GAO-03-1086R 

United States General Accounting Office

Washington, DC 20548 

B-292672 

August 8, 2003 

The Honorable Charles Grassley 

Chairman 

The Honorable Max Baucus 

Ranking Minority Member 

Committee on Finance 

United States Senate 

The Honorable William M. Thomas 

Chairman 

The Honorable Charles B. 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 Inpatient 

Rehabilitation Facility Prospective Payment System and Fiscal Year 2004 

Rates

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 Inpatient Rehabilitation Facility Prospective Payment System and Fiscal Year 

2004 Rates” (RIN: 0938-AL95). We received the rule on July 31, 2003. It was 

published in the Federal Register as a final rule on August 1, 2003. 68 Fed. Reg. 

45674. 

The final rule establishes the prospective payment rates for inpatient hospital 

services furnished under Medicare by inpatient rehabilitation facilities (IRF) for 

fiscal year 2004. 

Enclosed is our assessment of the CMS’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 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 
Page 2 GAO-03-1086R 

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: Ann Stallion 

Regulations Coordinator 

Department of Health and 

 Human Services 
GAO-03-1086R 

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 

INPATIENT REHABILITATION FACILITY 

PROSPECTIVE PAYMENT SYSTEM AND 

FISCAL YEAR 2004 RATES" 

(RIN: 0938-AL95) 

(i) Cost-benefit analysis

The Centers for Medicare and Medicaid Services projects that updating the IRF 

prospective payment system for fiscal year 2004 will increase by $187.3 million over 

fiscal year 2003 levels. 

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

607, and 609

The Administrator of CMS has certified that the final rule will not have a significant 

economic impact on a substantial number of small entities. 

(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 procedures found at 5 U.S.C. 

553. On May 16, 2003, CMS published a Notice of Proposed Rulemaking in the 

Federal Register. 68 Fed. Reg. 26788. CMS received over 6,900 comments in 

response to the proposed rule and the major issues raised in the comments are 

summarized and discussed in the final rule’s preamble. 

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

The final rule contains an information collection that is subject to review and 

approval by the Office of Management and Budget (OMB) under the Paperwork 
Page 2 GAO-03-1086R 

Review Act. The preamble to the final rule contains the required information 

regarding the collection including the annual burden. CMS estimates that the 

collection will be used 390,000 times per year with a one-minute response time for a 

total annual burden of 6,500 hours. 

Statutory authorization for the rule 

The final rule is promulgated under the authority contained in section 1886(j)(3)(C) 

of the Social Security Act. 

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 determined that the final rule will not have any negative impact on the 

rights, roles, or responsibilities of state, local, or tribal governments.