Federal Register / Vol. 62, No. 211 / Friday, October 31, 1997 / Notices 59261

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Health Care Financing Administration

[BPD–893–FN]

RIN 0938–AI16

Medicare Program; Physician Fee

Schedule Conversion Factor for

Calendar Year 1998 and Sustainable

Growth Rate for Fiscal Year 1998

AGENCY: Health Care Financing

Administration (HCFA), HHS.

ACTION: Final notice.

SUMMARY: This final notice announces

the calendar year 1998 Medicare

physician fee schedule conversion

factor and the fiscal year 1998

sustainable growth rate for expenditures

for physicians’ services under the

Medicare Supplementary Medical

Insurance (Part B) program as required

by sections 1848(d) and (f), respectively,

of the Social Security Act. The 1998

Medicare physician fee schedule

conversion factor is $36.6873. The

sustainable growth rate for fiscal year

1998 is 1.5 percent.

EFFECTIVE DATE: The provisions in this

final notice pertaining to the Medicare

sustainable growth rate of increase are

effective October 1, 1997, and the

provisions pertaining to the Medicare

physician fee schedule conversion

factor are effective January 1, 1998, as

provided by the Medicare statute.

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FOR FURTHER INFORMATION CONTACT:

Ordering information: See ADDRESSES

section.

Content information: Don Thompson,

(410) 786–4586.

SUPPLEMENTARY INFORMATION:

I. Background and Summary of

Legislation

The following discussion contains

references to the conversion factor and

relative value units as components of

the Medicare physician fee schedule.

The 1998 physician fee schedule final

rule, published elsewhere in this

Federal Register issue, explains how

these factors are used in determining

payments under the fee schedule.

A. Calendar Year 1998 Physician Fee

Schedule Conversion Factor

There are currently three conversion

factors used in the physician fee

schedule: one for primary care services,

one for surgical services, and one for all

other services. However, section

1848(d)(1)(C) of the Social Security Act

(the Act), as amended by section 4501

of the Balanced Budget Act of 1997

(BBA 1997) (Pub. L. 105–33), enacted on

August 5, 1997, states that the 1998

physician fee schedule conversion

factor for all services ‘‘shall be the

conversion factor for primary care

services for 1997, increased by the

Secretary’s estimate of the weighted

average of the three separate updates

that would otherwise occur were it not

for the enactment of . . . the Balanced

Budget Act of 1997.’’

The conversion factor is also affected

by section 1848(c)(2)(B)(ii)(II) of the Act,

which requires that any changes to the

relative value units of the Medicare

physician fee schedule not cause

expenditures to increase or decrease by

more than $20 million from the amount

of expenditures that would have been

made if such adjustments had not been

made. We implement this requirement

through a uniform budget neutrality

adjustment to the conversion factor.

B. Fiscal Year 1998 Medicare

Sustainable Growth Rate

Section 1848(f) of the Act, as

amended by section 4503 of the BBA

1997, replaces the volume performance

standard with a sustainable growth rate

standard. It specifies the formula for

establishing yearly sustainable growth

rate expenditure targets for physicians’

services under Medicare. The use of

sustainable growth rate targets is

intended to control the actual growth in

Medicare expenditures for physicians’

services.

The sustainable growth rate targets are

not limits on expenditures. Payments

for services are not withheld if the

sustainable growth rate target is

exceeded. Rather, the appropriate fee

schedule update, as specified in section

1848(d)(3)(A) of the Act, is adjusted to

reflect the success or failure in meeting

the sustainable growth rate target.

The amended section 1848(f)(2) of the

Act now states that ‘‘the sustainable

growth rate for all physicians’ services

for a fiscal year (beginning with fiscal

year 1998) shall be equal to the product

of—

(A) 1.0 plus the Secretary’s estimate of

the weighted-average percentage

increase (divided by 100) in the fees for

all physicians’ services in the fiscal year

involved,

(B) 1.0 plus the Secretary’s estimate of

the percentage change (divided by 100)

in the average number of individuals

enrolled under this part (other than

Medicare+Choice plan enrollees) from

the previous fiscal year to the fiscal year

involved,

(C) 1.0 plus the Secretary’s estimate of

the projected percentage growth in real

gross domestic product per capita

(divided by 100) from the previous

fiscal year to the year involved, and

(D) 1.0 plus the Secretary’s estimate of

the percentage change (divided by 100)

in expenditures for all physicians’

services in the fiscal year (compared

with the previous fiscal year) that will

result from changes in law or

regulations determined without taking

into account estimated changes in
59262 Federal Register / Vol. 62, No. 211 / Friday, October 31, 1997 / Notices

expenditures resulting from the update

adjustment factor determined under

subsection (d)(3)(B), minus 1 and

multiplied by 100.

C. Physicians’ Services

Because the scope of physicians’

services covered by the sustainable

growth rate is identical to the scope of

services that was covered by the

Medicare volume performance

standards, we are using the same

definition of physicians’ services for the

sustainable growth rate as we did for the

Medicare volume performance standard.

The November 22, 1996 final notice (61

FR 59717) announcing the fiscal year

1997 volume performance standard

rates of increase contains a detailed

description of this scope of services.

II. Provisions of This Final Notice

A. Calendar Year 1998 Physician Fee

Schedule Conversion Factor

Under the requirements of the

amended section 1848(d)(1)(C) of the

Act, the 1998 physician fee schedule

conversion factor is $36.6873. We

determined this conversion factor as

follows:

1997 Primary care conversion factor ................................................ 35.7671

Weighted average update if BBA

1997 not enacted ........................ 1.034

Budget neutrality adjustment* ...... 0.992

1998 Physician fee schedule conversion factor .............................. 36.6873

*This adjustment results from section

1848(c)(2)(B)(ii) of the Act and is described

in the 1998 physician fee schedule final

rule, published elsewhere in this Federal

Register issue.

Under the requirements of section

1848(d)(1)(D) of the Act, as amended by

section 4504 of the BBA 1997, the 1998

anesthesia conversion factor is equal to

46 percent of the 1998 physician fee

schedule conversion factor. This

calculation yields a 1998 anesthesia

conversion factor of $16.8762.

The specific calculations to determine

the conversion factor for physicians’

services for calendar year 1998 are

explained in section III. A. of this

notice.

The following table shows the

combined effect on calendar year 1998

payments (relative to calendar year

1997) of the move to a single conversion

factor and the changes to the 1998

Medicare physician fee schedule

relative value units (described in the

1998 physician fee schedule final rule

published elsewhere in this Federal

Register issue).

TABLE 1.—1998 PERCENT CHANGE IN PAYMENTS BY SPECIALTY*

Specialty

Change due

to single

conversion

factor

Change due

to relative

value units

Combined

change

M.D./D.O. Physicians:

Radiation Oncology .................................................................................................................................. 9.2 ¥0.7 8.4

Psychiatry .......................................................................................................................................... 9.0 ¥0.7 8.2

Radiology .......................................................................................................................................... 9.0 ¥0.7 8.2

Pathology .......................................................................................................................................... 9.3 ¥1.1 8.1

Hematology/Oncology ....................................................................................................................... 7.1 0.8 8.0

Neurology .......................................................................................................................................... 7.9 0.0 7.9

Pulmonary ......................................................................................................................................... 8.1 ¥0.4 7.7

Rheumatology ................................................................................................................................... 5.7 1.4 7.2

Gastroenterology ............................................................................................................................... 8.5 ¥1.3 7.1

Internal Medicine ............................................................................................................................... 6.4 0.6 7.0

Family Practice .................................................................................................................................. 5.0 1.3 6.4

Cardiology ......................................................................................................................................... 7.9 ¥1.4 6.4

Other Physician ................................................................................................................................. 6.4 ¥0.2 6.2

General Practice ............................................................................................................................... 4.7 1.2 6.0

Nephrology ........................................................................................................................................ 6.0 ¥1.2 4.7

Clinics ................................................................................................................................................ 4.5 ¥0.1 4.4

Emergency Medicine ......................................................................................................................... 3.8 ¥0.6 3.2

Anesthesiology .................................................................................................................................. 1.2 0.9 2.1

Obstetrics/Gynecology ...................................................................................................................... ¥2.3 3.0 0.6

Otolaryngology .................................................................................................................................. ¥0.1 0.6 0.5

General Surgery ................................................................................................................................ ¥4.0 1.8 ¥2.3

Vascular Surgery ............................................................................................................................... ¥4.0 1.5 ¥2.6

Urology .............................................................................................................................................. ¥3.3 0.4 ¥2.9

Orthopedic Surgery ........................................................................................................................... ¥4.8 0.8 ¥4.0

Dermatology ...................................................................................................................................... ¥4.8 0.2 ¥4.6

Plastic Surgery .................................................................................................................................. ¥6.9 1.7 ¥5.3

Ophthalmology .................................................................................................................................. ¥3.3 ¥2.6 ¥5.8

Neurosurgery ..................................................................................................................................... ¥5.7 ¥0.2 ¥5.9

Thoracic Surgery ............................................................................................................................... ¥7.0 ¥0.2 ¥7.2

Cardiac Surgery ................................................................................................................................ ¥8.1 ¥0.7 ¥8.8

Others:

Chiropractic ....................................................................................................................................... 9.3 ¥0.8 8.4

Suppliers ........................................................................................................................................... 9.3 ¥1.0 8.2

Optometry .......................................................................................................................................... 5.7 0.1 5.8

Nonphysician practitioners ................................................................................................................ 5.1 ¥0.6 4.5

Podiatry ............................................................................................................................................. ¥5.2 0.8 ¥4.4

* Table reflects changes from 1997 payments due to the relative value units and single conversion factor, excluding the 0.3 percent volume

and intensity increase associated with the single conversion factor and the 0.1 percent volume and intensity increase associated with the relative

value unit changes.
Federal Register / Vol. 62, No. 211 / Friday, October 31, 1997 / Notices 59263

B. Physician Sustainable Growth Rate

for Fiscal Year 1998

Under the requirements in sections

1848(f)(2)(A) and (B) of the Act, as

amended by section 4503 of the BBA

1997, we have determined that the

sustainable growth rate of increase for

physicians’ services for fiscal year 1998

is 1.5 percent.

This determination is based on the

following statutory factors:

Statutory factors Percent

change

Fees .............................................. 2.3

Enrollment ..................................... ¥2.4

Statutory factors Percent

change

Increase in Gross Domestic Product .............................................. 1.1

Legislation ..................................... 0.6

Total .............................................. 1.5

The specific calculations to determine

the sustainable growth rate for

physicians’ services for fiscal year 1998

are explained in section III. B. of this

notice.

III. Detail on Calculation of the

Calendar Year 1998 Physician Fee

Schedule Conversion Factor and the

Fiscal Year 1998 Sustainable Growth

Rate

A. Physician Fee Schedule Conversion

Factor

1. The Weighted Average Update

The weighted average update if the

BBA 1997 had not been enacted is 3.4

percent. This was determined based on

the Medicare Economic Index (MEI) and

the Medicare volume performance

standard (MVPS) adjustments as

follows:

Service 1998 MEI MVPS adjustment

Update

(prior to

BBA 1997)

[In Percent]

Primary Care ............................................................................................................................................ 2.2 5.3 7.5

Surgical ..................................................................................................................................................... 2.2 0.3 2.5

All other .................................................................................................................................................... 2.2 ¥0.3 1.9

Weighted average .................................................................................................................................... .................... .................... 3.4

The MEI and the MVPS adjustments

are described below.

2. The Percentage Change in the

Medicare Economic Index

The MEI measures the weightedaverage annual price change for various

inputs needed to produce physicians’

services. The MEI is a fixed-weight

input price index, with an adjustment

for the change in economy-wide labor

productivity. This index, which has

1989 base weights, is comprised of two

broad categories: (1) Physician’s own

time, and (2) physician’s practice

expense.

The physician’s own time component

represents the net income portion of

business receipts and primarily reflects

the input of the physician’s own time

into the production of physicians’

services in physicians’ offices. This

category consists of two

subcomponents: wages and salaries, and

fringe benefits. These components are

adjusted by the 10-year moving average

percent change in output per man-hour

for the nonfarm business sector to

eliminate double counting for

productivity growth in physicians’

offices and the general economy.

The physician’s practice expense

category represents the rate of price

growth in nonphysician inputs to the

production of services in physicians’

offices. This category consists of wages

and salaries and fringe benefits for

nonphysician staff and other nonlabor

inputs. Like physician’s own time, the

nonphysician staff categories are

adjusted for productivity using the 10-

year moving average percent change in

output per man-hour for the nonfarm

business sector. The physician’s

practice expense component also

includes the following categories of

nonlabor inputs: office expense, medical

materials and supplies, professional

liability insurance, medical equipment,

professional car, and other expense. The

table below presents a listing of the MEI

cost categories with associated weights

and percent changes for price proxies

for the 1998 update. The calendar year

1998 MEI is 2.2 percent.

INCREASE IN THE MEDICARE ECONOMIC INDEX UPDATE FOR CALENDAR YEAR 1998 1

1989

weights 2

CY 1998

percent

changes

Medicare Economic Index Total ...................................................................................................................................... 100.0 2.2

1. Physician’s Own Time3 4 ...................................................................................................................................... 54.2 2.5

a. Wages and Salaries: Average hourly earnings private nonfarm, net of productivity ................................... 45.3 2.8

b. Fringe Benefits: Employment Cost Index, benefits, private nonfarm, net of productivity ............................. 8.8 1.2

2. Physician’s Practice Expense 3 ............................................................................................................................ 45.8 1.9

a. Nonphysician Employee Compensation ........................................................................................................ 16.3 2.4

1. Wages and Salaries: Employment Cost Index, wages and salaries, weighted by occupation, net of

productivity .............................................................................................................................................. 13.8 2.6

2. Fringe Benefits: Employment Cost Index, fringe benefits, white collar, net of productivity .................. 2.5 1.4

b. Office Expense: Consumer Price Index for Urban Consumers (CPI–U), housing ....................................... 10.3 2.9

c. Medical Materials and Supplies: Producer Price Index (PPI), ethical drugs/PPI, surgical appliances and

supplies/CPI–U, medical equipment and supplies (equally weighted) .......................................................... 5.2 1.6

d. Professional Liability Insurance: HCFA professional liability insurance survey5 .......................................... 4.8 ¥1.8

e. Medical Equipment: PPI, medical instruments and equipment .................................................................... 2.3 ¥0.4

f. Other Professional Expense ........................................................................................................................... 6.9 2.5

1. Professional Car: CPI–U, private transportation .................................................................................... 1.4 2.3

2. Other: CPI–U, all items less food and energy ....................................................................................... 5.5 2.6
59264 Federal Register / Vol. 62, No. 211 / Friday, October 31, 1997 / Notices

INCREASE IN THE MEDICARE ECONOMIC INDEX UPDATE FOR CALENDAR YEAR 1998 1—Continued

1989

weights 2

CY 1998

percent

changes

Addendum:

Productivity: 10-year moving average of output per man-hour, nonfarm business sector ...................................... N/A 0.8

Physician’s Own Time, not productivity adjusted ..................................................................................................... 54.2 3.3

Wages and salaries, not productivity adjusted .................................................................................................. 45.3 3.6

Fringe benefits, not productivity adjusted .......................................................................................................... 8.8 2.0

Nonphysician Employee Compensation, not productivity adjusted .......................................................................... 16.3 3.2

Wages and salaries, not productivity adjusted .................................................................................................. 13.8 3.4

Fringe benefits, not productivity adjusted .......................................................................................................... 2.5 2.2

1The rates of change are for the 12-month period ending June 30, 1997, which is the period used for computing the calendar year 1998 update. The price proxy values are based upon the latest available Bureau of Labor Statistics data as of September 1997. 2The weights shown for the MEI components are the 1989 base-year weights, which may not sum to subtotals or totals because of rounding.

The MEI is a fixed-weight, Laspeyres-type input price index whose category weights indicate the distribution of expenditures among the inputs to

physicians’ services for calendar year 1989. To determine the MEI level for a given year, the price proxy level for each component is multiplied

by its 1989 weight. The sum of these products (weights multiplied by the price index levels) over all cost categories yields the composite MEI

level for a given year. The annual percent change in the MEI levels is an estimate of price change over time for a fixed market basket of inputs

to physicians’ services. 3The Physician’s Own Time and Nonphysician Employee Compensation category price measures include an adjustment for productivity. The

price measure for each category is divided by the 10-year moving average of output per man-hour in the nonfarm business sector. For example,

the wages and salaries component of Physician’s Own Time is calculated by dividing the rate of growth in average hourly earnings by the 10-

year moving average rate of growth of output per man-hour for the nonfarm business sector. Dividing one plus the decimal form of the percent

change in the average hourly earnings (1+.036=1.036 by one plus the decimal form of the percent change in the 10-year moving average of

labor productivity (1+.008=1.008) equals one plus the change in average hourly earnings net of the change in output per manhour (1.036/

1.008=1.028). All Physician’s Own Time and Nonphysician Employee Compensation categories are adjusted in this way. Due to a higher level of

precision the computer calculated quotient may differ from the quotient calculated from rounded individual percent changes. 4The average hourly earnings proxy, the Employment Cost Index proxies, as well as the CPI-U, housing and CPI-U, private transportation are

published in the Current Labor Statistics Section of the Bureau of Labor Statistics’ Monthly Labor Review. The remaining CPIs and PPIs in the

revised index can be obtained from the Bureau of Labor Statistics’ CPI Detailed Report or Producer Price Indexes. 5 Derived from a HCFA survey of several major insurers (the latest available historical percent change data are for calendar year 1997). This is

consistent with prior computations of the professional liability insurance component of the MEI.

n/a Productivity is factored into the MEI compensation categories as an adjustment to the price variables; therefore, no explicit weight exists

for productivity in the MEI.

3. Medicare Volume Performance

Standard Performance Adjustment

Prior to the enactment of the BBA

1997, the update methodology set forth

in section 1848(d)(3)(B)(i) of the Act

would have increased the primary care

services update by 5.3 percentage

points, increased the surgical services

update by 0.3 percentage points, and

decreased the update for all other

services by 0.3 percentage points. These

adjustments reflect the percentage

increase in expenditures between fiscal

year 1995 and fiscal year 1996 relative

to the volume performance standard

rates of increase for fiscal year 1996.

The volume performance standard rates

of increase were targets for the growth

in Medicare expenditures for

physicians’ services that have

subsequently been replaced by the

sustainable growth rates. The success or

failure in meeting the volume

performance standard targets was taken

into account in determining the

Medicare physician fee schedule

update. The update methodology prior

to the enactment of the BBA 1997 is

described in detail in the November 22,

1996 final notice announcing the

physician fee schedule update for 1997

(61 FR 59717).

The MVPS adjustments were derived

as follows:

Service

FY 1996

MVPS

target

FY 1996 increase in

expenditures

MVPS adjustment difference)

[In Percent]

Primary Care ............................................................................................................................................ 9.3 4.0 5.3

Surgical ..................................................................................................................................................... ¥0.5 ¥0.8 0.3

All other .................................................................................................................................................... 0.6 0.9 ¥0.3

B. Fiscal Year 1998 Sustainable Growth

Rate

Below we explain how we determined

the increases for each of the four factors

used in determining the sustainable

growth rate for fiscal year 1998.

Factor 1—Percentage Increase in Fees

for Physicians’ Services (Before

Applying Legislative Adjustments) for

Fiscal Year 1998

This factor was calculated as a

weighted average of the calendar year

1997 and 1998 fee increases that apply

during fiscal year 1998. Adjustments to

the fee increases, such as the move to a

single conversion factor, are accounted

for in Factor 4 (the increase in

expenditures resulting from changes in

law or regulations).

Most of the fees for physicians’

services (as defined in section I. C. of

this notice) are updated by the MEI.

However, laboratory services, which
Federal Register / Vol. 62, No. 211 / Friday, October 31, 1997 / Notices 59265

represent about 13 percent of the

Medicare allowed charges for

physicians’ services, are updated by the

Consumer Price Index for Urban

Consumers (CPI–U). The following

table, therefore, shows both the MEI and

CPI–U updates that were used in

determining the percentage increase in

physicians’ fees for fiscal year 1998.

MEDICARE ECONOMIC INDEX AND

CONSUMER PRICE INDEX FOR

URBAN CONSUMERS FOR CALENDAR

YEARS 1997 AND 1998

1997 1998

MEI .................................... 2.0 2.2

CPI–U ................................ 2.7 3.0

After taking into account all the

elements described above, we estimate

that the weighted-average increase in

fees for physicians’ services in fiscal

year 1998 before applying any

legislative adjustments will be 2.3

percent for all physicians’ services.

Factor 2—The Percentage Change in the

Average Number of Part B Enrollees

from Fiscal Year 1997 to Fiscal Year

1998

Due to the rapid growth in

Medicare+Choice plan enrollees (whose

Medicare-covered medical care is

outside the scope of the sustainable

growth rate), we estimate that the

average number of Medicare Part B

enrollees excluding those in

Medicare+Choice plans will decline by

2.4 percent. This was derived as

follows:

Average Medicare Part B enrollment

(in millions)

Overall Medicare

+Choice*

Overall excluding

Medicare+Choice

FY 1997 .......................................................................................................................................... 36.384 4.461 31.923

FY 1998 .......................................................................................................................................... 36.775 5.627 31.148

Percent change ........................................................................................................................ .................... .................... ¥2.4%

*Because the Medicare+Choice program does not begin until 1998, the 1997 Medicare+Choice enrollment was proxied by the risk health

maintenance organization enrollment.

Differences between projected and

actual enrollment will be adjusted for in

subsequent years.

Factor 3—Estimated Real Gross

Domestic Product Per Capita Growth in

Fiscal Year 1998

In calculating the sustainable growth

rate, section 1848(f)(2)(C) of the Act, as

amended by section 4503 of the BBA

1997, requires the Secretary to project

real gross domestic product per capita

growth for the coming fiscal year. We

estimate that this growth will be 1.1

percent in fiscal year 1998.

Differences between projected and

actual real gross domestic product per

capita growth will be adjusted for in

subsequent years.

Factor 4—Percentage Increase in

Expenditures for Physicians’ Services

Resulting from Changes in Law or

Regulations in Fiscal Year 1998

Compared with Fiscal Year 1997

Legislative changes contained in the

BBA 1997 will impact expenditures for

physicians’ services in fiscal year 1998.

Although the move to a single

conversion factor for the Medicare

physician fee schedule will cause the

payments for surgical services to

decline, it will increase the payments

for nonsurgical services sufficiently to

cause an overall increase in

expenditures for fiscal year 1998

relative to fiscal year 1997. The

Medicare coverage changes for

screening mammography, colorectal

cancer screening, screening PAP smears,

and screening pelvic exams will cause

increases in Medicare expenditures. The

changes in payments for nurse

practitioners, clinical nurse specialists,

and physician assistants will also

increase expenditures. Medicare to be

secondary payer and the provisions

relating to payments for laboratory

services will cause reductions in

Medicare expenditures.

In response to the fee changes

associated with implementation of the

1998 physician fee schedule, we

anticipate that the volume and intensity

of physician services provided to

Medicare beneficiaries will increase by

0.1 percent. In order to prevent an

increase in expenditures as a result of

this volume and intensity response, an

offsetting 0.1 percent reduction is made

to the conversion factor. Because we

incorporate both the volume and

intensity response and the offsetting

conversion factor reduction into the

sustainable growth rate target, if the

volume and intensity response does not

occur, the sustainable growth rate

system returns the offsetting reduction

to the conversion factor in form of

higher future updates to the Medicare

physician fee schedule.

After taking into account all the BBA

1997 provisions, the increase in

expenditures for physician services due

to changes in law or regulations is

estimated to be 0.6 percent.

IV. Inapplicability of a Notice and

Comment Procedure and of a 30-Day

Delay in Effective Date

We find good cause to waive notice

and comment procedure for this final

notice. It is an interpretive rule because

section 1848 of the Social Security Act,

as amended by sections 4501 and 4503

of the BBA 1997, sets out in detail the

factors and procedures necessary to

calculate the conversion factor for

calendar year 1998 and the sustainable

growth rate of increase for fiscal year

1998. As required by the statute, section

I. A. of this notice discusses the

replacement of the three conversion

factors that are currently used under the

physician fee schedule with a single

conversion factor, and the method used

to determine the conversion factor for

calendar year 1998. Section I. B. of this

notice discusses the replacement of the

volume performance standard with the

sustainable growth rate of increase, and

the formula for establishing the fiscal

year 1998 sustainable growth rate target

for physicians’ services under Medicare.

Therefore, it would be impracticable

and unnecessary to submit this notice to

the public for a notice and comment

procedure.

We usually provide a delay of 30 days

in the effective date for final Federal

Register documents. In this case,

however, the sustainable growth rates of

increase are required by law to be

published by November 1, 1997 and are

effective on October 1, 1997. Thus, the
59266 Federal Register / Vol. 62, No. 211 / Friday, October 31, 1997 / Notices

Congress has clearly indicated its intent

that the rates of increase be

implemented without the usual 30-day

delay in the effective date and has

foreclosed any discretion by us in this

matter. Therefore, the requirement for a

30-day delay in the effective date does

not apply to this notice. With regard to

the physician fee schedule conversion

factor, the effective date will be January

1, 1998, which exceeds the 30-day

requirement for the publication of this

notice.

V. Regulatory Impact Statement

We generally prepare a regulatory

flexibility analysis that is consistent

with the Regulatory Flexibility Act

(RFA) (5 U.S.C. 601 through 612) unless

the Secretary certifies that a notice will

not have a significant economic impact

on a substantial number of small

entities. For purposes of the RFA, States

and individuals are not entities, but we

consider all physicians to be small

entities.

We are not preparing a regulatory

flexibility analysis since we have

determined, and the Secretary certifies,

that this notice will not have a

significant economic impact on a

substantial number of small entities.

Also, section 1102(b) of the Act

requires the Secretary to prepare a

regulatory impact analysis if a notice

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 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 are not preparing a rural impact

analysis since we have determined, and

the Secretary certifies, that this notice

will not have a significant 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.

(Sections 1848(d) and (f) of the Social

Security Act) (42 U.S.C. 1395w–4(d) and (f))

(Catalog of Federal Domestic Assistance

Program No. 93.774, Medicare—

Supplementary Medical Insurance Program)

Dated: October 27, 1997.

Nancy-Ann Min DeParle,

Deputy Administrator, Health Care Financing

Administration.

Dated: October 28, 1997.

Donna E. Shalala,

Secretary.

[FR Doc. 97–29028 Filed 10–30–97; 8:45 am]

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