Monday, 

May 15, 2006 

Part III 

Department of 

Health and Human 

Services 

Centers for Medicare & Medicaid Services 

42 CFR Part 412 

Medicare Program; Inpatient 

Rehabilitation Facility Prospective 

Payment System for Federal Fiscal Year 

2007; Proposed Rule 


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DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 412 

[CMS–1540–P] 

RIN 0938–AO16 

Medicare Program; Inpatient 

Rehabilitation Facility Prospective 

Payment System for Federal Fiscal 

Year 2007 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

update the prospective payment rates 

for inpatient rehabilitation facilities 

(IRFs) for Federal fiscal year (FY) 2007 

(for discharges occurring on or after 

October 1, 2006 and on or before 

September 30, 2007) 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 inpatient rehabilitation facility 

prospective payment system’s case-mix 

groups and a description of the 

methodology and data used in 

computing the prospective payment 

rates for that fiscal year. 

We are proposing to revise existing 

policies regarding the prospective 

payment system within the authority 

granted under section 1886(j) of the Act. 

In addition, we are proposing to revise 

the current regulation text at 42 CFR 

412.23(b)(2)(i) and (b)(2)(ii) to reflect the 

changes enacted under section 5005 of 

the Deficit Reduction Act of 2005. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on July 7, 2006. 

ADDRESSES: In commenting, please refer 

to file code CMS–1540–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (no duplicates, please): 

1. Electronically. You may submit 

electronic comments on specific issues 

in this regulation to http:// 

www.cms.hhs.gov/eRulemaking. Click 

on the link ‘‘Submit electronic 

comments on CMS regulations with an 

open comment period.’’ (Attachments 

should be in Microsoft Word, 

WordPerfect, or Excel; however, we 

prefer Microsoft Word.) 

2. By regular mail. You may mail 

written comments (one original and two 

copies) to the following address only: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: CMS–1540– 

P, P.O. Box 8012, Baltimore, MD 21244– 

8012. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments (one 

original and two copies) to the following 

address only: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–1540–P, Mail Stop C4–26–05, 

7500 Security Boulevard, Baltimore, MD 

21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments (one original 

and two copies) before the close of the 

comment period to one of the following 

addresses. If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786– 

7195 in advance to schedule your 

arrival with one of our staff members. 

Room 445–G, Hubert H. Humphrey 

Building, 200 Independence Avenue, 

SW., Washington, DC 20201; or 7500 

Security Boulevard, Baltimore, MD 

21244–1850. 

(Because access to the interior of the 

Hubert H. Humphrey (HHH) Building is 

not readily available to persons without 

Federal Government identification, 

commenters are encouraged to leave 

their comments in the Centers for 

Medicare & Medicaid Services (CMS) 

drop slots located in the main lobby of 

the building. A stamp-in clock is 

available for persons wishing to retain a 

proof of filing by stamping in and 

retaining an extra copy of the comments 

being filed.) 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Pete Diaz, (410) 786–1235, for 

information regarding the 75 percent 

rule. 

Susanne Seagrave, (410) 786–0044, for 

information regarding the new 

payment policy proposals. 

Zinnia Ng, (410) 786–4587, for 

information regarding the wage index 

and prospective payment rate 

calculation. 

SUPPLEMENTARY INFORMATION: 

Submitting Comments: We welcome 

comments from the public on all issues 

set forth in this rule to assist us in fully 

considering issues and developing 

policies. You can assist us by 

referencing the file code CMS–1540–P 

and the specific ‘‘issue identifier’’ that 

precedes the section on which you 

choose to comment. 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

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

eRulemaking. Click on the link 

‘‘Electronic Comments on CMS 

Regulations’’ on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

Table of Contents 

I. Background 

A. Historical Overview of the Inpatient 

Rehabilitation Facility Prospective 

Payment System (IRF PPS) for Fiscal 

Years (FYs) 2002 Through 2005 

B. Revisions Made by the IRF PPS Final 

Rule for FY 2006 

C. Requirements for Updating the IRF PPS 

Rates 

D. Operational Overview of the Current IRF 

PPS 

E. Brief Summary of Proposed Revisions to 

the IRF PPS for FY 2007 

II. Refinements to the Patient Classification 

System 

A. Proposed Changes to the Existing List of 

Tier Comorbidities 

B. Proposed Changes to the CMG Relative 

Weights 

1. Development of CMG Relative Weights 

2. Overview of the Methodology for 

Calculating the CMG Relative Weights 

3. Proposed Changes to the CMG Relative 

Weights and Average Lengths of Stay 

III. Proposed FY 2007 Federal Prospective 

Payment Rates 

A. Proposed Reduction of the Standard 

Payment Amount to Account for Coding 

Changes 

B. Proposed FY 2007 IRF Market Basket 

Increase Factor and Labor-Related Share 

C. Area Wage Adjustment 


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D. Description of the Proposed 

Methodology Used to Implement the 

Changes in a Budget Neutral Manner 

E. Proposed Budget Neutrality Factor 

Methodology for Fiscal Year 2007 

F. Description of the Proposed IRF 

Standard Payment Conversion Factor 

and Proposed Payment Rates for FY 2007 

G. Example of the Methodology for 

Adjusting the Proposed Federal 

Prospective Payment Rates 

IV. Proposed Update to Payments for HighCost Outliers Under the IRF PPS 

A. Proposed Update to the Outlier 

Threshold Amount for FY 2007 

B. Update to the IRF Cost-to-Charge Ratio 

Ceilings and Proposed Clarification to 

the Regulation Text for FY 2007 

V. Other Issues 

VI. Proposed Revisions to the Classification 

Criteria Percentage for IRFs 

VII. Provisions of the Proposed Rule 

A. Section 412.23 Excluded Hospitals: 

Classifications 

B. Section 412.624 Methodology for 

Calculating the Federal Prospective 

Payment Rates 

C. Additional Proposed Changes 

VIII. Collection of Information Requirements 

IX. Response to Comments 

X. Regulatory Impact Analysis 

A. Overall Impact 

B. Anticipated Effects of the Proposed Rule 

C. Accounting Statement 

D. Alternatives Considered 

E. Conclusion 

Regulation Text 

Addendum 

Acronyms 

Because of the many terms to which 

we refer by acronym in this proposed 

rule, we are listing the acronyms used 

and their corresponding terms in 

alphabetical order below. 

ADC Average Daily Census 

SCA Adminstrative 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 

DRG Diagnosis-Related Group 

DSH Disproportionate Share Hospital 

ECI Employment Cost Indexes 

FI Fiscal Intermediary 

FR Federal Register 

FY Federal Fiscal Year 

GDP Gross Domestic Product 

HHH Hubert H. Humphrey Building 

HIPAA Health Insurance Portability and 

Accountability Act, Pub. L. 104–191 

HIT Health Information Technology 

IFMC Iowa Foundation for Medical Care 

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 

PAC Post Acute Care 

PAI Patient Assessment Instrument 

PPS Prospective Payment System 

RAND RAND Corporation 

RFA Regulatory Flexibility Act, Pub. L. 96–

354 

RIA Regulation Impact Analysis 

RIC Rehabilitation Impairment Category 

RPL Rehabilitation, Psychiatric, and 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 

[If you choose to comment on issues in this 

section, please include the caption 

‘‘Background’’ at the beginning of your 

comments.] 

A. Historical Overview of the Inpatient 

Rehabilitation Facility Prospective 

Payment System (IRF PPS) for Fiscal 

Years (FYs) 2002 Through 2005 

Section 4421 of the Balanced Budget 

Act of 1997 (BBA, Pub. L. 105–33), as 

amended by section 125 of the 

Medicare, Medicaid, and SCHIP [State 

Children’s Health Insurance Program] 

Balanced Budget Refinement Act of 

1999 (BBRA, Pub. L. 106–113), and by 

section 305 of the Medicare, Medicaid, 

and SCHIP Benefits Improvement and 

Protection Act of 2000 (BIPA, Pub. L. 

106–554), provides for the 

implementation of a per discharge 

prospective payment system (PPS), 

through section 1886(j) of the Social 

Security Act (the Act), for inpatient 

rehabilitation hospitals and inpatient 

rehabilitation units of a hospital 

(hereinafter referred to as IRFs). 

Payments under the IRF PPS 

encompass inpatient operating and 

capital costs of furnishing covered 

rehabilitation services (that is, routine, 

ancillary, and capital costs) but not 

costs of approved educational activities, 

bad debts, and other services or items 

outside the scope of the IRF PPS. 

Although a complete discussion of the 

IRF PPS provisions appears in the 

August 7, 2001 final rule (66 FR 41316) 

as revised in the FY 2006 IRF PPS final 

rule (70 FR 47880), we are providing 

below a general description of the IRF 

PPS for fiscal years (FYs) 2002 through 

2005. 

Under the IRF PPS from FY 2002 

through FY 2005, as described in the 

August 7, 2001 final rule, the Federal 

prospective payment rates were 

computed across 100 distinct case-mix 

groups (CMGs). We constructed 95 

CMGs using rehabilitation impairment 

categories (RICs), functional status (both 

motor and cognitive), and age (in some 

cases, cognitive status and age may not 

be a factor in defining a CMG). In 

addition, we constructed five special 

CMGs to account for very short stays 

and for patients who expire in the IRF. 

For each of the CMGs, we developed 

relative weighting factors to account for 

a patient’s clinical characteristics and 

expected resource needs. Thus, the 

weighting factors accounted for the 

relative difference in resource use across 

all CMGs. Within each CMG, we created 

tiers based on the estimated effects that 

certain comorbidities would have on 

resource use. 

We established the Federal PPS rates 

using a standardized payment 

conversion factor (formerly referred to 

as the budget neutral conversion factor). 

For a detailed discussion of the budget 

neutral conversion factor, please refer to 

our August 1, 2003 final rule (68 FR 

45674, 45684 through 45685). In the FY 

2006 IRF PPS final rule (70 FR 47880), 

we discussed in detail the methodology 

for determining the standard payment 

conversion factor. 

We applied the relative weighting 

factors to the standard payment 

conversion factor to compute the 

unadjusted Federal prospective 

payment rates. Under the IRF PPS from 

FYs 2002 through 2005, we then applied 

adjustments for geographic variations in 

wages (wage index), the percentage of 

low-income patients, and location in a 

rural area (if applicable) to the IRF’s 

unadjusted Federal prospective 

payment rates. In addition, we made 

adjustments to account for short-stay 

transfer cases, interrupted stays, and 

high cost outliers. 

For cost reporting periods that began 

on or after January 1, 2002 and before 

October 1, 2002, we determined the 

final prospective payment amounts 

using the transition methodology 

prescribed in section 1886(j)(1) of the 

Act. Under this provision, IRFs 

transitioning into the PPS were paid a 

blend of the Federal IRF PPS rate and 

the payment that the IRF would have 

received had the IRF PPS not been 

implemented. This provision also 


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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. 

B. Revisions Made by the IRF PPS Final 

Rule for FY 2006 

Section 1886(j) of the Act confers 

broad statutory authority to propose 

refinements to the IRF PPS. The 

refinements described in this section 

were finalized in the FY 2006 IRF PPS 

final rule (70 FR 47880). The provisions 

of the FY 2006 IRF PPS final rule 

became effective for discharges 

beginning on or after October 1, 2005. 

We published correcting amendments to 

the FY 2006 IRF PPS final rule in the 

Federal Register on September 30, 2005 

(70 FR 57166). Any reference to the FY 

2006 IRF PPS final rule in this proposed 

rule also includes the provisions 

effective in the correcting amendments. 

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 implementation of the IRF PPS. 

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: 

The FY 2006 IRF PPS final rule (70 FR 

47880, 47917 through 47928) included 

the adoption of the Office of 

Management and Budget’s (OMB’s) 

Core-Based Statistical Area (CBSA) 

market area definitions in a budget 

neutral manner. This geographic 

adjustment was made using the most 

recent final wage data available (that is, 

pre-reclassification and pre-floor 

hospital wage index based on FY 2001 

hospital wage data). In addition, we 

implemented a budget-neutral threeyear hold harmless policy for rural IRFs 

in FY 2005 that became urban in FY 

2006, as described in the FY 2006 IRF 

PPS final rule (70 FR 47880, 47923 

through 47925). 

The FY 2006 final rule (70 FR 47880, 

47904) also implemented a payment 

adjustment to account for changes in 

coding that did not reflect real changes 

in case mix. In that final rule, we 

reduced the standard payment amount 

by 1.9 percent to account for such 

changes in coding following 

implementation of the IRF PPS. Our 

contractors conducted a series of 

analyses to identify real case mix 

change over time and the effect of this 

change on aggregate IRF PPS payments. 

The contractors identified the impact of 

changing case mix on the IRF PPS 

payment ranges. From calendar year 

1999 through calendar year 2002, the 

real change in IRFs’ case mix ranged 

from negative 2.4 percent to positive 1.5 

percent. They attributed the remaining 

change in IRF payments (between 1.9 

percent and 5.8 percent) to coding 

changes. For FY 2006, we implemented 

a reduction in the standard payment 

amount based on the lowest of these 

estimates. At the time, we stated that we 

would continue to analyze the data and 

would make additional coding 

adjustments, as needed. 

In addition, in the FY 2006 final rule 

(70 FR 47880, 47886 through 47904), we 

made modifications to the CMGs, tier 

comorbidities, and relative weights in a 

budget-neutral manner. The final rule 

included a number of adjustments to the 

IRF classification system that are 

designed to improve the system’s ability 

to predict IRF costs. The data indicated 

that moving or eliminating some 

comorbidity codes from the tiers, 

redefining the CMGs, and other minor 

changes to the system would improve 

the ability of the classification system to 

ensure that Medicare payments to IRFs 

continue to be aligned with the costs of 

care. These refinements resulted in 87 

CMGs using Rehabilitation Impairment 

Categories (RICs), functional status 

(motor and cognitive scores), and age (in 

some cases, cognitive status and age 

may not be factors in defining CMGs). 

The five special CMGs remained the 

same as they had been before FY 2006 

and continue to account for very short 

stays and for patients who expire in the 

IRF. 

In addition, the FY 2006 IRF PPS final 

rule (70 FR 47928 through 47932) 

implemented a new teaching status 

adjustment for IRFs, similar to the one 

adopted for inpatient psychiatric 

facilities. We implemented the teaching 

status adjustment in a budget neutral 

manner. 

The FY 2006 IRF PPS final rule (70 FR 

47880, 47908 through 47917) also 

revised and rebased the market basket. 

We finalized the use of a new market 

basket reflecting the operating and 

capital cost structures for rehabilitation, 

psychiatric, and long term care (RPL) 

hospitals to update IRF payment rates. 

The RPL market basket excludes data 

from cancer hospitals, children’s 

hospitals, and religious non-medical 

institutions. In addition, we rebased the 

market basket to account for 2002-based 

cost structures for RPL hospitals. 

Further, we calculated the labor-related 

share using the RPL market basket. The 

FY 2006 IRF market basket increase 

factor was 3.6 percent and the RPL 

labor-related share was 75.865 percent. 

In the FY 2006 final rule (70 FR 

47880, 47932 through 47933), we 

updated the rural adjustment (from 

19.14 percent to 21.3 percent), the lowincome percentage (LIP) adjustment 

(from an exponent of 0.484 to an 

exponent of 0.6229), and the outlier 

threshold amount (from $11,211 to 

$5,129, as further revised in the FY 2006 

IRF PPS correction notice (70 FR 57166, 

57168)). We implemented the changes 

to the rural and the LIP adjustments in 

a budget neutral manner. 

The final FY 2006 standard payment 

conversion factor, accounting for the 

refinements, was $12,762 (as discussed 

in the FY 2006 IRF PPS correction 

notice (70 FR 57166, 57168)). 

C. Requirements for Updating the IRF 

PPS Rates 

On August 7, 2001, we published a 

final rule entitled ‘‘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, 


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2001 final rule, we set forth the per 

discharge Federal prospective payment 

rates for FY 2002, which provided 

payment for inpatient operating and 

capital costs of furnishing covered 

rehabilitation services (that is, routine, 

ancillary, and capital costs) but not 

costs of approved educational activities, 

bad debts, and other services or items 

that are outside the scope of the IRF 

PPS. The provisions of the August 7, 

2001 final rule were effective for cost 

reporting periods beginning on or after 

January 1, 2002. On July 1, 2002, we 

published a correcting amendment to 

the August 7, 2001 final rule in the 

Federal Register (67 FR 44073). Any 

references to the August 7, 2001 final 

rule in this proposed rule include the 

provisions effective in the correcting 

amendment. 

Section 1886(j)(5) of the Act and 

§ 412.628 of the regulations require the 

Secretary to publish in the Federal 

Register, on or before the August 1 that 

precedes the start of each new FY, the 

classifications and weighting factors for 

the IRF CMGs and a description of the 

methodology and data used in 

computing the prospective payment 

rates for the upcoming FY. On August 

1, 2002, we published a notice in the 

Federal Register (67 FR at 49928) to 

update the IRF Federal prospective 

payment rates from FY 2002 to FY 2003 

using the methodology as described in 

§ 412.624. As stated in the August 1, 

2002 notice, we used the same 

classifications and weighting factors for 

the IRF CMGs that were set forth in the 

August 7, 2001 final rule to update the 

IRF Federal prospective payment rates 

from FY 2002 to FY 2003. We continued 

to update the prospective payment rates 

in accordance with the methodology set 

forth in the August 7, 2001 final rule for 

each succeeding FY up to and including 

FY 2005. For FY 2006, however, we 

published a final rule that revised 

several IRF PPS policies (70 FR 47880), 

as summarized in sections I.B and I.C of 

this proposed rule. The provisions of 

the FY 2006 IRF PPS final rule became 

effective for discharges occurring on or 

after October 1, 2005. We published 

correcting amendments to the FY 2006 

IRF PPS final rule in the Federal 

Register (70 FR 57166). Any reference to 

the FY 2006 IRF PPS final rule in this 

proposed rule includes the provisions 

effective in the correcting amendments. 

In this proposed rule for FY 2007, we 

are proposing to update the IRF Federal 

prospective payment rates. In addition, 

we will update the cost-to-charge ratios 

from FY 2006 to FY 2007 and the outlier 

threshold. We are also proposing a onetime, 2.9 percent reduction to the FY 

2007 standard payment amount to 

account for changes in coding practices 

that do not reflect real changes in case 

mix. (See section III.A of this proposed 

rule for further discussion of the 

proposed reduction of the standard 

payment amount to account for coding 

changes.) 

We are also proposing changes to 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. 

(See section II for a detailed discussion 

of these proposed changes.) The 

proposed FY 2007 Federal prospective 

payment rates would be effective for 

discharges occurring on or after October 

1, 2006 and on or before September 30, 

2007. 

In addition, we are proposing to 

revise 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 

proposed regulation text change would 

prolong the overall duration of the 

phased transition to the full 75 percent 

threshold established in current 

regulation text in § 412.23(b)(2)(i) and 

§ 412.23(b)(2)(ii), by extending the 

transition’s current 60 percent phase for 

an additional 12 months. 

D. 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 at 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 interim 

final rule on Electronic Submission of 

Medicare Claims (68 FR 48805, August 

15, 2003). Section 3 of the ASCA 

operates in the context of the 

administrative simplification provisions 

of HIPAA, which include, among others, 

the requirements for transaction 

standards and code sets codified as 45 

CFR parts 160 and 162, subparts A and 

I through R (generally known as the 

Transactions Rule). The Transactions 

Rule requires covered entities, including 

covered providers, to conduct covered 

electronic transactions according to the 

applicable transaction standards. (See 

the program claim memoranda issued 

and published by CMS at: http:// 

www.cms.hhs.gov/ 

ElectronicBillingEDITrans/ and listed in 

the addenda to the Medicare 

Intermediary Manual, Part 3, section 

3600. Instructions for the limited 

number of claims submitted to Medicare 

on paper are located in section 3604 of 

Part 3 of the Medicare Intermediary 

Manual.) 

The Medicare FI processes the claim 

through its software system. This 

software system includes pricing 

programming called the PRICER 

software. The PRICER software uses the 

CMG number, along with other specific 

claim data elements and 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 


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as of FY 2006, as discussed in the FY 

2006 IRF PPS final rule (70 FR 47880). 

E. Brief Summary of Proposed Revisions 

to the IRF PPS for FY 2007 

In this proposed rule, we are 

proposing to make the following 

revisions and updates: 

• Revise the IRF GROUPER software 

and the relative weight and average 

length of stay tables based on re-analysis 

of the data by CMS and our contractor, 

the RAND Corporation, as discussed in 

section II of this proposed rule. 

• Reduce the standard payment 

amount by 2.9 percent to account for 

coding changes, as discussed in section 

III.A of this proposed rule. 

• Update the FY 2007 IRF PPS 

payment rates by the proposed market 

basket, as discussed in section III.B of 

this proposed rule. 

• Update the FY 2007 IRF PPS 

payment rates by the proposed labor 

related share, the wage indexes, and the 

second year of the hold harmless policy 

in a budget neutral manner, as 

discussed in sections III.C through G of 

this proposed rule. 

• Update the outlier threshold for FY 

2007 to $5,609, as discussed in section 

IV.A of this proposed rule. 

• Update the urban and rural national 

cost-to-charge ratio ceilings for purposes 

of determining outlier payments under 

the IRF PPS and propose clarifications 

to the methodology described in the 

regulation text, as discussed in section 

IV.B of this proposed rule. 

• Revise the regulation text at 

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

reflect section 5005 of the DRA, which 

maintains the compliance percentage 

requirement transition at its current 60 

percent phase for an additional 12 

months, as discussed in section VI of 

this proposed rule. 

II. Refinements to the Patient 

Classification System 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘Refinements to the Patient 

Classification System’’ at the beginning 

of your comments.] 

A. Proposed Changes to the Existing List 

of Tier Comorbidities 

As discussed in the FY 2006 IRF PPS 

final rule (70 FR 47880, 47888 through 

47892), we finalized several changes to 

the comorbidity tiers associated with 

the CMGs for FY 2006. 

A comorbidity is a specific patient 

condition that is secondary to the 

patient’s principal diagnosis or 

impairment. We use the patient’s 

principal diagnosis or impairment to 

classify the patient into a rehabilitation 

impairment category (RIC), and then we 

use the patient’s secondary diagnoses 

(or comorbidities) to determine whether 

to classify the patient into a higherpaying tier. A patient could have one or 

more comorbidities present during the 

inpatient rehabilitation stay. Our 

analysis for the August 7, 2001 final rule 

(66 FR 41316) found that the presence 

of certain comorbidities could have a 

major effect on the cost of furnishing 

inpatient rehabilitation care. We also 

found that the effect of comorbidities 

varied across RICs, significantly 

increasing the costs of patients in some 

RICs, while having no effect in others. 

Therefore, in determining whether the 

presence of a certain comorbidity 

should trigger placement in a higherpaying tier, we considered whether the 

comorbidity was an inherent part of the 

diagnosis that assigned the patient to 

the RIC. If it was an inherent part of the 

diagnosis, we excluded it from the RIC. 

The changes for FY 2006 included 

removing several tier comorbidity codes 

that RAND’s analysis found were no 

longer positively related to treatment 

costs, moving the comorbidity code for 

patients needing dialysis to tier 1, and 

moving certain comorbidity codes 

among tiers based on their marginal 

cost, as determined by RAND’s 

regression analysis. In accordance with 

the final rule, we implemented these 

changes by updating the IRF PPS 

GROUPER software for discharges 

occurring on or after October 1, 2005. 

In the FY 2006 IRF PPS final rule (70 

FR 47880, 47892), we explained that the 

purpose of these changes was to place 

comorbidity codes in tiers based on 

RAND’s analysis of how much the 

associated comorbidity would increase 

the costs of care in the IRF. (RAND’s 

detailed analysis and methodology can 

be found in their report ‘‘Preliminary 

Analyses for Refinement of the Tier 

Comorbidities in the Inpatient 

Rehabilitation Facility Prospective 

Payment System,’’ which is available on 

their Web site at http://www.rand.org/ 

pubs/technicalreports/TR201/). 

After publishing the FY 2006 IRF PPS 

final rule, we continued to monitor the 

IRF classification system. As a result of 

our review and an analysis of recently 

updated data from RAND, we are 

proposing to implement some 

additional refinements (described 

below) to the comorbidity tiers for FY 

2007 to ensure that IRF PPS payments 

continue to reflect as accurately as 

possible the costs of care in IRFs. 

Section 1886(j)(2)(C)(i) of the Act 

requires the Secretary from time to time 

to adjust the classifications and 

weighting factors for the IRF case-mix 

classification system as appropriate to 

reflect changes in treatment patterns, 

technology, case mix, number of 

payment units for which payment is 

made under the IRF PPS, and other 

factors which may affect the relative use 

of resources. 

Accordingly, as described below, we 

propose to revise the tier comorbidity 

list in the IRF GROUPER for FY 2007 to 

ensure that the list appropriately reflects 

current ICD–9–CM national coding 

guidelines (as discussed below) and to 

ensure that the comorbidity codes are in 

the most appropriate tiers, based on 

RAND’s analysis of the amount the 

associated comorbidities add to 

treatment costs. We are proposing the 

following five types of changes to the 

list of tier comorbidities in the IRF PPS 

GROUPER for FY 2007: 

• Adding four comorbidity codes, as 

shown in Table 1. 

• Deleting five comorbidity codes, as 

shown in Table 2. 

• Continuing to update the tier 

comorbidities in the IRF GROUPER, as 

appropriate, to reflect ICD–9–CM 

national coding guidelines, as discussed 

below. 

• Moving nine comorbidity codes 

from tier 2 to tier 3, as shown in Table 

3. 

• Deleting all category codes from the 

IRF GROUPER, as shown in Table 4. 

We note that the proposed revisions 

to the IRF GROUPER described in this 

section are subject to change for the 

final rule based on the results of 

updated analysis. 

The proposed changes listed below in 

Tables 1 and 2 are related to the 

monitoring and updating of the 

comorbidity tiers that CMS has been 

doing on an annual basis since we first 

implemented the IRF PPS, as described 

in detail below. We will continue to 

provide ongoing monitoring of 

additions, deletions, and changes to the 

ICD–9 coding structure, in order to 

ensure that the list of tier comorbidities 

in the IRF GROUPER is as consistent as 

possible with current national coding 

guidelines (as discussed below). 

Each year since 1986, the National 

Center for Health Statistics (NCHS) and 

CMS have issued new diagnosis and 

procedure codes for the International 

Classification of Diseases, 9th Revision, 

Clinical Modification (ICD–9–CM). The 

ICD–9–CM Coordination and 

Maintenance Committee, sponsored 

jointly by NCHS and CMS, is 

responsible for determining these new 

code assignments each year. The new 

ICD–9 codes generally become effective 

on October 1 of each year, and replace 

previously assigned ‘‘code equivalents.’’

However, the ICD–9–CM Coordination 

and Maintenance Committee recently 


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indicated that it may begin updating the 

ICD–9 codes twice a year. A mid-year 

revision of the code assignments has not 

occurred yet, but we will monitor any 

such revisions that may occur and 

update the IRF coding instructions, as 

appropriate. 

In order to ensure that the list of tier 

comorbidities accurately reflects 

changes to the ICD–9–CM codes, we 

propose to continue to update the list of 

ICD–9 codes in the IRF GROUPER 

software, as appropriate. For example, 

to the extent that the ICD–9–CM 

Coordination and Maintenance 

Committee changes an ICD–9 code for a 

comorbid condition on our tier 

comorbidity list into one or more codes 

that provide additional detail, we are 

proposing (as a general rule) to update 

the IRF GROUPER software to reflect the 

new codes. However, we recognize that 

there may be situations in which the 

addition of one or more of these new 

codes to the list of tier comorbidities 

may not be appropriate. For example, a 

situation could occur in which an ICD–

9 code for a particular condition is 

divided into two more detailed codes, 

one of which represents a condition that 

generally increases the costs of care in 

an IRF and one of which does not. In 

such a case, we may propose through 

notice and comment procedures to 

delete the code that does not reflect 

increased costs of care in an IRF from 

the list of tier comorbidities in the IRF 

GROUPER software. 

We propose to continue to indicate 

changes to the GROUPER software that 

reflect national coding guidelines by 

posting a complete ICD–9 table, 

including new, discontinued, and 

modified codes, on the IRF PPS Web 

site. We also propose to continue to 

report the complete list of ICD–9 codes 

associated with the tiers in the IRF 

GROUPER documentation, which is also 

posted on the IRF PPS Web site. 

In addition, we propose that the 

finalized list of tier comorbidities for FY 

2007 that we are proposing to post on 

the IRF PPS website and in the IRF 

GROUPER documentation (also posted 

on the IRF PPS website) as of October 

1, 2006 would generally reflect 

Appendix C of the August 7, 2001 final 

rule (66 FR 41316, 41414 through 

41427) as modified by the tier 

comorbidity changes adopted in the FY 

2006 IRF PPS final rule (70 FR 47880) 

and any tier comorbidity changes as 

adopted in the FY 2007 IRF PPS final 

rule, as well as changes adopted due to 

ICD–9 national coding guideline 

updates. This version would constitute 

the baseline for any future updates to 

the tier comorbidities. Moreover, we 

note that, if we decide that a substantive 

change to the comorbid conditions on 

the list of tier comorbidities in the IRF 

GROUPER is appropriate, we will 

propose the change through notice and 

comment procedures. 

Accordingly, in Table 1, we propose 

to add comorbidity codes 466.11, 

466.19, 282.68, and 567.29 to the 

GROUPER for FY 2007 to be consistent 

with the national ICD–9–CM coding 

guidelines, as discussed above. In Table 

1, on the basis of RAND’s analysis, we 

also indicate the proposed tier 

assignment for each ICD–9 comorbidity 

code and any applicable RIC exclusions. 

TABLE 1.—ICD–9 CODES WE PROPOSE TO ADD TO THE IRF PPS GROUPER 

ICD–9–CM ICD–9–CM label Tier 

RIC 

exclusion 

466.11 ................................................................................................... ACU BRONCHOLITIS D/T RSV ..................................... 3 15 

466.19 ................................................................................................... ACU BRNCHLTS D/T OTH ORG ................................... 3 15 

282.68 ................................................................................................... OTH SICKLE-CELL DISEASE W/O CRISIS .................. 3 None 

567.29 ................................................................................................... OTH SUPPURATIVE PERITONITIS .............................. 3 None 

In Table 2, we list all of the 

comorbidity codes that we propose to 

delete from the IRF GROUPER for FY 

2007. The clinical conditions that these 

codes represent were not part of the 

initial list of tier comorbidities in 

Appendix C of the August 7, 2001 final 

rule (66 FR 41316, 41414 through 

41427), but we inadvertently added 

these codes to the IRF GROUPER in our 

annual GROUPER updating process. 

Thus, we are proposing to delete these 

codes from the tier comorbidities for FY 

2007. 

TABLE 2.—PROPOSED ICD–9 CODES TO BE DELETED FROM THE IRF PPS GROUPER 

ICD–9–CM ICD–9–CM label Tier 

453.40 ............................................................................................ VEN EMBOL THRMBS UNSPEC DP VSLS LWR EXTREM ........... 3 

453.41 ............................................................................................ VEN EMBOL THRMBS DP VSLS PROX LWR EXTREM ................ 3 

453.42 ............................................................................................ VEN EMBOL THRMBS DP VSLS DIST LWR EXTREM ................. 3 

799.01 ............................................................................................ ASPHYXIA ........................................................................................ 3 

799.02 ............................................................................................ HYPOXEMIA ..................................................................................... 3 

Finally, in Table 3, we list the ICD–

9 codes that we propose to move to a 

different tier to reflect the amount that 

the associated comorbidities increase 

the costs of care in the IRF. In the FY 

2006 IRF GROUPER, we placed all of 

these codes in tier 2 based on the most 

up-to-date list of tier comorbidities we 

had at the time CMS published the FY 

2006 IRF PPS final rule. We have 

recently reanalyzed the data and found 

that these codes should be in tier 3, 

based on the amount that RAND’s 

updated analysis shows that the 

associated comorbidities increase the 

costs of treatment in IRFs. Thus, we 

propose to move the ICD–9 codes listed 

in Table 3 from tier 2 to tier 3, so that 

IRF PPS payments will continue to 

reflect as closely as possible the costs of 

care. 


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TABLE 3.—PROPOSED ICD–9 CODES TO BE MOVED FROM TIER 2 TO TIER 3 IN THE IRF PPS GROUPER 

ICD–9–CM ICD–9–CM label Tier RIC exclusion 

112.4 ............................................................................................................. CANDIDIASIS OF LUNG .......................... 3 15 

112.5 ............................................................................................................. DISSEMINATED CANDIDIASIS ............... 3 None 

112.81 ........................................................................................................... CANDIDAL ENDOCARDITIS ................... 3 14 

112.83 ........................................................................................................... CANDIDAL MENINGITIS .......................... 3 03,05 

112.84 ........................................................................................................... CANDIDAL ESOPHAGITIS ...................... 3 None 

785.4 ............................................................................................................. GANGRENE ............................................. 3 10,11 

995.90 ........................................................................................................... SIRS NOS ................................................. 3 None 

995.91 ........................................................................................................... SIRS INF W/O ORG DYS ........................ 3 None 

995.92 ........................................................................................................... SIRS INF W ORG DYS ............................ 3 None 

995.93 ........................................................................................................... SIRS NON-INF W/O ORG DYS ............... 3 None 

995.94 ........................................................................................................... SIRS NON-INF W ORG DYS ................... 3 None 

In our ongoing fiscal oversight of the 

IRF PPS, we will continue closely 

monitoring providers’ use of the ICD–9 

codes that increase IRF payments. To 

the extent that we find any 

inappropriate coding of particular ICD–

9 codes that increase payments, we may 

reconsider the appropriateness of their 

inclusion on the list of tier 

comorbidities in the future. 

Finally, in order to clarify the ICD–9 

comorbidity codes we use to increase 

payments to IRFs, we propose to remove 

the category codes listed in Appendix C 

of the August 7, 2001 final rule (66 FR 

41316, 41414 through 41427). We use 

the term ‘‘category code’’ to refer to a 

three-digit ICD–9 code for which one or 

more four- or five-digit ICD–9 codes 

exist to describe the same condition. 

Appendix C of the August 7, 2001 

final rule lists both ICD–9–CM codes 

and category codes to identify the 

comorbidity tiers. The category codes in 

that Appendix C are identified with an 

asterisk (*). 

ICD–9–CM diagnosis codes are 

composed of codes with three, four, or 

five digits. Occasionally, three digit 

codes are complete ICD–9–CM codes 

(examples include 037 (TETANUS) and 

042 (HUMAN IMMUNODEFICIENCY 

VIRUS (HIV) DISEASE)), and thus 

should be used to code comorbidities on 

the IRF–PAI form. However, codes with 

three digits are generally included in the 

ICD–9–CM coding system as the 

heading of a category of codes that are 

further subdivided using a fourth and/ 

or fifth digit to provide greater detail. In 

most cases, it is inappropriate for 

providers to use a category code to 

indicate a comorbidity on the IRF–PAI 

form because the national ICD–9–CM 

coding guidelines require use of the 

more detailed codes. The national ICD–

9–CM coding guidelines (published in 

the introduction to all releases of the 

ICD–9–CM codes themselves), were 

adopted, along with the ICD–9–CM 

codes themselves, as the standard 

medical data code set in compliance 

with the Health Insurance Portability 

and Accountability Act (HIPAA). 

To avoid any confusion regarding the 

fact that category codes should not be 

used to indicate comorbidities on the 

IRF–PAI form, we propose to remove 

the category codes from the tier 

comorbidities in the IRF GROUPER. 

This is consistent with the ICD–9–CM 

national coding guidelines. Table 4 

contains the list of category codes we 

are proposing to delete from the list of 

tier comorbidities in the IRF GROUPER. 

We note that three of the codes listed 

in Table 4, 998.3 (POSTOP WOUND 

DISRUPTION), 567.2 (SUPPURAT 

PERITONITIS NEC), and 567.8 

(PERITONITIS NEC), were listed in 

Appendix C of the August 7, 2001 final 

rule (70 FR 41316, 41414 through 

41427) without asterisks because they 

were not category codes at the time, but 

we are proposing to delete them from 

the IRF GROUPER now because they 

became category codes in 2002 and 

2005. In 2002, the ICD–9–CM 

Coordination and Maintenance 

Committee created ICD–9 codes 998.31 

and 998.32 as more specific codes for 

the condition that was coded using 

998.3 before 2002. Similarly, in 2005, 

the committee created ICD–9 codes 

567.21, 567.22, 567.23, and 567.29 as 

more specific codes for the condition 

that was coded using 567.2 before 2005, 

and codes 567.81, 567.82, and 567.89 as 

more specific codes for the condition 

that was coded using 567.8 before 2005. 

Once the committee introduced these 

more specific codes, 998.3, 567.2, and 

567.8 became category codes. For this 

reason, we are proposing to delete them 

from the IRF GROUPER along with the 

other category codes. ICD–9 codes 

998.31, 998.32, 567.21, 567.22, 567.23, 

567.29, 567.81, 567.82, and 567.89 will 

be included in the IRF GROUPER, but 

we will monitor these codes carefully to 

ensure that they are being used 

properly. 

TABLE 4.—CATEGORY CODES WE PROPOSE TO DELETE FROM THE IRF GROUPER 

Category code Category code label 

011. ...................................................................................................................................................... PULMONARY TUBERCULOSIS. 

011.0 .................................................................................................................................................... TB OF LUNG, INFILTRATIVE. 

011.1 .................................................................................................................................................... TB OF LUNG, NODULAR. 

011.2 .................................................................................................................................................... TB OF LUNG W CAVITATION. 

011.3 .................................................................................................................................................... TUBERCULOSIS OF BRONCHUS. 

011.4 .................................................................................................................................................... TB FIBROSIS OF LUNG. 

011.5 .................................................................................................................................................... TB BRONCHIECTASIS. 

011.6 .................................................................................................................................................... TUBERCULOUS PNEUMONIA. 

011.7 .................................................................................................................................................... TUBERCULOUS PNEUMOTHORAX. 

011.8 .................................................................................................................................................... PULMONARY TB NEC. 

011.9 .................................................................................................................................................... PULMONARY TB NOS. 

012. ...................................................................................................................................................... OTHER RESPIRATORY TB. 

012.0 .................................................................................................................................................... TUBERCULOUS PLEURISY. 

012.1 .................................................................................................................................................... TB THORACIC LYMPH NODES. 


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TABLE 4.—CATEGORY CODES WE PROPOSE TO DELETE FROM THE IRF GROUPER—Continued 

Category code Category code label 

012.2 .................................................................................................................................................... ISOLATED TRACH/BRONCH TB. 

012.3 .................................................................................................................................................... TUBERCULOUS LARYNGITIS. 

012.8 .................................................................................................................................................... RESPIRATORY TB NEC. 

013. ...................................................................................................................................................... CNS TUBERCULOSIS. 

013.0 .................................................................................................................................................... TUBERCULOUS MENINGITIS. 

013.1 .................................................................................................................................................... TUBERCULOMA OF MENINGES. 

013.2 .................................................................................................................................................... TUBERCULOMA OF BRAIN. 

013.3 .................................................................................................................................................... TB ABSCESS OF BRAIN. 

013.4 .................................................................................................................................................... TUBERCULOMA SPINAL CORD. 

013.5 .................................................................................................................................................... TB ABSCESS SPINAL CORD. 

013.6 .................................................................................................................................................... TB ENCEPHALITIS/MYELITIS. 

013.8 .................................................................................................................................................... CNS TUBERCULOSIS NEC. 

013.9 .................................................................................................................................................... CNS TUBERCULOSIS NOS. 

014. ...................................................................................................................................................... INTESTINAL TB. 

014.0 .................................................................................................................................................... TUBERCULOUS PERITONITIS. 

014.8 .................................................................................................................................................... INTESTINAL TB NEC. 

015. ...................................................................................................................................................... TB OF BONE AND JOINT. 

015.0 .................................................................................................................................................... TB OF VERTEBRAL COLUMN. 

015.1 .................................................................................................................................................... TB OF HIP. 

015.2 .................................................................................................................................................... TB OF KNEE. 

015.5 .................................................................................................................................................... TB OF LIMB BONES. 

015.6 .................................................................................................................................................... TB OF MASTOID. 

015.7 .................................................................................................................................................... TB OF BONE NEC. 

015.8 .................................................................................................................................................... TB OF JOINT NEC. 

015.9 .................................................................................................................................................... TB OF BONE & JOINT NOS. 

016. ...................................................................................................................................................... GENITOURINARY TB. 

016.0 .................................................................................................................................................... TB OF KIDNEY. 

016.1 .................................................................................................................................................... TB OF BLADDER. 

016.2 .................................................................................................................................................... TB OF URETER. 

016.3 .................................................................................................................................................... TB OF URINARY ORGAN NEC. 

016.4 .................................................................................................................................................... TB OF EPIDIDYMIS. 

016.5 .................................................................................................................................................... TB MALE GENITAL ORG NEC. 

016.6 .................................................................................................................................................... TB OF OVARY AND TUBE. 

016.7 .................................................................................................................................................... TB FEMALE GENIT ORG NEC. 

016.9 .................................................................................................................................................... GENITOURINARY TB NOS. 

017. ...................................................................................................................................................... TUBERCULOSIS NEC. 

017.0 .................................................................................................................................................... TB SKIN & SUBCUTANEOUS. 

017.1 .................................................................................................................................................... ERYTHEMA NODOSUM IN TB. 

017.2 .................................................................................................................................................... TB OF PERIPH LYMPH NODE. 

017.3 .................................................................................................................................................... TB OF EYE. 

017.4 .................................................................................................................................................... TB OF EAR. 

017.5 .................................................................................................................................................... TB OF THYROID GLAND. 

017.6 .................................................................................................................................................... TB OF ADRENAL GLAND. 

017.7 .................................................................................................................................................... TB OF SPLEEN. 

017.8 .................................................................................................................................................... TB OF ESOPHAGUS. 

017.9 .................................................................................................................................................... TB OF ORGAN NEC. 

018. ...................................................................................................................................................... MILIARY TUBERCULOSIS. 

018.0 .................................................................................................................................................... ACUTE MILIARY TB. 

018.8 .................................................................................................................................................... MILIARY TB NEC. 

018.9 .................................................................................................................................................... MILIARY TUBERCULOSIS NOS. 

038.1 .................................................................................................................................................... STAPHYLOCOCC SEPTICEMIA. 

038.4 .................................................................................................................................................... GRAM-NEG SEPTICEMIA NEC. 

115. ...................................................................................................................................................... HISTOPLASMOSIS. 

115.0 .................................................................................................................................................... HISTOPLASMA CAPSULATUM. 

115.1 .................................................................................................................................................... HISTOPLASMA DUBOISII. 

115.9 .................................................................................................................................................... HISTOPLASMOSIS UNSPEC. 

415.1 .................................................................................................................................................... PULMON EMBOLISM/INFARCT. 

441.0 .................................................................................................................................................... DISSECTING ANEURYSM. 

453. ...................................................................................................................................................... OTH VENOUS THROMBOSIS. 

466.1 .................................................................................................................................................... ACUTE BRONCHIOLITIS. 

482.8 .................................................................................................................................................... BACTERIAL PNEUMONIA NEC. 

567.2 .................................................................................................................................................... SUPPURAT PERITONITIS NEC. 

567.8 .................................................................................................................................................... PERITONITIS NEC. 

682. ...................................................................................................................................................... OTHER CELLULITIS/ABSCESS. 

998.3 .................................................................................................................................................... POSTOP WOUND DISRUPTION. 

998.5 .................................................................................................................................................... POSTOPERATIVE INFECTION. 


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As explained in detail below, we 

propose to apply all of these proposed 

changes to the tier comorbidities and 

the proposed changes to the CMG 

relative weights (described below) in a 

budget neutral manner. In the next 

section, we discuss our methodology for 

calculating the appropriate proposed 

budget neutrality factor. 

B. Proposed Changes to the CMG 

Relative Weights 

1. Development of CMG Relative 

Weights 

Section 1886(j)(2)(B) of the Act 

requires that we assign an appropriate 

relative weight to each CMG. Relative 

weights account for the variance in cost 

per discharge and resource utilization 

among the payment groups and are a 

primary element of a case-mix adjusted 

PPS. Use of the most accurate CMG 

relative weights possible helps ensure 

that beneficiaries have access to care 

and receive the same appropriate 

services as other Medicare beneficiaries 

in the same CMG. In addition, 

prospective payments based on relative 

weights encourage provider efficiency 

and, therefore, help ensure a fair 

distribution of Medicare payments. 

Accordingly, as specified in 

§ 412.620(b)(1), we calculate a relative 

weight for each CMG that is 

proportional to the resources needed by 

an average inpatient rehabilitation case 

in that CMG. For example, cases in a 

CMG with a relative weight of 2, on 

average, will cost twice as much as 

cases in a CMG with a relative weight 

of 1. 

2. Overview of the Methodology for 

Calculating the CMG Relative Weights 

As indicated in the original IRF PPS 

final rule (66 FR 41316) and the FY 

2006 IRF PPS final rule (70 FR 47880, 

47887 through 47888), in calculating the 

relative weights, we use a hospitalspecific relative value method to 

estimate operating (routine and 

ancillary services) and capital costs of 

IRFs. For FY 2007, we have used this 

same methodology to recalculate the 

relative weights to reflect the changes in 

comorbidity coding discussed in the 

next section of this proposed rule. The 

process used to calculate the relative 

weights for this proposed rule is shown 

below. 

Step 1. We calculate the CMG relative 

weights by estimating the effects that 

comorbidities have on costs. 

Step 2. We adjust the cost of each 

Medicare discharge (case) to reflect the 

effects found in the first step. 

Step 3. We use the adjusted costs from 

the second step to calculate ‘‘relative 

adjusted weights’’ in each CMG using 

the hospital-specific relative value 

method. 

Step 4. We calculate the CMG relative 

weights by modifying the ‘‘relative 

adjusted weight’’ with the effects of the 

existence of the comorbidity tiers and 

normalizing the weights to 1. 

3. Proposed Changes to the CMG 

Relative Weights and Average Lengths 

of Stay 

Relative weights that account for the 

variance in cost per discharge and 

resource utilization among payment 

groups are a primary element of a casemix adjusted PPS. The accuracy of the 

relative weights helps to ensure that 

payments reflect as closely as possible 

the relative costs of IRF patients and, 

therefore, that beneficiaries have access 

to care and receive appropriate services. 

We are proposing to update the 

relative weights for FY 2007 based on a 

revised analysis of the data used to 

construct the relative weights for FY 

2006. As part of CMS’s ongoing 

monitoring of the IRF PPS, we recently 

reviewed the analysis for the FY 2006 

final rule and discovered certain minor 

discrepancies. These discrepancies 

included ICD–9 codes in the 428.xx 

series that were not appropriately 

excluded from RIC 14, ICD–9 codes for 

tracheostomy that were incorrectly 

excluded from RIC 15, and two ICD–9 

comorbidity codes—428.0 

(CONGESTIVE HEART FAILURE 

UNSPECIFIED) and V43.3 (HEART 

VALVE REPLACED BY OTHER 

MEANS)—that were incorrectly 

included in the analysis. Thus, we are 

proposing to revise the CMG relative 

weights for FY 2007 because the data 

file used in RAND’s analysis was 

recently revised to correct these minor 

discrepancies so the file would comport 

with the policies outlined in the FY 

2006 IRF PPS final rule and this 

proposed rule. This led to changes in 

the CMG relative weights. 

Based on RAND’s reanalysis of the FY 

2003 data using the corrected list of tier 

comorbidities and the same 

methodology we used to construct the 

CMG relative weights in the FY 2002 

and FY 2006 IRF PPS final rules (66 FR 

41316, 41351, and 70 FR 47880, 47887 

through 47888), but using the correct 

tier comorbidities, we propose to update 

the CMG relative weights for FY 2007 to 

ensure that they continue to reflect as 

accurately as possible the costs of 

treatment for various types of patients in 

IRFs. Table 5 below contains the 

proposed new CMG relative weights and 

average lengths of stay for FY 2007. The 

proposed relative weights and average 

lengths of stay shown in Table 5 are 

subject to change for the final rule based 

on updated analysis and data. 

BILLING CODE 4120–01–P 


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BILLING CODE 4120–01–C 

We propose to make these revisions to 

the tier comorbidities and the CMG 

relative weights in a budget neutral 

manner, consistent with the budget 

neutral manner in which we 

implemented changes to the IRF 

classification system for FY 2006 as 

described in the FY 2006 IRF PPS final 

rule (70 FR 47880, 47900). The purpose 

of these proposed changes to the IRF 

classification system is to ensure that 

the existing resources in the IRF PPS are 

distributed as accurately as possible 

among IRFs according to the relative 

costliness of the types of patients they 

treat. 

To ensure that total estimated 

aggregate payments to IRFs do not 

change, we propose to apply a factor to 

the proposed standard payment amount 

to ensure that estimated aggregate 

payments due to the proposed changes 

to the tier comorbidities and the relative 

weights for FY 2007 are not greater or 

less than those estimated payments that 

would have been made in FY 2007 

without the proposed changes. To 

calculate an appropriate proposed 

budget neutrality factor to apply to the 

standard payment amount, we propose 

to use the following steps: 

Step 1. Calculate the estimated total 

amount of IRF PPS payments for FY 

2007 (with no proposed changes to the 

tier comorbidities and the CMG relative 

weights). 

Step 2. Apply the proposed changes 

to the tier comorbidities and the CMG 

relative weights (as discussed above) to 

calculate the estimated total amount of 

IRF PPS payments for FY 2007. 

Step 3. Divide the amount calculated 

in step 1 by the amount calculated in 

step 2 to determine the proposed factor 

(1.0079) that would maintain the same 

total estimated aggregate payments in 

FY 2007 with and without the proposed 

changes to the tier comorbidities and 

the CMG relative weights. 

Step 4. Apply the proposed budget 

neutrality factor (1.0079) to the FY 2006 

IRF PPS standard payment amount after 

the application of the market basket 

update, the budget-neutral wage 

adjustment factor, and the proposed 2.9 

percent reduction to account for coding 

changes that do not reflect real changes 

in case mix. 

In section III.D and section III.E of this 

proposed rule, we discuss the 

methodology and the factor we would 

apply to the proposed standard payment 

amount for FY 2007. The proposed 

budget neutrality factor for the proposed 

revisions to the tier comorbidities and 

the CMG relative weights is subject to 

change for the final rule based on 

updated analysis and data. 

III. Proposed FY 2007 Federal 

Prospective Payment Rates 

[If you choose to comment on issues in this 

section, please include the caption 

‘‘Proposed FY 2007 Federal Prospective 

Payment Rates’’ at the beginning of your 

comments.] 

A. Proposed Reduction of the Standard 

Payment Amount To Account for 

Coding Changes 

Section 1886(j)(2)(C)(ii) of the Act 

requires the Secretary to adjust the per 

payment unit payment rate for IRF 

services to eliminate the effect of coding 

or classification changes that do not 

reflect real changes in case mix, to the 

extent that such changes affect aggregate 

payments under the classification 

system. As described in detail in the FY 

2006 IRF PPS final rule (70 FR 47880), 

in accordance with this section of the 

Act, we applied a one-time adjustment 

of 1.9 percent to the standard payment 

amount for FY 2006 to account for 

changes in provider coding practices 

that, according to research conducted by 

the RAND Corporation under contract 

with us, increased Medicare payments 

to IRFs between 1999 and 2002. In that 

final rule, we stated that the 1.9 percent 

reduction amount was ‘‘the lowest 

possible amount of change attributable 

to coding change,’’ as determined by 

RAND’s analysis. Further, in that same 

final rule (70 FR 47880, 47906), we 

stated that we would continue to review 

the need for any further reduction in the 

standard payment amount in 

subsequent years as part of our overall 

monitoring and evaluation of the IRF 

PPS. 

Since publication of the FY 2006 final 

rule, we have continued our fiscal 

oversight of the IRF PPS, and have 

conducted detailed analyses of IRF 

payment and utilization practices. We 

believe the results of these analyses 

(described in detail below) indicate that 

a large portion of the increase in 

Medicare payments under the IRF PPS 

can be attributed to changes in provider 

coding practices that do not reflect real 

changes in case mix. Upon review of 

these data, and in accordance with 

section 1886(j)(2)(C)(ii) of the Act, we 

propose to apply a one-time adjustment 

consisting of a 2.9 percent reduction to 

the proposed standard payment amount 

for FY 2007. This proposed adjustment 

would be in addition to the 1.9 percent 

adjustment implemented for FY 2006. 

Our rationale for these changes is 

described below. The resulting total 

adjustment of 4.8 percent (1.9 + 2.9 = 

4.8) would still fall well within the 

range of estimates for reducing the 

standard payment amount as indicated 

by RAND’s analysis. (RAND’s analysis is 

detailed in the report entitled 

‘‘Preliminary Analyses of Changes in 

Coding and Case Mix Under the 

Inpatient Rehabilitation Facility 

Prospective Payment System,’’ which 


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can be found on RAND’s Web site at 

http://www.rand.org/pubs/ 

technical_reports/TR213/.) 

As we discussed in detail in the FY 

2006 IRF PPS final rule (70 FR 47880), 

we had asked RAND to support us in 

developing potential refinements for the 

FY 2006 IRF PPS proposed rule (70 FR 

30188). As part of this research, we 

asked RAND to examine changes in case 

mix and coding since the inception of 

the IRF PPS. We considered real 

changes in case mix to be those in 

which RAND found evidence that IRF 

patients required more resources in IRFs 

because they had more costly 

impairments, lower functional status, or 

more comorbidities in 2002 than in 

1999. Conversely, we considered 

observed case mix changes to be due to 

changes in coding practices if RAND 

found that IRF patients had the same 

impairments, functional status, and 

comorbidities in 2002 as they did in 

1999, but were coded differently 

resulting in higher payment. Based on 

these distinctions, we asked RAND to 

quantify the amount of change that was 

due to real case mix change and the 

amount that was due to coding. The 

purpose of this analysis was to ensure 

that changes in Medicare payments 

would accurately reflect the actual 

change in IRFs’ patient case mix (that is, 

the true cost of treating patients), rather 

than changes in coding practices. 

To examine the interaction between 

case mix and coding changes, RAND 

compared 2002 data from the first year 

of IRF PPS implementation with the 

1999 (pre-PPS) data used to construct 

the IRF PPS. RAND’s regression analysis 

of CY 2002 data showed that payments 

to IRFs were about 3.4 percent (or $140 

million) higher than expected during 

2002 due to changes in the classification 

of patients in IRFs that did not reflect 

real changes in case mix. As described 

below and in detail in the FY 2006 IRF 

PPS final rule (70 FR 47880, 47904 

through 47906), RAND estimated that 

between 1.9 and 5.8 percent of the 

increase in payments to IRFs was 

attributable to coding. 

As part of this study, RAND 

performed two sets of analyses on the 

1999 (pre-PPS) and 2002 (post-PPS) data 

to derive this range of estimates. RAND 

based its first analysis on examination 

of IRF patients’ acute care hospital 

records. Using this analysis, RAND 

found little evidence that the patients 

admitted to IRFs in 2002 had higher 

resource needs (that is, more 

impairments, lower functioning, or 

more comorbidities) than the patients 

admitted in 1999. In fact, most of the 

changes in case mix that RAND 

documented from the acute care 

hospital records implied that IRF 

patients should have been less costly to 

treat in 2002 than in 1999. For example, 

when it compared the results of the 

2002 data with the 1999 data, RAND 

found a 16 percent decrease in the 

proportion of patients treated in IRFs 

following acute hospitalizations for 

stroke. Stroke patients tend to be 

relatively more costly than other types 

of patients for IRFs, because their care 

tends to be relatively more intensive. A 

decrease in the proportion of stroke 

patients relative to other types of 

patients, therefore, would likely 

contribute to a decrease in the overall 

expected costliness of IRF patients. 

(CMS is concerned about this finding 

because stroke patients represent a 

cohort of patients who have been 

demonstrated to benefit substantially 

from inpatient rehabilitation care. We 

will continue to monitor access to IRF 

care for stroke patients closely and will 

consider proposing appropriate 

refinements to the IRF PPS in the future 

to support access for this important 

population. We solicit comments on this 

issue.) 

RAND also found a 22 percent 

increase in the proportion of cases 

treated in IRFs following a lower 

extremity joint replacement. Lower 

extremity joint replacement patients 

tend to be relatively less costly for IRFs 

than other types of patients, because 

their care needs tend to be relatively 

less intensive. For this reason, the 

increase in the proportion of these 

patients treated in IRFs would suggest a 

decrease in the overall expected 

costliness of IRF patients. Because this 

analysis of IRF patients’ acute care 

hospital records suggested that IRF 

patients in 2002 should have been less 

costly to treat than IRF patients in 1999, 

RAND estimated that coding changes 

likely led to as much as a 5.8 percent 

increase in IRF payments between 1999 

and 2002. 

However, RAND recognized a 

limitation in relying solely on acute care 

hospital records, in that they do not 

reflect changes in a patient’s condition 

that may occur after discharge from the 

hospital. For example, patients could 

develop impairments, functional 

problems, or comorbidities after leaving 

the acute care hospital that would make 

them more costly once they are in the 

IRF. Thus, RAND acknowledged that the 

5.8 percent estimate was likely an 

‘‘upper bound,’’ or a high-end estimate, 

of the amount of case mix change that 

was attributable to coding. 

For this reason, RAND performed a 

second analysis based on specific 

examples of coding in the IRF setting 

that we know have changed over time, 

such as direct indications of 

improvements in impairment coding, 

changes in coding instructions for 

bladder and bowel functioning, and 

dramatic increases in coding of certain 

conditions that affect patients’

placement into tiers (resulting in higher 

payments). Since this analysis focused 

solely on the IRFs’ classification of the 

patients, it automatically accounted for 

any changes in the patients’ condition at 

the start of or during the IRF stay. 

However, this approach was limited in 

that it generally assumed that IRFs’

coding practices did not change in 

response to implementation of the IRF 

PPS, other than for the specific, 

previously known examples listed 

above. That is, this analysis did not look 

beyond the specific, known examples to 

account for other, broader changes in 

IRFs’ coding practices that may have 

occurred. For this reason, RAND 

acknowledged that the second analysis, 

based on the specific, known examples 

listed above, was likely a ‘‘lower 

bound,’’ or low-end estimate, of the 

amount of case mix change that was 

attributable to coding. 

For FY 2006, we proposed and 

implemented a 1.9 percent adjustment 

to the standard payment amount. At the 

time, we adjusted the standard payment 

amount by the lowest amount 

attributable to coding change because 

we wanted to provide some flexibility to 

account for the possibility that all or 

some of the observed changes may have 

been attributable to factors other than 

coding changes or could be temporary 

changes associated with the transition to 

a new payment system. 

Since publication of the FY 2006 final 

rule, however, CMS and MedPAC have 

conducted several analyses that indicate 

that coding changes had a larger impact 

on payment than we initially believed. 

First, recent MedPAC analyses found 

that, since the introduction of the IRF 

PPS, increases in IRF payments far 

outstripped increases in IRFs’ costs. In 

fact, in its March 2006 report, MedPAC 

reported that IRF profit margins 

increased from 1.5 percent in 2001, the 

year before the introduction of the IRF 

PPS, to 11.1 percent in 2002, 17.7 

percent in 2003, and 16.3 in 2004. 

MedPAC also found that cost increases 

lagged far behind payment increases, 

with IRFs’ costs increasing only 2.4 

percent and 3.6 percent in 2003 and 

2004, respectively. The relatively low 

cost increases for these years suggest 

that patient severity could not have 

been increasing substantially over this 

time period. Thus, the rapid increases in 

IRF payments over this time period are 

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that do not reflect real changes in case 

mix. 

Based on our more recent analyses of 

IRF PPS payments, it is evident that 

changes in IRFs’ coding practices 

associated with implementation of the 

IRF PPS (not related to real changes in 

case mix) likely had a greater effect on 

Medicare payments than we initially 

anticipated. 

These findings have led us to 

reevaluate the amount of case mix 

change attributable to coding, within the 

1.9 to 5.8 percent range RAND 

estimated. Based on our updated 

payment analyses (described below), we 

now believe that the impact of coding 

on Medicare payments to IRFs is 

significantly higher than 1.9 percent, the 

lowest possible figure within RAND’s 

range of estimates, and that it would be 

more appropriate at this time to propose 

a total coding adjustment to the 

proposed standard payment amount 

closer to the upper end of RAND’s range 

of estimates. 

Further, as part of our ongoing 

analysis of provider coding practices, 

we analyzed IRF–PAI data from 2002 

and 2005 to examine trends in the 

distribution of patients in each of the 

four payment tiers, and found that the 

proportion of patients shifted each year 

from the lowest to the higher-paying 

tiers. 

To illustrate, to determine the IRF 

PPS payment for a particular patient, we 

first classify the patient into a major 

group, called a RIC, based on the 

patient’s primary reason for receiving 

inpatient rehabilitation (for example, a 

stroke). Next, we assign the patient to a 

CMG based on the patient’s ability to 

perform specific activities of daily 

living, and, for certain CMGs, based on 

the patient’s cognitive ability and age, as 

well. 

We also take into account special 

circumstances in determining the 

appropriate CMG, such as whether the 

case is a very short stay or whether the 

patient expires in the facility. Finally, 

we classify the patient into one of four 

tiers, based on the presence of any 

relevant comorbidities. One of the tiers 

contains patients with no relevant 

comorbidities. The other three tiers 

contain patients with increasingly costly 

comorbidities. For this reason, an IRF 

will receive higher payments for 

patients in one of the three more-costly 

tiers than for patients in the ‘‘no 

comorbidity’’ tier. 

As shown in Table 6, the proportion 

of IRF patients in the lowest-paying tier, 

the tier for patients with ‘‘no 

comorbidities,’’ decreased by 6 

percentage points between 2002 and 

2005. Conversely, the proportion of 

patients in each of the three higherpaying tiers increased each year. 

However, MedPAC’s analysis of IRFs’

reported costs (described above) 

suggests that patient severity was not 

increasing substantially over this time 

period. Thus, we believe this lends 

further support to the conclusion that a 

substantial portion of the unexpected 

increase in IRF payments since the 

establishment of the IRF PPS is due to 

changes in provider coding practices. 

TABLE 6.—PERCENT OF IRF PATIENTS IN EACH TIER, 2002–2005 

Tier 

Percent 

2002 2003 2004 2005 

‘‘No comorbidity’’ tier ....................................................................................... 74.42 72.01 70.81 68.41 

Tier 3 ................................................................................................................ 14.74 15.54 16.00 18.39 

Tier 2 ................................................................................................................ 9.04 9.95 10.44 10.16 

Tier 1 ................................................................................................................ 1.80 2.50 2.75 3.03 

Note: Tier 1 is the highest-paying tier, followed by tier 2 and then tier 3. The ‘‘no comorbidity’’ tier does not mean that the patient does not 

have any comorbidities, but that patients do not have any of the designated comorbidities that would elevate them to a higher-paying tier. 

Based on a review of the evidence 

above, we further analyzed providers’

responses to the tier comorbidity 

changes that we finalized in the FY 

2006 IRF PPS final rule (70 FR 47880). 

These changes became effective for 

discharges occurring on or after October 

1, 2005, and, as described below, affect 

Medicare payments to IRFs. 

In the FY 2006 IRF PPS final rule (70 

FR 47880), we finalized a number of 

changes to the comorbidity codes that 

we use to assign patients to one of the 

three higher-paying tiers, including 

adding or deleting certain comorbidity 

codes, and moving certain others among 

the tiers based on RAND’s analysis of 

the marginal cost of these comorbidities. 

After we implemented these changes to 

the tier comorbidity codes for FY 2006, 

we found that facilities responded 

quickly to the coding changes. For 

example, in updating the GROUPER 

software, we inadvertently added one 

comorbidity code (278.02, overweight) 

to one of the higher-payment tiers, even 

though RAND’s analysis did not 

indicate that this code belonged in a 

higher-paying tier. We had not adopted 

this particular code for addition to the 

tier in the FY 2006 IRF PPS final rule, 

and its addition to the IRF GROUPER 

software was simply a clerical error that 

we are in the process of correcting. 

However, the presence of this 

comorbidity code on the IRF patient 

assessment instrument (IRF–PAI) 

triggered an increased IRF per discharge 

payment in FY 2006. The increase in 

payment ranged from $171 to $4,587 per 

discharge, depending on the patient’s 

CMG classification. 

Once we discovered the inadvertent 

presence of code 278.02 in the higherpaying tier, we analyzed IRF–PAI data 

for the first quarter of FY 2006, the first 

period during which use of this code 

increased payment. We also reviewed 

IRF–PAI data to identify the way this 

particular code had been used before 

October 2005; that is, before it triggered 

increased payment. From January 2002 

through October 2005, code 278.02 

appeared as a coded comorbidity on 

only 8 IRF–PAI forms out of 

approximately 1.8 million total IRF–PAI 

forms submitted. For the first quarter of 

FY 2006, however, the same code, 

278.02, appeared as a coded 

comorbidity on 2,315 IRF–PAI forms out 

of approximately 113,000 total forms 

submitted in that quarter. The dramatic 

increase in the use of this ICD–9 code 

in such a short period of time leads us 

to believe that its increased use most 

likely reflects changes in the payment 

structure rather than in patient severity 

levels and suggests that providers 

respond more rapidly to coding changes 

than we initially believed. 

Based on these analyses and 

MedPAC’s findings that costs were not 

increasing substantially in 2003 and 

2004 (suggesting that patient acuity 

could not have been increasing 

substantially), we are now convinced 

that an additional coding adjustment for 

FY 2007 is needed to adjust for more of 

the impact of coding changes not related 

to real changes in case mix on IRF PPS 

payments. Therefore, for FY 2007, we 


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propose to reduce the IRF standard 

payment amount by 2.9 percent, which 

would result in a total adjustment 

(when combined with the 1.9 percent 

adjustment for FY 2006) of 4.8 percent 

(1.9 + 2.9 = 4.8). In this way, we can 

adjust the IRF PPS to reflect more fully 

the impact of coding changes on 

payments. Because 4.8 percent is well 

within the range of RAND’s estimates of 

the effects of coding changes on IRF PPS 

payments, we continue to believe that 

we are still providing flexibility to 

account for the possibility that some of 

the observed changes may be 

attributable to factors other than coding 

changes. We note that in the course of 

our analysis, we also considered the 

possibility of making a somewhat lower 

adjustment of 2.3 percent, which would 

fall at approximately the middle of 

RAND’s range of estimates. However, in 

view of the industry’s extremely rapid 

adoption of coding changes, we believe 

that a 2.9 percent reduction would 

likely account more accurately for the 

actual degree of these changes. We are 

continuing to analyze the data and, 

therefore, the specific amount of 

payment adjustment is subject to change 

for the final rule based on the results of 

the ongoing analysis. We specifically 

invite comments on the figure that 

would represent the most appropriate 

adjustment to account for changes in 

coding practices. 

We propose to use the same 

methodology that we used in the FY 

2006 IRF PPS final rule (70 FR 47880, 

47908) to reduce the standard payment 

amount to adjust for coding changes that 

affect payment. To reduce the standard 

payment amount by an additional 2.9 

percent for FY 2007, we first update the 

FY 2006 standard payment conversion 

factor by the estimated market basket 

update of 3.4 percent ($12,762 × 1.034 

= $13,196). Next, we propose to 

multiply this standard payment amount 

by 0.971 (obtained by subtracting 0.029 

from 1.000), which reduces the standard 

payment amount by 2.9 percent 

($13,196 × 0.971 = $12,813). 

In section III.D of this proposed rule, 

we further propose to adjust the 

resulting amount of $12,813 by the 

proposed budget neutrality factors for 

the wage index, the second year of the 

hold harmless policy, and the proposed 

revisions to the CMG relative weights 

and tier comorbidities, producing the 

proposed FY 2007 standard payment 

conversion factor. In section III.D of this 

proposed rule, we provide a step-bystep calculation that results in the 

proposed FY 2007 standard payment 

conversion factor. The proposed FY 

2007 standard payment conversion 

factor is subject to change in the final 

rule based on updated analysis and 

data. 

B. Proposed FY 2007 IRF 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. 

Accordingly, in updating the FY 2007 

payment rates set forth in this proposed 

rule, we apply an appropriate increase 

factor to the FY 2006 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. 

Beginning April 2006 with the 

publication of March 2006 data, the 

BLS’ ECI will use a different 

classification system, the North 

American Industrial Classification 

System (NAICS), instead of the Standard 

Industrial Codes (SIC), which will no 

longer exist. 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 are not 

making any changes to the usage at this 

time. However, we are soliciting 

comments on our continued use of the 

BLS ECI data in light of the BLS change 

in system usage to the NAICS-based ECI. 

The estimated FY 2007 IRF market 

basket increase factor and labor-related 

share in this proposed rule will be 

updated for the final rule based on the 

most recent data available from the BLS. 

We will use the same methodology 

described in the FY 2006 IRF PPS final 

rule to compute the FY 2007 IRF market 

basket increase factor and labor-related 

share. For this proposed rule, the FY 

2007 IRF market basket increase factor 

is 3.4 percent. This is based on Global 

Insight, Inc. for the first quarter of 2006 

(2006q1) forecast with historical data 

through the fourth quarter of 2005 

(2005q4). We propose to update the 

market basket with more recent data for 

the final rule to the extent it is available. 

In addition, we have used the 

methodology described in the FY 2006 

IRF PPS final rule to update the laborrelated share for FY 2007. In FY 2004 

and FY 2005, we updated the 1992 

market basket data to 1997 based on the 

methodology described in the August 1, 

2003 final rule (68 FR 45688 through 

45689). As discussed in the FY 2006 IRF 

PPS final rule (70 FR 47880, 47915 

through 47917), we rebased and revised 

the market basket for FY 2006, using the 

2002-based cost structures for IRFs, 

IPFs, and LTCHs to determine the FY 

2006 labor-related share. For FY 2007, 

we will use 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. As shown in Table 

7, the total FY 2007 RPL labor-related 

share is 75.720 percent in this proposed 

rule. We propose to update the laborrelated share with more recent data for 

the final rule to the extent it is available. 

TABLE 7.—PROPOSED FY 2007 IRF 

LABOR-RELATED SHARE RELATIVE

IMPORTANCE

Cost category 

Proposed FY 

2007 IRF 

labor-related relative importance 

Wages and salaries ........ 52.534 

Employee Benefits .......... 14.082 

Professional fees ............ 2.890 

All other labor intensive 

services ....................... 2.156 

Subtotal ................... 71.662 

Labor-related share of 

capital costs ................ 4.058 

Total ......................... 75.720 

Source: Global Insight, Inc. 1stQtr 2006, 

@USMACRO/CONTROL0306 @CISSIM/ 

CNTL08R3.SIM. 

C. 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 


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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 2006 IRF PPS final rule (70 

FR 47880, 47917), we established an IRF 

wage index based on FY 2001 acute care 

hospital wage data to adjust the FY 2006 

IRF payment rates. We also adopted the 

CBSA-based labor market area 

definitions set forth by the OMB (70 FR 

47880, 47917 through 47921). We 

applied a one-year blended wage index 

for FY 2006 to mitigate the impact of the 

wage index change from the 

Metropolitan Statistical Area (MSA) to 

the CBSA-based labor market area 

definitions. In addition to the blended 

wage index, we also adopted a threeyear budget neutral hold harmless 

policy beginning FY 2006 for IRFs that 

met the definition in § 412.602 as rural 

in FY 2005 and became urban in FY 

2006 under the CBSA-based 

designation. 

For FY 2007, we propose to maintain 

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 rational outlined in 

that final rule (70 FR 47880, 47917 

through 47933). However for FY 2007, 

the proposed wage index will be based 

solely on the previously adopted CBSAbased labor market area definitions and 

its wage index (rather than on a blended 

wage index) because the FY 2006 

blended wage index will expire for 

discharges on or after October 1, 2006 

(70 FR 47880, 47921 through 47926). 

We propose to continue to use the most 

recent final pre-reclassified and prefloor hospital wage data available (FY 

2002 hospital wage data) based on the 

CBSA labor market area definitions 

consistent with the rational outlined in 

the FY 2006 IRF PPS final rule. 

Furthermore, we propose to continue 

to use the methodology described in 

that FY 2006 final rule in the event 

there is no hospital wage data available 

for urban or rural areas consistent with 

the rational outlined in the final rule (70 

FR 47880, 47927). In addition, FY 2007 

is the second year of the three-year 

phase out of the budget neutral hold 

harmless policy described in the FY 

2006 IRF PPS final rule. For FY 2007, 

the hold harmless adjustment will be up 

to 6.38 percent for IRFs that meet the 

criteria described in the FY 2006 final 

rule (70 FR 47880, 47923 through 

47926). 

As we described in the FY 2006 final 

rule, certain titles to the CBSAs were 

changed based on OMB Bulletin No. 05–

02 (November 2004). The title changes 

listed below are nomenclatures that do 

not result in substantive changes to the 

CBSA-based designations. The proposed 

wage index tables in the addendum 

reflect the following title changes: 

• CBSA 36740: Orlando-Kissimmee, 

FL 

• CBSA 37620: Parkersburg-MariettaVienna, WV-OH 

• CBSA 42060: Santa Barbara-Santa 

Maria, CA 

• CBSA 13644: BethesdaGaithersburg-Fredrick, MD 

• CBSA 32580: McAllen-EdinburgMission, TX 

• CBSA 26420: Houston-Sugar LandBaytown, TX 

• CBSA 35644: New York-White 

Plains-Wayne, NY-NJ 

To calculate the wage-adjusted facility 

payment for the payment rates set forth 

in this proposed rule, we multiply the 

unadjusted Federal prospective 

payment by the proposed FY 2007 RPL 

labor-related share (75.720 percent) to 

determine the labor-related portion of 

the Federal prospective payments. We 

then multiply this labor-related portion 

by the applicable proposed IRF wage 

index shown in Table 1 for urban areas 

and Table 2 for rural areas in the 

Addendum. 

In addition, because any adjustment 

or update to the IRF wage index made 

under section 1886(j)(6) of the Act must 

be made in a budget neutral manner, we 

have calculated a budget neutral wage 

adjustment factor as established in the 

August 1, 2003 final rule and codified 

at § 412.624(e)(1), and described in the 

steps below. We propose to use the 

following steps to ensure that the FY 

2007 IRF standard payment conversion 

factor reflects the update to the 

proposed wage indexes (based on the 

FY 2002 pre-reclassified and pre-floor 

hospital wage data) and the proposed 

labor-related share in a budget neutral 

manner: 

Step 1. Determine the total amount of 

the estimated FY 2006 IRF PPS rates, 

using the FY 2006 standard payment 

conversion factor and the labor-related 

share and the wage indexes from FY 

2006 (as published in the FY 2006 IRF 

PPS final rule). 

Step 2. Calculate the total amount of 

estimated IRF PPS payments, using the 

FY 2006 standard payment conversion 

factor and the proposed FY 2007 laborrelated share and proposed full 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 2007 budget 

neutral wage adjustment factor of 

1.0017. 

Step 4. Apply the FY 2007 budget 

neutral wage adjustment factor from 

step 3 to the FY 2006 IRF PPS standard 

payment conversion factor after the 

application of the estimated market 

basket update to determine the FY 2007 

standard payment conversion factor. 

D. Description of the Proposed 

Methodology Used To Implement the 

Changes in a Budget Neutral Manner 

To ensure that total estimated 

aggregate payments to IRFs would not 

change with the proposed budget 

neutral changes described in this 

proposed rule, we are proposing to 

apply a factor to the standard payment 

amount for the proposed changes to 

ensure that estimated aggregate 

payments in FY 2007 would not be 

greater or less than those that would 

have been made in the year without the 

proposed changes. Using the 

methodology described below, we 

propose to apply the budget neutrality 

factors to the standard payment amount 

for the proposed changes to ensure that 

estimated aggregate payments in FY 

2007 would be the same with or without 

the proposed changes. We are proposing 

to apply the two budget neutrality 

factors using the following steps: 

Step 1. Determine the proposed FY 

2007 IRF PPS standard payment amount 

using the FY 2006 standard payment 

conversion factor ($12,762) increased by 

the estimated market basket (3.4 

percent) and reduced by the proposed 

2.9 percent adjustment to account for 

coding changes that do not reflect real 

changes in case mix, as discussed in 

section III.A of this proposed rule. 

Step 2. Multiply the wage index 

budget neutrality factor by the proposed 

standard payment amount computed in 

step 1 to account for the proposed wage 

index and labor-related share (1.0017), 

as discussed in section III.C of this 

proposed rule. 

Step 3. Calculate the estimated total 

amount of IRF PPS payments for FY 

2007 (with no change to the tier 

comorbidities and the CMG relative 

weights, and without the hold harmless 

policy for FY 2007). 

Step 4. Apply the FY 2007 hold 

harmless policy to IRFs that meet the 

criteria as described in § 412.624(e)(7) to 

calculate the estimated total amount of 

IRF PPS payment for FY 2007. 

Step 5. Divide the amount calculated 

in step 3 by the amount calculated in 

step 4 to determine the factor (1.0012) 

that keeps total estimated payments in 

FY 2007 the same with and without the 

change to the hold harmless policy. 

Step 6. Apply the factor computed in 

step 5 to the proposed standard 

payment amount in step 2, and calculate 

estimated total IRF PPS payments for FY 

2007. 

Step 7. Apply the proposed new tier 

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(as discussed in section II of this 

proposed rule) to calculate the 

estimated total amount of IRF PPS 

payments for FY 2007. 

Step 8. Divide the amount calculated 

in step 6 by the amount calculated in 

step 7 to determine the proposed factor 

(1.0079) that maintains the same total 

estimated aggregated payments in FY 

2007 with and without the proposed 

revisions to the tier comorbidities and 

CMG relative weights. 

Each of these proposed budget 

neutrality factors increases the proposed 

standard payment amount. The 

proposed budget neutrality factor for the 

second year of the hold harmless policy 

would increase the proposed standard 

payment amount from $12,835 to 

$12,850. The proposed budget neutrality 

factor for the proposed revisions to the 

tier comorbidities and CMG relative 

weights would increase the standard 

payment amount from $12,850 to 

$12,952. As indicated previously, the 

proposed standard payment conversion 

factor would need to be increased in 

order to ensure that total estimated 

payments for FY 2007 with the 

proposed changes equal total estimated 

payments for FY 2007 without the 

proposed changes. This is because the 

continuation of the hold harmless 

policy and the proposed revisions to the 

tier comorbidities and CMG relative 

weights would result in a slight 

decrease, on average, to total estimated 

aggregate payments to IRFs if we were 

not to propose to implement the policies 

in a budget neutral manner. To maintain 

the same total estimated aggregate 

payments to all IRFs with and without 

the policies, we are proposing to 

redistribute payments among IRFs. 

Thus, some redistribution of payment 

would occur among facilities, while 

total estimated aggregate payments 

would not change. To determine how 

these proposed changes are estimated to 

affect payments among different types of 

facilities, please see Table 11 in this 

proposed rule. 

E. Proposed Budget Neutrality Factor 

Methodology for Fiscal Year 2007 

In the FY 2006 final rule (70 FR 

47880, 47937 through 47398), we 

revised the IRF regulation by adding 

§ 412.624(d)(4) to allow the Secretary 

the authority to apply a factor when 

revisions are made to the tier 

comorbidities and the CMGs, the rural 

adjustment, the LIP adjustment, the 

teaching status adjustment, the hold 

harmless adjustment, or other budgetneutral policies. To clarify, we are not 

proposing to revise for FY 2007 the rural 

adjustment of 21.3 percent, the LIP 

exponential factor of 0.6229, and the 

teaching status adjustment exponential 

factor of 0.9012, as described in the FY 

2006 IRF PPS final rule. Since we are 

not proposing changes to these policies, 

we do not need to calculate budget 

neutrality factors for these policies 

because they are assumed in the FY 

2006 standard payment conversion 

factor. 

Although we are not calculating 

budget neutrality factors for the rural 

adjustment, the LIP adjustment, and the 

teaching status adjustment, we are 

continuing the budget neutral hold 

harmless policy (the second year of a 

three-year phase out of the rural 

adjustment) implemented in FY 2006 as 

well as proposing to revise the list of 

tier comorbidities and the CMG relative 

weights for FY 2007. Consistent with 

the hold harmless policy in the FY 2006 

IRF PPS final rule, we are implementing 

the policy in a budget neutral manner 

for FY 2007. We are also proposing to 

implement the revisions to the tier 

comorbidities and the CMG relative 

weights in a budget neutral manner for 

FY 2007. 

Consistent with § 412.624(d)(4), we 

apply a factor to the proposed standard 

payment amount in order to make the 

proposed changes described in this 

proposed rule in a budget neutral 

manner for FY 2007. We begin by using 

the methodology described in sections 

III.A and B of this proposed rule. We 

will use the FY 2006 standard payment 

conversion factor ($12,762) and apply 

the market basket (3.4 percent), which 

equals $13,196. Then, we propose to 

apply a one-time reduction to the 

standard payment amount of 2.9 percent 

as discussed in section III.A of this 

proposed rule, which equals $12,813. 

We will then apply the budget neutral 

wage adjustment (as described above in 

section III.C of this proposed rule) of 

1.0017 to $12,813, which will result in 

a standard payment amount of $12,835. 

The factors we propose to apply are 

1.0079 for the tier comorbidity and CMG 

relative weight changes and 1.0012 for 

the second year of the hold harmless 

policy. We propose to combine these 

factors, by multiplying the two factors to 

establish one proposed budget 

neutrality factor for the two changes 

(1.0012 × 1.0079 = 1.0091). We propose 

to apply this overall budget neutrality 

factor to $12,835 (the proposed standard 

payment amount that includes the 3.4 

percent market basket, the proposed 2.9 

percent reduction, and the budget 

neutrality factor for the wage index and 

labor related share), which would result 

in a proposed standard payment 

conversion factor of $12,952 for FY 

2007. 

The proposed FY 2007 standard 

payment conversion factor would be 

applied to each of the proposed CMG 

relative weights shown in Table 5, 

‘‘Proposed FY 2007 IRF PPS Relative 

Weights and Average Lengths of Stay for 

Case-Mix Groups,’’ to compute the 

unadjusted IRF prospective payment 

rates for FY 2007 shown in Table 8. To 

clarify further, the proposed budget 

neutrality factors described above 

would only be applied for FY 2007. 

However, if necessary, we will apply 

budget neutrality factors in applicable 

years hereafter to the extent that further 

adjustments are made to the IRF PPS 

consistent with § 412.624(d)(4). 

Otherwise, the general methodology to 

determine the Federal prospective 

payment rate is described in 

§ 412.624(c)(3)(ii). 

F. Description of the Proposed IRF 

Standard Payment Conversion Factor 

and Proposed Payment Rates for FY 

2007 

To calculate the proposed standard 

payment conversion factor for FY 2007 

and as illustrated in Table 8 below, we 

begin by applying the estimated market 

basket increase factor (3.4 percent) to 

the standard payment conversion factor 

for FY 2006 ($12,762), which equals 

$13,196. Then, we propose to apply a 

one-time 2.9 percent reduction to the 

standard payment amount to adjust for 

coding changes that have increased 

payments to IRFs since implementation 

of the IRF PPS, as discussed in section 

III.A of this proposed rule. This would 

result in a proposed standard payment 

amount of $12,813. We then apply the 

proposed budget neutrality factor for the 

wage index and labor related share of 

1.0017, which would result in a 

proposed standard payment amount of 

$12,835. Then, we propose to apply a 

combined budget neutrality factor for 

the hold harmless provision and the 

revisions to the tier comorbidities and 

the CMG relative weights of 1.0091 

(1.0012 × 1.0079 = 1.0091), which 

would result in a proposed FY 2007 

standard payment conversion factor of 

$12,952. 


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TABLE 8.—CALCULATIONS TO DETERMINE THE PROPOSED FY 2007 STANDARD PAYMENT CONVERSION FACTOR

Explanation for adjustment Calculations 

FY 2006 Standard Payment Conversion Factor ........................................................................................................................... $12,762 

Proposed FY 2007 Market Basket Increase Factor ...................................................................................................................... × 1.034 

Subtotal ................................................................................................................................................................................... =$13,196 

Proposed One-Time 2.9% Reduction for Coding Changes .......................................................................................................... × 0.971 

Subtotal ................................................................................................................................................................................... =$12,813 

Proposed Budget Neutrality Factor for the Wage Index and Labor-Related Share ..................................................................... × 1.0017 

Subtotal ................................................................................................................................................................................... =$12,835 

Proposed Budget Neutrality Factor for the Hold Harmless Provision and Revisions to the Tier Comorbidities and the CMG 

Relative Weights ........................................................................................................................................................................ × 1.0091 

Proposed FY 2007 Standard Payment Conversion Factor ............................................................................................ =$12,952 

Finally, we would apply the proposed 

relative weights for each CMG and tier, 

shown in section II.B of this proposed 

rule, Table 5 ‘‘Proposed FY 2007 IRF 

PPS Relative Weights and Average 

Lengths of Stay for Case-Mix Groups,’’

to the proposed FY 2007 standard 

payment conversion factor. 

After the application of the proposed 

relative weights, the resulting proposed 

unadjusted IRF prospective payment 

rates for FY 2007 are shown below in 

Table 9, ‘‘Proposed FY 2007 Payment 

Rates Based on the Proposed 

Revisions.’’

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G. Example of the Methodology for 

Adjusting the Proposed Federal 

Prospective Payment Rates 

In the FY 2006 final rule, we 

presented an example similar to the one 

in Table 10 below to illustrate the 

methodology we used to adjust the 

Federal prospective payments based on 

the refinements described in that final 

rule. Table 10 illustrates the proposed 

methodology for adjusting the Federal 

prospective payments (as described in 

sections III.D through F of this proposed 

rule). We have relabeled each step in 

Table 10 to illustrate more clearly how 

the case-level and facility-level 

adjustments are applied to the 

unadjusted Federal prospective 

payments in the IRF PPS. Thus, the 

content in Table 10 is modified from 

that of Table 11 in the FY 2006 final 

rule (70 FR 57166, 57169), in order to 

illustrate the step-by-step computations 

to determine the hypothetical examples. 

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 9 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 0.8624, 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 

0.9251, 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 9 above. 

Then, we multiply the estimated laborrelated share (75.720) described in 

section III.B by the unadjusted Federal 

prospective payment rate. To determine 

the non-labor portion of the Federal 

prospective payment rate, we subtract 

the labor portion of the Federal payment 

from the unadjusted Federal prospective 

payment. 

To compute the wage-adjusted 

Federal prospective payment, we 

multiply the result of the labor portion 

of the Federal payment by the 

appropriate wage index found in the 

Addendum in Tables 1 and 2, which 

will result in the wage-adjusted amount. 

Next, we compute the wage-adjusted 

Federal payment by adding the 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 10 illustrates the components 

of the proposed adjusted payment 

calculation. 

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Thus, the proposed adjusted payment 

for Facility A would be $31,409.69 and 

the proposed adjusted payment for 

Facility B would be $31,739.15. 

IV. Proposed Update to Payments for 

High-Cost Outliers Under the IRF PPS 

[If you choose to comment on issues in this 

section, please include the caption ‘‘HighCost Outliers Under the IRF PPS’ at the 

beginning of your comments.] 

A. Proposed Update to the Outlier 

Threshold Amount for FY 2007 

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 by the Medicare 

allowable covered charge. If the 

estimated cost of the case is higher than 

the adjusted outlier threshold, we make 


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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. FY 2006 was the first year for 

which we had sufficient post-PPS data 

(FY 2003) to adjust the outlier threshold 

amount. Therefore, in the FY 2006 IRF 

PPS final rule, as corrected by the 

September 30, 2005 correction notice 

(70 FR 47880 and 70 FR 57166), we 

updated the outlier threshold amount 

for FY 2006 to $5,129 based on RAND’s 

analysis of FY 2003 data. We also stated 

that we would continue to analyze the 

estimated outlier payments for 

subsequent years and adjust as 

appropriate in order to maintain 

estimated outlier payments at 3 percent 

of total estimated payments. 

For this proposed rule, we performed 

an updated analysis of FY 2004 claims 

and IRF–PAI data using the same 

methodology described in the FY 2006 

IRF PPS final rule (70 FR 47880, 47934 

through 47936). Based on this updated 

analysis, and consistent with the broad 

statutory authority conferred upon the 

Secretary in sections 1886(j)(4)(A)(i) and 

1886(j)(4)(A)(ii) of the Act, we propose 

to update the outlier threshold amount 

to $5,609 to set estimated outlier 

payments equal to 3 percent of total 

estimated aggregate IRF payments for 

FY 2007. 

We propose to increase the outlier 

threshold amount for FY 2007 because 

we estimate that IRF costs for FY 2007 

would be 3.4 percent (the estimated 

market basket increase) higher than FY 

2006 costs, but we estimate that IRF PPS 

(non-outlier) payments for FY 2007 

would be about 0.5 percent higher than 

FY 2006 payments (3.4 percent minus 

the proposed 2.9 percent coding 

adjustment described in section III.A of 

this proposed rule). Since estimated IRF 

costs would increase by more than 

proposed IRF PPS payments under the 

proposed policies for FY 2007, more 

cases would qualify for outlier 

payments and estimated outlier 

payments would exceed 3 percent of 

total estimated payments if we did not 

propose to adjust the outlier threshold 

amount. 

The appropriate outlier threshold 

amount for FY 2007 depends on the 

other proposed policies, especially the 

2.9 percent coding adjustment, 

described in this proposed rule. 

Therefore, the proposed outlier 

threshold amount for FY 2007 is subject 

to change in the final rule depending on 

the other policies contained in the final 

rule and updated analysis and data. 

B. Update to the IRF Cost-to-Charge 

Ratio Ceilings and Proposed 

Clarification to the Regulation Text for 

FY 2007 

In accordance with the methodology 

stated in the August 1, 2003 final rule 

(68 FR 45692 through 45694), as 

clarified below, we apply a ceiling to 

IRFs’ cost-to-charge ratios (CCRs). We 

propose a clarification to the current 

regulation text in § 412.624(e)(5) to 

emphasize that we calculate a single 

overall cost-to-charge ratio (CCR) for 

IRFs because IRF PPS payments are 

based on a prospective payment per 

discharge for both inpatient operating 

and capital-related costs. Specifically, 

we calculate an IRF’s CCR using its total 

Medicare-allowable costs (that is, the 

sum of its allowable operating and 

capital inpatient routine and ancillary 

costs) divided by its total Medicare 

charges (that is, the sum of its operating 

and capital inpatient routine and 

ancillary charges). Accordingly, we are 

proposing to revise the current 

regulation text in § 412.624(e)(5) to 

clarify that we apply adjustments to 

IRFs’ CCRs using the methodology 

described in § 412.84(i) and § 412.84(m), 

except that we use a single overall 

(combined operating and capital) costto-charge ratio for IRFs. We note that we 

are not proposing any changes to the 

substantive policies of how we calculate 

CCRs and national average CCRs, or of 

how we conduct reconciliation of 

outlier payments. Our proposal merely 

seeks to emphasize that the IRF PPS 

uses a single overall CCR instead of 

separate CCRs for operating and capital 

costs. 

Using the methodology described in 

the August 1, 2003 final rule, as 

clarified above, we propose to update 

the national urban and rural CCRs for 

IRFs. Under the proposed revision 

(clarification) to § 412.624(e)(5), we 

would apply the national urban and 

rural CCRs in the following situations: 

• New IRFs that have not yet 

submitted their first Medicare cost 

report. 

• IRFs whose overall CCR is in excess 

of 3 standard deviations above the 

corresponding national geometric mean, 

which we propose to set at 1.57 (based 

on the current estimate) for FY 2007. 

• Other IRFs for whom accurate data 

with which to calculate an overall CCR 

are not available. 

Specifically, for FY 2007, we estimate 

a proposed national CCR of 0.613 for 

rural IRFs and 0.488 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 

then use for the subsequent cost 

reporting period. We note that the 

proposed national average rural and 

urban CCRs and our estimate of 3 

standard deviations above the 

corresponding national geometric mean 

in this section are subject to change in 

the final rule based on updated analysis 

and data. 

V. Other Issues 

[If you choose to comment on issues in this 

section, please include the caption ‘‘Other 

Issues’’ at the beginning of your comments.] 

Both Medicare’s payment structures 

and the actual delivery of post acute 

care have evolved significantly over the 

past decade. Before the BBA, IRFs and 

other post-acute settings such as skilled 

nursing facilities (SNFs) were paid on 

the basis of cost. Since that time, we 

have implemented various legislative 

mandates that established prospective 

payment systems (PPSs) in these 

settings. The PPS methodologies used in 

these settings rely on patient-level 

clinical information to provide accurate 

pricing, support the provision of high 

quality services, and create incentives to 

deliver care more efficiently. 

Medicare is exploring refinements to 

the existing provider-oriented ‘‘silos’’ to 

create a more seamless system for 

payment and delivery of post-acute care 

(PAC) under Medicare. This new model 

will be characterized by more consistent 

payments for the same type of care 

across different sites of service, qualitydriven pay-for-performance incentives, 

and collection of uniform clinical 

assessment information to support 

quality and discharge planning 

functions. 

Section 5008 of the DRA provides a 

pathway to achieve the goals of the new 

model by providing for a demonstration 

on uniform assessment and data 

collection across different sites of 

service. We are in the early stages of 

developing a standard, comprehensive 

assessment instrument to be completed 

at hospital discharge and ultimately 

integrated with PAC assessments. The 

demonstration will enable us to test the 

usefulness of this instrument, and 

analyze cost and outcomes across 

different PAC sites. The lessons learned 

from this demonstration will inform 

efforts to improve the post-acute 

payment systems. The instrument is 

intended to cover the population 

admitted to all PAC settings (SNFs, 

IRFs, and long-term care hospitals) as 

well as residential-based PAC (home 

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We have evaluated existing 

assessment instruments used by 

managed care and other insurers. These 

instruments will form the basis of our 

efforts to create a hospital discharge 

assessment tool that may be used in the 

following ways: To facilitate posthospital placement decision making; to 

enhance the safety and quality of care 

during patient transfers through 

transmission of core information to a 

receiving provider; and to provide 

baseline information for longitudinal 

follow-up of health and function. 

At this time, we do not offer specific 

proposals related to the preceding 

discussion. However, we believe that it 

is useful to encourage discussion of a 

broad range of ideas in order to assess 

the relative advantages and 

disadvantages of the various policies 

affecting PAC sites. Accordingly, in this 

proposed rule, we invite comments on 

these and other approaches. 

In the April 25, 2006 Inpatient 

Prospective Payment Systems proposed 

rule (71 FR 23996), we discussed in 

detail the Health Care Information 

Transparency Initiative and our efforts 

to promote effective use of health 

information technology (HIT) as a 

means to help improve health care 

quality and improve efficiency. 

Specifically, with regard to the 

transparency initiative, we discussed 

several potential options for making 

pricing and quality information 

available to the public (71 FR 24120 

through 24121). We solicited comments 

on ways the Department can encourage 

transparency in health care quality and 

pricing whether through its leadership 

on voluntary initiatives or through 

regulatory requirements. We also sense 

sought comments on the Department’s 

statutory authority to impose such 

requirements. In addition, we discussed 

the potential for HIT to facilitate 

improvements in the quality and 

efficiency of health care services (71 FR 

24100 through 24101). We solicited 

comments on our statutory authority to 

encourage the adoption and use of HIT. 

The 2007 Budget states that ‘‘the 

Administration supports the adoption of 

health information technology (IT) as a 

normal cost of doing business to ensure 

patients receive high quality care.’’ We 

also sought comments on the 

appropriate role of HIT in potential 

value-based purchasing program, 

beyond the intrinsic incentives of a PPS 

to provide efficient care, encourage the 

avoidance of unnecessary costs, and 

increase quality of care. In addition, we 

sought comments on promotion of the 

use of effective HIT through Medicare 

conditions of participation. 

We intend to consider both the health 

care information transparency initiative 

and the use of health information 

technology as we refine and update all 

Medicare payment systems. Therefore, 

we seek comments on these initiatives 

as applied to IRF PPS in this proposed 

rule, and we may address these 

initiatives in the final IRF rule. We note 

that we are in the process of seeking 

input on these initiatives in various 

proposed Medicare payment rules being 

issued this year. 

VI. Proposed Revisions to the 

Classification Criteria Percentage for 

IRFs 

[If you choose to comment on issues in this 

section, please include in the caption 

‘‘Revisions to the Classification Criteria 

Percentage for IRFs’’ at the beginning of your 

comments.] 

The regulations implementing the IRF 

PPS provisions are presently in 42 CFR 

part 412, subpart P. In order to be paid 

under the IRF PPS, a hospital or unit of 

a hospital, must meet the requirements 

for classification as an IRF contained in 

subpart B of part 412, and must meet the 

specific conditions for payment under 

the IRF PPS at § 412.604 in order to be 

excluded from the inpatient hospital 

prospective payment system specified 

in § 412.1(a)(1). 

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), 

and 70 FR 36640 (June 24, 2005)), § 412 

23(b)(2) specifies one criterion, 

commonly known as the ‘‘75 percent 

rule,’’ which Medicare uses for 

classifying a hospital or unit of a 

hospital as an IRF. This criterion sets a 

minimum percentage of a facility’s total 

inpatient population that must meet one 

of 13 medical conditions listed in the 

regulation in order for the facility to be 

classified as an IRF. This minimum 

percentage is known as the ‘‘compliance 

threshold.’’ In the May 7, 2004 final rule 

(69 FR 25752), we revised § 412.23(b)(2) 

to provide that the compliance 

threshold would gradually transition to 

the full 75 percent level over several 

cost reporting periods, as follows: 

• For cost reporting periods 

beginning on or after July 1, 2004, and 

before July 1, 2005, a compliance 

threshold of 50 percent. 

• For cost reporting periods 

beginning on or after July 1, 2005, and 

before July 1, 2006, a compliance 

threshold of 60 percent. 

• For cost reporting periods 

beginning on or after July 1, 2006 and 

before July 1, 2007, a compliance 

threshold of 65 percent. 

• For cost reporting periods 

beginning on or after July 1, 2007, a 

compliance threshold of 75 percent. 

Section 5005 of the DRA recently 

revised the compliance thresholds that 

must be met for certain cost reporting 

periods. Therefore, we will make 

conforming revision to the latter phases 

of the compliance threshold transition 

currently specified in § 412.23(b)(2), as 

follows: 

• For cost reporting periods 

beginning on or after July 1, 2005 and 

before July 1, 2007, the compliance 

threshold will be 60 percent. 

• For cost reporting periods 

beginning on or after July 1, 2007, and 

before July 1, 2008, the compliance 

threshold will be 65 percent. 

• For cost reporting periods 

beginning on or after July 1, 2008, the 

compliance threshold will be 75 

percent. 

Currently, in accordance with 

§ 412.23(b)(2)(i), a case with a principal 

diagnosis that does not match one of the 

13 medical conditions listed in 

§ 412.23(b)(2)(iii) nonetheless can be 

considered as meeting one of those 

medical conditions if all of the 

following criteria are met: 

(1) The patient is admitted for inpatient 

rehabilitation for a condition that is not one 

of the conditions listed in § 412.23(b)(2)(iii); 

(2) The patient also has a comorbidity that 

falls within one of the conditions listed in 

§ 412.23(b)(2)(iii); and 

(3) The comorbidity has caused significant 

functional ability decline in the individual to 

such an extent that, even in the absence of 

the admitting condition, the individual 

would still require intensive rehabilitation 

treatment that is unique to IRFs paid under 

subpart P and cannot be appropriately 

performed in another setting. 

Thus, under § 412.23(b)(2)(i), as long 

as the compliance percentage is still 

transitioning to the full 75 percent level, 

patients with a comorbidity that meets 

the conditions described above are 

counted toward meeting the facility’s 

compliance percentage. However, under 

§ 412.23(b)(2)(ii), once the compliance 

percentage has completed the transition 

to the full 75 percent level, such 

patients will no longer be counted 

toward meeting the facility’s 

compliance percentage. Under current 

regulations, the compliance percentage’s 

transition to the full 75 percent level 

would be complete as of an IRF’s first 

cost reporting period that begins on or 

after July 1, 2007. Under the revised 

transition timeframes that we are now 

proposing in order to implement the 

DRA provision, a facility will not have 

to meet the full 75 percent compliance 

threshold until its first cost reporting 

period beginning on or after July 1, 


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2008. Consequently, we are also 

proposing that a comorbidity that meets 

the criteria as specified in 

§ 412.23(b)(2)(i) may continue to be 

used to determine the compliance 

threshold for cost reporting periods that 

begin before July 1, 2008, but not for 

those beginning on or after July 1, 2008. 

VII. Provisions of the Proposed Rule 

[If you choose to comment on issues in this 

section, please include the caption 

‘‘Provisions of the Proposed Regulations’’ at 

the beginning of your comments.] 

We are proposing to make revisions to 

the regulation text in order to 

implement the proposed policy changes 

for IRFs for FY 2007 and subsequent 

fiscal years. Specifically, we are 

proposing to make conforming changes 

in 42 CFR part 412. These proposed 

revisions and others are discussed in 

detail below. 

A. Section 412.23 Excluded Hospitals: 

Classifications. 

As discussed in section VI of this 

proposed rule, we would revise the 

regulation text in paragraphs (b)(2)(i) 

and (b)(2)(ii) to reflect the applicable 

percentages specified in this section as 

amended by the DRA. To summarize, 

for cost reporting periods—

(1) Beginning on or after July 1, 2005 

and before July 1, 2007, the hospital has 

served an inpatient population of whom 

at least 60 percent; 

(2) Beginning on or after July 1, 2007 

and before July 1, 2008, the hospital has 

served an inpatient population of whom 

at least 65 percent; and 

(3) Beginning on or after July 1, 2008, 

the hospital has served an inpatient 

population of whom at least 75 percent 

require intensive rehabilitative services 

for treatment of one or more of the 

conditions specified at paragraph 

(b)(2)(iii) of this section. 

Since we are revising the transition 

timeframes in order to implement the 

DRA provision, a facility will not have 

to meet the full 75 percent compliance 

threshold until its first cost reporting 

period beginning on or after July 1, 

2008. Consequently, a comorbidity that 

meets the criteria as specified in 

§ 412.23(b)(2)(i) may continue to be 

used to determine the compliance 

threshold for cost reporting periods that 

begin before July 1, 2008. However, for 

cost reporting periods beginning on or 

after July 1, 2008, a comorbidity 

specified in § 412.23(b)(2)(i) will not be 

use to determine the compliance at the 

75 percent threshold. 

B. Section 412.624 Methodology for 

Calculating the Federal Prospective 

Payment Rates. 

In this section, we are proposing to 

revise the current regulation text in 

paragraph (e)(5) to clarify that the costto-charge ratio for IRFs is a single 

overall (combined operating and capital) 

cost-to-charge ratio. We emphasize that 

we use the methodology described in 

§ 412.84(i) and § 412.84(m) except that 

the IRF PPS uses a single overall 

(combined operating and capital) costto-charge ratio and national averages are 

used instead of statewide averages. 

C. Additional Proposed Changes 

• Revise the IRF GROUPER software 

and the relative weight and average 

lengths of stay tables based on the reanalysis RAND has done with the 

corrected tier list, as discussed in 

section II of this proposed rule. 

• Reduce the standard payment 

amount by an additional 2.9 percent to 

account more fully for coding changes, 

as discussed in detail in section III.A of 

this proposed rule. 

• Update payment rates for 

rehabilitation facilities using the RPL 

market basket, RPL labor-related share, 

and CBSA urban and rural wage 

indexes, as discussed in section III.B 

through section III.C of this proposed 

rule. 

• Update the outlier threshold for FY 

2007 to $5,609, as discussed in section 

IV.A of this proposed rule. 

• Update the upper threshold 

(ceiling) and the national average urban 

and rural cost-to-charge ratios for 

determining high-cost outlier payments, 

as discussed in detail in section IV.B of 

this proposed rule. 

VIII. Collection of Information 

Requirements 

This document does not impose 

information collection and 

recordkeeping requirements. 

Consequently, it need not be reviewed 

by the Office of Management and 

Budget under the authority of the 

Paperwork Reduction Act of 1995. 

IX. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

X. Regulatory Impact Analysis 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Regulatory Impact Analysis’’ at the 

beginning of your comments.] 

A. Overall Impact 

We have examined the impacts of this 

proposed rule as required by Executive 

Order 12866 (September 1993, 

Regulatory Planning and Review), the 

Regulatory Flexibility Act (RFA, 

September 16, 1980, Pub. L. 96–354), 

section 1102(b) of the Social Security 

Act, the Unfunded Mandates Reform 

Act of 1995 (Pub. L. 104–4), and 

Executive Order 13132. 

Executive Order 12866 (as amended 

by Executive Order 13258, which 

merely reassigns responsibility of 

duties) directs agencies to assess all 

costs and benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). A regulatory impact analysis 

(RIA) must be prepared for major rules 

with economically significant effects 

($100 million or more in any 1 year). 

This proposed rule is a major rule, as 

defined in Title 5, United States Code, 

section 804(2), because we estimate the 

impact to the Medicare program, and 

the annual effects to the overall 

economy, would be more than $100 

million. We estimate that the total 

impact of these proposed changes for 

estimated FY 2007 payments compared 

to estimated FY 2006 payments would 

be an increase of approximately $40 

million (this reflects a $230 million 

increase from the update to the payment 

rates and a $10 million increase due to 

updating the outlier threshold amount 

to increase estimated outlier payments 

from 2.9 percent in FY 2006 to 3.0 

percent in FY 2007, offset by a $200 

million estimated decrease from the 

proposed reduction to the standard 

payment amount to account for changes 

in coding that do not reflect real 

changes in case mix). 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses. For purposes of the RFA, 

small entities include small businesses, 

nonprofit organizations, and 

government agencies. Most 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 1 

year. (For details, see the Small 

Business Administration’s final rule that 

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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. 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. The 

Department of Health and Human 

Services generally uses a revenue 

impact of 3 to 5 percent as a significance 

threshold under the RFA. Because the 

net effect of this proposed rule on 

almost all facilities would only be about 

1 percent or less of revenues, and would 

be positive, we have concluded that this 

proposed rule would not have a 

significant effect on a substantial 

number of small entities. Medicare 

fiscal intermediaries and carriers are not 

considered to be small entities. 

Individuals and States are not included 

in the definition of a small entity. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 603 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area and has 

fewer than 100 beds. As discussed in 

detail below, the rates and policies set 

forth in this proposed rule would not 

have an adverse impact on rural 

hospitals based on the data of the 181 

rural units and 20 rural hospitals in our 

database of 1,202 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 1 year of $100 

million in 1995 dollars, updated 

annually for inflation. That threshold 

level is currently approximately $120 

million. This proposed rule would not 

mandate any requirements for State, 

local, or tribal governments, nor would 

it affect private sector costs. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

As stated above, this proposed rule 

would not have a substantial effect on 

State and local governments. 

B. Anticipated Effects of the Proposed 

Rule 

We discuss below the impacts of this 

proposed rule on the budget and on 

IRFs. 

1. Basis and Methodology of Estimates 

This proposed rule sets forth updates 

of the IRF PPS rates contained in the FY 

2006 final rule and proposes a 2.9 

percent decrease to the standard 

payment amount to account for the 

increase in estimated aggregate 

payments due to changes in coding. In 

addition, we propose updates to the 

comorbidity tiers and the CMG relative 

weights, and to the outlier threshold 

amount. 

Based on the above, we estimate the 

FY 2007 impact would be a net increase 

of $40 million in payments to IRF 

providers (this reflects a $230 million 

estimated increase from the update to 

the payment rates and a $10 million 

estimated increase due to updating the 

outlier threshold amount to increase 

estimated outlier payments from 2.9 

percent in FY 2006 to 3.0 percent in FY 

2007, offset by a $200 million estimated 

decrease from the proposed reduction to 

the standard payment amount to 

account for the increase in estimated 

aggregate payments due to changes in 

coding). The impact analysis in Table 11 

of this proposed rule represents the 

projected effects of the proposed policy 

changes in the IRF PPS for FY 2007 

compared with estimated IRF PPS 

payments in FY 2006 without the 

proposed policy changes. We estimate 

the effects by estimating payments 

while holding all other payment 

variables constant. We use the best data 

available, but we do not attempt to 

predict behavioral responses to these 

proposed changes, 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 due to 

other changes in the forecasted impact 

time period. Some examples are newlylegislated general Medicare program 

funding changes by the Congress, 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 proposed rates for FY 

2007, we made a number of standard 

annual revisions and clarifications 

mentioned elsewhere in this proposed 

rule (for example, the update to the 

wage and market basket indexes used to 

adjust the Federal rates). These 

revisions would increase payments to 

IRFs by approximately $230 million. 

The aggregate change in payments 

associated with this proposed rule is 

estimated to be an increase in payments 

to IRFs of $40 million for FY 2007. The 

market basket increase of $230 million 

and the $10 million increase due to 

updating the outlier threshold amount 

to increase estimated outlier payments 

from 2.9 percent in FY 2006 to 3.0 

percent in FY 2007, combined with the 

estimated decrease of $200 million due 

to the proposed reduction to the 

standard payment amount to account for 

coding changes (not related to real 

changes in case mix), results in a net 

change in estimated payments from FY 

2006 to FY 2007 of $40 million. 

The impacts are shown in Table 11. 

The following proposed changes are 

discussed separately below: 

• The effects of applying the budgetneutral labor-related share and wage 

index adjustment, as required under 

section 1886(j)(6) of the Act. 

• The effects of the expiration of the 

one-year budget-neutral transition 

policy for adopting the new CBSA-based 

geographic area definitions announced 

by OMB in June 2003. 

• The effects of the proposed update 

to the outlier threshold amount to 

increase total estimated outlier 

payments from 2.9 to 3 percent of total 

estimated payments for FY 2007, 

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 the proposed decrease 

to the standard payment amount to 

account for the increase in estimated 

aggregate payments due to changes in 

coding, as required under section 

1886(j)(2)(C)(ii) of the Act. 

• The effects of the second 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 during FY 2006 and FY 

2007 and lose the rural adjustment, 

resulting in a loss of estimated IRF PPS 

payments if not for the hold harmless 

policy. 


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• The effect of the proposed budgetneutral revisions to the comorbidity 

tiers and the CMG relative weights, 

under the authority of section 

1886(j)(2)(C)(i) of the Act. 

• The total change in estimated 

payments based on the proposed FY 

2007 policies relative to estimated FY 

2006 payments without the proposed 

policies for FY 2007. 

2. Description of Table 11 

The table below categorizes IRFs by 

geographic location, including urban or 

rural location and location with respect 

to CMS’ nine regions 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 by 

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 1,202 

IRFs included in the analysis. 

The next 12 rows of Table 11 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 rural, which is further 

divided into rural units of a hospital, 

rural freestanding hospitals, and by type 

of ownership. There are 1,001 IRFs 

located in urban areas included in our 

analysis. Among these, there are 807 IRF 

units of hospitals located in urban areas 

and 194 freestanding IRF hospitals 

located in urban areas. There are 201 

IRFs located in rural areas included in 

our analysis. Among these, there are 181 

IRF units of hospitals located in rural 

areas and 20 freestanding IRF hospitals 

located in rural areas. There are 311 forprofit IRFs. Among these, there are 260 

IRFs in urban areas and 51 IRFs in rural 

areas. There are 743 non-profit IRFs. 

Among these, there are 630 urban IRFs 

and 113 rural IRFs. There are 148 

government-owned IRFs. Among these, 

there are 111 urban IRFs and 37 rural 

IRFs. 

The remaining three parts of Table 11 

show IRFs grouped by their geographic 

location within a region, and the last 

part groups IRFs by teaching status. 

First, IRFs located in urban areas are 

categorized with respect to their 

location within a particular one of the 

nine CMS geographic regions. Second, 

IRFs located in rural areas are 

categorized with respect to their 

location within a particular one of the 

nine CMS geographic regions. In some 

cases, especially for rural IRFs located 

in the New England, Mountain, and 

Pacific regions, the number of IRFs 

represented is small. Finally, IRFs are 

grouped by teaching status, including 

non-teaching IRFs, IRFs with an intern 

and resident to average daily census 

(ADC) ratio less than 10 percent, IRFs 

with an intern and resident to ADC ratio 

greater than or equal to 10 percent and 

less than or equal to 19 percent, and 

IRFs with an intern and resident to ADC 

ratio greater than 19 percent. 

The estimated impact of each 

proposed change to the facility 

categories listed above is shown in the 

columns of Table 11. The description of 

each column is as follows: 

Column (1) shows the facility 

classification categories described 

above. 

Column (2) shows the number of IRFs 

in each category. 

Column (3) shows the number of 

cases in each category. 

Column (4) shows the estimated effect 

of adjusting the outlier threshold 

amount so that estimated outlier 

payments increases from 2.9 percent in 

FY 2006 to 3 percent of total estimated 

payments for FY 2007. 

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 hold harmless 

policy. 

Column (7) shows the estimated 

effects of the proposed budget-neutral 

revisions to the comorbidity tiers and 

the CMG relative weights. 

Column (8) shows the estimated 

effects of the proposed decrease in the 

standard payment amount to account for 

the increase in aggregate payments due 

to changes in coding that do not reflect 

real changes in case mix, as discussed 

in section III.A of this proposed rule. 

Section 1886(j)(2)(C)(ii) of the Act 

requires us to adjust the per discharge 

PPS payment rate to eliminate the effect 

of coding or classification changes that 

do not reflect real changes in case mix 

if we determine that such changes result 

in a change in aggregate payments under 

the classification system. 

Column (9) compares our estimates of 

the payments per discharge, 

incorporating all proposed changes 

reflected in this proposed rule for FY 

2007, to our estimates of payments per 

discharge in FY 2006 (without these 

proposed changes). The average 

estimated increase for all IRFs is 

approximately 0.6 percent. This 

estimated increase includes the effects 

of the 3.4 percent market basket update. 

It also includes the 0.1 percent overall 

estimated increase to IRF payments 

from the proposed update to the outlier 

threshold amount, and the estimated 

impact of the proposed one-time 2.9 

percent reduction to the standard 

payment amount to account for changes 

in coding that increased payments to 

IRFs. Because we propose to make the 

remainder of the changes outlined in 

this proposed rule in a budget-neutral 

manner, they would not affect total 

estimated IRF payments in the 

aggregate. However, as described in 

more detail in each section, they would 

affect the estimated distribution of 

payments among providers. 

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3. Impact of the Proposed Update to the 

Outlier Threshold Amount (Column 4, 

Table 11) 

In the FY 2006 IRF PPS final rule (70 

FR 30188), we used FY 2003 patientlevel claims data (the best, most 

complete data available at that time) to 

set the outlier threshold amount for FY 

2006 so that estimated outlier payments 

would equal 3 percent of total estimated 

payments for FY 2006. For this 

proposed rule, we have updated our 

analysis using FY 2004 data. Between 

FYs 2003 and 2004, we observed that 

IRFs’ cost-to-charge ratios continued to 

fall, a trend that has occurred each year 

since we first implemented the IRF PPS. 

We are still investigating the reasons for 

this. However, this decrease in cost-tocharge ratios affected our estimate of 

outlier payments as a percentage of total 

estimated payments for FY 2006, which 

declined from 3 percent using the FY 

2003 data to 2.9 percent using the 

updated FY 2004 data. Thus, we are 

proposing to adjust the outlier threshold 

amount for FY 2007 to $5,609 in order 

to set total estimated outlier payments 

equal to 3 percent of total estimated 

payments in FY 2007 (see section IV.A 

of this proposed rule for a detailed 

discussion of the factors that influence 

how we arrive at the proposed outlier 

threshold amount). The estimated 

change in total payments between FY 

2006 and FY 2007, therefore, includes a 

0.1 percent overall estimated increase in 

payments because the outlier portion of 

total payments is estimated to increase 

from 2.9 percent to 3 percent. 

The impact of this proposed update 

(as shown in column 4 of Table 11) is 

to increase estimated overall payments 

to IRFs by 0.1 percent. We estimate the 

largest increase in payments to be a 0.3 

percent increase in payments to rural 

IRFs in the Mountain region. We do not 

estimate that any group of IRFs would 

experience a decrease in payments from 

this proposed update. 

4. Impact of the Market Basket Update 

to the IRF PPS Payment Rates (Column 

5, Table 11) 

In column 5 of Table 11, 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 would result 

in a 3.4 percent increase in overall 

payments to IRFs. 

5. Impact of the Full CBSA Wage 

Index, Labor-Related Share, and the 

Hold Harmless Policy for FY 2007 

(Column 6, Table 11) 

In column 6 of Table 11, we present 

the effects of the budget neutral wage 

index, labor-related share, and 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 due to the change from 

MSAs to CBSAs (referenced as the hold 

harmless policy). We applied the 

blended wage index to all IRFs and the 

hold harmless policy to those IRFs that 

qualify, as described in § 412.624(e)(7), 

in order to mitigate the impact of the 

change from the MSA-based labor area 

definitions to the CBSA-based labor area 

definitions for IRFs. 

As discussed in this proposed rule, 

the blended wage index expires in FY 

2007 and will not be applied for 

discharges on or after October 1, 2006. 

Since we are in the second year of the 

hold harmless policy, we are not 

proposing a change to this policy and 

will continue to apply it as described in 

the FY 2006 final rule in a budget 

neutral manner. 

As discussed in this proposed rule, 

we are proposing to update the wage 

index based on the CBSA-based labor 

market area definitions in a budget 

neutral manner. We will also apply the 

second year of the hold harmless policy 

in a budget neutral manner. Thus, in the 

aggregate, the estimated impact of the 

wage index and the labor-related share 

is zero percent. 

In the aggregate for all urban and all 

rural IRFs, we do not estimate that these 

changes would affect overall estimated 

payments to IRFs. However, we estimate 

these changes to have small 

distributional effects. We estimate the 

largest increase in payments to be a 2.8 

percent increase for rural IRFs in the 

Pacific region and the largest decrease 

in payments to be a 1.9 percent decrease 

among rural IRFs in the Mountain 

region. 


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6. Impact of the Proposed Changes to 

the Comorbidity Tiers and the CMG 

Relative Weights (Column 7, Table 11) 

In column 7 of Table 11, we present 

the effects of the proposed changes to 

the comorbidity tiers and the CMG 

relative weights. Since we are proposing 

to implement these changes in a budget 

neutral manner, we estimate that they 

would have no overall effect on 

payments to IRFs. Similarly, we 

estimate no overall effect of these 

proposed changes on payments to urban 

IRFs. However, we estimate a 0.1 

percent increase in payments to rural 

IRFs. We estimate the largest increase in 

payments to be a 0.2 percent increase 

among rural government-owned IRFs 

and rural IRFs located in the Middle 

Atlantic and South Atlantic regions. We 

estimate the largest decrease to be a 0.4 

percent decrease among teaching IRFs 

with intern and resident to average daily 

census ratios in the 10 percent to 19 

percent category. 

7. Impact of the Proposed 2.9 Percent 

Decrease to the Standard Payment 

Amount to Account for Coding Changes 

(Column 8, Table 11) 

In column 8 of Table 11, we present 

the effects of the proposed decrease in 

the standard payment amount to 

account for the increase in estimated 

aggregate payments due to changes in 

coding that do not reflect real changes 

in case mix. 

In the aggregate, and across all 

hospital groups, we estimate that the 

proposed policy would result in a 2.9 

percent decrease in overall payments to 

IRFs. Thus, we estimate that the 

proposed 2.9 percent reduction in the 

standard payment amount would result 

in a cost savings to the Medicare 

program of approximately $200 million. 

C. Accounting Statement 

As required by OMB Circular A–4 

(available at http:// 

www.whitehouse.gov/omb/circulars/ 

a004/a-4.pdf), in Table 12 below, we 

have prepared an accounting statement 

showing the classification of the 

expenditures associated with the 

provisions of this proposed rule. This 

table provides our best estimate of the 

increase in Medicare payments under 

the IRF PPS as a result of the proposed 

changes presented in this proposed rule 

based on the data for 1,202 IRFs in our 

database. All estimated expenditures are 

classified as transfers to Medicare 

providers (that is, IRFs). 

TABLE 12.—ACCOUNTING STATEMENT: 

CLASSIFICATION OF ESTIMATED EXPENDITURES, FROM THE 2006 IRF 

PPS RATE YEAR TO THE 2007 IRF 

PPS RATE YEAR

[In Millions] 

Category Transfers 

Annualized Monetized 

Transfers.

$40 million. 

From Whom To 

Whom.

Federal Government 

to IRF Medicare 

Providers. 

D. Alternatives Considered 

Because we have determined that this 

proposed rule would have a significant 

economic impact on IRFs, we will 

discuss the alternative changes to the 

IRF PPS that we considered. 

We considered a proposed reduction 

to the standard payment amount by an 

amount of up to 3.9 percent (5.8 percent 

minus the 1.9 percent adjustment to the 

standard payment amount for FY 2006), 

because one of RAND’s methodologies 

for determining the amount of real 

change in case mix and the amount of 

coding change that occurred between 

1999 and 2002 suggested that coding 

change could possibly have been 

responsible for up to 5.8 percent of the 

observed increase in IRFs’ case mix. 

This suggests that we could potentially 

have proposed a reduction greater than 

2.9 percent and as high as 3.9 percent. 

We also considered the possibility of 

making a somewhat lower adjustment of 

2.3 percent, which would fall at 

approximately the middle of RAND’s 

range of estimates. However, for the 

reasons discussed in section III.A of this 

proposed rule, we have instead decided 

to propose a 2.9 percent reduction to the 

standard payment amount. Further, in 

light of recent changes to the IRF PPS 

that affect IRF utilization trends, 

including the revised phase-in schedule 

of the IRF 75 percent rule compliance 

percentage, we believe it is appropriate 

to take an incremental approach to 

adjusting for coding changes. In this 

way, we maintain the flexibility to 

assess the impact of these changes and 

propose additional changes, if 

appropriate, in the future. 

We considered not proposing to 

update the comorbidity tiers and the 

CMG relative weights for FY 2007. 

However, as described in section II of 

this proposed rule, re-analysis of the 

data indicates that some minor technical 

revisions are appropriate to align the 

distribution of payments as closely as 

possible with the costs of IRF care. 

We also considered not proposing an 

update to the outlier threshold amount 

for FY 2007. However, analysis of 

updated FY 2004 data indicates that 

estimated outlier payments would not 

equal 3 percent of estimated total 

payment for FY 2007 unless we were to 

update the outlier threshold amount. 

E. Conclusion (Column 9, Table 11) 

Overall, estimated payments per 

discharge for IRFs in FY 2007 are 

projected to increase by 0.6 percent, 

compared with those in FY 2006, as 

reflected in column 9 of Table 11. We 

estimate that IRFs in urban and rural 

areas would both experience a 0.6 

percent increase in estimated payments 

per discharge compared with FY 2006. 

We estimate that rehabilitation units in 

urban areas would experience a 0.5 

percent increase in estimated payments 

per discharge, while freestanding 

rehabilitation hospitals in urban areas 

would experience a 0.7 percent increase 

in estimated payments per discharge. 

We estimate that rehabilitation units in 

rural areas would experience a 0.6 

percent increase in estimated payments 

per discharge, while freestanding 

rehabilitation hospitals in rural areas 

would experience a 0.7 percent increase 

in estimated payments per discharge. 

Overall, we estimate that the largest 

payment increase would be 3.5 percent 

among rural IRFs in the Pacific region. 

We estimate that the largest overall 

decrease in estimated payments would 

be a 1.2 percent decrease for rural IRFs 

in the Mountain region. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

List of Subjects in 42 CFR Part 412 

Administrative practice and 

procedure, Health facilities, Medicare, 

Puerto Rico, Reporting and 

recordkeeping requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services proposes to amend 

42 CFR chapter IV as follows: 

PART 412—PROSPECTIVE PAYMENT 

SYSTEMS FOR INPATIENT HOSPITAL 

SERVICES 

1. The authority citation for part 412 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

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

1395hh). 

Subpart P—Prospective Payment for 

Inpatient Rehabilitation Hospitals and 

Rehabilitation Units 

2. Section 412.23 is amended by—

A. Revising paragraph (b)(2)(i) 

introductory text. 


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28142 Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 

B. Revising paragraph (b)(2)(ii). 

The revisions read as follows: 

§ 412.23 Excluded hospitals: 

Classifications. 

* * * * * 

(b) * * * 

(2) * * * 

(i) For cost reporting periods 

beginning on or after July 1, 2004 and 

before July 1, 2005, the hospital has 

served an inpatient population of whom 

at least 50 percent, and for cost 

reporting periods beginning on or after 

July 1, 2005 and before July 1, 2007, the 

hospital has served an inpatient 

population of whom at least 60 percent, 

and for cost reporting periods beginning 

on or after July 1, 2007 and before July 

1, 2008, the hospital has served an 

inpatient population of whom at least 

65 percent required intensive 

rehabilitative services for treatment of 

one or more of the conditions specified 

at paragraph (b)(2)(iii) of this section. A 

patient with a comorbidity, as defined at 

§ 412.602, may be included in the 

inpatient population that counts toward 

the required applicable percentage if—

* * * * * 

(ii) For cost reporting periods 

beginning on or after July 1, 2008, the 

hospital has served an inpatient 

population of whom at least 75 percent 

required intensive rehabilitative 

services for treatment of one or more of 

the conditions specified in paragraph 

(b)(2)(iii) of this section. A patient with 

a comorbidity as described in paragraph 

(b)(2)(i) of this section is not included 

in the inpatient population that counts 

toward the required 75 percent. 

* * * * * 

3. In § 412.624, paragraph (e)(5) is 

revised to read as follows: 

§ 412.624 Methodology for calculating the 

Federal prospective payment rates. 

* * * * * 

(e) * * * 

(5) Adjustment for high-cost outliers. 

CMS provides for an additional 

payment to an inpatient rehabilitation 

facility if its estimated costs for a patient 

exceed a fixed dollar amount (adjusted 

for area wage levels and factors to 

account for treating low-income 

patients, for rural location, and for 

teaching programs) as specified by CMS. 

The additional payment equals 80 

percent of the difference between the 

estimated cost of the patient and the 

sum of the adjusted Federal prospective 

payment computed under this section 

and the adjusted fixed dollar amount. 

Effective for discharges occurring on or 

after October 1, 2003, additional 

payments made under this section will 

be subject to the adjustments at 

§ 412.84(i), except that CMS calculates a 

single overall combined operating and 

capital cost-to-charge ratio (instead of a 

separate operating cost-to-charge ratio 

and a separate capital cost-to-charge 

ratio) and national averages will be used 

instead of statewide averages. Effective 

for discharges occurring on or after 

October 1, 2003, additional payments 

made under this section will also be 

subject to adjustments at § 412.84(m), 

except that CMS calculates a single 

overall combined operating and capital 

cost-to-charge ratio (instead of a 

separate operating cost-to-charge ratio 

and a separate capital cost-to-charge 

ratio). 

* * * * * 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplemental Medical Insurance 

Program.) 

Dated: March 30, 2006. 

Mark B. McClellan, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: May 8, 2006. 

Michael O. Leavitt, 

Secretary. 

The following addendum will not 

appear in the Code of Federal 

Regulations. 

Addendum 

This addendum contains the tables referred 

to throughout the preamble of this proposed 

rule. The tables presented below are as 

follows: 

Table 1.—Proposed Inpatient Rehabilitation 

Facility Urban Area Wage Index for 

Discharges Occurring from October 1, 

2006 through September 30, 2007 

Table 2.—Proposed Inpatient Rehabilitation 

Facility Rural Area Wage Index for 

Discharges Occurring from October 1, 

2006 through September 30, 2007 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

10180 ....... Abilene, TX .............................................................................................................................................................. 0.7896 

Callahan County, TX.

Jones County, TX.

Taylor County, TX.

10380 ....... Aguadilla-Isabela-San Sebastia ́n, PR ..................................................................................................................... 0.4738 

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 ................................................................................................................................................................ 0.8982 

Portage County, OH.

Summit County, OH.

10500 ....... Albany, GA .............................................................................................................................................................. 0.8628 

Baker County, GA.

Dougherty County, GA.

Lee County, GA.

Terrell County, GA.

Worth County, GA.

10580 ....... Albany-Schenectady-Troy, NY ................................................................................................................................ 0.8589 

Albany County, NY.

Rensselaer County, NY.


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TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

Saratoga County, NY.

Schenectady County, NY.

Schoharie County, NY.

10740 ....... Albuquerque, NM .................................................................................................................................................... 0.9684 

Bernalillo County, NM.

Sandoval County, NM.

Torrance County, NM.

Valencia County, NM.

10780 ....... Alexandria, LA ......................................................................................................................................................... 0.8033 

Grant Parish, LA.

Rapides Parish, LA.

10900 ....... Allentown-Bethlehem-Easton, PA-NJ ...................................................................................................................... 0.9818 

Warren County, NJ.

Carbon County, PA.

Lehigh County, PA.

Northampton County, PA.

11020 ....... Altoona, PA ............................................................................................................................................................. 0.8944 

Blair County, PA.

11100 ....... Amarillo, TX ............................................................................................................................................................. 0.9156 

Armstrong County, TX.

Carson County, TX.

Potter County, TX.

Randall County, TX.

11180 ....... Ames, IA .................................................................................................................................................................. 0.9536 

Story County, IA.

11260 ....... Anchorage, AK ........................................................................................................................................................ 1.1895 

Anchorage Municipality, AK.

Matanuska-Susitna Borough, AK.

11300 ....... Anderson, IN ........................................................................................................................................................... 0.8586 

Madison County, IN.

11340 ....... Anderson, SC .......................................................................................................................................................... 0.8997 

Anderson County, SC.

11460 ....... Ann Arbor, MI .......................................................................................................................................................... 1.0859 

Washtenaw County, MI.

11500 ....... Anniston-Oxford, AL ................................................................................................................................................ 0.7682 

Calhoun County, AL.

11540 ....... Appleton, WI ............................................................................................................................................................ 0.9288 

Calumet County, WI.

Outagamie County, WI.

11700 ....... Asheville, NC ........................................................................................................................................................... 0.9285 

Buncombe County, NC.

Haywood County, NC.

Henderson County, NC.

Madison County, NC.

12020 ....... Athens-Clarke County, GA ...................................................................................................................................... 0.9855 

Clarke County, GA.

Madison County, GA.

Oconee County, GA.

Oglethorpe County, GA.

12060 ....... Atlanta-Sandy Springs-Marietta, GA ....................................................................................................................... 0.9793 

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.


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TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

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 ....................................................................................................................................................... 1.1615 

Atlantic County, NJ.

12220 ....... Auburn-Opelika, AL ................................................................................................................................................. 0.8100 

Lee County, AL.

12260 ....... Augusta-Richmond County, GA-SC ........................................................................................................................ 0.9748 

Burke County, GA.

Columbia County, GA.

McDuffie County, GA.

Richmond County, GA.

Aiken County, SC.

Edgefield County, SC.

12420 ....... Austin-Round Rock, TX ........................................................................................................................................... 0.9437 

Bastrop County, TX.

Caldwell County, TX.

Hays County, TX.

Travis County, TX.

Williamson County, TX.

12540 ....... Bakersfield, CA ........................................................................................................................................................ 1.0470 

Kern County, CA.

12580 ....... Baltimore-Towson, MD ............................................................................................................................................ 0.9897 

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 ............................................................................................................................................................. 0.9993 

Penobscot County, ME.

12700 ....... Barnstable Town, MA .............................................................................................................................................. 1.2600 

Barnstable County, MA.

12940 ....... Baton Rouge, LA ..................................................................................................................................................... 0.8593 

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 ...................................................................................................................................................... 0.9508 

Calhoun County, MI.

13020 ....... Bay City, MI ............................................................................................................................................................. 0.9343 

Bay County, MI.

13140 ....... Beaumont-Port Arthur, TX ....................................................................................................................................... 0.8412 

Hardin County, TX.

Jefferson County, TX.

Orange County, TX.

13380 ....... Bellingham, WA ....................................................................................................................................................... 1.1731 

Whatcom County, WA.

13460 ....... Bend, OR ................................................................................................................................................................. 1.0786 

Deschutes County, OR.

13644 ....... Bethesda-Gaithersburg-Frederick, MD ................................................................................................................... 1.1483 

Frederick County, MD.

Montgomery County, MD.

13740 ....... Billings, MT .............................................................................................................................................................. 0.8834 

Carbon County, MT.

Yellowstone County, MT.

13780 ....... Binghamton, NY ...................................................................................................................................................... 0.8562 


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TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

Broome County, NY.

Tioga County, NY.

13820 ....... Birmingham-Hoover, AL .......................................................................................................................................... 0.8959 

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 .......................................................................................................................................................... 0.7574 

Burleigh County, ND.

Morton County, ND.

13980 ....... Blacksburg-Christiansburg-Radford, VA ................................................................................................................. 0.7954 

Giles County, VA.

Montgomery County, VA.

Pulaski County, VA.

Radford City, VA.

14020 ....... Bloomington, IN ....................................................................................................................................................... 0.8447 

Greene County, IN.

Monroe County, IN.

Owen County, IN.

14060 ....... Bloomington-Normal, IL ........................................................................................................................................... 0.9075 

McLean County, IL.

14260 ....... Boise City-Nampa, ID .............................................................................................................................................. 0.9052 

Ada County, ID.

Boise County, ID.

Canyon County, ID.

Gem County, ID.

Owyhee County, ID.

14484 ....... Boston-Quincy, MA ................................................................................................................................................. 1.1558 

Norfolk County, MA.

Plymouth County, MA.

Suffolk County, MA.

14500 ....... Boulder, CO ............................................................................................................................................................. 0.9734 

Boulder County, CO.

14540 ....... Bowling Green, KY .................................................................................................................................................. 0.8211 

Edmonson County, KY.

Warren County, KY.

14740 ....... Bremerton-Silverdale, WA ....................................................................................................................................... 1.0675 

Kitsap County, WA.

14860 ....... Bridgeport-Stamford-Norwalk, CT ........................................................................................................................... 1.2592 

Fairfield County, CT.

15180 ....... Brownsville-Harlingen, TX ....................................................................................................................................... 0.9804 

Cameron County, TX.

15260 ....... Brunswick, GA ......................................................................................................................................................... 0.9311 

Brantley County, GA.

Glynn County, GA.

McIntosh County, GA.

15380 ....... Buffalo-Niagara Falls, NY ........................................................................................................................................ 0.9511 

Erie County, NY.

Niagara County, NY.

15500 ....... Burlington, NC ......................................................................................................................................................... 0.8905 

Alamance County, NC.

15540 ....... Burlington-South Burlington, VT .............................................................................................................................. 0.9410 

Chittenden County, VT.

Franklin County, VT.

Grand Isle County, VT.

15764 ....... Cambridge-Newton-Framingham, MA ..................................................................................................................... 1.1172 

Middlesex County, MA.

15804 ....... Camden, NJ ............................................................................................................................................................ 1.0517 

Burlington County, NJ.

Camden County, NJ.

Gloucester County, NJ.

15940 ....... Canton-Massillon, OH ............................................................................................................................................. 0.8935 

Carroll County, OH.

Stark County, OH.

15980 ....... Cape Coral-Fort Myers, FL ..................................................................................................................................... 0.9356 

Lee County, FL.


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TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

16180 ....... Carson City, NV ...................................................................................................................................................... 1.0234 

Carson City, NV.

16220 ....... Casper, WY ............................................................................................................................................................. 0.9026 

Natrona County, WY.

16300 ....... Cedar Rapids, IA ..................................................................................................................................................... 0.8825 

Benton County, IA.

Jones County, IA.

Linn County, IA.

16580 ....... Champaign-Urbana, IL ............................................................................................................................................ 0.9594 

Champaign County, IL.

Ford County, IL.

Piatt County, IL.

16620 ....... Charleston, WV ....................................................................................................................................................... 0.8445 

Boone County, WV.

Clay County, WV.

Kanawha County, WV.

Lincoln County, WV.

Putnam County, WV.

16700 ....... Charleston-North Charleston, SC ........................................................................................................................... 0.9245 

Berkeley County, SC.

Charleston County, SC.

Dorchester County, SC.

16740 ....... Charlotte-Gastonia-Concord, NC-SC ...................................................................................................................... 0.9750 

Anson County, NC.

Cabarrus County, NC.

Gaston County, NC.

Mecklenburg County, NC.

Union County, NC.

York County, SC.

16820 ....... Charlottesville, VA ................................................................................................................................................... 1.0187 

Albemarle County, VA.

Fluvanna County, VA.

Greene County, VA.

Nelson County, VA.

Charlottesville City, VA.

16860 ....... Chattanooga, TN-GA ............................................................................................................................................... 0.9088 

Catoosa County, GA.

Dade County, GA.

Walker County, GA.

Hamilton County, TN.

Marion County, TN.

Sequatchie County, TN.

16940 ....... Cheyenne, WY ........................................................................................................................................................ 0.8775 

Laramie County, WY.

16974 ....... Chicago-Naperville-Joliet, IL ................................................................................................................................... 1.0790 

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 ................................................................................................................................................................ 1.0511 

Butte County, CA.

17140 ....... Cincinnati-Middletown, OH-KY-IN ........................................................................................................................... 0.9615 

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.


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TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

Hamilton County, OH.

Warren County, OH.

17300 ....... Clarksville, TN-KY ................................................................................................................................................... 0.8284 

Christian County, KY.

Trigg County, KY.

Montgomery County, TN.

Stewart County, TN.

17420 ....... Cleveland, TN .......................................................................................................................................................... 0.8139 

Bradley County, TN.

Polk County, TN.

17460 ....... Cleveland-Elyria-Mentor, OH .................................................................................................................................. 0.9213 

Cuyahoga County, OH.

Geauga County, OH.

Lake County, OH.

Lorain County, OH.

Medina County, OH.

17660 ....... Coeur d’Alene, ID .................................................................................................................................................... 0.9647 

Kootenai County, ID.

17780 ....... College Station-Bryan, TX ....................................................................................................................................... 0.8900 

Brazos County, TX.

Burleson County, TX.

Robertson County, TX.

17820 ....... Colorado Springs, CO ............................................................................................................................................. 0.9468 

El Paso County, CO.

Teller County, CO.

17860 ....... Columbia, MO ......................................................................................................................................................... 0.8345 

Boone County, MO.

Howard County, MO.

17900 ....... Columbia, SC .......................................................................................................................................................... 0.9057 

Calhoun County, SC.

Fairfield County, SC.

Kershaw County, SC.

Lexington County, SC.

Richland County, SC.

Saluda County, SC.

17980 ....... Columbus, GA-AL ................................................................................................................................................... 0.8560 

Russell County, AL.

Chattahoochee County, GA.

Harris County, GA.

Marion County, GA.

Muscogee County, GA.

18020 ....... Columbus, IN ........................................................................................................................................................... 0.9588 

Bartholomew County, IN.

18140 ....... Columbus, OH ......................................................................................................................................................... 0.9860 

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 ................................................................................................................................................... 0.8550 

Aransas County, TX.

Nueces County, TX.

San Patricio County, TX.

18700 ....... Corvallis, OR ........................................................................................................................................................... 1.0729 

Benton County, OR.

19060 ....... Cumberland, MD-WV .............................................................................................................................................. 0.9317 

Allegany County, MD.

Mineral County, WV.

19124 ....... Dallas-Plano-Irving, TX ........................................................................................................................................... 1.0228 

Collin County, TX.

Dallas County, TX.

Delta County, TX.

Denton County, TX.

Ellis County, TX.

Hunt County, TX.

Kaufman County, TX.


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28148 Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

Rockwall County, TX.

19140 ....... Dalton, GA ............................................................................................................................................................... 0.9079 

Murray County, GA.

Whitfield County, GA.

19180 ....... Danville, IL ............................................................................................................................................................... 0.9028 

Vermilion County, IL.

19260 ....... Danville, VA ............................................................................................................................................................. 0.8489 

Pittsylvania County, VA.

Danville City, VA.

19340 ....... Davenport-Moline-Rock Island, IA-IL ...................................................................................................................... 0.8724 

Henry County, IL.

Mercer County, IL.

Rock Island County, IL.

Scott County, IA.

19380 ....... Dayton, OH .............................................................................................................................................................. 0.9064 

Greene County, OH.

Miami County, OH.

Montgomery County, OH.

Preble County, OH.

19460 ....... Decatur, AL ............................................................................................................................................................. 0.8469 

Lawrence County, AL.

Morgan County, AL.

19500 ....... Decatur, IL ............................................................................................................................................................... 0.8067 

Macon County, IL.

19660 ....... Deltona-Daytona Beach-Ormond Beach, FL .......................................................................................................... 0.9299 

Volusia County, FL.

19740 ....... Denver-Aurora, CO ................................................................................................................................................. 1.0723 

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, IA ........................................................................................................................................................ 0.9669 

Dallas County, IA.

Guthrie County, IA.

Madison County, IA.

Polk County, IA.

Warren County, IA.

19804 ....... Detroit-Livonia-Dearborn, MI ................................................................................................................................... 1.0424 

Wayne County, MI.

20020 ....... Dothan, AL .............................................................................................................................................................. 0.7721 

Geneva County, AL.

Henry County, AL.

Houston County, AL.

20100 ....... Dover, DE ................................................................................................................................................................ 0.9776 

Kent County, DE.

20220 ....... Dubuque, IA ............................................................................................................................................................ 0.9024 

Dubuque County, IA.

20260 ....... Duluth, MN-WI ......................................................................................................................................................... 1.0213 

Carlton County, MN.

St. Louis County, MN.

Douglas County, WI.

20500 ....... Durham, NC ............................................................................................................................................................ 1.0244 

Chatham County, NC.

Durham County, NC.

Orange County, NC.

Person County, NC.

20740 ....... Eau Claire, WI ......................................................................................................................................................... 0.9201 

Chippewa County, WI.

Eau Claire County, WI.

20764 ....... Edison, NJ ............................................................................................................................................................... 1.1249 

Middlesex County, NJ.

Monmouth County, NJ.

Ocean County, NJ.


cchase on PROD1PC60 with PROPOSALS2
Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 28149 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

Somerset County, NJ.

20940 ....... El Centro, CA .......................................................................................................................................................... 0.8906 

Imperial County, CA.

21060 ....... Elizabethtown, KY ................................................................................................................................................... 0.8802 

Hardin County, KY.

Larue County, KY.

21140 ....... Elkhart-Goshen, IN .................................................................................................................................................. 0.9627 

Elkhart County, IN.

21300 ....... Elmira, NY ............................................................................................................................................................... 0.8250 

Chemung County, NY.

21340 ....... El Paso, TX ............................................................................................................................................................. 0.8977 

El Paso County, TX.

21500 ....... Erie, PA ................................................................................................................................................................... 0.8737 

Erie County, PA.

21604 ....... Essex County, MA ................................................................................................................................................... 1.0538 

Essex County, MA.

21660 ....... Eugene-Springfield, OR .......................................................................................................................................... 1.0818 

Lane County, OR.

21780 ....... Evansville, IN-KY ..................................................................................................................................................... 0.8713 

Gibson County, IN.

Posey County, IN.

Vanderburgh County, IN.

Warrick County, IN.

Henderson County, KY.

Webster County, KY.

21820 ....... Fairbanks, AK .......................................................................................................................................................... 1.1408 

Fairbanks North Star Borough, AK.

21940 ....... Fajardo, PR ............................................................................................................................................................. 0.4153 

Ceiba Municipio, PR.

Fajardo Municipio, PR.

Luquillo Municipio, PR.

22020 ....... Fargo, ND-MN ......................................................................................................................................................... 0.8486 

Cass County, ND.

Clay County, MN.

22140 ....... Farmington, NM ....................................................................................................................................................... 0.8509 

San Juan County, NM.

22180 ....... Fayetteville, NC ....................................................................................................................................................... 0.9416 

Cumberland County, NC.

Hoke County, NC.

22220 ....... Fayetteville-Springdale-Rogers, AR-MO ................................................................................................................. 0.8661 

Benton County, AR.

Madison County, AR.

Washington County, AR.

McDonald County, MO.

22380 ....... Flagstaff, AZ ............................................................................................................................................................ 1.2092 

Coconino County, AZ.

22420 ....... Flint, MI .................................................................................................................................................................... 1.0655 

Genesee County, MI.

22500 Florence, SC ............................................................................................................................................. 0.8947 

Darlington County, SC.

Florence County, SC.

22520 ....... Florence-Muscle Shoals, AL ................................................................................................................................... 0.8272 

Colbert County, AL.

Lauderdale County, AL.

22540 ....... Fond du Lac, WI ...................................................................................................................................................... 0.9640 

Fond du Lac County, WI.

22660 ....... Fort Collins-Loveland, CO ....................................................................................................................................... 1.0122 

Larimer County, CO.

22744 ....... Fort Lauderdale-Pompano Beach-Deerfield ........................................................................................................... 1.0432 

Beach, FL.

Broward County, FL.

22900 ....... Fort Smith, AR-OK .................................................................................................................................................. 0.8230 

Crawford County, AR.

Franklin County, AR.

Sebastian County, AR.

Le Flore County, OK.

Sequoyah County, OK.

23020 ....... Fort Walton Beach-Crestview-Destin, FL ................................................................................................................ 0.8872 

Okaloosa County, FL.


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28150 Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

23060 ....... Fort Wayne, IN ........................................................................................................................................................ 0.9793 

Allen County, IN.

Wells County, IN.

Whitley County, IN.

23104 ....... Fort Worth-Arlington, TX ......................................................................................................................................... 0.9486 

Johnson County, TX.

Parker County, TX.

Tarrant County, TX.

Wise County, TX.

23420 ....... Fresno, CA .............................................................................................................................................................. 1.0538 

Fresno County, CA.

23460 ....... Gadsden, AL ........................................................................................................................................................... 0.7938 

Etowah County, AL.

23540 ....... Gainesville, FL ......................................................................................................................................................... 0.9388 

Alachua County, FL.

Gilchrist County, FL.

23580 ....... Gainesville, GA ........................................................................................................................................................ 0.8874 

Hall County, GA.

23844 ....... Gary, IN ................................................................................................................................................................... 0.9395 

Jasper County, IN.

Lake County, IN.

Newton County, IN.

Porter County, IN.

24020 ....... Glens Falls, NY ....................................................................................................................................................... 0.8559 

Warren County, NY.

Washington County, NY.

24140 ....... Goldsboro, NC ......................................................................................................................................................... 0.8775 

Wayne County, NC.

24220 ....... Grand Forks, ND-MN .............................................................................................................................................. 0.7901 

Polk County, MN.

Grand Forks County, ND.

24300 ....... Grand Junction, CO ................................................................................................................................................ 0.9550 

Mesa County, CO.

24340 ....... Grand Rapids-Wyoming, MI .................................................................................................................................... 0.9390 

Barry County, MI.

Ionia County, MI.

Kent County, MI.

Newaygo County, MI.

24500 ....... Great Falls, MT ....................................................................................................................................................... 0.9052 

Cascade County, MT.

24540 ....... Greeley, CO ............................................................................................................................................................ 0.9570 

Weld County, CO.

24580 ....... Green Bay, WI ......................................................................................................................................................... 0.9483 

Brown County, WI.

Kewaunee County, WI.

Oconto County, WI.

24660 ....... Greensboro-High Point, NC .................................................................................................................................... 0.9104 

Guilford County, NC.

Randolph County, NC.

Rockingham County, NC.

24780 ....... Greenville, NC ......................................................................................................................................................... 0.9425 

Greene County, NC.

Pitt County, NC.

24860 ....... Greenville, SC ......................................................................................................................................................... 1.0027 

Greenville County, SC.

Laurens County, SC.

Pickens County, SC.

25020 ....... Guayama, PR .......................................................................................................................................................... 0.3181 

Arroyo Municipio, PR.

Guayama Municipio, PR.

Patillas Municipio, PR.

25060 ....... Gulfport-Biloxi, MS .................................................................................................................................................. 0.8929 

Hancock County, MS.

Harrison County, MS.

Stone County, MS.

25180 ....... Hagerstown-Martinsburg, MD-WV .......................................................................................................................... 0.9489 

Washington County, MD.

Berkeley County, WV.

Morgan County, WV.


cchase on PROD1PC60 with PROPOSALS2
Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 28151 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

25260 ....... Hanford-Corcoran, CA ............................................................................................................................................. 1.0036 

Kings County, CA.

25420 ....... Harrisburg-Carlisle, PA ............................................................................................................................................ 0.9313 

Cumberland County, PA.

Dauphin County, PA.

Perry County, PA.

25500 ....... Harrisonburg, VA ..................................................................................................................................................... 0.9088 

Rockingham County, VA.

Harrisonburg City, VA.

25540 ....... Hartford-West Hartford-East Hartford, CT .............................................................................................................. 1.1073 

Hartford County, CT.

Litchfield County, CT.

Middlesex County, CT.

Tolland County, CT.

25620 ....... Hattiesburg, MS ....................................................................................................................................................... 0.7601 

Forrest County, MS.

Lamar County, MS.

Perry County, MS.

25860 ....... Hickory-Lenoir-Morganton, NC ................................................................................................................................ 0.8921 

Alexander County, NC.

Burke County, NC.

Caldwell County, NC.

Catawba County, NC.

25980 ....... Hinesville-Fort Stewart, GA ..................................................................................................................................... 1 0.7662 

Liberty County, GA.

Long County, GA.

26100 ....... Holland-Grand Haven, MI ....................................................................................................................................... 0.9055 

Ottawa County, MI.

26180 ....... Honolulu, HI ............................................................................................................................................................. 1.1214 

Honolulu County, HI.

26300 ....... Hot Springs, AR ...................................................................................................................................................... 0.9005 

Garland County, AR.

26380 ....... Houma-Bayou Cane-Thibodaux, LA ....................................................................................................................... 0.7894 

Lafourche Parish, LA.

Terrebonne Parish, LA.

26420 ....... Houston-Sugar Land-Baytown, TX ......................................................................................................................... 0.9996 

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 ............................................................................................................................ 0.9477 

Boyd County, KY.

Greenup County, KY.

Lawrence County, OH.

Cabell County, WV.

Wayne County, WV.

26620 ....... Huntsville, AL .......................................................................................................................................................... 0.9146 

Limestone County, AL.

Madison County, AL.

26820 ....... Idaho Falls, ID ......................................................................................................................................................... 0.9420 

Bonneville County, ID.

Jefferson County, ID.

26900 ....... Indianapolis, IN ........................................................................................................................................................ 0.9920 

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.


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28152 Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

26980 ....... Iowa City, IA ............................................................................................................................................................ 0.9747 

Johnson County, IA.

Washington County, IA.

27060 ....... Ithaca, NY ................................................................................................................................................................ 0.9793 

Tompkins County, NY.

27100 ....... Jackson, MI ............................................................................................................................................................. 0.9304 

Jackson County, MI.

27140 ....... Jackson, MS ............................................................................................................................................................ 0.8311 

Copiah County, MS.

Hinds County, MS.

Madison County, MS.

Rankin County, MS.

Simpson County, MS.

27180 ....... Jackson, TN ............................................................................................................................................................ 0.8964 

Chester County, TN.

Madison County, TN.

27260 ....... Jacksonville, FL ....................................................................................................................................................... 0.9290 

Baker County, FL.

Clay County, FL.

Duval County, FL.

Nassau County, FL.

St. Johns County, FL.

27340 ....... Jacksonville, NC ...................................................................................................................................................... 0.8236 

Onslow County, NC.

27500 ....... Janesville, WI .......................................................................................................................................................... 0.9538 

Rock County, WI.

27620 ....... Jefferson City, MO .................................................................................................................................................. 0.8387 

Callaway County, MO.

Cole County, MO.

Moniteau County, MO.

Osage County, MO.

27740 ....... Johnson City, TN ..................................................................................................................................................... 0.7937 

Carter County, TN.

Unicoi County, TN.

Washington County, TN.

27780 ....... Johnstown, PA ........................................................................................................................................................ 0.8354 

Cambria County, PA.

27860 ....... Jonesboro, AR ......................................................................................................................................................... 0.7911 

Craighead County, AR.

Poinsett County, AR.

27900 ....... Joplin, MO ............................................................................................................................................................... 0.8582 

Jasper County, MO.

Newton County, MO.

28020 ....... Kalamazoo-Portage, MI ........................................................................................................................................... 1.0381 

Kalamazoo County, MI.

Van Buren County, MI.

28100 ....... Kankakee-Bradley, IL .............................................................................................................................................. 1.0721 

Kankakee County, IL.

28140 ....... Kansas City, MO-KS ............................................................................................................................................... 0.9476 

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 ............................................................................................................................. 1.0619 

Benton County, WA.

Franklin County, WA.

28660 ....... Killeen-Temple-Fort Hood, TX ................................................................................................................................ 0.8526 

Bell County, TX.


cchase on PROD1PC60 with PROPOSALS2
Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 28153 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

Coryell County, TX.

Lampasas County, TX.

28700 ....... Kingsport-Bristol-Bristol, TN-VA .............................................................................................................................. 0.8054 

Hawkins County, TN.

Sullivan County, TN.

Bristol City, VA.

Scott County, VA.

Washington County, VA.

28740 ....... Kingston, NY ........................................................................................................................................................... 0.9255 

Ulster County, NY.

28940 Knoxville, TN ............................................................................................................................................ 0.8441 

Anderson County, TN.

Blount County, TN.

Knox County, TN.

Loudon County, TN.

Union County, TN.

29020 ....... Kokomo, IN .............................................................................................................................................................. 0.9508 

Howard County, IN.

Tipton County, IN.

29100 ....... La Crosse, WI-MN ................................................................................................................................................... 0.9564 

Houston County, MN.

La Crosse County, WI.

29140 ....... Lafayette, IN ............................................................................................................................................................ 0.8736 

Benton County, IN.

Carroll County, IN.

Tippecanoe County, IN.

29180 ....... Lafayette, LA ........................................................................................................................................................... 0.8428 

Lafayette Parish, LA.

St. Martin Parish, LA.

29340 ....... Lake Charles, LA ..................................................................................................................................................... 0.7833 

Calcasieu Parish, LA.

Cameron Parish, LA.

29404 ....... Lake County-Kenosha County, IL-WI ..................................................................................................................... 1.0429 

Lake County, IL.

Kenosha County, WI.

29460 ....... Lakeland, FL ............................................................................................................................................................ 0.8912 

Polk County, FL.

29540 ....... Lancaster, PA .......................................................................................................................................................... 0.9694 

Lancaster County, PA.

29620 ....... Lansing-East Lansing, MI ........................................................................................................................................ 0.9794 

Clinton County, MI.

Eaton County, MI.

Ingham County, MI.

29700 ....... Laredo, TX ............................................................................................................................................................... 0.8068 

Webb County, TX.

29740 Las Cruces, NM ........................................................................................................................................ 0.8467 

Dona Ana County, NM.

29820 ....... Las Vegas-Paradise, NV ......................................................................................................................................... 1.1437 

Clark County, NV.

29940 ....... Lawrence, KS .......................................................................................................................................................... 0.8537 

Douglas County, KS.

30020 ....... Lawton, OK .............................................................................................................................................................. 0.7872 

Comanche County, OK.

30140 ....... Lebanon, PA ............................................................................................................................................................ 0.8459 

Lebanon County, PA.

30300 ....... Lewiston, ID-WA ...................................................................................................................................................... 0.9886 

Nez Perce County, ID.

Asotin County, WA.

30340 ....... Lewiston-Auburn, ME .............................................................................................................................................. 0.9331 

Androscoggin County, ME.

30460 ....... Lexington-Fayette, KY ............................................................................................................................................. 0.9075 

Bourbon County, KY.

Clark County, KY.

Fayette County, KY.

Jessamine County, KY.

Scott County, KY.

Woodford County, KY.

30620 ....... Lima, OH ................................................................................................................................................................. 0.9225 

Allen County, OH.


cchase on PROD1PC60 with PROPOSALS2
28154 Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

30700 ....... Lincoln, NE .............................................................................................................................................................. 1.0214 

Lancaster County, NE.

Seward County, NE.

30780 ....... Little Rock-North Little Rock, AR ............................................................................................................................ 0.8747 

Faulkner County, AR.

Grant County, AR.

Lonoke County, AR.

Perry County, AR.

Pulaski County, AR.

Saline County, AR.

30860 ....... Logan, UT-ID ........................................................................................................................................................... 0.9164 

Franklin County, ID.

Cache County, UT.

30980 ....... Longview, TX ........................................................................................................................................................... 0.8730 

Gregg County, TX.

Rusk County, TX.

Upshur County, TX.

31020 ....... Longview, WA ......................................................................................................................................................... 0.9579 

Cowlitz County, WA.

31084 ....... Los Angeles-Long Beach-Glendale, CA ................................................................................................................. 1.1783 

Los Angeles County, CA.

31140 ....... Louisville, KY-IN ...................................................................................................................................................... 0.9251 

Clark County, IN.

Floyd County, IN.

Harrison County, IN.

Washington County, IN.

Bullitt County, KY.

Henry County, KY.

Jefferson County, KY.

Meade County, KY.

Nelson County, KY.

Oldham County, KY.

Shelby County, KY.

Spencer County, KY.

Trimble County, KY.

31180 ....... Lubbock, TX ............................................................................................................................................................ 0.8783 

Crosby County, TX.

Lubbock County, TX.

31340 ....... Lynchburg, VA ......................................................................................................................................................... 0.8691 

Amherst County, VA.

Appomattox County, VA.

Bedford County, VA.

Campbell County, VA.

Bedford City, VA.

Lynchburg City, VA.

31420 ....... Macon, GA .............................................................................................................................................................. 0.9443 

Bibb County, GA.

Crawford County, GA.

Jones County, GA.

Monroe County, GA.

Twiggs County, GA.

31460 ....... Madera, CA ............................................................................................................................................................. 0.8713 

Madera County, CA.

31540 ....... Madison, WI ............................................................................................................................................................ 1.0659 

Columbia County, WI.

Dane County, WI.

Iowa County, WI.

31700 ....... Manchester-Nashua, NH ......................................................................................................................................... 1.0354 

Hillsborough County, NH.

Merrimack County, NH.

31900 ....... Mansfield, OH .......................................................................................................................................................... 0.9891 

Richland County, OH.

32420 ....... Mayagu ̈ez, PR ......................................................................................................................................................... 0.4020 

Hormigueros Municipio, PR.

Mayagu ̆≤ez Municipio, PR.

32580 ....... McAllen-Edinburg-Mission, TX ................................................................................................................................ 0.8934 

Hidalgo County, TX.

32780 ....... Medford, OR ............................................................................................................................................................ 1.0225 

Jackson County, OR.


cchase on PROD1PC60 with PROPOSALS2
Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 28155 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

32820 ....... Memphis, TN-MS-AR .............................................................................................................................................. 0.9397 

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 ............................................................................................................................................................. 1.1109 

Merced County, CA.

33124 ....... Miami-Miami Beach-Kendall, FL ............................................................................................................................. 0.9750 

Miami-Dade County, FL.

33140 ....... Michigan City-La Porte, IN ...................................................................................................................................... 0.9399 

LaPorte County, IN.

33260 ....... Midland, TX ............................................................................................................................................................. 0.9514 

Midland County, TX.

33340 ....... Milwaukee-Waukesha-West Allis, WI ...................................................................................................................... 1.0146 

Milwaukee County, WI.

Ozaukee County, WI.

Washington County, WI.

Waukesha County, WI.

33460 ....... Minneapolis-St. Paul-Bloomington, MN-WI ............................................................................................................. 1.1075 

Anoka County, MN.

Carver County, MN.

Chisago County, MN.

Dakota County, MN.

Hennepin County, MN.

Isanti County, MN.

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 ........................................................................................................................................................... 0.9473 

Missoula County, MT.

33660 ....... Mobile, AL ............................................................................................................................................................... 0.7891 

Mobile County, AL.

33700 ....... Modesto, CA ............................................................................................................................................................ 1.1885 

Stanislaus County, CA.

33740 ....... Monroe, LA .............................................................................................................................................................. 0.8031 

Ouachita Parish, LA.

Union Parish, LA.

33780 ....... Monroe, MI .............................................................................................................................................................. 0.9468 

Monroe County, MI.

33860 ....... Montgomery, AL ...................................................................................................................................................... 0.8618 

Autauga County, AL.

Elmore County, AL.

Lowndes County, AL.

Montgomery County, AL.

34060 ....... Morgantown, WV ..................................................................................................................................................... 0.8420 

Monongalia County, WV.

Preston County, WV.

34100 ....... Morristown, TN ........................................................................................................................................................ 0.7961 

Grainger County, TN.

Hamblen County, TN.

Jefferson County, TN.

34580 ....... Mount Vernon-Anacortes, WA ................................................................................................................................ 1.0454 

Skagit County, WA.

34620 ....... Muncie, IN ............................................................................................................................................................ 0.8930 

Delaware County, IN.

34740 ....... Muskegon-Norton Shores, MI ................................................................................................................................. 0.9664 

Muskegon County, MI.

34820 ....... Myrtle Beach-Conway-North Myrtle Beach, SC ...................................................................................................... 0.8934 

Horry County, SC.

34900 ....... Napa, CA ................................................................................................................................................................. 1.2643 

Napa County, CA.


cchase on PROD1PC60 with PROPOSALS2
28156 Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

34940 ....... Naples-Marco Island, FL ......................................................................................................................................... 1.0139 

Collier County, FL.

34980 ....... Nashville-Davidson—Murfreesboro, TN .................................................................................................................. 0.9790 

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 ................................................................................................................................................. 1.2719 

Nassau County, NY.

Suffolk County, NY.

35084 ....... Newark-Union, NJ-PA ............................................................................................................................................. 1.1883 

Essex County, NJ.

Hunterdon County, NJ.

Morris County, NJ.

Sussex County, NJ.

Union County, NJ.

Pike County, PA.

35300 ....... New Haven-Milford, CT ........................................................................................................................................... 1.1887 

New Haven County, CT.

35380 ....... New Orleans-Metairie-Kenner, LA .......................................................................................................................... 0.8995 

Jefferson Parish, LA.

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-White Plains-Wayne, NY-NJ .................................................................................................................. 1.3188 

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 .......................................................................................................................................... 0.8879 

Berrien County, MI.

35980 ....... Norwich-New London, CT ....................................................................................................................................... 1.1345 

New London County, CT.

36084 ....... Oakland-Fremont-Hayward, CA .............................................................................................................................. 1.5346 

Alameda County, CA.

Contra Costa County, CA.

36100 ....... Ocala, FL ................................................................................................................................................................. 0.8925 

Marion County, FL.

36140 ....... Ocean City, NJ ........................................................................................................................................................ 1.1011 

Cape May County, NJ.

36220 ....... Odessa, TX ......................................................................................................................................................... 0.9884 

Ector County, TX.

36260 ....... Ogden-Clearfield, UT .............................................................................................................................................. 0.9029 

Davis County, UT.

Morgan County, UT.

Weber County, UT.

36420 ....... Oklahoma City, OK ................................................................................................................................................. 0.9031 

Canadian County, OK.

Cleveland County, OK.

Grady County, OK.


cchase on PROD1PC60 with PROPOSALS2
Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 28157 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

Lincoln County, OK.

Logan County, OK.

McClain County, OK.

Oklahoma County, OK.

36500 ....... Olympia, WA ........................................................................................................................................................... 1.0927 

Thurston County, WA.

36540 ....... Omaha-Council Bluffs, NE-IA .................................................................................................................................. 0.9560 

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-Kissimmee, FL ........................................................................................................................................... 0.9464 

Lake County, FL.

Orange County, FL.

Osceola County, FL.

Seminole County, FL.

36780 ....... Oshkosh-Neenah, WI .............................................................................................................................................. 0.9183 

Winnebago County, WI.

36980 ....... Owensboro, KY ....................................................................................................................................................... 0.8780 

Daviess County, KY.

Hancock County, KY.

McLean County, KY.

37100 ....... Oxnard-Thousand Oaks-Ventura, CA ..................................................................................................................... 1.1622 

Ventura County, CA.

37340 ....... Palm Bay-Melbourne-Titusville, FL ......................................................................................................................... 0.9839 

Brevard County, FL.

37460 ....... Panama City-Lynn Haven, FL ................................................................................................................................. 0.8005 

Bay County, FL.

37620 ....... Parkersburg-Marietta-Vienna, WV-OH .................................................................................................................... 0.8270 

Washington County, OH.

Pleasants County, WV.

Wirt County, WV.

Wood County, WV.

37700 ....... Pascagoula, MS ...................................................................................................................................................... 0.8156 

George County, MS.

Jackson County, MS.

37860 ....... Pensacola-Ferry Pass-Brent, FL ............................................................................................................................. 0.8096 

Escambia County, FL.

Santa Rosa County, FL.

37900 ....... Peoria, IL ................................................................................................................................................................. 0.8870 

Marshall County, IL.

Peoria County, IL.

Stark County, IL.

Tazewell County, IL.

Woodford County, IL.

37964 ....... Philadelphia, PA ...................................................................................................................................................... 1.1038 

Bucks County, PA.

Chester County, PA.

Delaware County, PA.

Montgomery County, PA.

Philadelphia County, PA.

38060 ....... Phoenix-Mesa-Scottsdale, AZ ................................................................................................................................. 1.0127 

Maricopa County, AZ.

Pinal County, AZ.

38220 ....... Pine Bluff, AR .......................................................................................................................................................... 0.8680 

Cleveland County, AR.

Jefferson County, AR.

Lincoln County, AR.

38300 ....... Pittsburgh, PA ......................................................................................................................................................... 0.8845 

Allegheny County, PA.

Armstrong County, PA.

Beaver County, PA.

Butler County, PA.

Fayette County, PA.

Washington County, PA.


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28158 Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

Westmoreland County, PA.

38340 ....... Pittsfield, MA ........................................................................................................................................................... 1.0181 

Berkshire County, MA.

38540 ....... Pocatello, ID ............................................................................................................................................................ 0.9351 

Bannock County, ID.

Power County, ID.

38660 ....... Ponce, PR ............................................................................................................................................................... 0.4939 

Juana D ́ıaz Municipio, PR.

Ponce Municipio, PR.

Villalba Municipio, PR.

38860 ....... Portland-South Portland-Biddeford, ME .................................................................................................................. 1.0382 

Cumberland County, ME.

Sagadahoc County, ME.

York County, ME.

38900 ....... Portland-Vancouver-Beaverton, OR-WA ................................................................................................................. 1.1266 

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 ................................................................................................................................. 1.0123 

Martin County, FL.

St. Lucie County, FL.

39100 ....... Poughkeepsie-Newburgh-Middletown, NY .............................................................................................................. 1.0891 

Dutchess County, NY.

Orange County, NY.

39140 ....... Prescott, AZ ............................................................................................................................................................. 0.9869 

Yavapai County, AZ.

39300 ....... Providence-New Bedford-Fall River, RI-MA ........................................................................................................... 1.0966 

Bristol County, MA.

Bristol County, RI.

Kent County, RI.

Newport County, RI.

Providence County, RI.

Washington County, RI.

39340 ....... Provo-Orem, UT ...................................................................................................................................................... 0.9500 

Juab County, UT.

Utah County, UT.

39380 ....... Pueblo, CO .............................................................................................................................................................. 0.8623 

Pueblo County, CO.

39460 ....... Punta Gorda, FL ...................................................................................................................................................... 0.9255 

Charlotte County, FL.

39540 ....... Racine, WI ............................................................................................................................................................... 0.8997 

Racine County, WI.

39580 ....... Raleigh-Cary, NC .................................................................................................................................................... 0.9691 

Franklin County, NC.

Johnston County, NC.

Wake County, NC.

39660 ....... Rapid City, SD ......................................................................................................................................................... 0.8987 

Meade County, SD.

Pennington County, SD.

39740 ....... Reading, PA ............................................................................................................................................................ 0.9686 

Berks County, PA.

39820 ....... Redding, CA ............................................................................................................................................................ 1.2203 

Shasta County, CA.

39900 ....... Reno-Sparks, NV .................................................................................................................................................... 1.0982 

Storey County, NV.

Washoe County, NV.

40060 ....... Richmond, VA ......................................................................................................................................................... 0.9328 

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.


cchase on PROD1PC60 with PROPOSALS2
Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 28159 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

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 ................................................................................................................... 1.1027 

Riverside County, CA.

San Bernardino County, CA.

40220 ....... Roanoke, VA ........................................................................................................................................................... 0.8374 

Botetourt County, VA.

Craig County, VA.

Franklin County, VA.

Roanoke County, VA.

Roanoke City, VA.

Salem City, VA.

40340 ....... Rochester, MN ........................................................................................................................................................ 1.1131 

Dodge County, MN.

Olmsted County, MN.

Wabasha County, MN.

40380 ....... Rochester, NY ......................................................................................................................................................... 0.9121 

Livingston County, NY.

Monroe County, NY.

Ontario County, NY.

Orleans County, NY.

Wayne County, NY.

40420 ....... Rockford, IL ............................................................................................................................................................. 0.9984 

Boone County, IL.

Winnebago County, IL.

40484 ....... Rockingham County-Strafford County, NH ............................................................................................................. 1.0374 

Rockingham County, NH.

Strafford County, NH.

40580 ....... Rocky Mount, NC .................................................................................................................................................... 0.8915 

Edgecombe County, NC.

Nash County, NC.

40660 ....... Rome, GA ................................................................................................................................................................ 0.9414 

Floyd County, GA.

40900 ....... Sacramento—Arden-Arcade—Roseville, CA .......................................................................................................... 1.2969 

El Dorado County, CA.

Placer County, CA.

Sacramento County, CA.

Yolo County, CA.

40980 ....... Saginaw-Saginaw Township North, MI ................................................................................................................... 0.9088 

Saginaw County, MI.

41060 ....... St. Cloud, MN .......................................................................................................................................................... 0.9965 

Benton County, MN.

Stearns County, MN.

41100 ....... St. George, UT ........................................................................................................................................................ 0.9392 

Washington County, UT.

41140 ....... St. Joseph, MO-KS ................................................................................................................................................. 0.9519 

Doniphan County, KS.

Andrew County, MO.

Buchanan County, MO.

DeKalb County, MO.

41180 ....... St. Louis, MO-IL ...................................................................................................................................................... 0.8954 

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.


cchase on PROD1PC60 with PROPOSALS2
28160 Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

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 ............................................................................................................................................................... 1.0442 

Marion County, OR.

Polk County, OR.

41500 ....... Salinas, CA .............................................................................................................................................................. 1.4128 

Monterey County, CA.

41540 ....... Salisbury, MD .......................................................................................................................................................... 0.9064 

Somerset County, MD.

Wicomico County, MD.

41620 ....... Salt Lake City, UT ................................................................................................................................................... 0.9421 

Salt Lake County, UT.

Summit County, UT.

Tooele County, UT.

41660 ....... San Angelo, TX ....................................................................................................................................................... 0.8271 

Irion County, TX.

Tom Green County, TX.

41700 ....... San Antonio, TX ...................................................................................................................................................... 0.8980 

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 .................................................................................................................... 1.1413 

San Diego County, CA.

41780 ....... Sandusky, OH ......................................................................................................................................................... 0.9019 

Erie County, OH.

41884 ....... San Francisco-San Mateo-Redwood City, CA ........................................................................................................ 1.4994 

Marin County, CA.

San Francisco County, CA.

San Mateo County, CA.

41900 ....... San Germa ́n-Cabo Rojo, PR .................................................................................................................................. 0.4650 

Cabo Rojo Municipio, PR.

Lajas Municipio, PR.

Sabana Grande Municipio, PR.

San Germa ́n Municipio, PR.

41940 ....... San Jose-Sunnyvale-Santa Clara, CA .................................................................................................................... 1.5099 

San Benito County, CA.

Santa Clara County, CA.

41980 ....... San Juan-Caguas-Guaynabo, PR ........................................................................................................................... 0.4621 

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.


cchase on PROD1PC60 with PROPOSALS2
Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 28161 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

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 ......................................................................................................................... 1.1349 

San Luis Obispo County, CA.

42044 ....... Santa Ana-Anaheim-Irvine, CA ............................................................................................................................... 1.1559 

Orange County, CA.

42060 ....... Santa Barbara-Santa Maria, CA ............................................................................................................................. 1.1694 

Santa Barbara County, CA.

42100 ....... Santa Cruz-Watsonville, CA .................................................................................................................................... 1.5166 

Santa Cruz County, CA.

42140 ....... Santa Fe, NM .......................................................................................................................................................... 1.0920 

Santa Fe County, NM.

42220 ....... Santa Rosa-Petaluma, CA ...................................................................................................................................... 1.3493 

Sonoma County, CA.

42260 ....... Sarasota-Bradenton-Venice, FL .............................................................................................................................. 0.9639 

Manatee County, FL.

Sarasota County, FL.

42340 ....... Savannah, GA ......................................................................................................................................................... 0.9461 

Bryan County, GA.

Chatham County, GA.

Effingham County, GA.

42540 ....... Scranton—Wilkes-Barre, PA ................................................................................................................................... 0.8540 

Lackawanna County, PA.

Luzerne County, PA.

Wyoming County, PA.

42644 ....... Seattle-Bellevue-Everett, WA .................................................................................................................................. 1.1577 

King County, WA.

Snohomish County, WA.

43100 ....... Sheboygan, WI ........................................................................................................................................................ 0.8911 

Sheboygan County, WI.

43300 ....... Sherman-Denison, TX ............................................................................................................................................. 0.9507 

Grayson County, TX.

43340 ....... Shreveport-Bossier City, LA .................................................................................................................................... 0.8760 

Bossier Parish, LA.

Caddo Parish, LA.

De Soto Parish, LA.

43580 ....... Sioux City, IA-NE-SD .............................................................................................................................................. 0.9381 

Woodbury County, IA.

Dakota County, NE.

Dixon County, NE.

Union County, SD.

43620 ....... Sioux Falls, SD ........................................................................................................................................................ 0.9635 

Lincoln County, SD.

McCook County, SD.

Minnehaha County, SD.

Turner County, SD.

43780 ....... South Bend-Mishawaka, IN-MI ............................................................................................................................... 0.9788 

St. Joseph County, IN.

Cass County, MI.


cchase on PROD1PC60 with PROPOSALS2
28162 Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

43900 ....... Spartanburg, SC ...................................................................................................................................................... 0.9172 

Spartanburg County, SC.

44060 ....... Spokane, WA .......................................................................................................................................................... 1.0905 

Spokane County, WA.

44100 ....... Springfield, IL .......................................................................................................................................................... 0.8792 

Menard County, IL.

Sangamon County, IL.

44140 ....... Springfield, MA ........................................................................................................................................................ 1.0248 

Franklin County, MA.

Hampden County, MA.

Hampshire County, MA.

44180 ....... Springfield, MO ........................................................................................................................................................ 0.8237 

Christian County, MO.

Dallas County, MO.

Greene County, MO.

Polk County, MO.

Webster County, MO.

44220 ....... Springfield, OH ........................................................................................................................................................ 0.8396 

Clark County, OH.

44300 ....... State College, PA .................................................................................................................................................... 0.8356 

Centre County, PA.

44700 ....... Stockton, CA ........................................................................................................................................................... 1.1307 

San Joaquin County, CA.

44940 ....... Sumter, SC .............................................................................................................................................................. 0.8377 

Sumter County, SC.

45060 ....... Syracuse, NY .......................................................................................................................................................... 0.9574 

Madison County, NY.

Onondaga County, NY.

Oswego County, NY.

45104 ....... Tacoma, WA ............................................................................................................................................................ 1.0742 

Pierce County, WA.

45220 ....... Tallahassee, FL ....................................................................................................................................................... 0.8688 

Gadsden County, FL.

Jefferson County, FL.

Leon County, FL.

Wakulla County, FL.

45300 ....... Tampa-St. Petersburg-Clearwater, FL .................................................................................................................... 0.9233 

Hernando County, FL.

Hillsborough County, FL.

Pasco County, FL.

Pinellas County, FL.

45460 ....... Terre Haute, IN ....................................................................................................................................................... 0.8304 

Clay County, IN.

Sullivan County, IN.

Vermillion County, IN.

Vigo County, IN.

45500 ....... Texarkana, TX-Texarkana, AR ............................................................................................................................... 0.8283 

Miller County, AR.

Bowie County, TX.

45780 ....... Toledo, OH .............................................................................................................................................................. 0.9574 

Fulton County, OH.

Lucas County, OH.

Ottawa County, OH.

Wood County, OH.

45820 ....... Topeka, KS .............................................................................................................................................................. 0.8920 

Jackson County, KS.

Jefferson County, KS.

Osage County, KS.

Shawnee County, KS.

Wabaunsee County, KS.

45940 ....... Trenton-Ewing, NJ ................................................................................................................................................... 1.0834 

Mercer County, NJ.

46060 ....... Tucson, AZ .............................................................................................................................................................. 0.9007 

Pima County, AZ.

46140 ....... Tulsa, OK ................................................................................................................................................................ 0.8543 

Creek County, OK.

Okmulgee County, OK.

Osage County, OK.

Pawnee County, OK.


cchase on PROD1PC60 with PROPOSALS2
Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 28163 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

Rogers County, OK.

Tulsa County, OK.

Wagoner County, OK.

46220 ....... Tuscaloosa, AL ........................................................................................................................................................ 0.8645 

Greene County, AL.

Hale County, AL.

Tuscaloosa County, AL.

46340 ....... Tyler, TX .................................................................................................................................................................. 0.9168 

Smith County, TX.

46540 ....... Utica-Rome, NY ...................................................................................................................................................... 0.8358 

Herkimer County, NY.

Oneida County, NY.

46660 ....... Valdosta, GA ........................................................................................................................................................... 0.8866 

Brooks County, GA.

Echols County, GA.

Lanier County, GA.

Lowndes County, GA.

46700 ....... Vallejo-Fairfield, CA ................................................................................................................................................. 1.4936 

Solano County, CA.

46940 ....... Vero Beach, FL ....................................................................................................................................................... 0.9434 

Indian River County, FL.

47020 ....... Victoria, TX .............................................................................................................................................................. 0.8160 

Calhoun County, TX.

Goliad County, TX.

Victoria County, TX.

47220 ....... Vineland-Millville-Bridgeton, NJ ............................................................................................................................... 0.9827 

Cumberland County, NJ.

47260 ....... Virginia Beach-Norfolk-Newport News, VA-NC ...................................................................................................... 0.8799 

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.

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 .............................................................................................................................................. 1.0123 

Tulare County, CA.

47380 ....... Waco, TX ................................................................................................................................................................. 0.8518 

McLennan County, TX.

47580 ....... Warner Robins, GA ................................................................................................................................................. 0.8645 

Houston County, GA.

47644 ....... Warren-Farmington Hills-Troy, MI ........................................................................................................................... 0.9871 

Lapeer County, MI.

Livingston County, MI.

Macomb County, MI.

Oakland County, MI.

St. Clair County, MI.

47894 ....... Washington-Arlington-Alexandria, DC-VA-MD-WV ................................................................................................. 1.0926 

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.


cchase on PROD1PC60 with PROPOSALS2
28164 Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

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 ......................................................................................................................................... 0.8557 

Black Hawk County, IA.

Bremer County, IA.

Grundy County, IA.

48140 ....... Wausau, WI ............................................................................................................................................................. 0.9590 

Marathon County, WI.

48260 ....... Weirton-Steubenville, WV-OH ................................................................................................................................. 0.7819 

Jefferson County, OH.

Brooke County, WV.

Hancock County, WV.

48300 ....... Wenatchee, WA ...................................................................................................................................................... 1.0070 

Chelan County, WA.

Douglas County, WA.

48424 ....... West Palm Beach-Boca Raton-Boynton Beach, FL ............................................................................................... 1.0067 

Palm Beach County, FL.

48540 ....... Wheeling, WV-OH ................................................................................................................................................... 0.7161 

Belmont County, OH.

Marshall County, WV.

Ohio County, WV.

48620 ....... Wichita, KS .............................................................................................................................................................. 0.9153 

Butler County, KS.

Harvey County, KS.

Sedgwick County, KS.

Sumner County, KS.

48660 ....... Wichita Falls, TX ..................................................................................................................................................... 0.8285 

Archer County, TX.

Clay County, TX.

Wichita County, TX.

48700 ....... Williamsport, PA ...................................................................................................................................................... 0.8364 

Lycoming County, PA.

48864 ....... Wilmington, DE-MD-NJ ........................................................................................................................................... 1.0471 

New Castle County, DE.

Cecil County, MD.

Salem County, NJ.

48900 ....... Wilmington, NC ....................................................................................................................................................... 0.9582 

Brunswick County, NC.

New Hanover County, NC.

Pender County, NC.

49020 ....... Winchester, VA-WV ................................................................................................................................................. 1.0214 

Frederick County, VA.

Winchester City, VA.

Hampshire County, WV.

49180 ....... Winston-Salem, NC ................................................................................................................................................. 0.8944 

Davie County, NC.

Forsyth County, NC.

Stokes County, NC.

Yadkin County, NC.

49340 ....... Worcester, MA ......................................................................................................................................................... 1.1028 

Worcester County, MA.

49420 ....... Yakima, WA ............................................................................................................................................................. 1.0155 

Yakima County, WA.

49500 ....... Yauco, PR ............................................................................................................................................................... 0.4408 

Gua ́nica Municipio, PR.

Guayanilla Municipio, PR.

Pen ̃uelas Municipio, PR.

Yauco Municipio, PR.

49620 ....... York-Hanover, PA ................................................................................................................................................... 0.9347 

York County, PA.

49660 ....... Youngstown-Warren-Boardman, OH-PA ................................................................................................................ 0.8603 

Mahoning County, OH.

Trumbull County, OH.


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Federal Register / Vol. 71, No. 93 / Monday, May 15, 2006 / Proposed Rules 28165 

TABLE 1.—PROPOSED INPATIENT REHABILITATION FACILITY URBAN AREA WAGE INDEX FOR DISCHARGES OCCURRING

FROM OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007—Continued 

CBSA 

code Urban area (constituent counties) 

Full 

wage 

index 

Mercer County, PA.

49700 ....... Yuba City, CA .......................................................................................................................................................... 1.0921 

Sutter County, CA.

Yuba County, CA.

49740 ....... Yuma, AZ ................................................................................................................................................................ 0.9126 

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.—PROPOSED INPATIENT REHABILITATION FACILITY RURAL AREA

WAGE INDEX FOR DISCHARGES OCCURRING FROM OCTOBER 1, 2006 

THROUGH SEPTEMBER 30, 2007 

CBSA 

code Nonurban area 

Full 

wage 

Index 

01 ........ Alabama .......................... 0.7446 

02 ........ Alaska ............................. 1.1977 

03 ........ Arizona ............................ 0.8768 

04 ........ Arkansas ......................... 0.7466 

05 ........ California ......................... 1.1054 

06 ........ Colorado ......................... 0.9380 

07 ........ Connecticut ..................... 1.1730 

08 ........ Delaware ......................... 0.9579 

10 ........ Florida ............................. 0.8568 

11 ........ Georgia ........................... 0.7662 

12 ........ Hawaii ............................. 1.0551 

13 ........ Idaho ............................... 0.8037 

14 ........ Illinois .............................. 0.8271 

15 ........ Indiana ............................ 0.8624 

16 ........ Iowa ................................ 0.8509 

17 ........ Kansas ............................ 0.8035 

18 ........ Kentucky ......................... 0.7766 

19 ........ Louisiana ........................ 0.7411 

20 ........ Maine .............................. 0.8843 

21 ........ Maryland ......................... 0.9353 

22 ........ Massachusetts 2 .............. 1.0216 

23 ........ Michigan ......................... 0.8895 

24 ........ Minnesota ....................... 0.9132 

25 ........ Mississippi ...................... 0.7674 

26 ........ Missouri .......................... 0.7900 

27 ........ Montana .......................... 0.8762 

28 ........ Nebraska ........................ 0.8657 

29 ........ Nevada ........................... 0.9065 

30 ........ New Hampshire .............. 1.0817 

31 ........ New Jersey 1 ................... ............

32 ........ New Mexico .................... 0.8635 

TABLE 2.—PROPOSED INPATIENT REHABILITATION FACILITY RURAL AREA

WAGE INDEX FOR DISCHARGES OCCURRING FROM OCTOBER 1, 2006 

THROUGH SEPTEMBER 30, 2007—

Continued 

CBSA 

code Nonurban area 

Full 

wage 

Index 

33 ........ New York ........................ 0.8154 

34 ........ North Carolina ................ 0.8540 

35 ........ North Dakota .................. 0.7261 

36 ........ Ohio ................................ 0.8826 

37 ........ Oklahoma ....................... 0.7581 

38 ........ Oregon ............................ 0.9826 

39 ........ Pennsylvania .................. 0.8291 

40 ........ Puerto Rico 2 ................... 0.4047 

41 ........ Rhode Island 1 ................ ............

42 ........ South Carolina ................ 0.8638 

43 ........ South Dakota .................. 0.8560 

44 ........ Tennessee ...................... 0.7895 

45 ........ Texas .............................. 0.8003 

46 ........ Utah ................................ 0.8118 

47 ........ Vermont .......................... 0.9830 

48 ........ Virgin Islands .................. 0.7615 

49 ........ Virginia ............................ 0.8013 

50 ........ Washington ..................... 1.0510 

51 ........ West Virginia .................. 0.7717 

52 ........ Wisconsin ....................... 0.9509 

53 ........ Wyoming ......................... 0.9257 

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

1All counties within the State are classified 

as urban. 2 Massachusetts and Puerto Rico have 

areas designated as rural; however, no shortterm, acute care hospitals are located in the 

area(s) for FY 2007. As discussed in the FY 

2006 IRF PPS Final Rule (70 FR 47880), we 

use the previous year’s wage index value. 

[FR Doc. 06–4409 Filed 5–8–06; 4:00 pm] 

BILLING CODE 4120–01–P 


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