GAO-01-1048R

United States General Accounting Office

Washington, DC 20548

B-288482

August 15, 2001

The Honorable Max Baucus

Chairman

The Honorable Chuck Grassley

Ranking Minority Member

Committee on Finance

United States Senate

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, Centers for Medicare and

Medicaid Services: Medicare Program; Changes to the Hospital Inpatient

Prospective Payment Systems and Rates and Costs of Graduate Medical

Education: Fiscal Year 2002 Rates; Provisions of the Balanced Budget

Refinement Act of 1999; and Provisions of the Medicare, Medicaid, and

SCHIP Benefits Improvement and Protection Act of 2000

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, Centers

for Medicare and Medicaid Services (CMS), entitled “Medicare Program; Changes to

the Hospital Inpatient Prospective Payment Systems and Rates and Costs of

Graduate Medical Education: Fiscal Year 2002 Rates; Provisions of the Balanced

Budget Refinement Act of 1999; and Provisions of the Medicare, Medicaid, and

SCHIP Benefits Improvement and Protection Act of 2000” (RIN: 0938-AK20; 0938-

AK73; and 0938-AK74). We received the rule on August 1, 2001. It was published in

the Federal Register as a final rule on August 1, 2001. 66 Fed. Reg. 39828.

The final 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-01-1048R

Enclosed is our assessment of the CMS’ 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 the CMS 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-01-1048R

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,

CENTERS FOR MEDICARE AND MEDICAID SERVICES

ENTITLED

"MEDICARE PROGRAM; CHANGES TO THE HOSPITAL INPATIENT

PROSPECTIVE PAYMENT SYSTEMS AND RATES AND COSTS OF GRADUATE

MEDICAL EDUCATION: FISCAL YEAR 2002 RATES; PROVISIONS OF THE

BALANCED BUDGET REFINEMENT ACT OF 1999; AND PROVISIONS OF THE

MEDICARE, MEDICAID, AND SCHIP BENEFITS IMPROVEMENT AND

PROTECTION ACT OF 2000"

(RIN: 0938-AK47; 0938-AK73; 0938-AK74)

(i) Cost-benefit analysis

CMS estimates that the impact of the changes made by the final rule on the inpatient

prospective payment system to be an increase of $1.9 billion.

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

607, and 609

CMS prepared a Final Regulatory Flexibility Analysis in connection with its

Regulatory Impact Analysis. The analysis discusses the impacts of the final rule on

hospitals affected by geographic location, size, and payment classification.

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

Act of 1995, 2 U.S.C. §§ 1532-1535

The final 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 final rule was issued using the notice and comment provisions of 5 U.S.C. 553.

On May 4, 2001, CMS published a Notice of Proposed Rulemaking in the Federal

Register. 66 Fed. Reg. 22646. CMS responds to the 232 comments that it received in

response to the notice in the preamble to the final rule.

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

The final rule contains information collections that are subject to review by the

Office of Management and Budget under the Paperwork Reduction Act (PRA).
Page 2 GAO-01-1048R

One of the collections has already been approved and assigned OMB No. 0938-0573,

with an expiration date of September 30, 2002. Another collection affects less than

10 hospitals and, according to CMS, is therefore exempt from the requirements of the

PRA.

Regarding the third collection, the required data, including the estimated burden

hours, has been submitted to OMB for its approval and is discussed in the preamble

to the final rule.

Statutory authorization for the rule

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

regulatory action under the order.

Executive Order No. 13132 (Federalism)

CMS has examined the final 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.