GAO-01-876R

United States General Accounting Office

Washington, DC 20548

B-288095

June 28, 2001

The Honorable Max Baucus

Chairman

The Honorable Chuck Grassley

Ranking Minority Member

Committee on Finance

United States Senate

The Honorable W.J. “Billy” Tauzin

Chairman

The Honorable John D. Dingell

Ranking Minority Member

Committee on Energy and Commerce

House of Representatives

The Honorable Bill Thomas

Chairman

The Honorable Charles Rangel

Ranking Minority Member

Committee on Ways and Means

House of Representatives

Subject: Department of Health and Human Services, Health Care Financing

Administration: Medicare Program; Provisions of the Benefits Improvement

and Protection Act of 2000; Inpatient Payments and Rates and Costs of

Graduate Medical Education

Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a

major rule promulgated by the Department of Health and Human Services, Health

Care Financing Administration (HCFA), entitled “Medicare Program; Provisions of

the Benefits Improvement and Protection Act of 2000; Inpatient Payments and Rates

and Costs of Graduate Medical Education” (RIN: 0938-AK74). We received the rule

on June 14, 2001. It was published in the Federal Register as an “interim final rule

with comment period” on June 13, 2001. 66 Fed. Reg. 32172.

The interim rule implements certain statutory provisions relating to Medicare

payments to hospitals for inpatient services that are contained in the Medicare,

Medicaid, and SCHIP (State Children’s Health Insurance Program) Benefits

Improvement and Protection Act of 2000.
Page 2 GAO-01-876R

Enclosed is our assessment of HCFA’s compliance with the procedural steps

required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule.

Our review indicates that HCFA complied with the applicable requirements.

If you have any questions about this report, please contact James W. Vickers,

Assistant General Counsel, at (202) 512-8210. The official responsible for GAO

evaluation work relating to the subject matter of the rule is William Scanlon,

Managing Director, Health Care. Mr. Scanlon can be reached at (202) 512-7114.

signed

Kathleen E. Wannisky

Managing Associate General Counsel

Enclosure

cc: Ms. Ann Stallion

Regulations Coordinator

Department of Health and

 Human Services
GAO-01-876R

ENCLOSURE

ANALYSIS UNDER 5 U.S.C. § 801(a)(1)(B)(i)-(iv) OF A MAJOR RULE

ISSUED BY THE

DEPARTMENT OF HEALTH AND HUMAN SERVICES,

HEALTH CARE FINANCING ADMINISTRATION

ENTITLED

"MEDICARE PROGRAM; PROVISIONS OF THE BENEFITS IMPROVEMENT

AND PROTECTION ACT OF 2000; INPATIENT PAYMENTS AND RATES

AND COSTS OF GRADUATE MEDICAL EDUCATION"

(RIN: 0938-AK74)

(i) Cost-benefit analysis

HCFA estimates that the impact of the changes made by the interim rule on the

inpatient prospective payment system to be $1.04 billion.

(ii) Agency actions relevant to the Regulatory Flexibility Act, 5 U.S.C. §§ 603-605,

607, and 609

Although not required to under the Regulatory Flexibility Act (RFA) since the

interim rule did not follow the issuance of a notice of proposed rulemaking, HCFA

considered the impact of the interim rule on small entities. Since the overall impact

of the interim rule is to increase payments to the hospitals, which for the purpose of

the RFA are considered small entities, HCFA did not find a substantial economic

impact on small entities under the RFA.

(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform

Act of 1995, 2 U.S.C. §§ 1532-1535

The interim rule does not contain either an intergovernmental or private sector

mandate, as defined in title II, of more than $100 million in any one year.

(iv) Other relevant information or requirements under acts and executive orders

Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.

The notice and comment provisions of 5 U.S.C. 553 were not used by HCFA in this

rulemaking.

Under section1871(b) of the Social Security Act, a notice of proposed rulemaking is

not required before a rule takes effect where “a statute establishes a specific

deadline for the implementation of the provision and the deadline is less than 150

days after the date of enactment.” Public Law 106-554 contains a number of

provisions that have effective dates of October 1, 2000, April 1, 2001, or other dates
Page 2 GAO-01-876R

prior to the end of fiscal year 2001. Accordingly, HCFA has issued the rule as an

interim rule with request for comments.

Paperwork Reduction Act, 44 U.S.C. §§ 3501-3520

The interim rule does not contain any information collections that are subject to

review by the Office of Management and Budget (OMB) under the Paperwork

Reduction Act.

Statutory authorization for the rule

The interim rule was promulgated under the authority contained in sections 1102,

1812(d), 1814(b), 1815, 1833(a), (i), and (n), 1871, 1881, 1883, and 1886 of the Social

Security Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and (n), 1395hh,

1395rr, 1395tt, and 1395ww) and the Medicare, Medicaid, and SCHIP Benefits

Improvement and Protection Act of 2000 (Pub. L. 106-554).

Executive Order No. 12866

The interim rule was reviewed by OMB and found to be an “economically significant”

regulatory action under the order.

Executive Order No. 13132 (Federalism)

HCFA has examined the interim rule under the order and concludes that it will not

have any negative impact on the rights, rules, and responsibilities of state, local, or

tribal governments.