Federal Register / Vol. 62, No. 190 / Wednesday, October 1, 1997 / Notices 51551

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Health Care Financing Administration

[BPD–896–PN]

RIN 0938–AL14

Medicare Program; Adjustments to

Cost Limits for Skilled Nursing Facility

Inpatient Routine Service Costs

AGENCY: Health Care Financing

Administration (HCFA), HHS.

ACTION: Proposed notice.

SUMMARY: This notice proposes to

eliminate an adjustment that we make to

the Medicare cost limits for skilled

nursing facility (SNF) routine services if

the final rate of change in the market

basket index for a calendar year that we

use to set the limits differs from the

estimated rate of change in the index by

at least 0.3 percentage points. Elsewhere

in this issue of the Federal Register is

a separate final notice with comment

period that explains the methodology

we use to develop the cost limits and

sets forth the cost limits applicable to

cost reporting periods occurring on or

after October 1, 1997.

COMMENT PERIOD: Written comments

will be considered if we receive them at

the appropriate address, as provided

below, no later than 5:00 p.m. on

December 1, 1997.

ADDRESSES: Mail written comments (one

original and three copies) to the

following address: Health Care

Financing Administration, Department

of Health and Human Services,

Attention: BPD–896–PN, P.O. Box 7517,

Baltimore, MD 21244–0517.

If you prefer, you may deliver your

written comments (one original and

three copies) to one of the following

addresses: Room 309–G, Hubert H.

Humphrey Building, 200 Independence

Avenue, SW, Washington, DC 20201, or

Room C5–09–26, 7500 Security

Boulevard, Baltimore, MD 21244–1850.

Comments may also be submitted

electronically to the following E-mail

address: BPD–896–PN@hcfa.gov. E-mail

comments must include the full name

and address of the sender and must be

submitted to the referenced address in

order to be considered. All comments

must be incorporated in the E-mail

message because we may not be able to

access attachments. Electronically

submitted comments will be available

for public inspection at the

Independence Avenue address, below.

Because of staffing and resource

limitations, we cannot accept comments

by facsimile (FAX) transmission. In

commenting, please refer to file code

BPD–896–PN. Comments received

timely will be available for public

inspection as they are received,

generally beginning approximately 3

weeks after publication of a document,

in Room 309–G of the Department’s

offices at 200 Independence Avenue,

SW, Washington, DC, on Monday

through Friday of each week from 8:30

a.m. to 5 p.m. (phone: (202) 690–7890).

Copies: To order copies of the Federal

Register containing this document, send

your request to: New Orders,

Superintendent of Documents, P.O. Box

371954, Pittsburgh, PA 15250–7954.

Specify the date of the issue requested

and enclose a check or money order

payable to the Superintendent of

Documents, or enclose your Visa or

Master Card number and expiration

date. Credit card orders can also be

placed by calling the order desk at (202)

512–1800 or by faxing to (202) 512–

2250. The cost for each copy is $8.00.

As an alternative, you can view and

photocopy the Federal Register

document at most libraries designated

as Federal Depository Libraries and at

many other public and academic

libraries throughout the country that

receive the Federal Register.

FOR FURTHER INFORMATION CONTACT:

Robert Kuhl, (410) 786–4597.

SUPPLEMENTARY INFORMATION:

I. Background

Sections 1861(v)(1)(A) and 1888 of the

Act authorize the Secretary to set limits

on allowable costs incurred by a

provider of services for which payment

may be made under Medicare. These

limits are based on estimates of the costs

necessary for the efficient delivery of

needed health services. Section 1888(a)

of the Act directs the Secretary to set

limits on per diem inpatient routine

service costs for hospital-based and

freestanding SNFs by urban or rural

area. Implementing regulations appear

at 42 CFR 413.30.

Elsewhere is this issue of the Federal

Register, we are issuing a final notice

with comment period that announces,

for cost reporting periods beginning in

FY 1998 (1) an updated schedule of

limits on SNF routine service costs for

which payment may be made under the

Medicare program; and (2) an updated

schedule of prospectively determined

payment rates for low Medicare volume

SNFs that have elected to receive

prospective payments for routine

service costs, as required under section

1888(a) of the Act. The cost limits have

been updated to reflect changes to the

wage data, the Metropolitan Statistical

Area (MSA) designations, and inflation

data since the limits were last issued.

The cost limits set forth in the

separate notice are based on the FY

1997 cost limits, trended to cost

reporting periods beginning in FY 1998,

using the most recent projections of the

rates of inflation or increase in the costs

included in the SNF market basket

index. The market basket index is used

to adjust the SNF cost data to reflect

cost increases occurring between the

cost reporting periods represented in the

data collection and the midpoints of the

cost reporting periods to which the cost

limits and rates apply. The market

basket index is comprised of the most

commonly used categories of SNF

routine service expenses. The categories

are based primarily on those used by the

National Center for Health Statistics in

its National Nursing Home Surveys.

The categories of expenses are

weighted according to the estimated

proportion of SNF routine service costs

attributable to each category. A detailed

description of the market basket index

is described in the October 7, 1992

Federal Register notice for cost limits

(57 FR 46177).

II. Provisions of the Proposed Notice

In developing the market basket

index, we obtain historical and

projected (estimated) rates of change in

the price of goods and services in each

category. For cost limit purposes only,

estimated rates of change may be

revised, retroactively, based on actual

(final) rates of change.

As described in all previous

schedules of cost limits, if the final rate

of change in the market basket index for

a calendar year differs from the

estimated rate of change by at least 0.3

percentage points, we adjust the limits.

We are proposing to eliminate this

provision to adjust the limits based on

the following justification:

In the past, our determination to make

this adjustment was made 6 months

after the end of last calendar year where

an estimate of change was used. Since

1984, we have made several adjustments

to the cost limits because our estimates

differed from the actual rates of change

by at least 0.3 percentage points. In

some cases, the retroactive adjustment

was made to cost reports that had been

settled for Medicare reimbursement

purposes for more than 2 years. We

believe that the original intent behind

setting cost limits was to help providers

determine their cost limits prior to the

beginning of the affected cost reporting

period. In addition, for the most part,

these adjustments have not been

significant in relation to the financial

insecurity placed on providers and the

administrative burden placed on the

Medicare fiscal intermediaries to
51552 Federal Register / Vol. 62, No. 190 / Wednesday, October 1, 1997 / Notices

implement the adjustments. We believe

that this retroactive adjustment has not

served a useful purpose based on past

experience. Accordingly, we believe it is

administratively feasible to propose the

elimination of this provision. If, based

on our analysis of public comments we

receive, we finalize the elimination of

the adjustment, the effect of that

elimination will be made on a

prospective basis.

III. Impact Statement

For proposed notices such as this, we

generally prepare a regulatory flexibility

analysis that is consistent with the

Regulatory Flexibility Act (RFA) (5

U.S.C. 601 through 612) unless we

certify that a proposed notice would not

have a significant economic impact on

a substantial number of small entities.

For purposes of the RFA, all SNFs are

considered to be small entities.

Individuals and States are not included

in the definition of a small entity.

We have determined, and we certify,

that a regulatory flexibility analysis

under the RFA is not required. As stated

earlier in this notice, we believe it is

administratively feasible to propose

elimination of the adjustment provision

to the cost limits. For the most part,

these adjustments have not been

significant in relation to the financial

insecurity placed on providers and the

administrative burden placed on the

Medicare fiscal intermediaries to

implement the adjustments. In addition,

based on past experience, the retroactive

adjustments have not served a useful

purpose.

Section 1102(b) of the Act requires us

to prepare a regulatory impact analysis

if a notice such as this may have a

significant impact on the operations of

a substantial number of small rural

hospitals. Such an analysis must

conform to the provisions of section 604

of the RFA. For purposes of section

1102(b) of the Act, we define a small

rural hospital as a hospital that is

located outside of a Metropolitan

Statistical Area and has fewer than 50

beds.

We have not prepared a rural impact

statement since we have determined

that this proposed notice would not

have a significant economic impact on

the operations of a substantial number

of small rural hospitals.

In accordance with the provisions of

Executive Order 12866, this notice was

reviewed by the Office of Management

and Budget.

IV. Response to Comments

Because of the large number of items

of correspondence we normally receive

on Federal Register documents

published for comment, 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 notice, and, if we proceed with a

subsequent document, we will respond

to the comments in that document.

Authority: (Secs. 1102, 1814(b), 1861(v)(1),

1866(a), 1871, and 1888 of the Social

Security Act (42 U.S.C. 1302, 1395f(b),

1395x(v)(1), 1395cc(a), 1395hh, and 1395yy);

section 13503 of Pub. L. 103–66 (42 U.S.C.

1395x(v)(1)(B) and 1395yy (note)) and 42

CFR 413.1, 413.24, 413.300 through 413.321).

(Catalog of Federal Domestic Assistance

Program No. 93.773, Medicare—Hospital

Insurance)

Dated: September 25, 1997.

Nancy-Ann Min DeParle,

Deputy Administrator, Health Care Financing

Administration.

Dated: September 25, 1997.

Donna E. Shalala,

Secretary.

[FR Doc. 97–25986 Filed 9–30–97; 8:45 am]

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