Vol. 78 Monday, 

No. 87 May 6, 2013 

Part II 

Department of Health and Human Services 

Centers for Medicare & Medicaid Services 

42 CFR Parts 413 and 424 

Medicare Program; Prospective Payment System and Consolidated Billing 

for Skilled Nursing Facilities for FY 2014; Proposed Rule 

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26438 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 413 and 424 

[CMS–1446–P] 

RIN 0938–AR65 

Medicare Program; Prospective 

Payment System and Consolidated 

Billing for Skilled Nursing Facilities for 

FY 2014 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

update the payment rates used under 

the prospective payment system (PPS) 

for skilled nursing facilities (SNFs) for 

fiscal year (FY) 2014, would revise and 

rebase the SNF market basket, and 

would make certain technical and 

conforming revisions in the regulations 

text. This proposed rule also includes a 

proposed policy for reporting the SNF 

market basket forecast error correction 

in certain limited circumstances and a 

proposed new item for the Minimum 

Data Set (MDS), Version 3.0. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on July 1, 2013. 

ADDRESSES: In commenting, please refer 

to file code CMS–1446–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

to http://www.regulations.gov. Follow 

the ‘‘Submit a comment’’ instructions. 

2. By regular mail. You may mail 

written comments to the following 

address only: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–1446–P, P.O. Box 8016, Baltimore, 

MD 21244–8016. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address only: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–1446–P, Mail 

Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments before the close 

of the comment period to either of the 

following addresses: 

a. Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal Government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786– 

7195 in advance to schedule your 

arrival with one of our staff members. 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Penny Gershman, (410) 786–6643, for 

information related to clinical issues. 

John Kane, (410) 786–0557, for 

information related to the development 

of the payment rates and case-mix 

indexes. 

Kia Sidbury, (410) 786–7816, for 

information related to the wage index. 

Bill Ullman, (410) 786–5667, for 

information related to level of care 

determinations, consolidated billing, 

and general information. 

SUPPLEMENTARY INFORMATION: 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http:// 

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

Availability of Certain Information 

Exclusively Through the Internet on the 

CMS Web Site 

The Wage Index for Urban Areas 

Based on CBSA Labor Market Areas 

(Table A) and the Wage Index Based on 

CBSA Labor Market Areas for Rural 

Areas (Table B) are published in the 

Federal Register as an Addendum to the 

annual SNF PPS rulemaking (that is, the 

SNF PPS proposed and final rules or, 

when applicable, the current update 

notice). However, as of FY 2012, a 

number of other Medicare payment 

systems adopted an approach in which 

such tables are no longer published in 

the Federal Register in this manner, and 

instead are made available exclusively 

through the Internet; see, for example, 

the FY 2012 Hospital Inpatient PPS 

(IPPS) final rule (76 FR 51476). To be 

consistent with these other Medicare 

payment systems and streamline the 

published content to focus on policy 

discussion, we now propose to adopt a 

similar approach for the SNF PPS as 

well. As discussed in greater detail in 

section VI. of this proposed rule, we 

would revise the applicable regulations 

text at § 413.345 to accommodate this 

approach, consistent with the wording 

of the corresponding statutory authority 

at section 1888(e)(4)(H)(iii) of the Social 

Security Act (the Act). Under this 

approach, effective October 1, 2013, the 

individual wage index values displayed 

in Tables A and B of this rule would no 

longer be published in the Federal 

Register as part of the annual SNF PPS 

rulemaking, and instead would be made 

available exclusively through the 

Internet on CMS’s SNF PPS Web site at 

http://www.cms.gov/Medicare/

Medicare-Fee-for-Service-Payment/ 

SNFPPS/WageIndex.html. Consistent 

with the provisions of section 

1888(e)(4)(H)(iii) of the Act, we would 

continue to publish in the Federal 

Register the specific ‘‘factors to be 

applied in making the area wage 

adjustment’’ (for example, the SNF 

prospective payment system’s use of the 

hospital wage index exclusive of its 

occupational mix adjustment) as part of 

our annual SNF PPS rulemaking 

process, but that document would no 

longer include a listing of the individual 

wage index values themselves, which 

would instead be made available 

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Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 26439 

exclusively through the Internet on the 

CMS Web Site. 

In addition, we note that in previous 

years, each rule or update notice issued 

under the annual SNF PPS rulemaking 

cycle has included a detailed reiteration 

of the various individual legislative 

provisions that have affected the SNF 

PPS over the years, a number of which 

represented temporary measures that 

have long since expired. That 

discussion, along with detailed 

background information on various 

other aspects of the SNF PPS, will now 

be made available exclusively on the 

CMS Web site as well, at http:// 

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/ 

index.html. In connection with this 

change, this proposed rule is presented 

in a revised format that also serves to 

consolidate material on the individual 

rate components that had previously 

appeared redundantly in several 

different portions of the preamble. The 

revised format also reorders the 

preamble discussion to achieve a more 

logical presentation, by systematically 

discussing each of the various rate 

components in the actual order in 

which it is applied to the SNF payment 

rates. For ease of reference, we are 

including the following crosswalk 

between this proposed rule’s reordered 

preamble discussion and the material 

that was presented in last year’s SNF 

PPS update notice for FY 2013 (77 FR 

46214, August 2, 2012). 

Crosswalk to FY 2013 Update Notice 

FY 2014 Proposed Rule FY 2013 Update Notice 

I. Executive Summary ......................................................................................................................................................... I. 

II.A Statutory Basis and Scope ........................................................................................................................................... II.A 

II.B Initial Transition ............................................................................................................................................................ II.A 

II.C Required Annual Rate Updates ................................................................................................................................... II.B, III.D 

III.A Federal Base Rates ..................................................................................................................................................... II.A, II.G.1, III.A.1 

III.B.1 SNF Market Basket Index ........................................................................................................................................ II.G.2, V 

III.B.2 Use of the SNF Market Basket Percentage ............................................................................................................. II.G.2, V.A 

III.B.3 Forecast Error Adjustment ....................................................................................................................................... II.G.2, V.B 

III.B.4 Multifactor Productivity Adjustment (MFP) ............................................................................................................... II.G.2, V.C 

III.B.4.1 Incorporating the MFP into the Market Basket Update ........................................................................................ V.C.1 

III.B.5 Market Basket Update Factor for FY 2014 .............................................................................................................. V.D 

III.C Case-Mix (C–M) Adjustment ....................................................................................................................................... II.G.1, III.A.2, III.B 

III.D Wage Index Adjustment .............................................................................................................................................. III.C 

III.E Adjusted Rate Computation Example ......................................................................................................................... III.F 

IV.A SNF Level of Care—Administrative Presumption ....................................................................................................... II.A, III.E 

IV.B Consolidated Billing ..................................................................................................................................................... II.A, VI 

IV.C Payment for SNF-Level Swing-Bed Services ............................................................................................................. II.A, VII 

V.A Revising and Rebasing the SNF Market Basket Index ............................................................................................... N/A 

V.B Monitoring Impact of FY 2012 Policy Changes ........................................................................................................... IV 

V.C Ensuring Accuracy in Grouping to Rehabilitation Categories ..................................................................................... N/A 

V.D SNF Therapy Research Project ................................................................................................................................... N/A 

VI. Provisions of the Proposed Rule and Technical Correction ......................................................................................... N/A 

VII. Collection of Information Requirements ....................................................................................................................... VIII. 

VIII. Response to Comments .............................................................................................................................................. N/A 

IX. Economic Analyses ....................................................................................................................................................... X. 

Table 1 Diff. Bet. Forecasted, Actual Market Basket Increases ........................................................................................ Table 1 

Table 2 Unadjusted Federal Rate Per Diem (Urban) ......................................................................................................... Table 2 

Table 3 Unadjusted Federal Rate Per Diem (Rural) .......................................................................................................... Table 3 

Table 4 C–M Adjusted Federal Rates, Indexes (Urban) .................................................................................................... Table 4 

Table 5 C–M Adjusted Federal Rates, Indexes (Rural) ..................................................................................................... Table 5 

Table 6 C–M Adj. Fed. Rates (Urban), Lab./Non-Lab. Components ................................................................................. Table 6 

Table 7 C–M Adj. Fed. Rates (Rural), Lab./Non-Lab. Components .................................................................................. Table 7 

Table 8 Rate Computation Example ................................................................................................................................... Table 8 

Tables 9 through 16 Revising & Rebasing SNF Market Basket ........................................................................................ N/A 

Table 17 Labor-Related Relative Importance ..................................................................................................................... Table 13 

Table 18 C–M Distributions by Major RUG–IV Category ................................................................................................... Table 9 

Table 19 C–M Distribution for Therapy RUG–IV Groups ................................................................................................... Table 10 

Table 20 Mode of Therapy Provision ................................................................................................................................. Table 11 

Table 21 Distribution of MDS Assessment Types .............................................................................................................. Table 12 

Table 22 Projected Impact .................................................................................................................................................. Table 14 

Table 23 Accounting Statement .......................................................................................................................................... Table 15 

To assist readers in referencing 

sections contained in this document, we 

are providing the following Table of 

Contents. 

Table of Contents 

I. Executive Summary 

A. Purpose 

B. Summary of Major Provisions 

C. Summary of Cost and Benefits 

II. Background 

A. Statutory Basis and Scope 

B. Initial Transition 

C. Required Annual Rate Updates 

III. SNF PPS Rate Setting Methodology and 

FY 2014 Update 

A. Federal Base Rates 

B. SNF Market Basket Update 

1. SNF Market Basket Index 

2. Use of the SNF Market Basket Percentage 

3. Forecast Error Adjustment 

4. Multifactor Productivity Adjustment 

5. Market Basket Update Factor for FY 

2014 

C. Case-Mix Adjustment 

D. Wage Index Adjustment 

E. Adjusted Rate Computation Example 

IV. Additional Aspects of the SNF PPS 

A. SNF Level of Care—Administrative 

Presumption 

B. Consolidated Billing 

C. Payment for SNF-Level Swing-Bed 

Services 

V. Other Issues 

A. Revising and Rebasing the SNF Market 

Basket Index 

1. Background 

2. Revising and Rebasing the SNF Market 

Basket 

3. Price Proxies Used to Measure Cost 

Category Growth 

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26440 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 

4. Proposed Market Basket Estimate for the 

FY 2014 SNF PPS Update 

5. Labor-Related Share 

B. Monitoring Impact of FY 2012 Policy 

Changes 

1. RUG Distributions 

2. Group Therapy Allocation 

3. MDS 3.0 Changes 

4. Conclusion 

C. Ensuring Accuracy in Grouping to 

Rehabilitation RUG–IV Categories 

D. SNF Therapy Research Project 

VI. Provisions of the Proposed Rule and 

Technical Correction 

VII. Collection of Information Requirements 

VIII. Response to Comments 

IX. Economic Analyses 

Regulation Text 

Acronyms 

In addition, because of the many 

terms to which we refer by acronym in 

this proposed rule, we are listing these 

abbreviations and their corresponding 

terms in alphabetical order below: 

AIDS Acquired Immune Deficiency 

Syndrome 

ARD Assessment reference date 

BBA Balanced Budget Act of 1997, Pub. L. 

105–33 

BBRA Medicare, Medicaid, and SCHIP 

Balanced Budget Refinement Act of 1999, 

Pub. L. 106–113 

BIPA Medicare, Medicaid, and SCHIP 

Benefits Improvement and Protection Act 

of 2000, Pub. L. 106–554 

CAH Critical access hospital 

CBSA Core-based statistical area 

CFR Code of Federal Regulations 

CMI Case-mix index 

CMS Centers for Medicare & Medicaid 

Services 

COT Change of therapy 

ECI Employment Cost Index 

EOT End of therapy 

EOT–R End of therapy—resumption 

FQHC Federally qualified health center 

FR Federal Register 

FY Fiscal year 

GAO Government Accountability Office 

HCPCS Healthcare Common Procedure 

Coding System 

HOMER Home office Medicare records 

IGI IHS (Information Handling Services) 

Global Insight, Inc. 

MDS Minimum data set 

MFP Multifactor productivity 

MMA Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003, Pub. L. 108–173 

MSA Metropolitan statistical area 

NAICS North American Industrial 

Classification System 

OMB Office of Management and Budget 

OMRA Other Medicare Required 

Assessment 

PPS Prospective Payment System 

RAI Resident assessment instrument 

RAVEN Resident assessment validation 

entry 

RFA Regulatory Flexibility Act, Pub. L. 96– 

354 

RHC Rural health clinic 

RIA Regulatory impact analysis 

RUG–III Resource Utilization Groups, 

Version 3 

RUG–V Resource Utilization Groups, 

Version 4 

RUG–53 Refined 53-Group RUG–III CaseMix Classification System 

SCHIP State Children’s Health Insurance 

Program 

SNF Skilled nursing facility 

STM Staff time measurement 

STRIVE Staff time and resource intensity 

verification 

UMRA Unfunded Mandates Reform Act, 

Pub. L. 104–4 

I. Executive Summary 

A. Purpose 

This proposed rule would update the 

SNF prospective payment rates for FY 

2014 as required under section 

1888(e)(4)(E) of the Act. It would also 

respond to section 1888(e)(4)(H) of the 

Act, which requires the Secretary to 

‘‘provide for publication in the Federal 

Register’’ before the August 1 that 

precedes the start of each fiscal year, the 

unadjusted federal per diem rates, the 

case-mix classification system, and the 

factors to be applied in making the area 

wage adjustment used in computing the 

prospective payment rates for that fiscal 

year. 

B. Summary of Major Provisions 

In accordance with sections 

1888(e)(4)(E)(ii)(IV) and 1888(e)(5) of 

the Act, the federal rates in this 

proposed rule would reflect an update 

to the rates that we published in the 

SNF PPS update notice for FY 2013 (77 

FR 46214) which reflects the SNF 

market basket index, adjusted by the 

forecast error correction, if applicable, 

and the multifactor productivity 

adjustment for FY 2014. 

C. Summary of Cost and Benefits 

Provision 

description Total transfers 

Proposed FY 

2014 SNF 

PPS payment rate 

update.

The overall economic impact 

of this proposed rule 

would be an estimated increase of $500 million in 

aggregate payments to 

SNFs during FY 2014. 

II. Background 

A. Statutory Basis and Scope 

As amended by section 4432 of the 

Balanced Budget Act of 1997 (BBA, Pub. 

L. 105–33, enacted on August 5, 1997), 

section 1888(e) of the Act provides for 

the implementation of a PPS for SNFs. 

This methodology uses prospective, 

case-mix adjusted per diem payment 

rates applicable to all covered SNF 

services defined in section 1888(e)(2)(A) 

of the Act. The SNF PPS is effective for 

cost reporting periods beginning on or 

after July 1, 1998, and covers all costs 

of furnishing covered SNF services 

(routine, ancillary, and capital-related 

costs) other than costs associated with 

approved educational activities and bad 

debts. Under section 1888(e)(2)(A)(i) of 

the Act, covered SNF services include 

post-hospital extended care services for 

which benefits are provided under Part 

A, as well as those items and services 

(other than a small number of excluded 

services, such as physician services) for 

which payment may otherwise be made 

under Part B and which are furnished to 

Medicare beneficiaries who are 

residents in a SNF during a covered Part 

A stay. A comprehensive discussion of 

these provisions appears in the May 12, 

1998 interim final rule (63 FR 26252). 

B. Initial Transition 

Under sections 1888(e)(1)(A) and 

1888(e)(11) of the Act, the SNF PPS 

included an initial, three-phase 

transition that blended a facility-specific 

rate (reflecting the individual facility’s 

historical cost experience) with the 

federal case-mix adjusted rate. The 

transition extended through the 

facility’s first three cost reporting 

periods under the PPS, up to and 

including the one that began in FY 

2001. Thus, the SNF PPS is no longer 

operating under the transition, as all 

facilities have been paid at the full 

federal rate effective with cost reporting 

periods beginning in FY 2002. As we 

now base payments for SNFs entirely on 

the adjusted federal per diem rates, we 

no longer include adjustment factors 

under the transition related to facilityspecific rates for the upcoming FY. 

C. Required Annual Rate Updates 

Section 1888(e)(4)(E) of the Act 

requires the SNF PPS payment rates to 

be updated annually. The most recent 

annual update occurred in an update 

notice that set forth updates to the SNF 

PPS payment rates for FY 2013 (77 FR 

46214). 

Under this requirement, section 

1888(e)(4)(H) of the Act specifies that 

we provide for publication annually in 

the Federal Register of the following: 

• The unadjusted federal per diem 

rates to be applied to days of covered 

SNF services furnished during the 

upcoming FY. 

• The case-mix classification system 

to be applied with respect to these 

services during the upcoming FY. 

• The factors to be applied in making 

the area wage adjustment with respect 

to these services. 

Along with other revisions discussed 

later in this preamble, this proposed 

rule would provide the required annual 

updates to the per diem payment rates 

for SNFs for FY 2014. 

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Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 26441 

III. SNF PPS Rate Setting Methodology 

and FY 2014 Update 

A. Federal Base Rates 

Under section 1888(e)(4) of the Act, 

the SNF PPS uses per diem federal 

payment rates based on mean SNF costs 

in a base year (FY 1995) updated for 

inflation to the first effective period of 

the PPS. We developed the federal 

payment rates using allowable costs 

from hospital-based and freestanding 

SNF cost reports for reporting periods 

beginning in FY 1995. The data used in 

developing the federal rates also 

incorporated a ‘‘Part B add-on,’’ which 

is an estimate of the amounts that, prior 

to the SNF PPS, would have been 

payable under Part B for covered SNF 

services furnished to individuals during 

the course of a covered Part A stay in 

a SNF. 

In developing the rates for the initial 

period, we updated costs to the first 

effective year of the PPS (the 15-month 

period beginning July 1, 1998) using a 

SNF market basket index, and then 

standardized for geographic variations 

in wages and for the costs of facility 

differences in case mix. In compiling 

the database used to compute the 

federal payment rates, we excluded 

those providers that received new 

provider exemptions from the routine 

cost limits, as well as costs related to 

payments for exceptions to the routine 

cost limits. Using the formula that the 

BBA prescribed, we set the federal rates 

at a level equal to the weighted mean of 

freestanding costs plus 50 percent of the 

difference between the freestanding 

mean and weighted mean of all SNF 

costs (hospital-based and freestanding) 

combined. We computed and applied 

separately the payment rates for 

facilities located in urban and rural 

areas, and adjusted the portion of the 

federal rate attributable to wage-related 

costs by a wage index to reflect 

geographic variations in wages. 

B. SNF Market Basket Update 

1. SNF Market Basket Index 

Section 1888(e)(5)(A) of the Act 

requires us to establish a SNF market 

basket index that reflects changes over 

time in the prices of an appropriate mix 

of goods and services included in 

covered SNF services. Accordingly, we 

have developed a SNF market basket 

index that encompasses the most 

commonly used cost categories for SNF 

routine services, ancillary services, and 

capital-related expenses. We use the 

SNF market basket index, adjusted in 

the manner described below, to update 

the federal rates on an annual basis. In 

the SNF PPS final rule for FY 2008 (72 

FR 43425 through 43430), we revised 

and rebased the market basket, which 

included updating the base year from 

FY 1997 to FY 2004. For FY 2014, we 

propose to revise and rebase the market 

basket to reflect FY 2010 total cost data, 

as detailed in section V.A. of this 

proposed rule. 

We are also proposing to determine 

the FY 2014 market basket increase 

based on the percent increase in the 

revised and rebased FY 2010-based SNF 

market basket. For the FY 2014 

proposed rule, the FY 2010-based SNF 

market basket growth rate is estimated 

to be 2.3 percent, which is based on the 

Information Handling Services (IHS) 

Global Insight, Inc. (IGI) first quarter 

2013 forecast with historical data 

through fourth quarter 2012. In section 

III.B.5 of this proposed rule, we discuss 

the specific application of this 

adjustment to the forthcoming annual 

update of the SNF PPS payment rates. 

2. Use of the SNF Market Basket 

Percentage 

Section 1888(e)(5)(B) of the Act 

defines the SNF market basket 

percentage as the percentage change in 

the SNF market basket index from the 

midpoint of the previous FY to the 

midpoint of the current FY. For the 

federal rates set forth in this proposed 

rule, we use the percentage change in 

the SNF market basket index to compute 

the update factor for FY 2014. This is 

based on the IGI first quarter 2013 

forecast (with historical data through 

the fourth quarter 2012) of the FY 2014 

percentage increase in the FY 2010- 

based SNF market basket index for 

routine, ancillary, and capital-related 

expenses, which is used to compute the 

update factor in this proposed rule. As 

discussed in sections III.B.3. and III.B.4. 

of this proposed rule, this market basket 

percentage change would be reduced by 

the forecast error correction 

(§ 413.337(d)(2)), and by the MFP 

adjustment as required by section 

1888(e)(5)(B)(ii) of the Act. Finally, as 

discussed in section II.B. of this 

proposed rule, we no longer compute 

update factors to adjust a facilityspecific portion of the SNF PPS rates, 

because the initial 3-phase transition 

period from facility-specific to full 

federal rates that started with cost 

reporting periods beginning in July 1998 

has expired. 

3. Forecast Error Adjustment 

As discussed in the June 10, 2003 

supplemental proposed rule (68 FR 

34768) and finalized in the August 4, 

2003, final rule (68 FR 46057 through 

46059), the regulations at 

§ 413.337(d)(2) provide for an 

adjustment to account for market basket 

forecast error. The initial adjustment for 

market basket forecast error applied to 

the update of the FY 2003 rate for FY 

2004, and took into account the 

cumulative forecast error for the period 

from FY 2000 through FY 2002, 

resulting in an increase of 3.26 percent 

to the FY 2004 update. Subsequent 

adjustments in succeeding FYs take into 

account the forecast error from the most 

recently available FY for which there is 

final data, and apply the difference 

between the forecasted and actual 

change in the market basket when the 

difference exceeds a specified threshold. 

We originally used a 0.25 percentage 

point threshold for this purpose; 

however, for the reasons specified in the 

FY 2008 SNF PPS final rule (72 FR 

43425, August 3, 2007), we adopted a 

0.5 percentage point threshold effective 

for FY 2008 and subsequent fiscal years. 

As we stated in the final rule for FY 

2004 that first issued the market basket 

forecast error adjustment (68 FR 46058, 

August 4, 2003), the adjustment will 

‘‘. . . reflect both upward and 

downward adjustments, as 

appropriate.’’ 

For FY 2012 (the most recently 

available FY for which there is final 

data), the estimated increase in the 

market basket index was 2.7 percentage 

points, while the actual increase was 2.2 

percentage points, resulting in the 

actual increase being 0.5 percentage 

point lower than the estimated increase. 

As the forecast error calculation in this 

instance does not permit one to 

determine definitively if the forecast 

error adjustment threshold has been 

exceeded, we are proposing a policy 

that would be applied in instances, and 

only those instances, where the forecast 

error calculation is equal to 0.5 

percentage point, when rounded to one 

significant digit (otherwise referred to as 

a tenth of a percentage point), as further 

discussed below. When the forecast 

error, rounded to one significant digit, is 

equal to 0.5 percentage point, we 

propose to report the forecast error to 

two significant digits (otherwise referred 

to as a hundredth of a percentage point) 

so that we may determine whether the 

forecast error correction threshold has 

been exceeded and whether the forecast 

error adjustment should be applied 

under § 413.337(d)(2). This policy 

would apply only in those instances 

where the forecast error, when rounded 

to one significant digit, is 0.5 percentage 

point. For example, if the forecast error 

is calculated to be 0.4 percentage point 

when rounded to one significant digit, 

then no further determinations are 

necessary, the forecast error will be 

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26442 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 

reported as 0.4 percentage point, and a 

forecast error adjustment will not be 

applied. Likewise, if the forecast error is 

determined to be 0.6 percentage point 

when rounded to one significant digit, 

then no further determination is 

necessary, the forecast error will be 

reported as 0.6 percentage point, and a 

forecast error adjustment will be 

applied. 

We propose that when the forecast 

error is determined to be 0.5 percentage 

point, when rounded to one significant 

digit, the determination of whether or 

not the threshold has been exceeded 

would be made by rounding the forecast 

error calculation to the second 

significant digit. We believe this 

approach is necessary and appropriate 

to ensure that the necessity for a forecast 

error adjustment is accurately 

determined in accordance with 

§ 413.337(d)(2), which enables us to 

identify those instances where the 

difference between the actual and 

projected market basket becomes 

sufficiently significant to indicate that 

the historical price changes are not 

being adequately reflected. This 

proposed policy would enable us to 

distinguish between cases where the 

difference carried out to the second 

decimal place is less than the 0.5 

threshold but rounds to 0.5 (0.45 to 

0.49) and cases where the difference 

carried out to the second decimal place 

is greater than the 0.5 threshold but 

rounds to 0.5 (0.51 to 0.54). We would 

apply the proposed policy when the 

difference between the actual and 

projected market basket is either 

positive or negative 0.5 percentage 

point. 

As stated earlier, the forecast error 

calculation for FY 2012 is equal to 0.5 

percentage point, rounded to one 

significant digit, or a tenth of a 

percentage point. Therefore, following 

the proposed policy outlined above, we 

would determine the forecast error for 

FY 2012 to the second significant digit, 

or the hundredth of a percentage point. 

The forecasted FY 2012 SNF market 

basket percentage change was 2.7 

percent. When rounded to the second 

significant digit, it was 2.69 percent. 

This would be subtracted from the 

actual FY 2012 SNF market basket 

percentage change, rounded to the 

second significant digit, of 2.18 percent 

to yield a negative forecast error 

correction of 0.51 percentage point. As 

the forecast error correction, when 

rounded to two significant digits, 

exceeds 0.5 percentage point, a forecast 

error adjustment would be warranted 

under the policy outlined in the FY 

2008 SNF PPS final rule (72 FR 43425) 

(see § 413.337(d)(2)). 

Consistent with prior applications of 

the forecast error adjustment since 

establishing the 0.5 percentage point 

threshold, and consistent with our 

applications of both the market basket 

adjustment and productivity adjustment 

described below, once we have 

determined that a forecast error 

adjustment is warranted, we will 

continue to apply the adjustment itself 

at one significant digit (otherwise 

referred to as a tenth of a percentage 

point). Therefore, because the forecasted 

FY 2012 SNF market basket percentage 

change exceeded the actual SNF market 

basket percentage change for FY 2012 

(the most recently available FY for 

which there is final data) by 0.51 

percentage point, the FY 2014 SNF 

market basket percentage change of 2.3 

percent would be adjusted downward 

by the forecast error correction of 0.5 

percentage point, resulting in a net SNF 

market basket increase factor of 1.8 

percent. Table 1 shows the forecasted 

and actual market basket amounts for 

FY 2012. 

TABLE 1—DIFFERENCE BETWEEN THE FORECASTED AND ACTUAL MARKET BASKET INCREASES FOR FY 2012 

Index 

Forecasted 

FY 2012 

increase* 

Actual 

FY 2012 

increase** 

FY 2012 

difference 

SNF (rounded to one significant digit) ......................................................................................... 2.7 2.2 ¥0.5 

SNF (rounded to two significant digits) ....................................................................................... 2.69 2.18 ¥0.51 

* Published in Federal Register; based on second quarter 2011 IGI forecast (2004-based index). 

** Based on the first quarter 2013 IHS Global Insight forecast, with historical data through the fourth quarter 2012 (2004-based index). 

4. Multifactor Productivity Adjustment 

Section 3401(b) of the Affordable Care 

Act requires that, in FY 2012 (and in 

subsequent FYs), the market basket 

percentage under the SNF payment 

system as described in section 

1888(e)(5)(B)(i) of the Act is to be 

reduced annually by the productivity 

adjustment described in section 

1886(b)(3)(B)(xi)(II) of the Act. Section 

1886(b)(3)(B)(xi)(II) of the Act, added by 

section 3401(a) of the Affordable Care 

Act, sets forth the definition of this 

productivity adjustment. The statute 

defines the productivity adjustment to 

be equal to ‘‘the 10-year moving average 

of changes in annual economy-wide 

private nonfarm business multi-factor 

productivity (as projected by the 

Secretary for the 10-year period ending 

with the applicable fiscal year, year, 

cost-reporting period, or other annual 

period)’’ (the MFP adjustment). The 

Bureau of Labor Statistics (BLS) is the 

agency that publishes the official 

measure of private nonfarm business 

multifactor productivity (MFP). Please 

see http://www.bls.gov/mfp to obtain the 

BLS historical published MFP data. 

The projection of MFP is currently 

produced by IGI, an economic 

forecasting firm. To generate a forecast 

of MFP, IGI replicated the MFP measure 

calculated by the BLS, using a series of 

proxy variables derived from IGI’s U.S. 

macroeconomic models. This process is 

described in greater detail in section 

III.F.3 of the FY 2012 SNF PPS final rule 

(76 FR 48527 through 48529). 

a. Incorporating the Multifactor 

Productivity Adjustment Into the 

Market Basket Update 

According to section 1888(e)(5)(A) of 

the Act, the Secretary ‘‘shall establish a 

skilled nursing facility market basket 

index that reflects changes over time in 

the prices of an appropriate mix of 

goods and services included in covered 

skilled nursing facility services.’’ As 

described in section III.B.1. of this 

proposed rule, we propose to estimate 

the SNF PPS market basket percentage 

for FY 2014 under section 

1888(e)(5)(B)(i) of the Act based on the 

proposed FY 2010-based SNF market 

basket. Section 1888(e)(5)(B)(ii) of the 

Act, added by section 3401(b) of the 

Affordable Care Act, requires that for FY 

2012 and each subsequent FY, after 

determining the market basket 

percentage described in section 

1888(e)(5)(B)(i) of the Act, ‘‘the 

Secretary shall reduce such percentage 

by the productivity adjustment 

described in section 

1886(b)(3)(B)(xi)(II)’’ (which we refer to 

as the MFP adjustment). Section 

1888(e)(5)(B)(ii) of the Act further states 

that the reduction of the market basket 

percentage by the MFP adjustment may 

result in the market basket percentage 

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being less than zero for a FY, and may 

result in payment rates under section 

1888(e) of the Act for a FY being less 

than such payment rates for the 

preceding FY. Thus, if the application of 

the MFP adjustment to the market 

basket percentage calculated under 

section 1888(e)(5)(B)(i) of the Act results 

in an MFP-adjusted market basket 

percentage that is less than zero, then 

the annual update to the unadjusted 

federal per diem rates under section 

1888(e)(4)(E)(ii) of the Act would be 

negative, and such rates would decrease 

relative to the prior FY. 

For the FY 2014 update, the MFP 

adjustment is calculated as the 10-year 

moving average of changes in MFP for 

the period ending September 30, 2014. 

In accordance with section 

1888(e)(5)(B)(i) of the Act and 

§ 413.337(d)(2) of the regulations, the 

market basket percentage for FY 2014 

for the SNF PPS is based on IGI’s first 

quarter 2013 forecast of the proposed FY 

2010-based SNF market basket update, 

as adjusted by the forecast error 

adjustment, and is estimated to be 1.8 

percent. In accordance with section 

1888(e)(5)(B)(ii) of the Act (as added by 

section 3401(b) of the Affordable Care 

Act) and § 413.337(d)(3), this market 

basket percentage is then reduced by the 

MFP adjustment (the 10-year moving 

average of changes in MFP for the 

period ending September 30, 2014) of 

0.4 percent, which is calculated as 

described above and based on IGI’s first 

quarter 2013 forecast. The resulting 

MFP-adjusted SNF market basket 

update is equal to 1.4 percent, or 1.8 

percent less 0.4 percentage point. 

5. Market Basket Update Factor for FY 

2014 

Sections 1888(e)(4)(E)(ii)(IV) and 

1888(e)(5)(i) of the Act require that the 

update factor used to establish the FY 

2014 unadjusted federal rates be at a 

level equal to the market basket index 

percentage change. Accordingly, we 

determined the total growth from the 

average market basket level for the 

period of October 1, 2012 through 

September 30, 2013 to the average 

market basket level for the period of 

October 1, 2013 through September 30, 

2014. This process yields an update 

factor of 2.3 percent. As further 

explained in section III.B.3 of this 

proposed rule, as applicable, we adjust 

the market basket update factor by the 

forecast error from the most recently 

available FY for which there is final 

data and apply this adjustment 

whenever the difference between the 

forecasted and actual percentage change 

in the market basket exceeds a 0.5 

percentage point threshold. Since the 

forecasted FY 2012 SNF market basket 

percentage change exceeded the actual 

FY 2012 SNF market basket percentage 

change (FY 2012 is the most recently 

available FY for which there is final 

data) by more than 0.5 percentage point, 

the FY 2014 market basket of 2.3 

percent would be adjusted downward 

by the applicable difference, in this case 

of 0.5 percentage points, which reduces 

the FY 2014 market basket update factor 

to 1.8 percent. In addition, for FY 2014, 

section 1888(e)(5)(B) of the Act requires 

us to reduce the market basket 

percentage by the MFP adjustment (the 

10-year moving average of changes in 

MFP for the period ending September 

30, 2014) of 0.4 percent, as described in 

section III.B.4. of this proposed rule. 

The resulting MFP-adjusted SNF market 

basket update would be equal to 1.4 

percent, or 1.8 percent less 0.4 

percentage point. We are proposing that 

if more recent data become available (for 

example, a more recent estimate of the 

FY 2010-based SNF market basket, MFP 

adjustment, and/or FY 2004-based SNF 

market basket used for the forecast error 

calculation), we would use such data, if 

appropriate, to determine the FY 2014 

SNF market basket update, FY 2014 

labor-related share relative importance, 

and MFP adjustment in the FY 2014 

SNF PPS final rule. We used the SNF 

market basket, adjusted as described 

above, to adjust each per diem 

component of the federal rates forward 

to reflect the change in the average 

prices for FY 2014 from average prices 

for FY 2013. We would further adjust 

the rates by a wage index budget 

neutrality factor, described later in this 

section. Tables 2 and 3 reflect the 

updated components of the unadjusted 

federal rates for FY 2014, prior to 

adjustment for case-mix. 

TABLE 2—FY 2014 UNADJUSTED FEDERAL RATE PER DIEM—URBAN

Rate component Nursing— 

case-mix 

Therapy— 

case-mix 

Therapy—noncase-mix Non-case-mix 

Per Diem Amount ............................................................................................ $165.92 $124.98 $16.46 $84.67 

TABLE 3—FY 2014 UNADJUSTED FEDERAL RATE PER DIEM—RURAL

Rate component Nursing— 

case-mix 

Therapy— 

case-mix 

Therapy—noncase-mix Non-case-mix 

Per Diem Amount ............................................................................................ $158.52 $144.11 $17.58 $86.25 

C. Case-Mix Adjustment 

Under section 1888(e)(4)(G)(i) of the 

Act, the federal rate also incorporates an 

adjustment to account for facility casemix, using a classification system that 

accounts for the relative resource 

utilization of different patient types. 

The statute specifies that the adjustment 

is to reflect both a resident classification 

system that the Secretary establishes to 

account for the relative resource use of 

different patient types, as well as 

resident assessment data and other data 

that the Secretary considers appropriate. 

In the interim final rule with comment 

period that initially implemented the 

SNF PPS (63 FR 26252, May 12, 1998), 

we developed the RUG–III case-mix 

classification system, which tied the 

amount of payment to resident resource 

use in combination with resident 

characteristic information. Staff time 

measurement (STM) studies conducted 

in 1990, 1995, and 1997 provided 

information on resource use (time spent 

by staff members on residents) and 

resident characteristics that enabled us 

not only to establish RUG–III, but also 

to create case-mix indexes (CMIs). The 

original RUG–III grouper logic was 

based on clinical data collected in 1990, 

1995, and 1997. As discussed in the 

SNF PPS proposed rule for FY 2010 (74 

FR 22208), we subsequently conducted 

a multi-year data collection and analysis 

under the Staff Time and Resource 

Intensity Verification (STRIVE) project 

to update the case-mix classification 

system for FY 2011. The resulting 

Resource Utilization Groups, Version 4 

(RUG–IV) case-mix classification system 

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reflected the data collected in 2006– 

2007 during the STRIVE project, and 

was finalized in the FY 2010 SNF PPS 

final rule (74 FR 40288) to take effect in 

FY 2011 concurrently with an updated 

new resident assessment instrument, 

version 3.0 of the Minimum Data Set 

(MDS 3.0), which collects the clinical 

data used for case-mix classification 

under RUG–IV. 

We note that case-mix classification is 

based, in part, on the beneficiary’s need 

for skilled nursing care and therapy 

services. The case-mix classification 

system uses clinical data from the MDS 

to assign a case-mix group to each 

patient that is then used to calculate a 

per diem payment under the SNF PPS. 

As discussed in section IV.A of this 

proposed rule, the clinical orientation of 

the case-mix classification system 

supports the SNF PPS’s use of an 

administrative presumption that 

considers a beneficiary’s initial case-mix 

classification to assist in making certain 

SNF level of care determinations. 

Further, because the MDS is used as a 

basis for payment, as well as a clinical 

assessment, we have provided extensive 

training on proper coding and the time 

frames for MDS completion in our 

Resident Assessment Instrument (RAI) 

Manual. For an MDS to be considered 

valid for use in determining payment, 

the MDS assessment must be completed 

in compliance with the instructions in 

the RAI Manual in effect at the time the 

assessment is completed. For payment 

and quality monitoring purposes, the 

RAI Manual consists of both the Manual 

instructions and the interpretive 

guidance and policy clarifications 

posted on the appropriate MDS Web site 

at http://www.cms.gov/Medicare/ 

Quality-Initiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/ 

MDS30RAIManual.html. 

In addition, we note that section 511 

of the Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (MMA) (Pub. L. 108–173, enacted 

December 8, 2003) amended section 

1888(e)(12) of the Act to provide for a 

temporary increase of 128 percent in the 

PPS per diem payment for any SNF 

residents with Acquired Immune 

Deficiency Syndrome (AIDS), effective 

with services furnished on or after 

October 1, 2004. This special add-on for 

SNF residents with AIDS was to remain 

in effect until ‘‘. . . the Secretary 

certifies that there is an appropriate 

adjustment in the case mix . . . to 

compensate for the increased costs 

associated with [such] residents. . . .’’ 

The add-on for SNF residents with AIDS 

is also discussed in Program Transmittal 

#160 (Change Request #3291), issued on 

April 30, 2004, which is available 

online at www.cms.gov/transmittals/ 

downloads/r160cp.pdf. In the SNF PPS 

final rule for FY 2010 (74 FR 40288), we 

did not address the certification of the 

add-on for SNF residents with AIDS in 

that final rule’s implementation of the 

case-mix refinements for RUG–IV, thus 

allowing the add-on payment required 

by section 511 of the MMA to remain in 

effect. For the limited number of SNF 

residents that qualify for this add-on, 

there is a significant increase in 

payments. For example, using FY 2011 

data, we identified fewer than 4,100 

SNF residents with a diagnosis code of 

042 (Human Immunodeficiency Virus 

(HIV) Infection). For FY 2014, an urban 

facility with a resident with AIDS in 

RUG–IV group ‘‘HC2’’ would have a 

case-mix adjusted payment of $414.72 

(see Table 4) before the application of 

the MMA adjustment. After an increase 

of 128 percent, this urban facility would 

receive a case-mix adjusted payment of 

approximately $945.56. 

Currently, we use the ICD–9–CM code 

042 to identify those residents for whom 

it is appropriate to apply the AIDS addon established by section 511 of the 

MMA. In this context, we note that, in 

accordance with the requirements of the 

final rule published in the September 5, 

2012 Federal Register (77 FR 54664), we 

will be discontinuing our current use of 

the International Classification of 

Diseases, 9th revision, Clinical 

Modification (ICD–9–CM), effective 

with the compliance date for using the 

International Classification of Diseases, 

10th revision, Clinical Modification 

(ICD–10–CM) of October 1, 2014. 

Regarding the above-referenced ICD–9– 

CM diagnosis code of 042, we propose 

to transition to the equivalent ICD–10– 

CM diagnosis code of B20 upon the 

October 1, 2014 implementation date for 

conversion to ICD–10–CM, and we 

invite public comment on this proposal. 

We note that both ICD–9–CM diagnosis 

code 042 and ICD–10–CM diagnosis 

code B20 include AIDS, AIDS-related 

complex (ARC), and HIV infection, 

symptomatic, but ICD–9–CM diagnosis 

code 042 additionally includes AIDSlike syndrome whereas ICD–10–CM 

diagnosis code B20 does not. The term 

‘‘AIDS-like syndrome’’ denotes a 

condition other than AIDS that has 

symptoms resembling those of AIDS, 

but a different etiology from the human 

immunodeficiency virus that causes 

AIDS. Accordingly, we believe that in 

omitting the category of AIDS-like 

syndrome, ICD–10–CM diagnosis code 

B20 actually reflects more accurately 

than its predecessor ICD–9–CM code the 

intended scope of the statutory 

provision, which is directed specifically 

at those residents who are 

‘‘. . . afflicted with acquired immune 

deficiency syndrome (AIDS)’’ (see 

section 1888(e)(12)(A) of the Act, as 

amended by section 511 of the MMA). 

Under section 1888(e)(4)(H), each 

update of the payment rates must 

include the case-mix classification 

methodology applicable for the coming 

FY. The payment rates set forth in this 

proposed rule reflect the use of the 

RUG–IV case-mix classification system 

from October 1, 2013, through 

September 30, 2014. We list the casemix adjusted RUG–IV payment rates, 

provided separately for urban and rural 

SNFs, in Tables 4 and 5 with 

corresponding case-mix values. These 

tables do not reflect the add-on for SNF 

residents with AIDS enacted by section 

511 of the MMA, which we apply only 

after making all other adjustments (such 

as wage and case-mix). 

TABLE 4—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES—URBAN

RUG–IV 

Category 

Nursing 

index 

Therapy 

index 

Nursing 

component 

Therapy 

component 

Non-case mix 

therapy comp 

Non-case mix 

component 

Total 

rate 

RUX .............................. 2.67 1.87 443.01 $233.71 ........................ $84.67 $761.39 

RUL .............................. 2.57 1.87 426.41 233.71 ........................ 84.67 744.79 

RVX .............................. 2.61 1.28 433.05 159.97 ........................ 84.67 677.69 

RVL .............................. 2.19 1.28 363.36 159.97 ........................ 84.67 608.00 

RHX .............................. 2.55 0.85 423.10 106.23 ........................ 84.67 614.00 

RHL .............................. 2.15 0.85 356.73 106.23 ........................ 84.67 547.63 

RMX ............................. 2.47 0.55 409.82 68.74 ........................ 84.67 563.23 

RML .............................. 2.19 0.55 363.36 68.74 ........................ 84.67 516.77 

RLX .............................. 2.26 0.28 374.98 34.99 ........................ 84.67 494.64 

RUC ............................. 1.56 1.87 258.84 233.71 ........................ 84.67 577.22 

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TABLE 4—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES—URBAN—Continued 

RUG–IV 

Category 

Nursing 

index 

Therapy 

index 

Nursing 

component 

Therapy 

component 

Non-case mix 

therapy comp 

Non-case mix 

component 

Total 

rate 

RUB .............................. 1.56 1.87 258.84 233.71 ........................ 84.67 577.22 

RUA .............................. 0.99 1.87 164.26 233.71 ........................ 84.67 482.64 

RVC .............................. 1.51 1.28 250.54 159.97 ........................ 84.67 495.18 

RVB .............................. 1.11 1.28 184.17 159.97 ........................ 84.67 428.81 

RVA .............................. 1.10 1.28 182.51 159.97 ........................ 84.67 427.15 

RHC ............................. 1.45 0.85 240.58 106.23 ........................ 84.67 431.48 

RHB .............................. 1.19 0.85 197.44 106.23 ........................ 84.67 388.34 

RHA .............................. 0.91 0.85 150.99 106.23 ........................ 84.67 341.89 

RMC ............................. 1.36 0.55 225.65 68.74 ........................ 84.67 379.06 

RMB ............................. 1.22 0.55 202.42 68.74 ........................ 84.67 355.83 

RMA ............................. 0.84 0.55 139.37 68.74 ........................ 84.67 292.78 

RLB .............................. 1.50 0.28 248.88 34.99 ........................ 84.67 368.54 

RLA .............................. 0.71 0.28 117.80 34.99 ........................ 84.67 237.46 

ES3 .............................. 3.58 ........................ 593.99 ........................ $16.46 84.67 695.12 

ES2 .............................. 2.67 ........................ 443.01 ........................ 16.46 84.67 544.14 

ES1 .............................. 2.32 ........................ 384.93 ........................ 16.46 84.67 486.06 

HE2 .............................. 2.22 ........................ 368.34 ........................ 16.46 84.67 469.47 

HE1 .............................. 1.74 ........................ 288.70 ........................ 16.46 84.67 389.83 

HD2 .............................. 2.04 ........................ 338.48 ........................ 16.46 84.67 439.61 

HD1 .............................. 1.60 ........................ 265.47 ........................ 16.46 84.67 366.60 

HC2 .............................. 1.89 ........................ 313.59 ........................ 16.46 84.67 414.72 

HC1 .............................. 1.48 ........................ 245.56 ........................ 16.46 84.67 346.69 

HB2 .............................. 1.86 ........................ 308.61 ........................ 16.46 84.67 409.74 

HB1 .............................. 1.46 ........................ 242.24 ........................ 16.46 84.67 343.37 

LE2 ............................... 1.96 ........................ 325.20 ........................ 16.46 84.67 426.33 

LE1 ............................... 1.54 ........................ 255.52 ........................ 16.46 84.67 356.65 

LD2 ............................... 1.86 ........................ 308.61 ........................ 16.46 84.67 409.74 

LD1 ............................... 1.46 ........................ 242.24 ........................ 16.46 84.67 343.37 

LC2 ............................... 1.56 ........................ 258.84 ........................ 16.46 84.67 359.97 

LC1 ............................... 1.22 ........................ 202.42 ........................ 16.46 84.67 303.55 

LB2 ............................... 1.45 ........................ 240.58 ........................ 16.46 84.67 341.71 

LB1 ............................... 1.14 ........................ 189.15 ........................ 16.46 84.67 290.28 

CE2 .............................. 1.68 ........................ 278.75 ........................ 16.46 84.67 379.88 

CE1 .............................. 1.50 ........................ 248.88 ........................ 16.46 84.67 350.01 

CD2 .............................. 1.56 ........................ 258.84 ........................ 16.46 84.67 359.97 

CD1 .............................. 1.38 ........................ 228.97 ........................ 16.46 84.67 330.10 

CC2 .............................. 1.29 ........................ 214.04 ........................ 16.46 84.67 315.17 

CC1 .............................. 1.15 ........................ 190.81 ........................ 16.46 84.67 291.94 

CB2 .............................. 1.15 ........................ 190.81 ........................ 16.46 84.67 291.94 

CB1 .............................. 1.02 ........................ 169.24 ........................ 16.46 84.67 270.37 

CA2 .............................. 0.88 ........................ 146.01 ........................ 16.46 84.67 247.14 

CA1 .............................. 0.78 ........................ 129.42 ........................ 16.46 84.67 230.55 

BB2 .............................. 0.97 ........................ 160.94 ........................ 16.46 84.67 262.07 

BB1 .............................. 0.90 ........................ 149.33 ........................ 16.46 84.67 250.46 

BA2 .............................. 0.70 ........................ 116.14 ........................ 16.46 84.67 217.27 

BA1 .............................. 0.64 ........................ 106.19 ........................ 16.46 84.67 207.32 

PE2 .............................. 1.50 ........................ 248.88 ........................ 16.46 84.67 350.01 

PE1 .............................. 1.40 ........................ 232.29 ........................ 16.46 84.67 333.42 

PD2 .............................. 1.38 ........................ 228.97 ........................ 16.46 84.67 330.10 

PD1 .............................. 1.28 ........................ 212.38 ........................ 16.46 84.67 313.51 

PC2 .............................. 1.10 ........................ 182.51 ........................ 16.46 84.67 283.64 

PC1 .............................. 1.02 ........................ 169.24 ........................ 16.46 84.67 270.37 

PB2 .............................. 0.84 ........................ 139.37 ........................ 16.46 84.67 240.50 

PB1 .............................. 0.78 ........................ 129.42 ........................ 16.46 84.67 230.55 

PA2 .............................. 0.59 ........................ 97.89 ........................ 16.46 84.67 199.02 

PA1 .............................. 0.54 ........................ 89.60 ........................ 16.46 84.67 190.73 

TABLE 5—RUG—IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES—RURAL

RUG–IV 

Category 

Nursing 

index 

Therapy 

index 

Nursing 

component 

Therapy 

component 

Non-case mix 

therapy comp 

Non-case mix 

component 

Total 

rate 

RUX .............................. 2.67 1.87 $423.25 $269.49 ........................ $86.25 $778.99 

RUL .............................. 2.57 1.87 407.40 269.49 ........................ 86.25 763.14 

RVX .............................. 2.61 1.28 413.74 184.46 ........................ 86.25 684.45 

RVL .............................. 2.19 1.28 347.16 184.46 ........................ 86.25 617.87 

RHX .............................. 2.55 0.85 404.23 122.49 ........................ 86.25 612.97 

RHL .............................. 2.15 0.85 340.82 122.49 ........................ 86.25 549.56 

RMX ............................. 2.47 0.55 391.54 79.26 ........................ 86.25 557.05 

RML .............................. 2.19 0.55 347.16 79.26 ........................ 86.25 512.67 

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TABLE 5—RUG—IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES—RURAL—Continued 

RUG–IV 

Category 

Nursing 

index 

Therapy 

index 

Nursing 

component 

Therapy 

component 

Non-case mix 

therapy comp 

Non-case mix 

component 

Total 

rate 

RLX .............................. 2.26 0.28 358.26 40.35 ........................ 86.25 484.86 

RUC ............................. 1.56 1.87 247.29 269.49 ........................ 86.25 603.03 

RUB .............................. 1.56 1.87 247.29 269.49 ........................ 86.25 603.03 

RUA .............................. 0.99 1.87 156.93 269.49 ........................ 86.25 512.67 

RVC .............................. 1.51 1.28 239.37 184.46 ........................ 86.25 510.08 

RVB .............................. 1.11 1.28 175.96 184.46 ........................ 86.25 446.67 

RVA .............................. 1.10 1.28 174.37 184.46 ........................ 86.25 445.08 

RHC ............................. 1.45 0.85 229.85 122.49 ........................ 86.25 438.59 

RHB .............................. 1.19 0.85 188.64 122.49 ........................ 86.25 397.38 

RHA .............................. 0.91 0.85 144.25 122.49 ........................ 86.25 352.99 

RMC ............................. 1.36 0.55 215.59 79.26 ........................ 86.25 381.10 

RMB ............................. 1.22 0.55 193.39 79.26 ........................ 86.25 358.90 

RMA ............................. 0.84 0.55 133.16 79.26 ........................ 86.25 298.67 

RLB .............................. 1.50 0.28 237.78 40.35 ........................ 86.25 364.38 

RLA .............................. 0.71 0.28 112.55 40.35 ........................ 86.25 239.15 

ES3 .............................. 3.58 ........................ 567.50 ........................ 17.58 86.25 671.33 

ES2 .............................. 2.67 ........................ 423.25 ........................ 17.58 86.25 527.08 

ES1 .............................. 2.32 ........................ 367.77 ........................ 17.58 86.25 471.60 

HE2 .............................. 2.22 ........................ 351.91 ........................ 17.58 86.25 455.74 

HE1 .............................. 1.74 ........................ 275.82 ........................ 17.58 86.25 379.65 

HD2 .............................. 2.04 ........................ 323.38 ........................ 17.58 86.25 427.21 

HD1 .............................. 1.60 ........................ 253.63 ........................ 17.58 86.25 357.46 

HC2 .............................. 1.89 ........................ 299.60 ........................ 17.58 86.25 403.43 

HC1 .............................. 1.48 ........................ 234.61 ........................ 17.58 86.25 338.44 

HB2 .............................. 1.86 ........................ 294.85 ........................ 17.58 86.25 398.68 

HB1 .............................. 1.46 ........................ 231.44 ........................ 17.58 86.25 335.27 

LE2 ............................... 1.96 ........................ 310.70 ........................ 17.58 86.25 414.53 

LE1 ............................... 1.54 ........................ 244.12 ........................ 17.58 86.25 347.95 

LD2 ............................... 1.86 ........................ 294.85 ........................ 17.58 86.25 398.68 

LD1 ............................... 1.46 ........................ 231.44 ........................ 17.58 86.25 335.27 

LC2 ............................... 1.56 ........................ 247.29 ........................ 17.58 86.25 351.12 

LC1 ............................... 1.22 ........................ 193.39 ........................ 17.58 86.25 297.22 

LB2 ............................... 1.45 ........................ 229.85 ........................ 17.58 86.25 333.68 

LB1 ............................... 1.14 ........................ 180.71 ........................ 17.58 86.25 284.54 

CE2 .............................. 1.68 ........................ 266.31 ........................ 17.58 86.25 370.14 

CE1 .............................. 1.50 ........................ 237.78 ........................ 17.58 86.25 341.61 

CD2 .............................. 1.56 ........................ 247.29 ........................ 17.58 86.25 351.12 

CD1 .............................. 1.38 ........................ 218.76 ........................ 17.58 86.25 322.59 

CC2 .............................. 1.29 ........................ 204.49 ........................ 17.58 86.25 308.32 

CC1 .............................. 1.15 ........................ 182.30 ........................ 17.58 86.25 286.13 

CB2 .............................. 1.15 ........................ 182.30 ........................ 17.58 86.25 286.13 

CB1 .............................. 1.02 ........................ 161.69 ........................ 17.58 86.25 265.52 

CA2 .............................. 0.88 ........................ 139.50 ........................ 17.58 86.25 243.33 

CA1 .............................. 0.78 ........................ 123.65 ........................ 17.58 86.25 227.48 

BB2 .............................. 0.97 ........................ 153.76 ........................ 17.58 86.25 257.59 

BB1 .............................. 0.90 ........................ 142.67 ........................ 17.58 86.25 246.50 

BA2 .............................. 0.70 ........................ 110.96 ........................ 17.58 86.25 214.79 

BA1 .............................. 0.64 ........................ 101.45 ........................ 17.58 86.25 205.28 

PE2 .............................. 1.50 ........................ 237.78 ........................ 17.58 86.25 341.61 

PE1 .............................. 1.40 ........................ 221.93 ........................ 17.58 86.25 325.76 

PD2 .............................. 1.38 ........................ 218.76 ........................ 17.58 86.25 322.59 

PD1 .............................. 1.28 ........................ 202.91 ........................ 17.58 86.25 306.74 

PC2 .............................. 1.10 ........................ 174.37 ........................ 17.58 86.25 278.20 

PC1 .............................. 1.02 ........................ 161.69 ........................ 17.58 86.25 265.52 

PB2 .............................. 0.84 ........................ 133.16 ........................ 17.58 86.25 236.99 

PB1 .............................. 0.78 ........................ 123.65 ........................ 17.58 86.25 227.48 

PA2 .............................. 0.59 ........................ 93.53 ........................ 17.58 86.25 197.36 

PA1 .............................. 0.54 ........................ 85.60 ........................ 17.58 86.25 189.43 

D. Wage Index Adjustment 

Section 1888(e)(4)(G)(ii) of the Act 

requires that we adjust the federal rates 

to account for differences in area wage 

levels, using a wage index that the 

Secretary determines appropriate. Since 

the inception of the SNF PPS, we have 

used hospital inpatient wage data in 

developing a wage index to be applied 

to SNFs. We propose to continue this 

practice for FY 2014, as we continue to 

believe that in the absence of SNFspecific wage data, using the hospital 

inpatient wage index is appropriate and 

reasonable for the SNF PPS. As 

explained in the update notice for FY 

2005 (69 FR 45786), the SNF PPS does 

not use the hospital area wage index’s 

occupational mix adjustment, as this 

adjustment serves specifically to define 

the occupational categories more clearly 

in a hospital setting; moreover, the 

collection of the occupational wage data 

also excludes any wage data related to 

SNFs. Therefore, we believe that using 

the updated wage data exclusive of the 

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occupational mix adjustment continues 

to be appropriate for SNF payments. For 

FY 2014, the updated wage data are for 

hospital cost reporting periods 

beginning on or after October 1, 2009 

and before October 1, 2010 (FY 2010 

cost report data). 

Finally, we propose to continue to use 

the same methodology discussed in the 

SNF PPS final rule for FY 2008 (72 FR 

43423) to address those geographic areas 

in which there are no hospitals, and 

thus, no hospital wage index data on 

which to base the calculation of the FY 

2014 SNF PPS wage index. For rural 

geographic areas that do not have 

hospitals, and therefore, lack hospital 

wage data on which to base an area 

wage adjustment, we would use the 

average wage index from all contiguous 

Core-Based Statistical Areas (CBSAs) as 

a reasonable proxy. For FY 2014, there 

are no rural geographic areas that do not 

have hospitals, and thus, this 

methodology would not be applied. For 

rural Puerto Rico, we would not apply 

this methodology due to the distinct 

economic circumstances that exist there 

(for example, due to the close proximity 

to one another of almost all of Puerto 

Rico’s various urban and non-urban 

areas, this methodology would produce 

a wage index for rural Puerto Rico that 

is inappropriately higher than that in 

half of its urban areas); instead, we 

would continue to use the most recent 

wage index previously available for that 

area. For urban areas without specific 

hospital wage index data, we would use 

the average wage indexes of all of the 

urban areas within the state to serve as 

a reasonable proxy for the wage index 

of that urban CBSA. For FY 2014, the 

only urban area without wage index 

data available is CBSA 25980, 

Hinesville-Fort Stewart, GA. 

In addition, we note that section 315 

of the Medicare, Medicaid, and SCHIP 

Benefits Improvement and Protection 

Act of 2000 (BIPA) (Pub. L. 106–554, 

enacted on December 21, 2000) 

authorized us to establish a geographic 

reclassification procedure that is 

specific to SNFs, but only after 

collecting the data necessary to establish 

a SNF wage index that is based on wage 

data from nursing homes. However, to 

date, this has proven to be unfeasible 

due to the volatility of existing SNF 

wage data and the significant amount of 

resources that would be required to 

improve the quality of that data. 

Once calculated, we would apply the 

wage index adjustment to the laborrelated portion of the federal rate. Each 

year, we calculate a revised laborrelated share, based on the relative 

importance of labor-related cost 

categories (that is, those cost categories 

that are sensitive to local area wage 

costs) in the input price index. For the 

FY 2014 SNF PPS update, we are 

proposing to revise the labor-related 

share to reflect the relative importance 

of the revised FY 2010-based SNF 

market basket cost weights for the 

following cost categories (as discussed 

further in section V.A. of this proposed 

rule): wages and salaries; employee 

benefits; contract labor; the labor-related 

portion of nonmedical professional fees; 

administrative and facilities support 

services; all other: labor-related services 

(previously referred to in the FY 2004- 

based SNF market basket as laborintensive); and a proportion of capitalrelated expenses. 

We calculate the labor-related relative 

importance from the SNF market basket, 

and it approximates the labor-related 

portion of the total costs after taking 

into account historical and projected 

price changes between the base year and 

FY 2014. The price proxies that move 

the different cost categories in the 

market basket do not necessarily change 

at the same rate, and the relative 

importance captures these changes. 

Accordingly, the relative importance 

figure more closely reflects the cost 

share weights for FY 2014 than the base 

year weights from the SNF market 

basket. 

We calculate the labor-related relative 

importance for FY 2014 in four steps. 

First, we compute the FY 2014 price 

index level for the total market basket 

and each cost category of the market 

basket. Second, we calculate a ratio for 

each cost category by dividing the FY 

2014 price index level for that cost 

category by the total market basket price 

index level. Third, we determine the FY 

2014 relative importance for each cost 

category by multiplying this ratio by the 

base year (FY 2010) weight. Finally, we 

add the FY 2014 relative importance for 

each of the labor-related cost categories 

(wages and salaries, employee benefits, 

the labor-related portion of non-medical 

professional fees, administrative and 

facilities support services, all other: 

labor-related services (previously 

referred to in the FY 2004-based SNF 

market basket as labor-intensive 

services), and a portion of capitalrelated expenses) to produce the FY 

2014 labor-related relative importance. 

Tables 6 and 7 show the RUG–IV casemix adjusted federal rates by laborrelated and non-labor-related 

components. In section V. of this 

proposed rule, Table 17 provides the FY 

2014 labor-related share components 

based on the revised and rebased FY 

2010-based SNF market basket. 

TABLE 6—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES FOR URBAN

SNFS BY LABOR AND NON-LABOR

COMPONENT

RUG–IV 

Category Total rate Labor portion 

Non-labor 

portion 

RUX ...... 761.39 $531.18 $230.21 

RUL ....... 744.79 519.60 225.19 

RVX ...... 677.69 472.78 204.91 

RVL ....... 608.00 424.17 183.83 

RHX ...... 614.00 428.35 185.65 

RHL ....... 547.63 382.05 165.58 

RMX ...... 563.23 392.93 170.30 

RML ...... 516.77 360.52 156.25 

RLX ....... 494.64 345.08 149.56 

RUC ...... 577.22 402.69 174.53 

RUB ...... 577.22 402.69 174.53 

RUA ...... 482.64 336.71 145.93 

RVC ...... 495.18 345.46 149.72 

RVB ...... 428.81 299.16 129.65 

RVA ...... 427.15 298.00 129.15 

RHC ...... 431.48 301.02 130.46 

RHB ...... 388.34 270.92 117.42 

RHA ...... 341.89 238.52 103.37 

RMC ...... 379.06 264.45 114.61 

RMB ...... 355.83 248.24 107.59 

RMA ...... 292.78 204.26 88.52 

RLB ....... 368.54 257.11 111.43 

RLA ....... 237.46 165.66 71.80 

ES3 ....... 695.12 484.94 210.18 

ES2 ....... 544.14 379.61 164.53 

ES1 ....... 486.06 339.09 146.97 

HE2 ....... 469.47 327.52 141.95 

HE1 ....... 389.83 271.96 117.87 

HD2 ....... 439.61 306.69 132.92 

HD1 ....... 366.60 255.75 110.85 

HC2 ....... 414.72 289.33 125.39 

HC1 ....... 346.69 241.86 104.83 

HB2 ....... 409.74 285.85 123.89 

HB1 ....... 343.37 239.55 103.82 

LE2 ....... 426.33 297.42 128.91 

LE1 ....... 356.65 248.81 107.84 

LD2 ....... 409.74 285.85 123.89 

LD1 ....... 343.37 239.55 103.82 

LC2 ....... 359.97 251.13 108.84 

LC1 ....... 303.55 211.77 91.78 

LB2 ....... 341.71 238.39 103.32 

LB1 ....... 290.28 202.51 87.77 

CE2 ....... 379.88 265.02 114.86 

CE1 ....... 350.01 244.18 105.83 

CD2 ....... 359.97 251.13 108.84 

CD1 ....... 330.10 230.29 99.81 

CC2 ....... 315.17 219.88 95.29 

CC1 ....... 291.94 203.67 88.27 

CB2 ....... 291.94 203.67 88.27 

CB1 ....... 270.37 188.62 81.75 

CA2 ....... 247.14 172.41 74.73 

CA1 ....... 230.55 160.84 69.71 

BB2 ....... 262.07 182.83 79.24 

BB1 ....... 250.46 174.73 75.73 

BA2 ....... 217.27 151.58 65.69 

BA1 ....... 207.32 144.63 62.69 

PE2 ....... 350.01 244.18 105.83 

PE1 ....... 333.42 232.61 100.81 

PD2 ....... 330.10 230.29 99.81 

PD1 ....... 313.51 218.72 94.79 

PC2 ....... 283.64 197.88 85.76 

PC1 ....... 270.37 188.62 81.75 

PB2 ....... 240.50 167.78 72.72 

PB1 ....... 230.55 160.84 69.71 

PA2 ....... 199.02 138.84 60.18 

PA1 ....... 190.73 133.06 57.67 

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TABLE 7—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES FOR RURAL

SNFS BY LABOR AND NON-LABOR

COMPONENT

RUG–IV 

Category Total rate Labor portion 

Non-labor 

portion 

RUX ...... 778.99 $543.45 $235.54 

RUL ....... 763.14 532.40 230.74 

RVX ...... 684.45 477.50 206.95 

RVL ....... 617.87 431.05 186.82 

RHX ...... 612.97 427.63 185.34 

RHL ....... 549.56 383.40 166.16 

RMX ...... 557.05 388.62 168.43 

RML ...... 512.67 357.66 155.01 

RLX ....... 484.86 338.26 146.60 

RUC ...... 603.03 420.70 182.33 

RUB ...... 603.03 420.70 182.33 

RUA ...... 512.67 357.66 155.01 

RVC ...... 510.08 355.85 154.23 

RVB ...... 446.67 311.61 135.06 

RVA ...... 445.08 310.51 134.57 

RHC ...... 438.59 305.98 132.61 

RHB ...... 397.38 277.23 120.15 

RHA ...... 352.99 246.26 106.73 

RMC ...... 381.10 265.87 115.23 

RMB ...... 358.90 250.38 108.52 

RMA ...... 298.67 208.36 90.31 

RLB ....... 364.38 254.21 110.17 

RLA ....... 239.15 166.84 72.31 

ES3 ....... 671.33 468.35 202.98 

ES2 ....... 527.08 367.71 159.37 

ES1 ....... 471.60 329.01 142.59 

HE2 ....... 455.74 317.94 137.80 

HE1 ....... 379.65 264.86 114.79 

HD2 ....... 427.21 298.04 129.17 

HD1 ....... 357.46 249.38 108.08 

HC2 ....... 403.43 281.45 121.98 

HC1 ....... 338.44 236.11 102.33 

HB2 ....... 398.68 278.14 120.54 

HB1 ....... 335.27 233.90 101.37 

LE2 ....... 414.53 289.19 125.34 

LE1 ....... 347.95 242.74 105.21 

LD2 ....... 398.68 278.14 120.54 

LD1 ....... 335.27 233.90 101.37 

LC2 ....... 351.12 244.96 106.16 

LC1 ....... 297.22 207.35 89.87 

LB2 ....... 333.68 232.79 100.89 

LB1 ....... 284.54 198.51 86.03 

CE2 ....... 370.14 258.22 111.92 

CE1 ....... 341.61 238.32 103.29 

CD2 ....... 351.12 244.96 106.16 

CD1 ....... 322.59 225.05 97.54 

CC2 ....... 308.32 215.10 93.22 

CC1 ....... 286.13 199.62 86.51 

CB2 ....... 286.13 199.62 86.51 

CB1 ....... 265.52 185.24 80.28 

CA2 ....... 243.33 169.76 73.57 

CA1 ....... 227.48 158.70 68.78 

BB2 ....... 257.59 179.71 77.88 

BB1 ....... 246.50 171.97 74.53 

BA2 ....... 214.79 149.85 64.94 

BA1 ....... 205.28 143.21 62.07 

PE2 ....... 341.61 238.32 103.29 

PE1 ....... 325.76 227.26 98.50 

PD2 ....... 322.59 225.05 97.54 

PD1 ....... 306.74 213.99 92.75 

PC2 ....... 278.20 194.08 84.12 

PC1 ....... 265.52 185.24 80.28 

PB2 ....... 236.99 165.33 71.66 

PB1 ....... 227.48 158.70 68.78 

PA2 ....... 197.36 137.69 59.67 

PA1 ....... 189.43 132.15 57.28 

Section 1888(e)(4)(G)(ii) of the Act 

also requires that we apply this wage 

index in a manner that does not result 

in aggregate payments under the SNF 

PPS that are greater or less than would 

otherwise be made if the wage 

adjustment had not been made. For FY 

2014 (federal rates effective October 1, 

2013), we apply an adjustment to fulfill 

the budget neutrality requirement. We 

meet this requirement by multiplying 

each of the components of the 

unadjusted federal rates by a budget 

neutrality factor equal to the ratio of the 

weighted average wage adjustment 

factor for FY 2013 to the weighted 

average wage adjustment factor for FY 

2014. For this calculation, we use the 

same 2012 claims utilization data for 

both the numerator and denominator of 

this ratio. We define the wage 

adjustment factor used in this 

calculation as the labor share of the rate 

component multiplied by the wage 

index plus the non-labor share of the 

rate component. The budget neutrality 

factor for FY 2014 is 1.0003. The wage 

index applicable to FY 2014 is set forth 

in Tables A and B, which appear in the 

Addendum of this proposed rule, and is 

also available on the CMS Web site at 

http://cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/ 

WageIndex.html. 

In the SNF PPS final rule for FY 2006 

(70 FR 45026, August 4, 2005), we 

adopted the changes discussed in the 

OMB Bulletin No. 03–04 (June 6, 2003), 

available online at http:// 

www.whitehouse.gov/omb/bulletins/ 

b03–04.html, which announced revised 

definitions for metropolitan statistical 

areas (MSAs), and the creation of 

micropolitan statistical areas and 

combined statistical areas. In addition, 

OMB published subsequent bulletins 

regarding CBSA changes, including 

changes in CBSA numbers and titles. 

We indicated in the FY 2008 SNF PPS 

final rule (72 FR 43423), that all 

subsequent SNF PPS rules and notices 

are considered to incorporate the CBSA 

changes published in the most recent 

OMB bulletin that applies to the 

hospital wage data used to determine 

the current SNF PPS wage index. The 

OMB bulletins are available online at 

http://www.whitehouse.gov/omb/ 

bulletins/index.html. 

In adopting the CBSA geographic 

designations, we provided for a 1-year 

transition in FY 2006 with a blended 

wage index for all providers. For FY 

2006, the wage index for each provider 

consisted of a blend of 50 percent of the 

FY 2006 MSA-based wage index and 50 

percent of the FY 2006 CBSA-based 

wage index (both using FY 2002 

hospital data). We referred to the 

blended wage index as the FY 2006 SNF 

PPS transition wage index. As discussed 

in the SNF PPS final rule for FY 2006 

(70 FR 45041), subsequent to the 

expiration of this 1-year transition on 

September 30, 2006, we used the full 

CBSA-based wage index values, as now 

presented in Tables A and B in the 

Addendum of this proposed rule. 

On February 28, 2013, OMB issued 

OMB Bulletin No. 13–01, announcing 

revisions to the delineation of 

Metropolitan Statistical Areas, 

Micropolitian Statistical Areas, and 

Combined Statistical Areas, and 

guidance on uses of the delineation of 

these areas. A copy of this bulletin may 

be obtained at http:// 

www.whitehouse.gov/sites/default/files/ 

omb/bulletins/2013/b-13–01.pdf. This 

bulletin states that it provides the 

delineations of all Metropolitan 

Statistical Areas, Metropolitan 

Divisions, Micropolitan Statistical 

Areas, Combined Statistical Areas, and 

New England City and Town Areas in 

the United States and Puerto Rico based 

on the standards published in the June 

28, 2010 Federal Register (75 FR 37246– 

37252) and Census Bureau data. 

While the revisions OMB published 

on February 28, 2013 are not as 

sweeping as the changes made when we 

adopted the CBSA geographic 

designations for FY 2006, the February 

28, 2013 bulletin does contain a number 

of significant changes. For example, 

there are new CBSAs, urban counties 

that become rural, rural counties that 

become urban, and existing CBSAs that 

are being split apart. 

The changes made by the bulletin and 

their ramifications must be extensively 

reviewed and assessed by CMS before 

using them for the SNF PPS wage index. 

Because the bulletin was not issued 

until February 28, 2013, we were unable 

to undertake such a lengthy process 

before publication of this FY 2014 

proposed rule. By the time the bulletin 

was issued, the FY 2014 SNF PPS 

proposed rule was in the advanced 

stages of development. We had already 

developed the FY 2014 proposed wage 

index based on the previous OMB 

definitions. To allow for sufficient time 

to assess the new changes and their 

ramifications, we intend to propose 

changes to the wage index based on the 

newest CBSA changes in the FY 2015 

SNF PPS proposed rule. Thus, we 

would continue to use the previous 

OMB definitions (that is, those used for 

the FY 2013 SNF PPS update notice) for 

the FY 2014 SNF PPS wage index. 

E. Adjusted Rate Computation Example 

Using the hypothetical SNF XYZ 

described below, Table 8 shows the 

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adjustments made to the federal per 

diem rates to compute the provider’s 

actual per diem PPS payment under the 

described scenario. We derive the Labor 

and Non-labor columns from Table 6. 

As illustrated in Table 8, SNF XYZ’s 

total PPS payment would equal 

$41,917.80. 

TABLE 8—ADJUSTED RATE COMPUTATION EXAMPLE, SNF XYZ: LOCATED IN CEDAR RAPIDS, IA (URBAN CBSA 16300), 

WAGE INDEX: 0.9001 

RUG–IV group Labor Wage index Adjusted 

labor Non-labor Adjusted rate 

Percent 

adjustment 

Medicare 

days Payment 

RVX .................................. $472.78 0.9001 $425.55 $204.91 $630.46 $630.46 14 $8,826.44 

ES2 .................................. 379.61 0.9001 341.69 164.53 506.22 506.22 30 15,186.60 

RHA .................................. 238.52 0.9001 214.69 103.37 318.06 318.06 16 5,088.96 

CC2* ................................. 219.88 0.9001 197.91 95.29 293.20 668.50 10 6,685.00 

BA2 .................................. 151.58 0.9001 136.44 65.69 202.13 202.13 30 6,063.90 

.................... .................... .................... .................... .................... .................... 100 $41,850.90 

* Reflects a 128 percent adjustment from section 511 of the MMA. 

IV. Additional Aspects of the SNF PPS 

A. SNF Level of Care—Administrative 

Presumption 

The establishment of the SNF PPS did 

not change Medicare’s fundamental 

requirements for SNF coverage. 

However, because the case-mix 

classification is based, in part, on the 

beneficiary’s need for skilled nursing 

care and therapy, we have attempted, 

where possible, to coordinate claims 

review procedures with the existing 

resident assessment process and casemix classification system discussed in 

section III.C of this proposed rule. This 

approach includes an administrative 

presumption that utilizes a beneficiary’s 

initial classification in one of the upper 

52 RUGs of the 66-group RUG–IV casemix classification system to assist in 

making certain SNF level of care 

determinations. 

In accordance with section 

1888(e)(4)(H)(ii) of the Act and the 

regulations at § 413.345, we include in 

each update of the federal payment rates 

in the Federal Register the designation 

of those specific RUGs under the 

classification system that represent the 

required SNF level of care, as provided 

in § 409.30. As set forth in the FY 2011 

SNF PPS update notice (75 FR 42910), 

this designation reflects an 

administrative presumption under the 

66-group RUG–IV system that 

beneficiaries who are correctly assigned 

to one of the upper 52 RUG–IV groups 

on the initial 5-day, Medicare-required 

assessment are automatically classified 

as meeting the SNF level of care 

definition up to and including the 

assessment reference date on the 5-day 

Medicare-required assessment. 

A beneficiary assigned to any of the 

lower 14 RUG–IV groups is not 

automatically classified as either 

meeting or not meeting the definition, 

but instead receives an individual level 

of care determination using the existing 

administrative criteria. This 

presumption recognizes the strong 

likelihood that beneficiaries assigned to 

one of the upper 52 RUG–IV groups 

during the immediate post-hospital 

period require a covered level of care, 

which would be less likely for those 

beneficiaries assigned to one of the 

lower 14 RUG–IV groups. 

In the July 30, 1999 final rule (64 FR 

41670), we indicated that we would 

announce any changes to the guidelines 

for Medicare level of care 

determinations related to modifications 

in the case-mix classification structure. 

In this proposed rule, we would 

continue to designate the upper 52 

RUG–IV groups for purposes of this 

administrative presumption, consisting 

of all groups encompassed by the 

following RUG–IV categories: 

• Rehabilitation plus Extensive 

Services; 

• Ultra High Rehabilitation; 

• Very High Rehabilitation; 

• High Rehabilitation; 

• Medium Rehabilitation; 

• Low Rehabilitation; 

• Extensive Services; 

• Special Care High; 

• Special Care Low; and, 

• Clinically Complex. 

However, we note that this 

administrative presumption policy does 

not supersede the SNF’s responsibility 

to ensure that its decisions relating to 

level of care are appropriate and timely, 

including a review to confirm that the 

services prompting the beneficiary’s 

assignment to one of the upper 52 RUG– 

IV groups (which, in turn, serves to 

trigger the administrative presumption) 

are themselves medically necessary. As 

we explained in the FY 2000 SNF PPS 

final rule (64 FR 41667), the 

administrative presumption: 

‘‘. . . is itself rebuttable in those 

individual cases in which the services 

actually received by the resident do not meet 

the basic statutory criterion of being 

reasonable and necessary to diagnose or treat 

a beneficiary’s condition (according to 

section 1862(a)(1) of the Act). Accordingly, 

the presumption would not apply, for 

example, in those situations in which a 

resident’s assignment to one of the upper 

. . . groups is itself based on the receipt of 

services that are subsequently determined to 

be not reasonable and necessary.’’ 

Moreover, we want to stress the 

importance of careful monitoring for 

changes in each patient’s condition to 

determine the continuing need for Part 

A SNF benefits after the assessment 

reference date of the 5-day assessment. 

B. Consolidated Billing 

Sections 1842(b)(6)(E) and 1862(a)(18) 

of the Act (as added by section 4432(b) 

of the BBA) require a SNF to submit 

consolidated Medicare bills to its fiscal 

intermediary or Medicare 

Administrative Contractor for almost all 

of the services that its residents receive 

during the course of a covered Part A 

stay. In addition, section 1862(a)(18) 

places the responsibility with the SNF 

for billing Medicare for physical 

therapy, occupational therapy, and 

speech-language pathology services that 

the resident receives during a 

noncovered stay. Section 1888(e)(2)(A) 

of the Act excludes a small list of 

services from the consolidated billing 

provision (primarily those services 

furnished by physicians and certain 

other types of practitioners), which 

remain separately billable under Part B 

when furnished to a SNF’s Part A 

resident. These excluded service 

categories are discussed in greater detail 

in section V.B.2. of the May 12, 1998 

interim final rule (63 FR 26295 through 

26297). 

We note that section 103 of the 

Medicare, Medicaid, and SCHIP 

Balanced Budget Refinement Act of 

1999 (BBRA) (Pub. L. 106–113, enacted 

on November 29, 1999) amended this 

provision (section 1888(e)(2)(A) of the 

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Act) by further excluding a number of 

individual ‘‘high-cost, low-probability’’ 

services, identified by Healthcare 

Common Procedure Coding System 

(HCPCS) codes, within several broader 

categories (chemotherapy items, 

chemotherapy administration services, 

radioisotope services, and customized 

prosthetic devices) that otherwise 

remained subject to the provision. We 

discuss this BBRA amendment in 

greater detail in the SNF PPS proposed 

and final rules for FY 2001 (65 FR 19231 

through 19232, April 10, 2000, and 65 

FR 46790 through 46795, July 31, 2000), 

as well as in Program Memorandum 

AB–00–18 (Change Request #1070), 

issued March 2000, which is available 

online at www.cms.gov/transmittals/ 

downloads/ab001860.pdf. 

As explained in the FY 2001 proposed 

rule (65 FR 19232), the amendments 

enacted in section 103 of the BBRA not 

only identified for exclusion from this 

provision a number of particular service 

codes within four specified categories 

(that is, chemotherapy items, 

chemotherapy administration services, 

radioisotope services, and customized 

prosthetic devices), but also gave the 

Secretary ‘‘. . . the authority to 

designate additional, individual services 

for exclusion within each of the 

specified service categories.’’ In the 

proposed rule for FY 2001, we also 

noted that the BBRA Conference report 

(H.R. Rep. No. 106–479 at 854 (1999) 

(Conf. Rep.)) characterizes the 

individual services that this legislation 

targets for exclusion as ‘‘. . . high-cost, 

low probability events that could have 

devastating financial impacts because 

their costs far exceed the payment 

[SNFs] receive under the prospective 

payment system. . . .’’ According to the 

conferees, section 103(a) of the BBRA 

‘‘is an attempt to exclude from the PPS 

certain services and costly items that are 

provided infrequently in SNFs. . . .’’ By 

contrast, we noted that the Congress 

declined to designate for exclusion any 

of the remaining services within those 

four categories (thus, leaving all of those 

services subject to SNF consolidated 

billing), because they are relatively 

inexpensive and are furnished routinely 

in SNFs. 

As we further explained in the final 

rule for FY 2001 (65 FR 46790), and as 

our longstanding policy, any additional 

service codes that we might designate 

for exclusion under our discretionary 

authority must meet the same statutory 

criteria used in identifying the original 

codes excluded from consolidated 

billing under section 103(a) of the 

BBRA: they must fall within one of the 

four service categories specified in the 

BBRA, and they also must meet the 

same standards of high cost and low 

probability in the SNF setting, as 

discussed in the BBRA Conference 

report. Accordingly, we characterized 

this statutory authority to identify 

additional service codes for exclusion 

‘‘. . . as essentially affording the 

flexibility to revise the list of excluded 

codes in response to changes of major 

significance that may occur over time 

(for example, the development of new 

medical technologies or other advances 

in the state of medical practice)’’ (65 FR 

46791). In this proposed rule, we 

specifically invite public comments 

identifying HCPCS codes in any of these 

four service categories (chemotherapy 

items, chemotherapy administration 

services, radioisotope services, and 

customized prosthetic devices) 

representing recent medical advances 

that might meet our criteria for 

exclusion from SNF consolidated 

billing. We may consider excluding a 

particular service if it meets our criteria 

for exclusion as specified above. 

Commenters should identify in their 

comments the specific HCPCS code that 

is associated with the service in 

question, as well as their rationale for 

requesting that the identified HCPCS 

code(s) be excluded. 

We note that the original BBRA 

amendment (as well as the 

implementing regulations) identified a 

set of excluded services by means of 

specifying HCPCS codes that were in 

effect as of a particular date (in that 

case, as of July 1, 1999). Identifying the 

excluded services in this manner made 

it possible for us to utilize program 

issuances as the vehicle for 

accomplishing routine updates of the 

excluded codes, to reflect any minor 

revisions that might subsequently occur 

in the coding system itself (for example, 

the assignment of a different code 

number to the same service). 

Accordingly, in the event that we 

identify through the current rulemaking 

cycle any new services that would 

actually represent a substantive change 

in the scope of the exclusions from SNF 

consolidated billing, we would identify 

these additional excluded services by 

means of the HCPCS codes that are in 

effect as of a specific date (in this case, 

as of October 1, 2013). By making any 

new exclusions in this manner, we 

could similarly accomplish routine 

future updates of these additional codes 

through the issuance of program 

instructions. 

C. Payment for SNF-Level Swing-Bed 

Services 

Section 1883 of the Act permits 

certain small, rural hospitals to enter 

into a Medicare swing-bed agreement, 

under which the hospital can use its 

beds to provide either acute- or SNFlevel care, as needed. For critical access 

hospitals (CAHs), Part A pays on a 

reasonable cost basis for SNF-level 

services furnished under a swing-bed 

agreement. However, in accordance 

with section 1888(e)(7) of the Act, these 

services furnished by non-CAH rural 

hospitals are paid under the SNF PPS, 

effective with cost reporting periods 

beginning on or after July 1, 2002. As 

explained in the FY 2002 final rule (66 

FR 39562), this effective date is 

consistent with the statutory provision 

to integrate swing-bed rural hospitals 

into the SNF PPS by the end of the 

transition period, June 30, 2002. 

Accordingly, all non-CAH swing-bed 

rural hospitals have now come under 

the SNF PPS. Therefore, all rates and 

wage indexes outlined in earlier 

sections of this proposed rule for the 

SNF PPS also apply to all non-CAH 

swing-bed rural hospitals. A complete 

discussion of assessment schedules, the 

MDS, and the transmission software 

(RAVEN–SB for Swing Beds) appears in 

the FY 2002 final rule (66 FR 39562) 

and in the FY 2010 final rule (74 FR 

40288). As finalized in the FY 2010 SNF 

PPS final rule (74 FR 40356–57), 

effective October 1, 2010, non-CAH 

swing-bed rural hospitals are required to 

complete an MDS 3.0 swing-bed 

assessment which is limited to the 

required demographic, payment, and 

quality items. The latest changes in the 

MDS for swing-bed rural hospitals 

appear on the SNF PPS Web site at 

http://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

SNFPPS/index.html. 

V. Other Issues 

A. Revising and Rebasing the SNF 

Market Basket Index 

1. Background 

Section 1888(e)(5)(A) of the Act 

requires the Secretary to establish a 

market basket index that reflects the 

changes over time in the prices of an 

appropriate mix of goods and services 

included in the SNF PPS. Effective for 

cost reporting periods beginning on or 

after July 1, 1998, we revised and 

rebased our 1977 routine costs input 

price index and adopted a total 

expenses SNF input price index using 

FY 1992 as the base year. In the FY 2002 

SNF PPS final rule (66 FR 39582), we 

rebased and revised the market basket to 

a base year of FY 1997. We last rebased 

and revised the market basket to a base 

year of FY 2004 in the FY 2008 SNF PPS 

final rule (72 FR 43425). In this FY 2014 

SNF PPS proposed rule, we are 

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proposing to revise and rebase the SNF 

market basket to a base year of FY 2010. 

The term ‘‘market basket’’ refers to the 

mix of goods and services needed to 

produce SNF care, and is also 

commonly used to denote the input 

price index that includes both weights 

(mix of goods and services) and price 

factors. The term ‘‘market basket’’ and 

‘‘market basket index’’ used in this 

proposed rule refers to the SNF input 

price index. 

The proposed FY 2010-based SNF 

market basket represents routine costs, 

costs of ancillary services, and capitalrelated costs. The percentage change in 

the market basket reflects the average 

change in the price of a fixed set of 

goods and services purchased by SNFs 

to furnish all services. For further 

background information, see the May 

12, 1998 interim final rule with 

comment period (63 FR 26289), the FY 

2002 final rule (66 FR 39582), and the 

FY 2008 final rule (72 FR 43425). 

For purposes of the SNF PPS, the SNF 

market basket is a fixed-weight 

(Laspeyres-type) price index. A 

Laspeyres-type index compares the cost 

of purchasing a specified mix of goods 

and services in a selected base period to 

the cost of purchasing that same group 

of goods and services at current prices. 

We construct the market basket in 

three steps. The first step is to select a 

base period and estimate total base 

period expenditure shares for mutually 

exclusive and exhaustive spending 

categories. We use total costs for routine 

services, ancillary services, and capital. 

These shares are called ‘‘cost’’ or 

‘‘expenditure’’ weights. The second step 

is to match each expenditure category to 

a price/wage variable, called a price 

proxy. We draw these price proxy 

variables from publicly available 

statistical series published on a 

consistent schedule, preferably at least 

quarterly. The final step involves 

multiplying the price level for each 

spending category by the cost weight for 

that category. The sum of these products 

(that is, weights multiplied by proxy 

index levels) for all cost categories 

yields the composite index level of the 

market basket for a given quarter or 

year. Repeating the third step for other 

quarters and years produces a time 

series of market basket index levels, 

from which we can calculate rates of 

growth. 

The market basket represents a fixedweight index because it answers the 

question of how much more or less it 

would cost, at a later time, to purchase 

the same mix of goods and services that 

was purchased in the base period. The 

effects on total expenditures resulting 

from changes in the quantity or mix of 

goods and services purchased 

subsequent or prior to the base period 

are, by design, not considered. 

Consistent with our discussion in the 

May 12, 1998 interim final rule with 

comment period (63 FR 26252), the FY 

2002 final rule (66 FR 39582), and the 

FY 2008 proposed rule (72 FR 25541), 

and as further discussed below, to 

implement section 1888(e)(5)(A) of the 

Act we propose to revise and rebase the 

market basket so the cost weights and 

price proxies reflect the mix of goods 

and services that underlie Medicare 

allowable SNF costs (routine, ancillary, 

and capital-related) for FY 2010. 

2. Revising and Rebasing the Skilled 

Nursing Facility Market Basket 

The terms ‘‘rebasing’’ and ‘‘revising,’’ 

while often used interchangeably, 

actually denote different activities. 

Rebasing means shifting the base year 

for the structure of costs of the input 

price index (for example, for this 

proposed rule, we propose to shift the 

base year cost structure from FY 2004 to 

FY 2010). Revising means changing data 

sources, cost categories, price proxies, 

and/or methodology used in developing 

the input price index. 

We are proposing both to rebase and 

revise the SNF market basket to reflect 

FY 2010 Medicare allowable total cost 

data (routine, ancillary, and capitalrelated). Medicare allowable costs are 

costs that are eligible for inclusion 

under the SNF PPS payments. For 

example, the SNF market basket 

excludes home health aide costs as 

these costs would be reimbursed under 

the Home Health PPS. We last rebased 

and revised the SNF market basket in 

the FY 2008 PPS final rule (72 FR 

43425), reflecting data from FY 2004 

Medicare allowable total costs. 

We selected FY 2010 as the new base 

year because 2010 is the most recent 

year for which relatively complete 

Medicare cost report (MCR) data are 

available. In developing the proposed 

market basket, we reviewed SNF 

expenditure data from SNF MCRs (CMS 

Form 2540–96) for FY 2010 for each 

freestanding SNF that reported 

Medicare expenses and payments. The 

FY 2010 cost reports are those with cost 

reporting periods beginning after 

September 30, 2009, and before October 

1, 2010. We propose to maintain our 

policy of using data from freestanding 

SNFs because freestanding SNF data 

reflect the actual cost structure faced by 

the SNF itself. In contrast, expense data 

for a hospital-based SNF reflect the 

allocation of overhead over the entire 

institution. Due to this method of 

allocation, total expenses will be 

correct, but the individual components’ 

expenses may be skewed. 

We developed cost category weights 

for the proposed FY 2010-based SNF 

market basket in two stages. First, we 

derived base weights for seven major 

categories (wages and salaries, employee 

benefits, contract labor, 

pharmaceuticals, professional liability 

insurance, capital-related, and a 

residual ‘‘all other’’) from the SNF 

MCRs. Second, we are proposing to 

divide the residual ‘‘all other’’ cost 

category (21.534 percent) into 

subcategories, using U.S. Department of 

Commerce Bureau of Economic 

Analysis’ (BEA) 2002 Benchmark InputOutput (I–O) tables for the nursing 

home industry aged forward using price 

changes. The methodology we propose 

to use to age the data forward involves 

applying the annual price changes from 

the respective price proxies to the 

appropriate cost categories. We repeat 

this practice for each year. We then 

apply the resulting 2010 distributions to 

the aggregate 2010 ‘‘all other’’ cost 

weight of 21.534 percent to yield the 

detailed 2010 all other cost weights. 

This is similar to the methodology we 

used to revise and rebase the SNF 

market basket to reflect FY 2004 data in 

the FY 2008 SNF final rule. 

The BEA Benchmark I–O data are 

generally scheduled for publication 

every 5 years, with the most recent data 

available being 2002. The 2007 BEA 

Benchmark I–O data are expected to be 

released in the summer of 2013. We are 

proposing that if more recent BEA 

Benchmark I–O data for 2007 are 

released between the proposed and final 

rule with sufficient time to incorporate 

such data into the final rule that we 

would incorporate these data, as 

appropriate, into the FY 2010-based 

SNF PPS market basket for the final 

rule, so that the SNF market basket 

reflects the most recent BEA data 

available. We note that the FY 2004- 

based SNF market basket used the 1997 

BEA Benchmark I–O data to 

disaggregate the ‘‘all other’’ (residual) 

cost category—the data available at the 

time of the rebasing. The 2002 BEA 

Benchmark I–O data (and the 

forthcoming 2007 BEA Benchmark I–O 

data) are updates of the 1997 BEA 

Benchmark I–O data. 

For this SNF market basket revision 

and rebasing, we are proposing to 

include a total of 29 detailed cost 

categories for the proposed FY 2010- 

based SNF market basket, which is six 

more cost categories than the FY 2004- 

based SNF market basket. We are 

proposing to include five new cost 

categories in the proposed FY 2010- 

based SNF market basket: (1) Medical 

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Instruments and Supplies; (2) Apparel; 

(3) Machinery and Equipment; (4) 

Administrative and Facilities Support 

Services; and (5) Financial Services. 

Having separate categories for these 

costs enables them to be proxied more 

precisely. We are also proposing to 

divide the Nonmedical Professional 

Fees cost category into Nonmedical 

Professional Fees: Labor-Related and 

Nonmedical Professional Fees: 

Nonlabor-Related. In addition, we are 

proposing to revise our labels for the 

Labor-Intensive Services and NonlaborIntensive Services cost categories to All 

Other: Labor-Related Services and All 

Other: Nonlabor-Related Services, 

respectively. A more thorough 

discussion of our proposals is provided 

below. 

The capital-related portion of the FY 

2010-based SNF market basket employs 

the same overall methodology used to 

develop the capital-related portion of 

the FY 1997-based SNF market basket, 

described in the FY 2002 SNF PPS final 

rule (66 FR 39582) and the FY 2004- 

based SNF market basket, described in 

the FY 2008 SNF PPS final rule (72 FR 

43425). It is a similar methodology as is 

used for the inpatient hospital capital 

input price index described in the FY 

1997 Hospital IPPS proposed rule (61 

FR 27466), the FY 1997 Hospital IPPS 

final rule (61 FR 46196), the FY 2006 

Hospital IPPS final rule (70 FR 47407), 

and the FY 2010 Hospital IPPS final rule 

(74 FR 43857). The strength of this 

methodology is that it reflects the 

vintage nature of capital, which 

represents the acquisition and use of 

capital over time. We explain this 

methodology in more detail below. 

Table 9 presents the FY 2010-based 

and FY 2004-based SNF market basket 

major cost weights. Following the table, 

we describe the sources of the major 

category weights and their subcategories 

in the FY 2010-based SNF market 

basket. 

TABLE 9—FY 2010-BASED SNF MARKET BASKET MAJOR COST WEIGHTS

Cost Category 

Proposed FY 

2010-based SNF 

market basket 

FY 2004-based 

SNF market 

basket 

Wages and Salaries .................................................................................................................................... 46.057 48.105 

Employee Benefits ....................................................................................................................................... 10.491 10.699 

Contract Labor ............................................................................................................................................. 5.545 3.951 

Pharmaceuticals .......................................................................................................................................... 7.872 7.894 

Professional Liability Insurance ................................................................................................................... 1.141 1.717 

Capital-related Expenses ............................................................................................................................. 7.360 7.207 

All Other (residual) ....................................................................................................................................... 21.534 20.427 

• Wages and Salaries: We derived the 

wages and salaries cost category using 

the FY 2010 SNF MCRs. We determined 

the share using Medicare allowable 

wages and salaries from Worksheet S–3, 

part II and total expenses from 

Worksheet B, part I. Medicare allowable 

wages and salaries are equal to total 

wages and salaries minus: (1) Excluded 

salaries from worksheet S–3, part II; and 

(2) nursing facility and nonreimbursable salaries from worksheet A, 

lines 18, 34 through 36, and 58 through 

63. Medicare allowable total expenses 

are equal to total expenses from 

Worksheet B, lines 16, 21 through 30, 

32, 33, 48, and 52 through 54. This 

share represents the wage and salary 

share of costs for employees for the 

SNF, and does not include the wages 

and salaries from contract labor, which 

are allocated to wages and salaries in a 

later step. The same cost report 

methodology was used to derive the 

wages and salaries cost weight of the FY 

2004-based SNF market basket. 

• Employee Benefits: We determined 

the weight for employee benefits using 

FY 2010 SNF MCR data. We derived the 

share using Medicare allowable benefit 

costs from Worksheet S–3, part II and 

total expenses from Worksheet B. 

Medicare allowable benefits are equal to 

total benefits from Worksheet S–3, part 

II, minus excluded (non-Medicare 

allowable) benefits. Non-Medicare 

allowable benefits are derived by 

multiplying non-Medicare allowable 

salaries times the ratio of total benefit 

costs for the SNF to the total wage costs 

for the SNF. The same cost report 

methodology was used to derive the 

benefits cost weight of the FY 2004- 

based SNF market basket. 

• Contract Labor: We determined the 

weight for contract labor using 2010 

SNF MCR data. We derived the share 

using Medicare allowable contract labor 

costs from Worksheet S–3, part II line 17 

minus nursing facility (NF) contract 

labor costs, and Medicare allowable 

total costs from Worksheet B. 

(Worksheet S–3, part II line 17 only 

includes direct patient care contract 

labor attributable to SNF and NF 

services.) NF contract labor costs, which 

are not reimbursable under Medicare, 

are derived by multiplying total contract 

labor costs by the ratio of NF wages and 

salaries to the sum of NF and SNF 

wages and salaries. 

As we did for the FY 2004-based SNF 

market basket, we propose to allocate 

contract labor costs to the wages and 

salaries and employee benefits cost 

weights based on their relative 

proportion, under the assumption that 

contract costs are similarly distributed 

and likely to change at the same rate as 

direct labor costs even though unit labor 

cost levels may be different. The 

contract labor allocation proportion for 

wages and salaries is equal to the wages 

and salaries cost weight as a percent of 

the sum of the wages and salaries cost 

weight and the employee benefits cost 

weight. Using the FY 2010 MCR data, 

this percentage is approximately 81 

percent; therefore, we propose to 

allocate approximately 81 percent of the 

contract labor cost weight to the wages 

and salaries cost weight. The remaining 

proportion of the contract labor cost 

weight is allocated to the employee 

benefits cost weight. Table 10 shows the 

wages and salaries and employee benefit 

cost weights after contract labor 

allocation for both the FY 2004-based 

SNF market basket and the proposed FY 

2010-based SNF market basket. 

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TABLE 10—WAGES AND SALARIES AND EMPLOYEE BENEFITS COST WEIGHTS AFTER CONTRACT LABOR ALLOCATION

Major cost categories 

Proposed FY 

2010-based SNF 

market basket 

FY 2004-Based 

SNF market 

basket 

Wages and salaries ..................................................................................................................................... 50.573 51.337 

Employee benefits ....................................................................................................................................... 11.520 11.418 

Prior to contract labor allocation, the 

proposed FY 2010-based SNF market 

basket wages and salaries cost weight 

was about 2 percentage points lower 

than the FY 2004-based SNF market 

basket wages and salaries cost weight 

while the proposed FY 2010-based 

employee benefit cost weight was 0.2 

percentage point lower than the FY 

2004-based employee benefit cost 

weight. After the allocation of contract 

labor, the proposed FY 2010-based 

wages and salaries cost weight is about 

0.7 percentage point lower than the FY 

2004-based wages and salaries cost 

weight while the proposed FY 2010- 

based employee benefits cost weight is 

about 0.1 percentage point higher than 

the FY 2004-based employee benefit 

cost weight. This is due to the increase 

in the FY 2010-based SNF market basket 

contract labor cost weight from the FY 

2004-based SNF market basket contract 

labor cost weight, of which 81 percent 

of this increase is applied to the wages 

and salaries cost weight and 19 percent 

is applied to the employee benefit cost 

weight, offsetting the actual decrease in 

the wages and salaries and employee 

benefit cost weights prior to the contract 

labor allocation. 

• Pharmaceuticals: We derive the 

cost weight for pharmaceuticals in two 

steps using the FY 2010 SNF MCR and 

Medicare claims data. 

First, we calculated pharmaceutical 

costs using the non-salary costs from the 

Pharmacy cost center and the Drugs 

Charged to Patients’ cost center, both 

found on Worksheet B of the SNF 

MCRs. Since these drug costs were 

attributable to the entire SNF and not 

limited to Medicare allowable services, 

we adjusted the drug costs by the ratio 

of Medicare allowable pharmacy total 

costs to total pharmacy costs from 

Worksheet B, part I, column 11. 

Worksheet B, part I allocates the general 

service cost centers, which are often 

referred to as ‘‘overhead costs’’ (in 

which pharmacy costs are included) to 

the Medicare allowable and nonMedicare allowable cost centers. This 

resulted in a proposed FY 2010-based 

SNF market basket drug cost weight of 

3.1 percent compared to the FY 2004- 

based SNF market basket drug cost 

weight, which was 3.2 percent using the 

same methodology. This drug cost share 

does not include the drug expenses 

associated with Medicaid patients. The 

methodology for including the Medicaid 

drug expenditures is explained in detail 

below. This Medicaid drug add-on 

increases the drug expenditure weight 

to over seven percent, and is consistent 

with the Medicaid drug add-on method 

that was used in the FY 2004-based SNF 

market basket. 

Second, for the FY 2010-based SNF 

market basket, we are proposing to 

continue to adjust the drug expenses 

reported on the MCR to include an 

estimate of total Medicaid drug costs, 

which are not represented in the 

Medicare-allowable drug cost weight. 

Similar to the last rebasing, we are 

estimating Medicaid drug costs based on 

data representing dual-eligible Medicaid 

beneficiaries. Medicaid drug costs are 

estimated by multiplying Medicaid dual 

eligible drug costs per day times the 

number of Medicaid days as reported in 

the Medicare allowable skilled nursing 

cost center in the SNF MCR. Medicaid 

dual eligible drug costs per day (where 

the day represents an unduplicated drug 

supply day) were estimated using a 

sample of 2010 Part D claims for those 

dual-eligible beneficiaries who had a 

Medicare SNF stay during the year. 

Medicaid dual-eligible beneficiaries 

would receive their drugs through the 

Medicare Part D benefit, which would 

work directly with the pharmacy, and 

therefore, these costs would not be 

represented in the Medicare SNF MCRs. 

A random 20 percent sample of 

Medicare Part D claims data yielded a 

Medicaid drug cost per day of $17.39. 

We note that the FY 2004-based SNF 

market basket relied on data from the 

Medicaid Statistical Information 

System, which yielded a dual eligible 

Medicaid drug cost per day of $13.65 for 

2004. For the revised and rebased FY 

2010-based SNF market basket, we 

propose to use Part D claims to estimate 

total Medicaid drug costs as this 

provides drug expenditure data for dualeligible beneficiaries for 2010. The 

Medicaid Statistical Information System 

is no longer a comprehensive database 

for dual-eligible beneficiaries’ drug 

costs. 

The proposed adjusted FY 2010-based 

SNF market basket drug cost weight, 

representing all drug expenditures 

including those we estimated for 

Medicaid, is 7.872 percent. The FY 

2004-based SNF market basket 

pharmaceutical cost weight was 7.894 

percent. 

• Professional Liability Insurance: We 

calculated the professional liability 

insurance cost weight using costs from 

Worksheet S–2 of the MCRs as the sum 

of premiums, paid losses, and selfinsurance. To derive the professional 

liability insurance cost weight for the 

proposed FY 2010-based SNF market 

basket, we used the same cost report 

methodology that was used to derive the 

cost weight of the FY 2004-based SNF 

market basket (see 72 FR 25543–25544). 

For the proposed FY 2010-based SNF 

market basket, the professional liability 

weight is 1.141 percent, which is 

slightly lower than the 1.717 weight for 

the FY 2004-based SNF market basket. 

• Capital-Related: We derived the 

weight for overall capital-related 

expenses using the FY 2010 SNF MCRs. 

We calculated the Medicare allowable 

capital-related cost weight from 

Worksheet B, part II. In determining the 

subcategory weights for capital, we used 

information from the FY 2010 SNF MCR 

and the 2010 Bureau of Census’ Service 

Annual Survey (SAS) data. For the FY 

2004-based SNF market basket, we 

relied on the Bureau of Census Business 

Expenditure Survey (BES). The SAS 

data is a replacement/extension of the 

BES data, reflecting more recent data. 

We calculated the depreciation cost 

weight (that is, depreciation costs 

excluding leasing costs) using 

depreciation costs from Worksheet S–2. 

Since the depreciation costs reflect the 

entire SNF facility (Medicare and nonMedicare allowable units) we used total 

facility costs as the denominator. This 

methodology assumes that the 

depreciation of an asset is the same 

regardless of whether the asset was used 

for Medicare or non-Medicare patients. 

This methodology yielded a FY 2010- 

based SNF market basket depreciation 

cost weight of 2.301 percent. This 

depreciation cost weight is further 

adjusted to account for a proportion of 

leasing expenses, which is described in 

more detail below. We determined the 

distribution between building and fixed 

equipment and movable equipment 

depreciation from the FY 2010 SNF 

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MCR, as well. The FY 2010 SNF MCR 

data showed a fixed/moveable 

depreciation split of 85/15, which is the 

same split used in the FY 2004-based 

SNF market basket. 

We also derived the interest expense 

share of capital-related expenses from 

Worksheet A from the FY 2010 SNF 

MCRs. Similar to the depreciation cost 

weight, we calculated the interest cost 

weight using total facility costs. As done 

with the last rebasing, we determined 

the split of interest expense between forprofit and not-for-profit facilities based 

on the distribution of long-term debt 

outstanding by type of SNF (for-profit or 

not-for-profit) from the FY 2010 SNF 

MCRs. We estimated the split between 

for-profit and not-for-profit interest 

expense to be 41/59 percent. 

Because the data were not available in 

the MCRs, we used the most recent 2010 

SAS data to derive the capital-related 

expenses attributable to leasing and 

other capital-related expenses. Based on 

the 2010 SAS data, we determined the 

leasing costs to be 30 percent of total 

capital-related expenses, while we 

determined the other capital-related 

costs (insurance, taxes, licenses, other) 

to be 18 percent of total capital-related 

expenses. In the FY 2004-based SNF 

market basket, leasing costs represent 21 

percent of total capital-related expenses 

while other capital-related costs 

represent 13 percent of total capitalrelated expenses. 

Lease expenses are not broken out as 

a separate cost category, but are 

distributed among the cost categories of 

depreciation, interest, and other capital, 

reflecting the assumption that the 

underlying cost structure and price 

movement of leasing expenses is similar 

to capital costs in general. As was done 

in previous rebasings, we assumed 10 

percent of lease expenses are overhead 

and assigned them to the other capital 

expenses cost category. We distributed 

the remaining lease expenses to the 

three cost categories based on the 

proportion of depreciation, interest, and 

other capital expenses to total capital 

costs, excluding lease expenses. 

Table 11 shows the capital-related 

expense distribution (including 

expenses from leases) in the proposed 

FY 2010-based SNF market basket and 

the FY 2004-based SNF market basket. 

TABLE 11—COMPARISON OF THE CAPITAL-RELATED EXPENSE DISTRIBUTION OF THE FY 2010-BASED SNF MARKET

BASKET AND THE FY 2004-BASED SNF MARKET BASKET

Cost category 

Proposed FY 

2010-based SNF 

market basket 

FY 2004-based 

SNF market 

basket 

Capital-related expenses ............................................................................................................................. 7.360 7.207 

Total Depreciation ........................................................................................................................................ 3.180 2.858 

Total Interest ................................................................................................................................................ 2.096 3.037 

Other Capital-related Expenses .................................................................................................................. 2.084 1.312 

Our methodology for determining the 

price change of capital-related expenses 

accounts for the vintage nature of 

capital, which is the acquisition and use 

of capital over time. To capture this 

vintage nature, the price proxies must 

be vintage-weighted. The determination 

of these vintage weights occurs in two 

steps. First, we must determine the 

expected useful life of capital and debt 

instruments held by SNFs. Second, we 

must identify the proportion of 

expenditures within a cost category that 

is attributable to each individual year 

over the useful life of the relevant 

capital assets, or the vintage weights. 

We rely on Bureau of Economic 

Analysis (BEA) fixed asset data to derive 

the useful lives of both fixed and 

movable capital, which is the same data 

source used to derive the useful lives 

during the last rebasing. The specifics of 

the data sources used are explained 

below. 

Estimates of useful lives for movable 

and fixed assets for the proposed FY 

2010-based SNF market basket are 6 and 

25 years, respectively. These estimates 

are based on several data sources from 

the BEA, which publishes various 

useful life-related statistics, including 

asset service lives and current-cost 

average age, historical cost average age, 

and industry-specific current cost net 

stocks of assets. While SNF-specific data 

are not available, we can use the BEA 

data to develop estimates of useful life 

that are approximates of SNF capital 

purchases. 

There are two major issues we must 

address in using the BEA service life 

data to develop SNF-specific estimates. 

First, these data are published at a 

detailed asset level and not at an 

aggregate level, such as movable and 

fixed assets. There are 43 detailed 

movable assets in the BEA estimates. 

Some examples include computer 

software (34 months service life), 

electromedical equipment (9 years), 

medical instruments and related 

equipment (12 years), communication 

equipment (15 years), and office 

equipment (8 years). There are 23 

detailed fixed assets in the BEA 

estimates. Some examples of detailed 

fixed assets are medical office buildings 

(36 years), hospitals and special care 

buildings (48 years), and lodging (32 

years). Again, there are no service life 

estimates at an aggregate level, such as 

movable and fixed assets. The second 

reason BEA service life data are not 

directly applicable to SNFs is that 

service lives are not industry-specific; 

they apply to many different industries 

and, in most cases, to all industries in 

the economy. We seek estimates 

applicable to nursing homes for our 

SNF-specific estimates. BEA also 

publishes average asset age estimates. 

Average age estimates are updated more 

regularly than service lives data but 

reflect an average age rather than a 

service life. To get an estimate of the 

available service life of an asset, the 

average age is multiplied by 2 to reflect 

that some assets are retired prior to the 

useful life being exhausted. Average age 

data are available by detailed and 

aggregate asset levels for the overall 

economy and were last published in 

2012. 

We developed a methodology to 

approximate movable and fixed asset 

ages for nursing and residential care 

services (NAICS 623) using the 

published BEA data. For the proposed 

FY 2010 SNF market basket, we use the 

average age for each asset type from the 

BEA fixed assets Table 2.9 for all assets 

(not SNF-specific) and weight them 

using current cost net stock levels for 

each of these asset types in the nursing 

and residential care services industry. 

Current cost net stock levels are 

available for download from the BEA 

Web site at http://www.bea.gov/ 

national/FA2004/Details/Index.html. 

These detailed current cost net stock 

estimates are not published in the 

Survey of Current Business, a U.S. 

Department of Commerce monthly 

publication that provides data on U.S. 

businesses. Historical cost average age 

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estimates for all industries are 

published in the BEA fixed assets Table 

2.10; there are no industry-specific 

estimates for historical cost average age. 

Industry-specific historical cost average 

ages for NAICS 6230 is estimated by 

multiplying the industry specific 

current cost average age by the ratio of 

historical cost to current cost average 

age for all industries. This produces 

historical cost average age data for 

movable and fixed assets specific to 

NAICS 6230 of 3.2 and 12.2 years, 

respectively. Since averages are 

measures of central tendency, we 

multiply each of these estimates by two 

to produce estimates of likely useful 

lives of 6.4 and 24.5 years for movable 

and fixed assets, which we round to 6 

and 25 years, respectively. We are 

proposing an interest vintage weight 

time span of 22 years, obtained by 

weighting the fixed and movable vintage 

weights (25 years and 6 years, 

respectively) by the fixed and movable 

split (85 percent and 15 percent, 

respectively). 

Given the expected useful life of 

capital and debt instruments, we must 

determine the proportion of capital 

expenditures attributable to each year of 

the expected useful life by cost category. 

These proportions represent the vintage 

weights. We were not able to find a 

historical time series of capital 

expenditures by SNFs. Therefore, we 

approximated the capital expenditure 

patterns of SNFs over time, using 

alternative SNF data sources. For 

building and fixed equipment, we used 

the stock of beds in nursing homes from 

the National Nursing Home Survey 

(NNHS) conducted by the National 

Center for Health Statistics (NCHS) for 

1962 through 1999. For 2000 through 

2010, we extrapolated the 1999 bed data 

forward using a 10-year moving average 

of growth in the number of beds from 

the SNF MCR data. We then used the 

change in the stock of beds each year to 

approximate building and fixed 

equipment purchases for that year. This 

procedure assumes that bed growth 

reflects the growth in capital-related 

costs in SNFs for building and fixed 

equipment. We believe that this 

assumption is reasonable because the 

number of beds reflects the size of a 

SNF, and as a SNF adds beds, it also 

likely adds fixed capital. 

For movable equipment, we used 

available SNF data to capture the 

changes in intensity of SNF services that 

would likely be accompanied by the 

purchase of movable equipment. We 

used the same methodology to estimate 

the change in intensity as published in 

the FY 2008 SNF final rule for the 

period from 1962 through 2004. For 

more details of the methodology, see the 

FY 2008 SNF PPS final rule (72 FR 

43428). We propose to use the same 

methodology to estimate the ratio of 

ancillary to routine costs for 2005 

through 2010 from the SNF MCR. The 

time series of the ratio of ancillary costs 

to routine costs for SNFs measures 

changes in intensity in SNF services, 

which are assumed to be associated 

with movable equipment purchase 

patterns. The assumption here is that as 

ancillary costs increase compared to 

routine costs, the SNF caseload becomes 

more complex and would require more 

movable equipment. Again, the lack of 

movable equipment purchase data for 

SNFs over time required us to use 

alternative SNF data sources. We 

believe the resulting two time series, 

determined from beds and the ratio of 

ancillary to routine costs, reflect real 

capital purchases of building and fixed 

equipment and movable equipment over 

time. 

To obtain nominal purchases, which 

are used to determine the vintage 

weights for interest, we converted the 

two real capital purchase series from 

1963 through 2010 determined above to 

nominal capital purchase series using 

their respective price proxies (the BEA 

chained price index for nonresidential 

construction for hospitals & special care 

facilities and the PPI for Machinery and 

Equipment). We then combined the two 

nominal series into one nominal capital 

purchase series for 1963 through 2010. 

Nominal capital purchases are needed 

for interest vintage weights to capture 

the value of debt instruments. 

Once we created these capital 

purchase time series for 1963 through 

2010, we averaged different periods to 

obtain an average capital purchase 

pattern over time: (1) For building and 

fixed equipment, we averaged 24, 25- 

year periods; (2) for movable equipment, 

we averaged 43, 6-year periods; and (3) 

for interest, we averaged 27, 22-year 

periods. We calculate the vintage weight 

for a given year by dividing the capital 

purchase amount in any given year by 

the total amount of purchases during the 

expected useful life of the equipment or 

debt instrument. Following publication 

of the FY 2010 IPPS/Rate Year 2010 

LTCH PPS proposed rule, and to 

provide greater transparency, we posted 

on the CMS market basket Web site at 

http://www.cms.gov/Research-StatisticsData-and-Systems/Statistics-Trendsand-Reports/ 

MedicareProgramRatesStats/ 

MarketBasketResearch.html, an 

illustrative spreadsheet that contains an 

example of how the vintage-weighted 

price indexes are calculated. 

Table 12 shows the resulting vintage 

weights for each of these cost categories. 

TABLE 12—VINTAGE WEIGHTS FOR PROPOSED FY 2010-BASED SNF PPS CAPITAL-RELATED PRICE PROXIES

Year 1

Building 

and fixed 

equipment 

Movable 

equipment Interest 

1 ................................................................................................................................................... .061 .165 .030 

2 ................................................................................................................................................... .059 .160 .030 

3 ................................................................................................................................................... .053 .167 .032 

4 ................................................................................................................................................... .050 .167 .033 

5 ................................................................................................................................................... .046 .169 .035 

6 ................................................................................................................................................... .043 .171 .037 

7 ................................................................................................................................................... .041 ........................ .039 

8 ................................................................................................................................................... .039 ........................ .040 

9 ................................................................................................................................................... .036 ........................ .041 

10 ................................................................................................................................................. .034 ........................ .043 

11 ................................................................................................................................................. .034 ........................ .045 

12 ................................................................................................................................................. .034 ........................ .047 

13 ................................................................................................................................................. .033 ........................ .048 

14 ................................................................................................................................................. .032 ........................ .048 

15 ................................................................................................................................................. .031 ........................ .050 

16 ................................................................................................................................................. .031 ........................ .052 

17 ................................................................................................................................................. .032 ........................ .055 

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26456 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 

TABLE 12—VINTAGE WEIGHTS FOR PROPOSED FY 2010-BASED SNF PPS CAPITAL-RELATED PRICE PROXIES— 

Continued 

Year 1

Building 

and fixed 

equipment 

Movable 

equipment Interest 

18 ................................................................................................................................................. .034 ........................ .058 

19 ................................................................................................................................................. .035 ........................ .060 

20 ................................................................................................................................................. .036 ........................ .060 

21 ................................................................................................................................................. .038 ........................ .058 

22 ................................................................................................................................................. .039 ........................ .058 

23 ................................................................................................................................................. .042 ........................ ........................

24 ................................................................................................................................................. .043 ........................ ........................

25 ................................................................................................................................................. .044 ........................ ........................

Total ...................................................................................................................................... 1.000* 1.000* 1.000* 

SOURCES: 2010 SNF MCRs; CMS, 

NOTE: Totals may not sum to 1.000 due to rounding. 

1Year 1 represents the vintage weight applied to the farthest year while the vintage weight for year 25, for example, would apply to the most 

recent year. 

• All Other (residual): We divided the 

residual ‘‘all other’’ cost category into 

subcategories, using the BEA’s 

Benchmark Input-Output Tables for the 

nursing home industry aged to 2010 

using relative price changes. (The 

methodology we used to age the data 

involves applying the annual price 

changes from the price proxies to the 

appropriate cost categories. We repeat 

this practice for each year. We then 

apply the resulting 2010 distributions to 

the aggregate 2010 ‘‘all other’’ cost 

weight of 21.534 percent to yield the 

detailed 2010 all other cost weights.) 

For the FY 2010-based SNF market 

basket, we are proposing to include five 

new cost categories compared to the FY 

2004-based SNF market basket, as 

discussed further below. We are also 

proposing to revise the labels for the 

labor-intensive and nonlabor-intensive 

cost categories; the new labels would be 

‘‘all other: labor-related’’, and ‘‘all other: 

nonlabor-related’’. As discussed in more 

detail below, we classify a cost category 

as labor-related and include it in the 

labor-related share if the cost category is 

determined to be labor-intensive and its 

cost varies with the local labor market. 

In previous regulations, we grouped cost 

categories that met both of these criteria 

into labor-intensive services. We believe 

the new labels more accurately reflect 

the concepts that they are intended to 

convey. We are not proposing a change 

to our definition of the labor-related 

share, since we continue to classify a 

cost category as labor-related if the costs 

are labor-intensive and vary with the 

local labor market. 

For nonmedical professional fees, we 

are proposing to create two separate cost 

categories: (1) Nonmedical professional 

fees: labor-related, and (2) nonmedical 

professional fees: Nonlabor-related. We 

discuss the distinction between these 

two categories in more detail below in 

the discussion of the labor-related share. 

Table 13 compares the proposed FY 

2010-based SNF market basket cost 

weights with the FY 2004-based SNF 

market basket cost weights. 

TABLE 13—COMPARISON OF THE PROPOSED FY 2010-BASED SNF MARKET BASKET COST WEIGHTS AND THE FY 2004- 

BASED SNF MARKET BASKET COST WEIGHTS

Cost category 

Proposed FY 

2010-based 

SNF market 

basket weights 

FY 2004- 

based SNF 

market basket 

weights 

Total ......................................................................................................................................................................... 100.000 100.000 

Compensation ................................................................................................................................................... 62.093 62.755 

Wages and Salaries .................................................................................................................................. 50.573 51.337 

Employee Benefits .................................................................................................................................... 11.520 11.418 

Nonmedical Professional Fees 1 ...................................................................................................................... ........................ 1.322 

Nonmedical Professional Fees ................................................................................................................. ........................ 1.322 

Utilities .............................................................................................................................................................. 2.223 1.551 

Electricity ................................................................................................................................................... 1.411 0.919 

Fuels, Non-highway ................................................................................................................................... 0.667 0.453 

Water and Sewerage ................................................................................................................................ 0.145 0.179 

Professional Liability Insurance ........................................................................................................................ 1.141 1.717 

Professional Liability Insurance ................................................................................................................. 1.141 1.717 

All Other ............................................................................................................................................................ 27.183 25.448 

All Other Products ..................................................................................................................................... 16.148 19.03 

Pharmaceuticals ................................................................................................................................. 7.872 7.894 

Food, Wholesale Purchase ................................................................................................................ 3.661 2.906 

Food, Retail Purchase ....................................................................................................................... 1.190 3.151 

Chemicals ........................................................................................................................................... 0.166 0.589 

Medical Instruments and Supplies 2 ................................................................................................... 0.764 ........................

Rubber and Plastics ........................................................................................................................... 0.981 1.513 

Paper and Printing Products .............................................................................................................. 0.838 1.394 

Apparel 2 ............................................................................................................................................. 0.195 ........................

Machinery and Equipment 2 ............................................................................................................... 0.190 ........................

Miscellaneous Products ..................................................................................................................... 0.291 1.582 

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TABLE 13—COMPARISON OF THE PROPOSED FY 2010-BASED SNF MARKET BASKET COST WEIGHTS AND THE FY 2004- 

BASED SNF MARKET BASKET COST WEIGHTS—Continued 

Cost category 

Proposed FY 

2010-based 

SNF market 

basket weights 

FY 2004- 

based SNF 

market basket 

weights 

All Other Services ..................................................................................................................................... 11.035 6.418 

Labor-Related Services ...................................................................................................................... 6.227 ........................

Nonmedical Professional Fees: Labor-related 1 ......................................................................... 3.427 ........................

Administrative and Facilities Support 3 ....................................................................................... 0.497 ........................

All Other: Labor-Related Services 4 ................................................................................................... 2.303 3.521 

NonLabor-Related Services ........................................................................................................ 4.808 ........................

Nonmedical Professional Fees: Nonlabor-related 1 2.042 ........................

Financial Services 5 ................................................................................................................................... 0.899 ........................

Telephone Services ................................................................................................................................... 0.572 0.434 

Postage ..................................................................................................................................................... 0.240 0.454 

All Other: Nonlabor-related Services 4 ...................................................................................................... 1.055 2.008 

Capital-related Expenses ................................................................................................................................. 7.360 7.207 

Total Depreciation ..................................................................................................................................... 3.180 2.858 

Building and Fixed Equipment ........................................................................................................... 2.701 2.437 

Movable Equipment ........................................................................................................................... 0.479 0.421 

Total Interest ............................................................................................................................................. 2.096 3.037 

For-Profit SNFs .................................................................................................................................. 0.869 1.197 

Non-profit SNFs ................................................................................................................................. 1.227 1.84 

Other Capital-related Expenses ................................................................................................................ 2.084 1.312 

Other .................................................................................................................................................. 2.084 1.312 

1For the FY 2010-based SNF Market basket, we are proposing to divide this category into nonmedical professional fees: labor-related and 

nonmedical professional fees: nonlabor-related. 2For the FY 2010-based SNF Market basket, we are proposing to create a separate cost category for these expenses to proxy the price 

growth by a more specific index. These expenses were previously classified under miscellaneous products in the FY 2004-based SNF market 

basket. 3For the FY 2010-based SNF Market basket, we are proposing to create a separate cost category for these expenses to proxy the price 

growth by a more specific index. These expenses were previously classified under labor intensive services cost weight in the FY 2004-based 

SNF market basket. 4For the FY 2010-based SNF market basket, we are proposing to revise the labels for the labor-intensive and nonlabor-intensive cost categories to be all other: labor-related and all other: nonlabor-related. 5For the FY 2010-based SNF market basket, we are proposing to create a separate cost category for these expenses to proxy the price 

growth by a more specific index. These expenses were previously classified under nonlabor intensive services cost weight in the FY 2004-based 

SNF market basket. 

3. Price Proxies Used To Measure Cost 

Category Growth 

After developing the 29 cost weights 

for the proposed FY 2010-based SNF 

market basket, we selected the most 

appropriate wage and price proxies 

currently available to represent the rate 

of change for each expenditure category. 

With four exceptions (three for the 

capital-related expenses cost categories 

and one for Professional Liability 

Insurance (PLI)), we base the wage and 

price proxies on Bureau of Labor 

Statistics (BLS) data, and group them 

into one of the following BLS categories: 

• Employment Cost Indexes. 

Employment Cost Indexes (ECIs) 

measure the rate of change in 

employment wage rates and employer 

costs for employee benefits per hour 

worked. These indexes are fixed-weight 

indexes and strictly measure the change 

in wage rates and employee benefits per 

hour. ECIs are superior to Average 

Hourly Earnings (AHE) as price proxies 

for input price indexes because they are 

not affected by shifts in occupation or 

industry mix, and because they measure 

pure price change and are available by 

both occupational group and by 

industry. The industry ECIs are based 

on the 2004 North American Industry 

Classification System (NAICS). 

• Producer Price Indexes. Producer 

Price Indexes (PPIs) measure price 

changes for goods sold in other than 

retail markets. PPIs are used when the 

purchases of goods or services are made 

at the wholesale level. 

• Consumer Price Indexes. Consumer 

Price Indexes (CPIs) measure change in 

the prices of final goods and services 

bought by consumers. CPIs are only 

used when the purchases are similar to 

those of retail consumers rather than 

purchases at the wholesale level, or if 

no appropriate PPI were available. 

We evaluated the price proxies using 

the criteria of reliability, timeliness, 

availability, and relevance. Reliability 

indicates that the index is based on 

valid statistical methods and has low 

sampling variability. Widely accepted 

statistical methods ensure that the data 

were collected and aggregated in a way 

that can be replicated. Low sampling 

variability is desirable because it 

indicates that the sample reflects the 

typical members of the population. 

(Sampling variability is variation that 

occurs by chance because only a sample 

was surveyed rather than the entire 

population.) Timeliness implies that the 

proxy is published regularly, preferably 

at least once a quarter. The market 

baskets are updated quarterly, and 

therefore, it is important for the 

underlying price proxies to be up-todate, reflecting the most recent data 

available. We believe that using proxies 

that are published regularly (at least 

quarterly, whenever possible) helps to 

ensure that we are using the most recent 

data available to update the market 

basket. We strive to use publications 

that are disseminated frequently, 

because we believe that this is an 

optimal way to stay abreast of the most 

current data available. Availability 

means that the proxy is publicly 

available. We prefer that our proxies are 

publicly available because this will help 

ensure that our market basket updates 

are as transparent to the public as 

possible. In addition, this enables the 

public to be able to obtain the price 

proxy data on a regular basis. Finally, 

relevance means that the proxy is 

applicable and representative of the cost 

category weight to which it is applied. 

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26458 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 

The CPIs, PPIs, and ECIs that we have 

selected to propose in this regulation 

meet these criteria. Therefore, we 

believe that they continue to be the best 

measure of price changes for the cost 

categories to which they would be 

applied. 

As discussed above, we propose that 

if the 2007 Benchmark I–O data become 

available between the proposed and 

final rule with sufficient time to 

incorporate such data into the final rule, 

we would incorporate these data, as 

appropriate, into the FY 2010-based 

SNF market basket for the final rule. In 

addition, we propose that to the extent 

the incorporation of the 2007 

Benchmark I–O data results in a 

different composition of costs included 

in a particular cost category, we would 

revise that specific price proxy, as 

appropriate, to ensure that the costs 

included in each detailed cost category 

are aligned with the most appropriate 

price proxy. Table 15 lists all price 

proxies for the proposed revised and 

rebased SNF market basket. Below is a 

detailed explanation of the price proxies 

used for each cost category weight. 

• Wages and Salaries: We are 

proposing to use the ECI for Wages and 

Salaries for Nursing Care Facilities 

(Private Industry) (NAICS 6231; BLS 

series code CIU2026231000000I) to 

measure price growth of this category. 

The FY 2004-based SNF market basket 

used a blended index based on 50 

percent of the ECI for wages and salaries 

for nursing and residential care facilities 

(NAICS 623) and 50 percent of the ECI 

for wages and salaries for hospital 

workers (NAICS 622). For the FY 2010- 

based SNF market basket, we are 

proposing to use the Nursing Care 

Facilities ECI, as we believe this ECI 

better reflects wage trends consistent 

with services provided by Medicarecertified SNFs. 

NAICS 623 includes facilities that 

provide a mix of health and social 

services, with many of the health 

services being largely some level of 

nursing services. Within NAICS 623 is 

NAICS 6231, which includes nursing 

care facilities primarily engaged in 

providing inpatient nursing and 

rehabilitative services. These facilities, 

which are most comparable to 

Medicare-certified SNFs, provide skilled 

nursing and continuous personal care 

services for an extended period of time, 

and therefore, have a permanent core 

staff of registered or licensed practical 

nurses. At the time of the last rebasing, 

BLS had just begun publishing ECI data 

for the more detailed nursing care 

facilities (NAICS 6231), and therefore, 

IGI, the economic forecasting firm, was 

unable to forecast this price proxy. 

BLS has now published over six years 

of historical data for the ECI for Nursing 

Care Facilities (NAICS 6231), which 

allows IGI to create a forecast for this 

detailed index. Additionally, in 

analyzing the historical trends, we 

believe this ECI is the most technically 

appropriate wage concept to use for the 

proposed revised and rebased 2010- 

based SNF market basket as it is most 

comparable to Medicare-certified SNFs, 

which are engaged in providing 

inpatient nursing and rehabilitative 

services. 

• Employee Benefits: We are 

proposing to use the ECI for Benefits for 

Nursing Care Facilities (NAICS 6231) to 

measure price growth of this category. 

The ECI for Benefits for Nursing Care 

Facilities is calculated using BLS’s total 

compensation (BLS series ID 

CIU2016231000000I) for nursing care 

facilities series and the relative 

importance of wages and salaries within 

total compensation. We believe this ECI 

and constructed series is technically 

appropriate for the reason stated above 

in the wages and salaries price proxy 

section. We used a blended benefits 

index in the FY 2004-based SNF market 

basket. 

• Electricity: We are proposing to use 

the PPI for Commercial Electric Power 

(BLS series code WPU0542) to measure 

the price growth of this cost category. 

We used the same index in the FY 2004- 

based SNF market basket. 

• Fuels, nonhighway: We are 

proposing to use the PPI for Commercial 

Natural Gas (BLS series code WPU0552) 

to measure the price growth of this cost 

category. We used the same index in the 

FY 2004-based SNF market basket. 

• Water and Sewerage: We are 

proposing to use the CPI for Water and 

Sewerage Maintenance (All Urban 

Consumers) (BLS series code 

CUUR0000SEHG01) to measure the 

price growth of this cost category. We 

used the same index in the FY 2004- 

based SNF market basket. 

• Professional Liability Insurance: We 

are proposing to use the CMS Hospital 

Professional Liability Insurance Index to 

measure price growth of this category. 

In the FY 2008 proposed rule (72 FR 

25552), we stated our difficulties 

associated with pricing malpractice 

costs experienced in all healthcare 

sectors, including hospitals and 

physicians. We also stated our intent to 

research alternative data sources, such 

as obtaining the data directly from the 

individual states’ Departments of 

Insurance. We were unable to find a 

reliable data source that collects SNFspecific PLI data. Therefore, we are 

proposing to use the CMS Hospital 

Professional Liability Index, which 

tracks price changes for commercial 

insurance premiums for a fixed level of 

coverage, holding nonprice factors 

constant (such as a change in the level 

of coverage). We used the same index in 

the FY 2004-based SNF market basket. 

We believe this is an appropriate proxy 

to measure the price growth associated 

with SNF professional liability 

insurance, as it captures the price 

inflation associated with other medical 

institutions that serve Medicare 

patients. 

• Pharmaceuticals: We are proposing 

to use the PPI for Pharmaceuticals for 

Human Use, Prescription (BLS series 

code WPUSI07003) to measure the price 

growth of this cost category. This is the 

same proxy that was used in the FY 

2004-based SNF market basket, though 

BLS has since changed the naming 

convention of this series. 

• Food: Wholesale Purchases: We are 

proposing to use the PPI for Processed 

Foods and Feeds (BLS series code 

WPU02) to measure the price growth of 

this cost category. We used the same 

index in the FY 2004-based SNF market 

basket. 

• Food: Retail Purchase: We are 

proposing to use the CPI for Food Away 

From Home (All Urban Consumers) 

(BLS series code CUUR0000SEFV) to 

measure the price growth of this cost 

category. We used the same index in the 

FY 2004-based SNF market basket. 

• Chemicals: For measuring price 

change in the Chemicals cost category, 

we are proposing to use a blended PPI 

composed of the PPIs for Other Basic 

Organic Chemical Manufacturing 

(NAICS 325190) (BLS series code 

PCU32519–32519), Paint and Coating 

Manufacturing (NAICS 325510) (BLS 

series code PCU32551–32551), Soap and 

Cleaning Compound Manufacturing 

(NAICS 325610) (BLS series code 

PCU32561–32561), and All Other 

Chemical Product and Preparation 

Manufacturing (NAICS 3259A0) (BLS 

series code PCU3259–3259). 

Using the 2002 Benchmark I–O data, 

we found that these four NAICS 

industries accounted for approximately 

95 percent of SNF chemical expenses. 

The remaining 5 percent of SNF 

chemical expenses are for five other 

incidental NAICS chemicals industries, 

such as Alkalies and Chlorine 

Manufacturing. We are proposing to 

create a blended index based on those 

four NAICS chemical expenses listed 

above that account for 95 percent of 

SNF chemical expenses. We are 

proposing to create a blend based on 

each NAICS’ expenses as a share of their 

sum. As stated above, we propose that 

if the 2007 Benchmark I–O data become 

available between the proposed and 

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final rule with sufficient time to 

incorporate such data into the final rule, 

we would incorporate these data, as 

appropriate, into the FY 2010-based 

SNF market basket for the final rule. In 

addition, we propose that to the extent 

the incorporation of the 2007 

Benchmark I–O data results in a 

different composition of chemical costs, 

we may revise, as appropriate, the 

blended chemical index set forth above 

to reflect these more recent data on SNF 

chemical purchases, to better align the 

costs with its price proxy. Table 14 

below provides the weights for the 

blended chemical index. 

TABLE 14—PROPOSED CHEMICAL BLENDED INDEX WEIGHTS

NAICS Industry description Weights 

(percent) 

325190 ...................................................... Other basic organic chemical manufacturing .............................................................. 7 

325510 ...................................................... Paint and coating manufacturing ................................................................................. 12 

325610 ...................................................... Soap and cleaning compound manufacturing ............................................................. 49 

3259A0 ...................................................... All other chemical product and preparation manufacturing ......................................... 32 

....................................................................................................................................... 100 

The FY 2004-based SNF market basket 

also used a blended chemical proxy that 

was based on 1997 Benchmark I–O data. 

We believe our proposed chemical 

blended index for the FY 2010-based 

SNF market basket is technically 

appropriate, as it reflects more recent 

data on SNFs’ purchasing patterns. 

• Medical Instruments and Supplies: 

We are proposing to use the PPI for 

Medical, Surgical, and Personal Aid 

Devices (BLS series code WPU156) to 

measure the price growth of this cost 

category. The FY 2004-based SNF 

market basket did not include a separate 

cost category for these expenses. Rather, 

these expenses were classified in the 

miscellaneous products cost category 

and proxied by the PPI for Finished 

Goods less Food and Energy (BLS series 

code WPUSOP3500). As stated above, 

we are proposing to break-out this cost 

category to proxy these expenses by a 

more specific price index that better 

reflects the price growth of medical 

instruments and supplies. 

• Rubber and Plastics: We are 

proposing to use the PPI for Rubber and 

Plastic Products (BLS series code 

WPU07) to measure price growth of this 

cost category. We used the same index 

in the FY 2004-based SNF market 

basket. 

• Paper and Printing Products: We 

are proposing to use the PPI for 

Converted Paper and Paperboard 

Products (BLS series code WPU0915) to 

measure the price growth of this cost 

category. We used the same index in the 

FY 2004-based SNF market basket. 

• Apparel: We are proposing to use 

the PPI for Apparel (BLS series code 

WPU0381) to measure the price growth 

of this cost category. The FY 2004-based 

SNF market basket did not have a 

separate cost category for these 

expenses. Rather, these expenses were 

classified in the miscellaneous products 

cost category and proxied by the PPI for 

Finished Goods less Food and Energy. 

As stated above, we are proposing to 

break-out this cost category to proxy 

these expenses by a more specific price 

index that better reflects the price 

growth of apparel products. 

• Machinery and Equipment: We are 

proposing to use the PPI for Machinery 

and Equipment (BLS series code 

WPU11) to measure the price growth of 

this cost category. The 2004-based index 

did not have a separate cost category for 

these expenses. Rather, these expenses 

were classified in the miscellaneous 

products cost category and proxied by 

the PPI for Finished Goods less Food 

and Energy (BLS series code 

WPUSOP3500). As stated above, we are 

proposing to break-out this cost category 

to proxy these expenses by a more 

specific price index that reflects the 

price growth of machinery and 

equipment. 

• Miscellaneous Products: For 

measuring price change in the 

Miscellaneous Products cost category, 

we are proposing to use the PPI for 

Finished Goods less Food and Energy 

(BLS series code WPUSOP3500). Both 

food and energy are already adequately 

represented in separate cost categories 

and should not also be reflected in this 

cost category. We used the same index 

in the FY 2004-based SNF market 

basket. 

• Nonmedical Professional Fees: 

Labor-Related and Nonmedical 

Professional Fees: Nonlabor-Related: 

We are proposing to use the ECI for 

Total Compensation for Professional 

and Related Occupations (Private 

Industry) (BLS series code 

CIU2010000120000I) to measure the 

price growth of these categories. As 

described in more detail below, for this 

revising and rebasing of the SNF market 

basket we are proposing to divide the 

nonmedical professional fees cost 

category into two separate cost 

categories: (1) Nonmedical professional 

fees: labor-related; and (2) nonmedical 

professional fees: Nonlabor-related. By 

separating these two categories we are 

able to identify more precisely which 

categories are to be included in the 

labor-related share, which is used in 

applying the SNF PPS geographic 

adjustment factor. We are proposing to 

proxy both of these cost categories by 

the ECI for Total Compensation for 

Professional and Related Occupations 

(Private Industry). This is the same 

proxy that was used in the FY 2004- 

based SNF market basket. 

• Administrative and Facilities 

Support Services: We are proposing to 

use the ECI for Total Compensation for 

Office and Administrative Support 

Services (Private Industry) (BLS series 

code CIU2010000220000I) to measure 

the price growth of this category. The 

FY 2004-based SNF market basket did 

not have a separate cost category for 

these expenses. Rather, these expenses 

were classified under labor intensive 

services and proxied by the ECI for 

Compensation for Service Occupations 

(Private Industry). As stated above, we 

are proposing to create a separate cost 

category for these expenses to reflect the 

specific price changes associated with 

these services. 

• All Other: Labor-Related Services: 

We are proposing to use the ECI for 

Total Compensation for Service 

Occupations (Private Industry) (BLS 

series code CIU2010000300000I) to 

measure the price growth of this cost 

category (previously referred to as the 

labor-intensive cost category in the FY 

2004-based SNF market basket index). 

We used the same index in the FY 2004- 

based SNF market basket. As explained 

above, for this revising and rebasing of 

the SNF market basket, we are 

proposing to revise our label for the 

labor-intensive services to the all other: 

labor-related services. 

• Financial Services: We are 

proposing to use the ECI for Total 

Compensation for Financial Activities 

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26460 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 

(Private Industry) (BLS series code 

CIU201520A000000I) to measure the 

price growth of this cost category. The 

FY 2004-based SNF market basket did 

not have a separate cost category for 

these expenses. Rather, these expenses 

were classified under nonlabor 

intensive services cost category and 

proxied by the CPI for All Items (Urban). 

As stated above, we are proposing to 

create a separate cost category for these 

expenses to reflect the specific price 

changes associated with these services. 

• Telephone Services: We are 

proposing to use the CPI for Telephone 

Services (Urban) (BLS series code 

CUUR0000SEED) to measure the price 

growth of this cost category. We used 

the same index in the FY 2004-based 

SNF market basket. 

• Postage: We are proposing to use 

the CPI for Postage and Delivery 

Services (Urban) (BLS series code 

CUUR0000SEEC) to measure the price 

growth of this cost category. We used 

the same index in the FY 2004-based 

SNF market basket. 

• All Other: NonLabor-Related 

Services: We are proposing to use the 

CPI for All Items Less Food and Energy 

(BLS series code CUUR0000SA0L1E) to 

measure the price growth of this cost 

category (previously referred to as the 

nonlabor-intensive cost category in the 

FY 2004-based SNF market basket 

index). Previously these costs were 

proxied by the CPI for All Items (Urban). 

We believe that using the CPI for All 

Items Less Food and Energy (BLS series 

code CUUR0000SA0L1E) will remove 

any double-counting of food and energy 

prices, which are already captured 

elsewhere in the market basket. 

Consequently, we believe that the 

incorporation of this proxy represents a 

technical improvement to the market 

basket. 

• Capital-Related Expenses: For the 

capital price proxies (with the exception 

of the price proxy for the other capitalrelated cost category weight), we 

calculate vintage weighted price 

proxies. The methodology used to 

derive the vintage weights was 

described above. Below, we describe the 

price proxies for the SNF capital-related 

expenses: 

• Depreciation—Building and Fixed 

Equipment: For measuring price change 

in this cost category, we are proposing 

to use BEA’s chained price index for 

nonresidential construction for hospital 

and special care facilities. This is a 

publicly available price index used by 

BEA to deflate current-dollar private 

fixed investment for hospitals and 

special care facilities. The 2004-based 

index used the Boeckh Institutional 

Construction Index, which is not 

publicly available. We compared the 

BEA index with the Boeckh Institutional 

Construction Index and found that the 

average growth rates in the two series 

were similar over the historical time 

period. We are proposing to use the BEA 

price index in the FY 2010-based SNF 

market basket as this index is a publicly 

available index that reflects the price 

inflation associated with nonresidential 

construction, such as the construction of 

hospitals and special care facilities. As 

stated above, we prefer that our proxies 

are publicly available because this will 

help ensure that our market basket 

updates are as transparent to the public 

as possible. 

• Depreciation—Movable Equipment: 

For measuring price change in this cost 

category, we are proposing to use the 

PPI for Machinery and Equipment (BLS 

series code WPU11). The same price 

proxy was used in the FY 2004-based 

SNF market basket index. 

• Interest—Government and 

Nonprofit SNFs: For measuring price 

change in this cost category, we are 

proposing to use the Average Yield for 

Municipal Bonds from the Bond Buyer 

Index of 20 bonds. CMS input price 

indexes, including this proposed 

rebased and revised SNF market basket, 

appropriately reflect the rate of change 

in the price proxy and not the level of 

the price proxy. While SNFs may face 

different interest rate levels than those 

included in the Bond Buyer Index, the 

rate of change between the two is not 

significantly different. The same price 

proxy was used in the FY 2004-based 

SNF market basket index. 

• Interest—For-profit SNFs: For 

measuring price change in this cost 

category, we are proposing to use the 

Average Yield for Moody’s AAA 

Corporate Bonds. Again, the proposed 

revised and rebased SNF market basket 

index focuses on the rate of change in 

this interest rate, not on the level of the 

interest rate. The same price proxy was 

used in the FY 2004-based SNF market 

basket index. 

• Other Capital-related Expenses: For 

measuring price change in this cost 

category, we are proposing the CPI–U 

for Rent of Primary Residence (BLS 

series ID CUUR0000SEHA). The same 

price proxy was used in the FY2004- 

based SNF market basket index, though 

the naming convention is slightly 

different as we have provided the full 

BLS naming convention. 

Table 15 shows the proposed price 

proxies for the FY 2010-based SNF 

Market Basket. 

TABLE 15—PROPOSED PRICE PROXIES FOR THE FY 2010-BASED SNF MARKET BASKET

Cost category Weight Proposed price proxy 

Compensation ............................................................................. 62.093 

Wages and Salaries ............................................................ 50.573 ECI for Wages and Salaries for Nursing Care Facilities. 

Employee Benefits ............................................................... 11.520 ECI for Benefits for Nursing Care Facilities. 

Utilities ......................................................................................... 2.223 

Electricity .............................................................................. 1.411 PPI for Commercial Electric Power. 

Fuels, Nonhighway .............................................................. 0.667 PPI for Commercial Natural Gas. 

Water and Sewerage ........................................................... 0.145 CPI–U for Water and Sewerage Maintenance. 

Professional Liability Insurance .................................................. 1.141 CMS Hospital Professional Liability Insurance Index. 

All Other ...................................................................................... 27.183 

Other Products ..................................................................... 16.148 

Pharmaceuticals ........................................................... 7.872 PPI for Pharmaceuticals for Human Use, Prescription. 

Food, Wholesale Purchase .......................................... 3.661 PPI for Processed Foods and Feeds. 

Food, Retail Purchases ................................................ 1.190 CPI–U for Food Away From Home. 

Chemicals ..................................................................... 0.166 Blend of Chemical PPIs. 

Medical Instruments and Supplies ............................... 0.764 PPI for Medical, Surgical, and Personal Aid Devices. 

Rubber and Plastics ..................................................... 0.981 PPI for Rubber and Plastic Products. 

Paper and Printing Products ........................................ 0.838 PPI for Converted Paper and Paperboard Products. 

Apparel ......................................................................... 0.195 PPI for Apparel. 

Machinery and Equipment ............................................ 0.190 PPI for Machinery and Equipment. 

Miscellaneous Products ................................................ 0.291 PPI for Finished Goods Less Food and Energy. 

All Other Services ................................................................ 11.035 

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TABLE 15—PROPOSED PRICE PROXIES FOR THE FY 2010-BASED SNF MARKET BASKET—Continued 

Cost category Weight Proposed price proxy 

Labor-Related Services ................................................ 6.227 

Nonmedical Professional Fees: Labor-related ...... 3.427 ECI for Total Compensation for Professional and Related Occupations. 

Administrative and Facilities Support .................... 0.497 ECI for Total Compensation for Office and Administrative Support. 

All Other: Labor-Related Services ........................ 2.303 ECI for Total Compensation for Service Occupations. 

Non Labor-Related Services ........................................ 4.808 

Nonmedical Professional Fees: Non Labor-Related.2.042 ECI for Total Compensation for Professional and Related Occupations. 

Financial Services ................................................. 0.899 ECI for Total Compensation for Financial Activities. 

Telephone Services ............................................... 0.572 CPI–U for Telephone Services. 

Postage ................................................................. 0.240 CPI–U for Postage and Delivery Services. 

All Other: Nonlabor-Related Services ................... 1.055 CPI–U for All Items Less Food and Energy. 

Capital-Related Expenses .......................................................... 7.360 

Total Depreciation ................................................................ 3.180 

Building and Fixed Equipment ..................................... 2.701 BEA chained price index for nonresidential construction for 

hospitals and special care facilities—vintage weighted (25 

years). 

Movable Equipment ...................................................... 0.479 PPI for Machinery and Equipment—vintage weighted (6 

years). 

Total Interest ........................................................................ 2.096 

For-Profit SNFs ............................................................. 0.869 Average yield on municipal bonds (Bond Buyer Index 20 

bonds)—vintage weighted (22 years). 

Government and Nonprofit SNFs ................................. 1.227 Average yield on Moody’s AAA corporate bonds—vintage 

weighted (22 years). 

Other Capital-Related Expenses ......................................... 2.084 CPI–U for Rent of Primary Residence. 

Total ............................................................................................ 100.000 

4. Proposed Market Basket Estimate for 

the FY 2014 SNF PPS Update 

As discussed previously in this 

proposed rule, beginning with the FY 

2014 SNF PPS update, we are proposing 

to adopt the FY 2010-based SNF market 

basket as the appropriate market basket 

of goods and services for the SNF PPS. 

Based on IGI’s first quarter 2013 

forecast with history through the fourth 

quarter of 2012, the most recent estimate 

of the proposed FY 2010-based SNF 

market basket for FY 2014 is 2.3 

percent. IGI is a nationally recognized 

economic and financial forecasting firm 

that contracts with CMS to forecast the 

components of CMS’ market baskets. 

Based on IGI’s first quarter 2013 forecast 

with history through the fourth quarter 

of 2012, the estimate of the current FY 

2004-based SNF market basket for FY 

2014 is 2.5 percent. 

Table 16 compares the proposed FY 

2010-based SNF market basket and the 

FY 2004-based SNF market basket 

percent changes. For the historical 

period between FY 2008 and FY 2012, 

the average difference between the two 

market baskets is ¥0.3 percentage 

point. This is primarily the result of 

lower compensation price increases in 

the FY 2010-based market basket 

compared to the FY 2004-based SNF 

market basket. For the forecasted period 

between FY 2013 and FY 2015, the 

difference in the market basket forecasts 

is similar. 

TABLE 16—PROPOSED FY 2010-BASED SNF MARKET BASKET AND FY 2004-BASED SNF MARKET BASKET, PERCENT

CHANGES: 2008–2015 

Fiscal year (FY) 

Proposed rebased 

FY 2010-based 

SNF market 

basket 

FY 2004-based 

SNF basket 

Historical data: 

FY 2008 ................................................................................................................................................ 3.5 3.6 

FY 2009 ................................................................................................................................................ 2.4 2.8 

FY 2010 ................................................................................................................................................ 1.8 2.0 

FY 2011 ................................................................................................................................................ 2.0 2.2 

FY 2012 ................................................................................................................................................ 1.8 2.2 

Average FY 2008–2012 ................................................................................................................ 2.3 2.6 

Forecast: 

FY 2013 ................................................................................................................................................ 1.9 2.3 

FY 2014 ................................................................................................................................................ 2.3 2.5 

FY 2015 ................................................................................................................................................ 2.4 2.6 

Average FY 2013–2015 ................................................................................................................ 2.2 2.5 

Source: IHS Global Insight, Inc. 1st quarter 2013 forecast with historical data through 4th quarter 2012. 

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26462 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 

5. Labor-Related Share 

We define the labor-related share 

(LRS) as those expenses that are laborintensive and vary with, or are 

influenced by, the local labor market. 

Each year, we calculate a revised laborrelated share based on the relative 

importance of labor-related cost 

categories in the input price index. In 

this FY 2014 SNF PPS proposed rule, 

we are proposing to revise the laborrelated share to reflect the relative 

importance of the following proposed 

FY 2010-based SNF market basket cost 

weights that we believe are laborintensive and vary with, or are 

influenced by, the local labor market: (1) 

Wages and salaries; (2) employee 

benefits; (3) contract labor; (4) the laborrelated portion of nonmedical 

professional fees; (5) administrative and 

facilities support services; (6) all other: 

labor-related services (previously 

referred to in the FY 2004-based SNF 

market basket as labor-intensive); and 

(7) a proportion of capital-related 

expenses. We are proposing to continue 

to include a proportion of capitalrelated expenses because a portion of 

these expenses are deemed to be laborintensive and vary with, or are 

influenced by, the local labor market. 

For example, a proportion of 

construction costs for a medical 

building would be attributable to local 

construction workers’ compensation 

expenses. 

Consistent with previous SNF market 

basket revisions and rebasings, the ‘‘all 

other: labor-related services’’ cost 

category is mostly comprised of 

building maintenance and security 

services (including, but not limited to, 

commercial and industrial machinery 

and equipment repair, nonresidential 

maintenance and repair, and 

investigation and security services). 

Because these services tend to be laborintensive and are mostly performed at 

the SNF facility (and therefore, unlikely 

to be purchased in the national market), 

we believe that they meet our definition 

of labor-related services. 

For the proposed FY 2010-based SNF 

market basket, the proposed inclusion of 

the administrative and facilities support 

services cost category into the laborrelated share remains consistent with 

the current labor-related share, since 

this cost category was previously 

included in the FY 2004-based SNF 

market basket labor-intensive cost 

category. As previously stated, we are 

proposing to establish a separate 

administrative and facilities support 

services cost category so that we can use 

the ECI for Total Compensation for 

Office and Administrative Support 

Services to reflect the specific price 

changes associated with these services. 

For the FY 2004-based SNF market 

basket, we assumed that all nonmedical 

professional services (including 

accounting and auditing services, 

engineering services, legal services, and 

management and consulting services) 

were purchased in the local labor 

market and, thus, all of their associated 

fees varied with the local labor market. 

As a result, we previously included 100 

percent of these costs in the laborrelated share. In an effort to determine 

more accurately the share of nonmedical 

professional fees that should be 

included in the labor-related share, we 

surveyed SNFs regarding the proportion 

of those fees that are attributable to local 

firms and the proportion that are 

purchased from national firms. We 

notified the public of our intent to 

conduct this survey on December 9, 

2005 (70 FR 73250) and received no 

comments (71 FR 8588). 

With approval from OMB, we reached 

out to the industry and received 

responses to our survey from 141 SNFs. 

Using data on full-time equivalents to 

allocate responding SNFs across strata 

(region of the country and urban/rural 

status), post-stratification weights were 

calculated. Based on these weighted 

results, we determined that SNFs 

purchase, on average, the following 

portions of contracted professional 

services inside their local labor market: 

• 86 percent of accounting and 

auditing services. 

• 89 percent of architectural, 

engineering services. 

• 78 percent of legal services. 

• 87 percent of management 

consulting services. 

Together, these four categories 

represent 2.672 percentage points of the 

total costs for the proposed FY 2010- 

based SNF market basket. We applied 

the percentages from this special survey 

to their respective SNF market basket 

weights to separate them into laborrelated and nonlabor-related costs. As a 

result, we are designating 2.285 of the 

2.672 total to the labor-related share, 

with the remaining 0.387 categorized as 

nonlabor-related. 

In addition to the professional 

services listed above, we also classified 

expenses under NAICS 55, Management 

of Companies and Enterprises, into the 

nonmedical professional fees cost 

category. The NAICS 55 data are mostly 

comprised of corporate, subsidiary, and 

regional managing offices, or otherwise 

referred to as home offices. Formerly, all 

of the expenses within this category 

were considered to vary with, or be 

influenced by, the local labor market, 

and thus, were included in the laborrelated share. Because many SNFs are 

not located in the same geographic area 

as their home office, we analyzed data 

from a variety of sources to determine 

what proportion of these costs should be 

appropriately included in the laborrelated share. 

Our proposed methodology is based 

on data from the MCRs, as well as a 

CMS database of Home Office Medicare 

Records (HOMER) (a database that 

provides city and state information 

(addresses) for home offices). The MCR 

requires SNFs to report their home 

office compensation costs. Using the 

HOMER database to determine the home 

office location for each home office 

provider number, we compared the 

location of the SNF with the location of 

the SNF’s home office. We propose to 

determine the proportion of NAICS 55 

costs that should be allocated to the 

labor-related share based on the percent 

of SNF home office compensation 

attributable to SNFs that had home 

offices located in their respective local 

labor markets—defined as being in the 

same MSA. We determined a SNF’s 

MSA using its Zip Code information 

from the MCR, while a home office MSA 

was determined using the Medicare 

HOMER Database, which provided a 

home office Zip Code, as well. 

As stated above, we are proposing to 

determine the proportion of NAICS 55 

costs that should be allocated to the 

labor-related share based on the percent 

of SNF home office compensation 

attributable to those SNFs that had 

home offices located in their respective 

labor markets. Using this proposed 

methodology, we determined that 32 

percent of SNF home office 

compensation costs were for SNFs that 

had home offices located in their 

respective local labor markets; therefore, 

we propose to allocate 32 percent of 

NAICS 55 expenses to the labor-related 

share. We believe that this methodology 

provides a reasonable estimate of the 

NAICS 55 expenses that are 

appropriately allocated to the laborrelated share, because we primarily rely 

on data on home office compensation 

costs as provided by SNFs on Medicare 

cost reports. By combining these data 

with the specific MSAs for the SNF and 

their associated home office, we believe 

we have a reasonable estimate of the 

proportion of SNF’s home office costs 

that would be incurred in the local labor 

market. 

In the proposed FY 2010-based SNF 

market basket, NAICS 55 expenses that 

were subject to allocation based on the 

home office allocation methodology 

represent 1.833 percent of the total 

costs. Based on the home office results, 

we are apportioning 0.587 percentage 

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Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 26463 

point of the 1.833 percentage points 

figure into the labor-related share and 

designating the remaining 1.247 

percentage points as nonlabor-related. 

The Benchmark I–O data contains 

other smaller cost categories that we 

allocate fully to either ‘‘nonmedical 

professional fees: Labor-related’’ or 

‘‘nonmedical professional fees: 

nonlabor-related.’’ Together, the sum of 

these smaller cost categories, the four 

nonmedical professional fees cost 

categories where survey results were 

available, and the NAICS 55 expenses 

represent all nonmedical professional 

fees, or 5.469 percent of total costs in 

the SNF market basket. Of the 5.469 

percentage points, 3.427 percentage 

points represent professional fees: 

Labor-related while 2.042 percentage 

points represent nonmedical 

professional fees: Nonlabor-related. 

Each year, we calculate a revised 

labor-related share based on the relative 

importance of labor-related cost 

categories in the SNF market basket. 

Table 17 summarizes the proposed 

updated labor-related share for FY 2014, 

which is based on the proposed rebased 

and revised FY 2010-based SNF market 

basket, compared to the labor-related 

share that was used for the FY 2013 SNF 

PPS update. 

TABLE 17—LABOR-RELATED RELATIVE IMPORTANCE, FY 2013 AND FY 2014 

Relative 

importance, 

labor-related, 

FY 2013 (FY 

2004-based index) 

12:2 forecast 

Relative 

importance, 

labor-related, 

FY 2014 (FY 

2010-based index) 

13:1 forecast 

Wages and salaries1 ................................................................................................................................... 49.847 49.204 

Employee benefits ....................................................................................................................................... 11.532 11.546 

Nonmedical Professional fees: labor-related ............................................................................................... 1.307 3.451 

Administrative and facilities support services .............................................................................................. N/A 0.501 

All Other: Labor-related services2 ............................................................................................................... 3.364 2.292 

Capital-related (.391) ................................................................................................................................... 2.333 2.770 

Total ...................................................................................................................................................... 68.383 69.764 

1 As discussed above in section V.A.2 in this preamble, the wages and salaries and employee benefits cost weight reflect contract labor costs. 2 Previously referred to as labor-intensive services cost category in the FY 2004 -based SNF market basket. 

B. Monitoring Impact of FY 2012 Policy 

Changes 

In the FY 2012 SNF PPS final rule, we 

stated we would monitor the impact of 

certain FY 2012 policy changes on 

various aspects of the SNF PPS (76 FR 

48498). Specifically, we have been 

monitoring the impact of the following 

FY 2012 policy changes: 

• Recalibration of the FY 2011 SNF 

parity adjustment to align overall 

payments under RUG–IV with those 

under RUG–III. 

• Allocation of group therapy time to 

pay more appropriately for group 

therapy services based on resource 

utilization and cost. 

• Implementation of changes to the 

MDS 3.0 patient assessment instrument, 

most notably the introduction of the 

Change-of-Therapy (COT) Other 

Medicare Required Assessment 

(OMRA). 

We have posted quarterly memos to 

the SNF PPS Web site which highlight 

some of the trends we have observed 

over a given time period. These memos 

may be accessed through the SNF PPS 

Web site at http://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/Downloads/ 

SNF_Monitoring.zip. Below, we provide 

a summary of the results derived from 

this monitoring effort. 

1. RUG Distributions 

As stated in the FY 2012 SNF PPS 

final rule (76 FR 48493), the 

recalibration of the FY 2011 parity 

adjustment used 8 months of FY 2011 

data as the basis for the recalibration. 

We observed that case-mix utilization 

patterns continued to be consistent over 

the final 4 months of FY 2011 and 

would not have resulted in a significant 

difference in the calculated amount of 

the recalibrated parity adjustment. We 

have posted data illustrating the RUG– 

IV distribution of days for the entirety 

of FY 2011, as compared to the days 

distribution used to calculate the parity 

adjustment in the FY 2012 final rule, 

and the distribution of days for FY 2012, 

all of which may be found at http:// 

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/ 

Downloads/SNF_Monitoring.zip. 

Additionally, case-mix utilization 

observed during FY 2012 has not shown 

unanticipated changes in patient 

classification. Overall patient case mix 

is not significantly different from that 

observed in FY 2011. Table 18 

illustrates a breakdown of the SNF casemix distribution of service days by the 

major RUG classification categories for 

FY 2011 and FY 2012. 

TABLE 18—SNF CASE-MIX DISTRIBUTIONS BY MAJOR RUG–IV CATEGORY

FY 2011 (percent) FY 2012 (percent) 

Rehabilitation Plus Extensive Services ....................................................................................................... 2.5 1.8 

Rehabilitation ............................................................................................................................................... 87.9 88.8 

Extensive Services ...................................................................................................................................... 0.6 0.7 

Special Care ................................................................................................................................................ 4.6 4.9 

Clinically Complex ....................................................................................................................................... 2.5 2.2 

Behavioral Symptoms and Cognitive Performance ..................................................................................... 0.4 0.3 

Reduced Physical Function ......................................................................................................................... 1.5 1.4 

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As illustrated in Table 18, there has 

been a decrease in the Rehabilitation 

Plus Extensive Services category and 

increases in some of the medicallybased RUG categories, specifically 

Special Care and Extensive Services. 

It should be noted that the 

recalibration of the parity adjustment 

applied only to those RUG–IV groups 

with a therapy component 

(Rehabilitation Plus Extensive Services 

and Rehabilitation). This caused a shift 

in the hierarchy of nursing case-mix 

weights among the various RUG–IV 

groups. Since SNFs are permitted to 

‘‘index maximize’’ when determining a 

resident’s RUG classification (that is, of 

those RUGs for which the resident 

qualifies, SNFs are permitted to choose 

the one with the highest per diem 

payment), it is possible that the 

aforementioned case-mix distribution 

shifts reflect residents that had 

previously been classified into therapy 

groups but now index maximize into 

nursing groups instead. 

Looking specifically at the case-mix 

distribution for Rehabilitation RUGs 

only, the data show an increase in the 

percentage of service days at the highest 

therapy level (Ultra High Rehabilitation) 

in FY 2012. This is illustrated in Table 

19. 

TABLE 19—SNF CASE-MIX DISTRIBUTION FOR THERAPY RUG–IV GROUPS, BY MINOR RUG–IV THERAPY CATEGORIES

FY 2011 (percent) FY 2012 (percent) 

Ultra-High Rehabilitation (≥ 720 minutes of therapy per week) .................................................................. 44.8 48.6 

Very-High Rehabilitation (500–719 minutes of therapy per week) ............................................................. 26.9 25.6 

High Rehabilitation (325–499 minutes of therapy per week) ...................................................................... 10.8 10.1 

Medium Rehabilitation (150–324 minutes of therapy per week) ................................................................ 7.6 6.2 

Low Rehabilitation (45–149 minutes of therapy per week) ......................................................................... 0.1 0.1 

Although the decreases in the 

percentage of service days which 

classify into the Very-High, High, and 

Medium Rehabilitation RUG–IV therapy 

categories may be explained by the 

increased utilization of the Ultra-High 

Rehabilitation RUG–IV therapy 

category, some of the decrease may be 

due to index maximization into the 

Special Care RUG–IV category. 

2. Group Therapy Allocation 

To account more accurately for 

resource utilization and cost and to 

equalize the payment incentives across 

therapy modes, we allocated group 

therapy time beginning in FY 2012. We 

anticipated that this policy would result 

in some change to the type of therapy 

mode (that is, individual, concurrent, or 

group) used for SNF residents. As noted 

in the section above, we have not 

observed any significant difference in 

patient case mix. However, as illustrated 

in Table 20, providers have significantly 

changed the mode of therapy since our 

STRIVE study (2006–2007). 

TABLE 20—MODE OF THERAPY PROVISION

STRIVE 

(percent) 

FY 2011 

(percent) 

FY 2012 

(percent) 

Individual .................................................................................................................... 74 91.8 99.5 

Concurrent ................................................................................................................. 25 0.8 0.4 

Group ......................................................................................................................... <1 7.4 0.1 

In the FY 2010 final rule (74 FR 

40288, 40315–40319), we established a 

policy that, beginning in FY 2011, we 

would allocate concurrent therapy 

without the allocation of group therapy 

and, as a result, providers shifted from 

concurrent therapy to group therapy. In 

the FY 2012 SNF PPS final rule (76 FR 

48486, 48511–48517), we established a 

policy that would allocate group 

therapy, and data from FY 2012 indicate 

that facilities are providing individual 

therapy almost exclusively. 

3. MDS 3.0 Changes 

In the FY 2012 SNF PPS final rule, we 

introduced a new assessment called the 

COT OMRA to capture more accurately 

the therapy services provided to SNF 

residents. Effective for services provided 

on or after October 1, 2011, SNFs are 

required to complete a COT OMRA for 

patients classified into a RUG–IV 

therapy category (and for patients 

receiving therapy services who are 

classified into a nursing RUG because of 

index maximization), whenever the 

intensity of therapy changes to such a 

degree that it would no longer reflect 

the RUG–IV classification and payment 

assigned for the patient based on the 

most recent assessment used for 

Medicare payment (76 FR 48525). An 

evaluation of the necessity for a COT 

OMRA must be completed at the end of 

each COT observation period, which is 

a successive 7-day window beginning 

on the day following the ARD set for the 

most recent scheduled or unscheduled 

PPS assessment (or beginning the day 

therapy resumes in cases where an 

EOT–R OMRA is completed), and 

ending every seven calendar days 

thereafter. In cases where the resident’s 

therapy has changed to such a degree 

that it is no longer consistent with the 

resident’s current RUG–IV 

classification, then the SNF must 

complete a COT OMRA to reclassify the 

resident into the appropriate RUG–IV 

category. The new RUG–IV group 

resulting from the COT OMRA is billed 

starting the first day of the 7-day COT 

observation period for which the COT 

OMRA was completed and remains at 

this level until a new assessment is 

done that changes the patient’s RUG–IV 

classification. Table 21 shows the 

distribution of all MDS assessment 

types as a percentage of all MDS 

assessments. 

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TABLE 21—DISTRIBUTION OF MDS ASSESSMENT TYPES

FY 2011 

(percent) 

FY 2012 

(percent) 

Scheduled PPS assessment ............................................................................................................................................... 95 84 

Start-of-Therapy (SOT) OMRA ............................................................................................................................................ 2 2 

End-of-Therapy (EOT) OMRA (w/o Resumption) ............................................................................................................... 3 3 

Combined SOT/EOT OMRA ................................................................................................................................................ 0 0 

End-of-Therapy OMRA (w/Resumption) (EOT–R OMRA) .................................................................................................. N/A 0 

Combined SOT/EOT–R OMRA ........................................................................................................................................... N/A 0 

Change-of-Therapy (COT) OMRA ....................................................................................................................................... N/A 11 

Prior to the implementation of the 

COT OMRA, scheduled PPS 

assessments comprised the vast majority 

of completed assessments. With the 

implementation of the COT OMRA for 

FY 2012, scheduled PPS assessments 

still comprise the vast majority of 

completed MDS assessments, though 

the COT OMRA is the most frequently 

completed OMRA. 

4. Conclusion 

Information related to our monitoring 

activities is posted on the SNF PPS Web 

site at http://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

SNFPPS/Downloads/ 

SNF_Monitoring.zip. Based on the data 

reviewed thus far, we have found no 

evidence of the possible negative 

impacts on SNF providers cited in 

comments in the FY 2012 final rule (see 

76 FR 48497–98, 48537), particularly 

references to a potential ‘‘double hit’’ 

from the combined impact of the 

recalibration of the FY 2011 SNF parity 

adjustment and the FY 2012 policy 

changes (for example, allocation of 

group therapy time and introduction of 

the COT OMRA). As noted in the data 

provided in this section, overall case 

mix has not been affected significantly, 

which suggests that the aforementioned 

changes, while ensuring more accurate 

payment, have been absorbed into 

facility practices in such a manner that 

facilities continue to maintain historical 

trends in terms of patient case mix. 

Therefore, while we will continue our 

SNF monitoring efforts, we will post 

information to the aforementioned Web 

site only as appropriate. 

C. Ensuring Accuracy in Grouping to 

Rehabilitation RUG–IV Categories 

As noted in section III.C of this 

proposed rule, under section 

1888(e)(4)(G)(i) of the Act, the federal 

rate incorporates an adjustment to 

account for facility case mix, using a 

classification system that accounts for 

the relative resource utilization of 

different patient types. As part of the 

Nursing Home Case-Mix and Quality 

demonstration project, Version III of the 

Resource Utilization Groups (RUG–III) 

case-mix classification system was 

developed to capture resource use of 

nursing home patients and to provide an 

improved method of tracking the quality 

of their care. In 1998, the first version 

of RUG–III was a 44-group model for 

classifying SNF patients into 

homogeneous groups according to their 

clinical characteristics and the amount 

and type of resources they use as 

measured by the Resident Assessment 

Instrument, the Minimum Data Set 

(MDS). A detailed description of the 

RUG–III groups appears in the interim 

final rule with comment period from 

May 12, 1998 (63 FR 26262–26263). The 

RUG–III groups were the basis for the 

case mix indexes used to establish 

equitable prospective payment levels for 

patients with different service use. 

In FY 2006, the RUG–III classification 

system was refined to include 53 groups 

for case-mix classification that 

continued to be based on patient data 

collected on the MDS 2.0. This reflected 

the addition of 9 new RUG groups 

comprising a new Extensive Services 

plus Rehabilitation payment category, to 

account for the higher cost of 

beneficiaries requiring both 

rehabilitation and certain high-intensity 

medical services. A detailed explanation 

of the RUG–III refinement appears in the 

FY 2006 proposed rule (70 FR 29076– 

29079, May 19, 2005). 

In FY 2011, the RUG–IV classification 

system was implemented and included 

66 groups for case-mix classification 

based on patient data collected on the 

newest version of the Resident 

Assessment Instrument, MDS 3.0. A 

detailed explanation of the RUG–IV 

model appears in the FY 2010 proposed 

rule (74 FR 22220–22238, May 12, 

2009). 

In the May 12, 1998 interim final rule 

with comment period (63 FR 26252, 

26256), we explained how the RUG–III 

system was used to place SNF patients 

into one of 44 patient groups or 

subcategories used for payment. The 

RUG category of Medium Rehabilitation 

(Medium Rehab) was explained in 

conjunction with the RUG categories of 

High and Very High Rehabilitation. 

Among other requirements specific to 

each category, ‘‘all three require at least 

5 days per week of skilled rehabilitative 

therapy, but they are split according to 

weekly treatment time’’ (63 FR 26258). 

To qualify for Medium Rehab, a patient 

also needs to receive at least 150 

minutes of therapy of any combination 

of the three rehabilitation disciplines: 

physical therapy, occupational therapy, 

and speech therapy. 

Subsequently, across all iterations of 

the SNF PPS (including the RUG 

refinement in FY 2006 and the 

transition from RUG–III to RUG–IV in 

FY 2011), the criteria for classification 

into the Medium Rehab category 

remained the same. As set forth in the 

FY 2010 final rule (74 FR 40389), to be 

classified into the Medium Rehab 

category under RUG III or RUG IV, the 

resident must receive ‘‘5 days any 

combination of 3 rehabilitation 

disciplines.’’ In order for the SNF 

resident to qualify for the Medium 

Rehab or Medium Rehab plus Extensive 

Services category, he or she must 

receive five distinct calendar days of 

therapy within a 7-day time period (and 

at least 150 minutes of therapy across 

that time as well). This reflects the SNF 

level of care requirement under 

§ 409.31(b)(1) that skilled services must 

be needed and received on a daily basis, 

and the provision at § 409.34(a)(2) 

which specifies that the ‘‘daily basis’’ 

criterion can be met by skilled 

rehabilitation services that are needed 

and provided at least 5 days per week. 

Further, the payment rates for these 

RUG groups were based on staff time 

over the requisite number of distinct 

therapy days. For example, the policy 

would be implemented correctly if a 

patient received a total of 150 minutes 

of therapy in the form of physical 

therapy on Monday and Wednesday, 

occupational therapy on Sunday and 

Tuesday, and speech therapy on Friday. 

In this example, therapy services are 

being provided over a separate and 

distinct 5-day period (Sunday, Monday, 

Tuesday, Wednesday, and Friday). 

Similarly, 5 distinct calendar days of 

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therapy are required to classify into the 

High, Very High, and Ultra High 

Rehabilitation categories. The amount of 

therapy provided over the 7-day lookback period is currently recorded on the 

MDS 3.0 in section O, item O0400A, 

O0400B, and O0400C. 

Medium Rehab and Medium Rehab 

Plus Extensive Services qualifiers 

remained the same under the SNF PPS 

from 1998 until the present; however, 

the MDS did not contain the appropriate 

items to permit providers to report the 

number of distinct calendar days of 

therapy that a particular resident 

receives during a given week, 

inadvertently allowing residents who do 

not meet the Medium Rehab and 

Medium Rehab Plus Extensive Services 

qualifiers (under the intended policy as 

discussed above) to classify 

inappropriately into those RUG 

categories. For example, a resident 

receives 150 minutes of therapy in the 

form of physical therapy and 

occupational therapy on Monday (one 

session of physical therapy and one 

session of occupational therapy) and 

Wednesday (one session of physical 

therapy and one session of occupational 

therapy) and speech therapy on Friday. 

The intent of the Medium Rehab 

classification criteria is for such a 

resident not to classify into the Medium 

Rehab RUG category, since he or she 

only received therapy on 3 days 

(Monday, Wednesday, and Friday) 

during the 7-day look-back period for 

this PPS assessment. However, the MDS 

item set only requires the SNF to record 

the number of days therapy was 

received by each therapy discipline 

during that 7-day look-back period, 

without distinguishing between distinct 

calendar days. Thus, in the example 

above, the SNF would record on the 

MDS: 2 days of physical therapy, 2 days 

of occupational therapy, and 1 day of 

speech therapy. Currently, the RUG 

grouper adds these days together, 

allowing the resident described above to 

be classified into the Medium Rehab 

category even though the resident did 

not actually receive 5 distinct calendar 

days of therapy as required by the 

criteria. This resident would not meet 

the classification criteria for the 

Medium Rehab category as they were 

intended to be applied. 

In rare instances, the same issue can 

occur with the Low Rehabilitation (Low 

Rehab) and Low Rehab Plus Extensive 

Services categories, which require 

rehabilitation services for at least 45 

minutes a week with three days of any 

combination of the three rehabilitation 

disciplines (and restorative nursing 6 

days per week). Similar to the Medium 

Rehab classification criteria, the intent 

here, as well, is to require distinct 

calendar days of therapy during the 7- 

day look-back period (in this case, 3 

distinct calendar days of therapy). For 

example, this policy would be 

implemented correctly if a resident 

received a total of 90 minutes of therapy 

in the form of physical therapy on 

Monday and Wednesday, occupational 

therapy on Wednesday and Friday, and 

speech therapy on Friday. In this 

example, therapy services are being 

provided over 3 distinct calendar days 

(Monday, Wednesday, and Friday). 

However, as with the Medium Rehab 

category, it is possible for certain 

residents who do not meet the Low 

Rehab qualifiers under the intended 

policy to classify inappropriately into 

the Low Rehab category. For example, if 

a resident were to receive 90 minutes of 

therapy in the form of physical therapy 

and occupational therapy on Monday, 

and physical therapy and speech 

therapy on Tuesday, this patient would 

only have received therapy for 2 distinct 

days in that 7-day look-back period; 

however, based on the information 

currently recorded on the MDS, the 

patient would still be classified in a 

Low Rehab RUG. 

As explained above, we are clarifying 

that our classification criteria for the 

Rehabilitation RUG categories require 

that the resident receive the requisite 

number of distinct calendar days of 

therapy to be classified into the 

Rehabilitation RUG category. However, 

the MDS item set currently does not 

contain an item that permits SNFs to 

report the total number of distinct 

calendar days of therapy provided by all 

rehabilitation disciplines, allowing 

some residents to be classified into 

Rehabilitation RUG categories when 

they do not actually meet our 

classification criteria. To permit 

facilities to report the number of distinct 

calendar days that a resident receives 

therapy, and to permit implementation 

of our Rehabilitation RUG classification 

criteria as intended, we propose to add 

item O0420 to the MDS Item Set, 

Distinct Calendar Days of Therapy. 

Effective October 1, 2013, facilities 

would be required to record under this 

item the number of distinct calendar 

days of therapy provided by all the 

rehabilitation disciplines over the 7-day 

look-back period for the current 

assessment, which would be used to 

classify the resident into the correct 

Rehabilitation RUG category. We invite 

comments on our proposal to add this 

item to the MDS Item Set so that we may 

properly implement our Rehabilitation 

RUG classification criteria based on the 

number of distinct calendar days of 

therapy a patient received, as described 

above. 

D. SNF Therapy Research Project 

Currently, the therapy payment rate 

component of the SNF PPS is based 

solely on the amount of therapy 

provided to a patient during the 7-day 

look-back period, regardless of the 

specific patient characteristics. The 

amount of therapy a patient receives is 

used to classify the resident into a RUG 

category, which then determines the per 

diem payment for that resident. CMS 

has contracted with Acumen, LLC and 

the Brookings Institution to identify 

potential alternatives to the existing 

methodology used to pay for therapy 

services received under the SNF PPS. 

As an initial step, the project will 

review past research studies and policy 

issues related to SNF PPS therapy 

payment and options for improving or 

replacing the current system of paying 

for SNF therapy services received. We 

welcome comments and ideas on the 

existing methodology used to pay for 

therapy services under the SNF PPS. 

Comments may be included as part of 

comments on this proposed rule. We are 

also soliciting comments outside the 

comment period and these comments 

should be sent via email to 

SNFTherapyPayments@cms.hhs.gov. 

We will also regularly update the public 

on the progress of this project on the 

project Web site at http://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/ 

therapyresearch.html. 

VI. Provisions of the Proposed Rule and 

Technical Correction 

As discussed in section III. of this 

proposed rule, this proposed rule would 

update the payment rates under the SNF 

PPS for FY 2014 as required by section 

1888(e)(4)(E)(ii). Also, as discussed in 

section III.B.3. of this proposed rule, we 

propose that when the forecast error, 

rounded to one significant digit, is 0.5 

percentage point, we would calculate 

the forecast error to 2 significant digits 

in order to determine whether the 

forecast error threshold has been 

exceeded. Further, as discussed in 

section III.C. of this proposed rule, we 

propose that upon the conversion to 

ICD–10–CM effective October 1, 2014, 

we would use the ICD–10–CM code B20 

(in place of the ICD–9–CM code 042) to 

identify those residents for whom it is 

appropriate to apply the AIDS add-on 

established under section 511 of the 

MMA. In addition, as discussed in 

section III.D. of this proposed rule, to 

allow for sufficient time to assess the 

February 28, 2013 OMB changes to the 

statistical area delineations and their 

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ramifications, we intend to propose 

changes to the wage index based on the 

newest CBSA changes in the FY 2015 

SNF PPS proposed rule. Thus, we 

would continue to use the previous 

OMB definitions (that is, those used for 

the FY 2013 SNF PPS update notice) for 

the FY 2014 SNF PPS wage index. 

As discussed previously in section 

V.A of this proposed rule, we propose 

to revise and rebase the SNF market 

basket index to reflect a base year of FY 

2010, and to use this revised and 

rebased market basket to determine the 

SNF market basket percentage increase 

for 2014. In addition, we propose to 

revise the labor-related share to reflect 

the relative importance of the laborrelated cost weights in the proposed FY 

2010-based SNF market basket. Also, as 

discussed in section V.C. of this 

proposed rule, to help ensure accuracy 

in grouping to the rehabilitation RUG 

categories, we propose to add item 

O0420 to the MDS Item Set, which 

would require facilities to record the 

number of distinct calendar days of 

therapy provided by all the 

rehabilitation disciplines over the 7-day 

look-back period for the current 

assessment. 

In addition, as discussed earlier in 

this proposed rule, we are proposing to 

adopt an approach already being 

followed by other Medicare payment 

systems, under which the lengthy wage 

index tables that are currently published 

in the Federal Register as part of the 

annual SNF PPS rulemaking, would 

instead be made available exclusively 

through the Internet on the CMS Web 

site at http://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

SNFPPS/WageIndex.html. To adopt this 

approach, we propose to revise 

§ 413.345. Currently, § 413.345 states 

that CMS publishes the wage index in 

the Federal Register. We propose to 

revise this language, consistent with the 

language of the corresponding statutory 

authority at section 1888(e)(4)(H)(iii), to 

state that CMS publishes in the Federal 

Register ‘‘the factors to be applied in 

making the area wage adjustment.’’ 

Accordingly, while the annual Federal 

Register publication would continue to 

include a discussion of the various 

applicable ‘‘factors’’ applied in making 

the area wage adjustment (for example, 

the SNF PPS’s use of the hospital wage 

index exclusive of its occupational mix 

adjustment), effective October 1, 2013, it 

would no longer include a listing of the 

individual wage index values 

themselves, which would instead be 

made available exclusively through the 

Internet on the CMS Web site. 

Further, we propose to make a minor 

technical correction in the regulations 

text at § 424.11(e)(4), regarding the types 

of practitioners (in addition to 

physicians) that can sign the required 

SNF level of care certification and 

recertifications. In the calendar year 

(CY) 2011 Medicare Physician Fee 

Schedule (MPFS) final rule with 

comment period (75 FR 73387, 73602, 

73626–27), we revised the regulations at 

§ 424.20(e)(2) to implement section 3108 

of the Affordable Care Act, which 

amended section 1814(a)(2) of the Act, 

by adding physician assistants to the 

provision authorizing nurse 

practitioners and clinical nurse 

specialists to perform this function. 

However, we inadvertently neglected to 

make a conforming revision in the 

regulations text at § 424.11(e)(4), an 

omission that we now propose to 

rectify. 

VII. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995 (PRA), we are required to 

provide a 60-day notice in the Federal 

Register and solicit public comments 

before a collection of information 

requirement is submitted to the Office of 

Management and Budget (OMB) for 

review and approval. In order to 

evaluate fairly whether an information 

collection should be approved by OMB, 

section 3506(c)(2)(A) of the PRA 

requires that we solicit comments on the 

following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

We are soliciting public comment on 

each of the section 3506(c)(2)(A)- 

required issues for the following 

information collection requirements 

(ICRs): 

ICRs Regarding Nursing Home and 

Swing Bed PPS Item Sets 

Under sections 4204(b) and 4214(d) of 

the Omnibus Budget Reconciliation Act 

of 1987 (OBRA 1987, Pub. L. 100–203 

enacted on December 22, 1987), the 

submission and retention of resident 

assessment data for purposes of carrying 

out OBRA 1987 are not subject to the 

PRA. While certain data items that are 

collected under the SNF resident 

assessment instrument (or MDS 3.0) fall 

under the OBRA 1987 exemption, MDS 

3.0’s PPS-related item sets are outside 

the scope of OBRA 1987 and require 

PRA consideration. 

As discussed in section V.C. of the 

preamble, this rule proposes to add PPSrelated Item O0420 to the MDS 3.0 form 

to capture the number of distinct 

calendar days a SNF resident has 

received therapy in a seven-day lookback period. The Item would be added 

to allow the RUG–IV grouper software to 

calculate more accurately the number of 

therapy days a SNF resident has 

received in order to place him or her 

into the correct RUG–IV payment group. 

The Item would not be added as the 

result of any change in statute or policy; 

rather, it would be added to ensure that 

our existing Rehabilitation RUG 

classification policies are properly 

implemented as intended. 

While we are proposing to add Item 

O0420 to the MDS 3.0 form, we do not 

believe this action will cause any 

measurable adjustments to our burden 

estimates. Consequently, we are not 

revising the burden estimates that have 

been approved under OCN 0938–1140 

(CMS–R–250) for the Nursing Home and 

Swing Bed PPS Item Sets. 

Submission of PRA-Related Comments 

We have submitted a copy of this 

proposed rule to OMB for its review of 

the rule’s information collection and 

recordkeeping requirements. These 

requirements are not effective until they 

have been approved by the OMB. 

To obtain copies of the supporting 

statement and any related forms for the 

proposed paperwork collection 

referenced above, access CMS’ Web site 

at http://www.cms.hhs.gov/ 

PaperworkReductionActof1995, or email 

your request, including your address, 

phone number, OMB number, and CMS 

document identifier, to 

Paperwork@cms.hhs.gov, or call the 

Reports Clearance Office on (410) 786– 

1326. 

We invite public comments on this 

proposed information collection and 

recordkeeping requirement. If you 

comment on this proposed information 

collection and recordkeeping 

requirement, please do either of the 

following: 

1. Submit your comments 

electronically as specified in the 

ADDRESSES section of this proposed rule; 

or 

2. Submit your comments to the 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Attention: CMS Desk Officer, 

(CMS–1446–P) Fax: (202) 395–6974; or 

Email: OIRA_submission@omb.eop.gov. 

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26468 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 

VIII. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, 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 preamble, and when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

IX. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

We have examined the impacts of this 

proposed rule as required by Executive 

Order 12866 on Regulatory Planning 

and Review (September 30, 1993), 

Executive Order 13563 on Improving 

Regulation and Regulatory Review 

(January 18, 2011), the Regulatory 

Flexibility Act (RFA) (September 19, 

1980, Pub. L. 96–354), section 1102(b) of 

the Act, section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA, 

March 22, 1995; Pub. L. 104–4), 

Executive Order 13132 on Federalism 

(August 4, 1999), and the Congressional 

Review Act (5 U.S.C. 804(2)). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This rule 

has been designated an economically 

significant rule, under section 3(f)(1) of 

Executive Order 12866. Accordingly, we 

have prepared a regulatory impact 

analysis (RIA) as further discussed 

below. Also, the rule has been reviewed 

by OMB. 

2. Statement of Need 

This proposed rule would update the 

SNF prospective payment rates for FY 

2014 as required under section 

1888(e)(4)(E) of the Act. It also responds 

to section 1888(e)(4)(H) of the Act, 

which requires the Secretary to 

‘‘provide for publication in the Federal 

Register’’ before the August 1 that 

precedes the start of each fiscal year, of 

the unadjusted federal per diem rates, 

the case-mix classification system, and 

the factors to be applied in making the 

area wage adjustment. As these statutory 

provisions prescribe a detailed 

methodology for calculating and 

disseminating payment rates under the 

SNF PPS, we do not have the discretion 

to adopt an alternative approach. 

3. Overall Impacts 

This proposed rule sets forth 

proposed updates of the SNF PPS rates 

contained in the update notice for FY 

2013 (77 FR 46214). Based on the above, 

we estimate that the aggregate impact 

would be an increase of $500 million in 

payments to SNFs, resulting from the 

SNF market basket update to the 

payment rates, as adjusted by the MFP 

adjustment and forecast error correction. 

The impact analysis of this proposed 

rule represents the projected effects of 

the changes in the SNF PPS from FY 

2013 to FY 2014. Although the best data 

available are utilized, there is no 

attempt to predict behavioral responses 

to these changes, or to make 

adjustments for future changes in such 

variables as days or case-mix. 

Certain events may occur to limit the 

scope or accuracy of our impact 

analysis, as this analysis is futureoriented and, thus, very susceptible to 

forecasting errors due to certain events 

that may occur within the assessed 

impact time period. Some examples of 

possible events may include newlylegislated general Medicare program 

funding changes by the Congress, or 

changes specifically related to SNFs. In 

addition, changes to the Medicare 

program may continue to be made as a 

result of previously-enacted legislation, 

or new statutory provisions. Although 

these changes may not be specific to the 

SNF PPS, the nature of the Medicare 

program is such that the changes may 

interact and, thus, the complexity of the 

interaction of these changes could make 

it difficult to predict accurately the full 

scope of the impact upon SNFs. 

In accordance with sections 

1888(e)(4)(E) and 1888(e)(5) of the Act, 

we update the FY 2013 payment rates 

by a factor equal to the market basket 

index percentage change adjusted by the 

FY 2012 forecast error adjustment (if 

applicable) and the MFP adjustment to 

determine the payment rates for FY 

2014. As discussed previously, for FY 

2012 and each subsequent FY, as 

required by section 1888(e)(5)(B) of the 

Act as amended by section 3401(b) of 

the Affordable Care Act, the market 

basket percentage is reduced by the 

MFP adjustment. The special AIDS addon established by section 511 of the 

MMA remains in effect until ‘‘. . . such 

date as the Secretary certifies that there 

is an appropriate adjustment in the case 

mix. . . .’’ We have not provided a 

separate impact analysis for the MMA 

provision. Our latest estimates indicate 

that there are fewer than 4,100 

beneficiaries who qualify for the add-on 

payment for residents with AIDS. The 

impact to Medicare is included in the 

‘‘total’’ column of Table 22. In updating 

the SNF rates for FY 2014, we made a 

number of standard annual revisions 

and clarifications mentioned elsewhere 

in this proposed rule (for example, the 

update to the wage and market basket 

indexes used for adjusting the federal 

rates). 

The annual update set forth in this 

proposed rule applies to SNF payments 

in FY 2014. Accordingly, the analysis 

that follows only describes the impact of 

this single year. In accordance with the 

requirements of the Act, we will publish 

a notice or rule for each subsequent FY 

that will provide for an update to the 

SNF payment rates and include an 

associated impact analysis. 

4. Detailed Economic Analysis 

The FY 2014 impacts appear in Table 

22. Using the most recently available 

data, in this case FY 2012, we apply the 

current FY 2013 wage index and laborrelated share value to the number of 

payment days to simulate FY 2013 

payments. Then, using the same FY 

2012 data, we apply the FY 2014 wage 

index and labor-related share value to 

simulate FY 2014 payments. We 

tabulate the resulting payments 

according to the classifications in Table 

22, e.g. facility type, geographic region, 

facility ownership, and compare the 

difference between current and 

proposed payments to determine the 

overall impact. The breakdown of the 

various categories of data in the table 

follows. 

The first column shows the 

breakdown of all SNFs by urban or rural 

status, hospital-based or freestanding 

status, census region, and ownership. 

The first row of figures describes the 

estimated effects of the various changes 

on all facilities. The next six rows show 

the effects on facilities split by hospitalbased, freestanding, urban, and rural 

categories. The urban and rural 

designations are based on the location of 

the facility under the CBSA designation. 

The next nineteen rows show the effects 

on facilities by urban versus rural status 

by census region. The last three rows 

show the effects on facilities by 

ownership (that is, government, profit, 

and non-profit status). 

The second column in the table shows 

the number of facilities in the impact 

database. 

The third column of the table shows 

the effect of the annual update to the 

wage index. This represents the effect of 

using the most recent wage data 

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available. The total impact of this 

change is zero percent; however, there 

are distributional effects of the change. 

The fourth column shows the effect of 

all of the changes on the FY 2014 

payments. The update of 1.4 percent 

(consisting of the market basket increase 

of 2.3 percentage points, reduced by the 

0.5 percentage point forecast error 

correction and further reduced by the 

0.4 percentage point MFP adjustment) is 

constant for all providers and, though 

not shown individually, is included in 

the total column. It is projected that 

aggregate payments will increase by 1.4 

percent, assuming facilities do not 

change their care delivery and billing 

practices in response. 

As illustrated in Table 22, the 

combined effects of all of the changes 

vary by specific types of providers and 

by location. Though all facilities would 

experience payment increases, the 

projected impact on providers for FY 

2014 varies due to the impact of the 

wage index update. For example, due to 

changes from updating the wage index, 

providers in the rural Pacific region 

would experience a 2.5 percent increase 

in FY 2014 total payments and 

providers in the urban East South 

Central region would experience a 0.7 

percent increase in FY 2014 total 

payments. 

TABLE 22—RUG–IV PROJECTED IMPACT TO THE SNF PPS FOR FY 2014 

Number of 

facilities 

FY 2014 

Update wage 

data 

(percent) 

Total FY 2014 

change 

(percent) 

Group: 

Total ............................................................................................................................................. 15,376 0.0 1.4 

Urban .................................................................................................................................... 10,578 0.1 1.5 

Rural ..................................................................................................................................... 4,798 ¥0.3 1.1 

Hospital based urban ........................................................................................................... 757 0.2 1.6 

Freestanding urban .............................................................................................................. 9,821 0.1 1.5 

Hospital based rural ............................................................................................................. 402 ¥0.3 1.1 

Freestanding rural ................................................................................................................ 4,396 ¥0.3 1.1 

Urban by region: 

New England ........................................................................................................................ 804 0.6 2.0 

Middle Atlantic ...................................................................................................................... 1,452 0.9 2.3 

South Atlantic ....................................................................................................................... 1,740 ¥0.5 0.8 

East North Central ................................................................................................................ 2,048 ¥0.3 1.1 

East South Central ............................................................................................................... 525 ¥0.7 0.7 

West North Central ............................................................................................................... 868 ¥0.6 0.8 

West South Central .............................................................................................................. 1,240 ¥0.2 1.2 

Mountain ............................................................................................................................... 490 0.2 1.6 

Pacific ................................................................................................................................... 1,405 0.8 2.2 

Outlying ................................................................................................................................. 6 0.1 1.5 

Rural by region: 

New England ........................................................................................................................ 153 0.4 1.8 

Middle Atlantic ...................................................................................................................... 262 ¥0.2 1.2 

South Atlantic ....................................................................................................................... 608 ¥0.5 0.9 

East North Central ................................................................................................................ 928 ¥0.8 0.6 

East South Central ............................................................................................................... 551 ¥0.7 0.7 

West North Central ............................................................................................................... 1,114 0.6 2.0 

West South Central .............................................................................................................. 813 ¥0.8 0.6 

Mountain ............................................................................................................................... 246 0.3 1.7 

Pacific ................................................................................................................................... 123 1.0 2.5 

Ownership: 

Government .......................................................................................................................... 830 0.2 1.6 

Profit ..................................................................................................................................... 10,722 0.0 1.4 

Non-profit .............................................................................................................................. 3,824 0.0 1.4 

Note: The Total column includes the 2.3 percent market basket increase, reduced by the 0.5 percentage point forecast error correction and 

further reduced by the 0.4 percentage point MFP adjustment. Additionally, we found no SNFs in rural outlying areas. 

5. Alternatives Considered 

As described above, we estimate that 

the aggregate impact for FY 2014 would 

be an increase of $500 million in 

payments to SNFs, resulting from the 

SNF market basket update to the 

payment rates, as adjusted by the 

forecast error correction and the MFP 

adjustment. 

Section 1888(e) of the Act establishes 

the SNF PPS for the payment of 

Medicare SNF services for cost reporting 

periods beginning on or after July 1, 

1998. This section of the statute 

prescribes a detailed formula for 

calculating payment rates under the 

SNF PPS, and does not provide for the 

use of any alternative methodology. It 

specifies that the base year cost data to 

be used for computing the SNF PPS 

payment rates must be from FY 1995 

(October 1, 1994, through September 30, 

1995). In accordance with the statute, 

we also incorporated a number of 

elements into the SNF PPS (for example, 

case-mix classification methodology, a 

market basket index, a wage index, and 

the urban and rural distinction used in 

the development or adjustment of the 

federal rates). Further, section 

1888(e)(4)(H) of the Act specifically 

requires us to disseminate the payment 

rates for each new FY through the 

Federal Register, and to do so before the 

August 1 that precedes the start of the 

new FY. Accordingly, we are not 

pursuing alternatives with respect to the 

payment methodology as discussed 

above. 

6. Accounting Statement 

As required by OMB Circular A–4 

(available online at 

www.whitehouse.gov/sites/default/files/ 

omb/assets/regulatory_matters_pdf/a4.pdf), in Table 23, we have prepared an 

accounting statement showing the 

classification of the expenditures 

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26470 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 

associated with the provisions of this 

proposed rule. Table 23 provides our 

best estimate of the possible changes in 

Medicare payments under the SNF PPS 

as a result of the policies in this 

proposed rule, based on the data for 

15,376 SNFs in our database. All 

expenditures are classified as transfers 

to Medicare providers (that is, SNFs). 

TABLE 23—ACCOUNTING STATEMENT: 

CLASSIFICATION OF ESTIMATED EXPENDITURES, FROM THE 2013 SNF 

PPS FISCAL YEAR TO THE 2014 

SNF PPS FISCAL YEAR

Category Transfers 

Annualized Monetized 

Transfers.

$500 million.* 

From Whom To 

Whom? 

Federal Government 

to SNF Medicare 

Providers. 

* The net increase of $500 million in transfer 

payments is a result of the MFP-adjusted market basket increase of $500 million. 

7. Conclusion 

This proposed rule sets forth updates 

of the SNF PPS rates contained in the 

update notice for FY 2013 (77 FR 

46214). Based on the above, we estimate 

the overall estimated payments for SNFs 

in FY 2014 are projected to increase by 

$500 million, or 1.4 percent, compared 

with those in FY 2013. We estimate that 

in FY 2014 under RUG–IV, SNFs in 

urban and rural areas would experience, 

on average, a 1.5 and 1.1 percent 

increase, respectively, in estimated 

payments compared with FY 2013. 

Providers in the rural Pacific region 

would experience the largest estimated 

increase in payments of approximately 

2.5 percent. Providers in the rural West 

South Central region would experience 

the smallest increase in payments of 0.6 

percent. 

B. Regulatory Flexibility Act Analysis 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities, if a rule has a significant impact 

on a substantial number of small 

entities. For purposes of the RFA, small 

entities include small businesses, nonprofit organizations, and small 

governmental jurisdictions. Most SNFs 

and most other providers and suppliers 

are small entities, either by their nonprofit status or by having revenues of 

$25.5 million or less in any 1 year. For 

purposes of the RFA, approximately 91 

percent of SNFs are considered small 

businesses according to the Small 

Business Administration’s latest size 

standards (NAICS 623110), with total 

revenues of $25.5 million or less in any 

1 year. (For details, see the Small 

Business Administration’s Web site at 

http://www.sba.gov/category/ 

navigation-structure/contracting/ 

contracting-officials/eligibility-sizestandards). Individuals and States are 

not included in the definition of a small 

entity. In addition, approximately 25 

percent of SNFs classified as small 

entities are non-profit organizations. 

Finally, the estimated number of small 

business entities does not distinguish 

provider establishments that are within 

a single firm and, therefore, the number 

of SNFs classified as small entities may 

be higher than the estimate above. 

This proposed rule sets forth updates 

of the SNF PPS rates contained in the 

update notice for FY 2013 (77 FR 

46214). Based on the above, we estimate 

that the aggregate impact would be an 

increase of $500 million in payments to 

SNFs, resulting from the SNF market 

basket update to the payment rates, as 

adjusted by the forecast error correction 

and the MFP adjustment. While it is 

projected in Table 22 that all providers 

would experience a net increase in 

payments, we note that some individual 

providers within the same region or 

group may experience different impacts 

on payments than others due to the 

distributional impact of the FY 2014 

wage indexes and the degree of 

Medicare utilization. 

Guidance issued by the Department of 

Health and Human Services on the 

proper assessment of the impact on 

small entities in rulemakings, utilizes a 

cost or revenue impact of 3 to 5 percent 

as a significance threshold under the 

RFA. According to MedPAC, Medicare 

covers approximately 12 percent of total 

patient days in freestanding facilities 

and 23 percent of facility revenue 

(Report to the Congress: Medicare 

Payment Policy, March 2013, available 

at http://www.medpac.gov/documents/ 

Mar13_EntireReport.pdf). However, it is 

worth noting that the distribution of 

days and payments is highly variable. 

That is, the majority of SNFs have 

significantly lower Medicare utilization 

(Report to the Congress: Medicare 

Payment Policy, March 2013, available 

at http://www.medpac.gov/documents/ 

Mar13_EntireReport.pdf). As a result, 

for most facilities, when all payers are 

included in the revenue stream, the 

overall impact on total revenues should 

be substantially less than those impacts 

presented in Table 22. As indicated in 

Table 22, the effect on facilities is 

projected to be an aggregate positive 

impact of 1.4 percent. As the overall 

impact on the industry as a whole, and 

thus on small entities specifically, is 

less than the 3 to 5 percent threshold 

discussed above, the Secretary has 

determined that this proposed rule 

would not have a significant impact on 

a substantial number of small entities. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule 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 603 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 100 beds. This proposed rule 

would affect small rural hospitals that 

(a) furnish SNF services under a swingbed agreement or (b) have a hospitalbased SNF. We anticipate that the 

impact on small rural hospitals would 

be similar to the impact on SNF 

providers overall. Moreover, as noted in 

the FY 2012 final rule (76 FR 48539), 

the category of small rural hospitals 

would be included within the analysis 

of the impact of this proposed rule on 

small entities in general. As indicated in 

Table 22, the effect on facilities is 

projected to be an aggregate positive 

impact of 1.4 percent. As the overall 

impact on the industry as a whole is less 

than the 3 to 5 percent threshold 

discussed above, the Secretary has 

determined that this proposed rule 

would not have a significant impact on 

a substantial number of small rural 

hospitals. 

C. Unfunded Mandates Reform Act 

Analysis 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any 1 year of $100 

million in 1995 dollars, updated 

annually for inflation. In 2013, that 

threshold is approximately $141 

million. This proposed rule would not 

impose spending costs on State, local, or 

tribal governments in the aggregate, or 

by the private sector, of $141 million. 

D. Federalism Analysis 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that impose substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has federalism implications. 

This proposed rule would have no 

substantial direct effect on State and 

local governments, preempt State law, 

or otherwise have federalism 

implications. 

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Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 26471 

List of Subjects 

42 CFR Part 413 

Health facilities, Kidney diseases, 

Medicare, Reporting and recordkeeping 

requirements. 

42 CFR Part 424 

Emergency medical services, Health 

facilities, Health professions, Medicare, 

Reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services proposes to amend 

42 CFR chapter IV as set forth below: 

PART 413—PRINCIPLES OF 

REASONABLE COST 

REIMBURSEMENT; PAYMENT FOR 

END–STAGE RENAL DISEASE 

SERVICES; OPTIONAL 

PROSPECTIVELY DETERMINED 

PAYMENT RATES FOR SKILLED 

NURSING FACILITIES 

■ 1. The authority citation for part 413 

continues to read as follows: 

Authority: Secs. 1102, 1812(d), 1814(b), 

1815, 1833(a), (i), and (n), 1861(v), 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), 1395x(v), 

1395hh, 1395rr, 1395tt, and 1395ww); sec. 

124 of Pub. L. 106–133 (113 Stat. 1501A–332) 

and sec. 3201 of Pub. L. 112–96 (126 Stat. 

156). 

■ 2. Section 413.345 is revised to read 

as follows: 

§ 413.345 Publication of Federal 

prospective payment rates. 

CMS publishes information pertaining 

to each update of the Federal payment 

rates in the Federal Register. This 

information includes the standardized 

Federal rates, the resident classification 

system that provides the basis for casemix adjustment (including the 

designation of those specific Resource 

Utilization Groups under the resident 

classification system that represent the 

required SNF level of care, as provided 

in § 409.30 of this chapter), and the 

factors to be applied in making the area 

wage adjustment. This information is 

published before May 1 for the fiscal 

year 1998 and before August 1 for the 

fiscal years 1999 and after. 

PART 424—CONDITIONS FOR 

MEDICARE PAYMENT 

■ 3. The authority citation for part 424 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

■ 4. Section 424.11 is amended by 

revising paragraph (e)(4) to read as 

follows: 

§ 424.11 General procedures. 

* * * * * 

(e) * * * 

(4) A nurse practitioner or clinical 

nurse specialist as defined in paragraph 

(e)(5) or (e)(6) of this section, or a 

physician assistant as defined in section 

1861(aa)(5) of the Act, in the 

circumstances specified in § 424.20(e). 

* * * * * 

Authority: (Catalog of Federal Domestic 

Assistance Program No. 93.773, Medicare— 

Hospital Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: April 4, 2013. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: April 25, 2013. 

Kathleen Sebelius, 

Secretary. 

Note: The following addendum will not 

appear in the Code of Federal Regulations. 

Addendum—FY 2014 CBSA Wage 

Index Tables 

In this addendum, we provide the wage 

index tables referred to in the preamble to 

this proposed rule. Tables A and B display 

the CBSA-based wage index values for urban 

and rural providers. As noted previously in 

this proposed rule, we are currently 

proposing to take an approach already being 

followed by other Medicare payment 

systems, whereby for SNF PPS rules and 

notices published on or after October 1, 2013, 

these wage index tables would henceforth be 

made available exclusively through the 

Internet on the CMS Web site rather than 

being published in the Federal Register as 

part of the annual SNF PPS rulemaking. 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

10180 .. Abilene, TX ................... 0.8260 

Callahan County, TX 

Jones County, TX 

Taylor County, TX 

10380 .. Aguadilla-Isabela-San 

Sebastia ́n, PR.

0.3662 

Aguada Municipio, PR 

Aguadilla Municipio, PR 

An ̃asco Municipio, PR 

Isabela Municipio, PR 

Lares Municipio, PR 

Moca Municipio, PR 

Rinco ́n Municipio, PR 

San Sebastia ́n 

Municipio, PR 

10420 .. Akron, OH ..................... 0.8485 

Portage County, OH 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Summit County, OH 

10500 .. Albany, GA .................... 0.8750 

Baker County, GA 

Dougherty County, GA 

Lee County, GA 

Terrell County, GA 

Worth County, GA 

10580 .. Albany-SchenectadyTroy, NY.0.8636 

Albany County, NY 

Rensselaer County, NY 

Saratoga County, NY 

Schenectady County, 

NY 

Schoharie County, NY 

10740 .. Albuquerque, NM .......... 0.9704 

Bernalillo County, NM 

Sandoval County, NM 

Torrance County, NM 

Valencia County, NM 

10780 .. Alexandria, LA .............. 0.7821 

Grant Parish, LA 

Rapides Parish, LA 

10900 .. Allentown-BethlehemEaston, PA–NJ.0.9208 

Warren County, NJ 

Carbon County, PA 

Lehigh County, PA 

Northampton County, 

PA 

11020 .. Altoona, PA ................... 0.9140 

Blair County, PA 

11100 .. Amarillo, TX .................. 0.8993 

Armstrong County, TX 

Carson County, TX 

Potter County, TX 

Randall County, TX 

11180 .. Ames, IA ....................... 0.9465 

Story County, IA 

11260 .. Anchorage, AK .............. 1.2259 

Anchorage Municipality, 

AK 

Matanuska-Susitna Borough, AK 

11300 .. Anderson, IN ................. 0.9694 

Madison County, IN 

11340 .. Anderson, SC ............... 0.8803 

Anderson County, SC 

11460 .. Arbor, MI ....................... 1.0125 

Washtenaw County, MI 

11500 .. Anniston-Oxford, AL ...... 0.7369 

Calhoun County, AL 

11540 .. Appleton, WI ................. 0.9485 

Calumet County, WI 

Outagamie County, WI 

11700 .. Asheville, NC ................ 0.8508 

Buncombe County, NC 

Haywood County, NC 

Henderson County, NC 

Madison County, NC 

12020 .. Athens-Clarke County, 

GA.

0.9284 

Clarke County, GA 

Madison County, GA 

Oconee County, GA 

Oglethorpe County, GA 

12060 .. Atlanta-Sandy SpringsMarietta, GA.0.9465 

Barrow County, GA 

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26472 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Bartow County, GA 

Butts County, GA 

Carroll County, GA 

Cherokee County, GA 

Clayton County, GA 

Cobb County, GA 

Coweta County, GA 

Dawson County, GA 

DeKalb County, GA 

Douglas County, GA 

Fayette County, GA 

Forsyth County, GA 

Fulton County, GA 

Gwinnett County, GA 

Haralson County, GA 

Heard County, GA 

Henry County, GA 

Jasper County, GA 

Lamar County, GA 

Meriwether County, GA 

Newton County, GA 

Paulding County, GA 

Pickens County, GA 

Pike County, GA 

Rockdale County, GA 

Spalding County, GA 

Walton County, GA 

12100 .. Atlantic CityHammonton, NJ.1.2310 

Atlantic County, NJ 

12220 .. Auburn-Opelika, AL ...... 0.7802 

Lee County, AL 

12260 .. Augusta-Richmond 

County, GA–SC.

0.9189 

Burke County, GA 

Columbia County, GA 

McDuffie County, GA 

Richmond County, GA 

Aiken County, SC 

Edgefield County, SC 

12420 .. Austin-Round Rock, TX 0.9616 

Bastrop County, TX 

Caldwell County, TX 

Hays County, TX 

Travis County, TX 

Williamson County, TX 

12540 .. Bakersfield, CA ............. 1.1730 

Kern County, CA 

12580 .. Baltimore-Towson, MD 0.9916 

Anne Arundel County, 

MD 

Baltimore County, MD 

Carroll County, MD 

Harford County, MD 

Howard County, MD 

Queen Anne’s County, 

MD 

Baltimore City, MD 

12620 .. Bangor, ME ................... 0.9751 

Penobscot County, ME 

12700 .. Barnstable Town, MA ... 1.3062 

Barnstable County, MA 

12940 .. Baton Rouge, LA .......... 0.8050 

Ascension Parish, LA 

East Baton Rouge Parish, LA 

East Feliciana Parish, 

LA 

Iberville Parish, LA 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Livingston Parish, LA 

Pointe Coupee Parish, 

LA 

St. Helena Parish, LA 

West Baton Rouge Parish, LA 

West Feliciana Parish, 

LA 

12980 .. Battle Creek, MI ............ 0.9763 

Calhoun County, MI 

13020 .. Bay City, MI .................. 0.9526 

Bay County, MI 

13140 .. Beaumont-Port Arthur, 

TX.

0.8634 

Hardin County, TX 

Jefferson County, TX 

Orange County, TX 

13380 .. Bellingham, WA ............ 1.1940 

Whatcom County, WA 

13460 .. Bend, OR ...................... 1.1857 

Deschutes County, OR 

13644 .. Bethesda-Frederick-Gaithersburg, MD.1.0348 

Frederick County, MD 

Montgomery County, 

MD 

13740 .. Billings, MT ................... 0.8727 

Carbon County, MT 

Yellowstone County, MT 

13780 .. Binghamton, NY ............ 0.7863 

Broome County, NY 

Tioga County, NY 

13820 .. Birmingham-Hoover, AL 0.8395 

Bibb County, AL 

Blount County, AL 

Chilton County, AL 

Jefferson County, AL 

St. Clair County, AL 

Shelby County, AL 

Walker County, AL 

13900 .. Bismarck, ND ................ 0.7312 

Burleigh County, ND 

Morton County, ND 

13980 .. BlacksburgChristiansburgRadford, VA.0.8354 

Giles County, VA 

Montgomery County, VA 

Pulaski County, VA 

Radford City, VA 

14020 .. Bloomington, IN ............ 0.9343 

Greene County, IN 

Monroe County, IN 

Owen County, IN 

14060 .. Bloomington-Normal, IL 0.9349 

McLean County, IL 

14260 .. Boise City-Nampa, ID ... 0.9298 

Ada County, ID 

Boise County, ID 

Canyon County, ID 

Gem County, ID 

Owyhee County, ID 

14484 .. Boston-Quincy, MA ....... 1.2505 

Norfolk County, MA 

Plymouth County, MA 

Suffolk County, MA 

14500 .. Boulder, CO .................. 0.9891 

Boulder County, CO 

14540 .. Bowling Green, KY ....... 0.8314 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Edmonson County, KY 

Warren County, KY 

14740 .. Bremerton-Silverdale, 

WA.

1.0311 

Kitsap County, WA 

14860 .. Bridgeport-StamfordNorwalk, CT.1.3287 

Fairfield County, CT 

15180 .. Brownsville-Harlingen, 

TX.

0.8213 

Cameron County, TX 

15260 .. Brunswick, GA .............. 0.7716 

Brantley County, GA 

Glynn County, GA 

McIntosh County, GA 

15380 .. Buffalo-Niagara Falls, 

NY.

1.0048 

Erie County, NY 

Niagara County, NY 

15500 .. Burlington, NC ............... 0.8552 

Alamance County, NC 

15540 .. Burlington-South Burlington, VT.1.0173 

Chittenden County, VT 

Franklin County, VT 

Grand Isle County, VT 

15764 .. Cambridge-Newton-Framingham, MA.1.1201 

Middlesex County, MA 

15804 .. Camden, NJ .................. 1.0297 

Burlington County, NJ 

Camden County, NJ 

Gloucester County, NJ 

15940 .. Canton-Massillon, OH ... 0.8729 

Carroll County, OH 

Stark County, OH 

15980 .. Cape Coral-Fort Myers, 

FL.

0.8720 

Lee County, FL 

16020 .. Cape Girardeau-Jackson, MO–IL.0.9213 

Alexander County, IL 

Bollinger County, MO 

Cape Girardeau County, 

MO 

16180 .. Carson City, NV ............ 1.0767 

Carson City, NV 

16220 .. Casper, WY .................. 1.0154 

Natrona County, WY 

16300 .. Cedar Rapids, IA .......... 0.9001 

Benton County, IA 

Jones County, IA 

Linn County, IA 

16580 .. Champaign-Urbana, IL .. 0.9450 

Champaign County, IL 

Ford County, IL 

Piatt County, IL 

16620 .. Charleston, WV ............. 0.8147 

Boone County, WV 

Clay County, WV 

Kanawha County, WV 

Lincoln County, WV 

Putnam County, WV 

16700 .. Charleston-North 

Charleston-Summerville, SC.

0.9013 

Berkeley County, SC 

Charleston County, SC 

Dorchester County, SC 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 26473 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

16740 .. Charlotte-Gastonia-Concord, NC–SC.0.9479 

Anson County, NC 

Cabarrus County, NC 

Gaston County, NC 

Mecklenburg County, 

NC 

Union County, NC 

York County, SC 

16820 .. Charlottesville, VA ......... 0.8443 

Albemarle County, VA 

Fluvanna County, VA 

Greene County, VA 

Nelson County, VA 

Charlottesville City, VA 

16860 .. Chattanooga, TN–GA ... 0.8499 

Catoosa County, GA 

Dade County, GA 

Walker County, GA 

Hamilton County, TN 

Marion County, TN 

Sequatchie County, TN 

16940 .. Cheyenne, WY .............. 0.9534 

Laramie County, WY 

16974 .. Chicago-Naperville-Joliet, IL.1.0446 

Cook County, IL 

DeKalb County, IL 

DuPage County, IL 

Grundy County, IL 

Kane County, IL 

Kendall County, IL 

McHenry County, IL 

Will County, IL 

17020 .. Chico, CA ...................... 1.1637 

Butte County, CA 

17140 .. Cincinnati-Middletown, 

OH–KY–IN.

0.9382 

Dearborn County, IN 

Franklin County, IN 

Ohio County, IN 

Boone County, KY 

Bracken County, KY 

Campbell County, KY 

Gallatin County, KY 

Grant County, KY 

Kenton County, KY 

Pendleton County, KY 

Brown County, OH 

Butler County, OH 

Clermont County, OH 

Hamilton County, OH 

Warren County, OH 

17300 .. Clarksville, TN–KY ........ 0.7376 

Christian County, KY 

Trigg County, KY 

Montgomery County, TN 

Stewart County, TN 

17420 .. Cleveland, TN ............... 0.7528 

Bradley County, TN 

Polk County, TN 

17460 .. Cleveland-Elyria-Mentor, 

OH.

0.9306 

Cuyahoga County, OH 

Geauga County, OH 

Lake County, OH 

Lorain County, OH 

Medina County, OH 

17660 .. Coeur d’Alene, ID ......... 0.9102 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Kootenai County, ID 

17780 .. College Station-Bryan, 

TX.

0.9537 

Brazos County, TX 

Burleson County, TX 

Robertson County, TX 

17820 .. Colorado Springs, CO ... 0.9321 

El Paso County, CO 

Teller County, CO 

17860 .. Columbia, MO ............... 0.8231 

Boone County, MO 

Howard County, MO 

17900 .. Columbia, SC ................ 0.8680 

Calhoun County, SC 

Fairfield County, SC 

Kershaw County, SC 

Lexington County, SC 

Richland County, SC 

Saluda County, SC 

17980 .. Columbus, GA–AL ........ 0.7896 

Russell County, AL 

Chattahoochee County, 

GA 

Harris County, GA 

Marion County, GA 

Muscogee County, GA 

18020 .. Columbus, IN ................ 0.9860 

Bartholomew County, IN 

18140 .. Columbus, OH .............. 0.9700 

Delaware County, OH 

Fairfield County, OH 

Franklin County, OH 

Licking County, OH 

Madison County, OH 

Morrow County, OH 

Pickaway County, OH 

Union County, OH 

18580 .. Corpus Christi, TX ........ 0.8469 

Aransas County, TX 

Nueces County, TX 

San Patricio County, TX 

18700 .. Corvallis, OR ................. 1.0641 

Benton County, OR 

18880 .. Crestview-Fort Walton 

Beach-Destin, FL.

0.8948 

Okaloosa County, FL 

19060 .. Cumberland, MD–WV ... 0.8088 

Allegany County, MD 

Mineral County, WV 

19124 .. Dallas-Plano-Irving, TX 0.9872 

Collin County, TX 

Dallas County, TX 

Delta County, TX 

Denton County, TX 

Ellis County, TX 

Hunt County, TX 

Kaufman County, TX 

Rockwall County, TX 

19140 .. Dalton, GA .................... 0.8662 

Murray County, GA 

Whitfield County, GA 

19180 .. Danville, IL .................... 0.9500 

Vermilion County, IL 

19260 .. Danville, VA .................. 0.7921 

Pittsylvania County, VA 

Danville City, VA 

19340 .. Davenport-Moline-Rock 

Island, IA–IL.

0.9345 

Henry County, IL 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Mercer County, IL 

Rock Island County, IL 

Scott County, IA 

19380 .. Dayton, OH ................... 0.8941 

Greene County, OH 

Miami County, OH 

Montgomery County, 

OH 

Preble County, OH 

19460 .. Decatur, AL ................... 0.7195 

Lawrence County, AL 

Morgan County, AL 

19500 .. Decatur, IL .................... 0.7946 

Macon County, IL 

19660 .. Deltona-Daytona BeachOrmond Beach, FL.0.8596 

Volusia County, FL 

19740 .. Denver-Aurora-Broomfield, CO.1.0461 

Adams County, CO 

Arapahoe County, CO 

Broomfield County, CO 

Clear Creek County, CO 

Denver County, CO 

Douglas County, CO 

Elbert County, CO 

Gilpin County, CO 

Jefferson County, CO 

Park County, CO 

19780 .. Des Moines-West Des 

Moines, IA.

0.9433 

Dallas County, IA 

Guthrie County, IA 

Madison County, IA 

Polk County, IA 

Warren County, IA 

19804 .. Detroit-Livonia-Dearborn, MI.0.9256 

Wayne County, MI 

20020 .. Dothan, AL .................... 0.7136 

Geneva County, AL 

Henry County, AL 

Houston County, AL 

20100 .. Dover, DE ..................... 0.9981 

Kent County, DE 

20220 .. Dubuque, IA .................. 0.8828 

Dubuque County, IA 

20260 .. Duluth, MN–WI .............. 0.9351 

Carlton County, MN 

St. Louis County, MN 

Douglas County, WI 

20500 .. Durham-Chapel Hill, NC 0.9707 

Chatham County, NC 

Durham County, NC 

Orange County, NC 

Person County, NC 

20740 .. Eau Claire, WI ............... 1.0174 

Chippewa County, WI 

Eau Claire County, WI 

20764 .. Edison-New Brunswick, 

NJ.

1.0956 

Middlesex County, NJ 

Monmouth County, NJ 

Ocean County, NJ 

Somerset County, NJ 

20940 .. El Centro, CA ................ 0.8885 

Imperial County, CA 

21060 .. Elizabethtown, KY ......... 0.7928 

Hardin County, KY 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

26474 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Larue County, KY 

21140 .. Elkhart-Goshen, IN ....... 0.9369 

Elkhart County, IN 

21300 .. Elmira, NY ..................... 0.8396 

Chemung County, NY 

21340 .. El Paso, TX ................... 0.8441 

El Paso County, TX 

21500 .. Erie, PA ......................... 0.7973 

Erie County, PA 

21660 .. Eugene-Springfield, OR 1.1773 

Lane County, OR 

21780 .. Evansville, IN–KY ......... 0.8367 

Gibson County, IN 

Posey County, IN 

Vanderburgh County, IN 

Warrick County, IN 

Henderson County, KY 

Webster County, KY 

21820 .. Fairbanks, AK ............... 1.1043 

Fairbanks North Star 

Borough, AK 

21940 .. Fajardo, PR ................... 0.3744 

Ceiba Municipio, PR 

Fajardo Municipio, PR 

Luquillo Municipio, PR 

22020 .. Fargo, ND–MN .............. 0.7835 

Cass County, ND 

Clay County, MN 

22140 .. Farmington, NM ............ 0.9776 

San Juan County, NM 

22180 .. Fayetteville, NC ............. 0.8460 

Cumberland County, NC 

Hoke County, NC 

22220 .. Fayetteville-SpringdaleRogers, AR–MO.0.8993 

Benton County, AR 

Madison County, AR 

Washington County, AR 

McDonald County, MO 

22380 .. Flagstaff, AZ ................. 1.2840 

Coconino County, AZ 

22420 .. Flint, MI ......................... 1.1303 

Genesee County, MI 

22500 .. Florence, SC ................. 0.7968 

Darlington County, SC 

Florence County, SC 

22520 .. Florence-Muscle Shoals, 

AL.

0.7553 

Colbert County, AL 

Lauderdale County, AL 

22540 .. Fond du Lac, WI ........... 0.9517 

Fond du Lac County, WI 

22660 .. Fort Collins-Loveland, 

CO.

0.9743 

Larimer County, CO 

22744 .. Fort Lauderdale-Pompano Beach-Deerfield 

Beach, FL.

1.0422 

Broward County, FL 

22900 .. Fort Smith, AR–OK ....... 0.7588 

Crawford County, AR 

Franklin County, AR 

Sebastian County, AR 

Le Flore County, OK 

Sequoyah County, OK 

23060 .. Fort Wayne, IN .............. 0.9048 

Allen County, IN 

Wells County, IN 

Whitley County, IN 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

23104 .. Fort Worth-Arlington, TX 0.9552 

Johnson County, TX 

Parker County, TX 

Tarrant County, TX 

Wise County, TX 

23420 .. Fresno, CA .................... 1.1817 

Fresno County, CA 

23460 .. Gadsden, AL ................. 0.8017 

Etowah County, AL 

23540 .. Gainesville, FL .............. 0.9751 

Alachua County, FL 

Gilchrist County, FL 

23580 .. Gainesville, GA ............. 0.9292 

Hall County, GA 

23844 .. Gary, IN ........................ 0.9440 

Jasper County, IN 

Lake County, IN 

Newton County, IN 

Porter County, IN 

24020 .. Glens Falls, NY ............. 0.8402 

Warren County, NY 

Washington County, NY 

24140 .. Goldsboro, NC .............. 0.8316 

Wayne County, NC 

24220 .. Grand Forks, ND–MN ... 0.7321 

Polk County, MN 

Grand Forks County, 

ND 

24300 .. Grand Junction, CO ...... 0.9347 

Mesa County, CO 

24340 .. Grand Rapids-Wyoming, 

MI.

0.9129 

Barry County, MI 

Ionia County, MI 

Kent County, MI 

Newaygo County, MI 

24500 .. Great Falls, MT ............. 0.9274 

Cascade County, MT 

24540 .. Greeley, CO .................. 0.9694 

Weld County, CO 

24580 .. Green Bay, WI .............. 0.9627 

Brown County, WI 

Kewaunee County, WI 

Oconto County, WI 

24660 .. Greensboro-High Point, 

NC.

0.8288 

Guilford County, NC 

Randolph County, NC 

Rockingham County, 

NC 

24780 .. Greenville, NC ............... 0.9382 

Greene County, NC 

Pitt County, NC 

24860 .. Greenville-MauldinEasley, SC.0.9611 

Greenville County, SC 

Laurens County, SC 

Pickens County, SC 

25020 .. Guayama, PR ............... 0.3723 

Arroyo Municipio, PR 

Guayama Municipio, PR 

Patillas Municipio, PR 

25060 .. Gulfport-Biloxi, MS ........ 0.8610 

Hancock County, MS 

Harrison County, MS 

Stone County, MS 

25180 .. Hagerstown-Martinsburg, MD–WV.0.9273 

Washington County, MD 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Berkeley County, WV 

Morgan County, WV 

25260 .. Hanford-Corcoran, CA .. 1.1171 

Kings County, CA 

25420 .. Harrisburg-Carlisle, PA 0.9515 

Cumberland County, PA 

Dauphin County, PA 

Perry County, PA 

25500 .. Harrisonburg, VA .......... 0.9128 

Rockingham County, VA 

Harrisonburg City, VA 

25540 .. Hartford-West HartfordEast Hartford, CT.1.1056 

Hartford County, CT 

Middlesex County, CT 

Tolland County, CT 

25620 .. Hattiesburg, MS ............ 0.7972 

Forrest County, MS 

Lamar County, MS 

Perry County, MS 

25860 .. Hickory-Lenoir-Morganton, NC.0.8383 

Alexander County, NC 

Burke County, NC 

Caldwell County, NC 

Catawba County, NC 

25980 .. Hinesville-Fort Stewart, 

GA1.

0.8602 

Liberty County, GA 

Long County, GA 

26100 .. Holland-Grand Haven, 

MI.

0.8050 

Ottawa County, MI 

26180 .. Honolulu, HI .................. 1.2109 

Honolulu County, HI 

26300 .. Hot Springs, AR ............ 0.8510 

Garland County, AR 

26380 .. Houma-Bayou CaneThibodaux, LA.0.7556 

Lafourche Parish, LA 

Terrebonne Parish, LA 

26420 .. Houston-Sugar LandBaytown, TX.0.9945 

Austin County, TX 

Brazoria County, TX 

Chambers County, TX 

Fort Bend County, TX 

Galveston County, TX 

Harris County, TX 

Liberty County, TX 

Montgomery County, TX 

San Jacinto County, TX 

Waller County, TX 

26580 .. Huntington-Ashland, 

WV–KY–OH.

0.8858 

Boyd County, KY 

Greenup County, KY 

Lawrence County, OH 

Cabell County, WV 

Wayne County, WV 

26620 .. Huntsville, AL ................ 0.8199 

Limestone County, AL 

Madison County, AL 

26820 .. Idaho Falls, ID ............... 0.9351 

Bonneville County, ID 

Jefferson County, ID 

26900 .. Indianapolis-Carmel, IN 1.0151 

Boone County, IN 

Brown County, IN 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 26475 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Hamilton County, IN 

Hancock County, IN 

Hendricks County, IN 

Johnson County, IN 

Marion County, IN 

Morgan County, IN 

Putnam County, IN 

Shelby County, IN 

26980 .. Iowa City, IA ................. 0.9896 

Johnson County, IA 

Washington County, IA 

27060 .. Ithaca, NY ..................... 0.9366 

Tompkins County, NY 

27100 .. Jackson, MI ................... 0.8981 

Jackson County, MI 

27140 .. Jackson, MS ................. 0.8196 

Copiah County, MS 

Hinds County, MS 

Madison County, MS 

Rankin County, MS 

Simpson County, MS 

27180 .. Jackson, TN .................. 0.7720 

Chester County, TN 

Madison County, TN 

27260 .. Jacksonville, FL ............ 0.8987 

Baker County, FL 

Clay County, FL 

Duval County, FL 

Nassau County, FL 

St. Johns County, FL 

27340 .. Jacksonville, NC ........... 0.7894 

Onslow County, NC 

27500 .. Janesville, WI ................ 0.9110 

Rock County, WI 

27620 .. Jefferson City, MO ........ 0.8501 

Callaway County, MO 

Cole County, MO 

Moniteau County, MO 

Osage County, MO 

27740 .. Johnson City, TN .......... 0.7257 

Carter County, TN 

Unicoi County, TN 

Washington County, TN 

27780 .. Johnstown, PA .............. 0.8486 

Cambria County, PA 

27860 .. Jonesboro, AR .............. 0.8017 

Craighead County, AR 

Poinsett County, AR 

27900 .. Joplin, MO ..................... 0.8016 

Jasper County, MO 

Newton County, MO 

28020 .. Kalamazoo-Portage, MI 1.0001 

Kalamazoo County, MI 

Van Buren County, MI 

28100 .. Kankakee-Bradley, IL ... 0.9698 

Kankakee County, IL 

28140 .. Kansas City, MO–KS .... 0.9487 

Franklin County, KS 

Johnson County, KS 

Leavenworth County, 

KS 

Linn County, KS 

Miami County, KS 

Wyandotte County, KS 

Bates County, MO 

Caldwell County, MO 

Cass County, MO 

Clay County, MO 

Clinton County, MO 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Jackson County, MO 

Lafayette County, MO 

Platte County, MO 

Ray County, MO 

28420 .. Kennewick-Pasco-Richland, WA.0.9499 

Benton County, WA 

Franklin County, WA 

28660 .. Killeen-Temple-Fort 

Hood, TX.

0.8963 

Bell County, TX 

Coryell County, TX 

Lampasas County, TX 

28700 .. Kingsport-Bristol-Bristol, 

TN–VA.

0.7223 

Hawkins County, TN 

Sullivan County, TN 

Bristol City, VA 

Scott County, VA 

Washington County, VA 

28740 .. Kingston, NY ................. 0.9104 

Ulster County, NY 

28940 .. Knoxville, TN ................. 0.7484 

Anderson County, TN 

Blount County, TN 

Knox County, TN 

Loudon County, TN 

Union County, TN 

29020 .. Kokomo, IN ................... 0.9099 

Howard County, IN 

Tipton County, IN 

29100 .. La Crosse, WI–MN ....... 1.0248 

Houston County, MN 

La Crosse County, WI 

29140 .. Lafayette, IN ................. 0.9996 

Benton County, IN 

Carroll County, IN 

Tippecanoe County, IN 

29180 .. Lafayette, LA ................. 0.8266 

Lafayette Parish, LA 

St. Martin Parish, LA 

29340 .. Lake Charles, LA .......... 0.7798 

Calcasieu Parish, LA 

Cameron Parish, LA 

29404 .. Lake County-Kenosha 

County, IL–WI.

1.0249 

Lake County, IL 

Kenosha County, WI 

29420 .. Lake Havasu City-Kingman, AZ.0.9953 

Mohave County, AZ 

29460 .. Lakeland-Winter Haven, 

FL.

0.8316 

Polk County, FL 

29540 .. Lancaster, PA ............... 0.9704 

Lancaster County, PA 

29620 .. Lansing-East Lansing, 

MI.

1.0663 

Clinton County, MI 

Eaton County, MI 

Ingham County, MI 

29700 .. Laredo, TX .................... 0.7618 

Webb County, TX 

29740 .. Las Cruces, NM ............ 0.9210 

Dona Ana County, NM 

29820 .. Las Vegas-Paradise, NV 1.1682 

Clark County, NV 

29940 .. Lawrence, KS ............... 0.8700 

Douglas County, KS 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

30020 .. Lawton, OK ................... 0.7926 

Comanche County, OK 

30140 .. Lebanon, PA ................. 0.8192 

Lebanon County, PA 

30300 .. Lewiston, ID–WA .......... 0.9254 

Nez Perce County, ID 

Asotin County, WA 

30340 .. Lewiston-Auburn, ME .... 0.9086 

Androscoggin County, 

ME 

30460 .. Lexington-Fayette, KY .. 0.8850 

Bourbon County, KY 

Clark County, KY 

Fayette County, KY 

Jessamine County, KY 

Scott County, KY 

Woodford County, KY 

30620 .. Lima, OH ....................... 0.9170 

Allen County, OH 

30700 .. Lincoln, NE ................... 0.9505 

Lancaster County, NE 

Seward County, NE 

30780 .. Little Rock-North Little 

Rock-Conway, AR.

0.8661 

Faulkner County, AR 

Grant County, AR 

Lonoke County, AR 

Perry County, AR 

Pulaski County, AR 

Saline County, AR 

30860 .. Logan, UT–ID ............... 0.8791 

Franklin County, ID 

Cache County, UT 

30980 .. Longview, TX ................ 0.8971 

Gregg County, TX 

Rusk County, TX 

Upshur County, TX 

31020 .. Longview, WA ............... 1.0504 

Cowlitz County, WA 

31084 .. Los Angeles-Long 

Beach-Glendale, CA.

1.2315 

Los Angeles County, CA 

31140 .. Louisville-Jefferson 

County, KY–IN.

0.8892 

Clark County, IN 

Floyd County, IN 

Harrison County, IN 

Washington County, IN 

Bullitt County, KY 

Henry County, KY 

Meade County, KY 

Nelson County, KY 

Oldham County, KY 

Shelby County, KY 

Spencer County, KY 

Trimble County, KY 

31180 .. Lubbock, TX .................. 0.8994 

Crosby County, TX 

Lubbock County, TX 

31340 .. Lynchburg, VA .............. 0.8808 

Amherst County, VA 

Appomattox County, VA 

Bedford County, VA 

Campbell County, VA 

Bedford City, VA 

Lynchburg City, VA 

31420 .. Macon, GA .................... 0.8860 

Bibb County, GA 

Crawford County, GA 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

26476 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Jones County, GA 

Monroe County, GA 

Twiggs County, GA 

31460 .. Madera-Chowchilla, CA 0.8352 

Madera County, CA 

31540 .. Madison, WI .................. 1.1463 

Columbia County, WI 

Dane County, WI 

Iowa County, WI 

31700 .. Manchester-Nashua, NH 1.0099 

Hillsborough County, 

NH 

31740 .. Manhattan, KS .............. 0.7876 

Geary County, KS 

Pottawatomie County, 

KS 

Riley County, KS 

31860 .. Mankato-North Mankato, 

MN.

0.9316 

Blue Earth County, MN 

Nicollet County, MN 

31900 .. Mansfield, OH ............... 0.8448 

Richland County, OH 

32420 .. Mayagu ̈ez, PR .............. 0.3769 

Hormigueros Municipio, 

PR 

Mayagu ̈ez Municipio, 

PR 

32580 .. McAllen-Edinburg-Mission, TX.0.8429 

Hidalgo County, TX 

32780 .. Medford, OR ................. 1.0735 

Jackson County, OR 

32820 .. Memphis, TN–MS–AR .. 0.9075 

Crittenden County, AR 

DeSoto County, MS 

Marshall County, MS 

Tate County, MS 

Tunica County, MS 

Fayette County, TN 

Shelby County, TN 

Tipton County, TN 

32900 .. Merced, CA ................... 1.2788 

Merced County, CA 

33124 .. Miami-Miami BeachKendall, FL.0.9912 

Miami-Dade County, FL 

33140 .. Michigan City-La Porte, 

IN.

0.9255 

LaPorte County, IN 

33260 .. Midland, TX ................... 1.0092 

Midland County, TX 

33340 .. Milwaukee-WaukeshaWest Allis, WI.0.9868 

Milwaukee County, WI 

Ozaukee County, WI 

Washington County, WI 

Waukesha County, WI 

33460 .. Minneapolis-St. PaulBloomington, MN–WI.1.1260 

Anoka County, MN 

Carver County, MN 

Chisago County, MN 

Dakota County, MN 

Hennepin County, MN 

Isanti County, MN 

Ramsey County, MN 

Scott County, MN 

Sherburne County, MN 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Washington County, MN 

Wright County, MN 

Pierce County, WI 

St. Croix County, WI 

33540 .. Missoula, MT ................ 0.9100 

Missoula County, MT 

33660 .. Mobile, AL ..................... 0.7475 

Mobile County, AL 

33700 .. Modesto, CA ................. 1.3641 

Stanislaus County, CA 

33740 .. Monroe, LA ................... 0.7550 

Ouachita Parish, LA 

Union Parish, LA 

33780 .. Monroe, MI .................... 0.8755 

Monroe County, MI 

33860 .. Montgomery, AL ........... 0.7507 

Autauga County, AL 

Elmore County, AL 

Lowndes County, AL 

Montgomery County, AL 

34060 .. Morgantown, WV .......... 0.8267 

Monongalia County, WV 

Preston County, WV 

34100 .. Morristown, TN .............. 0.6884 

Grainger County, TN 

Hamblen County, TN 

Jefferson County, TN 

34580 .. Mount VernonAnacortes, WA.1.0697 

Skagit County, WA 

34620 .. Muncie, IN ..................... 0.8780 

Delaware County, IN 

34740 .. Muskegon-Norton 

Shores, MI.

0.9625 

Muskegon County, MI 

34820 .. Myrtle Beach-North Myrtle Beach-Conway, 

SC.

0.8663 

Horry County, SC 

34900 .. Napa, CA ...................... 1.5354 

Napa County, CA 

34940 .. Naples-Marco Island, FL 0.9147 

Collier County, FL 

34980 .. Nashville-Davidson— 

Murfreesboro-Franklin, TN.

0.9174 

Cannon County, TN 

Cheatham County, TN 

Davidson County, TN 

Dickson County, TN 

Hickman County, TN 

Macon County, TN 

Robertson County, TN 

Rutherford County, TN 

Smith County, TN 

Sumner County, TN 

Trousdale County, TN 

Williamson County, TN 

Wilson County, TN 

35004 .. Nassau-Suffolk, NY ...... 1.2764 

Nassau County, NY 

Suffolk County, NY 

35084 .. Newark-Union, NJ–PA .. 1.1273 

Essex County, NJ 

Hunterdon County, NJ 

Morris County, NJ 

Sussex County, NJ 

Union County, NJ 

Pike County, PA 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

35300 .. New Haven-Milford, CT 1.1933 

New Haven County, CT 

35380 .. New Orleans-MetairieKenner, LA.0.8789 

Jefferson Parish, LA 

Orleans Parish, LA 

Plaquemines Parish, LA 

St. Bernard Parish, LA 

St. Charles Parish, LA 

St. John the Baptist Parish, LA 

St. Tammany Parish, LA 

35644 .. New York-White PlainsWayne, NY–NJ.1.3117 

Bergen County, NJ 

Hudson County, NJ 

Passaic County, NJ 

Bronx County, NY 

Kings County, NY 

New York County, NY 

Putnam County, NY 

Queens County, NY 

Richmond County, NY 

Rockland County, NY 

Westchester County, NY 

35660 .. Niles-Benton Harbor, MI 0.8479 

Berrien County, MI 

35840 .. North Port-BradentonSarasota-Venice, FL.0.9468 

Manatee County, FL 

Sarasota County, FL 

35980 .. Norwich-New London, 

CT.

1.1871 

New London County, 

CT 

36084 .. Oakland-Fremont-Hayward, CA.1.7061 

Alameda County, CA 

Contra Costa County, 

CA 

36100 .. Ocala, FL ...................... 0.8461 

Marion County, FL 

36140 .. Ocean City, NJ .............. 1.0628 

Cape May County, NJ 

36220 .. Odessa, TX ................... 0.9702 

Ector County, TX 

36260 .. Ogden-Clearfield, UT .... 0.9209 

Davis County, UT 

Morgan County, UT 

Weber County, UT 

36420 .. Oklahoma City, OK ....... 0.8896 

Canadian County, OK 

Cleveland County, OK 

Grady County, OK 

Lincoln County, OK 

Logan County, OK 

McClain County, OK 

Oklahoma County, OK 

36500 .. Olympia, WA ................. 1.1650 

Thurston County, WA 

36540 .. Omaha-Council Bluffs, 

NE–IA.

0.9797 

Harrison County, IA 

Mills County, IA 

Pottawattamie County, 

IA 

Cass County, NE 

Douglas County, NE 

Sarpy County, NE 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 26477 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Saunders County, NE 

Washington County, NE 

36740 .. Orlando-Kissimmee, FL 0.9101 

Lake County, FL 

Orange County, FL 

Osceola County, FL 

Seminole County, FL 

36780 .. Oshkosh-Neenah, WI .... 0.9438 

Winnebago County, WI 

36980 .. Owensboro, KY ............. 0.7823 

Daviess County, KY 

Hancock County, KY 

McLean County, KY 

37100 .. Oxnard-Thousand OaksVentura, CA.1.3132 

Ventura County, CA 

37340 .. Palm Bay-MelbourneTitusville, FL.0.8707 

Brevard County, FL 

37380 .. Palm Coast, FL ............. 0.8209 

Flagler County, FL 

37460 .. Panama City-Lynn 

Haven-Panama City 

Beach, FL.

0.7909 

Bay County, FL 

37620 .. Parkersburg-Marietta-Vienna, WV–OH.0.7576 

Washington County, OH 

Pleasants County, WV 

Wirt County, WV 

Wood County, WV 

37700 .. Pascagoula, MS ............ 0.7574 

George County, MS 

Jackson County, MS 

37764 .. Peabody, MA ................ 1.0571 

Essex County, MA 

37860 .. Pensacola-Ferry PassBrent, FL.0.7800 

Escambia County, FL 

Santa Rosa County, FL 

37900 .. Peoria, IL ...................... 0.8290 

Marshall County, IL 

Peoria County, IL 

Stark County, IL 

Tazewell County, IL 

Woodford County, IL 

37964 .. Philadelphia, PA ........... 1.0926 

Bucks County, PA 

Chester County, PA 

Delaware County, PA 

Montgomery County, PA 

Philadelphia County, PA 

38060 .. Phoenix-Mesa-Scottsdale, AZ.1.0505 

Maricopa County, AZ 

Pinal County, AZ 

38220 .. Pine Bluff, AR ............... 0.8103 

Cleveland County, AR 

Jefferson County, AR 

Lincoln County, AR 

38300 .. Pittsburgh, PA ............... 0.8713 

Allegheny County, PA 

Armstrong County, PA 

Beaver County, PA 

Butler County, PA 

Fayette County, PA 

Washington County, PA 

Westmoreland County, 

PA 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

38340 .. Pittsfield, MA ................. 1.0966 

Berkshire County, MA 

38540 .. Pocatello, ID ................. 0.9795 

Bannock County, ID 

Power County, ID 

38660 .. Ponce, PR ..................... 0.4614 

Juana Dı ́az Municipio, 

PR 

Ponce Municipio, PR 

Villalba Municipio, PR 

38860 .. Portland-South PortlandBiddeford, ME.1.0023 

Cumberland County, ME 

Sagadahoc County, ME 

York County, ME 

38900 .. Portland-VancouverBeaverton, OR–WA.1.1848 

Clackamas County, OR 

Columbia County, OR 

Multnomah County, OR 

Washington County, OR 

Yamhill County, OR 

Clark County, WA 

Skamania County, WA 

38940 .. Port St. Lucie, FL .......... 0.9391 

Martin County, FL 

St. Lucie County, FL 

39100 .. Poughkeepsie-Newburgh-Middletown, NY.1.1593 

Dutchess County, NY 

Orange County, NY 

39140 .. Prescott, AZ .................. 1.0199 

Yavapai County, AZ 

39300 .. Providence-New Bedford-Fall River, RI–MA.1.0579 

Bristol County, MA 

Bristol County, RI 

Kent County, RI 

Newport County, RI 

Providence County, RI 

Washington County, RI 

39340 .. Provo-Orem, UT ............ 0.9501 

Juab County, UT 

Utah County, UT 

39380 .. Pueblo, CO ................... 0.8250 

Pueblo County, CO 

39460 .. Punta Gorda, FL ........... 0.8771 

Charlotte County, FL 

39540 .. Racine, WI .................... 0.9352 

Racine County, WI 

39580 .. Raleigh-Cary, NC .......... 0.9286 

Franklin County, NC 

Johnston County, NC 

Wake County, NC 

39660 .. Rapid City, SD .............. 0.9608 

Meade County, SD 

Pennington County, SD 

39740 .. Reading, PA .................. 0.9105 

Berks County, PA 

39820 .. Redding, CA ................. 1.5053 

Shasta County, CA 

39900 .. Reno-Sparks, NV .......... 1.0369 

Storey County, NV 

Washoe County, NV 

40060 .. Richmond, VA ............... 0.9723 

Amelia County, VA 

Caroline County, VA 

Charles City County, VA 

Chesterfield County, VA 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Cumberland County, VA 

Dinwiddie County, VA 

Goochland County, VA 

Hanover County, VA 

Henrico County, VA 

King and Queen County, VA 

King William County, VA 

Louisa County, VA 

New Kent County, VA 

Powhatan County, VA 

Prince George County, 

VA 

Sussex County, VA 

Colonial Heights City, 

VA 

Hopewell City, VA 

Petersburg City, VA 

Richmond City, VA 

40140 .. Riverside-San 

Bernardino-Ontario, 

CA.

1.1492 

Riverside County, CA 

San Bernardino County, 

CA 

40220 .. Roanoke, VA ................. 0.9233 

Botetourt County, VA 

Craig County, VA 

Franklin County, VA 

Roanoke County, VA 

Roanoke City, VA 

Salem City, VA 

40340 .. Rochester, MN .............. 1.1712 

Dodge County, MN 

Olmsted County, MN 

Wabasha County, MN 

40380 .. Rochester, NY ............... 0.8770 

Livingston County, NY 

Monroe County, NY 

Ontario County, NY 

Orleans County, NY 

Wayne County, NY 

40420 .. Rockford, IL .................. 0.9792 

Boone County, IL 

Winnebago County, IL 

40484 .. Rockingham CountyStrafford County, NH.1.0215 

Rockingham County, 

NH 

Strafford County, NH 

40580 .. Rocky Mount, NC .......... 0.8786 

Edgecombe County, NC 

Nash County, NC 

40660 .. Rome, GA ..................... 0.8962 

Floyd County, GA 

40900 .. Sacramento-Arden-Arcade-Roseville, CA.1.5211 

El Dorado County, CA 

Placer County, CA 

Sacramento County, CA 

Yolo County, CA 

40980 .. Saginaw-Saginaw 

Township North, MI.

0.8886 

Saginaw County, MI 

41060 .. St. Cloud, MN ............... 1.0703 

Benton County, MN 

Stearns County, MN 

41100 .. St. George, UT ............. 0.9385 

Washington County, UT 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

26478 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

41140 .. St. Joseph, MO–KS ...... 0.9876 

Doniphan County, KS 

Andrew County, MO 

Buchanan County, MO 

DeKalb County, MO 

41180 .. St. Louis, MO–IL ........... 0.9373 

Bond County, IL 

Calhoun County, IL 

Clinton County, IL 

Jersey County, IL 

Macoupin County, IL 

Madison County, IL 

Monroe County, IL 

St. Clair County, IL 

Crawford County, MO 

Franklin County, MO 

Jefferson County, MO 

Lincoln County, MO 

St. Charles County, MO 

St. Louis County, MO 

Warren County, MO 

Washington County, MO 

St. Louis City, MO 

41420 .. Salem, OR .................... 1.1195 

Marion County, OR 

Polk County, OR 

41500 .. Salinas, CA ................... 1.5626 

Monterey County, CA 

41540 .. Salisbury, MD ................ 0.8986 

Somerset County, MD 

Wicomico County, MD 

41620 .. Salt Lake City, UT ......... 0.9396 

Salt Lake County, UT 

Summit County, UT 

Tooele County, UT 

41660 .. San Angelo, TX ............ 0.8053 

Irion County, TX 

Tom Green County, TX 

41700 .. San Antonio, TX ........... 0.8939 

Atascosa County, TX 

Bandera County, TX 

Bexar County, TX 

Comal County, TX 

Guadalupe County, TX 

Kendall County, TX 

Medina County, TX 

Wilson County, TX 

41740 .. San Diego-CarlsbadSan Marcos, CA.1.2104 

San Diego County, CA 

41780 .. Sandusky, OH ............... 0.7821 

Erie County, OH 

41884 .. San Francisco-San 

Mateo-Redwood City, 

CA.

1.6200 

Marin County, CA 

San Francisco County, 

CA 

San Mateo County, CA 

41900 .. San Germa ́n-Cabo 

Rojo, PR.

0.4569 

Cabo Rojo Municipio, 

PR 

Lajas Municipio, PR 

Sabana Grande 

Municipio, PR 

San Germa ́n Municipio, 

PR 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

41940 .. San Jose-SunnyvaleSanta Clara, CA.1.6761 

San Benito County, CA 

Santa Clara County, CA 

41980 .. San Juan-CaguasGuaynabo, PR.0.4374 

Aguas Buenas 

Municipio, PR 

Aibonito Municipio, PR 

Arecibo Municipio, PR 

Barceloneta Municipio, 

PR 

Barranquitas Municipio, 

PR 

Bayamo ́n Municipio, PR 

Caguas Municipio, PR 

Camuy Municipio, PR 

Cano ́vanas Municipio, 

PR 

Carolina Municipio, PR 

Catan ̃o Municipio, PR 

Cayey Municipio, PR 

Ciales Municipio, PR 

Cidra Municipio, PR 

Comerı ́o Municipio, PR 

Corozal Municipio, PR 

Dorado Municipio, PR 

Florida Municipio, PR 

Guaynabo Municipio, 

PR 

Gurabo Municipio, PR 

Hatillo Municipio, PR 

Humacao Municipio, PR 

Juncos Municipio, PR 

Las Piedras Municipio, 

PR 

Loı ́za Municipio, PR 

Manatı ́ Municipio, PR 

Maunabo Municipio, PR 

Morovis Municipio, PR 

Naguabo Municipio, PR 

Naranjito Municipio, PR 

Orocovis Municipio, PR 

Quebradillas Municipio, 

PR 

Rı ́o Grande Municipio, 

PR 

San Juan Municipio, PR 

San Lorenzo Municipio, 

PR 

Toa Alta Municipio, PR 

Toa Baja Municipio, PR 

Trujillo Alto Municipio, 

PR 

Vega Alta Municipio, PR 

Vega Baja Municipio, 

PR 

Yabucoa Municipio, PR 

42020 .. San Luis Obispo-Paso 

Robles, CA.

1.3089 

San Luis Obispo County, CA 

42044 .. Santa Ana-AnaheimIrvine, CA.1.2036 

Orange County, CA 

42060 .. Santa Barbara-Santa 

Maria-Goleta, CA.

1.3165 

Santa Barbara County, 

CA 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

42100 .. Santa Cruz-Watsonville, 

CA.

1.7835 

Santa Cruz County, CA 

42140 .. Santa Fe, NM ................ 1.0179 

Santa Fe County, NM 

42220 .. Santa Rosa-Petaluma, 

CA.

1.6743 

Sonoma County, CA 

42340 .. Savannah, GA .............. 0.8572 

Bryan County, GA 

Chatham County, GA 

Effingham County, GA 

42540 .. Scranton—Wilkes-Barre, 

PA.

0.8283 

Lackawanna County, PA 

Luzerne County, PA 

Wyoming County, PA 

42644 .. Seattle-Bellevue-Everett, 

WA.

1.1784 

King County, WA 

Snohomish County, WA 

42680 .. Sebastian-Vero Beach, 

FL.

0.8797 

Indian River County, FL 

43100 .. Sheboygan, WI ............. 0.9242 

Sheboygan County, WI 

43300 .. Sherman-Denison, TX .. 0.8760 

Grayson County, TX 

43340 .. Shreveport-Bossier City, 

LA.

0.8297 

Bossier Parish, LA 

Caddo Parish, LA 

De Soto Parish, LA 

43580 .. Sioux City, IA–NE–SD .. 0.9202 

Woodbury County, IA 

Dakota County, NE 

Dixon County, NE 

Union County, SD 

43620 .. Sioux Falls, SD ............. 0.8310 

Lincoln County, SD 

McCook County, SD 

Minnehaha County, SD 

Turner County, SD 

43780 .. South Bend-Mishawaka, 

IN–MI.

0.9465 

St. Joseph County, IN 

Cass County, MI 

43900 .. Spartanburg, SC ........... 0.8797 

Spartanburg County, SC 

44060 .. Spokane, WA ................ 1.1221 

Spokane County, WA 

44100 .. Springfield, IL ................ 0.9204 

Menard County, IL 

Sangamon County, IL 

44140 .. Springfield, MA ............. 1.0422 

Franklin County, MA 

Hampden County, MA 

Hampshire County, MA 

44180 .. Springfield, MO ............. 0.8476 

Christian County, MO 

Dallas County, MO 

Greene County, MO 

Polk County, MO 

Webster County, MO 

44220 .. Springfield, OH ............. 0.8483 

Clark County, OH 

44300 .. State College, PA ......... 0.9615 

Centre County, PA 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 26479 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

44600 .. Steubenville-Weirton, 

OH–WV.

0.7415 

Jefferson County, OH 

Brooke County, WV 

Hancock County, WV 

44700 .. Stockton, CA ................. 1.3792 

San Joaquin County, 

CA 

44940 .. Sumter, SC ................... 0.7626 

Sumter County, SC 

45060 .. Syracuse, NY ................ 0.9937 

Madison County, NY 

Onondaga County, NY 

Oswego County, NY 

45104 .. Tacoma, WA ................. 1.1623 

Pierce County, WA 

45220 .. Tallahassee, FL ............ 0.8602 

Gadsden County, FL 

Jefferson County, FL 

Leon County, FL 

Wakulla County, FL 

45300 .. Tampa-St. PetersburgClearwater, FL.0.9114 

Hernando County, FL 

Hillsborough County, FL 

Pasco County, FL 

Pinellas County, FL 

45460 .. Terre Haute, IN ............. 0.9747 

Clay County, IN 

Sullivan County, IN 

Vermillion County, IN 

Vigo County, IN 

45500 .. Texarkana, TX-Texarkana, AR.0.7459 

Miller County, AR 

Bowie County, TX 

45780 .. Toledo, OH ................... 0.8854 

Fulton County, OH 

Lucas County, OH 

Ottawa County, OH 

Wood County, OH 

45820 .. Topeka, KS ................... 0.9012 

Jackson County, KS 

Jefferson County, KS 

Osage County, KS 

Shawnee County, KS 

Wabaunsee County, KS 

45940 .. Trenton-Ewing, NJ ........ 1.0622 

Mercer County, NJ 

46060 .. Tucson, AZ ................... 0.8991 

Pima County, AZ 

46140 .. Tulsa, OK ...................... 0.8179 

Creek County, OK 

Okmulgee County, OK 

Osage County, OK 

Pawnee County, OK 

Rogers County, OK 

Tulsa County, OK 

Wagoner County, OK 

46220 .. Tuscaloosa, AL ............. 0.8498 

Greene County, AL 

Hale County, AL 

Tuscaloosa County, AL 

46340 .. Tyler, TX ....................... 0.8562 

Smith County, TX 

46540 .. Utica-Rome, NY ............ 0.8806 

Herkimer County, NY 

Oneida County, NY 

46660 .. Valdosta, GA ................. 0.7558 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Brooks County, GA 

Echols County, GA 

Lanier County, GA 

Lowndes County, GA 

46700 .. Vallejo-Fairfield, CA ...... 1.6355 

Solano County, CA 

47020 .. Victoria, TX ................... 0.8986 

Calhoun County, TX 

Goliad County, TX 

Victoria County, TX 

47220 .. Vineland-Millville-Bridgeton, NJ.1.0674 

Cumberland County, NJ 

47260 .. Virginia Beach-NorfolkNewport News, VA– 

NC.

0.8928 

Currituck County, NC 

Gloucester County, VA 

Isle of Wight County, VA 

James City County, VA 

Mathews County, VA 

Surry County, VA 

York County, VA 

Chesapeake City, VA 

Hampton City, VA 

Newport News City, VA 

Norfolk City, VA 

Poquoson City, VA 

Portsmouth City, VA 

Suffolk City, VA 

Virginia Beach City, VA 

Williamsburg City, VA 

47300 .. Visalia-Porterville, CA ... 0.9989 

Tulare County, CA 

47380 .. Waco, TX ...................... 0.8248 

McLennan County, TX 

47580 .. Warner Robins, GA ....... 0.7718 

Houston County, GA 

47644 .. Warren-Troy-Farmington 

Hills, MI.

0.9464 

Lapeer County, MI 

Livingston County, MI 

Macomb County, MI 

Oakland County, MI 

St. Clair County, MI 

47894 .. Washington-ArlingtonAlexandria, DC–VA– 

MD–WV.

1.0570 

District of Columbia, DC 

Calvert County, MD 

Charles County, MD 

Prince George’s County, 

MD 

Arlington County, VA 

Clarke County, VA 

Fairfax County, VA 

Fauquier County, VA 

Loudoun County, VA 

Prince William County, 

VA 

Spotsylvania County, 

VA 

Stafford County, VA 

Warren County, VA 

Alexandria City, VA 

Fairfax City, VA 

Falls Church City, VA 

Fredericksburg City, VA 

Manassas City, VA 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Manassas Park City, VA 

Jefferson County, WV 

47940 .. Waterloo-Cedar Falls, IA 0.8366 

Black Hawk County, IA 

Bremer County, IA 

Grundy County, IA 

48140 .. Wausau, WI .................. 0.8652 

Marathon County, WI 

48300 .. Wenatchee-East 

Wenatchee, WA.

1.0151 

Chelan County, WA 

Douglas County, WA 

48424 .. West Palm Beach-Boca 

Raton-Boynton 

Beach, FL.

0.9637 

Palm Beach County, FL 

48540 .. Wheeling, WV–OH ........ 0.6702 

Belmont County, OH 

Marshall County, WV 

Ohio County, WV 

48620 .. Wichita, KS ................... 0.8710 

Butler County, KS 

Harvey County, KS 

Sedgwick County, KS 

Sumner County, KS 

48660 .. Wichita Falls, TX ........... 0.9578 

Archer County, TX 

Clay County, TX 

Wichita County, TX 

48700 .. Williamsport, PA ............ 0.8303 

Lycoming County, PA 

48864 .. Wilmington, DE–MD–NJ 1.0632 

New Castle County, DE 

Cecil County, MD 

Salem County, NJ 

48900 .. Wilmington, NC ............. 0.8900 

Brunswick County, NC 

New Hanover County, 

NC 

Pender County, NC 

49020 .. Winchester, VA–WV ..... 0.9072 

Frederick County, VA 

Winchester City, VA 

Hampshire County, WV 

49180 .. Winston-Salem, NC ...... 0.8373 

Davie County, NC 

Forsyth County, NC 

Stokes County, NC 

Yadkin County, NC 

49340 .. Worcester, MA .............. 1.1632 

Worcester County, MA 

49420 .. Yakima, WA .................. 1.0399 

Yakima County, WA 

49500 .. Yauco, PR ..................... 0.3798 

Gua ́nica Municipio, PR 

Guayanilla Municipio, 

PR 

Pen ̃uelas Municipio, PR 

Yauco Municipio, PR 

49620 .. York-Hanover, PA ......... 0.9580 

York County, PA 

49660 .. Youngstown-WarrenBoardman, OH–PA.0.8406 

Mahoning County, OH 

Trumbull County, OH 

Mercer County, PA 

49700 .. Yuba City, CA1 ............. 1.1809 

Sutter County, CA 

Yuba County, CA 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

26480 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Proposed Rules 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

49740 .. Yuma, AZ ...................... 0.9715 

Yuma County, AZ 

1At this time, there are no hospitals located 

in this urban area on which to base a wage 

index. 

TABLE B—FY 2014 WAGE INDEX

BASED ON CBSA LABOR MARKET

AREAS FOR RURAL AREAS

State 

code Nonurban area Wage index 

1 ........... Alabama ..................... 0.7175 

2 ........... Alaska ......................... 1.3720 

3 ........... Arizona ....................... 0.9205 

4 ........... Arkansas .................... 0.7374 

5 ........... California .................... 1.2697 

6 ........... Colorado ..................... 0.9844 

7 ........... Connecticut ................ 1.1356 

8 ........... Delaware .................... 1.0116 

10 ......... Florida ........................ 0.8009 

11 ......... Georgia ....................... 0.7482 

12 ......... Hawaii ......................... 0.9919 

13 ......... Idaho .......................... 0.7637 

14 ......... Illinois ......................... 0.8392 

15 ......... Indiana ........................ 0.8547 

16 ......... Iowa ............................ 0.8470 

17 ......... Kansas ....................... 0.7963 

18 ......... Kentucky ..................... 0.7726 

19 ......... Louisiana .................... 0.7610 

20 ......... Maine .......................... 0.8273 

21 ......... Maryland ..................... 0.8733 

22 ......... Massachusetts ........... 1.3671 

TABLE B—FY 2014 WAGE INDEX

BASED ON CBSA LABOR MARKET

AREAS FOR RURAL AREAS—Continued 

State 

code Nonurban area Wage index 

23 ......... Michigan ..................... 0.8308 

24 ......... Minnesota ................... 0.9140 

25 ......... Mississippi .................. 0.7610 

26 ......... Missouri ...................... 0.7780 

27 ......... Montana ..................... 0.9136 

28 ......... Nebraska .................... 0.8893 

29 ......... Nevada ....................... 0.9822 

30 ......... New Hampshire .......... 1.0381 

31 ......... New Jersey 1 .............. ................

32 ......... New Mexico ................ 0.8843 

33 ......... New York .................... 0.8235 

34 ......... North Carolina ............ 0.8118 

35 ......... North Dakota .............. 0.6814 

36 ......... Ohio ............................ 0.8281 

37 ......... Oklahoma ................... 0.7712 

38 ......... Oregon ....................... 0.9437 

39 ......... Pennsylvania .............. 0.8350 

40 ......... Puerto Rico 1 .............. 0.4047 

41 ......... Rhode Island 1 ............ ................

42 ......... South Carolina ........... 0.8337 

43 ......... South Dakota ............. 0.8199 

44 ......... Tennessee .................. 0.7458 

45 ......... Texas .......................... 0.7889 

46 ......... Utah ............................ 0.8769 

47 ......... Vermont ...................... 0.9782 

48 ......... Virgin Islands .............. 0.7089 

49 ......... Virginia ....................... 0.7802 

50 ......... Washington ................ 1.0574 

51 ......... West Virginia .............. 0.7398 

52 ......... Wisconsin ................... 0.8934 

53 ......... Wyoming .................... 0.9280 

TABLE B—FY 2014 WAGE INDEX

BASED ON CBSA LABOR MARKET

AREAS FOR RURAL AREAS—Continued 

State 

code Nonurban area Wage index 

65 ......... Guam .......................... 0.9611 

1All counties within the State are classified 

as urban, with the exception of Puerto Rico. 

Puerto Rico has areas designated as rural; 

however, no short-term, acute care hospitals 

are located in the area(s) for FY 2014. The 

Puerto Rico wage index is the same as FY 

2013. 

[FR Doc. 2013–10558 Filed 5–1–13; 4:15 pm] 

BILLING CODE 4120–01–P 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2