44284 Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 

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. 

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 FacilityPatient 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 LongTerm 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 facilitylevel adjustments. These refinements 

were based on analyses by the RAND 

Corporation (RAND), a non-partisan 

economic and social policy research 

group, using calendar year 2002 and FY 

2003 data. These were the first 

significant refinements to the IRF PPS 

since its implementation. In conducting 

the analysis, RAND used claims and 

clinical data for services furnished after 

the IRF PPS implementation. These 

newer data sets were more complete, 

and reflected improved coding of 

comorbidities and patient severity by 

IRFs. The researchers were able to use 

new data sources for imputing missing 

values and more advanced statistical 

approaches to complete their analyses. 

The RAND reports supporting the 

refinements made to the IRF PPS are 

available on the CMS Web site at: 

http://www.cms.hhs.gov/ 

InpatientRehabFacPPS/ 

09_Research.asp. 

The final key policy changes, effective 

for discharges occurring on or after 

October 1, 2005, are discussed in detail 

in the FY 2006 IRF PPS final rule (70 

FR 47880 and 70 FR 57166). The 

following is a brief summary of the key 

policy changes: 

• Adopted the Office of Management 

and Budget’s (OMB’s) Core-Based 

Statistical Area (CBSA) market area 

definitions in a budget neutral manner. 

• Implemented a budget-neutral 3- 

year hold harmless policy for IRFs that 

had been classified as rural in FY 2005, 

but became urban in FY 2006. 

• Implemented a payment adjustment 

to account for changes in coding that 

did not reflect real changes in case mix. 

We reduced the standard payment 

amount by 1.9 percent to account for 

such changes in coding following 

implementation of the IRF PPS. 

• Modified the CMGs, tier 

comorbidities, and relative weights in a 

budget-neutral manner. The five special 

CMGs remained the same as they had 

been before FY 2006 and continued to 

account for very short stays and for 

patients who expire in the IRF. 

• Implemented a teaching status 

adjustment in a budget neutral manner 

for IRFs, similar to the one adopted for 

inpatient psychiatric facilities. 

• Revised and rebased the market 

basket and labor-related share to reflect 

the operating and capital cost structures 

for rehabilitation, psychiatric, and longterm care (RPL) hospitals to update IRF 

payment rates. 

• Updated the rural adjustment from 

19.14 percent to 21.3 percent in a 

budget neutral manner. 

• Updated the low-income percentage 

(LIP) adjustment from an exponent of 

0.484 to an exponent of 0.6229 in a 

budget neutral manner. 

• Updated the outlier threshold 

amount from $11,211 to $5,129. 

As noted above, a detailed discussion 

of the final key policy changes for FY 

2006 appears in the FY 2006 IRF PPS 

final rule (70 FR 47880 and 70 FR 

57166). 

In the FY 2007 final rule (71 FR 

48354) we made the following revisions 

and updates: 

• Updated the relative weight and 

average length of stay tables based on reanalysis of the data by CMS and our 

contractor, the RAND Corporation. 

• Reduced the standard payment 

amount by 2.6 percent to account more 

fully for coding changes that do not 

reflect real changes in case mix. 

• Updated the IRF PPS payment rates 

by the FY 2007 estimates of the market 

basket and the labor-related share. 

• Updated the IRF PPS payment rates 

by the FY 2007 wage indexes. 

• Applied the second year of the hold 

harmless policy in a budget neutral 

manner. 

• Updated the outlier threshold from 

$5,129 to $5,534. 

• Updated the urban and rural 

national cost-to-charge ratio ceilings for 


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the purposes of determining outlier 

payments under the IRF PPS and 

clarified the methodology described in 

the regulations text. 

• Revised the regulation text in 

§ 412.23(b)(2)(i) and § 412.23(b)(2)(ii) to 

reflect the statutory changes in section 

5005 of the Deficit Reduction Act of 

2005 (DRA, Pub. L. 109–171). The 

regulation text change prolongs the 

overall duration of the phased transition 

to the full 75 percent threshold 

established in § 412.23(b)(2)(i) and 

§ 412.23(b)(2)(ii), by extending the 

transition’s 60 percent phase for an 

additional 12 months. In addition to the 

above DRA requirements pertaining to 

the applicable compliance percentage 

requirements under § 412.23(b)(2), we 

also permitted a comorbidity that meets 

the criteria as specified in 

§ 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 

§ 412.628 of the regulations require the 

Secretary to publish in the Federal 

Register, on or before the August 1 that 

precedes the start of each new FY, the 

classifications and weighting factors for 

the IRF CMGs and a description of the 

methodology and data used in 

computing the prospective payment 

rates for the upcoming FY. On August 

1, 2002, we published a notice in the 

Federal Register (67 FR at 49928) to 

update the IRF Federal prospective 

payment rates from FY 2002 to FY 2003 

using the methodology as described in 

§ 412.624. As stated in the August 1, 

2002 notice, we used the same 

classifications and weighting factors for 

the IRF CMGs that were set forth in the 

August 7, 2001 final rule to update the 

IRF Federal prospective payment rates 

from FY 2002 to FY 2003. We continued 

to update the prospective payment rates 

in accordance with the methodology set 

forth in the August 7, 2001 final rule for 

each succeeding FY up to and including 

FY 2005. For FY 2006, however, we 

published a final rule that revised 

several IRF PPS policies (70 FR 47880). 

The provisions of the FY 2006 IRF PPS 

final rule became effective for 

discharges occurring on or after October 

1, 2005. We published correcting 

amendments to the FY 2006 IRF PPS 

final rule in the Federal Register (70 FR 

57166). Any reference to the FY 2006 

IRF PPS final rule in this 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-forservice 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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Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 44287 

claim data elements and providerspecific 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 

• 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). 

• 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). 

• Update the pre-reclassified and prefloor 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). 

• 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). 

• 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). 

• 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). 

• 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 

§ 412.1(a)(1) and instead be paid under 

the IRF PPS, a hospital or rehabilitation 

unit of an acute care hospital must meet 

the requirements for classification as an 

IRF stipulated in subpart B of part 412. 

As discussed in previous Federal 

Register publications 68 FR 26786 (May 

16, 2003), 68 FR 53266 (September 9, 

2003), 69 FR 25752 (May 7, 2004), 70 FR 

36640 (June 24, 2005), and 71 FR 48354 

(August 18, 2006)), § 412.23(b)(2) 

specifies one criterion 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 § 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 § 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), § 412.23(b)(2) stipulated that 

the compliance threshold was 75 

percent. Therefore, the compliance 

threshold was commonly referred to as 

the ‘‘75 percent rule.’’ In addition, prior 

to the May 7, 2004 final rule, the 

regulation only specified 10 medical 

conditions. However, in the May 7, 2004 

final rule, we revised § 412.23(b)(2) 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 § 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: 

• The patient is admitted for 

inpatient rehabilitation for a condition 

that is not one of the conditions listed 

in § 412.23(b)(2)(iii). 

• The patient also has a comorbidity 

that falls within one of the conditions 

listed in § 412.23(b)(2)(iii). 

• The comorbidity has caused 

significant decline in functional ability 

in the individual such that, even in the 

absence of the admitting condition, the 

individual would require the intensive 

rehabilitation treatment that is unique to 

inpatient rehabilitation facilities paid 

under the IRF PPS and that cannot be 

appropriately performed in another 

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 


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compliance threshold transition period. 

Due to the DRA, the transition period 

was extended to include cost reporting 

periods starting on or after July 1, 2004, 

and before July 1, 2008. Therefore, in 

order to conform the regulations to the 

DRA, we revised § 412.23(b)(2) 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 

§ 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 § 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 § 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 § 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 

§ 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 § 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 

§ 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 

§ 412.23(b)(2)(iii) who may occasionally 

also require treatment in an IRF. 

Therefore, § 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 § 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 

§ 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, § 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 highquality 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 

§ 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 


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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 

§ 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: 

• 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. 

• 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 priceneutral 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 ‘‘priceneutral 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 § 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. 

• 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. 

• 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. 

• 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. 

• 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 

§ 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: 

• The 75 percent rule accurately 

identifies as IRFs those facilities serving 

patients who genuinely need intensive 

rehabilitation; and 

• 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 § 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 


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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 CMG description 

(M=motor, C=cognitive, A=age) 

Relative weights Average length of stay 

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 and C>18.5 .......................... 0.9493 0.8995 0.8095 0.7818 11 15 11 10 

0103 ......... Stroke 

M>44.45 and M<51.05 and C<18.5 .......................... 1.1192 1.0605 0.9544 0.9218 14 13 12 12 

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 


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TABLE 1.—RELATIVE WEIGHTS AND AVERAGE LENGTHS OF STAY FOR CASE MIX GROUPS—Continued 

CMG CMG description 

(M=motor, C=cognitive, A=age) 

Relative weights Average length of stay 

Tier 1 Tier 2 Tier 3 None Tier 1 Tier 2 Tier 3 None 

M>22.35 and M<26.15 and A<84.5 ........................... 2.1998 2.0843 1.8758 1.8116 23 26 24 23 

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 and C>23.5 .......................... 1.0460 0.8743 0.7810 0.7254 12 10 11 9 

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 


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TABLE 1.—RELATIVE WEIGHTS AND AVERAGE LENGTHS OF STAY FOR CASE MIX GROUPS—Continued 

CMG CMG description 

(M=motor, C=cognitive, A=age) 

Relative weights Average length of stay 

Tier 1 Tier 2 Tier 3 None Tier 1 Tier 2 Tier 3 None 

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 and A>83.5 ........................... 1.2707 1.0700 0.9974 0.8956 15 15 13 12 

0804 ......... Replacement of lower extremity joint 

M>28.65 and M<37.05 and A<83.5 ........................... 1.1040 0.9296 0.8665 0.7781 13 12 12 10 

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 


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TABLE 1.—RELATIVE WEIGHTS AND AVERAGE LENGTHS OF STAY FOR CASE MIX GROUPS—Continued 

CMG CMG description 

(M=motor, C=cognitive, A=age) 

Relative weights Average length of stay 

Tier 1 Tier 2 Tier 3 None Tier 1 Tier 2 Tier 3 None 

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 


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TABLE 1.—RELATIVE WEIGHTS AND AVERAGE LENGTHS OF STAY FOR CASE MIX GROUPS—Continued 

CMG CMG description 

(M=motor, C=cognitive, A=age) 

Relative weights Average length of stay 

Tier 1 Tier 2 Tier 3 None Tier 1 Tier 2 Tier 3 None 

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, length of stay is 3 days or fewer .. ............ ............ ............ 0.2201 ............ ............ ............ 2 

5101 ......... Expired, orthopedic, length of stay is 13 days or 

fewer.

............ ............ ............ 0.6351 ............ ............ ............ 8 

5102 ......... Expired, orthopedic, length of stay is 14 days or 

more.

............ ............ ............ 1.5985 ............ ............ ............ 22 

5103 ......... Expired, not orthopedic, length of stay is 15 days or 

fewer.

............ ............ ............ 0.7203 ............ ............ ............ 8 

5104 ......... Expired, not orthopedic, length of stay is 16 days or 

more.

............ ............ ............ 1.8784 ............ ............ ............ 24 

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 laborrelated 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 


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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

Cost category 

FY 2008 IRF 

labor-related 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 laborrelated 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 laborrelated 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, laborintensive 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 


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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-toyear. 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 prefloor, 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 reexamine 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 laborrelated 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 § 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 prefloor hospital wage data) and the laborrelated 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 


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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 holdharmless 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. 


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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 ............................................................................................................................................ × 1.032 

Subtotal ................................................................................................................................................................................................ = 13,396 

Budget Neutrality Factor for the Wage Index, Labor-Related Share, and the Hold Harmless Provision .......................................... × 1.0041 

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

CMG 

Payment 

rate tier 

1 

Payment 

rate tier 

2 

Payment 

rate tier 

3 

Payment 

rate no 

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 


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TABLE 4.—FY 2008 PAYMENT RATES—Continued 

CMG 

Payment 

rate tier 

1 

Payment 

rate tier 

2 

Payment 

rate tier 

3 

Payment 

rate no 

comorbidity 

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 nonlabor 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 laborrelated share (75.818) described in 

section VI.A of this final rule by the 

unadjusted Federal prospective 

payment rate. To determine the nonlabor 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 wageadjusted 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 wageadjusted and rural-adjusted amount (if 

applicable). Finally, we add the 

additional teaching status payments (if 

applicable) to the wage, rural, and LIPadjusted Federal prospective payment 

rate. Table 5 illustrates the components 

of the adjusted payment calculation. 


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TABLE 5.—EXAMPLE OF COMPUTING AN IRF’S FY 2008 FEDERAL PROSPECTIVE PAYMENT

Steps 

Rural Facility A 

(Spencer Co., 

IN) 

Urban Facility B 

(Harrison Co., 

IN) 

1 ................... Unadjusted Federal Prospective Payment ........................................................................... $29,120.07 $29,120.07 

2 ................... Labor Share .......................................................................................................................... × 0.75818 × 0.75818 

3 ................... Labor Portion of Federal Payment ........................................................................................ = $22,078.25 = $22,078.25 

4 ................... CBSA Based Wage Index (shown in the Addendum, Tables 1 and 2) ............................... × 0.8538 × 0.9118 

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 ................................................................................................................... × 1.213 × 1.000 

9 ................... Wage- and Rural-Adjusted Federal Payment ....................................................................... = $31,407.27 = $27,172.77 

10 ................. LIP Adjustment ...................................................................................................................... × 1.0309 × 1.0910 

11 ................. FY2007 Wage-, Rural- and LIP-Adjusted Federal Prospective Payment Rate ................... = $32,377.76 = $29,645.49 

12 ................. FY2007 Wage- and Rural-Adjusted Federal Prospective Payment ..................................... $31,407.27 $27,172.77 

13 ................. Teaching Status Adjustment ................................................................................................. × 0.000 × 0.109 

14 ................. Teaching Status Adjustment Amount ................................................................................... = $0.00 = $2,961.83 

15 ................. FY2007 Wage-, Rural-, and LIP-Adjusted Federal Prospective Payment Rate .................. + $32,377.76 + $29,645.49 

16 ................. Total FY2007 Adjusted Federal Prospective Payment ......................................................... = $32,377.76 = $32,607.32 

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: 

• New IRFs that have not yet 

submitted their first Medicare cost 

report. 

• IRFs whose overall CCR is in excess 

of 3 standard deviations above the 

corresponding national geometric mean, 

which is set at 1.56 for FY 2008. 

• Other IRFs for whom accurate data 

with which to calculate an overall CCR 

are not available. 

Specifically, for FY 2008, we estimate 

a 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 


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beginning of the IRF PPS through FY 

2005, obtained from IRFs’ cost report 

filings, to identify specific payment 

vulnerabilities in the IRF outlier 

payment policy. 

Under this policy, which is outlined 

in § 412.624(e)(5), which in turn 

references § 412.84(i) and § 412.84(m) of 

the IPPS regulations, outlier payments 

will be processed on an interim basis 

throughout the year using IRFs’ CCRs 

based on the best information available 

at the time. When an IRF’s cost report 

is settled, any reconciliation of outlier 

payments by fiscal intermediaries will 

be based on the relationship between an 

IRF’s costs and charges at the time a 

particular discharge actually occurred. 

This revised methodology ensures that 

the final outlier payments reflect an 

accurate assessment of the actual costs 

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-tocharge 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 facilitylevel payment factors (specifically 


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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 patientlevel 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 ProviderSpecific 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 


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under § 412.624(f). The transfer policy 

provides payments that more accurately 

reflect facility resources used and 

services delivered for patients that 

transfer to another site of care as 

discussed in the FY 2002 IRF PPS final 

rule (66 FR 41316, 41353 through 

41355). We are revising our regulations 

text to clarify our existing policy under 

§ 412.624(f). 

In the FY 2002 IRF PPS final rule (66 

FR 41316, 41353 through 41355), we 

discuss our rationale, criteria for 

defining a transfer case, and the 

methodology to determine the 

unadjusted Federal prospective 

payment for the transfer case. In 

addition, we discuss several 

adjustments that we apply to the 

unadjusted Federal prospective 

payment rate. The final adjustments 

described in the FY 2002 IRF PPS final 

rule (65 FR 66304, 66347 through 

66357) include the area wage 

adjustment, rural adjustment, the LIP 

adjustment, and the high-cost outlier 

adjustment. In our FY 2006 IRF PPS 

final rule (70 FR 47880), we refined the 

facility level adjustments and also 

adopted a teaching status adjustment. 

We define a ‘‘transfer’’ under 

§ 412.602 to mean the release of a 

Medicare inpatient from an IRF to 

another IRF, a short-term, acute-care 

prospective payment hospital, a longterm care hospital as described in 

§ 412.23(e), or a nursing home that 

qualifies to receive Medicare or 

Medicaid payment. In order to receive a 

transfer payment under § 412.624(f), a 

patient must be transferred to another 

site of care as defined in § 412.602 and 

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 § 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 

§ 412.624(f)(2)(v). We proposed to revise 

§ 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 

§ 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 

§ 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 § 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 § 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 

§ 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 postacute 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-forperformance 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 


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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: 

• 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. 

• 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. 

• 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. 

• 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. 

• We are updating the outlier 

threshold amount for FY 2008 to $7,362, 

as discussed in section VII.A in this 

final rule. 

• 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. 

• We are maintaining the comorbidity 

policy specified in § 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. 

• We are revising the regulation text 

at § 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 


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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: 

• 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. 

• The effects of the annual market 

basket update (using the RPL market 

basket) to IRF PPS payment rates, as 

required by sections 1886(j)(3)(A)(i) and 

1886(j)(3)(C) of the Act. 

• The effects of applying the budget 

neutral labor-related share and wage 

index adjustment, including 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. 

• The effects of the final year of the 

3-year budget neutral hold-harmless 

policy for IRFs that were rural under 

§ 412.602 during FY 2005, but are urban 

under § 412.602 beginning 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. 

• 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 


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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 

Facility classification 

(1) 

Number of 

IRFs in FY 

2006 

(2) 

Number of 

cases in FY 

2006 

(3) 

Outlier 

(4) 

(percent) 

Market basket 

(5) 

(percent) 

FY08 CBSA 

wage index, 

labor-related 

share, and 

hold harmless 

(6) 

(percent) 

Total change 

(7) 

(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 


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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 patientlevel 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 

§ 412.624(e)(7), in order to mitigate the 

impact of the change from the MSAbased 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 CBSAbased 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 § 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 


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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 casemixes 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. 


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44312 Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 

■ 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 

■ 1. The authority citation for part 412 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

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

1395hh). 

Subpart P—Prospective Payment for 

Inpatient Rehabilitation Hospitals and 

Rehabilitation Units 

■ 2. Section 412.624 is amended by 

revising paragraph (f)(2)(v) to read as 

follows: 

§ 412.624 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 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

10180 ....... Abilene, TX ................................................................................................................................................................................ 0.8000 

Callahan County, TX.

Jones County, TX.

Taylor County, TX.

10380 ....... Aguadilla-Isabela-San Sebastia ́n, PR ....................................................................................................................................... 0.3915 

Aguada Municipio, PR.

Aguadilla Municipio, PR.

An ̃asco Municipio, PR.

Isabela Municipio, PR.

Lares Municipio, PR.

Moca Municipio, PR.

Rinco ́n Municipio, PR.

San Sebastia ́n Municipio, PR.

10420 ....... Akron, OH .................................................................................................................................................................................. 0.8654 

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.


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TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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.


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44314 Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 

TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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.


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TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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 


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TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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.


ebenthall on PROD1PC71 with RULES2
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TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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.


ebenthall on PROD1PC71 with RULES2
44318 Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 

TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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.


ebenthall on PROD1PC71 with RULES2
Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 44319 

TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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 Beach, FL ............................................................................................................ 1.0133 

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 


ebenthall on PROD1PC71 with RULES2
44320 Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 

TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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.


ebenthall on PROD1PC71 with RULES2
Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 44321 

TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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.


ebenthall on PROD1PC71 with RULES2
44322 Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 

TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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 


ebenthall on PROD1PC71 with RULES2
Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 44323 

TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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.


ebenthall on PROD1PC71 with RULES2
44324 Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 

TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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 ....... Mayagu ̈ez, PR ........................................................................................................................................................................... 0.3848 

Hormigueros Municipio, PR.

Mayagu ̈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.


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Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 44325 

TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

Ramsey County, MN.

Scott County, MN.

Sherburne County, MN.

Washington County, MN.

Wright County, MN.

Pierce County, WI.

St. Croix County, WI.

33540 ....... Missoula, MT ............................................................................................................................................................................. 0.8928 

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.


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44326 Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 

TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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 


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Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 44327 

TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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 Dı ́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.


ebenthall on PROD1PC71 with RULES2
44328 Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 

TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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 


ebenthall on PROD1PC71 with RULES2
Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 44329 

TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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 


ebenthall on PROD1PC71 with RULES2
44330 Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 

TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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 Germa ́n-Cabo Rojo, PR .................................................................................................................................................... 0.4885 

Cabo Rojo Municipio, PR.

Lajas Municipio, PR.

Sabana Grande Municipio, PR.

San Germa ́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.

Bayamo ́n Municipio, PR.

Caguas Municipio, PR.

Camuy Municipio, PR.

Cano ́vanas Municipio, PR.

Carolina Municipio, PR.

Catan ̃o Municipio, PR.

Cayey Municipio, PR.

Ciales Municipio, PR.

Cidra Municipio, PR.

Comer ́ıo 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 ́ıza Municipio, PR.

Manat ́ı Municipio, PR.

Maunabo Municipio, PR.

Morovis Municipio, PR.

Naguabo Municipio, PR.

Naranjito Municipio, PR.

Orocovis Municipio, PR.

Quebradillas Municipio, PR.

R ́ıo 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 


ebenthall on PROD1PC71 with RULES2
Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 44331 

TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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.


ebenthall on PROD1PC71 with RULES2
44332 Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 

TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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.


ebenthall on PROD1PC71 with RULES2
Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 44333 

TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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.


ebenthall on PROD1PC71 with RULES2
44334 Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 

TABLE 1.—INPATIENT REHABILITATION FACILITY WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING FROM

OCTOBER 1, 2007 THROUGH SEPTEMBER 30, 2008—Continued 

CBSA 

code 

Urban area 

(constituent counties) 

Wage 

index 

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 

Gua ́nica Municipio, PR.

Guayanilla Municipio, PR.

Pen ̃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.

1At 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 

CBSA 

code Nonurban area Wage 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 

TABLE 2.—INPATIENT REHABILITATION

FACILITY WAGE INDEX FOR RURAL

AREAS FOR DISCHARGES OCCURRING FROM OCTOBER 1, 2007 

THROUGH SEPTEMBER 30, 2008—

Continued 

CBSA 

code Nonurban area Wage index 

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 

TABLE 2.—INPATIENT REHABILITATION

FACILITY WAGE INDEX FOR RURAL

AREAS FOR DISCHARGES OCCURRING FROM OCTOBER 1, 2007 

THROUGH SEPTEMBER 30, 2008—

Continued 

CBSA 

code Nonurban area Wage index 

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 


ebenthall on PROD1PC71 with RULES2
Federal Register / Vol. 72, No. 151 / Tuesday, August 7, 2007 / Rules and Regulations 44335 

TABLE 2.—INPATIENT REHABILITATION

FACILITY WAGE INDEX FOR RURAL

AREAS FOR DISCHARGES OCCURRING FROM OCTOBER 1, 2007 

THROUGH SEPTEMBER 30, 2008—

Continued 

CBSA 

code Nonurban area Wage index 

65 ....... Guam ........................... 0.9611 

1All 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. 3Puerto 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 


ebenthall on PROD1PC71 with RULES2