[Federal Register Volume 72, Number 151 (Tuesday, August 7, 2007)]
[Rules and Regulations]
[Pages 44284-44335]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-3789]



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Part III





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Part 412



Medicare Program; Inpatient Rehabilitation Facility Prospective Payment 
System for Federal Fiscal Year 2008; Final Rule

Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules 
and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1551-F]
RIN 0938-AO63


Medicare Program; Inpatient Rehabilitation Facility Prospective 
Payment System for Federal Fiscal Year 2008

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule will 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 revising existing policies regarding the PPS within the 
authority granted under section 1886(j) of the Act.

DATES: The regulatory changes to 42 CFR part 412 are effective October 
1, 2007. The updated IRF prospective payment rates are applicable for 
discharges on or after October 1, 2007 and on or before September 30, 
2008.

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:

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
II. Provisions of the Proposed Regulations
III. Analysis of and Responses to Public Comments
IV. 75 Percent Rule Policy
V. Classification System for the Inpatient Rehabilitation Facility 
Prospective Payment System
VI. FY 2008 IRF PPS Federal Prospective Payment Rates
    A. FY 2008 IRF Market Basket Increase Factor and Labor-Related 
Share
    B. Area Wage Adjustment
    C. Description of the IRF Standard Payment Conversion Factor and 
Payment Rates for FY 2008
    D. Example of the Methodology for Adjusting the Federal 
Prospective Payment Rates
VII. Update to Payments for High-Cost Outliers Under the IRF PPS
    A. Update to the Outlier Threshold Amount for FY 2008
    B. Update to the IRF Cost-to-Charge Ratio Ceilings
VIII. Clarification to the Regulations Text for Special Payment 
Provisions for Patients That Are Transferred
IX. Miscellaneous Comments Outside the Scope of the Proposed Rule
X. Provisions of the Final Regulation
XI. Collection of Information Requirement
XII. Regulatory Impact Analysis
    A. Overall Impact
    B. Anticipated Effects of the Final Rule
    C. Anticipated Effects of the 75 Percent Rule Policy
    D. Alternatives Considered
    E. Accounting Statement
    F. Conclusion
Regulation Text
Addendum

Acronyms

    Because of the many terms to which we refer by acronym in this 
final 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
HHH Hubert H. Humphrey Building
HIPAA Health Insurance Portability and Accountability Act, Pub. L. 
104-191
IFMC Iowa Foundation for Medical Care
IOM Internet-Only Manual
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
RAC Recovery Audit Contractor
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

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, August 15, 
2005), we are providing below a general

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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, 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. 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 final rule also includes the provisions 
effective in the correcting amendments.
    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:
    <bullet> Adopted the Office of Management and Budget's (OMB's) 
Core-Based Statistical Area (CBSA) market area definitions in a budget 
neutral manner.
    <bullet> Implemented a budget-neutral 3-year hold harmless policy 
for IRFs that had been classified as rural in FY 2005, but became urban 
in FY 2006.
    <bullet> 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.
    <bullet> 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.
    <bullet> Implemented a teaching status adjustment in a budget 
neutral manner for IRFs, similar to the one adopted for inpatient 
psychiatric facilities.
    <bullet> 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.
    <bullet> Updated the rural adjustment from 19.14 percent to 21.3 
percent in a budget neutral manner.
    <bullet> Updated the low-income percentage (LIP) adjustment from an 
exponent of 0.484 to an exponent of 0.6229 in a budget neutral manner.
    <bullet> 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:
    <bullet> 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.
    <bullet> 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.
    <bullet> Updated the IRF PPS payment rates by the FY 2007 estimates 
of the market basket and the labor-related share.
    <bullet> Updated the IRF PPS payment rates by the FY 2007 wage 
indexes.
    <bullet> Applied the second year of the hold harmless policy in a 
budget neutral manner.
    <bullet> Updated the outlier threshold from $5,129 to $5,534.
    <bullet> Updated the urban and rural national cost-to-charge ratio 
ceilings for

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the purposes of determining outlier payments under the IRF PPS and 
clarified the methodology described in the regulations text.
    <bullet> Revised the regulation text in Sec.  412.23(b)(2)(i) and 
Sec.  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 Sec.  
412.23(b)(2)(i) and Sec.  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 Sec.  412.23(b)(2), we also permitted a 
comorbidity that meets the criteria as specified in Sec.  
412.23(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 final rule include the provisions 
effective in the correcting amendment.
    Section 1886(j)(5) of the Act and Sec.  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 Sec.  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 final 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 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 the Internet-
Only Manual (IOM) at Pub. 100-04 published by CMS at: http://www.cms.hhs.gov/Manuals/IOM/list.asp). 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

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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).

II. Provisions of the Proposed Regulation

    As discussed in the FY 2008 IRF PPS proposed rule (72 FR 26230), we 
proposed to make revisions to the regulation text in order to implement 
policy changes for IRFs for FY 2008 and subsequent fiscal years. 
Specifically, we proposed 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

    We proposed 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

    <bullet> Update the FY 2008 IRF PPS payment rates by the market 
basket, as discussed in section IV.A of the FY 2008 IRF PPS proposed 
rule (72 FR 26320).
    <bullet> 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 of the FY 2008 IRF PPS proposed rule 
(72 FR 26320).
    <bullet> 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 of the FY 2008 IRF PPS 
proposed rule (72 FR 26320).
    <bullet> Revise the wage index policy for rural areas without 
hospital wage data by imputing an average wage index from all 
contiguous CBSAs to represent a reasonable proxy for the rural area 
within a State, as discussed in section IV.B of the proposed rule (72 
FR 26320).
    <bullet> Implement the final year of the 3-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 
of the FY 2008 IRF PPS proposed rule (72 FR 26320).
    <bullet> Update the outlier threshold amount for FY 2008 to $7,522, 
as discussed in section V.A of the FY 2008 IRF PPS proposed rule (72 FR 
26320).
    <bullet> 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 of the FY 2008 IRF PPS proposed rule (72 FR 26320).

III. Analysis of and Responses to Public Comments

    We received approximately 40 timely items of correspondence 
containing multiple comments on the FY 2008 proposed rule (72 FR 26230) 
from the public. We received comments from a university, various trade 
associations, inpatient rehabilitation facilities, health care industry 
organizations, and health care consulting firms. The following 
discussion, arranged by subject area, includes a summary of the public 
comments that we received, and our responses to the comments appear 
under the appropriate subject heading.

IV. 75 Percent Rule Policy

    In order to be excluded from the acute care inpatient hospital PPS 
specified in Sec.  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)), Sec.  412.23(b)(2) specifies one criterion that 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 Sec.  
412.23(b)(2)(iii) in order for the facility to be classified as an IRF. 
The minimum percentage is known as the ``compliance threshold.'' In 
addition, for cost reporting periods beginning on or after July 1, 
2004, and before July 1, 2008, a patient's comorbidity, as defined at 
Sec.  412.602, as well as the patient's principal diagnosis, may be 
included when determining the medical conditions of the inpatient 
population that count toward the required applicable percentage, if 
certain requirements are met.
    Prior to the May 7, 2004 final rule (69 FR 25752), Sec.  
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 Sec.  412.23(b)(2) to increase the 
number of medical conditions to 13. We also temporarily lowered the 
compliance threshold, while at the same time specifying a transition 
period at the end of which IRFs would once again have to meet a 
compliance threshold of 75 percent. Also, as described below, the 
revised regulation specified that during the compliance threshold 
transition period, a patient's comorbidity may be used to determine 
whether a provider met the compliance threshold, provided certain 
applicable requirements were met.
    The regulations at Sec.  412.602 define a comorbidity as a specific 
patient condition that is secondary to the patient's principal 
diagnosis. A patient's principal diagnosis is the primary reason a 
patient is admitted to an IRF, and this diagnosis is used to determine 
whether the patient had a medical condition that can be counted toward 
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:
    <bullet> The patient is admitted for inpatient rehabilitation for a 
condition that is not one of the conditions listed in Sec.  
412.23(b)(2)(iii).
    <bullet> The patient also has a comorbidity that falls within one 
of the conditions listed in Sec.  412.23(b)(2)(iii).
    <bullet> 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 Medicare-covered care setting.
    In accordance with the May 7, 2004 final rule, IRFs would have had 
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

[[Page 44288]]

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 Sec.  412.23(b)(2) by 
stipulating that an IRF must meet the full 75 percent compliance 
threshold as of its first cost reporting period that starts on or after 
July 1, 2008, rather than on or after July 1, 2007. In addition, we 
also permitted a comorbidity that meets the criteria as specified in 
paragraph (b)(2)(i) of Sec.  412.23 to continue to be used, along with 
principal diagnosis, to determine the compliance threshold for cost 
reporting periods beginning before July 1, 2008, rather than before 
July 1, 2007. (For a complete description of all of the changes, see 
the FY 2007 IRF PPS final rule (71 FR 48354)).
    Under existing policy, for cost reporting periods beginning on or 
after July 1, 2008, comorbidities will not be eligible for inclusion in 
the calculations used to determine whether the provider meets the 75 
percent compliance threshold specified in Sec.  412.23(b)(2)(ii). 
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, in the May 8, 2007 
proposed rule (72 FR 26230), we solicited 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 solicited comments that include clinical data 
based on scientifically sound research that provide evidence to support 
these and other options.
    We received many comments on this proposal, which are summarized 
below.
    Comment: Commenters cited our acknowledgement, made during a 
conference on Medicare and Medicaid payment issues held March 2007 in 
Baltimore, Maryland, that approximately 7 percent of inpatients from 
July 2005 through June 2006 were counted toward the compliance 
threshold because they met the medical conditions listed in Sec.  
412.23(b)(2)(iii) only because of the patient's comorbidities. They 
argued that eliminating use of comorbidities to determine the 
compliance percentage would be equivalent to adding an additional 7 
percent to the compliance threshold.
    Response: One method that we use to determine compliance with the 
requirements specified at Sec.  412.23(b)(2) is analysis of the 
impairment group and etiologic diagnosis codes, as well as the 
comorbidity codes, recorded on the IRF-PAI. It is true that IRF-PAI 
data from July 1, 2005, to June 30, 2006, indicates that approximately 
7 percent of IRF cases met the compliance standards based on the IRF-
PAI comorbidity codes alone rather than on the IRF-PAI impairment group 
or etiologic diagnosis codes. However, this does not mean that the 
cases were evenly distributed across providers or that 7 percent of 
IRFs met the compliance threshold solely because of the comorbid 
conditions of their inpatients. The commenters offer no evidence that 
IRFs needed to rely on those 7 percent of cases in order to meet the 
compliance threshold. Also, our rules already provide that up to 25 
percent of the cases do not have to be admitted because of a qualifying 
diagnosis. It does not follow that, because 7 percent of the IRF cases 
met the compliance standards only because of the comorbidities recorded 
on the IRF-PAIs, using just the principal diagnoses to determine 
compliance would result in a higher ``effective'' compliance threshold. 
For example, although an IRF may have had a certain percentage of cases 
that presumptively met a medical condition listed in Sec.  
412.23(b)(2)(iii) only because of the comorbid conditions recorded on 
the IRF-PAI, the IRF may also have a sufficient number of other cases 
with impairment group or etiologic codes that meet one of the medical 
conditions identified in Sec.  412.23(b)(2)(iii), and these other cases 
by themselves could allow the IRF to meet the compliance threshold.
    In addition, there is a second method of verifying compliance, 
which is the FI analyzing a random sample of medical records. 
Consequently, although the IRF may fail to meet the compliance 
threshold by an analysis of its IRF-PAI data, the IRF may meet the 
compliance threshold when the medical records are analyzed. The medical 
records identify the principal diagnoses, as well as the information 
supporting the principal diagnoses, which is much more detailed than 
the list of codes recorded on the IRF-PAIs. Thus, the medical record of 
a patient may indicate the presence of a qualifying condition that 
meets the 75 percent rule when the IRF data does not.
    The medical conditions that we believe are most appropriate for 
treatment in an IRF are listed in Sec.  412.23(b)(2)(iii). However, 
these medical conditions are not specific diagnoses, but broad medical 
categories. In addition, we acknowledge that there may be atypical 
patients with medical conditions not listed in Sec.  412.23(b)(2)(iii) 
who may occasionally also require treatment in an IRF. Therefore, Sec.  
412.23(b)(2) has always allowed the IRF the flexibility to admit a 
percentage of patients with medical conditions not listed in this 
section of the regulations without losing its classification status as 
an IRF and the higher reimbursement rate than would be paid to 
hospitals under the IPPS.
    It is important to note that even when the compliance threshold 
increases to 75 percent, an IRF may admit up to 25 percent of patients 
who have medical needs that meet the IRF medical necessity criteria but 
do not have as a principal diagnosis one of the 13 medical conditions 
used to classify a provider as an IRF. Thus, an IRF may admit up to 25 
percent of patients not meeting the 75 percent rule and still be 
eligible to be paid under the IRF PPS. In other words, when the 
compliance threshold increases to 75 percent, as many as 1 in every 4 
patients may still be admitted with a principal diagnosis that is not 
one of the medical conditions listed in Sec.  412.23(b)(2)(iii), as 
long as the patient requires an IRF level of care. Therefore, if an IRF 
believes that the clinical status of some patients involves principal 
diagnoses or comorbidities that are so unusually medically and 
functionally complex as to demonstrate medical necessity to be admitted 
the IRF, then the IRF may admit these atypical cases as part of the 
percentage of cases that do not have to meet the 75 percent rule.
    Comment: Many commenters urged CMS to permanently continue to use a 
patient's comorbidities to determine whether a provider met the 75 
percent rule. Some commenters stated that terminating the use of 
comorbidities would decrease the number of IRFs that can achieve 
compliance as they are adapting their admissions policies and operating 
procedures. Several commenters urged us to continue the use of 
comorbidities in the compliance calculations until we can refine the 
way we identify patients that are most appropriate for an IRF-level of 
care, or until such time as we have sufficient data to reassess all the 
provisions of the 75 percent rule. These commenters state that the 
simple diagnosis-based criteria used in the 75 percent rule is 
insensitive to the special needs of individual patients, and encouraged 
CMS to move toward more patient-specific criteria. These commenters 
also urged CMS to modernize the classifying conditions. Several 
commenters argued that

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comorbidities should be retained for use in compliance calculations at 
a minimum until further research examining the use of comorbidities is 
conducted, such as assessing the potential negative patient outcomes 
that may result from the discontinued use. Commenters believed that 
expiration of the comorbidity provision would change provider behavior, 
and specifically change admission patterns, in ways that cannot be 
evaluated using historical data.
    Response: We believe a patient's principal diagnosis most 
accurately identifies the medical condition that required intensive 
inpatient rehabilitation. A patient's principal diagnosis is determined 
from the combination of items and services the IRF furnished to the 
inpatient as documented in the patient's medical record, including the 
data derived from medical tests, lab tests, procedures, and therapy, as 
well as the notes of the IRF's clinicians. Medical conditions that are 
secondary to the patient's principal reason for the inpatient 
rehabilitation stay are comorbid medical conditions.
    It is not unusual for patients admitted to an IRF to have more than 
one ailment for which the patient exhibited a need for medical 
treatment. However, it is the patient's principal diagnosis that most 
accurately denotes whether a patient had a medical condition listed in 
Sec.  412.23(b)(2)(iii) that required intensive inpatient 
rehabilitation because of how, as described previously, the principal 
diagnosis is determined. In other words, the data used to determine the 
principal diagnosis makes it the most accurate diagnosis that 
identifies the medical condition which required intensive inpatient 
rehabilitation. Additionally, as stated above, Sec.  412.23(b)(2) has 
always allowed the IRF the flexibility to admit a percentage of 
patients with medical conditions not listed in this regulation section, 
as long as the patient requires an IRF level of care, without 
jeopardizing the IRF's classification and eligibility for payment under 
the IRF PPS.
    We believe it is essential that we maintain appropriate criteria to 
ensure that only facilities providing medically necessary intensive 
inpatient rehabilitation are classified as IRFs. Thus, it is imperative 
to identify medical conditions that would typically require intensive 
inpatient rehabilitation in IRFs, because rehabilitation in general can 
be delivered in a variety of settings, such as acute care hospitals, 
SNFs, and outpatient settings. The most appropriate method we can use 
to identify the medical condition of an inpatient is to determine the 
impairment that led to admission of the patient to the IRF. It is the 
principal diagnosis that best identifies the impairment which resulted 
in the patient's admission providing the principal diagnosis was made 
in accordance with acceptable medical practice and appropriate clinical 
coding standards.
    The inclusion of comorbidities in determining provider compliance 
with IRF classification requirements was established as a temporary 
policy in our May 7, 2004 final rule (69 FR 25752), and the revised 
regulation continues to be commonly referred to as the 75 percent rule. 
After careful review of a large volume of comments, we stated in the 
May 7, 2004 final rule (69 FR 25752, 25762) that we recognized IRFs 
could need additional time in order to adjust to the revised 
regulations. Therefore, in order to give IRFs flexibility to adapt we 
implemented a phase-in to meeting the 75 percent compliance threshold. 
Similarly, the intent of the comorbidity provision was to provide 
flexibility that would help providers adapt to the phase-in of 
enforcement of the compliance threshold.
    Originally the transition time period, which provided for a phase-
in of the compliance percentage and included the use of comorbid 
conditions in compliance calculations, was 3 years. However, in 
accordance with the DRA, the transition time period was extended one 
additional year. We also decided to extend the use of comorbidities for 
one additional year as well to maintain consistency with our current 
approach with respect to the counting of comorbidities before the 75 
percent threshold applies. Therefore, providers will have had 4 years 
to adjust their case-mixes and adapt their operations in order to 
comply with the 75 percent rule.
    As stated in the May 7, 2004 final rule (69 FR 25752, 25762) we 
have encouraged stakeholders to conduct research studies that could 
assist us in evaluating IRF compliance criteria. (Elsewhere in this 
preamble we describe our research efforts.) While we are aware that 
some studies have been initiated, they have not yet yielded results. 
The commenters urging the continuation of comorbidities did not support 
their arguments with sound clinical evidence on the value of including 
comorbidities when calculating the compliance percentage. In the 
absence of such evidence, we do not believe it would be appropriate to 
convert what was always intended to be a temporary accommodation during 
the phase-in period to a permanent policy. Similarly, we think it would 
be inappropriate to adopt an extension of indefinite duration because 
we have no way to estimate when and if sufficient data will become 
available to reevaluate the IRF classification criteria. However, we 
will examine our policies as the results of well-designed, rigorous, 
scientific studies become available and continue to encourage the 
industry and academics to conduct rehabilitation research. We will 
continue to evaluate the 75 percent rule and as appropriate will 
consider improvements to the criteria identifying appropriate IRF 
admissions that are supported by high-quality research and/or our data 
analysis.

Miscellaneous 75 Percent Rule Comments

    Although it is difficult to separate comments on our comorbidity 
policy and comments on the other provisions of the 75 percent rule, we 
believe that the following comments were generally about the other 
aspects of the 75 percent rule.
    Comment: Commenters stated that the 75 percent rule jeopardized the 
care of patients who required treatment in an IRF by restricting access 
to treatment. They believe that patients with medical conditions not 
listed in Sec.  412.23(b)(2)(iii) should be admitted to IRFs because 
IRFs provide better care for these types of patients. One commenter 
further stated that the 75 percent rule, by restricting access to care, 
is denying patients with disabilities access to the comprehensive, 
coordinated rehabilitation services in an IRF. Another commenter 
referenced research that the commenter believes shows the length of 
stay (LOS) of patients with single joint replacements was less in an 
IRF as opposed to a SNF.
    Response: In this rule, we did not propose changes to the 13 
qualifying conditions considered to be appropriate for IRF care. 
However, in the May 7, 2004 final rule (69 FR 25752) we responded to 
similar comments. We continue to believe that an IRF is appropriately 
characterized as an inpatient hospital setting designed to provide the 
specialized, intensive, and interdisciplinary rehabilitation level of 
care that certain types of patients need. Although we remain committed 
to maintaining access to rehabilitation care for all Medicare 
beneficiaries, not all patients require the intensive degree of 
rehabilitation services that an IRF furnishes. We believe that those 
specific patients with certain medical conditions requiring intensive 
inpatient physical therapy, occupational therapy, and, if necessary, 
speech and language therapy

[[Page 44290]]

are the patients most appropriate for treatment in an IRF.
    We do not believe that the 75 percent rule jeopardizes access to an 
appropriate level of rehabilitation care, nor do we have data to 
support that perspective. In addition, although an IRF is capable of 
extensive medical management of patients by virtue of its inpatient 
hospital status, as we stated in the May 7, 2004 final rule (69 FR 
25752, 25764) ``patients who require medical management but not 
intensive, interdisciplinary rehabilitation can be cared for in another 
setting.'' The fact that care in an IRF may be preferred by some 
patients and/or their physicians does not make it the most appropriate 
clinical treatment setting or the most optimal use of intensive 
rehabilitation resources uniquely provided by IRFs. As part of our 
ongoing efforts to evaluate the impact of the requirements at Sec.  
412.23(b)(2) since we revised the regulations, we have analyzed the 
available data extensively. Our most recent analysis of this data is 
available at the following Web site: http://www.cms.hhs.gov/InpatientRehabFacPPS/Downloads/IRF_PPS_75_percent_Rule_060807.pdf.
    As the IRF industry has noted, the reduced claims volume identified 
since 2004, which shows the decrease in the inpatient population of 
IRFs, is almost entirely attributable to cases in one of these five IRF 
PPS rehabilitation impairment categories (RICs): Lower extremity joint 
replacement, cardiac, osteoarthritis, pain syndrome, and the 
miscellaneous category. These five RICs are precisely the types of 
medical conditions that the 75 percent rule was designed to screen out, 
because they are not generally thought to require the intensive 
rehabilitation services provided by IRFs. The clinical experts that CMS 
consulted prior to publishing the May 7, 2004 final rule (69 FR 25752) 
indicated that the vast majority of patients with these medical 
conditions could typically be cared for appropriately in other less 
intensive settings. In addition, while we have and are continuing to 
encourage research studies, these studies have not yet been completed. 
In the absence of findings generated from well-designed scientific 
studies, we have no evidence showing that the medical conditions in 
these 5 RICs require treatment in an IRF as opposed to receiving 
treatment at another treatment setting. Therefore, we do not agree that 
without a more complete analysis of the patient characteristics and 
care needs of patients served in the different settings that a 
shortened length of stay for single joint replacement cases is, in 
itself, a compelling reason for these cases to be treated in an IRF.
    In addition, as more fully described in the analysis, which is 
available on the previously identified Web site, our examination of the 
data indicates that patients requiring post-acute rehabilitation care 
for four common conditions (total knee replacement, total hip 
replacement, hip fracture, and stroke) have access to and are receiving 
services in different settings. Therefore, we believe that the data 
indicate beneficiaries have access to care and are receiving the 
appropriate level of care at an appropriate cost to the Medicare 
program. Further, we believe the 75 percent rule promotes equal access 
to those who require an IRF level of care.
    The IRF classification polices are used to identify those patients 
who have a need for a more intensive level of rehabilitation than is 
generally required by most patients. Recent industry reports emphasize 
only a very selective subset of the CMS data, using as their starting 
point the highest level of utilization and then focusing on the 
relative decreases that follow. It is important to note, however, that 
the highest historical level of utilization is not necessarily the most 
appropriate or even the most typical level of utilization, and that 
patients who need rehabilitation services have continued access to 
these services in other settings, as shown by the data in the analysis 
on the previously referenced Web site. For example:
    <bullet> Although the proportion of total knee replacement and 
total hip replacement patients receiving care in IRFs has dropped 
significantly since 2004, our data show that the proportions of these 
patients receiving care in the other post-acute care settings are 
increasing.
    <bullet> The SNFs, particularly, are now better able to manage 
patients with musculoskeletal conditions with the introduction of 9 new 
resource utilization group payment categories beginning in FY 2006. 
These new payment categories compensate SNFs more fully for patients 
who have both significant rehabilitation and medical needs--precisely 
the type of patient who may need some level of medical monitoring but 
does not require the intense level of inpatient rehabilitation services 
provided in an IRF setting.
    The analyses described above are part of our ongoing evaluation of 
our IRF classification policies. However, although we have encouraged 
research to be undertaken that would contribute to improving the 
criteria for identifying appropriate IRF admissions, we have not 
received results of well-designed scientific studies that would support 
such changes at this time.
    Comment: Several commenters stated that we should suspend 
increasing the compliance percentage until we have implemented a single 
post-acute assessment instrument. One commenter stated that we should 
devise a price-neutral payment system to pay for care that could be 
furnished in either a SNF or an IRF. Although the commenter was not 
clear, we believe that by ``price-neutral payment system'' the 
commenter means payments that are basically the same regardless of the 
setting where the services were furnished. We refer to such a payment 
system as being site-neutral. Another commenter stated that instead of 
the broad 13 medical conditions we should use facility characteristics 
to define a provider as an IRF. Many commenters recommended that the 
medical conditions listed at Sec.  412.23(b)(2)(iii) should be updated. 
Other commenters suggested that we should use more specific patient-
centered criteria than the broad 13 medical conditions in order to 
identify which patients should receive care in an IRF. Similarly, a 
commenter stated that a patient's overall function should be used to 
determine compliance. Another commenter encouraged us to better 
identify patients who ``typically'' are in need of inpatient 
rehabilitation. This commenter urged CMS to consider that the 
comorbidity in combination with the primary diagnosis establishes the 
need for inpatient rehabilitation. Some commenters stated that the 75 
percent rule is insensitive and inadequate as a tool to determine a 
patient's need for IRF care.
    Response: While these recommendations address issues that are 
beyond the scope of this rule because they concern issues about which 
we did not make any proposals, we will address them briefly because 
they generally pertain to the 75 percent rule. We agree that future 
data analysis and the results of well-designed scientific studies may 
inform policy decisions regarding the IRF classification criteria. With 
input from all our stakeholders, we will continue our efforts to make 
these refinements as quickly as possible. In attempting to promote 
research that better identifies the types of patients whose treatment 
needs require an IRF setting, CMS has collaborated with several crucial 
stakeholders to create a framework for future research. We describe 
some of these efforts below.
    <bullet> At CMS's request, the National Center for Medical 
Rehabilitation Research at the National Institute of Child Health and 
Human Development

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(NCMRR/NICHD) at the National Institutes of Health (NIH) convened a 
panel in February 2005 to develop a research agenda on appropriate 
settings for rehabilitation.
    <bullet> Recently, NCMRR/NICHD also issued a notice on the NIH Web 
site recognizing the need to enhance the evidence base for clinical 
practice, with a commitment to work with providers and research groups 
to encourage the design of clinical studies that meet NIH standards. We 
also intend to work with researchers conducting NIH-approved studies so 
that they can meet their study objectives within the overall framework 
of the Medicare program benefit.
    <bullet> Over the past year, we have been actively participating in 
various NIH panel discussions to foster research in the area of medical 
rehabilitation, with the goal to better identify typical 
characteristics of patients in need of the intensive rehabilitative 
services that only IRFs can provide. In the course of attending these 
meetings, we have established connections with many of the researchers 
conducting the research in this area and have been helping them to 
identify the appropriate resources within CMS.
    <bullet> We strongly support industry research efforts by serving 
on project advisory boards and by participating in industry-sponsored 
meetings and research conferences.
    We also want to express our support for our integrated post-acute 
payment system demonstration project. As part of that demonstration, we 
are developing an assessment instrument that can be used to assess 
patients in different treatment settings. We expect that the 
demonstration will generate much needed data on differences in patient 
characteristics and treatment outcomes across settings that will be 
extremely useful in our ongoing evaluation of the IRF PPS. Further, in 
an effort to try to move toward a site-neutral payment system as 
suggested by a commenter, the proposed FY 2008 President's Budget 
includes a proposal to reduce the difference in payment between IRFs 
and SNFs for total knee and hip replacements. We will continue to look 
for opportunities to propose policies which move the program in the 
direction of our ultimate goal of PAC payment reform.
    In summary, we will continue to examine our IRF classification 
polices and the criteria for identifying appropriate IRF admissions 
using sound data analysis or well-designed scientific studies.
    Comment: A commenter believes that our CMG data should be used to 
identify the concentrations of typical conditions treated in an IRF and 
use that data instead of or in combination with the 13 medical 
conditions listed in the regulations as the criteria to classify a 
provider as an IRF.
    Response: We addressed a similar comment in the May 7, 2004 final 
rule (69 FR 25752, 25758-25759) regarding why it would be inappropriate 
to use the RICs to classify a provider as an IRF. The CMGs are derived 
from the RICs and, thus, using CMGs to classify a provider as an IRF 
would also be inappropriate. The payment system, which is based on the 
RICs, was devised to pay for all the patients an IRF admits, including 
the patients not counted as part of the compliance percentage the IRF 
must meet. Thus, a PPS created to pay for IRF cases is different than a 
classification system that specifies the percentage of patients that 
must have certain medical conditions. We refer the commenter to the May 
7, 2004 final rule for a more detailed explanation.
    Comment: A commenter suggested that we modify our medical review 
policies to assume that any claim with a qualifying diagnosis or a 
comorbidity code used in the 75 percent rule calculations can be deemed 
to meet Medicare's medical necessity provisions. Another commenter 
stated that FIs were incorrectly performing medical necessity reviews. 
The same commenter expressed concerns regarding how the Recovery Audit 
Contractors (RACs) are performing their reviews. Another commenter 
stated that the 75 percent rule is being used as a crude measure of 
medical necessity. A few commenters suggested all local coverage 
determination polices be suspended until we fully examine the issues 
associated with medical necessity for IRF level of care. Another 
commenter requested that we use the criteria specified in the Health 
Care Financing Administration (HCFA) ruling 85-2 as the sole 
determinant for the medical necessity of an IRF admission, and 
implement a moratorium on new rehabilitation programs participating in 
Medicare until we revise the 75 percent rule. One commenter requested 
that CMS expand our policy to include additional complicating 
conditions as comorbidities, which count toward compliance with the 75 
percent rule.
    Response: These comments relate to regulatory policies or 
operational issues that are outside the scope of the rule. 
Nevertheless, we address them briefly here. First, the purpose of the 
comorbidity policy has been to recognize patients with one of the 13 
qualifying conditions, even when that qualifying condition is not the 
primary reason for the IRF admission. The effect of adding new codes 
would be to inappropriately expand the set of qualifying conditions 
without any clinical evidence or review. Second, our medical review 
protocols and IRF compliance criteria were designed to perform two 
distinct oversight functions. For example, medical review protocols are 
used to ensure that claims are paid appropriately, but our IRF 
classification criteria are used to ensure that only facilities that 
provide intensive inpatient rehabilitation services are paid under the 
IRF PPS. While we continue to work diligently to improve consistency 
between the review protocols where appropriate, we realize that there 
will always be some differences that reflect differences in statutory, 
regulatory and operational priorities and the two distinct oversight 
functions. Third, regarding the reviews performed by our contractors, 
it should be noted that we believe these reviews are necessary to 
ensure the integrity of the Medicare trust fund. As part of this 
oversight function, we continuously review the performance of our 
contractors to ensure that they are functioning in accordance with our 
policies and guidance. Finally, we believe that implementing a 
moratorium on new rehabilitation programs participating in Medicare 
could result in restricting access to care and therefore is not 
appropriate at this time.
    Comment: A commenter stated that the impact of the 75 percent rule 
combined with reviews being performed by FIs and RACs have decreased 
IRF admissions well beyond the estimates we envisioned in the May 7, 
2004 final rule (69 FR 25752). In addition, the commenter appeared to 
indicate that the significant drop in IRF admissions as a result of the 
75 percent rule and the contractor reviews calls into question the 
validity of the revisions to Sec.  412.23(b)(2) that we made in the May 
7, 2004 final rule.
    Response: In evaluating the potential effect of an impending rule 
change, the regulatory impact analysis represents our best effort to 
project the economic impact of the change, based on the data available 
at the time of publication. It is important to note that such 
projections are estimates, and that they consider only the potential 
effect of the change itself. Moreover, we do not use such projections 
as program targets or benchmarks, but rather, conduct reviews and 
analyses of program data after the change is implemented in order to 
evaluate its actual impact.
    In order to put a proposed change in perspective, a regulatory 
impact analysis generally is projected on the

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assumption that all other variables remain constant. Thus, the 
projections in a regulatory impact analysis take historical data on 
provider behavior, utilization of services, and expenditure levels and 
simply trend them forward, in order to show more clearly the effect of 
the single policy change under review.
    When we imposed the temporary moratorium on enforcing the 75 
percent rule in June 2002, we assumed that provider case-mix and 
utilization would remain stable while we took steps to standardize the 
provider classification procedures. However, our data indicate that 
during the period when the moratorium was in effect, there was actually 
a pronounced increase in the volume of IRF cases involving certain 
specific categories of conditions. In general, the medical conditions 
in these particular rehabilitation impairment categories--lower 
extremity joint replacement, cardiac, osteoarthritis, pain syndrome, 
and miscellaneous--are unlikely to require intensive rehabilitation in 
IRFs. According to the clinical experts that CMS consulted in revising 
the 75 percent rule criteria prior to publishing the May 7, 2004 final 
rule, the vast majority of patients with these medical conditions can 
typically be appropriately cared for in other less intensive settings. 
In addition, we have not received reports from well-designed scientific 
studies showing that these medical conditions are typically appropriate 
for treatment in an IRF. Thus, we continue to believe that these 
medical conditions are appropriately treatable in other, less intensive 
settings.
    When we resumed enforcement of the 75 percent rule, the volume of 
these less intensive IRF cases decreased, accompanied by a concomitant 
increase in the volume of cases involving conditions that typically do 
require intensive rehabilitation: brain injury and certain nervous 
system conditions. This phenomenon would appear to indicate that:
    <bullet> The 75 percent rule accurately identifies as IRFs those 
facilities serving patients who genuinely need intensive 
rehabilitation; and
    <bullet> Significant behavior changes occurred among IRFs in 
response to both the initial imposition and the subsequent lifting of 
the moratorium, underscoring the inappropriateness of utilizing the 
2004 final rule's regulatory impact analysis projections (which were 
not designed to take possible behavior changes into account) as a 
benchmark in analyzing subsequent utilization patterns.
    We do not believe that the decline in IRF utilization levels for 
certain conditions in the period since we lifted the moratorium is an 
indication that beneficiaries are being denied access to needed care in 
this setting. As explained above, we believe that the moratorium itself 
may well have triggered aberrant IRF utilization patterns, which were 
skewed toward certain conditions that generally do not require the 
exceptionally intensive type of rehabilitation that characterizes the 
IRF setting. As a consequence, what would appear to be a relative 
decline in IRF utilization since that time may, in fact, represent a 
return to more normal utilization patterns, which better reflect the 
actual prevalence of patient need for the kind of intensive 
rehabilitation that the IRF setting is intended to provide.
    We will continue to review Medicare claim and patient assessment 
data closely as part of our ongoing effort to monitor Medicare 
beneficiary access to rehabilitation services in IRFs.
    Comment: A commenter stated that the 75 percent rule is negatively 
affecting the financial operations of IRFs because the 75 percent rule 
and other IRF policies have resulted in more severely ill patients 
being treated in IRFs, which is not being reflected in IRF PPS payment 
rates.
    Response: We agree that IRF utilization patterns have changed since 
we began enforcing the 75 percent rule in 2004. The CMS data show a 
shift in the pattern of admissions away from lower acuity cases such as 
unilateral knee replacements to more severe conditions. However, we do 
not agree that the IRF PPS rates do not cover the cost of treating 
these more severely ill patients, in fact, comparisons of IRF payments 
and costs, as calculated by both CMS and MedPAC, showed double digit 
profit margins from the start of the IRF PPS in 2002 through 2005. The 
IRF profit margins are expected to decline in FY 2008, but should still 
remain positive. Based on this profitability analysis, we believe that 
the existing IRF PPS rate structure adequately accounts for the full 
range of IRF patients. Further, these analyses support our 
understanding that the IRF case-mix system was specifically designed to 
reflect the needs and costs of a unique segment of the post acute 
population requiring both intensive rehabilitation and medical 
management.
    Final Decision: After carefully considering the comments, we are 
maintaining the comorbidity policy specified in Sec.  412.23(b)(2). 
Therefore, for cost reporting periods beginning on or after July 1, 
2007, and before July 1, 2008, the compliance threshold remains 65 
percent and we will continue to include comorbidities when calculating 
the compliance percentage. However, for cost reporting periods 
beginning on or after July 1, 2008, the compliance threshold will 
increase to 75 percent, but the comorbidities will not be used to 
determine whether a provider met the 75 percent of the compliance 
threshold.

V. Classification System for the Inpatient Rehabilitation Facility 
Prospective Payment System

    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).
    We received a few comments on the proposed classification system 
for FY 2008, which are summarized below.
    Comment: A few commenters expressed concerns about the proposed CMG 
relative weight and average length of stay values for FY 2008, noting 
that they are based on FY 2003 data and that these data do not reflect 
the changes in IRF cost structures that may be occurring in response to 
the renewed enforcement of the 75 percent rule. These commenters 
requested that CMS use the latest available data to update the CMG 
relative weights and average length of stay values for FY 2008 and 
future years. One commenter suggested that CMS update the CMG 
definitions regularly to reflect changes in clinical practice that 
affect resource use.
    Response: We agree with the commenters that it is important to 
update the CMG relative weights, average length of stay values, and CMG 
definitions regularly to reflect changes in IRF admission patterns and 
cost structures, using the most recent available data. We are analyzing 
the data carefully to prepare to update the IRF classification system, 
as appropriate, in the future. However, we also believe it is important 
to balance the need to update these elements with the benefits derived 
from maintaining

[[Page 44293]]

stability within the IRF classification system and payment rates. In 
the FY 2006 IRF PPS final rule (70 FR 47880, 47886 through 47904), we 
implemented major changes to the IRF classification system, including 
revising the CMG definitions and recalibrating the CMG relative weights 
and average length of stay values. Given that these major changes to 
the classification system took effect less than 2 years ago, we believe 
that, in the interest of fostering stability in the IRF PPS, we should 
allow more time to pass before we implement more changes to the system. 
By waiting at least one additional year before making further changes 
to the system, we will ensure that we have sufficient time to analyze 
the effects of the FY 2006 revisions and the impact they are having on 
providers, which will improve the accuracy of future IRF PPS 
refinements. We also believe that further analysis of the FY 2006 data 
is needed to determine how the changes to the classification system, as 
well as the changes to the facility-level adjustments and the other 
changes we adopted in the FY 2006 final rule, are affecting providers. 
Now that the FY 2006 claims data are available, we are analyzing them 
and will propose updates to the system as appropriate in the future.
    Although we believe that it is best to delay updating the CMG 
relative weights and average length of stay values, we have conducted 
an analysis of these components of the IRF classification system using 
FY 2006 data. This analysis shows that updating these elements of the 
classification system would not materially change payments for the vast 
majority of IRF discharges. From this analysis, we found that payments 
for about 90 percent of the cases in our data would change by less than 
4 percent. CMGs for which payments would change by more than 4 percent 
contain a small number of cases. Based on our analysis, we believe that 
it is more appropriate to update the CMG relative weights and average 
length of stay values after we conduct careful analysis of the FY 2006 
data and analyze IRFs' responses to the changes that we implemented to 
the system in FY 2006. We believe that the results that we will obtain 
from this analysis of the effects of the FY 2006 revisions on providers 
will improve the accuracy of future revisions to the IRF PPS.
    Comment: One commenter suggested that CMS should review the FY 2006 
revisions to the classification system with more recent data to 
determine whether the revisions caused a 2.2 percent decrease in 
aggregate IRF payments and whether further revisions to the system are 
needed to account for this.
    Response: Since this comment is on revisions that we implemented 
for FY 2006, and we did not propose additional revisions to the IRF 
classification system for FY 2008, this comment is outside the scope of 
this final rule. Further, we responded to a very similar comment in the 
FY 2007 IRF PPS final rule (71 FR 48373 through 48374). However, our 
analysis of the data continues to show that the FY 2006 refinements to 
the IRF classification system did not cause a reduction in aggregate 
IRF payments. We are continuing to work with the industry to understand 
its concerns, and we are analyzing the FY 2006 IRF claims data in 
detail to identify any unanticipated effects of the FY 2006 revisions 
to the classification system on IRF payments. However, our analysis of 
the data continues to show that we implemented the FY 2006 refinements 
to the IRF classification system in a budget neutral manner, so that 
estimated aggregate payments to providers did not increase or decrease 
as a result of these refinements. Although our preliminary data do not 
show any decrease in IRF aggregate payments for FY 2006 resulting from 
the FY 2006 revisions to the IRF classification system, we will 
continue to analyze the FY 2006 data to determine whether additional 
refinements to the IRF classification system are necessary in the 
future.
    Final Decision: After carefully reviewing the comments that we 
received on the proposed changes to the CMG relative weights and 
average length of stay values, we proposed and will finalize our 
decision to update the CMG relative weights and the average length of 
stay values for FY 2008, as shown in Table 1.

                   Table 1.--Relative Weights and Average Lengths of Stay for Case Mix Groups
----------------------------------------------------------------------------------------------------------------
                      CMG description              Relative weights                 Average length of stay
       CMG        (M=motor, C=cognitive, -----------------------------------------------------------------------
                          A=age)           Tier 1   Tier 2   Tier 3    None    Tier 1   Tier 2   Tier 3    None
----------------------------------------------------------------------------------------------------------------
0101............  Stroke
                  M>51.05...............   0.7707   0.7303   0.6572   0.6347        8       11        9        9
----------------------------------------------------------------------------------------------------------------
0102............  Stroke
                  M>44.45 and M<51.05      0.9493   0.8995   0.8095   0.7818       11       15       11       10
                   and C>18.5.
----------------------------------------------------------------------------------------------------------------
0103............  Stroke
                  M>44.45 and M<51.05      1.1192   1.0605   0.9544   0.9218       14       13       12       12
                   and C<18.5.
----------------------------------------------------------------------------------------------------------------
0104............  Stroke
                  M>38.85 and M<44.45...   1.1885   1.1260   1.0134   0.9787       13       14       13       13
----------------------------------------------------------------------------------------------------------------
0105............  Stroke
                  M>34.25 and M<38.85...   1.4261   1.3512   1.2161   1.1745       16       17       16       15
----------------------------------------------------------------------------------------------------------------
0106............  Stroke
                  M>30.05 and M<34.25...   1.6594   1.5722   1.4150   1.3666       18       20       18       18
----------------------------------------------------------------------------------------------------------------
0107............  Stroke
                  M>26.15 and M<30.05...   1.9150   1.8145   1.6330   1.5771       21       23       21       20
----------------------------------------------------------------------------------------------------------------
0108............  Stroke
                  M<26.15 and A>84.5....   2.2160   2.0997   1.8897   1.8250       28       29       25       24
----------------------------------------------------------------------------------------------------------------
0109............  Stroke

[[Page 44294]]

 
                  M>22.35 and M<26.15      2.1998   2.0843   1.8758   1.8116       23       26       24       23
                   and A<84.5.
----------------------------------------------------------------------------------------------------------------
0110............  Stroke
                  M<22.35 and A<84.5....   2.6287   2.4907   2.2416   2.1649       30       33       28       27
----------------------------------------------------------------------------------------------------------------
0201............  Traumatic brain injury
                  M>53.35 and C>23.5....   0.8143   0.6806   0.6080   0.5647       10        9        9        8
----------------------------------------------------------------------------------------------------------------
0202............  Traumatic brain injury
                  M>44.25 and M<53.35      1.0460   0.8743   0.7810   0.7254       12       10       11        9
                   and C>23.5.
----------------------------------------------------------------------------------------------------------------
0203............  Traumatic brain injury
                  M>44.25 and C<23.5....   1.2503   1.0450   0.9335   0.8671       15       15       12       12
----------------------------------------------------------------------------------------------------------------
0204............  Traumatic brain injury
                  M>40.65 and M<44.25...   1.3390   1.1192   0.9998   0.9287       15       16       13       13
----------------------------------------------------------------------------------------------------------------
0205............  Traumatic brain injury
                  M>28.75 and M<40.65...   1.6412   1.3718   1.2254   1.1382       17       18       16       15
----------------------------------------------------------------------------------------------------------------
0206............  Traumatic brain injury
                  M>22.05 and M<28.75...   2.1445   1.7924   1.6011   1.4873       23       22       21       20
----------------------------------------------------------------------------------------------------------------
0207............  Traumatic brain injury
                  M<22.05...............   2.7664   2.3122   2.0655   1.9185       35       29       26       25
----------------------------------------------------------------------------------------------------------------
0301............  Non-traumatic brain
                   injury
                  M>41.05...............   1.1394   0.9533   0.8552   0.7772       12       12       11       10
----------------------------------------------------------------------------------------------------------------
0302............  Non-traumatic brain
                   injury
                  M>35.05 and M<41.05...   1.4875   1.2446   1.1164   1.0147       14       16       14       13
----------------------------------------------------------------------------------------------------------------
0303............  Non-traumatic brain
                   injury
                  M>26.15 and M<35.05...   1.7701   1.4810   1.3285   1.2074       20       19       17       16
----------------------------------------------------------------------------------------------------------------
0304............  Non-traumatic brain
                   injury
                  M<26.15...............   2.4395   2.0410   1.8309   1.6640       32       25       23       21
----------------------------------------------------------------------------------------------------------------
0401............  Traumatic spinal cord
                   injury
                  M>48.45...............   0.9587   0.8456   0.7722   0.6858       12       12       11       10
----------------------------------------------------------------------------------------------------------------
0402............  Traumatic spinal cord
                   injury
                  M>30.35 and M<48.45...   1.3256   1.1691   1.0676   0.9482       18       16       14       13
----------------------------------------------------------------------------------------------------------------
0403............  Traumatic spinal cord
                   injury
                  M>16.05 and M<30.35...   2.3069   2.0347   1.8580   1.6502       22       24       24       22
----------------------------------------------------------------------------------------------------------------
0404............  Traumatic spinal cord
                   injury
                  M<16.05 and A>63.5....   4.1542   3.6639   3.3458   2.9717       51       46       41       37
----------------------------------------------------------------------------------------------------------------
0405............  Traumatic spinal cord
                   injury
                  M<16.05 and A<63.5....   3.1371   2.7668   2.5266   2.2441       33       37       33       28
----------------------------------------------------------------------------------------------------------------
0501............  Non-traumatic spinal
                   cord injury
                  M>51.35...............   0.7648   0.6455   0.5687   0.5071        9        8        8        7
----------------------------------------------------------------------------------------------------------------
0502............  Non-traumatic spinal
                   cord injury
                  M>40.15 and M<51.35...   1.0262   0.8661   0.7630   0.6804       13       12       11        9
----------------------------------------------------------------------------------------------------------------
0503............  Non-traumatic spinal
                   cord injury
                  M>31.25 and M<40.15...   1.3596   1.1476   1.0109   0.9014       15       15       13       12
----------------------------------------------------------------------------------------------------------------
0504............  Non-traumatic spinal
                   cord injury
                  M>29.25 and M<31.25...   1.6984   1.4335   1.2628   1.1260       21       19       16       15
----------------------------------------------------------------------------------------------------------------
0505............  Non-traumatic spinal
                   cord injury
                  M>23.75 and M<29.25...   2.0171   1.7025   1.4997   1.3373       23       22       19       18
----------------------------------------------------------------------------------------------------------------
0506............  Non-traumatic spinal
                   cord injury
                  M<23.75...............   2.7402   2.3128   2.0374   1.8167       29       28       26       23
----------------------------------------------------------------------------------------------------------------
0601............  Neurological

[[Page 44295]]

 
                  M>47.75...............   0.8991   0.7330   0.7019   0.6522       11       10        9        9
----------------------------------------------------------------------------------------------------------------
0602............  Neurological
                  M>37.35 and M<47.75...   1.1968   0.9757   0.9342   0.8682       13       13       13       12
----------------------------------------------------------------------------------------------------------------
0603............  Neurological
                  M>25.85 and M<37.35...   1.5326   1.2495   1.1965   1.1118       17       17       15       15
----------------------------------------------------------------------------------------------------------------
0604............  Neurological
                  M<25.85...............   1.9592   1.5973   1.5295   1.4213       22       20       21       19
----------------------------------------------------------------------------------------------------------------
0701............  Fracture of lower
                   extremity
                  M>42.15...............   0.9028   0.7717   0.7338   0.6617       12       11       10        9
----------------------------------------------------------------------------------------------------------------
0702............  Fracture of lower
                   extremity
                  M>34.15 and M<42.15...   1.1736   1.0033   0.9539   0.8602       13       14       13       12
----------------------------------------------------------------------------------------------------------------
0703............  Fracture of lower
                   extremity
                  M>28.15 and M<34.15...   1.4629   1.2506   1.1890   1.0722       16       17       16       14
----------------------------------------------------------------------------------------------------------------
0704............  Fracture of lower
                   extremity
                  M<28.15...............   1.7969   1.5361   1.4605   1.3170       20       20       19       18
----------------------------------------------------------------------------------------------------------------
0801............  Replacement of lower
                   extremity joint
                  M>49.55...............   0.6537   0.5504   0.5131   0.4607        7        7        7        6
----------------------------------------------------------------------------------------------------------------
0802............  Replacement of lower
                   extremity joint
                  M>37.05 and M<49.55...   0.8542   0.7193   0.6704   0.6020       10       10        9        8
----------------------------------------------------------------------------------------------------------------
0803............  Replacement of lower
                   extremity joint
                  M>28.65 and M<37.05      1.2707   1.0700   0.9974   0.8956       15       15       13       12
                   and A>83.5.
----------------------------------------------------------------------------------------------------------------
0804............  Replacement of lower
                   extremity joint
                  M>28.65 and M<37.05      1.1040   0.9296   0.8665   0.7781       13       12       12       10
                   and A<83.5.
----------------------------------------------------------------------------------------------------------------
0805............  Replacement of lower
                   extremity joint
                  M>22.05 and M<28.65...   1.3927   1.1727   1.0931   0.9816       17       16       14       13
----------------------------------------------------------------------------------------------------------------
0806............  Replacement of lower
                   extremity joint
                  M<22.05...............   1.6723   1.4082   1.3126   1.1787       18       19       17       15
----------------------------------------------------------------------------------------------------------------
0901............  Other orthopedic
                  M>44.75...............   0.8425   0.7641   0.6868   0.6120       10       11       10        9
----------------------------------------------------------------------------------------------------------------
0902............  Other orthopedic
                  M>34.35 and M<44.75...   1.1088   1.0057   0.9039   0.8056       13       13       12       11
----------------------------------------------------------------------------------------------------------------
0903............  Other orthopedic
                  M>24.15 and M<34.35...   1.4638   1.3277   1.1934   1.0635       18       19       16       15
----------------------------------------------------------------------------------------------------------------
0904............  Other orthopedic
                  M<24.15...............   1.8341   1.6636   1.4952   1.3325       25       23       21       19
----------------------------------------------------------------------------------------------------------------
1001............  Amputation, lower
                   extremity
                  M>47.65...............   0.9625   0.8879   0.7957   0.7361       11       11       11       10
----------------------------------------------------------------------------------------------------------------
1002............  Amputation, lower
                   extremity
                  M>36.25 and M<47.65...   1.2709   1.1724   1.0507   0.9719       14       15       14       13
----------------------------------------------------------------------------------------------------------------
1003............  Amputation, lower
                   extremity
                  M<36.25...............   1.7876   1.6491   1.4779   1.3671       19       22       19       18
----------------------------------------------------------------------------------------------------------------
1101............  Amputation, non-lower
                   extremity
                  M>36.35...............   1.2554   1.0482   0.9225   0.8496       14       15       12       11
----------------------------------------------------------------------------------------------------------------
1102............  Amputation, non-lower
                   extremity
                  M<36.35...............   1.8824   1.5717   1.3832   1.2739       19       19       18       17
----------------------------------------------------------------------------------------------------------------
1201............  Osteoarthritis
                  M>37.65...............   1.0177   0.8785   0.8182   0.7405       11       12       11       10
----------------------------------------------------------------------------------------------------------------
1202............  Osteoarthritis

[[Page 44296]]

 
                  M>30.75 and M<37.65...   1.3168   1.1367   1.0586   0.9581       15       16       14       13
----------------------------------------------------------------------------------------------------------------
1203............  Osteoarthritis
                  M<30.75...............   1.6241   1.4020   1.3057   1.1817       21       19       17       16
----------------------------------------------------------------------------------------------------------------
1301............  Rheumatoid, other
                   arthritis
                  M>36.35...............   1.0354   0.9636   0.8511   0.7429       12       13       11       10
----------------------------------------------------------------------------------------------------------------
1302............  Rheumatoid, other
                   arthritis
                  M>26.15 and M<36.35...   1.4321   1.3327   1.1772   1.0275       15       18       15       14
----------------------------------------------------------------------------------------------------------------
1303............  Rheumatoid, other
                   arthritis
                  M<26.15...............   1.8250   1.6984   1.5002   1.3094       22       21       20       18
----------------------------------------------------------------------------------------------------------------
1401............  Cardiac
                  M>48.85...............   0.8160   0.7351   0.6534   0.5861       10        9        9        8
----------------------------------------------------------------------------------------------------------------
1402............  Cardiac
                  M>38.55 and M<48.85...   1.1038   0.9944   0.8839   0.7928       12       13       12       11
----------------------------------------------------------------------------------------------------------------
1403............  Cardiac
                  M>31.15 and M<38.55...   1.3705   1.2347   1.0975   0.9844       16       16       14       13
----------------------------------------------------------------------------------------------------------------
1404............  Cardiac
                  M<31.15...............   1.7370   1.5649   1.3910   1.2477       21       20       18       16
----------------------------------------------------------------------------------------------------------------
1501............  Pulmonary
                  M>49.25...............   0.9986   0.8870   0.7793   0.7399       11       13       10       10
----------------------------------------------------------------------------------------------------------------
1502............  Pulmonary
                  M>39.05 and M<49.25...   1.2661   1.1246   0.9880   0.9381       13       15       12       12
----------------------------------------------------------------------------------------------------------------
1503............  Pulmonary
                  M>29.15 and M<39.05...   1.5457   1.3730   1.2062   1.1453       16       16       15       15
----------------------------------------------------------------------------------------------------------------
1504............  Pulmonary
                  M<29.15...............   2.0216   1.7957   1.5775   1.4979       26       21       20       18
----------------------------------------------------------------------------------------------------------------
1601............  Pain syndrome
                  M>37.15...............   1.0070   0.8550   0.7774   0.6957       12       11       10       10
----------------------------------------------------------------------------------------------------------------
1602............  Pain syndrome
                  M>26.75 and M<37.15...   1.3826   1.1739   1.0673   0.9552       15       17       14       13
----------------------------------------------------------------------------------------------------------------
1603............  Pain syndrome
                  M<26.75...............   1.7025   1.4455   1.3143   1.1762       19       19       18       16
----------------------------------------------------------------------------------------------------------------
1701............  Major multiple trauma
                   without brain or
                   spinal cord injury
                  M>39.25...............   0.9818   0.9641   0.8479   0.7368       12       12       11       10
----------------------------------------------------------------------------------------------------------------
1702............  Major multiple trauma
                   without brain or
                   spinal cord injury
                  M>31.05 and M<39.25...   1.2921   1.2688   1.1158   0.9696       14       16       15       13
----------------------------------------------------------------------------------------------------------------
1703............  Major multiple trauma
                   without brain or
                   spinal cord injury
                  M>25.55 and M<31.05...   1.5356   1.5080   1.3262   1.1524       17       20       18       16
----------------------------------------------------------------------------------------------------------------
1704............  Major multiple trauma
                   without brain or
                   spinal cord injury
                  M<25.55...............   1.9246   1.8899   1.6620   1.4443       26       26       22       19
----------------------------------------------------------------------------------------------------------------
1801............  Major multiple trauma
                   with brain or spinal
                   cord injury
                  M>40.85...............   1.1920   0.9866   0.8243   0.7342       15       13       13       10
----------------------------------------------------------------------------------------------------------------
1802............  Major multiple trauma
                   with brain or spinal
                   cord injury
                  M>23.05 and M<40.85...   1.9058   1.5774   1.3179   1.1738       19       21       18       16
----------------------------------------------------------------------------------------------------------------
1803............  Major multiple trauma
                   with brain or spinal
                   cord injury
                  M<23.05...............   3.4302   2.8391   2.3721   2.1127       43       33       30       27
----------------------------------------------------------------------------------------------------------------

[[Page 44297]]

 
1901............  Guillian Barre
                  M>35.95...............   1.2399   1.0986   1.0965   0.9350       14       13       14       12
----------------------------------------------------------------------------------------------------------------
1902............  Guillian Barre
                  M>18.05 and M<35.95...   2.3194   2.0552   2.0512   1.7491       27       25       25       23
----------------------------------------------------------------------------------------------------------------
1903............  Guillian Barre
                  M<18.05...............   3.3464   2.9651   2.9593   2.5235       37       39       31       33
----------------------------------------------------------------------------------------------------------------
2001............  Miscellaneous
                  M>49.15...............   0.8734   0.7381   0.6735   0.6084       10       10        9        8
----------------------------------------------------------------------------------------------------------------
2002............  Miscellaneous
                  M>38.75 and M<49.15...   1.1447   0.9674   0.8827   0.7975       12       13       12       11
----------------------------------------------------------------------------------------------------------------
2003............  Miscellaneous
                  M>27.85 and M<38.75...   1.4777   1.2488   1.1395   1.0294       16       16       15       14
----------------------------------------------------------------------------------------------------------------
2004............  Miscellaneous
                  M<27.85...............   1.9716   1.6662   1.5204   1.3735       25       22       20       18
----------------------------------------------------------------------------------------------------------------
2101............  Burns
                  M>0...................   2.1842   2.1842   1.6606   1.4587       27       24       20       17
----------------------------------------------------------------------------------------------------------------
5001............  Short-stay cases,       .......  .......  .......   0.2201  .......  .......  .......        2
                   length of stay is 3
                   days or fewer.
----------------------------------------------------------------------------------------------------------------
5101............  Expired, orthopedic,    .......  .......  .......   0.6351  .......  .......  .......        8
                   length of stay is 13
                   days or fewer.
----------------------------------------------------------------------------------------------------------------
5102............  Expired, orthopedic,    .......  .......  .......   1.5985  .......  .......  .......       22
                   length of stay is 14
                   days or more.
----------------------------------------------------------------------------------------------------------------
5103............  Expired, not            .......  .......  .......   0.7203  .......  .......  .......        8
                   orthopedic, length of
                   stay is 15 days or
                   fewer.
----------------------------------------------------------------------------------------------------------------
5104............  Expired, not            .......  .......  .......   1.8784  .......  .......  .......       24
                   orthopedic, length of
                   stay is 16 days or
                   more.
----------------------------------------------------------------------------------------------------------------

VI. FY 2008 IRF PPS Federal Prospective Payment Rates

A. 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 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 final 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 propose to make any changes to the data source in the proposed 
rule. This final rule's estimated FY 2008 IRF market basket increase 
factor and labor-related share is 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 final rule, the FY 2008 IRF market basket 
increase factor is 3.2 percent. This is based on Global Insight, Inc.'s 
(GII) forecast of price proxies for the second quarter of 2007 (2007Q2) 
with historical data through the first quarter of 2007 (2007Q1).
    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. 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, inpatient psychiatric hospitals, 
and long-term care hospitals 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

[[Page 44298]]

methodology discussed in the FY 2006 IRF PPS final rule. As shown in 
Table 2, the total FY 2008 RPL labor-related share is 75.818 percent in 
this final rule.

      Table 2.--FY 2008 IRF Labor-Related Share Relative Importance
------------------------------------------------------------------------
                                                           FY 2008 IRF
                                                          labor-related
                     Cost category                          relative
                                                           importance
------------------------------------------------------------------------
Wages and salaries....................................            52.640
Employee benefits.....................................            14.125
Professional fees.....................................             2.907
All other labor intensive services....................             2.144
                                                       -----------------
    Subtotal..........................................            71.816
Labor-related share of capital costs..................             4.002
                                                       -----------------
    Total.............................................            75.818
------------------------------------------------------------------------
Source: Global Insight, Inc, 2nd Qtr, 2007; @USMACRO/CONTROL0507@CISSIM/
  TL0507.SIM, Historical Data through 1st QTR, 2007.

    We received two comments on the proposed FY 2008 IRF PPS market 
basket and labor-related share, which are summarized below.
    Comment: One commenter requested that the IRF PPS market basket 
adjustments be calculated using more current market basket data, 
stating that the inflation factors for FY 2008 are based upon data that 
are 5 years old (FY 2002). The commenter suggested that this may result 
in an underestimation of the labor cost inflation experienced by IRFs.
    Response: We disagree with the comment that the inflation factors 
used in the market basket are based upon data that are 5 years old. To 
derive the IRF market basket, we use FY 2002 data to derive the 
relative cost weights for the base year. While these cost weights 
remain fixed until the market basket is rebased to a new base year, 
data for the respective price proxies are frequently updated to reflect 
more recent data as they become available. The final IRF market basket 
update for FY 2008 is based on GII's forecast for the second quarter of 
2007 (2007Q2). This forecast reflects historical data for the various 
inflation factors through the first quarter of 2007 (2007Q1).
    Comment: Several commenters expressed concern about the methodology 
for computing the labor-related share. One commenter requested that we 
begin updating the labor-related share on an annual basis in FY 2009 
using the most recent available data. The commenter stated that the 
current calculation of the labor-related share is based on 2002 data 
and expressed concern that this time lag is distorting actual labor 
cost trends being experienced by IRFs. Another commenter said that the 
methodology does not adequately reflect the difficulty IRFs have in 
recruiting a skilled labor force.
    Response: We disagree with the commenters' view that the 
methodology does not reflect accurate labor-related costs for IRFs. The 
FY 2008 labor-related share is calculated as the sum of the relative 
importance of those costs that are related to, influenced by, or vary 
with the local labor market. This includes wages and salaries, fringe 
benefits, professional fees, labor-intensive services, and a portion of 
capital costs. We calculate this share based on the cost weights 
associated with the 2002-based RPL market basket, which is constructed 
using Medicare Cost Reports submitted by IRFs.
    Further, we believe these weights adequately reflect the current 
cost structures of Medicare-participating IRFs given our methodology 
for calculating the labor-related relative importance for FY 2008. 
First, we compute the FY 2008 price index level for the total market 
basket and each cost category of the market basket. Second, we 
calculate a ratio for each cost category by dividing the FY 2008 price 
index level for that cost category by the total market basket price 
index level. Third, we determine the FY 2008 relative importance for 
each cost category by multiplying this ratio by the base year (FY 2002) 
weight. Finally, we sum the FY 2008 relative importance for each of the 
labor-related categories to produce the FY 2008 labor-related relative 
importance.
    The price proxies that move the different cost categories in the 
market basket do not necessarily change at the same rate, and the 
relative importance captures these changes. Accordingly, the relative 
importance figure more closely reflects the cost share weights for FY 
2008 when compared to the base year weights from the 2002-based RPL 
market basket. We revised and rebased the market basket and labor-
related share in FY 2006 and expect to conduct additional updates on a 
regular basis.
    Final Decision: We will continue to update the IRF PPS payment 
rates using our current methodology, which reflects the most recent 
available data. For this final rule, the FY 2008 IRF market basket 
increase factor is 3.2 percent and the labor-related share is 75.818 
percent. This is based on GII's forecast for the second quarter of 2007 
(2007Q2) with historical data through the first quarter of 2007 
(2007Q1).

B. 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 will 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 final rule continues to use the 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 1-year transition with a blended wage index for all 
providers. For FY 2006, the

[[Page 44299]]

wage index for each provider consisted of a blend of 50 percent of the 
FY 2006 metropolitan statistical area (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 
1-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 final rule.
    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 final rule, we are revising 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 
updatable 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 are finalizing the use of 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 this 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. 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 
critical access hospital, that does not submit the appropriate wage 
data), and 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 will continue using the most recent wage 
index previously available for Puerto Rico; that is, a wage index of 
0.4047.
    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 of 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 
final rule, we are clarifying 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 final rule, we multiply the unadjusted Federal 
prospective payment by the FY 2008 RPL labor-related share (75.818 
percent) to determine the labor-related portion of the Federal 
prospective payments. We then multiply this labor-related portion by 
the applicable 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 Sec.  
412.624(e)(1), and described in the steps below. We use the following 
steps to ensure that the FY 2008 IRF standard payment conversion factor 
reflects the update to the wage indexes (based on the FY 2003 pre-
reclassified and pre-floor hospital wage data) and the 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 FY 2008 
labor-related share and 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 1.0028.
    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

[[Page 44300]]

application of the estimated market basket update to determine the FY 
2008 standard payment conversion factor.
    We received a few comments on the proposed IRF PPS wage index, 
which are summarized below.
    Comment: A few commenters recommended that we revise the urban IRF 
PPS wage index policies to stabilize the wage index from one year to 
the next. The commenters stated that the FY 2008 IRF PPS proposed wage 
indexes would be lower than other IRFs or acute care hospitals in their 
local market area. In addition, the variability of the wage index from 
one year to the next causes unpredictable annual revenue swings that 
make it difficult to retain staff. Thus, it is difficult for these IRFs 
to compete for healthcare personnel in the same market area as other 
local IRFs and acute care hospitals. The wage index recommendations 
varied from a general change to the urban wage index to specific 
criteria an IRF must meet in order to qualify for the commenter's 
recommended wage index policy.
    We also received a few public comments that recommend that we 
consider wage index policies under the acute IPPS because IRFs compete 
in a similar labor pool as acute care hospitals. The IPPS wage index 
policies would allow IRFs to benefit from the IPPS reclassification 
and/or floor policies. (A discussion of the IPPS reclassification and 
floor policies may be found on our Web site at http://www.cms.hhs.gov/AcuteInpatientPPS/01_overview.asp.)
    In addition, commenters recommended that we conduct further 
analysis and discussions with the industry regarding alternative wage 
index methodologies that would minimize fluctuations in the wage index 
and better reflect the costs of IRF labor in the market areas.
    Response: For FY 2008, we proposed a revision to our methodology to 
determine a proxy for rural areas without hospital wage data. This 
proxy would be applied to rural geographic areas in a State where there 
is no hospital wage data. We did not propose changes in the IRF PPS 
methodology for urban areas with available hospital wage data nor did 
we propose to revise our current wage index policies to adopt the 
reclassification or floor provisions used in the IPPS. For this reason, 
we are not making changes at this time to wage index policies beyond 
what we discussed in the FY 2008 IRF PPS proposed rule (72 FR 26230).
    A few commenters recommended alternative approaches to the IRF PPS 
wage index that we would like to further analyze and may consider in 
the future. For example, we received recommendations ranging from a 
general change to the urban wage index and wage data to specific 
criteria an IRF must meet in order to qualify for the commenter's 
recommended wage index policy. We met in 2006 and 2007 with industry 
representatives that recommended several different approaches to the 
IRF PPS wage index that they believe would minimize the shifts in the 
wage index from one year to the next. However, we agree with the 
commenters that urged us to conduct further analysis. For this reason, 
we believe that it is prudent to refrain from acting on these 
recommendations at this time so that we can consider, if appropriate, 
these recommended approaches and provide the public the opportunity in 
future rulemaking to evaluate and comment upon any alternatives we may 
propose.
    We reviewed Medicare Payment Advisory Commission's (MedPAC) wage 
index recommendations as discussed in MedPAC's June 2007 report titled, 
``Report to Congress: Promoting Greater Efficiency in Medicare.'' 
Although some commenters recommend that we adopt the IPPS wage index 
policies such as reclassification and floor policies, we note that 
MedPAC's June 2007 report to Congress recommends that Congress ``repeal 
the existing hospital wage index statute, including reclassification 
and exceptions, and give the Secretary authority to establish new wage 
index systems.'' We believe that adopting the IPPS wage index policies, 
such as reclassification or floor, would not be prudent at this time 
because MedPAC suggests that the reclassification and exception 
policies in the IPPS wage index alters the wage index values for one-
third of IPPS hospitals. In addition, MedPAC found that the exceptions 
may lead to anomalies in the wage index. By adopting the IPPS 
reclassification and exceptions at this time, the IRF PPS wage index 
may be vulnerable to similar issues that MedPAC identified in their 
June 2007 Report to Congress. However, we will continue to review and 
consider MedPAC's recommendations on a refined or an alternative wage 
index methodology for the IRF PPS in future years.
    Therefore, we will only revise the methodology for computing a wage 
index for rural areas without hospital wage data by computing an 
average wage index from all contiguous CBSAs to represent a reasonable 
proxy for the rural area within a State (as discussed above). We may 
consider the commenters' recommended alternative wage index policies 
and methodology in the future.
    Comment: We received a comment that supports the expiration of the 
hold-harmless policy implemented in FY 2006 for IRFs that were rural in 
FY 2005 and became urban based on the CBSAs. Specifically, the budget 
neutral hold harmless policy established in the FY 2006 final rule will 
expire for discharges occurring on or after October 1, 2007.
    Response: As discussed above and in the FY 2006 IRF PPS final rule 
(70 FR 47880), the hold harmless policy was implemented in FY 2006 and, 
as recommended by the commenter, will expire for discharges occurring 
on or after October 1, 2007.
    Final Decision: Although we solicited public comments on revising 
the wage index for rural areas without hospital wage data, we did not 
receive any comments regarding the use of an imputed wage index for 
rural areas without wage data within a State. Therefore, we proposed 
and will finalize in this rule the methodology for computing a wage 
index for rural areas without hospital wage data by computing an 
average wage index from all contiguous CBSAs to represent a reasonable 
proxy for the rural area within a State (as discussed above), as 
proposed in the FY 2008 proposed rule. In addition, the wage index 
tables for the IRF PPS in this and all subsequent IRF PPS rules and 
notices are considered to incorporate the CBSA changes published in the 
most recent OMB bulletin (see Web site at http://www.whitehouse.gov/omb/bulletins/index.html) that applies to the hospital wage data used 
to determine the current IRF PPS wage index.

C. Description of the IRF Standard Payment Conversion Factor and 
Payment Rates for FY 2008

    To calculate the standard payment conversion factor for FY 2008 and 
as illustrated in Table 3 below, we begin by applying the estimated 
market basket increase factor (3.2 percent) to the standard payment 
conversion factor for FY 2007 ($12,981), which equals $13,396. We then 
apply the combined budget neutrality factor for the wage index and 
labor related share and final year of the hold harmless policy of 
1.0041 (1.0028 * 1.0013 = 1.0041), which would result in a standard 
payment conversion factor of $13,451.

[[Page 44301]]



    Table 3.--Calculations To Determine the FY 2008 Standard Payment
                            Conversion Factor
------------------------------------------------------------------------
               Explanation for adjustment                  Calculations
------------------------------------------------------------------------
FY 2007 Standard Payment Conversion Factor..............          12,981
FY 2008 Market Basket Increase Factor...................         x 1.032
Subtotal................................................        = 13,396
Budget Neutrality Factor for the Wage Index, Labor-             x 1.0041
 Related Share, and the Hold Harmless Provision.........
FY 2008 Standard Payment Conversion Factor..............       = $13,451
------------------------------------------------------------------------

    After the application of the relative weights, the resulting 
unadjusted IRF prospective payment rates for FY 2008 are shown below in 
Table 4, ``FY 2008 Payment Rates.''

                                         Table 4.--FY 2008 Payment Rates
----------------------------------------------------------------------------------------------------------------
                                            Payment rate      Payment rate      Payment rate     Payment rate no
                   CMG                         tier 1            tier 2            tier 3          comorbidity
----------------------------------------------------------------------------------------------------------------
0101....................................        $10,366.69         $9,823.27         $8,840.00         $8,537.35
0102....................................         12,769.03         12,099.17         10,888.58         10,515.99
0103....................................         15,054.36         14,264.79         12,837.63         12,399.13
0104....................................         15,986.51         15,145.83         13,631.24         13,164.49
0105....................................         19,182.47         18,174.99         16,357.76         15,798.20
0106....................................         22,320.59         21,147.66         19,033.17         18,382.14
0107....................................         25,758.67         24,406.84         21,965.48         21,213.57
0108....................................         29,807.42         28,243.06         25,418.35         24,548.08
0109....................................         29,589.51         28,035.92         25,231.39         24,367.83
0110....................................         35,358.64         33,502.41         30,151.76         29,120.07
0201....................................         10,953.15          9,154.75          8,178.21          7,595.78
0202....................................         14,069.75         11,760.21         10,505.23          9,757.36
0203....................................         16,817.79         14,056.30         12,556.51         11,663.36
0204....................................         18,010.89         15,054.36         13,448.31         12,491.94
0205....................................         22,075.78         18,452.08         16,482.86         15,309.93
0206....................................         28,845.67         24,109.57         21,536.40         20,005.67
0207....................................         37,210.85         31,101.40         27,783.04         25,805.74
0301....................................         15,326.07         12,822.84         11,503.30         10,454.12
0302....................................         20,008.36         16,741.11         15,016.70         13,648.73
0303....................................         23,809.62         19,920.93         17,869.65         16,240.74
0304....................................         32,813.71         27,453.49         24,627.44         22,382.46
0401....................................         12,895.47         11,374.17         10,386.86          9,224.70
0402....................................         17,830.65         15,725.56         14,360.29         12,754.24
0403....................................         31,030.11         27,368.75         24,991.96         22,196.84
0404....................................         55,878.14         49,283.12         45,004.36         39,972.34
0405....................................         42,197.13         37,216.23         33,985.30         30,185.39
0501....................................         10,287.32          8,682.62          7,649.58          6,821.00
0502....................................         13,803.42         11,649.91         10,263.11          9,152.06
0503....................................         18,287.98         15,436.37         13,597.62         12,124.73
0504....................................         22,845.18         19,282.01         16,985.92         15,145.83
0505....................................         27,132.01         22,900.33         20,172.46         17,988.02
0506....................................         36,858.43         31,109.47         27,405.07         24,436.43
0601....................................         12,093.79          9,859.58          9,441.26          8,772.74
0602....................................         16,098.16         13,124.14         12,565.92         11,678.16
0603....................................         20,615.00         16,807.02         16,094.12         14,954.82
0604....................................         26,353.20         21,485.28         20,573.30         19,117.91
0701....................................         12,143.56         10,380.14          9,870.34          8,900.53
0702....................................         15,786.09         13,495.39         12,830.91         11,570.55
0703....................................         19,677.47         16,821.82         15,993.24         14,422.16
0704....................................         24,170.10         20,662.08         19,645.19         17,714.97
0801....................................          8,792.92          7,403.43          6,901.71          6,196.88
0802....................................         11,489.84          9,675.30          9,017.55          8,097.50
0803....................................         17,092.19         14,392.57         13,416.03         12,046.72
0804....................................         14,849.90         12,504.05         11,655.29         10,466.22
0805....................................         18,733.21         15,773.99         14,703.29         13,203.50
0806....................................         22,494.11         18,941.70         17,655.78         15,854.69
0901....................................         11,332.47         10,277.91          9,238.15          8,232.01
0902....................................         14,914.47         13,527.67         12,158.36         10,836.13
0903....................................         19,689.57         17,858.89         16,052.42         14,305.14
0904....................................         24,670.48         22,377.08         20,111.94         17,923.46
1001....................................         12,946.59         11,943.14         10,702.96          9,901.28
1002....................................         17,094.88         15,769.95         14,132.97         13,073.03
1003....................................         24,045.01         22,182.04         19,879.23         18,388.86
1101....................................         16,886.39         14,099.34         12,408.55         11,427.97

[[Page 44302]]

 
1102....................................         25,320.16         21,140.94         18,605.42         17,135.23
1201....................................         13,689.08         11,816.70         11,005.61          9,960.47
1202....................................         17,712.28         15,289.75         14,239.23         12,887.40
1203....................................         21,845.77         18,858.30         17,562.97         15,895.05
1301....................................         13,927.17         12,961.38         11,448.15          9,992.75
1302....................................         19,263.18         17,926.15         15,834.52         13,820.90
1303....................................         24,548.08         22,845.18         20,179.19         17,612.74
1401....................................         10,976.02          9,887.83          8,788.88          7,883.63
1402....................................         14,847.21         13,375.67         11,889.34         10,663.95
1403....................................         18,434.60         16,607.95         14,762.47         13,241.16
1404....................................         23,364.39         21,049.47         18,710.34         16,782.81
1501....................................         13,432.17         11,931.04         10,482.36          9,952.39
1502....................................         17,030.31         15,126.99         13,289.59         12,618.38
1503....................................         20,791.21         18,468.22         16,224.60         15,405.43
1504....................................         27,192.54         24,153.96         21,218.95         20,148.25
1601....................................         13,545.16         11,500.61         10,456.81          9,357.86
1602....................................         18,597.35         15,790.13         14,356.25         12,848.40
1603....................................         22,900.33         19,443.42         17,678.65         15,821.07
1701....................................         13,206.19         12,968.11         11,405.10          9,910.70
1702....................................         17,380.04         17,066.63         15,008.63         13,042.09
1703....................................         20,655.36         20,284.11         17,838.72         15,500.93
1704....................................         25,887.79         25,421.04         22,355.56         19,427.28
1801....................................         16,033.59         13,270.76         11,087.66          9,875.72
1802....................................         25,634.92         21,217.61         17,727.07         15,788.78
1803....................................         46,139.62         38,188.73         31,907.12         28,417.93
1901....................................         16,677.89         14,777.27         14,749.02         12,576.69
1902....................................         31,198.25         27,644.50         27,590.69         23,527.14
1903....................................         45,012.43         39,883.56         39,805.54         33,943.60
2001....................................         11,748.10          9,928.18          9,059.25          8,183.59
2002....................................         15,397.36         13,012.50         11,873.20         10,727.17
2003....................................         19,876.54         16,797.61         15,327.41         13,846.46
2004....................................         26,519.99         22,412.06         20,450.90         18,474.95
2101....................................         29,379.67         29,379.67         22,336.73         19,620.97
5001....................................              0.00              0.00              0.00          2,960.57
5101....................................              0.00              0.00              0.00          8,542.73
5102....................................              0.00              0.00              0.00         21,501.42
5103....................................              0.00              0.00              0.00          9,688.76
5104....................................              0.00              0.00              0.00         25,266.36
----------------------------------------------------------------------------------------------------------------

D. Example of the Methodology for Adjusting the Federal Prospective 
Payment Rates

    Table 5 illustrates the methodology for adjusting the Federal 
prospective payments (as described in sections VI.A through VI.C of 
this final 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 
(75.818) described in section VI.A of this final rule 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 
adjusted payment calculation.

[[Page 44303]]



                   Table 5.--Example of Computing an IRF's FY 2008 Federal Prospective Payment
----------------------------------------------------------------------------------------------------------------
                                                                              Rural Facility A  Urban Facility B
             Steps                                                              (Spencer Co.,    (Harrison Co.,
                                                                                     IN)               IN)
----------------------------------------------------------------------------------------------------------------
1..............................  Unadjusted Federal Prospective Payment.....        $29,120.07        $29,120.07
2..............................  Labor Share................................         x 0.75818         x 0.75818
3..............................  Labor Portion of Federal Payment...........      = $22,078.25      = $22,078.25
4..............................  CBSA Based Wage Index (shown in the                  x 0.8538          x 0.9118
                                  Addendum, Tables 1 and 2).
5..............................  Wage-Adjusted Amount.......................      = $18,850.41      = $20,130.95
6..............................  Non-labor Amount...........................       + $7,041.82       + $7,041.82
7..............................  Wage-Adjusted Federal Payment..............      = $25,892.23      = $27,172.77
8..............................  Rural Adjustment...........................           x 1.213           x 1.000
9..............................  Wage- and Rural-Adjusted Federal Payment...      = $31,407.27      = $27,172.77
10.............................  LIP Adjustment.............................          x 1.0309          x 1.0910
11.............................  FY2007 Wage-, Rural- and LIP-Adjusted            = $32,377.76      = $29,645.49
                                  Federal Prospective Payment Rate.
12.............................  FY2007 Wage- and Rural-Adjusted Federal            $31,407.27        $27,172.77
                                  Prospective Payment.
13.............................  Teaching Status Adjustment.................           x 0.000           x 0.109
14.............................  Teaching Status Adjustment Amount..........           = $0.00       = $2,961.83
15.............................  FY2007 Wage-, Rural-, and LIP-Adjusted           + $32,377.76      + $29,645.49
                                  Federal Prospective Payment Rate.
16.............................  Total FY2007 Adjusted Federal Prospective        = $32,377.76      = $32,607.32
                                  Payment.
----------------------------------------------------------------------------------------------------------------

    Thus, the adjusted payment for Facility A would be $32,377.76 and 
the adjusted payment for Facility B would be $32,607.32.

VII. Update to Payments for High-Cost Outliers Under the IRF PPS

A. 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, 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 final rule, we performed an updated analysis of FY 2006 
claims and IRF-PAI data using the same methodology that 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 that we used to update the outlier threshold amounts 
for FYs 2006 and 2007. Using the updated FY 2006 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 3.7 percent using the updated FY 2006 data.
    Based on the updated analysis using FY 2006 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 are 
updating the outlier threshold amount to $7,362 to decrease estimated 
outlier payments from approximately 3.7 to 3 percent of total estimated 
aggregate IRF payments for FY 2008.

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 are updating the national urban and rural CCRs for IRFs. 
We apply the national urban and rural CCRs in the following situations:
    <bullet> New IRFs that have not yet submitted their first Medicare 
cost report.
    <bullet> IRFs whose overall CCR is in excess of 3 standard 
deviations above the corresponding national geometric mean, which is 
set at 1.56 for FY 2008.
    <bullet> Other IRFs for whom accurate data with which to calculate 
an overall CCR are not available.
    Specifically, for FY 2008, we estimate a national CCR of 0.596 for 
rural IRFs and 0.476 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.

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

[[Page 44304]]

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 Sec.  412.624(e)(5), which 
in turn references Sec.  412.84(i) and Sec.  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 that 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.
    We received several comments on the proposed high-cost outliers 
under the IRF PPS, which are summarized below.
    Comment: One commenter suggested that CMS adopt a new methodology 
for modeling charge increases and cost-to-charge ratio (CCR) changes in 
estimating the outlier threshold amount, similar to the methodology 
implemented for IPPS hospitals in the FY 2007 IPPS final rule (71 FR 
47870, 48150 through 48151).
    Response: In response to the comment, we considered adopting the 
same methodology described in the FY 2007 IPPS final rule (71 FR 47870, 
48150 through 48151) for projecting cost and charge growth in 
estimating the FY 2008 IRF outlier threshold amount. However, we 
discovered that the accuracy of the projections depends on the case mix 
of patients in the facilities remaining similar from year to year, as 
it does in IPPS hospitals. However, with the recent phase in of the 
enforcement of the 75 percent rule criteria, we find evidence of 
relatively large changes in the case mix of patients in IRFs, 
especially in the years immediately following the reinstatement of 
enforcement of the 75 percent rule (FYs 2004 through 2006). In 
performing our analysis, we discovered that we could get inaccurate 
results if we based future projections of cost and charge growth on 
data from years in which IRFs were experiencing abnormal fluctuations 
in case mix. Rather than implementing an outlier threshold amount for 
FY 2008 based on these potentially inaccurate results, we thought a 
better approach would be to wait until we could further analyze the 
interactions between case mix changes and IRF cost and charge growth. 
Our analysis of the data suggests that it is likely better to wait 
until the 75 percent rule has been fully phased in, and the IRF case 
mix has stabilized, before we attempt to project cost and charge growth 
using a new methodology. Otherwise, the substantial changes occurring 
in the system all at the same time, including changes in IRFs' charges, 
costs, and case mix, could compromise the accuracy of our results. For 
the reasons described above, our analysis shows that using the same 
methodology we used previously for updating the outlier threshold 
amount for FY 2008 is the best approach at this time. However, we will 
carefully consider the commenter's suggestions as we investigate 
alternative approaches for projecting IRF cost and charge growth in 
estimating future updates to the IRF outlier threshold amount.
    Comment: One commenter requested that we use updated FY 2006 data 
to estimate the IRF outlier threshold amount for FY 2008, because the 
FY 2006 data better reflect changes in the volume of IRF cases due to 
the 75 percent rule.
    Response: We agree with the commenter and we have updated our 
analysis for this final rule based on FY 2006 data using the same 
methodology that was described in the August 7, 2001 final rule (66 FR 
41316), which was the same methodology used to calculate the proposed 
outlier threshold for the FY 2008 proposed rule (72 FR 26250).
    Comment: In the proposed rule, we indicated that we would 
investigate the reasons for our finding that estimated FY 2007 outlier 
payments increased from 3.0 to 3.8 percent of total estimated payments 
when we updated the claims data used in the calculations from FY 2004 
to FY 2005. Two commenters requested that we report the findings of our 
analysis and our rationale for increasing the outlier threshold amount 
in this final rule.
    Response: Our analysis of the increase in estimated FY 2007 outlier 
payments using the updated FY 2005 claims data (compared with the FY 
2004 claims data) shows that the increase was caused primarily by 
increases in IRF charges and cost-to-charge ratios (CCRs) between FY 
2004 and FY 2005. As discussed above in section VII.C of this final 
rule, we are continuing to examine these changes closely to assess 
whether they indicate the presence of specific payment vulnerabilities 
in the IRF outlier payment policy. This is ongoing research, but we 
have already discovered large variations in charges and CCRs among IRFs 
from year to year since the implementation of the IRF PPS that we 
believe may be indicative of specific payment vulnerabilities in the 
IRF PPS outlier payment policy.
    For this final rule, we used updated FY 2006 IRF claims data to 
analyze IRF outliers. Similar to the findings from the FY 2005 data, 
the FY 2006 data show that estimated IRF outlier payments would equal 
3.7 percent of total estimated payments in FY 2007. Thus, based on the 
analysis of both the FYs 2005 and 2006 data, we believe that continuing 
to use the same outlier threshold amount for FY 2008 that we 
implemented for FY 2007 would result in an overpayment of IRF outlier 
payments, above the 3 percent outlier pool that we established when we 
first implemented the IRF PPS. For this reason, we are finalizing our 
decision to update the IRF outlier threshold amount for FY 2008 to 
$7,362, based on analysis of FY 2006 data.
    Comment: Two commenters supported the proposed change to the IRF 
outlier threshold amount for FY 2008 to maintain estimated outlier 
payments at 3 percent of total estimated payments. One commenter 
indicated that the outlier threshold amount may have been set too low 
in FYs 2006 and 2007, which they said may have meant that the standard 
payment conversion factor in these years was also too low.
    Response: We agree with these commenters that it is important to 
adjust the outlier threshold amount to maintain estimated outlier 
payments at 3 percent of total estimated payments for FY 2008. However, 
our calculation of the outlier threshold amount for a given FY has no 
effect on the amount of the standard payment conversion factor for that 
FY. Therefore, we disagree that the standard payment conversion factor 
was too low in FYs 2006 and 2007.
    Comment: One commenter requested that CMS provide additional data 
and information to the public to allow the IRF industry and external 
researchers to conduct a more thorough review of CMS's proposed updates 
to the outlier threshold amount. Specifically, the commenter asked that 
we provide information on IRF charges and CCRs, a discussion of the 
data sources and time periods used in computing the outlier threshold, 
an IRF Medpar file (including total payments, outlier payments, and 
actual, estimated, and proposed CMGs), historical information on IRF 
facility-level payment factors (specifically

[[Page 44305]]

CCRs), and actual levels and percentages of outlier payments.
    Response: We will carefully consider all of the commenter's 
suggestions in updating the IRF rate setting files that we post on the 
IRF PPS Web site in conjunction with each IRF PPS proposed and final 
rule. These files are available for download from the IRF PPS Web site 
at http://www.cms.hhs.gov/InpatientRehabFacPPS/07_DataFiles.asp. These 
files already contain much of the facility-level payment data requested 
by the commenter, including the CCRs used to compute the IRF outlier 
threshold amount. For this final rule, we used FY 2006 IRF claims data, 
merged with FY 2006 IRF-PAI data, to conduct patient-level payment 
simulations to estimate the outlier threshold amount for FY 2008. This 
data file contains information that can be used to identify individual 
Medicare beneficiaries and is therefore not publicly available. We 
obtained the provider-level CCR data used in this analysis from the 
Provider-Specific Files, which contain historical CCR data and are 
available for download from the CMS Web site at http://www.cms.hhs.gov/ProspMedicareFeeSvcPmtGen/03_psf.asp.
    The modified Medpar data files that CMS provides to IPPS hospitals 
already contain IRF stay data. However, we have recently discovered 
that these files do not include the CMGs, and we recognize that there 
may be other limitations to the usefulness of these files for analyzing 
IRF payments. Based on the commenter's request, we will carefully 
consider the usefulness and feasibility of including additional 
variables on the Medpar file in the future to facilitate IRF analyses.
    Comment: One commenter recommended that CMS consider placing a 10 
percent upper limit on the amount of an IRF's outlier payments (as a 
percentage of total payments) to encourage IRFs to strengthen their 
management of cases that might become high-cost outlier cases. In 
addition, the commenter requested that CMS incorporate any unused funds 
from the 3 percent IRF outlier pool back into the IRF base rate to 
increase payments for all IRF discharges.
    Response: We appreciate the commenter's suggestion to place a cap 
on an IRF's outlier payments, and will consider this approach in the 
future as we work to eliminate potential vulnerabilities in the IRF 
outlier payment policy. However, at this time, we believe that a better 
approach to mitigating the vulnerabilities in the IRF outlier payment 
methodology is to increase the accuracy of the IRF outlier payments. As 
discussed previously in section VII.C of this final rule, we will soon 
be issuing instructions to fiscal intermediaries to begin reconciling 
the IRF CCRs upon settlement of the cost reports. We believe that using 
the actual CCR computed from an IRF's cost report at the time the cost 
report is settled, rather than an older CCR, to compute the outlier 
payments on the discharges that coincide with that cost report will 
improve the accuracy of the outlier payment calculations. We expect 
that much of the variation in outlier payments (as a percentage of 
total payments) among IRFs will be reduced by this approach, because it 
will limit IRFs' ability to increase their outlier payments by 
increasing their charges.
    As discussed in the August 7, 2001 final rule (66 FR 41316, 41362 
through 41363), we believe that setting estimated outlier payments 
equal to 3 percent of total estimated payments effectively balances the 
need to encourage IRFs to continue admitting potential high-cost 
outlier cases, while simultaneously ensuring that adequate funds are 
available to reimburse IRFs for treating the non-high-cost outlier 
cases. As we discussed in response to comments that we received on the 
FY 2006 IRF PPS rule and other PPS rules, we do not make adjustments to 
IRF PPS payment rates to account for differences between the 3 percent 
target and actual outlier payments. (See 70 FR 47936 for the IRF PPS 
response and a list of the FRs addressing this issue for other PPS 
systems.) If outlier payments for a given year are higher than 3 
percent, we do not recoup money from IRFs. Similarly, if outlier 
payments in a given year are below 3 percent, we do not increase IRF 
PPS payments to account for this. We believe that this policy is 
consistent with the statute and with the goals of the prospective 
payment systems.
    Comment: Two commenters supported CMS's plan to instruct fiscal 
intermediaries to begin reconciling IRF outlier payments, in certain 
instances, upon settlement of the IRF cost reports. However, both 
commenters recommended that CMS limit the administrative burden of 
these reviews by conducting reconciliation on only those IRF providers 
whose outlier payments and cost-to-charge ratio fluctuations exceed 
certain thresholds, similar to the process for IPPS hospitals. 
Specifically, one commenter recommended that CMS structure the IRF 
outlier reconciliation policy so that it is similar to the 
reconciliation policies for IPPS and long-term care hospitals. In 
addition, one commenter suggested that CMS limit our reconciliation 
efforts to discharges that occurred on or after October 1, 2003, the 
effective date of recent improvements to the methodology for 
determining IRF outlier payments.
    Response: We agree with the commenters that we should conduct 
outlier reconciliation to address vulnerabilities in IRF outlier 
payments, and we also agree that we should apply the outlier 
reconciliation policies used in the IPPS and long-term care hospital 
settings as closely as possible. To this end, we have been working 
closely with the CMS components that develop the outlier reconciliation 
policies for these facilities. We also agree that focusing our outlier 
reconciliation efforts on those IRFs whose outlier payments and cost-
to-charge ratio fluctuations exceed certain thresholds, similar to the 
process for IPPS hospitals, would limit the administrative burden of 
the reconciliation process. We are in the process now of determining 
the appropriate thresholds to apply in the IRF setting, and will 
carefully consider the commenters' recommendations in this regard. We 
will issue the final thresholds in our instructions to the fiscal 
intermediaries. We will also consider the commenter's suggestions in 
deciding which years to review for outlier reconciliation.
    Final Decision: Based on a careful review of the comments that we 
received on the proposed update to the outlier threshold amount for FY 
2008 and based on updated analysis of the FY 2006 data, we are 
finalizing our decision to update the outlier threshold amount for FY 
2008 to $7,362. In addition, we did not receive any comments on the IRF 
cost-to-charge ratio ceilings and are finalizing the national average 
urban CCR at 0.476 and the national average rural CCR at 0.596. We are 
also finalizing our estimate of 3 standard deviations above the 
corresponding national geometric mean, at 1.56 for FY 2008.

VIII. Clarification to the Regulation Text for Special Payment 
Provisions for Patients That Are Transferred

    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

[[Page 44306]]

under Sec.  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 
revising our regulations text to clarify our existing policy under 
Sec.  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 Sec.  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 Sec.  412.23(e), or a nursing home that qualifies to 
receive Medicare or Medicaid payment. In order to receive a transfer 
payment under Sec.  412.624(f), a patient must be transferred to 
another site of care as defined in Sec.  412.602 and must have been 
admitted to the IRF for less than the average length of stay for the 
CMG. Table 1 in this final 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, a claim meets the high-
cost outlier policy under Sec.  412.624(e)(5), as revised in the FY 
2007 IRF PPS final rule (71 FR 48354, 48382 through 48383), if the 
estimated cost of the case exceeds the adjusted outlier threshold. For 
a case that qualifies, 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 proposed to clarify the 
regulations text to articulate the transfer policy more clearly. 
Specifically, we proposed to add the phrase ``subject to paragraph 
(e)(5)'' at the end of the paragraph under Sec.  412.624(f)(2)(v). We 
proposed to revise Sec.  412.624(f)(2)(v) to read, ``[B]y 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).''
    We received a couple comments on the proposed clarification to the 
regulation text for special payment provisions for patients that are 
transferred, which are summarized below.
    Comment: We received a comment supporting the revisions to the 
clarification to the regulation text for special payment provisions for 
patients that are transferred described above. Another commenter 
requested additional clarification to better understand the intent of 
the revision to the regulation text.
    Response: In the past, we have received questions from the public 
about whether an outlier payment applies to cases that are transferred 
to another site of care as defined in Sec.  412.602. As discussed in 
detail above in this section, we have provided an additional high-cost 
outlier payment to both transfer cases and full CMG cases when 
applicable. We reviewed Sec.  412.624(f) and believe that a minor 
revision to the regulation text would clarify the existing policy. As 
we emphasized in the proposed rule, the revision to the regulation text 
will not change our current methodology for determining whether a high-
cost outlier payment applies to transfer cases. Based on the comment, 
we believe the regulations text should be revised to make more clear 
that we will apply a high-cost outlier payment to a transfer case based 
on the methodology set forth in Sec.  412.624(e)(5), which we use to 
determine whether a high-cost outlier payment. Therefore, we will add 
the phrase to the end of Sec.  412.624(f)(2)(v) to read, ``and making 
an outlier payment in accordance with (e)(5), if applicable.''
    Final Decision: We are finalizing our change to the regulations 
text at Sec.  412.624(f)(2)(v) by revising the paragraph to read, 
``[B]y 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 and making an outlier payment in 
accordance with (e)(5), if applicable.''

IX. Miscellaneous Comments

    Comment: One commenter requested that CMS work to define more 
precisely the requirements for other post acute care providers, such as 
skilled nursing facilities and long-term care hospitals that also 
provide rehabilitation services.
    Response: Because this comment concerns the establishment of 
regulations for other Medicare post-acute care settings, the comment is 
outside the scope of this final rule. However, in the IRF PPS final 
rule for FY 2007 (71 FR 48354), we described our plans to explore 
refinements to the existing provider-oriented ``silos'' to create a 
more seamless system for payment and delivery of post-acute care (PAC) 
under Medicare. We expect that this new model will be characterized by 
more consistent payments for the same type of care across different 
sites of service, quality driven pay-for-performance incentives, and 
collection of uniform clinical assessment information to support 
quality and discharge planning functions. In the IRF PPS final rule for 
FY 2007 (71 FR 48354), we described how section 5008 of the DRA 
provides for a demonstration on uniform assessment and data collection 
across different sites of service. We are developing a standard, 
comprehensive assessment instrument to be completed at hospital 
discharge for use in the demonstration, which we expect to begin in 
2008. We expect that the demonstration will enable us to test the 
usefulness of this instrument, and analyze cost and outcomes across 
different PAC sites.
    Comment: A few commenters recommended that CMS implement additional 
refinements to the IRF PPS using more recent data that reflect changes 
in IRF case mix and volume occurring in response to the 75 percent rule 
compliance criteria and medical necessity reviews. Specifically, one 
commenter recommended changes to the IRF facility-level adjustments, 
including suggested revisions to CMS's methodology for determining the 
amount of the adjustments. A few commenters also suggested that CMS 
work with the IRF industry and researchers to develop an analytical 
framework for analyzing future payment adjustments to account for 
coding changes that do not reflect real changes in IRFs' case mix.
    Response: Since we did not propose any additional refinements to 
the IRF PPS for FY 2008, these comments are outside the scope of this 
final rule. However, we are currently analyzing the

[[Page 44307]]

FY 2006 data to determine whether any future revisions to the IRF PPS, 
including revisions to the facility-level adjustments and coding 
adjustments, would be appropriate. In conducting our analyses, we will 
carefully consider the suggestions offered by the commenters and will 
explore any new analytical frameworks that may be useful for developing 
future refinements.

X. Provisions of the Final Regulations

    In this final rule we are adopting the provisions as set forth in 
the May 8, 2007 proposed rule (72 FR 26230) except as noted elsewhere 
in the preamble with the following revisions:
    <bullet> We will 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 VI.B.
    <bullet> We will revise the wage index policy for rural areas 
without hospital wage data by imputing an average wage index from all 
contiguous CBSAs to represent a reasonable proxy for the rural area 
within a State, as discussed in section VI.B of this final rule.
    <bullet> We are updating the FY 2008 IRF PPS payment rates by the 
market basket (3.2 percent), as discussed in section VI.A of this final 
rule.
    <bullet> We are updating the FY 2008 IRF PPS payment rates by the 
labor-related share (75.818 percent), the wage indexes, and the final 
year of the hold harmless policy in a budget neutral manner, as 
discussed in sections VI of this final rule.
    <bullet> We are updating the outlier threshold amount for FY 2008 
to $7,362, as discussed in section VII.A in this final rule.
    <bullet> We are updating the urban and rural national cost-to-
charge ratio ceilings for purposes of determining outlier payments 
under the IRF PPS, as discussed in section VII.B in this final rule.
    <bullet> We are maintaining the comorbidity policy specified in 
Sec.  412.23(b)(2). Therefore, for cost reporting periods beginning on 
or after July 1, 2007, and before July 1, 2008, the compliance 
threshold remains 65 percent and we will continue to include 
comorbidities when calculating the compliance percentage. However, for 
cost reporting periods beginning on or after July 1, 2008, the 
compliance threshold will increase to 75 percent, but the comorbidities 
will not be used to determine if a provider met the 75 percent of the 
compliance threshold.
    <bullet> We are revising the regulation text at Sec.  
412.624(f)(2)(v) to clarify that we determine whether a high-cost 
outlier payment would be applicable for transfer cases.

XI. 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.

XII. Regulatory Impact Analysis

A. Overall Impact

    We have examined the impacts of this final 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 final 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, will 
be more than $100 million. We estimate that the total impact of these 
changes for estimated FY 2008 payments compared to estimated FY 2007 
payments will be an increase of approximately $150 million (this 
reflects a $195 million increase from the update to the payment rates 
and a $45 million decrease due to the update to the outlier threshold 
amount to decrease estimated outlier payments from approximately 3.7 
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 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 final 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 urban IRFs in the Mountain 
region and rural IRFs in the Middle Atlantic and East South Central 
regions). Thus, we anticipate that this final rule may have a 
significant impact on a substantial number of small entities. However, 
the estimated impact of this final rule is a net increase in revenues 
across all categories of IRFs, so we believe that this final rule will 
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 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 100 beds. As discussed in detail 
below, the rates and policies set forth in this final rule will not 
have an adverse impact on rural hospitals based on the data of the 198 
rural units and 20 rural hospitals in our database of 1,220 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

[[Page 44308]]

for inflation. That threshold level is currently approximately $120 
million. This final rule will not mandate any requirements for State, 
local, or tribal governments, nor will it affect private sector costs.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a 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 final rule will not have a substantial effect on State and 
local governments.

B. Anticipated Effects of the Final Rule

    We discuss below the impacts of this final rule on the budget and 
on IRFs.
1. Basis and Methodology of Estimates
    This final rule sets forth updates of the IRF PPS rates contained 
in the FY 2007 final rule, updates the outlier threshold for high-cost 
cases, and establishes an adjustment to the wage index methodology.
    Based on the above, we estimate that the FY 2008 impact will be a 
net increase of $150 million in payments to IRF providers (this 
reflects a $195 million estimated increase from the update to the 
payment rates and a $45 million estimated decrease due to the update to 
the outlier threshold amount to decrease the estimated outlier payments 
from approximately 3.7 percent in FY 2007 to 3 percent in FY 2008). The 
impact analysis in Table 6 of this final rule represents the projected 
effects of the policy changes in the IRF PPS for FY 2008 compared with 
estimated IRF PPS payments in FY 2007 without the 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 changes, and we do 
not make adjustments for future changes in such variables as number of 
discharges or case-mix.
    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 
will 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 are implementing a number of 
standard annual revisions and clarifications mentioned elsewhere in 
this final rule (for example, the update to the wage and market basket 
indexes used to adjust the Federal rates). We estimate that these 
revisions will increase payments to IRFs by approximately $195 million.
    The aggregate change in estimated payments associated with this 
final rule is estimated to be an increase in payments to IRFs of $150 
million for FY 2008. The market basket increase of $195 million and the 
$45 million decrease due to the update to the outlier threshold amount 
to decrease estimated outlier payments from approximately 3.7 percent 
in FY 2007 to 3.0 percent in FY 2008 will result in a net change in 
estimated payments from FY 2007 to FY 2008 of $150 million.
    The effects of the changes that affect IRF PPS payment rates are 
shown in Table 6. The following changes that affect the IRF PPS payment 
rates are discussed separately below:
    <bullet> The effects of the update to the outlier threshold amount 
to decrease total estimated outlier payments from approximately 3.7 to 
3 percent of total estimated payments for FY 2008, consistent with 
section 1886(j)(4) of the Act.
    <bullet> 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.
    <bullet> The effects of applying the budget neutral labor-related 
share and wage index adjustment, including revisions to our methodology 
for determining a proxy for rural areas without hospital wage data (as 
described in section VI of this final rule), as required under section 
1886(j)(6) of the Act.
    <bullet> The effects of the final year of the 3-year budget neutral 
hold-harmless policy for IRFs that were rural under Sec.  412.602 
during FY 2005, but are urban under Sec.  412.602 beginning in FY 2006 
and lose the rural adjustment, resulting in a decrease in the estimated 
IRF PPS payments if not for the hold harmless policy.
    <bullet> The total change in estimated payments based on the FY 
2008 policies relative to estimated FY 2007 payments without the 
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 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 1,220 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 1,002 IRFs located in 
urban areas included in our analysis. Among these, there are 806 IRF 
units of hospitals located in urban areas and 196 freestanding IRF 
hospitals located in urban areas. There are 218 IRFs located in rural 
areas included in our analysis. Among these, there are 198 IRF units of 
hospitals located in rural areas and 20 freestanding IRF hospitals 
located in rural areas. There are 406 for-profit IRFs. Among these, 
there are 328 IRFs in urban areas and 78 IRFs in rural areas. There are 
745 non-profit IRFs. Among these, there are 622 urban IRFs and 123 
rural IRFs. There are 69 government-owned IRFs. Among these, there are 
52 urban IRFs and 17 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

[[Page 44309]]

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 impact of each 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 in our FY 2006 
analysis file.
    Column (3) shows the number of cases in each category in our FY 
2006 analysis file.
    Column (4) shows the estimated effect of the adjustment to the 
outlier threshold amount so that estimated outlier payments decrease 
from approximately 3.7 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 changes reflected in this final rule for FY 
2008, to our estimates of payments per discharge in FY 2007 (without 
these changes).
    The average estimated increase for all IRFs is approximately 2.4 
percent. This estimated increase includes the effects of the 3.2 
percent market basket update. It also includes the 0.7 percent overall 
estimated decrease in estimated IRF outlier payments from the update to 
the outlier threshold amount. Because we are making the remainder of 
the changes outlined in this final rule in a budget neutral manner, 
they will not affect total estimated IRF payments in the aggregate. 
However, as described in more detail in each section, they will affect 
the estimated distribution of payments among providers.

                                                  Table 6.--Projected Impact on the IRF PPS for FY 2008
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                          FY08 CBSA wage
                                                                                                                           index, labor-
                                                          Number of IRFs     Number of     Outlier  (4)    Market basket  related share,   Total change
              Facility classification  (1)                  in FY 2006      cases in FY      (percent)    (5)  (percent)     and hold     (7)  (percent)
                                                                (2)          2006  (3)                                     harmless  (6)
                                                                                                                             (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total...................................................           1,220         404,331            -0.7             3.2               0             2.4
Urban unit..............................................             806         225,170            -1.0             3.2             0.2             2.4
Rural unit..............................................             198          35,612            -0.8             3.2             0.2             2.7
Urban hospital..........................................             196         137,865            -0.4             3.2            -0.3             2.5
Rural hospital..........................................              20           5,684            -0.4             3.2             0.1             2.9
Urban For-Profit........................................             328         137,349            -0.6             3.2            -0.2             2.4
Rural For-Profit........................................              78          14,824            -0.6             3.2             0.1             2.7
Urban Non-Profit........................................             622         210,708            -0.8             3.2             0.1             2.5
Rural Non-Profit........................................             123          23,686            -0.7             3.2             0.3             2.7
Urban Government........................................              52          14,978            -0.9             3.2            -0.2             2.0
Rural Government........................................              17           2,786            -1.2             3.2             0.3             2.3
Urban...................................................           1,002         363,035            -0.7             3.2             0.0             2.4
Rural...................................................             218          41,296            -0.7             3.2             0.2             2.7
Urban by region:
    Urban New England...................................              32          15,634            -0.7             3.2            -0.4             2.0
    Urban Middle Atlantic...............................             155          63,821            -0.5             3.2             0.1             2.8
    Urban South Atlantic................................             134          61,794            -0.7             3.2            -0.6             1.8
    Urban East North Central............................             195          62,561            -0.9             3.2             0.6             2.8
    Urban East South Central............................              53          26,084            -0.5             3.2            -0.8             1.9
    Urban West North Central............................              72          19,076            -0.9             3.2             0.2             2.4
    Urban West South Central............................             180          64,823            -0.7             3.2            -0.4             2.1
    Urban Mountain......................................              75          22,942            -0.9             3.2             0.7             3.0
    Urban Pacific.......................................             106          26,300            -1.0             3.2             0.5             2.6
Rural by region:
    Rural New England...................................               5           1,078            -1.4             3.2            -0.8             1.0
    Rural Middle Atlantic...............................              19           3,706            -0.4             3.2             0.7             3.4
    Rural South Atlantic................................              26           6,175            -0.5             3.2            -0.1             2.6
    Rural East North Central............................              36           6,804            -0.7             3.2             0.3             2.7
    Rural East South Central............................              22           4,357            -0.6             3.2             0.5             3.1
    Rural West North Central............................              37           6,334            -1.0             3.2             0.5             2.7
    Rural West South Central............................              58          11,392            -0.6             3.2             0.1             2.7
    Rural Mountain......................................               9             946            -1.8             3.2            -0.2             1.1
    Rural Pacific.......................................               6             504            -1.2             3.2             0.3             2.3
Teaching Status:
    Non-teaching........................................           1,103         352,896            -0.8             3.2             0.0             2.4
    Resident to ADC less than 10%.......................              59          32,718            -0.6             3.2             0.1             2.9
    Resident to ADC 10%-19%.............................              41          15,597            -0.6             3.2             0.1             2.7
    Resident to ADC greater than 19%....................              17           3,120            -0.7             3.2             0.1             2.8
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 44310]]

3. Impact of the 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 final rule, we are updating our analysis 
using FY 2006 data. Using the updated FY 2006 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 3.7 percent using the updated FY 2006 data. Thus, we are 
adjusting the outlier threshold amount for FY 2008 to $7,362 to set 
total estimated outlier payments equal to 3 percent of total estimated 
payments in FY 2008. The estimated change in total payments between FY 
2007 and FY 2008, therefore, includes a 0.7 percent overall estimated 
decrease in payments because the estimated outlier portion of total 
payments is estimated to decrease from approximately 3.7 percent to 3 
percent.
    The impact of this update (as shown in column 4 of Table 6) is to 
decrease estimated overall payments to IRFs by 0.7 percent. We do not 
estimate that any group of IRFs would experience an increase in 
payments from this update. We estimate the largest decrease in payments 
to be a 1.8 percent decrease in estimated payments to rural IRFs in the 
Mountain region.
4. Impact of the 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 
market basket update to the IRF PPS payment rates. In the aggregate, 
and across all hospital groups, the update will result in a 3.2 percent 
increase in overall estimated payments to IRFs.
5. Impact of the 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 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 Sec.  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 final rule, we are revising 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 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 changes will affect overall estimated payments to IRFs. However, 
we estimate that these changes will 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 0.8 percent decrease for urban IRFs in the East South 
Central region and 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, on the 
basis of its meeting the compliance threshold, which is described in 
Sec.  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, the existing regulations 
indicate that comorbidities will not be eligible for inclusion in the 
calculations used to determine whether the provider meets the 75 
percent compliance threshold. As discussed in section IV of this final 
rule, we are not changing the existing policy. On or after July 1, 
2008, we anticipate that IRFs will 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 final rule will have a 
significant economic impact on IRFs and on a substantial number of 
small entities, we will discuss 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 3.2 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 updating the outlier threshold amount has an estimated 
negative impact on IRF providers and, therefore, on small entities. If 
we were to 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 2006 data indicates that 
estimated outlier payments would not equal 3 percent of total estimated 
payments for FY 2008 unless we updated the outlier threshold amount. 
Also, we estimate that the overall effect of this policy on estimated 
payments to IRFs is small (less than 1 percent).
    We considered two other options regarding the use of comorbidities 
in determining compliance with the 75 percent rule, in addition to the 
one that we are finalizing to maintain the existing policy regarding 
use of the comorbidities. First, we considered

[[Page 44311]]

retaining the use of the comorbidities for one additional year, for 
cost reporting periods beginning before July 1, 2009. We considered 
this option in order to extend the phase in of the 75 percent rule for 
one additional year and to separate the increase in the compliance 
percentage (to 75 percent) from the expiration of the use of 
comorbidities. However, providers have already had 4 years to adjust 
their case-mixes and adapt their operations in order to comply with the 
75 percent rule.
    The second alternative option that we considered was to continue 
the use of the comorbidities in determining compliance with the 75 
percent rule on a permanent basis. However, we believe that, in the 
absence of sound clinical data, it would be premature to convert a 
temporary transition policy into a permanent part of the compliance 
requirements. Thus, we believe that continuing the existing policy, 
which expires the use of comorbidities in determining compliance with 
the 75 percent rule for cost reporting periods beginning on or after 
July 1, 2008, is the best approach.

E. Accounting Statement

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 7 below, we 
have prepared an accounting statement showing the classification of the 
expenditures associated with the provisions of this final rule. This 
table provides our best estimate of the increase in Medicare payments 
under the IRF PPS as a result of the changes presented in this final 
rule based on the data for 1,220 IRFs in our database. All estimated 
expenditures are classified as transfers to Medicare providers (that 
is, IRFs).

       Table 7.--Accounting Statement: Classification of Estimated
 Expenditures, from the 2007 IRF PPS Rate Year to the 2008 IRF PPS Rate
                                  Year
                              [In millions]
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
Annualized 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 will experience a 2.4 percent increase in estimated 
payments per discharge compared with FY 2007. We estimate that IRFs in 
rural areas will experience a 2.7 percent increase in estimated 
payments per discharge compared with FY 2007. We estimate that 
rehabilitation units in urban areas will experience a 2.4 percent 
increase in estimated payments per discharge and that freestanding 
rehabilitation hospitals in urban areas will experience a 2.5 percent 
increase in estimated payments per discharge. We estimate that 
rehabilitation units in rural areas will experience a 2.7 percent 
increase in estimated payments per discharge, while freestanding 
rehabilitation hospitals in rural areas will experience a 2.9 percent 
increase in estimated payments per discharge.
    Overall, we estimate that the largest payment increase will be 3.4 
percent among rural IRFs in the Middle Atlantic region. We do not 
estimate that any group of IRFs will experience an overall decrease in 
payments from the changes in this final rule.
    Comment: One commenter expressed concerns about the total number of 
IRFs (Column 2, Table 6) and the total number of IRF discharges (Column 
3, Table 6) reflected in table 6 of the proposed rule. The commenter 
noted that a recent report released by CMS on June 8, 2007 projected an 
estimated number of IRF discharges of approximately 412,000 in 2006, 
whereas table 6 of the proposed rule shows 427,419 IRF discharges in 
the FY 2005 claims data. The commenter questioned why CMS based its 
impact analysis on the higher number of discharges rather than the more 
recent, lower number.
    Response: For the proposed rule, we analyzed the most current and 
complete IRF claims data available at that time, FY 2005, to estimate 
the impact of the proposed policies. The FY 2005 claims data show that 
there were 427,419 Medicare discharges from IRFs in that year. However, 
we have updated our analysis for this final rule using FY 2006 IRF 
claims data. This data show that there were 404,331 Medicare discharges 
from IRFs in FY 2006. Note that both of these numbers were calculated 
on a FY basis, whereas the 412,000 Medicare discharges reported in the 
June 8, 2007 report were estimated on a calendar year basis.
    As discussed above, we use the best data available in estimating 
the impact of the policies contained in this final rule, but we do not 
attempt to predict behavioral responses to these changes and we do not 
make adjustments for future changes in such variables as number of 
discharges or case-mix. Thus, the number of Medicare discharges 
reflected in table 6 represents the actual number of discharges for 
which we have IRF claims in the FY 2006 data, and we have not attempted 
to predict how many discharges would be expected to occur in FY 2008.
    We are confident that the impact analysis, based on FY 2006 data, 
provides our best estimate of the payment impact of the policies 
contained in this final rule.
    Comment: One commenter requested that CMS provide additional 
information, including detailed payment information, to allow 
interested parties to recreate CMS's impact table, make projections on 
a facility-level basis, and review the proposed policies in more 
detail.
    Response: We will carefully consider the commenter's suggestions in 
updating the IRF PPS rate setting files that we post in conjunction 
with each IRF PPS proposed and final rule. These files are available 
for download from the IRF PPS Web site at http://www.cms.hhs.gov/InpatientRehabFacPPS/07_DataFiles. asp. Some of the payment 
information that the commenter requested is already contained in these 
files, and we will consider the possibility of adding additional 
information to the file.
    We believe the public should have as much information as possible 
to be able to review our proposed policies and evaluate the impacts of 
these policies. However, to recreate the detailed payment simulations 
used in preparing the impact analysis, the public would need detailed 
patient-level data, such as claims and IRF-PAI data. Some of these data 
files are available to the public through CMS's standard data 
distribution systems. More information on CMS's data distribution 
policies is available on CMS's Web site at http://www.cms.hhs.gov/researchers/statsdata.asp.
    We will continue to work with researchers and with industry groups 
to determine the best ways of providing data that will be useful in 
reviewing and analyzing our IRF PPS payment policies.
    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.

[[Page 44312]]


0
For the reasons set forth in the preamble, the Centers for Medicare & 
Medicaid Services amends 42 CFR chapter IV as follows:

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL 
SERVICES

0
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

0
2. Section 412.624 is amended by revising paragraph (f)(2)(v) to read 
as follows:


Sec.  412.624  Methodology for calculating the Federal prospective 
payment rates.

* * * * *
    (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 and making a payment in 
accordance with paragraph (e)(5) of this section, if applicable.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplemental Medical Insurance Program)

    Dated: July 18, 2007.
Leslie V. Norwalk,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: July 24, 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 final rule. The tables presented below are as follows:

Table 1.--Inpatient Rehabilitation Facility Wage Index for Urban Areas 
for Discharges Occurring From October 1, 2007 Through September 30, 
2008
Table 2.--Inpatient Rehabilitation Facility Wage Index for Rural Areas 
for Discharges Occurring From October 1, 2007 Through September 30, 
2008

 Table 1.--Inpatient Rehabilitation Facility Wage Index for Urban Areas
for Discharges Occurring From October 1, 2007 Through September 30, 2008
------------------------------------------------------------------------
                                                                   Wage
    CBSA code           Urban area  (constituent counties)        index
------------------------------------------------------------------------
10180............  Abilene, TX.................................   0.8000
                    Callahan County, TX........................
                    Jones County, TX...........................
                    Taylor County, TX..........................
10380............  Aguadilla-Isabela-San Sebasti[aacute]n, PR..   0.3915
                    Aguada Municipio, PR.......................
                    Aguadilla Municipio, PR....................
                    A[ntilde]asco Municipio, PR................
                    Isabela Municipio, PR......................
                    Lares Municipio, PR........................
                    Moca Municipio, PR.........................
                    Rinc[oacute]n Municipio, PR................
                    San Sebasti[aacute]n Municipio, PR.........
10420............  Akron, OH...................................   0.8654
                    Portage County, OH.........................
                    Summit County, OH..........................
10500............  Albany, GA..................................   0.8991
                    Baker County, GA...........................
                    Dougherty County, GA.......................
                    Lee County, GA.............................
                    Terrell County, GA.........................
                    Worth County, GA...........................
10580............  Albany-Schenectady-Troy, NY.................   0.8720
                    Albany County, NY..........................
                    Rensselaer County, NY......................
                    Saratoga County, NY........................
                    Schenectady County, NY.....................
                    Schoharie County, NY.......................
10740............  Albuquerque, NM.............................   0.9458
                    Bernalillo County, NM......................
                    Sandoval County, NM........................
                    Torrance County, NM........................
                    Valencia County, NM........................
10780............  Alexandria, LA..............................   0.8006
                    Grant Parish, LA...........................
                    Rapides Parish, LA.........................
10900............  Allentown-Bethlehem-Easton, PA-NJ...........   0.9947
                    Warren County, NJ..........................
                    Carbon County, PA..........................
                    Lehigh County, PA..........................
                    Northampton County, PA.....................

[[Page 44313]]

 
11020............  Altoona, PA.................................   0.8812
                    Blair County, PA...........................
11100............  Amarillo, TX................................   0.9169
                    Armstrong County, TX.......................
                    Carson County, TX..........................
                    Potter County, TX..........................
                    Randall County, TX.........................
11180............  Ames, IA....................................   0.9760
                    Story County, IA...........................
11260............  Anchorage, AK...............................   1.2023
                    Anchorage Municipality, AK.................
                    Matanuska-Susitna Borough, AK..............
11300............  Anderson, IN................................   0.8681
                    Madison County, IN.........................
11340............  Anderson, SC................................   0.9017
                    Anderson County, SC........................
11460............  Ann Arbor, MI...............................   1.0826
                    Washtenaw County, MI.......................
11500............  Anniston-Oxford, AL.........................   0.7770
                    Calhoun County, AL.........................
11540............  Appleton, WI................................   0.9455
                    Calumet County, WI.........................
                    Outagamie County, WI.......................
11700............  Asheville, NC...............................   0.9216
                    Buncombe County, NC........................
                    Haywood County, NC.........................
                    Henderson County, NC.......................
                    Madison County, NC.........................
12020............  Athens-Clarke County, GA....................   0.9856
                    Clarke County, GA..........................
                    Madison County, GA.........................
                    Oconee County, GA..........................
                    Oglethorpe County, GA......................
12060............  Atlanta-Sandy Springs-Marietta, GA..........   0.9762
                    Barrow County, GA..........................
                    Bartow County, GA..........................
                    Butts County, GA...........................
                    Carroll County, GA.........................
                    Cherokee County, GA........................
                    Clayton County, GA.........................
                    Cobb County, GA............................
                    Coweta County, GA..........................
                    Dawson County, GA..........................
                    DeKalb County, GA..........................
                    Douglas County, GA.........................
                    Fayette County, GA.........................
                    Forsyth County, GA.........................
                    Fulton County, GA..........................
                    Gwinnett County, GA........................
                    Haralson County, GA........................
                    Heard County, GA...........................
                    Henry County, GA...........................
                    Jasper County, GA..........................
                    Lamar County, GA...........................
                    Meriwether County, GA......................
                    Newton County, GA..........................
                    Paulding County, GA........................
                    Pickens County, GA.........................
                    Pike County, GA............................
                    Rockdale County, GA........................
                    Spalding County, GA........................
                    Walton County, GA..........................
12100............  Atlantic City, NJ...........................   1.1831
                    Atlantic County, NJ........................
12220............  Auburn-Opelika, AL..........................   0.8096
                    Lee County, AL.............................
12260............  Augusta-Richmond County, GA-SC..............   0.9667
                    Burke County, GA...........................
                    Columbia County, GA........................
                    McDuffie County, GA........................

[[Page 44314]]

 
                    Richmond County, GA........................
                    Aiken County, SC...........................
                    Edgefield County, SC.......................
12420............  Austin-Round Rock, TX.......................   0.9344
                    Bastrop County, TX.........................
                    Caldwell County, TX........................
                    Hays County, TX............................
                    Travis County, TX..........................
                    Williamson County, TX......................
12540............  Bakersfield, CA.............................   1.0725
                    Kern County, CA............................
12580............  Baltimore-Towson, MD........................   1.0088
                    Anne Arundel County, MD....................
                    Baltimore County, MD.......................
                    Carroll County, MD.........................
                    Harford County, MD.........................
                    Howard County, MD..........................
                    Queen Anne's County, MD....................
                    Baltimore City, MD.........................
12620............  Bangor, ME..................................   0.9711
                    Penobscot County, ME.......................
12700............  Barnstable Town, MA.........................   1.2539
                    Barnstable County, MA......................
12940............  Baton Rouge, LA.............................   0.8084
                    Ascension Parish, LA.......................
                    East Baton Rouge Parish, LA................
                    East Feliciana Parish, LA..................
                    Iberville Parish, LA.......................
                    Livingston Parish, LA......................
                    Pointe Coupee Parish, LA...................
                    St. Helena Parish, LA......................
                    West Baton Rouge Parish, LA................
                    West Feliciana Parish, LA..................
12980............  Battle Creek, MI............................   0.9762
                    Calhoun County, MI.........................
13020............  Bay City, MI................................   0.9251
                    Bay County, MI.............................
13140............  Beaumont-Port Arthur, TX....................   0.8595
                    Hardin County, TX..........................
                    Jefferson County, TX.......................
                    Orange County, TX..........................
13380............  Bellingham, WA..............................   1.1104
                    Whatcom County, WA.........................
13460............  Bend, OR....................................   1.0743
                    Deschutes County, OR.......................
13644............  Bethesda-Frederick-Gaithersburg, MD.........   1.0903
                    Frederick County, MD.......................
                    Montgomery County, MD......................
13740............  Billings, MT................................   0.8712
                    Carbon County, MT..........................
                    Yellowstone County, MT.....................
13780............  Binghamton, NY..............................   0.8786
                    Broome County, NY..........................
                    Tioga County, NY...........................
13820............  Birmingham-Hoover, AL.......................   0.8894
                    Bibb County, AL............................
                    Blount County, AL..........................
                    Chilton County, AL.........................
                    Jefferson County, AL.......................
                    St. Clair County, AL.......................
                    Shelby County, AL..........................
                    Walker County, AL..........................
13900............  Bismarck, ND................................   0.7240
                    Burleigh County, ND........................
                    Morton County, ND..........................
13980............  Blacksburg-Christiansburg-Radford, VA.......   0.8213
                    Giles County, VA...........................
                    Montgomery County, VA......................
                    Pulaski County, VA.........................
                    Radford City, VA...........................

[[Page 44315]]

 
14020............  Bloomington, IN.............................   0.8533
                    Greene County, IN..........................
                    Monroe County, IN..........................
                    Owen County, IN............................
14060............  Bloomington-Normal, IL......................   0.8944
                    McLean County, IL..........................
14260............  Boise City-Nampa, ID........................   0.9401
                    Ada County, ID.............................
                    Boise County, ID...........................
                    Canyon County, ID..........................
                    Gem County, ID.............................
                    Owyhee County, ID..........................
14484............  Boston-Quincy, MA...........................   1.1679
                    Norfolk County, MA.........................
                    Plymouth County, MA........................
                    Suffolk County, MA.........................
14500............  Boulder, CO.................................   1.0350
                    Boulder County, CO.........................
14540............  Bowling Green, KY...........................   0.8148
                    Edmonson County, KY........................
                    Warren County, KY..........................
14740............  Bremerton-Silverdale, WA....................   1.0913
                    Kitsap County, WA..........................
14860............  Fairfield County, CT........................   1.2659
                    Bridgeport-Stamford-Norwalk, CT............
15180............  Brownsville-Harlingen, TX...................   0.9430
                    Cameron County, TX.........................
15260............  Brunswick, GA...............................   1.0164
                    Brantley County, GA........................
                    Glynn County, GA...........................
                    McIntosh County, GA........................
15380............  Buffalo-Niagara Falls, NY...................   0.9424
                    Erie County, NY............................
                    Niagara County, NY.........................
15500............  Burlington, NC..............................   0.8674
                    Alamance County, NC........................
15540............  Burlington-South Burlington, VT.............   0.9474
                    Chittenden County, VT......................
                    Franklin County, VT........................
                    Grand Isle County, VT......................
15764............  Cambridge-Newton-Framingham, MA.............   1.0970
                    Middlesex County, MA.......................
15804............  Camden, NJ..................................   1.0392
                    Burlington County, NJ......................
                    Camden County, NJ..........................
                    Gloucester County, NJ......................
15940............  Canton-Massillon, OH........................   0.9031
                    Carroll County, OH.........................
                    Stark County, OH...........................
15980............  Cape Coral-Fort Myers, FL...................   0.9342
                    Lee County, FL.............................
16180............  Carson City, NV.............................   1.0025
                    Carson City, NV............................
16220............  Casper, WY..................................   0.9145
                    Natrona County, WY.........................
16300............  Cedar Rapids, IA............................   0.8888
                    Benton County, IA..........................
                    Jones County, IA...........................
                    Linn County, IA............................
16580............  Champaign-Urbana, IL........................   0.9644
                    Champaign County, IL.......................
                    Ford County, IL............................
                    Piatt County, IL...........................
16620............  Charleston, WV..............................   0.8542
                    Boone County, WV...........................
                    Clay County, WV............................
                    Kanawha County, WV.........................
                    Lincoln County, WV.........................
                    Putnam County, WV..........................
16700............  Charleston-North Charleston, SC.............   0.9145

[[Page 44316]]

 
                    Berkeley County, SC........................
                    Charleston County, SC......................
                    Dorchester County, SC......................
16740............  Charlotte-Gastonia-Concord, NC-SC...........   0.9554
                    Anson County, NC...........................
                    Cabarrus County, NC........................
                    Gaston County, NC..........................
                    Mecklenburg County, NC.....................
                    Union County, NC...........................
                    York County, SC............................
16820............  Charlottesville, VA.........................   1.0125
                    Albemarle County, VA.......................
                    Fluvanna County, VA........................
                    Greene County, VA..........................
                    Nelson County, VA..........................
                    Charlottesville City, VA...................
16860............  Chattanooga, TN-GA..........................   0.8948
                    Catoosa County, GA.........................
                    Dade County, GA............................
                    Walker County, GA..........................
                    Hamilton County, TN........................
                    Marion County, TN..........................
                    Sequatchie County, TN......................
16940............  Cheyenne, WY................................   0.9060
                    Laramie County, WY.........................
16974............  Chicago-Naperville-Joliet, IL...............   1.0751
                    Cook County, IL............................
                    DeKalb County, IL..........................
                    DuPage County, IL..........................
                    Grundy County, IL..........................
                    Kane County, IL............................
                    Kendall County, IL.........................
                    McHenry County, IL.........................
                    Will County, IL............................
17020............  Chico, CA...................................   1.1053
                    Butte County, CA...........................
17140............  Cincinnati-Middletown, OH-KY-IN.............   0.9601
                    Dearborn County, IN........................
                    Franklin County, IN........................
                    Ohio County, IN............................
                    Boone County, KY...........................
                    Bracken County, KY.........................
                    Campbell County, KY........................
                    Gallatin County, KY........................
                    Grant County, KY...........................
                    Kenton County, KY..........................
                    Pendleton County, KY.......................
                    Brown County, OH...........................
                    Butler County, OH..........................
                    Clermont County, OH........................
                    Hamilton County, OH........................
                    Warren County, OH..........................
17300............  Clarksville, TN-KY..........................   0.8436
                    Christian County, KY.......................
                    Trigg County, KY...........................
                    Montgomery County, TN......................
                    Stewart County, TN.........................
17420............  Cleveland, TN...............................   0.8109
                    Bradley County, TN.........................
                    Polk County, TN............................
17460............  Cleveland-Elyria-Mentor, OH.................   0.9400
                    Cuyahoga County, OH........................
                    Geauga County, OH..........................
                    Lake County, OH............................
                    Lorain County, OH..........................
                    Medina County, OH..........................
17660............  Coeur d'Alene, ID...........................   0.9344
                    Kootenai County, ID........................
17780............  College Station-Bryan, TX...................   0.9045
                    Brazos County, TX..........................

[[Page 44317]]

 
                    Burleson County, TX........................
                    Robertson County, TX.......................
17820............  Colorado Springs, CO........................   0.9701
                    El Paso County, CO.........................
                    Teller County, CO..........................
17860............  Columbia, MO................................   0.8542
                    Boone County, MO...........................
                    Howard County, MO..........................
17900............  Columbia, SC................................   0.8933
                    Calhoun County, SC.........................
                    Fairfield County, SC.......................
                    Kershaw County, SC.........................
                    Lexington County, SC.......................
                    Richland County, SC........................
                    Saluda County, SC..........................
17980............  Columbus, GA-AL.............................   0.8239
                    Russell County, AL.........................
                    Chattahoochee County, GA...................
                    Harris County, GA..........................
                    Marion County, GA..........................
                    Muscogee County, GA........................
18020............  Columbus, IN................................   0.9318
                    Bartholomew County, IN.....................
18140............  Columbus, OH................................   1.0107
                    Delaware County, OH........................
                    Fairfield County, OH.......................
                    Franklin County, OH........................
                    Licking County, OH.........................
                    Madison County, OH.........................
                    Morrow County, OH..........................
                    Pickaway County, OH........................
                    Union County, OH...........................
18580............  Corpus Christi, TX..........................   0.8564
                    Aransas County, TX.........................
                    Nueces County, TX..........................
                    San Patricio County, TX....................
18700............  Corvallis, OR...............................   1.1546
                    Benton County, OR..........................
19060............  Cumberland, MD-WV...........................   0.8446
                    Allegany County, MD........................
                    Mineral County, WV.........................
19124............  Dallas-Plano-Irving, TX.....................   1.0075
                    Collin County, TX..........................
                    Dallas County, TX..........................
                    Delta County, TX...........................
                    Denton County, TX..........................
                    Ellis County, TX...........................
                    Hunt County, TX............................
                    Kaufman County, TX.........................
                    Rockwall County, TX........................
19140............  Dalton, GA..................................   0.9093
                    Murray County, GA..........................
                    Whitfield County, GA.......................
19180............  Danville, IL................................   0.9266
                    Vermilion County, IL.......................
19260............  Danville, VA................................   0.8451
                    Pittsylvania County, VA....................
                    Danville City, VA..........................
19340............  Davenport-Moline-Rock Island, IA-IL.........   0.8846
                    Henry County, IL...........................
                    Mercer County, IL..........................
                    Rock Island County, IL.....................
                    Scott County, IA...........................
19380............  Dayton, OH..................................   0.9037
                    Greene County, OH..........................
                    Miami County, OH...........................
                    Montgomery County, OH......................
                    Preble County, OH..........................
19460............  Decatur, AL.................................   0.8159
                    Lawrence County, AL........................

[[Page 44318]]

 
                    Morgan County, AL..........................
19500............  Decatur, IL.................................   0.8172
                    Macon County, IL...........................
19660............  Deltona-Daytona Beach-Ormond Beach, FL......   0.9263
                    Volusia County, FL.........................
19740............  Denver-Aurora, CO...........................   1.0930
                    Adams County, CO...........................
                    Arapahoe County, CO........................
                    Broomfield County, CO......................
                    Clear Creek County, CO.....................
                    Denver County, CO..........................
                    Douglas County, CO.........................
                    Elbert County, CO..........................
                    Gilpin County, CO..........................
                    Jefferson County, CO.......................
                    Park County, CO............................
19780............  Des Moines-West Des Moines, IA..............   0.9214
                    Dallas County, IA..........................
                    Guthrie County, IA.........................
                    Madison County, IA.........................
                    Polk County, IA............................
                    Warren County, IA..........................
19804............  Detroit-Livonia-Dearborn, MI................   1.0281
                    Wayne County, MI...........................
20020............  Dothan, AL..................................   0.7381
                    Geneva County, AL..........................
                    Henry County, AL...........................
                    Houston County, AL.........................
20100............  Dover, DE...................................   0.9847
                    Kent County, DE............................
20220............  Dubuque, IA.................................   0.9133
                    Dubuque County, IA.........................
20260............  Duluth, MN-WI...............................   1.0042
                    Carlton County, MN.........................
                    St. Louis County, MN.......................
                    Douglas County, WI.........................
20500............  Durham, NC..................................   0.9826
                    Chatham County, NC.........................
                    Durham County, NC..........................
                    Orange County, NC..........................
                    Person County, NC..........................
20740............  Eau Claire, WI..............................   0.9630
                    Chippewa County, WI........................
                    Eau Claire County, WI......................
20764............  Edison, NJ..................................   1.1190
                    Middlesex County, NJ.......................
                    Monmouth County, NJ........................
                    Ocean County, NJ...........................
                    Somerset County, NJ........................
20940............  El Centro, CA...............................   0.9076
                    Imperial County, CA........................
21060............  Elizabethtown, KY...........................   0.8697
                    Hardin County, KY..........................
                    Larue County, KY...........................
21140............  Elkhart-Goshen, IN..........................   0.9426
                    Elkhart County, IN.........................
21300............  Elmira, NY..................................   0.8240
                    Chemung County, NY.........................
21340............  El Paso, TX.................................   0.9053
                    El Paso County, TX.........................
21500............  Erie, PA....................................   0.8827
                    Erie County, PA............................
21604............  Essex County, MA............................   1.0418
                    Essex County, MA...........................
21660............  Eugene-Springfield, OR......................   1.0876
                    Lane County, OR............................
21780............  Evansville, IN-KY...........................   0.9071
                    Gibson County, IN..........................
                    Posey County, IN...........................
                    Vanderburgh County, IN.....................

[[Page 44319]]

 
                    Warrick County, IN.........................
                    Henderson County, KY.......................
                    Webster County, KY.........................
21820............  Fairbanks, AK...............................   1.1059
                    Fairbanks North Star Borough, AK...........
21940............  Fajardo, PR.................................   0.4036
                    Ceiba Municipio, PR........................
                    Fajardo Municipio, PR......................
                    Luquillo Municipio, PR.....................
22020............  Fargo, ND-MN................................   0.8250
                    Cass County, ND............................
                    Clay County, MN............................
22140............  Farmington, NM..............................   0.8589
                    San Juan County, NM........................
22180............  Fayetteville, NC............................   0.8945
                    Cumberland County, NC......................
                    Hoke County, NC............................
22220............  Fayetteville-Springdale-Rogers, AR-MO.......   0.8865
                    Benton County, AR..........................
                    Madison County, AR.........................
                    Washington County, AR......................
                    McDonald County, MO........................
22380............  Flagstaff, AZ...............................   1.1601
                    Coconino County, AZ........................
22420............  Flint, MI...................................   1.0969
                    Genesee County, MI.........................
22500............  Florence, SC................................   0.8388
                    Darlington County, SC......................
                    Florence County, SC........................
22520............  Florence-Muscle Shoals, AL..................   0.7843
                    Colbert County, AL.........................
                    Lauderdale County, AL......................
22540............  Fond du Lac, WI.............................   1.0063
                    Fond du Lac County, WI.....................
22660............  Fort Collins-Loveland, CO...................   0.9544
                    Larimer County, CO.........................
22744............  Fort Lauderdale-Pompano Beach-Deerfield        1.0133
                    Beach, FL.
                    Broward County, FL.........................
22900............  Fort Smith, AR-OK...........................   0.7731
                    Crawford County, AR........................
                    Franklin County, AR........................
                    Sebastian County, AR.......................
                    Le Flore County, OK........................
                    Sequoyah County, OK........................
23020............  Fort Walton Beach-Crestview-Destin, FL......   0.8643
                    Okaloosa County, FL........................
23060............  Fort Wayne, IN..............................   0.9517
                    Allen County, IN...........................
                    Wells County, IN...........................
                    Whitley County, IN.........................
23104............  Fort Worth-Arlington, TX....................   0.9569
                    Johnson County, TX.........................
                    Parker County, TX..........................
                    Tarrant County, TX.........................
                    Wise County, TX............................
23420............  Fresno, CA..................................   1.0943
                    Fresno County, CA..........................
23460............  Gadsden, AL.................................   0.8066
                    Etowah County, AL..........................
23540............  Gainesville, FL.............................   0.9277
                    Alachua County, FL.........................
                    Gilchrist County, FL.......................
23580............  Gainesville, GA.............................   0.8958
                    Hall County, GA............................
23844............  Gary, IN....................................   0.9334
                    Jasper County, IN..........................
                    Lake County, IN............................
                    Newton County, IN..........................
                    Porter County, IN..........................
24020............  Glens Falls, NY.............................   0.8324

[[Page 44320]]

 
                    Warren County, NY..........................
                    Washington County, NY......................
24140............  Goldsboro, NC...............................   0.9171
                    Wayne County, NC...........................
24220............  Grand Forks, ND-MN..........................   0.7949
                    Polk County, MN............................
                    Grand Forks County, ND.....................
24300............  Grand Junction, CO..........................   0.9668
                    Mesa County, CO............................
24340............  Grand Rapids-Wyoming, MI....................   0.9455
                    Barry County, MI...........................
                    Ionia County, MI...........................
                    Kent County, MI............................
                    Newaygo County, MI.........................
24500............  Great Falls, MT.............................   0.8598
                    Cascade County, MT.........................
24540............  Greeley, CO.................................   0.9602
                    Weld County, CO............................
24580............  Green Bay, WI...............................   0.9787
                    Brown County, WI...........................
                    Kewaunee County, WI........................
                    Oconto County, WI..........................
24660............  Greensboro-High Point, NC...................   0.8866
                    Guilford County, NC........................
                    Randolph County, NC........................
                    Rockingham County, NC......................
24780............  Greenville, NC..............................   0.9432
                    Greene County, NC..........................
                    Pitt County, NC............................
24860............  Greenville, SC..............................   0.9804
                    Greenville County, SC......................
                    Laurens County, SC.........................
                    Pickens County, SC.........................
25020............  Guayama, PR.................................   0.3235
                    Arroyo Municipio, PR.......................
                    Guayama Municipio, PR......................
                    Patillas Municipio, PR.....................
25060............  Gulfport-Biloxi, MS.........................   0.8915
                    Hancock County, MS.........................
                    Harrison County, MS........................
                    Stone County, MS...........................
25180............  Hagerstown-Martinsburg, MD-WV...............   0.9038
                    Washington County, MD......................
                    Berkeley County, WV........................
                    Morgan County, WV..........................
25260............  Hanford-Corcoran, CA........................   1.0282
                    Kings County, CA...........................
25420............  Harrisburg-Carlisle, PA.....................   0.9402
                    Cumberland County, PA......................
                    Dauphin County, PA.........................
                    Perry County, PA...........................
25500............  Harrisonburg, VA............................   0.9073
                    Rockingham County, VA......................
                    Harrisonburg City, VA......................
25540............  Hartford-West Hartford-East Hartford, CT....   1.0894
                    Hartford County, CT........................
                    Litchfield County, CT......................
                    Middlesex County, CT.......................
                    Tolland County, CT.........................
25620............  Hattiesburg, MS.............................   0.7430
                    Forrest County, MS.........................
                    Lamar County, MS...........................
                    Perry County, MS...........................
25860............  Hickory-Lenoir-Morganton, NC................   0.9010
                    Alexander County, NC.......................
                    Burke County, NC...........................
                    Caldwell County, NC........................
                    Catawba County, NC.........................
25980............  Hinesville-Fort Stewart, GA1................   0.9178
                    Liberty County, GA.........................

[[Page 44321]]

 
                    Long County, GA............................
26100............  Holland-Grand Haven, MI.....................   0.9163
                    Ottawa County, MI..........................
26180............  Honolulu, HI................................   1.1096
                    Honolulu County, HI........................
26300............  Hot Springs, AR.............................   0.8782
                    Garland County, AR.........................
26380............  Houma-Bayou Cane-Thibodaux, LA..............   0.8082
                    Lafourche Parish, LA.......................
                    Terrebonne Parish, LA......................
26420............  Houston-Sugar Land-Baytown, TX..............   1.0008
                    Austin County, TX..........................
                    Brazoria County, TX........................
                    Chambers County, TX........................
                    Fort Bend County, TX.......................
                    Galveston County, TX.......................
                    Harris County, TX..........................
                    Liberty County, TX.........................
                    Montgomery County, TX......................
                    San Jacinto County, TX.....................
                    Waller County, TX..........................
26580............  Huntington-Ashland, WV-KY-OH................   0.8997
                    Boyd County, KY............................
                    Greenup County, KY.........................
                    Lawrence County, OH........................
                    Cabell County, WV..........................
                    Wayne County, WV...........................
26620............  Huntsville, AL..............................   0.9007
                    Limestone County, AL.......................
                    Madison County, AL.........................
26820............  Idaho Falls, ID.............................   0.9088
                    Bonneville County, ID......................
                    Jefferson County, ID.......................
26900............  Indianapolis-Carmel, IN.....................   0.9895
                    Boone County, IN...........................
                    Brown County, IN...........................
                    Hamilton County, IN........................
                    Hancock County, IN.........................
                    Hendricks County, IN.......................
                    Johnson County, IN.........................
                    Marion County, IN..........................
                    Morgan County, IN..........................
                    Putnam County, IN..........................
                    Shelby County, IN..........................
26980............  Iowa City, IA...............................   0.9714
                    Johnson County, IA.........................
                    Washington County, IA......................
27060............  Ithaca, NY..................................   0.9928
                    Tompkins County, NY........................
27100............  Jackson, MI.................................   0.9560
                    Jackson County, MI.........................
27140............  Jackson, MS.................................   0.8271
                    Copiah County, MS..........................
                    Hinds County, MS...........................
                    Madison County, MS.........................
                    Rankin County, MS..........................
                    Simpson County, MS.........................
27180............  Jackson, TN.................................   0.8853
                    Chester County, TN.........................
                    Madison County, TN.........................
27260............  Jacksonville, FL............................   0.9165
                    Baker County, FL...........................
                    Clay County, FL............................
                    Duval County, FL...........................
                    Nassau County, FL..........................
                    St. Johns County, FL.......................
27340............  Jacksonville, NC............................   0.8231
                    Onslow County, NC..........................
27500............  Janesville, WI..............................   0.9655
                    Rock County, WI............................

[[Page 44322]]

 
27620............  Jefferson City, MO..........................   0.8332
                    Callaway County, MO........................
                    Cole County, MO............................
                    Moniteau County, MO........................
                    Osage County, MO...........................
27740............  Johnson City, TN............................   0.8043
                    Carter County, TN..........................
                    Unicoi County, TN..........................
                    Washington County, TN......................
27780............  Johnstown, PA...............................   0.8620
                    Cambria County, PA.........................
27860............  Jonesboro, AR...............................   0.7662
                    Craighead County, AR.......................
                    Poinsett County, AR........................
27900............  Joplin, MO..................................   0.8605
                    Jasper County, MO..........................
                    Newton County, MO..........................
28020............  Kalamazoo-Portage, MI.......................   1.0704
                    Kalamazoo County, MI.......................
                    Van Buren County, MI.......................
28100............  Kankakee-Bradley, IL........................   1.0083
                    Kankakee County, IL........................
28140............  Kansas City, MO-KS..........................   0.9495
                    Franklin County, KS........................
                    Johnson County, KS.........................
                    Leavenworth County, KS.....................
                    Linn County, KS............................
                    Miami County, KS...........................
                    Wyandotte County, KS.......................
                    Bates County, MO...........................
                    Caldwell County, MO........................
                    Cass County, MO............................
                    Clay County, MO............................
                    Clinton County, MO.........................
                    Jackson County, MO.........................
                    Lafayette County, MO.......................
                    Platte County, MO..........................
                    Ray County, MO.............................
28420............  Kennewick-Richland-Pasco, WA................   1.0343
                    Benton County, WA..........................
                    Franklin County, WA........................
28660............  Killeen-Temple-Fort Hood, TX................   0.8901
                    Bell County, TX............................
                    Coryell County, TX.........................
                    Lampasas County, TX........................
28700............  Kingsport-Bristol-Bristol, TN-VA............   0.7985
                    Hawkins County, TN.........................
                    Sullivan County, TN........................
                    Bristol City, VA...........................
                    Scott County, VA...........................
                    Washington County, VA......................
28740............  Kingston, NY................................   0.9367
                    Ulster County, NY..........................
28940............  Knoxville, TN...............................   0.8249
                    Anderson County, TN........................
                    Blount County, TN..........................
                    Knox County, TN............................
                    Loudon County, TN..........................
                    Union County, TN...........................
29020............  Kokomo, IN..................................   0.9669
                    Howard County, IN..........................
                    Tipton County, IN..........................
29100............  La Crosse, WI-MN............................   0.9426
                    Houston County, MN.........................
                    La Crosse County, WI.......................
29140............  Lafayette, IN...............................   0.8931
                    Benton County, IN..........................
                    Carroll County, IN.........................
                    Tippecanoe County, IN......................
29180............  Lafayette, LA...............................   0.8289

[[Page 44323]]

 
                    Lafayette Parish, LA.......................
                    St. Martin Parish, LA......................
29340............  Lake Charles, LA............................   0.7914
                    Calcasieu Parish, LA.......................
                    Cameron Parish, LA.........................
29404............  Lake County-Kenosha County, IL-WI...........   1.0570
                    Lake County, IL............................
                    Kenosha County, WI.........................
29460............  Lakeland, FL................................   0.8879
                    Polk County, FL............................
29540............  Lancaster, PA...............................   0.9589
                    Lancaster County, PA.......................
29620............  Lansing-East Lansing, MI....................   1.0088
                    Clinton County, MI.........................
                    Eaton County, MI...........................
                    Ingham County, MI..........................
29700............  Laredo, TX..................................   0.7811
                    Webb County, TX............................
29740............  Las Cruces, NM..............................   0.9273
                    Dona Ana County, NM........................
29820............  Las Vegas-Paradise, NV......................   1.1430
                    Clark County, NV...........................
29940............  Lawrence, KS................................   0.8365
                    Douglas County, KS.........................
30020............  Lawton, OK..................................   0.8065
                    Comanche County, OK........................
30140............  Lebanon, PA.................................   0.8679
                    Lebanon County, PA.........................
30300............  Lewiston, ID-WA.............................   0.9853
                    Nez Perce County, ID.......................
                    Asotin County, WA..........................
30340............  Lewiston-Auburn, ME.........................   0.9126
                    Androscoggin County, ME....................
30460............  Lexington-Fayette, KY.......................   0.9181
                    Bourbon County, KY.........................
                    Clark County, KY...........................
                    Fayette County, KY.........................
                    Jessamine County, KY.......................
                    Scott County, KY...........................
                    Woodford County, KY........................
30620............  Lima, OH....................................   0.9042
                    Allen County, OH...........................
30700............  Lincoln, NE.................................   1.0092
                    Lancaster County, NE.......................
                    Seward County, NE..........................
30780............  Little Rock-North Little Rock, AR...........   0.8890
                    Faulkner County, AR........................
                    Grant County, AR...........................
                    Lonoke County, AR..........................
                    Perry County, AR...........................
                    Pulaski County, AR.........................
                    Saline County, AR..........................
30860............  Logan, UT-ID................................   0.9022
                    Franklin County, ID........................
                    Cache County, UT...........................
30980............  Longview, TX................................   0.8788
                    Gregg County, TX...........................
                    Rusk County, TX............................
                    Upshur County, TX..........................
31020............  Longview, WA................................   1.0011
                    Cowlitz County, WA.........................
31084............  Los Angeles-Long Beach-Glendale, CA.........   1.1760
                    Los Angeles County, CA.....................
31140............  Louisville, KY-IN...........................   0.9118
                    Clark County, IN...........................
                    Floyd County, IN...........................
                    Harrison County, IN........................
                    Washington County, IN......................
                    Bullitt County, KY.........................
                    Henry County, KY...........................

[[Page 44324]]

 
                    Jefferson County, KY.......................
                    Meade County, KY...........................
                    Nelson County, KY..........................
                    Oldham County, KY..........................
                    Shelby County, KY..........................
                    Spencer County, KY.........................
                    Trimble County, KY.........................
31180............  Lubbock, TX.................................   0.8613
                    Crosby County, TX..........................
                    Lubbock County, TX.........................
31340............  Lynchburg, VA...............................   0.8694
                    Amherst County, VA.........................
                    Appomattox County, VA......................
                    Bedford County, VA.........................
                    Campbell County, VA........................
                    Bedford City, VA...........................
                    Lynchburg City, VA.........................
31420............  Macon, GA...................................   0.9519
                    Bibb County, GA............................
                    Crawford County, GA........................
                    Jones County, GA...........................
                    Monroe County, GA..........................
                    Twiggs County, GA..........................
31460............  Madera, CA..................................   0.8154
                    Madera County, CA..........................
31540............  Madison, WI.................................   1.0840
                    Columbia County, WI........................
                    Dane County, WI............................
                    Iowa County, WI............................
31700............  Manchester-Nashua, NH.......................   1.0243
                    Hillsborough County, NH....................
                    Merrimack County, NH.......................
31900............  Mansfield, OH...............................   0.9271
                    Richland County, OH........................
32420............  Mayag[uuml]ez, PR...........................   0.3848
                    Hormigueros Municipio, PR..................
                    Mayag[uuml]ez Municipio, PR................
32580............  McAllen-Edinburg-Pharr, TX..................   0.8773
                    Hidalgo County, TX.........................
32780............  Medford, OR.................................   1.0818
                    Jackson County, OR.........................
32820............  Memphis, TN-MS-AR...........................   0.9373
                    Crittenden County, AR......................
                    DeSoto County, MS..........................
                    Marshall County, MS........................
                    Tate County, MS............................
                    Tunica County, MS..........................
                    Fayette County, TN.........................
                    Shelby County, TN..........................
                    Tipton County, TN..........................
32900............  Merced, CA..................................   1.1471
                    Merced County, CA..........................
33124............  Miami-Miami Beach-Kendall, FL...............   0.9812
                    Miami-Dade County, FL......................
33140............  Michigan City-La Porte, IN..................   0.9118
                    LaPorte County, IN.........................
33260............  Midland, TX.................................   0.9786
                    Midland County, TX.........................
33340............  Milwaukee-Waukesha-West Allis, WI...........   1.0218
                    Milwaukee County, WI.......................
                    Ozaukee County, WI.........................
                    Washington County, WI......................
                    Waukesha County, WI........................
33460............  Minneapolis-St. Paul-Bloomington, MN-WI.....   1.0946
                    Anoka County, MN...........................
                    Carver County, MN..........................
                    Chisago County, MN.........................
                    Dakota County, MN..........................
                    Hennepin County, MN........................
                    Isanti County, MN..........................

[[Page 44325]]

 
                    Ramsey County, MN..........................
                    Scott County, MN...........................
                    Sherburne County, MN.......................
                    Washington County, MN......................
                    Wright County, MN..........................
                    Pierce County, WI..........................
                    St. Croix County, WI.......................
33540............  Missoula, MT................................   0.8928
                    Missoula County, MT........................
33660............  Mobile, AL..................................   0.7913
                    Mobile County, AL..........................
33700............  Modesto, CA.................................   1.1729
                    Stanislaus County, CA......................
33740............  Monroe, LA..................................   0.7997
                    Ouachita Parish, LA........................
                    Union Parish, LA...........................
33780............  Monroe, MI..................................   0.9707
                    Monroe County, MI..........................
33860............  Montgomery, AL..............................   0.8009
                    Autauga County, AL.........................
                    Elmore County, AL..........................
                    Lowndes County, AL.........................
                    Montgomery County, AL......................
34060............  Morgantown, WV..............................   0.8423
                    Monongalia County, WV......................
                    Preston County, WV.........................
34100............  Morristown, TN..............................   0.7933
                    Grainger County, TN........................
                    Hamblen County, TN.........................
                    Jefferson County, TN.......................
34580............  Mount Vernon-Anacortes, WA..................   1.0517
                    Skagit County, WA..........................
34620............  Muncie, IN..................................   0.8562
                    Delaware County, IN........................
34740............  Muskegon-Norton Shores, MI..................   0.9941
                    Muskegon County, MI........................
34820............  Myrtle Beach-Conway-North Myrtle Beach, SC..   0.8810
                    Horry County, SC...........................
34900............  Napa, CA....................................   1.3374
                    Napa County, CA............................
34940............  Naples-Marco Island, FL.....................   0.9941
                    Collier County, FL.........................
34980............  Nashville-Davidson-Murfreesboro, TN.........   0.9847
                    Cannon County, TN..........................
                    Cheatham County, TN........................
                    Davidson County, TN........................
                    Dickson County, TN.........................
                    Hickman County, TN.........................
                    Macon County, TN...........................
                    Robertson County, TN.......................
                    Rutherford County, TN......................
                    Smith County, TN...........................
                    Sumner County, TN..........................
                    Trousdale County, TN.......................
                    Williamson County, TN......................
                    Wilson County, TN..........................
35004............  Nassau-Suffolk, NY..........................   1.2662
                    Nassau County, NY..........................
                    Suffolk County, NY.........................
35084............  Newark-Union, NJ-PA.........................   1.1892
                    Essex County, NJ...........................
                    Hunterdon County, NJ.......................
                    Morris County, NJ..........................
                    Sussex County, NJ..........................
                    Union County, NJ...........................
                    Pike County, PA............................
35300............  New Haven-Milford, CT.......................   1.1953
                    New Haven County, CT.......................
35380............  New Orleans-Metairie-Kenner, LA.............   0.8831
                    Jefferson Parish, LA.......................

[[Page 44326]]

 
                    Orleans Parish, LA.........................
                    Plaquemines Parish, LA.....................
                    St. Bernard Parish, LA.....................
                    St. Charles Parish, LA.....................
                    St. John the Baptist Parish, LA............
                    St. Tammany Parish, LA.....................
35644............  New York-Wayne-White Plains, NY-NJ..........   1.3177
                    Bergen County, NJ..........................
                    Hudson County, NJ..........................
                    Passaic County, NJ.........................
                    Bronx County, NY...........................
                    Kings County, NY...........................
                    New York County, NY........................
                    Putnam County, NY..........................
                    Queens County, NY..........................
                    Richmond County, NY........................
                    Rockland County, NY........................
                    Westchester County, NY.....................
35660............  Niles-Benton Harbor, MI.....................   0.8915
                    Berrien County, MI.........................
35980............  Norwich-New London, CT......................   1.1932
                    New London County, CT......................
36084............  Oakland-Fremont-Hayward, CA.................   1.5819
                    Alameda County, CA.........................
                    Contra Costa County, CA....................
36100............  Ocala, FL...................................   0.8867
                    Marion County, FL..........................
36140............  Ocean City, NJ..............................   1.0472
                    Cape May County, NJ........................
36220............  Odessa, TX..................................   1.0073
                    Ector County, TX...........................
36260............  Ogden-Clearfield, UT........................   0.8995
                    Davis County, UT...........................
                    Morgan County, UT..........................
                    Weber County, UT...........................
36420............  Oklahoma City, OK...........................   0.8843
                    Canadian County, OK........................
                    Cleveland County, OK.......................
                    Grady County, OK...........................
                    Lincoln County, OK.........................
                    Logan County, OK...........................
                    McClain County, OK.........................
                    Oklahoma County, OK........................
36500............  Olympia, WA.................................   1.1081
                    Thurston County, WA........................
36540............  Omaha-Council Bluffs, NE-IA.................   0.9450
                    Harrison County, IA........................
                    Mills County, IA...........................
                    Pottawattamie County, IA...................
                    Cass County, NE............................
                    Douglas County, NE.........................
                    Sarpy County, NE...........................
                    Saunders County, NE........................
                    Washington County, NE......................
36740............  Orlando, FL.................................   0.9452
                    Lake County, FL............................
                    Orange County, FL..........................
                    Osceola County, FL.........................
                    Seminole County, FL........................
36780............  Oshkosh-Neenah, WI..........................   0.9315
                    Winnebago County, WI.......................
36980............  Owensboro, KY...............................   0.8748
                    Daviess County, KY.........................
                    Hancock County, KY.........................
                    McLean County, KY..........................
37100............  Oxnard-Thousand Oaks-Ventura, CA............   1.1546
                    Ventura County, CA.........................
37340............  Palm Bay-Melbourne-Titusville, FL...........   0.9443
                    Brevard County, FL.........................
37460............  Panama City-Lynn Haven, FL..................   0.8027

[[Page 44327]]

 
                    Bay County, FL.............................
37620............  Parkersburg-Marietta, WV-OH.................   0.7977
                    Washington County, OH......................
                    Pleasants County, WV.......................
                    Wirt County, WV............................
                    Wood County, WV............................
37700............  Pascagoula, MS..............................   0.8215
                    George County, MS..........................
                    Jackson County, MS.........................
37860............  Pensacola-Ferry Pass-Brent, FL..............   0.8000
                    Escambia County, FL........................
                    Santa Rosa County, FL......................
37900............  Peoria, IL..................................   0.8982
                    Marshall County, IL........................
                    Peoria County, IL..........................
                    Stark County, IL...........................
                    Tazewell County, IL........................
                    Woodford County, IL........................
37964............  Philadelphia, PA............................   1.0996
                    Bucks County, PA...........................
                    Chester County, PA.........................
                    Delaware County, PA........................
                    Montgomery County, PA......................
                    Philadelphia County, PA....................
38060............  Phoenix-Mesa-Scottsdale, AZ.................   1.0287
                    Maricopa County, AZ........................
                    Pinal County, AZ...........................
38220............  Pine Bluff, AR..............................   0.8383
                    Cleveland County, AR.......................
                    Jefferson County, AR.......................
                    Lincoln County, AR.........................
38300............  Pittsburgh, PA..............................   0.8674
                    Allegheny County, PA.......................
                    Armstrong County, PA.......................
                    Beaver County, PA..........................
                    Butler County, PA..........................
                    Fayette County, PA.........................
                    Washington County, PA......................
                    Westmoreland County, PA....................
38340............  Pittsfield, MA..............................   1.0266
                    Berkshire County, MA.......................
38540............  Pocatello, ID...............................   0.9400
                    Bannock County, ID.........................
                    Power County, ID...........................
38660............  Ponce, PR...................................   0.4842
                    Juana D[iacute]az Municipio, PR............
                    Ponce Municipio, PR........................
                    Villalba Municipio, PR.....................
38860............  Portland-South Portland-Biddeford, ME.......   0.9908
                    Cumberland County, ME......................
                    Sagadahoc County, ME.......................
                    York County, ME............................
38900............  Portland-Vancouver-Beaverton, OR-WA.........   1.1416
                    Clackamas County, OR.......................
                    Columbia County, OR........................
                    Multnomah County, OR.......................
                    Washington County, OR......................
                    Yamhill County, OR.........................
                    Clark County, WA...........................
                    Skamania County, WA........................
38940............  Port St. Lucie-Fort Pierce, FL..............   0.9833
                    Martin County, FL..........................
                    St. Lucie County, FL.......................
39100............  Poughkeepsie-Newburgh-Middletown, NY........   1.0911
                    Dutchess County, NY........................
                    Orange County, NY..........................
39140............  Prescott, AZ................................   0.9836
                    Yavapai County, AZ.........................
39300............  Providence-New Bedford-Fall River, RI-MA....   1.0783
                    Bristol County, MA.........................

[[Page 44328]]

 
                    Bristol County, RI.........................
                    Kent County, RI............................
                    Newport County, RI.........................
                    Providence County, RI......................
                    Washington County, RI......................
39340............  Provo-Orem, UT..............................   0.9537
                    Juab County, UT............................
                    Utah County, UT............................
39380............  Pueblo, CO..................................   0.8753
                    Pueblo County, CO..........................
39460............  Punta Gorda, FL.............................   0.9405
                    Charlotte County, FL.......................
39540............  Racine, WI..................................   0.9356
                    Racine County, WI..........................
39580............  Raleigh-Cary, NC............................   0.9864
                    Franklin County, NC........................
                    Johnston County, NC........................
                    Wake County, NC............................
39660............  Rapid City, SD..............................   0.8833
                    Meade County, SD...........................
                    Pennington County, SD......................
39740............  Reading, PA.................................   0.9622
                    Berks County, PA...........................
39820............  Redding, CA.................................   1.3198
                    Shasta County, CA..........................
39900............  Reno-Sparks, NV.............................   1.1963
                    Storey County, NV..........................
                    Washoe County, NV..........................
40060............  Richmond, VA................................   0.9177
                    Amelia County, VA..........................
                    Caroline County, VA........................
                    Charles City County, VA....................
                    Chesterfield County, VA....................
                    Cumberland County, VA......................
                    Dinwiddie County, VA.......................
                    Goochland County, VA.......................
                    Hanover County, VA.........................
                    Henrico County, VA.........................
                    King and Queen County, VA..................
                    King William County, VA....................
                    Louisa County, VA..........................
                    New Kent County, VA........................
                    Powhatan County, VA........................
                    Prince George County, VA...................
                    Sussex County, VA..........................
                    Colonial Heights City, VA..................
                    Hopewell City, VA..........................
                    Petersburg City, VA........................
                    Richmond City, VA..........................
40140............  Riverside-San Bernardino-Ontario, CA........   1.0904
                    Riverside County, CA.......................
                    San Bernardino County, CA..................
40220............  Roanoke, VA.................................   0.8647
                    Botetourt County, VA.......................
                    Craig County, VA...........................
                    Franklin County, VA........................
                    Roanoke County, VA.........................
                    Roanoke City, VA...........................
                    Salem City, VA.............................
40340............  Rochester, MN...............................   1.1408
                    Dodge County, MN...........................
                    Olmsted County, MN.........................
                    Wabasha County, MN.........................
40380............  Rochester, NY...............................   0.8994
                    Livingston County, NY......................
                    Monroe County, NY..........................
                    Ontario County, NY.........................
                    Orleans County, NY.........................
                    Wayne County, NY...........................
40420............  Rockford, IL................................   0.9989

[[Page 44329]]

 
                    Boone County, IL...........................
                    Winnebago County, IL.......................
40484............  Rockingham County-Strafford County, NH......   1.0159
                    Rockingham County, NH......................
                    Strafford County, NH.......................
40580............  Rocky Mount, NC.............................   0.8854
                    Edgecombe County, NC.......................
                    Nash County, NC............................
40660............  Rome, GA....................................   0.9193
                    Floyd County, GA...........................
40900............  Sacramento-Arden-Arcade-Roseville, CA.......   1.3372
                    El Dorado County, CA.......................
                    Placer County, CA..........................
                    Sacramento County, CA......................
                    Yolo County, CA............................
40980............  Saginaw-Saginaw Township North, MI..........   0.8874
                    Saginaw County, MI.........................
41060............  St. Cloud, MN...............................   1.0362
                    Benton County, MN..........................
                    Stearns County, MN.........................
41100............  St. George, UT..............................   0.9265
                    Washington County, UT......................
41140............  St. Joseph, MO-KS...........................   1.0118
                    Doniphan County, KS........................
                    Andrew County, MO..........................
                    Buchanan County, MO........................
                    DeKalb County, MO..........................
41180............  St. Louis, MO-IL............................   0.9005
                    Bond County, IL............................
                    Calhoun County, IL.........................
                    Clinton County, IL.........................
                    Jersey County, IL..........................
                    Macoupin County, IL........................
                    Madison County, IL.........................
                    Monroe County, IL..........................
                    St. Clair County, IL.......................
                    Crawford County, MO........................
                    Franklin County, MO........................
                    Jefferson County, MO.......................
                    Lincoln County, MO.........................
                    St. Charles County, MO.....................
                    St. Louis County, MO.......................
                    Warren County, MO..........................
                    Washington County, MO......................
                    St. Louis City, MO.........................
41420............  Salem, OR...................................   1.0438
                    Marion County, OR..........................
                    Polk County, OR............................
41500............  Salinas, CA.................................   1.4337
                    Monterey County, CA........................
41540............  Salisbury, MD...............................   0.8953
                    Somerset County, MD........................
                    Wicomico County, MD........................
41620............  Salt Lake City, UT..........................   0.9402
                    Salt Lake County, UT.......................
                    Summit County, UT..........................
                    Tooele County, UT..........................
41660............  San Angelo, TX..............................   0.8362
                    Irion County, TX...........................
                    Tom Green County, TX.......................
41700............  San Antonio, TX.............................   0.8844
                    Atascosa County, TX........................
                    Bandera County, TX.........................
                    Bexar County, TX...........................
                    Comal County, TX...........................
                    Guadalupe County, TX.......................
                    Kendall County, TX.........................
                    Medina County, TX..........................
                    Wilson County, TX..........................
41740............  San Diego-Carlsbad-San Marcos, CA...........   1.1354

[[Page 44330]]

 
                    San Diego County, CA.......................
41780............  Sandusky, OH................................   0.9302
                    Erie County, OH............................
41884............  San Francisco-San Mateo-Redwood City, CA....   1.5165
                    Marin County, CA...........................
                    San Francisco County, CA...................
                    San Mateo County, CA.......................
41900............  San Germ[aacute]n-Cabo Rojo, PR.............   0.4885
                    Cabo Rojo Municipio, PR....................
                    Lajas Municipio, PR........................
                    Sabana Grande Municipio, PR................
                    San Germ[aacute]n Municipio, PR............
41940............  San Jose-Sunnyvale-Santa Clara, CA..........   1.5543
                    San Benito County, CA......................
                    Santa Clara County, CA.....................
41980............  San Juan-Caguas-Guaynabo, PR................   0.4452
                    Aguas Buenas Municipio, PR.................
                    Aibonito Municipio, PR.....................
                    Arecibo Municipio, PR......................
                    Barceloneta Municipio, PR..................
                    Barranquitas Municipio, PR.................
                    Bayam[oacute]n Municipio, PR...............
                    Caguas Municipio, PR.......................
                    Camuy Municipio, PR........................
                    Can[oacute]vanas Municipio, PR.............
                    Carolina Municipio, PR.....................
                    Cata[ntilde]o Municipio, PR................
                    Cayey Municipio, PR........................
                    Ciales Municipio, PR.......................
                    Cidra Municipio, PR........................
                    Comer[iacute]o Municipio, PR...............
                    Corozal Municipio, PR......................
                    Dorado Municipio, PR.......................
                    Florida Municipio, PR......................
                    Guaynabo Municipio, PR.....................
                    Gurabo Municipio, PR.......................
                    Hatillo Municipio, PR......................
                    Humacao Municipio, PR......................
                    Juncos Municipio, PR.......................
                    Las Piedras Municipio, PR..................
                    Lo[iacute]za Municipio, PR.................
                    Manat[iacute] Municipio, PR................
                    Maunabo Municipio, PR......................
                    Morovis Municipio, PR......................
                    Naguabo Municipio, PR......................
                    Naranjito Municipio, PR....................
                    Orocovis Municipio, PR.....................
                    Quebradillas Municipio, PR.................
                    R[iacute]o Grande Municipio, PR............
                    San Juan Municipio, PR.....................
                    San Lorenzo Municipio, PR..................
                    Toa Alta Municipio, PR.....................
                    Toa Baja Municipio, PR.....................
                    Trujillo Alto Municipio, PR................
                    Vega Alta Municipio, PR....................
                    Vega Baja Municipio, PR....................
                    Yabucoa Municipio, PR......................
42020............  San Luis Obispo-Paso Robles, CA.............   1.1598
                    San Luis Obispo County, CA.................
42044............  Santa Ana-Anaheim-Irvine, CA................   1.1473
                    Orange County, CA..........................
42060............  Santa Barbara-Santa Maria-Goleta, CA........   1.1091
                    Santa Barbara County, CA...................
42100............  Santa Cruz-Watsonville, CA..................   1.5457
                    Santa Cruz County, CA......................
42140............  Santa Fe, NM................................   1.0824
                    Santa Fe County, NM........................
42220............  Santa Rosa-Petaluma, CA.....................   1.4464
                    Sonoma County, CA..........................
42260............  Sarasota-Bradenton-Venice, FL...............   0.9868

[[Page 44331]]

 
                    Manatee County, FL.........................
                    Sarasota County, FL........................
42340............  Savannah, GA................................   0.9351
                    Bryan County, GA...........................
                    Chatham County, GA.........................
                    Effingham County, GA.......................
42540............  Scranton-Wilkes-Barre, PA...................   0.8347
                    Lackawanna County, PA......................
                    Luzerne County, PA.........................
                    Wyoming County, PA.........................
42644............  Seattle-Bellevue-Everett, WA................   1.1434
                    King County, WA............................
                    Snohomish County, WA.......................
42680............  Sebastian-Vero Beach, FL....................   0.9573
                    Indian River County, FL....................
43100............  Sheboygan, WI...............................   0.9026
                    Sheboygan County, WI.......................
43300............  Sherman-Denison, TX.........................   0.8502
                    Grayson County, TX.........................
43340............  Shreveport-Bossier City, LA.................   0.8865
                    Bossier Parish, LA.........................
                    Caddo Parish, LA...........................
                    De Soto Parish, LA.........................
43580............  Sioux City, IA-NE-SD........................   0.9200
                    Woodbury County, IA........................
                    Dakota County, NE..........................
                    Dixon County, NE...........................
                    Union County, SD...........................
43620............  Sioux Falls, SD.............................   0.9559
                    Lincoln County, SD.........................
                    McCook County, SD..........................
                    Minnehaha County, SD.......................
                    Turner County, SD..........................
43780............  South Bend-Mishawaka, IN-MI.................   0.9842
                    St. Joseph County, IN......................
                    Cass County, MI............................
43900............  Spartanburg, SC.............................   0.9174
                    Spartanburg County, SC.....................
44060............  Spokane, WA.................................   1.0447
                    Spokane County, WA.........................
44100............  Springfield, IL.............................   0.8890
                    Menard County, IL..........................
                    Sangamon County, IL........................
44140............  Springfield, MA.............................   1.0079
                    Franklin County, MA........................
                    Hampden County, MA.........................
                    Hampshire County, MA.......................
44180............  Springfield, MO.............................   0.8469
                    Christian County, MO.......................
                    Dallas County, MO..........................
                    Greene County, MO..........................
                    Polk County, MO............................
                    Webster County, MO.........................
44220............  Springfield, OH.............................   0.8593
                    Clark County, OH...........................
44300............  State College, PA...........................   0.8784
                    Centre County, PA..........................
44700............  Stockton, CA................................   1.1442
                    San Joaquin County, CA.....................
44940............  Sumter, SC..................................   0.8083
                    Sumter County, SC..........................
45060............  Syracuse, NY................................   0.9691
                    Madison County, NY.........................
                    Onondaga County, NY........................
                    Oswego County, NY..........................
45104............  Tacoma, WA..................................   1.0789
                    Pierce County, WA..........................
45220............  Tallahassee, FL.............................   0.8942
                    Gadsden County, FL.........................
                    Jefferson County, FL.......................

[[Page 44332]]

 
                    Leon County, FL............................
                    Wakulla County, FL.........................
45300............  Tampa-St. Petersburg-Clearwater, FL.........   0.9144
                    Hernando County, FL........................
                    Hillsborough County, FL....................
                    Pasco County, FL...........................
                    Pinellas County, FL........................
45460............  Terre Haute, IN.............................   0.8765
                    Clay County, IN............................
                    Sullivan County, IN........................
                    Vermillion County, IN......................
                    Vigo County, IN............................
45500............  Texarkana, TX-Texarkana, AR.................   0.8104
                    Miller County, AR..........................
                    Bowie County, TX...........................
45780............  Toledo, OH..................................   0.9586
                    Fulton County, OH..........................
                    Lucas County, OH...........................
                    Ottawa County, OH..........................
                    Wood County, OH............................
45820............  Topeka, KS..................................   0.8730
                    Jackson County, KS.........................
                    Jefferson County, KS.......................
                    Osage County, KS...........................
                    Shawnee County, KS.........................
                    Wabaunsee County, KS.......................
45940............  Trenton-Ewing, NJ...........................   1.0835
                    Mercer County, NJ..........................
46060............  Tucson, AZ..................................   0.9202
                    Pima County, AZ............................
46140............  Tulsa, OK...................................   0.8103
                    Creek County, OK...........................
                    Okmulgee County, OK........................
                    Osage County, OK...........................
                    Pawnee County, OK..........................
                    Rogers County, OK..........................
                    Tulsa County, OK...........................
                    Wagoner County, OK.........................
46220............  Tuscaloosa, AL..............................   0.8542
                    Greene County, AL..........................
                    Hale County, AL............................
                    Tuscaloosa County, AL......................
46340............  Tyler, TX...................................   0.8811
                    Smith County, TX...........................
46540............  Utica-Rome, NY..............................   0.8396
                    Herkimer County, NY........................
                    Oneida County, NY..........................
46660............  Valdosta, GA................................   0.8369
                    Brooks County, GA..........................
                    Echols County, GA..........................
                    Lanier County, GA..........................
                    Lowndes County, GA.........................
46700............  Vallejo-Fairfield, CA.......................   1.5137
                    Solano County, CA..........................
47020............  Victoria, TX................................   0.8560
                    Calhoun County, TX.........................
                    Goliad County, TX..........................
                    Victoria County, TX........................
47220............  Vineland-Millville-Bridgeton, NJ............   0.9832
                    Cumberland County, NJ......................
47260............  Virginia Beach-Norfolk-Newport News, VA-NC..   0.8790
                    Currituck County, NC.......................
                    Gloucester County, VA......................
                    Isle of Wight County, VA...................
                    James City County, VA......................
                    Mathews County, VA.........................
                    Surry County, VA...........................
                    York County, VA............................
                    Chesapeake City, VA........................
                    Hampton City, VA...........................

[[Page 44333]]

 
                    Newport News City, VA......................
                    Norfolk City, VA...........................
                    Poquoson City, VA..........................
                    Portsmouth City, VA........................
                    Suffolk City, VA...........................
                    Virginia Beach City, VA....................
                    Williamsburg City, VA......................
47300............  Visalia-Porterville, CA.....................   0.9968
                    Tulare County, CA..........................
47380............  Waco, TX....................................   0.8633
                    McLennan County, TX........................
47580............  Warner Robins, GA...........................   0.8380
                    Houston County, GA.........................
47644............  Warren-Troy-Farmington Hills, MI............   1.0054
                    Lapeer County, MI..........................
                    Livingston County, MI......................
                    Macomb County, MI..........................
                    Oakland County, MI.........................
                    St. Clair County, MI.......................
47894............  Washington-Arlington-Alexandria, DC-VA-MD-WV   1.1054
                    District of Columbia, DC...................
                    Calvert County, MD.........................
                    Charles County, MD.........................
                    Prince George's County, MD.................
                    Arlington County, VA.......................
                    Clarke County, VA..........................
                    Fairfax County, VA.........................
                    Fauquier County, VA........................
                    Loudoun County, VA.........................
                    Prince William County, VA..................
                    Spotsylvania County, VA....................
                    Stafford County, VA........................
                    Warren County, VA..........................
                    Alexandria City, VA........................
                    Fairfax City, VA...........................
                    Falls Church City, VA......................
                    Fredericksburg City, VA....................
                    Manassas City, VA..........................
                    Manassas Park City, VA.....................
                    Jefferson County, WV.......................
47940............  Waterloo-Cedar Falls, IA....................   0.8408
                    Black Hawk County, IA......................
                    Bremer County, IA..........................
                    Grundy County, IA..........................
48140............  Wausau, WI..................................   0.9722
                    Marathon County, WI........................
48260............  Weirton-Steubenville, WV-OH.................   0.8063
                    Jefferson County, OH.......................
                    Brooke County, WV..........................
                    Hancock County, WV.........................
48300............  Wenatchee, WA...............................   1.0346
                    Chelan County, WA..........................
                    Douglas County, WA.........................
48424............  West Palm Beach-Boca Raton-Boynton Beach, FL   0.9649
                    Palm Beach County, FL......................
48540............  Wheeling, WV-OH.............................   0.7010
                    Belmont County, OH.........................
                    Marshall County, WV........................
                    Ohio County, WV............................
48620............  Wichita, KS.................................   0.9063
                    Butler County, KS..........................
                    Harvey County, KS..........................
                    Sedgwick County, KS........................
                    Sumner County, KS..........................
48660............  Wichita Falls, TX...........................   0.8311
                    Archer County, TX..........................
                    Clay County, TX............................
                    Wichita County, TX.........................
48700............  Williamsport, PA............................   0.8139
                    Lycoming County, PA........................

[[Page 44334]]

 
48864............  Wilmington, DE-MD-NJ........................   1.0684
                    New Castle County, DE......................
                    Cecil County, MD...........................
                    Salem County, NJ...........................
48900............  Wilmington, NC..............................   0.9835
                    Brunswick County, NC.......................
                    New Hanover County, NC.....................
                    Pender County, NC..........................
49020............  Winchester, VA-WV...........................   1.0091
                    Frederick County, VA.......................
                    Winchester City, VA........................
                    Hampshire County, WV.......................
49180............  Winston-Salem, NC...........................   0.9276
                    Davie County, NC...........................
                    Forsyth County, NC.........................
                    Stokes County, NC..........................
                    Yadkin County, NC..........................
49340............  Worcester, MA...............................   1.0722
                    Worcester County, MA.......................
49420............  Yakima, WA..................................   0.9847
                    Yakima County, WA..........................
49500............  Yauco, PR...................................   0.3854
                    Gu[aacute]nica Municipio, PR...............
                    Guayanilla Municipio, PR...................
                    Pe[ntilde]uelas Municipio, PR..............
                    Yauco Municipio, PR........................
49620............  York-Hanover, PA............................   0.9397
                    York County, PA............................
49660............  Youngstown-Warren-Boardman, OH-PA...........   0.8802
                    Mahoning County, OH........................
                    Trumbull County, OH........................
                    Mercer County, PA..........................
49700............  Yuba City, CA...............................   1.0730
                    Sutter County, CA..........................
                    Yuba County, CA............................
49740............  Yuma, AZ....................................   0.9109
                    Yuma County, AZ............................
------------------------------------------------------------------------
\1\ 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.--Inpatient Rehabilitation Facility Wage Index for Rural Areas
for Discharges Occurring From October 1, 2007 Through September 30, 2008
------------------------------------------------------------------------
                                                                  Wage
              CBSA code                    Nonurban area         index
------------------------------------------------------------------------
01..................................  Alabama................     0.7591
02..................................  Alaska.................     1.0661
03..................................  Arizona................     0.8908
04..................................  Arkansas...............     0.7307
05..................................  California.............     1.1454
06..................................  Colorado...............     0.9325
07..................................  Connecticut............     1.1709
08..................................  Delaware...............     0.9705
10..................................  Florida................     0.8594
11..................................  Georgia................     0.7593
12..................................  Hawaii.................     1.0448
13..................................  Idaho..................     0.8120
14..................................  Illinois...............     0.8320
15..................................  Indiana................     0.8538
16..................................  Iowa...................     0.8681
17..................................  Kansas.................     0.7998
18..................................  Kentucky...............     0.7768
19..................................  Louisiana..............     0.7438
20..................................  Maine..................     0.8443
21..................................  Maryland...............     0.8926
22..................................  Massachusetts \2\......     1.1661
23..................................  Michigan...............     0.9062
24..................................  Minnesota..............     0.9153
25..................................  Mississippi............     0.7738
26..................................  Missouri...............     0.7927
27..................................  Montana................     0.8590
28..................................  Nebraska...............     0.8677
29..................................  Nevada.................     0.8944
30..................................  New Hampshire..........     1.0853
31..................................  New Jersey \1\.........  .........
32..................................  New Mexico.............     0.8332
33..................................  New York...............     0.8232
34..................................  North Carolina.........     0.8588
35..................................  North Dakota...........     0.7215
36..................................  Ohio...................     0.8658
37..................................  Oklahoma...............     0.7629
38..................................  Oregon.................     0.9753
39..................................  Pennsylvania...........     0.8320
40..................................  Puerto Rico \3\........     0.4047
41..................................  Rhode Island \1\.......  .........
42..................................  South Carolina.........     0.8566
43..................................  South Dakota...........     0.8480
44..................................  Tennessee..............     0.7827
45..................................  Texas..................     0.7965
46..................................  Utah...................     0.8140
47..................................  Vermont................     0.9744
48..................................  Virgin Islands.........     0.8467
49..................................  Virginia...............     0.7940
50..................................  Washington.............     1.0263
51..................................  West Virginia..........     0.7607
52..................................  Wisconsin..............     0.9553
53..................................  Wyoming................     0.9295

[[Page 44335]]

 
65..................................  Guam...................     0.9611
------------------------------------------------------------------------
\1\ 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 VI.B, we will impute a wage index
  value for rural Massachusetts 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 VI.B, we will 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).

[FR Doc. 07-3789 Filed 7-31-07; 4:00 pm]
BILLING CODE 4120-01-P