Federal Register / Vol. 79, No. 87 / Tuesday, May 6, 2014 / Proposed Rules 25767 

3 Jordan HT, Stellman SD, Morabia A, MillerArchie SA, Alper H, Laskaris Z, Brackbill RM, and 

Cone JE [2013] Cardiovascular disease 

hospitalizations in relation to exposure to the 

September 11, 2001 World Trade Center disaster 

and posttraumatic stress disorder. Journal of the 

American Heart Association 2(5). 

4This methodology, ‘‘Policy and Procedures for 

Adding Non-Cancer Conditions to the List of WTCRelated Health Conditions,’’ is available on the 

WTC Health Program Web site, at http://

www.cdc.gov/wtc/policies.html. 

5The substantial evidence standard is met when 

the Program assesses all of the available, relevant 

information and determines with high confidence 

that the evidence supports its findings regarding a 

causal association between the 9/11 exposure(s) and 

the health condition. 

6The modest evidence standard is met when the 

Program assesses all of the available, relevant 

information and determines with moderate 

confidence that the evidence supports its findings 

regarding a causal association between the 9/11 

exposure(s) and the health condition. 

7 Jordan HT, Brackbill RM, Cone JE, 

Debchoudhury I, Farfel MR, Greene CM, Hadler JL, 

Kennedy J, Li J, Liff J, Stayner L, Stellman SD 

[2011]. Mortality among survivors of the Sept 11, 

2001, World Trade Center disaster: results from the 

World Trade Center Health Registry cohort. The 

Lancet 378: 879–87; Jordan HT, Miller-Archie SA, 

Cone JE, Morabia A, Stellman SD [2011]. Heart 

disease among adults exposed to the September 11, 

2001 World Trade Center disaster: Results from the 

World Trade Center Health Registry. Preventive 

Medicine 53:370–376; Jordan HT, Stellman SD, 

Morabia A, Miller-Archie SA, Alper H, Laskaris Z, 

Brackbill RM, Cone JE [2013]. Cardiovascular 

Disease Hospitalizations in Relation to Exposure to 

the September 11, 2001 World Trade Center 

Disaster and Posttraumatic Stress Disorder. J Am 

Heart Assoc; Brackbill RM, Cone JE, Farfel MR, 

Stellman SD [2014]. Chronic Physical Health 

Consequences of Being Injured During the Terrorist 

Attacks on World Trade Center on September 11, 

2001. American Journal of Epidemiology. Advance 

Access published February 20, 2014. 

8 In this case, ‘‘selection bias’’ refers to study 

populations that include individuals who were selfidentified as heart patients but whose reported 

illness was not independently verified; ‘‘recall bias’’ 

refers to the inaccuracies or incompleteness 

inherent in the self-reporting of 9/11-related health 

conditions years after the event; and ‘‘confounding 

bias’’ refers to the existence of risk factors for 

cardiovascular disease that have not been 

accounted for by study authors. 

in the Journal of the American Heart 

Association on October 24, 2013.3

C. Administrator’s Determination on 

Petition 004 

The Administrator has established a 

methodology for evaluating whether to 

add non-cancer health conditions to the 

List of WTC-Related Health Conditions.4

A health condition may be added to the 

List if published, peer-reviewed 

epidemiologic evidence provides 

substantial support for a causal 

relationship between 9/11 exposures 

and the health condition in 9/11- 

exposed populations.5 If the 

epidemiologic evidence provides 

modest support for a causal relationship 

between 9/11 exposures and the health 

condition, the Administrator may then 

evaluate studies of associations between 

the health condition and 9/11 agents in 

similarly-exposed populations.6 If that 

additional assessment establishes 

substantial support for a causal 

relationship between a 9/11 agent or 

agents and the health condition, the 

health condition may be added to the 

List. 

In accordance with section 

3312(a)(6)(B) of the PHS Act, 42 CFR 

88.17, and the methodology for the 

addition of non-cancer health 

conditions, the Administrator reviewed 

the evidence presented in Petition 004. 

Although the petitioner requested the 

addition of ‘‘heart attack,’’ the 

Administrator determined that the more 

appropriate health condition is 

‘‘cardiovascular disease,’’ which 

includes heart attack, acute or chronic 

coronary artery disease, cardiac 

arrhythmia, angina, and any other heart 

condition. The Administrator then 

selected a team under the direction of 

the WTC Health Program Associate 

Director for Science (ADS) to perform a 

systematic literature search and provide 

input on whether the available scientific 

and medical information has the 

potential to provide a basis for a 

decision on whether to add the health 

condition to the List. The ADS 

conducted a search of the existing 

scientific/medical literature for 

epidemiologic evidence of a causal 

relationship between 9/11 exposures 

and cardiovascular disease. Among the 

studies identified by the literature 

search, four were found to be published, 

peer-reviewed epidemiologic studies of 

9/11-exposed populations.7 However, 

when reviewed by the ADS for 

relevance, quantity, and quality, each of 

the four published, peer-reviewed 

epidemiologic studies of 9/11-exposed 

populations were found to have 

significant limitations, both 

individually and in combination. 

Limitations of the four studies included 

selection, recall, and confounding bias 8; 

poor generalizability among all exposed 

groups; and lack of consistency among 

the associations reported between 9/11 

exposures and cardiovascular disease 

between studies. Thus, the ADS 

concluded that the available 

information did not have the potential 

to form the basis for a decision on 

whether to propose adding 

cardiovascular disease to the List. 

The findings described above led the 

Administrator to determine that 

insufficient evidence exists to take 

further action, including either 

proposing the addition of cardiovascular 

disease to the List (pursuant to PHS Act, 

section 3312(a)(6)(B)(ii) and 42 CFR 

88.17(a)(2)(ii)) or publishing a 

determination not to publish a proposed 

rule in the Federal Register (pursuant to 

PHS Act, section 3312(a)(6)(B)(iii) and 

42 CFR 88.17(a)(2)(iii)). The 

Administrator has also determined that 

requesting a recommendation from the 

STAC (pursuant to PHS Act, section 

3312(a)(6)(B)(i) and 42 CFR 

88.17(a)(2)(i)) is unwarranted. 

For the reasons discussed above, the 

request made in Petition 004 to add 

cardiovascular disease to the List of 

WTC-Related Health Conditions is 

denied. 

Dated: May 1, 2014. 

John Howard, 

Administrator, World Trade Center Health 

Program and Director, National Institute for 

Occupational Safety and Health, Centers for 

Disease Control and Prevention, Department 

of Health and Human Services. 

[FR Doc. 2014–10434 Filed 5–5–14; 8:45 am] 

BILLING CODE 4163–18–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 488 

[CMS–1605–P] 

RIN 0938–AS07 

Medicare Program; Prospective 

Payment System and Consolidated 

Billing for Skilled Nursing Facilities for 

FY 2015 

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) 2015. In addition, it 

includes a proposal to adopt the most 

recent Office of Management and 

Budget (OMB) statistical area 

delineations to identify a facility’s urban 

or rural status for the purpose of 

determining which set of rate tables 

would apply to the facility and to 

determine the SNF PPS wage index 

including a proposed one-year 

transition with a blended wage index for 

all providers for FY 2015. It also 

includes a discussion of the SNF 

therapy payment research currently 

underway within CMS. This proposed 

rule also proposes a revision to policies 

related to the Change of Therapy (COT) 

Other Medicare Required Assessment 

(OMRA). This proposed rule includes a 

discussion of a provision related to the 


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Affordable Care Act involving Civil 

Money Penalties. Finally, this proposed 

rule includes a discussion of observed 

trends related to therapy utilization 

among SNF providers and a discussion 

of accelerating health information 

exchange in SNFs. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on June 30, 2014. 

ADDRESSES: In commenting, please refer 

to file code CMS–1605–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. Within 

the search bar, enter the Regulation 

Identifier Number associated with this 

regulation, 0938–AS07, and then click 

on the ‘‘Comment Now’’ box. 

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–1605–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–1605–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. 

Karen Tritz, (410) 786–8021, for 

information related to Civil Money 

Penalties. 

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 Tables 

Exclusively Through the Internet on the 

CMS Web Site 

In the past, tables setting forth the 

Wage Index for Urban Areas Based on 

CBSA Labor Market Areas and the Wage 

Index Based on CBSA Labor Market 

Areas for Rural Areas were 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 finalized in the FY 

2014 SNF PPS final rule (78 FR 47936, 

47964), beginning in FY 2015, these 

wage index tables are no longer 

published in the Federal Register. 

Instead, these tables will be available 

exclusively through the Internet. The 

wage index tables for this proposed rule 

are available exclusively through the 

Internet on the CMS Web site at http:// 

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

Index.html. 

Readers who experience any problems 

accessing any of the tables that are 

posted on the CMS Web sites identified 

above should contact Kia Sidbury at 

(410) 786–7816. 

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 2015 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 

a. Incorporating the Multifactor 

Productivity Adjustment Into the Market 

Basket Update 

5. Market Basket Update Factor for FY 

2015 

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. Proposed Changes to SNF PPS Wage 

Index 

1. Background 

2. Proposed Implementation of New Labor 

Market Definitions 

a. Micropolitan Areas 

b. Urban Counties Becoming Rural 

c. Rural Counties Becoming Urban 

d. Urban Counties Moving to a Different 

Urban CBSA 

e. Transition Period 

3. Labor-Related Share 

B. SNF Therapy Research Project 

C. Proposed Revisions to Policies Related 

to the Change of Therapy (COT) Other 

Medicare Required Assessment (OMRA) 


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D. Civil Money Penalties (Section 6111 of 

the Affordable Care Act) 

E. Observations on Therapy Utilization 

Trends 

F. Accelerating Health Information 

Exchange in the SNF PPS 

VI. Provisions of the Proposed Rule 

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 

CMP Civil money penalties 

CMS Centers for Medicare & Medicaid 

Services 

COT Change of therapy 

ECI Employment Cost Index 

eCQM Electronically specified clinical 

quality measures 

EHR Electronic health record 

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 

HIE Health information exchange 

HIT Health information technology 

HOMER Home office Medicare records 

ICR Information Collection Requirements 

IGI IHS (Information Handling Services) 

Global Insight, Inc. 

IPPS Inpatient Prospective Payment System 

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 

NF Nursing facility 

OMB Office of Management and Budget 

OMRA Other Medicare Required 

Assessment 

PAMA Protecting Access to Medicare Act of 

2014, Pub. L 113–93 

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–IV 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 

2015 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, 

certain specified information relating to 

the payment update (see section II.C.). 

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 final rule for FY 2014 (78 FR 

47936) which reflects the SNF market 

basket index, adjusted by the forecast 

error correction, if applicable, and the 

multifactor productivity adjustment for 

FY 2015. 

C. Summary of Cost and Benefits 

Provision description Total transfers 

Proposed FY 2015 SNF PPS payment rate update.The overall economic impact of this proposed rule would be an estimated increase of $750 

million in aggregate payments to SNFs during FY 2015. 

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). In 

addition, a detailed discussion of the 

legislative history of the SNF PPS is 

available online at http://www.cms.gov/ 

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

Legislative_History_07302013.pdf. 

As noted in section I.F. of that 

legislative history, on March 23, 2010, 

the Patient Protection and Affordable 

Care Act (Pub. L. 111–148) was enacted. 

Then, the Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111– 

152, enacted on March 30, 2010) 

amended certain provisions of Pub. L. 

111–148 and certain sections of the 

Social Security Act and, in certain 

instances, included ‘‘freestanding’’ 

provisions. In this proposed rule, Public 

Law 111–148 and Public Law 111–152 

are collectively referred to as the 

‘‘Affordable Care Act.’’ In section V. of 

this proposed rule, we include 

discussions of one specific provision 

related to the Affordable Care Act 

involving Civil Money Penalties (as 

discussed in section V.D.). 

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 


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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 a final rule 

that set forth updates to the SNF PPS 

payment rates for FY 2014 (78 FR 

47936, August 6, 2013). We 

subsequently published two correction 

notices (78 FR 61202, October 3, 2013, 

and 79 FR 63, January 2, 2014) with 

respect to that final rule, as well as a 

notice that made corrections to the 

January 2, 2014 correction notice (79 FR 

1742, January 10, 2014). 

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 for these services during 

the upcoming FY. 

• The factors to be applied in making 

the area wage adjustment for 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 2015. 

III. SNF PPS Rate Setting Methodology 

and FY 2015 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 2014 (78 

FR 47939 through 47946), we revised 

and rebased the market basket, which 

included updating the base year from 

FY 2004 to FY 2010. 

For the FY 2015 proposed rule, the FY 

2010-based SNF market basket growth 

rate is estimated to be 2.4 percent, 

which is based on the IHS Global 

Insight, Inc. (IGI) first quarter 2014 

forecast with historical data through 

fourth quarter 2013. 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 2015. This is 

based on the IGI first quarter 2014 

forecast (with historical data through 

the fourth quarter 2013) of the FY 2015 

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 (as 

described in § 413.337(d)(2)) if 

applicable, and by the multifactor 

productivity 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 

facility-specific portion of the SNF PPS 

rates, because the initial three-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 


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downward adjustments, as 

appropriate.’’ 

For FY 2013 (the most recently 

available FY for which there is final 

data), the estimated increase in the 

market basket index was 2.5 percentage 

points, while the actual increase for FY 

2013 was 2.2 percentage points, 

resulting in the actual increase being 0.3 

percentage point lower than the 

estimated increase. Accordingly, as the 

difference between the estimated and 

actual amount of change in the market 

basket index does not exceed the 0.5 

percentage point threshold, the payment 

rates for FY 2015 do not include a 

forecast error adjustment. Table 1 shows 

the forecasted and actual market basket 

amounts for FY 2013. 

TABLE 1—DIFFERENCE BETWEEN THE FORECASTED AND ACTUAL MARKET BASKET INCREASES FOR FY 2013 

Index 

Forecasted 

FY 2013 

increase * 

Actual 

FY 2013 

increase ** 

FY 2013 

difference 

SNF .............................................................................................................................................. 2.5 2.2 ¥0.3 

* Published in Federal Register; based on second quarter 2012 IGI forecast (2004-based index). 

** Based on the first quarter 2014 IHS Global Insight forecast, with historical data through the fourth quarter 2013 (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.’’ 

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 

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 2015 update, the MFP 

adjustment is calculated as the 10-year 

moving average of changes in MFP for 

the period ending September 30, 2015, 

which is 0.4 percent. Consistent with 

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

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

market basket percentage for FY 2015 

for the SNF PPS is based on IGI’s first 

quarter 2014 forecast of the SNF market 

basket update, and is estimated to be 2.4 

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, 2015) of 

0.4 percent, which is calculated as 

described above and based on IGI’s first 

quarter 2014 forecast. The resulting 

MFP-adjusted SNF market basket 

update is equal to 2.0 percent, or 2.4 

percent less 0.4 percentage point. 

5. Market Basket Update Factor for FY 

2015 

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 

2015 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, 2013 through 

September 30, 2014 to the average 

market basket level for the period of 

October 1, 2014 through September 30, 

2015. This process yields an update 

factor of 2.4 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 

difference between the forecasted FY 

2013 SNF market basket percentage 

change and the actual FY 2013 SNF 

market basket percentage change (FY 

2013 is the most recently available FY 

for which there is final data) does not 

exceed 0.5 percentage point, the FY 

2015 market basket of 2.4 percent would 

not be adjusted by the applicable 

difference. In addition, for FY 2015, 

section 1888(e)(5)(B)(ii) 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, 2015) of 0.4 percent, as described in 

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


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The resulting MFP-adjusted SNF market 

basket update would be equal to 2.0 

percent, or 2.4 percent less 0.4 

percentage point. We note that if more 

recent data become available (for 

example, a more recent estimate of the 

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 2015 

SNF market basket update, FY 2015 

labor-related share relative importance, 

and MFP adjustment in the FY 2015 

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 2015 from average prices 

for FY 2014. 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 2015, prior to 

adjustment for case-mix. 

While we would continue to compute 

and apply separate federal per diem 

rates for SNFs located in urban and 

rural areas as we have in the past, we 

propose to use the revised OMB 

statistical area delineations discussed in 

Section V.A below to identify a facility’s 

urban or rural status for the purpose of 

determining which set of rate tables 

would apply to a facility beginning on 

October 1, 2014. We believe that the 

most current OMB delineations more 

accurately reflect the contemporary 

urban and rural nature of areas across 

the country, and that use of such 

delineations would allow us to more 

accurately determine the appropriate 

rate tables to apply under the SNF PPS. 

Thus, we believe it is appropriate to use 

the most current OMB delineations for 

this purpose, in order to enhance the 

accuracy of payments under the SNF 

PPS. We invite comments on this 

proposal. 

TABLE 2—FY 2015 UNADJUSTED FEDERAL RATE PER DIEM URBAN

Rate component Nursing— 

case-mix 

Therapy— 

case-mix 

Therapy—noncase-mix Non-case-mix 

Per Diem Amount ............................................................................................ $169.14 $127.41 $16.78 $86.32 

TABLE 3—FY 2015 UNADJUSTED FEDERAL RATE PER DIEM RURAL

Rate component Nursing— 

case-mix 

Therapy— 

case-mix 

Therapy—noncase-mix Non-case-mix 

Per Diem Amount ............................................................................................ $161.59 $146.90 $17.92 $87.92 

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 

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) 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 


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#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 2012 

data, we identified fewer than 4,355 

SNF residents with a diagnosis code of 

042 (Human Immunodeficiency Virus 

(HIV) Infection). For FY 2015, an urban 

facility with a resident with AIDS in 

RUG–IV group ‘‘HC2’’ would have a 

case-mix adjusted per diem payment of 

$422.77 (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 per diem payment of 

approximately $963.92. 

Currently, we use the International 

Classification of Diseases, 9th revision, 

Clinical Modification (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 the 

Department published a final rule in the 

September 5, 2012 Federal Register (77 

FR 54664) which requires us to stop 

using ICD–9–CM on September 30, 

2014, and begin using the International 

Classification of Diseases, 10th revision, 

Clinical Modification (ICD–10–CM), on 

October 1, 2014. Regarding the abovereferenced ICD–9–CM diagnosis code of 

042, in the FY 2014 SNF PPS proposed 

rule (78 FR 26444, May 6, 2013), we 

proposed to transition to the equivalent 

ICD–10–CM diagnosis code of B20 upon 

the overall conversion to ICD–10–CM on 

October 1, 2014, and we subsequently 

finalized that proposal in the FY 2014 

SNF PPS final rule (78 FR 47951 

through 47952). 

However, on April 1, 2014, the 

Protecting Access to Medicare Act of 

2014 (PAMA) (Pub. L. No. 113–93) was 

enacted. Section 212 of PAMA, titled 

‘‘Delay in Transition from ICD–9 to 

ICD–10 Code Sets,’’ provides that ‘‘[t]he 

Secretary of Health and Human Services 

may not, prior to October 1, 2015, adopt 

ICD–10 code sets as the standard for 

code sets under section 1173(c) of the 

Social Security Act (42 U.S.C. 1320d– 

2(c)) and section 162.1002 of title 45, 

Code of Federal Regulations.’’ As of 

now, the Secretary has not implemented 

this provision under HIPAA. In light of 

PAMA, the effective date of the change 

from ICD–9–CM code 042 to ICD–10– 

CM code B20 for purposes of applying 

the AIDS add-on would be the date 

when ICD–10 becomes the required 

medical data code set for use on 

Medicare SNF claims. Until that time, 

we would continue to use ICD–9–CM 

code 042 for this purpose. 

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

update of the payment rates must 

include the case-mix classification 

methodology applicable for the 

upcoming FY. The payment rates set 

forth in this proposed rule reflect the 

use of the RUG–IV case-mix 

classification system from October 1, 

2014, through September 30, 2015. We 

list the proposed case-mix adjusted 

RUG–IV payment rates, provided 

separately for urban and rural SNFs, in 

Tables 4 and 5 with corresponding casemix values. As discussed above, 

facilities would use the proposed 

revised OMB delineations in order to 

identify their urban or rural status for 

the purpose of determining which set of 

rate tables would apply to them 

beginning on October 1, 2014. 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 index 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 $451.60 $238.26 ........................ $86.32 $776.18 

RUL .............................. 2.57 1.87 434.69 238.26 ........................ 86.32 759.27 

RVX .............................. 2.61 1.28 441.46 163.08 ........................ 86.32 690.86 

RVL .............................. 2.19 1.28 370.42 163.08 ........................ 86.32 619.82 

RHX .............................. 2.55 0.85 431.31 108.30 ........................ 86.32 625.93 

RHL .............................. 2.15 0.85 363.65 108.30 ........................ 86.32 558.27 

RMX ............................. 2.47 0.55 417.78 70.08 ........................ 86.32 574.18 

RML .............................. 2.19 0.55 370.42 70.08 ........................ 86.32 526.82 

RLX .............................. 2.26 0.28 382.26 35.67 ........................ 86.32 504.25 

RUC ............................. 1.56 1.87 263.86 238.26 ........................ 86.32 588.44 

RUB .............................. 1.56 1.87 263.86 238.26 ........................ 86.32 588.44 

RUA .............................. 0.99 1.87 167.45 238.26 ........................ 86.32 492.03 

RVC .............................. 1.51 1.28 255.40 163.08 ........................ 86.32 504.80 

RVB .............................. 1.11 1.28 187.75 163.08 ........................ 86.32 437.15 

RVA .............................. 1.10 1.28 186.05 163.08 ........................ 86.32 435.45 

RHC ............................. 1.45 0.85 245.25 108.30 ........................ 86.32 439.87 

RHB .............................. 1.19 0.85 201.28 108.30 ........................ 86.32 395.90 

RHA .............................. 0.91 0.85 153.92 108.30 ........................ 86.32 348.54 

RMC ............................. 1.36 0.55 230.03 70.08 ........................ 86.32 386.43 

RMB ............................. 1.22 0.55 206.35 70.08 ........................ 86.32 362.75 

RMA ............................. 0.84 0.55 142.08 70.08 ........................ 86.32 298.48 

RLB .............................. 1.50 0.28 253.71 35.67 ........................ 86.32 375.70 

RLA .............................. 0.71 0.28 120.09 35.67 ........................ 86.32 242.08 

ES3 .............................. 3.58 ........................ 605.52 ........................ 16.78 86.32 708.62 

ES2 .............................. 2.67 ........................ 451.60 ........................ 16.78 86.32 554.70 

ES1 .............................. 2.32 ........................ 392.40 ........................ 16.78 86.32 495.50 

HE2 .............................. 2.22 ........................ 375.49 ........................ 16.78 86.32 478.59 

HE1 .............................. 1.74 ........................ 294.30 ........................ 16.78 86.32 397.40 

HD2 .............................. 2.04 ........................ 345.05 ........................ 16.78 86.32 448.15 

HD1 .............................. 1.60 ........................ 270.62 ........................ 16.78 86.32 373.72 

HC2 .............................. 1.89 ........................ 319.67 ........................ 16.78 86.32 422.77 

HC1 .............................. 1.48 ........................ 250.33 ........................ 16.78 86.32 353.43 


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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 

HB2 .............................. 1.86 ........................ 314.60 ........................ 16.78 86.32 417.70 

HB1 .............................. 1.46 ........................ 246.94 ........................ 16.78 86.32 350.04 

LE2 ............................... 1.96 ........................ 331.51 ........................ 16.78 86.32 434.61 

LE1 ............................... 1.54 ........................ 260.48 ........................ 16.78 86.32 363.58 

LD2 ............................... 1.86 ........................ 314.60 ........................ 16.78 86.32 417.70 

LD1 ............................... 1.46 ........................ 246.94 ........................ 16.78 86.32 350.04 

LC2 ............................... 1.56 ........................ 263.86 ........................ 16.78 86.32 366.96 

LC1 ............................... 1.22 ........................ 206.35 ........................ 16.78 86.32 309.45 

LB2 ............................... 1.45 ........................ 245.25 ........................ 16.78 86.32 348.35 

LB1 ............................... 1.14 ........................ 192.82 ........................ 16.78 86.32 295.92 

CE2 .............................. 1.68 ........................ 284.16 ........................ 16.78 86.32 387.26 

CE1 .............................. 1.50 ........................ 253.71 ........................ 16.78 86.32 356.81 

CD2 .............................. 1.56 ........................ 263.86 ........................ 16.78 86.32 366.96 

CD1 .............................. 1.38 ........................ 233.41 ........................ 16.78 86.32 336.51 

CC2 .............................. 1.29 ........................ 218.19 ........................ 16.78 86.32 321.29 

CC1 .............................. 1.15 ........................ 194.51 ........................ 16.78 86.32 297.61 

CB2 .............................. 1.15 ........................ 194.51 ........................ 16.78 86.32 297.61 

CB1 .............................. 1.02 ........................ 172.52 ........................ 16.78 86.32 275.62 

CA2 .............................. 0.88 ........................ 148.84 ........................ 16.78 86.32 251.94 

CA1 .............................. 0.78 ........................ 131.93 ........................ 16.78 86.32 235.03 

BB2 .............................. 0.97 ........................ 164.07 ........................ 16.78 86.32 267.17 

BB1 .............................. 0.90 ........................ 152.23 ........................ 16.78 86.32 255.33 

BA2 .............................. 0.70 ........................ 118.40 ........................ 16.78 86.32 221.50 

BA1 .............................. 0.64 ........................ 108.25 ........................ 16.78 86.32 211.35 

PE2 .............................. 1.50 ........................ 253.71 ........................ 16.78 86.32 356.81 

PE1 .............................. 1.40 ........................ 236.80 ........................ 16.78 86.32 339.90 

PD2 .............................. 1.38 ........................ 233.41 ........................ 16.78 86.32 336.51 

PD1 .............................. 1.28 ........................ 216.50 ........................ 16.78 86.32 319.60 

PC2 .............................. 1.10 ........................ 186.05 ........................ 16.78 86.32 289.15 

PC1 .............................. 1.02 ........................ 172.52 ........................ 16.78 86.32 275.62 

PB2 .............................. 0.84 ........................ 142.08 ........................ 16.78 86.32 245.18 

PB1 .............................. 0.78 ........................ 131.93 ........................ 16.78 86.32 235.03 

PA2 .............................. 0.59 ........................ 99.79 ........................ 16.78 86.32 202.89 

PA1 .............................. 0.54 ........................ 91.34 ........................ 16.78 86.32 194.44 

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 $431.45 $274.70 ........................ $87.92 $794.07 

RUL .............................. 2.57 1.87 415.29 274.70 ........................ 87.92 777.91 

RVX .............................. 2.61 1.28 421.75 188.03 ........................ 87.92 697.70 

RVL .............................. 2.19 1.28 353.88 188.03 ........................ 87.92 629.83 

RHX .............................. 2.55 0.85 412.05 124.87 ........................ 87.92 624.84 

RHL .............................. 2.15 0.85 347.42 124.87 ........................ 87.92 560.21 

RMX ............................. 2.47 0.55 399.13 80.80 ........................ 87.92 567.85 

RML .............................. 2.19 0.55 353.88 80.80 ........................ 87.92 522.60 

RLX .............................. 2.26 0.28 365.19 41.13 ........................ 87.92 494.24 

RUC ............................. 1.56 1.87 252.08 274.70 ........................ 87.92 614.70 

RUB .............................. 1.56 1.87 252.08 274.70 ........................ 87.92 614.70 

RUA .............................. 0.99 1.87 159.97 274.70 ........................ 87.92 522.59 

RVC .............................. 1.51 1.28 244.00 188.03 ........................ 87.92 519.95 

RVB .............................. 1.11 1.28 179.36 188.03 ........................ 87.92 455.31 

RVA .............................. 1.10 1.28 177.75 188.03 ........................ 87.92 453.70 

RHC ............................. 1.45 0.85 234.31 124.87 ........................ 87.92 447.10 

RHB .............................. 1.19 0.85 192.29 124.87 ........................ 87.92 405.08 

RHA .............................. 0.91 0.85 147.05 124.87 ........................ 87.92 359.84 

RMC ............................. 1.36 0.55 219.76 80.80 ........................ 87.92 388.48 

RMB ............................. 1.22 0.55 197.14 80.80 ........................ 87.92 365.86 

RMA ............................. 0.84 0.55 135.74 80.80 ........................ 87.92 304.46 

RLB .............................. 1.50 0.28 242.39 41.13 ........................ 87.92 371.44 

RLA .............................. 0.71 0.28 114.73 41.13 ........................ 87.92 243.78 

ES3 .............................. 3.58 ........................ 578.49 ........................ 17.92 87.92 684.33 

ES2 .............................. 2.67 ........................ 431.45 ........................ 17.92 87.92 537.29 

ES1 .............................. 2.32 ........................ 374.89 ........................ 17.92 87.92 480.73 

HE2 .............................. 2.22 ........................ 358.73 ........................ 17.92 87.92 464.57 

HE1 .............................. 1.74 ........................ 281.17 ........................ 17.92 87.92 387.01 

HD2 .............................. 2.04 ........................ 329.64 ........................ 17.92 87.92 435.48 

HD1 .............................. 1.60 ........................ 258.54 ........................ 17.92 87.92 364.38 


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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 

HC2 .............................. 1.89 ........................ 305.41 ........................ 17.92 87.92 411.25 

HC1 .............................. 1.48 ........................ 239.15 ........................ 17.92 87.92 344.99 

HB2 .............................. 1.86 ........................ 300.56 ........................ 17.92 87.92 406.40 

HB1 .............................. 1.46 ........................ 235.92 ........................ 17.92 87.92 341.76 

LE2 ............................... 1.96 ........................ 316.72 ........................ 17.92 87.92 422.56 

LE1 ............................... 1.54 ........................ 248.85 ........................ 17.92 87.92 354.69 

LD2 ............................... 1.86 ........................ 300.56 ........................ 17.92 87.92 406.40 

LD1 ............................... 1.46 ........................ 235.92 ........................ 17.92 87.92 341.76 

LC2 ............................... 1.56 ........................ 252.08 ........................ 17.92 87.92 357.92 

LC1 ............................... 1.22 ........................ 197.14 ........................ 17.92 87.92 302.98 

LB2 ............................... 1.45 ........................ 234.31 ........................ 17.92 87.92 340.15 

LB1 ............................... 1.14 ........................ 184.21 ........................ 17.92 87.92 290.05 

CE2 .............................. 1.68 ........................ 271.47 ........................ 17.92 87.92 377.31 

CE1 .............................. 1.50 ........................ 242.39 ........................ 17.92 87.92 348.23 

CD2 .............................. 1.56 ........................ 252.08 ........................ 17.92 87.92 357.92 

CD1 .............................. 1.38 ........................ 222.99 ........................ 17.92 87.92 328.83 

CC2 .............................. 1.29 ........................ 208.45 ........................ 17.92 87.92 314.29 

CC1 .............................. 1.15 ........................ 185.83 ........................ 17.92 87.92 291.67 

CB2 .............................. 1.15 ........................ 185.83 ........................ 17.92 87.92 291.67 

CB1 .............................. 1.02 ........................ 164.82 ........................ 17.92 87.92 270.66 

CA2 .............................. 0.88 ........................ 142.20 ........................ 17.92 87.92 248.04 

CA1 .............................. 0.78 ........................ 126.04 ........................ 17.92 87.92 231.88 

BB2 .............................. 0.97 ........................ 156.74 ........................ 17.92 87.92 262.58 

BB1 .............................. 0.90 ........................ 145.43 ........................ 17.92 87.92 251.27 

BA2 .............................. 0.70 ........................ 113.11 ........................ 17.92 87.92 218.95 

BA1 .............................. 0.64 ........................ 103.42 ........................ 17.92 87.92 209.26 

PE2 .............................. 1.50 ........................ 242.39 ........................ 17.92 87.92 348.23 

PE1 .............................. 1.40 ........................ 226.23 ........................ 17.92 87.92 332.07 

PD2 .............................. 1.38 ........................ 222.99 ........................ 17.92 87.92 328.83 

PD1 .............................. 1.28 ........................ 206.84 ........................ 17.92 87.92 312.68 

PC2 .............................. 1.10 ........................ 177.75 ........................ 17.92 87.92 283.59 

PC1 .............................. 1.02 ........................ 164.82 ........................ 17.92 87.92 270.66 

PB2 .............................. 0.84 ........................ 135.74 ........................ 17.92 87.92 241.58 

PB1 .............................. 0.78 ........................ 126.04 ........................ 17.92 87.92 231.88 

PA2 .............................. 0.59 ........................ 95.34 ........................ 17.92 87.92 201.18 

PA1 .............................. 0.54 ........................ 87.26 ........................ 17.92 87.92 193.10 

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 2015, as we continue to 

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

inpatient wage index data 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 

occupational mix adjustment continues 

to be appropriate for SNF payments. For 

FY 2015, the updated wage data are for 

hospital cost reporting periods 

beginning on or after October 1, 2010 

and before October 1, 2011 (FY 2011 

cost report data). 

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. 

In addition, 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 2015 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 2015, 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 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 2015, the only 

urban area without wage index data 


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available is CBSA 25980, HinesvilleFort Stewart, GA. 

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. In the 

SNF PPS final rule for FY 2014 (78 FR 

47944 through 47946), we finalized a 

proposal 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: wages and 

salaries; employee benefits; the laborrelated portion of nonmedical 

professional fees; administrative and 

facilities support services; all other— 

labor-related services; and a proportion 

of capital-related 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 2015. 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 2015 than the base 

year weights from the SNF market 

basket. 

We calculate the labor-related relative 

importance for FY 2015 in four steps. 

First, we compute the FY 2015 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 

2015 price index level for that cost 

category by the total market basket price 

index level. Third, we determine the FY 

2015 relative importance for each cost 

category by multiplying this ratio by the 

base year (FY 2010) weight. Finally, we 

add the FY 2015 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, and a portion of 

capital-related expenses) to produce the 

FY 2015 labor-related relative 

importance. Tables 6 and 7 show the 

RUG–IV case-mix adjusted federal rates 

by labor-related and non-labor-related 

components. As discussed above, the 

proposed new OMB delineations would 

be used to identify a facility’s urban or 

rural status for the purpose of 

determining which set of rate tables 

would apply to them beginning on 

October 1, 2014. Table 12 in section 

V.A.3. provides the FY 2015 laborrelated share components based on the 

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 ........ 776.18 $539.55 $236.63 

RUL ......... 759.27 527.79 231.48 

RVX ........ 690.86 480.24 210.62 

RVL ......... 619.82 430.86 188.96 

RHX ........ 625.93 435.10 190.83 

RHL ......... 558.27 388.07 170.20 

RMX ........ 574.18 399.13 175.05 

RML ........ 526.82 366.21 160.61 

RLX ......... 504.25 350.52 153.73 

RUC ........ 588.44 409.04 179.40 

RUB ........ 588.44 409.04 179.40 

RUA ........ 492.03 342.02 150.01 

RVC ........ 504.80 350.90 153.90 

RVB ........ 437.15 303.88 133.27 

RVA ........ 435.45 302.69 132.76 

RHC ........ 439.87 305.77 134.10 

RHB ........ 395.90 275.20 120.70 

RHA ........ 348.54 242.28 106.26 

RMC ........ 386.43 268.62 117.81 

RMB ........ 362.75 252.16 110.59 

RMA ........ 298.48 207.48 91.00 

RLB ......... 375.70 261.16 114.54 

RLA ......... 242.08 168.28 73.80 

ES3 ......... 708.62 492.58 216.04 

ES2 ......... 554.70 385.59 169.11 

ES1 ......... 495.50 344.44 151.06 

HE2 ......... 478.59 332.68 145.91 

HE1 ......... 397.40 276.24 121.16 

HD2 ......... 448.15 311.52 136.63 

HD1 ......... 373.72 259.78 113.94 

HC2 ......... 422.77 293.88 128.89 

HC1 ......... 353.43 245.68 107.75 

HB2 ......... 417.70 290.36 127.34 

HB1 ......... 350.04 243.32 106.72 

LE2 ......... 434.61 302.11 132.50 

LE1 ......... 363.58 252.74 110.84 

LD2 ......... 417.70 290.36 127.34 

LD1 ......... 350.04 243.32 106.72 

LC2 ......... 366.96 255.08 111.88 

LC1 ......... 309.45 215.11 94.34 

LB2 ......... 348.35 242.15 106.20 

LB1 ......... 295.92 205.70 90.22 

CE2 ......... 387.26 269.20 118.06 

CE1 ......... 356.81 248.03 108.78 

CD2 ......... 366.96 255.08 111.88 

CD1 ......... 336.51 233.92 102.59 

CC2 ......... 321.29 223.34 97.95 

CC1 ......... 297.61 206.88 90.73 

CB2 ......... 297.61 206.88 90.73 

CB1 ......... 275.62 191.59 84.03 

CA2 ......... 251.94 175.13 76.81 

CA1 ......... 235.03 163.38 71.65 

BB2 ......... 267.17 185.72 81.45 

BB1 ......... 255.33 177.49 77.84 

BA2 ......... 221.50 153.97 67.53 

BA1 ......... 211.35 146.92 64.43 

PE2 ......... 356.81 248.03 108.78 

PE1 ......... 339.90 236.27 103.63 

PD2 ......... 336.51 233.92 102.59 

PD1 ......... 319.60 222.16 97.44 

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

SNFS BY LABOR AND NON-LABOR

COMPONENT—Continued 

RUG–IV 

Category 

Total 

rate 

Labor 

portion 

Non-labor 

portion 

PC2 ......... 289.15 201.00 88.15 

PC1 ......... 275.62 191.59 84.03 

PB2 ......... 245.18 170.43 74.75 

PB1 ......... 235.03 163.38 71.65 

PA2 ......... 202.89 141.03 61.86 

PA1 ......... 194.44 135.16 59.28 

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 ........ 794.07 $551.98 $242.09 

RUL ......... 777.91 540.75 237.16 

RVX ........ 697.70 484.99 212.71 

RVL ......... 629.83 437.81 192.02 

RHX ........ 624.84 434.35 190.49 

RHL ......... 560.21 389.42 170.79 

RMX ........ 567.85 394.73 173.12 

RML ........ 522.60 363.27 159.33 

RLX ......... 494.24 343.56 150.68 

RUC ........ 614.70 427.30 187.40 

RUB ........ 614.70 427.30 187.40 

RUA ........ 522.59 363.27 159.32 

RVC ........ 519.95 361.43 158.52 

RVB ........ 455.31 316.50 138.81 

RVA ........ 453.70 315.38 138.32 

RHC ........ 447.10 310.79 136.31 

RHB ........ 405.08 281.58 123.50 

RHA ........ 359.84 250.14 109.70 

RMC ........ 388.48 270.04 118.44 

RMB ........ 365.86 254.32 111.54 

RMA ........ 304.46 211.64 92.82 

RLB ......... 371.44 258.20 113.24 

RLA ......... 243.78 169.46 74.32 

ES3 ......... 684.33 475.70 208.63 

ES2 ......... 537.29 373.49 163.80 

ES1 ......... 480.73 334.17 146.56 

HE2 ......... 464.57 322.94 141.63 

HE1 ......... 387.01 269.02 117.99 

HD2 ......... 435.48 302.72 132.76 

HD1 ......... 364.38 253.29 111.09 

HC2 ......... 411.25 285.87 125.38 

HC1 ......... 344.99 239.81 105.18 

HB2 ......... 406.40 282.50 123.90 

HB1 ......... 341.76 237.57 104.19 

LE2 ......... 422.56 293.73 128.83 

LE1 ......... 354.69 246.56 108.13 

LD2 ......... 406.40 282.50 123.90 

LD1 ......... 341.76 237.57 104.19 

LC2 ......... 357.92 248.80 109.12 

LC1 ......... 302.98 210.61 92.37 

LB2 ......... 340.15 236.45 103.70 

LB1 ......... 290.05 201.62 88.43 

CE2 ......... 377.31 262.28 115.03 

CE1 ......... 348.23 242.07 106.16 

CD2 ......... 357.92 248.80 109.12 

CD1 ......... 328.83 228.58 100.25 

CC2 ......... 314.29 218.47 95.82 

CC1 ......... 291.67 202.75 88.92 

CB2 ......... 291.67 202.75 88.92 

CB1 ......... 270.66 188.14 82.52 

CA2 ......... 248.04 172.42 75.62 


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

SNFS BY LABOR AND NON-LABOR

COMPONENT—Continued 

RUG–IV 

Category 

Total 

rate 

Labor 

portion 

Non-labor 

portion 

CA1 ......... 231.88 161.19 70.69 

BB2 ......... 262.58 182.53 80.05 

BB1 ......... 251.27 174.67 76.60 

BA2 ......... 218.95 152.20 66.75 

BA1 ......... 209.26 145.46 63.80 

PE2 ......... 348.23 242.07 106.16 

PE1 ......... 332.07 230.83 101.24 

PD2 ......... 328.83 228.58 100.25 

PD1 ......... 312.68 217.35 95.33 

PC2 ......... 283.59 197.13 86.46 

PC1 ......... 270.66 188.14 82.52 

PB2 ......... 241.58 167.93 73.65 

PB1 ......... 231.88 161.19 70.69 

PA2 ......... 201.18 139.85 61.33 

PA1 ......... 193.10 134.23 58.87 

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 

2015 (federal rates effective October 1, 

2014), we would apply an adjustment to 

fulfill the budget neutrality requirement. 

We would 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 2014 to the weighted 

average wage adjustment factor for FY 

2015, based on the blended wage index 

for FY 2015 as proposed later in this 

proposed rule. For this calculation, we 

use the same FY 2013 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 2015 would be 1.0001. 

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 

www.whitehouse.gov/omb/bulletins/

b03-04.html, which announced revised 

definitions for MSAs, and the creation 

of micropolitan statistical areas and 

combined statistical areas. 

In adopting the CBSA geographic 

designations, we provided for a one-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), since the expiration of 

this one-year transition on September 

30, 2006, we have used the full CBSAbased wage index values. 

On February 28, 2013, OMB issued 

OMB Bulletin No. 13–01, announcing 

revisions to the delineation of MSAs, 

Micropolitan Statistical Areas, and 

Combined Statistical Areas, and 

guidance on uses of the delineation of 

these areas. A copy of this bulletin is 

available online 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 on June 28, 

2010, in the 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. 

As discussed in the SNF PPS 

proposed rule for FY 2014 (78 FR 

26448), the changes made by the 

bulletin and their ramifications required 

extensive review by CMS before using 

them for the SNF PPS wage index. 

Having completed our assessment, we 

are proposing changes to the SNF PPS 

wage index based on the newest OMB 

delineations, as described in OMB 

Bulletin No. 13–01, beginning in FY 

2015, including a proposed one-year 

transition with a blended wage index for 

FY 2015. These proposed changes are 

discussed further in section V.A. of this 

proposed rule. The proposed wage 

index applicable to FY 2015 is set forth 

in Table A available on the CMS Web 

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

Medicare-Fee-for-Service-Payment/

SNFPPS/WageIndex.html. Table A 

provides a crosswalk between the FY 

2015 wage index for a provider using 

the current OMB delineations in effect 

in FY 2014 and the FY 2015 wage index 

using the proposed revised OMB 

delineations, as well as the proposed 

transition wage index values that would 

be in effect in FY 2015 if these proposed 

changes are finalized. 

E. Adjusted Rate Computation Example 

Using the hypothetical SNF XYZ 

described below, Table 8 shows the 

adjustments made to the federal per 

diem rates to compute the provider’s 

actual per diem PPS payment. We 

derive the Labor and Non-labor columns 

from Table 6. The wage index used in 

this example is based on the proposed 

transition wage index, which may be 

found in Table A as referenced above. 

As illustrated in Table 8, SNF XYZ’s 

total PPS payment would equal 

$42,299.26. 

TABLE 8—ADJUSTED RATE COMPUTATION EXAMPLE

SNF XYZ: LOCATED IN CEDAR RAPIDS, IA (URBAN CBSA 16300) WAGE INDEX: 0.8883 

[See Proposed Transition Wage Index in Table A] 1

RUG–IV Group Labor Wage index Adjusted 

labor Non-labor Adjusted rate 

Percent 

adjustment 

Medicare 

days Payment 

RVX .................................. $480.24 0.8883 $426.60 $210.62 $637.22 $637.22 14 $8,921.08 

ES2 .................................. 385.59 0.8883 342.52 169.11 511.63 511.63 30 15,348.90 

RHA .................................. 242.28 0.8883 215.22 106.26 321.48 321.48 16 5,143.68 

CC2 * ................................ 223.34 0.8883 198.39 97.95 296.34 675.66 10 6,756.60 

BA2 .................................. 153.97 0.8883 136.77 67.53 204.30 204.30 30 6,129.00 

.................... .................... .................... .................... .................... .................... 100 42,299.26 

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

1Available on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html. 


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25778 Federal Register / Vol. 79, No. 87 / Tuesday, May 6, 2014 / Proposed Rules 

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 five-day, Medicarerequired assessment are automatically 

classified as meeting the SNF level of 

care definition up to and including the 

assessment reference date on the fiveday 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 

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). 

A detailed discussion of the 

legislative history of the consolidated 

billing provision is available on the SNF 

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

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

Legislative_History_07302013.pdf. In 

particular, 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 section 1888(e)(2)(A) of 

the 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 


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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, 2014). 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. Proposed Changes to SNF PPS Wage 

Index 

1. Background 

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, 

exclusive of the occupational mix 

adjustment, in developing a wage index 

to be applied to SNFs. As noted 

previously in section III.D of this 

proposed rule, we are proposing to 

continue that practice for FY 2015. The 

wage index used for the SNF PPS is 

calculated using the Inpatient 

Prospective Payment System (IPPS) 

wage index data on the basis of the labor 

market area in which the acute care 

hospital is located, but without taking 

into account geographic reclassifications 

under section 1886(d)(8) and (d)(10) of 

the Act, and without applying the IPPS 

rural floor under section 4410 of the 

BBA, the IPPS imputed rural floor under 

42 CFR 412.64(h), and the outmigration 

adjustment under section 1886(d)(13) 

(see the FY 2006 SNF PPS proposed rule 

(70 FR 29090 through 29092)). The 

applicable SNF wage index value is 

assigned to a SNF on the basis of the 

labor market area in which the SNF is 

geographically located. Under section 

1888(e)(4)(G)(ii) of the Act, beginning 

with FY 2006, we delineate labor market 

areas based on the Core-Based Statistical 

Areas (CBSAs) established by the Office 

of Management and Budget (OMB). The 

current statistical areas used in FY 2014 

are based on OMB standards published 

on December 27, 2000 (65 FR 82228) 

and Census 2000 data and Census 

Bureau population estimates for 2007 

and 2008 (OMB Bulletin No. 10–02). For 

a discussion of OMB’s delineations of 

CBSAs and our implementation of the 

CBSA definitions, we refer readers to 

the preamble of the FY 2006 SNF PPS 

proposed rule (70 FR 29090 through 

29096) and final rule (70 FR 45040 

through 45041). As stated in the FY 

2014 SNF PPS proposed rule (78 FR 

26448) and final rule (78 FR 47952), on 

February 28, 2013, OMB issued OMB 

Bulletin No. 13–01, which established 

revised delineations for Metropolitan 

Statistical Areas, Micropolitan 

Statistical Areas, and Combined 

Statistical Areas, and provided guidance 

on the use of the delineations of these 

statistical areas. A copy of this bulletin 

may be obtained at http://

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

omb/bulletins/2013/b-13-01.pdf. 

According to OMB, ‘‘[t]his bulletin 

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 


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on June 28, 2010, in the 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 OMB bulletin does contain a 

number of significant changes. For 

example, there are new CBSAs, urban 

counties that have become rural, rural 

counties that have become urban, and 

existing CBSAs that have been split 

apart. However, because the bulletin 

was not issued until February 28, 2013, 

with supporting data not available until 

later, and because the changes made by 

the bulletin and their ramifications 

needed to be extensively reviewed and 

verified, we were unable to undertake 

such a lengthy process before 

publication of the FY 2014 SNF PPS 

proposed rule and, thus, did not 

implement changes to the wage index 

for FY 2014 based on these new OMB 

delineations. In the FY 2014 SNF PPS 

final rule (78 FR 47952), we stated that 

we intended to propose changes to the 

wage index based on the most current 

OMB delineations in this FY 2015 SNF 

PPS proposed rule. As discussed below, 

in this proposed rule, we are proposing 

to implement the new OMB 

delineations as described in the 

February 28, 2013 OMB Bulletin No. 

13–01, for SNF PPS wage index 

beginning in FY 2015. 

2. Proposed Implementation of New 

Labor Market Delineations 

As discussed in the FY 2014 SNF PPS 

proposed rule (78 FR 26448) and final 

rule (78 FR 47952), CMS delayed 

implementing the new OMB statistical 

area delineations to allow for sufficient 

time to assess the new changes. We 

believe it is important for the SNF PPS 

to use the latest OMB delineations 

available in order to maintain a more 

accurate and up-to-date payment system 

that reflects the reality of population 

shifts and labor market conditions. 

While CMS and other stakeholders have 

explored potential alternatives to the 

current CBSA-based labor market 

system (we refer readers to the CMS 

Web site at www.cms.gov/Medicare/

Medicare-Fee-for-Service-Payment/

AcuteInpatientPPS/Wage-IndexReform.html), no consensus has been 

achieved regarding how best to 

implement a replacement system. As 

discussed in the FY 2005 IPPS final rule 

(69 FR 49027), ‘‘While we recognize that 

MSAs are not designed specifically to 

define labor market areas, we believe 

they do represent a useful proxy for this 

purpose.’’ We further believe that using 

the most current OMB delineations 

would increase the integrity of the SNF 

PPS wage index by creating a more 

accurate representation of geographic 

variation in wage levels. We have 

reviewed our findings and impacts 

relating to the new OMB delineations, 

and have concluded that there is no 

compelling reason to further delay 

implementation. Because we believe 

that we have broad authority under 

section 1888(e)(4)(G)(ii) to determine 

the labor market areas used for the SNF 

PPS wage index, and because we also 

believe that the most current OMB 

delineations accurately reflect the local 

economies and wage levels of the areas 

in which hospitals are currently located, 

we are proposing to implement the new 

OMB delineations as described in the 

February 28, 2013 OMB Bulletin No. 

13–01, for the SNF PPS wage index 

effective beginning in FY 2015. As 

discussed further below, we are 

proposing to implement a one-year 

transition with a blended wage index for 

all providers in FY 2015 to assist 

providers in adapting to the new OMB 

delineations (if we finalize 

implementation of such delineations for 

the SNF PPS wage index beginning in 

FY 2015). We invite comments on this 

proposal. This proposed transition is 

discussed in more detail below. 

a. Micropolitan Statistical Areas 

As discussed in the FY 2006 SNF PPS 

proposed rule (70 FR 29093 through 

29094) and final rule (70 FR 45041), 

CMS considered how to use the 

Micropolitan Statistical Area definitions 

in the calculation of the wage index. 

OMB defines a ‘‘Micropolitan Statistical 

Area’’ as a CBSA ‘‘associated with at 

least one urban cluster that has a 

population of at least 10,000, but less 

than 50,000’’ (75 FR 37252). We refer to 

these as Micropolitan Areas. After 

extensive impact analysis, consistent 

with the treatment of these areas under 

the IPPS as discussed in the FY 2005 

IPPS final rule (69 FR 49029 through 

49032), CMS determined the best course 

of action would be to treat Micropolitan 

Areas as ‘‘rural’’ and include them in 

the calculation of each state’s SNF PPS 

rural wage index (see 70 FR 29094 and 

70 FR 45040 through 45041)). Thus, the 

SNF PPS statewide rural wage index is 

determined using IPPS hospital data 

from hospitals located in non-MSA 

areas, and the statewide rural wage 

index is assigned to SNFs located in 

those areas. Because Micropolitan Areas 

tend to encompass smaller population 

centers and contain fewer hospitals than 

MSAs, we determined that if 

Micropolitan Areas were to be treated as 

separate labor market areas, the SNF 

PPS wage index would have included 

significantly more single-provider labor 

market areas. As we explained in the FY 

2006 SNF PPS proposed rule (70 FR 

29094), recognizing Micropolitan Areas 

as independent labor markets would 

generally increase the potential for 

dramatic shifts in year-to-year wage 

index values because a single hospital 

(or group of hospitals) could have a 

disproportionate effect on the wage 

index of an area. Dramatic shifts in an 

area’s wage index from year to year are 

problematic and create instability in the 

payment levels from year to year, which 

could make fiscal planning for SNFs 

difficult if we adopted this approach. 

For these reasons, we adopted a policy 

to include Micropolitan Areas in the 

state’s rural wage area for purposes of 

the SNF PPS wage index, and have 

continued this policy through the 

present. 

Based upon the new 2010 Decennial 

Census data, a number of urban counties 

have switched status and have joined or 

became Micropolitan Areas, and some 

counties that once were part of a 

Micropolitan Area, have become urban. 

Overall, there are fewer Micropolitan 

Areas (541) under the new OMB 

delineations based on the 2010 Census 

than existed under the latest data from 

the 2000 Census (581). We believe that 

the best course of action would be to 

continue the policy established in the 

FY 2006 SNF PPS final rule and include 

Micropolitan Areas in each state’s rural 

wage index. These areas continue to be 

defined as having relatively small urban 

cores (populations of 10,000 to 49,999). 

We do not believe it would be 

appropriate to calculate a separate wage 

index for areas that typically may 

include only a few hospitals for the 

reasons discussed in the FY 2006 SNF 

PPS proposed rule, and as discussed 

above. Therefore, in conjunction with 

our proposal to implement the new 

OMB labor market delineations 

beginning in FY 2015 and consistent 

with the treatment of Micropolitan 

Areas under the IPPS, we are proposing 

to continue to treat Micropolitan Areas 

as ‘‘rural’’ and to include Micropolitan 

Areas in the calculation of the state’s 

rural wage index. 

b. Urban Counties Becoming Rural 

As previously discussed, we are 

proposing to implement the new OMB 

statistical area delineations (based upon 

the 2010 decennial Census data) 

beginning in FY 2015 for the SNF PPS 

wage index. Our analysis shows that a 

total of 37 counties (and county 

equivalents) that are currently 

considered part of an urban CBSA 

would be considered located in a rural 


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area, beginning in FY 2015, if we adopt 

the new OMB delineations. Table 9 

below lists the 37 urban counties that 

would be rural if we finalize our 

proposal to implement the new OMB 

delineations. 

TABLE 9—COUNTIES THAT WOULD LOSE URBAN STATUS

County State Previous CBSA Previous urban area 

(constituent counties) 

Greene County ............................................................................ IN 14020 Bloomington, IN. 

Anson County .............................................................................. NC 16740 Charlotte-Gastonia-Rock Hill, NC-SC. 

Franklin County ............................................................................ IN 17140 Cincinnati-Middletown, OH-KY-IN. 

Stewart County ............................................................................ TN 17300 Clarksville, TN-KY. 

Howard County ............................................................................ MO 17860 Columbia, MO. 

Delta County ................................................................................ TX 19124 Dallas-Fort Worth-Arlington, TX. 

Pittsylvania County ...................................................................... VA 19260 Danville, VA. 

Danville City ................................................................................. VA 19260 Danville, VA. 

Preble County .............................................................................. OH 19380 Dayton, OH. 

Gibson County ............................................................................. IN 21780 Evansville, IN-KY. 

Webster County ........................................................................... KY 21780 Evansville, IN-KY. 

Franklin County ............................................................................ AR 22900 Fort Smith, AR-OK. 

Ionia County ................................................................................. MI 24340 Grand Rapids-Wyoming, MI.

Newaygo County ......................................................................... MI 24340 Grand Rapids-Wyoming, MI. 

Greene County ............................................................................ NC 24780 Greenville, NC. 

Stone County ............................................................................... MS 25060 Gulfport-Biloxi, MS. 

Morgan County ............................................................................ WV 25180 Hagerstown-Martinsburg, MD-WV. 

San Jacinto County ..................................................................... TX 26420 Houston-Sugar Land-Baytown, TX.

Franklin County ............................................................................ KS 28140 Kansas City, MO-KS. 

Tipton County .............................................................................. IN 29020 Kokomo, IN. 

Nelson County ............................................................................. KY 31140 Louisville/Jefferson County, KY-IN. 

Geary County ............................................................................... KS 31740 Manhattan, KS. 

Washington County ..................................................................... OH 37620 Parkersburg-Marietta-Vienna, WV-OH. 

Pleasants County ......................................................................... WV 37620 Parkersburg-Marietta-Vienna, WV-OH. 

George County ............................................................................ MS 37700 Pascagoula, MS. 

Power County .............................................................................. ID 38540 Pocatello, ID. 

Cumberland County ..................................................................... VA 40060 Richmond, VA. 

King and Queen County .............................................................. VA 40060 Richmond, VA. 

Louisa County .............................................................................. VA 40060 Richmond, VA. 

Washington County ..................................................................... MO 41180 St. Louis, MO-IL. 

Summit County ............................................................................ UT 41620 Salt Lake City, UT. 

Erie County .................................................................................. OH 41780 Sandusky, OH. 

Franklin County ............................................................................ MA 44140 Springfield, MA. 

Ottawa County ............................................................................. OH 45780 Toledo, OH. 

Greene County ............................................................................ AL 46220 Tuscaloosa, AL. 

Calhoun County ........................................................................... TX 47020 Victoria, TX. 

Surry County ................................................................................ VA 47260 Virginia Beach-Norfolk-Newport News, 

VA-NC. 

We are proposing that the wage data 

for all hospitals located in the counties 

listed above would now be considered 

rural when calculating their respective 

state’s rural wage index value, which 

rural wage index value would be used 

under the SNF PPS. Furthermore, for 

SNF providers currently located in an 

urban county that would be considered 

rural, should this proposal be finalized, 

CMS would utilize the rural unadjusted 

per-diem rates, found in Table 3 above, 

as the basis for determining this 

facility’s payment rates beginning on 

October 1, 2014. 

c. Rural Counties Becoming Urban 

Analysis of the new OMB 

delineations (based upon the 2010 

decennial Census data) shows that a 

total of 105 counties (and county 

equivalents) that are currently located in 

rural areas would be located in urban 

areas, if we finalize our proposal to 

implement the new OMB delineations. 

Table 10 below lists the 105 rural 

counties that would be urban if we 

finalize this proposal. 

TABLE 10—COUNTIES THAT WOULD GAIN URBAN STATUS

County State New CBSA Urban area 

(constituent counties) 

Utuado Municipio ......................................................................... PR 10380 Aguadilla-Isabela, PR. 

Linn County .................................................................................. OR 10540 Albany, OR. 

Oldham County ............................................................................ TX 11100 Amarillo, TX. 

Morgan County ............................................................................ GA 12060 Atlanta-Sandy Springs-Roswell, GA. 

Lincoln County ............................................................................. GA 12260 Augusta-Richmond County, GA-SC. 

Newton County ............................................................................ TX 13140 Beaumont-Port Arthur, TX. 

Fayette County ............................................................................ WV 13220 Beckley, WV. 

Raleigh County ............................................................................ WV 13220 Beckley, WV. 

Golden Valley County .................................................................. MT 13740 Billings, MT. 

Oliver County ............................................................................... ND 13900 Bismarck, ND. 


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TABLE 10—COUNTIES THAT WOULD GAIN URBAN STATUS—Continued 

County State New CBSA Urban area 

(constituent counties) 

Sioux County ............................................................................... ND 13900 Bismarck, ND. 

Floyd County ................................................................................ VI 13980 Blacksburg-Christiansburg-Radford, VA. 

De Witt County ............................................................................ IL 14010 Bloomington, IL. 

Columbia County ......................................................................... PA 14100 Bloomsburg-Berwick, PA. 

Montour County ........................................................................... PA 14100 Bloomsburg-Berwick, PA. 

Allen County ................................................................................ KY 14540 Bowling Green, KY. 

Butler County ............................................................................... KY 14540 Bowling Green, KY. 

St. Mary’s County ........................................................................ MD 15680 California-Lexington Park, MD. 

Jackson County ........................................................................... IL 16060 Carbondale-Marion, IL. 

Williamson County ....................................................................... IL 16060 Carbondale-Marion, IL. 

Franklin County ............................................................................ PA 16540 Chambersburg-Waynesboro, PA. 

Iredell County ............................................................................... NC 16740 Charlotte-Concord-Gastonia, NC-SC. 

Lincoln County ............................................................................. NC 16740 Charlotte-Concord-Gastonia, NC-SC. 

Rowan County ............................................................................. NC 16740 Charlotte-Concord-Gastonia, NC-SC. 

Chester County ............................................................................ SC 16740 Charlotte-Concord-Gastonia, NC-SC. 

Lancaster County ......................................................................... SC 16740 Charlotte-Concord-Gastonia, NC-SC. 

Buckingham County ..................................................................... VA 16820 Charlottesville, VA. 

Union County ............................................................................... IN 17140 Cincinnati, OH-KY-IN. 

Hocking County ........................................................................... OH 18140 Columbus, OH. 

Perry County ................................................................................ OH 18140 Columbus, OH. 

Walton County ............................................................................. FL 18880 Crestview-Fort Walton Beach-Destin, FL. 

Hood County ................................................................................ TX 23104 Dallas-Fort Worth-Arlington, TX. 

Somervell County ........................................................................ TX 23104 Dallas-Fort Worth-Arlington, TX. 

Baldwin County ............................................................................ AL 19300 Daphne-Fairhope-Foley, AL. 

Monroe County ............................................................................ PA 20700 East Stroudsburg, PA. 

Hudspeth County ......................................................................... TX 21340 El Paso, TX. 

Adams County ............................................................................. PA 23900 Gettysburg, PA. 

Hall County .................................................................................. NE 24260 Grand Island, NE. 

Hamilton County .......................................................................... NE 24260 Grand Island, NE. 

Howard County ............................................................................ NE 24260 Grand Island, NE. 

Merrick County ............................................................................. NE 24260 Grand Island, NE. 

Montcalm County ......................................................................... MI 24340 Grand Rapids-Wyoming, MI. 

Josephine County ........................................................................ OR 24420 Grants Pass, OR. 

Tangipahoa Parish ....................................................................... LA 25220 Hammond, LA. 

Beaufort County ........................................................................... SC 25940 Hilton Head Island-Bluffton-Beaufort, SC. 

Jasper County .............................................................................. SC 25940 Hilton Head Island-Bluffton-Beaufort, SC. 

Citrus County ............................................................................... FL 26140 Homosassa Springs, FL. 

Butte County ................................................................................ ID 26820 Idaho Falls, ID. 

Yazoo County .............................................................................. MS 27140 Jackson, MS. 

Crockett County ........................................................................... TN 27180 Jackson, TN. 

Kalawao County ........................................................................... HI 27980 Kahului-Wailuku-Lahaina, HI. 

Maui County ................................................................................. HI 27980 Kahului-Wailuku-Lahaina, HI. 

Campbell County ......................................................................... TN 28940 Knoxville, TN. 

Morgan County ............................................................................ TN 28940 Knoxville, TN. 

Roane County .............................................................................. TN 28940 Knoxville, TN. 

Acadia Parish ............................................................................... LA 29180 Lafayette, LA. 

Iberia Parish ................................................................................. LA 29180 Lafayette, LA. 

Vermilion Parish ........................................................................... LA 29180 Lafayette, LA. 

Cotton County .............................................................................. OK 30020 Lawton, OK. 

Scott County ................................................................................ IN 31140 Louisville/Jefferson County, KY-IN. 

Lynn County ................................................................................. TX 31180 Lubbock, TX. 

Green County .............................................................................. WI 31540 Madison, WI. 

Benton County ............................................................................. MS 32820 Memphis, TN-MS-AR. 

Midland County ............................................................................ MI 33220 Midland, MI. 

Martin County .............................................................................. TX 33260 Midland, TX. 

Le Sueur County .......................................................................... MN 33460 Minneapolis-St. Paul-Bloomington, MNWI. 

Mille Lacs County ........................................................................ MN 33460 Minneapolis-St. Paul-Bloomington, MNWI. 

Sibley County ............................................................................... MN 33460 Minneapolis-St. Paul-Bloomington, MNWI. 

Maury County .............................................................................. TN 34980 Nashville-Davidson-Murfreesboro-Franklin, TN. 

Craven County ............................................................................. NC 35100 New Bern, NC. 

Jones County ............................................................................... NC 35100 New Bern, NC. 

Pamlico County ............................................................................ NC 35100 New Bern, NC. 

St. James Parish ......................................................................... LA 35380 New Orleans-Metairie, LA. 

Box Elder County ......................................................................... UT 36260 Ogden-Clearfield, UT. 

Gulf County .................................................................................. FL 37460 Panama City, FL. 

Custer County .............................................................................. SD 39660 Rapid City, SD. 

Fillmore County ............................................................................ MN 40340 Rochester, MN. 


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TABLE 10—COUNTIES THAT WOULD GAIN URBAN STATUS—Continued 

County State New CBSA Urban area 

(constituent counties) 

Yates County ............................................................................... NY 40380 Rochester, NY. 

Sussex County ............................................................................. DE 41540 Salisbury, MD-DE. 

Worcester County ........................................................................ MA 41540 Salisbury, MD-DE. 

Highlands County ........................................................................ FL 42700 Sebring, FL. 

Webster Parish ............................................................................ LA 43340 Shreveport-Bossier City, LA.

Cochise County ........................................................................... AZ 43420 Sierra Vista-Douglas, AZ. 

Plymouth County ......................................................................... IA 43580 Sioux City, IA-NE-SD. 

Union County ............................................................................... SC 43900 Spartanburg, SC. 

Pend Oreille County .................................................................... WA 44060 Spokane-Spokane Valley, WA. 

Stevens County ........................................................................... WA 44060 Spokane-Spokane Valley, WA. 

Augusta County ........................................................................... VA 44420 Staunton-Waynesboro, VA. 

Staunton City ............................................................................... VA 44420 Staunton-Waynesboro, VA. 

Waynesboro City ......................................................................... VA 44420 Staunton-Waynesboro, VA. 

Little River County ....................................................................... AR 45500 Texarkana, TX-AR. 

Sumter County ............................................................................. FL 45540 The Villages, FL. 

Pickens County ............................................................................ AL 46220 Tuscaloosa, AL. 

Gates County ............................................................................... NC 47260 Virginia Beach-Norfolk-Newport News, 

VA-NC. 

Falls County ................................................................................. TX 47380 Waco, TX. 

Columbia County ......................................................................... WA 47460 Walla Walla, WA. 

Walla Walla County ..................................................................... WA 47460 Walla Walla, WA. 

Peach County .............................................................................. GA 47580 Warner Robins, GA. 

Pulaski County ............................................................................. GA 47580 Warner Robins, GA. 

Culpeper County .......................................................................... VA 47894 Washington-Arlington-Alexandria, DC-VAMD-WV. 

Rappahannock County ................................................................ VA 47894 Washington-Arlington-Alexandria, DC-VAMD-WV. 

Jefferson County .......................................................................... NY 48060 Watertown-Fort Drum, NY. 

Kingman County .......................................................................... KS 48620 Wichita, KS. 

Davidson County ......................................................................... NC 49180 Winston-Salem, NC. 

Windham County ......................................................................... CT 49340 Worcester, MA-CT. 

We are proposing that when 

calculating the area wage index, the 

wage data for hospitals located in these 

counties would be included in their 

new respective urban CBSAs. 

Furthermore, for SNF providers 

currently located in a rural county that 

would be considered urban, should this 

proposal be finalized, CMS would 

utilize the urban unadjusted per-diem 

rates, found in Table 2 above, as the 

basis for determining this facility’s 

payment rates beginning on October 1, 

2014 

d. Urban Counties Moving to a Different 

Urban CBSA 

In addition to rural counties becoming 

urban and urban counties becoming 

rural, several urban counties would shift 

from one urban CBSA to another urban 

CBSA under our proposal to adopt the 

new OMB delineations. In other cases, 

applying the new OMB delineations 

would involve a change only in CBSA 

name or number, while the CBSA 

continues to encompass the same 

constituent counties. For example, 

CBSA 29140 (Lafayette, IN), would 

experience both a change to its number 

and its name, and would become CBSA 

29200 (Lafayette-West Lafayette, IN), 

while all of its three constituent 

counties would remain the same. We are 

not discussing these proposed changes 

in this section because they are 

inconsequential changes with respect to 

the SNF PPS wage index. However, in 

other cases, if we adopt the new OMB 

delineations, counties would shift 

between existing and new CBSAs, 

changing the constituent makeup of the 

CBSAs. 

In one type of change, an entire CBSA 

would be subsumed by another CBSA. 

For example, CBSA 37380 (Palm Coast, 

FL) currently is a single county (Flagler, 

FL) CBSA. Flagler County would be a 

part of CBSA 19660 (Deltona-Daytona 

Beach-Ormond Beach, FL) under the 

new OMB delineations. 

In another type of change, some 

CBSAs have counties that would split 

off to become part of or to form entirely 

new labor market areas. For example, 

CBSA 37964 (Philadelphia Metropolitan 

Division of MSA 37980) currently is 

comprised of five Pennsylvania counties 

(Bucks, Chester, Delaware, Montgomery, 

and Philadelphia). If we adopt the new 

OMB delineations, Montgomery, Bucks, 

and Chester counties would split off and 

form the new CBSA 33874 (Montgomery 

County-Bucks County-Chester County, 

PA Metropolitan Division of MSA 

37980), while Delaware and 

Philadelphia counties would remain in 

CBSA 37964. 

Finally, in some cases, a CBSA would 

lose counties to another existing CBSA 

if we adopt the new OMB delineations. 

For example, Lincoln County and 

Putnam County, WV would move from 

CBSA 16620 (Charleston, WV) to CBSA 

26580 (Huntington-Ashland, WV–KY– 

OH). CBSA 16620 would still exist in 

the new labor market delineations with 

fewer constituent counties. Table 11 

lists the urban counties that would 

move from one urban CBSA to another 

urban CBSA if we adopt the new OMB 

delineations. 

TABLE 11—COUNTIES THAT WOULD CHANGE TO A DIFFERENT CBSA 

Prior CBSA New CBSA County State 

11300 ................ 26900 Madison County ....................................................................................................................... IN. 


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TABLE 11—COUNTIES THAT WOULD CHANGE TO A DIFFERENT CBSA—Continued 

Prior CBSA New CBSA County State 

11340 ................ 24860 Anderson County ...................................................................................................................... SC. 

14060 ................ 14010 McLean County ........................................................................................................................ IL. 

37764 ................ 15764 Essex County ........................................................................................................................... MA. 

16620 ................ 26580 Lincoln County .......................................................................................................................... WV. 

16620 ................ 26580 Putnam County ......................................................................................................................... WV. 

16974 ................ 20994 DeKalb County ......................................................................................................................... IL. 

16974 ................ 20994 Kane County ............................................................................................................................. IL. 

21940 ................ 41980 Ceiba Municipio ........................................................................................................................ PR. 

21940 ................ 41980 Fajardo Municipio ..................................................................................................................... PR. 

21940 ................ 41980 Luquillo Municipio ..................................................................................................................... PR. 

26100 ................ 24340 Ottawa County .......................................................................................................................... MI. 

31140 ................ 21060 Meade County .......................................................................................................................... KY. 

34100 ................ 28940 Grainger County ....................................................................................................................... TN. 

35644 ................ 35614 Bergen County ......................................................................................................................... NJ. 

35644 ................ 35614 Hudson County ......................................................................................................................... NJ. 

20764 ................ 35614 Middlesex County ..................................................................................................................... NJ. 

20764 ................ 35614 Monmouth County .................................................................................................................... NJ. 

20764 ................ 35614 Ocean County .......................................................................................................................... NJ. 

35644 ................ 35614 Passaic County ........................................................................................................................ NJ. 

20764 ................ 35084 Somerset County ...................................................................................................................... NJ. 

35644 ................ 35614 Bronx County ............................................................................................................................ NY. 

35644 ................ 35614 Kings County ............................................................................................................................ NY. 

35644 ................ 35614 New York County ..................................................................................................................... NY. 

35644 ................ 20524 Putnam County ......................................................................................................................... NY. 

35644 ................ 35614 Queens County ........................................................................................................................ NY. 

35644 ................ 35614 Richmond County ..................................................................................................................... NY. 

35644 ................ 35614 Rockland County ...................................................................................................................... NY. 

35644 ................ 35614 Westchester County ................................................................................................................. NY. 

37380 ................ 19660 Flagler County .......................................................................................................................... FL. 

37700 ................ 25060 Jackson County ........................................................................................................................ MS. 

37964 ................ 33874 Bucks County ........................................................................................................................... PA. 

37964 ................ 33874 Chester County ........................................................................................................................ PA. 

37964 ................ 33874 Montgomery County ................................................................................................................. PA. 

39100 ................ 20524 Dutchess County ...................................................................................................................... NY. 

39100 ................ 35614 Orange County ......................................................................................................................... NY. 

41884 ................ 42034 Marin County ............................................................................................................................ CA. 

41980 ................ 11640 Arecibo Municipio ..................................................................................................................... PR. 

41980 ................ 11640 Camuy Municipio ...................................................................................................................... PR. 

41980 ................ 11640 Hatillo Municipio ....................................................................................................................... PR. 

41980 ................ 11640 Quebradillas Municipio ............................................................................................................. PR. 

48900 ................ 34820 Brunswick County ..................................................................................................................... NC. 

49500 ................ 38660 Gua ́nica Municipio .................................................................................................................... PR. 

49500 ................ 38660 Guayanilla Municipio ................................................................................................................ PR. 

49500 ................ 38660 Pen ̃uelas Municipio .................................................................................................................. PR. 

49500 ................ 38660 Yauco Municipio ....................................................................................................................... PR. 

If providers located in these counties 

move from one CBSA to another under 

the new OMB delineations, there may 

be impacts, both negative and positive, 

upon their specific wage index values. 

As discussed below, we propose to 

implement a transition wage index to 

adjust for these possible impacts. 

e. Transition Period 

Overall, we believe implementing the 

new OMB delineations would result in 

wage index values being more 

representative of the actual costs of 

labor in a given area. Further, we 

recognize that some providers (15 

percent) would have a higher wage 

index due to our proposed 

implementation of the new labor market 

area delineations. However, we also 

recognize that more providers (22 

percent) would experience decreases in 

wage index values as a result of our 

proposed implementation of the new 

labor market area delineations. 

Therefore, we believe it would be 

appropriate to consider, as we did in FY 

2006, whether or not a transition period 

should be used in order to implement 

these proposed changes to the wage 

index. 

We considered having no transition 

period and fully implementing the 

proposed new OMB delineations 

beginning in FY 2015. This would mean 

that we would adopt the revised OMB 

delineations for all providers on October 

1, 2014. However, this would not 

provide any time for providers to adapt 

to the new OMB delineations. As 

discussed above, more providers would 

experience a decrease in wage index 

due to implementation of the proposed 

new OMB delineations than would 

experience an increase. Thus, we 

believe that it would be appropriate to 

provide for a transition period to 

mitigate the resulting short-term 

instability and negative impacts on 

these providers, and to provide time for 

providers to adjust to their new labor 

market area delineations. Furthermore, 

in light of the comments received 

during the FY 2006 rulemaking cycle on 

our proposal in the FY 2006 SNF PPS 

proposed rule (70 FR 29094–29095) to 

adopt the new CBSA definitions 

without a transition period, we 

anticipate that providers would have 

similar concerns with not having a 

transition period for the proposed new 

OMB delineations. Therefore, as further 

discussed below, similar to the policy 


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adopted in the FY 2006 SNF PPS final 

rule (70 FR 45041) when we first 

adopted OMB’s CBSA definitions for 

purposes of the SNF PPS wage index, 

we are proposing a one-year transition 

blended wage index for all SNFs to 

assist providers in adapting to the new 

OMB delineations (should we finalize 

implementation of such delineations for 

the SNF PPS wage index beginning in 

FY 2015). In determining an appropriate 

transition methodology, consistent with 

the objectives set forth in the FY 2006 

SNF PPS final rule (70 FR 45041), we 

looked for approaches that would 

provide relief to the largest percentage 

of adversely-affected SNFs with the 

least impact to the rest of the facilities. 

First, we considered transitioning the 

wage index to the revised OMB 

delineations over a number of years in 

order minimize the impact of the 

proposed wage index changes in a given 

year. However, we also believe this 

must be balanced against the need to 

ensure the most accurate payments 

possible, which argues for a faster 

transition to the revised OMB 

delineations. As discussed above in 

section V.A.2 of this proposed rule, we 

believe that using the most current OMB 

delineations would increase the 

integrity of the SNF PPS wage index by 

creating a more accurate representation 

of geographic variation in wage levels. 

As such, we believe that utilizing a oneyear (rather than a multiple year) 

transition with a blended wage index in 

FY 2015 would strike the best balance. 

Second, we considered what type of 

blend would be appropriate for 

purposes of the transition wage index. 

We are proposing that providers would 

receive a one-year blended wage index 

using 50 percent of their FY 2015 wage 

index based on the proposed new OMB 

delineations and 50 percent of their FY 

2015 wage index based on the OMB 

delineations used in FY 2014. We 

believe that a 50/50 blend would best 

mitigate the negative payment impacts 

associated with the implementation of 

the proposed new OMB delineations. 

While we considered alternatives to the 

50/50 blend, we believe this type of 

split balances the increases and 

decreases in wage index values 

associated with this proposal, as well as 

provides a readily understandable 

calculation for providers. 

Next, we considered whether or not 

the blended wage index should be used 

for all providers or for only a subset of 

providers, such as those providers that 

would experience a decrease in their 

respective wage index values due to 

implementation of the revised OMB 

delineations. If we were to apply the 

transition policy only to those providers 

that would experience a decrease in 

their respective wage index values due 

to the implementation of the revised 

OMB delineations, then providers that 

would experience either no change in 

wage index or an increase in wage index 

due to the revised OMB delineations 

would be immediately transitioned to 

the FY 2015 wage index under the 

revised OMB delineations. As required 

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

the wage index adjustment must be 

implemented in a budget-neutral 

manner. As such, if we were to apply 

the transition policy only to those 

providers that would experience a 

decrease in their respective wage index 

values due to implementation of the 

revised OMB delineations, the budget 

neutrality factor, discussed in section 

III.D, calculated based on this this 

approach would be 0.9986, which 

would result in reduced base rates for 

all providers as compared to the budget 

neutrality factor of 1.0001 which would 

result from applying the blended wage 

index to all providers. Furthermore, 

based on our analysis of the wage index 

changes associated with fully 

implementing the revised OMB 

delineations, we determined that the 

new OMB delineations would only 

affect the wage index values of 

approximately 37 percent of facilities. 

Given that our goal is to provide relief 

to the largest percentage of adverselyaffected SNFs with the least impact to 

the rest of the facilities (whose wage 

index values either would remain the 

same or would increase), we believe that 

using a blended wage index for all 

providers would be the best option. This 

option would assist the 22 percent of 

providers that would be adversely 

affected by the proposed 

implementation of the new OMB 

delineations without reducing the base 

rates for all providers, 63 percent of 

which would otherwise be unaffected 

by the proposed implementation of the 

new OMB delineations. In other words, 

this option is based on a balance 

between the interests of all SNF 

providers, including the 15 percent of 

providers that would experience an 

increase in their wage index value due 

to the proposed implementation of the 

new OMB delineations, the 22 percent 

of providers that would experience a 

decrease in their wage index value due 

to the proposed implementation of the 

new OMB delineations, and the 63 

percent of providers that would be 

unaffected by the proposed 

implementation of the new OMB 

delineations. As discussed above, if we 

were to apply the blended wage index 

only to the 22 percent of providers that 

would experience a decrease in their 

respective wage index values due to the 

proposed implementation of the new 

OMB delineations in an effort to 

preserve the full increase in wage index 

value for the 15 percent of providers 

that would experience such an increase 

due to the proposed implementation of 

the new OMB delineations, the budget 

neutrality factor of 1.0001 referenced in 

section III.D, which is based on 

applying the blended wage index to all 

providers, would be revised to 0.9986. 

As such, this would mean a reduction 

in the base rate for all providers, most 

notably the 63 percent of providers that 

would be unaffected by the proposed 

implementation of the new OMB 

delineations, but also for that 15 percent 

of providers that would experience an 

increase in their wage index value. 

Moreover, while providers experience 

wage index changes from year to year 

based on updating the wage data, full 

implementation of the proposed new 

OMB delineations would dramatically 

increase the magnitude of those changes 

for some providers. Year-to-year wage 

index changes usually vary from 

decreases as high as 10 percent to 

increases as high as 10 percent. Using 

FY 2011 wage data (the data used for the 

FY 2015 wage index), the range of 

changes in the wage index values due 

solely to full implementation of the 

proposed OMB delineations would span 

from decreases of over 20 percent to 

increases of over 30 percent. Therefore, 

in addition to mitigating the impact of 

the proposed OMB delineations on the 

facilities that are adversely affected by 

them and providing a period to adjust, 

we believe a transition wage index 

could also mitigate the volatility of the 

SNF PPS wage index caused by these 

proposed changes. 

Therefore, for the reasons discussed 

above, if we finalize implementation of 

the new OMB delineations, we are 

proposing to apply a one-year transition 

with a 50/50 blended wage index for all 

providers in FY 2015. We propose to 

calculate the FY 2015 wage indexes 

using both the current FY 2014 and 

proposed new labor market 

delineations. Specifically, providers 

would receive 50 percent of their FY 

2015 wage index based on the new OMB 

delineations, and 50 percent of their FY 

2015 wage index based on the labor 

market area delineations for FY 2014 

(both using FY 2011 hospital wage 

data). This ultimately results in an 

average of the two values. As we stated 

in the FY 2006 SNF PPS final rule (70 

FR 45041), we believe that our proposed 

transition approach would best achieve 

our objective of providing relief to the 

largest percentage of adversely-affected 


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SNFs with the least impact to the rest 

of the facilities, because it reduces the 

impact of the transition on the base rates 

for all providers. For the reasons 

discussed above, and based on provider 

reaction during the FY 2006 rulemaking 

cycle to the proposed adoption of the 

new CBSA definitions, we are proposing 

to provide a one-year blended wage 

index for all SNFs to assist providers in 

adapting to these proposed changes. We 

refer to this blended wage index as the 

FY 2015 SNF PPS transition wage 

index. This transition policy would be 

for a one-year period, going into effect 

October 1, 2014, and continuing through 

September 30, 2015. Thus, beginning 

October 1, 2015, the wage index for all 

SNFs would be fully based on the new 

OMB delineations. We invite comments 

on our proposed transition 

methodology, as well as on the other 

transition options discussed above. 

The proposed wage index applicable 

to FY 2015 is set forth in Table A 

available on the CMS Web site at http:// 

cms.gov/Medicare/Medicare-Fee-forService-Payment/SNFPPS/

WageIndex.html. Table A provides a 

crosswalk between the FY 2015 wage 

index for a provider using the current 

OMB delineations in effect in FY 2014 

and the FY 2015 wage index using the 

proposed revised OMB delineations, as 

well as the proposed transition wage 

index values that would be in effect in 

FY 2015 if these proposed changes are 

finalized. 

3. Labor-Related Share 

Each year, we calculate a revised 

labor-related share based on the relative 

importance of labor-related cost 

categories in the SNF market basket as 

discussed in Section III.D of this 

proposed rule. Table 12 summarizes the 

proposed updated labor-related share 

for FY 2015, compared to the laborrelated share that was used for the FY 

2014 SNF PPS final rule. 

TABLE 12—LABOR-RELATED RELATIVE IMPORTANCE, FY 2014 AND FY 2015 

Relative importance, 

labor-related, FY 2014 

13:2 forecast 1

Relative importance, 

labor-related, FY 2015 

14:1 forecast 2

Wages and salaries ................................................................................................................. 49.118 49.116 

Employee benefits ................................................................................................................... 11.423 11.373 

Nonmedical Professional fees: labor-related ........................................................................... 3.446 3.460 

Administrative and facilities support services .......................................................................... 0.499 0.503 

All Other: Labor-related services ............................................................................................. 2.287 2.285 

Capital-related (.391) ............................................................................................................... 2.772 2.776 

Total .................................................................................................................................. 69.545 69.513 

1Published in the Federal Register; based on second quarter 2013 IGI forecast. 2Based on first quarter 2014 IGI forecast, with historical data through fourth quarter 2013. 

B. SNF Therapy Research Project 

As discussed in the FY 2014 SNF PPS 

proposed rule (78 FR 26466, May 6, 

2013), CMS 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. Under the current payment model, 

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. In the FY 2014 SNF 

PPS proposed rule (78 FR 26466, May 

6, 2013), we invited public comment on 

this project. In the FY 2014 SNF PPS 

final rule (78 FR 47963, August 6, 2013), 

we discussed the comments we received 

on this project, all of which supported 

the overall goals and objective of the 

project, and a few highlighted the 

importance of maintaining contact with 

the stakeholder community. 

In this proposed rule, we are taking 

the opportunity to update the public on 

the current state of this project. In 

September 2013, we completed the first 

phase of the research project, which 

included a literature review, stakeholder 

outreach, supplementary analyses, and a 

comprehensive review of options for a 

viable alternative to the current therapy 

payment model. CMS produced a report 

outlining the most promising and viable 

options that we plan to pursue in the 

second phase of the project. The report 

is available on the CMS Web site at 

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

Medicare-Fee-for-Service-Payment/

SNFPPS/therapyresearch.html. 

During the second phase of the 

project, which began in September 

2013, our team will further develop the 

options outlined in the aforementioned 

report and perform more comprehensive 

data analysis to determine which of 

these options would work best as a 

potential replacement for the existing 

therapy payment model. In keeping 

with the public comments we received 

on this project previously, we also plan 

to engage the stakeholder community by 

convening a Technical Expert Panel 

during this second phase of the project 

to discuss the available alternatives, as 

well as present some of the initial data 

analysis that is currently being 

conducted. We hope that by convening 

this Technical Expert Panel, we can best 

ensure that we utilize the expertise of 

the stakeholder community in 

identifying the most viable alternative to 

the current therapy payment model. 

As before, comments may be included 

as part of comments on this proposed 

rule. We are also soliciting comments 

outside the rulemaking process and 

these comments should be sent via 

email to SNFTherapyPayments@

cms.hhs.gov. Information regarding this 

project can be found on the project Web 

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

Medicare-Fee-for-Service-Payment/

SNFPPS/therapyresearch.html. 

C. Proposed Revisions to Policies 

Related to the Change of Therapy (COT) 

Other Medicare Required Assessment 

(OMRA) 

On October 1, 2011, CMS introduced 

the Change of Therapy (COT) Other 

Medicare Required Assessment 

(OMRA), which is an assessment 

designed to capture changes in the 

therapy services provided to a given 

SNF resident during the past 7 days. As 

discussed in the FY 2012 SNF PPS final 

rule, this assessment was implemented 

because we had found that in certain 

cases, ‘‘the therapy recorded on a given 

PPS assessment did not provide an 

accurate account of the therapy 

provided to a given resident outside the 

observation window used for the most 

recent assessment’’ (76 FR 48518). 


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To address this situation, effective for 

services provided on or after October 1, 

2011, we required facilities to complete 

a COT OMRA for patients classified into 

a RUG–IV therapy category, whenever 

the intensity of therapy (that is, the total 

reimbursable therapy minutes delivered 

or other therapy category qualifiers, 

such as the number of days the patient 

received therapy during the week or the 

number of therapy disciplines) changes 

to such a degree that it would no longer 

reflect the RUG–IV classification and 

payment assigned for a given SNF 

resident based on the most recent 

assessment used for Medicare payment 

(see 76 FR 48525). In addition, as 

discussed in the FY 2012 SNF PPS final 

rule (76 FR 48523 through 48524, 

48526), the COT OMRA policy also 

applies to patients who are receiving a 

level of therapy sufficient for 

classification into a therapy RUG, but 

are classified into a nursing RUG 

because of index maximization. An 

evaluation of the necessity for a COT 

OMRA must be completed every 7 

calendar days starting from the day 

following the Assessment Reference 

Date (ARD) set for the most recent 

scheduled or unscheduled PPS 

assessment (or in the case of an End of 

Therapy–Resumption-OMRA, starting 

the day that therapy resumes). This 

rolling 7-day window is called the COT 

observation period. As discussed in the 

FY 2012 SNF PPS final rule (76 FR 

48523), the purpose of the COT OMRA 

is to track changes in a patient’s 

condition and in the provision of 

therapy services more accurately to 

ensure that the patient is placed in the 

appropriate RUG category, thereby 

improving the accuracy of 

reimbursement. 

As discussed above, the resident must 

be classified into a RUG–IV therapy 

category or into a nursing RUG because 

of index maximization (while receiving 

a level of therapy sufficient for 

classification into a RUG–IV therapy 

category) in order for the COT OMRA 

requirements to apply. However, since 

implementation of this assessment, we 

have learned that, in rare cases where a 

resident has been classified into a RUG– 

IV therapy category, therapy services 

provided to the resident during a COT 

observation period may not be sufficient 

to continue to qualify the resident for 

any therapy RUG, resulting in 

classification of the resident into a nontherapy RUG. During a subsequent week 

when the therapy services are sufficient 

to again qualify the resident for a 

therapy RUG, providers have indicated 

that they cannot complete a subsequent 

COT OMRA to reclassify the resident 

into a therapy RUG because the resident 

is no longer in a therapy RUG or in a 

nursing RUG because of index 

maximization as discussed above 

(pursuant to the conditions set forth in 

the FY 2012 SNF PPS final rule and in 

Section 2.9 of the MDS 3.0 RAI manual). 

As a result, providers are unable to use 

the COT OMRA to capture the increased 

therapy services provided to the 

resident to ensure accurate payment for 

the services provided, which is the 

express purpose of the COT OMRA. 

Accordingly, we propose to revise the 

existing COT OMRA policy to permit 

providers to complete a COT OMRA for 

a resident who is not currently 

classified into a RUG–IV therapy group, 

or receiving a level of therapy sufficient 

for classification into a RUG–IV therapy 

group as discussed above, but only in 

those rare cases where the resident had 

qualified for a RUG–IV therapy group on 

a prior assessment during the resident’s 

current Medicare Part A stay and had no 

discontinuation of therapy services 

between Day 1 of the COT observation 

period for the COT OMRA that 

classified the resident into his/her 

current non-therapy RUG–IV group and 

the ARD of the COT OMRA that 

reclassified the patient into a RUG–IV 

therapy group. Under the proposed 

policy, while a COT OMRA may be used 

to reclassify a resident into a therapy 

RUG in the circumstances described 

above, it may not be used to initially 

classify a resident into a therapy RUG. 

We believe it is appropriate to revise the 

COT OMRA policy in this manner to 

provide for more accurate payment for 

services provided to those residents 

who have qualified for a RUG–IV 

therapy group during their Medicare 

Part A stay and continue to receive 

skilled therapy services during their 

Medicare Part A stay (even though they 

may have been classified into a nontherapy RUG as discussed above). 

Consider, for example, if Mr. A. was 

classified into the RUG group RUA on 

his 30-day assessment with an ARD set 

for Day 30 of his stay. On Day 37, the 

facility checks how much therapy was 

provided to Mr. A. and finds that while 

Mr. A. did receive the requisite number 

of therapy minutes to qualify for this 

RUG category, he only received therapy 

on 4 distinct calendar days, which 

would make it impossible for him to 

qualify for an Ultra-High Rehabilitation 

RUG group. Moreover, due to the lack 

of 5 distinct calendar days of therapy 

and the lack of any restorative nursing 

services, Mr. A. does not qualify for any 

therapy RUG group. As a result, the 

facility must complete a COT OMRA for 

Mr. A., on which he may only classify 

to a non-therapy RUG group. Let us 

further assume that the facility 

continues to provide Mr. A. with skilled 

therapy and that, when looking back on 

Mr. A.’s services from Day 44 (7 days 

after the ARD of the COT OMRA), Mr. 

A. again qualifies for classification in 

the RUG group RUA. 

Under the existing COT OMRA 

policy, it would not be possible for this 

provider to reclassify Mr. A. back into 

RUA from the non-therapy group by 

using a COT OMRA. Instead, Mr. A. 

could only be classified into a therapy 

RUG either by discontinuing his therapy 

using an End of Therapy (EOT) OMRA 

and beginning a new therapy program 

and completing a Start of Therapy (SOT) 

OMRA, or by waiting until the next 

scheduled assessment. Under our 

proposed revised policy, this provider 

would be permitted to complete a COT 

OMRA with an ARD of Day 44 in order 

to reclassify Mr. A. back into the RUA 

group. The facility would then continue 

to review the therapy services provided 

to Mr. A. in order to ensure that these 

services continue to reflect Mr. A.’s 

current RUG–IV therapy classification. 

To further clarify the scope of this 

proposal, consider a slightly different 

example in which Mr. A. is classified 

into the RUG group RUA on his 30-day 

assessment with an ARD set for Day 30 

of his stay. On Day 37, the facility 

checks the amount of therapy that was 

provided to Mr. A. and finds that while 

Mr. A. did receive the requisite number 

of therapy minutes to qualify for this 

RUG category, he only received therapy 

on 4 distinct calendar days, which 

would make it impossible for him to 

qualify for an Ultra-High Rehabilitation 

RUG group. Moreover, due to the lack 

of 5 distinct calendar days of therapy 

and the lack of any restorative nursing 

services, Mr. A. does not qualify for any 

therapy RUG group. As a result, the 

facility must complete a COT OMRA for 

Mr. A., on which he may only classify 

for a non-therapy RUG group. However, 

as opposed to the previous situation 

where the resident’s therapy continued 

during the week following the COT 

OMRA, let us assume that the facility 

decides to discontinue his therapy 

services by completing an End of 

Therapy OMRA with an ARD set for Day 

39, resulting in a non-therapy RUG 

classification for Mr. A. The facility 

subsequently decides to restart Mr. A.’s 

therapy services, beginning on Day 41 of 

his stay. The facility looks back from 

Day 47 (7 days following the day 

therapy began on Day 41, including Day 

41) to review the therapy services 

provided to Mr. A. during the prior 

week and finds that Mr. A. would 

qualify for the RUG group RVA. 


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As in the prior example, under the 

existing COT OMRA policy, it would 

not be possible for this provider to 

classify Mr. A. into RVA from the nontherapy group by using a COT OMRA. 

However, as opposed to the prior 

example, under the revised COT OMRA 

policy proposed in this proposed rule, 

the facility would still not be permitted 

to complete the COT OMRA in this 

instance, as a discontinuation of therapy 

services had occurred between Day 1 of 

the COT observation period for the COT 

OMRA that classified the resident into 

his/her current non-therapy RUG–IV 

group and the ARD of the COT OMRA 

that would have been used to reclassify 

the patient into a RUG–IV therapy group 

if it had been permitted. Based on this 

example, in order to reclassify the 

resident into a RUG–IV therapy group, 

the provider would need to either 

complete a Start of Therapy OMRA or 

wait until the next regularly scheduled 

assessment. 

We believe this proposal would 

address the concern of those providers 

who have experienced the rare 

occurrence of a COT OMRA classifying 

a resident into a non-therapy RUG group 

from a therapy RUG group, where the 

patient continues to receive therapy and 

later qualifies again for a therapy RUG. 

We believe this proposed revision to the 

COT OMRA policy would ensure the 

most accurate payment for therapy 

services furnished to such residents by 

allowing providers to capture variations 

in therapy services on a weekly basis. 

As with other similar policy changes, if 

this revision is finalized, then we intend 

to monitor the impact of this revision to 

ensure that is has the intended effect. 

We invite comments on this proposed 

change to the existing COT OMRA 

policy. 

D. Civil Money Penalties (Section 6111 

of the Affordable Care Act) 

Sections 6111 of the Patient 

Protection and Affordable Care Act 

(Affordable Care Act), amended sections 

1819(h) and 1919(h) of the Act to 

incorporate specific provisions 

pertaining to the imposition and 

collection of civil money penalties 

(CMPs). Sections 1819(h)(2)(B)(ii)(IV)(ff) 

and 1919(h)(3)(C)(ii)(IV)(ff) of the Act 

specifies that some portion of such 

amounts collected may be used to 

support activities that benefit residents, 

including assistance to support and 

protect residents of a facility that closes 

(voluntarily or involuntarily) or is 

decertified (including offsetting costs of 

relocating residents to home and 

community-based settings or another 

facility), projects that support resident 

and family councils and other consumer 

involvement in assuring quality care in 

facilities, and facility improvement 

initiatives approved by the Secretary 

(including joint training of facility staff 

and surveyors, technical assistance for 

facilities implementing quality 

assurance programs, the appointment of 

temporary management firms, and other 

activities approved by the Secretary). 

These changes were implemented in a 

final rule published on March 18, 2011 

entitled ‘‘Medicare and Medicaid 

Programs; Civil Money Penalties for 

Nursing Homes.’’ At § 488.433, we 

specify that these funds may not be used 

for survey and certification operations 

but must be used entirely for activities 

that protect or improve the quality of 

care for residents and that these 

activities must be approved by CMS. 

This proposed rule would clarify 

statutory requirements as specified in 

section 6111 of the Affordable Care Act 

regarding the approval and use of CMPs 

imposed by CMS. It is important to note 

that these clarifications not only apply 

to the Federal share of collected CMP 

funds granted for approved projects that 

benefit residents under § 488.433, but 

they also apply to the portion of the 

CMPs collected by CMS that is 

disbursed to the states based on the 

proportion of Medicaid eligible nursing 

home residents under § 488.442(e)(2) 

and (f). The amendments made by 

section 6111 of the Affordable Care Act 

makes it clear that the specified use of 

CMP funds collected from SNFs, SNF/ 

NFs, and NF-only facilities as a result of 

CMPs imposed by CMS, must be 

approved by CMS by specifying that the 

activities that CMP funds are used for 

must be approved by the Secretary. 

Sections 1819(h)(2)(B)(ii)(IV)(ff) and 

1919(h)(3)(C)(ii)(IV)(ff) of the Act also 

provide for flexibility on how CMP 

funds imposed by CMS may be used 

within the bounds established by law. 

The regulations at § 488.433 specify that 

collected CMP funds must be used 

entirely for activities that protect or 

improve the quality of care for residents, 

and may not be used for survey and 

certification operations. However, we 

are aware of instances in which states 

have used federal CMP funds without 

obtaining prior approval from CMS, 

have used these funds even though CMS 

had disapproved their intended use, 

have not used these funds at all, or have 

used these funds for purposes other 

than to support activities that benefit 

residents as specified in statute and 

regulation. For example, information 

reported by the CMS Regional Offices 

for CY 2012 indicates that 24 states had 

not approved any projects using CMP 

funds. While some states have only 

small amounts of CMP funds available 

and seek to maintain a core reserve in 

the event of emergencies or involuntary 

termination that necessitates timely 

relocation for resident safety and wellbeing, other states maintain significant 

amounts of funds. One state, for 

example, maintained more than $15 

million in FY 2012. While it is very 

prudent to maintain a reserve fund for 

emergencies, we believe that 

maintenance of large amounts of unused 

CMP funds is not desirable or consistent 

with ensuring that collected CMP funds 

be used to benefit nursing home 

residents. In addition, large amounts of 

unused CMP funds may create the 

appearance that CMPs are being levied 

for purposes other than to benefit 

nursing home residents. 

A key function of the CMP remedy is 

to prompt quick compliance with the 

federal health and safety requirements. 

These monies must be used to support 

projects or activities that will benefit 

nursing home residents. Entities 

applying for approval of projects 

utilizing CMP funds must demonstrate 

that the planned use will benefit 

nursing home residents and promote 

compliance with the regulations. 

We propose changes to the CMS 

enforcement regulations at § 488.433 to 

clarify and strengthen these provisions 

to provide more specific instructions to 

states regarding the use of CMPs and the 

approval process, and to permit an 

opportunity for greater transparency and 

accountability of CMP monies utilized 

by States. 

We invite public comment on our 

proposed changes. This proposed rule 

would explicitly clarify the intended 

use and statutory requirements of 

collected CMP funds. Specifically, we 

propose to: (1) Specify that CMP funds 

may not be used for state management 

operations except for the reasonable 

costs that are consistent with managing 

projects utilizing CMP funds; (the 

rationale for this clarification is 

explained further in section VI.); (2) 

clarify CMS’s expectations that States 

must obtain prior approval for use of 

these CMP funds; (3) outline specific 

requirements that must be included in 

proposals submitted for CMS approval; 

(4) specify that CMPs funds may not be 

used for projects that have been 

disapproved by CMS; (5) specify that 

states are responsible for having an 

acceptable plan to solicit, accept, 

monitor and track projects utilizing 

CMP funds and make the results of all 

approved projects publicly available on 

at least an annual basis; (6) specify that 

state plans must ensure that a core 

amount of civil money penalty funds 

will be held in reserve for emergencies, 


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such as relocation of residents in the 

event of involuntary termination from 

Medicare and Medicaid, and (7) specify 

that if a state is not spending collected 

CMPs in accordance with the law or not 

at all, that CMS has authority to take 

appropriate steps to ensure that these 

funds are used for their intended 

purpose, such as withholding future 

disbursements of CMP amounts. We do 

not believe this has significant cost 

implications and it will benefit nursing 

home residents to ensure that CMP 

funds will be used for their intended 

purpose. We further invite public 

comment on CMS’s proposed methods 

to ensure compliance with these 

requirements. 

E. Observations on Therapy Utilization 

Trends 

In the FY 2014 SNF PPS final rule (78 

FR 47959 through 47960), we discussed 

our monitoring efforts associated with 

the impact of certain policy changes 

finalized in the FY 2012 SNF PPS final 

rule (76 FR 48486). We noted that we 

would continue these monitoring efforts 

and report any new information as 

appropriate. We are not proposing new 

Medicare policy in this discussion of 

observed trends but merely highlighting 

that we will continue to monitor these 

observed trends which may serve as the 

basis for future policy development. 

In the FY 2014 SNF PPS proposed 

rule (78 FR 26464), we presented data 

which compared various utilization 

metrics including, in particular, the 

case-mix distribution for the RUG–IV 

therapy categories (Ultra-High 

Rehabilitation or RU, Very-High 

Rehabilitation or RV, High 

Rehabilitation or RH, Medium 

Rehabilitation or RM, and Low 

Rehabilitation or RL), for FY 2011 and 

FY 2012. It was observed based on those 

data that the percentage of billed days 

of service being classified into the RU 

RUG groups had increased from 44.8 

percent in FY 2011 to 48.6 percent in 

FY 2012, while utilization in all other 

therapy RUG categories either remained 

stable or declined. We have since 

updated this data set using data from FY 

2013 and have posted a memo to the 

SNF PPS Web site (available at http:// 

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

Spotlight.html) which demonstrates that 

the percentage of billed service days in 

the RU RUG groups has increased to 

over 50 percent. These revised data in 

the aforementioned memo are presented 

in a slightly different format than they 

have been presented in the past, which 

is to show how, over the course of the 

past 3 years since October of 2010, the 

percentage of residents classified into 

one of these Ultra-High Rehabilitation 

groups has not only increased, but done 

so rather steadily. 

The second identified trend that we 

would highlight here and is discussed 

in the memo referenced above is that, 

most notably in the cases of RU and RV 

RUG groups, the amount of therapy 

reported on the MDS is just enough to 

surpass the relevant therapy minute 

threshold for a given therapy RUG 

category. For example, as demonstrated 

in Figure 2 in the aforementioned 

memo, the percentage of claimsmatched MDS assessments in the range 

of 720 minutes to 739 minutes, which 

is just enough to surpass the therapy 

minute threshold for RU RUG groups of 

720 minutes, has increased from 21 

percent in FY 2011 to 33 percent in FY 

2013. As stated above, this trend also 

holds for residents classified into a RV 

RUG group, where the largest 

percentage of service days were 

provided in the 500 to 520 minutes 

range, which just surpasses the therapy 

minute threshold for the RV RUG 

groups of 500 minutes. 

We invite comment on the data 

presented here and the discussion of 

observed trends. 

F. Accelerating Health Information 

Exchange in SNFs 

As we have stated in the past, we 

believe all patients, and others involved 

in the patient’s care, and their 

healthcare providers should have 

consistent and timely access to their 

health information in a standardized 

format that can be securely exchanged 

between the patient, providers, and 

others involved in the patient’s care. 

(HHS August 2013 Statement, 

‘‘Principles and Strategies for 

Accelerating Health Information 

Exchange.’’) The Department is 

committed to accelerating health 

information exchange (HIE) through the 

use of electronic health records (EHRs) 

and other types of health information 

technology (HIT) across the broader care 

continuum through a number of 

initiatives including: (1) Alignment of 

incentives and payment adjustments to 

encourage provider adoption and 

optimization of HIT and HIE services 

through Medicare and Medicaid 

payment policies; (2) adoption of 

common standards and certification 

requirements for interoperable HIT; (3) 

support for privacy and security of 

patient information across all HIEfocused initiatives; and (4) governance 

of health information networks. These 

initiatives are designed to improve care 

delivery and coordination across the 

entire care continuum and encourage 

HIE among all health care providers, 

including professionals and hospitals 

eligible for the Medicare and Medicaid 

EHR Incentive Programs and those who 

are not eligible for the EHR Incentive 

Programs. To increase flexibility in 

ONC’s HIT Certification Program and 

expand HIT certification, ONC has 

issued a proposed rule concerning a 

voluntary 2015 Edition of EHR 

certification criteria which would more 

easily accommodate certification of HIT 

used in other types of health care 

settings where individual or 

institutional health care providers are 

not typically eligible for incentive 

payments under the Medicare and 

Medicaid EHR Incentive Programs, such 

as long-term and post-acute care and 

behavioral health settings. 

We believe that HIE and the use of 

certified EHRs by SNFs and other types 

of providers that are ineligible for the 

Medicare and Medicaid EHR Incentive 

Programs can effectively and efficiently 

help providers improve internal care 

delivery practices, support management 

of patient care across the continuum, 

and enable the reporting of 

electronically specified clinical quality 

measures (eCQMs). More information on 

the identification of EHR certification 

criteria and development of standards 

applicable to SNFs can be found at: 

• http://healthit.gov/policyresearchers-implementers/standardsand-certification-regulations. 

• http://www.healthit.gov/facas/

FACAS/health-it-policy-committee/

hitpc-workgroups/certificationadoption. 

• http://wiki.siframework.org/

LCC+LTPAC+Care+Transition+SWG. 

• http://wiki.siframework.org/

Longitudinal+Coordination+of+Care. 

VI. Provisions of the Proposed Rule 

As discussed in section III. of this 

proposed rule, this proposed rule would 

update the payment rates under the SNF 

PPS for FY 2015 as required by section 

1888(e)(4)(E)(ii) of the Act. In addition, 

we propose to use the most current 

OMB delineations (discussed in section 

V.A) to identify a facility’s urban or 

rural status for the purpose of 

determining which set of rate tables 

would apply to the facility (section 

III.B.). Furthermore, as discussed in 

section V. of this proposed rule, we 

propose changes to the wage index 

based on the most current OMB 

delineations, including a one-year 

transition with a blended wage index for 

FY 2015 (section V.A.); propose to 

revise the policy governing use of the 

COT OMRA (section V.C.); and finally, 

propose changes to the enforcement 

regulations related to civil money 

penalties utilized by states (section 

V.D.). 


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With reference to the civil money 

penalty provisions discussed in section 

V.D. of this proposed rule, we propose 

to modify current CMS regulations to 

provide further clarification to states 

and the public regarding prior approval 

and appropriate use of these federalimposed civil money penalty funds. 

At § 488.433, civil money penalties: 

Uses and approval of civil money 

penalties imposed by CMS, we propose 

to amend this regulation to specify that 

civil money penalties may not be used 

for state management operations except 

for the costs that are consistent with 

managing the civil money penalty 

funds, specify that all activities utilizing 

civil money penalty funds must be 

approved in advance by CMS, outline 

specific requirements that must be 

included in proposals submitted for 

CMS approval, specify that states are 

responsible for monitoring and tracking 

the results of all approved activities 

utilizing civil money penalties and 

making this information publicly 

available, specify that state plans must 

ensure that a core amount of civil 

money penalty funds will be held in 

reserve for emergencies, such as 

relocation of residents in the event of 

involuntary termination from Medicare 

and Medicaid, and specify steps CMS 

will take if civil money penalty funds 

are being used for disapproved purposes 

or not being used at all. 

The proposed CMS regulation would 

explicitly clarify the intended use of 

these civil money penalty funds 

including the processes for prior 

approval of all activities using civil 

money penalty funds by CMS and how 

CMS will address a state’s use of civil 

money penalty funds for activities that 

have been disapproved by CMS or used 

by states for activities other than those 

explicitly specified in statute or 

regulations. 

At proposed § 488.433(a), we would 

clarify that approved projects may work 

to improve residents’ quality of life and 

not just quality of care. We would also 

clarify that states while states may not 

use funds for survey and certification 

operations or state expenses, they may 

use a reasonable amount of civil money 

penalty funds for the actual 

administration of grant awards, 

including the tracking, monitoring, and 

evaluating of approved projects. Some 

states have maintained that effective use 

and management of the civil money 

penalty funds requires more state 

oversight and planning than they are 

able to provide currently, and that an 

allowance for such management would 

remove a barrier to the effective use of 

these funds. We have not proposed a 

monetary or numeric limit on what 

might be considered reasonable, 

although one to 3 percent of available 

funds might be considered reasonable 

for an established fund. We invite 

comment on the question of appropriate 

limits. 

At proposed § 488.433(b)(5), we 

would clarify in a new paragraph that in 

extraordinary situations involving 

closure of a facility, civil monetary 

penalty funds may be used to pay the 

salary of a temporary manager when 

CMS concludes that it is infeasible to 

ensure timely payment for such a 

manager by the facility. We have 

encountered situations, for example, in 

which a facility is in bankruptcy and the 

court has frozen all funds at the very 

time that residents are being relocated 

and closure is proceeding. In another 

situation involving involuntary 

termination from Medicare and 

impending closure of the facility, the 

facility was not making payments for 

staff or for its utilities, and residents 

were at risk due to the imminent 

departure of staff and the absence of a 

manager. While § 489.55 permits 

Medicare and Medicaid payments to a 

facility to continue for up to 30 days 

after the effective date of a facility’s 

termination or possibly longer (or 

shorter) if a facility has submitted a 

notification of closure under § 483.75(r) 

in order to promote the orderly and safe 

relocation of residents, if the continued 

Medicare and Medicaid payments are 

being used to pay for facility operations 

during the relocation period but are 

being diverted elsewhere by the facility, 

then residents may be placed at 

increased risk. The proposed change at 

§ 488.433(b)(5) would clarify not only 

that CMS places a priority on resident 

protection and protection of the Trust 

Fund and allows such emergency use of 

civil money funds, but that CMS also 

intends to stop or suspend the payments 

to the facility under § 489.55 when such 

a situation occurs. 

At new § 488.433(c), we specify the 

requirements for all CMP fund 

proposals being submitted to CMS for 

approval. 

At new § 488.433 (d), we state that 

CMP funds may not be used for 

activities that have been disapproved by 

CMS. 

At new § 488.433(e), we propose that 

states must maintain an acceptable plan 

for the effective use of civil monetary 

penalty funds, including a description 

of methods by which the state will 

solicit, accept, monitor, and track 

approved projects funded by CMP 

amounts and make key information 

publicly available. Examples of 

information that must be publically 

available would include information on 

the projects that have been approved by 

CMS, the grantee and project recipients, 

the dollar amounts of projects approved, 

and the results of the projects. We also 

propose that these plans provide for a 

minimum amount of funds that will 

generally be held in reserve for 

emergencies, unless the state’s plan 

demonstrates the availability of other 

funds to cover emergency situations, 

and a reasonable aggregate amount of 

civil money penalty funds, beyond the 

emergency reserve amount, that the 

state expects to disburse each year for 

grants or contracts of projects that 

benefit residents and are consistent with 

the statute and CMS regulations. We 

appreciate that states may wish to 

develop a multi-year plan and provide 

an approximate range of total amount 

that the state plans to disburse. The 

intent is to ensure there is an acceptable 

plan, and that a state is prepared to 

respond to emergencies while at the 

same time is not maintaining a large 

unused amount of civil monetary 

penalty funds. 

In § 488.433(f), we propose that CMS 

may withhold future disbursement of 

collected civil money penalty funds to 

a state if CMS finds that the state has not 

spent such funds in accordance with the 

statute and regulations, fails to make use 

of funds to benefit the quality of care or 

life of residents, or fails to maintain an 

acceptable plan approved by CMS. 

VII. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995 (PRA), we are required to 

publish 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. 

A. Information Collection Requirements 

(ICRs) 

While this proposed rule does not 

have any PRA implications, we are 

soliciting comment on the following: 


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1. ICRs Regarding the SNF PPS Rate 

Setting Methodology (preamble sections 

III and V) 

While sections III and V propose to 

revise certain policies related to the 

current rate setting methodology (such 

as the use of updated OMB delineations 

to assign a facility the urban or rural per 

diem rate and to calculate wage index 

adjustments), the provisions would not 

impose any new or revised reporting, 

recordkeeping, or third-party disclosure 

requirements. Nor would they require 

the development, acquisition, 

installation, and utilization of any new 

or revised technology or information 

systems. Consequently, they do not 

require review under the authority of 

the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.). 

The information collection 

requirements discussed in section III.C. 

concerning the resident assessment 

instrument (MDS 3.0) are currently 

approved by OMB under OCN 0938– 

1140 (CMS–10387). 

2. ICRs Regarding the COT OMRA 

(Preamble Section V.C.) 

While section V.C. proposes to revise 

current COT OMRA policy by 

permitting providers to complete a COT 

OMRA for a resident who is not 

currently classified into a RUG–IV 

therapy group in certain circumstances, 

this provision does not impose any new 

or revised reporting, recordkeeping, or 

third-party disclosure requirements. 

Consequently, it does not require review 

under the authority of the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501 

et seq.). 

3. ICRs Regarding the Use of Civil 

Money Penalties (§ 488.433(c)) 

In § 488.433(c), states proposing to 

use civil money penalties for certain 

activities are required to submit 

descriptions of the intended outcomes, 

deliverables, sustainability, and 

methods by which the results will be 

assessed, including specific measures. 

Prior to using these funds, the activities 

must be approved by CMS under 

existing regulations. The proposed 

language in this rule provides methods 

to ensure that these requirements are 

followed and to promote additional 

transparency. 

The provision does not require 

additional OMB review under the 

authority of the Paperwork Reduction 

Act of 1995 (44 U.S.C. 3501 et seq.). In 

addition, as stated in the Civil Money 

Penalties for Nursing Homes final rule 

published on March 18, 2011 (76 FR 

15125), sections 4204(b) and 4214(d) of 

the Omnibus Budget Reconciliation Act 

of 1987 (OBRA ’87), Public Law 100– 

203, enacted on December 21, 1987, 

provide waivers of Office of 

Management and Budget review of 

information collection requirements for 

the purpose of implementing the 

nursing home reform amendments. The 

provisions of OBRA ’87 that exempt 

agency actions to collect information 

from states or facilities relevant to 

survey and enforcement activities from 

the Paperwork Reduction Act are not 

time-limited. 

4. ICRs Regarding Civil Money Penalty 

Plans (§ 488.433(e)) 

In § 488.433(e), states would be 

required to maintain an acceptable plan 

(approved by CMS) for the effective use 

of civil money funds. The plan must 

include a description of methods by 

which the state will: (1) Solicit, accept, 

monitor, and track projects utilizing 

civil money penalty funds; (2) make 

information about the use of civil 

money penalty funds publicly available, 

including key information about 

approved projects, the grantee or 

contract recipients, and the results of 

projects; (3) ensure that a core amount 

of civil money penalty funds will be 

held in reserve for emergencies, such as 

unplanned relocation of residents 

pursuant to an involuntary termination 

from Medicare and Medicaid; and (4) 

ensure that a reasonable amount of 

funds, beyond those held in reserve, 

will be awarded or contracted each year. 

Since current statute, regulations and/ 

or CMS policy guidance released to the 

states already specifies that all proposed 

activities using civil money penalty 

funds must be submitted to CMS for 

approval and must contain information 

on the expected final outcomes of the 

activity and how the results of the 

activity will be assessed, states must 

already have plans in place to monitor 

and track the outcomes of all approved 

activities using these funds. 

Consequently, the proposed provision 

would not require any substantive 

revision to any state plans and would 

not impose any additional burden to 

states. 

Since the provisions in § 488.433(e) 

would not impose any new or revised 

reporting, recordkeeping, or third-party 

disclosure requirements, they do not 

require additional OMB review under 

the authority of the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501 

et seq.). In addition, as stated in the 

Civil Money Penalties for Nursing 

Homes final rule published on March 

18, 2011 (76 FR 15125), sections 4204(b) 

and 4214(d) of the Omnibus Budget 

Reconciliation Act of 1987 (OBRA ’87), 

Public Law 100–203, enacted on 

December 21, 1987, provides waivers of 

OMB review of information collection 

requirements for the purpose of 

implementing the nursing home reform 

amendments. The provisions of OBRA 

’87 that exempt agency actions to collect 

information from states or facilities 

relevant to survey and enforcement 

activities from the Paperwork Reduction 

Act are not time-limited. 

B. Submission of PRA-Related 

Comments 

If you comment on any of these 

information collection requirements, 

please submit your comments 

electronically as specified in the 

ADDRESSES section of this proposed rule. 

Comments must be received on/by 

June 30, 2014. 

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 


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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 

2015 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, 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. In 

addition, this proposed rule would 

clarify statutory requirements and intent 

as specified in section 6111 of the 

Affordable Care Act regarding the 

approval and use of civil money 

penalties imposed by CMS. 

3. Overall Impacts 

This proposed rule sets forth 

proposed updates of the SNF PPS rates 

contained in the SNF PPS final rule for 

FY 2014 (78 FR 47936). Based on the 

above, we estimate that the aggregate 

impact would be an increase of $750 

million in payments to SNFs, resulting 

from the SNF market basket update to 

the payment rates, as adjusted by the 

MFP adjustment. The impact analysis of 

this proposed rule represents the 

projected effects of the changes in the 

SNF PPS from FY 2014 to FY 2015. 

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 2014 payment rates 

by a factor equal to the market basket 

index percentage change adjusted by the 

FY 2013 forecast error adjustment (if 

applicable) and the MFP adjustment to 

determine the payment rates for FY 

2015. 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 4,355 

beneficiaries who qualify for the add-on 

payment for residents with AIDS. The 

impact to Medicare is included in the 

‘‘total’’ column of Table 13. In updating 

the SNF PPS rates for FY 2015, 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 PPS 

payments in FY 2015. 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 PPS payment rates 

and include an associated impact 

analysis. 

As discussed in Section V.D. of this 

proposed rule, we would also clarify 

statutory requirements and intent as 

specified in section 6111 of the 

Affordable Care Act regarding the 

approval and use of civil money 

penalties imposed by CMS. There 

would be no impact to States unless 

they failed to follow the new regulations 

regarding the approval and use of civil 

money penalty funds. In FY 2011, the 

approximate total amount of civil 

money penalties returned to the states 

was $28 million. In FY 2012, the 

approximate total amount of civil 

money penalties returned to the states 

was $32 million. In FY 2013, the 

approximate total amount of civil 

money penalties returned to the states 

was $35 million. The estimated amount 

that we expect to be returned to the 

states in FY2015, based on data from 

previous years, is approximately $33 

million. These payments to the states 

would only be withheld in the event 

that states did not spend civil money 

penalty funds in accordance with the 

statute and this regulation, or failed to 

make use of funds to benefit the quality 

of care or life of residents, or failed to 

maintain an acceptable plan for the use 

of these funds. Even if CMP funds are 

withheld from a state, we expect that 

the state would eventually come into 

compliance and that the state would 

later gain access to the withheld funds. 

4. Detailed Economic Analysis 

The FY 2015 impacts appear in Table 

13. Using the most recently available 

data, in this case FY 2013, we apply the 

current FY 2014 wage index and laborrelated share value to the number of 

payment days to simulate FY 2014 

payments. Then, using the same FY 

2013 data, we apply the FY 2015 wage 

index, as proposed in Section V.A 

above, and labor-related share value to 

simulate FY 2015 payments. We 

tabulate the resulting payments 

according to the classifications in Table 

13 (for example, 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 new OMB 

delineations that we are proposing to 

implement beginning in FY 2015. 

Facilities should use these proposed 

OMB delineations to identify their 

urban or rural status for purposes of 

identifying what areas of the impact 

table would apply to them beginning on 

October 1, 2014. 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 shows the 

number of facilities in the impact 

database. 


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The third column shows the effect of 

the annual update to the wage index. 

This represents the effect of using the 

most recent wage data available, 

without taking into account the 

proposed revised OMB delineations. 

That is, the impact represented in this 

column is solely that of updating from 

the FY 2014 wage index to the FY 2015 

wage index without any changes to the 

OMB delineations. The total impact of 

this change is zero percent; however, 

there are distributional effects of the 

change. 

The fourth column shows the effect of 

adopting the updated OMB delineations 

(as set forth in OMB Bulletin No. 13–01) 

for wage index purposes for FY 2015, 

independent of the effect of using the 

most recent wage data available, 

captured in Column 3. That is, the 

impact represented in this column is 

that of the proposed use of the revised 

OMB delineations, utilizing the 

proposed blended wage index. The total 

impact of this change is zero percent; 

however, there are distributional effects 

of the change. 

The fifth column shows the effect of 

all of the changes on the FY 2015 

payments. The update of 2.0 percent 

(consisting of the market basket increase 

of 2.4 percentage points, 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 2.0 

percent, assuming facilities do not 

change their care delivery and billing 

practices in response. 

As illustrated in Table 13, the 

combined effects of all of the changes 

vary by specific types of providers and 

by location. For example, due to 

changes proposed in this rule, providers 

in the rural Pacific region would 

experience a 4.5 percent increase in FY 

2015 total payments. 

TABLE 13—RUG–IV PROJECTED IMPACT TO THE SNF PPS FOR FY 2015 

Number of 

facilities 

FY 2015 

Update wage 

data 

(%) 

Update OMB 

delineations 

(%) 

Total change 

(%) 

Group: 

Total .......................................................................................................... 15,397 0.0 0.0 2.0 

Urban ........................................................................................................ 10,860 0.0 0.0 2.0

Rural ......................................................................................................... 4,537 0.1 ¥0.2 1.9 

Hospital based urban ............................................................................... 572 0.1 0.0 2.0 

Freestanding urban .................................................................................. 10,288 0.0 0.0 2.0 

Hospital based rural ................................................................................. 640 0.1 ¥0.3 1.7 

Freestanding rural .................................................................................... 3,897 0.1 ¥0.2 1.9 

Urban by region: 

New England ............................................................................................ 803 0.9 0.0 2.9 

Middle Atlantic .......................................................................................... 1,490 0.3 0.1 2.5 

South Atlantic ........................................................................................... 1,853 ¥0.3 0.0 1.7 

East North Central .................................................................................... 2,054 ¥0.3 0.0 1.6 

East South Central ................................................................................... 544 ¥1.0 0.0 1.0 

West North Central ................................................................................... 889 0.0 0.0 2.0 

West South Central .................................................................................. 1,293 ¥0.4 0.0 1.6 

Mountain ................................................................................................... 501 0.1 ¥0.1 2.0 

Pacific ....................................................................................................... 1,427 0.3 0.0 2.3

Outlying ..................................................................................................... 6 0.6 ¥0.2 2.4 

Rural by region: 

New England ............................................................................................ 144 0.7 0.1 2.8 

Middle Atlantic .......................................................................................... 228 1.5 ¥1.6 1.8 

South Atlantic ........................................................................................... 504 ¥0.4 ¥0.2 1.4 

East North Central .................................................................................... 925 ¥0.1 0.0 1.9 

East South Central ................................................................................... 533 ¥0.3 ¥0.2 1.4 

West North Central ................................................................................... 1,093 0.3 ¥0.2 2.2 

West South Central .................................................................................. 770 0.3 ¥0.4 1.9 

Mountain ................................................................................................... 235 ¥0.7 0.0 1.3 

Pacific ....................................................................................................... 105 2.6 ¥0.1 4.5 

Outlying ..................................................................................................... 0 0.0 0.0 2.0 

Ownership: 

Government .............................................................................................. 852 0.1 0.1 2.2 

Profit ......................................................................................................... 10,783 0.0 0.0 2.0 

Non-profit .................................................................................................. 3,762 0.1 0.0 2.0 

Note: The Total column includes the 2.4 percent market basket increase, 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 2015 would 

be an increase of $750 million in 

payments to SNFs, resulting from the 

SNF market basket update to the 

payment rates, as adjusted by 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 


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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. 

With regard to the proposal discussed 

in section V.A of this rule related to our 

proposed adoption of the revised OMB 

delineations for purposes of calculating 

the wage index, we believe 

implementing the new OMB 

delineations would result in wage index 

values being more representative of the 

actual costs of labor in a given area. 

Further, we recognize that some 

providers (15 percent) would have a 

higher wage index due to our proposed 

implementation of the new labor market 

delineations. However, we also 

recognize that more providers (22 

percent) would experience decreases in 

wage index values as a result of our 

proposed implementation of the new 

labor market area delineations. 

Therefore, we believe it would be 

appropriate to consider, as we did in FY 

2006, whether or not a transition period 

should be used in order to implement 

these proposed changes to the wage 

index. 

We considered having no transition 

period and fully implementing the 

proposed new OMB delineations 

beginning in FY 2015. This would mean 

that we would adopt the revised OMB 

delineations for all providers on October 

1, 2014. However, this would not 

provide any time for providers to adapt 

to the new OMB delineations. As 

discussed above, more providers would 

experience a decrease in wage index 

due to implementation of the proposed 

new OMB delineations than would 

experience an increase. Thus, we 

believe that it would be appropriate to 

provide for a transition period to 

mitigate the resulting short-term 

instability and negative impact on these 

providers, and to provide time for 

providers to adjust to their new labor 

market area delineations. Furthermore, 

in light of the comments received 

during the FY 2006 rulemaking cycle on 

our proposal in the FY 2006 SNF PPS 

proposed rule (70 FR 29094–29095) to 

adopt the new CBSA definitions 

without a transition period, we 

anticipate that providers would have 

similar concerns with not having a 

transition period for the proposed new 

OMB delineations. Therefore, as further 

discussed below, similar to the policy 

adopted in the FY 2006 SNF PPS final 

rule (70 FR 45041) when we first 

adopted OMB’s CBSA definitions for 

purposes of the SNF PPS wage index, 

we are proposing a one-year transition 

blended wage index for all SNFs to 

assist providers in adapting to the new 

OMB delineations (should we finalize 

implementation of such delineations for 

the SNF PPS wage index beginning in 

FY 2015). In determining an appropriate 

transition methodology, consistent with 

the objectives set forth in the FY 2006 

SNF PPS final rule (70 FR 45041), we 

looked for approaches that would 

provide relief to the largest percentage 

of adversely-affected SNFs with the 

least impact to the rest of the facilities 

First, we considered transitioning the 

wage index to the revised OMB 

delineations over a number of years in 

order minimize the impact of the 

proposed wage index changes in a given 

year. However, we also believe this 

must be balanced against the need to 

ensure the most accurate payments 

possible, which argues for a faster 

transition to the revised OMB 

delineations. As discussed above in 

section V.A.2 of this proposed rule, we 

believe that using the most current OMB 

delineations would increase the 

integrity of the SNF PPS wage index by 

creating a more accurate representation 

of geographic variation in wage levels. 

As such, we believe that utilizing a oneyear (rather than a multiple year) 

transition with a blended wage index in 

FY 2015 would strike the best balance. 

Second, we considered what type of 

blend would be appropriate for 

purposes of the transition wage index. 

We are proposing that providers would 

receive a one-year blended wage index 

using 50 percent of their FY 2015 wage 

index based on the proposed new OMB 

delineations and 50 percent of their FY 

2015 wage index based on the FY 2014 

OMB delineations. We believe that a 50/ 

50 blend would best mitigate the 

negative payment impacts associated 

with the implementation of the 

proposed new OMB delineations. While 

we considered alternatives to the 50/50 

blend, we believe this type of split 

balances the increases and decreases in 

wage index values associated with this 

proposal, as well as provides a readily 

understandable calculation for 

providers. 

Next, we considered whether or not 

the blended wage index should be used 

for all providers or for only a subset of 

providers, such as those providers that 

would experience a decrease in their 

respective wage index values due to 

implementation of the revised OMB 

delineations. If we were to apply the 

transition policy only to those providers 

that would experience a decrease in 

their respective wage index values due 

to the implementation of the revised 

OMB delineations, then providers that 

would experience either no change in 

wage index or an increase in wage due 

to the revised OMB delineations would 

be immediately transitioned to the FY 

2015 wage index under the revised 

OMB delineations. As required in 

section 1888(e)(4)(G)(ii) of the Act, the 

wage index adjustment must be 

implemented in a budget-neutral 

manner. As such, if we were to apply 

the transition policy only to those 

providers that would experience a 

decrease in their respective wage index 

values due to implementation of the 

revised OMB delineations, the budget 

neutrality factor, discussed in section 

III.D, calculated based on this this 

approach would be 0.9986, which 

would result in reduced base rates for 

all providers as compared to the budget 

neutrality factor of 1.0001 which would 

result from applying the blended wage 

index to all providers. Furthermore, 

based on our analysis of the wage index 

changes associated with fully 

implementing the revised OMB 

delineations, we determined that the 

new OMB delineations would only 

affect the wage index values of 

approximately 37 percent of facilities. 

Given that our goal is to provide relief 

to the largest percentage of adverselyaffected SNFs with the least impact to 

the rest of the facilities (whose wage 

index values either would remain the 

same or increase), we believe that using 

a blended wage index for all providers 

would be the best option. This option 

would assist the 22 percent of providers 

that would be adversely affected by the 

proposed implementation of the new 

OMB delineations without reducing the 

base rates for all providers, 63 percent 

of which would otherwise be unaffected 

by the proposed implementation of the 

new OMB delineations. In other words, 

this option is based on a balance 

between the interests of all SNF 

providers, including the 15 percent of 

providers that would experience an 

increase in their wage index value due 

to the proposed implementation of the 

new OMB delineations, the 22 percent 

of providers that would experience a 

decrease in their wage index value due 

to the proposed implementation of the 

new OMB delineations, and the 63 

percent of providers that would be 

unaffected by the proposed 

implementation of the new OMB 

delineations. As discussed above, if we 

were to apply the blended wage index 

only to the 22 percent of providers that 

would experience a decrease in their 

respective wage index values due to the 

proposed implementation of the new 

OMB delineations in an effort to 

preserve the full increase in wage index 


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value for the 15 percent of providers 

that would experience such an increase 

due to the proposed implementation of 

the new OMB delineations, the budget 

neutrality factor of 1.0001 referenced in 

section III.D, which is based on 

applying the blended wage index to all 

providers, would be revised to 0.9986. 

As such, this would mean a reduction 

in the base rate for all providers, most 

notably the 63 percent of providers that 

would be unaffected by the proposed 

implementation of the new OMB 

delineations, but also for that 15 percent 

of providers that would experience an 

increase in their wage index value. 

Moreover, while providers experience 

wage index changes from year to year 

based on updating the wage data, full 

implementation of the proposed new 

OMB delineations would dramatically 

increase the magnitude of those changes 

for some providers. Year-to-year wage 

index changes usually vary from 

decreases as high as 10 percent to 

increases as high as 10 percent. Using 

FY 2011 wage data (the data used for the 

FY 2015 wage index), the range of 

changes in the wage index values due 

solely to full implementation of the 

proposed OMB delineations would span 

from decreases of over 20 percent to 

increases of over 30 percent. Therefore, 

in addition to mitigating the impact of 

the proposed OMB delineations on the 

facilities that are adversely affected by 

them and providing a period to adjust, 

we believe a transition wage index 

could also mitigate the volatility of the 

SNF PPS wage index for certain 

providers caused by these proposed 

changes. 

Therefore, if we finalize 

implementation of the new OMB 

delineations for the SNF PPS wage 

index, we are proposing to use a oneyear transition with a blended wage 

index for all providers in FY 2015, as 

outlined in Section V.A.2.e. For the 

reasons discussed above, we believe that 

this proposed transition approach 

appropriately balances the interests of 

all SNFs, and would best achieve our 

objective of providing relief to the 

largest percentage of adversely affected 

SNFs with the least impact to the rest 

of the facilities. We believe this 

approach would mitigate negative 

impacts on providers as well as the 

volatility of the SNF PPS wage index for 

certain providers resulting from 

implementation of the proposed new 

OMB delineations. We invite comments 

on the alternatives discussed in this 

analysis. 

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 14, we have prepared an 

accounting statement showing the 

classification of the expenditures 

associated with the provisions of this 

proposed rule. Table 14 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 

15,397 SNFs in our database. All 

expenditures are classified as transfers 

to Medicare providers (that is, SNFs). 

TABLE 14—ACCOUNTING STATEMENT: 

CLASSIFICATION OF ESTIMATED EXPENDITURES, FROM THE 2014 SNF 

PPS FISCAL YEAR TO THE 2015 

SNF PPS FISCAL YEAR

Category Transfers 

Annualized Monetized 

Transfers.

$750 million*. 

From Whom To 

Whom?.

Federal Government 

to SNF Medicare 

Providers. 

* The net increase of $750 million in transfer 

payments is a result of the MFP-adjusted market basket increase of $750 million. 

7. Conclusion 

This proposed rule sets forth updates 

of the SNF PPS rates contained in the 

SNF PPS final rule for FY 2014 (78 FR 

47936). Based on the above, we estimate 

the overall estimated payments for SNFs 

in FY 2015 are projected to increase by 

$750 million, or 2.0 percent, compared 

with those in FY 2014. We estimate that 

in FY 2015 under RUG–IV, SNFs in 

urban and rural areas would experience, 

on average, a 2.0 and 1.9 percent 

increase, respectively, in estimated 

payments compared with FY 2014. 

Providers in the rural Pacific region 

would experience the largest estimated 

increase in payments of approximately 

4.5 percent. Providers in the urban East 

South Central region would experience 

the smallest increase in payments of 1.0 

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, non 

profit 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. We 

utilized the revenues of individual SNF 

providers (from recent Medicare Cost 

Reports) to classify a small business, 

and not the revenue of a larger firm they 

may be affiliated with. As a result, we 

estimate 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/navigationstructure/contracting/contractingofficials/eligibility-size-standards). In 

addition, approximately 25 percent of 

SNFs classified as small entities are 

non-profit organizations. Finally, 

individuals and states are not included 

in the definition of a small entity. 

This proposed rule sets forth updates 

of the SNF PPS rates contained in the 

SNF PPS final rule for FY 2014 (78 FR 

47936). Based on the above, we estimate 

that the aggregate impact would be an 

increase of $750 million in payments to 

SNFs, resulting from the SNF market 

basket update to the payment rates, as 

adjusted by the MFP adjustment. While 

it is projected in Table 13 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 2015 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 11 percent of total 

patient days in freestanding facilities 

and 22 percent of facility revenue 

(Report to the Congress: Medicare 

Payment Policy, March 2014, available 

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

Mar14_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 2014, available 

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

Mar14_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 13. As indicated in 

Table 13, the effect on facilities is 

projected to be an aggregate positive 

impact of 2.0 percent. As the overall 

impact on the industry as a whole, and 

thus on small entities specifically, is 


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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 

(1) furnish SNF services under a swingbed agreement or (2) 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 

previous SNF PPS final rules (most 

recently the one for FY 2014 (78 FR 

47968)), 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 13, the effect on 

facilities is projected to be an aggregate 

positive impact of 2.0 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 2014, 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. 

List of Subjects in 42 CFR Part 488 

Administrative practice and 

procedure, Health facilities, 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 488—SURVEY, CERTIFICATION 

AND ENFORCEMENT PROCEDURES 

■ 1. The authority citation for part 488 

continues to read as follows: 

Authority: Secs. 1102, 1128I and 1871 of 

the Social Security Act, unless otherwise 

noted (42 U.S.C. 1302, 1320a–7j, and 

1395hh); Pub. L. 110–149, 121 Stat. 1819. 

■ 2. Section 488.433 is revised to read 

as follows: 

§ 488.433 Civil money penalties: Uses and 

approval of civil money penalties imposed 

by CMS. 

(a) Ten percent of the collected civil 

money penalty funds that are required 

to be held in escrow pursuant to 

§ 488.431 and that remain after a final 

administrative decision will be 

deposited with the Department of the 

Treasury in accordance with 

§ 488.442(f). The remaining ninety 

percent of the collected civil money 

penalty funds that are required to be 

held in escrow pursuant to § 488.431 

and that remain after a final 

administrative decision must be used 

entirely for activities that protect or 

improve the quality of care or quality of 

life for residents consistent with 

paragraph (b) of this section and may 

not be used for survey and certification 

operations or State expenses, except that 

reasonable expenses necessary to 

administer, monitor, or evaluate the 

effectiveness of projects utilizing civil 

money penalty funds may be permitted. 

(b) All activities and plans for 

utilizing civil money penalty funds, 

including any expense used to 

administer grants utilizing CMP funds, 

must be approved in advance by CMS 

and may include, but are not limited to: 

(1) Support and protection of 

residents of a facility that closes 

(voluntarily or involuntarily). 

(2) Time-limited expenses incurred in 

the process of relocating residents to 

home and community-based settings or 

another facility when a facility is closed 

(voluntarily or involuntarily) or 

downsized pursuant to an agreement 

with the State Medicaid agency. 

(3) Projects that support resident and 

family councils and other consumer 

involvement in assuring quality care in 

facilities. 

(4) Facility improvement initiatives, 

such as joint training of facility staff and 

surveyors or technical assistance for 

facilities implementing quality 

assurance and performance 

improvement programs. 

(5) Development and maintenance of 

temporary management or receivership 

capability such as but not limited to, 

recruitment, training, retention or other 

system infrastructure expenses. 

However, as specified in § 488.415(c), a 

temporary manager’s salary must be 

paid by the facility. In rare situations, if 

the facility is closing, CMS plans to stop 

or suspend continued payments to the 

facility under § 489.55 of this chapter 

during the temporary manager’s duty 

period, and CMS determines that 

extraordinary action is necessary to 

protect the residents until relocation 

efforts are successful, civil money 

penalty funds may be used to pay the 

manager’s salary. 

(c) At a minimum, proposed activities 

submitted to CMS for prior approval 

must include a description of the 

intended outcomes, deliverables, and 

sustainability; and a description of the 

methods by which the activity results 

will be assessed, including specific 

measures. 

(d) Civil money penalty funds may 

not be used for activities that have been 

disapproved by CMS. 

(e) The State must maintain an 

acceptable plan for the effective use of 

civil money funds, including a 

description of methods by which the 

State will: 

(1) Solicit, accept, monitor, and track 

projects utilizing civil money penalty 

funds including any funds used for state 

administration. 

(2) Make information about the use of 

civil money penalty funds publicly 

available, including about the dollar 

amount awarded for approved projects, 

the grantee or contract recipients, the 

results of projects, and other key 

information. 

(3) Ensure that: 

(i) A core amount of civil money 

penalty funds will be held in reserve for 

emergencies, such as relocation of 

residents pursuant to an involuntary 

termination from Medicare and 

Medicaid. 

(ii) A reasonable amount of funds, 

beyond those held in reserve under 

paragraph (i) of this section, will be 

awarded or contracted each year for the 

purposes specified in this section. 

(f) If CMS finds that a State has not 

spent civil money penalty funds in 

accordance with this section, or fails to 

make use of funds to benefit the quality 


sroberts on DSK5SPTVN1PROD with PROPOSALS
Federal Register / Vol. 79, No. 87 / Tuesday, May 6, 2014 / Proposed Rules 25797 

of care or life of residents, or fails to 

maintain an acceptable plan for the use 

of funds that is approved by CMS, then 

CMS may withhold future 

disbursements of civil money penalty 

funds to the State until the State has 

submitted an acceptable plan to comply 

with this section. 

Dated: April 16, 2014. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: April 22, 2014. 

Kathleen Sebelius, 

Secretary. 

[FR Doc. 2014–10319 Filed 5–1–14; 4:15 pm] 

BILLING CODE 4120–01–P 

DEPARTMENT OF THE INTERIOR 

Fish and Wildlife Service 

50 CFR Part 17 

[Docket No. FWS–R8–ES–2013–0049; 

4500030113] 

RIN 1018–AZ33 

Endangered and Threatened Wildlife 

and Plants; Designation of Critical 

Habitat for Diplacus vandenbergensis 

(Vandenberg Monkeyflower) 

AGENCY: Fish and Wildlife Service, 

Interior. 

ACTION: Proposed rule; revision and 

reopening of the comment period. 

SUMMARY: We, the U.S. Fish and 

Wildlife Service (Service), announce the 

reopening of the public comment period 

on the proposed rule to designate 

critical habitat for Diplacus 

vandenbergensis (Vandenberg 

monkeyflower). We also announce the 

availability of a draft economic analysis 

(DEA) of the proposed designation of 

critical habitat for D. vandenbergensis 

and an amended required 

determinations section of the proposal. 

In addition, in this document, we are 

proposing revised unit names for the 

four previously described subunits, and 

a revised acreage for one subunit based 

on information we received on the 

proposal. These revisions result in an 

increase of approximately 24 acres (10 

hectares) in the proposed designation of 

critical habitat. We are reopening the 

comment period to allow all interested 

parties an opportunity to comment 

simultaneously on the proposed rule, 

the associated DEA, the amended 

required determinations section, and the 

unit revisions described in this 

document. Comments previously 

submitted need not be resubmitted, as 

they will be fully considered in 

preparation of the final rule. 

DATES: The comment period for the 

proposed rule published October 29, 

2013 (at 78 FR 64446), is reopened. We 

will consider comments on that 

proposed rule or the changes to it 

proposed in this document that we 

receive or that are postmarked on or 

before June 5, 2014. Comments 

submitted electronically using the 

Federal eRulemaking Portal (see 

ADDRESSES section, below) must be 

received by 11:59 p.m. Eastern Time on 

the closing date. 

ADDRESSES:

Document availability: You may 

obtain copies of the proposed rule and 

the associated DEA (Industrial 

Economics, Incorporated (IEc) 2014; 

Service 2014) on the internet at http:// 

www.regulations.gov at Docket No. 

FWS–R8–ES–2013–0049 or by mail 

from the Ventura Fish and Wildlife 

Office (see FOR FURTHER INFORMATION

CONTACT). 

Written comments: You may submit 

written comments by one of the 

following methods: 

(1) Electronically: Go to the Federal 

eRulemaking Portal: http://

www.regulations.gov. Search for Docket 

No. FWS–R8–ES–2013–0049 (the docket 

number for the proposed critical habitat 

rule). 

(2) By hard copy: Submit by U.S. mail 

or hand-delivery to: Public Comments 

Processing, Attn: FWS–R8–ES–2013– 

0049; Division of Policy and Directives 

Management; U.S. Fish and Wildlife 

Service; 4401 N. Fairfax Drive, MS 

2042–PDM; Arlington, VA 22203. 

We request that you send comments 

only by the methods described above. 

We will post all comments on http://

www.regulations.gov. This generally 

means that we will post any personal 

information you provide us (see the 

Public Comments section below for 

more information). 

FOR FURTHER INFORMATION CONTACT: 

Stephen P. Henry, Acting Field 

Supervisor, Ventura Fish and Wildlife 

Office, U.S. Fish and Wildlife Service, 

2493 Portola Road, Suite B, Ventura, CA 

93003; telephone 805–644–1766; 

facsimile 805–644–3958. Persons who 

use a telecommunications device for the 

deaf (TDD) may call the Federal 

Information Relay Service (FIRS) at 

800–877–8339. 

SUPPLEMENTARY INFORMATION: 

Public Comments 

We will accept written comments and 

information during this reopened 

comment period on our proposed 

designation of critical habitat for 

Diplacus vandenbergensis (hereafter 

referred to as Vandenberg 

monkeyflower) that was published in 

the Federal Register on October 29, 

2013 (78 FR 64446), our DEA (which 

comprises an economics screening 

memorandum (IEc 2014) and the 

Service’s Incremental Effects 

Memorandum (Service 2014)) of the 

proposed designation, the amended 

required determinations provided in 

this document, and the revisions to the 

names and one unit as described in this 

document. We will consider 

information and recommendations from 

all interested parties. We are 

particularly interested in comments 

concerning: 

(1) The reasons why we should or 

should not designate habitat as ‘‘critical 

habitat’’ under section 4 of the 

Endangered Species Act (16 U.S.C. 1531 

et seq.) (Act), including whether there 

are threats to the species from human 

activity, the degree those threats can be 

expected to increase due to the 

designation, and whether that increase 

in threat outweighs the benefit of 

designation such that the designation of 

critical habitat is not prudent. 

(2) Specific information on: 

(a) The amount and distribution of 

Vandenberg monkeyflower and its 

habitat; 

(b) What may constitute ‘‘physical or 

biological features essential to the 

conservation of the species,’’ within the 

geographical range currently occupied 

by the species; 

(c) Where these features are currently 

found; 

(d) Whether any of these features may 

require special management 

considerations or protection; 

(e) What areas currently occupied by 

the species and that contain features 

essential to the conservation of the 

species should be included in the 

designation and why; and 

(f) What areas not occupied at the 

time of listing are essential for the 

conservation of the species and why. 

(3) Land use designations and current 

or planned activities in the areas 

occupied by the species or proposed to 

be designated as critical habitat, and 

possible impacts of these activities on 

this species and proposed critical 

habitat. 

(4) Comments or information that may 

assist us in identifying or clarifying the 

primary constituent elements (PCEs). 

(5) Information on the projected and 

reasonably likely impacts of climate 

change on Vandenberg monkeyflower 

and proposed critical habitat. 

(6) Any probable economic, national 

security, or other relevant impacts of 

designating any area that may be 


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