[Federal Register Volume 65, Number 214 (Friday, November 3, 2000)]
[Proposed Rules]
[Pages 66304-66442]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-27646]



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Part II





Department of Health and Human Services





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Health Care Financing Administration



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42 CFR Parts 412 and 413



Medicare Program; Prospective Payment System for Inpatient 
Rehabilitation Facilities; Proposed Rule

Federal Register / Vol. 65, No. 214 / Friday, November 3, 2000 / 
Proposed Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 412 and 413

[HCFA-1069-P]
RIN 0938-AJ55


Medicare Program; Prospective Payment System for Inpatient 
Rehabilitation Facilities

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would establish a prospective payment 
system for Medicare payment of inpatient hospital services provided by 
a rehabilitation hospital or by a rehabilitation unit of a hospital. 
This proposed rule would implement section 1886(j) of the Social 
Security Act (the Act), as added by section 4421 of the Balanced Budget 
Act of 1997 (Public Law 105-33) and as amended by section 125 of the 
Balanced Budget Refinement Act of 1999 (Public Law 106-113), which 
authorizes the implementation of a prospective payment system for 
inpatient rehabilitation hospitals and rehabilitation units. It also 
authorizes the Secretary to require rehabilitation hospitals and 
rehabilitation units to submit such data as the Secretary deems 
necessary to establish and administer the prospective payment system. 
The prospective payment system described in this proposed rule would 
replace the reasonable cost-based payment system under which the 
rehabilitation hospitals and rehabilitation units are currently paid.

DATES: We will consider comments if we receive them at the appropriate 
address, as provided below, no later than 5 p.m. on January 2, 2001.

ADDRESSES: Mail written comments (one original and three copies) to the 
following address ONLY:

Health Care Financing Administration, Department of Health and Human 
Services, Attention: HCFA-1069-P, P.O. Box 8010, Baltimore, MD 21244-
8010.

    If you prefer, you may deliver your written comments (one original 
and three copies) to one of the following addresses:

Room 443-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW, 
Washington, DC 20201; or Room C5-14-03, Central Building, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    Comments mailed to the delivery addresses may be delayed and could 
be considered late.

FOR FURTHER INFORMATION CONTACT:

Robert Kuhl, (410) 786-4597 (General information).
Pete Diaz, (410) 786-1235 (Requirements for completing the Minimum Data 
Set for Post Acute Care (MDS-PAC), and other MDS-PAC issues).
Jacqueline Gordon, (410) 786-4517 (Payment system, the case-mix 
classification methodology, transition payments, relative weights/case-
mix index, update factors, transfer policies, payment adjustments).
Nora Hoban, (410) 786-0675 (Calculation of the payment rates, relative 
weights/case-mix index, wage index, payment adjustments).

SUPPLEMENTARY INFORMATION:

Comments, Procedures, Availability of Copies, and Electronic Access

    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code HCFA-1069-P.
    Comments received timely will be available for public inspection as 
they are received, generally beginning approximately 3 weeks after 
publication of a document, in Room 443-G of the Department's office at 
200 Independence Avenue, SW., Washington, DC, on Monday through Friday 
of each week from 8:30 a.m. to 5 p.m. (Phone: (202) 690-7890).
    Copies: To order copies of the Federal Register containing this 
document, send your request to: New Orders, Superintendent of 
Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date 
of the issue requested and enclose a check or money order payable to 
the Superintendent of Documents, or enclose your Visa or Master Card 
number and expiration date. Credit card orders can also be placed by 
calling the order desk at (202) 512-1800 or by faxing to (202) 512-
2250. The cost for each copy is $8. As an alternative, you can view and 
photocopy the Federal Register document at most libraries designated as 
Federal Depository Libraries and at many other public and academic 
libraries throughout the country that receive the Federal Register. 
This Federal Register document is also available from the Federal 
Register online database through GPO Access, a service of the U.S. 
Government Printing Office. The Website address is: http://www.access.gpo.gov/nara/index.html.
    To assist readers in referencing sections contained in this 
document, we are providing the following table of contents.

Table of Contents

I. Background
    A. Overview of Current Payment System for Inpatient 
Rehabilitation Facilities
    B. Research for Alternate Prospective Payment Systems for 
Inpatient Rehabilitation Facilities Prior to the Balanced Budget Act 
of 1997
    C. Requirements of the BBA and the BBRA for Inpatient 
Rehabilitation Facilities
    D. Policy Objectives in Developing a Prospective Payment System 
for Inpatient Rehabilitation Facilities
    E. Discussion of Evaluated Options for the Prospective Payment 
System for Inpatient Rehabilitation Facilities
    F. Inpatient Rehabilitation Facility Prospective Payment 
System--General Overview
    G. Applicability of the Inpatient Rehabilitation Facility 
Prospective Payment System
II. Current Research to Support the Establishment of the Inpatient 
Rehabilitation Prospective Payment System--Update of RAND Analysis
    A. Overview of the Updated Work for the Proposed Rule
    B. Construction of Data File for Analysis
    C. Description of Sources of the Data File
    D. Description of the Methodology Used to Construct the Data 
File
    E. Representativeness of the Data File
    F. Analyses to Support Future Adjustments to the Payment System
III. The Minimum Data Set for the Post Acute Care (MDS-PAC) Patient 
Assessment Instrument
    A. Implementation of the MDS-PAC
    B. Overview of MDS-PAC Assessment Process
    C. The MDS-PAC Assessment and Medical Necessity
    D. The MDS-PAC Assessment Reference Date
    E. Performing the MDS-PAC Assessment
    F. The MDS-PAC Assessment Schedule
    G. Computerization of the MDS-PAC Data
    H. Quality Monitoring
    I. MDS-PAC Training and Technical Support for IRFs
    J. Patient Rights
    K. Medical Review Under the IRF Prospective Payment System
IV. Case-Mix Group Case Classification System
    A. Background
    B. Case-Mix Groups
V. Payment Rates
    A. Development of CMG Relative Weights
    B. Transfer Payment Policy
    C. Special Cases that Are Not Transfers
    D. Adjustments
    E. Calculation of the Budget Neutral Conversion Factor Minus Two 
Percent
    F. Development of the Federal Prospective Payment
    G. Examples of Computing the Adjusted Facility Prospective 
Payments
    H. Computing Total Payments During Fiscal Year 2001
    I. Method of Payment
    J. Update to the Adjusted Facility Federal Prospective Payment

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VI. Provisions of the Proposed Rule
VII. Response to Comments
VIII. Regulatory Impact Statement
    A. Background
    B. Anticipated Effects of this Proposed Rule
    C. Alternatives Considered
IX. Collection of Information Requirements Regulations Text
Appendix A--Technical Discussion of Cases and Facilities Used in 
RAND Analysis
Appendix B--Variables Suggested for Exclusion from the MDS-PAC 
Instrument
Appendix BB--Patient Assessment Instrument: Minimum Data Set for 
Post Acute Care; Version 1
Appendix BBB--Item-by-Item Guide to the Minimum Data Set for Post 
Acute Care (MDS-PAC)
Appendix C--List of Comorbidities
Appendix D--IRF Market Basket

    In addition, because of the many terms to which we refer by acronym 
in this proposed rule, we are listing these acronyms and their 
corresponding terms in alphabetical order below:

ADL--Activities of Daily Living
BBA--Balanced Budget Act of 1997, Public Law 105-33
BBRA--Balanced Budget Refinement Act of 1999, Public Law 106-113
CMGs--case-mix groups
CMI--case-mix index
COS--Clinical Outcomes Systems
DRGs--diagnosis-related groups
FIM--functional independence measure
FIM--FRG-functional independence measurement-function related group
FRG--Function Related Group
FY--Federal fiscal year
HCFA--Health Care Financing Administration
HHAs--home health agencies
HMO--health maintenance organization
IRF--inpatient rehabilitation facilities
MDCN--Medicare Data Collection Network
MDS--PAC-Minimum Data Set for Post Acute Care
MedPAC--Medicare Payment Advisory Commission
MEDPAR--Medicare provider analysis and review
MPACT--MDS-PAC Tool--Minimum Data Set for Post Acute Care Tool
OASIS--Outcome and Assessment Information Set
ProPAC--Prospective Payment Assessment Commission
RICs--Rehabilitation Impairment Categories
SNF--skilled nursing facility
TEFRA--Tax Equity and Fiscal Responsibility Act of 1982, Public Law 97-
248
UDSmr--Uniform Data Set for medical rehabilitation
Y2K--Year 2000/Millennium

I. Background

    When the Medicare statute was originally enacted in 1965, Medicare 
payment for hospital inpatient services was based on the reasonable 
costs incurred in furnishing services to Medicare beneficiaries. The 
statute was later amended by section 101(a) of the Tax Equity and 
Fiscal Responsibility Act of 1982 (Public Law 97-248) to limit payment 
by placing a limit on allowable costs per discharge. Section 601 of the 
Social Security Amendments of 1983 (Public Law 98-21) added a new 
section 1886(d) to the Social Security Act (the Act) which replaced the 
reasonable cost-based payment system for most hospital inpatient 
services. Section 1886(d) of the Act provides for a prospective payment 
system for the operating costs of hospital inpatient stays effective 
with hospital cost reporting periods beginning on or after October 1, 
1983.
    Although most hospital inpatient services became subject to a 
prospective payment system, certain specialty hospitals were excluded 
from that system. As discussed in detail in section I.A.1 of this 
preamble, rehabilitation hospitals and distinct part rehabilitation 
units in hospitals were among the excluded facilities. Subsequent to 
the implementation of the hospital inpatient prospective payment 
system, both the number of excluded rehabilitation facilities, 
particularly distinct part units, and Medicare payments to these 
facilities grew rapidly. In order to control escalating costs, the 
Congress, through enactment of section 4421 of the Balanced Budget Act 
of 1997 (BBA) (Public Law 105-33) and section 125 of the Balanced 
Budget Refinement Act of 1999 (BBRA) (Public Law 106-113), provided for 
the implementation of a prospective payment system for inpatient 
rehabilitation facilities.
    Section 4421 of the BBA amended the Act by adding section 1886(j), 
which authorizes the implementation of a prospective payment system for 
inpatient rehabilitation services. This proposed rule would implement a 
Medicare prospective payment system, as authorized by section 1886(j) 
of the Act, for inpatient rehabilitation hospitals and units. We refer 
to these inpatient rehabilitation hospitals and units as ``inpatient 
rehabilitation facilities'' or ``IRFs'' throughout this proposed rule.
    The statute provides for the prospective payment system for IRFs to 
be implemented for cost reporting periods beginning on or after October 
1, 2000. The statute also provides for a new prospective payment system 
for home health services for cost reporting periods beginning on or 
after October 1, 2000, along with modifications to the existing 
prospective payment systems for acute care hospitals and skilled 
nursing facilities.
    Although we are working very hard to implement the extensive 
changes required by the statute, the demands of simultaneously 
implementing new prospective payment systems (for example, outpatient 
hospital and home health) and modifying existing payment systems are 
significant. The creation of each new payment system or modification to 
an existing payment system requires an extraordinary amount of lead 
time to develop and implement the necessary changes to our existing 
computerized claims processing systems. In addition, it requires 
additional time after implementation to ensure that these complex 
changes are properly administered. After an extensive analysis of the 
changes required to HCFA's systems, we have concluded that it is 
infeasible to implement the IRF prospective payment system as of 
October 1, 2000. Therefore, we plan to implement the IRF prospective 
payment system for cost reporting periods beginning on or after April 
1, 2001. We believe that this implementation date is the earliest 
feasible date given the scope and magnitude of the implementation 
requirements associated with this and other mandated provisions.
    In this proposed rule, we provide a number of discussions useful in 
understanding the development and implementation of the IRF prospective 
payment system. These discussions include the following:
    <bullet> An overview of the current payment system for IRFs.
    <bullet> A discussion of research on IRF patient classification 
systems and prospective payment systems, including prior and current 
research performed by the RAND Corporation.
    <bullet> A discussion of statutory requirements for developing and 
implementing an IRF prospective payment system.
    <bullet> A discussion of the proposed requirement that IRFs 
complete the Minimum Data Set for Post Acute Care (MDS-PAC) (a patient 
assessment instrument) as a part of the data collection deemed 
necessary by the Secretary to implement and administer the IRF 
prospective payment system.
    <bullet> A discussion of the IRF patient classification system 
using case-mix groups (CMGs).
    <bullet> A detailed discussion of the proposed prospective payment 
system including the relative weights and payment rates for each CMG, 
adjustments to the payment system, additional payments, and budget

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neutrality requirements mandated by section 1886(j).
    <bullet> An analysis of the impact of the IRF prospective payment 
system on the Federal budget and inpatient rehabilitation facilities, 
including small rural facilities.
    Finally, we are proposing conforming changes to existing 
regulations as well as new regulations that are necessary to implement 
the proposed IRF prospective payment system.

A. Overview of Current Payment System for Inpatient Rehabilitation 
Facilities

1. Exclusion of Certain Facilities From the Hospital Inpatient 
Prospective Payment System
    Although payment for operating costs of most hospital inpatient 
services became subject to a prospective payment system when the 
hospital inpatient prospective payment system was implemented in 
October 1983, certain types of specialty hospitals and units were 
excluded from that payment system. As set forth in section 
1886(d)(1)(B) of the Act, the following hospitals were originally 
excluded from the hospital inpatient prospective payment system: 
psychiatric, rehabilitation, children's, and long-term care. Effective 
with cost reporting periods beginning on or after October 1, 1989 
cancer hospitals were added to this list by section 6004(a) of the 
Omnibus Budget Reconciliation Act of 1989 Public Law (101-239). In 
addition, psychiatric and rehabilitation distinct part units of 
hospitals are excluded from the hospital inpatient prospective payment 
system.
    These specialty hospitals were excluded by the Congress from the 
hospital inpatient prospective payment system because they typically 
treat cases that involve lengths of stay that are, on average, longer 
or more costly than would be predicted by the diagnosis related group 
(DRG) system and, therefore, could be systematically underpaid if the 
DRG system was applied to them. These exclusions were the result of 
concerns that DRGs--the classification system on which payment under 
the hospital inpatient prospective payment system is based--might not 
accurately account for the resource costs for the types of patients 
treated in those facilities.
    The concern that DRGs might not accurately account for costs in 
excluded hospitals arose because the hospital inpatient prospective 
payment system was developed from the cost and utilization experience 
of general hospitals, which typically provide acute care for a variety 
of medical conditions. The hospital inpatient prospective payment 
system is a system of average-based payments that assume that some 
patient stays will consume more resources than the typical stay, while 
others will demand fewer resources.
    Thus, an efficiently operated hospital should be able to deliver 
care to its Medicare patients for an overall cost that is at or below 
the amount paid under the hospital inpatient prospective payment 
system. In a Report to Congress: Hospital Prospective Payment for 
Medicare (1982), the Department of Health and Human Services stated 
that the ``467 DRGs were not designed to account for these types of 
treatment'' found in the four special classes of hospitals, and noted 
that ``including these hospitals will result in criticism * * * (and) 
their application to these hospitals would be inaccurate and unfair.''
    Accordingly, this report to the Congress suggested that a DRG 
system might not work as well for these treatment classes as they did 
for other medical specialties. One concern was that the resource needs 
of patients in these excluded hospitals were not solely correlated with 
diagnoses. A second concern was that the mix of service intensities 
provided by these specialty hospitals significantly differed from that 
of general medical/surgical hospitals. The legislative history of the 
1983 amendments to the Act stated that the ``DRG system was developed 
for short-term acute care general hospitals and as currently 
constructed does not adequately take into account special circumstances 
of diagnoses requiring long stays.'' (Report of the Committee on Ways 
and Means, U.S. House of Representatives, to Accompany HR 1900, H.R. 
Rep. No. 98-25, at 141 (1983)).
    Following enactment in April 1983 of the Social Security Amendments 
of 1983, we undertook a number of initiatives to ensure implementation 
of the hospital inpatient prospective payment system by October 1, 
1983. Important activities included the publication of the rules and 
regulations for the hospital inpatient prospective payment system. The 
interim final rule was published in the September 1, 1983 Federal 
Register (48 FR 39752). We published a final rule in the January 3, 
1984, Federal Register (49 FR 234) following a public comment period, 
evaluation of comments received, and formulation of responses to and 
regulatory revisions to the regulations based upon the comments. 
Updates and modifications of the regulations are published annually in 
the Federal Register. Together, the initial statutory mandate and the 
published regulations addressed several important program issues. One 
program issue was the implementation of the criteria for hospitals that 
are seeking to be excluded from the hospital inpatient prospective 
payment system under one of the specialty classes, including IRFs. The 
regulations concerning exclusion from the hospital inpatient 
prospective payment system, in part 412, subpart B, are discussed 
below.
2. Requirements for Inpatient Rehabilitation Facilities To be Excluded 
From the Hospital Inpatient Prospective Payment System
    Under section 1886(d)(1)(B) of the Act, the prospective payment 
system for hospital inpatient operating costs set forth in section 
1886(d) of the Act does not apply to several specified types of 
entities, including a rehabilitation hospital ``as defined by the 
Secretary'' or, ``in accordance with regulations of the Secretary,'' a 
rehabilitation unit of a hospital which is a distinct part of the 
hospital ``as defined by the Secretary.'' In general, existing 
regulations in part 412, subpart B provide that to be excluded from the 
hospital inpatient prospective payment system, an IRF must--(1) Have a 
provider agreement or be a unit in an institution that has in effect an 
agreement to participate as a hospital under part 489; and (2) except 
for newly participating hospitals seeking to be excluded, demonstrate 
that they serve an inpatient population of whom at least 75 percent 
require intensive rehabilitative services for the treatment of 1 or 
more of 10 specified conditions. The specified conditions are stroke, 
spinal cord injury, congenital deformity, amputation, major multiple 
trauma, hip fracture, brain injury, polyarthritis including rheumatoid 
arthritis, neurological disorders, and burns. Patients in IRFs require 
frequent physician involvement, rehabilitation nursing, and care from a 
coordinated group of professionals. (All IRFs that meet the 
requirements in Secs. 412.23(b), 412.25, and 412.29 would be paid under 
the IRF prospective payment system proposed in this rule.)
3. Payment System Requirements Prior to the Balanced Budget Act of 1997
    Hospitals that are excluded from the hospital inpatient prospective 
payment system are paid for inpatient operating costs under the 
provisions of section 1886(b) of the Act. Until the IRF prospective 
payment system is implemented, IRFs are paid on the basis of Medicare 
reasonable costs limited by a facility-specific target amount per 
discharge. Each facility has a separate

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payment limit or target amount that is calculated for that facility 
based on its cost per discharge in a base year, subject to caps. The 
target amount is adjusted annually by an update factor called the rate-
of-increase percentage. Facilities whose costs are below their target 
amounts receive bonus payments equal to the lesser of half of the 
difference between costs and the target amount, up to a maximum of 5 
percent of the target amount. For facilities whose costs exceed their 
target amounts, Medicare provides relief payments equal to half of the 
amount by which the hospitals costs exceeded the target amount up to 10 
percent of the target amount. Facilities that experience a more 
significant increase in patient acuity can also apply for an additional 
amount under the regulations for Medicare exception payments.
4. Strengths and Weaknesses of the Current Payment System
    Utilization of post-acute care services has grown rapidly in recent 
years. Since the implementation of the hospital inpatient prospective 
payment system, average length of stay in acute care hospitals has 
decreased and patients are increasingly being discharged to post-acute 
care settings such as IRFs, skilled nursing facilities (SNFs), home 
health agencies (HHAs), and long-term care hospitals to complete their 
course of treatment. The increased utilization of post-acute care 
providers, including excluded facilities, has fueled the rapid growth 
in payments in recent years. With increased utilization and the 
incentives associated with the reasonable-cost based payment system, 
discussed below, the number of IRFs has also increased significantly.
    In its March 1999 Report to the Congress the Medicare Payment 
Advisory Commission (MedPAC) (formerly the Prospective Payment 
Assessment Commission (ProPAC)) stated, ``Aggregate spending has 
increased at a fairly rapid pace, reflecting increased patient volume 
rather than increased payments per discharge. Aggregate Medicare 
operating payments to rehabilitation facilities rose 18 percent 
annually between 1990 and 1996, from $1.9 billion to $4.3 billion. 
Since 1990, payments per discharge have risen less than the rate of 
inflation, reaching $10,500 in 1996.'' (p. 90.) The MedPAC report 
explains that the--

    TEFRA system has remained in effect longer than expected partly 
because of difficulties in accounting for the variation in resource 
use across patients in exempted facilities. The unintended 
consequences of sustaining that system have included a steady growth 
in the number of prospective payment system-exempt facilities and a 
substantial payment inequity between older and newer facilities. In 
particular, the payment system encouraged new exempt facilities to 
maximize their costs in the base year to establish high cost limits. 
Once subject to its relatively high limit, a recent entrant could 
reduce its costs below its limit, resulting in reimbursement of its 
full costs. * * * By contrast, facilities that existed before they 
became subject to TEFRA could not influence their cost limits. Given 
the relatively low limits of older facilities, they are more likely 
to incur costs above their limits and thus receive payments less 
than their costs. (p. 72)

    To address concerns such as the historical growth in payments and 
disparity in payments to existing and newly excluded hospitals and 
units, the BBA mandated several changes to the current payment system. 
These changes are outlined in section I.C.1 of this preamble. In 
addition, we and other organizations have conducted research since the 
inception of the hospital inpatient prospective payment system to 
determine if alternate prospective payment systems are feasible for 
these excluded hospitals.

B. Research for Alternate Prospective Payment Systems for Inpatient 
Rehabilitation Facilities Prior to the Balanced Budget Act of 1997

    Below is a discussion of research projects and other analyses 
concerning prospective payment systems that are relevant to the 
development of the IRF prospective payment system that we are proposing 
to implement in this rule.
    The methods and tasks that must be undertaken in order to develop 
an IRF prospective payment system include development of a patient 
classification system that accounts for differences in patient case 
mix. A patient classification system is developed by classifying 
patients into mutually exclusive groups based on similar clinical 
characteristics and similar levels of resource use. A factor to weight 
differences in patient case mix can be developed by measuring the 
relative difference in resource intensity among the different groups. 
We are proposing to implement a payment system that uses case-mix 
groups and weighting factors that account for the intensity of services 
delivered to IRF Medicare patients.
1. Early Studies
    In October 1984, as mentioned in the 1987 Report to the Congress: 
Developing a Prospective Payment System for Excluded Hospitals (1987), 
the Medical College of Wisconsin and the RAND Corporation (RAND) began 
a joint effort to investigate the feasibility of a prospective payment 
system for excluded hospitals including IRFs. The RAND Corporation is a 
nonprofit institution with extensive health care background in 
improving policy and decision making through research and analysis. 
This joint effort was under a HCFA cooperative agreement with the RAND 
Corporation. The Medical College of Wisconsin collected data from a 
survey of patient records that included standard discharge data, 
diagnostic condition, functional status and other impairment measures, 
billing data, and facility information gathered from telephone 
interviews. RAND assisted in the design and analysis of the survey data 
and obtained a 20 percent sample of the HCFA patient billing file for 
FY 1984--the implementation year of the hospital inpatient prospective 
payment system.
    The data were used to analyze the delivery systems of 
rehabilitation care. The Report to the Congress stated that care in 
IRFs ``emphasizes the treatment of functional limitations and 
disability''. Functional limitations could be measured by the patient's 
ability to perform activities of daily living such as locomotion, 
dressing, eating, bathing, etc. The patient's level of performing these 
activities of daily living is referred to as the patient's functional 
status. The results of this analysis showed that ``diagnostic condition 
explained little, whereas functional status measures explained 
substantially more, of the variance in total charges for a 
rehabilitation stay.'' However, at the time of this analysis, a 
nationally-accepted set of functional status measures had not been 
developed for application in a classification system for IRFs.
2. Functional Status Studies
    While numerous studies involved developing and assessing functional 
status, several researchers (for example, Batavia 1988; Johnston 1984) 
suggested using functional status as the basis for a rehabilitation 
payment system. Functional status, as measured by a patient's ability 
to perform activities of daily living and by mobility, can be evaluated 
at admission and discharge or any time during the stay. In addition, 
change in functional status (the difference in functional status from 
admission to discharge) can be measured.
    Researchers evaluated several methods of using functional status at 
different stages of the patient's stay to develop a payment system. For 
the most part, the use of these methods resulted in payment systems 
that appeared to be inadequate in creating the proper incentives to 
care for high resource use

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patients and to produce quality outcomes. Basing a payment system on 
expected improvement in a patient's functional limitations requires a 
scale that is sensitive to changes in functional status. In addition, 
precise data describing the functional status of the patient would have 
to be collected on admission and at periodic intervals until discharge 
(Hosek et al.; 1986).
    The development of a patient classification system for a case-mix 
adjusted prospective payment system was hindered by the lack of an 
appropriate and widely accepted functional status measure for inpatient 
rehabilitation. The functional independence measure (FIM) was developed 
to fill this need (Hamilton et al., 1987). The functional independence 
measure addresses a patient's functional status covering six domains--
self-care, sphincter control, mobility, locomotion, social cognition, 
and communication. There are two national sources of functional 
independence measures. The Uniform Data Set for Medical Rehabilitation 
(UDSmr) is operated within the Center for Functional Assessment 
Research, U. B. Foundation Activities, Inc. The UDSmr collects data on 
patient age, sex, living situation prior to hospitalization, the 
impairment that is the primary reason for admission to the IRF, and 
functional status at admission and discharge. It also includes patient 
admission and discharge information as well as hospital charges. The 
Clinical Outcomes System (COS) is operated by Caredata.com, Inc. 
(formerly Medirisk Inc.), located in Atlanta, Georgia. The COS contains 
the same type of patient information as UDSmr. However, we have been 
notified that the COS has been discontinued as of July 2000.
3. Studies on Patient Classification Systems
    In 1991, Nancy Diane Harada presented a study in her dissertation 
titled ``The Development of a Resource-Based Patient Classification 
Scheme for Rehabilitation.'' This study developed a clinically-based, 
diagnosis-specific patient classification system for rehabilitation 
hospital services. The final classification system in this study 
includes 33 patient classification groups. The patient classification 
groups are referred to as Rehabilitation Functional Related Groups.
    Harada believed that, at the facility level, the rehabilitation 
functional related groups could be viewed as a managerial tool to 
monitor the quality of care, as well as the resources expended in the 
treatment of rehabilitation patients. From a policy perspective, use of 
the rehabilitation functional related groups could minimize the adverse 
incentives for IRFs to underserve certain groups that may arise from 
the lack of case-mix index adjusted payments in the current cost limit 
payment system. The results of this study found that rehabilitation 
functional related group methodology may provide an appropriate basis 
for the prospective payment of rehabilitation services.
    Using FIM data reported to UDSmr, a team of researchers from the 
University of Pennsylvania developed a patient classification system, 
Function Related Groups (FRGs), referred to as the FIM-FRGs (Stineman 
et al., 1994). The American Rehabilitation Association (currently known 
as the American Medical Rehabilitation Providers Association) funded 
the development of a prototype of function related groups. Further work 
and revisions were funded by the Agency for Health Care Research and 
Quality, formerly known as the Agency for Health Care Policy and 
Research and the National Center for Medical Rehabilitation Research at 
the National Institutes of Health.
    As FIM-FRGs were refined, they were reframed using the 
International Classification of Impairments, Disabilities and Handicaps 
to ensure a better measure of the consumption of rehabilitation 
resources, prognosis, and outcome (Stineman, 1997). These 
classifications were designed to be related to the major categories of 
the DRGs and indirectly linked to the ICD-9-CM with focus on 
disabilities and impairment categorization.
    This original work on a FIM-FRG patient classification system 
identified 21 clinically defined rehabilitation impairment categories 
(RICs) such as stroke, traumatic brain dysfunction, non-traumatic brain 
dysfunction, and non-traumatic spinal cord injury. The RICs were then 
subdivided into FIM-FRGs using the FIM motor score, FIM cognitive 
score, and age. Accordingly, the FIM-FRG patient classification system 
first sorted patients into a RIC and then used assessments of patient 
functional and cognitive abilities and age to classify them into a FIM-
FRG.
4. HCFA-Sponsored Analysis by RAND
    In 1994, we contracted with RAND for analyses designed to: (1) 
examine the stability of the original FRGs; (2) extend the FRGs to take 
account of previously unexamined cases (re-admissions), previously 
unused information (interrupted stays), and newly available data 
(Medicare data on comorbidities and complications); and (3) evaluate 
the performance of FRGs when cost rather than length of stay is used to 
form groups and when only Medicare cases rather than all cases are used 
to form groups.
    RAND's analyses: (1) evaluated the suitability of the FIM-FRG 
patient classification system; (2) evaluated a prospective payment 
system for inpatient rehabilitation facilities based on the FIM-FRGs; 
and (3) prepared final reports describing the evaluation of the UDSmr, 
FIM, and FIM-FRGs. This analysis used more current data to replicate 
and update previous work performed by RAND in 1990.
    Two data systems--the UDSmr and Medicare program information--were 
the primary sources for these analyses. UDSmr provided RAND with 
functional status and demographic information for rehabilitation 
discharge data on 139,360 cases from 352 IRFs from calendar year 1994. 
The Medicare program information included Medicare bill and cost report 
data for 1994.
    The first step of the analysis involved matching UDSmr cases with 
Medicare records using patient and facility identifiers. Because 
patient and facility identifiers on the UDSmr records were encrypted, 
it was necessary to use a sophisticated matching probability technique 
to match Medicare records to a corresponding UDSmr case. In addition, 
several thousand of the Medicare discharges corresponded to part of an 
interrupted rehabilitation stay. For the purposes of this analysis, a 
rehabilitation stay interrupted by a single admission to an acute care 
hospital is treated as two rehabilitation discharges, one interrupted 
by two admissions to an acute care hospital is treated as three 
rehabilitation discharges, and so on. Using this definition of 
``interrupted stays'', RAND stated that the 139,360 cases found in the 
UDSmr data corresponded to 144,719 Medicare discharges. A file with the 
matched patient data was created.
    RAND then subjected this patient data to a rigorous and complex 
statistical algorithm to test the predictive power of resource use to 
classify these patients into RICs and corresponding FIM-FRGs. As a 
result, RAND recommended that the number of FRGs per RIC be limited to 
a maximum of 5 and proposed a total of 70 FRGs. Facility level data 
from the hospital cost report information system file was used to test 
the feasibility of using the resulting FIM-FRGs to develop an IRF 
prospective payment system.
    The results of the RAND study were released in September 1997 and 
are contained in two reports available through the National Technical

[[Page 66309]]

Information Service (NTIS). The reports are--
    <bullet> Classification System for Inpatient Rehabilitation 
Patients--A Review and Proposed Revisions to the Function Independence 
Measure-Function Related Groups, NTIS order number PB98-105992INZ; and
    <bullet> Prospective Payment System for Inpatient Rehabilitation, 
NTIS order number PB98-106024INZ. These reports can be ordered by 
calling the NTIS sales desk at 1-800-553-6847 or by e-mail at 
<a href="/cdn-cgi/l/email-protection#335c4157564140735d475a401d555657445c415f571d545c45"><span class="__cf_email__" data-cfemail="6d021f09081f1e2d0319041e430b08091a021f0109430a021b">[email protected]</span></a>.
    RAND found that, with limitations, the FIM-FRGs were effective 
predictors of resource use based on the proxy measurement: length of 
stay. FRGs based upon FIM motor scores, cognitive scores, and age 
remained stable over time (prediction remained consistent between the 
1990 and 1994 data). Researchers at RAND developed, examined, and 
evaluated a model payment system based upon FIM-FRG classifications 
that explains approximately 50 percent of patient costs and 
approximately 60 to 65 percent of costs at the facility level. Based on 
this analysis, RAND concluded that a rehabilitation prospective payment 
system using this model is feasible. RAND's design of a rehabilitation 
prospective payment system aimed to achieve the following three 
important goals:
    <bullet> To provide hospitals with incentives for efficiency.
    <bullet> To ensure access to high quality and appropriate care for 
all Medicare beneficiaries.
    <bullet> To distribute Medicare payments to hospitals in an 
equitable way.
    RAND needed to account adequately for each hospital's patient mix 
and for other appropriate factors that affect costs. This aspect of the 
analysis was based on the notion that Medicare should not pay hospitals 
more for inefficiency or even for a greater intensity of care than is 
typically received by patients with similar clinical characteristics 
and social support levels.
    Two technical advisory panels provided advice concerning this 
research. The first panel reviewed the reliability of the FIM scoring 
process and the second panel provided guidance on the development of 
the patient classification system. These panels raised some major 
concerns about the FIM-FRG research.
    First, the UDSmr data represented only 24 percent of IRFs and 
accounted for 40 percent of all Medicare cases in IRFs. Second, the 
UDSmr data over-represented free-standing rehabilitation hospitals and 
under-represented excluded units with a slight over-representation of 
teaching hospitals. Third, while the FIM-FRG system is a good predictor 
of length of stay, more work was needed to determine the system's 
ability to predict the intensity of services furnished during a stay. 
Fourth, hospital charges might not accurately reflect actual resource 
use in this context, so relative weights based on hospital charges 
might be distorted. This problem would be further exacerbated because 
there is evidence of unexplainable distorted charging patterns among 
facilities under the current payment limits, which have been in effect 
for a prolonged period of time.
5. Prospective Payment Assessment Commission Analysis for 1997 Report 
to Congress
    In its 1997 Report to Congress, the Prospective Payment Assessment 
Commission (ProPAC) recommended that a prospective payment system for 
IRFs based on patient case mix should be implemented as soon as 
possible. ProPAC stated that RAND's work on the FIM-FRGs could be an 
adequate basis for prospective payment, and that implementation of a 
system in the near future is feasible. (ProPAC's March 1, 1997 report 
was published as Appendix F to our proposed rule ``Medicare Program; 
Changes to the Hospital Inpatient Prospective Payment Systems and 
Fiscal Year 1998 Rates'' published in the June 2, 1997 Federal Register 
(62 FR 29902).)
    In response to this recommendation, we cited in our final rule 
``Medicare Program; Changes to the Hospital Inpatient Prospective 
Payment Systems and Fiscal Year 1998 Rates'' published in the August 
29, 1997, Federal Register (62 FR 45966), the concerns raised by the 
technical advisory panels and our review of the RAND analysis as issues 
that needed to be further addressed before implementing a prospective 
payment system using the FIM-FRG patient classification system. In 
addition, we stated that our preference is to focus on developing a 
coordinated payment system for post-acute care across all settings that 
relies on a core assessment tool. Accordingly, one of our goals in 
developing a prospective payment system would be that it is based on 
the characteristics of the patient and their needs rather than the 
characteristics or type of provider of care.

C. Requirements of the BBA and the BBRA for Inpatient Rehabilitation 
Facilities

1. Provisions for the Current Payment System
    The following BBA provisions relating to the current payment system 
were explained in detail and implemented in our final rule published in 
the August 29, 1997 Federal Register (62 FR 45966).
    Section 4411 describes the update of payments for specific fiscal 
years (FYs) using the market basket effective for cost reporting 
periods beginning on or after October 1, 1997.
    Section 4412 describes the reduction of capital payments for FYs 
1998 through 2002, effective October 1, 1997.
    Section 4413 describes the provisions for rebasing a facility's 
target amount for cost reporting periods beginning during FY 1998.
    Section 4414 describes the requirement to cap and update the rate-
of-increase limits for cost reporting periods beginning on or after 
October 1, 1997.
    Section 4415 describes the provisions regarding bonus and relief 
payments effective for cost reporting periods beginning on or after 
October 1, 1997.
    Section 4419 eliminates the exemptions from the target amounts 
effective for cost reporting periods beginning on or after October 1, 
1997.
2. Provisions for a Prospective Payment System
    Section 4421(a) of the BBA amended the Act by adding a new section 
1886(j) to the Act that provides for the implementation of a Medicare 
prospective payment system for all IRFs. For cost reporting periods 
beginning on or after the implementation date and before October 1, 
2002, payment to IRFs will be based on a blend of--(1) the amount that 
would have been paid under Part A with respect to these costs if the 
prospective payment system were not implemented and (2) the IRF Federal 
prospective payment. For cost reporting periods beginning on or after 
October 1, 2002, IRFs will be paid under the fully implemented Federal 
prospective payment system.
    Under the prospective payment system, rehabilitation facilities 
will be paid based on predetermined amounts. These prospective payments 
will encompass the inpatient operating and capital costs of furnishing 
covered rehabilitation services (that is, routine, ancillary, and 
capital costs) but not for costs of approved educational activities, 
bad debts, and other costs not subject to the provisions of the IRF 
prospective

[[Page 66310]]

payment system. Covered rehabilitation services include services for 
which benefits are provided under Part A (the hospital insurance 
program) of the Medicare program.
    Section 1886(j)(1)(A) of the Act provides that, notwithstanding 
section 1814(b) of the Act and subject to the provisions of section 
1813 of the Act regarding beneficiary deductibles and coinsurance 
responsibility, the amount of payment for inpatient rehabilitation 
hospital services equals an amount determined under section 1886(j) of 
the Act. Sections 1886(j)(1)(A)(i) and (ii) of the Act provide for a 
transition phase covering cost reporting periods that begin during the 
first two Federal fiscal years under the prospective payment system. 
During this transition phase, IRFs will receive a payment rate 
comprised of a blend of the ``TEFRA percentage'' of the amount that 
would have been paid under Part A with respect to those costs if the 
prospective payment system had not been implemented, and the 
``prospective payment percentage'' of payments using the IRF 
prospective payment system rate.
    Section 1886(j)(1)(B) of the Act sets forth a requirement 
applicable to all facilities for the payment rates under the fully 
implemented system. Notwithstanding section 1814(b) of the Act and 
subject to the provisions of section 1813 of the Act regarding 
beneficiary deductibles and coinsurance responsibility, the amount of 
the payment with respect to the operating and capital costs of a 
rehabilitation facility for a payment unit in a cost reporting period 
beginning on or after October 1, 2002, will be equal to the per unit 
payment rate established under this prospective payment system for the 
fiscal year in which the payment unit of service occurs.
    Sections 1886(j)(1)(C)(i) and (ii) of the Act set forth the 
applicable TEFRA and prospective payment rate percentages during the 
transition period. For a cost reporting period beginning on or after 
April 1, 2001 and before October 1, 2001, the ``TEFRA percentage'' is 
66\2/3\ percent and ``the prospective payment percentage'' is 33\1/3\ 
percent; and on or after October 1, 2001, and before October 1, 2002, 
the ``TEFRA percentage'' is 33\1/3\ percent and ``prospective payment 
percentage'' is 66\2/3\ percent.
    Section 1886(j)(1)(D) of the Act contains the definition of 
``payment unit.'' Until the passage of the BBRA, ``payment unit'' was 
defined by the statute as ``a discharge, day of inpatient hospital 
services, or other unit of payment defined by the Secretary''. However, 
section 125(a)(1) of the BBRA amended section 1886(j)(1)(D) of the Act 
by striking ``day of inpatient hospital services, or other unit of 
payment defined by the Secretary.'' Accordingly, the payment unit 
utilized in the IRF prospective payment system will be a discharge.
    Section 125(a)(3) of the BBRA also amended the Act by adding a new 
section 1886(j)(1)(E) to the Act that states: ``(E) CONSTRUCTION 
RELATING TO TRANSFER AUTHORITY.--Nothing in this subsection shall be 
construed as preventing the Secretary from providing for an adjustment 
to payments to take into account the early transfer of a patient from a 
rehabilitation facility to another site of care.'' We invite comments 
on the proposed transfer policy discussed in section V. of this 
preamble.
    Section 1886(j)(2)(A) of the Act, as added by the BBA, directed the 
Secretary to establish case-mix groups based on the factors as the 
Secretary deems appropriate, which may include impairment, age, related 
prior hospitalization, comorbidities, and functional capability of the 
patient. This section also requires the Secretary to establish a method 
of classifying specific patients in rehabilitation facilities within 
these groups. The BBRA amended section 1886(j)(2)(A)(i) of the Act to 
describe the classification system to read as follows: ``Classes of 
patient discharges of rehabilitation facilities by functional-related 
groups (each in this subsection referred to as a `case mix group'), 
based on impairment, age, comorbidities, and functional capability of 
the patient and such other factors as the Secretary deems appropriate 
to improve the explanatory power of functional independence measure-
function related groups.''
    Section 1886(j)(2)(B) of the Act provides that the Secretary will 
assign each case-mix group a weighting factor reflecting the facility 
resources used for patients within the group as compared to patients 
classified within other groups.
    Section 1886(j)(2)(C)(i) of the Act directs the Secretary to adjust 
``from time to time'' the case-mix classifications and weighting 
factors ``as appropriate to reflect changes in treatment patterns, 
technology, case-mix, number of payment units for which payment is made 
under this title, and other factors which may affect the relative use 
of resources.'' Such periodic adjustments shall be made in a manner so 
that changes in aggregate payments are a result of real changes in 
case-mix, not changes in coding that are unrelated to real changes in 
case-mix. Section 1886(j)(2)(C)(ii) of the Act provides that, if the 
Secretary determines that adjustments to the case-mix classifications 
or weighting factors resulted in (or are likely to result in) a change 
in aggregate payments that does not reflect real changes in case-mix, 
the Secretary shall adjust the per payment unit payment rate for 
subsequent years so as to eliminate the effect of the coding or 
classification changes.
    Section 1886(j)(2)(D) of the Act authorizes the Secretary to 
require rehabilitation facilities to submit such data as the Secretary 
deems necessary to establish and administer the IRF prospective payment 
system.
    Section 1886(j)(3)(A) of the Act describes how the prospective 
payment rate will be determined. A prospective payment rate will be 
determined for each payment unit for which an IRF is entitled to 
payment under the prospective payment system. The payment rate will be 
based on the average payment per payment unit for inpatient operating 
and capital costs of IRFs, using the most recently available data, and 
adjusted by the following factors:
    <bullet> Updating the per-payment unit amount to the fiscal year 
involved by the applicable percentage increase (as defined by section 
1886(b)(3)(B)(ii) of the Act) covering the period from the midpoint of 
the period for such data through the midpoint of fiscal year 2000 and 
by an increase factor specified by the Secretary for subsequent fiscal 
years;
    <bullet> Reducing the rate by a factor equaling the proportion of 
Medicare payments under the prospective payment system as estimated by 
the Secretary based on prospective payment amounts which are additional 
payments relating to outlier and related payments;
    <bullet> Accounting for area wage variations among IRFs;
    <bullet> Applying the case-mix weighting factors; and
    <bullet> Adjusting for such other factors as determined necessary 
by the Secretary to properly reflect variations in necessary costs of 
treatment among IRFs.
    Section 1886(j)(3)(B) of the Act directs the Secretary to establish 
IRF prospective payment system payment rates during fiscal years 2001 
and 2002 at levels such that, in the Secretary's estimation, total 
payments under the new system will equal 98 percent of the amount that 
would have been made for operating and capital costs in those years if 
the IRF prospective payment system had not been implemented. In 
establishing these payment amounts, the Secretary shall consider the 
effects of

[[Page 66311]]

the prospective payment system on the total number of payment units 
from IRFs and other factors.
    Section 1886(j)(3)(C) of the Act addresses the annual increase 
factor, to be applied beginning with FY 2001. This factor shall be 
based on an appropriate percentage increase in a market basket of goods 
and services comprising services for which payment is made under 
section 1886(j) of the Act.
    Under section 1886(j)(4)(A) of the Act, the Secretary is authorized 
but not required to provide for an additional payment to a 
rehabilitation facility for patients in a case-mix group, based upon 
the patient being classified as an outlier based on an unusual length 
of stay, costs, or other factors specified by the Secretary. The amount 
of the additional payment must approximate the marginal cost of care 
above what otherwise would be paid and must be budget neutral. The 
total amount of the additional payments to IRFs under the prospective 
payment system for a fiscal year may not be projected to exceed 5 
percent of the total payments based on prospective payment rates for 
payment units in that year.
    Section 1886(j)(4)(B) of the Act establishes that the Secretary is 
authorized but not required to provide for adjustments to the payment 
amounts under the prospective payment system as the Secretary deems 
appropriate to take into account the unique circumstances of IRFs 
located in Alaska and Hawaii.
    Section 1886(j)(5) of the Act provides for the Secretary to publish 
in the Federal Register, on or before August 1 of each fiscal year, the 
classifications and weighting factors for the IRF case-mix groups and a 
description of the methodology and data used in computing the 
prospective payment rates for that fiscal year.
    Section 1886(j)(6) of the Act provides that the Secretary shall 
adjust the proportion (as estimated by the Secretary from time to time) 
of IRFs' costs that are attributable to wages and wage-related costs, 
of the prospective payment rates for area differences in wage levels by 
a factor (established by the Secretary) reflecting the relative 
hospital wage level in the geographic area of the IRF compared to the 
national average wage level for such facilities. Additionally, the 
Secretary is required to make a budget-neutral update to the area wage 
adjustment factor no later than October 1, 2001, and at least once 
every 36 months thereafter. The budget neutral update is based on 
information available to the Secretary (and updated as appropriate) of 
the wages and wage-related costs incurred in furnishing rehabilitation 
services.
    Sections 1886(j)(7)(A), (B), (C) and (D) of the Act establish that 
there shall be no administrative or judicial review under sections 1869 
and 1878 of the Act or otherwise of the establishment of case-mix 
groups, of the methodology for the classification of patients within 
these groups, the weighting factors, the prospective payment rates, 
outlier and special payments and area wage adjustments.
    Section 125(b) of the BBRA provides that the Secretary shall 
conduct a study of the impact on utilization and beneficiary access to 
services of the implementation of the IRF prospective payment system. A 
report on the study must be submitted to the Congress not later than 3 
years after the date the IRF prospective payment system is first 
implemented.

D. Policy Objectives in Developing a Prospective Payment System for 
Inpatient Rehabilitation Facilities

    In developing the prospective payment system for IRFs, we 
identified policy objectives to evaluate the relative merits of the 
various policy options considered. The objectives we identified include 
the following:
    <bullet> The creation of a beneficiary-centered payment system that 
promotes quality of care, access to care, and continuity of care and is 
administratively feasible while controlling costs.
    <bullet> The provision of incentives to furnish services as 
efficiently as possible without diminishing the quality of the care or 
limiting access to care.
    <bullet> The creation of a payment system that is fair and 
equitable to facilities, beneficiaries, and the Medicare program.
    <bullet> The IRF prospective payment system must be able to 
recognize legitimate cost differences among various settings furnishing 
the same service; and any patient classification system used to group 
patients and services should be based on clinically coherent categories 
and, at the same time, reflect similar resource use. This would limit 
opportunities to ``upcode'' or ``game'' the system.
    In its March 1999 Report to the Congress, MedPAC recommended in 
detail the type of prospective payment system it believed should be 
implemented for IRFs. As will be discussed further in this proposed 
rule, MedPAC's recommendations share much with our approach and policy 
objectives for the development of an IRF prospective payment system. 
Both HCFA and MedPAC believe the IRF prospective payment system should 
include the use of a comprehensive patient assessment instrument such 
as the MDS-PAC. HCFA and MedPAC both seek sufficient data to devise a 
patient classification system that effectively predicts resource use. 
HCFA and MedPAC believe the prospective payment system should be based 
on reliable and valid payment weights using functional and other 
diagnostic data. We agree with MedPAC's recommendation to use a per 
discharge unit of payment. Also, there is a shared belief that a 
discharge-based system provides an inherent incentive to discharge 
patients prematurely, and that this impetus could be overcome by 
implementing sound transfer and short-stay policies as part of the 
prospective payment system. Accordingly, we have taken steps to 
initiate the appropriate research to meet our immediate needs in 
developing this proposed rule and in implementing an IRF prospective 
payment system, as well as to collect data for the future that may 
reflect actual facility resources used to meet the needs of Medicare 
beneficiaries.

E. Discussion of Evaluated Options for the Prospective Payment System 
for Inpatient Rehabilitation Facilities

    We used the objectives identified above in section I.D. of the 
preamble to evaluate policy options under consideration. The IRF 
prospective payment system we are proposing consists of the following 
major components: the patient assessment instrument; the patient 
classification system; the unit of payment; and the data used to 
construct the payment rates. A brief discussion of the major issues and 
options considered in preparing this proposed rule follows.
1. Patient Assessment Instrument
    Data from a patient assessment instrument will allow us to: (1) 
Group patients into a CMG for payment under the prospective payment 
system; and (2) monitor the effects the prospective payment system has 
on the access and the quality of patient care. We have reviewed the 
data elements of the UDSmr and COS instruments and the MDS-PAC. We are 
proposing to use the MDS-PAC because we believe it contains the data 
elements that will better enable us to implement and administer the IRF 
prospective payment system required by section 1886(j) of the Act. In 
section III of this preamble, we will discuss in detail the reasons for 
our proposal to use the MDS-PAC patient assessment instrument.

[[Page 66312]]

2. Patient Classification System
    The patient classification system is another important component of 
the prospective payment system. We initially considered two primary 
patient classification systems--one similar to the hospital inpatient 
prospective payment system and the other similar to the one used in the 
skilled nursing facility prospective payment system. Ideally, we would 
like to maintain similar classification systems for those entities 
delivering comparable services. We recognize a unified classification 
system would have to recognize patient needs and facilitate appropriate 
compensation across various post-acute care settings. Section 125(a) of 
the BBRA mandated the use of a per discharge payment unit and 
established classes of patients by functional-related groups. 
Therefore, in implementing the IRF prospective payment system we will 
use CMGs, consistent with section 1886(j)(2) of the Act.
3. Unit of Payment
    Under the provisions of section 1886(j)(1)(D) as added by the BBA, 
we considered using either a per diem or a per discharge unit of 
payment. The vast majority of rehabilitation episodes begin with an 
acute event. The goal of inpatient rehabilitation is functional 
improvement that will allow the patient to return to independent living 
in the community, and, as evidenced by ongoing research, the majority 
of cases are, in fact, discharged to a community setting. Further, a 
discharge is also the current unit of payment under the TEFRA payment 
system. Finally, as noted above, the BBRA amends the Act to provide 
that the ``payment unit'' under the IRF prospective payment system is 
the discharge. Therefore, we propose to use a per discharge payment 
unit in accordance with section 1886(j)(1)(D) of the Act.
4. Data Used to Construct Payment Rates
    We gave careful consideration in deciding which data to use to 
create the proposed relative weights and payment rates. Two sources of 
data were considered: (1) Medicare bill and corresponding UDSmr/COS 
data; and (2) patient level staff time measurements. The methodology we 
are proposing to use to calculate the relative weights of each CMG 
attempts to account for the cost variations among rehabilitation 
facilities and focus on variations among patient types. Further, the 
payment rates we are proposing are established in a budget neutral 
manner in accordance with section 1886(j)(3)(B) of the Act. Section V 
of the preamble describes the methodology that we are proposing to use 
to develop relative weights and payment rates.
    Under the current payment system, payment limits are based on 
historical costs in a base period. Accordingly, payments to a given 
facility for a given year might not accurately reflect the facility's 
actual costs in that year. Creating a new payment system based on costs 
that are a product of the existing payment methodology raises concerns 
that these costs may not adequately reflect actual resource use. In 
order to develop a prospective payment system that is more reflective 
of the actual costs of delivering care, further work is needed to 
identify these costs and the services and resources required by 
patients. The IRF data from calendar years 1996 and 1997 bills and FY 
1997 cost reports contain the most recent available data we have to 
create the new IRF prospective payment system rates.
    We will continue to explore other options, including the use of 
staff time measurements, later Medicare bill and UDSmr/COS data, and 
other data to improve the explanatory power of the CMGs and to derive 
payments that more directly reflect the resources used to produce 
services delivered in the IRFs.

F. Inpatient Rehabilitation Facility Prospective Payment System--
General Overview

    In accordance with the requirements of section 1886(j) of the Act, 
we are proposing to implement a prospective payment system for IRFs 
that will replace the current reasonable cost-based payment system. The 
new prospective payment system will utilize information from a patient 
assessment instrument to classify patients into distinct groups based 
on clinical characteristics and expected resource needs. Separate 
payments are calculated for each group with additional case and 
facility level adjustments applied, as described below.
1. Patient Assessment Provisions
    We are proposing to require IRFs to complete the MDS-PAC patient 
assessment instrument for all Medicare patients admitted or discharged 
on or after April 1, 2001. In accordance with our proposed assessment 
schedule, the MDS-PAC would be completed on the 4th, 11th, 30th, and 
60th day from the admission date of a Medicare patient and upon the 
discharge of a Medicare patient. In general, a 3-day observation period 
would be required prior to the completion of the MDS-PAC. Data from the 
MDS-PAC will be used to--
    <bullet> Determine the appropriate classification of a Medicare 
patient into a CMG for payment under the prospective payment system 
(using data from only the MDS-PAC completed on the fourth day);
    <bullet> Implement a system to monitor the quality of care 
furnished to Medicare patients; and
    <bullet> Ensure that appropriate case-mix and other adjustments can 
be made to the proposed patient classification system.
    A computerized MDS-PAC data collection system will be developed. 
Facilities will be required to input the MDS-PAC data into the data 
system. In general, this system consists of a computerized patient 
grouping software program (grouper software) and data transmission 
software.
    Upon the discharge of the patient, the existing Medicare claim form 
will be completed with the appropriate CMG indicated on the claim form 
so that the prospective payment can be made. The operational aspects 
and instructions for completing and submitting Medicare claims under 
the IRF prospective payment system will be addressed in a Medicare 
Program Memorandum once the final system requirements are developed and 
implemented.
    Further details about the MDS-PAC patient assessment instrument and 
data collection system are discussed in section III of this preamble.
2. Patient Classification Provisions
    We are proposing a patient classification system that uses case-mix 
groups called CMGs. The CMGs classify patient discharges by functional-
related groups based on a patient's impairment, age, comorbidities, and 
functional capability. We began the development of the CMGs by using 
the FIM-FRG classification system and, with the most recent data 
available, we identified clinical aspects of the FIM-FRG system that 
could be improved to increase the ability of the CMGs to predict 
resource use. Further details of the proposed CMG classification system 
are discussed in section IV of this preamble.
3. Payment Rate Provisions
    The payment unit for the proposed IRF prospective payment system 
for Medicare patients will be a discharge. The payment rates will 
encompass inpatient operating and capital costs of furnishing covered 
inpatient rehabilitation hospital services, including routine, 
ancillary, and capital costs, but not the costs of bad debts or of 
approved educational activities.
    Beneficiaries may be charged only for deductibles, coinsurance 
amounts, and

[[Page 66313]]

non-covered services (for example, telephone, and television, etc.). 
They may not be charged for the differences between the hospital's cost 
of providing covered care and the proposed Medicare prospective payment 
amount.
    The prospective payment rates that we are proposing to implement 
are determined using relative weights to account for the variation in 
resource needs among CMGs. We would adjust the payment rates to account 
for area differences in hospital wages. We would update the per 
discharge payment amounts annually. During FYs 2001 and 2002, the 
prospective payment system will be ``budget neutral'', in accordance 
with the statute. That is, total payments for IRFs during these fiscal 
years will be projected to equal 98 percent of the amount of payments 
that would have been paid for operating and capital costs of IRFs had 
this new payment system not been enacted. This is discussed in detail 
in section V of this preamble.
    Based on our analysis of the data, we are proposing to adjust the 
payment rates for facilities located in rural areas and for costs 
associated with treating low income patients.
    We are proposing to make additional payments to IRFs for discharges 
meeting specified criteria as ``outliers.'' For the purposes of this 
proposed rule, outliers are cases that have unusually high costs when 
compared to the cases classified in the same CMG. We are proposing 
outlier payments that are projected to equal 3 percent of total 
estimated payments.
    In conjunction with an outlier policy, we are proposing payment 
policies regarding short stay cases and for cases that expire. In 
addition, we are proposing to implement a transfer policy, consistent 
with section 1886(j)(1)(E) of the Act, as added by the BBRA. (A 
detailed description of these policies appears in section V of the 
preamble.)
4. Implementation of the Prospective Payment System
    The statute provides for a 2-year transition period. During that 
time, 2 payment percentages will be used to determine an IRF's total 
payment under the prospective payment system as follows. For a cost 
reporting period beginning on or after April 1, 2001 and before October 
1, 2001, the total prospective payment will consist of 66\2/3\ percent 
of the amount based on the current payment system and 33\1/3\ percent 
of the proposed Federal prospective payment. For a cost reporting 
period beginning during FY 2002, the total prospective payment will 
consist of 33\1/3\ percent of the amount based on the current payment 
system and 66\2/3\ percent of the proposed Federal prospective payment. 
For cost reporting periods beginning on or after October 1, 2002, 
Medicare payment for IRFs will be determined entirely under the 
proposed Federal prospective payment methodology.

G. Applicability of the Inpatient Rehabilitation Facility Prospective 
Payment System

    This proposed rule would not change the criteria for a hospital or 
hospital unit to be classified as a rehabilitation hospital or a 
rehabilitation unit that is excluded from the hospital prospective 
payment systems under sections 1886(d) and 1886(g) of the Act, nor 
would it revise the survey and certification procedures applicable to 
entities seeking this classification. Accordingly, for cost reporting 
periods beginning on or after April 1, 2001, hospitals or hospital 
units that are classified as rehabilitation hospitals or rehabilitation 
units under subpart B of part 412 of the regulations will be paid under 
the proposed IRF prospective payment system (except for IRFs that are 
paid under the special payment provisions at Sec. 412.22(c) of the 
regulations) as described below.
    The following rehabilitation hospitals and rehabilitation units, 
that are currently paid under section 1886(b) of the Act, would be paid 
under the proposed IRF prospective payment system for cost reporting 
periods beginning on or after April 1, 2001:
1. Excluded Rehabilitation Hospitals and Rehabilitation Units
    We are proposing that the IRF prospective payment system apply to 
inpatient rehabilitation services furnished by Medicare participating 
entities that are classified rehabilitation hospitals or rehabilitation 
units under Secs. 412.22, 412.23, 412.25, 412.29 and 412.30.
2. Excluded Rehabilitation Hospitals and Rehabilitation Units Outside 
the 50 States and the District of Columbia
    Excluded rehabilitation hospitals and rehabilitation units located 
in Puerto Rico, Guam, the Virgin Islands, American Samoa, the Northern 
Marianas, and the District of Columbia will be subject to the IRF 
prospective payment system.
    The following hospitals are paid under special payment provisions, 
as described in Sec. 412.22(c), and, therefore, are not subject to the 
proposed IRF prospective payment system rules:
    <bullet> Veterans Administration hospitals.
    <bullet> Hospitals that are reimbursed under State cost control 
systems approved under 42 CFR part 403.
    <bullet> Hospitals that are reimbursed in accordance with 
demonstration projects authorized under section 402(a) of Public Law 
90-248 (42 U.S.C. 1395b-1) or section 222(a) of Public Law 92-603 (42 
U.S.C. 1395b-1 (note)).

II. Current Research To Support the Establishment of the Inpatient 
Rehabilitation Prospective Payment System--Update of the RAND 
Analysis

A. Overview of the Updated Work for the Proposed Rule

    In July 1999, we contracted with the RAND Corporation (RAND) to 
update their previous research discussed in section I of this proposed 
rule. The update included an analysis of FIM data, the FRGs, and the 
model rehabilitation prospective payment system using more recent data 
from a greater number of IRFs. The purpose of updating the previous 
research is to develop the underlying data necessary to assist us in 
designing, developing, implementing, monitoring, and refining the 
proposed Medicare IRF prospective payment system based on case-mix 
groups. In addition, RAND expanded the scope of their previous research 
to include the examination of several payment elements, such as 
comorbidities and facility-level adjustments, as well as focus on 
implementation issues, including evaluation and monitoring. The update 
is restricted to Medicare patient data and the payment system is 
designed for payment of Medicare inpatient operating and capital costs 
only.
    Specifically, for this proposed rule, RAND performed the following 
tasks:
    <bullet> Constructed an updated data file, using the most recent 
data available from UDSmr, COS, HCFA, and other data sources.
    <bullet> Determined the extent to which the UDSmr and COS data are 
representative of the Medicare population.
    <bullet> Identified factors or variables that may be used to help 
us design and implement the payment system.
    <bullet> Developed data on the elements of the payment system 
regarding the patient classification system, relative weights and 
payment rates for each case-mix group, facility-level adjustments, and 
patient-level adjustments.
    <bullet> Developed data to examine the joint performance of all of 
the payment system elements by simulating facility payments for our 
analysis of the impact of implementing the payment system.

[[Page 66314]]

    <bullet> Developed data to assist in identifying specific issues in 
connection with implementing the payment system.
    <bullet> Presented options regarding the design and development of 
a system to monitor the effects of the payment system and other changes 
in the health care market on IRFs and on other post-acute care 
providers, including home health agencies and skilled nursing 
facilities, by measuring factors such as access, utilization, quality, 
and cost of care.

B. Construction of Data File for Analysis

    Using the methodology in its previous research, RAND constructed a 
data file that was used to develop the proposed CMG patient 
classification system and the resulting payment weights, rates, and 
payment adjustments using more recent data. The analysis of this data 
file forms the basis of our discussion on the patient classification 
methodology and the structure of the payment system proposed in this 
rule. We expect that further analysis of the data file and review of 
the comments that we receive in response to this proposed rule may 
result in refinements to some patient CMGs and corresponding weights 
and rates.

C. Description of Sources of the Data File

    The essential sources of the data file are Medicare program 
information and patient case-mix data. The Medicare program information 
includes patient discharge files (patient demographic, clinical, and 
financial information) and facility-level files (facility 
characteristics and financial information). Patient case-mix data is 
collected by IRFs using a patient assessment instrument. We are 
proposing to require the use of the MDS-PAC patient assessment 
instrument that includes patient case-mix data similar to the data 
collected on the UDSmr and COS, as described in section III of this 
preamble. However, the availability of MDS-PAC data records is limited 
to the sample of providers that participated in the pilot and field 
tests during its development. Therefore, to initially establish the IRF 
prospective payment system, we will be using a larger number of data 
records (as compared to the 1994 data used in RAND's previous study) 
from UDSmr and COS to represent more adequately the total number of 
IRFs.
1. Medicare Program Data
    For this proposed rule, RAND used calendar year 1996 and 1997 
Medicare Provider Analysis and Review (MEDPAR) files. The MEDPAR file 
contains the records for all Medicare hospital inpatient discharges 
(including discharges for rehabilitation facilities). The data in the 
MEDPAR file include patient demographics (age, gender, race, residence 
zip code), clinical characteristics (diagnoses and procedures), and 
hospitalization characteristics (admission date, discharge date, days 
in intensive-care wards, charges by department, and payment 
information).
    The Medicare cost report data is contained in the Health Care 
Provider Cost Report Information System (HCRIS). The cost report files 
contain information on facility characteristics, utilization data, and 
cost and charge data by cost center. For this proposed rule, RAND used 
the HCRIS file containing the most current available cost data for cost 
reporting periods beginning during FYs 1996 and 1997. Supplementary 
information to this file includes--(1) The wage data for the area in 
which an IRF is located, (2) data on the number of residents assigned 
to rehabilitation units and the distribution of resident time across 
inpatient and outpatient settings, (3) data on the number of Medicare 
cases at each IRF that represent Supplemental Security Income (SSI) 
beneficiaries, and (4) information about payments under the current 
reasonable cost payment system.
    The Online Survey, Certification and Reporting System (OSCAR) file 
retains a list of all IRFs that are currently Medicare certified. For 
this proposed rule, RAND used the OSCAR file to identify instances in 
which we may be missing facility-level data.
2. Patient Case-Mix Data
    We entered into agreements with the University at Buffalo 
Foundation Activities, Inc. and Caredata.com, Inc. to retrieve UDSmr 
and COS data, respectively, for RAND's updated research. For this 
proposed rule, RAND used both UDSmr and COS data that describe 
rehabilitation stays in participating hospitals for calendar years 1996 
and 1997. The data include demographic descriptions of the patient 
(birth date, gender, zip code, ethnicity, marital status, living 
setting), clinical descriptions of the patient (condition requiring 
rehabilitation, ICD-9-CM diagnoses, functional independence measures at 
admission and discharge) and the hospitalization data (encrypted 
hospital identifier, admission date, discharge date, charges, payment 
source, and an indicator of whether this is the first rehabilitation 
hospitalization for this condition, a readmission, or a short stay for 
evaluation).

D. Description of the Methodology Used To Construct the Data File

    Under a separate contract, we contracted with RAND in September 
1998 to construct a data file that linked the 1996 and 1997 UDSmr and 
COS patient records with patient records on the respective MEDPAR files 
that describe the same discharge. Under this contract, RAND determined 
the Medicare provider number(s) that correspond to each UDSmr/COS 
facility code. Next, RAND matched the UDSmr/COS and MEDPAR patients 
within the paired facilities.
    Because of the proprietary and sensitive nature of the UDSmr and 
COS patient records, certain data fields that specifically identify the 
patient and the servicing IRF were encrypted. Therefore, as in RAND's 
previous study (see section I of this preamble), it was necessary to 
subject the UDSmr, COS, and MEDPAR records to a sophisticated and 
complex matching probability technique. The result produces the most 
statistically valid match of patient/facility records and a data file 
that contains the characteristics of each Medicare beneficiary and his 
or her servicing IRF.
    Because of the complex scope and nature of the matching technique 
used, we have included in Appendix A of this proposed rule a technical 
discussion of each step taken to create the data file. The tables 
contained in Appendix A show the actual effects of applying the 
matching technique on both the patient and facility records.

E. Representativeness of the Data File

    It is extremely important to examine the quality of the resulting 
match, including the extent to which the linked MEDPAR and UDSmr/COS 
records are representative of the MEDPAR universe. After constructing 
the data file described in Appendix A, we believe that the file 
contains the best available data to construct a prospective payment 
system for all IRFs within the parameters of the statutory 
requirements. Our analysis of the data file allows us to develop the 
proposed CMG patient classification and payment system, described below 
in sections IV and V of this preamble.

F. Analyses To Support Future Adjustments to the Payment System

    The principal goal of the analysis described above is to determine 
the extent to which measurable patient characteristics permit 
classification of patients into identifiable groups that accurately 
predict the use of resources in inpatient rehabilitation facilities. 
The

[[Page 66315]]

research to date indicates that CMGs are effective predictors of 
resource use as measured by proxies such as length of stay and charges. 
The use of these proxies is necessary because data that measures actual 
nursing and therapy time spent on patient care, and other resource use 
data, are not available. The scientifically structured collection of 
data on patient characteristics and patient-specific resource use may 
enhance our ability to refine the CMGs in a manner that supports our 
policy objectives for implementing a IRF prospective payment system. 
Accordingly, we have contracted with Aspen Systems Corporation to 
collect actual resource use data in a sample of IRFs. The data 
collected by Aspen will be submitted to RAND for analysis to determine 
if it can be used to support future refinements to the CMGs.

III. The Minimum Data Set for Post-Acute Care (MDS-PAC) Patient 
Assessment Instrument

A. Implementation of the MDS-PAC

    Under section 1886(j)(2)(D) of the Act, ``The Secretary is 
authorized to require rehabilitation facilities that provide inpatient 
hospital services to submit such data as the Secretary deems necessary 
to establish and administer the prospective payment system under this 
subsection.'' The collection of patient data is indispensable for the 
successful development and implementation of the IRF prospective 
payment system. A comprehensive, reliable system for collecting 
standardized patient assessment data is necessary for: (1) The 
objective assignment of Medicare beneficiaries to appropriate IRF CMGs; 
(2) the development of a system to monitor the effects of an IRF 
prospective payment system on patient care and outcomes; (3) the 
determination of whether future adjustments to the IRF CMGs are 
warranted; and (4) the development of an integrated system for post-
acute care in the future.
    The MDS-PAC is the standardized patient assessment instrument we 
are proposing to use under the IRF prospective payment system. We 
acknowledge that the nature of the patient data we would collect may 
evolve over time. We believe that the present structure of independent 
Medicare post-acute benefits, which includes payment systems, coverage 
requirements, and quality assessment instruments based primarily on 
site of care, may provide incentives that result in reduced access and 
choice for beneficiaries and may contribute to inappropriate care. As a 
result of this fragmentation in the payment and delivery of post-acute 
care under Medicare, we are reevaluating the payment and delivery of 
post-acute services with the objective of developing a more integrated 
approach focusing on the entire post-acute episode of care and each 
patient's care needs regardless of setting. We believe the MDS-PAC will 
help to move Medicare toward our long term objective of creating a more 
integrated post acute care payment and delivery system that facilitates 
improved quality, choice and access to care for beneficiaries.
    Our goal of ultimately establishing a common system to assess 
patient characteristics and care needs for post-acute providers was 
endorsed by MedPAC in its March 1999 report to the Congress. MedPAC 
recommended that the Secretary collect a core set of patient assessment 
information across all post-acute settings. (Recommendation 5A). In the 
narrative supporting this recommendation, MedPAC ``commends HCFA's 
development of the MDS-PAC and encourages its refinement and use. The 
instrument will facilitate greatly comparisons of patient 
characteristics and service use across inpatient post-acute settings. 
Insights gleaned from these data should inform future prospective 
payment system policies, as well as longer term policy considerations 
about post-acute care.'' We share MedPAC's opinion of the utility of a 
common patient data system across post-acute settings. We believe that 
future refinements in the design and application of the MDS-PAC will 
provide us with essential information to inform policy decisions 
related to post-acute care users and their characteristics, quality, 
and payment.
    The implementation of the per-case prospective payment system based 
on the ``functional-related group'' methodology requires the use of a 
standardized data collection instrument that contains the elements 
required to classify a patient into a distinct CMG. To classify a 
patient into a distinct CMG the data collection instrument must first 
assign the patient into one of the various high level categories that 
are based principally on ICD-9-CM diagnoses plus some additional 
patient information. These high level categories are called 
Rehabilitation Impairment Categories. After that initial classification 
step a patient's comorbidity data (which is also based on the ICD-9-CM 
codes), the level of the patient's impairment as determined by the 
patient's motor and cognitive function scores, and the age of the 
patient are used to classify a patient into a distinct CMG within the 
higher level Rehabilitation Impairment Group. Additional data elements 
are required to identify the patient and for monitoring the quality of 
care furnished to patients in IRFs.
    Several approaches to the collection of these data elements are 
available. These include--(a) the development of a new data collection 
instrument, the MDS-PAC (as proposed in this rule); (b) adoption of an 
instrument closely modeled on the Uniform Data Set for Medical 
Rehabilitation (UDSmr) and the Caredata.com Clinical Outcome Set (COS) 
that would contain the needed data elements exactly as they have been 
recorded in the past and as used in the development of the FIM-FRG 
classification of patients; and (c) the incorporation verbatim into the 
new instrument (MDS-PAC) of the UDSmr/COS data elements that are 
relevant to payment. We are proposing the first option, the MDS-PAC, 
for the reasons outlined in the section below.
1. Use of MDS as Foundation
    The basis of the MDS-PAC system is the Minimum Data Set (MDS)/
Resident Assessment Instrument (RAI). The MDS/RAI was one of the key 
provisions of the nursing home reform legislation enacted by the 
Omnibus Budget Reconciliation Act of 1987 (OBRA), Pub. L. 100-203, and 
the first standardized assessment instrument that the Congress required 
to be used in a post-acute care setting. The MDS is a core set of 
screening and assessment elements, including common definitions and 
coding categories, which forms the foundation of a comprehensive 
assessment (the RAI). OBRA mandated that we develop the MDS and require 
its use for all residents of certified long-term care facilities as a 
condition of participating in Medicare or Medicaid.
    We originally implemented the MDS/RAI in 1990 through 1991 in the 
approximately 17,000 certified long-term care facilities nationwide. 
The MDS/RAI has been used by long-term care facilities to assess all 
residents at specific points during their stay, regardless of payer 
source. Residents are assessed upon admission to the facility, after 
experiencing a significant change, and at least annually, with a review 
of key items required every 90 days. Regulations requiring all 
certified long-term care facilities to encode and transmit MDS data to 
the State and HCFA became effective June 22, 1998 ((62 FR 67174) 
``Resident Assessment In Long Term Care Facilities''). As of March 3, 
2000, there were 23,829,196 records for 4,576,748 residents submitted 
to our national MDS repository.

[[Page 66316]]

    Long-term care facilities use the assessment system as the basis of 
developing an individualized plan of care. However, the design of our 
long-term care facility payment and quality of care systems relies on 
use of the resident characteristic, health status, and service use 
information derived from the MDS to support a number of our programs. 
For example, the SNF prospective payment system implemented in July 
1998 relies on MDS data to classify patients into the appropriate case-
mix categories. In addition, in July 1999, we began to use MDS data to 
generate quality indicators for use in the long-term care facility 
survey process. Also, long-term care facilities may request real-time 
MDS-based quality indicator reports, from the HCFA-sponsored State-
level MDS data system, that compare the facility's performance in key 
care areas with the performance of other facilities within the State. 
These reports can be used for internal quality assurance and 
improvement activities. Our Peer Review Organizations (PROs) are using 
MDS data to conduct long-term care facility quality improvement 
activities in a number of areas, including pain management, pressure 
ulcers, and urinary incontinence.
    In keeping with our commitment to the nursing home industry to 
refine the MDS/RAI system over time to incorporate advances in 
assessment technology and changes in the nursing home population, we 
developed a second generation instrument, known as the MDS version 2. 
The MDS 2 was implemented nationally in 1996. Shortly thereafter, we 
agreed to begin work on a post-acute version of the MDS, in response to 
the long-term care industry's concerns that the MDS had not been 
constructed to address the characteristics and needs of the increasing 
numbers of short stay patients admitted to SNFs for rehabilitation and 
medically complex care.
    Before we started work on the MDS-PAC, however, we made a policy 
decision that our goal was to establish a common instrument to assess 
patients receiving services by all Medicare institutional post-acute 
providers. This broadened the scope of the instrument to include 
freestanding rehabilitation hospitals and hospital-based rehabilitation 
units, as well as long-term care hospitals. Our policy decision was 
based on a belief that there is considerable overlap among the patient 
populations and services rendered by post-acute care providers. The 
March 1999 MedPAC report to Congress indicated that prior distinctions 
in the types of patients and services provided across settings have 
become less clear for a number of reasons (p. 82), and that lack of 
uniform patient-level data across settings severely restricts our 
ability to identify where differences and overlaps occur.
    This hypothesis regarding the overlap of patient populations was 
tested by collecting MDS 2 data for patients of rehabilitation and 
long-term care hospitals and comparing that data with MDS records for 
SNF patients. The SNF database included records for long-stay nursing 
home residents who had been readmitted after a hospitalization and now 
qualified for a period of skilled care. There were 1,535 SNF patient 
records collected from initial MDS assessments in 1996. Of these 
patient records, 517 (34 percent) of the patients were expected to be 
discharged within 30 days of admission. An additional 248 (16 percent) 
were expected to be discharged in 31 to 90 days. For the remaining 
patient records, discharge status was unknown, not anticipated or (in a 
limited number of cases) the discharge variable was missing. This 
activity was also conducted in order to provide us with information 
about the characteristics, health status, and service utilization of 
rehabilitation and long-term care hospital patients, as part of our 
initial activities to inform development of the MDS-PAC.
    Staff from participating rehabilitation hospitals, rehabilitation 
units of acute care hospitals, and long-term care hospitals were 
trained in the use of the MDS 2.0, and were asked to complete it for a 
sample of their newly admitted patients during June through October 
1998. Data were received for 614 patients in 26 rehabilitation 
hospitals and units, and for 479 patients in 26 long-term care 
hospitals. Of the 52 providers participating in the baseline data 
collection, 38 were recruited using a random sample of Medicare-
certified providers.
    We found many similarities in the characteristics, health status, 
medical diagnoses, and service utilization patterns of SNF and 
rehabilitation hospital patients. We note that our focus groups 
indicated to us that many rehabilitation hospitals and self-proclaimed 
``subacute'' SNFs have as a criteria for admission the patient's 
potential ability to be discharged from the facility within a certain 
time period. Thus, for comparative purposes we differentiated between 
the MDS records of SNF patients expected to be discharged and those of 
SNF patients not expected to be discharged. As illustrated below by 
Table 1C, patients in rehabilitation hospitals and SNF patients who 
were expected to be discharged demonstrated similar levels of activity 
of daily living (ADL) overall impairment, as measured by the MDS 2, 
while a greater number of SNF patients who were not expected to be 
discharged experienced impairment in ``late loss'' ADLs or were fully 
dependent.

                       Table 1C.--Percent of Patients With ADL Impairment by Facility Type
----------------------------------------------------------------------------------------------------------------
                                                                       Rehab      SNF  discharge  SNF  discharge
            ADL score (hierarchical)               LTC  hospital     hospital         expected      not expected
----------------------------------------------------------------------------------------------------------------
0--Independent..................................             3.1              .8             4.2             3.4
1--Supervision..................................             4.4             9.5             6.5             5.6
2--Limited......................................            12.8            25.4            29.3            17.9
3--Early Loss ADL--extensive or dependent.......             4.2            14.8             8.2             9.8
4--Mid late loss ADL--extensive assistance late              8.0            21.1            20.9            15.9
 loss ADL.......................................
5--Mid late-some late loss ADL dependency.......            34.8            22.5            27.3            33.8
6--Full dependency..............................            32.9             5.9             3.7            13.5
----------------------------------------------------------------------------------------------------------------

    In addition, fewer SNF patients were reported to have symptoms of 
delirium as compared to rehabilitation hospital patients. While the 
number of SNF patients not expected to be discharged who experienced 
memory problems was higher, the overall cognitive performance score (a 
composite measure based on several MDS items) for patients across the 
four populations was remarkably similar, except for the higher number 
of long-term care hospital patients rated as a ``6'' (that is, very 
severely cognitively impaired). A comparison of cognitive impairment by 
facility type can be seen in Table 2C.

[[Page 66317]]



                    Table 2C.--Percent of Patients with Cognitive Impairment by Facility Type
----------------------------------------------------------------------------------------------------------------
                                                                       Rehab      SNF  discharge  SNF  discharge
                    Condition                      LTC  hospital     Hospital         expected      not expected
----------------------------------------------------------------------------------------------------------------
                                             Delirium Symptoms--New
----------------------------------------------------------------------------------------------------------------
Easily Distracted...............................            12.0            15.4             3.1             1.7
Altered Perceptions.............................             9.7             5.9             2.6             2.2
Disorganized Speech.............................             8.8            10.5             2.4             2.2
Restlessness....................................            13.6             8.9             2.0             3.0
Lethargy........................................            14.4             9.2             4.0             4.0
Mental Function Varies..........................            17.2            13.5             5.2             4.0
----------------------------------------------------------------------------------------------------------------
                                           Cognitive Performance Scale
----------------------------------------------------------------------------------------------------------------
0=Intact........................................            40.5            49.3            46.0            17.9
1=Borderline Intact.............................            14.3            13.6            16.7            17.6
2=Mild..........................................             7.2            10.2            12.0            11.3
3=Moderate......................................             9.1            13.0            16.3            26.2
4=Moderate Severe...............................             4.0             3.3             4.1            10.5
5=Severe........................................             3.0             5.7             3.3             6.9
6=Very Severe...................................            21.9             4.9             1.6             9.6
----------------------------------------------------------------------------------------------------------------
                                                     Memory
----------------------------------------------------------------------------------------------------------------
Memory Problem--short term......................            32.8            36.2            37.0            61.0
Memory Problem--long-term.......................            29.9            23.0            23.1            46.2
Memory Problem--situational.....................            37.5            12.4
----------------------------------------------------------------------------------------------------------------

    We did not find significant differences across care settings in 
many of the disease diagnoses recorded in section I of the MDS, 
although long-term care hospital patients had more cases of diabetes, 
cardiac dysrhythmia, post heart surgery, peripheral vascular disease, 
paraplegia, respiratory conditions, renal failure, and antibiotic-
resistant infections (Table 3C).

                    Table 3C.--Percent of Patients With Specific Conditions by Facility Type
----------------------------------------------------------------------------------------------------------------
                                                                       Rehab       SNF discharge   SNF discharge
                    Condition                      LTC  hospital     hospital        expected      not expected
----------------------------------------------------------------------------------------------------------------
                                                    Diseases
----------------------------------------------------------------------------------------------------------------
Diabetes........................................            37.0            25.0            27.0            24.2
Hyperthyroidism.................................             0.4             0.7             0.7             0.3
Hypothyroidism..................................             9.0             8.2             8.0             6.8
Arteriosclerotic heart disease..................            17.3            14.7            15.7            18.3
Cardiac dysrhythmia.............................            21.1            11.3            14.7            17.2
Post heart surgery..............................            24.0            13.0             6.9             6.2
CHF.............................................            23.0             8.5            21.6            22.9
Deep vein thrombosis............................             4.8             3.1            11.4             1.8
Hypertension....................................            37.6            45.8            47.9            46.5
Hypotension.....................................             2.8             1.3             1.5             1.0
Peripheral vascular disease.....................            15.0             9.0             8.6             6.0
Other cardiovascular disease....................            14.8            10.3            19.5            20.8
Arthritis.......................................            11.3            20.1            25.4            21.9
Hip fracture....................................             6.7            11.6            14.1             7.4
Missing limb....................................             5.4             4.9             3.0             3.5
Osteoporosis....................................             7.1             3.6             8.0            10.5
Pathological bone fracture......................             1.3             1.8             1.0             1.5
Alzheimer's.....................................             1.5             0.5             4.1            12.3
Aphasia.........................................             2.3             6.5             3.8             7.2
CP..............................................             0.2             0.7  ..............  ..............
CVA.............................................            23.8            34.6            22.2            27.7
Other dementia..................................             7.9             2.1            13.9            31.5
Hemiplegia/hemiparesis..........................            12.9            27.8             8.8            10.1
MS..............................................             2.1             1.1             0.1             0.7
Paraplegia......................................             3.0             2.1             0.3             0.3
Parkinson's.....................................             2.5             1.6             3.3             4.0
Quadriplegia....................................             3.3             2.6             0.1             0.2
Seizure disorder................................             6.5             5.2             4.5             4.5
TIA.............................................             1.0              23             4.0             4.0
Traumatic brain injury..........................             4.2             7.0             0.3             0.3
Anxiety disorder................................             4.6             5.2             7.8             6.8
Depression......................................            10.2            14.4            14.6            13.6
Manic depression................................             0.8             1.1             0.9             0.7

[[Page 66318]]

 
Schizophrenia...................................             0.8             0.5             1.0             1.5
Asthma..........................................             3.5             3.1             2.0             1.5
Emphysema/COPD..................................            29.0            10.1            19.3            17.2
Pulmonary failure...............................            24.0             4.3  ..............  ..............
Cataracts.......................................             2.9             3.3             6.5             5.5
Diabetic retinopathy............................             1.9             1.8             0.7             0.5
Glaucoma........................................             3.8             2.9             5.9             4.0
Macular degeneration............................             1.5             0.7             1.2             0.8
Allergies.......................................             9.4            15.2            28.2            28.9
Anemia..........................................            15.7            11.9            18.2            19.5
Cancer..........................................            12.1             7.5            14.4            15.3
Renal failure...................................            14.0             4.7             4.9             5.3
Amputated limb..................................             5.4             5.0             N/A             N/A
Post surgery--elective hip......................             4.0            13.0  ..............  ..............
Antibiotic resistant infection..................            16.7             2.8             1.0             0.5
Pneumonia.......................................            19.2             3.1             8.5             6.5
UTI.............................................            21.9            19.9            21.1            23.1
----------------------------------------------------------------------------------------------------------------
                                               Bladder Continence
----------------------------------------------------------------------------------------------------------------
Continent, no catheter..........................            28.0            60.9            63.4            45.6
Continent, catheter.............................            52.1            15.2             N/A             N/A
Some incontinence...............................            50.8            31.6            36.6            54.4
Bowel Continence................................            48.0            75.0            71.3            47.9
----------------------------------------------------------------------------------------------------------------
                                                  Complications
----------------------------------------------------------------------------------------------------------------
Inability to lie flat--loss of breath...........            44.0             6.5             6.9             6.2
Shortness of breath--exertion...................            52.0            21.7  ..............  ..............
Shortness of breath--at rest....................            32.0             0.0  ..............  ..............
Difficulty coughing/clearing airways............            40.0             2.2             N/A             N/A
Recurrent respiratory infection.................            28.0             2.2  ..............  ..............
Surgical wound..................................            48.0            56.5  ..............  ..............
----------------------------------------------------------------------------------------------------------------
                                                      Pain
----------------------------------------------------------------------------------------------------------------
None............................................            45.4            25.6            36.0            58.8
Less than daily.................................            17.3            19.5            31.0            22.3
Daily...........................................            37.3            55.0            33.0            18.9
----------------------------------------------------------------------------------------------------------------
                                              Health Complications
----------------------------------------------------------------------------------------------------------------
Syncope.........................................             2.3             1.0             .07               0
Unsteady Gait...................................            26.2            52.5            48.0            40.1
Limited ROM--Arm................................            20.7             9.3             6.3            12.5
Limited ROM--Hand...............................            18.0             7.2             3.5             8.8
Limited ROM--Foot...............................            26.4            10.5             5.7            14.7
Pressure Ulcers--Any (stage 1-4)................            36.0            17.9            17.7            21.6
----------------------------------------------------------------------------------------------------------------
                                     Expectations (Rehabilitation Potential)
----------------------------------------------------------------------------------------------------------------
Patient believes self could be more independent.            53.7            74.5            45.1            16.2
Staff believes patient could be more independent            59.1            76.4            50.9            31.3
Patient able to perform tasks slowly............            26.1            33.9            12.7            12.4
Major difference in ADLs AM and PM..............             8.1            16.7             1.9             3.2
----------------------------------------------------------------------------------------------------------------
                                                    Behavior
----------------------------------------------------------------------------------------------------------------
Wander..........................................             3.6             4.1             2.8             9.1
Verbally abusive................................             3.4             3.8             3.0             5.4
Physically abusive..............................             1.8             2.1             1.4             5.9
Socially inappropriate..........................             3.2             4.8             4.2             8.6
Resists care....................................            12.2             8.6             9.8            16.3
----------------------------------------------------------------------------------------------------------------

    The diagnostic profiles of patients in rehabilitation hospitals and 
SNFs were similar, although rehabilitation hospitals treated a higher 
percentage of patients with strokes, hemiplegia/hemiparesis, and 
traumatic brain injury and fewer patients with congestive heart failure 
and emphysema or chronic obstructive pulmonary disease. Both bladder 
and bowel continence levels were similar for rehabilitation hospital 
and SNF patients who were expected to be discharged. Pain levels for 
rehabilitation hospital and SNF patients were also similar overall, 
although more

[[Page 66319]]

SNF patients were reported to experience pain less frequently than 
daily and more rehabilitation hospital patients were assessed as having 
daily pain. Pressure ulcer rates for rehabilitation hospital and SNF 
patients were comparable, as were the number of patients with unsteady 
gait and limitations in range of motion. Rehabilitation hospitals 
reported a higher use of restraints. Rehabilitation hospital and SNF 
patients who were expected to be discharged had a similar number of 
behavioral symptoms, which were less overall as compared to the number 
of behavioral symptoms experienced by SNF patients not expected to be 
discharged.
    These results confirmed anecdotal information reported by 
rehabilitation hospital and SNF clinicians during our focus groups. 
While Medicare coverage policies allow payment to SNFs for a wider 
range of patients than rehabilitation hospitals, both groups reported 
that their patient populations had changed over the past few years, 
leading to some convergence in the types of patients treated by 
rehabilitation hospitals and SNFs. Both reported a large increase in 
the number of comorbidities and clinical complexities for patients 
admitted primarily for rehabilitative services, saying that 
``uncomplicated'' patients were no longer admitted for inpatient 
rehabilitation, (instead, for example, ``uncomplicated'' patients 
requiring rehabilitation after a hip fracture now generally receive 
therapy in their homes).
    It is our view that any system used to classify rehabilitation 
patients should be based on the same measures of a patient's health 
status and care needs as are used in other segments of the post-acute 
care industry. However, for purposes of this proposed rule, we are most 
concerned that the classification instrument work well with IRF 
patients. Given our use of the MDS in SNFs, it is logical to extend an 
MDS-based system to IRFs.
    We are developing version 3 of the MDS/RAI, which we envision as 
containing sections for specific populations (for example, traditional, 
long stay resident; short-stay patient; those receiving palliative or 
end of life care; and pediatrics).
2. Other Options
    We recognized that many rehabilitation hospitals already use a 
patient assessment instrument that contains the functional independence 
measures (FIM). The FIM were developed by researchers who were funded 
by a consortium of rehabilitation professional associations and the 
Department of Education, at the State University of New York (SUNY) at 
Buffalo in the 1980s. The FIM are contained in a patient assessment 
instrument that is marketed by the Uniform Data System for Medical 
Rehabilitation (UDSmr) maintained by SUNY/Buffalo. Caredata.com 
Clinical Outcome System (COS) used to market a patient assessment 
instrument that contained the FIM, but we have been notified that 
Caredata.com has discontinued its business related to FIM reporting as 
of July 2000. The patient assessment instrument marketed by UDSmr is 
proprietary.
    Many rehabilitation providers are clients of UDSmr. Our 1997 data 
shows that approximately 68 percent of Medicare patients had a UDSmr or 
COS data file, indicating that these patients were assessed with the 
FIM. There is extensive experience with the FIM contained in the UDSmr 
and COS patient assessment instruments and the uses of the FIM data. 
This is documented by a substantial list of publications produced both 
in the United States and overseas (for example, Sweden and Japan), by 
the developers of the system, and by independent investigators.
    The developers of the FIM offer a certification course to train 
assessors in the use of the instruments. This results in very high 
rates of intra and inter rater reliability, with Cronbach alpha 
coefficients of more than 0.9 for both the motor and cognitive 
subscores. The Cronbach alpha coefficient is a statistical measure of 
inter-rater reliability with perfect reliability equal to 1.0. 
Therefore, a score of 0.9 indicates a very high level of inter-rater 
reliability.
    The MDS-PAC is a modification of the MDS, the patient assessment 
instrument developed for use in nursing facilities. The principal 
objective of the MDS is to facilitate care planning through a 
description of the needs of the patient for services. In contrast, the 
principal objective of the FIM is to assess person level disability in 
the inpatient medical rehabilitation setting.
    The strength of the FIM assessment instrument is that it is a well-
evolved and extensively tested approach to the assessment of the 
critical components of care provided by IRFs, the impact on the patient 
improvement in functional capacity, and the purpose of the care 
provided by the IRFs. The variations among facilities in the difference 
between the observed and expected improvement in function are used as 
indicators of the quality and the effectiveness of the facilities. The 
organization that analyzes FIM data for providers generates benchmark 
data that allows IRFs to compare the outcome of their performance on 
the functional independence measures relative to other providers 
participating in the system.
    One drawback of the FIM assessment instrument is that it is 
specifically focused on functional performance. Information is 
collected only on the matters directly related to functional 
performance and only at admission and discharge, and, when possible, 6 
months after discharge. There is, therefore, a lack of detail on the 
needs of the patient or on the evolution of the condition of the 
patient during the course of the admission. However, given that the 
mean length of stay in an IRF is 15.81 days (median length of stay is 
14 days), we are specifically soliciting comments on the benefits of 
mid-stay assessments.
    We are not proposing to use the FIM assessment instruments marketed 
by either the UDSmr or COS as the basis for an IRF prospective payment, 
because of our desire to have a common measurement instrument across 
different post-acute provider settings. Our proposal to use an MDS-
based approach comes from our conviction that the use of common item 
labels and definitions across different provider settings would be 
essential to monitoring patient care across different provider 
settings. While we recognize that there are differences between the MDS 
and the MDS-PAC, our intention is, at some point in the future, to 
reconcile these differences. Structuring the IRF assessment instrument 
consistent with the MDS would allow for comparison of patients across 
different institutional settings. The MDS-PAC collects information on 
many of the same activities or functional measures as the FIM but 
defines these activities more specifically in some cases. It would also 
help facilitate continuity of care in that comparable baseline data 
would accompany the patient's transfer from one setting to the other. 
Standardized information across provider types would also be extremely 
useful in comparing patient characteristics and potentially the 
appropriateness of care in different settings that serve the same 
populations. This is especially important since analysis by RAND (1997) 
shows that costs for the same services vary significantly by provider.
    When we began to develop the MDS in the 1980s, the possibility of 
using the FIM ADL scoring schema was considered. However, field 
experience demonstrated that nursing home staff did not feel 
comfortable making the level of distinctions required in the FIM.

[[Page 66320]]

The FIM serve as a functional-based system designed to capture specific 
aspects of ADL performance. Therefore, the FIM's ability to measure 
items that are not functionally related, such as cognition, may be 
problematic. For example, in order to score communication on the FIM, 
compromises must be made to blend cognitive and performance ideas into 
a single construct. The scoring schema used in the MDS-PAC allows the 
instrument to describe a concept like communication from a functional 
performance perspective as well as from the cognitive perspective based 
on how much caregivers have to intervene to help compensate for the 
patient's communication deficits.
    UDSmr requires that users of the FIM (for example, therapists) be 
trained. An evaluation of the FIM scoring will be performed by RAND 
before a final rule is published. FIM scoring rules assign the lowest 
(most dependent) value to missing data which is likely to bias scores 
downward, especially upon admission when data are more likely to be 
missing. The payment implications may generally be to place patients in 
a more service intensive CMG. The MDS-PAC addresses this by having a 
separate coding entry (8) for activities that do not occur rather than 
instructing users to code with the most dependent level.
    An independent team of technical experts highlighted areas of 
concern regarding the FIM's accuracy in predicting costs for patient 
care. Panelists were concerned that the scoring of some items, such as 
cognitive functioning, gave raters a great deal of discretion in 
determining what evidence was used in the assessment and how often the 
behavior had occurred. These technical experts also agreed that a 
functional status assessment for payment purposes should be based on 
clinical observation of performance rather than on the rater's 
assessment of the patient's capacity to perform the task.
    The MDS-PAC uses the same FIM constructs as were originally 
designed by the UDSmr team but rewords them in such a way so that these 
items better fit into the context of the MDS instrument. In addition, 
the item language and definitions and instructions are integrated into 
the instrument. The administration of the MDS-PAC at more than one 
point in a patient's stay will permit assessment of patient changes 
during that episode of treatment and may lead to possible refinements 
to the patient classification system.
    We seek public comment on our proposal to use the MDS-PAC as the 
assessment instrument for the IRF prospective payment system, 
including: comments and supporting data regarding the additional burden 
and cost, if any, associated with this instrument; the suitability of 
the instrument for the rehabilitation setting and as a model for other 
post-acute care settings; views on whether the instrument has been 
properly tested and validated for industry-wide use; and the utility 
and reliability of the quality data items contained in the instrument.
3. Combining the MDS-PAC and the FIM
    The MDS-PAC covers several topics, for example, nutrition, 
swallowing, and pain, that are either not included in the FIM or not 
covered in sufficient detail in the FIM for clinical assessment 
purposes, and that are not currently used in classifying patients for 
payment. An alternative to using the MDS-PAC would be to retain the 
non-payment items from the MDS-PAC and incorporate the FIM items for 
patient classification into CMGs. Because of our concerns, as outlined 
above (for example, compatibility with assessments in other settings), 
we have rejected this option for purposes of this proposed rule and 
propose to use payment-related questions that are compatible with the 
FIM.
    However, the FIM assessment system has been under development since 
the mid 1980s and is currently recognized as a valid and reliable 
instrument to measure impairments in IRFs. The FIM are in current and 
increasing use in rehabilitation facilities, the data analysis being 
performed by UDSmr and by COS, with the data analysis organization 
depending on which of these two organizations the IRF has selected. 
Thus, there has been extensive training in and experience with the data 
elements, particularly the functional components, that enter into the 
construction of the CMGs. We will be testing whether the MDS-PAC 
results in patient classifications that are equivalent to the 
classifications that occurred with the FIMs (that is, the assessment 
instruments that were used to design the payment system).
    If the tests show that patients are classified differently using 
the MDS-PAC, HCFA will, in the final rule, incorporate the phrasing, 
definitions, and order of the items required by the payment system, 
based on the FIM, replacing the proposed equivalent sections of the 
MDS-PAC. This would meet our objective to field the more extensive 
instrument to provide a more complete picture of the evolution of 
condition of the patient and of the care provided in the IRF, but also 
to retain confidence in the validity of the classification of the 
patient. Using the phrasing, definitions, and order of the items would 
minimize the effect on reliability and validity inherent in the design 
of new data collection instruments.
4. The MDS-PAC Development Process
    Under contract, a team led by John N. Morris, Ph.D., at the Hebrew 
Rehabilitation Center for the Aged, began to develop the MDS-PAC in 
1997. This team played a key role in designing the original MDS/RAI 
system and MDS 2.
    The MDS-PAC development process relied on broad-based input from a 
large and diverse constituency, representing rehabilitation facilities, 
SNFs, long-term care hospitals, and the viewpoints of individual and 
corporate providers, clinical disciplines, consumers, States, other 
Federal agencies, and researchers. Examples of organizations 
representing rehabilitation providers and clinicians include the 
American Medical Rehabilitation Providers Association, the American 
Hospital Association (representing hospital-based rehabilitation 
units), the Federation of American Health Systems, the Commission on 
Accreditation of Rehabilitation Facilities, the National Head Injury 
Foundation, the Uniform Data System for Medical Rehabilitation, the 
Association of Academic Physiatrists, and the American Academy of 
Physical Medicine and Rehabilitation.
    Representatives and staff of over 40 national organizations and 
agencies with a stake in the MDS-PAC were brought together in a 
technical expert panel, which met at the outset of the MDS-PAC 
development process, and at key intervals thereafter. The purpose of 
the technical expert panel was to provide us with advice on technical 
and operational issues associated with assessment of post-acute 
patients. We requested that technical expert panel representatives 
disseminate project information to their constituents, coordinate input 
from their members back to our project team, and assist with 
identifying facilities to participate in field testing of the 
instrument. We solicited comments from technical expert members on 
several drafts of the MDS-PAC, and also conducted a mailing that 
solicited comments from over 1100 facilities and individuals, 
identified in part by technical expert panel members. We also posted a 
project summary and various drafts of the MDS-PAC on our MDS web site. 
In addition, the project team reviewed the

[[Page 66321]]

comments we received on the assessment instrument.
    We began development of the MDS-PAC by gathering baseline 
information through focus groups, a provider survey, and collection of 
MDS data within rehabilitation hospitals/hospital-based units and long-
term care hospitals. We held two focus groups, consisting of 
physicians, nurses, and therapists who were involved in patient 
assessment and care planning on a daily basis within rehabilitation 
hospitals and units, SNFs, and long-term care hospitals. The clinicians 
who participated in the focus groups were all nominated by the national 
associations representing rehabilitation hospitals, SNFs, and long-term 
care hospitals. The purpose of the focus groups was to solicit real-
world input regarding current assessment and care planning practices 
for post-acute patients.
    We also conducted a survey of SNF, rehabilitation hospital, and 
long-term care hospital providers to gather information about their 
patient populations, assessment and care planning practices, care 
processes, care delivery models, and the availability of various types 
of specialized staff. Facility staff were asked to comment on the 
perceived clinical utility of MDS items and each of the RAPs for their 
own patient populations. Providers participating in our focus groups 
were asked to pilot the questionnaire, which was subsequently refined. 
The questionnaire was then distributed to over 900 SNFs, rehabilitation 
hospitals and units, and long-term care hospitals that had requested 
information on the project or whose names we had received from 
associations participating on the technical expert panel. A total of 
416 providers (224 SNFs, 131 rehabilitation hospitals or units, and 61 
long-term care hospitals) responded to the survey during January 
through March 1998. A summary of these responses was presented during 
our March 1998 meeting with the technical expert panel.
    Using the input gathered from our initial activities, we developed 
an initial draft of the MDS-PAC in September 1997. In developing the 
initial MDS-PAC draft, it is important to note that we did not start 
with the current MDS 2. Rather, we used a ``bottom-up'' approach to 
build the MDS-PAC. This means that we started by listing the various 
domains and issues that had been identified through our initial focus 
groups and provider survey as relevant for the post-acute patient. We 
then selected items to measure those specific issues from the MDS 2 or 
other HCFA assessment instruments, such as the Outcome and Assessment 
Information Set (OASIS) or the Uniform Needs Assessment Instrument. New 
items were developed for those areas in which no item currently existed 
within our group of assessment tools. In building and refining the MDS-
PAC items we relied extensively on the input of clinical experts 
serving on, or identified by, our technical expert panel. Appendix B 
contains a summary of the survey items and the responses of the 
clinical experts.
    The original MDS-PAC draft was refined through the production of 10 
major draft revisions over a 2-year period. We solicited comments on 
various drafts through mailings to our technical expert panel, and to 
over 1100 providers that had been identified by the technical expert 
panel or otherwise indicated an interest in the project, as well as 
through posting of various drafts on our web site.
    One of the guiding principles of our MDS-PAC development has been 
that the instrument had to include items that were compatible with the 
FIM and would result in the same patient classifications generated 
using the FIM. In nearly all instances, we did not simply insert the 
functional independence measures items into the MDS-PAC. Generally, the 
goal was to develop blended items that were consistent with the general 
MDS model and scales, but were also capable of generating the type and 
level of detail contained in a specific functional independence measure 
item. This work was conducted through extensive collaboration with Dr. 
Carl Granger, who was a member of our MDS-PAC technical expert panel, 
and his UDSmr team. Prior to our final rule, we will be conducting 
further research to determine whether the MDS-PAC will classify 
patients into the same CMGs as they would have been classified into 
using FIM.
5. Developmental Testing of the MDS-PAC
    Drafts of the MDS-PAC were subjected to substantial field testing, 
to ensure it is both reliable and feasible for use as the patient data 
collection system needed to implement the IRF prospective payment 
system. Formal testing consisted of an initial pilot test, as well as 
two larger rounds of field testing, in rehabilitation hospitals and 
units, SNFs, and long-term care hospitals. In conducting research, a 
pilot test allows a preliminary trial of an instrument to discover and 
rectify any major problems before the main study begins. A pilot test 
uses a small study sample of facilities, whose results enable 
researchers to make last minute corrections and adjustments. A field 
test uses a larger sample and more formally delineated procedures and 
protocols.
    In conducting our tests we worked with a number of providers that 
volunteered to participate either directly or through their provider 
associations. However, most of the participants in each of the testing 
rounds were recruited randomly from our listing of Medicare-certified 
providers maintained in the Online Survey and Certification Reporting 
System; we designed our sample to ensure that participating facilities 
varied in geographic location, size, etc.
    Pilot testing of the MDS-PAC was conducted in September through 
October 1998, with a total of 20 providers (7 rehabilitation hospitals 
or units, 4 long-term care hospitals, 9 SNFs; 15 sites recruited 
randomly). A total of 161 assessments were completed as part of the 
pilot test, with 69 completed by rehabilitation hospitals, 68 by SNFs, 
and 24 by long-term care hospitals.
    MDS-PAC testing consisted of a pilot test and two field tests. A 
total of 16 assessors participated in the pilot test conducted in IRFs 
and 96 and 75 assessors participated in the first and second field 
tests, respectively. The MDS-PAC was used to assess a total of 885 
admissions and 345 discharges in these IRFs during this pilot and field 
testing. The average length of stay for these admissions was 18.9 days 
with a median of 16 days.
    The initial field test occurred in January through April 1999, in 
85 providers total (40 rehabilitation hospitals or units, 21 long-term 
care hospitals, 22 SNFs, and 2 facilities for which the above category 
was not properly recorded; 51 sites recruited randomly). A total of 
1164 patients were assessed using draft 8 of the MDS-PAC, with 599 
cases assessed in rehabilitation hospitals or units, 284 in SNFs and 
281 in long-term care hospitals.
    The second field test was conducted in June through September 1999, 
in a total of 57 providers (33 rehabilitation hospitals and units, 11 
long-term care hospitals, 13 SNFs; 39 sites recruited randomly). A 
total of 462 cases were completed in the second field test, with 285 
patients assessed by rehabilitation hospitals, 80 by SNFs, and 97 by 
long-term care hospitals.
    Testing focused on the inter-rater reliability and clinical 
validity of MDS-PAC items, as well as the administrative feasibility 
and burden associated with completion of the assessment tool. Paired 
assessments were completed for a sample of cases during each of the 
field trials (N=171 assessments

[[Page 66322]]

conducted using the June 30, 1999 version of the MDS-PAC used in field 
test 2) and reliability coefficients were calculated using a weighted 
Kappa statistic. Reliability measures whether the instrument would 
result in the same findings if it were administered at a later date or 
by a different person. The average reliability for the 315 items on the 
version of the MDS-PAC tested in the second field test (draft 9) was 
0.78. A frequently cited standard in the research community, Fleiss 
(1975), establishes item reliability of 0.5 as acceptable, with levels 
of 0.75 or better considered as superior for tools of this nature. 
Reliability coefficients ranged from 0.51 for ``repetitive health 
complaints'' to 1.0 for several items.
    Facility staff were asked to log the amount of time spent on each 
MDS-PAC assessment, and also categorize how that time was spent. There 
was general comparability across provider types in how time was spent. 
Review of the clinical record consumed the most time and interaction 
with the patient's physician or family was conducted by only a minority 
of assessors. Recognizing the learning curve associated with any new 
process, burden estimates were calculated for both the initial few 
cases completed by staff and subsequent cases after staff had become 
more familiar with the process (that is, after completing approximately 
10 MDS-PAC assessments).
    Rehabilitation hospital staff initially required a median of 105 
minutes to complete the intake assessment and 85 minutes after they 
became familiar with the Version 9 MDS-PAC, as compared to the 85 and 
77 minutes respectively, required by SNF staff. The time required to 
complete follow-up or discharge MDS-PAC assessments was also 
calculated, as these assessments involve fewer items than the initial 
MDS-PAC assessment. Rehabilitation hospital staff required a median of 
75 minutes to complete the first few cases using this shorter 
assessment and 48 minutes after they completed approximately 10 cases. 
SNF staff spent a median of 50 minutes on the first few follow-up 
assessments they completed, and 45 minutes subsequently.

B. Overview of the MDS-PAC Assessment Process

1. Description of the MDS-PAC
    We include, in Appendix BB of this proposed rule, the MDS-PAC 
Version 1, which we refer to throughout this preamble as the MDS-PAC. 
Appendix BBB contains the Item-by-Item Guide to the MDS-PAC, which 
consists of instructions for completing the MDS-PAC. The MDS-PAC that 
is included in Appendix BB is a modified version of the MDS-PAC that 
was the product of the previously described pilot and field testing. 
This modified version MDS-PAC reflects changes we made in order to 
ensure that the MDS-PAC items used to classify a patient into a CMG 
cover all of the same subjects as the functional independence measures 
items that were used to develop the classification system.
    Before the final rule, we will conduct field testing of the 
modified MDS-PAC, Version 1, to establish its validity, reliability, 
and equivalence for payment. In addition, we will study a sample of 
facilities that are currently using UDSmr's FIM patient assessment 
instrument and the COS. These facilities will complete their 
instruments (either UDSmr's or COS) and the MDS-PAC on the same patient 
at the same time. Results of this paired assessment will be compared to 
determine the capability of the MDS-PAC instrument to accurately and 
consistently assign CMGs and whether the MDS-PAC assigns the same CMGs 
as the UDSmr/COS instrument would. If the results of this study do not 
indicate that the MDS-PAC accurately and consistently assigns CMGs as 
the UDSmr/COS instrument would, then the MDS-PAC will be redesigned to 
incorporate the phrasing, content, and coding conventions of the UDSmr/
COS instruments. This study will be completed this fall by researchers 
from RAND, and the results will be incorporated into the final rule. 
The study and any modifications to the assessment instrument will be 
completed prior to the publication of the IRF prospective payment 
system final rule.
    The MDS-PAC is a patient-centered assessment tool that emphasizes a 
patient's care needs, rather than the characteristics of the provider. 
The assessment instrument consists of 15 sections, each collecting 
different categories of patient information. These categories include 
identification and demographic information about the patient, as well 
as the following categories of information: cognition; communication; 
behavior and mood; functional status; bowel and bladder continence; 
diagnoses; medical complexities and other health conditions; oral and 
nutritional information; pain status information; information on 
procedures and services; functional prognosis; and resources for 
discharge.
2. Use of the MDS-PAC
    We propose to require that IRFs use a standardized patient data 
collection assessment instrument for Medicare patients in IRFs, the 
MDS-PAC. We propose to require that IRFs must computerize and 
electronically report the MDS-PAC data.
    Each year tens of thousands of Medicare patients are treated in 
IRFs. As discussed in more detail in section III.F. of this preamble, 
we propose that each of these patients would be assessed on the average 
at least of three times, with the MDS-PAC being used as the patient 
assessment instrument. Therefore, there will be a very large quantity 
of data collected and submitted to us each year. As a result, it would 
be unrealistic for us to perform a meaningful analysis of this large 
amount of data for payment, medical review, and quality monitoring 
purposes in the absence of the capability to use automated data 
collection. An analysis of MDS-PAC data would allow us to use MDS-PAC 
data in a manner similar to how we use SNF MDS data.
    One use of SNF MDS data is to support quality of care monitoring. 
The SNF MDS data is reliable and effective in supporting early 
identification of potential quality of care problems. Early 
identification, in turn, helps to focus the survey process upon these 
identified problem areas.
    Using MDS data we have developed indicators of the quality of care 
in SNFs. The quality of care indicators are used to support analytical 
evaluations of the quality of services that SNFs furnish. For example, 
we use MDS data to provide us with objective and detailed measures of 
the clinical status and care outcomes of residents in a SNF. In 
addition, quality of care indicators can be used to analyze the 
relationship between Medicare policy changes and quality of care.
    Computerization of the MDS-PAC data would make it easier and more 
practical for an IRF to use the MDS-PAC data to classify a patient into 
a CMG. Electronic transmission of the MDS-PAC data by the IRF makes the 
creation of an MDS-PAC database feasible. An MDS-PAC database, in turn, 
permits the data to be accessed easily in various formats for different 
analytical purposes, which can be used to support the Medicare 
program's fraud and abuse efforts, for medical review purposes, and for 
uses similar to how the SNF MDS data is used.
    We propose that beginning on April 1, 2001, IRFs must collect MDS-
PAC data as part of the IRF's inpatient assessment process for patients 
who are receiving Medicare-covered Part A services. This MDS-PAC data 
collection requirement applies to Medicare beneficiaries who are 
already inpatients as of April 1,

[[Page 66323]]

2001, as well as beneficiaries admitted as inpatients on or after April 
1, 2001. In addition, we propose that the IRFs must use the MDS-PAC to 
assess inpatients in accordance with the MDS-PAC assessment schedule 
specified in section III.F. of this preamble.
    The IRFs would encode the MDS-PAC data by entering the MDS-PAC data 
into a computer software program. MDS-PAC records would be considered 
``locked'' when they passed all HCFA-specified edits and were accepted 
by the MDS-PAC database to which the IRF transmitted its records.
    We propose in Sec. 412.610 that IRFs must also maintain all 
completed MDS-PAC assessments for the previous 5 years, either in a 
paper format in the patient's clinical record or in an electronic 
computer file format that can be easily obtained, because the 
assessments may be needed as part of a retrospective review conducted 
at the IRF for various purposes, for example, as part of the 
documentation that the IRF used to determine the medical necessity of 
the Medicare-covered services the IRF furnished. Also, completed MDS-
PAC assessments that are available at the IRF could be beneficial to 
other entities that appropriately have access to these records (for 
example, a State or Federal agency conducting an investigation due to a 
complaint of patient abuse or a suspicion of fraud). In addition, 
retention of the MDS-PAC assessment by the IRF would provide a backup 
to the electronic database.
    Data from the initial MDS-PAC assessment would be used to classify 
patients into a CMG. The CMG would correlate with the payment rate that 
the IRF receives for the Medicare-covered Part A services furnished by 
the IRF during the Medicare beneficiary's episode of care.
3. Transmission of the MDS-PAC Data
    We propose that between February 1 and February 28, 2001, IRFs must 
complete a successful transmission of test MDS-PAC data to the HCFA 
MDS-PAC system. A successful transmission by the IRFs of test MDS-PAC 
data to the HCFA MDS-PAC system is necessary to determine connectivity 
with the system and to identify any transmission problems. The HCFA 
MDS-PAC system would transmit a test data feedback report to each IRF 
indicating that the test data transmission was either completely 
successful or experienced problems. The problems would be specified in 
the test data transmission report.
    On March 1, 2001, the HCFA MDS-PAC system would begin to purge all 
test data from the system to allow for acceptance of production data, 
that is, data that would be associated with the MDS-PAC assessment 
schedule and CMG payment rates, as specified in sections III. F. and V. 
of this preamble.
    For example:
    February 1, 2001, to February 28, 2001--Period for transmission of 
test MDS-PAC data.
    March 1, 2001, to March 7, 2001--The HCFA MDS-PAC system purges 
test data.
    April 1, 2001--Assessments completed on or after this date must be 
transmitted as production data.
    As specified in section III. I. of this preamble, we would provide 
training and technical support to the IRFs on administering and 
completing the MDS-PAC, as well as transmitting the MDS-PAC data.

C. The MDS-PAC Assessment and Medical Necessity

    The initial MDS-PAC assessment would be used to classify each 
Medicare patient into a CMG, with the CMG being the basis for IRF 
payment. One principle governing appropriate Medicare payment and 
utilization of Medicare inpatient services is that there must be 
documentation establishing appropriate medical necessity for the 
inpatient services furnished to a patient.
    When the data recorded on the MDS-PAC accurately reflect the 
patient's clinical status, they form the basis for documenting the 
medical necessity of the services furnished to the IRF Medicare 
inpatient. There may be cases in which a medical review (or other type 
of facility or patient review) questions the accuracy of the recorded 
MDS-PAC items and, by extension, the associated medical necessity of 
the services that the IRF furnished. In these cases, other 
documentation would be examined to verify the information recorded on 
the MDS-PAC, and the medical necessity for the services as indicated by 
the MDS-PAC. Other documentation that would support the accuracy of the 
recorded MDS-PAC information (and the medical necessity for the 
services furnished to the inpatient) must be recorded in the patient's 
medical record and could include, but is not limited to: (1) 
physician's orders; (2) physician's notes; (3) nursing notes; (4) notes 
from therapists; (5) diagnostic tests and their results; and (6) other 
associated information, such as social worker or case manager notes.
    A patient's clinical status for a given time period, as indicated 
by a completed MDS-PAC form, must be verifiable and consistent with the 
clinical information independently or separately recorded in the 
patient's clinical record. Otherwise, inaccurately completed MDS-PAC 
assessments might be used to classify patients into CMGs that would, in 
turn, form the basis for Medicare payment for medically inappropriate 
or unnecessary services. We will continue to conduct medical review 
activities to verify and monitor the medical necessity of services 
furnished in conjunction with our continuing efforts to eliminate 
Medicare payment errors.
    In proposed Sec. 412.614, facilities will transmit each Medicare 
inpatient's MDS-PAC assessments to the HCFA MDS-PAC system, and submit 
claims for Medicare payment to the fiscal intermediary, in accordance 
with the current claims procedures. Payment to the IRF would be made 
according to the CMG recorded on the claim sent to the fiscal 
intermediary. We will have the capability to analyze the claim 
information against the transmitted MDS-PAC data. The results of this 
analysis may necessitate additional review of a particular claim and 
the associated MDS-PAC data to determine if payment was made 
accurately.

D. The MDS-PAC Assessment Reference Date

    In Sec. 412.610(c) we propose that each assessment would have a 
specific assessment reference date. The purpose of the assessment 
reference date is to establish a common temporal reference point for 
the care team participating in the patient's assessment. Although staff 
members may work on completing a patient's MDS-PAC on different days, 
establishment of the assessment reference date ensures the commonality 
of the assessment period (that is, ``starting the clock''), so that all 
assessment items refer to the patient's objective performance and 
clinical status during the same period of time. The assessment 
reference date is a specific endpoint in the MDS-PAC assessment 
observation time period. Almost all MDS-PAC items refer to the 
patient's status over a continuous three calendar day time period, 
which is the observation time period.
    During the patient's current hospitalization, an IRF must indicate 
on the MDS-PAC one of the following assessment reference dates--
    <bullet> For the assessment that covers calendar days 1 through 3 
of the patient's current hospitalization the date that is the third 
calendar day after the patient started being furnished Medicare-covered 
Part A services.
    <bullet> For the assessment that covers calendar days 8 through 10 
of the

[[Page 66324]]

patient's current hospitalization the date that is the 10th calendar 
day after the patient started being furnished Medicare-covered Part A 
services.
    <bullet> For the assessment that covers calendar days 28 through 30 
of the patient's current hospitalization the date that is the 30th 
calendar day after the patient started being furnished Medicare-covered 
Part A services.
    <bullet> For the assessment that covers calendar days 58 through 60 
of the patient's current hospitalization the date that is the 60th 
calendar day after the patient started being furnished Medicare-covered 
Part A services.
    <bullet> For the assessment that must be completed when the patient 
stops receiving Medicare-covered Part A services but is not discharged 
from the IRF, the assessment reference date must be the actual date 
that the patient stops receiving Medicare-covered Part A services.
    <bullet> For the assessment that is completed when the patient 
stops receiving Medicare-covered Part A services and is discharged from 
the IRF the assessment reference date must be the actual date of 
discharge from the patient rehabilitation facility.
    The general concept is that the assessment reference date sets the 
designated endpoint of the common 3-day observation period, and the 
MDS-PAC items will usually refer back in time from this point. The 
assessment reference date establishes the end of the assessment time 
period that the clinician(s) will use for the data gathering. As 
specified in proposed Sec. 412.606(c), these data are obtained through 
patient observation, patient interview, the clinical record or other 
means, in order for the clinician(s) to complete an MDS-PAC assessment 
that covers a given data-gathering time period.
    For discharge assessments, the date when the patient either is 
discharged or stops receiving Medicare-covered Part A services is the 
assessment reference date. The observation time period includes either 
the date that the patient is discharged, or the date that the patient 
stops receiving Medicare-covered Part A services, along with the 
preceding 2 calendar days. In a situation when the discharge occurs 
unexpectedly, the clinical record would become a prime source of the 
data recorded on the MDS-PAC.

E. Performing the MDS-PAC Assessment

    In Sec. 412.606, we propose that Medicare beneficiaries who are 
inpatients of an IRF must be assessed by a professional clinician(s), 
and that the MDS-PAC must be used to perform the patient assessment. 
Because the MDS-PAC will be used to obtain a variety of assessment 
data, we believe that the assessment process should be a collaborative 
team effort, employing the clinical skills of a variety of professional 
clinicians.
    The data recorded for a specific MDS-PAC item may be more accurate 
if the information used to record the data for that specific item was 
obtained by a professional clinician with specialized training related 
to that specific MDS-PAC item. A professional clinician may be a 
dietitian, an occupational therapist, a physical therapist, a 
physician, a practical (vocational) nurse, a registered nurse, a 
speech-language pathologist or a social worker.
    For purposes of this proposed rule, we propose to incorporate the 
existing definition of a qualified dietitian specified in 
Sec. 483.35(a)(2). For purposes of this proposed rule, we propose to 
incorporate the existing standard at Sec. 482.56(a)(2) of who may 
perform occupational therapy and physical therapy as defining the terms 
occupational therapist and physical therapist. Section 482.56(a)(2) 
states that physical therapy and occupational therapy ``must be 
provided by staff who meet the qualifications specified by the medical 
staff, consistent with State law.'' Therefore, an occupational 
therapist and a physical therapist are individuals who meet the 
qualifications of the provider's medical staff and State law.
    A practical (vocational) nurse, a registered nurse, and a speech-
language pathologist are individuals who meet the applicable 
definitions of Sec. 484.4. For purposes of this proposed rule, an 
individual would be considered a social worker if that person meets 
either the definition in Sec. 483.15(g)(3) or the one in 
Sec. 483.430(b)(5)(vi), because these two sections define a social 
worker in terms of varying levels of education and experience.
    For purposes of this proposed rule, we propose to define the term 
physician as an individual who is a doctor of medicine or osteopathy 
who is currently legally licensed to practice medicine and surgery by 
the State in which that function or action is performed.
    Performing an MDS-PAC assessment is a process that involves patient 
interview, patient observation, and, if necessary, obtaining 
information from other sources, such as the clinical record or the 
patient's family. The data recorded on the MDS-PAC would be the result 
of that total assessment process, and the manner in which data is 
obtained for a specific MDS-PAC item would depend on a combination of 
the instructions on the MDS-PAC form itself, the Item-by-Item Guide to 
the MDS-PAC, and provisions set forth via rulemaking. Although 
different professional clinicians may be involved in the MDS-PAC 
assessment process, in order to ensure that the MDS-PAC assessment 
process is properly followed, we propose that only specific clinicians 
be authorized to sign item AB1a of the MDS-PAC.
    In general, we believe that physicians, registered nurses, physical 
therapists, and occupational therapists are the only disciplines 
equipped with the education and experience to accurately assess the 
entire range of an individual's functional/motor performance and 
medical/clinical status. Additionally, the licensure requirements of 
some States restrict the human services disciplines that may perform a 
clinical assessment. Therefore, we propose that only an occupational 
therapist, a physical therapist, a physician, or a registered nurse be 
authorized to sign item AB1a of the MDS-PAC and provide the data for 
items AB1b thru AB1g of the MDS-PAC. Item AB1a is where the clinician 
who is attesting to the completion of the assessment signs. Items AB1b 
thru AB1g are the items that identify the clinician who signed item 
AB1a and the date that item AB1a was signed.
    The clinician who signs item AB1a would be responsible for the 
accuracy and thoroughness of a specific patient's MDS-PAC assessment, 
and would be responsible for the accuracy of the date inserted in item 
AB1g. The signatures of other professional clinicians who contributed 
to the data recorded on the MDS-PAC would be recorded in item AB, lines 
2a through item 2f.
    The data for the MDS-PAC items that require the collection of data 
that is not associated with the observation of an activity by the 
patient can be obtained from the patient, the patient's clinical 
record, and, if necessary, from the patient's family. If the patient is 
uncooperative we believe that the data that is not associated with the 
observation of an activity by the patient can be obtained from the 
patient's clinical record, or other easily obtained documentation that 
contains patient information. We believe that the data for the MDS-PAC 
items related to the observation of a particular activity would always 
be recorded on the MDS-PAC, because these items allow for the recording 
of the data in different ways, including recording that the activity 
did not occur. For the items related to observation of a patient 
activity we want to emphasize that the clinician assessor should not 
require a patient to perform

[[Page 66325]]

an activity that in the clinician's professional judgment is clinically 
contraindicated or hazardous. The Item-by-Item Guide to the MDS-PAC in 
Appendix BBB contains information concerning observational techniques 
and provides more guidance for clinicians in performing the MDS-PAC 
assessment.

F. The MDS-PAC Assessment Schedule

1. General Rule
    We propose in Sec. 412.610 that an IRF Medicare patient be assessed 
by a clinician(s) using the MDS-PAC to gather and record the patient 
assessment data. The length of the patient's hospitalization would 
determine how many MDS-PAC assessments are required. Table 4C below, 
entitled ``MDS-PAC Assessment Schedule and Associated Dates,'' 
illustrates the proposed MDS-PAC assessment schedule for the following 
``MDS-PAC Assessment Type'': Day 4, Day 11, Day 30, and Day 60 
assessments. The term ``day'' as used in the assessment schedule is a 
calendar day, and is counted as including the first day of the 
patient's current IRF hospitalization when the patient started 
receiving Medicare-covered Part A services, (which is generally the day 
of admission to the IRF). As specified in proposed Sec. 412.620(a)(3), 
in general only data from the Day 4 assessment would determine the CMG 
classification that would in turn determine the payment that the IRF 
would receive for the entire episode of the patient's hospitalization. 
If a patient is not hospitalized in the IRF for the time period needed 
for the Day 4 assessment, then the patient's CMG would be determined as 
specified in section V.C. of this preamble.

                                                                   Table 4C.--MDS-PAC Assessment Schedule and Associated Dates
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                      Hospitalization time                                                           Hospitalization episode
      MDS-PAC assessment type        period and observation       MDS-PAC assessment           MDS-PAC must be           covered by this       MDS-PAC must be encoded       MDS-PAC must be
                                          time period*             reference date*             completed by:*              assessment:                  by:*                transmitted by:*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 Day 4...........................  First 3 Days.............  Day 3....................  Day 4....................  Entire Hospitalization    Day 10..................  Day 16
                                                                                                                     Time Period.
 Day 11..........................  Days 8 to 10.............  Day 10...................  Day 11...................  ........................  Day 17..................  Day 23
 Day 30..........................  Days 28 to 30............  Day 30...................  Day 31...................  ........................  Day 37..................  Day 43
 Day 60..........................  Days 58 to 60............  Day 60...................  Day 61...................  ........................  Day 67..................  Day 73
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Currently, on the MDS-PAC, item B4 ``Indicators of Delirium--
Periodic Disordered Thinking/Awareness,'' requires an assessment time 
period that is 7 days in length. Item F1 ``Bladder Continence,'' and 
item F4 ``Bowel Continence'' require an assessment time period that is 
7 to 14 days in length. Therefore, the assessment time period and 
associated coding for these three items affect the dates for the 
``Hospitalization Time Period and Observation Time Period,'' the ``MDS-
PAC Assessment Reference Date,'' the ``MDS-PAC Must Be Completed by:,'' 
the ``MDS-PAC Must be Encoded By:,'' and the ``MDS-PAC Must be 
Transmitted By:''. As stated previously, we will be conducting 
additional testing of the MDS-PAC. This additional testing will 
determine if the assessment time period for items B4, F1, and F4 can be 
changed, or if the instructions on assessing these items should be 
changed. If our additional testing indicates that the assessment time 
periods or the instructions for assessing items B4, F1, and F4 should 
not be changed, then in the final rule we will change the proposed MDS-
PAC assessment schedule and associated dates to reflect the current 
assessment time periods of these three items.
    Table 4C represents the generic assessment schedule and other 
associated MDS-PAC dates. Table 5C.--Example Applying the MDS-PAC 
Assessment Schedule and Associated Dates, below is an example of how 
Table 4C would be applied using actual calendar dates. In Table 5C it 
is assumed that the patient was admitted on April 3, 2001.

                Table 5C.--Example Applying the MDS-PAC Assessment Schedule and Associated Dates
----------------------------------------------------------------------------------------------------------------
                                                                MDS-PAC      MDS-PAC                   MDS-PAC
                                       Hospitalization time    assessment    must be      MDS-PAC      must be
       MDS-PAC assessment type        period and observation   reference    completed     must be    transmitted
                                            time period           date         by:      encoded by:      by:
----------------------------------------------------------------------------------------------------------------
Day 4...............................  First 3 Days..........       4/5/01       4/6/01      4/12/01      4/18/01
Day 11..............................  Days 8 to 10..........      4/12/01      4/13/01      4/19/01      4/25/01
Day 30..............................  Days 28 to 30.........       5/2/01       5/3/01       5/9/01      5/15/01
Day 60..............................  Days 58 to 60.........       6/1/01       6/2/01       6/8/01      6/14/01
----------------------------------------------------------------------------------------------------------------

    Each patient is assessed by a clinician(s) using an MDS-PAC to 
perform a comprehensive assessment according to the schedule stated 
above. More than one clinician can contribute to completion of the MDS-
PAC. We believe that MDS-PAC assessment accuracy would be enhanced if 
the data collected for an MDS-PAC item is collected by a clinician with 
specialized training and experience in the area of the data being 
collected. For example, although a registered nurse could fully assess 
all aspects of a patient and collect all the MDS-PAC data, a physical 
therapist or an occupational therapist has the specialized training 
which may contribute to a more accurate assessment of some neuro-
muscular items. Our objective is to have data collected that would best 
reflect the patient's unique circumstances and clinical status during 
the assessment observation period, considering that an MDS-PAC item may 
provide for several possible responses and that the accuracy of patient 
assessment is contingent on the training and experience of the 
clinician assessor.
    In section IV. of this preamble, we specify the MDS-PAC items that 
would be used to classify a patient into a specific CMG. We propose to 
require

[[Page 66326]]

that data be collected not only for the items that would be used to 
classify a patient into a CMG, but also for any of the other MDS-PAC 
items for which data collection is appropriate according to one or more 
of the following: (1) the instructions on the MDS-PAC; (2) the Item-by-
Item Guide to the MDS-PAC; and (3) applicable rulemaking provisions.
    The example that follows, with ``day'' referring to a calendar day, 
illustrates a typical IRF's Medicare beneficiary hospitalization 
assessment schedule:
    <bullet> Hospitalization Day 1. Patient admission day and the day 
that the IRF begins to furnish Medicare-covered Part A services. This 
is the day that starts the count as ``day 1'' when determining the 
assessment time periods for the MDS-PAC assessments.
    <bullet> Hospitalization Day 3. The last day of the 1 through 3 
calendar day assessment observation period and, as a general rule, the 
last day that can be used to set the assessment reference date for the 
initial (Day 4) MDS-PAC assessment.
    <bullet> Hospitalization Day 4. The day by which the Day 4 MDS-PAC 
must be completed.
    <bullet> Hospitalization Day 10. The last day of the 8 through 10 
calendar day assessment observation period and, as a general rule, the 
last day that can be used to set the assessment reference date for the 
first re-assessment.
    <bullet> Hospitalization Day 11. The day by which the Day 11 MDS-
PAC must be completed.
    <bullet> Hospitalization Day 30. The last day of the 28 through 30 
calendar day assessment time period and, as a general rule, the last 
day that can be used to set the assessment reference date for the 
second re-assessment.
    <bullet> Hospitalization Day 31. The day by which the Day 30 MDS-
PAC must be completed.
    In the above example, if the patient is instead discharged on day 
22 of the hospitalization, then the discharge day is the assessment 
reference date.
2. Interrupted Stays
    a. Definition of an Interrupted Stay.
    As specified in proposed Sec. 412.602 an interrupted stay is one in 
which an IRF patient is discharged from the IRF and returns to the same 
IRF within 3 calendar days. For purposes of the MDS-PAC assessment 
process, if a patient has an interrupted stay, then: (1) the initial 
CMG classification from the ``initial'' (Day 4) MDS-PAC assessment 
would remain in effect (no new initial MDS-PAC assessment would be 
performed); and (2) the required scheduled MDS-PAC update assessments 
must still be performed. A patient who returns to the same IRF more 
than 3 calendar days after being discharged is considered a ``new'' 
patient for purposes of the MDS-PAC assessment schedule process. Being 
considered a ``new'' patient for the MDS-PAC assessment schedule 
process means that a new Day 4 assessment needs to be performed. That 
new Day 4 assessment would determine a new CMG. That new CMG may or may 
not be the same CMG into which the patient classified prior to the 
interrupted stay.
    In counting the 3 calendar day time period to determine the length 
of the interrupted stay, the first day of the start of the interrupted 
stay is counted as ``day 1,'' with midnight of that day serving as the 
end of that calendar day. The 2 calendar days that immediately follow 
would be days 2 and 3. If the patient returns to the IRF by midnight of 
the third calendar day, then it would be determined that the patient 
had an interrupted stay of 3 calendar days or less.
    When a patient has an interrupted stay, the interrupted stay must 
be documented on the MDS-PAC interrupted stay tracking form. The data 
recorded on the interrupted stay tracking form must be transmitted to 
the HCFA MDS-PAC system within 7 calendar days of the date the patient 
returns to the IRF.
    b. Effect of an Interrupted Stay Upon the Assessment Schedule
    When an interruption of a patient's IRF stay occurs it may affect 
the MDS-PAC--(1) assessment reference dates; (2) completion dates; (3) 
encoding dates; and (4) transmission dates.
    As discussed in section III. D. of this preamble, the assessment 
reference date generally is the designated endpoint of the common 3-day 
observation period, and the MDS-PAC items will usually refer back in 
time from this point. Therefore, in order to set an assessment 
reference date, the patient must be an inpatient of the IRF during the 
3-day observation time period. The 3-day observation time period must 
be continuous.
    In order to facilitate the discussion that follows regarding the 
effect of an interrupted stay upon the assessment schedule Table 5C has 
been reproduced below.

                 Table 5C--Example Applying the MDS-PAC Assessment Schedule and Associated Dates
----------------------------------------------------------------------------------------------------------------
                                                                MDS-PAC      MDS-PAC                   MDS-PAC
                                       Hospitalization time    assessment    must be      MDS-PAC      must be
      MDS-PAC  assessment type        period and observation   reference    completed     must be    transmitted
                                            time period           date         by:      encoded by:      by:
----------------------------------------------------------------------------------------------------------------
Day 4...............................  First 3 Days..........     04/05/01     04/06/01     04/12/01     04/18/01
Day 11..............................  Days 8 to 10..........     04/12/01     04/13/01     04/19/01     04/25/01
Day 30..............................  Days 28 to 30.........     05/02/01     05/03/01     05/09/01     05/15/01
Day 60..............................  Days 58 to 60.........     06/01/01     06/02/01     06/08/01     06/14/01
----------------------------------------------------------------------------------------------------------------

    In Table 5C above, if an interruption of 3 calendar days or less 
occurred for any of the ``MDS-PAC Assessment Type'' assessment 
observation time periods (for example, the days specified in the 
``Hospitalization Time Period and Observational Time Period'' column in 
the Table), then the associated assessment reference dates, MDS-PAC 
completion dates, MDS-PAC encoded by dates, and MDS-PAC transmitted by 
dates for that particular ``MDS-PAC Assessment Type'' would be shifted 
forward by the number of days that the patient was not an inpatient of 
the IRF.
    We refer to Table 5C to illustrate the shifting forward of dates. 
With regard to the Day 4 assessment assume that the patient's stay 
began with admission to the IRF on April 3, 2001, but was interrupted 
on April 4, 2001, which would be day 2 of the patient's IRF 
hospitalization. The patient returned to the same IRF prior to midnight 
of April 6, 2001, and had an interrupted stay of 3 calendar days. The 
assessment reference date observation time period for the Day 4 
assessment would be shifted to April 6, 7, and 8. (Without the 
interrupted stay, the Day 4 assessment reference date observation time 
period would have been April 3, 4, and 5, with the assessment reference 
date being April 5, 2001). Because of the interruption in stay, the 
MDS-PAC Day 4 assessment reference date would be

[[Page 66327]]

reset to April 8, 2001. The Day 4 MDS-PAC completion date would be 
reset to April 9, 2001. The Day 4 ``MDS-PAC Must Be Encoded By'' date 
would be reset to April 15, 2001. The Day 4 ``MDS-PAC Must Be 
Transmitted By'' date would be reset to April 21, 2001.
    Before this interrupted stay, the Day 11 assessment reference date 
was set to be day 10 of the patient's hospitalization, which would be 
April 12, 2001. Because of the shifting forward of the Day 4 assessment 
reference date from April 5, 2001, to April 8, 2001, the Day 11 
assessment dates, and only the Day 11 assessment dates, would also be 
shifted forward. The Day 11 assessment reference date would then be 
April 15, 2001. The Day 11 MDS-PAC completion date would be reset to 
April 16, 2001. The Day 11 ``MDS-PAC Must Be Encoded By'' date would be 
reset to April 22, 2001. The Day 11 ``MDS-PAC Must Be Transmitted By'' 
date would be reset to April 28, 2001. When there is a shifting forward 
of the Day 4 or Day 11 assessment dates they would not affect the 
assessment timeframes for the subsequent (for example, Day 30 or Day 
60) assessments, because the purpose of shifting forward an assessment 
due to an interruption in stay is to keep the time periods between 
assessments to at least 7 calendar days.
    Again, we refer to Table 5C to illustrate the shifting forward of 
dates. Assume that for the Day 11 reassessment the patient, who was 
admitted to the IRF on April 3, 2001, started an interrupted stay on 
April 11, 2001, which would be day 9 of the patient's IRF 
hospitalization. (For this example, do not assume that the patient also 
had a Day 4 interrupted stay.) The patient returned to the same IRF 
prior to midnight of April 13, 2001, and had an interrupted stay of 3 
calendar days. The assessment reference date observation time period 
for the Day 11 assessment would be shifted to April 13, 14, and 15. 
(Before the interrupted stay, the Day 11 assessment reference date 
observation time period was April 10, 11, and 12, with the assessment 
reference date being April 12, 2001.) Due to the interruption in stay, 
the MDS-PAC assessment reference date would be reset to April 15, 2001. 
The MDS-PAC completion date would be reset to April 16, 2001. The 
``MDS-PAC Must Be Encoded By'' date would be reset to April 22, 2001. 
The ``MDS-PAC Must Be Transmitted By'' date would be reset to April 28, 
2001. The various dates, as illustrated in Table 5C, for the Day 30 and 
Day 60 assessments would not be affected by the shifting forward of the 
Day 11 assessment associated dates. However, if the patient had an 
interrupted stay during the time period that is associated with the Day 
30 or Day 60 assessment as indicated in the Table 5C column entitled 
``Hospitalization Time Period and Observation Time Period'' then the 
same shifting forward methodology described above for the Day 11 
assessment would apply.
3. MDS-PAC Dates Associated with the Discharge Assessment
    As specified in proposed Sec. 412.610(c)(5) and (6) the assessment 
reference date for the discharge assessment is the day when one of two 
events occurs first: (1) the day the patient is discharged from the IRF 
or (2) the day the patient ceases receiving Medicare-covered Part A 
inpatient rehabilitation services. The MDS-PAC assessment is performed 
only at the first point in time either of these events occur. There may 
be cases when a patient ceases receiving inpatient rehabilitation 
Medicare-covered services, but is not discharged from the IRF.
    After the assessment reference date for the discharge MDS-PAC 
assessment is determined the completion date for the discharge MDS-PAC 
assessment must be set. As specified in proposed Sec. 412.610(e)(2) the 
completion date for the discharge MDS-PAC assessment is the 5th 
calendar day in the period beginning with the discharge MDS-PAC 
assessment reference date. To count the 5 calendar days, count the 
discharge MDS-PAC assessment reference date as day 1 of the 5 calendar 
days. For example, if the MDS-PAC assessment reference date is May 1, 
2000, then the MDS-PAC completion date would be May 5, 2000.
    The method used to determine the completion date for the discharge 
MDS-PAC assessment is not the same method used to determine the 
completion date for the Day 4, Day 11, Day 30 or Day 60 MDS-PAC 
assessments. The reason for using a different method to determine the 
discharge MDS-PAC completion date is because of the definition of an 
interrupted stay. Previously we specified that after the patient 
returns to the IRF after an interrupted stay another Day 4 assessment 
is not performed, and the CMG into which the patient classified prior 
to starting the interrupted stay is still in effect. Therefore, in 
order to ensure that a clinician does not perform a discharge 
assessment on a patient who meets the criteria of an interrupted stay, 
it is necessary to make the completion date of the discharge MDS-PAC 
assessment a date that exceeds the interrupted stay defined time 
period. This safeguard prevents the performance of unnecessary MDS-PAC 
discharge assessments by the IRF.
    In addition, any discharge MDS-PAC assessment that is transmitted 
to the HCFA MDS-PAC system is used by the system to indicate that a 
patient is no longer hospitalized in the IRF. Therefore, if a discharge 
assessment that is only associated with an interrupted stay is 
transmitted to the HCFA MDS-PAC system, it would result in the HCFA 
MDS-PAC system rejecting any subsequent update (either a Day 11, Day 30 
or Day 60) assessments that are associated with the patient's continued 
hospitalization in the same IRF following an interrupted stay.
    As specified in proposed Sec. 412.610(e)(3) the discharge MDS-PAC 
``must be encoded by'' date is the 7th calendar day in the period 
beginning with the discharge MDS-PAC completion date. To count the 7 
calendar days, count the discharge MDS-PAC assessment completion date 
as day 1 of the 7 calendar days. For example, if the MDS-PAC assessment 
completion date is May 5, 2000, then the MDS-PAC must be encoded by 
date would be May 11, 2000.
    As specified in proposed Sec. 412.614(c) the discharge MDS-PAC 
``must be transmitted by'' date is the 7th calendar day in the period 
beginning with the discharge MDS-PAC ``must be encoded by'' date. To 
count the 7 calendar days, count the discharge MDS-PAC assessment 
``must be encoded by'' date as day 1 of the 7 calendar days. For 
example, if the MDS-PAC assessment must be encoded by date is May 11, 
2000, then the MDS-PAC must be transmitted by date would be May 17, 
2000.

[[Page 66328]]

Table 6C below illustrates the discharge MDS-PAC dates discussed 
above:

                       Table 6C.--Example Applying the MDS-PAC Discharge Assessment Dates
----------------------------------------------------------------------------------------------------------------
                                                                MDS-PAC      MDS-PAC                   MDS-PAC
                                                  Discharge    assessment    must be      MDS-PAC      must be
            MDS-PAC  assessment type                date*      reference    completed     must be    transmitted
                                                                  date         on:      encoded by:      by:
----------------------------------------------------------------------------------------------------------------
Discharge Assessment...........................       5/1/00       5/1/00       5/5/00      5/11/00     5/17/00
----------------------------------------------------------------------------------------------------------------
*This is either: (1) the day the patient is discharged from the IRF; or (2) the day the patient ceases receiving
  Medicare-coverred Part A inpatient rehabilitation services.

    Data from recent studies indicate that the vast majority of 
patients are discharged from IRFs within the first twenty calendar days 
of their hospitalization. Therefore, we believe that, in most cases, 
IRFs would only perform three assessments under this proposal: The Day 
4, Day 11, and the discharge assessment. Early data indicated that the 
mean length of stay was 18.9 days, that the median length of stay was 
16 days, with a standard deviation of 13. More recent data from the 
RAND Institute indicates that the mean length of stay is 15.81 days, 
and that the median length of stay is 14 days. The recent RAND data 
also indicates that less than 9 percent of patients would require a Day 
30 assessment and less than \1/2\ of 1 percent of patients would 
require a Day 60 assessment. We are especially interested in Day 30 and 
Day 60 assessments because these cases will be very unusual when 
compared to the average length of stay; therefore, we want to 
understand what characteristics make these cases atypical. In addition, 
Day 30 assessment data may be useful in making any future CMG 
refinements; for example, providing outlier information after the IRF 
prospective payment system has been implemented. We are specifically 
soliciting comments on the benefits of performing interim assessments 
on days 11, 30, and 60.
4. Assessment Rule to Use If Medicare Beneficiaries Are Receiving IRF 
Services on the Effective Date of this Regulation
    We propose a special MDS-PAC assessment rule for the Medicare 
beneficiaries who already are IRF patients on the date that this 
regulation becomes effective. For these patients we are proposing that 
only one MDS-PAC assessment must be performed. The one MDS-PAC 
assessment would be used to classify a patient into a CMG, and that CMG 
would determine the payment the IRF would receive for all the Part A 
services the IRF furnished to the patient during the patient's current 
hospitalization. For Medicare beneficiaries who already are IRF 
patients on the date that this regulation becomes effective the one 
MDS-PAC assessment would, as applicable, cover one of the following 
calendar day time periods and associated conditions: (1) When this 
regulation becomes effective if a patient currently hospitalized 
continues being an IRF patient for at least 3 calendar days, then the 
data for the MDS-PAC assessment items must be collected according to 
the instructions on the MDS-PAC form and the Item-by-Item Guide to the 
MDS-PAC. (2) When this regulation becomes effective if a patient 
currently hospitalized continues being an IRF patient for only 2 
calendar days, then the data for the MDS-PAC assessment items that must 
be collected would pertain to only these 2 calendar days, unless the 
instructions on the MDS-PAC form and the Item-by-Item Guide to the MDS-
PAC specify a shorter time period. (3) When this regulation becomes 
effective if a patient currently hospitalized continues being an IRF 
patient for only 1 or less than 1 calendar day then the data for the 
MDS-PAC assessment items that must be collected would pertain to 1 or 
less than 1 calendar day, unless the instructions on the MDS-PAC form 
and the Item-by-Item Guide to the MDS-PAC specify a shorter time 
period.
    For this special MDS-PAC assessment we propose that, no later than 
30 calendar days from the date this regulation becomes effective, all 
the following would apply--(1) the data for this special MDS-PAC 
assessment must be collected; (2) this special MDS-PAC must be 
completed; (3) the MDS-PAC data for this special assessment must be 
encoded; and (4) the MDS-PAC data for this special assessment must not 
only be transmitted to but also be accepted by the HCFA MDS-PAC system. 
We propose that if the IRF does not, as specified above, collect, 
complete, encode, and transmit the data for this special MDS-PAC 
assessment, then the IRF would receive no payment for any of the Part A 
services furnished to Medicare beneficiaries who already are IRF 
patients on the date that this regulation becomes effective.
5. What MDS-PAC Items Are Collected On Each Assessment
    The MDS-PAC assessments must be performed according to the schedule 
specified previously. Table 7C's.--MDS-PAC Items Required by Type of 
Assessment, title indicates the data for each MDS-PAC item that we 
propose to require collecting for the Day 4, Day 11, Day 30, Day 60, 
and discharge assessments.
    It should be noted that recording data on the MDS-PAC for a 
particular item may require, according to the instructions for that 
item on the MDS-PAC form, that the clinician not record data for 
certain other items. For example, the MDS-PAC instructions state that 
if data is recorded indicating a patient is comatose in item B1, the 
clinician assessing the patient must proceed from item B1 to item E1. 
This means that the data for the items between B1 and E1 are not 
recorded. (The term ``update'' in Table 7C below refers to the Day 11, 
Day 30, and Day 60 assessments. An ``X'' indicates that the MDS-PAC 
item is required for that assessment type.)

         Table 7C.--MDS-PAC Items Required by Type of Assessment
------------------------------------------------------------------------
                                             Assessment type
         MDS-PAC Item          -----------------------------------------
                                  Admission      Update       Discharge
------------------------------------------------------------------------
ITEM AA1 and ITEM A1. Legal               X             X             X
 Name of Patient..............
ITEM AA2 and ITEM A2.                     X             X             X
 Admission Date (2a and, if
 applicable, also 2b).........

[[Page 66329]]

 
ITEM AA3 and ITEM A3. Reason              X             X             X
 for Assessment...............
ITEM AA4. Assessment Reference            X             X             X
 Date.........................
ITEM AA5a and AA5b. Discharge   ............  ............            X
 Status.......................
ITEM AA6a and AA6b. Social                X             X             X
 Security (6a) and Medicare
 Numbers (6b).................
ITEM AA7. Medical Record                  X             X             X
 Number.......................
ITEM AA8. Facility Provider               X             X             X
 Number (Both 8a and 8b)......
ITEM AA9. Medicaid Number.....            X             X             X
ITEM AA10. Gender.............            X             X             X
ITEM AA11. BirthDate..........            X             X             X
ITEM AA12. Ethnicity/Race.....            X             X             X
ITEM AA13a and AA13b.
 Interrupted Stay * (Only
 appears on the interrupted
 stay tracking form. Record
 and submit data if
 applicable.).................
ITEM AA14a thru AA14f.
 Clinician Completing
 Assessment * (Only appears on
 the interrupted stay tracking
 form. Record and submit data
 if Item 13 data is recorded
 and submitted.)..............
Item AB1a thru AB1g. Person               X             X             X
 Completing Assessment........
Item AB2a thru AB2f. Signature            X             X             X
 of Staff Completing Part of
 the Assessment...............
ITEM A4. Admission Status.....            X             X             X
ITEM A5. Goals for Stay.......            X             X             X
ITEM A6. Admitted From........            X             X             X
ITEM A7. Precipitating Event              X             X             X
 Prior to Admission...........
ITEM A8. Primary and Secondary            X             X             X
 Payment Source For Stay......
ITEM A9. Marital Status.......            X             X             X
ITEM A10. Education...........            X   ............  ............
ITEM A11a and A11b. Language..            X             X             X
ITEM A12. Dominant Hand.......            X   ............  ............
ITEM A13. Mental Health                   X   ............  ............
 History......................
ITEM A14. Conditions Related              X   ............  ............
 to MR/DD Status..............
ITEM A15a thru A15e.                      X   ............  ............
 Responsibility/Legal Guardian
ITEM A16a thru A16e. Advance              X   ............  ............
 Directives...................
ITEM B1. Comatose.............            X             X             X
ITEM B2a thru B2d. Memory/                X             X             X
 Recall Ability...............
ITEM B3a and B3b. Cognitive               X             X             X
 Skills for Daily Decision
 Making.......................
ITEM B4a thru B4f. Indicators             X             X             X
 of Delirium-Periodic
 Disordered Thinking/Awareness
ITEM C1. Hearing..............            X             X             X
ITEM C2a thru C2e. Modes of               X             X             X
 Communication................
ITEM C3a and C3b. Making Self             X             X             X
 Understood...................
ITEM C4. Speech Clarity.......            X             X             X
ITEM C5a and C5b. Ability to              X             X             X
 Understand Others............
ITEM C6a and C6b. Vision......            X             X             X
ITEM D1a thru D1k. Indicators             X             X             X
 of Depression, Anxiety, Sad
 Mood.........................
ITEM D2. Mood Persistence.....            X             X             X
ITEM D3a thru D3e. Behavioral             X             X             X
 Symptoms.....................
ITEM E1a thru E1l. 3-Day ADL              X             X             X
 Self-Performance.............
ITEM E2a thru E2l. ADL Assist             X             X             X
 codes........................
ITEM E3a and E3b. ADL Changes.            X             X             X
ITEM E4a thru E4f.                        X             X             X
 Instrumental Activities of
 Daily Living.................
ITEM E5. IADL Areas Now More              X             X             X
 Limited......................
ITEM E6a thru E6j. Devices/               X             X             X
 Aides........................
ITEM E7a and E7b. Stamina.....            X             X             X
ITEM E8a thru E8c. Walking and            X             X             X
 Stair Climbing...............
ITEM E9a and E9b. Balance                 X             X             X
 Related to Transitions.......
ITEM E10a thru E10c. Neuro-               X             X             X
 musculoskeletal Impairment...
ITEM F1a and F1b. Bladder                 X             X             X
 Continence...................
ITEM F2a thru F2g. Bladder                X             X             X
 Appliance....................
ITEM F3. Bladder Appliance                X             X             X
 Support......................
ITEM F4. Bowel Continence.....            X             X             X
ITEM F5a thru F5d. Bowel                  X             X             X
 Appliances...................
ITEM F6. Bowel Appliance                  X             X             X
 Support......................
ITEM G1. Impairment Group.....            X   ............  ............
ITEM G2a thru G2aq. Other                 X             X             X
 Diseases.....................
ITEM G3a thru G3l. Infections.            X             X             X
ITEM G4A and G4B. Other                   X             X             X
 Current or More Detailed
 Diagnoses and ICD-9-CM Codes
 (Line ``a'' thru line ``e''
 as applicable.)..............
ITEM G5. Complications/Co-                X             X             X
 Morbidities (Line ``a'' thru
 line ``d'' as applicable.)...
ITEM H1. Vital Signs..........            X             X             X
ITEM H2a, H2b, H2d thru H2t,              X             X             X
 and H2w. Problem Conditions..
ITEM H2c, H2u, and H2v.                   X   ............  ............
 Problem Conditions...........
ITEM H3a thru H3h. Respiratory            X             X             X
 Conditions...................
ITEM H4a thru H4f. Pressure               X             X             X
 Ulcers.......................
ITEM H5a and H5b. Other Skin              X             X             X
 Integrity....................

[[Page 66330]]

 
ITEM H5c. Other Skin Integrity            X   ............  ............
ITEM H6a thru H6e. Other Skin             X             X             X
 Problems or Lesions Present..
ITEM I1a and I1b. Pain                    X             X             X
 Symptoms.....................
ITEM I1c. Pain Symptoms.......            X   ............  ............
ITEM J1a and J1b. Oral                    X             X             X
 Problems.....................
ITEM J2. Swallowing...........            X             X             X
ITEM J3a. Height..............            X   ............  ............
ITEM J3b. Weight..............            X             X             X
ITEM J4a and J4b. Weight                  X   ............  ............
 Change.......................
ITEM J5a and J5b. Parenteral              X             X             X
 or Enteral Intake............
ITEM K1a thru K1e. Clinical               X             X             X
 Visits and Orders............
ITEM K2a thru K2ai. Treatments            X             X             X
 and Services.................
ITEM K3a thru K3k. Nursing                X             X             X
 Practice or Restorative Care.
ITEM K4a thru K4f. Therapy                X             X             X
 Services.....................
ITEM K5a thru K5d. Devices and            X             X             X
 Restraints...................
ITEM L1a thru L1h. Functional             X             X             X
 Improvement Goals............
ITEM L2a thru L2c. Attributes             X             X             X
 Relevant to Rehabilitation...
ITEM L3a and L3b. Change over             X             X             X
 last 3 days..................
ITEM L4. Estimated Length of              X             X             X
 Stay from Date of Admission..
ITEM M1a thru M1e. Available              X             X             X
 Social Supports..............
ITEM M2a and M2b. Caregiver               X   ............            X
 Status.......................
ITEM M3a and M3b. Living                  X             X            X
 Arrangement..................
------------------------------------------------------------------------
* Note: Data for items AA13 and AA14 would only be recorded and
  submitted to the HCFA MDS-PAC system if the patient has an interrupted
  stay according to how interrupted stay is defined in this preamble.
  This means each time the patient has an interrupted stay, as that term
  is defined in this preamble, data for items AA13 and AA14 would be
  recorded and submitted to the HCFA MDS-PAC system. The other items on
  the interrupted stay tracking form would also be submitted. However,
  these other interrupted stay tracking form items are identification
  information items that have previously been collected and recorded by
  the IRF clinician and, therefore, do not require collection as new
  items of data.

6. The MDS-PAC Completion Date
    We propose in Sec. 412.610(e) that for the Day 4, Day 11, Day 30, 
and Day 60 assessments that IRFs ``complete'' the MDS-PAC on the 
calendar day that follows the assessment reference date. Previously we 
discussed the completion date for the discharge assessment. For all 
assessments ``completion'' of the MDS-PAC means that accurate 
information has been recorded for each MDS-PAC item, and that the MDS-
PAC has been signed and dated by the clinicians that recorded 
information on the MDS-PAC. It is our belief that the IRF clinician(s) 
can easily access or recall specific patient information if only a 
short period of time has elapsed, between the patient interview/patient 
observation time period and the recording of that information on the 
MDS-PAC.
7. Penalties for Late Assessments
    In Sec. 412.610(d) we propose that the MDS-PAC assessment is late 
if the assessment is not in accordance with the assessment reference 
date specification for the Day 4 assessment discussed previously in 
this preamble. If the MDS-PAC assessment is late then the IRF would 
either receive a reduced CMG-determined payment or no payment. If the 
MDS-PAC assessment is less than or equal to 10 calendar days late then 
the reduced CMG-determined payment would be a default rate. We propose 
to set the default rate at 25 percent less than the CMG-determined 
payment that the IRF would otherwise have received. If any assessment 
is more than 10 calendar days late, then the IRF would receive no 
payment for the Medicare-covered Part A services furnished.

G. Computerization of the MDS-PAC Data

1. Encoding the MDS-PAC Data
    The data for all MDS-PAC assessments must be encoded. Encoding the 
data means entering the MDS-PAC data into the IRF's computer using 
appropriate software, including performing data edits. In 
Sec. 412.610(e)(3), we propose that IRFs encode and edit the data for 
Medicare patients within 7 calendar days of the date that the MDS-PAC 
is completed. We propose to specify a maximum of 7 calendar days 
because we believe that this is a reasonable amount of time for IRFs to 
complete these tasks.
    In determining the first day to count as being ``within 7 calendar 
days of the date that the MDS-PAC is completed,'' the assessment 
completion date itself would be counted as ``day 1'' of the 7 calendar 
days. For example, if the MDS-PAC completion date is April 6, 2001, 
then the MDS-PAC must be encoded by April 12, 2001. As previously 
stated, MDS-PAC records are considered ``locked'' when they pass all 
HCFA-specified edits and are accepted by the MDS-PAC database to which 
the IRF transmits its records.
    To encode the MDS-PAC data, the IRF may: use a commercial 
application from a private software vendor; develop its own data entry 
program based on our specifications; or use the free data entry and 
data transmission software program developed by HCFA, which is the MDS-
PAC Tool (MPACT). The IRF will be able to download MPACT from our 
Inpatient Rehabilitation Facility Prospective Payment System website. 
The MPACT data entry tool accommodates standard HCFA edit 
specifications for MDS-PAC data.
    It is preferable for the edits and corrections to be made as soon 
as possible after the assessment activity, because the clinician's 
recall of the patient assessment at that point is likely to be more 
detailed and easier to associate with any clinical notes related to the 
assessment. Therefore, it is reasonable to expect that IRFs will have 
the MDS-PAC data encoded, edited, and ready for transmission within 7 
calendar days of the completion date. In addition, if the IRF chooses 
to use the MDS-PAC information in patient care planning, our timeframes 
would contribute to the facility's efforts to produce a current and 
workable plan of care.

[[Page 66331]]

    IRFs will have flexibility in the process used to encode their 
data. Once the assessment is completed by the clinician(s), the data 
may be encoded by a clinician, or by a clerical staff member using a 
paper copy of a completed MDS-PAC, or by a data entry technician. Non-
clinical staff may not assess patients or complete clinical assessment 
items. However, clerical staff or data entry operators may enter the 
MDS-PAC data that has been collected by the clinician into the 
computer.
    In entering the data, IRFs must comply with requirements for 
safeguarding the confidentiality of patient identifiable information, 
as specified in section III.I.1. of this preamble. In addition, IRFs 
must train personnel with access to patient information to disclose 
that patient information only to those recipients who are authorized to 
have access to it.
    On August 12, 1998, we published in the Federal Register a proposed 
rule entitled ``Security and Electronic Signature Standards'' (63 FR 
43242), and on November 3, 1999, we published another proposed rule 
entitled ``Standards for Privacy of Individually Identifiable Health 
Information'' (64 FR 59918). When these proposed rules are published as 
final rules, the security and privacy criteria specified in these rules 
may supplement or supersede the security and privacy criteria specified 
in this proposed rule.
    Once the IRF encodes the MDS-PAC information, the computer software 
is used to review and edit the data to create a file that will be 
transmitted to the HCFA MDS-PAC system. The software program edits are 
designed to help preclude the transmission of erroneous or inconsistent 
information.
2. Accuracy of the Encoded MDS-PAC Data
    In Sec. 412.610(f) we propose that the encoded MDS-PAC data must 
accurately reflect the patient's status at the time the data are 
collected. Because the patient's clinical status may change over time, 
the MDS-PAC data must accurately represent a patient's clinical status 
as of a particular assessment reference date. Before transmission, the 
IRF must ensure that the data items on the MDS-PAC paper copy match the 
encoded data that are sent to the HCFA MDS-PAC system. We are requiring 
that once the clinician(s) completes the MDS-PAC assessment, using 
either a paper copy of the MDS-PAC or an electronic version, the IRF 
must ensure that the data encoded into the computer and transmitted to 
the HCFA MDS-PAC system accurately reflects the data collected by the 
clinician. We will leave to the IRFs the development of methods that 
ensure the accuracy of the MDS-PAC data that is transmitted. However, 
it should be noted that because the policies of the IRF prospective 
payment system only apply to Medicare beneficiaries, the HCFA MDS-PAC 
system will reject all transmitted assessment data for which a non-
Medicare payment source is indicated.
3. Transmission of the MDS-PAC Data
    We will utilize the most current technology to secure the safety of 
the information transmitted to and from the HCFA MDS-PAC system. In 
Sec. 412.614, we propose to require that the IRF electronically 
transmit to the HCFA MDS-PAC system accurate, complete, and encoded 
MDS-PAC data for each Medicare patient. We also propose that the data 
must be transmitted in a format that meets the general requirements 
specified in Sec. 412.614. We believe that once the MDS-PAC data are 
encoded and edited, it is a relatively simple procedure to complete the 
preparation of the data for transmission to the HCFA MDS-PAC system. 
Therefore, we are proposing that encoded and edited data that has not 
previously been transmitted, must be transmitted within 7 calendar days 
of the day by which the data must be encoded by as specified in Table 
4C ``MDS-PAC Assessment Schedule and Associated Dates''. In addition, 
the data must be transmitted in a manner that meets the locked data 
criteria previously discussed in this section of the preamble. At the 
end of the transmission file, an entry concerning the number of records 
being transmitted is required to complete the transmission process.
    We believe that the 7 calendar day transmission requirement would 
support claim review efforts, because prompt transmission of MDS-PAC 
data would facilitate our ability to compare a claim promptly against 
the associated MDS-PAC data which, in turn, would enhance our ability 
to make any necessary adjustment to the IRF's payment amount in a 
timely manner. We will maintain a national MDS-PAC repository to which 
State Agencies, fiscal intermediaries and peer review organizations 
will have access. An adjustment to the IRF claim may be made if a 
discrepancy is discovered between what the MDS-PAC data indicated the 
CMG on the claim should be and what is actually on the claim.
    The IRF must have a system that supports dial-up communications for 
the transmission of MDS-PAC data to the HCFA MDS-PAC system. The MDS-
PAC data will be submitted to the HCFA MDS-PAC system via HCFA's 
Medicare Data Collection Network (MDCN). The MDCN is a secured private 
network. Specific instructions and telephone numbers will be provided 
to the IRFs to access the MDCN. For security purposes, there are two 
levels of user authentication required. To obtain access to the MDCN, 
the IRF must obtain an individual network-identification code for each 
person submitting the HCFA MDS-PAC data. This identification code is 
distributed by the HCFA system administrator or HCFA's agents. To 
obtain access to the HCFA MDS-PAC system, an IRF must also obtain a 
facility-identification code from the HCFA system administrator.
    The IRF will transmit the MDS-PAC data via secured lines, and not 
via the Internet, to the HCFA MDS-PAC system, where the data will be 
checked to ensure it complies with HCFA MDS-PAC system data formatting 
specifications. The IRF will receive two reports, the initial and final 
validation reports. The initial validation report will notify the IRF 
if the submission is accepted or rejected. If the submission is 
rejected, the IRF is notified of the reason for the rejection. If the 
submission is accepted, the report alerts the IRF of any changes or 
discrepancies in the facility and vendor information. After the initial 
edit checks and acceptance of the file, the MDS-PAC data are validated 
to ensure that the data conforms to the HCFA specifications. If there 
are errors found in an assessment record, it will be rejected. Upon 
completion of the validation, the IRF receives the final validation 
report. This report includes the total number of assessment records 
submitted and the total number of assessment records rejected, as well 
as the total number of assessment records added to the database. The 
final validation also includes alert messages pertaining to an 
assessment record when appropriate; for example, ``Assessment was 
submitted out of sequence.''
    In order to test transmission of MDS-PAC data using the HCFA MDS-
PAC system IRFs must make a successful test transmission of test MDS-
PAC data to the HCFA MDS-PAC system between February 1 and February 28, 
2001. The initial test must include the following: (1) a transmission 
of MDS-PAC data that passes the HCFA edit checks built into the 
software program used by the IRF to encode the assessment data; and (2) 
a validation report back from the HCFA MDS-PAC system confirming 
transmission of data. This test data will not be included in the HCFA 
national repository. The test data are to contain MDS-PAC data on all 
Medicare

[[Page 66332]]

inpatients, both newly admitted and those previously receiving care, 
that are inpatients during the test transmission time period.
    If an IRF does not have Medicare inpatients receiving care during 
the specified test transmission time period, we propose that the IRF 
transmit test MDS-PAC data for Medicare inpatients that received care 
in the most recent 30 calendar day time period. This would require that 
these IRFs use the clinical record and professional clinical judgment 
to obtain the information required for the MDS-PAC items. In this way, 
these facilities could transmit test data in order to ascertain how 
well their system is functioning, and become familiar with entering 
data into the computerized version of the MDS-PAC. In order to both 
assist all IRFs in constructing MDS-PAC test data and to test the 
volume data capacity of the HCFA MDS-PAC system we may use and provide 
the IRFs with ``dummy'' MDS-PAC records or test data.
    We will provide training to the IRFs on the MDS-PAC instrument 
(including any modification arising from research examining the 
equivalence of the MDS-PAC and the FIM for classifying patients), the 
HCFA provided MPACT, the data transmission process, and the 
interpretation of the validation reports. Training will be provided 
prior to the implementation of IRF prospective payment system. The most 
current MDS-PAC will be available on our HCFA Inpatient Rehabilitation 
Facility Prospective Payment System website. IRFs and software vendors 
will be able to access the website and download the most current MDS-
PAC. In addition, the MPACT will be available on the HCFA Inpatient 
Rehabilitation Facility Prospective Payment System website, and IRFs 
and software vendors will be able to download the MPACT at no charge. 
This website will include the data specifications, data dictionaries, 
the Item-by-Item Guide to the MDS-PAC, and the IRF data submission 
procedures.
    We may also post other educational materials for IRFs on the 
website. We intend the website to provide current information to IRFs, 
State agencies, software vendors, professional organizations, and 
consumers. We encourage vendors, IRFs, and other interested parties to 
review the website regularly for information and issues related to the 
IRF prospective payment system.
4. Late Transmission Penalty
    In section III.G.2. of this preamble, we propose Secs. 412.606 and 
412.610 to require that MDS-PAC data be collected and transmitted not 
only for the items that would be used to classify a patient into a CMG, 
but also for the other MDS-PAC items, if collection and transmission of 
that data are appropriate according to one or more of the following: 
(1) the instructions on the MDS-PAC; (2) the Item-by-Item Guide to the 
MDS-PAC; and (3) applicable rulemaking provisions. In addition, if the 
IRF transmits MDS-PAC data for a particular patient that is not in 
accordance with the data record specifications, that data would be 
rejected by the HCFA MDS-PAC system. If the data is rejected by the 
HCFA MDS-PAC system, then the data is not ``locked'' as that term was 
defined previously, and the data must be re-transmitted.
    We propose in Sec. 412.614 to impose a penalty for an IRF's late 
transmission of MDS-PAC data to the HCFA MDS-PAC system. ``Late 
transmission'' means that the IRF did not transmit MDS-PAC data in 
accordance with the transmission timeframes previously specified in 
Table 4C of section III of this preamble. We propose that if the IRF 
transmits the MDS-PAC data late, then the IRF is either paid a reduced 
CMG-determined payment or no CMG-determined payment. If the IRF 
transmits the MDS-PAC data 10 or less calendar days late then the IRF 
would receive a payment that is 25 percent less than the CMG payment 
that the IRF would otherwise have received. If the MDS-PAC data is 
transmitted more than 10 calendar days late, then the IRF would receive 
no payment for the Medicare-covered Part A services furnished.
5. The MDS-PAC and Computer Software
    In Sec. 412.614(c) we propose that the IRF encode and transmit the 
MDS-PAC data using the MPACT software available from HCFA or other 
software that conforms to the HCFA standard data specifications, data 
dictionary, and other HCFA-specified data requirements, and that 
includes the MDS-PAC data items that match the most updated version of 
the MDS-PAC. HCFA's MPACT software will be able to be used for several 
purposes, such as to encode MDS-PAC data, to maintain IRF and patient-
specific MDS-PAC information, to create export files to submit MDS-PAC 
data, and to test alternative software. MPACT software will provide 
comprehensive on-line help to users in encoding, editing, and 
transmitting the MDS-PAC data. Additionally, there will be a toll-free 
hotline to support this software product.
    We caution IRFs that the MPACT software system would provide only 
the minimum requirements to encode and format the data. We will support 
these functions and applications; however, we do not intend to provide 
any other applications related to care planning, financial information, 
durable medical equipment, medications, or personnel issues. Software 
vendors are encouraged to use the MPACT software as a minimum system, 
until they have developed their own software to accommodate HCFA 
specifications and other applications useful for IRFs.

H. Quality Monitoring

    Before we present our specific strategies for quality monitoring in 
IRFs, we want to discuss our conceptual framework for understanding and 
advancing quality in the setting of IRFs, as well as other post-acute 
settings. Quality of care is complex, sometimes difficult to define, 
and is multi-dimensional in nature. One dimension is that the care 
achieve its intended result, which in the context of the IRF setting is 
most often to improve the patient's functioning in order to foster more 
independent living. A second dimension of quality is the prevention of 
avoidable complications or other adverse events and minimizing the 
effects of adverse events. A third related dimension is to improve 
management of the patient's medical impairments, with the goal being to 
promote ``improved'' health as well as function, or at least to improve 
the management of the patient's medical conditions. In addition, it is 
also important to use data to identify other sentinel events that may 
potentially impact care negatively. Our specific quality monitoring 
processes should be developed in a way that supports this multi-
dimensional view of quality.
    The consequences of detecting quality of care problems may be 
varied and could include increasing educational efforts to 
beneficiaries to help them make better informed selections of 
providers, guiding investigators to survey institutions (including 
verification surveys performed in JCAHO-accredited facilities), and if 
the problem(s) is not remedied consideration of whether the IRF should 
be permitted to continue to participate in the Medicare program. An 
IRF's own staff may use quality of care information from the MDS-PAC 
for their own quality assurance and, ultimately, quality improvement 
activities. We also have the potential to develop refinements to the 
case-mix methodology which provide incentives for improving quality.
    As our payment policies continue to evolve, our objective is to 
move forward

[[Page 66333]]

with a quality assessment and improvement agenda that is based on 
standardized data, beneficiaries' clinical characteristics, and patient 
care outcomes. To achieve that objective, we need to collect common 
data elements and develop standardized assessment tools that will 
enable us to focus on beneficiary care needs rather than the 
characteristics of the provider. We believe that the most important 
short-term goal of post-acute care quality monitoring is to assess the 
effects of implementing the changes in the payment system and the 
quality of post-acute care.
    We are aware of MedPAC's concern that we may have only a limited 
ability to assess the impact of Medicare payment changes that either 
have been implemented or will soon be initiated--for example, the IRF 
prospective payment system. There is a need to enhance our ability to 
assess this impact in order to improve the policies associated with our 
Medicare prospective payment systems.
    In the March 2000 MedPAC Report to Congress, MedPAC states that 
quality monitoring systems are important to ensure that payment systems 
are designed so that providers are responding appropriately to the 
system's incentives. MedPAC believes that such information could assist 
in tracking trends over time or provide an early warning of impending 
problems in quality. ``Attaining any of these ends requires routine, 
systematic measurement of health care quality.'' (p. 62) We believe 
that the MDS-PAC is a first step towards developing such a measure.
    The MDS-PAC is a multi-dimensional assessment instrument which 
provides a detailed picture of the patient. The non-payment related 
items in the instrument are necessary to provide a comprehensive 
inventory of patient factors that are necessary to monitor quality and 
risk adjust. This data can be used by facilities to identify patients 
at risk for adverse outcomes. In addition, MDS-PAC information may 
contribute to development of the patient care plan. Information 
collected can identify patients at risk for adverse outcomes, such as 
weight loss, aspiration, or pressure ulcers, and support the monitoring 
of these patients to prevent outcomes that might negatively impact 
patients' likelihood of optimal rehabilitation.
    We believe that the MDS-PAC items are needed to monitor the impact 
of the IRF prospective payment system upon IRFs and beneficiaries, 
including beneficiary access to care. Section 125 of the BBRA directs 
the Secretary to conduct a monitoring study, and to submit a report to 
the Congress no later than 3 years from the date that the IRF 
prospective payment is implemented. To both monitor the impact of the 
IRF prospective payment system upon IRFs and beneficiaries, and support 
this BBRA-mandated report to the Congress, we need a data-driven 
monitoring system that would give us the capability to acquire 
objective (as opposed to anecdotal) data for analysis.
    The MDS-PAC discharge assessment would provide data about a 
patient's clinical status at discharge, and give us the ability to 
compare a patient's clinical status at discharge with the patient's 
clinical status at the Day 4 assessment. Comparison of the patient's 
clinical status at Day 4 and at discharge would give us the data to 
analyze the relationship between any changes in the patient's clinical 
status and the quantity and effectiveness of the services the IRF 
furnished to the patient. That comparison would provide us with data 
that would indicate the quality of the IRF services furnished, and if 
an IRF was not furnishing the level of Medicare-covered services the 
patient needed.
    Many studies have examined overall and condition-specific 
functional gain from admission to discharge as a measure of the 
effectiveness of a rehabilitation program. National benchmarks of 
functional gain have been used by providers to measure their 
performance relative to other facilities. In addition, some work has 
also been devoted to understanding providers' efficiency by linking 
measures of length of stay and functional gain.
    Update assessments would yield the type of structured data that we 
can use to analyze the effectiveness of treatment services at a point 
in time when the services were still being furnished. Update 
assessments provide the information during treatment and allow 
measurement of changes in the patient's clinical status during a 
defined time period when the patient is still in treatment. We can then 
compare the patient's clinical status at that point in time to the 
patient's clinical status at either the Day 4 or discharge assessments, 
which would provide us with data about any changes in the patient's 
clinical status between the update assessments and these other 
assessments.
    In essence, update assessments provide a ``snapshot'' of the 
patient while the patient is still being treated. This snapshot 
provides a method to analyze the changes in the patient's clinical 
status that are a result of the IRF services furnished either up to, or 
from, a predetermined point in the patient's hospitalization stay. The 
snapshot is similar to how a clinician evaluates a patient's reaction 
to treatment at points in time after the clinician has implemented a 
plan of care, and, therefore, the snapshot can be used by the IRF in a 
similar manner. Because we propose to mandate the data requirements for 
update assessments, the snapshot will provide us with the same 
structured and detailed data that is comparable across IRFs, permitting 
us to analyze clinical outcomes related to the IRF services furnished 
up to, and from, a predetermined point in time at one or many IRFs. The 
update assessments could also provide us with the some of the data 
needed to analyze the effectiveness of the services being furnished at 
more than just the time period between the patient's admission and 
discharge. That analysis could be used to evaluate the quality and 
quantity of services the IRF furnished at different periods of time 
during the patient's hospitalization.
    The data associated with each MDS-PAC item would enhance our 
ability to monitor and, thus, safeguard the quality of care that 
beneficiaries receive. A quality of care improvement monitoring system 
that is based on the MDS-PAC data is consistent with other information-
based quality monitoring programs, such as the ORYX process used by the 
Joint Commission on Accreditation of Health Care Organizations.
    While only some MDS-PAC items would be used to determine the CMG, 
we believe that the data provided by MDS-PAC items are an essential 
first step in developing the type of quality monitoring system that 
both MedPAC and HCFA favor. Possible uses of the data could include: 
(1) strengthening existing quality assurance mechanisms; (2) generating 
indicators that would allow providers to assess their performance, and 
to compare it against benchmarks derived from standards of care or the 
performance of peers; and (3) creating a system that assists 
beneficiaries in making informed decisions when choosing among 
providers. In addition, MDS-PAC items may be useful in developing core 
measures that provide meaningful information on patient characteristics 
and outcomes across post-acute care settings.
1. Monitoring the IRF Prospective Payment System
    We are planning a system that can be used to monitor access to 
rehabilitation facilities as well as to monitor the quality of the care 
delivered in these

[[Page 66334]]

facilities. This will be done through the monitoring of payment for the 
care and the associated cost of the delivered care. Monitoring will 
include variables as length of IRF stay, percent of IRF discharges to 
SNF, long-term care hospital, or intensive outpatient rehabilitation 
program, change in motor function between admission and discharge, and 
the case-mix distribution of the facility. We plan to examine changes 
within ``market areas'' as well as individual facilities.
    In addition, we will be developing a variety of methods for 
monitoring the impact of the IRF prospective payment system. Monitoring 
may describe changes in access to rehabilitation, in payments to 
rehabilitation facilities, in quality of care, and in the cost of 
rehabilitation care. This monitoring would also help to identify 
unintended changes in the operations of providers, and would help to 
identify refinements needed in the IRF prospective payment system. In 
addition, because the IRF prospective payment system may have effects 
on non-IRF providers, and because changes in the payment systems for 
other providers may affect IRFs once common core data elements are 
required across post-acute providers and linked with other data, the 
monitoring system could also describe changes in access, utilization, 
quality, and cost of care in different types of post-acute sites 
including but not limited to HHAs and SNFs. We could start these 
activities as early as 2002.
2. Quality Indicators
    Quality indicators are markers that indicate either the presence or 
absence of potentially poor facility care practices or outcomes. The 
development of quality indicators depends on the collection and 
analysis of sufficient MDS-PAC data from a representative national 
sample. We are attempting to design a monitoring system that would not 
only describe quality indicators, but also show how they can be used 
together to obtain a clear description of access, outcomes, and cost in 
IRFs. Quality indicators will be developed around the different 
dimensions of quality discussed earlier in this section. We believe 
that quality indicators developed for individual IRFs would help 
identify the IRFs that require attention because they may be coding 
incorrectly or providing lower quality care. Analysis of the 
distribution of hospital indicators within specific classes of 
hospitals (for example, teaching hospitals, rural hospitals, etc.) 
would help us to evaluate whether facility level adjustments are 
warranted.
    We currently have a contractor conducting analysis for purposes of 
developing quality indicators to be used in IRFs. Quality indicators 
are not direct measures of quality but rather point towards potential 
areas that require further investigation. Quality indicators identify 
the percent of a patient population with a certain condition and 
compare this percent to a state level and a national level. If a 
facility ``flags'' for scoring ``high'' on a particular quality 
indicator, this does not necessarily mean that the facility has a 
quality of care problem but simply that further focussed review of care 
practices may be required. Quality indicators have already been 
developed by the University of Wisconsin for use in SNFs and are being 
effectively used by State surveyors to target facilities for closer on-
site review of care practices as well as by some nursing homes to 
identify potential problems within their facility.
    We have already begun consideration of quality indicators that may 
be collected from MDS-PAC data to evaluate care delivered in IRFs. We 
agree with MedPAC's advice that quality monitoring efforts be closely 
coordinated across different types of post-acute care providers. We 
expect to develop measures to be applied across different settings. We 
anticipate that measures of functional improvement from admission to 
discharge will be examined. In addition, during 2000, the 
infrastructure to collect the data to identify quality indicators for 
IRFs will be under development. Field validation of these indicators is 
expected to begin in 2001. Once the indicators have been field tested, 
the State quality infrastructure can begin to utilize these data to 
monitor quality and to target facilities to survey for accreditation. 
The next step will be validation of the assessment data. Piloting the 
reporting of data will be ongoing during this time period. There is 
funding in the 2001 budget for analysis of the accuracy of the 
assessment data collected. ``Tool kits'' will be developed for targeted 
interventions to address common quality issues in these facilities. 
Examples of quality indicators currently being considered for IRFs are 
described below.
3. Functional Independence
    The main goal of an IRF is to assist the patient in regaining his 
or her prior level of functional ability. A measure of the quality of a 
rehabilitation program is the patient's ability to function 
independently upon discharge to the community. Using MDS-PAC data, it 
will be possible to measure the percent of all cases discharged to the 
community who are functionally independent or whose functional status 
has improved at the time of discharge. Functional independence on the 
MDS-PAC would be measured using Section E of the instrument. The 
information collected in this section may be used by staff to calculate 
the Activities of Daily Living for Post-Acute Care (ADL-PAC) Summary 
Scale for each patient. The ADL-PAC computes patients' level of 
dependence on a scale from 0 (fully independent) to 6 (fully 
dependent). The scale considers level of dependence for each of the 
following activities: bed mobility, transfer between the bed and chair, 
locomotion, walking in facility, dressing upper body, dressing lower 
body, eating, toilet use, transfer to toilet, grooming and personal 
hygiene, bathing, transfer to and from the tub or shower. This 
information about the patient's levels of dependence on these various 
activities of daily living on admission, at intervals during the stay, 
and at discharge will be particularly useful to describe the patient's 
progress as a result of rehabilitation care. A patient's progress can 
be evaluated with respect to thresholds or milestones, developed after 
analysis of data collected during rehabilitation stays rather than 
based upon theoretical assumptions. The data will also assist in the 
development of quality indicators to predict the types of patients who 
have the best prognosis for improvement in rehabilitation programs. 
This information may also encourage referrals to IRFs for patients who 
might otherwise not have been referred. The data derived from 
functional information may also serve to better match patients with 
program characteristics to ``fine tune'' the delivery of rehabilitation 
services.
    Additional variables on the MDS-PAC would allow the facility to 
consider factors which may affect a patient's ability to return to his 
or her previous level of functional ability or live independently in 
the community. Item E7 (stamina) helps staff predict how much therapy 
the patient can tolerate daily. This will impact the intensity of 
rehabilitation to help the patient regain functional independence. 
Assessment of stamina will likely affect a patient's ability to 
function independently once he or she is discharged back to the 
community. Items M1 (available social supports), M2 (caregiver status) 
and M3 (living arrangement) will help predict the characteristics of 
the community to which the patient is being discharged in order to make 
sure the environment is optimal to the patient's success. Finally,

[[Page 66335]]

item L2 (Attributes relevant to rehabilitation) measures whether a 
patient recognizes his or her limitations. This information will be 
important to determine whether the patient can function in the 
community and to determine how much help the patient will need, without 
taking risks that may cause a fall or other harmful events when not 
supervised.
    Indicators based on functional gain will be useful in public 
reporting to help beneficiaries make more educated decisions about the 
facility from which they choose to receive care. In addition, Peer 
Review Organizations (PROs) can use the data from successful facilities 
to identify factors that are better at assisting patients in achieving 
functional independence and returning to the community. This 
information can be shared with other facilities to help improve their 
success rate as well.
4. Incidence of Pressure Ulcers
    Pressure ulcers (also known as Decubitus Ulcers) are a problem in 
IRFs as well as in other post-acute and acute settings. In some 
situations the patient is admitted with these ulcers. Facilities cannot 
be held responsible for ulcers which were present upon admission, but 
if these ulcers increase in size or grade, or if new ulcers develop, 
this can be an indicator of poor quality of care.
    Information about pressure ulcers would be collected in section H 
of the MDS-PAC. Information about bed mobility and transfer ability 
(items E1a and E1b), bladder incontinence (item F1a), and nutritional 
status (item J5a and J5b) is useful in identifying patients at high 
risk for developing new pressure ulcers. A pressure ulcer quality 
indicator could be used by the facility to institute such measures as 
staff training or more attention to techniques and equipment intended 
to prevent the development of pressure ulcers (such as frequent change 
of position of patients unable to move themselves and use of pressure 
relieving devices). In addition, quality indicators at the facility and 
State level can be compared to national averages for a better 
understanding of a facility's performance relative to its peers. 
Focused review will help identify which factors are contributing to the 
higher incidence of pressure ulcers. Analysis of MDS-PAC data can also 
be used to identify facilities that are successful in resolving and 
treating existing pressure ulcers. These facilities may have effective 
pressure ulcer reduction programs in place that can be shared with 
other facilities that are experiencing difficulty treating and reducing 
the incidence of pressure ulcers. Public reporting of the rate of 
pressure ulcers based on quality indicator information may help 
consumers make more informed choices when choosing a facility.
5. Falls Prevention
    Falls prevention is an important component of a rehabilitation 
program and is critical to avoiding repeat hospitalizations which, in 
turn, will delay return to independence. Items in the MDS-PAC such as 
D3a and D3e on wandering and resisting care, item E9 on balance, and 
item H2 on dizziness and falls, provide critical information regarding 
fall risk to help facilities identify patients who may be at risk for 
falls. This indicator may also be used to identify facilities with 
poorer track records in fall avoidance. Information about falls 
prevention also provides information so that facilities serving 
different types of patients can be distinguished. PROs may also use 
these data to teach facilities how to better identify patients at risk 
for falls and set up programs to reduce the incidence of falls through 
such methods as low beds or better monitoring of at-risk patients.
    As illustrated by these examples, there are several ways the 
quality information gathered through the MDS-PAC may be used. As noted, 
quality indicator data does not necessarily illustrate that a facility 
is providing a lower level of care, but this information can be useful 
to surveyors in targeting facilities for closer review of their patient 
care practices and facility layout. Quality indicators can also be used 
to identify facilities with best practices. Identifying how these 
facilities maintain a high-quality level of care may provide valuable 
information to assist facilities.
6. Quality Improvement
    Quality assurance involves the establishment of standards and 
having a system to enforce compliance with these standards. Quality 
improvement fosters and facilitates continuous enhancement of whatever 
service or product an organization is engaged in or produces. The JCAHO 
require facilities to have quality improvement programs. Currently, the 
Medicare Conditions of Participation require hospitals to do quality 
assurance, which we believe can be supported with the information 
obtained from the MDS-PAC. The proposed change in the Medicare 
Conditions of Participation for Hospitals, proposed December 19, 1997, 
would require hospitals, including IRFs, to have quality improvement 
programs. Also, we are identifying opportunities in which PROs can use 
their expertise and skill mix to provide valuable information on 
quality improvement to post-acute providers. PROs have been working 
with SNFs for the past year, and feedback from facilities has indicated 
that the information shared by the PRO in a penalty-free environment 
has been valuable in helping facilities learn how to use the MDS to 
identify their own opportunities for quality improvement. In addition, 
many IRFs already have data-based quality improvement systems 
addressing some aspects of quality. PROs may build on their experience 
in SNFs and on the current experience of IRFs to become a resource on 
how to use information derived from the MDS-PAC to identify potential 
quality concerns. Quality improvement activities may include providing 
each facility with information derived from its MDS-PAC submissions for 
use in self-monitoring, providing facilities with information comparing 
their performance with that of their peers, and maintaining a 
clearinghouse of ``best practices'' that can be used by facilities to 
improve the quality of care they deliver.
    IRFs may also use MDS-PAC data to generate quality indicators on 
their own and use this information to help them target specific 
problems within their facility or identify areas where quality 
improvement projects may be most effective. IRFs can also use the MDS-
PAC to perform their own monitoring of changes in quality of care 
within the facility.
7. Consumer Information
    We plan to use the comprehensive quality information derived from 
MDS-PAC for use in our public reporting strategy. MDS-PAC data, after 
appropriate evaluation and validation, can be used to inform consumers 
about the performance of facilities in their area so that they can make 
informed decisions when selecting a rehabilitation facility. In 
addition, information derived from MDS-PAC and the comparable 
information available in SNFs and other settings will help us 
understand which patients fare better in which types of post-acute 
settings, or even within subsets of IRFs, thus informing and shaping 
future long-term care quality initiatives.
    As part of our efforts in designing a monitoring system, we are 
soliciting comments on whether we should also collect data related to 
medications and medication administration.

I. MDS-PAC Training and Technical Support for IRFs

    We will provide educational and technical resources to IRFs, to 
support both implementation of the MDS-PAC

[[Page 66336]]

assessment instrument and the computerization and transmission of the 
MDS-PAC data. We will provide training and technical support on the use 
of the MDS-PAC by clinical staff and on the use of MPACT software to 
encode and transmit MDS-PAC data.
    Although we will be providing both initial and ongoing training and 
technical support, IRFs will probably find it advantageous to designate 
a staff member as an IRF trainer, in order to have in-house capability 
both to train newly hired staff, and to have a designated person who 
can serve as the in-house resource for other staff.
    We would train and support the IRFs in the implementation of the 
IRF prospective payment system and automation of the MDS-PAC by--
    <bullet> Training IRFs on MDS-PAC data set administration;
    <bullet> Answering questions on the clinical aspects of the MDS-PAC 
and providing information to IRFs on the use of the MDS-PAC to 
determine CMGs;
    <bullet> Providing training to State agency staff in using MDS-PAC 
data for survey activities;
    <bullet> Training IRFs in interpreting validation reports;
    <bullet> Providing information relative to hardware and software 
requirements; and
    <bullet> Providing support for transmission of test data, 
supporting callers who request technical assistance, providing 
passwords to IRFs, and answering questions about the computer edits and 
reports.
1. Release of Information Collected Using the MDS-PAC
    In Sec. 412.616, we propose that the IRF and its agents must ensure 
the confidentiality of the information collected using the MDS-PAC in 
the same manner as all other information in the medical record, in 
accordance with the hospital conditions of participation at 
Sec. 482.24(b)(3). The facility must ensure that information may be 
released only to authorized individuals and must ensure that 
unauthorized individuals cannot gain access to or alter patient 
records. Information must be released by the facility or its agent only 
in accordance with Federal or State laws, court orders or subpoenas. In 
addition, we propose that an agent acting on behalf of an IRF in 
accordance with a written contract with that IRF may only use the 
information for the purposes specified in the contract.
    We believe that this provision will ensure that access to MDS-PAC 
data (paper copy as well as electronic data) is secured and controlled 
by the IRF, in accordance with Federal and State laws. We believe that 
proposed Sec. 412.616 would provide an adequate safeguard against the 
unauthorized use of a patient's clinical record and the information it 
contains, regardless of form or storage method. As discussed in section 
III.G.1 of this preamble, however, the confidentiality provisions at 
proposed Sec. 412.616 may be supplemented or superseded by the security 
and privacy requirements contained in the ``Standards for Privacy of 
Individually Identifiable Health Information'' regulation (64 FR 59918) 
and the ``Security and Electronic Signature Standards'' regulation (63 
FR 43242), when they are finalized.
    As with other regulations that result in the creation of a new 
system of records, we are in the process of developing a notice 
describing the new system of records that is unique to MDS-PAC. We have 
typically issued notices describing new systems of records in 
conjunction with the issuing of a final rule, rather than at the 
proposed rule stage. These notices, required by the Privacy Act of 
1974, describe both the entities to whom identifiable and non-
identifiable data can be routinely disclosed, as well as the safeguards 
that will protect the privacy and the security of the data. While each 
system of records notice is unique to the system and the data 
instrument, readers interested in understanding a recent approach are 
referred to the notice of the new system of records published June 18, 
1999, (64 FR 32992) for the ``Home Health Agency Outcome and Assessment 
Information Set (OASIS).'' We would welcome comments on issues germane 
to the notice that we will develop for MDS-PAC.

J. Patient Rights

    In Sec. 412.608, we propose that, in order to receive payment for 
the Medicare IRF services furnished, the authorized clinician must 
inform the Medicare inpatient of the following rights with respect to 
the MDS-PAC assessment prior to performing the assessment. These rights 
include--
    <bullet> The right to be informed of the purpose of the MDS-PAC 
data collection;
    <bullet> The right to have any MDS-PAC information that is 
collected remain confidential and secure;
    <bullet> The right to be informed that the MDS-PAC information will 
not be disclosed to others except for legitimate purposes allowed by 
the Federal Privacy Act and Federal and State regulations;
    <bullet> The right to refuse to answer MDS-PAC questions; and
    <bullet> The right to see, review, and request changes on the MDS-
PAC assessment.
    We propose requiring the IRF ensure that a clinician documents in 
the Medicare patient's clinical record that the patient has been 
informed of the above patient rights. IRFs should note that the above 
patient rights are in addition to the patient rights specified under 
the conditions of participation for hospitals in Sec. 482.13.
    Our statements of patient rights with regard to the MDS-PAC would 
also be available via the HCFA Inpatient Rehabilitation Facility 
Prospective Payment System website. These statements may be revised in 
accordance with the Office of Management and Budget Paperwork Reduction 
Act re-approval process. Future revisions to these statements will be 
available via the HCFA Inpatient Rehabilitation Facility Prospective 
Payment System website, and in other instructional materials that we 
issue.

K. Medical Review Under the IRF Prospective Payment System

    Under a discharge-based prospective payment system IRFs might have 
financial incentives to reduce the quality and quantity of services 
furnished to a patient. To monitor for any reduction in the quality or 
quantity of services IRFs furnish, medical review may be conducted on 
both a random and targeted basis. Targeting may include claim-specific 
data and patterns of case-mix upcoding, as well as the general issues 
of the medical need for the episode of care and technical eligibility. 
There will be the capability for both prepayment and post-payment 
medical review that will deny claims in total or adjust payment to the 
correct case mix. Medical review will validate MDS-PAC data items 
against clinical records.

IV. Case-Mix Group Case Classification System

A. Background

    As discussed in section I.C.2. of this preamble, section 
1886(j)(2)(A) of the Act requires the Secretary to establish a method 
of classifying patients in rehabilitation facilities within case-mix 
groups. Further, the Act, as amended by section 125 of the BBRA, 
requires the Secretary to establish classes of patient discharges of 
rehabilitation facilities by functional-related groups, based on 
impairment, age, comorbidities, functional capability of the patient, 
and other factors as the Secretary considers appropriate to improve the 
explanatory power of the functional independence measure-function 
related groups. Under

[[Page 66337]]

the classification system that we are proposing, as described at 
Sec. 412.620(a), patients would be classified into case-mix groups 
called CMGs based on clinical characteristics and resource needs.
    We began our efforts to establish an appropriate classification 
system by examining the FIM-FRGs, a classification methodology 
developed by Stineman et al. (1994) and extended to incorporate 
comorbidities in Carter, Relles, et al. (1997). In developing the 
proposed CMGs, we updated the earlier FIM-FRG analysis with more recent 
data from calendar years 1996 and 1997 Medicare bills as well as 
functional status measures from UDSmr and Caredata.com for the same 
calendar years (see Appendix A for a detailed description of the data 
used to create the CMGs). The results of using more recent data showed 
that the earlier FIM-FRG classification system continues to be an 
appropriate basis to predict resource use. Based on our analysis of the 
more recent data, we are proposing a classification system that 
reflects general enhancements, including: a refined set of 
rehabilitation impairment categories; a modified set of relevant 
comorbidities; groups for cases that expire; and other types of 
atypical discharges, such as short-stay cases.

B. Case-Mix Groups

1. General Description of the Case-Mix Groups
    The data elements used to construct the proposed CMGs include 
rehabilitation impairment categories (RICs), functional status (both 
motor and cognitive), age, and comorbidities. We also used other 
factors to define the CMGs that allow us to improve the explanatory 
power of the groups. Specifically, we created CMGs to account for 
short-stays and expired cases. The CMGs are based on an analysis of the 
Medicare inpatient rehabilitation cases described in Appendix A of this 
proposed rule. We separated those cases that we believe received a 
typical, full course of inpatient rehabilitation care from those cases 
that may not have received a typical, full course of inpatient 
rehabilitation care such as transfer cases and special cases that are 
not transfers. As described below, (1) the analysis of cases that 
receive a typical, full course of inpatient rehabilitation care results 
in the construction of 21 RICs and 92 CMGs; and (2) the analysis of 
special cases that are not transfers results in the construction of 4 
CMGs for cases that expire and 1 CMG for cases that have a length of 
stay of 3 days or less. In addition, as described in section V.B. of 
this preamble, the analysis of transfer cases results in a payment 
policy that is dependent on which CMG the patient is classified to 
prior to the patient's transfer.
2. Criteria for Establishing CMGs
    We used the following criteria for establishing specific groups 
within the proposed classification system:
    <bullet> Group cases that are clinically similar. To do this, we 
began with the 20 RICs defined by Stineman et al. (1997) and examined a 
variety of changes that were suggested might improve either clinical or 
resource homogeneity.
    <bullet> Group cases that have similar resource needs. To do this, 
we used a statistical classification method, the Classification and 
Regression Trees (CART), to partition the cases within RICs into groups 
that are homogeneous with respect to resource use and functional 
impairment. Thus, each CMG consists of cases that have similar clinical 
and resource needs.
    <bullet> Determine which comorbidities affect the cost of 
rehabilitation cases by RIC.
    We describe in more detail the methodology that we used to 
construct the CMGs.
3. Rehabilitation Impairment Categories
    The first partition in creating the CMGs is based on the RIC of the 
case. RICs are groups of codes that indicate the primary cause of the 
rehabilitation hospitalization and are clinically homogeneous. The 
patient is first grouped into a RIC based on the impairment identified 
in the data described above. Table 1D below lists the RICs used to 
define and construct the first partition of the inpatient 
rehabilitation cases.
    The earlier RAND research of 1994 data resulted in 20 RICs. We 
analyzed RAND's statistical analysis of 1997 data, and that showed that 
the 1997 data performed as well as the 1994 data in predicting resource 
use in RICs 01 through 20 (except that the impairment code 14.9 
``Status post major multiple fractures'' grouped better in RIC 17). In 
addition, the 1997 data indicated the need to create a separate RIC for 
burn cases.
    For the majority of CMGs, the RIC represents the first two digits 
of the CMG. Thus, in Table 2D below, CMGs 0101 through 0111 are cases 
that are classified to the stroke (01) RIC.

     Table 1D.--Rehabilitation Impairment Categories and Associated
                         Impairment Group Codes
------------------------------------------------------------------------
Rehabilitation impairment category    Associated impairment group codes
------------------------------------------------------------------------
01  Stroke (Stroke)...............  01.1  Left body involvement (right
                                     brain)
                                    01.2  Right body involvement (left
                                     brain)
                                    01.3  Bilateral Involvement
                                    01.4  No Paresis
                                    01.9  Other Stroke
02  Traumatic brain injury (TBI)..  02.21  Open Injury
                                    02.22  Closed Injury
03  Nontraumatic brain injury       02.1  Non-traumatic
 (NTBI).                            02.9  Other Brain
04  Traumatic spinal cord (TSCI)..  04.210  Paraplegia, Unspecified
                                    04.211  Paraplegia, Incomplete
                                    04.212  Paraplegia, Complete
                                    04.220  Quadriplegia, Unspecified
                                    04.2211  Quadriplegia, Incomplete C1-
                                     4
                                    04.2212  Quadriplegia, Incomplete C5-
                                     8
                                    04.2221  Quadriplegia, Complete C1-4
                                    04.2222  Quadriplegia, Complete C5-8
                                    04.230  Other traumatic spinal cord
                                     dysfunction

[[Page 66338]]

 
05  Nontraumatic spinal cord        04.110  Paraplegia, unspecified
 (NTSCI).                           04.111  Paraplegia, incomplete
                                    04.112  Paraplegia, complete
                                    04.120  Quadriplegia, unspecified
                                    04.1211  Quadriplegia, Incomplete C1-
                                     4
                                    04.1212  Quadriplegia, Incomplete C5-
                                     8
                                    04.1221  Quadriplegia, Complete C1-4
                                    04.1222  Quadriplegia, Complete C5-8
                                    04.130  Other non-traumatic spinal
                                     cord dysfunction
06  Neurological (Neuro)..........  03.1  Multiple Sclerosis
                                    03.2  Parkinsonism
                                    03.3  Polyneuropathy
                                    03.5  Cerebral Palsy
                                    03.8  Neuromuscular Disorders
                                    03.9  Other Neurologic
07  Fracture of LE (FracLE).......  08.11  Status post unilateral hip
                                     fracture
                                    08.12  Status post bilateral hip
                                     fractures
                                    08.2  Status post femur (shaft)
                                     fracture
                                    08.3  Status post pelvic fracture
08  Replacement of LE joint         08.51  Status post unilateral hip
 (ReplLE).                           replacement
                                    08.52  Status post bilateral hip
                                     replacements
                                    08.61  Status post unilateral knee
                                     replacement
                                    08.62  Status post bilateral knee
                                     replacements
                                    08.71 Status post knee and hip
                                     replacements (same side)
                                    08.72  Status post knee and hip
                                     replacements (different sides)
09  Other orthopedic (Ortho)......  08.9  Other orthopedic
10  Amputation, lower extremity     05.3  Unilateral lower extremity
 (AMPLE).                            above the knee (AK)
                                    05.4  Unilateral lower extremity
                                     below the knee (BK)
                                    05.5 Bilateral  lower  extremity
                                     above  the knee (AK/AK)
                                    05.6 Bilateral lower extremity above/
                                     below the knee (AK/BK)
                                    05.7  Bilateral lower extremity
                                     below the knee (BK/BK)
11  Amputation, other (AMP-NLE)...  05.1  Unilateral upper extremity
                                     above the elbow (AE)
                                    05.2  Unilateral upper extremity
                                     below the elbow (BE)
                                    05.9  Other amputation
12  Osteoarthritis (OsteoA).......  06.2  Osteoarthritis
13  Rheumatoid, other arthritis     06.1  Rheumatoid Arthritis
 (RheumA).                          06.9  Other arthritis
14  Cardiac (Cardiac).............  09  Cardiac
15  Pulmonary (Pulmonary).........  10.1  Chronic Obstructive Pulmonary
                                     Disease
                                    10.9  Other pulmonary
16  Pain Syndrome (Pain)..........  07.1  Neck pain
                                    07.2  Back pain
                                    07.3  Extremity pain
                                    07.9  Other pain
17  Major multiple trauma, no       08.4  Status post major multiple
 brain injury or spinal cord         fractures
 injury (MMT-NBSCI).                14.9  Other multiple trauma
18  Major multiple trauma, with     14.1  Brain and spinal cord injury
 brain or spinal cord injury (MMT-  14.2  Brain and multiple fractures/
 BSCI).                              amputation
                                    14.3  Spinal cord and multiple
                                     fractures/amputation
19  Guillian Barre (GB)...........  03.4
20  Miscellaneous (Misc)..........  12.1  Spina Bifida*
                                    12.9  Other congenital
                                     13  Other disabling impairments
                                     15  Developmental disability
                                     16  Debility
                                     17.1  Infection
                                     17.2  Neoplasms
                                     17.31  Nutrition (endocrine/
                                     metabolic) with intubation/
                                     parenteral nutrition
                                     17.32  Nutrition (endocrine/
                                     metabolic) without intubation/
                                     parenteral nutrition
                                     17.4  Circulatory disorders
                                     17.51  Respiratory disorders--
                                     Ventilator Dependent
                                     17.52  Respiratory disorders--Non-
                                     ventilator Dependent
                                     17.6  Terminal care
                                     17.7  Skin disorders
                                     17.8  Medical/Surgical
                                     complications
                                     17.9  Other medically complex
                                     conditions
21  Burns (Burns).................  11  Burns
------------------------------------------------------------------------
* We are in the process of analyzing the effect of moving the few cases
  within this impairment category to one of the other spinal cord RICs
  (either 05 or 04 depending upon the ``fit'').


[[Page 66339]]

4. Functional Status Measures and Age
    After using the RIC to define the first split among the inpatient 
rehabilitation cases, we used functional status measures and age to 
partition the cases further. We describe below the statistical 
methodology (Classification and Regression Trees or CART) that we used 
to incorporate a patient's functional status measures (motor score and 
cognitive score), and age into the construction of the proposed CMGs.
    The CART methodology was used to split the rehabilitation cases 
further within each RIC. In general, CART can be used to identify 
statistical relationships among data and, using these relationships, 
construct a predictive model for organizing and partitioning a large 
set of data into smaller homogeneous groups. Further, in constructing 
the proposed CMGs, we analyzed the extent to which the independent 
variables (motor score, cognitive score, and age) help predict the 
value of the dependent variable (the log of the cost per case).
    The CART methodology will ensure that the proposed CMGs recognize 
that patients with clinically distinct resource needs are treated 
separately in the classification and payment systems. CART is an 
iterative process that creates initial groups of patients then searches 
for ways to split the initial groups that may further decrease the 
clinical and cost variances within a group and increase the explanatory 
power of the CMGs. (Further information regarding this methodology can 
be found in the seminal literature on CART (Classification and 
Regression Trees, Leo Breiman, Jerome Friedman, Richard Olshen, Charles 
Stone, Wadsworth Inc., Belmont CA, 1984: pp 78-80.)
    We also used a validation method to assess the predictive accuracy 
of the RICs and CMGs. Half of the 1996 and 1997 data described in 
Appendix A was used initially to create the CMGs. Once this was done, 
the other half of the data was used to test or validate the predictive 
accuracy of the CMGs. We concluded that the RICs and CMGs we are 
proposing are valid because the groups performed as well using the 
second half of the data as they did with the first half. The final 
definitions of the specific RICs and CMGs was based on 100 percent of 
the 1997 Medicare cost data with corresponding UDSmr/COS data.
    As a result of this analysis, Table 2D lists 92 CMGs and their 
respective descriptions, including the motor and cognitive scores and 
age that will be used to classify discharges into CMGs. As described in 
section II.B. of this preamble, some CMGs may change based on further 
analysis of available data and comments we receive in response to this 
proposed rule.
5. Comorbidities
    We found comorbidities have major effects on the cost of furnishing 
inpatient rehabilitation care. RAND's previous analysis, based on 1994 
data, found that these comorbidities also increased the cost of 
furnishing inpatient rehabilitation care. A list of the major 
comorbidities appears in Appendix C of this proposed rule. A case has 
to have only one of the listed comorbidities to be classified as a case 
with comorbidity. We found that the presence of major comorbidities 
multiplies the expected resource use of a case by the same amount for 
each CMG in the same RIC.
    We matched frequently occurring comorbidities to impairment 
categories in order to ensure that all of the chosen comorbidities are, 
in fact, relevant to the RIC. Providing rehabilitation services to a 
beneficiary with a total hip replacement can become both more complex 
and more costly if the beneficiary also has pneumonia. By contrast, 
some pulmonary diagnoses might be determined not to have a cost impact 
for beneficiaries with chronic obstructive pulmonary disease.
    We found comorbidities to affect cost per case for some of the 
CMGs, but not all. When comorbidities substantially increased the 
average cost of the CMG and were determined to be clinically relevant, 
we developed CMG relative weights adjusted for comorbidities. We will 
continue to analyze the data to determine if refinements to the list of 
comorbidities in Appendix C are necessary. Further discussion of the 
effect of comorbidities is described in section V.A.2. of this 
preamble.
6. Analysis of Special Cases
    We analyzed payment-to-cost ratios of special types of cases that 
were not transfer cases to determine if costs could be predicted. From 
this analysis, we believe that cases that expire and cases with a 
length of stay of 3 days or less (not including transfer cases) would 
be substantially ``overpaid'' if facilities receive the full CMG 
payment for these cases. To improve the explanatory power of the 
groups, we added four CMGs to account for cases that expire and one CMG 
for all cases that have a length of stay of 3 days or less (not 
including transfer cases). These types of special cases are further 
explained in section V.C. of this preamble. Therefore, the total number 
of proposed CMGs is 97 as shown in Table 2D.
7. Methodology To Classify Patients Into CMGs
    Data from the MDS-PAC, described in section III of this preamble 
and specified in proposed Sec. 412.620(a)(3) of the regulations, will 
be used to classify a patient into a CMG. In Table 3D, we have 
identified the specific MDS-PAC items that must be completed in order 
to classify a patient into a CMG and to effectively implement the 
proposed prospective payment system. (These items, along with other 
MDS-PAC items, will be used to administer, monitor, and analyze 
possible refinements to the proposed prospective payment system as 
described in section III of this preamble.) The MDS-PAC items will be 
used to establish the motor score, cognitive score, and age of the 
patient that corresponds with a specific CMG description.
8. Case Example To Classify a Patient Into a CMG
    The following example illustrates how a Medicare beneficiary would 
be classified to a CMG under the proposed classification system. An 82 
year old woman has a left total hip replacement because of 
osteoarthritis, and is admitted to the IRF because of the need for 
rehabilitation after the hip replacement surgery. The beneficiary is 
first classified into RIC 08: Replacement of Left Extremity Joint with 
Associated Impairment Group Code 08.51: Status Post Unilateral Hip 
Replacement.
Assessment

MDS-PAC SCORE

0  Independent in eating (MDS-PAC section E, 1g);
1  Requires set up to dress upper body (MDS-PAC section E, 1e);
5  Requires maximum assistance to dress lower body (MDS-PAC section E, 
1f);
1  Requires set up for grooming (MDS-PAC section E, 1j);
2  Requires minimal assistance for bed mobility (MDS-PAC section E, 
1b);
5  Requires maximum assistance for bed to chair transfer (MDS-PAC 
section E, 1b);
5  Requires maximum assistance for walking (MDS-PAC section E, 1d);
5  Requires maximum assistance for toilet transfer (MDS-PAC section E, 
1i);
5  Requires maximum assistance for bathing (MDS-PAC section E, 1k);
6  Dependent shower transfer (MDS-PAC section E, 1k);
6  Dependent stair climbing (MDS-PAC section E, 8c); and
0  Independent bowel and bladder sphincter control (MDS-PAC section F, 
1 and 4.


[[Page 66340]]


Total MDS-PAC Motor Score: 41

    This motor score places the Medicare beneficiary in CMG 0802, which 
is ``Replacement of lower extremity joint'' with a motor score from 41-
33. (See footnote at the bottom of Table 2D)

                      Table 2D.--Definition of CMGs
------------------------------------------------------------------------
       CMG number**                       CMG description
------------------------------------------------------------------------
0101.....................  Stroke with motor score from 29-0
0102.....................  Stroke with motor score from 34-30 and
                            cognitive score from 27-135*
0103.....................  Stroke with motor score from 40-35 and
                            cognitive score from 28-35*
0104.....................  Stroke with motor score from 34-30 and
                            cognitive score from 5-26*
0105.....................  Stroke with motor score from 40-35 and
                            cognitive score from 5-27*
0106.....................  Stroke with motor score from 45-41
0107.....................  Stroke with motor score from 49-46
0108.....................  Stroke with motor score from 55-50
0109.....................  Stroke with motor score from 78-56 and
                            patient is 84 years old or older
0110.....................  Stroke with motor score from 60-56 and
                            patient is 83 years old or younger
0111.....................  Stroke with motor score from 78-61 and
                            patient is 83 years old or younger
0201.....................  Traumatic brain injury with motor score from
                            33-0 and cognitive score from 30-35*
0202.....................  Traumatic brain injury with motor score from
                            33-0 and cognitive score from 5-29*
0203.....................  Traumatic brain injury with motor score from
                            50-34 and cognitive score from 22-35*
0204.....................  Traumatic brain injury with motor score from
                            50-34 and cognitive score from 5-21*
0205.....................  Traumatic brain injury with motor score from
                            66-51
0206.....................  Traumatic brain injury with motor score from
                            78-67
0301.....................  Non-traumatic brain injury with motor score
                            from 33-0 and cognitive score from 22-35*
0302.....................  Non-traumatic brain injury with motor score
                            from 33-0 and cognitive score from 5-21*
0303.....................  Non-traumatic brain injury with motor score
                            from 46-34
0304.....................  Non-traumatic brain injury with motor score
                            from 56-47
0305.....................  Non-traumatic brain injury with motor score
                            from 78-57
0401.....................  Traumatic spinal cord injury with motor score
                            from 36-0
0402.....................  Traumatic spinal cord injury with motor score
                            from 57-37
0403.....................  Traumatic spinal cord injury with motor score
                            from 74-58
0404.....................  Traumatic spinal cord injury with motor score
                            from 78-75
0501.....................  Non-traumatic spinal cord injury with motor
                            score from 23-0
0502.....................  Non-traumatic spinal cord injury with motor
                            score from 36-24
0503.....................  Non-traumatic spinal cord injury with motor
                            score from 45-37
0504.....................  Non-traumatic spinal cord injury with motor
                            score from 57-46
0505.....................  Non-traumatic spinal cord injury with motor
                            score from 78-58
0601.....................  Neurological with motor score from 35-0
0602.....................  Neurological with motor score from 45-36
0603.....................  Neurological with motor score from 53-46
0604.....................  Neurological with motor score from 78-54
0701.....................  Fracture of lower extremity with motor score
                            from 36-0
0702.....................  Fracture of lower extremity with motor score
                            from 45-37
0703.....................  Fracture of lower extremity with motor score
                            from 51-46
0704.....................  Fracture of lower extremity with motor score
                            from 78-52
0801.....................  Replacement of lower extremity joint with
                            motor score from 32-0
0802.....................  Replacement of lower extremity joint with
                            motor score from 41-33
0803.....................  Replacement of lower extremity joint with
                            motor score from 48-42
0804.....................  Replacement of lower extremity joint with
                            motor score from 78-49 and cognitive score
                            from 34-35*
0805.....................  Replacement of lower extremity joint with
                            motor score from 55-50 and cognitive score
                            from 5-33*
0806.....................  Replacement of lower extremity joint with
                            motor score from 78-56 and cognitive score
                            from 5-33*
0901.....................  Other orthopedic with motor score from 32-0
0902.....................  Other orthopedic with motor score from 44-33
0903.....................  Other orthopedic with motor score from 53-45
0904.....................  Other orthopedic with motor score from 78-54
1001.....................  Amputation, lower extremity with motor score
                            from 38-0
1002.....................  Amputation, lower extremity with motor score
                            from 48-39
1003.....................  Amputation, lower extremity with motor score
                            from 78-49
1101.....................  Amputation, non-lower extremity with motor
                            score from 30-0
1102.....................  Amputation, non-lower extremity with motor
                            score from 44-31 and patient is 68 years old
                            or older
1103.....................  Amputation, non-lower extremity with motor
                            score from 44-31 and patient is 67 years old
                            or younger
1104.....................  Amputation, non-lower extremity with motor
                            score from 78-45
1201.....................  Osteoarthritis with motor score from 42-0 and
                            cognitive score from 34-35*
1202.....................  Osteoarthritis with motor score from 42-0 and
                            cognitive score from 5-33*
1203.....................  Osteoarthritis with motor score from 54-43
1204.....................  Osteoarthritis with motor score from 78-55
1301.....................  Rheumatoid, other arthritis with motor score
                            from 30-0
1302.....................  Rheumatoid, other arthritis with motor score
                            from 42-31
1303.....................  Rheumatoid, other arthritis with motor score
                            from 78-43
1401.....................  Cardiac with motor score from 37-0
1402.....................  Cardiac with motor score from 50-38
1403.....................  Cardiac with motor score from 78-51
1501.....................  Pulmonary with motor score from 40-0 and
                            patient is 78 years old or older
1502.....................  Pulmonary with motor score from 40-0 and
                            patient is 77 years old or younger

[[Page 66341]]

 
1503.....................  Pulmonary with motor score from 63-41
1504.....................  Pulmonary with motor score from 78-64
1601.....................  Pain syndrome with motor score from 41-0 and
                            cognitive score from 33-35*
1602.....................  Pain syndrome with motor score from 41-0 and
                            cognitive score from 5-32*
1603.....................  Pain syndrome with motor score from 78-42
1701.....................  Major multiple trauma with brain or spinal
                            cord injury with motor score from 48-0
1702.....................  Major multiple trauma with brain or spinal
                            cord injury with motor score from 78-49
1801.....................  Major multiple trauma, with brain or spinal
                            cord injury with motor score from 56-0
1802.....................  Major multiple trauma, with brain or spinal
                            cord injury with motor score from 78-57
1901.....................  Guillian Barre with motor score from 36-0
1902.....................  Guillian Barre with motor score from 47-37
1903.....................  Guillian Barre with motor score from 78-48
2001.....................  Miscellaneous with motor score from 21-0 and
                            patient is 59 years old or older
2002.....................  Miscellaneous with motor score from 31-22
2003.....................  Miscellaneous with motor score from 36-32
2004.....................  Miscellaneous with motor score from 21-0 and
                            patient is 58 years old or younger
2005.....................  Miscellaneous with motor score from 43-37 and
                            patient is 65 years old or older
2006.....................  Miscellaneous with motor score from 52-44 and
                            patient is 65 years old or older
2007.....................  Miscellaneous with motor score from 43-37 and
                            patient is 65 years old or younger
2008.....................  Miscellaneous with motor score from 78-53 and
                            patient is 84 years old or older
2009.....................  Miscellaneous with motor score from 59-53 and
                            patient is 84 years old or younger
2010.....................  Miscellaneous with motor score from 52-44 and
                            patient is 65 years old or younger
2011.....................  Miscellaneous with motor score from 78-60 and
                            patient is 84 years old or younger
2101.....................  Burns
5001.....................  Short-stay cases, length of stay is 3 days or
                            fewer
5101.....................  Expired, orthopedic, short stay
5102.....................  Expired, orthopedic, not short stay
5103.....................  Expired, not orthopedic, short stay
5104.....................  Expired, not orthopedic, not short stay
------------------------------------------------------------------------
*In developing this example of scoring conventions, we have displayed
  only the FIM motor scores as MDS-PAC scores. We have not included the
  cognitive scores as MDS-PAC scores. We are currently studying the
  aggregation of the MDS-PAC variable into the FIM cognitive categories.
  RAND, our contractor, will be performing additional analysis on the
  cognitive scoring conventions, and we will be including this research
  in the final regulations.
**The first two digits of the CMG number from 01 to 21 correspond with a
  specific RIC number shown on Table 1D.


                    Table 3D.--Critical MDS-PAC Items
------------------------------------------------------------------------
              Section/item name                       Item number
------------------------------------------------------------------------
            A. ITEMS FROM THE INTERRUPTED STAY TRACKING FORM
------------------------------------------------------------------------
SECTION AA. IDENTIFICATION INFORMATION:
    Legal Name of Patient....................  1a-1d
    Admission Date...........................  2a-2b
    Social Security and Medicare Numbers.....  6a-6b
    Facility Provider Number.................  8a-8b
    Medicaid Number..........................  9
    Gender...................................  10
    Birthdate................................  11
    Ethnicity/Race...........................  12a-12f
    Interrupted Stay.........................  13a-13b
    Clinician Completing Assessment..........  14b-14f
------------------------------------------------------------------------
            B. ITEMS FROM THE BASIC ASSESSMENT TRACKING FORM
------------------------------------------------------------------------
SECTION AA. IDENTIFICATION INFORMATION:
    Legal Name of Patient....................  1a-1d
    Admission Date...........................  2a-2b
    Reason for Assessment....................  3
    Assessment Reference Date................  4
    Discharge Status.........................  5a-5b*
    Social Security and Medicare Numbers.....  6a-6b
    Facility Provider Number.................  8a-8b
    Medicaid Number..........................  9
    Gender...................................  10
    Birthdate................................  11*
    Ethnicity/Race...........................  12a-12f
SECTION AB. ASSESSMENT ATTESTATION:
    Person Completing Assessment.............  1b-1g
------------------------------------------------------------------------

[[Page 66342]]

 
 C. ITEMS FROM COMPLETE ASSESSMENT (ASSESSMENT, READMISSION, DISCHARGE)
------------------------------------------------------------------------
SECTION A. DEMOGRAPHIC/ADMISSION INFORMATION
 HISTORY:
    Legal Name of Patient....................  1a-1d
    Admission Date...........................  2a-2b
    Reason for Assessment....................  3
    Admission Status.........................  4
    Goals for Stay...........................  5a-5e
    Admitted From............................  6
    Precipitating Event Prior to Admission...  7
    Primary and Secondary Payment Source for   8A-8B
     Stay.
    Marital Status...........................  9
    Language.................................  11
SECTION B. COGNITIVE PATTERNS:
    Comatose.................................  1*
    Memory/Recall Ability....................  2a-2d*
    Cognitive Skills for Daily Decision        3a-3b*
     Making.
    Indicators of Delirium-Periodic Disorder   4a-4f*
     Thinking/Awareness.
SECTION C. COMMUNICATION/VISUAL PATTERNS:
    Modes of Communication...................  2a-2e*
    Making Self Understood...................  3a-3b*
    Speech Clarity...........................  4*
    Ability to Understand Others.............  5a-5b*
SECTION E. FUNCTIONAL STATUS:
    3 Day ADL Self-Performance...............  1a-1l*
    ADL Assist Codes.........................  2a-2l*
    ADL Changes..............................  3
    Devices and Aids.........................  6a-6j*
    Walking and Stair Climbing...............  8a-8c*
SECTION F. BLADDER/BOWEL MANAGEMENT:
    Bladder Continence.......................  1a-1b*
    Bladder Appliance........................  2a-2g*
    Bladder Appliance Support................  3*
    Bowel Continence.........................  4*
    Bowel Appliances.........................  5a-5d*
    Bowel Appliance Support..................  6*
SECTION G. DIAGNOSES:
    Impairment Group.........................  1*
    Complications/Comorbidities..............  5a-5d*
SECTION M. RESOURCES FOR DISCHARGE:
    Living Arrangement.......................  3a-3b (A-C)
------------------------------------------------------------------------
*Must be recorded by category, variable, and item number, in order for a
  patient to be classified into a CMG.

9. Adjustment to the Case-Mix Groups
    As described in proposed Sec. 412.620(c) of the regulations and as 
provided by section 1886(j)(2)(c)(i) of the Act, we adjust the CMGs 
periodically to reflect changes in treatment patterns, technology, 
number of discharges, and other factors affecting the relative use of 
resources.

V. Payment Rates

    The IRF prospective payment system proposed in this rule utilizes 
Federal prospective payment rates across 97 distinct CMGs. The Federal 
payment rates are established using a standard payment amount (referred 
to as the budget neutral conversion factor). A set of relative payment 
weights which account for the relative difference in resource use 
across the CMGs is applied to the budget neutral conversion factor, and 
finally a number of facility level and case level adjustments may 
apply. The facility level adjustments include those which account for 
geographic variation in wages (wage index), Disproportionate Share 
(DSH), and location in a rural area. Case level adjustments include 
those which apply for transfer, short-stay and outlier cases, as 
described later in this section.
    The budget neutral conversion factor provides the basis for 
determining the CMG based Federal payment rates. It is a standardized 
payment amount that is based on average costs from a base period and 
also reflects the combined aggregate effects of the payment weights, 
various facility and case level adjustments, and other policies 
discussed in this section. Consequently, in discussing the methodology 
for development of the Federal payment rates, we begin by describing 
the various adjustments and factors which serve as the inputs used in 
establishing the budget neutral conversion factor. Accordingly, we 
propose to develop prospective payments for IRFs using the following 
major steps:
    <bullet> Develop the CMG relative weights.
    <bullet> Determine the payment adjustments.
    <bullet> Calculate the budget neutral conversion factor minus 2 
percent.
    <bullet> Calculate the Federal CMG prospective payments.
    A detailed description of each step and a discussion of our 
proposed transfer policy, phase-in implementation and other policies 
follows.

A. Development of CMG Relative Weights

1. Overview of Development of the CMG Relative Weights
    As previously stated, one of the primary goals for the 
implementation of the proposed IRF prospective payment system is to pay 
each rehabilitation

[[Page 66343]]

facility an appropriate payment for the efficient delivery of the care 
required by its set of Medicare patients. The system must be able to 
account adequately for each facility's case-mix in order to ensure both 
fair distribution of Medicare payments and access to adequate care for 
beneficiaries whose care is provided at a higher cost. To accomplish 
these goals, payment for each case is adjusted for case-mix.
    In this payment system, under proposed Sec. 412.620(b)(1), relative 
weights are a primary element in accounting for the variance in cost 
per discharge and resource utilization among the payment groups. To 
ensure that beneficiaries classified to each CMG will have access to 
care and to encourage efficiency, we calculate a relative weight for 
each CMG that is proportional to the resources needed by an average 
inpatient rehabilitation case in that CMG. For example, cases in a CMG 
with a relative weight of 2 will on average cost twice as much as cases 
in a CMG with a weight of 1.
    To calculate the relative weights, we estimate operating (routine 
and ancillary services) and capital costs from inpatient rehabilitation 
facilities. Cost-to-charge ratios for ancillary services and per diem 
costs for routine services were obtained from the most recent available 
cost report data (FYs 1997, 1996, and/or 1995), charges were obtained 
from calendar year 1997 Medicare bill data, and corresponding 
functional measures were derived from the UDSmr/COS data. We omit data 
from rehabilitation facilities that are classified as all-inclusive 
providers from the calculation of the relative weights, as well as from 
the parameters that we use to define transfer cases, because these 
facilities are paid a single, negotiated rate per discharge and they do 
not maintain a charge structure.
    For ancillary services, we calculate both operating and capital 
costs by converting charges from Medicare claims into costs using 
facility-specific, cost-center specific cost-to-charge ratios obtained 
from cost reports. Some departmental cost-to-charge ratios were missing 
or found to be outside a plausible range. We replace individual cost-
to-charge ratios for all departments except anesthesiology when the 
values are either greater than 10, or less than 0.05. For 
anesthesiology, we replace the cost-to-charge ratio only when the value 
is greater than 10, or less than 0.01. The replacement value that we 
use for these aberrant cost-to-charge ratios is the mean value of the 
cost-to-charge ratio for the cost-center within the same type of 
hospital (either freestanding or unit).
    For routine services, per diem operating and capital costs are used 
to develop the relative weights. In addition, per diem operating and 
capital costs for special care services are used to develop the 
relative weights. (Special care services are furnished in intensive 
care units. We note that fewer than 1 percent of rehabilitation days 
are spent in intensive care units.) Per diem costs are obtained from 
each facility's Medicare cost report data. We use per diem costs for 
routine and special care services because, unlike for ancillary 
services, cost-to-charge ratios cannot be obtained from Medicare data. 
To estimate the costs for routine and special care services included in 
developing the relative weights, we sum the product of routine cost per 
diem and Medicare inpatient days and the product of the special care 
per diem and the number of Medicare special care days.
    We propose to use a hospital-specific relative value method to 
calculate relative weights. We believe this method allows us to account 
for more of the cross-facility variation in costs. Specifically, we 
remove the variation in costs across providers by converting a 
facility's cost for a case to a relative value based on the facility's 
case-mix index. The case-mix index is the average case weight (adjusted 
to eliminate the effect of comorbidities) for cases at a facility. 
Under the hospital-specific relative value method, costs are 
standardized at the facility level using facility-specific costs. Costs 
are standardized for each case by first dividing the adjusted cost for 
the case (which reflects comorbidities) by the average adjusted cost 
for the facility in which the case was treated. The average adjusted 
cost represents the average intensity of the health care services 
delivered by a particular facility. The resulting ratio is multiplied 
by the facility's own costliness (the facility's case-mix index) to 
determine the standardized cost for the case. The case-mix index 
accounts for the extent to which the intensity of the services is due 
to the needs of the facility's patients.
    Because costs are standardized in this manner, costs for a 
beneficiary at a facility with high average costs are counted as less 
resource intensive than costs at a facility with low average costs. 
Therefore, the adjusted cost of an individual case more accurately 
reflects actual resource use for an individual facility. For example, a 
$7,000 case in a facility with an average adjusted cost of $10,000 
reflects a higher level of relative resource use than a $7,000 case in 
a facility with the same case-mix, but an average adjusted cost of 
$20,000.
    We used the following basic steps to calculate the relative weights 
in this proposed rule:
    The first step in calculating the CMG weights is to estimate the 
effect that comorbidities have on costs. The second step is to adjust 
the cost of each Medicare discharge (case) to reflect the effects found 
in the first step. In the third step, the adjusted costs from the 
second step are used to calculate ``relative adjusted weights'' in each 
CMG using the hospital-specific relative value method described above. 
The final steps are to calculate the CMG relative weights by modifying 
the ``relative adjusted weight'' with the effects of the existence of a 
comorbidity and normalize the weights to 1.
    We describe each of these steps in greater detail below.
2. Steps for Calculating the Relative Weights
    Step 1--Estimate the effect of comorbidities on costs. In general, 
comorbidities are defined as additional medical conditions that 
increase the complexity of care delivered. For example, treatment for a 
beneficiary with a total hip replacement can become more complex if the 
beneficiary also has pneumonia. Because we found comorbidities to be 
significant predictors of costs in most RICs, we propose to calculate 
separate relative weights for cases in a given CMG with comorbidity and 
without comorbidity to reflect the additional costs incurred by cases 
classified with a comorbidity. We use regression analyses to determine 
if the weight for a Medicare discharge (case) should reflect the costs 
of comorbidities. Specifically, separate regression analyses are 
performed for each RIC. In the analysis, we found that not all 
comorbidities have the same effect on each RIC. Therefore, if 
coefficients by RIC are positive and significant and the comorbidity is 
deemed to be clinically relevant to the CMG, then we calculate separate 
relative weights for cases with comorbidity in Step 3 below.
    Step 2--Adjust the costs of each discharge for the effects of 
comorbidities. The second step in the calculation of the weights is to 
adjust the resource use for each case to eliminate the effect of 
comorbidities. The adjusted cost (A) for a discharge, with values x for 
comorbidity is:

A = cost per discharge/exp(a*x)

    These adjusted cost for each discharge are then used to calculate 
the relative adjusted weight in each CMG k,w<INF>k</INF>.

[[Page 66344]]

    Step 3--Calculate the CMG relative weights adjusted for 
comorbidities, on an iterative basis. The process of calculating the 
CMG relative weights is iterative. First, we give an initial case-mix 
index value of 1 to each facility. Then, for each case, we calculate a 
facility-specific relative value by dividing the comorbidity-adjusted 
cost of the case by the average comorbidity-adjusted cost of all cases 
at the facility, and multiplying the result by the facility's case-mix 
index. The CMG-adjusted weights are then set in proportion to the 
average of the facility-specific relative values. The result is a new 
case-mix index for each facility and, therefore, new facility-specific, 
relative values. The process is continued until there is convergence 
between the weights produced at adjacent steps, for example, when the 
maximum difference is less than 0.0001. After the first iteration, 
statistical outliers are defined as cases that differ from the CMG mean 
by more than three standard deviations in the log scale of standardized 
cost. These outliers are removed. Discharges that meet the definition 
of a transfer case are treated as a fraction of a case. (See discussion 
of transfers in section V.B, below.) A relative weight for each 
relevant combination of CMG ``with comorbidity'' and ``without 
comorbidity'' is calculated using the following formula:

W(k,x) = exp(a*x)w<INF>k</INF>

Where x equals 1 if the patient had one or more comorbidities or x 
equals 0 if no comorbidities were present. The variable (w<INF>k</INF>) 
equals the comorbidity adjusted weight. If the coefficient (a) is not 
positive and significant as previously discussed in Step 1, then (a) 
will be set to equal 0 in the formula. This results in exp(a*x), in the 
formula, to equal 1 and the weight (W) will equal (w<INF>k</INF>).
    Step 4--Calculate the weight by modifying the relative adjusted 
weight with the effects of comorbidity and normalizing the weights to 
1.0. This step entails calculating a relative weight for each relevant 
combination of CMG and comorbidity. In this step, we determine the 
average cost per discharge for all the cases and use that value as the 
divisor to calculate the relative weights. For example, if the average 
cost per discharge across all discharges is $12,000, then the relative 
weight for a CMG with an average cost of $12,000 is 1, and the relative 
weight for a CMG with an average cost per discharge of $20,000 is 1.67. 
If ``r'' is the relative adjusted weight for a case in a CMG with a 
comorbidity given by:

w = k r exp(a*x),

    then k is determined so that the average value of w is 1.
    Table 1E below lists the CMGs and their respective relative 
weights. The relative weights reflect the inclusion of cases with a 
very short interruption (return on day of discharge or either of the 
next 2 days). As stated previously, comorbidities were found to affect 
the cost of certain CMGs, but not all. Thus, the value for CMGs not 
affected by comorbidities is the same in both the ``No Comorbidity'' 
and the ``With Comorbidity'' columns. Information obtained from the 
first assessment (Day 4 assessment) will be used to determine the 
appropriate CMG and corresponding payment, including existence of a 
comorbidity. If a relevant comorbidity is indicated on this assessment, 
payment will be based on the relative weight from the comorbidity 
column. It should also be noted that Table 1E reflects cognitive scores 
that were derived from UDSmr/COS data.

                                         Table 1E.--CMG Relative Weights
----------------------------------------------------------------------------------------------------------------
                  Definition                          Average length of stay              Relative weight
                   (M=motor,         Split by    ---------------------------------------------------------------
    CMG *        C=cognitive,      comorbidity                         With                            With
                    A=age)                        No comorbidity    comorbidity   No comorbidity    comorbidity
----------------------------------------------------------------------------------------------------------------
0101.........  M = 29-0........               Y             10.4             9.6          0.6058          0.6613
0102.........  M = 34-30 and C                Y             12.0            11.4          0.7095          0.7746
                = 27-35.
0103.........  M = 40-35 and C                Y             14.3            15.2          0.8605          0.9394
                = 28-35.
0104.........  M = 34-30 and C                Y             14.2            16.7          0.8560          0.9344
                = 5-26.
0105.........  M = 40-35 and C                Y             15.9            16.7          0.9620          1.0501
                = 5-27.
0106.........  M = 45-41.......               Y             17.7            17.2          1.0944          1.1947
0107.........  M = 49-46.......               Y             20.1            20.7          1.2630          1.3787
0108.........  M = 55-50.......               Y             22.7            21.2          1.4365          1.5682
0109.........  M = 78-56 and A                Y             24.0            24.9          1.5989          1.7455
                >= 84.
0110.........  M = 60-56 and A                Y             25.9            23.4          1.6616          1.8139
                = 83.
0111.........  M = 78-61 and A                Y             29.5            29.6          1.9626          2.1425
                = 83.
0201.........  M = 33-0 and C =               N              9.4             9.4          0.5504          0.5504
                30-35.
0202.........  M = 33-0 and C =               N             13.3            13.3          0.8325          0.8325
                5-29.
0203.........  M = 50-34 and C                N             16.0            16.0          0.9777          0.9777
                = 22-35.
0204.........  M = 50-34 and C                N             18.3            18.3          1.1640          1.1640
                = 5-21.
0205.........  M = 66-51.......               N             22.3            22.3          1.4739          1.4739
0206.........  M = 78-67.......               N             31.6            31.6          2.2179          2.2179
0301.........  M = 33-0 and C =               Y             10.6            10.4          0.6399          0.7208
                22-35.
0302.........  M = 33-0 and C =               Y             13.5            13.3          0.8393          0.9454
                5-21.
0303.........  M = 46-34.......               Y             14.8            15.3          0.9467          1.0664
0304.........  M = 56-47.......               Y             19.2            19.3          1.2605          1.4198
0305.........  M = 78-57.......               Y             24.8            26.9          1.7517          1.9731
0401.........  M = 36-0........               Y             12.6            10.3          0.7135          0.8560
0402.........  M = 57-37.......               Y             17.5            18.6          1.0506          1.2603
0403.........  M = 74-58.......               Y             26.6            25.5          1.7459          2.0944
0404.........  M = 78-75.......               Y             39.3            48.6          2.9252          3.5092
0501.........  M = 23-0........               Y              8.4             8.2          0.4459          0.5528
0502.........  M = 36-24.......               Y             10.6            12.8          0.6197          0.7683
0503.........  M = 45-37.......               Y             13.5            15.7          0.8152          1.0107
0504.........  M = 57-46.......               Y             18.2            18.8          1.1515          1.4277
0505.........  M = 78-58.......               Y             25.9            30.2          1.7816          2.2089
0601.........  M = 35-0........               Y             12.3            12.5          0.6971          0.7970
0602.........  M = 45-36.......               Y             15.2            15.6          0.9086          1.0389

[[Page 66345]]

 
0603.........  M = 53-46.......               Y             17.7            18.2          1.0833          1.2387
0604.........  M = 78-54.......               Y             21.4            22.6          1.3375          1.5292
0701.........  M = 36-0........               Y             11.7            12.1          0.6525          0.7604
0702.........  M = 45-37.......               Y             14.3            15.5          0.8337          0.9716
0703.........  M = 51-46.......               Y             17.1            17.5          1.0129          1.1803
0704.........  M = 78-52.......               Y             19.6            20.9          1.1794          1.3743
0801.........  M = 32-0........               Y              8.6             9.6          0.4822          0.5920
0802.........  M = 41-33.......               Y             10.1            11.3          0.5984          0.7346
0803.........  M = 48-42.......               Y             12.2            14.3          0.7464          0.9162
0804.........  M = 78-49 and C                Y             13.5            16.8          0.8835          1.0845
                = 34-35.
0805.........  M = 55-50 and C                Y             15.3            16.7          0.9540          1.1710
                = 5-33.
0806.........  M = 78-56 and C                Y             18.4            21.2          1.1765          1.4441
                = 5-33.
0901.........  M = 32-0........               Y             10.4            11.0          0.5587          0.6716
0902.........  M = 44-33.......               Y             13.3            14.5          0.7641          0.9185
0903.........  M = 53-45.......               Y             16.4            17.0          0.9685          1.1642
0904.........  M = 78-54.......               Y             20.0            19.7          1.2144          1.4597
1001.........  M = 38-0........               Y             15.0            14.1          0.8488          0.9278
1002.........  M = 48-39.......               Y             18.2            17.5          1.1178          1.2219
1003.........  M = 78-49.......               Y             21.4            21.0          1.3785          1.5068
1101.........  M = 30-0........               Y             10.6             9.6          0.6095          0.7489
1102.........  M = 44-31 and A                Y             13.4            13.5          0.8278          1.0171
                >= 68.
1103.........  M = 44-31 and A                Y             17.4            17.8          1.0894          1.3386
                = 67.
1104.........  M = 78-45.......               Y             20.7            20.8          1.3232          1.6258
1201.........  M = 42-0 and C =               Y             10.7            12.1          0.5965          0.6847
                34-35.
1202.........  M = 42-0 and C =               Y             13.3            13.9          0.7181          0.8244
                5-33.
1203.........  M = 54-43.......               Y             16.4            17.0          0.9181          1.0540
1204.........  M = 78-55.......               Y             20.8            22.4          1.1492          1.3192
1301.........  M = 30-0........               Y             11.3            11.2          0.5927          0.6859
1302.........  M = 42-31.......               Y             13.3            14.2          0.7116          0.8234
1303.........  M = 78-43.......               Y             18.0            19.1          1.0450          1.2093
1401.........  M = 37-0........               Y             12.4            12.1          0.6511          0.7618
1402.........  M = 50-38.......               Y             15.4            16.4          0.9006          1.0537
1403.........  M = 78-51.......               Y             19.7            24.3          1.2689          1.4846
1501.........  M = 40-0 and A                 Y             14.0            12.7          0.7741          0.8327
                >= 78.
1502.........  M = 40-0 and A =               Y             15.0            15.3          0.8529          0.9175
                77.
1503.........  M = 63-41.......               Y             19.2            19.6          1.1875          1.2774
1504.........  M = 78-64.......               Y             29.6            32.6          2.2797          2.4524
1601.........  M = 41-0 and C =               Y             11.0            10.6          0.6151          0.7313
                33-35.
1602.........  M = 41-0 and C =               Y             12.8            15.1          0.7257          0.8628
                5-32.
1603.........  M = 78-42.......               Y             15.9            16.0          0.9725          1.1562
1701.........  M = 48-0........               Y             14.8            15.5          0.8513          1.0565
1702.........  M = 78-49.......               Y             22.5            24.9          1.3677          1.6974
1801.........  M = 56-0........               N             16.7            16.7          0.9935          0.9935
1802.........  M = 78-57.......               N             29.5            29.5          2.0563          2.0563
1901.........  M = 36-0........               N             11.5            11.5          0.7048          0.7048
1902.........  M = 47-37.......               N             18.0            18.0          1.0883          1.0883
1903.........  M = 78-48.......               N             31.4            31.4          2.0648          2.0648
2001.........  M = 21-0 and A                 Y              9.2             8.8          0.5010          0.5604
                >= 59.
2002.........  M = 31-22.......               Y             11.5            11.5          0.6435          0.7198
2003.........  M = 36-32.......               Y             13.0            13.0          0.7468          0.8353
2004.........  M = 21-0 and A =               Y             13.9            11.2          0.7131          0.7977
                58.
2005.........  M = 43-37 and A                Y             14.4            14.4          0.8549          0.9562
                >= 65.
2006.........  M = 52-44 and A                Y             16.5              17          1.0145          1.1348
                >= 65.
2007.........  M = 43-37 and A                Y             16.0            15.7          0.9998          1.1183
                65.
2008.........  M = 78-53 and A                Y             18.2            20.2          1.1359          1.2705
                >= 84.
2009.........  M = 59-53 and A                Y             19.8            19.9          1.2481          1.3960
                84.
2010.........  M = 52-44 and A                Y             18.1            18.6          1.1570          1.2941
                65.
2011.........  M = 78-60 and A                Y             23.2            24.3          1.4898          1.6664
                84.
2101.........  All burn cases..               N             18.5            18.5          1.2863          1.2863
5001.........  Short stay                     N              2.6             2.6          0.1908          0.1908
                cases--LOS is 3
                days or fewer.
5101.........  Expired                        N              7.1             7.1          0.4657          0.4657
                orthopedic,
                short stay.
5102.........  Expired                        N             20.0            20.0          1.0777          1.0777
                orthopedic, not
                short stay.
5103.........  Expired not                    N              8.4             8.4          0.5485          0.5485
                ortho, short
                stay.
5104.........  Expired not                    N             25.1            25.1          1.5027         1.5027
                ortho, not
                short stay.
----------------------------------------------------------------------------------------------------------------
* The first two digits of the CMG number from 01 to 21 correspond with a specific RIC number shown on Table 1D
  in section IV of this proposed rule.


[[Page 66346]]

B. Transfer Payment Policy

1. Background
    We are proposing, under Sec. 412.624(f), a transfer policy to 
provide for payments that more accurately reflect facility resources 
used and services delivered. We believe that it is important to 
minimize the inherent incentives specifically associated with the early 
transfer of patients in a discharge-based payment system. Without a 
transfer policy, we are concerned that incentives might exist for IRFs 
to discharge patients prematurely as well as admit patients that may 
not be able to endure intense inpatient therapy services. Patients 
might be transferred before receiving the typical, full course of 
inpatient rehabilitation, but the IRF would be paid the full CMG 
payment rate in the absence of a transfer policy. Accordingly, the 
transfer policy that we are proposing would reduce the full CMG payment 
rate when a Medicare beneficiary is transferred (as defined below).
2. Statutory Background
    Section 125(a)(3) of the BBRA amended section 1886(j)(1) of the Act 
by adding a new paragraph (E) that states ``Construction relating to 
transfer authority. ``Nothing in this subsection shall be construed as 
preventing the Secretary from providing for an adjustment to payments 
to take into account the early transfer of a patient from a 
rehabilitation facility to another site of care.''
    The statute does not define ``site of care''. ``Site of care'' 
could be defined as an ``institutional site'' that includes other 
rehabilitation facilities, long-term care hospitals (as described in 
section 412.23(e) of the regulations), inpatient hospitals, and nursing 
homes that accept payment under Title 18 (the Medicare program) or 
Title 19 (the Medicaid program), or both. ``Site of care'' can also be 
defined as a ``provider site'' that is more encompassing and could 
include home health, outpatient rehabilitation, ``day program'' 
services, as well as the ``institutional sites'' listed above. For the 
purposes of our transfer policy, we are proposing to define site of 
care as an ``institutional site'', although we are considering the 
option to extend the definition of site of care to the ``provider 
site'' definition. Further, we are soliciting comments regarding the 
inclusion of nursing homes in the definition of site of care.
3. Criteria for Defining Transfer Cases
    We propose that, in order for a discharge from an IRF to be 
classified as an early transfer, the length of stay for the discharge 
must be less than the average length of stay for non-transfer cases 
(cases in which the patient is discharged to the community and the 
length of stay is more than 3 days) in a given CMG (as shown in Table 
1E in this section), and the patient must be discharged to another 
rehabilitation facility, a long term care hospital, an inpatient 
hospital, or a nursing home that accepts payment under either the 
Medicare program or the Medicaid program, or both.
    We believe that under a prospective payment system, an IRF may, 
also, be inclined to discharge beneficiaries prematurely while 
increasing the volume and intensity of HHA and outpatient therapy 
services. We expect that some beneficiaries may require HHA or 
outpatient therapy services as a normal progression of care after their 
inpatient rehabilitation stay. However, we are concerned that intensive 
use of these therapy services could be inappropriately used as a 
substitute for several days of an intensive therapy program in the IRF. 
We are analyzing claims data to determine the extent to which we can 
distinguish among services that could be considered a substitution of 
care rather than an extension of the normal progression for inpatient 
rehabilitation care and to determine the frequency and intensity of 
both HHA and outpatient therapy services. Estimating the potential 
substitution of HHA therapy services is made more challenging because 
we have just developed the HHA prospective payment system and it is 
difficult to anticipate how therapy services will be delivered after 
implementation of that system.
    Accordingly, we are not proposing to include HHA, outpatient 
therapy, and ``day programs'' in our transfer policy. However, we are 
considering including these services to the extent we can distinguish 
when HHA and outpatient therapy services are more intensive and used as 
a substitution for inpatient rehabilitation care. If we can determine 
that the care is used as a substitution rather than just the normal 
progression of care, we believe these types of intensive HHA and 
outpatient therapy services should be included as part of the transfer 
policy. Therefore, we specifically solicit comments on this option.
    In addition, we will be developing a monitoring system that 
includes transfers or discharges from an IRF to ``provider sites'', 
previously referenced. This will include transfers or discharges from 
an IRF to skilled nursing facility, long term care facilities, home 
health agencies and inpatient hospitals. This system will include 
discharges and transfers from one IRF to a different IRF including 
situations where the transfer occurs between organizations of common 
ownership. Although currently it does not appear that this type of 
transfer occurs frequently, further analysis of data regarding this 
type of transfer between IRFs may warrant an adjustment to payments. 
Therefore, we are specifically soliciting comments on this monitoring 
system.
4. Transfer Case Payment
    We believe that matching payment as closely as possible to expected 
costs is the best way to reduce opportunities for financial 
considerations to affect clinical decisions. We found a significant 
correlation between the length of a patient's stay and the cost of the 
services received. This correlation indicates that the average length 
of stay can be used as a proxy measure of a facility's resources needed 
to treat a specific diagnosis with rehabilitation services. Thus, a 
per-diem-based payment for the number of days of care prior to a 
transfer will allow us to pay providers more appropriately for the 
facility resources used and services delivered.
    We propose to compute the per-diem-based payment for a transfer 
case as follows: First, calculate the unadjusted per-diem amount for 
each CMG (except the short-stay CMG) by dividing the average length of 
stay for non-transfer cases (those cases discharged to the community 
with a length of stay more than 3 days) in the CMG into the Federal 
prospective payment (with or without comorbidities) for that CMG. Next, 
multiply the CMG per-diem payment from the first step by the number of 
days that the beneficiary was in the IRF prior to their transfer. The 
result equals the unadjusted Federal prospective payment for the 
transfer case. See section V.D of this preamble for specific 
adjustments that are applicable to this Federal prospective payment. We 
solicit comments on the appropriateness of our proposed methodology for 
computing payments for transfer cases.
    We will examine the distribution of costs to determine if and to 
what extent costs vary during the course of an episode. If costs vary 
during the course of an episode, an alternative transfer policy could 
be developed to better reflect the costs of care. The results of this 
analysis will be considered as well as the incentives inherent in an 
alternative transfer payment methodology.

[[Page 66347]]

C. Special Cases That Are Not Transfers

    Section 1886(j)(3)(A)(v) of the Act permits us to adjust the 
payment rates by factors as the Secretary determines are necessary to 
properly reflect variations in necessary costs of treatment among 
rehabilitation facilities.
    Certain cases that have stays of less than the typical length of 
time and that receive less than the full course of rehabilitation 
treatment for a specific CMG would be paid inappropriately if the 
facility were to receive the full CMG payment. Further, because of the 
budget neutrality requirements, ``overpayment'' for these cases would 
reduce payments for all other cases that warrant full payment based on 
the rehabilitation services actually delivered. We discuss the special 
cases below in terms of the definitions, policy rationale, and the 
proposed payment methodology. The three subsets are short-stay 
outliers, cases that expire, and interrupted stays.
1. Short-Stay Outlier
    We propose, under Sec. 412.620(b)(2), to define a short-stay 
outlier as a case that has a length of stay of 3 days or fewer 
(regardless of the CMG) and that does not meet the definition of a 
transfer as discussed in section V.B. of this preamble. A short-stay 
may occur when a beneficiary receives less than the full course of 
rehabilitative treatment because he or she leaves the facility against 
medical advice. Another circumstance warranting classification as a 
short-stay outlier involves patients who are admitted to rehabilitation 
facilities but are unable to tolerate intensive rehabilitative 
services. These patients may be discharged home and be readmitted once 
they are able to tolerate intensive rehabilitative services (see the 
interrupted stay policy in section V.C.3. of this preamble, for further 
clarification regarding length of stay criteria), or they may be 
discharged and not readmitted because they remain unable to tolerate 
these services.
    An incomplete assessment submitted when the patient's length of 
stay is 3 days or fewer is another example of a short-stay case. In 
this situation, the facility may not have the appropriate information 
to complete the MDS-PAC patient assessment. We believe that a payment 
adjustment is necessary to reduce incentives for facilities to complete 
an assessment with inadequate information. Further, we believe that 
providing a special payment for incomplete assessments neither 
encourages facilities to submit incomplete assessments without 
obtaining the appropriate information, nor severely penalizes providers 
that occasionally may be unable, despite good faith efforts, to 
complete assessments.
    Making a short-stay outlier payment for these types of cases will 
allow us to counteract the incentives inherent in a discharge-based 
prospective payment system for this pattern to emerge. Payment-to-cost 
ratios for the cases described above show that if facilities receive a 
full CMG payment, they would be ``overpaid'' for the resources they 
have expended. One of the primary objectives of the prospective payment 
system is to provide incentives for facilities to become more efficient 
and, in doing so, to ensure that they can still receive adequate and 
appropriate payments. Because the rates are set to be budget neutral 
minus 2 percent, excessive payment for those cases that do not actually 
entail the full course of rehabilitative treatment would reduce 
payments for cases that warrant full payment based on the 
rehabilitation services delivered. A short-stay outlier policy would 
permit more equitable payment to those facilities that manage to 
increase efficiencies while still providing the full course of 
rehabilitative treatment.
    We propose to pay short-stay outliers a relative weight of 0.1908. 
We computed this relative weight for short-stay outlier discharges by 
identifying all cases in which the length of stay is 3 days or fewer 
and the discharge does not meet the policy criteria to be considered a 
transfer. The relative weight for these cases is calculated in the same 
manner discussed previously, using the hospital-specific relative value 
methodology.
    However, we believe that the considerations underlying the short-
stay policy might also apply to cases with a length of stay greater 
than 3 days. More specifically, we note that some beneficiaries may 
have longer lengths of stay, and yet may not require intensive 
inpatient rehabilitative care, or may lack the capacity to participate 
in an intensive rehabilitation program. Therefore, we are also 
considering a short-stay policy that would encompass cases with a 
length of stay longer than 3 days. We are in the process of further 
analyzing claims data for Medicare beneficiaries to determine the most 
appropriate number of days to use in the definition of a short-stay 
case. If analysis of the data supports increasing the number of days 
for the short-stay criteria, we might adopt in the final rule a 
definition covering a longer period than the 3-day period. We 
specifically solicit comments on the appropriate time period for our 
short-stay criteria.
2. Cases That Expire
    In general, cases that end in death would be substantially 
``overpaid'' if facilities received the full CMG payment for these 
cases; even excluding all of the very short-stay cases with a length of 
stay of 3 days or fewer, the remaining expired cases as a whole would 
still be ``overpaid''. We analyzed payment-to-cost ratios and found 
that we can improve the accuracy of the payments if we split expired 
cases into two categories based on the RIC--one for orthopedic cases 
and one for all other types of RICs. We further find that splitting 
these cases based on length of stay also improves the accuracy of the 
payment system. Therefore, we propose, under Sec. 412.620(b)(3), that, 
for expired cases where a beneficiary dies within 3 days from admission 
or fewer, the case would be classified into the short-stay CMG. We 
propose that, for expired cases with a length of stay greater than 3 
days, the case would be classified into one of four CMGs, based on 
length of stay and whether or not the discharge falls within the 
orthopedic RIC. More specifically, one group includes orthopedic 
discharges with a length of stay of more than 3 days but less than or 
equal to the average length of stay for expired cases classified within 
the orthopedic RIC. The second group includes orthopedic discharges 
with a length of stay greater than the average length of stay for 
expired cases classified within the orthopedic RIC. The third group 
includes non-orthopedic discharges with a length of stay of more than 3 
days but less than or equal to the average length of stay of expired 
cases that are not classified within the orthopedic RIC. The fourth 
group includes non-orthopedic discharges with a length of stay greater 
than the average length of stay of expired cases that are not 
classified within the orthopedic RIC. Relative weights for each expired 
CMG are calculated using the hospital-specific relative value 
methodology discussed previously in this preamble.
3. Interrupted Stay
    We propose to define interrupted stay cases as those involving 
cases in which the beneficiary returns to the rehabilitation facility 
by midnight of the third day following a discharge. We propose to pay 
one discharge payment for these cases. The assessment from the initial 
stay would be used to determine the appropriate CMG.

D. Adjustments

    Section 1886(j)(6) of the Act requires an adjustment to the Federal

[[Page 66348]]

prospective payments to account for geographical wage variation. 
Section 1886(j)(3)(A)(v) of the Act confers broad discretion on the 
Secretary to adjust prospective payments ``by such other factors as the 
Secretary determines are necessary to properly reflect variations in 
necessary costs of treatment among rehabilitation facilities.'' Section 
1886(j)(4) of the Act authorizes (but does not require) the Secretary 
to make specified payment adjustments (including an adjustment for 
outlier cases). In addition to the geographical wage adjustment, we 
propose to adjust payments for facilities located in rural areas. 
Further, we propose to adjust payments to reflect the percentage of low 
income patients. These adjustments and the proposed payment 
methodologies are discussed below.
1. Area Wage Adjustment
    Section 1886(j)(6) of the Act specifies that payment rates under 
the IRF prospective payment system must be adjusted to account for 
geographic area wage variation. The statute requires the Secretary to 
adjust the labor-related portion of the prospective payment rates for 
area differences in wage levels by a factor reflecting the relative 
facility wage level in the geographic area of the rehabilitation 
facility compared to the national average wage level for these 
facilities. We propose, under Sec. 412.624(e)(1), to adjust the payment 
rates for geographic wage variations using the following methodology.
    To account for wage differences, we first identify the proportion 
of labor and non-labor components of costs. In general, the labor-
related share is the sum of relative importances of wages, fringe 
benefits, professional fees, postal services, labor-intensive services, 
and a portion of the capital share from an appropriate market basket. 
We determine a labor-related share for rehabilitation facilities by 
first estimating the portion related to operating costs. We use the 
excluded market basket with capital to determine the labor-related 
share. The excluded market basket with capital is derived from 
available cost data for facilities including rehabilitation, long-term 
care, psychiatric, cancer, and children's hospitals. Using the excluded 
hospital market basket with capital, the labor-related share of 
operating costs is 67.03 percent in fiscal year 2001. Table 2E shows 
that the sum of the relative importance for wages and salaries, 
employee benefits, professional fees, postal services and all other 
labor intensive services equals 67.03 percent for FY 2001. The labor-
related share of capital costs needs to be considered as well. The 
portion of capital attributed to labor is estimated to be 46 percent, 
the same percentage used for the hospital inpatient capital-related 
prospective payment system. Because the relative importance for capital 
is 9.285 percent of the excluded hospital with capital market basket in 
FY 2001, we multiply 46 percent by 9.285 percent to determine the 
labor-related share for capital costs in FY 2001, which is 4.271 
percent. We add 4.271 percent for capital costs to 67.03 percent for 
operating costs to determine the total labor-related share. Thus, the 
labor-related share that we propose to use for rehabilitation 
facilities in FY 2001 is 71.301 percent as shown in the Table 2E below.

                  Table 2E.--Total Labor-Related Share
------------------------------------------------------------------------
                                                             Relative
                      Cost category                         importance
                                                            (%) FY 2001
------------------------------------------------------------------------
Wages and salaries......................................          48.895
Employee benefits.......................................          10.790
Professional fees.......................................           1.979
Postal services.........................................           0.245
All other labor intensive services......................           5.121
                                                         ---------------
    SUBTOTAL............................................           67.03
Labor related share of capital..........................           4.271
                                                         ===============
      TOTAL.............................................          71.301
------------------------------------------------------------------------

    We note that a precedent exists for using this method to adjust for 
geographic differences in costs. Specifically, the labor-related 
portion for acute care hospitals is determined from cost report data, 
and is established in conjunction with the hospital operating market 
basket. We further validated the labor-related share by analyzing the 
results of the wage index coefficient derived from the regressions. The 
wage index coefficient allows us to approximate the labor-related 
portion of cost per case. The coefficient confirms that 71.301 percent 
is an appropriate labor-related share.
    The labor-related portion of the unadjusted Federal payment is 
multiplied by a wage index value to account for area wage differences. 
We are proposing to use inpatient acute care hospital wage data to 
compute the wage indices. Wage data to compute IRF-specific wage 
indices are currently not available. We believe that the inpatient 
acute care hospital wage data reflect wage levels similar to those of 
post-acute care facilities, including IRFs. We believe that IRFs and 
other post-acute care facilities (such as, SNFs and HHAs) generally 
compete in the same labor market as inpatient acute care hospitals. 
(Inpatient acute care hospital data is currently being used to compute 
wage indices for the SNF and HHA prospective payment systems.) 
Accordingly, we believe that inpatient acute care hospital wage data is 
appropriate to use as a basis of computing the IRF wage index in 
accordance with section 1886(j)(6) of the Act.
    The inpatient acute care hospital wage data that we propose to use 
includes the following categories of data associated with costs paid 
under the inpatient acute care hospital prospective payment system (as 
well as outpatient costs): salaries and hours from short-term, acute 
care hospitals, home office costs and hours, certain contract labor 
costs and hours, and wage-related costs. The wage data excludes the 
wages for services provided by teaching physicians, interns and 
residents, and nonphysician anesthetists under Medicare Part B, because 
these services are not covered under the IRF prospective payment 
system. These wages are currently being phased out of the hospital 
inpatient prospective payment system wage index over a 5-year period. 
The wage data used to compute the FY 2000 SNF and hospital wage indices 
are based on a blend of 80 percent of an average hourly wage that 
includes these costs and 20 percent of an average hourly wage that 
excludes these costs. Unlike the inpatient prospective payment system 
for acute care hospitals, a transition is unnecessary for IRF 
prospective payment system because payment for inpatient rehabilitation 
services has never been based on a wage index that includes data for 
these services. The difference across geographic areas between a wage 
index that uses the 80/20 blend and a wage index that excludes 100 
percent of wages for teaching physicians, residents, and nonphysician 
anesthetists is less than 2 percent on average.
    Consistent with the wage index methodologies in other prospective 
payment systems, we propose to divide hospitals into labor market 
areas. For purposes of defining labor market areas, we are proposing to 
define an urban area as a Metropolitan Statistical Area (MSA) or New 
England County Metropolitan Area (NECMA), as defined by the Executive 
Office of Management and Budget. We are proposing to define a rural 
area as any area outside an urban area. For the purposes of computing 
the wage index for IRFs, the wage index values for urban and rural 
areas are determined without regard to

[[Page 66349]]

geographic reclassification under section 1886(d)(8) or (d)(10) of the 
Act.
    We are proposing to use an IRF wage index that is based on FY 1996 
inpatient acute care hospital wage data. These data were also used to 
compute the FY 2000 hospital inpatient PPS wage indices. The FY 1997 
inpatient acute care hospital wage data was used to develop the FY 2001 
hospital wage index, and we will consider using this data for 
developing the final Federal prospective payments.
    The proposed IRF wage indices are computed as follows:
    <bullet> Compute an average hourly wage for each urban and rural 
area.
    <bullet> Compute a national average hourly wage.
    <bullet> Divide the average hourly wage for each urban and rural 
area by the national average hourly wage--the result is a wage index 
for each urban and rural area.
    To calculate the adjusted facility payments, the prospectively 
determined Federal prospective payment is multiplied by the labor-
related percentage (0.71301) to determine the labor-related portion of 
the Federal prospective payments. This labor-related portion is then 
multiplied by the applicable IRF wage index shown in Table 3E for urban 
areas and Table 4E for rural areas.

                    Table 3E.--Wage Index Urban Areas
------------------------------------------------------------------------
                              Urban area (Constituent counties    Wage
            MSA                    or county equivalents)         index
------------------------------------------------------------------------
0040.......................  Abilene, TX......................    0.8275
                             Taylor, TX
0060.......................  Aguadilla, PR....................    0.3859
                             Aguada, PR
                             Aguadilla, PR
                              Moca, PR
0080.......................  Akron, OH........................    1.0093
                             Portage, OH
                             Summit, OH
0120.......................  Albany, GA.......................    1.6055
                             Dougherty, GA
                             Lee, GA
0160.......................  Albany-Schenectady-Troy, NY......    0.8751
                             Albany, NY
                             Montgomery, NY
                             Rensselaer, NY
                             Saratoga, NY
                             Schenectady, NY
                             Schoharie, NY
0200.......................  Albuquerque, NM..................    0.8366
                             Bernalillo, NM
                             Sandoval, NM
                             Valencia, NM
0220.......................  Alexandria, LA...................    0.7960
                             Rapides, LA
0240.......................  Allentown-Bethlehem-Easton, PA...    1.0226
                             Carbon, PA
                             Lehigh, PA.......................
                             Northampton, PA..................
0280.......................  Altoona, PA......................    0.9410
                             Blair, PA
0320.......................  Amarillo, TX.....................    0.8450
                             Potter, TX
                             Randall, TX
0380.......................  Anchorage, AK....................    1.3010
                             Anchorage, AK
0440.......................  Ann Arbor, MI....................    1.1354
                             Lenawee, MI
                             Livingston, MI
                             Washtenaw, MI
0450.......................  Anniston,AL......................    0.8562
                             Calhoun, AL
0460.......................  Appleton-Oshkosh-Neenah, WI......    0.9018
                             Calumet, WI
                             Outagamie, WI
                             Winnebago, WI
0470.......................  Arecibo, PR......................    0.4871
                             Arecibo, PR
                             Camuy, PR
                             Hatillo, PR
0480.......................  Asheville, NC....................    0.8969
                             Buncombe, NC
                             Madison, NC
0500.......................  Athens, GA.......................    0.9819
                             Clarke, GA
                             Madison, GA
                             Oconee, GA
0520.......................  Atlanta, GA......................    1.0173
                             Barrow, GA
                             Bartow, GA
                             Carroll, GA
                             Cherokee, GA
                             Clayton, GA
                             Cobb, GA
                             Coweta, GA
                             De Kalb, GA
                             Douglas, GA
                             Fayette, GA
                             Forsyth, GA
                             Fulton, GA
                              Gwinnett, GA
                             Henry, GA
                             Newton, GA
                             Paulding, GA
                             Pickens, GA
                             Rockdale, GA
                             Spalding, GA
                             Walton, GA
0560.......................  Atlantic City-Cape May...........    1.1469
                             Atlantic City, NJ
                             Cape May, NJ
0580.......................  Auburn-Opelika, AL...............    0.7718
                             Lee, AL
0600.......................  Augusta-Aiken, GA-SC.............    0.9091
                             Columbia, GA
                             McDuffie, GA
                             Richmond, GA
                             Aiken, SC
                             Edgefield, SC
0640.......................  Austin-San Marcos, TX............    0.9112
                             Bastrop, TX
                             Caldwell, TX
                             Hays, TX
                             Travis, TX
                             Williamson, TX
0680.......................  Bakersfield, CA..................    0.9622
                             Kern, CA
 0720......................  Baltimore, MD....................    0.9614
                              Anne Arundel, MD
                              Baltimore, MD
                              Baltimore City, MD
                              Carroll, MD
                              Harford, MD
                              Howard, MD
                              Queen Annes, MD
0733.......................  Bangor, ME.......................    0.9696
                              Penobscot, ME
 0743......................  Barnstable-Yarmouth, MA..........    1.3573
                              Barnstable, MA
0760.......................  Baton Rouge, LA..................    0.8782
                              Ascension, LA
                              East Baton Rouge
                              Livingston, LA
                              West Baton Rouge
0840.......................  Beaumont-Port Arthur, TX.........    0.8715
                              Hardin, TX
                              Jefferson, TX
                              Orange, TX
0860.......................  Bellingham, WA...................    1.1528
                              Whatcom, WA
0870.......................  Benton Harbor, MI................    0.8557
                              Berrien, MI
0875.......................  Bergen-Passaic, NJ...............    1.2128
                              Bergen, NJ
                              Passaic, NJ
0880.......................  Billings, MT.....................    1.0154
                              Yellowstone, MT
0920.......................  Biloxi-Gulfport-Pascagoula, MS...    0.7960
                              Hancock, MS
                              Harrison, MS
                              Jackson, MS
0960.......................  Binghamton, NY...................    0.8689
                              Broome, NY
                              Tioga, NY
1000.......................  Birmingham, AL...................    0.9009
                              Blount, AL
                              Jefferson, AL
                              St. Clair, AL
                              Shelby, AL
1010.......................  Bismarck, ND.....................    0.7746
                              Burleigh, ND
                              Morton, ND
1020.......................  Bloomington, IN..................    0.8694
                              Monroe, IN
1040.......................  Bloomington-Normal, IL...........    0.9099
                              McLean, IL
1080.......................  Boise City, ID...................    0.9144
                              Ada, ID
                              Canyon, ID
1123.......................  Boston-Worcester-Lawrence-Lowell-    1.1327
                              Brockton, MA-NH.
                              Bristol, MA
                              Essex, MA
                              Middlesex, MA
                              Norfolk, MA
                              Plymouth, MA
                              Suffolk, MA
                              Worcester, MA
                              Hillsborough, NH
                              Merrimack, NH
                              Rockingham, NH
                              Strafford, NH
1125.......................  Boulder-Longmont, CO.............    1.0030

[[Page 66350]]

 
                              Boulder, CO
1145.......................  Brazoria, TX.....................    0.8616
                              Brazoria, TX
1150.......................  Bremerton, WA....................    1.1141
                              Kitsap, WA
1240.......................  Brownsville-Harlingen-San Benito,    0.9294
                              TX.
                              Cameron, TX
1260.......................  Bryan-College Station, TX........    0.8601
                              Brazos, TX
1280.......................  Buffalo-Niagara Falls, NY........    0.9549
                              Erie, NY
                              Niagara, NY
1303.......................  Burlington, VT...................    1.0796
                              Chittenden, VT
                              Franklin, VT
                              GrandIsle, VT
1310.......................  Caguas, PR.......................    0.4596
                              Caguas, PR
                              Cayey, PR
                              Cidra, PR
                              Gurabo, PR
                              San Lorenzo, PR
1320.......................  Canton-Massillon, OH.............    0.8770
                              Carroll, OH
                              Stark, OH
1350.......................  Casper, WY.......................    0.9286
                              Natrona, WY
1360.......................  Cedar Rapids, IA.................    0.9082
                              Linn, IA
1400.......................  Champaign-Urbana, IL.............    0.9225
                              Champaign, IL
1440.......................  Charleston-North Charleston, SC..    0.9073
                              Berkeley, SC
                              Charleston, SC
                              Dorchester, SC
1480.......................  Charleston, WV...................    0.9157
                              Kanawha, WV
                              Putnam, WV
1520.......................  Charlotte-Gastonia-Rock Hill, NC-    0.9471
                              SC.
                              Cabarrus, NC
                              Gaston, NC
                              Lincoln, NC
                              Mecklenburg, NC
                              Rowan, NC
                              Stanly, NC
                              Union, NC
                              York, SC
1540.......................  Charlottesville, VA..............    1.0662
                              Albemarle, VA
                              Charlottesville City, VA
                              Fluvanna, VA
                              Greene, VA
1560.......................  Chattanooga, TN-GA...............    0.9824
                             Catoosa, GA
                             Dade, GA
                             Walker, GA
                             Hamilton, TN
                             Marion, TN
1580.......................  Cheyenne, WY.....................    0.8272
                             Laramie, WY
1600.......................  Chicago, IL......................    1.0889
                             Cook, IL
                             De Kalb, IL
                             Du Page, IL
                             Grundy, IL
                             Kane, IL
                             Kendall, IL
                             Lake, IL
                             McHenry, IL
                             Will, IL
1620.......................  Chico-Paradise, CA...............    1.0513
                             Butte, CA
1640.......................  Cincinnati, OH-KY-IN.............    0.9424
                             Dearborn, IN
                             Ohio, IN
                             Boone, KY
                             Campbell, KY
                             Gallatin, KY
                             Grant, KY
                             Kenton, KY
                             Pendleton, KY
                             Brown, OH
                             Clermont, OH
                             Hamilton, OH
                             Warren, OH
1660.......................  Clarksville-Hopkinsville, TN-KY..    0.8185
                             Christian, KY
                             Montgomery, TN
1680.......................  Cleveland-Lorain-Elyria, OH......    0.9667
                             Ashtabula, OH
                             Geauga, OH
                             Cuyahoga, OH
                             Lake, OH
                             Lorain, OH
                             Medina, OH
1720.......................  Colorado Springs, CO.............    0.9326
                             El Paso, CO
1740.......................  Columbia MO......................    0.9072
                             Boone, MO
1760.......................  Columbia, SC.....................    0.9456
                             Lexington, SC
                             Richland, SC
1800.......................  Columbus, GA-AL..................    0.8529
                             Russell, AL
                             Chattanoochee, GA
                             Harris, GA
                             Muscogee, GA
1840.......................  Columbus, OH.....................    0.9952
                             Delaware, OH
                             Fairfield, OH
                             Franklin, OH
                             Licking, OH
                             Madison, OH
                             Pickaway, OH
1880.......................  Corpus Christi, TX...............    0.8848
                             Nueces, TX
                             San Patricio, TX
1890.......................  Corvallis, OR....................    1.1217
                             Benton, OR
1900.......................  Cumberland, MD-WV................    0.8905
                             Allegany MD
                             Mineral WV
1920.......................  Dallas, TX.......................    0.9559
                             Collin, TX
                             Dallas, TX
                             Denton, TX
                             Ellis, TX
                             Henderson, TX
                             Hunt, TX
                             Kaufman, TX
                             Rockwall, TX
1950.......................  Danville, VA.....................    0.9167
                             Danville City, VA
                             Pittsylvania, VA
1960.......................  Davenport-Moline-Rock Island, IA-    0.8787
                              IL.
                             Scott, IA
                             Henry, IL
                             Rock Island, IL
2000.......................  Dayton-Springfield, OH...........    0.9478
                             Clark, OH
                             Greene, OH
                             Miami, OH
                             Montgomery, OH
2020.......................  Daytona Beach, FL................    0.9048
                             Flagler, FL
                             Volusia, FL
2030.......................  Decatur, AL......................    0.8781
                             Lawrence, AL
                             Morgan, AL
2040.......................  Decatur, IL......................    0.8380
                             Macon, IL
2080.......................  Denver, CO.......................    1.0202
                             Adams, CO
                             Arapahoe, CO
                             Denver, CO
                             Douglas, CO
                             Jefferson, CO
2120.......................  Des Moines, IA...................    0.8793
                             Dallas, IA
                             Polk, IA
                             Warren, IA
2160.......................  Detroit, MI......................    1.0310
                             Lapeer, MI
                             Macomb, MI
                             Monroe, MI
                             Oakland, MI
                             St. Clair, MI
                             Wayne, MI
2180.......................  Dothan, AL.......................    0.7890
                             Dale, AL
                             Houston, AL
2190.......................  Dover, DE........................    0.9445
                             Kent, DE
2200.......................  Dubuque, IA......................    0.8620
                             Dubuque, IA
2240.......................  Duluth-Superior, MN-WI...........    1.0279
                             St. Louis, MN
                             Douglas, WI
2281.......................  Dutchess County, NY..............    1.0674
                             Dutchess, NY
2290.......................  Eau Claire, WI...................    0.9030
                             Chippewa, WI
                             Eau Claire, WI
2320.......................  El Paso, TX......................    0.9004
                             El Paso, TX
2330.......................  Elkhart-Goshen, IN...............    0.9490
                             Elkhart, IN
2335.......................  Elmira, NY.......................    0.8634
                             Chemung, NY
2340.......................  Enid, OK.........................    0.8047
                             Garfield, OK
2360.......................  Erie, PA.........................    0.8880
                             Erie, PA
2400.......................  Eugene-Springfield, OR...........    1.0715
                             Lane, OR
2440.......................  Evansville-Henderson, IN-KY......    0.8329
                             Posey, IN
                             Vanderburgh, IN
                             Warrick, IN
                             Henderson, KY

[[Page 66351]]

 
2520.......................  Fargo-Moorhead, ND-MN............    0.8721
                             Clay, MN
                             Cass, ND
2560.......................  Fayetteville, NC.................    0.8594
                             Cumberland, NC
2580.......................  Fayetteville-Springdale-Rogers,      0.7768
                              AR.
                             Benton, AR
                             Washington, AR
2620.......................  Flagstaff, AZ-UT.................    1.0470
                             Coconino, AZ
                             Kane, UT
2640.......................  Flint, MI........................    1.1037
                             Genesee, MI
2650.......................  Florence, AL.....................    0.8020
                             Colbert, AL
                             Lauderdale, AL
2655.......................  Florence, SC.....................    0.8668
                             Florence, SC
2670.......................  Fort Collins-Loveland, CO........    1.0335
                             Larimer, CO
2680.......................  Ft. Lauderdale, FL...............    1.0297
                             Broward, FL
2700.......................  Fort Myers-Cape Cora, FL.........    0.9056
                             Lee, FL
2710.......................  Fort Pierce-Port St. Lucie, FL...    1.0116
                             Martin, FL
                             St. Lucie, FL
2720.......................  Fort Smith, AR-OK................    0.7936
                             Crawford, AR
                             Sebastian, AR
                             Sequoyah, OK
2750.......................  Fort Walton Beach, FL............    0.8816
                             Okaloosa, FL
2760.......................  Fort Wayne, IN...................    0.9158
                             Adams, IN
                             Allen, IN
                             De Kalb, IN
                             Huntington, IN
                             Wells, IN
                             Whitley, IN
2800.......................  Forth Worth-Arlington, TX........    0.9673
                             Hood, TX
                             Johnson, TX
                             Parker, TX
                             Tarrant, TX
2840.......................  Fresno, CA.......................    1.0311
                             Fresno, CA
                             Madera, CA
2880.......................  Gadsden, AL......................    0.8791
                             Etowah, AL
2900.......................  Gainesville, FL..................    0.9879
                             Alachua, FL
2920.......................  Galveston-Texas City, TX.........    0.9767
                             Galveston, TX
2960.......................  Gary, IN.........................    0.9494
                             Lake, IN
                             Porter, IN
2975.......................  Glens Falls, NY..................    0.8707
                             Warren, NY
                             Washington, NY
2980.......................  Goldsboro, NC....................    0.8432
                             Wayne, NC
2985.......................  Grand Forks, ND-MN...............    0.9199
                             Polk, MN
                             Grand Forks, ND
2995.......................  Grand Junction, CO...............    0.9102
                             Mesa, CO
3000.......................  Grand Rapids-Muskegon-Holland, MI    1.0151
                             Allegan, MI
                             Kent, MI
                             Muskegon, MI
                             Ottawa, MI
3040.......................  Great Falls, MT..................    1.0582
                             Cascade, MT
3060.......................  Greeley, CO......................    0.9667
                             Weld, CO
3080.......................  Green Bay, WI....................    0.9224
                             Brown, WI
3120.......................  Greensboro-Winston-Salem-High        0.9091
                              Point, NC.
                             Alamance, NC
                             Davidson, NC
                             Davie, NC
                             Forsyth, NC
                             Guilford, NC
                             Randolph, NC
                             Stokes, NC
                             Yadkin, NC
3150.......................  Greenville, NC...................    0.9451
                             Pitt, NC
3160.......................  Greenville-Spartanburg-Anderson,     0.9264
                              SC.
                             Anderson, SC
                             Cherokee, SC
                             Greenville, SC
                             Pickens, SC
                             Spartanburg, SC
3180.......................  Hagerstown, MD...................    0.8946
                             Washington, MD
3200.......................  Hamilton-Middletown, OH..........    0.9051
                             Butler, OH
3240.......................  Harrisburg-Lebanon-Carlisle, PA..    0.9749
                             Cumberland, PA
                             Dauphin, PA
                             Lebanon, PA
                             Perry, PA
3283.......................  Hartford, CT.....................    1.1758
                             Hartford, CT
                             Litchfield, CT
                             Middlesex, CT
                             Tolland, CT
3285.......................  Hattiesburg, MS..................    0.7723
                             Forrest, MS
                             Lamar, MS
3290.......................  Hickory-Morganton-Lenoir, NC.....    0.9219
                             Alexander, NC
                             Burke, NC
                             Caldwell, NC
                             Catawba, NC
3320.......................  Honolulu, HI.....................    1.1599
                             Honolulu, HI
3350.......................  Houma, LA........................    0.7878
                             Lafourche, LA
                             Terrebonne, LA
3360.......................  Houston, TX......................    0.9405
                             Chambers, TX
                             Fort Bend, TX
                             Harris, TX
                             Liberty, TX
                             Montgomery, TX
                             Waller, TX
3400.......................  Huntington-Ashland, WV-KY-OH.....    0.9859
                             Boyd, KY
                             Carter, KY
                             Greenup, KY
                             Lawrence, OH
                             Cabell, WV
                             Wayne, WV
3440.......................  Huntsville, AL...................    0.8926
                             Limestone, AL
                             Madison, AL
3480.......................  Indianapolis, IN.................    0.9802
                             Boone, IN
                             Hamilton, IN
                             Hancock, IN
                             Hendricks, IN
                             Johnson, IN
                             Madison, IN
                             Marion, IN
                             Morgan, IN
                             Shelby, IN
3500.......................  Iowa City, IA....................    0.9532
                             Johnson, IA
3520.......................  Jackson, MI......................    0.8944
                             Jackson, MI
3560.......................  Jackson, MS......................    0.8379
                             Hinds, MS
                             Madison, MS
                             Rankin, MS
3580.......................  Jackson, TN......................    0.8701
                             Chester, TN
                             Madison, TN
3600.......................  Jacksonville, FL.................    0.9020
                             Clay, FL
                             Duval, FL
                             Nassau, FL
                             St. Johns, FL
3605.......................  Jacksonville, NC.................    0.7944
                             Onslow, NC
3610.......................  Jamestown, NY....................    0.7950
                             Chautaqua, NY
3620.......................  Janesville-Beloit, WI............    0.9677
                             Rock, WI
3640.......................  Jersey City, NJ..................    1.1742
                             Hudson, NJ
3660.......................  Johnson City-Kingsport-Bristol,      0.8949
                              TN-VA.
                             Carter, TN
                             Hawkins, TN
                             Sullivan, TN
                             Unicoi, TN
                             Washington, TN
                             Bristol City, VA
                             Scott ,VA
                             Washington, VA
3680.......................  Johnstown, PA....................    0.8589
                             Cambria, PA
                             Somerset, PA
3700.......................  Jonesboro, AR....................    0.7316
                             Craighead, AR
3710.......................  Joplin, MO.......................    0.7766
                             Jasper, MO
                             Newton, MO
3720.......................  Kalamazoo-Battlecreek, MI........    1.0098
                             Calhoun, MI
                             Kalamazoo, MI
                             Van Buren, MI
3740.......................  Kankakee, IL.....................    0.8699

[[Page 66352]]

 
                             Kankakee, IL
3760.......................  Kansas City, KS-MO...............    0.9281
                             Johnson, KS
                             Leavenworth, KS
                             Miami, KS
                             Wyandotte, KS
                             Cass, MO
                             Clay, MO
                             Clinton, MO
                             Jackson, MO
                             Lafayette, MO
                             Platte, MO
                             Ray, MO
3800.......................  Kenosha, WI......................    0.9139
                             Kenosha, WI
3810.......................  Killeen-Temple, TX...............    1.0078
                             Bell, TX
                             Coryell, TX
3840.......................  Knoxville, TN....................    0.9238
                             Anderson, TN
                             Blount, TN
                             Knox, TN
                             Loudon, TN
                             Sevier, TN
                             Union, TN
3850.......................  Kokomo, IN.......................    0.9023
                             Howard, IN
                             Tipton, IN
3870.......................  La Crosse, WI-MN.................    0.9020
                             Houston, MN
                             La Crosse, WI
3880.......................  Lafayette, LA....................    0.8437
                             Acadia, LA
                             Lafayette, LA
                             St. Landry, LA
                             St. Martin, LA
3920.......................  Lafayette, IN....................    0.8913
                             Clinton, IN
                             Tippecanoe, IN
3960.......................  Lake Charles, LA.................    0.8056
                             Calcasieu, LA
3980.......................  Lakeland-WinterHaven, FL.........    0.8919
                             Polk, FL
4000.......................  Lancaster, PA....................    0.9325
                             Lancaster, PA
4040.......................  Lansing-East Lansing, MI.........    1.0075
                             Clinton, MI
                             Eaton, MI
                             Ingham, MI
4080.......................  Laredo, TX.......................    0.8421
                             Webb, TX
4100.......................  Las Cruces, NM...................    0.8606
                             DonaAna, NM
4120.......................  Las Vegas, NV-AZ.................    1.1285
                             Mohave, AZ
                             Clark, NV
                             Nye, NV
4150.......................  Lawrence, KS.....................    0.8319
                             Douglas, KS
4200.......................  Lawton, OK.......................    0.9645
                             Comanche, OK
4243.......................  Lewiston-Auburn, ME..............    0.8962
                             Androscoggin ME
4280.......................  Lexington, KY....................    0.8568
                             Bourbon, KY
                             Clark, KY
                             Fayette, KY
                             Jessamine, KY
                             Madison, KY
                             Scott, KY
                             Woodford, KY
4320.......................  Lima, OH.........................    0.9010
                             Allen, OH
                             Auglaize, OH
4360.......................  Lincoln, NE......................    0.9723
                             Lancaster NE
4400.......................  Little Rock-North Little, AR.....    0.8708
                             Faulkner, AR
                             Lonoke, AR
                             Pulaski, AR
                             Saline, AR
4420.......................  Longview-Marshall, TX............    0.8841
                             Gregg, TX
                             Harrison, TX
                             Upshur, TX
4480.......................  Los Angeles-Long Beach, CA.......    1.2103
                             Los Angeles, CA
4520.......................  Louisville, KY-IN................    0.9415
                             Clark, IN
                             Floyd, IN
                             Harrison, IN
                             Scott, IN
                             Bullitt, KY
                             Jefferson, KY
                             Oldham, KY
4600.......................  Lubbock, TX......................    0.8512
                             Lubbock, TX
4640.......................  Lynchburg, VA....................    0.8908
                             Amherst, VA
                             Bedford City, VA
                             Bedford, VA
                             Campbell, VA
                             Lynchburg City, VA
4680.......................  Macon, GA........................    0.8501
                             Bibb, GA
                             Houston, GA
                             Jones, GA
                             Peach, GA
                             Twiggs, GA
4720.......................  Madison, WI......................    0.9869
                             Dane, WI
4800.......................  Mansfield, OH....................    0.8575
                             Crawford, OH
                             Richland, OH
4840.......................  Mayaguez, PR.....................    0.4729
                             Anasco, PR
                             CaboRojo, PR
                             Hormigueros, PR
                             Mayaguez, PR
                             Sabana Grande, PR
                             San German, PR.
4880.......................  McAllen-Edinburg-Mission, TX.....    0.8208
                             Hidalgo, TX
4890.......................  Medford-Ashland, OR..............    1.0607
                             Jackson, OR
4900.......................  Melbourne-Titusville-Palm Bay, FL    0.9405
                             Brevard, FL
4920.......................  Memphis, TN-AR-MS................    0.8321
                             Crittenden, AR
                             De Soto, MS
                             Fayette, TN
                             Shelby, TN
                             Tipton, TN
4940.......................  Merced, CA.......................    1.0313
                             Merced, CA
5000.......................  Miami, FL........................    1.0368
                             Dade, FL
5015.......................  Middlesex-Somerset-Hunterdon, NJ.    1.1128
                             Hunterdon, NJ
                             Middlesex, NJ
                             Somerset, NJ
5080.......................  Milwaukee-Waukesha, WI...........    0.9848
                             Milwaukee, WI
                             Ozaukee, WI
                             Washington, WI
                             Waukesha, WI
5120.......................  Minneapolis-St. Paul, MN-WI......    1.0979
                             Anoka, MN
                             Carver, MN
                             Chisago, MN
                             Dakota, MN
                             Hennepin, MN
                             Isanti, MN
                             Ramsey, MN
                             Scott, MN
                             Sherburne, MN
                             Washington, MN
                             Wright, MN
                             Pierce, WI
                             St. Croix, WI
5140.......................  Missoula, MT.....................    0.9192
                             Missoula, MT
5160.......................  Mobile, AL.......................    0.8171
                             Baldwin, AL
                             Mobile, AL
5170.......................  Modesto, CA......................    1.0233
                             Stanislaus, CA
5190.......................  Monmouth-Ocean, NJ...............    1.1332
                             Monmouth, NJ
                             Ocean, NJ
5200.......................  Monroe, LA.......................    0.8315
                             Ouachita, LA
5240.......................  Montgomery, AL...................    0.7794
                             Autauga, AL
                             Elmore, AL
                             Montgomery, AL
5280.......................  Muncie, IN.......................    1.0533
                             Delaware, IN
5330.......................  Myrtle Beach, SC.................    0.8612
                             Horry, SC
5345.......................  Naples, FL.......................    0.9955
                             Collier, FL
5360.......................  Nashville, TN....................    0.9368
                             Cheatham, TN
                             Davidson, TN
                             Dickson, TN
                             Robertson, TN
                             Rutherford, TN
                             Sumner, TN
                             Williamson, TN
                             Wilson, TN
5380.......................  Nassau-Suffolk, NY...............    1.4087
                             Nassau, NY
                             Suffolk, NY
5483.......................  New Haven-Bridgeport-Stamford-       1.2260
                              Waterbury-Danbury, CT.
                             Fairfield, CT
                             New Haven, CT
5523.......................  New London-Norwich, CT...........    1.2572

[[Page 66353]]

 
                             New London, CT
5560.......................  New Orleans, LA..................    0.9140
                             Jefferson, LA
                             Orleans, LA
                             Plaquemines, LA
                             St. Bernard, LA
                             St. Charles, LA
                             St. James, LA
                             St. John The Baptist, LA
                             St. Tammany, LA
5600.......................  New York, NY.....................    1.4338
                             Bronx, NY
                             Kings, NY
                             New York, NY
                             Putnam, NY
                             Queens, NY
                             Richmond, NY
                             Rockland, NY
                             Westchester, NY
5640.......................  Newark, NJ.......................    1.1729
                             Essex, NJ
                             Morris, NJ
                             Sussex, NJ
                             Union, NJ
                             Warren, NJ
5660.......................  Newburgh, NY-PA..................    1.1035
                             Orange, NY
                             Pike, PA
5720.......................  Norfolk-Virginia Beach-Newport       0.8483
                              News, VA-NC.
                             Currituck, NC
                             Chesapeake City, VA
                             Gloucester, VA
                             Hampton City, VA
                             Isle of Wight, VA
                             James City, VA
                             Mathews, VA
                             Newport News City, VA
                             Norfolk City, VA
                             Poquoson City, VA
                             Portsmouth City, VA
                             Suffolk City, VA
                             Virginia Beach City, VA
                             Williamsburg City, VA
                             York, VA
5775.......................  Oakland, CA......................    1.5277
                             Alameda, CA
                             Contra Costa, CA
5790.......................  Ocala, FL........................    0.9728
                             Marion, FL
5800.......................  Odessa-Midland, TX...............    0.8951
                             Ector, TX
                             Midland, TX
5880.......................  Oklahoma City, OK................    0.8551
                             Canadian, OK
                             Cleveland, OK
                             Logan, OK
                             McClain, OK
                             Oklahoma, OK
                             Pottawatomie, OK
5910.......................  Olympia, WA......................    1.1023
                             Thurston, WA
5920.......................  Omaha, NE-IA.....................    1.0405
                             Pottawattamie, IA
                             Cass, NE
                             Douglas, NE
                             Sarpy, NE
                             Washington, NE
5945.......................  Orange County, CA................    1.1720
                             Orange, CA
5960.......................  Orlando, FL......................    0.9845
                             Lake, FL
                             Orange, FL
                             Osceola, FL
                             Seminole, FL
5990.......................  Owensboro, KY....................    0.8199
                             Daviess, KY
6015.......................  Panama City, FL..................    0.9277
                             Bay, FL
6020.......................  Parkersburg-Marietta, WV-OH......    0.8503
                              Washington, OH
                              Wood, WV
6080.......................  Pensacola, FL....................    0.8529
                              Escambia, FL
                              Santa Rosa, FL
6120.......................  Peoria-Pekin, IL.................    0.8201
                             Peoria, IL
                             Tazewell, IL
                              Woodford, IL
6160.......................  Philadelphia, PA-NJ..............    1.1076
                             Burlington, NJ
                             Camden, NJ
                             Gloucester, NJ
                             Salem, NJ
                             Bucks, PA
                             Chester, PA
                             Delaware, PA
                             Montgomery, PA
                             Philadelphia, PA
6200.......................  Phoenix-Mesa, AZ.................    0.9420
                             Maricopa, AZ
                             Pinal, AZ
6240.......................  Pine Bluff, AR...................    0.7777
                             Jefferson, AR
6280.......................  Pittsburgh, PA...................    0.9478
                             Allegheny, PA
                             Beaver, PA
                              Butler, PA
                              Fayette, PA
                              Washington, PA
                              Westmoreland, PA
6323.......................  Pittsfield, MA...................    1.0173
                             Berkshire, MA
6340.......................  Pocatello, ID....................    0.9063
                             Bannock, ID
6360.......................  Ponce, PR........................    0.4970
                             Guayanilla, PR
                             Juana Diaz, PR
                             Penuelas, PR
                             Ponce, PR
                             Villalba, PR
                             Yauco, PR
6403.......................  Portland, ME.....................    0.9499
                             Cumberland, ME
                             Sagadahoc, ME
                             York, ME
6440.......................  Portland-Vancouver, OR-WA........    1.1087
                             Clackamas, OR
                             Columbia, OR
                             Multnomah, OR
                             Washington, OR
                             Yamhill, OR
                             Clark, WA
6483.......................  Providence-Warwick-Pawtucket, RI.    1.0766
                             Bristol, RI
                             Kent, RI
                             Newport, RI
                             Providence, RI
                             Washington, RI
6520.......................  Provo-Orem, UT...................    0.9916
                             Utah, UT
6560.......................  Pueblo, CO.......................    0.8922
                             Pueblo, CO
6580.......................  Punta Gorda, FL..................    0.9620
                             Charlotte, FL
6600.......................  Racine, WI.......................    0.9325
                              Racine, WI
6640.......................  Raleigh-Durham-Chapel Hill, NC...    0.9683
                             Chatham, NC
                             Durham, NC
                             Franklin, NC
                             Johnston, NC
                             Orange, NC
                             Wake, NC
6660.......................  Rapid City, SD...................    0.8415
                             Pennington, SD
6680.......................  Reading, PA......................    0.9496
                             Berks, PA
6690.......................  Redding, CA......................    1.1376
                             Shasta, CA
6720.......................  Reno, NV.........................    1.0781
                             Washoe, NV
6740.......................  Richland-Kennewick-Pasco, WA.....    1.1356
                             Benton, WA
                             Franklin, WA
6760.......................  Richmond-Petersburg, VA..........    0.9569
                             Charles City County, VA
                             Chesterfield, VA
                             Colonial Heights City, VA
                             Dinwiddie, VA
                             Goochland, VA
                             Hanover, VA
                             Henrico, VA
                             Hopewell City, VA
                             New Kent, VA
                             Petersburg City, VA
                             Powhatan, VA
                             Prince George, VA
                             Richmond City, VA
6780.......................  Riverside-San Bernardino, CA         1.1256
                             Riverside, CA
                             San Bernardino, CA
6800.......................  Roanoke, VA......................    0.7971
                             Botetourt, VA
                             Roanoke, VA
                             Roanoke City, VA
                             Salem City, VA
                  6820.....  Rochester, MN....................    1.1619
                             Olmsted, MN
6840.......................  Rochester, NY....................    0.9066
                             Genesee, NY
                             Livingston, NY
                             Monroe, NY
                             Ontario, NY
                             Orleans, NY
                             Wayne, NY
6880.......................  Rockford, IL.....................    0.8885
                             Boone, IL
                             Ogle, IL
                             Winnebago, IL
6895.......................  Rocky Mount, NC..................    0.8837

[[Page 66354]]

 
                             Edgecombe, NC
                             Nash, NC
6920.......................  Sacramento, CA...................    1.2473
                             El Dorado, CA
                             Placer, CA
                             Sacramento, CA
6960.......................  Saginaw-Bay City-Midland, MI.....    0.9365
                             Bay, MI
                             Midland, MI
                             Saginaw, MI
6980.......................  St. Cloud, MN....................    0.9525
                             Benton, MN
                             Stearns, MN
7000.......................  St. Joseph, MO...................    0.9048
                             Andrews, MO
                             Buchanan, MO
7040.......................  St. Louis, MO-IL.................    0.8943
                             Clinton, IL
                             Jersey, IL
                             Madison, IL
                             Monroe, IL
                             St. Clair, IL
                             Franklin, MO
                             Jefferson, MO
                             Lincoln, MO
                             St. Charles, MO
                             St. Louis, MO
                             St. Louis City, MO
                             Warren, MO
                             Sullivan City, MO
7080.......................  Salem, OR........................    1.0065
                             Marion, OR
                             Polk, OR
7120.......................  Salinas, CA......................    1.4900
                             Monterey, CA
7160.......................  Salt Lake City-Ogden, UT.........    0.9919
                             Davis, UT
                             Salt Lake, UT
                             Weber, UT
7200.......................  San Angelo, TX...................    0.7938
                             Tom Green, TX
7240.......................  San Antonio, TX..................    0.8429
                             Bexar, TX
                             Comal, TX
                             Guadalupe, TX
                             Wilson, TX
7320.......................  San Diego, CA....................    1.2100
                             San Diego, CA
7360.......................  San Francisco, CA................    1.4287
                             Marin, CA
                             San Francisco, CA
                             San Mateo, CA
7400.......................  San Jose, CA.....................    1.3848
                             Santa Clara, CA
7440.......................  San Juan-Bayamon, PR.............    0.4698
                             Aguas Buenas, PR
                             Barceloneta, PR
                             Bayamon, PR
                             Canovanas, PR
                             Carolina, PR
                             Catano, PR
                             Ceiba, PR
                             Comerio, PR
                             Corozal, PR
                             Dorado, PR
                             Fajardo, PR
                             Florida, PR
                             Guaynabo, PR
                             Humacao, PR
                             Juncos, PR
                             Los Piedras, PR
                             Loiza, PR
                             Luguillo, PR
                             Manati, PR
                             Morovis, PR
                             Naguabo, PR
                             Naranjito, PR
                             Rio Grande, PR
                             San Juan, PR
                             Toa Alta, PR
                             Toa Baja, PR
                             Trujillo Alto, PR
                             Vega Alta, PR
                             Vega Baja, PR
                             Yabucoa, PR
7460.......................  San Luis Obispo-Atascadero-          1.0593
                              PasoRobles, CA.
                             San Luis Obispo, CA
7480.......................  Santa Barbara-Santa Maria-Lompoc,    1.0939
                              CA.
                             Santa Barbara, CA
7485.......................  Santa Cruz-Watsonville, CA.......    1.4091
                             Santa Cruz, CA
7490.......................  Santa Fe, NM.....................    1.0511
                             Los Alamos, NM
                             Santa Fe, NM
7500.......................  Santa Rosa, CA...................    1.3172
                             Sonoma, CA
7510.......................  Sarasota-Bradenton, FL...........    1.0022
                             Manatee, FL
                             Sarasota, FL
7520.......................  Savannah, GA.....................    0.9995
                             Bryan, GA
                             Chatham, GA
                             Effingham, GA
7560.......................  Scranton-Wilkes-Barre-Hazleton,      0.8442
                              PA.
                             Columbia, PA
                             Lackawanna, PA
                             Luzerne, PA
                             Wyoming, PA
7600.......................  Seattle-Bellevue-Everett, WA.....    1.1376
                             Island, WA
                             King, WA
                             Snohomish, WA
7610.......................  Sharon, PA.......................    0.8374
                             Mercer, PA
7620.......................  Sheboygan, WI....................    0.8299
                             Sheboygan, WI
7640.......................  Sherman-Denison, TX..............    0.9439
                             Grayson, TX
7680.......................  Shreveport-Bossier City, LA......    0.9126
                             Bossier, LA
                             Caddo, LA
                             Webster, LA
7720.......................  Sioux City, IA-NE................    0.8552
                             Woodbury, IA
                             Dakota, NE
7760.......................  Sioux Falls, SD..................    0.8813
                             Lincoln, SD
                             Minnehaha, SD
7800.......................  South Bend, IN...................    0.9732
                             St. Joseph, IN
7840.......................  Spokane, WA......................    1.0898
                             Spokane, WA
7880.......................  Springfield, IL..................    0.8710
                             Menard, IL
                             Sangamon, IL
7920.......................  Springfield, MO..................    0.8062
                             Christian, MO
                             Greene, MO
                             Webster, MO
8003.......................  Springfield, MA..................    1.0488
                             Hampden, MA
                             Hampshire, MA
8050.......................  State College, PA................    0.9212
                             Centre, PA
8080.......................  Steubenville-Weirton, OH-WV......    0.8716
                             Jefferson, OH
                             Brooke, WV
                             Hancock, WV
8120.......................  Stockton-Lodi, CA................    1.0571
                             San Joaquin, CA
8140.......................  Sumter, SC.......................    0.8335
                             Sumter, SC
8160.......................  Syracuse, NY.....................    0.9310
                             Cayuga, NY
                             Madison, NY
                             Onondaga, NY
                             Oswego, NY
8200.......................  Tacoma, WA.......................    1.1583
                             Pierce, WA
8240.......................  Tallahassee, FL..................    0.8529
                             Gadsden, FL
                             Leon, FL
8280.......................  Tampa-St. Petersburg-Clearwater,     0.9136
                              FL.
                             Hernando, FL
                             Hillsborough, FL
                             Pasco, FL
                             Pinellas, FL
8320.......................  Terre Haute, IN..................    0.8614
                             Clay, IN
                             Vermillion, IN
                             Vigo, IN
8360.......................  Texarkana, AR-TX.................    0.8101
                             Miller, AR
                             Bowie, TX
8400.......................  Toledo, OH.......................    0.9764
                             Fulton, OH
                             Lucas, OH
                             Wood, OH
8440.......................  Topeka, KS.......................    0.9440
                             Shawnee, KS
8480.......................  Trenton, NJ......................    1.0180
                             Mercer, NJ
8520.......................  Tucson, AZ.......................    0.8846
                             Pima, AZ
8560.......................  Tulsa, OK........................    0.8181
                             Creek, OK
                             Osage, OK
                             Rogers, OK
                             Tulsa, OK
                             Wagoner, OK
8600.......................  Tuscaloosa, AL...................    0.8104
                             Tuscaloosa, AL
8640.......................  Tyler, TX........................    0.9499
                             Smith, TX
8680.......................  Utica-Rome, NY...................    0.8370
                             Herkimer, NY
                             Oneida, NY

[[Page 66355]]

 
8720.......................  Vallejo-Fairfield-Napa, CA.......    1.3503
                             Napa, CA
                             Solano, CA
8735.......................  Ventura, CA......................    1.1603
                             Ventura, CA
8750.......................  Victoria, TX.....................    0.8476
                             Victoria, TX
 8760......................  Vineland-Millville-Bridgeton, NJ.    1.0640
                             Cumberland, NJ
 8780......................  Visalia-Tulare-Porterville, CA...    1.0533
                             Tulare, CA
 8800......................  Waco, TX                             0.8099
                             McLennan, TX
 8840......................  Washington, DC-MD-VA-WV..........    1.1088
                              District of Columbia, DC
                              Calvert, MD
                              Charles, MD
                              Frederick, MD
                              Montgomery, MD
                              Prince Georges, MD
                              Alexandria City, VA
                              Arlington, VA
                              Clarke, VA
                              Culpepper, VA
                              Fairfax, VA
                              Fairfax City, VA
                              Falls Church City, VA
                              Fauquier, VA
                              Fredericksburg City, VA
                              King George, VA
                              Loudoun, VA
                              Manassas City, VA
                              Manassas Park City, VA
                              Prince William, VA
                              Spotsylvania, VA
                              Stafford, VA
                              Warren, VA
                              Berkeley, WV
                              Jefferson, WV
8920.......................  Waterloo-Cedar Falls, IA             0.8597
                             BlackHawk, IA
 8940......................  Wausau, WI.......................    0.9556
                             Marathon, WI
8960.......................  West Palm Beach-Boca, FL             1.0130
                             Palm Beach, FL
 9000......................  Wheeling, OH-WV..................    0.7662
                             Belmont, OH
                              Marshall, WV
                             Ohio, WV
 9040......................  Wichita, KS......................    0.9559
                             Butler, KS
                             Harvey, KS
                             Sedgwick, KS
 9080......................  Wichita Falls, TX................    0.7743
                             Archer, TX
                             Wichita, TX
 9140......................  Williamsport, PA.................    0.8472
                             Lycoming, PA
 9160......................  Wilmington-Newark, DE-MD.........    1.1000
                             New Castle, DE
                             Cecil, MD
 9200......................  Wilmington, NC...................    0.9818
                             New Hanover, NC
                             Brunswick, NC
 9260......................  Yakima, WA.......................    1.0331
                             Yakima, WA
 9270......................  Yolo, CA.........................    0.9833
                             Yolo, CA
9280.......................  York, PA                             0.9255
                             York, PA
9320.......................  Youngstown-Warren, OH                1.0025
                             Columbiana, OH
                             Mahoning, OH
                             Trumbull, OH
 9340......................  Yuba City, CA....................    1.0787
                             Sutter, CA
                             Yuba, CA
 9360......................  Yuma, AZ.........................    1.0040
                             Yuma, AZ
------------------------------------------------------------------------


                  Table 4E.--Wage Index for Rural Areas
------------------------------------------------------------------------
                                                                  Wage
                         Nonurban area                            Index
------------------------------------------------------------------------
Alabama.......................................................    0.7467
Alaska........................................................    1.2175
Arizona.......................................................    0.8625
Arkansas......................................................    0.7317
California....................................................    1.0066
Colorado......................................................    0.8915
Connecticut...................................................    1.2559
Delaware......................................................    0.9240
Florida.......................................................    0.9089
Georgia.......................................................    0.8176
Guam..........................................................
Hawaii........................................................    1.0853
Idaho.........................................................    0.8707
Illinois......................................................    0.8122
Indiana.......................................................    0.8493
Iowa..........................................................    0.7976
Kansas........................................................    0.7513
Kentucky......................................................    0.8127
Louisiana.....................................................    0.7456
Maine.........................................................    0.8679
Maryland......................................................    0.8730
Massachusetts.................................................    1.1499
Michigan......................................................    0.8896
Minnesota.....................................................    0.8743
Mississippi...................................................    0.7374
Missouri......................................................    0.7802
Montana.......................................................    0.8479
Nebraska......................................................    0.8024
Nevada........................................................    0.9197
New Hampshire.................................................    0.9827
New Jersey \1\................................................
New Mexico....................................................    0.8472
New York......................................................    0.8604
North Carolina................................................    0.8378
North Dakota..................................................    0.7662
Ohio..........................................................    0.8746
Oklahoma......................................................    0.7332
Oregon........................................................    0.9966
Pennsylvania..................................................    0.8559
Puerto Rico...................................................    0.4299
Rhode Island \1\..............................................
South Carolina................................................    0.8353
South Dakota..................................................    0.7625
Tennessee.....................................................    0.7738
Texas.........................................................    0.7545
Utah..........................................................    0.8998
Vermont.......................................................    0.9518
Virginia......................................................    0.7991
Virgin Islands................................................
Washington....................................................    1.0548
West Virginia.................................................    0.8116
Wisconsin.....................................................    0.8838
Wyoming.......................................................   0.8955
------------------------------------------------------------------------
\1\ All counties within the State are classified urban.

    The resulting wage-adjusted labor-related portion is added to the 
nonlabor related portion, resulting in a wage-adjusted payment. The 
following example illustrates how a Medicare fiscal intermediary would 
calculate the Adjusted Facility Federal prospective payment for 
inpatient rehabilitation facility services with a hypothetical Federal 
prospective payment of $10,000 for services provided in the 
rehabilitation facility located in Heartland, USA. The rehabilitation 
wage index value for facilities located in Heartland, USA is 1.0234. 
The labor-related portion (71.301 percent) of the Federal prospective 
payment is $7130.10=($10,000*71.301 percent), and the nonlabor related 
portion (28.699 percent) of the Federal prospective payment is 
$2869.90=($10,000*28.699 percent). Therefore, the wage-adjusted payment 
calculation, rounded to the nearest dollar is as follows:

$10,167=($7130.10*1.0234) + $2,869.90
2. General Specifications to Determine Other Adjustments
    As indicated earlier, section 1886(j)(3)(A)(v) of the Act confers 
broad authority on the Secretary to adjust prospective payments ``by 
such other factors as the Secretary determines are necessary to 
properly reflect variations in necessary costs of treatment among 
rehabilitation facilities''. To determine whether other payment 
adjustments are warranted for the IRF prospective payment system, we 
conducted extensive regression analysis of the relationship between IRF 
costs (including both operating and capital costs per case) and several 
factors that may affect costs. The appropriateness of potential payment 
adjustments are based on both cost effects estimated by regression 
analysis and other factors, including simulated payments that we 
discuss in section VIII.B.2. of this preamble.
    Our analyses included 624 facilities for which cost and case-mix 
data were available. We estimated costs for each case by multiplying 
facility specific,

[[Page 66356]]

cost-center specific cost-to-charge ratios by charges. Cost-to-charge 
ratios were obtained from FYs 1995, 1996, and/or 1997 cost report data 
and charges were obtained from the calendar years 1996 and 1997 
Medicare claims data. The cost per case is calculated by summing all 
costs and dividing by the number of equivalent full cases. When we had 
cost per case data for both years, the number of cases and total costs 
are combined for both years. We accounted for the difference in the 
year by adjusting the 1996 cost per case by the case-weighted average 
change in cost per case between 1996 and 1997. Using the data from both 
years should provide more stability in the payment adjustments than 
would using data for a single year. When data for only one year are 
available, we use the costs and number of equivalent cases for that 
year.
    Multivariate regression analysis is a standard way to examine 
facility cost variation and analyze potential payment adjustments. We 
looked at two standard models: (1) Fully specified explanatory models 
to examine the impact of all relevant factors that might potentially 
affect facility cost per case; and (2) payment models that examine the 
impacts of those factors specifically used to determine payment rates. 
The general specification for the multi-variate regression is that the 
estimated average cost per case (the dependent variable) at the 
facility can be explained or predicted by several independent 
variables, including the case-mix index, the wage index for the 
facility, and a vector of additional explanatory variables that affect 
a facility's cost per case, such as its teaching program or the 
proportion of low-income patients. The case-mix index is the average of 
the CMG weights derived by the hospital-specific relative value method 
for each facility. Transfer cases are given a partial weight based on 
the ratio of the length of stay for the transfer to the average length 
of stay for nontransfer cases. Using the regression coefficients, we 
then simulated payments and calculated payment-to-cost ratios for 
different classes of hospitals, for specific combinations of payment 
policies.
    We use payment variables from the hospital inpatient prospective 
payment system, including disproportionate share patient percentage, 
both capital and operating teaching variables (resident-to-average 
daily census and resident-to-bed ratios, respectively) as well as the 
teaching variable (resident-to-adjusted average daily census ratio) 
used in the analyses for the hospital outpatient prospective payment 
system, and variables to account for location in a rural or large urban 
area. A discussion of the major payment variables and our findings 
appears below.
3. Adjustments for Rural Location
    We examined costs per case for both large urban and rural 
facilities. In the regression models, both explanatory and payment, the 
variable for rural facilities was positive and significant (p0.05). The 
standardized cost per case for rural hospitals is 15 percent higher 
than the national average. On average, rural facilities tend to have 
fewer cases, a longer length of stay, and a higher average cost per 
case. The difference in costs becomes more evident when the average 
cost per case is standardized for the case-mix index and the wage 
index. In the regression models, large urban facilities were not 
significantly different from other urban facilities. We propose, under 
Sec. 412.624(e)(3), to adjust for rural facilities by multiplying the 
payment by 1.1589. This adjustment was determined by using the 
coefficients derived from the regressions.
4. Adjustments for Indirect Teaching Costs
    Facilities with major teaching programs tend to be located in large 
urban areas and have more cases, a higher case-mix and a higher 
proportion of low-income patients. We found that when only the payment 
variables that might warrant an adjustment (that is, DSH or rural/urban 
status, rather than for-profit/not for profit) under the prospective 
payment system are used in the regression models, the indirect teaching 
cost variable is not significant. We looked at different specifications 
for the teaching variable. We used a resident-to-average daily census 
ratio and a resident-to-bed ratio that we based on the estimated number 
of residents assigned to the inpatient area of the rehabilitation 
facility. We also used a resident-to-adjusted average daily census 
ratio based on the total number of residents at the hospital complex 
and outpatient as well as inpatient volume. We also looked for a 
teaching threshold. In all our payment regressions, the teaching 
variable was not significant. Therefore, we are not proposing an 
adjustment for indirect teaching costs.
5. Adjustments for Disproportionate Share of Low-Income Patients
    We assessed the appropriateness of adjustments for facilities 
serving a disproportionate share of low income patients. We limited our 
analysis to the effects of serving low-income patients on costs per 
case, rather than a subsidy for uncompensated care.
    We evaluated a facility-level adjustment that takes into account 
both the percentage of Medicare patients who are on Supplemental 
Security Income and the percentage of Medicaid patients who are not 
entitled to Medicare. As a facility's percentage of low income patients 
increases, there is an incremental increase in the facility's cost. 
This suggests that additional payments are appropriate. We propose to 
use the same measure of disproportionate patient percentage currently 
used for the acute care hospital inpatient prospective payment system. 
Payments for each facility would be adjusted to reflect the facility's 
disproportionate share percentage.
    Section 4403(b) of the BBA requires HCFA to develop a Report to the 
Congress containing a formula for determining additional payment 
amounts to hospitals under section 1886(d)(5)(F) of the Act. In 
determining the formula, the Secretary must:
    <bullet> Establish a single threshold for costs incurred by 
hospitals serving low-income patients.
    <bullet> Consider the costs incurred in furnishing hospital 
services to individuals who are entitled to benefits under Part A of 
Medicare and who receive Supplemental Security Income benefits under 
Title XVI.
    <bullet> Consider the costs incurred in furnishing hospital 
services to individuals who receive medical assistance under the State 
plan under the Medicare program and are not entitled to benefits under 
Part A of Medicare.
    Further, MedPAC recommends including the costs of uncompensated 
care in calculating low-income shares and using the same formula to 
distribute payments to all facilities covered by prospective payments. 
In light of HCFA's current study of a new payment formula for 
determining adjustments for hospitals serving low income patients and 
MedPAC's recommendations, we will consider these study results and 
other information as it becomes available and potentially refine the 
DSH adjustment in the future so that we ensure that facilities are paid 
in the most consistent and equitable manner possible. At this time, we 
propose, under Sec. 412.624(e)(2), to adjust each rehabilitation 
facility payment by the following formula to account for the cost of 
furnishing care to low income patients: ((.0001+DSH) raised to the 
power of .0905)/(.0001 raised to the power of .0905));

[[Page 66357]]

[GRAPHIC] [TIFF OMITTED] TP03NO00.021

6. Adjustments for Alaska and Hawaii
    Section 1886(j)(4)(B) provides that the Secretary is authorized but 
not required to take into account the unique circumstances of IRFs 
located in Alaska and Hawaii. There are currently three IRFs in Hawaii 
and one in Alaska. However, we have cost and case-mix data for only one 
of the facilities in Hawaii (982 cases) and the facility in Alaska (117 
cases). In the absence of a cost-of-living adjustment, our simulations 
indicate that the facility in Hawaii may profit and the facility in 
Alaska may experience a loss. Due to the small number of cases, 
analyses of the simulation results are inconclusive regarding whether a 
cost-of-living adjustment would improve payment equity for these 
facilities. Therefore, we are not proposing an adjustment for 
rehabilitation facilities located in Alaska and Hawaii.
7. Adjustments for Cost Outliers
    Section 1886(j)(4) of the Act specifies that the Secretary is 
authorized, but not required, to provide for additional payments for 
outlier cases. Further, section 1886(j)(4)(A)(iii) of the Act specifies 
that the total amount of the additional payments cannot be projected to 
exceed 5 percent of the total payments in a given year. Providing 
additional payments for costs that are beyond facilities' control can 
strongly improve the accuracy of the IRF prospective payment system in 
determining resource costs at the patient and facility level. In 
general, outlier payments reduce the financial risk which would 
otherwise be substantial because of the relatively small size of many 
rehabilitation facilities. These additional payments reduce the 
financial losses caused by treating patients who require more costly 
care and, therefore, will reduce the incentives to under serve these 
patients.
    We considered various outlier policy options. Specifically, we 
examined outlier policies using 3, 4, and 5 percent of the total 
estimated payments. In order to determine the most appropriate outlier 
policy, we analyzed the extent to which the various options reduce 
financial risk, reduce incentives to underserve costly beneficiaries, 
and improve the overall fairness of the system. We believe an outlier 
policy of 3 percent will allow us to achieve a balance of the above 
stated goals. Additional increments of outlier payments reduce risk by 
successively smaller amounts. Further, additional amounts of outlier 
payments are funded by prospectively reducing the non-outlier payment 
rates in a budget neutral manner. Therefore, we propose an outlier 
policy of 3 percent of total estimated payments because we believe this 
option optimizes the extent to which we can protect vulnerable 
facilities, while still providing adequate payment for all other cases.
    We propose, under Sec. 412.624(e)(4), to make outlier payments for 
discharges whose estimated cost exceeds an adjusted threshold amount 
($7,066 multiplied by the facility's adjustments) plus the adjusted CMG 
payment. Both the loss threshold and the CMG payment amount are 
adjusted for wages, rural location, and disproportionate share. The 
estimated cost of a case will be calculated by multiplying an overall 
facility-specific cost-to-charge ratio by the charge. Based on analysis 
of payment-to-cost ratios for outlier cases, and consistent with the 
marginal cost factor used under section 1886(d) of the Act, we propose 
to pay outlier cases 80 percent of the difference between the estimated 
cost of the case and the outlier threshold (the sum of the CMG payment 
and the loss amount of $7,066, as adjusted). The outlier threshold was 
calculated by simulating aggregate payments with and without an outlier 
policy, and applying an iterative process to determine a threshold that 
would result in outlier payments being equal to 3 percent of total 
payments under the simulation.

E. Calculation of the Budget Neutral Conversion Factor Minus Two 
Percent

1. Overview of Development of the Budget Neutral Conversion Factor
    Section 1886(j)(3)(B) of the Act and proposed Sec. 412.624(d) of 
the regulations specify that, for prospective payment units during FYs 
2001 and 2002, the amount of total payments, including any payment 
adjustments under sections 1886(j)(4) and (6) of the Act, shall be 
projected to equal 98 percent of the amount of payments that would have 
been made during these fiscal years for operating and capital costs of 
rehabilitation facilities had section 1886(j) not been enacted.
    We propose, under Sec. 412.624(c)(1), to calculate the budget 
neutral conversion factor using the following steps:
    Step 1--Update the latest cost report data to the midpoint of the 
year 2001.
    Step 2--Estimate total payments under the current payment system.
    Step 3--Calculate the average weighted payment per discharge amount 
under the current payment system.
    Step 4--Estimate new payments under the proposed payment system 
without a budget neutral adjustment.
    Step 5--Determine the budget neutral conversion factor.
2. Steps for Developing the Budget Neutral Conversion Minus 2 Percent
<bullet> Data Sources
    The data sources that we propose under Sec. 412.624(a)(1) to 
construct the budget neutral adjustment factor include the cost report 
data from FYs 1995, 1996, and 1997, a list obtained from the fiscal 
intermediaries of facility-specific target amounts applicable for 
providers that applied to rebase their target amount in fiscal year 
1998, and calendar year 1996 and 1997 Medicare claims with 
corresponding UDSmr or COS data. We used data from 508 facilities to 
calculate the budget neutral conversion factor. These facilities 
represent those providers for which we had cost report data available 
from FYs 1995, 1996, and 1997. We used the 3 years cost report data to 
trend the data to the midpoint of the year 2001 based on the 
facilities' historical relationship of costs and target amounts. The FY 
1995 cost report data was used to determine the update to be used for 
FY 1999, the FY 1996 cost report data was used to determine the update 
to be used for FY 2000, and the FY 1997 cost report data was used to 
determine the update to be used for FY 2001. We were unable to 
calculate payment under the current payment system for some inpatient 
rehabilitation facilities because cost report data were unavailable. We 
will attempt to obtain the most recent payment amounts for these 
facilities through their Medicare fiscal intermediary and we will 
consider using this data to construct the payment rates for the final 
rule. We will also examine the extent to which certain facilities, such 
as new facilities, are not included in the construction of the budget 
neutral conversion factor and consider the appropriateness of an 
adjustment to better reflect total estimated payments for IRFs.
    Step 1--Update the latest cost report data to the midpoint of the 
year 2001. Section 1886(j)(3)(A)(i) of the Act and proposed 
Sec. 412.624(b) of the regulations

[[Page 66358]]

specify that the per-payment-unit amount is to be updated to the 
midpoint of the fiscal year 2000, using the weighted average of the 
applicable percentage increases provided under Section 
1886(b)(3)(B)(ii) of the Act. The statute allows us more discretion in 
determining an appropriate methodology to update from the year 2000 to 
2001. We propose, under Sec. 412.624(c)(2), to update from the midpoint 
of the year 2000 to the midpoint of the year 2001 using the same 
methodology provided under Section 1886(b)(3)(B)(ii). We determine the 
appropriate update factor for each facility by using one of the four 
methodologies described below:
    <bullet> For facilities with costs that equal or exceed their 
target amounts by 10 percent or more for the most recent cost reporting 
period for which information is available, the update factor is the 
market basket percentage increase; or
    <bullet> For facilities that exceed their target by less than 10 
percent, the update factor would be equal to the market basket minus 
.25 percentage points for each percentage point by which operating 
costs are less than 10 percent over the target (but in no case less 
than 0); or
    <bullet> For facilities that are at or below their target but 
exceed two-thirds of the target amount, the update factor is the market 
basket minus 2.5 percentage points (but in no case less than 0); or
    <bullet> For facilities that do not exceed two-thirds of their 
target amount, the update factor is 0 percent.
    Step 2--Estimate total payments under the current payment system.
    Operating payments are calculated using the following methodology:
    Step 2a--We determine the facility-specific target amount, subject 
to the applicable cap on the target amounts for rehabilitation 
facilities. There are two national caps on the target amounts for 
rehabilitation facilities. We used the cap amounts published in the 
July 30, 1999 Federal Register. For older facilities certified before 
October 1, 1997, the applicable cap amount for FY 2000 is $14,654 for 
the labor-related share adjusted by the appropriate geographic wage 
index and added to $4,169 for the nonlabor-related share. For newer 
facilities certified on or after October 1, 1997, the cap amount 
applicable for FY 2000 is $12,574 for the labor-related share adjusted 
by the appropriate geographic wage index and added to $4,999 for the 
nonlabor-related share. These target amounts are then inflated to the 
midpoint of the year 2001 by applying the excluded hospital operating 
market basket.
    Step 2b--We calculate the lower of the results of step 2a.
    <bullet> The facility-specific target amount (including application 
of the cap) times the Medicare discharges (the ceiling) or;
    <bullet> The facility average operating cost per case times 
Medicare discharges. Payment for operating costs are determined by 
using one of the following methods:
    <bullet> For facilities whose operating costs are lower than or 
equal to the ceiling, payment would be the lower of either the 
operating cost plus 15 percent of the difference between the operating 
cost and the ceiling or the operating costs plus 2 percent of the 
ceiling; or
    <bullet> For facilities whose operating costs are more than 110 
percent of the ceiling, payment would be the lower of either the 
ceiling multiplied by 1.10 or half of the difference between the 110 
percent of the ceiling and the operating costs.
    <bullet> For facilities whose operating costs are greater than the 
ceiling but less than 110 percent of the ceiling, payment would be the 
ceiling.
    Step 2c--After operating payments are computed, we determine 
capital payments. Section 4412 of the BBA amended section 1886(g) of 
the Act by reducing capital payments that would otherwise be made for 
rehabilitation facilities. Payments for capital costs are made on a 
reasonable cost basis. The BBA mandated the reduction of capital 
payments by 15 percent. Therefore, we reduce capital payments for 
inpatient rehabilitation facilities or units by multiplying the costs 
by .85.
    Step 2d--The next step in determining total payments under the 
current payment system is to add operating and capital payments. 
Section 1886(j)(1)(A) of the Act specifies that the IRF prospective 
payment system will include both operating and capital costs. Once 
appropriate payments for operating costs are determined (including 
bonus and penalty payments as appropriate), and after reductions are 
made for capital payments, we would add the operating costs and the 
reduced capital costs together.
    Step 2e--The statute provides for the Secretary to adjust the rates 
so that the amount of total payments under this section are projected 
to equal 98 percent of the payments that would have been paid under 
this section in the absence of this new payment methodology. Payments 
made for cost reporting periods beginning on or after the 
implementation of this prospective payment system through FY 2002 are 
based on both the facility-specific payment and the Federal prospective 
payment that we propose in this regulation. Therefore under proposed 
Sec. 412.624(d)(2), we reduce total estimated payments calculated under 
the current payment system to ensure that the 98 percent budget 
neutrality provision is applicable to all payments. In addition, total 
estimated payments are adjusted to reflect the estimated proportion of 
additional outlier payments, under proposed Sec. 412.624(d)(1) and for 
coding and classification changes under proposed Sec. 412.624(d)(3). 
These payments are the proposed numerator of the equation used to 
calculate the budget neutral adjustment.
    Step 3--Calculate the average weighted payment per discharge amount 
under the current payment system. Once total payments are calculated 
under the current payment system, an average per discharge payment 
amount weighted by the number of Medicare discharges under the current 
payment system can be calculated. This is done by first determining the 
average payment per discharge amount under the current payment system 
for each facility. Cost report data are used to calculate each 
facility's average payment per discharge by dividing the number of 
discharges into the total payments. The next step is to determine the 
weighted average per discharge payment amount. To calculate this 
amount, we multiply the number of discharges from the Medicare bills 
(with corresponding UDSmr/COS data) by each facility's average payment 
per discharge amount. We then sum the amounts for all facilities and 
divide by the total number of discharges from the Medicare bills (with 
corresponding UDSmr/COS data) to derive an average payment per 
discharge amount that is weighted by the number of Medicare discharges.
    Step 4--Estimate payments under the proposed payment system without 
a budget neutral adjustment. Payments under the proposed payment system 
are then simulated without a budget neutral adjustment. To do this, we 
multiply the following: each facility's case-mix index, the number of 
discharges from the Medicare bills (with corresponding UDSmr/COS data), 
the appropriate wage index, the rural adjustment (if applicable), an 
appropriate disproportionate share adjustment, and the weighted average 
per discharge payment amount computed in Step 3. Total payments for 
each facility are then added together. This total is the denominator in 
the calculation of the budget neutral adjustment.
    Step 5--Determine the budget neutral conversion factor. The 
denominator of the budget neutral adjustment equation is the total 
estimated payments for the

[[Page 66359]]

proposed prospective payment system without a budget neutral adjustment 
(the total amount calculated in Step 4). The budget neutral adjustment 
is calculated by dividing total reduced payments under the current 
payment system (the total amount calculated in Step 2) by estimated 
payments for the proposed prospective payment system. The resulting 
budget neutral adjustment is then multiplied by the average weighted 
per discharge payment amount under the current payment system to derive 
the budget neutral conversion factor.
    Because we do not have UDSmr and COS data for all rehabilitation 
facilities, for the final rule we will further analyze the extent to 
which the data used to construct the budget neutral conversion factor 
accurately reflect the relationship between case-mix and cost. We are 
considering the use of weighted averages to more fully account for 
those types of facilities that may be under-represented with the given 
data.
    Once the budget neutral conversion factor is calculated, the factor 
is further adjusted to include a behavioral offset. As previously 
stated, to calculate the budget neutral conversion factor, we had to 
estimate what would have been paid under the current payment system. 
However, due to the incentives for premature discharge inherent in the 
new payment system, we expect that differences in the utilization of 
these services might result. In the case of the proposed payment 
system, discharges to other settings of care may take place earlier 
than under the current payment system. This would result in lower 
payments under the current payment system for this care, which must be 
taken into account when computing budget neutral payment rates. 
Accounting for this effect through an adjustment is commonly known as a 
behavioral offset. The budget neutral conversion factor with a 
behavioral offset is $6,024. This represents a .64 percent (that is, 
sixty four hundredths of one percent) reduction in the budget neutral 
conversion factor otherwise calculated under the methodology described 
in the preceding pages. In determining this adjustment, we assumed that 
the IRFs would regain 15 percent of potential losses and augment 
payment increases by 5 percent through transfers occurring at or beyond 
the mean length of stay associated with CMG or home health care at any 
point.

F. Development of the Federal Prospective Payment

    Once the relative weights for each CMG and the budget neutral 
conversion factor are calculated, the Federal prospective payments can 
be determined. Under proposed Sec. 412.624(c)(4), these CMG payments 
are calculated by multiplying the budget neutral conversion factor by 
each of the CMG relative weights. The equation is as follows:

Federal Prospective Payment = CMG Relative Weight * Budget Neutral 
Conversion Factor

Table 5E displays the CMGs and the corresponding Federal prospective 
payments.

                 Table 5E.--Federal Prospective Payments
------------------------------------------------------------------------
                                               Without          With
                    CMG                     comorbidities  comorbidities
------------------------------------------------------------------------
0101......................................     $3,649.34      $3,983.67
0102......................................      4,274.03       4,666.19
0103......................................      5,183.65       5,658.95
0104......................................      5,156.54       5,628.83
0105......................................      5,795.09       6,325.80
0106......................................      6,592.67       7,196.87
0107......................................      7,608.31       8,305.29
0108......................................      8,653.48       9,446.84
0109......................................      9,631.77      10,514.89
0110......................................     10,009.48      10,926.93
0111......................................     11,822.70      12,906.42
0201......................................      3,315.61       3,315.61
0202......................................      5,014.98       5,014.98
0203......................................      5,889.66       5,889.66
0204......................................      7,011.94       7,011.94
0205......................................      8,878.77       8,878.77
0206......................................     13,360.63      13,360.63
0301......................................      3,854.76       4,342.10
0302......................................      5,055.94       5,695.09
0303......................................      5,702.92       6,423.99
0304......................................      7,593.25       8,552.88
0305......................................     10,552.24      11,885.95
0401......................................      4,298.12       5,156.54
0402......................................      6,328.81       7,592.05
0403......................................     10,517.30      12,616.67
0404......................................     17,621.40      21,139.42
0501......................................      2,686.10       3,330.07
0502......................................      3,733.07       4,628.24
0503......................................      4,910.76       6,088.46
0504......................................      6,936.64       8,600.46
0505......................................     10,732.36      13,306.41
0601......................................      4,199.33       4,801.13
0602......................................      5,473.41       6,258.33
0603......................................      6,525.80       7,461.93
0604......................................      8,057.10       9,211.90
0701......................................      3,930.66       4,580.65
0702......................................      5,022.21       5,852.92
0703......................................      6,101.71       7,110.13
0704......................................      7,104.71       8,278.78
0801......................................      2,904.77       3,566.21
0802......................................      3,604.76       4,425.23
0803......................................      4,496.31       5,519.19
0804......................................      5,322.20       6,533.03
0805......................................      5,746.90       7,054.10
0806......................................      7,087.24       8,699.26
0901......................................      3,365.61       4,045.72
0902......................................      4,602.94       5,533.04
0903......................................      5,834.24       7,013.14
0904......................................      7,315.55       8,793.23
1001......................................      5,113.17       5,589.07
1002......................................      6,733.63       7,360.73
1003......................................      8,304.08       9,076.96
1101......................................      3,671.63       4,511.37
1102......................................      4,986.67       6,127.01
1103......................................      6,562.55       8,063.73
1104......................................      7,970.96       9,793.82
1201......................................      3,593.32       4,124.63
1202......................................      4,325.83       4,966.19
1203......................................      5,530.63       6,349.30
1204......................................      6,922.78       7,946.86
1301......................................      3,570.42       4,131.86
1302......................................      4,286.68       4,960.16
1303......................................      6,295.08       7,284.82
1401......................................      3,922.23       4,589.08
1402......................................      5,425.21       6,347.49
1403......................................      7,643.85       8,943.23
1501......................................      4,663.18       5,016.18
1502......................................      5,137.87       5,527.02
1503......................................      7,153.50       7,695.06
1504......................................     13,732.91      14,773.26
1601......................................      3,705.36       4,405.35
1602......................................      4,371.62       5,197.51
1603......................................      5,858.34       6,964.95
1701......................................      5,128.23       6,364.36
1702......................................      8,239.02      10,225.14
1801......................................      5,984.84       5,984.84
1802......................................     12,387.15      12,387.15
1901......................................      4,245.72       4,245.72
1902......................................      6,555.92       6,555.92
1903......................................     12,438.36      12,438.36
2001......................................      3,018.02       3,375.85
2002......................................      3,876.44       4,336.08
2003......................................      4,498.72       5,031.85
2004......................................      4,295.71       4,805.34
2005......................................      5,149.92       5,760.15
2006......................................      6,111.35       6,836.04
2007......................................      6,022.80       6,736.64
2008......................................      6,842.66       7,653.49
2009......................................      7,518.55       8,409.50
2010......................................      6,969.77       7,795.66
2011......................................      8,974.56      10,038.39
2101......................................      7,748.67       7,748.67
5001......................................      1,149.38       1,149.38
5101......................................      2,805.38       2,805.38
5102......................................      6,492.06       6,492.06
5103......................................      3,304.16       3,304.16
5104......................................      9,052.26       9,052.26
------------------------------------------------------------------------

G. Examples of Computing the Adjusted Facility Prospective Payments

    The Federal prospective payments, described above, will be adjusted 
to account for geographic wage variation, disproportionate share and, 
if applicable, facilities located in rural areas.
    To illustrate the methodology that we propose to use for adjusting 
the Federal prospective payments, we provide the following example. One 
beneficiary is in rehabilitation facility A and another beneficiary is 
in rehabilitation facility B. Rehabilitation facility A has a 
disproportionate share adjustment of 1.0648, a wage index of 0.987, and 
is located in a rural area. Rehabilitation facility B has a 
disproportionate share amount of 1.1337, a wage index of 1.234, and is 
located in an urban area. Both Medicare beneficiaries are classified to 
CMG 0111 (without

[[Page 66360]]

comorbidity). This CMG represents a stroke with motor scores in the 78-
61 range and the patient is 83 years old or younger. To calculate the 
facility's total adjusted Federal prospective payment, we compute the 
wage adjusted Federal prospective payment and multiply the result by: 
the appropriate disproportionate share adjustment, and the rural 
adjustment (if applicable). Table 6E illustrates the components of the 
adjusted payment calculation.

    Table 6E.--Examples of Computing a Facility's Federal Prospective
                                 Payment
------------------------------------------------------------------------
 
                                                         Facility A
------------------------------------------------------------------------
Federal Prospective Payment          $11,822.70            $11,822.70
 (From Table 5E)............
Labor Share (From Table 2E).            x   .71301            x   .71301
------------------------------------------------------------------------
Labor Portion of Federal            = $8,429.70           = $8,429.70
 Payment....................
Wage Index (From Tables 3E             x   0.987             x   1.234
 or 4E).....................
------------------------------------------------------------------------
Wage Adjusted Amount........          $8,320.12            $10,402.25
Non-Labor Amount............       +  $3,393.00          +  $3,393.00
------------------------------------------------------------------------
Wage Adjusted Federal              = $11,713.11          = $13,795.25
 Payment....................
Rural Adjustment............           x   1.1589            x   1.0000
------------------------------------------------------------------------
    Subtotal................       = $13,574.33          = $13,795.25
DSH Adjustment..............           x   1.0648            x   1.1337
------------------------------------------------------------------------
    Total Adjusted Federal           $14,453.94            $15,639.68
     Prospective Payment....
------------------------------------------------------------------------

    Thus, the adjusted payment for facility A will be $14,453.64 and 
the adjusted payment for facility B will be $15,639.68.

H. Computing Total Payments

    As described in proposed Sec. 412.626, for cost reporting periods 
beginning on or after April 1, 2001 and before October 1, 2001, 
payments will be based on 66\2/3\ percent of the facility specific 
payment and 33\1/3\ percent of the IRF adjusted facility Federal 
prospective payment. The facility specific payment is the amount the 
facility would have been paid if the prospective payment system had not 
been implemented. Medicare fiscal intermediaries will continue to 
compute the facility specific payment amount according to 
Sec. 412.22(b) of the regulations and sections 1886(d) and (g) of the 
Act.

I. Method of Payment

    A beneficiary will be classified into a CMG based on data obtained 
during the initial MDS-PAC assessment. The CMG will determine the 
Federal prospective payment the IRF will receive for the Medicare-
covered Part-A services the IRF furnished during the Medicare 
beneficiary's episode of care. However, we are proposing, under 
Sec. 412.632(a), that the payment be based on the submission of a 
discharge bill. This will allow us to account for the occurrence of an 
event during the stay which would result in a reclassification to one 
of the five special CMGs (for cases that expire or have a very short 
length of stay) or an adjustment to the payment to reflect an early 
transfer and determine if the case qualifies for an outlier payment. 
Accordingly, the CMG and other information to determine if an 
adjustment to the payment is necessary will be recorded by the IRF on 
the beneficiary's discharge bill and submitted to its Medicare fiscal 
intermediary for processing. The payment made represents payment in 
full, under proposed Sec. 412.622(b), for inpatient operating and 
capital costs, but not for the costs of an approved medical education 
program, bad debts, or other costs not paid for under the proposed IRF 
prospective payment system.
    Under the current payment system, (1) An IRF may be paid using the 
periodic interim payment (PIP) method described in Sec. 413.64(h) of 
the regulations, (2) rehabilitation units are paid under the PIP method 
if the hospital of which they are a part is paid under Sec. 412.116(b), 
and (3) IRFs may be eligible to receive accelerated payments as 
described in Sec. 413.64(g) or for rehabilitation units under 
Sec. 412.116(f). We presently see no reason to discontinue 
administratively our existing policy of allowing the PIP and 
accelerated payment methods under the prospective payment system for 
qualified IRFs, though we may choose to evaluate its continuing need in 
the future. Therefore, we are proposing to permit the continued 
availability of PIP and accelerated payments for services of IRFs paid 
under the prospective payment system at proposed paragraphs (b) and (e) 
of Sec. 412.632 of the regulations.
    For those services paid under the PIP method, the amount is based 
on estimated prospective payments for the year rather than on estimated 
cost reimbursement. An IRF receiving prospective payments, whether or 
not it received a PIP prior to receiving prospective payments, may 
receive a PIP if it meets the requirements in Sec. 412.632 and receives 
approval by its intermediary. Likewise, if an intermediary determines 
that an IRF which received a PIP prior to receiving prospective 
payments is no longer entitled to receive a PIP, it will remove the IRF 
from the PIP method. As provided in Sec. 412.632, intermediary approval 
of a PIP is conditioned upon the intermediary's best judgment as to 
whether payment can be made under the PIP method without undue risk of 
its resulting in an overpayment to the provider.
    Excluded from the PIP amount are outlier payments that are paid in 
final upon the submission of a discharge bill. In addition, Part A 
costs that are not paid for under the IRF prospective payment system, 
including Medicare bad debts and costs of an approved educational 
program, will be subject to the interim payment provisions of the 
regulations at Sec. 413.64.
    Under the prospective payment system, if an IRF is not paid under 
the PIP method it may qualify to receive an accelerated payment. Under 
Sec. 412.632, the IRF must be experiencing financial difficulties due 
to a delay by the intermediary in making payment to the IRF or there is 
a temporary delay in the IRF's preparation and submittal of bills to 
the intermediary beyond its normal billing cycle because of an 
exceptional situation. A request for an accelerated payment must be 
made by the IRF and approved by the intermediary and

[[Page 66361]]

HCFA. The amount of an accelerated payment is computed as a percentage 
of the net payment for unbilled or unpaid covered services. Recoupment 
of an accelerated payment is made as bills are processed or by direct 
payment by the IRF.

J. Update to the Adjusted Facility Federal Prospective Payment

    Under section 1886(j)(3)(C) of the Act and under proposed 
Sec. 412.624(c)(3)(ii) of the regulations, future updates to the 
adjusted facility Federal prospective payments (budget neutral 
conversion factor) will include the use of an increase factor based on 
an appropriate percentage increase in a market basket of goods and 
services comprising services for which payment is made under the 
proposed IRF prospective payment system. This increase factor may be 
the market basket percentage increase described in section 
1886(b)(3)(B)(iii) of the Act. A description of IRF market basket that 
we propose to use in developing an increase factor under section 
1886(j)(3)(C) is found in Appendix D of this proposed rule.

VI. Provisions of the Proposed Rule

    We are proposing to make a number of revisions to the regulations 
in order to implement the prospective payment system for inpatient 
rehabilitation facilities. We are proposing to make conforming changes 
in 42 CFR parts 412 and 413. We are proposing to establish a new 
subpart P in part 412, ``Prospective Payment for Inpatient 
Rehabilitation Facilities''. This subpart would implement section 
1886(j) of the Act, which provides for the implementation of a 
prospective payment system for inpatient rehabilitation facilities. 
This subpart would set forth the framework for the inpatient 
rehabilitation facility prospective payment system, including the 
methodology used for the development of the payment rates and related 
rules. These revisions and others are discussed in detail below.

Section 412.1  Scope of Part

    We are proposing to revise Sec. 412.1 by redesignating paragraph 
(a) as paragraph (a)(1) and adding a paragraph (a)(2) that specifies 
that this part implements section 1886(j) of the Act by establishing a 
prospective payment system for the inpatient operating and capital 
costs of inpatient hospital services provided to Medicare beneficiaries 
by a rehabilitation hospital or rehabilitation unit for cost reporting 
periods beginning on or after April 1, 2001. As a result of our 
proposed changes to Sec. 412.1, we would make a number of conforming 
changes to various sections of the regulations text. These changes 
include adding references to the inpatient hospital prospective payment 
systems as described in Sec. 412.1(a)(1).
    Currently, Sec. 412.1(b) ``Summary of content'' describes the 
content of each subpart in part 412. To make this paragraph more user 
friendly, we would restructure the paragraph by dividing it into 12 
subparagraphs. In addition, we would add references to 
Sec. 412.1(a)(1)(where appropriate) and add a new subparagraph (b)(12) 
that summarizes the content of the new subpart P.

Section 412.20  Hospital Services to the Prospective Payment Systems

    We propose to revise Sec. 412.20 by revising paragraph (a) to add a 
reference to inpatient hospital prospective payment system, 
redesignating paragraph (b) as paragraph (c), and adding a new 
paragraph (b). Section 412.20(b) would specify that effective for all 
cost reporting periods beginning on or after April 1, 2001, the 
services furnished by an inpatient rehabilitation hospital or 
rehabilitation unit specified in Sec. 412.604 are paid for under the 
prospective payment system described in subpart P. We would also add a 
reference to Sec. 412.1(a)(1) to the introductory text of 
Sec. 412.20(c).

Section 412.22  Excluded Hospitals and Hospital Units: General Rules

    We propose to revise Secs. 412.22(a), (b), (e), and (h)(2) to add 
references to Sec. 412.1(a)(1) or Sec. 412.20 (b).

Section 412.23  Retroactive Adjustments for Incorrectly Excluded 
Hospital Units

    We propose to revise the introductory text of Secs. 412.23 and 
412.23(b)(2) to add references to Sec. 412.1(a)(1) and (a)(2). We 
propose to revise the introductory text of paragraph (b) to add 
references to Sec. 412.1(a)(1) and (a)(2). We proposed to revise 
paragraphs (b)(8) and (b)(9) to specify that in order to be classified 
as a rehabilitation hospital a patient assessment instrument must be 
completed in accordance with Sec. 412.606 for each Medicare patient 
admitted or discharged on or after April 1, 2001.

Section 412.25  Excluded Hospital Units: Common Requirements

    We propose to revise Secs. 412.25(a) and (e)(2) to add references 
to Sec. 412.1(a)(1).

Section 412.29  Excluded Rehabilitation Units: Additional Requirements

    We propose to revise the introductory text of Sec. 412.29 to add a 
reference to Sec. 412.1(a)(1) and (a)(2).

Section 412.116  Method of Payments

    We propose to restructure and revise paragraph (a) by creating 
paragraphs (a)(1) and (a)(2). New paragraph (a)(2) would be revised to 
specify that payments for inpatient hospital services furnished by an 
excluded psychiatric or rehabilitation unit (not paid under the 
provisions of subpart P of this part) are made as described in 
Sec. 413.64(a), (c), (d) and (e) of this chapter. We also propose to 
add a new paragraph (a)(3) that specifies how payments for inpatient 
hospital services are made to a qualified IRF.

Section 412.130  Retroactive Adjustments for Incorrectly Excluded 
Hospital Units

    We would revise paragraphs (a)(1) and (a)(2) to add references to 
Secs. 412.1(a)(1) and (a)(2). In addition, Sec. 412.130 (a)(1) and 
(a)(2) would be revised to specify that for cost reporting periods on 
or after October 1, 1991, rehabilitation hospitals and units that were 
excluded from the prospective payment systems specified in 
Sec. 412.1(a)(1) or paid under the inpatient rehabilitation prospective 
payment system, as a new rehabilitation hospital or unit will have its 
payments adjusted if the inpatient population actually treated in the 
hospital during the cost reporting period did not meet the requirements 
of Sec. 412.23(b)(2). In Sec. 412.130(b), we would add the provisions 
that specify that the intermediary adjusts the payment to the hospitals 
described in paragraph (a) of this section for cost reporting periods 
beginning on or after April 1, 2001 as follows:
    <bullet> The intermediary calculates the difference between the 
amounts actually paid under subpart P of this part during the cost 
reporting period for which the hospital, unit, or beds were first 
classified as a new hospital, new unit, or newly added beds under 
subpart B of this part, and the amount that would have been paid under 
the prospective payment systems described in Sec. 412.1(a)(1) for 
services furnished during that period.
    <bullet> The intermediary makes a retroactive adjustment for the 
difference between the amount paid to the hospital under subpart P of 
this part and the amount that would have been paid under the 
prospective payment systems described in Sec. 412.1(a)(1).

[[Page 66362]]

Subpart P  Prospective Payment for Inpatient Rehabilitation Hospitals 
and Rehabilitation Units

    We propose to reserve subparts N and O, and add a new subpart P.

Section 412.600  Basis and Scope of the Subpart

    We are proposing to add a new Sec. 412.600. Section 412.600(a) 
provides for the implementation of a prospective payment system for 
inpatient rehabilitation facilities. In Sec. 412.600(b), we would 
specify that this subpart sets forth the framework for the prospective 
payment system, including the methodology used for the development of 
payment rates and associated adjustments, the application of a 
transition phase, and related rules for inpatient rehabilitation 
facilities for cost reporting periods beginning on or after April 1, 
2001.

Section 412.602  Definitions

    In Sec. 412.602, we are proposing the following definitions for 
purposes of this new subpart:
    <bullet> Assessment reference date;
    <bullet> Authorized clinician;
    <bullet> Discharge;
    <bullet> Encode;
    <bullet> Functional-related groups;
    <bullet> Interrupted stay;
    <bullet> MDS-PAC;
    <bullet> Outlier payment;
    <bullet> Rural area
    <bullet> Transfer; and
    <bullet> Urban area.

Section 412.604  Conditions for Payment Under the Prospective Payment 
System for Inpatient Rehabilitation Facilities

    In proposed Sec. 412.604(a), we would specify that IRFs must meet 
the following general requirements to receive payment under the IRF 
prospective payment system:
    <bullet> The IRF must meet the conditions of this section;
    <bullet> If the IRF fails to comply with the provisions of the 
section then we can--
    <bullet> Withhold (in full or in part) or reduce payment to the 
IRF; or
    <bullet> Classify the IRF as an inpatient hospital subject to the 
inpatient hospital prospective payment system.
    In proposed paragraph (b), we would specify that an IRF must meet 
the rehabilitation hospital or rehabilitation unit classification 
criteria set forth in Secs. 412.22, 412.23(b) and 412.30 for exclusion 
from the inpatient hospital prospective payment system. In addition, we 
propose to specify that qualifying IRFs are subject to the payment 
provisions for the IRF prospective payment system.
    Proposed paragraph (c) would specify that the IRF must complete a 
patient assessment instrument for each Medicare patient admitted or 
discharged on or after April 1, 2001.
    Proposed paragraph (d) would specify the prohibited and permitted 
charges that can be imposed on Medicare beneficiaries. In proposed 
paragraph (d)(1), we would specify that an IRF may not charge a 
beneficiary for any services for which payment is made by Medicare, 
even if the IRF's costs are greater than the amount the facility is 
paid under the IRF prospective payment system. In addition, proposed 
paragraph (d)(2) would specify that an IRF receiving payment for a 
covered stay may charge the Medicare beneficiary or other person for 
only the applicable deductible and coinsurance amounts under 
Secs. 409.82, 409.83, and 409.87.
    Proposed paragraph (e) would specify the following provisions for 
furnishing IRF services directly or under arrangements:
    <bullet> Applicable payments made under the IRF prospective payment 
system are in full for all inpatient hospital services (as defined in 
Sec. 409.10) other than physicians' services to individual patients (as 
specified in Sec. 415.102(a)) which are reimbursable on a reasonable 
cost basis.
    <bullet> Payment is not made to a provider or supplier other than 
the IRF, except for physicians' services reimbursable under 
Sec. 405.550(b) and the services of an anesthetist employed by a 
physician reimbursable under Sec. 415.102(a).
    <bullet> The IRF must furnish all necessary covered services to the 
Medicare beneficiary directly or under arrangements (as defined in 
Sec. 409.3).
    Lastly, proposed paragraph (f) would specify that IRFs must meet 
the recordkeeping and cost reporting requirements of Secs. 413.20 and 
413.24.

Section 412.606  Patient Assessments

    In proposed Sec. 412.606, we set forth the requirements regarding 
patient assessment. Proposed Sec. 412.606(a) would specify that at the 
time each Medicare patient is admitted the facility must have physician 
orders for the patient's care during his or her hospitalization. 
Proposed Sec. 412.606(b) would specify that MDS-PAC is the instrument 
used to assess Medicare inpatients who are admitted on or after April 
1, 2001, or were admitted before April 1, 2001, and are still 
inpatients as of April 1, 2001. In proposed Sec. 412.606(c), we would 
specify that an inpatient rehabilitation facility's authorized 
clinician must perform a comprehensive, accurate, standardized, and 
reproducible assessment of each Medicare inpatient using the MDS-PAC. 
This assessment must be in accordance with the assessment schedule. A 
clinician must record appropriate and applicable data accurately and 
completely for each MDS-PAC item. The assessment process must include 
direct patient observation and communication with the patient; and when 
appropriate and to the extent feasible, patient data from the patient's 
physician(s), family, friends, the patient's clinical record and other 
sources. The authorized clinician must sign the MDS-PAC attesting to 
its completion and accuracy.

Section 412.608  Patients' Rights Regarding MDS-PAC Data Collection

    Proposed Sec. 412.608 specifies patient rights regarding MDS-PAC 
data collection. In proposed paragraph (a) we would specify the rights 
that a Medicare inpatient must be informed of by the IRF authorized 
clinician before an assessment can be performed. Proposed paragraph (b) 
would require the authorized clinician to document in the Medicare 
inpatient's clinical record that the patient was informed of the rights 
listed in paragraph (a). Proposed paragraph (c) specifies that the 
patient rights included in this section are in addition to the patient 
rights specified under the conditions of participation for hospitals in 
Sec. 482.13.

Section 412.610  Assessment Schedule

    In proposed Sec. 412.610, we would specify the following:
    <bullet> The start of the assessment schedule day count.
    <bullet> The determination of the assessment reference date.
    <bullet> The date when an MDS-PAC assessment reference is late.
    <bullet> MDS-PAC completion and encoding dates.
    <bullet> The accuracy of the MDS-PAC data.
    <bullet> The length of time that an IRF has to retain MDS-PAC 
patient data sets.

Section 412.612  Coordination of MDS-PAC Data Collection

    We proposed to add a new Sec. 412.612. Paragraph (a) of this 
section would specify the responsibilities of the IRF's authorized 
clinician. Section 412.612(b) states that the IRF's authorized 
clinician must certify the accuracy and completion date of the MDS-PAC 
assessment by signing and dating the appropriate lines of section AB of 
the MDS-PAC. Proposed paragraph (c) specifies the signature 
requirements for any clinician who contributes data for an MDS-PAC 
item. Proposed paragraph (d) specifies the penalty for falsification of 
a patient assessment.

[[Page 66363]]

Section 412.614  Transmission of MDS-PAC Data

    Proposed Sec. 412.614 specifies the requirements for transmittal of 
MDS-PAC data that include the following:
    <bullet> The format for submitting data.
    <bullet> How the data is to be submitted.
    <bullet> The timeframe for submitting data.
    <bullet> The penalties for late transmission of data.

Section 412.616  Release of Information Collected Using the MDS-PAC

    In proposed Sec. 412.616, we specify that the IRF and its agents 
must ensure the confidentiality of the information collected using the 
MDS-PAC in the same manner as all other information in the medical 
record, in accordance with the hospital conditions of participation at 
Sec. 482.24(b)(3). An IRF may release patient-identifiable information 
to an agent of the IRF only in accordance with a written contract under 
which the agent agrees not to use or disclose the information except 
for the purpose specified in the contract and only to the extent that 
the IRF itself is permitted to so under Sec. 412.616(a).

Section 412.618  Interrupted Stay

    In proposed Sec. 412.618 (a), we specify that for purposes of the 
MDS-PAC assessment process, if a Medicare inpatient has an interrupted 
stay then the following applies:
    <bullet> The initial case-mix group classification from the 
``initial'' (Day 4) MDS-PAC assessment remains in effect.
    <bullet> The required scheduled MDS-PAC Day 11, Day 30, Day 60, and 
discharge assessments must be performed.
    <bullet> The authorized clinician must record the interrupted stay 
data on the interrupted stay tracking form of the MDS-PAC.
    <bullet> The recorded and encoded interrupted stay data must be 
transmitted to the HCFA MDS-PAC system within 7 calendar days of the 
date that the Medicare patient returns to IRF. In proposed paragraph 
(d), we specify the revised assessment schedule. Proposed paragraph 
(d)(1) specifies that if the interrupted stay occurs before the Day 4 
assessment, the assessment reference dates, completion dates, encoding 
dates, and data transmission for the Day 4 and Day 11 MDS-PAC 
assessments are advanced by the same number of calendar days as the 
length of the Medicare patient's interrupted stay. Proposed paragraphs 
(d)(2), (d)(3) and (d)(4), specify the provisions under which the Day 
11, Day 30, and Day 60 are advanced in the same manner.

Section 412.620  Patient Classification System

    Proposed Sec. 412.620 specifies the classification methodology, 
weighting factors, and case-mix adjustments as they relate to the 
patient classification system.

Section 412.622  Basis of Payment

    Proposed Sec. 412.622(a), we would specify that under the 
prospective payment system, IRFs received a predetermined amount per 
discharge for inpatient services furnished to Medicare beneficiaries. 
This paragraph also specifies the basis for the amount of payment under 
the prospective system.
    Proposed Sec. 412.622(b) specifies that payments made under the 
prospective payment system represent payment in full for inpatient 
operating and capital costs associated with services furnished in an 
IRF, but not for the costs of an approved medical education program. 
Paragraph (b) also specifies the additional payments that an IRFs 
receive.

Section 412.624  Methodology for Calculating the Prospective Payment 
Rates

    This proposed section specifies the methodology for calculating the 
prospective payment rates for IRFs. The items specified in this section 
are as follows:
    <bullet> Proposed paragraph (a) specifies the data used to 
calculate the prospective payment rates;
    <bullet> Proposed paragraph (b) specifies the methodology for 
calculating the Federal per discharge payment rates that includes--
    <bullet> Determination of the per discharge payment rate; and
    <bullet> Adjustments to the data.
    <bullet> Proposed paragraph (c) specifies how the Federal 
prospective payment rates for IRFs will be determined. This includes 
the general rules, the update per discharge, the computation of the 
budget neutral conversion factor and the determination of the Federal 
prospective payment rate for each case-mix group.
    <bullet> Proposed paragraph (d) specifies the adjustments to the 
budget neutral conversion factor. The adjustments include the 
following: (1) outlier payments; (2) budget neutrality; and (3) coding 
and classification changes.
    <bullet> Proposed paragraph (e) specifies the calculation of the 
adjusted Federal prospective payment is computed for each discharge on 
the basis of the Federal prospective payment rate determined in 
paragraph (c) of this section and adjusted to account for area wage 
levels, payments for outliers, transfers, and other appropriate 
factors.

Section 412.626  Transition Period

    Proposed Sec. 412.626(a) specifies the duration of the transition 
period to IRF prospective payment system. It also specifies that IRFs 
will receive a payment that is comprised of a blend of the adjusted 
facility Federal prospective payment and the facility-specific payment. 
Proposed paragraph (b) specifies how the facility-specific payment is 
calculated.

Section 412.628  Publication of the Federal Prospective Payment Rates

    Proposed Sec. 412.628 specifies that we will publish information 
pertaining to the IRF prospective payment system effective for each 
fiscal year in the Federal Register. In addition, it specifies that the 
information regarding the IRF prospective payment system will be 
published on or before August 1 prior to the beginning of each fiscal 
year.

Section 412.630  Limitation on Review

    Proposed Sec. 412.630 specifies that administrative or judicial 
review under sections 1869 or 1878 of the Act, or otherwise, is 
prohibited with regard to the establishment of the methodology to 
classify a patient into the case-mix groups and the associated 
weighting factors, the unadjusted Federal per discharge payment rates, 
additional payments for outliers and special payments, and the area 
wage index.

Section 412.632  Method of Payment Under the Inpatient Rehabilitation 
Facility Prospective Payment System

    Proposed Sec. 412.632 specifies the method of payment under the 
inpatient rehabilitation facility prospective payment system. This 
section specifies the following:
    <bullet> General rule for receiving payment, including exceptions;
    <bullet> The requirements for periodic interim payments that 
include--
    <bullet> Criteria for receiving periodic interim payments;
    <bullet> Frequency of payments; and
    <bullet> Termination of periodic interim payments;
    <bullet> Interim payment for Medicare bad debts and for Part A 
costs not paid under the prospective payment system.
    <bullet> Outlier payments.
    <bullet> The requirements for accelerated payments that include--
    <bullet> General rule regarding request for accelerated payments;
    <bullet> Approval of request for accelerated payments;
    <bullet> Amount of the accelerated payment; and

[[Page 66364]]

    <bullet> Recovery of the accelerated payment.

Section 413.1  Introduction

    We propose to revised Sec. 413.1(d)(ii) to remove the reference to 
rehabilitation hospitals and units. We also propose to add a new 
Sec. 413.1(d)(iv) that specifies that for cost reporting periods 
beginning on or before April 1, 2001, payment to rehabilitation 
hospitals and units that are excluded under subpart B of part 412 of 
this subchapter from the prospective payment system is on a reasonable 
cost basis in accordance with the provisions of Sec. 413.40. In 
addition, we propose to add a new Sec. 413.1(d)(v) that specifies that 
for cost reporting periods on or after April 1, 2001, payment to 
rehabilitation hospitals and units (as described in Sec. 412.604) is 
based on the prospectively determined rates under the provisions of 
subpart P of part 412.

Section 413.40  Ceiling on the Rate of Increase in Hospital Costs

    Section 413.40(a)(2)(i) specifies the types of facilities to which 
the ceiling on the rate of increase in hospital inpatient costs is not 
applicable. We propose to add a new paragraph Sec. 413.40(a)(2)(i)(C) 
to specify that for cost reporting periods beginning on or after 
October 1, 2002, Sec. 413.40 is not applicable to rehabilitation 
hospitals and rehabilitation units that meet the conditions for payment 
under Sec. 412.604 and are paid under the prospective payment system 
for inpatient hospital services in accordance with section 1886(j) and 
subpart P of part 412.
    We propose to revise Sec. 413.40(a)(2)(ii) and to add (a)(2)(iii) 
to specify the cost reporting periods under which rehabilitation 
hospitals and units that are excluded from the prospective payment 
system specified in Sec. 412.1(a)(1) meet the terms of this section

Section 413.64  Payment to Providers: Specific Rules

    We propose to revise Sec. 413.64 to include hospitals paid under 
the IRF prospective payment system and add a reference to 
Sec. 412.1(a)(1).

VII. Response to Comments

    Because of the large number of items of correspondence we normally 
receive on Federal Register documents published for comment, we are not 
able to acknowledge or respond to them individually. We will consider 
all comments we receive by the date and time specified in the ``DATES'' 
section of this preamble, and we will respond to the comments in the 
preamble to the final rule.

VIII. Regulatory Impact Analysis

    Section 804(2) of title 5, United States Code (as added by section 
251 of Public Law 104-121), specifies that a ``major rule'' is any rule 
that the Office of Management and Budget finds is likely to result in--
    <bullet> An annual effect on the economy of $100 million or more;
    <bullet> A major increase in costs or prices for consumers, 
individual industries, Federal, State, or local government agencies, or 
geographic regions; or
    <bullet> Significant adverse effects on competition, employment, 
investment productivity, innovation, or on the ability of United 
States-based enterprises to compete with foreign based enterprises in 
domestic and export markets.
    We have examined the impacts of this proposed rule as required by 
Executive Order (EO) 12866, the Unfunded Mandates Reform Act of 1995 
(Public Law 104-4), the Regulatory Flexibility Act (RFA) (Public Law 
96-354), and EO 13132 (Federalism). Executive Order 12866 directs 
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). A regulatory impact analysis (RIA) must be prepared for 
major rules with economically significant effects ($100 million or more 
annually). This proposed regulation would be a major rule because the 
aggregate amount of savings is estimated to be 1.54 billion dollars 
over 7 years.
    The RFA requires agencies to analyze options for regulatory relief 
of small entities. For purposes of the RFA, businesses include small 
businesses, non-profit organizations and governmental agencies. Most 
hospitals and most other providers and suppliers are small entities, 
either by nonprofit status or by having revenues of $5 million or less 
annually. Intermediaries and carriers are not considered to be small 
entities. Individuals and States are not included in the definition of 
a small entity.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in an expenditure in any one year by 
State, local, or Tribal governments, in the aggregate, or by the 
private sector, of at least $100 million. This rule will not have an 
effect on the governments mentioned nor will it affect private sector 
costs, rather, the proposed rule will affect Medicare payments.
    In addition, we examined this rule in accordance with Executive 
Order 13132 and determined that this proposed rule would not have any 
negative impact on the rights, roles, or responsibilities of State, 
local, or Tribal governments.
    Section 1102(b) of the Act requires us to prepare a regulatory 
impact analysis for any proposed rule that may have a significant 
impact on the operations of a substantial number of small rural 
hospitals. This analysis must conform to the provisions of section 604 
of the RFA. For purposes of section 1102(b) of the Act, we define a 
small rural hospital as a hospital that is located outside of a 
Metropolitan Statistical Area and has fewer than 50 beds.
    For these reasons, we are preparing analyses under the RFA and 
section 1102(b) of the Act because we determine, and we certify, that 
this proposed rule would have a significant economic impact on a 
substantial number of small entities or a significant impact on the 
operations of a substantial number of small rural hospitals. As 
discussed earlier in this preamble, we propose to adjust payments for 
facilities located in rural areas. Therefore, the impacts shown below 
reflect the adjustments that are designed to minimize or eliminate the 
negative impact that the prospective payment system would otherwise 
have on rural facilities.

A. Background

    This proposed rule sets forth the prospective payments to be used 
to determine payments under the Medicare program for inpatient 
rehabilitation facilities.
    While section 1886(j) of the Act specifies the basic methodology of 
constructing a case-mix adjusted prospective payment system, the 
statute does allow us some discretion in designing the key elements of 
the system, and we had some opportunity to consider alternatives for 
these elements. These include the patient assessment instrument, the 
patient classification methodology based on functional-related groups, 
and adjustments to the prospective payments. These elements, and 
alternatives that we considered, were discussed in detail earlier in 
the preamble of this proposed rule.

B. Anticipated Effects of This Proposed Rule

    We discuss the impact of this proposed rule in terms of its fiscal 
impact on the budget and in terms of its

[[Page 66365]]

impact on providers. The estimated fiscal impact is discussed first.

1. Budgetary Impact

    Under section 1886(j)(3)(B) of the Act, payment rates set forth in 
this proposed rule must be set at levels such that total payments under 
this prospective payment system are projected to equal 98 percent of 
the amount that would have been paid for operating and capital costs if 
this prospective payment system had not been implemented. The provision 
to implement the IRF prospective payment system is projected to save 
the Medicare program $1.54 billion over 7 years, as follows:

$60 million for FY 2001
$200 million for FY 2002
$220 million for FY 2003
$240 million for FY 2004
$250 million for FY 2005
$270 million for FY 2006
$300 million for FY 2007

2. Impacts on Providers

    In order to understand the impact of the new prospective payment 
system on different categories of facilities, it is necessary to 
compare estimated payments under the current payment system (current 
payments) to estimated payments under the proposed prospective payment 
system (proposed prospective payments). To estimate the impacts among 
the various classes of providers it is imperative that current payments 
and proposed prospective payments contain similar inputs. More 
specifically, we simulate proposed prospective payments only for those 
providers that we are able to calculate current payment. Further, we 
calculate current payment only for those providers that we are able to 
simulate proposed prospective payments.
    As previously stated in section V. of this preamble, we have both 
case-mix and cost data for 624 rehabilitation facilities. Data from 
these facilities were used to analyze the appropriateness of various 
adjustments to the Federal unadjusted payment rates. However, for the 
impact analyses shown in the following tables, we simulate payments for 
505 facilities. These impacts reflect the estimated losses/gains among 
the various classifications of providers for FY 2001. The methodology 
used to update the data to the midpoint of FY 2001, necessitated the 
use of historical cost report data to determine the relationship of the 
facilities' costs and target amount. Thus, the number of providers 
reflects only those providers for which we had cost report data 
available from FYs 1995, 1996, and 1997 (see discussion in section 
V.E.1. of this proposed rule).
3. Calculation of Current Payments
    To calculate current payments, cost report data is trended forward 
from the midpoint of the cost reporting period to the midpoint of FY 
2001 using the methodology set forth in section V. of this preamble. To 
estimate current payments, we calculate operating payments for each 
rehabilitation facility in accordance with section 1886(b). Further, we 
compute capital payments by reducing reasonable costs by 15 percent, 
consistent with section 1886(g)(4) of the Act, as added by section 4412 
of the BBA. To determine each facility's average per discharge payment 
amount under the current payment system, operating and capital payments 
are added together, and then the total payment is divided by the number 
of Medicare discharges from the cost reports. Total payments for each 
facility are then computed by multiplying the number of discharges from 
the Medicare bills (with corresponding UDSmr/COS data) by the average 
per discharge payment amount.
4. Calculation of Proposed Prospective Payments
    To estimate payments under the proposed prospective payment system, 
we multiply each facility's case-mix index by the facility's number of 
Medicare discharges, the budget neutral conversion factor, the 
applicable wage index, a disproportionate share adjustment, and a rural 
adjustment, (if applicable). The specific adjustments follow:
    <bullet> The wage adjustment is calculated as (.2897 + (.7103  x  
Wage Index)),
    <bullet> The disproportionate share adjustment is calculated as:
    (( .0001 + Disproportionate Share) raised to the power of .0905)/
(.0001 raised to the power of .0905)),
    <bullet> The rural adjustment, if applicable, is calculated by 
multiplying payments by 1.1589.
    After the proposed Federal rate payments are calculated for each 
facility, the appropriate percentages of the current payments and the 
proposed Federal rate payments are blended together to determine the 
appropriate amount for the first three years of implementation of the 
IRF prospective payment system. Specifically, for cost reporting 
periods beginning on or after implementation of the prospective payment 
system through FY 2001 we combine 66\2/3\ percent of the current 
payment amount with 33\1/3\ percent of the proposed Federal rate 
payment amount. For cost reporting periods beginning in FY 2002, we 
combine 33\1/3\ percent of the current payment amount with 66\2/3\ 
percent of the proposed Federal rate payment amount. For cost reporting 
periods beginning in FY 2003, we show the impacts of the fully phased-
in IRF prospective payment amount. All payment simulations reflect data 
trended to the midpoint FY 2001. These data were not trended out to the 
midpoint of FYs 2002 or 2003.
    Tables 1G, 2G, and 3G illustrate the aggregate impact of the 
proposed payment system among various classifications of facilities. 
The first column, Facility Classifications, identifies the type of 
facility. The second column identifies the number of cases. The third 
column lists the number of facilities of each classification type, and 
the fourth column is the ratio of proposed prospective payments to 
current payments. The impacts reflect the adjustments that we propose, 
including the specific geographic wage adjustment, the adjustment for 
rural facilities (if applicable), and a disproportionate share 
adjustment for all facilities.

       Table 1G.--Impacts Reflecting \1/3\ of Proposed Prospective Payments Plus \2/3\ of Current Payments
----------------------------------------------------------------------------------------------------------------
                                                                                                     Proposed
                                                                     Number of       Number of      payment to
                    Facility classifications                           cases        Facilities        current
                                                                                                   payment ratio
----------------------------------------------------------------------------------------------------------------
 All Facilities.................................................          167390             505            0.98
----------------------------------------------------------------------------------------------------------------
                                               Geographic Location
----------------------------------------------------------------------------------------------------------------
 Large Urban....................................................           69344             218            0.98
 Other Urban....................................................           88232             238            0.98

[[Page 66366]]

 
 Rural..........................................................            9814              49            1.00
----------------------------------------------------------------------------------------------------------------
                                                      Region
----------------------------------------------------------------------------------------------------------------
 New England....................................................           15320              37            0.98
 Middle Atlantic................................................           24937              46            0.98
 South Atlantic.................................................           34845              79            0.99
 East North Central.............................................           33018             120            0.98
 East South Central.............................................           12344              26            1.00
 West North Central.............................................            9175              44            0.98
 West South Central.............................................           22995              73            0.95
 Mountain.......................................................            5659              25            0.96
 Pacific........................................................            9097              55            0.99
----------------------------------------------------------------------------------------------------------------
                                                 Urban by Region
----------------------------------------------------------------------------------------------------------------
 Urban--New England.............................................           15202              36            0.98
 Urban--Middle Atlantic.........................................           24351              43            0.98
 Urban--South Atlantic..........................................           31314              72            1.00
 Urban--East North Central......................................           30993             108            0.98
 Urban--East South Central......................................           11849              24            0.99
 Urban--West North Central......................................            7979              36            0.98
 Urban--West South Central......................................           21929              64            0.95
 Urban--Mountain................................................            5349              22            0.96
 Urban--Pacific.................................................            8610              51            0.99
----------------------------------------------------------------------------------------------------------------
                                                 Rural by Region
----------------------------------------------------------------------------------------------------------------
 Rural--New England.............................................             118               1            1.01
 Rural--Middle Atlantic.........................................             586               3            1.01
 Rural--South Atlantic..........................................            3531               7            0.99
 Rural--East North Central......................................            2025              12            1.03
 Rural--East South Central......................................             495               2            1.09
 Rural--West North Central......................................            1196               8            0.98
 Rural--West South Central......................................            1066               9            0.96
 Rural--Mountain................................................             310               3            1.02
 Rural--Pacific.................................................             487               4            0.97
----------------------------------------------------------------------------------------------------------------
                                            Type and Size of Facility
----------------------------------------------------------------------------------------------------------------
 Unit of acute hospital.........................................          101518             398            0.99
     Average Daily Census  10...................................           12962             102            0.98
     Average Daily Census 10-24.................................           51783             211            0.99
     Average Daily Census > 24..................................           36773              85            0.99
 Freestanding hospital..........................................           65872             107            0.96
     Average Daily Census less than 25..........................            3527              18            0.96
     Average Daily Census 25-50.................................           19248              40            0.97
     Average Daily Census greater than 50.......................           43097              49            0.96
----------------------------------------------------------------------------------------------------------------
                                              Disproportionate Share
----------------------------------------------------------------------------------------------------------------
 Disproportionate share less than 10%...........................           76374             197            0.98
 Disproportionate share 10%-19%.................................           56138             190            0.99
 Disproportionate share 20%-29%.................................           13308              58            0.98
 Disproportionate share greater than 29%........................            7191              32            0.99
 Missing........................................................           14379              28            0.97
----------------------------------------------------------------------------------------------------------------
                                                 Teaching Status
----------------------------------------------------------------------------------------------------------------
 Non-Teaching...................................................          132437             407            0.98
 Resident to ADC less than 10%..................................           26377              67            0.98
 Resident to ADC 10%-19%........................................            7309              20            0.97
 Resident to ADC greater than 19%...............................            1267              11            0.97
 Alaska/Hawaii..................................................            1099               2            0.99
----------------------------------------------------------------------------------------------------------------


[[Page 66367]]


       Table 2G.--Impacts Reflecting \2/3\ of Proposed Prospective Payments Plus \1/3\ of Current Payments
----------------------------------------------------------------------------------------------------------------
                                                                                                     Proposed
                                                                     Number of       Number of      payment to
                    Facility classifications                           cases        facilities        current
                                                                                                   payment ratio
----------------------------------------------------------------------------------------------------------------
All Facilities..................................................          167390             505            0.98
----------------------------------------------------------------------------------------------------------------
                                               Geographic Location
----------------------------------------------------------------------------------------------------------------
Large Urban.....................................................           69344             218            0.99
Other Urban.....................................................           88232             238            0.97
Rural...........................................................            9814              49            1.01
----------------------------------------------------------------------------------------------------------------
                                                     Region
----------------------------------------------------------------------------------------------------------------
New England.....................................................           15320              37            0.98
Middle Atlantic.................................................           24937              46            0.97
South Atlantic..................................................           34845              79            1.01
East North Central..............................................           33018             120            0.98
East South Central..............................................           12344              26            1.01
West North Central..............................................            9175              44            0.98
West South Central..............................................           22995              73            0.93
Mountain........................................................            5659              25            0.94
Pacific.........................................................            9097              55            0.99
----------------------------------------------------------------------------------------------------------------
                                                 Urban by Region
----------------------------------------------------------------------------------------------------------------
Urban--New England..............................................           15202              36            0.98
Urban--Middle Atlantic..........................................           24351              43            0.97
Urban--South Atlantic...........................................           31314              72            1.01
Urban--East North Central.......................................           30993             108            0.98
Urban--East South Central.......................................           11849              24            1.01
Urban--West North Central.......................................            7979              36            0.99
Urban--West South Central.......................................           21929              64            0.93
Urban--Mountain.................................................            5349              22            0.93
Urban--Pacific..................................................            8610              51            0.99
----------------------------------------------------------------------------------------------------------------
                                                 Rural by Region
----------------------------------------------------------------------------------------------------------------
Rural--New England..............................................             118               1            1.04
Rural--Middle Atlantic..........................................             586               3            1.03
Rural--South Atlantic...........................................            3531               7            1.00
Rural--East North Central.......................................            2025              12            1.08
Rural--East South Central.......................................             495               2            1.20
Rural--West North Central.......................................            1196               8            0.97
Rural--West South Central.......................................            1066               9            0.95
Rural--Mountain.................................................             310               3            1.06
Rural--Pacific..................................................             487               4            0.96
----------------------------------------------------------------------------------------------------------------
                                            Type and Size of Facility
----------------------------------------------------------------------------------------------------------------
Unit of acute hospital..........................................          101518             398            1.00
    Average Daily Census  10....................................           12962             102            0.99
    Average Daily Census 10-24..................................           51783             211            1.00
    Average Daily Census > 24...................................           36773              85            1.00
Freestanding hospital...........................................           65872             107            0.95
    Average Daily Census less than 25...........................            3527              18            0.93
    Average Daily Census 25-50..................................           19248              40            0.95
    Average Daily Census greater than 50........................           43097              49            0.95
----------------------------------------------------------------------------------------------------------------
                                             Disproportionate Share
----------------------------------------------------------------------------------------------------------------
Disproportionate share less than 10%............................           76374             197            0.97
Disproportionate share 10%-19%..................................           56138             190            0.99
Disproportionate share 20%-29%..................................           13308              58            0.98
Disproportionate share greater than 29%.........................            7191              32            1.01
Missing.........................................................           14379              28            0.96
----------------------------------------------------------------------------------------------------------------
                                                 Teaching Status
----------------------------------------------------------------------------------------------------------------
Non-Teaching....................................................          132437             407            0.98
Resident to ADC less than 10%...................................           26377              67            0.99
Resident to ADC 10%-19%.........................................            7309              20            0.96
Resident to ADC greater than 19%................................            1267              11            0.95
Alaska/Hawaii...................................................            1099               2            1.00
----------------------------------------------------------------------------------------------------------------


[[Page 66368]]


                     Table 3G.--Impacts Reflecting the Fully Phased-In Prospective Payments
----------------------------------------------------------------------------------------------------------------
                                                                                                     Proposed
                                                                     Number of       Number of      payment to
                    Facility classifications                           cases        facilities        current
                                                                                                   payment ratio
----------------------------------------------------------------------------------------------------------------
All Facilities..................................................          167390             505            0.98
----------------------------------------------------------------------------------------------------------------
                                               Geographic Location
----------------------------------------------------------------------------------------------------------------
Large Urban.....................................................           69344             218            0.99
Other Urban.....................................................           88232             238            0.97
Rural...........................................................            9814              49            1.03
----------------------------------------------------------------------------------------------------------------
                                                     Region
----------------------------------------------------------------------------------------------------------------
New England.....................................................           15320              37            0.98
Middle Atlantic.................................................           24937              46            0.97
South Atlantic..................................................           34845              79            1.02
East North Central..............................................           33018             120            0.99
East South Central..............................................           12344              26            1.03
West North Central..............................................            9175              44            0.99
West South Central..............................................           22995              73            0.90
Mountain........................................................            5659              25            0.92
Pacific.........................................................            9097              55            1.00
----------------------------------------------------------------------------------------------------------------
                                                 Urban by Region
----------------------------------------------------------------------------------------------------------------
Urban--New England..............................................           15202              36            0.98
Urban--Middle Atlantic..........................................           24351              43            0.97
Urban--South Atlantic...........................................           31314              72            1.03
Urban--East North Central.......................................           30993             108            0.98
Urban--East South Central.......................................           11849              24            1.02
Urban--West North Central.......................................            7979              36            0.99
Urban--West South Central.......................................           21929              64            0.90
Urban--Mountain.................................................            5349              22            0.91
Urban--Pacific..................................................            8610              51            1.00
----------------------------------------------------------------------------------------------------------------
                                                 Rural by Region
----------------------------------------------------------------------------------------------------------------
Rural--New England..............................................             118               1            1.07
Rural--Middle Atlantic..........................................             586               3            1.06
Rural--South Atlantic...........................................            3531               7            1.01
Rural--East North Central.......................................            2025              12            1.13
Rural--East South Central.......................................             495               2            1.31
Rural--West North Central.......................................            1196               8            0.97
Rural--West South Central.......................................            1066               9            0.93
Rural--Mountain.................................................             310               3            1.10
Rural--Pacific..................................................             487               4            0.96
----------------------------------------------------------------------------------------------------------------
                                            Type and Size of Facility
----------------------------------------------------------------------------------------------------------------
Unit of acute hospital..........................................          101518             398            1.01
    Average Daily Census  10....................................           12962             102            0.99
    Average Daily Census 10-24..................................           51783             211            1.02
    Average Daily Census > 24...................................           36773              85            1.02
Freestanding hospital...........................................           65872             107            0.93
    Average Daily Census less than 25...........................            3527              18            0.91
    Average Daily Census 25-50..................................           19248              40            0.94
    Average Daily Census greater than 50........................           43097              49            0.93
----------------------------------------------------------------------------------------------------------------
                                             Disproportionate Share
----------------------------------------------------------------------------------------------------------------
Disproportionate share less than 10%............................           76374             197            0.97
Disproportionate share 10%-19%..................................           56138             190            1.00
Disproportionate share 20%-29%..................................           13308              58            0.98
Disproportionate share greater than 29%.........................            7191              32            1.03
Missing.........................................................           14379              28            0.94
----------------------------------------------------------------------------------------------------------------
                                                 Teaching Status
----------------------------------------------------------------------------------------------------------------
Non-Teaching....................................................          132437             407            0.98
Resident to ADC less than 10%...................................           26377              67            0.99
Resident to ADC 10%-19%.........................................            7309              20            0.95
Resident to ADC greater than 19%................................            1267              11            0.94
Alaska/Hawaii...................................................            1099               2            1.00
----------------------------------------------------------------------------------------------------------------


[[Page 66369]]

5. Costs Associated With The MDS-PAC
    We propose that all IRFs furnishing Medicare-covered Part A 
services assess their Medicare patients using the standardized data set 
known as the MDS-PAC. Costs associated with MDS-PAC data collection and 
data reporting are related to both personnel and equipment. These two 
classes of costs include the costs associated with using the MDS-PAC to 
assess patients (MDS-PAC data collection costs), the IRF's costs to 
start the MDS-PAC process, and the IRF's ongoing costs after the MDS-
PAC process has been initiated. It should be noted that many of the 
components of the costs associated with initiation of the MDS-PAC 
process and the IRF's ongoing costs are the same.
a. MDS-PAC Data Collection Costs
    In calculating the cost to perform an MDS-PAC assessment we made 
the following assumptions: (1) That physicians, registered nurses, 
occupational therapists, or physical therapists are the only clinicians 
with the training to complete all, or the vast majority, of the MDS-PAC 
items. Other clinicians may contribute data to complete some MDS-PAC 
items. (2) That a physician would not record the data for all or most 
of the MDS-PAC items. We believe that the majority of the items would 
be completed by registered nurses, occupational therapists, or physical 
therapists.
    We then applied the above assumptions to the following data:
    <bullet> According to the Occupational Outlook Handbook of the 
Bureau of Labor Statistics, U.S. Department of Labor, the median 
earnings of registered nurses in 1998 were $40,690. That is equivalent 
to a median hourly wage of $19.56. ($40,690/52 weeks = $782.50/week. 
$782.50/40 hours = $19.5625).
    <bullet> According to the Occupational Outlook Handbook of the 
Bureau of Labor Statistics, U.S. Department of Labor, the median 
earnings of occupational therapists in 1998 were $48,230. That is 
equivalent to a median hourly wage of $23.19. ($48,230/52 weeks = 
$927.50. $927.50/40 hours = $23.1875).
    <bullet> According to the Occupational Outlook Handbook of the 
Bureau of Labor Statistics, U.S. Department of Labor, the median 
earnings of physical therapists in 1998 were $56,600. That is 
equivalent to a median hourly wage of $27.21. ($56,600/52 weeks = 
$1088.46/week. $1088.46/40 hours = $27.2115).
    <bullet> According to the Occupational Outlook Handbook of the 
Bureau of Labor Statistics, U.S. Department of Labor, the median 
earnings of dietitians and nutritionists in 1998 were $35,020. That is 
equivalent to a median hourly wage of $16.84. ($35,020/52 weeks = 
$673.46/week. $673.46/40 hours = $16.8365).
    <bullet> According to the Occupational Outlook Handbook of the 
Bureau of Labor Statistics, U.S. Department of Labor, the median 
earnings of social workers in 1998 were $30,590. That is equivalent to 
a median hourly wage of $14.71. ($30,590/52 weeks = $588.27/week. 
$588.27/40 hours = $14.7067).
    <bullet> According to the Occupational Outlook Handbook of the 
Bureau of Labor Statistics, U.S. Department of Labor, the median 
earnings of speech-language pathologists and audiologists in 1998 were 
$43,080. That is equivalent to a median hourly wage of $20.71. 
($43,080/52 weeks = $828.46/week. $828.46/40 hours = $20.7115).
    <bullet> IRF staff familiar with the MDS-PAC that was the product 
of our pilot and field testing required a median of 85 minutes to 
complete an initial intake assessment.
    <bullet> IRF staff familiar with the MDS-PAC that was the product 
of our pilot and field testing required a median of 48 minutes to 
complete an update assessment.
    <bullet> According to one external source IRF staff familiar with 
the UDSmr FIM required a median of 20 minutes to complete the initial 
FIM instrument.
    <bullet> According to another external source IRF staff familiar 
with the FIM required a range of 30 to 45 minutes to complete the FIM 
instrument. It was not specified if this was the UDSmr or COS 
instrument. Also, although it was not specified, we believe that this 
range of time was the time to complete an initial FIM assessment.
    <bullet> It should be noted that the information from both external 
sources concerning the length of time it takes to complete the FIM 
instrument has not been verified.
    <bullet> Our data indicates that in 1997 there were 359,032 IRF 
admissions and 1,123 IRFs. Therefore, there were an average of 319.70 
admissions per IRF.
    Based on the above data and assumptions, and depending on the type 
of clinician that completes all, or the vast majority, of the MDS-PAC 
items, the range of the incremental average cost difference per year 
per IRF to complete the initial MDS-PAC when compared to the initial 
FIM is illustrated in Table 4G below. In addition, considering the 
hourly wage rates specified above it would make no difference in cost 
if a dietitian or social worker completed all or most of the MDS-PAC 
items, and only a slight difference at the low end of the range if a 
speech-language pathologist completed all or most of the MDS-PAC items.

           Table 4G.--Range of Incremental Cost--Comparison of the Initial MDS-PAC to the Initial FIM
----------------------------------------------------------------------------------------------------------------
                                                                  Minimum incremental      Maximum incremental
                                                                  time of 40 minutes--     time of 65 minutes--
              Range of hourly wages per clinician                 range of Incremental     range of incremental
                                                                 Cost per IRF per year    cost per IRF per year
 
----------------------------------------------------------------------------------------------------------------
$19.56 (R.N.).................................................                $4,169.02                $6,774.61
23.19 (O.T.)..................................................                 4,942.72                 8,031.86
27.21 (P.T.)..................................................                 5,799.54                 9,424.18
----------------------------------------------------------------------------------------------------------------

    We believe that the FIM data are inconclusive, and we have several 
concerns and observations regarding the data. The data from both 
external sources were collected from a survey of a sample of IRFs. We 
do not know the size of one of the samples, and if either sample is 
representative of all IRFs. We do not know if the data are estimates of 
time or controlled measurements of time. Nor do we know the details of 
the survey method that was used to collect the data. The data may be 
biased at the source where the data was collected, that is, the sources 
of the data may be reflecting institutionalized biases when reporting 
their data. In addition, the data was reported by organizations with 
vested interests in the FIM, and they may have used a different 
approach than the one we used in estimating completion time of an 
assessment instrument. For example, we do not know whether they 
measured only the time necessary to enter information on the FIM form 
or also included--(1) the time it took to obtain information from

[[Page 66370]]

the patient and/or clinical record; (2) the time it took to actually 
assess the patient; and (3) the time it took clinicians before filling 
out the FIM to apply clinical judgment, or to consult with other 
clinicians, or to examine the clinical record regarding their 
assessment observations. In addition, unlike the MDS-PAC estimates, the 
information from both external sources was survey information, instead 
of a controlled study. For the above reasons, when we conduct a test of 
the UDSmr, COS, and the MDS-PAC instruments we will include in the test 
measurements of the time it takes to complete each one.
    Previously in this preamble we state that testing indicated that 
IRF staff familiar with the MDS-PAC can complete an update MDS-PAC in a 
median of 48 minutes. SNF staff familiar with the MDS-PAC can complete 
an update MDS-PAC in a median of 45 minutes.
    Although we are proposing to require more items to be collected on 
an update assessment, the update assessment still requires less data 
collection than an initial assessment. Table 7C (found in section II of 
this preamble), entitled ``MDS-PAC Items Required by Type of 
Assessment,'' listed the items that we propose be collected on the Day 
4 (admission), update (Day 11, Day 30, Day 60), and the discharge 
assessments. Counting the items in each column gives a simple total of 
the items required on each type of assessment. The update assessment 
requires that 85.2 percent of the items on the initial assessment be 
addressed on the update assessment. The discharge assessment requires 
that 87.5 percent of the items on the initial assessment be addressed 
on the discharge assessment. Consequently, we believe that the time 
required by IRF staff to complete an update MDS-PAC assessment is 
likely more than 48 minutes but less than the time it takes to complete 
the initial MDS-PAC assessment. We do not have data that specifically 
states the time it takes to complete a patient's discharge FIM, which, 
in essence, is the patient's update FIM. Therefore, we cannot currently 
compare MDS-PAC update or discharge assessment completion times to FIM 
update or discharge assessment completion times.
    Most patients would require a Day 11 update assessment, because our 
data indicates that the mean length of stay is 15.81 days and the 
median length of stay is 14 days. Patients would also require a 
discharge assessment. But our data indicates that less than 9 percent 
of patients would require a Day 30 assessment, and less than \1/2\ of 
one percent of patients would require a Day 60 assessment.
b. Start-Up Costs
    The IRF's costs to start the MDS-PAC process consists of material 
costs and personnel costs. Our data indicates that in 1997 there were 
1,123 IRFs. As presented in detail in Table 5G below entitled ``MDS-PAC 
IRF Start-up Costs'' we estimate that the costs for all IRFs to start 
the MDS-PAC process, excluding the MDS-PAC data collection costs 
discussed above, to be approximately $5,121,722 to $5,247,498, which is 
equal to approximately $4,561 to $4,673 per IRF.
    The costs presented below are based on the profile of an average 
IRF, because certain costs are constant regardless of the size of the 
IRF. For both start-up costs and on-going costs, cost estimates are 
based on an assumption that IRFs would perform the encoding and 
transmission functions themselves.

                                                                              Table 5G.--MDS-PAC IRF Start-Up Costs
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            Estimated
                                                                                                         number of staff
         Task/equipment             Hours per IRF                       Cost per IRF                      per IRF to be                     Total per IRF                       National costs
                                                                                                             trained
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Hard drive, printer, RAM, MODEM,  ................                          $0 <SUP>a</SUP>                         ...............                         $0 <SUP>a</SUP>                        None
 Internet Browser.
Training on MDS-PAC data          16                PT <SUP>b</SUP>              OT <SUP>b</SUP>              RN <SUP>b</SUP>             1 <SUP>c</SUP>              PT <SUP>d</SUP>             OT <SUP>e</SUP>             RN <SUP>f</SUP>             $359,360-
 collection at initial                              $27/hr            $23/hr            $20/hr                            $432             $368             $320             $485,136 <SUP>g</SUP>
 assessment, update assessment,
 discharge assessment, and data
 auditing.
                                  12                     $23/hr (average cost of the 3 disciplines)      9 <SUP>h</SUP>                                   $2,484 <SUP>i</SUP>                      $2,789,532 <SUP>j</SUP>
Data Entry (encoding/             5.5                                   $12.50/hr <SUP>k</SUP>                      1                                     $68.75 <SUP>l</SUP>                      $77,206.25 <SUP>m</SUP>
 transmission) training.
Data Entry......................  96 <SUP>n</SUP>                                    $1,200 <SUP>o</SUP>                       ...............                        $1,200                       $1,347,600 <SUP>p</SUP>
Data Entry Audits <SUP>q</SUP>.............  ................                         $38 <SUP>r</SUP>                         ...............                         $38                         $42,674 <SUP>s</SUP>
Data Transmissions--Staff time..  1                                        $150 <SUP>t</SUP>                        ...............                         $150                        $168,450 <SUP>u</SUP>
Running the data edit check
 program @ 20 minutes per month
 and actual transmission by
 staff @ 40 minutes per month.
Systems Maintenance.............  ................                          $100                         ...............                         $100                        $112,300
Supplies........................  ................                          $200                         ...............                         $200                        $224,600
                                 ---------------------------------------------------------------------------------------------------------------------------------------------------------------
    Total.......................  ................                                                       ...............                                                     $5,121,722-
                                                                                                                                                                             $5,247,498
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
<SUP>a</SUP> We believe that all IRFs have the computer capability to process the MDS-PAC-related software.
<SUP>b</SUP> These are the 1998 median hourly wages for these occupations based on the US Dept. of Labor, Bureau of Labor Statistics, Occupational Outlook Handbook, 2000-2001 Edition. We are providing a
  range of median hourly wages as the IRFs must determine the discipline specific clinician they will send to training.
<SUP>c</SUP> We expect the IRF to send a lead clinician to a HCFA sponsored training session and then that lead clinician would train the other IRF clinicians.
<SUP>d</SUP> 16  x  $27.
<SUP>e</SUP> 16  x  $23.

[[Page 66371]]

 
<SUP>f</SUP> 16  x  $20.
<SUP>g</SUP> 1,123  x  $320 to 1,123  x  $432.
<SUP>h</SUP> This number represents the average number of clinicians per IRF that would require training. These clinicians would be trained in their facility.
<SUP>i</SUP> 12 hrs  x  $23/hr  x  9 staff=$2,484.
<SUP>j</SUP> 1,123  x  $2,484.
<SUP>k</SUP> We estimate that the hourly wage for data entry personnel is $12.50 per hour.
<SUP>l</SUP> 5.5 hrs  x  $12.50.
<SUP>m</SUP> 1,123  x  $68.75.
<SUP>n</SUP> The average total of admissions per year per IRF is a approximately 320. We estimate that on average approximately 91 percent of IRF admissions will require 3 assessments. Approximately 9
  percent of IRF admissions will require 4 assessments. This time includes data review and entry of 3 min. per assessment for up-front review & another 3 min. of post data entry review for a
  total of 6 min. 6 minutes  x  291=1746 minutes/60=29.1 hrs  x  3=87.3. 6 minutes  x  29=174 minutes/60=2.9 hrs  x  3=8.7 hrs. 87.3 + 8.7=96 hrs.
<SUP>o</SUP> We estimate an hourly rate for data entry costs of $12.50. 96 hrs  x  $12.50=$1200.
<SUP>p</SUP> 1,123  x  $1200.
<SUP>q</SUP> We estimate a 15 minute monthly data entry audit for quality assurance purposes.
<SUP>r</SUP> $12.50 hr/4  x  12 months=$37.50 per year.
<SUP>s</SUP> 1,123  x  $38.
<SUP>t</SUP> 1 hr  x  12 (mos.)  x  $12.50/hr.
<SUP>u</SUP> 1,123  x  $150.
Note: We anticipate that the IRFs will designate a lead licensed clinician to attend all training. That lead clinician would then provide training to other IRF staff.

(1) Computer Hardware and Software
    Because we will supply to the IRFs free of charge the MDS-PAC 
software that performs the MDS-PAC process electronic functions, the 
IRFs will incur no software costs. We believe that IRFs possess the 
computer hardware capability to handle the MDS-PAC computerization, 
data transmission, and grouper software requirements. Our belief is 
based upon indications that--(1) Approximately 99 percent of hospital 
inpatient claims currently are submitted electronically; (2) close to 
100 percent of IRFs submit their cost reports electronically; and (3) 
approximately 55 percent of IRFs submit FIMs electronically. Although 
we will supply the MPACT software, IRFs may incur costs, which we are 
not able to estimate, associated with making changes to their 
information management systems to incorporate the MPACT software. 
Therefore, we are specifically soliciting comments regarding MDS-PAC 
computerization issues.
    IRFs have the option of purchasing data collection software that 
can be used to support other clinical or operational needs (for 
example, care planning, quality assurance, or billing) or other 
regulatory requirements for reporting patient information. However, we 
are developing an MDS-PAC data system (that is, MPACT) that would be 
available to IRFs at no charge through our website. MPACT would allow 
users to computerize their MDS-PAC assessment data and transmit the 
data in a HCFA-standard format to the HCFA MDS-PAC system. Therefore, 
IRFs that plan to use MPACT will need Internet access and a dial-up 
Internet Service Provider account in order to be able to download and 
install MPACT into their computer system. We believe that all IRFs 
currently have the capability to access the Internet. However, we are 
specifically soliciting comments from any IRFs that do not possess 
Internet access capability, in order for us to consider if we should 
make MPACT available to these facilities by some other means.
(2) Training
    IRF staff will require training in performing MDS-PAC assessments, 
encoding assessments, preparing MDS-PAC data for electronic submission, 
and actually transmitting the data. We believe that the initial 
training of IRF personnel would require about 75.5 hours of staff time. 
We estimate training to cost an IRF approximately $1,242 for training 
of clinical staff, based on an average hourly payroll rate of $23 for 
licensed clinical staff. We estimate training to cost an IRF 
approximately $69 for training data entry staff, based on an average 
hourly payroll rate of $12.50 for data entry staff.
(3) Data Entry
    IRFs have flexibility in choosing the data entry software used to 
computerize the MDS-PAC data, but the software must, at a minimum, 
perform the MPACT functions. In addition, when IRFs are performing data 
entry functions themselves, or contracting for the performance of these 
functions, the IRFs must ensure that performance of data entry complies 
with our requirement for safeguarding the confidentiality of clinical 
records.
    IRFs must collect and transmit MDS-PAC data to the HCFA MDS-PAC 
system in accordance with the assessment schedule and transmission 
requirements specified elsewhere in this preamble. The data may be 
entered by an IRF staff member from a paper document completed by a 
licensed clinical staff member, or by a data entry operator under 
contract to the IRF to key in data. IRFs must allow time for data 
validation, preparation of data for transmission, and correction of 
returned records that failed checks by the HCFA MDS-PAC system. We 
estimate that an average IRF will incur a cost of an hourly rate for 
data entry of $12.50. This cost includes data review and entry, as well 
as a (recommended) 15 minute monthly data entry audit for quality 
assurance purposes.
(4) Data Transmission
    MDS-PAC data would be transmitted to the HCFA MDS-PAC system. This 
system is similar to the ones that HHAs use to report OASIS data and 
that SNFs use to report MDS 2.0 data. IRF staff must also manage the 
data transmission function, correct transmission problems, and manage 
report logs and validation reports transmitted by the HCFA MDS-PAC 
system. We estimate that it will take about one additional hour of 
staff time to perform data transmission related tasks each month, 
including running a data edit check program. This staff time will cost 
an average-sized IRF about $150 per year based on an hourly rate of 
$12.50. IRFs will be able to transmit the MDS-PAC data using the toll-
free MDCN line.
(5) Systems Maintenance
    There are costs associated with normal maintenance related to 
computer equipment, such as the replacement of disk drives or memory 
chips. Typically, this maintenance is provided through warranty 
agreements with the original equipment manufacturer, system retailer, 
or a firm that provides computer support. These maintenance costs are 
estimated to average no more than $100 per year IRF.
(6) Supplies
    Supplies necessary for collection and transmission of data, 
including forms, diskettes, computer paper, and toner, will vary 
according to the size of the IRF, the number of patients served, and 
the number of assessments conducted.

[[Page 66372]]

We anticipate that an average IRF with approximately $200 in costs for 
supplies.
c. Ongoing Costs
    We wanted to differentiate between one-time start-up costs for the 
IRF and costs we believe the IRFs will incur on a regular, yearly 
basis. Therefore, Table 6G entitled ``Agency Ongoing Costs'' include 
only data that we consider will be a repeated cost to the IRF.

                                      Table 6G.--MDS-PAC IRF Ongoing Costs
----------------------------------------------------------------------------------------------------------------
                                                              Estimated
         Task/equipment           Hours per    Cost per IRF   number of      Total per IRF      National costs
                                     IRF                        staff
----------------------------------------------------------------------------------------------------------------
Data Entry.....................  96<SUP>a</SUP>          $1,200<SUP>b</SUP>                     $1,200              $1,347,600<SUP>c</SUP>
Data Entry Audit(d)............               $38<SUP>e</SUP>           1            $38                 $42,674<SUP>f</SUP>
Data Transmissions--Staff time   1            $150<SUP>g</SUP>          ...........  $150                $168,450<SUP>h</SUP>
 Running the data edit check
 program @ 20 minutes per month
 and actual transmission by
 staff @ 40 minutes per month.
Systems Maintenance............  ...........  $100           ...........  $100                $112,300
Supplies.......................  ...........  $200           ...........  $200                $224,600
Annual Training:
    Clinical...................  12           $20-27/hr<SUP>i</SUP>     1            $240-$324<SUP>j</SUP>          $269,520-$363,852<SUP>k</SUP>
    Data Entry.................  12           12.50/hr<SUP>l</SUP>      1            $150<SUP>m</SUP>               $168,450<SUP>n</SUP>
    Clinical<SUP>o</SUP>..................  2            $20-27/hr.     9            $360-$486           $404,280-$545,778
Total..........................  ...........  .............  ...........  ..................  $2,737,874-$2,973,
                                                                                               704
----------------------------------------------------------------------------------------------------------------
<SUP>a</SUP> The average total of admissions per year per IRF is approximately 320. We estimate that on average
  approximately 91 percent of IRF admissions will require 3 assessments. Approximately 9 percent of IRF
  admissions will require 4 assessments. This time includes data review and entry of 3 min. per assessment for
  up-front review & another 3 min. of post data entry review for a total of 6 min. 6 minutes  x  291=1746
  minutes/60=29.1 hrs  x  3=87.3. 6 minutes  x  29=174 minutes/60=2.9 hrs  x  3=8.7 hrs. 87.3 + 8.7=96 hrs.
<SUP>b</SUP> We estimate an hourly rate for data entry costs of $12.50. 96 hrs  x  $12.50=$1,200.
<SUP>c</SUP> 1,123  x  $1,200.
<SUP>d</SUP> We estimate a 15 minute monthly data entry audit for quality assurance purposes.
<SUP>e</SUP> $12.50 hr/4  x  12 months=$37.50 per year.
<SUP>f</SUP> 1,123  x  $38.
<SUP>g</SUP> 1 hr  x  12 (mos.)  x  $12.50/hr.
<SUP>h</SUP> 1,123  x  $150.
<SUP>i</SUP> Based on the 1998 U.S. Dept. of Labor, Bureau of Labor Statistics, Occupational Outlook Handbook, 2000-2001
  Edition, the median hourly wage for an RN is $20, $23 for an OT, and $27 for a PT. We are providing a range of
  median hourly wages as the IRFs must determine the discipline specific clinician they will send to training.
  We expect that the IRF will send one discipline specific clinician to a HCFA sponsored training session and
  then that individual would train the other IRF clinicians.
<SUP>j</SUP> 12 hours  x  $20 to 12 hours  x  $27.
<SUP>k</SUP> 1,123  x  $240 to 1,123  x  $324.
<SUP>l</SUP> We estimate that the hourly wage for data entry personnel is $12.50 per hour.
<SUP>m</SUP> 12 hours  x  $12.50.
<SUP>n</SUP> 1,123  x  $150.
<SUP>o</SUP> This entry represents the average annual cost of IRF in-house training for the MDS-PAC.

    Our data indicates that in 1997 there were 1,123 IRFs. Therefore, 
we estimate annual ongoing costs for an average-sized IRF, excluding 
MDS-PAC data collection costs discussed previously, to be approximately 
$2,438 to $2,648.
d. Conclusion
    As discussed in detail above, IRFs will incur costs associated with 
the MDS-PAC process. Table 7G below is a further analysis of these 
costs.

                                        Table 7G.--MDS-PAC Cost Per Case
                              [Based on IRFs currently completing a FIM instrument]
----------------------------------------------------------------------------------------------------------------
                                                              Maximum                           Average maximum
                                                            incremental                         incremental cost
                                       Percent of MDS-       clinician      Total incremental   per case (Col. 4
                                          PAC items          (physical       maximum cost per    divided by 320
                                          completed       therapist) cost   IRF (Col. 2 times       average
                                                           per IRF (from         Col. 3)         admissions per
                                                             table 4G)                                IRF)
Col. 1                                           Col. 2             Col. 3             Col. 4             Col. 5
----------------------------------------------------------------------------------------------------------------
Assessment Type:
    Initial.........................             100.00          $9,424.18          $9,424.18             $29.45
    Update..........................          \1\ 85.20           9,424.18           8,029.40              25.09
    Discharge.......................          \2\ 87.50           9,424.18           8,246.16              25.77
Average Estimated Cost to Complete    .................  .................          25,699.74              80.31
 MDS-PAC............................
Estimated Maximum MDS-PAC Start-up    .................  .................           4,673.00              14.60
 Cost per IRF \3\...................
Total Estimated Maximum first year    .................  .................          30,372.74             94.91
 Cost...............................
----------------------------------------------------------------------------------------------------------------
\1\ Assumes the time to complete each MDS-PAC item weighted equally at 1.000.
\2\ Same as footnote 1.

[[Page 66373]]

 
\3\ This amount is based on the maximum costs shown in Table 5G divided by 1,123 IRFs. This amount will decline
  after the first year of implementation to reflect the ongoing costs shown in Table 6G.

    We assessed the relationship between the estimated cost of 
completing the MDS-PAC with an estimate of the average cost of one RIC. 
For analysis we used RIC 7: Hip Fractures. This RIC has an estimated 
average cost of $9,848 (based upon secondary analysis of data from 1996 
and 1997 MEDPAR and cost reports). We compared the assumed cost for 
completing the initial, update and discharge assessments using the MDS-
PAC. We found that the average maximum incremental cost per case of 
completing the MDS-PAC for one year, assuming the completion of three 
assessments represents approximately 0.008 per cent of the cost of the 
estimated average cost of RIC 7. We used a single RIC for comparison 
because there is a large variation of cost across RICs. We believe that 
the estimated costs of completing the MDS-PAC are well justified when 
considered within the context of the statutory requirement and the 
methodology needed to implement the IRF prospective payment system, the 
probability that the MDS-PAC process will lead to increased quality of 
care for IRF patients, as well as the potential uses of the automated 
data by the IRFs themselves, the States, fiscal intermediaries, and 
HCFA. Our cost estimates may actually overstate anticipated costs, 
because they do not take into account cost-savings that IRFs may 
achieve by improving their management information systems, as well as 
potential improvements in the quality of patients' clinical care 
resulting from improved care planning under the MDS-PAC assessment 
process.

C. Alternatives Considered

    We propose to use the MDS-PAC as the patient assessment instrument 
instead of the patient assessment instruments marketed by UDSmr or COS. 
These other patient assessment instruments are used by approximately 56 
percent of the IRFs. But these patient assessment instruments are not 
as precise in assessing patients as the MDS-PAC, because they do not 
collect as much detailed data as the MDS-PAC. For example, the MDS-PAC 
provides a better description of a patient's cognitive functioning (the 
processing of empirical factual concepts) than these other assessment 
instruments. The MDS-PAC is also better at assessing a patient's mood 
and behavior patterns, measures of a patient's emotional and 
psychological status. Nor do these other assessment instruments allow 
for collecting patient assessment data in sufficient detail to allow us 
to develop the IRF quality of care monitoring system that we need. In 
addition, we believe that neither of these other patient assessment 
instruments permits a comparison of patients across different settings 
of post-acute care as recommended by MedPAC.
    In constructing our proposed assessment schedule we decided not to 
use the patient assessment schedules associated with the patient 
assessment instruments marketed by UDSmr or COS. These other patient 
assessment instruments are used to assess patients only upon admission 
and discharge. We believe that the data provided by our update 
assessments would yield the type of structured data that we can use to 
monitor the quality of treatment being furnished. We also propose not 
to use the FIM items exactly as they are contained in the patient 
assessment instruments of UDSmr or COS, or the MDS-PAC with the FIM 
payment items pasted in exactly as contained in the patient assessment 
instruments of UDSmr or COS. These two approaches were not selected as 
they would not support HCFA's long-term quality monitoring strategy nor 
the goal to establish a common core post-acute care assessment 
instrument. In addition, we propose not to collect only the assessment 
items that would be used to generate a case-mix group determined 
payment rate, because these few items do not provide the scope of 
information needed to monitor access to care, quality of care, and to 
determine if future adjustments to the payment system are needed.
    However, as we discussed earlier in the preamble, the process for 
arriving at the number of elements on the MDS-PAC was based on a 
consensus of clinical expert panels, which focused on the scope of 
elements necessary to support both quality monitoring and payment. 
Similarly, our proposed assessment schedule, including the number of 
assessments performed, was designed to meet both payment and quality 
monitoring objectives of the MDS-PAC. Alternatives to the approaches we 
have proposed in this rule could include either a reduction in the 
number of elements on the instrument or in the number of assessments 
performed while maintaining the MDS-PAC's ability to facilitate both 
payment and comprehensive quality monitoring. We are specifically 
requesting comments on these facets of the patient assessment 
methodology.
    In accordance with the provisions of Executive Order 12866 this 
regulation was reviewed by the Office of Management and Budget.

IX. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506 (c)(2)(A) of the PRA requires that we 
solicit comment on the following issues:
    <bullet> The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
    <bullet> The accuracy of our estimate of the information collection 
burden.
    <bullet> The quality, utility, and clarity of the information to be 
collected.
    <bullet> Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of these issues for the 
sections that contain information collection requirements (ICRs).

Section 412.23  Excluded Hospitals: Classifications

    <bullet> Paragraph (b)(2) requires that, except in the case of a 
newly participating hospital seeking classification under this 
paragraph as a rehabilitation hospital for its first 12-month cost 
reporting period, as described in paragraph (b)(8) of this section, the 
entity show that during its most recent 12-month cost reporting period 
it served an inpatient population of whom at least 75 percent required 
intensive rehabilitative services for treatment of one or more 
specified conditions.
    <bullet> Paragraph (b)(8) requires that a hospital seeking 
classification under this paragraph as a rehabilitation hospital, for 
the first 12-months cost reporting period that occurs after it becomes 
a Medicare participating hospital, may provide a written certification 
that the inpatient population it intends to serve meets the 
requirements of paragraph (b)(2) of this

[[Page 66374]]

section, instead of showing that it has treated this population during 
its most recent 12-month cost reporting period.
    The information collection requirements of these two paragraphs of 
this section are currently approved under OMB approval number 0938-0358 
(Psychiatric Unit Criteria Work Sheet, Rehabilitation Hospital Criteria 
Work Sheet, Rehabilitation Unit Criteria Work Sheet) through November 
30, 2000. The proposed changes to the information collection 
requirements in these two paragraphs are clarifying changes.

Section 412.116  Method of Payment

    Under 412.116 (b), Periodic interim payments, a hospital that meets 
the criteria in Sec. 413.65(h) of this chapter may request in writing 
to receive periodic interim payments as described in this paragraph.
    The burden associated with this provision is the time it takes a 
hospital to write its request for periodic interim payments. We 
estimate that 34 facilities would request these payments and that it 
would take each 1 hour to write and mail its request.

Sections 412.606  Patient Assessment and 412.610(c) Assessment Schedule

    <bullet> Paragraph (a) of Sec. 412.606 requires that at the time 
each Medicare patient is admitted the facility must have physician 
orders for the patient's immediate care.
    This requirement is subject to the PRA. However, we believe that 
the burden associated with it is exempt as defined in 5 CFR 
1320.3(b)(2), because the time, effort, and financial resources 
necessary to comply with the requirement are incurred by persons in the 
normal course of their activities.
    <bullet> Paragraph (c) of Sec. 412.606, Comprehensive assessments, 
requires that an IRF clinician initially and periodically perform a 
comprehensive, accurate, standardized, and reproducible assessment of 
each Medicare patient using the MDS-PAC as the patient assessment 
instrument and that the assessment process must include--
    <bullet> Direct patient observation and communication with the 
patient; and
    <bullet> When appropriate and to the extent feasible, patient data 
from the patient's physician(s), family, friends, and the patient's 
clinical record and other sources.
    <bullet> Section 412.610(c), Assessment reference dates, requires 
assessments upon admission (Day 4); Day 11, Day 30, and Day 60; upon 
discharge or when the patient stops receiving part A benefits.
    In 1997, there were approxiamtely 359,000 admissions to IRFs and 
there are 1,123 facilities, averaging 320 admissions annually. We 
estimate that it would take 85 minutes for the initial assessment and 
at least 48 minutes for each subsequent assessment.
    Under these proposed rules, all Medicare beneficiaries would be 
assessed two times: upon admission and upon discharge. Sixty-six 
percent would be assessed on the 11th day as well. Fewer than 9 percent 
of Medicare beneficiaries in IRFs would also be assessed at 30 days. 
Fewer than \1/2\ of a percent would require an assessment at 60 days.
    Below is a chart showing burden.

----------------------------------------------------------------------------------------------------------------
                                                           Estimated time     Hours per year     Hours per year
                   Type of assessment                      for completion   per facility  (in   nationwide  (in
                                                            (in minutes)          hours)             hours)
----------------------------------------------------------------------------------------------------------------
Admission (Day 4)......................................                 85                453            508,719
Day 11.................................................                 48                169            189,787
Day 30.................................................                 48                 23             25,829
Day 60.................................................                 48                  1              1,123
Discharge..............................................                 48                256            287,488
                                                                           -------------------------------------
    Total/Facility (5 assessment)......................  .................                902          1,012,946
----------------------------------------------------------------------------------------------------------------

    The total ongoing annual burden for all facilities for five 
assessments would be 902 hours  x  1,123 or 1,012,946 hours.
    We are also including training in our burden estimates: 16 hours to 
train the lead clinician and 12 hours to train the other clinicians (an 
average of 9). This totals 121,284 nationally for a one-time burden. We 
also estimate an on-going burden for training of 14 hours per IRF per 
year (15,722 nationally).

Section 412.608  Patient Rights Regarding MDS-PAC Data Collection.

    Under paragraph (a) of this section, before performing an 
assessment of a Medicare inpatient using the MDS-PAC, an IRF clinician 
must inform the Medicare inpatient of the following patient rights:
    <bullet> The right to be informed of the purpose of the MDS-PAC 
data collection;
    <bullet> The right to have the MDS-PAC information collected kept 
confidential and secure;
    <bullet> The right to be informed that the MDS-PAC information will 
not be disclosed to others, except for legitimate purposes allowed by 
the Federal Privacy Act and Federal and State regulations;
    <bullet> The right to refuse to answer MDS-PAC questions; and
    <bullet> The right to see, review, and request changes on his or 
her MDS-PAC assessment.
    Under paragraph (b) of this section, the IRF must ensure that the 
authorized clinician document in the patient's clinical record that the 
patient was informed of the patient rights specified in paragraph (a) 
of this section.
    In accordance with paragraph (c) of this section, the patient 
rights specified in paragraph (a) of this section are in addition to 
the patient rights specified under the conditions of participation for 
hospitals in Sec. 482.13.
    We anticipate adding the burden of disclosure to IRF patients and 
documenting that disclosure to the burden in Sec. 412.13 on hospitals 
furnishing a patient rights statements. The hospitals would be able to 
easily give both statements to patients upon admission, along with 
other required notifications. The burden for the general patient rights 
statement has not yet been approved but is under development. We have 
estimated that it would take each hospital 5 minutes to disclose the 
general hospital statement to each patient on admission. The disclosure 
of the IRF patients' rights statement would increase that time by an 
estimated 2 minutes.

Section 412.610  Assessment Schedule

    Paragraph (g), MDS-PAC record retention, of this section requires 
that an IRF maintain all MDS-PAC patient data sets completed within the 
previous 5 years in a paper format in the patient's clinical record or 
in an electronic computer file that the inpatient rehabilitation 
facility can easily obtain.
    We estimate that, for facilities that choose to file a paper copy, 
it would

[[Page 66375]]

take the facility 5 minutes to print out, or copy, each assessment and 
file it in the patient's record. On average, each facility would need 
to obtain a copy of and file 882 assessments per year, equaling 74 
hours. We cannot estimate how many facilities would choose to file 
paper copies. However, we are assuming that most facilities would 
choose to retain the assessments in an electronic format, which would 
not add to the paperwork burden. We request comments on the accuracy of 
this assumption concerning how many facilities will comply by retaining 
an electronic version.

Section 412.612  Coordination of MDS-PAC Data Collection.

    Paragraph (b), Certification, of this section requires that the 
authorized clinician who has done at least part of the assessment 
certify the accuracy and completion date by signing and dating the 
appropriate lines of section AB of the MDS-PAC.
    We estimate that it would take the authorized clinician 
approximately 10 minutes per assessment to determine to his or her 
satisfaction that the assessment is complete and to so certify. Eight 
hundred eighty-two assessments would equal 147 hours per year per 
facility, and 165,081 hours nationally.
    Paragraph (c) of this section requires that any clinical who 
contributes data for an MDS-PAC item sign and date the appropriate 
lines of the MDS-PAC.
    Under the definition of information in 5 CFR 1320.3(h)(1), 
``information'' does not include such items as affidavits, oaths, 
affirmations, certifications, consents or acknowledgments, provided 
that they do not entail any burden other than that necessary to 
identify the respondent, the date, and the respondent's address. We 
believe that the signatures required by Sec. 412.610(c) are 
acknowledgments identifying the signers (as persons furnishing a 
service) and are not information.

Section 412.614  Transmission of MDS-PAC Data

    Paragraph (a), Data format, of this section requires that each IRF 
encode and transmit data--
    <bullet> Using the computer program(s) available from HCFA; or
    <bullet> Using a computer program(s) that conforms to the HCFA 
standard electronic record layout, data specifications, and data 
dictionary, includes the required MDS-PAC data set, and meets other 
HCFA specifications.
    In accordance with paragraph (b), How to transmit data, of this 
section, each IRF must--
    <bullet> Electronically transmit complete and encoded MDS-PAC data 
for each Medicare inpatient to the HCFA MDS-PAC system in accordance 
with the data format specified in paragraph (a) of this section; and
    <bullet> Transmit data using electronic communications software 
that provides a direct telephone connection from the IRF to the HCFA 
MDS-PAC system.
    IRFs would have to collect and transmit MDS-PAC data to the HCFA 
MDS--PAC system. The data may be entered by a IRF staff member from a 
paper document completed by a licensed clinical staff member, or by a 
data entry operator under contract to the IRF to key in data. IRFs 
would have to allow time for data validation, preparation of data for 
transmission, and correction of returned records that failed checks by 
the HCFA MDS-PAC system.
    We estimate that an average IRF with 320 admissions per year will 
require 3 minutes for data review and entry per assessment for up-front 
review and another 3 minutes for data entry review for a total of 6 
minutes. The burden of transmitting the data is contained in that 6 
minutes. The yearly burden would be 96 hours per facility. (This burden 
also includes recommended 15 minute monthly data entry audit for 
quality assurance purposes.)

Other Data Transmission Functions

    In addition to the burden of managing the data transmission 
function, IRF staff will have to correct transmission problems and 
manage report logs and validation reports transmitted by the HCFA MDS-
PAC system. We estimate that it will take about one additional hour of 
staff time to perform data transmission related tasks each month, 
including running a data edit check program.
    We estimate that it will require a one-time burden of 5.5 hours per 
hospital to train the personnel to be able to complete data 
transmission tasks. With 1,123 facilities, the national burden would be 
6177 hours.

Section 412.616  Release of Information Collected Using the MDS-PAC

    Under paragraph (b) of this section, a facility may release 
information that is patient-identifiable to an agent only in accordance 
with a written contract under which the agent agrees not to use or 
disclose the information except for the purposes specified in the 
contract and to the extent the facility itself is permitted to do so 
under Sec. 412.616(a).
    The burden associated with this ICR is the time required to include 
the necessary information in the contract. While this ICR is subject to 
the PRA, we believe the burden associated with it is exempt as defined 
in 5 CFR 1320.3(b)(2) because the time, effort, and financial resources 
necessary to comply with the requirement would be incurred by persons 
in the normal course of their activities.

Section 412.618  Interrupted Stay

    Paragraph (a) of this section requires that if a patient has an 
interrupted stay the facility must record interrupted stay data on the 
MDS-PAC interrupted stay tracking form.
    We currently have no data on the incidence of interrupted stays. We 
estimate, however, that it would take no more than 5 minutes to 
complete a form. We request comments on the burden that completion of 
this form might impose.

Submission to OMB

    We have submitted a copy of this proposed rule to OMB for its 
review of the information collection requirements in Secs. 412.23, 
412.29, 412.116, and 412.606 through 412.618. These requirements are 
not effective until they have been approved by OMB.
    If you have any comments on any of these information collection and 
record keeping requirements, please mail the original and 3 copies 
directly to the following:

Health Care Financing Administration, Office of Information Services, 
Standards and Security Group, Division of HCFA Enterprise Standards, 
Room N2-14-26, 7500 Security Boulevard, Baltimore, MD 21244-1850, Attn: 
Julie Brown HCFA-1069-P.
    and,
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 10235, New Executive Office Building, Washington, DC 
20503, Attn: Allison Eydt, HCFA Desk Officer.

List of Subjects

42 CFR Part 412

    Administrative practice and procedure, Health facilities, Medicare, 
Puerto Rico, Reporting and recordkeeping requirements.

42 CFR Part 413

    Health facilities, Kidney diseases, Medicare, Puerto Rico, 
Reporting and recordkeeping requirements.
    For the reasons set forth in the preamble, 42 CFR chapter IV is 
proposed to be amended as follows:

[[Page 66376]]

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL 
SERVICES

    A. Part 412 is amended as set forth below:
    1. The authority citation for part 412 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

Subpart A--General Provisions

    2. Section Sec. 412.1 is revised to read as follows:


Sec. 412.1  Scope of part.

    (a) Purpose. (1) This part implements sections 1886(d) and (g) of 
the Act by establishing a prospective payment system for the operating 
costs of inpatient hospital services furnished to Medicare 
beneficiaries in cost reporting periods beginning on or after October 
1, 1983 and a prospective payment system for the capital-related costs 
of inpatient hospital services furnished to Medicare beneficiaries in 
cost reporting periods beginning on or after October 1, 1991. Under 
these prospective payment systems, payment for the operating and 
capital-related costs of inpatient hospital services furnished by 
hospitals subject to the systems (generally, short-term, acute-care 
hospitals) is made on the basis of prospectively determined rates and 
applied on a per discharge basis. Payment for other costs related to 
inpatient hospital services (organ acquisition costs incurred by 
hospitals with approved organ transplantation centers, the costs of 
qualified nonphysician anesthetist's services, as described in 
Sec. 412.113(c), and direct costs of approved nursing and allied health 
educational programs) is made on a reasonable cost basis. Payment for 
the direct costs of graduate medical education is made on a per 
resident amount basis in accordance with Sec. 413.86 of this chapter. 
Additional payments are made for outlier cases, bad debts, indirect 
medical education costs, and for serving a disproportionate share of 
low-income patients. Under either prospective payment system, a 
hospital may keep the difference between its prospective payment rate 
and its operating or capital-related costs incurred in furnishing 
inpatient services, and the hospital is at risk for inpatient operating 
or inpatient capital-related costs that exceed its payment rate.
    (2) This part implements section 1886(j) of the Act by establishing 
a prospective payment system for the inpatient operating and capital 
costs of inpatient hospital services furnished to Medicare 
beneficiaries by a rehabilitation hospital or rehabilitation unit that 
meets the conditions of Sec. 412.604.
    (b) Summary of content. (1) This subpart describes the basis of 
payment for inpatient hospital services under the prospective payment 
systems specified in paragraph (a)(1) of this section and sets forth 
the general basis of these systems.
    (2) Subpart B sets forth the classifications of hospitals that are 
included in and excluded from the prospective payment systems specified 
in paragraph (a)(1) of this section, and sets forth requirements 
governing the inclusion or exclusion of hospitals in the systems as a 
result of changes in their classification.
    (3) Subpart C sets forth certain conditions that must be met for a 
hospital to receive payment under the prospective payment systems 
specified in paragraph (a)(1) of this section.
    (4) Subpart D sets forth the basic methodology by which prospective 
payment rates for inpatient operating costs are determined under the 
prospective payment system specified in paragraph (a)(1) of this 
section.
    (5) Subpart E describes the transition rate-setting methods that 
are used to determine transition payment rates for inpatient operating 
costs during the first 4 years of the prospective payment system 
specified in paragraph (a)(1) of this section.
    (6) Subpart F sets forth the methodology for determining payments 
for outlier cases under the prospective payment system specified in 
paragraph (a)(1) of this section.
    (7) Subpart G sets forth rules for special treatment of certain 
facilities under the prospective payment system specified in paragraph 
(a)(1) of this section for inpatient operating costs.
    (8) Subpart H describes the types, amounts, and methods of payment 
to hospitals under the prospective payment system specified in 
paragraph (a)(1) of this section for inpatient operating costs.
    (9) Subpart K describes how the prospective payment system 
specified in paragraph (a)(1) of this section for inpatient operating 
costs is implemented for hospitals located in Puerto Rico.
    (10) Subpart L sets forth the procedures and criteria concerning 
applications from hospitals to the Medicare Geographic Classification 
Review Board for geographic redesignation under the prospective payment 
systems specified in paragraph (a)(1) of this section.
    (11) Subpart M describes how the prospective payment system 
specified in paragraph (a)(1) of this section for inpatient capital-
related costs is implemented effective with reporting periods beginning 
on or after October 1, 1991.
    (12) Subpart P describes the prospective payment system specified 
in paragraph (a)(2) of this section for rehabilitation hospitals and 
rehabilitation units and sets forth the general methodology for paying 
for the operating and capital costs of inpatient hospital services 
furnished by rehabilitation hospitals and rehabilitation units 
effective with cost reporting periods beginning on or after April 1, 
2001.

Subpart B--Hospital Services Subject to and Excluded From the 
Prospective Payment Systems for Inpatient Operating Costs and 
Inpatient Capital-Related Costs

    3. Section 412.20 is amended by:
    A. Revising paragraph (a).
    B. Redesignating paragraph (b) as paragraph (c).
    C. Adding a new paragraph (b).
    D. Revising the introductory text of the redesignated paragraph 
(c).


Sec. 412.20  Hospital services subject to the prospective payment 
systems.

    (a) Except for services described in paragraphs (b) and (c) of this 
section, all covered inpatient hospital services furnished to 
beneficiaries during subject cost reporting periods are paid under the 
prospective payment systems specified in Sec. 412.1(a)(1).
    (b) Effective for cost reporting periods beginning on or after 
April 1, 2001, covered inpatient hospital services furnished to 
Medicare beneficiaries by a rehabilitation hospital or rehabilitation 
unit that meet the conditions of Sec. 412.604 are paid under the 
prospective payment system described in subpart P of this part.
    (c) Inpatient hospital services will not be paid under the 
prospective payment systems specified in Sec. 412.1(a)(1) under any of 
the following circumstances:
* * * * *
    4. Section 412.22 is amended by:
    A. Revising paragraphs (a) and (b).
    B. Revising the introductory text of paragraph (e).
    C. Revising the introductory text of paragraph (h)(2).


Sec. 412.22  Excluded hospitals and hospital units: General rules.

    (a) Criteria. Subject to the criteria set forth in paragraph (e) of 
this section, a hospital is excluded from the prospective payment 
systems specified

[[Page 66377]]

in Sec. 412.1(a)(1) of this part if it meets the criteria for one or 
more of the excluded classifications described in Sec. 412.23.
    (b) Cost reimbursement. Except for those hospitals specified in 
paragraph (c) of this section and Sec. 412.20(b), all excluded 
hospitals (and excluded hospital units, as described in Secs. 412.23 
through 412.29) are reimbursed under the cost reimbursement rules set 
forth in part 413 of this subchapter, and are subject to the ceiling on 
the rate of hospital cost increases described in Sec. 413.40 of this 
subchapter.
* * * * *
    (e) Hospitals within hospitals. Except as provided in paragraph (f) 
of this section, for cost reporting periods beginning on or after 
October 1, 1997, a hospital that occupies space in a building also used 
by another hospital, or in one or more entire buildings located on the 
same campus as buildings used by another hospital, must meet the 
following criteria in order to be excluded from the prospective payment 
systems specified in Sec. 412.1(a)(1):
* * * * *
    (h) Satellite facilities. * * *
    (2) Except as provided in paragraph (h)(3) of this section, 
effective for cost reporting periods beginning on or after October 1, 
1999, a hospital that has a satellite facility must meet the following 
criteria in order to be excluded from the prospective payment systems 
specified in Sec. 412.1(a)(1) for any period:
* * * * *
    5. Section 412.23 is amended by:
    A. Revising the introductory text.
    B. Revising the introductory text of paragraph (b).
    C. Revising paragraphs (b)(2) introductory text, (b)(8), and 
(b)(9).


Sec. 412.23  Excluded hospitals: Classifications.

    Hospitals that meet the requirements for the classifications set 
forth in this section are not reimbursed under the prospective payment 
systems specified in Sec. 412.1(a)(1):
* * * * *
    (b) Rehabilitation hospitals. A rehabilitation hospital must meet 
the following requirements to be excluded from the prospective payment 
systems specified in Sec. 412.1(a)(1) and to be paid under the 
prospective payment system specified in Sec. 412.1(a)(2):
* * * * *
    (2) Except in the case of a newly participating hospital seeking 
classification under this paragraph as a rehabilitation hospital for 
its first 12-month cost reporting period, as described in paragraph 
(b)(8) of this section, show that during its most recent 12-month cost 
reporting period, it served an inpatient population of whom at least 75 
percent required intensive rehabilitative services for treatment of one 
or more of the following conditions:
* * * * *
    (8) A hospital that seeks classification under this paragraph as a 
rehabilitation hospital for the first full 12-month cost reporting 
period that occurs after it becomes a Medicare-participating hospital 
may provide a written certification that the inpatient population it 
intends to serve meets the requirements of paragraph (b)(2) of this 
section, instead of showing that it has treated that population during 
its most recent 12-month cost reporting period. The written 
certification is also effective for any cost reporting period of not 
less than one month and not more than 11 months occurring between the 
date the hospital began participating in Medicare and the start of the 
hospital's regular 12-month cost reporting period.
    (9) For cost reporting periods beginning on or after October 1, 
1991, if a hospital is excluded from the prospective payment systems 
specified in Sec. 412.1(a)(1) or is paid under the prospective payment 
system specified in Sec. 412.1(a)(2) for a cost reporting period under 
paragraph (b)(8) of this section, but the inpatient population it 
actually treated during that period does not meet the requirements of 
paragraph (b)(2) of this section, HCFA adjusts payments to the hospital 
retroactively in accordance with the provisions in Sec. 412.130.
* * * * *
    6. In Sec. 412.25, paragraph (a) introductory text and paragraph 
(e)(2) introductory text are revised to read as follows:


Sec. 412.25  Excluded hospital units: Common requirements.

    (a) Basis for exclusion. In order to be excluded from the 
prospective payment systems specified in Sec. 412.1(a)(1), a 
psychiatric or rehabilitation unit must meet the following 
requirements.
* * * * *
    (e) Satellite facilities. * * *
    (2) Except as provided in paragraph (e)(3) of this section, 
effective for cost reporting periods beginning on or after October 1, 
1999, a hospital unit that establishes a satellite facility must meet 
the following requirements in order to be excluded from the prospective 
payment systems specified in Sec. 412.1(a)(1) for any period:
* * * * *
    7. In Sec. 412.29, the introductory text is revised to read as 
follows:


Sec. 412.29  Excluded rehabilitation units: Additional requirements.

    In order to be excluded from the prospective payment systems 
described in Sec. 412.1(a)(1) and to be paid under the prospective 
payment system specified in Sec. 412.1(a)(2), a rehabilitation unit 
must meet the following requirements:
* * * * *

Subpart H--Payments to Hospitals Under the Prospective Payment 
Systems

    8. In Sec. 412.116, paragraph (a) is revised to read as follows:


Sec. 412.116  Method of payment.

    (a) General rule. (1) Unless the provisions of paragraphs (b) and 
(c) of this section apply, hospitals are paid for hospital inpatient 
operating costs and capital-related costs for each discharge based on 
the submission of a discharge bill.
    (2) Payments for inpatient hospital services furnished by an 
excluded psychiatric unit of a hospital (or by an excluded 
rehabilitation unit of a hospital for cost reporting periods beginning 
before April 1, 2001) are made as described in Sec. 413.64(a), (c), 
(d), and (e) of this chapter.
    (3) For cost reporting periods beginning on or after April 1, 2001, 
payments for inpatient hospital services furnished by a rehabilitation 
hospital or a rehabilitation unit that meets the conditions of 
Sec. 412.604 are made as described in Sec. 412.632.
* * * * *
    9. In Sec. 412.130, paragraphs (a)(1), (a)(2), and (b) are revised 
to read as follows:


Sec. 412.130  Retroactive adjustments for incorrectly excluded 
hospitals and units.

    (a) Hospitals for which adjustment is made. * * *
    (1) A hospital that was excluded from the prospective payment 
systems specified in Sec. 412.1(a)(1) or paid under the prospective 
payment system specified in Sec. 412.1(a)(2), as a new rehabilitation 
hospital for a cost reporting period beginning on or after October 1, 
1991 based on a certification under Sec. 412.23(b)(8) of this part 
regarding the inpatient population the hospital planned to treat during 
that cost reporting period, if the inpatient population actually 
treated in the hospital during that cost reporting period did not meet 
the requirements of Sec. 412.23(b)(2).
    (2) A hospital that has a unit excluded from the prospective 
payment systems specified in Sec. 412.1(a)(1) or paid under the 
prospective payment system

[[Page 66378]]

specified in Sec. 412.1(a)(2), as a new rehabilitation unit for a cost 
reporting period beginning on or after October 1, 1991, based on a 
certification under Sec. 412.30(a) regarding the inpatient population 
the hospital planned to treat in that unit during the period, if the 
inpatient population actually treated in the unit during that cost 
reporting period did not meet the requirements of Sec. 412.23(b)(2).
* * * * *
    (b) Adjustment of payment. (1) For cost reporting periods beginning 
before April 1, 2001, the intermediary adjusts the payment to the 
hospitals described in paragraph (a) of this section as follows:
    (i) The intermediary calculates the difference between the amounts 
actually paid during the cost reporting period for which the hospital, 
unit, or beds were first excluded as a new hospital, new unit, or newly 
added beds under subpart B of this part, and the amount that would have 
been paid under the prospective payment systems specified in 
Sec. 412.1(a)(1) for services furnished during that period.
    (ii) The intermediary makes a retroactive adjustment for the 
difference between the amount paid to the hospital based on the 
exclusion and the amount that would have been paid under the 
prospective payment systems specified in Sec. 412.1(a)(1).
    (2) For cost reporting periods beginning on or after April 1, 2001, 
the intermediary adjusts the payment to the hospitals described in 
paragraph (a) of this section as follows:
    (i) The intermediary calculates the difference between the amounts 
actually paid under subpart P of this part during the cost reporting 
period for which the hospital, unit, or beds were first classified as a 
new hospital, new unit, or newly added beds under subpart B of this 
part, and the amount that would have been paid under the prospective 
payment systems specified in Sec. 412.1(a)(1) for services furnished 
during that period.
    (ii) The intermediary makes a retroactive adjustment for the 
difference between the amount paid to the hospital under subpart P of 
this part and the amount that would have been paid under the 
prospective payment systems specified in Sec. 412.1(a)(1).

Subparts N and O--[Reserved]

    10. Subparts N and O are added and reserved.
    11. A new subpart P, consisting of Secs. 412.600, 412.602, 412.604, 
412.606, 412.608, 412.610, 412.612, 412.614, 412.616, 412.618, 412.620, 
412.622, 412.624, 412.626, 412.628, 412.630, and 412.632 is added to 
read as follows:

Subpart P--Prospective Payment for Inpatient Rehabilitation 
Hospitals and Rehabilitation Units

Sec.
412.600  Basis and scope of subpart.
412.602  Definitions.
412.604  Conditions for payment under the prospective payment system 
for inpatient rehabilitation facilities.
412.606  Patient assessment.
412.608  Patient rights regarding MDS-PAC data collection.
412.610  Assessment schedule.
412.612  Coordination of MDS-PAC data collection.
412.614  Transmission of MDS-PAC data.
412.616  Release of information collected using the MDS-PAC.
412.618  Interrupted stay.
412.620  Patient classification system.
412.622  Basis of payment.
412.624  Methodology for calculating the Federal prospective payment 
rates.
412.626  Transition period.
412.628  Publication of the Federal prospective payment rates.
412.630  Limitation on review.
412.632  Method of payment under the inpatient rehabilitation 
facility prospective payment system.

Subpart P--Prospective Payment for Inpatient Rehabilitation 
Hospitals and Rehabilitation Units


Sec. 412.600  Basis and scope of subpart.

    (a) Basis. This subpart implements section 1886(j) of the Act, 
which provides for the implementation of a prospective payment system 
for inpatient rehabilitation hospitals and rehabilitation units (in 
this subpart referred to as ``inpatient rehabilitation facilities'').
    (b) Scope. This subpart sets forth the framework for the 
prospective payment system for inpatient rehabilitation facilities, 
including the methodology used for the development of payment rates and 
associated adjustments, the application of a transition phase, and 
related rules. Under this system, for cost reporting periods beginning 
on or after April 1, 2001, payment for the operating and capital costs 
of inpatient hospital services furnished by inpatient rehabilitation 
facilities is made on the basis of prospectively determined rates and 
applied on a per discharge basis.


Sec. 412.602  Definitions.

    As used in this subpart--
    Assessment reference date means the specific calendar day in the 
MDS-PAC assessment process that sets the designated endpoint of the 
common 3 day patient observation period, with most MDS-PAC assessment 
items usually referring back in time from this endpoint.
    Authorized clinician means one of the following clinicians:
    (1) An occupational therapist who meets the qualifications 
specified in Sec. 482.56(a)(2) of this chapter.
    (2) A physical therapist who meets the qualifications specified in 
Sec. 482.56(a)(2) of this chapter.
    (3) A physician who is a doctor of medicine or osteopathy and is 
licensed to practice medicine and surgery by the State in which the 
function or action is performed.
    (4) A registered nurse as defined in Sec. 484.4 of this chapter.
    Discharge A Medicare patient in a inpatient rehabilitation facility 
is considered discharged when--
    (1) The patient is formally released; or
    (2) The patient dies in the inpatient rehabilitation facility.
    Encode means entering data items into the fields of the 
computerized MDS-PAC software program.
    Functional-related groups refers to the distinct groups under which 
inpatients are classified using proxy measurements of inpatient 
rehabilitation relative resource usage.
    Interrupted stay means the period during which a Medicare inpatient 
is discharged from the inpatient rehabilitation facility and returns to 
the same inpatient rehabilitation facility within 3 consecutive 
calendar days. The 3 consecutive calendar days begin with the day of 
discharge.
    MDS-PAC stands for the Minimum Data Set for Post Acute Care, a 
patient clinical assessment instrument.
    Outlier payment means an additional payment beyond the standard 
Federal prospective payment for cases with unusually high costs.
    Rural area means an area as defined in Sec. 412.62(f)(1)(iii).
    Transfer means the release of a Medicare inpatient from an 
inpatient rehabilitation facility to another inpatient rehabilitation 
facility, a short-term, acute-care prospective payment hospital, a 
long-term care hospital as described in Sec. 412.23(e), or a nursing 
home that qualifies to receive Medicare or Medicaid payments.
    Urban area means an area as defined in Sec. 412.62(f)(1)(ii).


Sec. 412.604  Conditions for payment under the prospective payment 
system for inpatient rehabilitation facilities.

    (a) General requirements. (1) An inpatient rehabilitation facility 
must meet the conditions of this section to receive payment under the 
prospective payment system described in this subpart for inpatient 
hospital services furnished to Medicare beneficiaries.

[[Page 66379]]

    (2) If an inpatient rehabilitation facility fails to comply fully 
with these conditions with respect to inpatient hospital services 
furnished to one or more Medicare beneficiaries, HCFA may, as 
appropriate--
    (i) Withhold (in full or in part) or reduce Medicare payment to the 
inpatient rehabilitation facility until the facility provides adequate 
assurances of compliance; or
    (ii) Classify the inpatient rehabilitation facility as an inpatient 
hospital that is subject to the conditions of subpart C of this part 
and is paid under the prospective payment systems specified in 
Sec. 412.1(a)(1).
    (b) Inpatient rehabilitation facilities subject to the prospective 
payment system. An inpatient rehabilitation facility must meet the 
criteria to be classified as a rehabilitation hospital or 
rehabilitation unit set forth in Secs. 412.23(b), 412.25, and 412.29 
for exclusion from the inpatient hospital prospective payment systems 
specified in Sec. 412.1(a)(1).
    (c) Completion of patient assessment instrument. For each Medicare 
patient admitted or discharged on or after April 1, 2001, the inpatient 
rehabilitation facility must complete a patient assessment instrument 
in accordance with Sec. 412.606.
    (d) Limitation on charges to beneficiaries. (1) Prohibited charges. 
Except as provided in paragraph (d)(2) of this section, an inpatient 
rehabilitation facility may not charge a beneficiary for any services 
for which payment is made by Medicare, even if the facility's costs of 
furnishing services to that beneficiary are greater than the amount the 
facility is paid under the prospective payment system.
    (2) Permitted charges. An inpatient rehabilitation facility 
receiving payment under this subpart for a covered hospital stay (that 
is, a stay that includes at least one covered day) may charge the 
Medicare beneficiary or other person only for the applicable deductible 
and coinsurance amounts under Secs. 409.82, 409.83, and 409.87 of this 
subchapter.
    (e) Furnishing of inpatient hospital services directly or under 
arrangement. (1) The applicable payments made under this subpart are 
payment in full for all inpatient hospital services, as defined in 
Sec. 409.10 of this chapter, other than physicians' services to 
individual patients reimbursable on a reasonable cost basis (in 
accordance with the criteria of Sec. 415.102(a) of this subchapter).
    (2) HCFA does not pay any provider or supplier other than the 
inpatient rehabilitation facility for services furnished to a Medicare 
beneficiary who is an inpatient, except for physicians' services 
reimbursable under Sec. 405.550(b) of this chapter and services of an 
anesthetist employed by a physician reimbursable under Sec. 415.102(a) 
of this subchapter.
    (3) The inpatient rehabilitation facility must furnish all 
necessary covered services to the Medicare beneficiary either directly 
or under arrangements (as defined in Sec. 409.3 of this subchapter).
    (f) Reporting and recordkeeping requirements. All inpatient 
rehabilitation facilities participating in the prospective payment 
system under this subpart must meet the recordkeeping and cost 
reporting requirements of Secs. 413.20 and 413.24 of this subchapter.


Sec. 412.606  Patient assessment.

    (a) Admission orders. At the time that each Medicare patient is 
admitted, the inpatient rehabilitation facility must have physician 
orders for the patient's care during the time the patient is 
hospitalized.
    (b) Patient assessment instrument. An inpatient rehabilitation 
facility must use the MDS-PAC instrument to assess Medicare inpatients 
who--
    (1) Are admitted on or after April 1, 2001; or
    (2) Were admitted before April 1, 2001, and are still inpatients as 
of April 1, 2001.
    (c) Comprehensive assessments. (1) An inpatient rehabilitation 
facility's authorized clinician must perform a comprehensive, accurate, 
standardized, and reproducible assessment of each Medicare inpatient 
using the MDS-PAC as part of his or her patient assessment in 
accordance with the schedule described in Sec. 412.610.
    (2) A clinician employed or contracted by an inpatient 
rehabilitation facility must record appropriate and applicable data 
accurately and completely for each MDS-PAC item.
    (3) The assessment process must include--
    (i) Direct patient observation and communication with the patient; 
and
    (ii) When appropriate and to the extent feasible, patient data from 
the patient's physician(s), family, friends, the patient's clinical 
record, and other sources.
    (4) The authorized clinician, must sign the MDS-PAC attesting to 
its completion and accuracy.


Sec. 412.608  Patient rights regarding MDS-PAC data collection.

    (a) Before performing an assessment using the MDS-PAC, an 
authorized clinician must inform the Medicare inpatient of the 
following patient rights:
    (1) The right to be informed of the purpose of the MDS-PAC data 
collection;
    (2) The right to have the MDS-PAC information collected be kept 
confidential and secure;
    (3) The right to be informed that the MDS-PAC information will not 
be disclosed to others, except for legitimate purposes allowed by the 
Federal Privacy Act and Federal and State regulations;
    (4) The right to refuse to answer MDS-PAC questions; and
    (5) The right to see, review, and request changes on his or her 
MDS-PAC assessment.
    (b) The inpatient rehabilitation facility must ensure that an 
authorized clinician documents in the Medicare inpatient's clinical 
record that the patient was informed of the patient rights specified in 
paragraph (a) of this section.
    (c) The patient rights specified in paragraph (a) of this section 
are in addition to the patient rights specified under the conditions of 
participation for hospitals in Sec. 482.13 of this chapter.


Sec. 412.610  Assessment schedule.

    (a) General. For each Medicare inpatient an inpatient 
rehabilitation facility must submit MDS-PAC assessment data that covers 
a time period that is in accordance with the assessment schedule 
specified in paragraph (c) of this section.
    (b) Starting the assessment schedule day count. The first day that 
the inpatient is furnished Medicare-covered services during his or her 
current inpatient rehabilitation facility hospital stay is counted as 
day one of the MDS-PAC assessment schedule.
    (c) Assessment reference dates. With respect to the patient's 
current hospitalization, an inpatient rehabilitation facility must 
indicate on the MDS-PAC one of the following assessment reference 
dates:
    (1) Day 4 MDS-PAC assessment. For the assessment that covers 
calendar days 1 through 3 of the patient's current hospitalization, the 
date that is the 3rd calendar day after the patient started being 
furnished Medicare-covered Part A services.
    (2) Day 11 MDS-PAC assessment. For the assessment that covers 
calendar days 8 through 10 of the patient's current hospitalization, 
the date that is the 10th calendar day after the patient started being 
furnished Medicare-covered Part A services.
    (3) Day 30 MDS-PAC assessment. For the assessment that covers 
calendar days 28 through 30 of the patient's current hospitalization, 
the date that is the 30th calendar day after the patient

[[Page 66380]]

started being furnished Medicare-covered Part A services.
    (4) Day 60 MDS-PAC assessment. For the assessment that covers 
calendar days 58 through 60 of the patient's current hospitalization, 
the date that is the 60th calendar day after the patient started being 
furnished Medicare-covered Part A services.
    (5) Discontinuation of Medicare-covered Part A services assessment. 
For the assessment that is completed when the inpatient is not 
discharged from the inpatient rehabilitation facility but stops 
receiving Medicare-covered Part A services, the actual date that the 
inpatient stops receiving Medicare-covered Part A services.
    (6) Discharge assessment. For the assessment that is completed when 
the Medicare inpatient is discharged from the inpatient rehabilitation 
facility, the actual date of discharge from the inpatient 
rehabilitation facility.
    (d) Late MDS-PAC assessment reference date. If the MDS-PAC 
assessment reference date is entered later than the assessment 
reference date specified in paragraph (c)(1) of this section, the MDS-
PAC assessment reference date is considered late.
    (1) If the MDS-PAC assessment reference date is late by 10 calendar 
days or fewer, the inpatient rehabilitation facility receives a payment 
rate that is 25 percent less than the payment rate associated with a 
case-mix group.
    (2) If the MDS-PAC assessment reference date is late by more than 
10 calendar days, the inpatient rehabilitation facility receives no 
payment.
    (e) Completion and encoding dates. (1) The Day 4, Day 11, Day 30, 
and Day 60 MDS-PAC assessments must be completed 1 calendar day after 
the MDS-PAC assessment reference date that is recorded on the MDS-PAC.
    (2) The discharge MDS-PAC assessment must be completed on the 5th 
calendar day in the period beginning with the MDS-PAC assessment 
reference date.
    (3) All MDS-PAC assessments must be encoded by the 7th calendar day 
in the period beginning with the MDS-PAC completion date that is 
recorded on the MDS-PAC.
    (f) Accuracy of the MDS-PAC data. The encoded MDS-PAC assessment 
data must accurately reflect the patient's clinical status at the time 
of the MDS-PAC assessment.
    (g) MDS-PAC record retention. An inpatient rehabilitation facility 
must maintain all MDS-PAC patient data sets completed within the 
previous 5 years in a paper format in the patient's clinical record or 
in an electronic computer file that the inpatient rehabilitation 
facility can easily obtain.


Sec. 412.612  Coordination of MDS-PAC data collection.

    (a) Responsibilities of the authorized clinician. An inpatient 
rehabilitation facility's authorized clinician who has participated in 
performing an MDS-PAC patient assessment must have responsibility for--
    (1) The accuracy and thoroughness of the patient's MDS-PAC 
assessment; and
    (2) The accuracy of the date inserted in the attestation section of 
the MDS-PAC.
    (b) Certification. An inpatient rehabilitation facility's 
authorized clinician must certify the accuracy and completion date of 
the MDS-PAC assessment by signing and dating the appropriate lines of 
the MDS-PAC.
    (c) Signatures. Any clinician who contributes data for an MDS-PAC 
item must sign and date the appropriate lines of the MDS-PAC.
    (d) Penalty for falsification. (1) Under Medicare an individual who 
knowingly and willfully--
    (i) Certifies a material and false statement in a patient 
assessment is subject to a civil money penalty of not more than $1,000 
for each assessment; or
    (ii) Causes another individual to certify a material and false 
statement in a patient assessment is subject to a civil money penalty 
of not more than $5,000 for each assessment.
    (2) Clinical disagreement does not constitute a material and false 
statement.


Sec. 412.614  Transmission of MDS-PAC data.

    (a) Data format. The inpatient rehabilitation facility must encode 
and transmit data for each Medicare inpatient--
    (1) Using the computerized version of the MDS-PAC available from 
HCFA; or (2) Using a computer program(s) that conforms to the HCFA 
standard electronic record layout, data specifications, and data 
dictionary, includes the required MDS-PAC data set, and meets other 
HCFA specifications.
    (b) How to transmit data. The inpatient rehabilitation facility 
must--
    (1) Electronically transmit complete and encoded MDS-PAC data for 
each Medicare inpatient to the HCFA MDS-PAC system in accordance with 
the data format specified in paragraph (a) of this section; and
    (2) Transmit data using electronic communications software that 
provides a direct telephone connection from the inpatient 
rehabilitation facility to the HCFA MDS-PAC system.
    (c) Transmission dates. All MDS-PAC assessments must be transmitted 
to HCFA MDS-PAC system by the 7th calendar day in the period beginning 
with the last permitted MDS-PAC encoding date.
    (d) Late transmission penalty. (1) HCFA assesses a penalty when an 
inpatient rehabilitation facility does not transmit the required MDS-
PAC data to the HCFA MDS-PAC system in accordance with the transmission 
timeframe in paragraph (c) of this section.
    (2) If the actual MDS-PAC transmission date is later than the 
transmission date specified in paragraph (a) of this section the MDS-
PAC data is considered late.
    (i) If the MDS-PAC transmission date is late by 10 calendar days or 
fewer, the inpatient rehabilitation facility receives a payment rate 
that is 25 percent less than the payment rate associated with a case-
mix group.
    (ii) If the MDS-PAC transmission date is late by more than 10 
calendar days, the inpatient rehabilitation facility receives no 
payment.


Sec. 412.616  Release of information collected using the MDS-PAC.

    (a) General. An inpatient rehabilitation facility may release 
information from the MDS-PAC only as specified in Sec. 482.24(b)(3) of 
this chapter.
    (b) Release to the inpatient rehabilitation facility's agent. An 
inpatient rehabilitation facility may release information that is 
patient-identifiable to an agent only in accordance with a written 
contract under which the agent agrees not to use or disclose the 
information except for the purposes specified in the contract and only 
to the extent the facility itself is permitted to do so under paragraph 
(a) of this section.


Sec. 412.618  Interrupted stay.

    For purposes of the MDS-PAC assessment process, if a Medicare 
patient has an interrupted stay the following applies:
    (a) Assessment requirements. (1) The initial case-mix group 
classification from the Day 4 MDS-PAC assessment remains in effect 
(that is, no new Day 4 MDS-PAC assessment is performed).
    (2) The required scheduled MDS-PAC Day 11, Day 30, and Day 60 
assessments must be performed.
    (3) When the patient is discharged, a discharge MDS-PAC assessment 
must be performed.
    (b) Recording and encoding of data. The authorized clinician must 
record

[[Page 66381]]

the interrupted stay data on the interrupted stay tracking form of the 
MDS-PAC.
    (c) Transmission of data. The data recorded on the interrupted stay 
tracking form must be transmitted to the HCFA MDS-PAC system within 7 
calendar days of the date that the Medicare patient returns to the 
inpatient rehabilitation facility.
    (d) Revised assessment schedule. (1) If the interrupted stay occurs 
before the Day 4 assessment, the assessment reference dates, completion 
dates, encoding dates, and data transmission dates for the Day 4 and 
Day 11 MDS-PAC assessments are advanced by the same number of calendar 
days as the length of the patient's interrupted stay.
    (2) If the interrupted stay occurs after the Day 4 assessment and 
before the Day 11 assessment, then the assessment reference date, 
completion date, encoding date, and data transmission date for the Day 
11 MDS-PAC assessment are advanced by the same number of calendar days 
as the length of the patient's interrupted stay.
    (3) If the interrupted stay occurs after the Day 11 and before the 
Day 30 assessment, then the assessment reference date, completion date, 
encoding date, and data transmission date for the Day 30 MDS-PAC 
assessment are advanced by the same number of calendar days as the 
length of the patient's interrupted stay.
    (4) If the interrupted stay occurs after the Day 30 and before the 
Day 60 assessment then the assessment reference date, completion date, 
encoding date, and data transmission date for the Day 60 MDS-PAC 
assessment are advanced by the same number of calendar days as the 
length of the patient's interrupted stay.


Sec. 412.620  Patient classification system.

    (a) Classification methodology. (1) A patient classification system 
is used to classify patients in inpatient rehabilitation facilities 
into mutually exclusive case-mix groups.
    (2) For the purposes of this subpart, case-mix groups are classes 
of Medicare patient discharges by functional-related groups that are 
based on a patient's impairment, age, comorbidities, functional 
capabilities, and other factors that may improve the ability of the 
functional-related groups to estimate variations in resource use.
    (3) Data from Day 4 assessments under Sec. 412.610(c)(1) are used 
to classify a Medicare patient into an appropriate case-mix group.
    (b) Weighting factors. (1) General. An appropriate weight is 
assigned to each case-mix group that measures the relative difference 
in facility resource intensity among the various case-mix groups.
    (2) Short-stay outliers. HCFA will determine a weighting factor or 
factors for patients that are discharged and not transferred within a 
number of days from admission as specified by HCFA.
    (3) Patients who expire. HCFA will determine a weighting factor or 
factors for patients who expire within a number of days from admission 
as specified by HCFA.
    (c) Revision of case-mix group classifications and weighting 
factors. HCFA may periodically adjust the case-mix groups and weighting 
factors to reflect changes in--
    (1) Treatment patterns;
    (2) Technology;
    (3) Number of discharges; and
    (4) Other factors affecting the relative use of resources.


Sec. 412.622  Basis of payment.

    (a) Method of payment. (1) Under the prospective payment system, 
inpatient rehabilitation facilities receive a predetermined amount per 
discharge for inpatient services furnished to Medicare beneficiaries.
    (2) The amount of payment under the prospective payment system is 
based on the Federal payment rate, including adjustments described in 
Sec. 412.624 and, during a transition period, on a blend of the Federal 
payment rate and the facility-specific payment rate described in 
Sec. 412.626.
    (b) Payment in full. (1) The payment made under this subpart 
represents payment in full (subject to applicable deductibles and 
coinsurance as described in subpart G of part 409 of this subchapter) 
for inpatient operating and capital costs associated with furnishing 
Medicare covered services in an inpatient rehabilitation facility, but 
not for the cost of an approved medical education program described in 
Secs. 413.85 and 413.86 of this chapter.
    (2) In addition to payments based on prospective payment rates, 
inpatient rehabilitation facilities receive payments for the 
following--
    (i) Bad debts of Medicare beneficiaries, as provided in Sec. 413.80 
of this chapter, and
    (ii) A payment amount per unit for blood clotting factor provided 
to Medicare inpatients who have hemophilia.


Sec. 412.624  Methodology for calculating the Federal prospective 
payment rates.

    (a) Data used. To calculate the prospective payment rates for 
inpatient hospital services furnished by inpatient rehabilitation 
facilities HCFA uses--
    (1) The most recent Medicare data available, as of the date of 
establishing the inpatient rehabilitation facility prospective payment 
system, used to estimate payments for inpatient operating and capital 
costs made under part 413 under this subchapter;
    (2) An appropriate wage index to adjust for area wage differences;
    (3) An increase factor to adjust for the most recent estimate of 
increases in the prices of an appropriate market basket of goods and 
services included in covered inpatient rehabilitation services; and
    (4) Patient assessment data described in Sec. 412.606 and other 
data that account for the relative resource utilization of different 
patient types.
    (b) Determining the average costs per discharge for fiscal year 
2000. HCFA determines the average inpatient operating and capital costs 
per discharge for which payment is made to each inpatient 
rehabilitation facility using the available data under paragraph (a)(1) 
of this section. The cost per discharge is adjusted to fiscal year 2000 
by an increase factor, described in paragraph (a)(3) of this section, 
under the update methodology described in section 1886(b)(3)(B)(ii) of 
the Act for each year through the midpoint of fiscal year 2000.
    (c) Determining the Federal prospective payment rates--(1) General. 
The Federal prospective payment rates will be established using a 
standard payment amount referred to as the budget neutral conversion 
factor. The budget neutral conversion factor is a standardized payment 
amount based on average costs from a base year which reflects the 
combined aggregate effects of the weighting factors, various facility 
and case level adjustments and other adjustments.
    (2) Update the cost per discharge. (i) HCFA applies the increase 
factor described in paragraph (a)(3) of this section to the facility's 
cost per discharge determined under paragraph (b) of this section to 
compute the cost per discharge for fiscal year 2001. Based on the 
updated cost per discharge, HCFA estimates the payments that would have 
been made to the facility for fiscal year 2001 under part 413 of this 
chapter without regard to the prospective payment system implemented 
under this subpart.
    (ii) HCFA applies the increase factor described in paragraph (a)(3) 
of this section to the facility's fiscal year 2001 cost per discharge 
determined under paragraph (c)(2)(i) of this section to compute the 
cost per discharge for fiscal year 2002. Based on the updated cost per 
discharge, HCFA estimates the

[[Page 66382]]

payments that would have been made to the facility for fiscal year 2002 
under part 413 of this chapter without regard to the prospective 
payment system implemented under this subpart.
    (3) Computation of the budget neutral conversion factor. The budget 
neutral conversion factor is computed as follows:
    (i) For fiscal years 2001 and 2002. Based on the updated costs per 
discharge and estimated payments for fiscal years 2001 and 2002 
determined in paragraphs (c)(2)(i) and (c)(2)(ii) of this section, HCFA 
computes a budget neutral conversion factor for fiscal years 2001 and 
2002, as specified by HCFA, that reflects, as appropriate, the 
adjustments described in paragraph (d) of this section.
    (ii) For fiscal years after 2002. The budget neutral conversion 
factor for fiscal years after 2002 will be the standardized payments 
for the previous fiscal year updated by the increase factor described 
in paragraph (a)(3) of this section including adjustments, described in 
paragraph (d) of this section, as appropriate.
    (4) Determining the Federal prospective payment rate for each case-
mix group. The Federal prospective payment rates for each case-mix 
group is the product of the weighting factors described in 
Sec. 412.620(b) and the budget neutral conversion factor described in 
paragraph (c)(3) of this section.
    (d) Adjustments to the budget neutral conversion factor. The budget 
neutral conversion factor described in paragraph (c)(3) of this section 
will be adjusted for--
    (1) Outlier payments. HCFA determines a reduction factor equal to 
the estimated proportion of additional outlier payments described in 
paragraph (e)(4) of this section.
    (2) Budget neutrality. HCFA adjusts the Federal prospective payment 
rates for fiscal years 2001 and 2002 so that aggregate payments under 
the prospective payment system are estimated to equal 98 percent of the 
amount that would have been made to inpatient rehabilitation facilities 
under part 413 of this subchapter without regard to the prospective 
payment system implemented under this subpart.
    (3) Coding and classification changes. HCFA adjusts the budget 
neutral conversion factor for a given year if HCFA determines that 
revisions in case-mix classifications or weighting factors for a 
previous fiscal year (or estimates that such revisions for a future 
fiscal year) did result in (or would otherwise result in) a change in 
aggregate payments that are a result of changes in the coding or 
classification of patients that do not reflect real changes in case-
mix.
    (e) Calculation of the adjusted Federal prospective payment. For 
each discharge, an inpatient rehabilitation facility's Federal 
prospective payment is computed on the basis of the Federal prospective 
payment rate determined under paragraph (c) of this section. A 
facility's Federal prospective payment rate will be adjusted, as 
appropriate, to account for area wage levels, payments for outliers and 
transfers, and for other factors as follows:
    (1) Adjustment for area wage levels. The labor portion of a 
facility's Federal prospective payment is adjusted to account for 
geographical differences in the area wage levels using an appropriate 
wage index. The application of the wage index is made on the basis of 
the location of the facility in an urban or rural area as defined in 
Sec. 412.602.
    (2) Adjustments for low income patients. HCFA adjusts the Federal 
prospective payment, on a facility basis, for the proportion of low 
income patients that receive inpatient rehabilitation services as 
determined by HCFA.
    (3) Adjustments for rural areas. HCFA adjusts the Federal 
prospective payment by a factor, as specified by HCFA, to account for 
the higher costs per patient in facilities located in rural areas as 
defined in Sec. 412.602.
    (4) Adjustment for high cost outliers. HCFA provides for an 
additional payment to a facility if its estimated costs for a patient 
exceeds a fixed dollar amount (adjusted for area wage levels, and 
factors to account for treating low income patients and for rural 
locations) as specified by HCFA. The additional payment equals 80 
percent of the difference between the estimated cost of the patient and 
the sum of the adjusted Federal prospective payment computed under this 
section and the adjusted fixed dollar amount.
    (5) Adjustments related to the MDS-PAC. An adjustment to a 
facility's Federal prospective payment amount for a given discharge 
will be made if--
    (i) The assessment reference date identified on the MDS-PAC as 
described in Sec. 412.610(d) is late; and
    (ii) The transmission of MDS-PAC data as described in 
Sec. 412.614(d) is late.
    (f) Special payment provision for patients that are transferred. 
(1) A facility's Federal prospective payment will be adjusted to 
account for a discharge of a patient who--
    (i) Is transferred from the inpatient rehabilitation facility to 
another site of care,; and
    (ii) Stays in the facility for a number of days that is less than 
the average length of stay for non-transfer cases in the case-mix group 
to which the patient is classified.
    (2) HCFA calculates the adjusted Federal prospective payment for 
patients who are transferred in the following manner:
    (i) By dividing the Federal prospective payment by the average 
length of stay for non-transfer cases in the case-mix group to which 
the patient is classified to equal the payment per day.
    (ii) By multiplying the payment per day under paragraph (f)(2)(i) 
of this section by the number of days the patient stayed in the 
facility prior to being discharged to equal the unadjusted payment 
amount.
    (iii) By applying the adjustments described in paragraphs (e)(1), 
(e)(2), and (e)(3) of this section to the unadjusted payment amount 
determined in paragraph (f)(2)(ii) of this section.


Sec. 412.626  Transition period.

    (a) Duration of transition period and proportions of the blended 
transition rate. (1) For cost reporting periods beginning on or after 
April 1, 2001 through fiscal year 2002, inpatient rehabilitation 
facilities receive a payment comprised of a blend of the adjusted 
Federal prospective payment, as determined in Sec. 412.624(e) or 
Sec. 412.624(f) and, a facility-specific payment as determined in 
paragraph (b) of this section.
    (i) For cost reporting periods beginning on or after April 1, 2001 
and before fiscal year 2002, payment is based on 66\2/3\ percent of the 
facility-specific payment and 33\1/3\ percent of the adjusted Federal 
prospective payment.
    (ii) For cost reporting periods beginning in fiscal year 2002, 
payment is based on 33\1/3\ percent of the facility-specific payment 
and 66\2/3\ percent of the adjusted Federal prospective payment.
    (2) For cost reporting periods beginning with fiscal year 2003 and 
after, payment is based entirely on the adjusted Federal prospective 
payment.
    (b) Calculation of the facility-specific payment. The facility-
specific payment is equal to the payment for each cost reporting period 
in the transition period that would have been made without regard to 
this subpart. The facility's Medicare fiscal intermediary calculates 
the facility-specific payment for inpatient operating costs and capital 
costs in accordance with part 413 of this chapter.

[[Page 66383]]

Sec. 412.628  Publication of the Federal prospective payment rates.

    HCFA publishes information pertaining to the inpatient 
rehabilitation facility prospective payment system effective for each 
fiscal year in the Federal Register. This information includes the 
unadjusted Federal payment rates, the patient classification system and 
associated weighting factors, and a description of the methodology and 
data used to calculate the payment rates. This information is published 
on or before August 1 prior to the beginning of each fiscal year.


Sec. 412.630  Limitation on review.

    Administrative or judicial review under sections 1869 or 1878 of 
the Act, or otherwise, is prohibited with regard to the establishment 
of the methodology to classify a patient into the case-mix groups and 
the associated weighting factors, the unadjusted Federal per discharge 
payment rates, additional payments for outliers and special payments, 
and the area wage index.


Sec. 412.632  Method of payment under the inpatient rehabilitation 
facility prospective payment system.

    (a) General rule. Subject to the exceptions in paragraphs (b) and 
(c) of this section, inpatient rehabilitation facilities receive 
payment under this subpart for inpatient operating costs and capital 
costs for each discharge only following submission of a discharge bill.
    (b) Periodic interim payments. (1) Criteria for receiving periodic 
interim payments. (i) An inpatient rehabilitation facility receiving 
payment under this subpart may receive periodic interim payments (PIP) 
for Part A services under the PIP method subject to the provisions of 
Sec. 413.64(h) of this subchapter.
    (ii) To be approved for PIP, the inpatient rehabilitation facility 
must meet the qualifying requirements in Sec. 413.64(h)(3) of this 
subchapter.
    (iii) Payments to a rehabilitation unit are made under the same 
method of payment as the hospital of which it is a part as described in 
Sec. 412.116.
    (iv) As provided in Sec. 413.64(h)(5) of this chapter, intermediary 
approval is conditioned upon the intermediary's best judgment as to 
whether payment can be made under the PIP method without undue risk of 
its resulting in an overpayment to the provider.
    (2) Frequency of payment. For facilities approved for PIP, the 
intermediary estimates the inpatient rehabilitation facility's Federal 
prospective payments net of estimated beneficiary deductibles and 
coinsurance and makes biweekly payments equal to \1/26\ of the total 
estimated amount of payment for the year. If the inpatient 
rehabilitation facility has payment experience under the prospective 
payment system, the intermediary estimates PIP based on that payment 
experience, adjusted for projected changes supported by substantiated 
information for the current year. Each payment is made 2 weeks after 
the end of a biweekly period of service as described in 
Sec. 413.64(h)(6) of this subchapter. The interim payments are reviewed 
at least twice during the reporting period and adjusted if necessary. 
Fewer reviews may be necessary if an inpatient rehabilitation facility 
receives interim payments for less than a full reporting period. These 
payments are subject to final settlement.
    (3) Termination of PIP--(i) Request by the inpatient rehabilitation 
facility. Subject to paragraph (b)(1)(iii) of this section, an 
inpatient rehabilitation facility receiving PIP may convert to 
receiving prospective payments on a non-PIP basis at any time.
    (ii) Removal by the intermediary. An intermediary terminates PIP if 
the inpatient rehabilitation facility no longer meets the requirements 
of Sec. 413.64(h) of this chapter.
    (c) Interim payments for Medicare bad debts and for Part A costs 
not paid under the prospective payment system. For Medicare bad debts 
and for costs of an approved education program and other costs paid 
outside the prospective payment system, the intermediary determines the 
interim payments by estimating the reimbursable amount for the year 
based on the previous year's experience, adjusted for projected changes 
supported by substantiated information for the current year, and makes 
biweekly payments equal to \1/26\ of the total estimated amount. Each 
payment is made 2 weeks after the end of a biweekly period of service 
as described in Sec. 413.64(h)(6) of this chapter. The interim payments 
are reviewed at least twice during the reporting period and adjusted if 
necessary. Fewer reviews may be necessary if an inpatient 
rehabilitation facility receives interim payments for less than a full 
reporting period. These payments are subject to final cost settlement.
    (d) Outlier payments. Additional payments for outliers are not made 
on an interim basis. The outlier payments are made based on the 
submission of a discharge bill and represent final payment.
    (e) Accelerated payments--(1) General rule. Upon request, an 
accelerated payment may be made to an inpatient rehabilitation facility 
that is receiving payment under this subpart and is not receiving PIP 
under paragraph (b) of this section if the inpatient rehabilitation 
facility is experiencing financial difficulties because of the 
following:
    (i) There is a delay by the intermediary in making payment to the 
inpatient rehabilitation facility.
    (ii) Due to an exceptional situation, there is a temporary delay in 
the inpatient rehabilitation facility's preparation and submittal of 
bills to the intermediary beyond its normal billing cycle.
    (2) Approval of payment. An inpatient rehabilitation facility's 
request for an accelerated payment must be approved by the intermediary 
and HCFA.
    (3) Amount of payment. The amount of the accelerated payment is 
computed as a percentage of the net payment for unbilled or unpaid 
covered services.
    (4) Recovery of payment. Recovery of the accelerated payment is 
made by recoupment as inpatient rehabilitation facility bills are 
processed or by direct payment by the inpatient rehabilitation 
facility.
    B. Part 413 is amended as set forth below:

PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR 
END-STAGE RENAL DISEASE SERVICES; PROSPECTIVELY DETERMINED PAYMENT 
FOR SKILLED NURSING FACILITIES

    1. The authority citation for part 413 is revised to read as 
follows:

    Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i) and 
(n), 1861(v), 1871, 1881, 1883, and 1886 of the Social Security Act 
(42 U.S.C. 1302, 1395f(b), 1395g, 1395l, 1395l(a), (i) and (n), 
1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww).

Subpart A--Introduction and General Rules

    2. Section 413.1 is amended by:
    A. Revising paragraph (d)(2)(ii).
    B. Adding paragraphs (d)(2)(iv) and (d)(2)(v).


Sec. 413.1  Introduction.

* * * * *
    (d) * * *
    (2) * * *
    (ii) Payment to children's, psychiatric, and long-term hospitals 
(as well as separate psychiatric units (distinct parts) of short-term 
general hospitals), that are excluded from the prospective payment 
systems under subpart B of part 412 of this subchapter, and hospitals 
outside the 50 States and the District of Columbia is on a reasonable

[[Page 66384]]

cost basis, subject to the provisions of Sec. 413.40.
* * * * *
    (iv) For cost reporting periods beginning before April 1, 2001, 
payment to rehabilitation hospitals (as well as separate rehabilitation 
units (distinct parts) of short-term general hospitals), that are 
excluded under subpart B of part 412 of this subchapter from the 
prospective payment systems is on a reasonable cost basis, subject to 
the provisions of Sec. 413.40.
    (v) For cost reporting periods beginning on or after April 1, 2001, 
payment to rehabilitation hospitals (as well as separate rehabilitation 
units (distinct parts) of short-term general hospitals) that meet the 
conditions of Sec. 412.604 of this chapter is based on prospectively 
determined rates under subpart P of part 412 of this subchapter.
* * * * *

Subpart C--Limits on Cost Reimbursement

    3. Section 413.40 is amended by:
    A. Republishing the introductory text of paragraph (a)(2)(i).
    B. Adding a new paragraph (a)(2)(i)(C).
    C. Revising paragraph (a)(2)(ii).
    D. Adding paragraph (a)(2)(iii).


Sec. 413.40  Ceiling on the rate of increase in hospital inpatient 
costs.

    (a) Introduction. * * *
    (2) Applicability. (i) This section is not applicable to--
* * * * *
    (C) Rehabilitation hospitals and rehabilitation units that are paid 
under the prospective payment system for inpatient hospital services in 
accordance with section 1886(j) of the Act and subpart P of part 412 of 
this subchapter for cost reporting periods beginning on or after 
October 1, 2002.
    (ii) For cost reporting periods beginning on or after October 1, 
1983, this section applies to--
    (A) Hospitals excluded from the prospective payment systems 
described in Sec. 412.1(a)(1) of this subchapter; and
    (B) Psychiatric and rehabilitation units excluded from the 
prospective payment systems, as described in Sec. 412.1(a)(1) of this 
chapter and in accordance with Secs. 412.25 through 412.30 of this 
chapter, except as limited by paragraph (a)(2)(iii) of this section 
with respect to rehabilitation hospitals and rehabilitation units 
specified in Secs. 412.23(b), 412.27, and 412.29 of this subchapter.
    (iii) For cost reporting periods beginning on or after October 1, 
1983 and before April 1, 2001, this section applies to rehabilitation 
hospitals and rehabilitation units that are excluded from the 
prospective payment systems described in Sec. 412.1(a)(1) of this 
subchapter.
* * * * *

Subpart E--Payments to Providers

    4. In Sec. 413.64 paragraph (h)(2)(i) is revised to read as 
follows:


Sec. 413.64  Payment to providers: Specific rules.

* * * * *
    (h) Periodic interim payment method of reimbursement--* * *
    (2) * * *
    (i) Part A inpatient services furnished in hospitals that are 
excluded from the prospective payment systems, described in 
Sec. 412.1(a)(1) of this chapter, under subpart B of part 412 of this 
chapter or are paid under the prospective payment system described in 
subpart P of part 412 of this chapter.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance Program)

    Dated: September 18, 2000.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.
    Dated: September 29, 2000.
Donna E. Shalala,
Secretary.

    Note: The following appendices will not appear in the Code of 
Federal Regulations.

Appendix A--Technical Discussion of Cases and Providers Used in RAND 
Analysis

    This Appendix explains the methodology used to create the data 
file used to develop the proposed IRF prospective payment system. A 
general description of the process to create this data file is 
contained in section II of this proposed rule. RAND has performed 
the following analysis to match UDSmr, COS, and HCFA data files.
    Table A shows that for 1996 and 1997, the MEDPAR files had over 
12 million records per year. We are interested in a subset of these 
records: cases paid by Medicare as rehabilitation stays that were 
exempt from the acute care hospital PPS.

             Table A.--Number of MEDPAR Cases and Facilities
------------------------------------------------------------------------
                                                    No. of      No. of
                 Calendar year                      cases     facilities
------------------------------------------------------------------------
1996...........................................   12,231,275      6,339
1997...........................................   12,263,463      6,257
------------------------------------------------------------------------

    Table B shows total 1996 and 1997 rehabilitation stays by type 
of provider (free-standing rehabilitation facility versus excluded 
unit of an acute care hospital). This was the ``sampling'' frame. In 
order to describe the IRF prospective payment system case-mix, RAND 
attached information from FIM instruments to each record in this 
frame, thereby obtaining ``complete'' records. To the extent that 
RAND was unable to add information to some records, it was important 
to know both how to and whether to weight the complete records so 
they would reflect the composition of the frame.

     Table B.--Number of Rehabilitation MEDPAR Cases and Facilities
------------------------------------------------------------------------
                                                     No. of     No. of
                Calendar year/type                    cases   facilities
------------------------------------------------------------------------
1996:
    Excluded unit.................................   229,193        877
    Free-standing.................................   114,933        204
                                                   ---------------------
      Total.......................................   344,126      1,081
                                                   =====================
1997:
    Excluded unit.................................   240,491        911
    Free-standing.................................   118,541        212
                                                   ---------------------
      Total.......................................   359,032     1,123
------------------------------------------------------------------------
Note: Free-standing facilities have characters 3-6 of the Medicare
  provider number in the range 3025-3099. Patients receiving
  rehabilitation care in excluded units of acute care hospitals have a
  ``provider code'' of T in their MEDPAR records.

    Table C shows the number of facilities and the number of UDSmr 
and COS records for calendar years 1996 and 1997.

          Table C.--Number of UDSmr/COS Records and Facilities
------------------------------------------------------------------------
                                                     No. of     No. of
         Calendar year                 Source        records  facilities
------------------------------------------------------------------------
1996...........................  UDSmr............   225,069        533
                                 COS..............    44,478        159
1997...........................  UDSmr............   258,915        595
                                 COS..............    67,350        164
------------------------------------------------------------------------

Matching MEDPAR and UDSmr/COS Facilities

    The first step in the matching process is to link MEDPAR 
facilities to UDSmr/COS facilities. For each of these combinations, 
RAND counted the number of exact matches of MEDPAR and UDSmr/COS 
records based on admission date, discharge date, and zip code. Table 
D summarizes the results of this stage of the linking process. The 
number of facilities represented in our UDSmr/COS datasets is 
slightly more than half of all IRFs.

[[Page 66385]]



  Table D.--Numbers of UDSmr/COS Facilities Linked to MEDPAR Facilities
------------------------------------------------------------------------
                                 MEDPAR      MEDPAR      Non-
     Calendar year/source        Unique     Multiple     Rehab    Total
----------------------------------\1\---------\2\---------\3\-----------
1996:
    UDSmr....................       501          10          22      533
    COS......................        67           8          84      159
1997:
    UDSmr....................       557          15          23      595
    COS......................        68          18          78     164
------------------------------------------------------------------------
\1\ UDSmr/COS IRFs that appear to have a single MEDPAR provider.
\2\ UDSmr/COS IRFs that appear to have more than one MEDPAR provider.
\3\ UDSmr/COS IRFs that appear to be SNFs or long term care hospitals.

    The UDSmr/COS data do not contain the Medicare beneficiary 
identifier, and therefore it was necessary to use a probabilistic 
matching algorithm based on characteristics of the beneficiary and 
the hospitalization. The matching was accomplished in a series of 
four steps:
    (1) Identify match variables;
    (2) Recode certain UDSmr/COS variables to be consistent with 
MEDPAR, create additional records for UDSmr interrupted stays, and 
eliminate duplicate cases;
    (3) Run a match algorithm to link UDSmr/COS and MEDPAR records; 
and
    (4) Choose a single MEDPAR case if it matches multiple UDSmr or 
COS cases.

Step 1: Identify Match Variables

    A further search for matches only within the provider number and 
facility identifier pairings was performed. For free-standing 
facilities, an attempt was made to match all MEDPAR records to a 
UDSmr record.
    For MEDPAR, in addition to facility identity, 6 variables were 
used to link the records: Admission date, discharge date, zip code, 
age at admission, sex, and race. For UDSmr/COS, the same information 
in a slightly recoded form was available (for example, birth date). 
An indicator of whether Medicare was the primary payor was used to 
determine how to set certain parameters for the matching algorithm.

Step 2: Create Additional UDSmr/COS Files

    COS's coding of interrupted stays is similar to Medicare's: One 
record per rehabilitation episode; therefore, these records did not 
require any additional processing. UDSmr, however, codes multiple 
stays via a series of ``transfer/return'' dates on a single UDSmr 
record. To facilitate matching UDSmr and MEDPAR records, multiple 
records for interrupted stays were created with admission and 
discharge dates corresponding to the beginning and ending of each 
stay. The additional records were then given the same chance of 
matching MEDPAR records as any non-interrupted stay. For both UDSmr 
and COS files, there were some duplicate cases.
    Table E shows the number of records present at the various 
stages of processing. The last column shows the number of cases that 
would be matched to MEDPAR.

  Table E.--Number of UDSmr/COS Records at Various Stages of Processing
------------------------------------------------------------------------
                                               No. of records
                                  --------------------------------------
       Calendar year/source                                     After
                                     Original      After      duplicate
                                                 expansion   elimination
------------------------------------------------------------------------
1996:
    UDSmr........................      225,069      232,076      231,003
    COS..........................       44,478       44,478       44,375
1997:
    UDSmr........................      258,915      267,444      266,288
    COS..........................       67,350       67,350       67,082
------------------------------------------------------------------------

Step 3: Match Discharges from MEDPAR and UDSmr/CareData

    A match algorithm similar to the one used in Carter, Relles, et 
al. (1997) was run assuming that links are imperfect--any variable 
can be in error. A scoring function is developed, based on Bayes' 
Theorem, which gives the odds of a match based on how consistent 
variables tend to be for true matching and non-matching cases. A 
score of 2.00 or above has a high probability of identifying a 
match. The match statistics reported below assume that cutoff.

Step 4: Choose a Single MEDPAR Case for Multiple UDSmr/COS Matches

    While the matching was unique within a facility/provider pair, 
some MEDPAR providers were paired with different facilities, as 
shown in Table F. Also, some UDSmr and COS facilities were the same: 
6 overlaps in 1996, 7 in 1997.

       Table F.--MEDPAR Facilities Paired With Multiple Facilities
------------------------------------------------------------------------
                                                    Calendar    No. of
                      Source                          year    facilities
------------------------------------------------------------------------
UDSmr............................................       1996           5
UDSmr............................................       1997           8
COS..............................................       1996           5
COS..............................................       1997          10
------------------------------------------------------------------------

    First, MEDPAR duplicate links were eliminated within each file, 
and then duplicate links were eliminated between UDSmr and COS files 
all within the same years. In all cases, the highest scores were 
kept. Table G provides results for cutoff score 2.0.

[[Page 66386]]



                        Table G.--Number of Linked Records After Duplication Elimination
----------------------------------------------------------------------------------------------------------------
                                                                 No. of Records, Cutoff Source <gr-thn-eq>2.0
                                                             ---------------------------------------------------
                                                                Multiple
                    Calendar year/source                         paired       Total      Duplicates    Overlap
                                                               providers     records     eliminated   eliminated
                                                                  (a)                       (b)          (c)
----------------------------------------------------------------------------------------------------------------
1996:
    UDSmr...................................................            5      163,509      162,850      162,692
    COS.....................................................            5       27,664       27,630       26,197
1997:
    UDSmr...................................................            8      185,567      184,431      183,960
    COS.....................................................           10       42,219       41,980      38,722
----------------------------------------------------------------------------------------------------------------
Note: (a) Number of MEDPAR providers paired with more than one UDSmr/COS facility. (b) Multiple pairings can
  link the same MEDPAR record to more than one UDSmr/COS case. This step eliminates those multiple links,
  keeping the link with the highest match score. (c) the same MEDPAR provider might show up in both UDSmr and
  COS, again allowing the same MEDPAR record to match more than one UDSmr/COS case.

Quality of the Match

    There are two aspects to evaluating the quality of the match. 
The first is whether we actually matched all of the cases. To 
evaluate this, we computed match rates for each of our populations: 
UDSmr, COS, and MEDPAR. The second aspect is the representativeness 
of the match for the entire population. To evaluate this, we 
compared patient and facility characteristics to both linked and 
full population, and considered whether some form of weighting would 
make those populations look sufficiently the same.

Match Rates

    Table H suggests overall match rates in these UDSmr/COS 
facilities for the eligible RPPS population to be almost 90 percent. 
This was slightly higher than expected--the Carter, Relles, et al. 
(1997) match rates were about 86 percent.

                        Table H.--MEDPAR Match Rates, Providers With a Full Year of Data
----------------------------------------------------------------------------------------------------------------
                                                                Calendar      MEDPAR      Matched      Percent
                           Source                                 year        cases        cases       matched
----------------------------------------------------------------------------------------------------------------
UDSmr.......................................................         1996      155,502      136,056         87.5
UDSmr.......................................................         1997      175,807      156,520         89.0
COS.........................................................         1996        7,157        6,354         88.8
COS.........................................................         1997       36,774       33,549        91.2
----------------------------------------------------------------------------------------------------------------
Note: Tabulations are for patients eligible for IRFPPS.

    The UDSmr/COS.com files contain many cases not paid by Medicare, 
but the files provide an indication of whether Medicare is the 
primary payer. Restricting our attention to just these cases, we 
obtain the percentages shown in Table I.

                        Table I.--UDSmr/COS Match Rates for Medicare as the Primary Payer
----------------------------------------------------------------------------------------------------------------
                                                                Calendar     UDS/COS      Matched      Percent
                           Source                                 year        cases        cases       matched
----------------------------------------------------------------------------------------------------------------
UDSmr.......................................................         1996      160,125      153,926         96.1
UDSmr.......................................................         1997      179,179      171,885         95.9
COS.........................................................         1996       28,767       26,857         93.4
COS.........................................................         1997       44,172       41,168        93.2
----------------------------------------------------------------------------------------------------------------
Note: UDSmr/COS cases matching any Medicare case.

    These match rates are also slightly higher than reported in 
Carter and Relles (1997), where a 93.7 percent rate was achieved for 
1994 UDSmr data. We consider these match rates to be acceptable, 
within the limitations of information available.

Representativeness of Linked MEDPAR

    For analytical purposes, lack of representativeness is most 
important for characteristics that are related to outcomes we are 
trying to model. For example, if costs for treating a patient in 
free-standing facilities differed from costs in excluded units of 
acute care hospitals, we would consider re-weighting the sample of 
linked cases to adjust our total cost estimates.

Representativeness of Linked MEDPAR Hospital Characteristics

    This section addresses the extent to which the facilities 
present in the UDSmr/COS file are representative of the set of all 
facilities that provide inpatient rehabilitation care to Medicare 
beneficiaries, and the extent to which UDSmr/COS patients are 
representative of all Medicare IRFPPS-eligible patients. This 
analysis reflects the effects of the partial-year sample available 
for some UDSmr/COS facilities as well as the sampling of MEDPAR 
facilities. The MEDPAR records contain data from over 1,000 IRFs in 
each year. Table J divides these facilities into free-standing 
rehabilitation facilities (free-standing rehab) and excluded 
rehabilitation units of acute-care hospitals (excluded units). It 
presents the number of facilities in the linked MEDPAR sample, along 
with the total MEDPAR counts of rehabilitation patients at these 
facilities.

[[Page 66387]]



            Table J.--Comparison of Number of UDSmr/COS and MEDPAR Rehabilitation Facilities, by Type
----------------------------------------------------------------------------------------------------------------
                                                     1996                                   1997
                                   -----------------------------------------------------------------------------
         Type of facility                           Total     Percent UDS/                 Total     Percent UDS/
                                     UDS/COS <SUP>1</SUP>     MEDPAR <SUP>2</SUP>       COS       UDS/COS <SUP>1</SUP>     MEDPAR <SUP>2</SUP>       COS
----------------------------------------------------------------------------------------------------------------
Number of rehab facilities:
    Free-standing rehab...........          130          204           64          142          212           67
    Excluded unit.................          435          877           50          489          911           54
                                   -----------------------------------------------------------------------------
      Total.......................          565        1,081           42          631        1,123           56
                                   =============================================================================
Number of rehab patients:
 
    Free-standing rehab...........       86,301      114,933           75       94,327      118,541           80
    Excluded unit.................      130,623      229,193           57      150,787      240,491           63
                                   -----------------------------------------------------------------------------
      Total.......................      216,924      344,126           63      245,114      359,032          68
----------------------------------------------------------------------------------------------------------------
<SUP>1</SUP> Hospitals with at least one linked MEDPAR/UDSmr/COS rehabilitation record.
<SUP>2</SUP> Total (matched and unmatched) rehabilitation cases.

    As shown in Table J, UDSmr/COS slightly over-represents free-
standing rehabilitation facilities and slightly under-represents 
excluded units. The table also indicates UDSmr/COS's tendency to 
include larger facilities. In 1997, UDSmr/COS facilities represented 
47 percent of the facilities, but served almost 70 percent of all 
MEDPAR IRF cases. Based on data found in the table, in 1997, UDSmr/
COS free-standing facilities had an average of 792 patients, 532 
more than other-MEDPAR free-standing facilities, and UDSmr/COS 
excluded units had an average of 365 patients, 185 more than other-
MEDPAR excluded units.
    Table K shows the distribution of UDSmr/COS IRFs by size. This 
shows both that free-standing facilities are larger than excluded 
units, and that UDSmr/COS IRFs tend to be larger than other MEDPAR 
facilities within type of facility.

                                  Table K.--Comparison of Sizes of UDSmr/COS and MEDPAR Facilities, by Type of Facility
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     1996                                        1997
                                                                 ---------------------------------------------------------------------------------------
                                                                      Free-standing         Excluded Unit         Free-standing         Excluded Unit
                     No. of MEDPAR patients                      ---------------------------------------------------------------------------------------
                                                                               Other                 Other                 Other                 Other
                                                                   UDS/COS     MEDPAR    UDS/COS     MEDPAR    UDS/COS     MEDPAR    UDS/COS     MEDPAR
--------------------------------------------------------------------------------------------------------------------------------------------------------
1-100...........................................................          2         23         30         97          4         24         33        105
101-200.........................................................         14          9        139        140         14          7        143        126
201-300.........................................................         14          2        105        102         11          5        123        103
301-400.........................................................         14         10         59         48         17          9         65         40
401-500.........................................................          8          8         38         27         12          7         52         29
501-1000........................................................         56         16         58         26         59         15         67         18
1001-2000.......................................................         20          6          6          2         24          3          6          1
2001-3000.......................................................          1          0          0          0          0          0          0          0
3001-4000.......................................................          1          0          0          0          1          0          0          0
                                                                 ---------------------------------------------------------------------------------------
    Total.......................................................        130         74        435        442        142         70        489        422
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Table L shows that there are some UDSmr/COS facilities in each 
region, although the southeast and mountain States appear to be 
slightly under represented.

     Table L.--Number and Percentage of MEDPAR Rehabilitation Cases for UDSmr/COS Sample Hospitals, by State
----------------------------------------------------------------------------------------------------------------
                                                     1996                                   1997
                                   -----------------------------------------------------------------------------
               State                          Total                                  Total
                                   -------------------------- Percent UDS/-------------------------- Percent UDS/
                                      UDS/COS       MEDPAR        COS        UDS/COS       MEDPAR        COS
----------------------------------------------------------------------------------------------------------------
 AL...............................        7,135        7,839           91        8,338        8,654           96
 AK...............................          136          247           55          153          302           51
 AR...............................        2,829        6,581           43        3,338        6,973           48
 AZ...............................        2,261        3,672           62        2,334        4,084           57
 CA...............................        8,108       15,294           53        7,899       15,559           51
 CO...............................        1,306        4,757           27        2,786        4,263           65
 CT...............................        1,521        2,217           69        2,024        2,290           88
 DC...............................          133        1,097           12          104          996           10
 DE...............................        1,061        1,399           76          985        1,361           72
 FL...............................       17,143       23,021           74       18,734       23,630           79
 GA...............................        6,115        9,615           64        7,014       10,716           65

[[Page 66388]]

 
 HI...............................        1,087        1,087          100        1,016        1,016          100
 IA...............................        1,264        1,264          100        1,404        1,404          100
 ID...............................        1,781        1,829           97        1,773        1,807           98
 IL...............................        8,044       14,953           54        9,191       14,894           62
 IN...............................        5,330        8,943           60        5,349        8,884           60
 KS...............................          874        3,224           27          786        3,333           24
 KY...............................        3,859        5,198           74        4,083        5,201           79
 LA...............................        3,338        9,206           36        5,071       10,061           50
 MA...............................        4,532        8,765           52        5,748        8,631           67
 MD...............................          667          867           77          574          715           80
 ME...............................          130        1,255           10        1,047        1,460           72
 MI...............................       13,470       16,523           82       14,090       17,255           82
 MN...............................        1,115        2,048           54        1,554        2,112           74
 MO...............................        3,349        9,788           34        4,414       10,513           42
 MS...............................        1,701        1,968           86        1,747        2,021           86
 MT...............................          878          878          100          766          766          100
 NC...............................        6,325        7,123           89        7,752        8,771           88
 ND...............................        1,564        1,821           86        1,356        1,636           83
 NE...............................        1,094        1,195           92        1,008        1,107           91
 NH...............................        1,320        2,310           57        1,442        2,505           58
 NJ...............................       10,010       11,234           89       10,637       11,083           96
 NM...............................          364        1,283           28          452        1,277           35
 NV...............................            0        2,230            0            0        2,303            0
 NY...............................        7,905       21,431           37       11,618       22,875           51
 OH...............................        8,992       11,837           76       10,175       13,888           73
 OK...............................        3,238        6,356           51        4,100        6,949           59
 OR...............................          824        1,179           70          728        1,184           61
 PA...............................       23,437       36,989           63       24,806       35,700           69
 RI...............................        1,379        2,247           61        1,517        2,307           66
 SC...............................        3,758        4,536           83        4,200        4,878           86
 SD...............................        1,684        2,096           80        1,702        2,101           81
 TN...............................        7,574       10,731           71        8,477       11,917           71
 TX...............................       19,498       33,619           58       22,551       36,616           62
 UT...............................          369          858           43          610          984           62
 VA...............................        4,924        6,738           73        5,628        7,235           78
 VT...............................          446          603           74          412          567           73
 WA...............................        3,726        3,753           99        3,584        3,608           99
 WI...............................        5,741        6,591           87        6,201        6,690           93
 WV...............................        3,480        3,497          100        3,553        3,574           99
 WY...............................          105          334           31          283          376           75
                                   -----------------------------------------------------------------------------
     Total........................      216,924      344,126           63      245,114      359,032           68
----------------------------------------------------------------------------------------------------------------

Representativeness of Patient and Stay Characteristics

    Table M compares demographic characteristics of all Medicare 
rehabilitation patients with the matched UDSmr/COS sample. Of all 
the characteristics examined, the UDSmr/COS sample of discharges 
appears very similar.

           Table M.--Patient Characteristics for MEDPAR Rehabilitation Inpatients, by UDSmr/COS Status
----------------------------------------------------------------------------------------------------------------
                                                     1996                                   1997
                                   -----------------------------------------------------------------------------
      Patient characteristic                        Other        Total                     Other        Total
                                      UDS/COS       MEDPAR       MEDPAR      UDS/COS       MEDPAR       MEDPAR
----------------------------------------------------------------------------------------------------------------
Sample Size.......................      171,626      172,500      344,126      206,032      153,000      359,032
Average Age.......................         75.4         75.6         75.5         75.4         75.6         75.5
Age 0-50..........................         2.6%         2.8%         2.7%         2.8%         3.0%         2.8%
Age 51-60.........................         3.1%         3.1%         3.1%         3.2%         3.2%         3.2%
Age 61-70.........................        20.1%        19.3%        19.7%        19.5%        18.9%        19.2%
Age 71-80.........................        44.2%        42.8%        43.5%        43.9%        42.8%        43.4%
Age 81-90.........................        26.9%        28.1%        27.5%        27.4%        28.2%        27.7%
Age 91+...........................         3.2%         3.9%         3.5%         3.2%         4.0%         3.6%
Male..............................        37.9%        37.3%        37.6%        38.0%        37.6%        37.8%
White.............................        86.7%        85.8%        86.3%        86.6%        85.3%        86.1%
Black.............................         9.8%        10.6%        10.2%        10.1%        10.9%        10.4%
In-hospital death.................         0.2%         0.6%         0.4%         0.3%         0.7%         0.4%
----------------------------------------------------------------------------------------------------------------


[[Page 66389]]

    Table N compares resources used for linked UDSmr/COS stays with 
those for other Medicare rehabilitation patients. Average length of 
stay for UDSmr/COS cases is the same as for non-UDSmr/COS patients. 
However, for cases in free-standing hospitals, UDSmr/COS stays 
consume fewer resources: LOS and total charges are about 10 percent 
less.

                            Table N.--Comparison of Resource Use for Medicare Rehabilitation Inpatients, by UDSmr/COS Status
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               1996                                            1997
             Hospitalization characteristic              -----------------------------------------------------------------------------------------------
                                                              UDS/COS      Other MEDPAR    Total MEDPAR       UDS/COS      Other MEDPAR    Total MEDPAR
--------------------------------------------------------------------------------------------------------------------------------------------------------
All hospitals:
    Sample size.........................................         171,626         172,500         344,126         206,032         153,000         359,032
    Length of Stay (days)...............................           16.20           16.20           16.20           15.70           15.70           15.70
    Daily therapy charges...............................         $360.00         $351.00         $355.00         $379.00         $368.00         $374.00
    Total therapy charges...............................       $5,960.00       $5,829.00       $5,894.00       $6,064.00       $5,924.00       $6,004.00
    Total charges.......................................      $18,013.00      $18,790.00      $18,403.00      $18,348.00      $19,287.00      $18,748.00
Freestanding hospitals:
    Sample size.........................................          65,349          49,584         114,933          82,393          36,148         118,541
    Length of Stay (days)...............................            18.0            18.9            18.4            17.8            19.2            18.2
    Daily therapy charges...............................         $360.00         $387.00         $371.00         $384.00         $406.00         $391.00
    Total therapy charges...............................       $6,652.00       $7,605.00       $7,063.00       $7,002.00       $8,064.00       $7,325.00
    Total charges.......................................      $19,443.00      $21,214.00      $20,207.00      $20,202.00      $22,541.00     $20,915.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: UDSmr/COS case totals count matched cases, hence differ from Table J which counts matched and unmatched cases.

    Appendix B: Variables Suggested for Exclusion from the MDS-PAC 
Instrument
    During the pilot and field testings of versions 7-9 of the MDS-
PAC, a number of assessors (Registered Nurses, Physical Therapists, 
or Occupational Therapists) were asked to rate which items on the 
MDS-PAC they would suggest dropping. Based on these findings, the 
MDS-PAC no longer includes 104 items that were originally field 
tested in Version 8 of the instrument. The table below describes the 
percentage of assessors by facility type (rehabilitation hospital or 
skilled nursing facility) who recommended dropping each of the MDS-
PAC items displayed in the table. The table is broken down by the 
type of facility in which the assessor was employed. The items in 
the table below are the majority of the items that are now in the 
version of the MDS-PAC found in Appendix BB.

        Table 1.--Percent of Assessors by the Type of Facility Who Recommended Removal of MDS-PAC Items
----------------------------------------------------------------------------------------------------------------
                                                                              Percent of assessors by facility-
                                                                               type who recommended removal of
                                                                                   specific MDS-PAC items
          MDS-PAC item No.                        MDS-PAC item             -------------------------------------
                                                                              Rehabilitation    Skilled nursing
                                                                                hospitals          facilities
----------------------------------------------------------------------------------------------------------------
A1A................................  First Name...........................                  0                8.3
A1B................................  Middle Initial.......................                  0                8.3
A1C................................  Last Name............................                  0                8.3
A1D................................  Jr/Sr................................                  0                8.3
A3.................................  Reason for Assessment................                5.9                2.0
A5A................................  Medical Stabilization................                5.8               10.0
A5B................................  Rehab/Functional Improvement.........                4.7                4.0
A5C................................  Recuperation.........................               12.8               18.0
A5D................................  Monitor to Avoid Clinical                            9.2                6.0
                                      Complication.
A5E................................  Palliative Care......................               18.6                6.0
A6.................................  Admitted from........................                6.5                4.8
A7A................................  Time of Onset of Precipitating Event.               15.4               33.3
A7B................................  Reason Most Recent Acute Care                        8.6               10.0
                                      Hospitalization.
A8A................................  Primary Payment Source for Stay......                2.3                4.0
A8B................................  Secondary Payment Source for Stay....                5.7                8.2
A9.................................  Marital Status.......................                4.7                4.2
AA10...............................  Gender...............................                  0                2.0
AA11...............................  Birthdate............................                  0                8.3
AA12A..............................  American Indian/Alaskan Native.......               12.0               16.7
AA12B..............................  Asian................................               12.0               16.7
AA12C..............................  Black or African-American............               12.0               16.7
AA12D..............................  Native Hawaiian or Other Pacific                    12.0               16.7
                                      Islander.
AA12E..............................  White................................               12.0               16.7
AA12F..............................  Hispanic or Latino...................               15.4               16.7
AA13...............................  Date of Reentry......................               12.9               14.3
A10................................  Education............................               10.3                6.0
A11A...............................  Primary Language.....................                1.2                2.0
A11B...............................  Other Language.......................                2.4                2.0
A12................................  Dominant Hand........................                9.2               50.0
A13................................  Mental Health History................               12.3                4.9
A14................................  Conditions Related to MR/DD Status...               12.5               25.0
A15A...............................  Legal Guardian.......................                7.5                5.0
A15B...............................  Other Legal Oversight................                7.5                5.0
A15C...............................  Durable Power of Attorney/Health.....                7.5                5.0
A15D...............................  Patient Responsible for Self.........                7.5                5.0

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A16A...............................  Living Will..........................               11.5                2.0
A16B...............................  Do Not Resuscitate...................               13.8                  0
A16C...............................  Do Not Hospitalize...................               16.1                4.1
A16D...............................  Other Treatment Restrictions.........               13.8                2.0
A16E...............................  None of the above....................               12.6                2.0
AA2A...............................  Date of Entry........................                3.1                  0
AA4................................  Assessment Reference Date............                  0                  0
AA6A...............................  Social Security #....................                3.4                  0
AA6B...............................  Medicare #...........................                  0                  0
AA7................................  Medical Record &num..................                2.3                  0
AA8A...............................  State #..............................                6.9                2.0
AA8B...............................  Federal #............................                4.7                  0
AA9................................  Medicaid #...........................                1.2                  0
B1.................................  Comatose.............................               14.8                  0
B2A................................  Short-term Memory Ok.................                  0                2.0
B2B................................  Long-term Memory Ok..................                  0                2.0
B2C................................  Situational Memory Ok................                8.2                  0
B2D................................  Procedural Memory Ok.................                5.9                  0
B3A................................  Decisions Regarding Tasks of Daily                   2.3                  0
                                      Life.
B3B................................  Status Compared to 30 Days Ago.......                6.9               24.5
B4A................................  Easily Distracted....................                5.7                  0
B4B................................  Periods of Altered Perception........                5.7                2.0
B4C................................  Episodes of Disorganized Speech......                5.7                4.1
B4D................................  Periods of Restlessness..............                5.7                2.0
B4E................................  Periods of Lethargy..................                6.1                  0
B4F................................  Mental Function Varies over Course of                7.4                  0
                                      Day.
C1.................................  Hearing..............................                3.4                  0
C2A................................  Hearing Aid..........................                4.5                  0
C2B................................  Lip Reading..........................                4.9                  0
C2C................................  Signs/Gestures/Jokes.................                5.7                  0
C2D................................  Message to Express Needs.............                4.5                  0
C2E................................  None of the Above....................                4.5                  0
C3A................................  Expressing Information Content.......                1.1               22.4
C3B................................  Status Compared to 30 Days Ago.......                8.0                2.0
C2.................................  Speech Clarity.......................                  0                  0
C5A................................  Verbal Content.......................                  0                  0
C5B................................  Status Compared to 30 Days Ago.......                7.0               22.4
C6A................................  See in Adequate Light W/Glasses......                1.2                  0
C6B................................  More Impaired in Vision..............                7.4               22.5
D1A................................  Patient Made Negative Statements.....                3.8                  0
D1B................................  Persistent Anger W/Self or Others....                3.8                  0
D1C................................  Expressions of Unrealistic Fears.....               11.5                  0
D1D................................  Repetitive Anxious Complaints........                7.7                  0
D1E................................  Repetitive Health Complaints.........               11.5                  0
D1F................................  Sad, Pained, Facial Expressions......                7.7                  0
D1G................................  Crying, Tearfulness..................                3.8                  0
D1H................................  Repetitive Physical Movements........               11.5                  0
D1IS...............................  Insomnia/change in Sleep Patterns....                3.8                  0
D1J................................  W/draw from Activities of Interest...               11.5                  0
D1K................................  Reduced Social Interaction...........                7.7                  0
D2.................................  Mood Persistence.....................                4.8                5.0
D3A................................  Wandering--Freq......................                3.4                  0
D3B................................  Verbal Abuse Behavior--Freq..........                4.6                  0
D3C................................  Physical Abuse Behavior--Freq........                3.4                2.1
D3D................................  Social Inappropriate Behavior--Freq..                3.4                2.1
D3E................................  Resists Care--Freq...................                3.4                  0
E10AA..............................  Leg--Joint...........................                4.7                4.2
E10AB..............................  Voluntary Motor Control Leg..........                5.1                2.6
E10AC..............................  Intact Touch Leg.....................                7.6               10.3
E10BA..............................  Arm-Joint............................                4.7                4.2
E10BB..............................  Voluntary Motor Control Arm..........                5.1                2.6
E10BC..............................  Intact Touch Arm.....................                7.6               10.3
E10CA..............................  Trunk & Neck--Joint..................                7.0                4.2
E10CB..............................  Vol. Motor Control--Trunk & Arm......                7.6                2.6
E10CC..............................  Intact Touch Trunk & Arm.............                8.9               10.3
E1A................................  Bed Mobility--3 Days.................                2.4                  0

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E1B................................  Transfer Bed/Chair--3 Days...........                2.4                2.0
E1C................................  Locomotion--3 Days...................                2.4                2.0
E1D................................  Walk in Corridor--3 Days.............                4.7                4.1
E1E................................  Dressing Upper Body--3 Days..........                2.4                  0
E1F................................  Dressing Lower Body--3 Days..........                2.4                  0
E1G................................  Eating--3 Days.......................                2.4                  0
E1H................................  Toilet Use--3 Days...................                2.4                  0
E1I................................  Transfer Toilet--3 Days..............                2.3                4.1
E1J................................  Personal Hygiene--3 Days.............                2.3                  0
E1K................................  Bathing--3 Days......................                2.4                  0
E1L................................  Transfer Tub/shower--3 Days..........                4.7                4.1
E3.................................  ADL Areas Now More Impaired..........                4.0               16.7
E4A................................  Meal Preparation--Now................                4.5               23.4
E4C................................  Phone Use--Now.......................               10.2               25.5
E4D................................  Medication Management--Now...........                4.5               31.9
E4E................................  Stairs--Now..........................                4.5               23.4
E4F................................  Car Transfer--Now....................                5.7               23.4
E5.................................  IADL Areas Now More Impaired.........                3.8               16.7
E6A................................  Cane/Crutch..........................                  0                  0
E6B................................  Walker...............................                2.3                  0
E6C................................  Wheeled--Not Motorized...............                2.5                  0
E6D................................  Adaptive Eating Utensil..............                  0                9.1
E6E................................  Mechanical Lift......................                3.4                2.2
E6F................................  Orthotics/Prosthesis.................                  0               18.2
E6G................................  Postural Support.....................                3.4                2.2
E6H................................  Slide Board..........................                3.4                2.2
E6I................................  Other Adaptive Device................                2.3                2.2
E6J................................  None of Above........................                2.5                2.7
E7A................................  Hours of Physical Activity--past 24                  6.5               45.0
                                      Hrs.
E7B................................  Hours of Physical Activity--30 Days                 29.4               50.0
                                      Ago.
E8A................................  Distance Walk W/o Sit Down--                         4.6                6.3
                                      Consistently.
E8B................................  Walking Support Provided.............               11.1               25.6
E9A................................  Moved from Seated to Standing........                8.0                2.1
E9B................................  Turned Around Face Opposite Direction               14.8                8.3
F1A................................  Control of Urinary Bladder...........                  0                  0
F1B................................  Continence Compared to 30 Days Ago...                4.5               22.4
F2A................................  External Catheter....................                1.1                  0
F2B................................  Indwelling Catheter..................                2.3                4.1
F2C................................  Intermittent Cath....................                2.5                  0
F2F................................  Pads, Briefs.........................                3.7                  0
F4.................................  Bowel Continence.....................                1.1                2.0
F5.................................  Bowel Appliances.....................                2.5                  0
G2A................................  Diabetes Mellitus....................                  0                8.3
G2AA...............................  A Multiple Sclerosis.................                  0                8.3
G2AB...............................  Parkinson's Disease..................                  0                8.3
G2AC...............................  Quadriplegia.........................                  0                8.3
G2AD...............................  Seizure Disorder.....................                  0                8.3
G2AE...............................  Spinal Cord Dysfunction--Nontraumatic                  0                8.3
G2AF...............................  Spinal Cord Dysfunction--Traumatic...                  0                8.3
G2AG...............................  Stroke...............................                  0                8.3
G2AH...............................  Anxiety Disorder.....................                  0                8.3
G2AI...............................  Depression...........................                  0                8.3
G2AJ...............................  Other Psychiatric Disorder...........                  0                8.3
G2AK...............................  Asthma...............................                  0                8.3
G2AL...............................  COPD.................................                  0                8.3
G2AM...............................  Emphysema............................                  0                8.3
G2AN...............................  Cancer...............................                4.2                8.3
G2AO...............................  Post Surgery--Non Orthopedic.........                4.2                8.3
G2AP...............................  Renal Failure........................                  0                8.3
G2AQ...............................  None of Above........................                  0                8.3
G2B................................  Hypothyroidism.......................                  0                8.3
G2C................................  Cardiac Arrhythmias..................                  0                8.3
G2D................................  Congestive Heart Failure.............                  0                8.3
G2E................................  Coronary Artery Disease..............                  0                8.3
G2F................................  Deep Vein Thrombosis.................                  0                8.3
G2G................................  Hypertension.........................                  0                8.3

[[Page 66392]]

 
G2H................................  Hypotension..........................                  0                8.3
G2I................................  Peripheral Vascular Disease..........                  0                8.3
G2J................................  Post Acute MI........................                  0                8.3
G2K................................  Post Heart Surgery...................                  0                8.3
G2L................................  Pulmonary Embolism...................                  0                8.3
G2M................................  Pulmonary Failure....................                  0                8.3
G2N................................  Other Cardiovascular Disease.........                  0                8.3
G2O................................  Fracture--Hip........................                  0                8.3
G2P................................  Fracture--Lower Extremity............                  0                8.3
G2Q................................  Fracture(s)--Other...................                  0                8.3
G2R................................  Osteoarthritis.......................                  0                8.3
G2S................................  Osteoporosis.........................                  0                8.3
G2T................................  Rheumatoid Arthritis.................                  0                8.3
G2U................................  Alzheimer's Disease..................                  0                8.3
G2V................................  Aphasia or Apraxia...................                  0                8.3
G2W................................  Cerebral Palsy.......................                  0                8.3
G2X................................  Dementia Other than Alzheimer's......                  0                8.3
G2Y................................  Hemiplegia/Hemiparesis...............                  0                8.3
G3A................................  Antibiotic Resistant Infection.......                  0                2.0
G3B................................  Cellulitis...........................                  0                2.5
G3C................................  Hepatitis............................                1.2                2.0
G3D................................  HIV/AIDS.............................                1.2                2.0
G3E................................  Pneumonia............................                  0                2.0
G3F................................  Osteomyelitis........................                  0                2.0
G3G................................  Septicemia...........................                1.2                2.0
G3H................................  Staphylococcus Infection.............                1.2                4.1
G3I................................  Tuberculosis (Active)................                1.2                2.0
G3J................................  Urinary Tract Infection..............                  0                2.0
G3K................................  Wound Infection......................                  0                2.0
G3L................................  None of Above........................                  0                2.0
G4AA...............................  ICD-9-CM Diagnosis Code #1...........               10.8                4.2
G4AB...............................  ICD-9-CM Code #1.....................                8.4                4.2
G4BA...............................  ICD-9-CM Diagnosis Code #2...........               10.8                4.2
G4BB...............................  ICD-9-CM Code #2.....................                8.4                4.2
G4CA...............................  ICD-9-CM Diagnosis Code #3...........               11.0                4.2
G4CB...............................  ICD-9-CM Code #3.....................                8.5                4.2
G4DA...............................  ICD-9-CM Diagnosis Code #4...........               11.0                4.2
G4DB...............................  ICD-9-CM Code #4.....................                8.5                4.2
G4EA...............................  ICD-9-CM Diagnosis Code #5...........               12.2                4.2
G4EB...............................  ICD-9-CM Code #5.....................                9.8                4.2
H1.................................  Vital Signs..........................                4.6               12.5
H2A................................  Dizziness/Vertigo/Lightheaded........                1.1                  0
H2B................................  Fell in past 7 Days..................                1.1                4.1
H2C................................  Fell in past 8 to 180 Days...........                7.7                  0
H3D................................  Advanced Cardiac Failure.............                9.1               10.2
H2E................................  Chest Pain/Pressure on Exertion......                1.1                2.0
H2F................................  Chest Pain/Pressure at Rest..........                1.1                2.0
H2G................................  Edema--Generalized...................                1.1                2.0
H2H................................  Edema--Localized.....................                2.3                2.0
H2I................................  Edema--pitting.......................                3.4                2.1
H2J................................  Impaired Aerobic Capacity............                3.4                2.0
H2K................................  Constipation.........................                1.1                  0
H2L................................  Dehydrated...........................                3.4                  0
H2M................................  Diarrhea.............................                1.1                  0
H2N................................  Internal Bleeding....................                3.8                  0
H2O................................  Recurrent Nausea/Vomiting............                2.3                  0
H2P................................  Refuse/Inability to Take Liquids                     6.8                  0
                                      Orally.
H2R................................  Fever................................                4.5                  0
H2S................................  Hemi-neglect.........................                4.5                  0
H2T................................  Cachexia (Severe Malnutrition).......                6.8                  0
H2U................................  Morbid Obesity.......................                3.4                  0
H2V................................  End-stage Disease....................                4.5                  0
H2W................................  None of Above........................                  0                  0
H3A................................  Inability to Lie Flat--Loss of Breath                2.3                  0
H3B................................  Shortness of Breath--Exertion........                3.4                  0
H3C................................  Shortness of Breath--Rest............                3.4                  0

[[Page 66393]]

 
H3D................................  Oxygen Saturation....................                3.4                2.0
H3E................................  Diff Cough/clearing Airway...........                3.4                  0
H3F................................  Recurrent Aspiration.................                2.3                  0
H3G................................  Recurrent Aspiration Infection.......                4.9                  0
H3H................................  None of Above........................                3.5                  0
H4A................................  Highest Pressure Ulcer Stage.........                2.3                  0
H4B................................  # of Current Pressure Ulcers.........                2.4                  0
H4C................................  Length Multiplied by Width...........                4.7               12.2
H4D................................  Exudate Amount.......................                4.7               12.2
H4E................................  Predominant Tissue...................                4.7               12.2
H4F................................  Total Push Score.....................                4.7               10.4
H5A................................  # of Stasis Ulcers...................                3.4                  0
H5B................................  # of Surgical Wounds.................                3.4                  0
H5C................................  Ulcer Resolved/Healed................                8.4                6.1
H6A................................  Burns................................                2.3                2.0
H6B................................  Open Lesions Excluding Foot..........                2.3                  0
H6C................................  Rashes...............................                1.1                  0
H6D................................  Skin Tears or Cuts...................                1.1                  0
H6E................................  None of Above........................                1.1                  0
I1A................................  Freq Patient Complains of Pain.......                  0                  0
I1B................................  Intensity of Pain....................                  0                  0
I1C................................  Current Pain Status..................                7.3               26.8
J1A................................  Chewing Problem......................                1.2                  0
J1B................................  Dental Problems......................                1.2                  0
J2.................................  Swallowing...........................                1.2                  0
J3A................................  Height in Inches.....................                5.8                  0
J3B................................  Weight in Pounds.....................                7.0                  0
J4A................................  Weight Loss..........................                8.1                4.2
J4B................................  Weight Gain..........................                8.2                4.2
J5A................................  Total Calories.......................                3.5                  0
J5B................................  Fluid Intake.........................                4.6                  0
K1A................................  Total # Physician Visits.............               21.6               22.4
K1B................................  # Times Phys/nurse Practitioner                     17.2               40.0
                                      Called to Bedside.
K1C................................  # Nurse Practitioner Visits..........               20.7               27.1
K1D................................  # Phys Asst Visits...................               20.7               29.2
K1E................................  # New or Changed Orders..............               14.9               22.4
K2AA...............................  Diabetic Management..................                3.5                8.3
K2AB...............................  At Dis--insulin Management...........                7.7               33.3
K2BA...............................  Injections...........................                7.7                8.3
K2BB...............................  Injections at Discharge..............                8.3               20.0
K2CA...............................  IV Antibiotics/meds..................                7.7                8.3
K2CB...............................  At Dis--Iv Antibiotics/meds..........                7.7               33.3
K2DA...............................  Application of Dressings.............                7.7                8.3
K2DB...............................  Application of Dressings at Dis......                8.3               20.0
K2EA...............................  Application of Ointments.............                7.7                8.3
K2EB...............................  At Dis--Application of Ointments.....                7.7               33.3
K2GA...............................  Nutrition/dehydration Intervention...                7.7                8.3
K2GB...............................  At Dis--nutrition/hydration                          7.7               33.3
                                      Intervention.
K2HA...............................  Pressure Relieving Bed/Chair.........                3.8                8.3
K2HB...............................  At Dis--Pressure Relieving Bed/Chair.                7.7               33.3
K2IA...............................  Turning and Repositioning............                3.8                8.3
K2IB...............................  At Dis--Turning and Repositioning....                7.7               33.3
K2JA...............................  Ulcer Care...........................                7.7                8.3
K2JB...............................  At Discharge--Ulcer Care.............                7.7               33.3
K2KA...............................  Wound Care--Surgical.................                7.7                8.3
K2KB...............................  At Dis--Wound Care Surgical..........                7.7               33.3
K2LA...............................  Bladder Training.....................                3.8                8.3
K2LB...............................  At Dis--Bladder Training.............                8.3               20.0
K2MA...............................  Scheduled Toileting..................                3.8                8.3
K2MB...............................  At Dis--Scheduled Toileting..........                8.3               20.0
K2NA...............................  Bowel Program........................                3.8                8.3
K2NB...............................  At Dis--Bowel Program................                8.3               20.0
K2OA...............................  Cardiac Monitoring/Rehab.............               11.5                8.3
K2OB...............................  At Dis--Cardiac Monitoring...........                7.7               33.3
K2PA...............................  Cast(s)..............................               11.5                8.3
K2PB...............................  At Dis--Cast(s)......................                7.7               33.3

[[Page 66394]]

 
K2QA...............................  Continuous Positive Airway Pressure..               11.5                8.3
K2QB...............................  At Dis--Continuous Positive Airway                   9.0               33.3
                                      Pressure.
K2RA...............................  Drains...............................                3.8                  0
K2RB...............................  At Dis--Drains.......................                7.7               31.7
K2SA...............................  Dialysis.............................                  0                  0
K2SB...............................  At Dis--Dialysis.....................                4.2               16.7
K2TA...............................  Enteral Tube Feeding.................                  0                  0
K2TB...............................  At Dis--Enteral Tube Feeding.........                6.5               31.7
K2UA...............................  IV Line--Central.....................                3.8                  0
K2UB...............................  At Dis--Central Iv Line..............                7.7               31.7
K2VA...............................  IV Line--Peripheral..................                3.8                  0
K2VB...............................  At Dis--Peripheral Iv Line...........                7.7               31.7
K2WA...............................  Ng Feeding Tube......................                  0                  0
K2WB...............................  At Dis--NG Feeding Tube..............                6.4               31.7
K2XA...............................  Oxygen...............................                  0                  0
K2XB...............................  At Dis--Oxygen.......................                6.4               31.7
K2YA...............................  Pain Management--Other than Drugs....                7.7                  0
K2YB...............................  At Dis--Pain Management..............                7.7               31.7
K2ZA...............................  Suctioning--Oral.....................                  0                  0
K2ZB...............................  At Dis--Suctioning--Oral.............                7.7               31.7
K2AAA..............................  Suctioning--Tracheal.................                  0                  0
K2AAB..............................  At Dis--Suctioning Tracheal..........                7.7               31.7
K2ABA..............................  Tracheostomy Care....................                  0                  0
K2ABB..............................  At Dis--Tracheostomy Care............                6.4               31.7
K2ACA..............................  Transfusion(s).......................                7.7                  0
K2ACB..............................  At Dis--Transfusion(s)...............                7.7               31.7
K2ADA..............................  Ventilator or Respirator.............                7.7                  0
K2ADB..............................  At Dis--Vent. Or Resp................                9.0               31.7
K2AEA..............................  Ventilator Weaning...................                7.7                  0
K2AEB..............................  At Dis--Ventilator Weaning...........                9.0               31.7
K2AFA..............................  Train Family to Assist Patient.......                3.8                  0
K2AFB..............................  At Dis-Train Family to Assist Patient                6.4               31.7
K2AGA..............................  Training in Health Maint.............                3.8                  0
K2AGB..............................  At Dis--Pat Train Skills Required                    6.4               31.7
                                      after Discharge.
K2AHA..............................  Design and Implementation............                3.8                  0
K2AHB..............................  At Dis--Social Service Design........                7.7               31.7
K3AIA..............................  None of Above........................                  0                  0
K3AIB..............................  At Dis--None of Above................                7.7               31.7
K3A................................  Range of Motion--Passive.............                4.5                8.2
K3B................................  Range of Motion--Active..............                4.5                8.2
K3C................................  Splint/Orthotic Assistance...........                4.5                8.2
K3D................................  Bed Mobility.........................                4.5                8.2
K3E................................  Bladder/Bowel........................                3.4                8.2
K3F................................  Transfer.............................                4.5                8.2
K3G................................  Walking..............................                4.5                8.2
K3H................................  Dressing or Grooming.................                3.4                8.2
K3I................................  Eating or Swallowing.................                3.4                8.2
K3K................................  Communication........................                3.4                8.2
K4AA...............................  Speech--Days Ordered.................               16.0               26.2
K4AB...............................  Speech--Days Delivered...............                2.4                4.8
K4AC...............................  Speech--Min Delivered................                3.7                2.4
K4AD...............................  Post Dis--Speech.....................                4.0               18.0
K4BA...............................  Ot--Days Ordered.....................               17.3               26.2
K4BB...............................  Ot--Days Delivered...................                2.4                4.8
K4BC...............................  Ot--Min Delivered....................                2.5                2.4
K4BD...............................  Post Dis--Ot.........................                5.3               18.2
K4CA...............................  Pt--Days Ordered.....................               17.3               26.2
K4CB...............................  Pt--Days Delivered...................                1.2                4.8
K4CC...............................  Pt--Min Delivered....................                3.7                2.4
K4CD...............................  Pt--Post Dis--Pt.....................                5.3               18.2
K4DA...............................  Resp. Therapy--Days Ordered..........               16.0               26.2
K4DB...............................  Resp. Therapy--Days Delievered.......                2.4                4.8
K4DC...............................  Resp. Therapy--Min. Delivered........                3.7                2.4
K4DD...............................  Post Dis--Resp.Therapy...............                4.0               18.2
K4EA...............................  Psych Therapy--Days Ordered..........               18.5               26.2
K4EB...............................  Psych Therapy--Days Delivered........                3.7                4.8

[[Page 66395]]

 
K4EC...............................  Psych Therapy--Min Delivered.........                3.7                2.4
K4ED...............................  Post Dis--Psych Therapy..............                6.7               18.2
K4FA...............................  Therapeutic Recreation--Days Ordered.               18.7               24.2
K3FB...............................  Therapeutic Recreation--Days                         1.3                3.0
                                      Delivered.
K3FC...............................  Therapeutic Recreation--Min Delivered                5.3                  0
K3FD...............................  Post Dis--Therapeutic Recreation.....                6.7               18.2
K5A................................  Full Bed Rails on Both Sides.........                5.1                  0
K5B................................  Other Types of Side Rails Used.......                6.4                4.9
K5C................................  Trunk Restraint......................                6.4                  0
K5D................................  Chair Prevents Rising................                7.7                2.4
L1A................................  Bed Mobility/Transfer................                6.9               10.2
L1B................................  Dressing.............................                6.9               10.2
L1C................................  Eating...............................                6.9               10.2
L1D................................  Locomotion...........................                6.9               10.2
L1F................................  Medication Managment.................                6.8               14.3
L1G................................  Pain Management......................                6.8               10.2
L2A................................  Believe Is Capable of Incr Indep.....                5.7               10.4
L2B................................  Unable to Recognize New Limits.......                8.0               10.4
L2C................................  Fails to Initiate/Continue Adls......                9.2               10.4
L3A................................  Functional Status--Last 3 Days.......                9.2               12.2
L3B................................  Health Status--Last 3 Days...........                9.3               12.2
L4.................................  Estimated Length of Stay.............                2.3                6.0
M1A................................  Emotional Support....................                  0                8.3
M1B................................  Intermit Phys Support--less than                       0                8.3
                                      Daily.
M1C................................  Intermit Phys Support--Daily.........                  0                8.3
M1D................................  Full Time Physical Support...........                  0                8.3
M1E................................  All or Most of Nec Transportation....                  0                9.1
M2A................................  Family Overwhelmed by Pat. Illness...                4.2               16.7
M2B................................  Family Relationship Require Great                    4.2                8.3
                                      Deal of Staff Time.
M3AA...............................  Type of Residence--Pre...............                2.3               10.2
M3AB...............................  Type of Residence--Discharge.........                  0               10.0
M3AC...............................  Temp. Type of Residence..............                5.0               12.5
M3BA...............................  Lived With--Pre......................                2.5               10.6
M3BB...............................  Live With--Disch.....................                  0               10.4
M3BC...............................  Temp Live(d) With....................                5.3               13.2
N1C................................  Date Assessment Coord Signed.........                  0                  0
----------------------------------------------------------------------------------------------------------------

BILLING CODE 4120-03-P

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BILLING CODE 4120-03-P

[[Page 66404]]

Appendix BBB--Item-by-Item Guide to the Minimum Data Set for Post Acute 
Care (MDS-PAC)

1.1  Required Assessments and Associated Forms

    The following rules apply to HCFA's MDS-PAC to be used by 
rehabilitation hospitals and rehabilitation units in acute care 
hospitals.
    The content of the MDS-PAC patient assessment instrument is 
recorded on the following required forms:
    The Minimum Data Set-Post Acute (MDS-PAC) is designed to be used 
for admission assessments, reassessments, and discharge assessments. 
These forms contain Section AA (Identification Information) through 
M (Resources for Discharge). There are three separate forms which 
are entitled ``Basic Assessment Tracking Form'', ``Interrupted Stay 
Tracking Form'', and ``Full Assessment Form''. Whenever an item is 
on all three forms, there will be no distinguishing notation. 
However, if an item(s) is (are) to be asked only on a particular 
form, there will be a statement in the ``coding'' section.

1.2  Overview to the Item-by-Item Guide to MDS-PAC

    This Manual is to be used in conjunction with the MDS-PAC forms.
    It provides information to facilitate completion of an accurate 
and uniform patient assessment. Item-by-item instructions focus on:
    <bullet> The intent of items included on the MDS-PAC.
    <bullet> Supplemental definitions and instructions for 
completing MDS-PAC items.
    <bullet> Reminders of which MDS-PAC items require a different 
observation and information about the patient other than the 
standard 3-day observation period.
    <bullet> Sources of information to be consulted in completing 
specific MDS-PAC items.
    <bullet> Examples to illustrate MDS-PAC coding responses.

1.3  How Can This Manual Be Used?

    Use this manual alongside the MDS-PAC forms, keeping the forms 
in front of you at all times. The MDS-PAC form itself contains a 
wealth of information. Learn to rely on it as a resource for many of 
the definitions and procedural instructions necessary for proper 
assessment. The amplifying information in this manual should 
facilitate successful use of the MDS-PAC forms.

Coding Conventions

    <bullet> Dates--Where recording month, day, and year, enter two 
digits for the month and the day, but four digits for the year. For 
example, the third day of January in the year 1999 is recorded as:
[GRAPHIC] [TIFF OMITTED] TP03NO00.008

    <bullet> The standard no-information code is either a 
``circled'' dash or an ``NA''. This code indicates that all 
available sources of information have been exhausted; that is the 
information is not available, and despite exhaustive probing, it 
remains unavailable. The use of NA code is very limited. For 
example, ``NA'' cannot be used in Section E. If an activity has not 
occurred in the last 3 days, a code of ``8'' must be used.
    <bullet> NONE OF THE ABOVE is a response item to several items 
(for example., G3, Infections, box l). Check this item where none of 
the responses apply; it should not be used to signify lack of 
information about the item.
    <bullet> ``Skip'' Patterns--There are a few instances where 
scoring on one item will govern how scoring is completed for one or 
more additional items. The instructions direct the assessor to 
``skip'' over the next item (or several items) and go on to another 
(for example, B1, Comatose, directs the assessor to ``skip'' to 
Section E. if B1 is answered ``1''--Yes''. The intervening items 
from B2-D3 would not be scored. If B1 was recorded as ``0''--``No'', 
then the assessor would continue with item B2.).
    A useful technique for visually checking the proper use of the 
``skip'' pattern instructions is to circle the ``skip'' instructions 
before going to the next appropriate item.
    <bullet> The ``8'' code is for use in Section E., Functional 
Status. The use of this code is limited to situations where the ADL 
activity was not performed and therefore an objective assessment of 
the resident's performance is not possible. Its primary use is with 
bed-bound residents who neither transferred from bed nor moved 
between locations over the entire 3 day period of observation.
    The items from the MDS-PAC forms are presented in a sequential 
basis in this manual. Each item is accompanied by a statement of 
intent (rationale for assessment), definitions, assessment 
processes, and coding instructions. Many items are accompanied by 
patient examples to illustrate coding concepts.
    The chart that follows summarizes the recommended approach to 
assist you in becoming familiar with the MDS-PAC. The initial time 
investment in this multi-step review process will have a major 
payback on the quality of your patient assessments using the MDS-
PAC.
    Carefully review these item-by-item instructions. The time-frame 
of the assessment, the processes, the coding options and items have 
been developed to reflect the needs of post-acute patients.

Recommended Approach for Becoming Familiar With the MDS-PAC

    (A) First, review the MDS-PAC forms.
    <bullet> Notice how sections are organized and where information 
is to be recorded.
    <bullet> Work through one section at a time.
    <bullet> Examine item definitions and response categories.
    <bullet> Review procedural instructions, time frames, and 
general coding conventions. Note that the assessment reflects 
activities over the last 3 days unless otherwise indicated.
    <bullet> Are the definitions and instructions clear? Do they 
differ from current practice at your facility? What areas require 
further clarification?
    <bullet> Complete the MDS-PAC assessment for a patient at your 
facility. Draw only on your knowledge of this individual. Enter the 
appropriate codes on the MDS-PAC form. Where your review could 
benefit from additional information, make note of that fact. Where 
might you secure additional information?
    (B) Complete the initial pass through this manual.
    <bullet> Go on to this step only after first reviewing the MDS-
PAC form and trying to complete as many items as possible for a 
patient known to you.
    <bullet> As you read this manual, clarify questions that arose 
as you used the MDS-PAC for the first time to assess a patient. Note 
sections of this manual that help to clarify coding and procedural 
questions you may have had.
    <bullet> Once again, read the instructions that apply to a 
single section of the MDS-PAC. Make sure you understand this 
information before going on to another section. Review the test case 
you completed. Would you still code it the same way? It will take 
time to go through all this material. Do it slowly. Do not rush. 
Work through the Manual one section at a time.
    <bullet> Are you surprised by any MDS-PAC definitions, 
instructions, or case examples? For example, do you understand how 
to code ADLs? Or Mood?
    <bullet> Do any definitions or instructions differ from what you 
thought you learned when you reviewed the MDS-PAC form?
    <bullet> Would you now complete your initial case differently?
    <bullet> Are there definitions or instructions that differ from 
current practice patterns in your facility?
    <bullet> Make notations next to any section(s) of this Manual 
you have questions about.
    In a second pass through this manual, focus on issues that were 
more difficult or problematic in the first pass.
    <bullet> Further familiarize yourself with definitions and 
procedures that differ from current practice patterns or seem to 
raise questions.
    <bullet> Reread each of the case examples presented throughout 
this chapter.
    <bullet> (D) The third pass through this manual will provide you 
with another opportunity to review the material in this manual.
    <bullet> (E) Future use of information in this manual:

[[Page 66405]]

    <bullet> Keep this manual at hand during the assessment process.
    <bullet> Where necessary, review the intent of each item in 
question.
    <bullet> This manual is a source of information. Use it to 
increase the accuracy of your assessments.

1.4  What Is the Standard Format Used in This Manual?

    To facilitate completion of the MDS-PAC assessment and to ensure 
consistent interpretation of items, this manual presents the 
following types of information for many (but not all) items:
    Intent: Reason(s) for including the item (or set of items) in 
the MDS-PAC, including discussions of how the information will be 
used by clinical staff to identify patient problems and develop the 
plan of care.
    Definition: Explanation of key terms.
    Process: Sources of information and methods for determining the 
correct response for an item. Sources include:
    <bullet> Patient interview, observation, and examination.
    <bullet> Clinical records, facility records, transmittal records 
(at admission), physician orders, laboratory data, medication 
records, treatment sheets, flow sheets (for example, vital signs, 
weights, intake and output), care plans, and any similar documents 
in the facility record system.
    <bullet> Discussion with multidisciplinary facility staff--
licensed and nonlicensed staff caregivers.
    <bullet> Discussion with the patient's family, particularly 
during the admission assessment period, when available.
    <bullet> Attending physician.
    Coding: Proper method of recording each response, with 
explanations of individual response categories.

1.5  Item-by-Item Instructions for the MDS-PAC Forms

    The item-by-item instructions follow the sequence of items on 
the HCFA MDS-PAC. This will facilitate your use of this guide as a 
reference tool.

Basic Assessment Tracking Form

Section AA. Identification Information

    Intent: This section provides the key information to uniquely 
identify each patient as well as the reason for assessment.

1. Legal Name of Patient

    Definition: Legal name in the clinical record. This must be the 
same as the patient's Medicare record legal name.
    Coding: Use printed letters. Enter in the following order:
    a. First Name.
    b. Middle initial (leave blank if no middle name).
    c. Last/Family Name.
    d. Suffix--meaning Jr., Sr., III, etc.

2. Admission Date

    a. Date the stay began.
    Intent and Definition: For the current precipitating event/
problem, this is the date when the patient first became a 
rehabilitation patient in your facility.
    It is possible that a patient in a rehabilitative phase of care 
may be discharged from the rehabilitation facility and then admitted 
to an acute care hospital or unit. Admissions and ``bed-hold'' 
policies vary in different settings. A rehabilitation facility may 
choose to follow a facility specific policy and ``close'' the 
medical record of a patient that has an overnight stay in an acute 
care hospital, or to keep the chart ``open'' during this period of 
time. However, to be in compliance with Medicare regulations, if a 
patient has an overnight stay in an acute care hospital or unit, 
then for Medicare payment purposes the rehabilitation facility must 
discharge the patient.
    For the purpose of the MDS-PAC, enter the date the person was 
first admitted to receive rehabilitative care for the current 
precipitating event/problem. This admission date should correspond 
with the admission date used by the billing office to initially 
begin this stay.
    Process: Review the clinical record. If it is unclear on what 
date the stay for the current precipitating event/problem began, 
clarify with the admissions/business or medical record departments.
    Coding: For a one digit month or day, place a zero in the box. 
For example: July 1, 2000, should be entered as follows:
[GRAPHIC] [TIFF OMITTED] TP03NO00.009

    b. Date Medicare-covered Part A stay began.
    Intent and Definition: For the current precipitating event/
problem, this is the date of the current stay when the patient first 
started receiving Medicare-covered Part-A services in your facility. 
Complete this date only if this date is different than the date in 
item AA2A ``Date the stay began.''
    It is possible that a patient in a rehabilitative phase of care 
may be discharged from the rehabilitation facility and then admitted 
to an acute care hospital or unit. Admissions and ``bed-hold'' 
policies vary in different settings. A rehabilitation facility may 
choose to follow a facility specific policy and ``close'' the 
medical record of a patient that has an overnight stay in an acute 
care hospital, or to keep the chart ``open'' during this period of 
time. However, to be in compliance with Medicare regulations, if a 
patient has an overnight stay in an acute care hospital or unit, 
then for Medicare payment purposes the rehabilitation facility must 
discharge the patient.
    For the purpose of the MDS-PAC, enter the date the patient first 
started to be furnished Medicare-covered Part A services in your 
rehabilitation facility for the current precipitating event/problem. 
This date should correspond with the date used by the billing office 
to initially start billing Medicare for this stay.
    Process: Review the clinical record. If it is unclear what date 
the person first started being furnished Medicare-covered Part A 
services for the current stay and for the current precipitating 
event/problem, clarify with the admissions/business or medical 
record departments.
    Coding: For a one digit month or day, place a zero in the first 
box. For example: July 1, 2000, should be entered as follows:
[GRAPHIC] [TIFF OMITTED] TP03NO00.010

3. Reason for Assessment

    Intent and Definition: To document the key reason for completing 
the MDS-PAC assessment.
    Process: Calculate the length of time the patient has been 
receiving Medicare-covered Part A services during the current stay. 
Then determine the type of assessment for which the data must be 
collected and recorded on the MDS-PAC.
    Coding: Code for appropriate assessment.
    1. Admission assessment (covers first 3 days)--Completed on day 
4.
    2. Reassessment--Completed on day 11.
    3. Reassessment--Completed on day 31.
    4. Reassessment--Completed on day 61.
    5. Discharge assessment--After the assessment reference date for 
the discharge MDS-PAC assessment is determined, the completion date 
for the discharge MDS-PAC assessment must be set. The completion 
date

[[Page 66406]]

for the discharge MDS-PAC assessment must be the fifth calendar day 
following the discharge MDS-PAC assessment reference date. To count 
the 5 calendar days following the discharge MDS-PAC assessment 
reference date count the discharge MDS-PAC assessment reference date 
as day 1 of the 5 calendar days. For example, if the MDS-PAC 
assessment reference date is May 1, 2000, then the MDS-PAC 
completion date would be May 5, 2000.
    The following tables illustrate the relationship between the 
type of MDS-PAC assessment (the Day 4, Day 11, Day 30, Day 60, and 
discharge assessment), and the observation time period, the 
assessment reference date, and the MDS-PAC completion date. In 
addition, for each type of MDS-PAC assessment the tables depict the 
associated encoding date and by when the data for that type of 
assessment must be transmitted.

                                               Table 1.--MDS-PAC Assessment Schedule and Associated Dates
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Hospitalization
                                    time period and   MDS-PAC assessment    MDS-PAC must be     Hospitalization     MDS-PAC must be     MDS-PAC must be
    MDS-PAC  assessment type       observation time     reference date       completed by:    episode covered by      encoded by:       transmitted by:
                                        period                                                 this  assessment:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Day 4...........................  First 3 Days......  Day 3.............  Day 4.............  Entire              Day 10............  Day 16.
                                                                                               Hospitalization
                                                                                               Time Period.
Day 11..........................  Days 8 to 10......  Day 10............  Day 11............  ..................  Day 17............  Day 23.
Day 30..........................  Days 28 to 30.....  Day 30............  Day 31............  ..................  Day 37............  Day 43.
Day 60..........................  Days 58 to 60.....  Day 60............  Day 61............  ..................  Day 67............  Day 73.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Table 1 above represents the generic assessment schedule and 
other associated MDS-PAC dates. The term ``day'' refers to the 
number of calendar days during the patient's current hospitalization 
that the patient has been hospitalized as a Medicare Part-A patient.
    Table 2 below is an example of how Table 1 would be applied 
using actual calendar dates. In Table 2 it is assumed that the 
patient was admitted on April 3, 2001.

                 Table 2.--Example Applying the MDS-PAC Assessment Schedule and Associated Dates
----------------------------------------------------------------------------------------------------------------
                                                                MDS-PAC      MDS-PAC                   MDS-PAC
                                       Hospitalization time    assessment    must be      MDS-PAC      must be
       MDS-PAC assessment type        period and observation   reference    completed     must be    transmitted
                                            time period           date         by:      encoded by:      by:
----------------------------------------------------------------------------------------------------------------
Day 4...............................  First 3 Days..........       4/5/01       4/6/01      4/12/01      4/18/01
Day 11..............................  Days 8 to 10..........      4/12/01      4/13/01      4/19/01      4/25/01
Day 30..............................  Days 28 to 30.........       5/2/01       5/3/01       5/9/01      5/15/01
Day 60..............................  Days 58 to 60.........       6/1/01       6/2/01       6/8/01      6/14/01
----------------------------------------------------------------------------------------------------------------


                        Table 3.--Example Applying the MDS-PAC Discharge Assessment Dates
----------------------------------------------------------------------------------------------------------------
                                                                MDS-PAC      MDS-PAC                   MDS-PAC
                                                  Discharge    assessment    must Be      MDS-PAC      must be
            MDS-PAC assessment type                 date*      reference    completed     must be    transmitted
                                                                  date         on:      encoded by:      by:
----------------------------------------------------------------------------------------------------------------
Discharge Assessment...........................       5/1/00       5/1/00       5/5/00      5/11/00     5/17/00
----------------------------------------------------------------------------------------------------------------
* This is either when the first of the following occurs: (1) The day the patient is discharged from the IRF, or
  (2) the day the patient ceases receiving Medicare-covered Part-A inpatient rehabilitation services.

4. Assessment Reference Date

    Intent: To establish a common reference point for all staff 
participating in the patient's assessment. Although staff members 
may work on completing a patient's MDS-PAC on different days (for 
example, begin entering demographics on day 1 of admission, and 
complete functional assessment on day 3), establishment of the 
assessment reference date ensures the commonality of the assessment 
period. It starts the ``clock'' so that all assessment items refer 
to the patient's status, treatment regimen, and resource utilization 
during the same period of time. Many items require the ``counting'' 
of the number of treatments, visits, or procedures, making a common 
temporal reference point crucial for accuracy.
    Definition: This is the last day in the MDS-PAC assessment 
process, that is, the last day of the 3-day MDS-PAC observation 
period. It is the designated endpoint of the observation period. In 
order to gain accurate information for the interdisciplinary team, 
it is essential for everyone to focus on the same time period (that 
is, for most items, this day and the two that preceded it.) It is 
from this date that all time references are measured. For a 
discharge assessment, including an unexpected discharge, see the 
explanation under ``Process'' below.
    For instance, if an item indicates ``in the past 3 days'' this 3 
day period is calculated from the last day of the MDS-PAC 
observation period (that is, the third day and the two days that 
preceded it.)
    Process: Refer to item AA2--``Admission Date''. The date entered 
in AA2b or if no date is entered in AA2b then the date entered in 
AA2a must be used to calculate the assessment reference date that 
must be used for the Day 4, Day 11, Day 30, or Day 60 assessments. 
The assessment reference date for the discharge assessment is the 
day when one of either of these two events occurs first: (1) The day 
the patient is discharged from the IRF, or (2) the day the patient 
ceases receiving Medicare-covered Part-A inpatient rehabilitation 
services. The MDS-PAC discharge assessment process is started only 
at the first point in time either of these events occur. There may 
be cases when a patient ceases receiving inpatient rehabilitation 
Medicare-covered services, but is not discharged from the IRF.
    Coding: Beginning with the left-most box enter the month, day, 
and year of the assessment reference date. Do not leave any boxes 
blank. If the month or day contains only a single digit, place a 
``0'' in the first box. For example: July 3, 2000, should be entered 
as follows:

[[Page 66407]]

[GRAPHIC] [TIFF OMITTED] TP03NO00.011

5. Discharge Status

    a. Last day of stay.
    Intent and Definition: To establish the date when either of 
these two events occurs first: (1) The individual is discharged as 
an inpatient from the IRF and physically leaves the facility, or (2) 
the patient ceases receiving Medicare-covered Part-A inpatient 
rehabilitation services whether or not the patient physically leaves 
the facility.
    Process: Consult the physician's orders. In cases when the 
patient is discharged ``Against Medical Advice'' (AMA) refer to the 
documentation in the clinical record progress notes and the 
physician's orders.
    Coding: Beginning with the left-most box enter the month, day, 
and year of discharge. Do not leave any boxes blank. If the month or 
day contains only a single digit, place a ``0'' in the first box. 
For example July 26, 2000, should be entered as:
[GRAPHIC] [TIFF OMITTED] TP03NO00.012

    b. If discharged, status at discharge.
    Intent: The intent of this item is to determine the patient's 
status upon discharge.
    Definition: This is the patient's clinical and rehabilitation 
program status at discharge.
    Process: Consult with members of the interdisciplinary team. 
Examine the documentation in the patient's clinical record. Talk to 
the patient and family if necessary.

Coding

    0. Rehabilitation program complete for this stay and return not 
anticipated.
    1. Patient left, against medical advice, prior to completion of 
plan of care.
    2. Acute problem, discharge to acute hospital.
    3. Patient died.

6. Social Security and Medicare Numbers

    Intent: To record patient identifier numbers.
    Process: Review the patient's medical record face sheet (usually 
at the front of the chart). To ensure accuracy, review a copy of the 
patient's Social Security (SS) card and Medicare card, if possible. 
In rare cases, the patient will have neither a Social Security 
number nor a Medicare number. When this occurs, another type of 
identification number may be used (for example, a railroad insurance 
number).
    Coding: Begin printing one number per box starting with the 
left-most box. Recheck each number to be sure you have entered the 
digits in the correct order.
    a. Enter the Social Security number as specified in the medical 
record or on the Social Security card.
    b. Enter the Medicare number as indicated in the medical record. 
However, if the patient does not have a Medicare number but instead 
has a comparable railroad insurance number, then enter that number 
in these boxes and indicate that this is not a Medicare number by 
placing the letter ``C'' in first box of the ``b'' boxes.

7. Medical Record Number

    Definition: A patient's identification number designated by the 
facility.
    Process: Review the patient's medical record ``face sheet'' 
(usually at the front of the chart) for the medical record number. 
If the number is missing, obtain the number from the facility's 
Medical Records Department.
    Coding: Begin printing one number per box starting with the 
left-most box. Recheck the number to be sure you have entered the 
digits in the correct order.

8. Facility Provider Number

    Intent: To record the facility identifier numbers.
    Definition: The identification numbers assigned to health care 
facilities by the Medicare and Medicaid programs. Some facilities 
will have only a Federal (Medicare) identification number; others 
will have Federal (Medicare) and State (Medicaid) identification 
numbers. ``Medicaid only'' facilities have a Federal as well as a 
State number. The Medicaid Federal number has a ``letter'' in the 
third box.
    Process: Obtain the facility's Medicare and Medicaid numbers 
from the facility's business office. Once you have these numbers, 
they apply to all patients of that facility.
    Coding: Begin printing one number per box starting with the 
left-most box. Recheck each number to be sure you have entered the 
digits in the correct order. Remember, there must be at least one 
provider number indicated, and there may be two, one for the state, 
one for the federal.

9. Medicaid Number

    Intent: An identifying number for tracking purposes.
    Process: Review the patient's medical record face sheet (usually 
at the front of the chart). Review a copy of the patient's Medicaid 
card to ensure accuracy, if possible.
    Coding: Begin printing one number per box starting with the 
left-most box. Recheck the number to be sure you have entered the 
digits in the correct order.
    <bullet> If the Medicaid application is pending, place a ``+'' 
in the first box.
    <bullet> If the patient does not receive Medicaid benefits, 
place an ``N'' in the first box.

10. Gender

Coding

    1. Male.
    2. Female.

11. Birthdate

    Coding: Beginning with the left-most box enter the month, day, 
and year of birth. If you do not know the patient's full birthdate 
you may enter a partial birthdate, but the partial birthdate must at 
least include the patient's year of birth. If the month or day 
contains only a single digit, place a ``0'' in the first box. For 
example: January 2, 1918 should be entered as:
[GRAPHIC] [TIFF OMITTED] TP03NO00.013


    Note: It's not unheard of to mistakenly enter today's date in 
this location. Make sure you have entered the date of birth.

12. Ethnicity/Race

    Intent: The documentation of ethnicity and race per nationally 
established standards.
    Process: Ask the patient and/or family member what best 
describes their race and ethnic background.
    Coding: Check all that apply.

[[Page 66408]]

Ethnicity

    a. Hispanic or Latino.

Race

    b. American Indian/Alaskan Native.
    c. Asian.
    d. Black or African American.
    e. Native Hawaiian or other Pacific Islander.
    f. White.

13. Interrupted Stay

    Note: This item only appears on the interrupted stay tracking 
form.

    Intent and Definition: To track patients that have an 
interruption in their stay. An interrupted stay is one in which a 
patient is discharged from a rehabilitation facility and returns to 
the same rehabilitation facility in 3 calendar days or less. For 
purposes of the MDS-PAC assessment process, if a patient has an 
interrupted stay, then--(1) No new Day 4 MDS-PAC assessment would be 
performed; and (2) The required scheduled MDS-PAC update assessments 
must still be performed. Note: A patient that returns to the same 
rehabilitation facility more than 3 calendar days after being 
discharged is considered a ``new'' patient in terms of the MDS-PAC 
assessment schedule process.
    In counting the 3 calendar day time period to determine the 
length of the interrupted stay, the first day of the start of the 
interrupted stay is counted as ``day 1,'' with midnight of that day 
serving as the end of that calendar day. The next 2 calendar days 
that immediately follow would be days two and three. If the patient 
returns to the rehabilitation facility by midnight of the third 
calendar day, then it would be determined that the patient had an 
interrupted stay of 3 calendar days or less.
    a. Date/time departed from the rehabilitation unit/hospital.
    Process: Consult the clinical record, talk to physician and 
nursing staff.
    Coding: If the patient has not had an interrupted stay, the 
boxes will remain blank. Otherwise, use all boxes. For a one-digit 
month or day, place a zero in the first box. July 31, 2000, should 
be entered as follows:
[GRAPHIC] [TIFF OMITTED] TP03NO00.014

    A time of 9:15 am should be entered as follows:
    [GRAPHIC] [TIFF OMITTED] TP03NO00.015
    
    b. Date/time returned to the rehabilitation unit/hospital.
    Process: Review the clinical record. If dates are unclear or 
unavailable, ask the admissions office or medical record department.
    Coding: If patient has not had an interrupted stay, leave the 
boxes blank.
    Otherwise, use all the boxes. For a one-digit month or day, 
place a zero in the first box.
    August 2, 2000, should be entered as follows:
    [GRAPHIC] [TIFF OMITTED] TP03NO00.016
    
    A time of 2:30 pm should be entered as follows:
    [GRAPHIC] [TIFF OMITTED] TP03NO00.017
    
14. Clinician Completing Assessment

    Note: This item only appears on the interrupted stay tracking 
form. This is NOT the same as Section AB ``Assessment Attestation''.

    Intent: To ensure that the data recorded on the Interrupted Stay 
Tracking Form is accurate and submitted to the HCFA MDS-PAC system 
within 7 calendar days of the date recorded in item AA13b. The date 
recorded in item AA13b is ``day 1'' when starting to count the 7 
calendar days in order to determine the 7 calendar day time period.
    Definition: The clinician who signs item AA14a must be a 
physician, registered nurse, physical therapist, or occupational 
therapist.
    Process: As necessary examine the clinical record, and consult 
with other members of the interdisciplinary care team to obtain the 
data needed prior to completing this item.
    Coding: After signing your name print your name at AA14b to 
AA14e. Indicate your credentials in the box at AA14f.

Section AB. Assessment Attestation

1. Person Completing the Assessment

    Intent and Definition: A licensed clinician who is a physician, 
registered nurse, physical therapist, or occupational therapist must 
sign and certify that--(1) The assessment is complete; and (2) The 
data recorded for the assessment items are to the best of his or her 
belief accurately recorded and accurately depict the patient's 
clinical status.
    Process: Examine the MDS-PAC to determine if according to the 
instructions that the required data for each item has been 
accurately recorded.
    Coding: The physician, registered nurse, physical therapist, or 
occupational therapist signs his/her name on line AB1a. The date 
that he or she signed the assessment as complete and accurate is 
entered in the boxes of AB1g and his/her name must be printed on the 
line that starts at AB1b. In the box for item AB1f enter the code 
number that identifies the type of licensed clinician signing item 
AB1a.

[[Page 66409]]

2. Signatures of Staff Completing Part of the Assessment

    Intent: Each individual who completes a portion of the 
assessment must sign and certify to the accuracy of the items he or 
she has completed.
    Coding: On lines AB2a-AB2f each person who has completed any 
MDS-PAC item signs their name, writes their credentials, indicates 
what section(s) or item(s) he or she completed, and writes the date 
of his or her signature.

Section A. Demographic/Admission Information History

    Intent: This section provides the key information to uniquely 
identify each patient as well as the reason for assessment.

1. Legal Name of Patient

    Definition: Legal name in the clinical record. This must be the 
same as the patient's Medicare record legal name.
    Coding: Use printed letters. Enter in the following order:
    a. First Name.
    b. Middle initial (leave blank if no middle name).
    c. Last/Family Name.
    d. Suffix--meaning Jr., Sr., III, etc.

2. Admission Date

    a. Date the stay began.
    Intent and Definition: For the current precipitating event/
problem, this is the date when the patient first became a 
rehabilitation patient in your facility.
    It is possible that a patient in a rehabilitative phase of care 
may be discharged from the rehabilitation facility and then admitted 
to an acute care hospital or unit. Admissions and ``bed-hold'' 
policies vary in different settings. A rehabilitation facility may 
choose to follow a facility specific policy and ``close'' the 
medical record of a patient that has an overnight stay in an acute 
care hospital, or to keep the chart ``open'' during this period of 
time. However, to be in compliance with Medicare regulations, if a 
patient has an overnight stay in an acute care hospital or unit, 
then for Medicare payment purposes the rehabilitation facility must 
discharge the patient.
    For the purpose of the MDS-PAC, enter the date the person was 
first admitted to receive rehabilitative care for the current 
precipitating event/problem. This admission date should correspond 
with the admission date used by the billing office to initially 
begin this stay.
    Process: Review the clinical record. If it is unclear what date 
the stay for the current precipitating event/problem began, clarify 
with the admissions/ business or medical record departments.
    Coding: For a one digit month or day, place a zero in the box. 
For example: July 1, 2000, should be entered as follows:
[GRAPHIC] [TIFF OMITTED] TP03NO00.018

    b. Date Medicare-covered Part-A stay began.
    Intent and Definition: For the current precipitating event/
problem, this is the date of the current stay when the patient first 
started receiving Medicare-covered Part-A services in your facility. 
Complete this date only if this date is different than the date in 
item A2a ``Date the stay began.''
    It is possible that a patient in a rehabilitative phase of care 
may be discharged from the rehabilitation facility and then admitted 
to an acute care hospital or unit. Admissions and ``bed-hold'' 
policies vary in different settings. A rehabilitation facility may 
choose to follow a facility specific policy and ``close'' the 
medical record of a patient that has an overnight stay in an acute 
care hospital, or to keep the chart ``open'' during this period of 
time. However, to be in compliance with Medicare regulations, if a 
patient has an overnight stay in an acute care hospital or unit, 
then for Medicare payment purposes the rehabilitation facility must 
discharge the patient.
    For the purpose of the MDS-PAC, enter the date the patient first 
started to be furnished Medicare-covered Part-A services in your 
rehabilitation facility for the current precipitating event/problem. 
This date should correspond with the date used by the billing office 
to initially start billing Medicare for this stay.
    Process: Review the clinical record. If it is unclear what date 
the person first started being furnished Medicare-covered Part A 
services for the current stay and for the current precipitating 
event/problem, clarify with the admissions/ business or medical 
record departments.
    Coding: For a one digit month or day, place a zero in the first 
box. For example: July 1, 2000, should be entered as follows:
[GRAPHIC] [TIFF OMITTED] TP03NO00.019

3. Reason for Assessment

    Intent and Definition: To document the key reason for completing 
the MDS-PAC assessment.
    Process: Calculate the length of time the patient has been 
receiving Medicare-covered Part-A services during the current stay. 
Then determine the type of assessment for which the data must be 
collected and recorded on the MDS-PAC.
    Coding: Code for appropriate assessment.
    1. Admission assessment (covers first 3 days)--Completed on day 
4.
    2. Reassessment--Completed on day 11.
    3. Reassessment--Completed on day 31.
    4. Reassessment--Completed on day 61.
    5. Discharge assessment--After the assessment reference date for 
the discharge MDS-PAC assessment is determined, the completion date 
for the discharge MDS-PAC assessment must be set. The completion 
date for the discharge MDS-PAC assessment must be the fifth calendar 
day following the discharge MDS-PAC assessment reference date. To 
count the 5 calendar days following the discharge MDS-PAC assessment 
reference date count the discharge MDS-PAC assessment reference date 
as day 1 of the 5 calendar days. For example, if the MDS-PAC 
assessment reference date is May 1, 2000, then the MDS-PAC 
completion date would be May 5, 2000.
    The following tables illustrate the relationship between the 
type of MDS-PAC assessment (the Day 4, Day 11, Day 30, Day 60, and 
discharge assessment), and the observation time period, the 
assessment reference date, and the MDS-PAC completion date. In 
addition, for each type of MDS-PAC assessment the tables depict the 
associated encoding date and by when the data for that type of 
assessment must be transmitted.

[[Page 66410]]



                                               Table 1.--MDS-PAC Assessment Schedule and Associated Dates
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Hospitalization
                                    time period and   MDS-PAC assessment    MDS-PAC must be     Hospitalization     MDS-PAC must be     MDS-PAC must be
    MDS-PAC  assessment type       observation time      reference date      completed on:    episode covered by      encoded by:       transmitted by:
                                        period                                                 this  assessment:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Day 4...........................  First 3 Days......  Day 3.............  Day 4.............  Entire              Day 10............  Day 16.
                                                                                               Hospitalization
                                                                                               Time Period.
Day 11..........................   Days 8 to 10.....  Day 10............  Day 11............  ..................  Day 17............  Day 23.
Day 30..........................  Days 28 to 30.....  Day 30............  Day 31............  ..................  Day 37............  Day 43.
Day 60..........................  Days 58 to 60.....  Day 60............  Day 61............  ..................  Day 67............  Day 73.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Table 1 above represents the generic assessment schedule and 
other associated MDS--PAC dates. The term ``day'' refers to the 
number of calendar days during the patient's current hospitalization 
that the patient has been hospitalized as a Medicare Part A patient.
    Table 2 below is an example of how Table 1 would be applied 
using actual calendar dates. In Table 2 it is assumed that the 
patient was admitted on April 3, 2001.

                 Table 2.--Example Applying the MDS-PAC Assessment Schedule and Associated Dates
----------------------------------------------------------------------------------------------------------------
                                                                MDS-PAC      MDS-PAC                   MDS-PAC
                                       Hospitalization time    assessment    must be      MDS-PAC      must be
       MDS-PAC assessment type        period and observation   reference    completed     must be    transmitted
                                            time period           date         by:      encoded by:      by:
----------------------------------------------------------------------------------------------------------------
Day 4...............................  First 3 Days..........     04/05/01     04/06/01     04/12/01     04/18/01
Day 11..............................  Days 8 to 10..........     04/12/01     04/13/01     04/19/01     04/25/01
Day 30..............................  Days 28 to 30.........     05/02/01     05/03/01     05/09/01     05/15/01
Day 60..............................  Days 58 to 60.........     06/01/01     06/02/01     06/08/01     06/14/01
----------------------------------------------------------------------------------------------------------------


                        Table 3.--Example Applying the MDS-PAC Discharge Assessment Dates
----------------------------------------------------------------------------------------------------------------
                                                                MDS-PAC      MDS-PAC                   MDS-PAC
                                                  Discharge    assessment    must be      MDS-PAC      must be
            MDS-PAC assessment type                  date      reference    completed     must be    transmitted
                                                                  date         by:      encoded by:      by:
----------------------------------------------------------------------------------------------------------------
Discharge Assessment...........................      5/01/00      5/01/00      5/05/00      5/11/00     5/17/00
----------------------------------------------------------------------------------------------------------------
* This is either when the first of the following occurs: (1) The day the patient is discharged from the IRF, or
  (2) the day the patient ceases receiving Medicare-covered Part-A inpatient rehabilitation services.

4. Admission Status

    Intent: The purpose of this item is to determine if the patient 
has been previously admitted for rehabilitation of this problem.
    Process: Talk to the patient and family if necessary. Review the 
medical record to determine what type of facility this patient has 
been admitted from.
    Coding: Place the number of the most appropriate code in the 
box.
    0. First admission to inpatient rehabilitation services.
    1. Readmission to rehabilitation but not directly from other 
rehabilitation.
    2. Readmission directly from other rehabilitation.

5. Goals for Stay

    Intent: To document the expected outcomes of the patient's post 
acute care stay. It is possible and common to have more than one 
goal for the stay.
    Definition: a. Medical stabilization--Patient's condition is 
unstable and requires frequent medical and nursing monitoring (for 
example, vital signs; drug levels; laboratory evaluation) and 
interventions (for example, titrating drug dosages; transfusions) in 
an effort to achieve a steady state/program of care.
    b. Rehabilitation/Functional Improvement--Care is directed 
towards the attainment of baseline (or prior to the precipitating 
event) level of function in a selected area or areas, for example, 
activities of daily living, instrumental activities of daily living, 
cognitive status, communication status, or psychosocial functioning.
    c. Recuperation--Care directed towards recovery from an illness 
by regaining health or strength. Often includes patient or family 
caregiver teaching to prepare for different level of care (for 
example, medication management; energy conservation; ostomy care).
    d. Monitoring to avoid clinical complication--For a medically 
stable patient, care directed at systematic monitoring of the 
patient's condition through observation (that is, clinical signs and 
symptoms) and measurement of physical parameters (that is, lab 
values; respiratory function tests) with the intent of preventing 
complications associated with the patient's clinical condition.
    e. Palliative care--A primary goal of care is to provide comfort 
and quality of life through the prevention and control of symptoms 
near the end of life. Palliative care often includes active 
treatment of associated conditions in an effort to promote a sense 
of well-being at the end of life (for example, antidepressant drugs/
psychotherapy for depression; physical therapy as an adjunct to pain 
management and prevention of pressure ulcers; nutritional 
counseling).
    Coding: Code each possible goal with one of the following 
responses, as appropriate:
    0. No.
    1. Yes.

6. Admitted From (At admission date A2)

    Intent: To facilitate care planning by documenting the place 
from which the patient was admitted to the facility on the date 
recorded in item A2.
    Definition: 1. Private home--Any house or condominium in the 
community whether owned by the patient or another person. Also 
included in this category are retirement communities, and 
independent housing for the elderly or disabled.
    2. Private apartment--Any apartment in the community whether 
owned by the patient or another person.
    3. Rented room--A rented room in a private house, boarding 
house, or hotel.
    4. Board and care/group home--A non-institutional community 
residential setting that integrates a shared living environment with 
varying degrees of supportive services of the following types: 
supervision, home

[[Page 66411]]

health, homemaker, personal care, meal service, transportation, etc.
    5. Assisted living--A housing option for older adults who need 
some assistance with activities of daily living (ADLs) but do not 
require 24-hour nursing care.
    6. Homeless shelter--A community-based shelter for individuals 
who do not have a place to reside.
    7. Transitional living--A community based supervised setting 
where individuals are taught skills so that they can live 
independently in the community.
    8. Long term care facility (nursing home)--A licensed health 
facility that provides 24-hour skilled or intermediate nursing care.
    9. Post acute care SNF--Facility (or designated beds within a 
SNF) dedicated to the care of patients with intense rehabilitative 
or clinically complex needs. Most patients are admitted to the post 
acute care facility from an acute hospital, or rehabilitation 
hospital. These patients will have a short, intense stay in the post 
acute care SNF.
    10. Acute care hospital (not rehabilitation unit)--A facility 
licensed as an acute care hospital which focuses primarily on the 
diagnosis and treatment of acute medical (and in some cases 
psychiatric) disorders.
    11. Rehabilitation unit (in acute care hospital)--A unit within 
an acute care hospital that focuses on the acute rehabilitation of 
individuals who have been functionally affected by disease or 
injury.
    12. Rehabilitation hospital--A facility licensed as a 
rehabilitation hospital that focuses on the physical rehabilitation 
of individuals who have been functionally affected by disease or 
injury.
    13. Long term care hospital--A facility licensed as a long-term 
care hospital. Included are hospitals that focus on the management 
of clinically complex patients, chronic medical needs, chronic 
disease, etc. (includes chronic disease hospitals, and long term 
acute care hospitals).
    14. Psychiatric hospital/unit--A facility licensed as a 
psychiatric hospital or unit which focuses on the diagnosis and 
treatment of psychiatric disorders.
    15. MR/DD facility (exclude group home)--A facility which 
specializes in the management and rehabilitation of individuals with 
mental retardation or developmental disorders. Examples include 
mental retardation or developmental disabilities facility (including 
MR/DD institutions) and intermediate care facilities for the 
mentally retarded (ICF/MRs).
    16. Other hospital--Any other hospital not categorized above 
(may include in-patient hospice programs).
    17. Outpatient surgery center--A stand-alone or hospital-
affiliated outpatient surgery center designated to provide 
perioperative care (no inpatient beds). Includes same-day surgery 
units.
    18. Other--Any other setting not categorized above.
    Process: Review the medical record. If unavailable in medical 
record, ask patient or family.
    Coding: Choose only one answer and enter the appropriate code in 
the box provided.

7. Precipitating Event Prior to Admission

    a. Time of onset of the precipitating event or problem that 
directly preceded admission into this facility (time from admission 
date--item A2).
    Intent: This item seeks to provide the care team with some 
perspective on the event that caused the admission.
    Process: Review medical record for history of the event or 
problem using admission date to the facility (item A2) as a 
reference point. If necessary, clarify with patient or family.
    Coding: Enter the number that best represents the time period in 
which the precipitating event occurred. This information is obtained 
only on admission, but must be coded and submitted to the HCFA MDS-
PAC system for each subsequent (for example, the Day 11) assessment.
    0. Within last week.
    1. Within last 8-14 days.
    2. 15-30 days ago.
    3. 31-60 days ago.
    4. More than 60 days ago.
    b. Date of admission of most recent acute care hospitalization 
(within last 90 days).
    Intent: This item (in addition to the next) gives perspective on 
the amount of time the patient spent in the hospital. If there was 
NO hospitalization in the last 90 days, leave this section blank and 
move on to item A8.
    Process: Review the medical record. Hospital discharge summaries 
are the most efficient means to gather this information, if 
available. If unavailable, consult with patient or family.
    Code: Enter the date of admission to the hospital in space 
provided. For a one-digit month or day, place a zero in the first 
box. For example: February 3, 1999, should be entered as:
[GRAPHIC] [TIFF OMITTED] TP03NO00.020

    c. Reason for most recent acute care hospitalization (within 
last 90 days).
    Definition: Hospitalization--The patient was formally admitted 
to an acute care hospital by a physician as an inpatient with an 
overnight stay. This category does not include day surgery or 
outpatient services.
    New problem--A condition that is distinctly different or 
unrelated to any previously identified disease or condition of the 
patient.
    Exacerbation--Recurrence or aggravation of symptoms or increase 
in the severity of a previously identified disease or condition.
    Process: Review medical record. If necessary, clarify with 
patient or family.
    Coding: Using the following codes, enter the number that best 
represents the reason the patient was most recently hospitalized.
    0. Not Hospitalized at any time in last 90 days.
    1. New problem.
    2. Exacerbation.
    3. Both (New Problem and Exacerbation).

8. Primary and Secondary Payment Sources for Stay (Per diem)

    Intent: To document the payment source(s) that covers the daily 
per diem services for this post acute stay.
    Definition: Per diem--Room, board, nursing services and other 
services included in the routine daily charge.
    Process: Consult with the business or billing office to review 
current payment sources. Do not rely exclusively on information 
recorded in the patient's medical record (usually the face sheet at 
the front of the chart) as the patient's clinical condition may 
trigger different sources of payment during the stay. It's important 
to capture all methods of payment; usually business offices track 
such information.
    Coding: Using the following list, enter the code which best 
indicates the primary and secondary payment sources in the 
appropriate boxes. In Column A, code for the primary payment source 
for the stay. In Column B, code for the secondary payment source for 
the stay.

    Note: The code for Column B can't be the same as the code in 
Column A.

    0. None--no insurance coverage, no private pay.
    1. Medicare.
    2. Medicaid.
    3. CHAMPUS.
    4. Department of Veterans Affairs.
    5. Managed Care/HMO--Medicare.
    6. Managed Care/HMO--non-Medicare.
    7. Private insurance.
    8. Private pay--self or family pays, includes private pay by 
patient or family.
    9. Worker's Compensation.
    10. Other payment--examples include Commission for the Blind, 
Alzheimer's Association.

9. Marital Status

    Process: Ask patient or family member.
    Coding: Choose the code that best describes the patient's 
current marital status. If the patient is in a ``Common Law'' 
marriage, enter code ``2'', Married. Common Law marriage--a couple 
who have been co-habitating and who consider themselves as being 
married, even though not legally married.
    1. Never married.
    2. Married.

[[Page 66412]]

    3. Widowed.
    4. Separated.
    5. Divorced.

10. Education (Highest Level Completed)

    Intent: To record the highest level of education the patient 
attained. Knowing this information is useful for assessment (for 
example, interpreting cognitive patterns or language skills), care 
planning (for example, deciding how to focus a planned recovery 
program), and planning for patient education in self-care skills.
    Definition: The highest level of education attained.
    1. No schooling: Patient/family state that patient received no 
formal schooling at all.
    2. 8th grade or less: Patient attended school through 8th grade 
level or less.
    3. 9th-11th grade: Patient completed school at 9th, 10th, or 
11th grade.
    4. High School: Patient obtained high school diploma--completed 
school through the twelfth grade or GED.
    5. Technical or Trade School: Include schooling in which the 
patient received a non-degree certificate in any technical 
occupation or trade (for example, carpentry, plumbing, acupuncture, 
baking, secretarial, practical/vocational nursing, computer 
programming, etc.).
    6. Some College: Includes completion of some college courses at 
a junior (community) college, associate's degree, or incomplete 
bachelor's degree.
    7. Bachelor's degree: Includes any undergraduate bachelor's 
level college degree.
    8. Graduate Degree: Master's degree or higher (M.S., Ph.D., 
M.D., J.D., etc.).
    Note: If assessor has been unsuccessful in determining 
educational information, the assessor may use a ``dash'' symbol to 
indicate information not available.
    Process: Ask the patient or family. If a part of your facility's 
standard intake record, review the patient's record.
    Coding: Code for the best response. For MR/DD patients who have 
received special education services, code ``2'' (8th grade/less).

11. Language

    Definition: (a.) Primary language--The language the patient 
primarily speaks or understands. If patient is unable to speak at 
the present time, code for language familiar to patient prior to the 
precipitating event.
    Process: Determine patient's primary language by asking the 
patient or family. If a part of your facility's standard intake 
record, review the patient's record.
    Coding: Given the choices provided, indicate what the patient 
identifies as their primary language.
    0. English.
    1. Spanish.
    2. French.
    3. Other, specify in A11b.
    (b.) If the patient's primary language is other than English, 
Spanish, or French, enter 3 for Other in item A11a, and print the 
primary language in item A11b beginning in the left-most box.

12. Dominant Hand

    Intent: To document which hand the patient considers to be the 
``dominant'' hand. Knowing the patient's ``handedness'' can 
facilitate rehabilitation and assist in the detection of 
neurological and functional diagnoses.
    Definition: The dominant hand describes what is usually referred 
to as ``handedness'' and reflects the area of the brain that is most 
dominant.
    Process: Ask patient, family, or therapy staff.
    Coding: Indicate which hand the individual has considered to be 
dominant since childhood. If an individual feels that both hands are 
equal (ambidextrous), enter code ``3'', unable to determine. Also 
use code ``3'' if you are unable to obtain this information from the 
patient, family or medical record.
    If Right handed, code ``1''.
    If Left handed, code ``2''.
    If Unable to determine, code ``3''.

13. Mental Health History

    Intent: To document a primary or secondary diagnosis of 
psychiatric illness or developmental disability.
    Definition: Patient has one of the following:
    <bullet> A schizophrenic, mood, paranoid, panic or other severe 
anxiety disorder; somatoform disorder, personality disorder; other 
psychotic disorder; or another mental disorder that may lead to 
chronic disability; but
    <bullet> Not a primary diagnosis of dementia, including 
Alzheimer's disease or a related disorder, or a non-primary 
diagnosis of dementia unless the primary diagnosis is a major mental 
disorder;

AND

    <bullet> The disorder results in functional limitations in major 
life activities that would be appropriate within the past 3 to 6 
months for the individual's developmental stage;

AND

    <bullet> The treatment history indicates that the individual has 
experienced either: (a) Psychiatric treatment more intensive than 
outpatient care more than once in the past 2 years (for example, 
partial hospitalization or inpatient hospitalization); or (b) within 
the last 2 years due to the mental disorder, experienced an episode 
of significant disruption to the normal living situation, for which 
formal supportive services were required to maintain functioning at 
home, or in a residential treatment environment, or which resulted 
in intervention by housing or law enforcement officials.
    Process: Review the patient's record only. For a ``Yes'' 
response to be entered, there must be written documentation (that 
is, verbal reports from the patient or patient's family are not 
sufficient).
    Coding: Enter ``0'' for No or ``1'' for Yes.
    0. No.
    1. Yes.

14. Conditions Related to MR/DD Status (Mental Retardation/
Developmental Disabilities)

    Intent: To document presence of mental retardation or 
developmental disabilities with and without organic conditions.
    Process: Review the patient's record only. Condition must be 
documented in the clinical record. Examples of organic conditions 
related to MR/DD are rubella, prenatal infection, congenital 
syphilis, maternal intoxication, mechanical injury at birth, 
prenatal hypoxia, neuronal lipid storage diseases, phenylketonuria 
(PKU), neurofibromatosis, microcephalus, macroencephaly, 
meningomyelocele, congenital hydrocephalus, etc.
    Coding: If organic condition is present, check if condition is 
related to MR/DD status present before age 22. When age of onset is 
not specified, assume that the condition meets this criterion AND is 
likely to continue indefinitely.
    1. Not applicable--No MR/DD.
    2. MR/DD with no organic condition.
    3. MR/DD with organic condition.

15. Responsibility/Legal Guardian

    Intent: To record who has responsibility for participating in 
decisions about the patient's health care, treatment, financial 
affairs, and legal affairs. Depending on the patient's condition, 
multiple options may apply. For example, a patient with moderate 
dementia may be competent to make decisions in certain areas, 
although in other areas a family member will assume decision-making 
responsibility. Or a patient may have executed a limited power of 
attorney to someone responsible only for legal affairs.
    Definition: a. Legal guardian--Someone who has been appointed 
after a court hearing and is authorized to make decisions for the 
patient, including giving and withholding consent for medical 
treatment. Once appointed, the decision-making authority of the 
guardian may be revoked only by another court hearing.
    b. Other legal oversight--Use this category for any other 
program in your State whereby someone other than the patient 
participates in or makes decisions about the patient's health care 
and treatment.
    c. Durable power of attorney/health care--Documentation that 
someone other than the patient is legally responsible for health 
care decisions if the patient becomes unable to make decisions. This 
document may also provide guidelines for the agent or proxy 
decision-maker, and may include instructions concerning the 
patient's wishes for care. Unlike a guardianship, durable power of 
attorney/health care proxy terms can be revoked by the patient at 
any time.
    d. Patient responsible for self--Patient retains responsibility 
for decisions. In the absence of guardianship or legal documents 
indicating that decision-making has been delegated to others, always 
assume that the patient is the responsible party.
    e. NONE OF THE ABOVE.
    Process: Legal oversight such as guardianship, durable power of 
attorney, and living wills are generally governed by state law. The 
descriptions provided here are for general information only. Refer 
to the law in your State and to the facility's legal counsel, as 
appropriate, for additional clarification.
    Consult the patient and the patient's family. Review records. 
Where the legal oversight or guardianship is court ordered, a copy 
of the legal document must be included in the patient's record in 
order for the item to be checked on the MDS-PAC form.
    Coding: Check all that apply.

[[Page 66413]]

16. Advance Directives

    Intent: To document the existence of any legal directives to 
guide the health care team in making treatment decisions, whether 
made by the patient him/herself or a legal proxy. This documentation 
must be in the medical record to be considered current and binding. 
The absence of pre-existing directives for the patient provides an 
opportunity for a discussion by the clinical team with the patient 
and family regarding the patient's wishes. Any discrepancies between 
the patient's current stated wishes and what is said in legal 
documents in the patient's file should be resolved immediately.
    Definition: a. Living will--A document specifying the patient's 
preferences regarding measures used to prolong life when there is a 
terminal prognosis.
    b. Do not resuscitate--In the event of respiratory or cardiac 
failure, the patient, family or legal guardian has directed that no 
cardiopulmonary resuscitation (CPR) or other life-saving methods 
will be used to attempt to restore the patient's respiratory or 
circulatory function.
    c. Do not hospitalize--A document specifying that the patient is 
not to be hospitalized even after developing a medical condition 
that usually requires hospitalization.
    d. Treatment restrictions--The patient or responsible party 
(family or legal guardian) does not wish the patient to receive 
certain medical treatments. Examples include, but are not limited 
to: blood transfusion, tracheotomy, respiratory intubation, and 
restraints. Such restrictions may not be appropriate to treatments 
given for palliative reasons (for example, reducing pain or 
distressing physical symptoms such as nausea or vomiting). In these 
cases, the directive should be reviewed with the responsible party. 
Treatment restrictions could also include:
    <bullet> Feeding restrictions--The patient or responsible party 
(family or legal guardian) does not wish the patient to be fed by 
artificial means (for example, tube, intravenous nutrition) if 
unable to be nourished by oral means.
    <bullet> Medication restrictions--The patient or responsible 
party (family or legal guardian) does not wish the patient to 
receive life-sustaining medications (for example, antibiotics, 
chemotherapy).
    e. NONE OF THE ABOVE.
    Process: You will need to familiarize yourself with the legal 
status of each type of directive in your State. In some states only 
a health care proxy is formally recognized; other jurisdictions 
allow for the formulation of living wills and the appointment of 
individuals with durable power of attorney for health care 
decisions. Facilities should develop a policy regarding documents 
drawn in other states, respecting them as important expressions of 
the patient's wishes until their legal status is determined.
    Review the patient's record for documentation of the patient's 
advance directives. Documentation must be available in the record 
for a directive to be considered current and binding.
    Some patients at the time of admission may be unable to 
participate in decision-making. Staff should make a reasonable 
attempt to determine whether the new patient has ever created an 
advance directive (for example, ask family members, check with the 
primary physician). Lacking any directive, treatment decisions will 
likely be made in concert with the patient's closest family members 
or, in their absence or in case of conflict, through legal 
guardianship proceedings.
    Coding: The following comments provide further guidance on how 
to code these directives. You will also need to consider State law, 
legal interpretations, and facility policy.
    <bullet> The patient (or proxy) should always be involved in the 
discussion to ensure informed decision-making. If the patient's 
preference is known and the attending physician is aware of the 
preference, but the preference is not recorded in the record, check 
the MDS-PAC item only after the preference has been documented.
    <bullet> If the patient's preference is in areas that require 
supporting orders by the attending physician (for example, do not 
resuscitate, do not hospitalize, feeding restrictions, other 
treatment restrictions), check the MDS-PAC item only if the document 
has been recorded or after the physician provides the necessary 
order. Where a physician's current order is recorded but patient's 
or proxy's preference is not indicated, discuss with the patient's 
physician and check the MDS-PAC item only after documentation 
confirming that the patient's or proxy's wishes have been entered 
into the record.
    <bullet> If your facility has a standard protocol for 
withholding particular treatments from all patients (for example, no 
facility staff member may resuscitate or perform CPR on any patient; 
facility does not use feeding tubes), check the MDS-PAC item only if 
the advanced directive is the individual preference of the patient 
(or legal proxy), regardless of the facility's policy or protocol.
    Coding: Check all that apply. If none of the directives are 
verified by documentation in the medical records, check NONE OF 
ABOVE.

Section B. Cognitive Patterns

    Intent: To assess the patient's ability to think coherently, 
remember and organize thoughts into actions, including daily self-
care activities. These items focus on the patient's functional 
performance, including demonstration of ability to remember recent 
and past events, to perform key decision making skills. This 
information can significantly contribute to the development of a 
post acute plan of care, including the discharge plan.
    Questions about cognitive function and memory can be threatening 
or sensitive for some patients. Some may react defensively or get 
agitated and emotional if unable to remember or answer the 
questions. These are not uncommon reactions to ``performance 
anxiety'' and feelings of being exposed, embarrassed, or frustrated 
if the patient is aware that he or she cannot respond cogently. It 
is important to recognize these feelings and to be as supportive as 
possible.
    It is important to establish an environment that enables the 
patient to function at their optimal level. The first few days of 
admission to a post acute setting can be overwhelming. Be sure to 
interview the patient in a private, quiet area (for example, limit 
distractions and interruptions as much as possible), and not in the 
presence of other patients or family, unless the patient would 
prefer that they stay. Using a non-judgmental approach to 
questioning will help create a needed sense of trust between the 
assessor and the patient. Clarify and validate your findings with 
the patient's family or other clinicians as needed. This input is 
especially important for those patients with limited communication 
skills or language barriers.
    Engage the patient in general conversation to help establish 
rapport.
    <bullet> Actively listen and observe for clues to help you 
structure your assessment. Remember that repetitiveness, 
inattention, rambling speech, defensiveness, or agitation may be 
challenging to deal with during an interview, but they provide 
important information about cognitive function.
    <bullet> Be open, supportive, and reassuring during your 
conversation with the patient (for example, ``Do you sometimes have 
trouble remembering things? Tell me what happens. We will try to 
help you'').
    If the patient becomes really agitated, sympathetically respond 
to his or her feelings of agitation and STOP discussing cognitive 
function. The information-gathering process does not need to be 
completed in one sitting during the three-day observation/assessment 
period but may be ongoing during the entire assessment period. Say 
to the agitated patient, for example, ``Let's talk about something 
else now,'' or ``We don't need to talk about that now. We can do it 
later''. Observe the patient's cognitive performance over the next 
few hours and days and come back to ask more questions when he or 
she is feeling more comfortable.

1. Comatose

    Intent: To record whether the patient's clinical record includes 
a documented neurological diagnosis of coma or persistent vegetative 
state.
    Process: Review medical record for documentation.
    Coding: Enter the appropriate number in the box.
    If the patient has been diagnosed as comatose or in a persistent 
vegetative state, code ``1'' (Yes) and Skip to Section E. If the 
patient is not comatose, or is semi-comatose, code ``0'' (No) and 
proceed to the next item (B2).

2. Memory/Recall Ability

    Intent: To determine a patient's ability to remember recent and 
past events (that is, short-term, long-term, situational and 
procedural memory).
    Process: a. Short-term memory OK: Ask the patient to describe a 
recent event that both of you have had the opportunity to remember 
(you should be able to validate that patient's memory with your 
knowledge of such events). Examples include what the patient had for 
breakfast, when the last pain medication dosage was received, (you 
can validate the patient's recollection with information from the 
medical record). For persons with verbal communication deficits,

[[Page 66414]]

non-verbal responses are acceptable (for example, when asked how 
many children visited today, they can correctly tap out a response 
of the appropriate number). If there is no positive indication of 
memory ability, code ``1'', Memory problem.
    b. Long-term memory OK: Engage in conversation about past events 
that are meaningful to the patient (for example, family, 
hospitalization, work experience). Ask questions for which you can 
validate the answers (from your review of the medical record, 
general knowledge, the patient's family). For patients with limited 
communication skills, ask family members about their perception of 
the patient's memory. If the patient demonstrates difficulty 
remembering key events of long ago, code ``1'', Memory problem.
    c. Situational memory OK: This item refers to two abilities that 
can be demonstrated by the patient within the facility: (1) The 
patient's ability to recognize the names and faces of staff whom 
they frequently encounter, AND (2) the patient's ability to remember 
the location of places regularly visited (for example, bedroom, meal 
room/dining area, activity room, therapy room). IMPORTANT: For 
coding purposes, the patient must demonstrate positive abilities in 
BOTH types of situations to be coded as ``0'', Memory OK. If she/he 
demonstrates difficulty in one or both areas code as ``1'', Memory 
problem.
    <bullet> Recognize staff names and faces--The patient 
distinguishes staff caregivers from family members, strangers, 
visitors, and other patients. It is not necessary that the patient 
remembers all staff members' names, but to recognize them as staff 
caregivers (that is, nurse, therapist) vs. others.
    <bullet> Remember the location of places regularly visited--The 
patient is able to locate or recognize key areas of the facility 
that they frequent regularly. It is not necessary for the patient to 
know his/her room number but he/she should be able to find the way 
to his room, recognize the purposes of particular rooms, etc.
    d. Procedural Memory OK: This MDS-PAC item refers to the ability 
to perform sequential activities. Dressing is an example of such a 
task as it requires multiple steps to complete the entire task. The 
patient must be able to perform or remember to perform all or most 
all of the steps in order to be scored a ``0'' Memory O.K. If the 
patient demonstrates difficulty in two or more steps, code as ``1'' 
Memory Problem.
    Coding: For each type of memory:
    Code ``0'' in the box provided, if memory OK.
    Code ``1'' in the box provided, if memory problem is 
demonstrated.

3. Cognitive Skills for Daily Decision Making

    Intent: To record the patient's ability and actual performance 
in making every day decisions about tasks or activities of daily 
living. This item is especially important for assessment and care 
planning for 2 reasons: (1) The information can alert health care 
providers to new changes (decline or improvement) in the patient's 
cognitive function, and (2) the information can alert staff to a 
discrepancy between a patient's capacity for decision-making and 
their current level of performance, which may indicate that 
caregivers or family may be inadvertently fostering the patient's 
dependence. It may have an impact on the course of treatment 
outcomes and discharge plan.
    For persons who have been acutely ill, it is important to 
determine the patient's ``baseline'' cognitive skills from some 
point prior to the current admission (Note: this instrument uses a 
time period prior to the assessment reference date [item AA4]), as 
well as his/her current skills (Note: the last 3 days, and the time 
immediately prior to precipitating event), so that the clinician can 
make a comparison for diagnostic and care planning purposes. Even 
slight deviations (decline) from baseline may be secondary to a 
variety of causes including: (1) The outcome of a recent acute event 
(for example, a primary neurological event such as a CVA; post 
anesthesia), (2) an evolving acute illness or exacerbation of 
disease (for example, infection; congestive heart failure; 
dehydration; drug effects or interactions; depression), or (3) a 
progression of a chronic neurological condition (for example, 
Alzheimer's disease; Huntington's disease). Detecting change is the 
first step in determining whether the change is due to a remediable 
condition or chronic decline. Likewise, follow-up measurements can 
provide an indication of success of treatment programs, prognosis 
for independent living, etc.
    (a) Making decisions regarding tasks of daily life.
    Process: This assessment should be conducted through 
conversation with direct care staff, a review of the clinical record 
(chart), in addition to personally observing and interacting with 
the patient [Note--this personal interaction can occur in the course 
of regular ongoing care activities; or it can be a part of a planned 
MDS-PAC interview/observation where a series of issues are 
reviewed--cognition, mood, ADLs, activities]. Your inquiry should 
focus on whether the patient is actively making choices, plans, and 
decisions, and not whether staff believe the patient might be 
capable of doing so. Remember, the intent of this item is to record 
what the patient is doing (performance). Where a health care 
provider or family member takes decision-making responsibilities 
away from the patient regarding tasks of everyday living or the 
patient does not participate in decision-making (which may happen 
when patients take on the ``sick'' role), consider the patient to 
have impaired performance in decision making. In this case document 
how they function now rather than your supposition of their capacity 
to function. Consult with family and health care providers where 
necessary to clarify patient decision making.
    Coding: Enter the number that most accurately characterizes the 
patient's cognitive performance in making decisions regarding the 
tasks of daily life over the last three days.
    0. Independent--The patient's decisions in planning and 
executing daily routines and making decisions were consistent, 
reasonable, safe, and organized reflecting lifestyle, culture, 
values.
    1. Modified Independence--The patient was organized in daily 
routines and made safe decisions in familiar situations, but 
experienced some difficulty in decision-making when faced with new 
tasks or situations.
    2. Minimally Impaired--For the most part, the patient was 
organized in daily routines and made safe decisions, but in specific 
situations the patient demonstrated poor decision-making skills 
requiring directions or cues or supervision at those times.
    3. Moderately Impaired--The patient demonstrated poor decision 
making skills that could place his/her safety at risk. The patient 
needs reminders, cues and supervision in planning, organizing, 
correcting, and carrying out daily routines. Cues and supervision 
are required at all times.
    4. Severely Impaired--The patient's decision making was severely 
impaired: the patient never (or rarely) makes decisions.
    (b) Is now more impaired in decision making than prior to 
precipitating event (item A7a).
    Intent: To record whether the patient is now more impaired than 
she/he was at a specified period in time prior to the precipitating 
event (that is, the current score to item B3a is higher that it 
would have been prior to the precipitating event).
    Process: Through patient interview, family reports, or review of 
earlier clinical record, compare the patient's current skills in 
daily decision making with their skills immediately prior to the 
precipitating event [Item A7a].
    Coding: Enter the number corresponding to the most appropriate 
response.
    0. No or unsure.
    1. Yes, more impaired today.

4. Indicators of Delirium--Periodic Disordered Thinking/Awareness

    Intent: To assess and record behavioral signs that may indicate 
that delirium is present. The characteristics of delirium are 
usually manifested behaviorally, and therefore can be observed. For 
example, disordered thinking, a typical characteristic of delirium, 
may be first observed as rambling, irrelevant, or incoherent speech. 
Other typical behaviors are described in the definitions below.
    Many acute conditions (for example, infections; congestive heart 
failure) and treatment (for example, polypharmacy; anesthesia; 
anticholinergic drugs) can have a deleterious effect on cognitive 
performance and the development of delirium, particularly in persons 
with the following risk factors: over age 80 years, prior history of 
cognitive impairment, recent hip fractures, complex medical 
conditions and drug regimens, recent hospitalization, and history or 
signs/symptoms of depression. The incidence rate of delirium among 
acute care hospital patients is as high as 41% and often occurs by 
day 2 through 6 of the hospitalization. Approximately 48-96% of 
patients continue to have some behavioral and cognitive symptoms by 
discharge. With the shortening of hospital stays, and the shift 
towards earlier discharge to post acute environments it is crucial 
for clinicians to identify and monitor for behavioral

[[Page 66415]]

manifestations of delirium for two reasons: (1) to identify new or 
worsening signs that herald the onset of a treatable acute 
condition, and (2) to document the progression of changes over time 
for discharge planning.
    Definition: a. Easily distracted--(for example, has difficulty 
paying attention, does not complete tasks or conversations without 
getting sidetracked)
    b. Periods of altered perception or awareness of surroundings--
(for example, moves lips or talks to someone not present; believes 
he/she is somewhere else; confuses night and day)
    c. Episodes of disorganized speech--(for example, speech is 
incoherent, nonsensical, irrelevant, rambling from subject to 
subject; loses train of thought)
    d. Periods of restlessness--(for example, fidgeting or picking 
at skin, clothing, napkins, etc.; frequently changing positions; 
repetitive physical movements or calling out)
    e. Periods of lethargy--(for example, sluggishness, staring into 
space; difficult to arouse; little body movement)
    f. Mental function varies over the course of the day--(for 
example, alertness and behaviors vary during the course of the day, 
sometimes better, sometimes worse; sometimes present, sometimes not)
    Process: Observe patient and interview staff.
    Coding: Code for the patient's behavior in the last seven days 
regardless of what you believe the cause to be--focus on when the 
manifested behavior first occurred. Accurate assessment requires 
conversations with staff and family who have direct knowledge of 
patient's behavior over this time.
    0. Behavior not present.
    1. Behavior present, not of recent onset.
    2. Behavior present over last 7 days appears different from the 
patient's usual functioning (for example, new onset or worsening).

Section C. Communication/Vision Patterns

    Intent: To document the patient's sensory function (for example, 
ability to hear and see with assistive devices, if used, and/or 
environmental adjustments, if necessary) and ability to understand 
and communicate with others.
    Communication--There are many possible causes for communication 
problems experienced by elderly and post acute patients. Some can be 
attributed to the aging process; others are associated with 
progressive physical and neurological disorders. Usually the 
communication problem is caused by more than one factor. For 
example, a patient might have aphasia as well as long standing 
hearing loss; or he might have dementia with word finding 
difficulties and a hearing loss. The patient's physical, emotional, 
and social situation may also complicate communication problems. 
Additionally, a noisy or isolating environment can inhibit 
opportunities for effective communication.
    Deficits in ability to make one's self understood (expressive 
communication deficits) can include reduced voice volume and 
difficulty in producing sounds, or difficulty in finding the right 
word, making sentences, writing, and gesturing. Deficits in one's 
ability to understand (receptive communication deficits) can involve 
declines in hearing, comprehension (spoken or written), or 
recognition of facial expressions.
    Vision--Visual limitations or difficulties may be related to the 
aging process as well as to diseases common in aged and chronically 
ill persons (for example, cataracts, glaucoma, macular degeneration, 
diabetic retinopathy, neurologic diseases). It is important to 
identify visual impairment. Some conditions may be treatable and 
reversible; others, though not reversible, may be managed by 
interventions aimed at maintaining or improving the patient's 
residual visual abilities. In the post acute setting, identifying 
and addressing visual impairment is an important part of preparing 
the patient for tasks related to self-care upon potential discharge 
to a more independent care setting (for example, reading medication 
and food labels; safely negotiating a living environment; using the 
stove).

1. Hearing

    Intent: To evaluate the patient's ability to hear (with hearing 
appliance, if used, and/or environmental adjustments, if necessary) 
during the last 3-day period. Identifying impairments early in the 
post acute stay can facilitate the development of necessary 
adaptions for discharge. Often the environment can have an impact on 
the patient's ability to hear and must be considered in the 
assessment.
    Process: If the patient has an adaptive hearing device/aid/
appliance, evaluate hearing ability with the working device in 
place. Interview the patient (ask about hearing function) and 
observe for hearing function during your verbal interactions. Use a 
variety of observations to make your assessment (for example, one-
on-one vs. group situations). Always be mindful of environmental 
factors that may influence your assessment (for example, call bells; 
vacuum cleaners; suctioning equipment; roommate's conversations; 
outside noises, etc.). If necessary to clarify exact hearing level, 
consult with the patient's family, primary caregivers, or speech or 
hearing specialists.
    Be alert to what you have to do to communicate with the patient. 
For example, if you have to speak more clearly, use a louder tone, 
speak more slowly, or use more gestures, or if the patient needs to 
see your face to know what you are saying, or if you have to take 
the patient to a more quiet area to conduct the interview--all of 
these are cues that there is a hearing problem, and should be 
indicated in coding this section.
    Coding: Enter the number that corresponds to the most correct 
response.
    0. Hears adequately--The patient hears all normal conversational 
speech, social interaction, including when using the phone, and 
watching TV.
    1. Minimal difficulty--The patient hears speech at 
conversational levels but has difficulty hearing when the 
environment is not quiet or when he/she is in group situations. 
Background noise affects hearing.
    2. Hears in special situations only--The patient is hearing 
deficient but compensates and hears better when the speaker 
increases volume, adjusts his voice tone, and/or speaks distinctly; 
or the patient can hear only when the speaker's face is clearly 
visible.
    3. Highly impaired/absence of useful hearing--The patient hears 
only some sounds and frequently fails to respond even when speaker 
adjusts tone and volume, speaks slowly and distinctly, or is 
positioned face-to-face with the patient. There is no comprehension 
of conversational speech, even when the speaker makes maximum 
adjustments.

2. Modes of Communication

    Intent: To record the types of communication techniques (for 
example, alternative verbal or non-verbal techniques) used by the 
patient to make his or her needs or wishes known.
    Definition: a. Hearing aid--An apparatus used by those with 
impaired hearing for amplifying sound.
    b. Lip reading--Understanding spoken word by means of 
visualization of the speaker's mouth and lips.
    c. Signs/gestures/sounds--This category includes non-verbal 
expressions used by the patient to communicate with others.
    <bullet> Actions may include pointing to words, objects, people; 
facial expressions; using physical gestures such as nodding head 
twice for ``yes'' and once for ``no'' or squeezing another's hand in 
the same manner.
    <bullet> Sounds may include grunting, banging, ringing a bell, 
etc.
    d. Writing messages to express or clarify needs--Patient writes 
notes to communicate with others.
    e. NONE OF THE ABOVE.
    Process: Interact with the patient and observe for any reliance 
on non-verbal expression (physical gestures, such as pointing to 
objects), either in one-on-one communication or in group situations. 
Consult with the direct care staff from all shifts. For patient with 
limited communication skills, have staff ask patient's family if 
there are additional effective means of communication.
    Coding: Check the boxes for each method used by the patient to 
communicate his or her needs. If the patient does not use any of the 
listed items, check NONE OF THE ABOVE.

3. Making Self Understood (Expression)

    Intent: To document the patient's ability to express or 
communicate requests, needs, opinions, urgent problems, and social 
conversation, whether in speech, writing, sign language, or a 
combination of these. In order to monitor the patient's progress, 
the assessment reflects the patient's status at 2 points in time: 
over the last 3 days, and immediately prior to the precipitating 
event (A7a).
    (a) Expressing information content--however able.
    Process: Interact with the patient. Observe and listen to the 
patient's efforts to communicate with you using the assistive 
devices/modes of expression they would normally use to communicate. 
Consult with the primary caregivers (over all shifts), and speech-
language pathologist, if possible, who will be able to report on 
observations of patient's interactions with others in different

[[Page 66416]]

settings (for example, one-on-one, groups) and different 
circumstances (for example, when calm, when agitated) and different 
times of day. If direct care staff are uncertain and you require 
further clarification, consult with family members who frequently 
visit the patient (if such a person is present).
    Coding: Enter the number corresponding to the patient's ability 
to make self understood over the last 3 days.
    0. Understood--The patient expresses ideas clearly, without 
difficulty.
    1. Usually Understood--The patient may have difficulty 
expressing ideas (finding words or finishing thoughts) but is able 
to make him/herself understood if the listener is patient and gives 
him/her time to express himself. Little or no prompting required by 
the listener.
    2. Often Understood--The patient has difficulty finding the 
right words or finishing thoughts, resulting in delayed or 
incomplete responses. The patient usually requires some prompting/
cuing by the listener to complete or clarify the message (make self 
understood).
    3. Sometimes Understood--The patient has limited ability, but 
expresses simple, concrete requests regarding at least basic needs 
that would be generally understood (for example, food, drink, sleep, 
toilet, pain).
    4. Rarely or Never Understood--The patient is not able to 
communicate effectively. At best, this communication is such that it 
required staff to interpret the meaning of highly individual, 
patient-specific sounds or body language (for example, indicated 
presence of pain or need to use the toilet).
    (b) Is now more impaired in making self understood by others 
than was prior to precipitating event (item A7a).
    Process: Through patient interview, family reports, or review of 
earlier clinical record compare patient's current ability to make 
self understood (last 3 days) with their ability prior to the 
precipitating event [Item A7a]).
    Coding: Enter the number corresponding to the most appropriate 
response.
    0. No, or unsure.
    1. Yes, more impaired today.

4. Speech Clarity

    Intent: To document the quality/intelligibility of the patient's 
speech (not the content or appropriateness).
    Definition: Speech--the expression of articulate words.
    Process: Throughout the course of the assessment the patient 
will have many opportunities to talk with you. Listen to the clarity 
of speech. To assess speech quality over the last 3 days also confer 
with primary caregivers.
    Coding: Enter the number corresponding to the response which 
best describes the clarity and quality of the patient's speech in 
the last 3 days.
    0. Clear speech--utters distinct, intelligible words.
    1. Unclear speech--utters slurred or mumbled words.
    2. No speech--absence of spoken words.

5. Ability to Understand Others (Comprehension)

    Intent: To describe the patient's ability to comprehend 
information whether communicated to the patient orally, in writing, 
or in sign language or Braille. This item measures not only the 
patient's ability to hear messages but also to process and 
understand language. In order to monitor the patient's progress, the 
assessment reflects the patient's status at 2 points in time: the 
last 3 days, and immediately prior to a more distant precipitating 
event (A7a).
    (a) Understanding verbal information content (however able) with 
hearing appliance, if used.
    Process: Assess the patient using whatever assistive devices/
methods (for example, hearing aids) that the patient would usually 
use in communicating with others. Interact with the patient. 
Throughout the assessment process and at other times observe the 
patient and determine his/her ability to comprehend your questions 
and statements. Try to observe the patient's interactions with 
others, in different situations and times of day. Consult with 
primary staff caregivers (over all shifts), and speech-language 
pathologist (if present) to clarify patient understanding at 
different times and in different settings. If direct care staff are 
uncertain and you require further clarification, consult with family 
member who frequently visits the patient (if such person is 
present).
    Coding: Enter the number corresponding to the patient's ability 
to comprehend (understand others) over the last 3 days.
    0. Understands--The patient clearly comprehends the speaker's 
message(s) and demonstrates this understanding through words or 
actions/behaviors.
    1. Usually Understands--The patient may miss some part or intent 
of the message but comprehends most of it. The patient may have 
periodic difficulties integrating information but generally 
demonstrates comprehension, by responding in words or actions. 
Little or no prompting required.
    2. Often Understands--The patient may miss some part or intent 
of the message. When the messenger(s) (staff or family) rephrase or 
simplify the message(s) or use gestures, and specifically inquires 
as to the patient's understanding of what is being communicated, the 
patient's comprehension is enhanced. This type of prompting occurs 
often.
    3. Sometimes Understands--The patient demonstrates frequent 
difficulties integrating information and responds adequately only to 
simple and direct questions or directions/cues (for example, one-
step commands such as ``close your eyes'')
    4. Rarely/Never Understands--The patient demonstrates very 
limited ability to understand communication. Based on the patient's 
verbal and nonverbal responses, staff have difficulty determining 
whether the patient comprehends messages, or the patient can hear 
sounds but does not understand messages.
    (b) Is now more impaired in understanding others than was prior 
to precipitating event (Item A7a).
    Process: Through patient interview, family reports, or review of 
earlier clinical record compare patient's current ability to 
understand others (last 3 days) with their ability immediately prior 
to the precipitating event [Item A7a].
    Coding: Enter the number corresponding to the most appropriate 
response.
    0. No or unsure.
    1. Yes, more impaired today.

6. Vision

    Intent: To evaluate the patient's ability to see close objects 
in adequate lighting, using the patient's customary visual 
appliances for close vision (for example, glasses; contact lenses; 
magnifying glass). Adequate lighting is defined as the amount of 
light that is sufficient or comfortable for a person with normal 
vision.
    Process: <bullet> Ask the patient about his or her visual 
abilities for close vision (for example, to see newsprint, menus, 
greeting cards), use of glasses, contact lenses, etc.
    <bullet> To validate the patient's reported vision, ask the 
patient to look at regular-size print in a book or newspaper using 
whatever visual appliance he or she customarily uses for close 
vision (for example, glasses, magnifying glass). Then ask the 
patient to read a few words aloud, starting with larger headlines 
and ending with the finest, smallest print.
    <bullet> Be sensitive to the fact that some patients are not 
literate or are unable to read English. In such cases, ask the 
patient to read aloud individual letters of different size print or 
numbers, such as dates or page numbers, or to name items in small 
pictures.
    <bullet> If the patient is unable to communicate or follow your 
directions for testing vision, observe the patient's eye movements 
to see if his or her eyes seem to follow movement and objects. 
Though these are gross measurements of visual acuity, they may 
assist you in assessing whether the patient has any visual ability.
    (a) Ability to see in adequate light and with glasses, if used.
    Coding: Enter the code that best describes the patient's visual 
ability given adequate light and use of his/her customary visual 
aids.
    0. Adequate--The patient sees fine detail, including regular 
print in newspapers/books.
    1. Impaired--The patient sees large print, but not regular print 
in newspapers/books.
    2. Moderately Impaired--The patient has limited vision, is not 
able to see newspaper headlines, but can identify objects in his or 
her environment.
    3. Highly Impaired--The patient's ability to identify objects in 
his or her environment is in question, but eye movements appear to 
follow objects (for example, people walking by).

    Note: Many patients with severe cognitive impairment are unable 
to participate in vision screening because they are unable to follow 
directions or are unable to tell you what they see. However, many 
such patients appear to ``track'' or follow moving objects in their 
environment with their eyes. For patients who appear to do this, use 
code ``3'', Highly Impaired. Even though these are gross measures, 
with our current limited technology, this is the best general 
assessment you can do under the circumstances.

    4. Severely Impaired--The patient has no vision; reports seeing 
only light or colors, but eyes do not appear to follow objects (for 
example, people walking by).

[[Page 66417]]

    (b) Is now more impaired in vision than was prior to 
precipitating event (Item A7a).
    0. No or unsure.
    1. Yes, more impaired today.

Section D. Mood and Behavior Patterns

    Mood distress is a serious condition that is associated with 
significant morbidity and mortality. It may be precipitated by acute 
illness, loss of independence (whether temporary or permanent), a 
new diagnosis (possibly terminal), pain, effects of medications, 
etc. Although changes in mood and behavior can happen to anyone, 
persons at particular risk for disorders such as depression are 
those with prior history of mood disorders, mild to moderate 
cognitive impairment, pain, and unstable health conditions. Many 
clinicians and patients perceive changes in mood and behavior to be 
normal, expected reactions to crisis (for example, deteriorating 
health). Although such reactions are common, it is crucial to 
identify the particular signs of distress, assess the frequency of 
their occurrence, and determine whether they are easily altered. 
Then clinicians can develop an appropriate treatment plan based on 
the impact of the mood or behavioral indicators on the patient's 
quality of life and well-being, ability to participate in the post 
acute treatment and discharge plans, etc.

1. Indicators of Depression, Anxiety, Sad Mood

    Intent: To record the frequency of indicators observed in the 
last 3 days, irrespective of the assumed cause of the indicator 
(behavior).
    Definition: Feelings of psychic distress may be expressed 
directly by the patient who is depressed, anxious, or sad. However, 
direct statements such as ``I'm so depressed'' are often rare; signs 
must be often ``teased'' out by clinicians through observation and 
interview. Distress may be more commonly expressed in the following 
ways:

VERBAL EXPRESSIONS OF DISTRESS

    a. Patient made negative statements--for example, ``Nothing 
matters; Would rather be dead than live this way; What's the use; 
Let me die.''
    b. Persistent anger with self or others--for example, easily 
annoyed, anger at presence in post acute care, anger at care 
received.
    c. Expressions of what appear to be unrealistic fears--for 
example, fear of being abandoned, left alone, being with others, 
afraid of nighttime.
    d. Repetitive anxious complaints/concerns (non-health related)--
for example, persistently seeks attention/reassurance regarding 
therapy or others' schedules, meals, laundry, clothing, relationship 
issues, when family will visit.
    e. Repetitive health complaints--for example, persistently seeks 
medical attention, obsessive concern with body functions, obsessive 
concern with vital signs.
    Distress may also be expressed non-verbally and identified 
through observation of the patient in the following areas during 
usual daily routines:

SAD, APATHETIC ANXIOUS APPEARANCE

    f. Sad, pained, worried facial expressions--for example, 
furrowed brows.
    g. Crying, tearfulness.
    h. Repetitive physical movements--for example, pacing, hand 
wringing, restlessness, fidgeting, picking.

SLEEP CYCLE ISSUES

    Distress can also be manifested in disturbed sleep patterns.
    i. Insomnia/change in usual sleep patterns--for example, 
difficulty falling asleep, fewer or more hours of sleep than usual, 
waking up too early and unable to fall back to sleep.

LOSS OF INTEREST

    These items refer to a change in the patient's usual pattern of 
behavior.
    j. Withdrawal from activities of interest--for example, no 
interest in long standing activities or being with family/friends.
    k. Reduced social interaction--for example, less talkative, more 
isolated.
    Process: Initiate a conversation with the patient, being 
cognizant of earlier statements by (or observations of) the patient. 
Some patients are more verbal about their feelings than others and 
will either tell someone about their distress, or tell someone only 
when asked directly how they feel. For patients who verbalize their 
feelings, ask how long these conditions have been present. Other 
patients may be unable to articulate their feelings (that is, cannot 
find the words to describe how they feel, or lack insight or 
cognitive capacity). Observe the patient carefully for any 
indicator, both at the time of the planned assessment and in any 
direct contacts you may have with the patient during the three days 
covered by this assessment. Consult with direct-care staff over all 
shifts, if possible, or other clinicians who work with the patient, 
or family who have direct knowledge of the patient's typical and 
current behavior. Relevant information may also be found in the 
clinical record, although this can vary.
    Coding: For each indicator apply one of the following codes 
based on interactions with and observations of the patient in the 
last 3 days. Remember, code regardless of what you believe the cause 
to be.
    0. Indicator not exhibited in last 3 days.
    1. Exhibited on 1-2 of last 3 days.
    2. Exhibited on each of last 3 days.

2. Mood Persistence

    Intent: To identify if one or more indicators of depressed, sad 
or anxious mood [Item D1] were easily altered by attempts to ``cheer 
up'', console, or reassure the patient over the last three days.
    Process: The information on which to base this judgement is 
gathered as part of the conversations, observation, and record 
reviews for D1 (the individual indicators of mood state). The key 
factor here is the need to assess whether (when aggregated across 
the several mood indicators) the patient cannot be easily consoled, 
reassured or cheered up.
    Coding: One or more indicators of depressed, sad or anxious mood 
were not easily altered by attempts to cheer up, console, or 
reassure the patient over last 3 days.
    0. No mood indicators or always easily altered.
    1. Partially altered or easily altered on only some occasions.
    2. All aspects of mood not easily altered.

3. Behavioral Symptoms

    Intent: To identify the frequency of behavioral symptoms over 
the last 3 days that cause distress to the patient, or are 
distressing or disruptive to other patients or staff members. Such 
behaviors include those that are potentially harmful to the patient, 
or disruptive in the environment, even if staff or other patients 
appear to understand or have adjusted to them (for example, ``Mrs. 
R. doesn't mean anything by calling out. She does it because she's 
confused right now.'')
    Behavioral symptoms can be associated with an acute illness, a 
change in medication, or simply a response to or change in the 
environment. Acknowledging and documenting behavioral symptoms 
provides a basis for further evaluation, care planning, and delivery 
of consistent, appropriate care.

    Note: Documentation of the patient's behavioral status in the 
medical record may not be accurate, valid, or complete, and it is 
not intended to be the only source of information. (See Process 
below). However, once the frequency and alterability of behavioral 
symptoms is determined, subsequent documentation should more 
accurately reflect the patient's status and response to 
interventions.

    Definition: a. Wandering--Locomotion with no discernible, 
rational purpose. A wandering patient may be oblivious to his or her 
physical or safety needs. Wandering behavior should be 
differentiated from purposeful movement (for example, a hungry 
person moving about the unit in search of food). Wandering may be 
manifested by walking or by wheelchair use.
    Do not include pacing back and forth as wandering behavior. If 
it occurs, it should be documented in Item D1h, ``Repetitive 
physical movements''.
    b. Verbally Abusive Behavioral Symptoms--Other patients or staff 
were threatened, screamed at, or cursed at.
    c. Physically Abusive Behavioral Symptoms--Other patients or 
staff were hit, shoved, scratched, or sexually abused.
    d. Socially Inappropriate/Disruptive Behavioral Symptoms--
Includes disruptive sounds, excessive noise, screams, self-abusive 
acts, sexual behavior or disrobing in public, smearing or throwing 
food or feces, hoarding, rummaging through others' belongings.
    e. Resists care--Resists taking medications/injections, ADL 
assistance, help with eating, or changes in position. This category 
does not include instances where the patient has made an informed 
choice not to follow a course of care (for example, patient has 
exercised his or her right to refuse treatment, and reacts 
negatively if staff try to reinstate treatment).
    Signs of resistance may be verbal or physical (for example, 
verbally refusing care, pushing caregiver away, scratching 
caregiver). These behaviors are not necessarily positive or 
negative, and their presence should prompt further investigation of 
their cause (for example, fear of pain, fear of falling, poor 
comprehension, anger, poor

[[Page 66418]]

relationships, eagerness for greater participation in care 
decisions, past experience with medication errors and unacceptable 
care, desire to modify care being provided).
    Process: Take an objective view of the patient's behavioral 
symptoms. The coding for this item focuses on the patient's actions, 
not intent. It is often difficult to determine the meaning behind a 
particular behavioral symptom. Therefore, it is important to record 
all behavioral symptoms. The fact that staff have become used to the 
behavior and minimize the patient's presumed intent (``He doesn't 
really mean to hurt anyone. He's just frightened.'') is not 
pertinent to this coding. Does the patient manifest the behavioral 
symptom or not?
    Observe the patient and how he/she responds to caregiver 
attempts to deliver care to him or her. Consult with staff who 
provide direct care on all three shifts. A symptomatic behavior may 
be present and might not be seen because it occurs during intimate 
care on another shift. Therefore, it is especially important to 
solicit input from direct caregivers (including nurse assistants) 
who have contact with the patient.
    Simply relying on written notes in the patient record is not 
sufficient. You must be alert to the possibility that staff might 
not think to report a behavioral symptom if it is part of the unit 
norm (for example, staff are working with severely cognitively and 
functionally impaired patients (for example, in a head trauma unit) 
and are used to patients' wandering, noisiness, etc.). Focus staff 
attention on what has been the individual patient's actual behavior 
over the last three days. Finally, although it may not be complete, 
review the clinical record for documentation of behaviors you may 
not have seen, nor staff reported. When such a note is found, review 
the patient's status with staff. Is the note correct? Is it within 
the appropriate time frame of the record?
    Coding: Behavioral symptom frequency in last 3 days.
    Record the frequency of behavioral symptoms manifested by the 
patient across all three shifts.
    Code ``0'' if the described behavioral symptom was not exhibited 
in last three days. This code applies to patients who have never 
exhibited the behavioral symptom or those who have previously 
exhibited the symptom but now no longer exhibit it, including those 
whose behavioral symptoms are fully managed by psychotropic drugs, 
or a behavior-management program. For example: A ``wandering'' 
patient who has not wandered in the last three days because he was 
restricted to bedrest and had a private duty nurse attending to him 
would be coded ``0''--Behavioral symptom not exhibited in last three 
days.
    Code ``1'' if the described behavioral symptom occurred on 1 
day.
    Code ``2'' if the described behavioral symptom occurred on 2 
days.
    Code ``3'' if the described behavioral symptom occurred daily or 
more frequently (that is, multiple times each day) in the last 3 
days.

Section E. Functional Status

    Patients in post-acute care settings will have acute (and often 
chronic) illnesses, and they will be subject to a variety of factors 
that can severely impact self-sufficiency. For example, cognitive 
deficits can limit a person's ability or willingness to initiate or 
participate in self-care or constrict understanding of the tasks 
required to complete the ADLs. A wide range of physical and 
neurological illnesses can adversely affect physical factors 
important to self-care such as stamina, muscle tone, balance, and 
bone strength. Side effects of medications and other treatments can 
also contribute to needless loss of self-sufficiency.
    Individualized plans of care can be successfully developed only 
when the patient's self-performance has been accurately assessed, 
including the amount and type of support being provided to the 
patient by others.
    For patients in post acute settings, the focus of the admission 
assessment is twofold: (1) to determine baseline functional 
performance levels, and (2) to determine if these levels have 
recently changed. This information will then be used as a basis for 
developing a plan of care (for example, targeted rehabilitation and 
other services) with the goal of leading the patient to an 
expeditious and coordinated discharge to home or a lower level of 
care.

1. Activities of Daily Living (ADL) Self-Performance Summary (Over Last 
Three Days)

    Intent: To record a summary of the patient's self-care 
performance in activities of daily living (that is, what the patient 
actually did for himself or herself or how much verbal or physical 
help was required by staff members) during the last three days. This 
requires a review of all ADL activities over this period.
    Definition: ADL SELF-PERFORMANCE--Measures what the patient 
actually did (not what he or she might be capable of doing) within 
each ADL category over all shifts for all episodes over the last 
three days according to a performance-based scale.
    a. Bed Mobility--How patient moves to and from a lying position, 
turns side to side, and positions the body while in bed.
    b. Transfer--Bed/Chair--How patient moves between surfaces-that 
is, to/from bed, chair, wheelchair standing position. This 
definition excludes movement to/from bath or toilet, which is coded 
under Transfer Toilet (item E1i) and Transfer Tub/Shower (item E1l).
    c. Locomotion--How patient moves between locations in his/her 
room and adjacent corridor on the same floor. If in wheelchair, 
locomotion is defined as self-sufficiency once in the chair.
    d. Walk in Facility--How patient walks in different areas of the 
facility. For a patient who uses a wheelchair exclusively, this 
would be coded as ``8'' (Activity did not occur).
    e. Dressing Upper Body--How patient dresses and undresses 
(street clothes, underwear) above the waist. Includes prostheses, 
orthotics, fasteners, pullovers, etc.
    f. Dressing Lower Body--How patient dresses and undresses 
(street clothes, underwear) from the waist down. Includes 
prostheses, orthotics (for example, anti-embolic stockings), belts, 
pants, skirt, shoes and fasteners.
    g. Eating--How patient eats and drinks (regardless of skill). 
Includes intake or nourishment by other means (for example, tube 
feeding, total parenteral nutrition).
    h. Toilet Use--How patient uses the toilet room (or commode, bed 
pan, urinal), adjusts clothes before and after using toilet, manages 
perineal hygiene, changes pad, manages ostomy or catheter. (EXCLUDE 
transfer to toilet which is coded under item E1i, Transfer Toilet).
    i. Transfer Toilet--How patient moves on and off toilet or 
commode or bedpan.
    j. Grooming/Personal Hygiene--How patient maintains personal 
hygiene, including combing hair, brushing teeth, shaving, applying 
makeup; and washing/drying face and hands (EXCLUDE baths and showers 
which are coded in item E1k, Bathing).
    k. Bathing--How patient takes full-body bath/shower or sponge 
bath (EXCLUDE washing of back and hair and TRANSFER [which is coded 
in item E1l, Transfer Tub/Shower]). Includes how each part of body 
is bathed: arms, upper and lower legs, chest, abdomen, perineal 
area. Note: For this item and item E1l below, you must code for most 
dependent episode.
    l. Transfer Tub/Shower--How patient transfers in/out of tub/
shower. Code for most dependent episode.
    Process: In order to promote the highest level of functioning 
among patients, clinical staff must first identify what the patient 
actually does for himself or herself, noting when assistance is 
received and clarifying the types of assistance provided (verbal 
cuing, physical support, etc.)
    A patient's ADL self-performance may vary from day to day, shift 
to shift, or within shifts. There are many possible reasons for 
these variations, including mood, medical condition, relationship 
issues (for example, willing to perform for a nurse assistant he or 
she likes), medications and changes in underlying functional 
capacity. The responsibility of the person completing the assessment 
is to capture the total picture of the patient's ADL self-
performance over the 3-day period, 24 hours a day--that is, not only 
how the evaluating clinician sees the patient, but how the patient 
performs on other shifts as well.
    In order to accomplish this, you will need to know about the 
multiple episodes of the activity over the last 3-days--for example, 
how the patient dressed and undressed the upper body yesterday, the 
day before yesterday, and the day before that. To gather this 
information, there are two obvious sets of people to talk with--the 
patient and direct care staff--and when you have these 
conversations, be sure to plan to discuss all ADLs (get the total 
picture)--that is, if possible, talk with the patient and direct 
care staff on all three shifts (including weekends) and review 
documentation used to communicate with staff across shifts.
    Ask questions pertaining to all aspects of the ADL activity 
definitions. For example,

[[Page 66419]]

when discussing Bed Mobility with a nurse assistant, be sure to 
inquire specifically how the patient moves to and from a lying 
position, how the patient turns from side to side, and how the 
patient positions himself or herself while in bed. A patient can be 
independent in one aspect of Bed Mobility yet require extensive 
assistance in another aspect. Be sure to consider each activity 
definition fully.
    The wording used in each coding option is intended to reflect 
real-world situations, where slight variations are common. Where 
variations occur, the coding ensures that the patient is not 
assigned to an excessively independent or dependent category. For 
example, by definition, codes 0, 1, 2, and 3 (Independent, Set up 
Help only, Supervision, Minimal Assistance) permit one or two 
exceptions for the provision of heavier care. This is clinically 
useful and increases the likelihood that staff will code ADL Self-
Performance items consistently and accurately.
    The following chart provides general guidelines for recording 
accurate ADL Self-Performance.

Guidelines for Assessing (Item E1) ADL Self-Performance (Last 3 Days)

    <bullet> The coding options for E1 record the patient's actual 
level of involvement in self-care and the type and amount of support 
actually received during the last three days--requiring that you 
have knowledge of all episodes of each of the ADLs (or as near as 
possible to all episodes).
    <bullet> Do not record your assessment of the patient's capacity 
for involvement in self-care--that is, what you believe the patient 
might be able to do for himself or herself based on demonstrated 
skills or physical attributes. An assessment of functional prognosis 
is covered in Item L1 (Functional Improvement Goals by Discharge).
    <bullet> Do not record the type and level of assistance that the 
patient ``should'' be receiving according to the written plan of 
care. The type and level of assistance actually provided may be 
quite different from what is indicated in the plan. Record what is 
actually happening.
    <bullet> Engage direct care staff from all shifts who have cared 
for the patient over the last three days in discussions regarding 
the patient's ADL functional performance. Remind staff that the 
focus is on the last three days only. To clarify your own 
understanding and observations about each ADL activity (bed 
mobility, locomotion, transfer, etc.), ask probing questions, 
beginning with the general and proceeding to the more specific.
    <bullet> When you are uncertain that the patient could perform 
the activity as described or conversely where you wonder why the 
patient is not more independent, observe a regularly scheduled 
session where this activity is carried out (for example, eating a 
meal, dressing in the morning). Observation will both help you to 
validate reported behaviors and will be useful as you go forward to 
care planning.
    Here is a typical conversation between the RN and a nurse 
assistant regarding a patient's Bed Mobility assessment:

R.N. ``Describe to me how Mrs. L positions herself in bed. By that I 
mean, once she is in bed, how does she move from sitting up to lying 
down, lying down to sitting up, turning side to side, and 
positioning herself?''
N.A. ``She can lay down and sit up by herself, but I help her turn 
on her side.''
R.N. ``She lays down and sits up without any verbal instructions or 
physical help?''
N.A. ``No, I have to remind her to use her trapeze every time. But 
once I tell her how to do things, she can do it herself.'' se 
\supervision\
R.N. ``How do you help her turn side to side?''
N.A. ``She can help turn herself by grabbing onto her siderail. I 
tell her what to do. But she needs me to lift her bottom and guide 
her legs into a good position.''
R.N. ``Do you lift her by yourself or does someone help you?''
N.A. ``I do it by myself.''
R.N. ``How many times during the last three days did you give this 
type of help?''
N.A. ``Every time she was turned.''

    Provided that ADL function in Bed Mobility was similar on all 
shifts, Mrs. L would receive an ADL Self-Performance (in the last 
three days) Code of ``4''.
    Now review the first two exchanges in the conversation between 
the RN and the nurse assistant. If the RN did not probe further, he 
or she would not have received enough information to make an 
accurate assessment of either the patient's skills or the nurse 
assistant's actual workload, or whether the current plan of care was 
being implemented.
    Coding: For each ADL category, code the appropriate response for 
the patient's actual performance during the last three days. 
Consider the patient's performance during all shifts, as function 
may vary. For example, for eating, a patient may receive 3 meals per 
day and two supplemental feedings. Thus, over 3 days, there would 
have been 15 feeding episodes. It is this performance experience 
that forms the basis for scoring item E1g.
    0. Independent--No help, or set up or staff oversight/
supervision -OR-help, setup or supervision provided only 1 or 2 
times during period (with any task or subtask). [See examples of 
Setup Help in the box following these coding options.]
    1. Setup Help Only--Article or device provided or placed within 
reach of patient 3 or more times. [See examples of Setup Help in the 
box following these coding options.]
    2. Supervision--Oversight, encouragement, or cuing provided 3 or 
more times during period-OR-Supervision (1 or more times) plus 
physical assistance provided only 1 or 2 times during period (for a 
total of 3 or more episodes of help or supervision).
    3. Minimal Assistance (Limited Assistance)--Patient highly 
involved in activity; received physical help in guided maneuvering 
of limbs or other non-weight bearing assistance 3 or more times -OR- 
Combination of non-weight bearing help with more help provided only 
1 or 2 times during period (for a total of 3 or more episodes of 
physical help).
    4. Moderate Assistance (Extensive Assistance)--Patient performed 
part of activity on own (50% or more of subtasks) BUT help of the 
following type(s) was provided 3 or more times:
    <bullet> Weight-bearing support (for example, holding weight of 
one or both lower limbs, trunk).
    <bullet> Full staff performance of a task (some of time) or 
discrete subtask.
    5. Maximal Assistance--Patient involved but completed less than 
50% of subtasks on own (includes 2 + person assist), received weight 
bearing help or full performance of certain subtasks 3 or more 
times.
    6. Total Assistance (Total Dependence)--Full staff performance 
of the activity during the entire period.
    8. Activity Did Not Occur--During the last three days, the ADL 
activity was not performed by the patient or staff. In other words, 
the specific activity did not occur at all.
    For example: A patient who was restricted to bed for the entire 
three day period and was never transferred from the bed would 
receive a code of ``8'' for Transfer (Item E1b).
    However, do not confuse a patient who is totally dependent in an 
ADL activity (Code 6--Total Dependence) with the activity itself not 
occurring. For example: A patient who receives tube feedings and no 
food or fluids by mouth is engaged in eating (receiving 
nourishment), and must be evaluated under the Eating category for 
his or her level of assistance in the process. A patient who is 
highly involved in giving himself a tube feeding is not totally 
dependent and should be coded as a ``3.''

    Note: Each of these ADL Self-Performance scoring categories is 
exclusive. There is no overlap between categories. Changing from one 
self-performance category to another demands an increase or decrease 
in the number of times that help is provided.

    There will be times when there is no one type or level of 
assistance provided to the patient 3 or more times during a three-
day period. However the sum total of support of various types will 
be provided three or more times. In this case, code for the least 
dependent self-performance category where the patient received that 
level or more dependent support 3 or more times during the 3 day 
period. Please review the following example for clarification of 
this principle.

Examples of Setup Help

    <bullet> For bed mobility--Handing the patient the bar on a 
trapeze apparatus.
    <bullet> For transfer--Giving the patient a transfer board or 
locking/unlocking the wheels on a wheelchair for a safe transfer.
    <bullet> For locomotion.
    Walking--Handing the patient a walker or cane.
    Wheeling--Locking/unlocking the brakes on the wheelchair or 
adjusting the foot pedals to facilitate foot motion while wheeling.
    <bullet> For dressing--Retrieving clothes from closet and laying 
out on the patient's bed; handing the patient a shirt; retrieving a 
prosthesis or orthotic.
    <bullet> For eating--Cutting meat and opening containers at 
meals; giving one food category at a time.
    <bullet> For toilet use--Handing the patient a bedpan or placing 
articles necessary for changing ostomy appliance within reach.

[[Page 66420]]

    <bullet> For personal hygiene--Providing a wash basin and 
grooming articles.
    <bullet> For bathing--Placing bathing articles at tub side 
within the patient's reach; handing the patient a towel upon 
completion of the bath.

2. ADL Assist Codes

    Intent: To identify and document the level of weight bearing ADL 
assistance provided to the patient over the last 3 days.
    Definition: a. Bed mobility--How patient moves to and from lying 
position, turns side to side, and positions body while in bed.
    b. Transfer bed/chair--How patient moves between surfaces-to or 
from: bed, chair, wheelchair, standing position (Exclude to or from 
bath or toilet).
    c. Locomotion--How patient moves between locations in his/her 
room and adjacent corridor on the same floor. If in wheelchair, how 
the patient moves once in the wheelchair.
    d. Walk in facility--How the patient walks in room, corridor, or 
other place in the facility.
    e. Dressing upper body--How the patient dresses and undresses 
(street clothes, underwear) above the waist, includes prostheses, 
orthotics, fasteners, pullovers, etc.
    f. Dressing lower body--How the patient dresses and undresses 
(street clothes, underwear) from the waist down, includes 
prostheses, orthotics, belts, pants, skirts, shoes, and fasteners.
    g. Eating--How the patient eats and drinks (regardless of skill) 
includes intake of nourishment by other means (for example, tube 
feeding, total parenteral nutrition).
    h. Toilet use--How patient uses the toilet room (or commode, 
bedpan, urinal), cleanses self after toilet use or incontinent 
episode(s), changes pad, manages ostomy or catheter, adjusts clothes 
(Exclude transfer to toilet).
    i. Transfer/Toilet--How patient moves on and off toilet or 
commode
    j. Grooming/Personal hygiene--How the patient maintains personal 
hygiene, including combing hair, brushing teeth, shaving, applying 
makeup, washing and drying face, and hands (Excludes baths and 
showers).
    k. Bathing--How patient takes full body bath or shower or sponge 
bath (Exclude washing of back and hair and transfer). Includes how 
each part of the body is bathed: arms, upper and lower legs, chest, 
abdomen, perineal area.
    l. Transfer tub/shower--How the patient transfers in and out of 
the tub or shower.
    Coding: Code for the most help in the last 3 days.
    0. Neither code applies.
    1. Weight bearing support with 1 limb (arm or leg).
    2. 2+ person physical assist.

3. ADL Changes

    Intent: In this item the assessor compares the patient's current 
ADL function to self performance prior to the precipitating event 
item A7a.
    Definition: a. The number of ADL areas (listed under E1) in 
which the patient is now more impaired in self performance than was 
prior to the precipitating event (A7a) determines the appropriate 
coding.
    b. The number of ADL areas (from E1 above) in which patient was 
independent prior to precipitating event (item A7a).
    Coding: Place the appropriate number of ADL areas in box a and 
box b.

4. Instrumental Activities of Daily Living (IADLs)

    Intent: The intent of these items is to examine the areas of 
function that are most commonly associated with independent living.
    Process: The patient is to be questioned directly about his or 
her capacity to perform the usual activities around the home or 
community in the last 24 hours of a 3-day assessment period. If the 
patient performed or contributed to the performance of the IADL task 
during this period (meal preparation, medication management, etc) 
this performance should be considered when coding. However, be aware 
that a patient's partial involvement in an activity in the last 24 
hours may not necessarily express that patient's full capacity to 
perform the task.
    For example: A patient may have performed part of the medication 
management with assistance from staff. Staff assistance may have 
been provided because medication containers are different than what 
the patient was used to at home. The patient states that within the 
last 24 hours, he or she could have performed the medication task if 
he or she had been in his or her own home. In fact, the patient had 
been independent prior to admission, and there have been no 
cognitive or functional changes that might cause you to call the 
patient's judgement into question. The assessor would code E4d as 
``0'' Independent.
    In talking to the patient, you are both involved in a process of 
speculation about IADL activities that did not occur at the 
facility, leading to the assessor's active coding decision.
    Definition: a. Meal preparation--How meals are prepared (for 
example, planning meals, assembling ingredients, cooking, setting 
out food and utensils.)
    b. Managing finances--Paying for newspaper or TV service, using 
the cafeteria.
    c. Phone Use--How telephone calls are made or received (using 
assistive devices such as large numbers on the telephone, voice 
amplification as needed.)
    d. Medication Management--How medications are managed (for 
example, remembering to take medications, opening bottles, taking 
correct dosage of pills, filling syringe, giving injections, 
applying ointments.)
    e. Stairs--How moves up and down stairs (for example, one flight 
of steps, using handrails as needed.)
    f. Car Transfer--How patient moves in and out of a car. Includes 
opening door, sitting, and rising from seat.
    Coding: CAPACITY TO PERFORM INSTRUMENTAL ACTIVITIES OF DAILY 
LIVING--If patient had been required to carry out the activity as 
independently as possible, SPECULATE AND CODE for what you would 
consider the patient's capacity (ability) would have been to perform 
the activity in the last 24 hours of the 3-day assessment period.
    0. Independent--Would have required no help, setup or 
supervision.
    1. Setup Help Only--Would have required help that would have 
been limited to providing or placing an article/device within reach 
of the patient; all other tasks would have been performed by the 
patient on his or her own.
    2. Supervision--Would have required oversight, encouragement or 
cuing.
    3. Limited Assistance--On some occasion(s) could have done on 
own, other times would have required help.
    4. Moderate Assistance--While patient could have been involved, 
would have required presence of helper at all times, and would have 
performed 50% or more of subtasks on own.
    5. Maximal Assistance--While patient could have been involved, 
would have required presence of helper at all times, and would have 
performed less than 50% of all subtasks on own.
    6. Total Dependence--Full performance of the activity by other 
person would have been required at all times (no residual capacity 
exists).

5. IADL Areas Now More Limited

    Intent: In this item the assessor compares the patient's current 
capacity to perform IADLs to self performance with IADLs prior to 
the precipitating event (Item A7a).
    Process: Compare all the IADL capacity self performance area 
codes (for Items E4a-f) to the patient's function prior to the 
precipitating event. Determine the overall number of IADL areas that 
the patient is now more limited in.
    Coding: Code for the most appropriate category.
    0. None.
    1. Some (1-3 IADL areas).
    2. All or most (4-6 IADL areas).

6. Devices/Aids

    Intent: To record the type of appliances, aids, or assistive 
devices the patient used over the last 3 days.

Definition: Locomotion Devices

    a. Cane/crutch--A cane is a slender stick held in the hand and 
used for support during walking. Includes 3 or 4 prong canes. A 
crutch is a device for aiding a patient with walking. Usually it is 
a long staff with padded crescent-shaped portion at the top that is 
placed under the armpit.
    b. Walker--A mobile device used to assist a patient with 
walking. Usually consists of a stable platform made of metal tubing 
that the patient grasps while taking a step. The patient then moves 
the walker forward and makes another step. Also check this item in 
those instances where the patient walks with a wheelchair or Meri-
Walker for support. [For Meri-Walkers, if the patient is standing 
most of the time in the Meri-Walker and using it as a walker, code 
as a walker--if the patient sits in the Meri-Walker most of the 
time--code it as a wheelchair.]
    c. Wheelchair/scooter--Includes use of a hand-propelled 
wheelchair as well as motorized chair or scooter, includes wheeling 
self and being wheeled by others.

[[Page 66421]]

Other Aids

    d. Adaptive eating utensil--A device that is specially designed 
to help the patient be independent in eating. Some examples are, 
built-up spoon, rocker knife, plate guard, special mug.
    e. Mechanical lift--A mechanical device such as a Hoyer lift, 
used to lift a patient.
    f. Orthotics/prosthesis--An orthotic is a device added to the 
upper or lower extremities to stabilize or immobilize present 
deformity, protect against injury, or assist with function (for 
example, arm sling, finger splint). A prosthesis is a replacement of 
a missing body part by an artificial substitute, such as an 
artificial extremity. A device of a natural function.
    g. Postural support (while sitting)--A device (pads, pillows, 
boards) used to maintain the patient's position while in a chair or 
wheelchair.
    h. Slide Board--A flat surfaced board (usually polished to a 
smooth finish) used to help a patient transfer from bed to chair or 
chair to bed.
    i. Other Adaptive Devices--Include assistive/adaptive devices 
such as trapezes, braces.
    j. NONE OF THE ABOVE.
    Process: Observe, interview patient or staff.
    Coding: Check all that apply.

7. Stamina

    Intent: Moderate physical activity in connection with activities 
of everyday life or chosen activities can help to keep patients fit 
in many ways. Below a certain threshold of activity, functional 
decline may be accelerated. Activities can include domestic IADLs 
(for example, light housework), or chosen physical activities (for 
example, recreation, going out to shop or walk).
    It is necessary to understand if the patient is motivated, what 
the patient's needs may be, what barriers need to be overcome, and 
whether health education is needed.
    Many people are interested in maintaining health. They usually 
know that lifestyle practices may be important, but they often need 
concrete information about how important their own life style is for 
health maintenance. For example, the patient may understand 
questions on walking and eating, but may not be willing to take 
corrective action.
    Definition: Hours of physical activity at two points in time--
examples of physical activity include exercise, therapy sessions, 
walking, house cleaning, grocery shopping: (A) in last 24 hours and 
(B) immediately prior to precipitating event (A7a).
    Process: Talk to the patient and family members if required. In 
assessing patient self-involvement, confirm patient stamina 
estimates. Talk to staff. Determine performance in last 24 hours and 
prior to precipitating event (Item A7a) and code accordingly.
    Coding: Note--Item E7 has two coding columns, Column A and 
Column B.
    0. None.
    1. Less than one hour per day.
    2. 1 to 2 hours per day.
    3. 2+ to 3 hours per day.
    4. 3+ to 4 hours per day.
    5. More than 4 hours per day.

8. Walking and Stair Climbing

    Intent: Walking is a crucial activity when considering a 
discharge back to the community. The interdisciplinary team members 
need current information about the patient's walking ability. This 
knowledge will help the team in devising an accurate service 
delivery and care plan resulting in an expeditious and coordinated 
discharge home.
    CODE for walking or stair climbing episode that represents the 
most consistent pattern over the last 24 hours of the 3-day 
assessment period (includes episodes during therapy, activities, 
etc.)
    Process: Observe the patient and interview staff.
    Coding: a. Farthest distance walked without sitting down.
    0. 150+ feet.
    1. 51-149 feet.
    2. 25-50 feet.
    3. 10-24 feet.
    4. Less than 10 feet.
    8. ACTIVITY DID NOT OCCUR.
    b. Walking support provided.
    0. None.
    1. Set up help only.
    2. Supervision.
    3. One person physical assistance.
    4. Two+ person physical assistance.
    8. ACTIVITY DID NOT OCCUR.
    c. Stair climbing.
    Intent: This item gives an indication of the patients stamina as 
measured by stair-climbing activity.
    Process: Talk with the patient and family member if necessary. 
Consult with therapy staff who have observed or assisted the patient 
in stair climbing activity in the last 24 hours.
    Definition: A full flight of stairs consists of 12-14 stairs 
(steps). A partial flight of stairs consists of 4 to 6 stairs 
(steps).
    Coding: Code for the most dependent episode of stair climbing 
activity when the activity attempted in the last 24 hours. Note: 
There are only three possible codes when the patient does 4-6 stairs 
(steps) only (code--2, 5, 6).
    0. Complete Independence--Up and down full flight of stairs with 
NEITHER physical help NOR support device.
    1. Modified Independence--Up and down full flight of stairs with 
NO physical help and any of following:
    Use of one or more supportive devices (support devices includes 
the required use of hand rails).
    OR Use of an appliance (that is, cane, brace, prosthesis, 
walker).
    OR Excessive time to climb the stairs (3 or more times normal).
    2. Supervision--Up/down full flight of stairs with supervision 
or cuing-OR-up and down partial flight with NO physical help (device 
may or may not be used).
    3. Minimal Assistance--Contact guard/steadying/assistance to go 
up/down full flight of stairs.
    4. Moderate Assistance--Some weight bearing help to go up/down 
full flights of stairs, patient does most on own.
    5. Maximal Assistance--Patient had limited involvement in going 
up/down full flight of stairs, staff perform more than 50% of 
effort-OR-receives physical help on partial flight of stairs.
    6. Total Assistance--Did not go up/down 4-6 stairs (OR has 2-
person assist) OR totally dependent.
    8. Activity did not occur in last 24 hours.

9. Balance Related to Transitions

    Intent: Balance is a key component of a patient's ability to 
transfer from standing to seated position and from seated to 
standing position. Problems with stability involve provision of 
support (either staff member or device) to ensure a safe transfer. 
It is important to assess a person's ability to balance in order 
that interventions (strength training exercises, safety awareness, 
restorative nursing, nursing-based rehabilitation) can be 
implemented to prevent injuries and foster increased independence in 
the patient.
    Process: Over the last 24 hours, assess how the patient: 
transfers from seated to standing position, or turns and faces the 
opposite direction. Because this assessment is to be based on the 
most dependent episode over the last 24 hours, base both on your own 
observations and reports of staff.
    Definition: a. Moved from seated to standing position.
    b. (While standing) turned around and faced the opposite 
direction.
    Coding: Code for the most dependent in the last 24 hours.
    0. Smooth transition; stabilizes without assistance.
    1. Transition not smooth, but able to stabilize without 
assistance.
    2. Transition not smooth, unable to stabilize without 
assistance.
    8. ACTIVITY DID NOT OCCUR.

10. Neuro-musculo-skeletal Impairment

    Process: Review the patient's record for documentation of 
impairment of this type. An obvious example of a patient with this 
problem is someone who is comatose. Other patients at high risk 
include those with quadriplegia, paraplegia, hemiplegia or 
hemiparesis, peripheral vascular disease and neurological disorders. 
In the absence of documentation in the clinical record, sensation 
can be tested in the following way:
    <bullet> To test for pain, use a new safety pin or wooden 
``orange stick'' (usually used for nail care). Always dispose of the 
pin or stick after each use to prevent contamination.
    <bullet> Do not use pins with agitated or restless patients. 
Abrupt movements can cause injury.
    <bullet> Ask the patient to close his or her eyes. If the 
patient cannot keep his or her eyes closed or cannot follow 
directions to close eyes, block what you are doing (in local areas 
of legs and feet) from view with a cupped hand or towel.
    <bullet> Lightly press the pointed end of the pin or stick 
against the patient's skin. Do not press hard enough to cause pain, 
injury, or break in the skin. Use the pointed and blunt ends of the 
pin or stick alternately to test sensations on the patient's arms, 
trunk, and legs. Ask the patient to report if the sensation is 
``sharp'' or ``dull.''
    <bullet> Compare the sensations in symmetrical areas on both 
sides of the body.
    <bullet> If the patient is unable to feel the sensation, or 
cannot differentiate sharp from dull, the area is considered 
desensitized to pain sensation.

[[Page 66422]]

    <bullet> For patients who are unable to make themselves 
understood or who have difficulty understanding your directions, 
rely on their facial expressions (for example, wincing, grimacing, 
surprise), body motions (for example, pulling the limb away, pushing 
the examiner) or sounds (for example, ``Ouch!'') to determine if 
they can feel pain.
    Definition: a. Leg (hip, knee, ankle, foot).
    b. Arm (shoulder, elbow, wrist, hand).
    c. Trunk and neck.
    Coding: Code for the most limited in the last 24 hours.
    A. Joint mobility/range of motion at joints listed (code for 
most impaired joint).
    0. No impairment.
    1. Impairment on one side.
    2. Impairment on both sides.
    B. Voluntary motor control (active, coordinated, purposeful 
movement--code for most dependent joint).
    0. No loss.
    1. Partial loss on one side.
    2. Partial loss both sides.
    3. Full loss one side.
    4. Full loss both sides.
    C. Intact touch/sensation on extremity (tactile sense) (Use same 
codes as E10B).
    0. No loss.
    1. Partial loss on one side.
    2. Partial loss both sides.
    3. Full loss one side.
    4. Full loss both sides.

Section F. Bowel/Bladder Management

1. Bladder Continence

    Intent: To describe the patient's pattern of bladder continence 
(control) over the last 7-14 days, and to compare current continence 
status to status prior to the current event which precipitated this 
post-acute stage. This information is key in care planning for 
incontinence.
    Definition: Bladder Continence--Refers to control of urinary 
bladder function. This item describes the patient's bladder 
continence pattern even with scheduled toileting plans, continence 
training programs, or appliances. It does not refer to the patient's 
ability to toilet self--for example, a patient can receive extensive 
assistance in toileting and yet be continent, perhaps as a result of 
staff help. The patient's self-performance in toilet use is recorded 
in Item E1h.
    Process: Complete your review in the following order. Remember 
to consider continence patterns over the last 7-14 day period, 24 
hours a day, including weekends.
    (1) Review the patient's clinical record and any urinary 
elimination (bladder) flow sheets (if available).
    (2) Validate the accuracy of written records with the patient. 
Make sure that your discussions are held in private. Control of 
bladder function is a sensitive subject, particularly for patients 
that are struggling to maintain control. Many people with poor 
control problems will try to hide their problems out of 
embarrassment or fear of retribution. Others will not report the 
problem to staff because they mistakenly believe that incontinence 
is a natural part of aging or certain disease processes and that 
nothing can be done to reverse the problem. Despite these common 
reactions to incontinence, many patients are relieved when a health 
care professional shows enough concern to ask about the nature of 
the problem in a sensitive, straightforward manner.
    (3) Validate continence patterns with people who know the 
patient well (for example, primary family member of a newly admitted 
patient, or direct care staff).
    (4) When the information you have received is inconsistent and 
particularly if the staff report incontinence that is not reported 
by the patient, review for physical indications that the patient is 
in fact incontinent. This could include being present at scheduled 
toileting intervals, observing clothing, bed clothes, etc.
    a. Control of urinary bladder function--(if patient dribbles, 
volume insufficient to soak through undergarments).
    Coding: Choose the response that best reflects the patient's 
level of bladder continence in the last 7-14 days.
    Code for the patient's actual bladder continence pattern--that 
is, the frequency with which the patient is wet and dry during the 
7-14 day assessment period. Do not record the level of control the 
patient might have achieved under optimal circumstances. For bladder 
continence the difference between a ``5'' (Frequently Incontinent) 
and a ``6'' (Incontinent) is determined by the presence (``5'') or 
absence (``6'') of any bladder control.
    0. Continent--Complete control; does not use any type of 
catheter or other urinary collection device.
    1. Continent with Catheter--Complete control with any use of any 
type of catheter or urinary collection device that does not leak 
urine.
    2. Biweekly Incontinence--Incontinent episodes less than once a 
week (that is, once in last 2 weeks).
    3. Weekly Incontinence--Incontinent episodes once a week.
    4. Occasionally Incontinent--Incontinent episodes 2 or more 
times a week, but not daily.
    5. Frequently Incontinent--Tended to be incontinent daily, but 
some control present (that is, on day shift).
    6. Incontinent--Has inadequate control of bladder, multiple 
daily episodes all or almost all of the time.
    8. DID NOT OCCUR--No urine output from bladder.
    b. Is now more impaired in bladder incontinence then was prior 
to precipitating event (item A7a).
    Coding: 0. No, or unsure.
    1. Yes, more impaired today.

2. Bladder Appliance.

    Definition: a. External catheter (condom catheter)--A urinary 
collection appliance worn over the penis.
    b. Indwelling catheter--A catheter that is maintained within the 
bladder for the purpose of continuous drainage of urine. This item 
includes catheters inserted through the urethra or via supra-pubic 
incision.
    c. Intermittent catheterization--A catheter that is used 
periodically for draining urine from the bladder. This type of 
catheter is usually removed immediately after the bladder has been 
emptied. Includes intermittent catheterization whether performed by 
a licensed professional or by the patient. Catheterization may occur 
as one-time event (for example, to obtain a sterile specimen) or as 
part of a bladder emptying program (for example, every shift in a 
patient with an underactive or a contractile bladder muscle).
    d. Medications for control--medications administered to the 
patient for the purpose of improving control of the bladder.
    e. Ostomy--Any type of ostomy of the urinary tract.
    f. Pads, briefs--Any type of absorbent disposable or reusable 
undergarment or item, whether worn by the patient (for example, 
diaper, adult brief) or placed on the bed or chair for protection 
from incontinence. Does not include the routine use of pads when a 
patient is never or rarely incontinent.
    g. Urinals, bedpan--A urinal is a container into which a patient 
urinates. A bedpan is a pan-shaped device placed under a patient for 
collecting urine (and feces)
    Process: Consult with the nursing staff and the patient. Be sure 
to ask about any items that are usually hidden from view because 
they are worn under street clothing (for example, pads or briefs). 
If necessary, check the clinical record.
    Coding: Code for the last 24 hours.
    0. No.
    1. Yes.

3. Bladder Appliance Support

    Intent: This item is designed to identify the type of assistance 
or support a patient needs in order to use any of the bladder 
appliances listed in F2.
    Coding: Code for the level of bladder appliance support provided 
to the patient in the last 24 hours.
    0. No appliances (in item F2).
    1. Use of appliances, did not require help or supervision.
    2. Use of appliances, required supervision or set up.
    3. Minimal contact assistance (light touch only).
    4. Moderate assistance--patient able to do 50% or more of 
subtasks involved in using equipment.
    5. Maximal assistance--patient able to do 25-49% of all subtasks 
involved in using equipment.
    6. Total dependence--patient requires assistance in all subtasks 
involved in using bladder equipment.

4. Bowel Continence

    Process: The assessment for bowel continence should be completed 
simultaneously with the bladder continence review. This will thus 
include a review of the patient's clinical record and any bowel 
records (if available). Validate the accuracy of written records 
with the patient. Make sure that your discussions are held in 
private. Control of bowel function is a sensitive issue. Be sure to 
ask about the nature of the problem in a sensitive, straightforward 
manner.
    <bullet> Validate continence patterns with people who know the 
patient well (for example, primary family member of newly admitted 
patient, direct care staff).
    <bullet> Remember to consider continence patterns over the last 
7-14 day period, 24 hours a day, including weekends.

[[Page 66423]]

    Coding: Code for bowel continence over the last 7-14 days.
    0. Continent--Complete control, does not use ostomy device.
    1. Continent with Ostomy--Complete control with use of ostomy 
device that does not leak stool.
    2. Biweekly Incontinence--Incontinent episodes less than once a 
week (that is, once in last two weeks).
    3. Weekly Incontinence--Incontinent episodes once a week.
    4. Occasionally Incontinent--2 to 3 times a week.
    5. Frequently Incontinent--4+ times a week but not all of the 
time.
    6. Incontinent--All of the time.
    8.DID NOT OCCUR--No bowel movement during the entire 14-day 
assessment period.

5. Bowel Appliances

    Definition: a. Bedpan--A bedpan is a pan-shaped device placed 
under a patient for collecting feces (and urine).
    b. Enema--Introduction of solutions into the rectum and colon in 
order to stimulate bowel activity and to cause emptying of the lower 
intestine.
    c. Medication for control--Medications administered to the 
patient for the pupose of improving control of the bowels. These 
medications can include laxatives, stool softeners, stimulants as 
well as anti-diarrheal preparations.
    d. Ostomy--Any type of ostomy of the gastrointestinal tract.
    Coding: Code for use of bowel appliances for the last 3 days.
    0. No.
    1. Yes.

6. Bowel Appliance Support

    Intent: This item is designed to identify the type of assistance 
or support a patient needs in order to use any of the bowel 
appliances listed in F5.
    Coding: Code for the level of bowel appliance support provided 
to the patient in the last 24 hours.
    0. No appliances (in item F5).
    1. Use of appliances, did not require help or supervision.
    2. Use of appliances, required supervision or set up.
    3. Minimal contact assistance (light touch only).
    4. Moderate assistance--patient able to do 50 percent or more of 
subtasks involved in using equipment.
    5. Maximal assistance--patient able to do 25-49 percent of all 
subtasks involved in using equipment.
    6. Total dependence--patient requires assistance in all subtasks 
involved in using bowel equipment.

Section G. Diagnoses

1. Impairment Group

    Intent: This item identifies the Impairment Group that best 
describes the primary reason for admission to the rehabilitation 
program.
    Process: Consult with attending physician.
    Coding: Each Impairment Group has been assigned a two-digit ID 
number, a decimal point, and a unique number (from one to four 
digits) for the subgroups. Code for the major diagnostic category of 
the patient by selecting the Impairment Group which best describes 
the condition requiring admission to rehabilitation. Then select a 
subgroup, if appropriate. Code as specifically as possible.

  Rehabilitation Impairment Categories and Associated Impairment Group
                                  Codes
------------------------------------------------------------------------
   Rehabilitation impairment
           category                 Associated impairment group codes
------------------------------------------------------------------------
01  Stroke (Stroke)...........  01.1 Left body involvement (right
                                 brain).
                                01.2 Right body involvement (left
                                 brain).
                                01.3 Bilateral Involvement.
                                01.4 No Paresis.
                                01.9 Other Stroke.
02  Traumatic brain injury      02.21 Open Injury.
 (TBI).
                                02.22 Closed Injury.
03  Nontraumatic brain injury   02.1 Non-traumatic.
 (NTBI).
                                02.9 Other Brain.
04  04 Traumatic spinal cord    04.210 Paraplegia, Unspecified.
 (TSCI).
                                04.211 Paraplegia, Incomplete.
                                04.212 Paraplegia, Complete.
                                04.220 Quadriplegia, Unspecified.
                                04.2211 Quadriplegia, Incomplete C1-4.
                                04.2212 Quadriplegia, Incomplete C5-8.
                                04.2221 Quadriplegia, Complete C1-4.
                                04.2222 Quadriplegia, Complete C5-8.
                                04.230 Other traumatic spinal cord
                                 dysfunction.
05  Nontraumatic spinal cord    04.110 Paraplegia, unspecified.
 (NTSCI).
                                04.111 Paraplegia, incomplete.
                                04.112 Paraplegia, complete.
                                04.120 Quadriplegia, unspecified.
                                04.1211 Quadriplegia, Incomplete C1-4.
                                04.1212 Quadriplegia, Incomplete C5-8.
                                04.1221 Quadriplegia, Complete C1-4.
                                04.1222 Quadriplegia, Complete C5-8.
                                04.130 Other non-traumatic spinal cord
                                 dysfunction.
06  Neurological (Neuro)......  03.1 Multiple Sclerosis.
                                03.2 Parkinsonism.
                                03.3 Polyneuropathy.
                                03.5 Cerebral Palsy.
                                03.8 Neuromuscular Disorders.
                                03.9 Other Neurologic.
07  Fracture of LE (FracLE)...  08.11 Status post unilateral hip
                                 fracture.
                                08.12 Status post bilateral hip
                                 fractures.
                                08.2 Status post femur (shaft) fracture.
                                08.3 Status post pelvic fracture.
08  Replacement of LE joint     08.51 Status post unilateral hip
 (ReplLE).                       replacement.
                                08.52 Status post bilateral hip
                                 replacements.
                                08.61 Status post unilateral knee
                                 replacement.
                                08.62 Status post bilateral knee
                                 replacements.
                                08.71 Status post knee and hip
                                 replacements (same side).
                                08.72 Status post knee and hip
                                 replacements (different sides).
08  Other orthopedic (Ortho)..  08.9 Other orthopedic.

[[Page 66424]]

 
10  Amputation, lower           05.3 Unilateral lower extremity above
 extremity (AMPLE).              the knee (AK).
                                05.4 Unilateral lower extremity below
                                 the knee (BK).
                                05.5 Bilateral lower extremity above the
                                 knee (AK/AK).
                                05.6 Bilateral lower extremity above/
                                 below the knee (AK/BK).
 
                                05.7 Bilateral lower extremity below the
                                 knee (BK/BK).
11  Amputation, other (AMP-     05.1 Unilateral upper extremity above
 NLE).                           the elbow (AE).
                                05.2 Unilateral upper extremity below
                                 the elbow (BE).
                                05.9 Other amputation.
12  Osteoarthritis (OsteoA)...  06.2 Osteoarthritis.
13  Rheumatoid, other           06.1 Rheumatoid Arthritis.
 arthritis (RheumA).
                                06.9 Other arthritis.
14  Cardiac (Cardiac).........  09 Cardiac.
15  Pulmonary (Pulmonary).....  10.1 Chronic Obstructive Pulmonary
                                 Disease.
                                10.9 Other pulmonary.
16  Pain Syndrome (Pain)......  07.1 Neck pain.
                                07.2 Back pain.
                                07.3 Extremity pain.
                                07.9 Other pain.
17  Major multiple trauma, no   08.4 Status post major multiple
 brain injury or spinal cord     fractures.
 injury (MMT-NBSCI).            14.9 Other multiple trauma.
18  Major multiple trauma,      14.1 Brain and spinal cord injury.
 with brain or spinal cord      14.2 Brain and multiple fractures/
 injury (MMT-BSCI).              amputation.
                                14.3 Spinal cord and multiple fractures/
                                 amputation.
19  Guillian Barre (FB).......  03.4.
20  Miscellaneous (Misc)......  *12.1 Spina Bifida.
                                12.9 Other congenital.
                                13 Other disabling impairments.
                                15 Developmental disability.
                                16 Debility.
                                17 Infection.
                                17.2 Neoplasms.
                                17.31 Nutrition (endocrine/metabolic)
                                 with intubation/parenteral nutrition.
                                17.32 Nutrition (endocrine/metabolic)
                                 without intubation/parenteral
                                 nutrition.
                                17.4 Circulatory disorders.
                                17.51 Respiratory disorders--Ventilator
                                 Dependent.
                                17.52 Respiratory disorders--Non-
                                 ventilator Dependent.
                                17.6 Terminal care.
                                17.7 Skin disorders.
                                17.8 Medical/Surgical complications.
                                17.9 Other medically complex conditions.
21  Burn (Burns)..............  11 Burns.
------------------------------------------------------------------------
We are in the process of anayzing the effect of moving the few cases
  within this impairment category to one of the other spinal cord RICs
  (either 05 or 04 depending upon the ``fit'').

2. Other Diseases

    Intent: To document the presence of diseases that have an impact 
or potential impact on the patient's overall function (physical, 
cognitive, mood and behavioral), treatment or discharge plans.

Definition: ENDOCRINE

    a. Diabetes Mellitus 250.00--Any of several metabolic disorders 
characterized by abnormal insulin secretion and elevated blood 
glucose levels. Category includes insulin-dependent diabetes 
mellitus (IDDM) as well as other types (for example, non-insulin 
dependent diabetes mellitus [NIDDM], adult onset diabetes mellitus 
[AODM], gestational diabetes, and diabetes associated with 
particular conditions or medications).
    b. Hypothyroidism 244.9--Under-activity of the thyroid gland 
(insufficiency of thyroid hormone) resulting in a decrease in the 
basal metabolic rate.

HEART/CIRCULATION

    c. Cardiac arrhythmias 427.9--A disturbance in the cardiac 
electrical conduction system resulting in irregularities in heart 
rate and rhythm.
    d. Congestive heart failure 428.0--A dysfunction that occurs 
when cardiac output is insufficient to meet the person's metabolic 
demands.
    e. Coronary artery disease (CAD) 746.85--A narrowing of one or 
more of the coronary arteries by atherosclerotic plaque or vascular 
spasm; results in a decrease in oxygenated blood flow (ischemia) to 
the heart. Usually associated with angina.
    f. Deep vein thrombosis 451.1--A condition in which a blood clot 
(thrombus) is formed in the deeper/larger veins, usually in the 
lower extremities.
    g. Hypertension 401.9--A persistent elevation of systolic or 
arterial blood pressure. This category includes primary (essential) 
and secondary hypertension.
    h. Hypotension 458.9--An absolute systolic blood pressure value 
of less than 90 mm Hg (or a decline of 20 mm Hg or greater in 
systolic blood pressure from the person's usual baseline, or a 
decline of 10 mm Hg or greater in diastolic blood pressure from the 
person's usual baseline). This category also includes orthostatic 
hypotension (a reduction <gr-thn-eq> 20 mm Hg in systolic blood 
pressure upon standing).
    i. Peripheral vascular disease (arteries) 443.9--A variety of 
syndromes that result in decreased blood flow in the peripheral 
arterial vessels, usually of the lower extremities. This category 
includes arteriosclerosis obliterans, small vessel syndrome, 
Raynaud's phenomenon, arterial aneurysms (for example, thoracic, 
abdominal, popliteal), and temporal arteritis. Do not include deep 
vein thrombosis in this category; if present, use item G2f.
    j. Post Acute MI (within 30 days) 410.92--The immediate period 
following the necrosis of myocardial tissue resulting from 
obstruction of a coronary artery.
    k. Post heart surgery (for example, valve, CABG) V45.81--
Cardiovascular surgery such

[[Page 66425]]

as percutaneous transluminal coronary angioplasty (PTCA), coronary 
artery bypass graft (CABG), valve replacement, percutaneous balloon 
valvuloplasty.
    l. Pulmonary embolism 415.1--Obstruction of one or more of the 
pulmonary arteries by a thrombus (blood clot).
    m. Pulmonary failure 518.8--Failure of the respiratory system to 
meet oxygenation needs (severe hypoxemia).
    n. Other cardiovascular disease 429.2--Any other cardiac 
diagnosis not coded elsewhere in Section G (for example, valvular 
heart disease).

MUSCULOSKELETAL

    o. Fracture--hip V43.64--Hip fracture (for example, femoral 
neck; intertrochanteric; subcapital) that has been repaired via 
surgical arthroplasty or internal fixation. Category also includes 
fractures treated with traction that may have involved the surgical 
placement of pins. Also includes surgical hip replacement (for 
example, total or hemiarthroplasty) following fracture of the hip 
(for example, femoral neck; intertrochanteric; subcapital fractures, 
etc). Hips stabilized via open reduction and internal fixation 
(ORIF) with pins or screws would be included in this item.
    p. Fracture--lower extremity 812.40--Any fracture of the lower 
extremity, other than hip fracture. Includes surgically and non-
surgically treated fractures. Category does not include pathological 
fractures of the lower extremity; if the patient has a diagnosis of 
pathologic bone fracture of the lower extremity, code item G4.
    q. Fracture(s)--other 829.0--Any other fracture type or location 
not captured in Section G.
    r. Osteoarthritis 715.90--A progressive degenerative disease of 
joint cartilage and bone characterized by joint pain; may be 
accompanied by joint deformity and limitation of movement.
    s. Osteoporosis 733.00--A metabolic bone disorder characterized 
by a loss of bone density resulting in weakened bones and 
susceptibility to fractures.
    t. Rheumatoid Arthritis 714.0--A progressive degenerative joint 
disease characterized by recurrent inflammation of synovial tissue 
and joint deformities.

NEUROLOGICAL

    u. Alzheimer's disease 331.0--A degenerative and progressive 
dementia that is diagnosed by ruling out other dementias and 
physiological reasons for the dementia.
    v. Aphasia or Apraxia (784.3, 784.69)--Symptoms of neurological 
defects characterized by a difficulty or inability to express 
thoughts (in speech or writing) or comprehend language (aphasia), or 
a difficulty/inability to carry out purposeful movements or use 
objects properly due to a failure to identify them or understand 
their meaning (apraxia).
    w. Cerebral Palsy 343.9--A group of nonprogressive muscular and 
motor disorders secondary to a neurological defect or trauma at 
birth.
    x. Dementia other than Alzheimer's disease 290.0--Includes 
diagnosis of organic brain syndrome (OBS) or Chronic Brain Syndrome 
(CBS), senile dementia, multi-infarct dementia, and dementia related 
to other neurological diseases other than Alzheimer's Disease (for 
example., Picks, Creutzfeld-Jacob, Huntington's Disease).
    y. Hemiplegia/hemiparesis left side 342.90--Paralysis/partial 
paralysis (temporary or permanent impairment of sensation, function, 
motion) of both limbs on left side of the body. Usually caused by 
cerebral hemorrhage, thrombosis, embolism, or tumor. There must be a 
diagnosis of hemiplegia or hemiparesis in the resident's record.
    z. Hemiplegia/hemiparesis right side 342.90--Paralysis/partial 
paralysis (temporary or permanent impairment of sensation, function, 
motion) of both limbs on right side of body. Usually caused by 
cerebral hemorrhage, thrombosis, embolism, or tumor. There must be a 
diagnosis of hemiplegia or hemiparesis in the resident's record.
    aa. Multiple sclerosis 340--A progressive central nervous system 
disease characterized by demyelination in brain and spinal cord 
resulting in various neurological symptoms (for example, 
paresthesias; motor disorders; diplopia or blindness; urinary 
incontinence); usually involves recurrent exacerbations and 
remissions.
    ab. Parkinson's Disease 332.0--A progressive disease affecting 
the centers of the brain responsible for control and regulation of 
movement.
    ac. Quadriplegia 344.00-344.09--Paralysis (temporary or 
permanent impairment of sensation, function, motion) of all four 
limbs. Usually caused by cerebral hemorrhage, thrombosis, embolism, 
tumor, or spinal cord injury. There must be a diagnosis of 
quadriplegia in the patient's record.
    ad. Seizure Disorder 780.39--Disorder of cerebral function 
characterized by sudden attacks of altered consciousness, sensory 
changes, motor activity, or inappropriate behavior. May be focal 
(localized) or generalized.
    ae. Spinal cord dysfunction--non-traumatic 336.9--A non-
traumatic disorder affecting the spinal cord (for example, neoplasm; 
abscess; hematoma; neurologic manifestations of pernicious anemia; 
spina bifida); may be associated with pain, sensory impairment, 
abnormal reflexes, motor dysfunction.
    af. Spinal cord dysfunction--traumatic 952.9--Alteration of 
neurological function (for example, motor, sensory, reflexes) 
secondary to compression or laceration of the spinal cord.
    ag. Stroke (CVA) 436--A vascular insult to the brain that may be 
caused by intracranial bleeding, stenosis, thrombosis, infarcts, or 
emboli; may result in permanent neurological and physical 
dysfunction.

PSYCHIATRIC/MOOD

    ah. Anxiety Disorder 300.00--A disorder characterized by 
prominent symptoms of anxiety or phobic avoidance. This category 
includes generalized anxiety disorder, panic disorder, phobias, 
obsessive-compulsive disorder, post-traumatic stress disorder, acute 
distress disorder, and other anxiety disorders (for example, due to 
general medical condition; substance-induced).
    ai. Depression 311--A mood disorder often characterized by a 
depressed mood (for example, feels sad or empty; appears tearful), 
decreased ability to think or concentrate, loss of interest or 
pleasure in usual activities, insomnia or hypersomnia, loss of 
energy, change in appetite, feelings of hopelessness or 
worthlessness or guilt. May include thoughts of death or suicide.
    aj. Other psychiatric disorders 300.9--Other diagnosed 
psychiatric disorders not coded elsewhere on this assessment (for 
example, psychotic disorders, such as anorexia, bulimia; eating 
disorders).

PULMONARY

    ak. Asthma 493.9--Intermittent periods of wheezing and dyspnea 
as a result of variable and recurring airway obstruction.
    al. COPD 496--A group of conditions resulting in generalized 
airway obstruction (particularly the small airways) associated with 
varying combinations of asthma, chronic bronchitis, and emphysema. 
May also be called COLD (chronic obstructive lung disease). This 
category also includes chronic restrictive lung diseases such as 
asbestosis.

    Note: Do not code asthma or emphysema in this category if either 
of these are the patient's definitive diagnoses. If asthma only is 
present, code in item G2ak. If emphysema only is present, code in 
item G2am.

    am. Emphysema 492.8--A specific chronic obstructive pulmonary 
disease which is characterized by destructive changes in the alveoli 
which reduce the surface area for gas exchange.

OTHER

    an.Cancer 199.1--A diagnosis of a carcinoma characterized by a 
localized malignant tumor or abnormal cell growth that has not 
spread to other areas or systems of the body. This category also 
includes metastatic cancer--a diagnosis of a carcinoma characterized 
by a malignant tumor or abnormal cell growth that has spread to 
other areas or systems of the body.
    ao. Post surgery-non-orthopedic, non-cardiac V50.9--Status post 
any surgical procedure not noted in Section G.
    ap. Renal Failure 586--Derangement and insufficiency of renal 
excretory and regulatory function. This category includes acute 
(ARF) and chronic renal failure (CRF).
    aq. NONE OF THE ABOVE
    Process: Review patient's current medical record (including 
current physician treatment orders and nursing care plans), referral 
information and hospital discharge summary. If the patient was 
admitted from an acute care or rehabilitation hospital, the 
discharge forms often list diagnoses and corresponding ICD-9-CM 
codes that were current during the hospital stay. If these diagnoses 
are still present, record them using the appropriate code to 
categorize the nature of the patient's treatment regimen.
    There will be times when a particular diagnosis will not be 
documented in the medical record. If that is the case, accept 
statements by the patient that seem to have clinical validity, 
consult with the physician for confirmation, and initiate necessary 
physician documentation.
    For example: If a new patient reports that he or she had a 
severe depression and was

[[Page 66426]]

seeing a private psychiatrist in the community, this information may 
not have been documented in records accompanying the patient from an 
acute care hospital to the post acute setting.
    Physician involvement in this part of the assessment process 
would be beneficial. The physician can be asked to review the items 
in Section G at the time of visit closest to the scheduled MDS-PAC 
assessment. Use this scheduled visit as an opportunity to ensure 
that ``active'' diagnoses are noted and ``inactive'' diagnoses are 
appropriately designated. This is also an important opportunity to 
share the entire assessment with the physician. It is the 
responsibility of clinical staff to solicit physician input. 
Inaccurate or missed diagnoses can be a serious impediment to care 
planning. Thus, share this section of the assessment with the 
physician and ask for his or her input.
    Full physician review of the most recent assessment or ongoing 
input into the assessment currently being completed can be very 
useful to overall care planning. For the physician, the assessment 
completed by clinical staff can provide insights that would have 
otherwise not been possible. For clinical staff, the informed 
comments of the physician may suggest new avenues of inquiry, or 
help to confirm existing observations, or suggest the need for 
additional consultation and follow-up.
    Record a diagnosis only if the disease is being treated or 
monitored; or has a relationship to current ADL status, cognitive 
status, behavior status, medical treatment, nursing monitoring, or 
risk of death. For example, do not place a code for item G2g 
(hypertension) if one episode occurred several years ago unless the 
hypertension is either currently being controlled with drug therapy, 
diet, biofeedback, etc., or is being regularly monitored for 
recurrence. Likewise gallbladder surgery that occurred 15 years ago 
would not be recorded in item G2ao (Post surgery--non-orthopedic, 
non-cardiac) unless it had a relationship to the patient's current 
health status.
    Coding: Record all documented diagnoses in the appropriate 
category. Do not record any conditions that have been resolved and 
no longer affect the patient's functional status or care plan--leave 
the box blank. For each item that is present enter the most 
appropriate code to describe the patient's documented diagnosis.
    [Blank] Not present.
    1. Other primary diagnosis/diagnoses for current stay (not 
primary impairment). These are the diagnoses used to support and 
justify services being provided.
    2. Diagnosis present, patient is receiving active treatment (for 
example, drug therapy; therapeutic rehabilitation services; 
laboratory monitoring); other medical or skilled nursing 
intervention (for example, wound care; IV antibiotics; suctioning).
    3. Diagnosis present, patient monitored but condition is not 
being actively treated.
    If none of the conditions in Section G2 apply, check NONE OF 
ABOVE (G2aq). If you have more detailed information available in the 
clinical record for a more definitive diagnosis than is provided in 
the list in Section G2, record the general diagnosis in Section G2 
and then enter the more detailed diagnosis (with ICD-9-CM code) 
under Section G4.

3. Infections

    Intent: To document the presence of infections that have an 
impact or potential impact on the patient's overall function 
(physical, cognitive, mood and behavioral), treatment and/or 
discharge plans.
    a. Antibiotic resistant infection--any infection in which the 
bacteria have developed a resistance to the effective actions of an 
antibiotic (for example, Methicillin resistant staphylococcus aureus 
[MRSA 041.11], Vancomycin-resistant enterococcus [VRE 041.9]).
    b. Cellulitis 682.9--inflammation of cellular or connective 
tissue, spreading as in erysipelas. The process of inflammation 
spreading throughout the tissue is called cellulitis.
    c. Hepatitis 070.9--an inflammatory process in the liver usually 
caused by viral infection. This category includes acute and chronic 
viral hepatitis.
    d. HIV/AIDS 042--Code this item only if-- (A) there is 
supporting documentation in the medical record of (1) a positive 
blood test result for the Human Immunodeficiency Virus (HIV), or (2) 
a diagnosis of Acquired Immuno-deficiency Syndrome (AIDS), or (3) a 
diagnosis of AIDS-related complex (ARC); or (B) if the patient (or 
surrogate decision-maker) informs you of the presence of any of 
these diagnoses.
    e. Pneumonia 486--an acute bacterial or viral infection of the 
lungs.
    f. Osteomyelitis 730.2--an infection of bone, usually caused by 
bacteria or other pathogens. This category also includes infection 
of a surgically-implanted prosthesis.
    g. Septicemia 038.9--clinical manifestations of bacterial 
infection of the circulatory system (bacteremia) associated with 
inadequate tissue perfusion (hypotension, renal failure and risk of 
death).
    h. Staphylococcus infection (other than item ``G3a'' above) 
041.10--any infection identified as staphylococcus by culture that 
is not considered to be resistant to antibiotic treatment.
    i. Tuberculosis (active) 011.90--Diagnosis of active 
tuberculosis as evidenced by symptoms and/or currently receiving 
drug therapy (for example, isoniazid (INH), ethambutol, rifampin, 
cycloserine). Includes patients who have converted to PPD positive 
tuberculin status and are receiving drug treatment.
    j. Urinary Tract Infection 599.0--includes chronic and acute 
symptomatic infection. Code only if there is supporting 
documentation or significant laboratory findings in the medical 
record, or the patient is currently being treated or evaluated for a 
UTI.
    k. Wound Infection (958.3, 998.59, 136.9)--Category includes 
documentation of infection(s) of any type of wound (for example, 
surgical; traumatic; pressure ulcer) of any part of the body. Note: 
Report of wound culture may or may not be present in the medical 
record; diagnosis may be based on presence of drainage, erythema, 
edema, etc. around wound site.
    l. NONE OF THE ABOVE.
    Process: Review patient's medical record.
    Coding: Record all documented diagnoses of infection(s) in the 
appropriate category. Do not record any conditions that have been 
resolved and no longer affect the patient's functional status or 
care plan--leave the box blank. For each item that is present enter 
the most appropriate code to describe the patient's documented 
diagnosis.
    [Blank] Not present.
    1. Other primary diagnosis/diagnoses for current stay. These are 
the diagnoses used to support and justify services being provided.
    2. Diagnosis present, patient is receiving active treatment 
(drug therapy; therapeutic rehabilitation services; laboratory 
monitoring; other medical or skilled nursing intervention (for 
example, wound care; IV antibiotics; suctioning; respiratory 
therapy).
    3. Diagnosis present, patient monitored but condition is not 
being actively treated.
    If none of the conditions in Section G3 apply, check NONE OF 
ABOVE (G3l). If you have more detailed information available in the 
clinical record for a more definitive diagnosis than is provided in 
the list in Section G3, record the general diagnosis in Section G3 
and then enter the more detailed diagnosis (with ICD-9-CM code) 
under Section G4.
    For example: If the medical record states that the patient has 
``Pneumocystis carinii pneumonia'' record the nature of this 
diagnosis in item G3e (Pneumonia) and then record the more specific 
diagnosis and ICD-9-CM code in Section G4.

4. Other Current or More Detailed Diagnoses and ICD-9 Codes

    Intent: To identify and document conditions not listed in Items 
G1, G2 and G3 that have an impact or potential impact on the 
patient's current ADL status, mood and behavioral status, medical 
treatments, nursing monitoring, therapeutic rehabilitation, 
discharge plan or risk of death. Also, to record more specific 
designations for general disease categories listed in Sections G2 
and G3.
    Process: Review patient's current medical record, referral 
information and hospital discharge summary.
    Coding: If the patient does not have any other or more detailed 
diagnoses documented, leave the boxes blank.
    Enter the description of the diagnoses on the lines provided. 
For each diagnosis complete the following:
    Write in diagnosis in lines ``a'' through ``e''.
    Column A: enter the ICD-9-CM code for the diagnosis in the 
boxes, AND
    Column B: enter the code (from the following codes) that best 
characterizes the diagnosis.
    1. Other primary diagnosis/diagnoses for current stay (not 
primary impairment). These are the diagnoses used to support and 
justify services being provided.
    2. Diagnosis present, patient is receiving active treatment (for 
example, drug therapy; therapeutic rehabilitation services; 
laboratory monitoring); other medical or skilled nursing 
intervention (for example, wound care; IV antibiotics; suctioning).

[[Page 66427]]

    3. Diagnosis present, patient monitored but condition is not 
being actively treated.
    Any new diagnosis at reassessment or discharge is to be recorded 
in G4.

5. Complications/Comorbidities

    Intent: To identify and document comorbidities that may effect 
the patient's functional status or health.
    Definition: ``Complications, comorbid conditions, and high-risk 
medical disorders may occur with any Impairment Group when the 
occurrence delays or compromises rehabilitation by:
    Existing prior to the rehabilitation program.
    Occurring or existing during the rehabilitation program.
    Causing subject transfer to acute care.
    Causing subject death during the rehabilitation program'' 
(Uniform Data System for Medical Rehabilitation, Guide for the 
Uniform Data Set for Medical Rehabilitation-Version 5.1, Appendix A: 
UDSmr Policy Regarding ICD-9 Coding, p. A19.) NOTE: HCFA has 
excluded from the definition of comorbidities the recording of 
diagnoses by Rehabilitation Impairment Category. For example, stroke 
is not a comorbidity for the stroke Rehabilitation Impairment 
Category, cardiac is not a comorbidity for the cardiac 
Rehabilitation Impairment Category. The ``Rehabilitation Impairment 
Categories and Associated Impairment Group Codes'' were discussed 
previously in this guide.
    Process: Review the patient's medical record, referral 
information, hospital discharge summary, and consult with other 
clinical staff.
    Coding: For the comorbidities to enter in lines G5a thru G5d 
including the ICD-9-CM codes refer to ``Appendix C: List of 
Comorbidities'' which is one of the appendixes of this proposed 
rule. If no comorbid condition exists write in the words ``No 
comorbid condition'' once and enter ``0000.00'' in the associated 
boxes.

Section H. Medical Complexities

    Intent: To record clinical signs, symptoms, and conditions that 
affect or could affect the patient's health, functional, and 
psychosocial status and to identify risk factors for illness, 
accidents, and functional decline. Such factors need to be 
considered for treatment, rehabilitation, and discharge planning.
    Definition: Medical complexities--include a number of indicators 
which help clinicians and others form a picture of the clinical 
intensity and level of service the patient receives in the post 
acute setting.

1. Vital Signs

    Intent: To record the status of the patient's vital signs (that 
is, pulse; blood pressure; respiratory rate; temperature).
    Definition: Abnormal vital signs--see ranges in box below.
    Process: To interpret whether vital signs are within the range 
of ``normal'' usually requires an evaluation of several measurements 
rather than relying on a single value at one point in time. 
Therefore, review the results from the evaluation of the patient's 
vital signs over the past three days. In addition to reviewing vital 
signs, review the patient's clinical record, specifically, vital 
signs ``flow sheets'', and physician or nursing documentation in the 
medical record, referral sheet, or discharge summary.
    Coding: Code for the ``most abnormal'' set of vital signs over 
the last 3 days.
    0. All vital signs were normal/standard (that is, when compared 
to standard values).
    1. Vital signs abnormal, but not on all days during assessment 
period.
    2. Vital signs consistently abnormal (on all days).

2. Problem Conditions

    Intent: To record clinical signs, symptoms, and conditions that 
affect or could affect the patient's health, functional, and 
psychosocial status and to identify risk factors for illness, 
accidents, and functional decline. Such factors need to be 
considered for treatment, rehabilitation, and discharge planning.
    Process: Gather information from a variety of sources. Begin by 
reviewing the discharge referral record and current medical record, 
including laboratory data, consultation reports, and nursing 
observations. This will be the primary source of information. Check 
that it is complete by soliciting input from all members of the 
interdisciplinary team, including direct care providers (for 
example, certified nurse assistants). Finally, in your scheduled 
contact with the patient to assess other areas, interview, observe, 
and examine the patient to ensure nothing has been overlooked. 
Remember, you are reviewing problem conditions that have been 
present in the last 3 days.

Definition: FALLS/BALANCE

    a. Dizziness/vertigo/lightheadedness--The patient has 
experienced the sensation of unsteadiness, that he or she is 
``turning'', or that the surroundings are whirling/spinning around; 
or if the patient complained specifically of dizziness/vertigo/or 
lightheadedness in the last 3 days.
    b. Fell (since admission or last assessment)--Patient/family 
reports or medical record or discharge summary indicates the patient 
fell since admission or since last assessment.
    c. Fell in 180 days prior to admission--Patient/family reports 
or medical record or discharge summary indicates the patient fell in 
the 180 days prior to admission.

CARDIAC/PULMONARY

    d. Advanced cardiac failure (ejection fraction 25 percent)--
Check if EITHER documented cardiac disease with significant decrease 
in cardiac output (for example, documented ejection fraction 25 
percent) in last 60 days OR diastolic dysfunction, as indicated by 
repeated episodes of heart failure with a normal ejection fraction).
    e. Chest pain/pressure on exertion--The patient experiences any 
type of pain in the chest (or radiating to arm or jaw pain), which 
may be described as burning, pressure, stabbing, or discomfort, etc. 
associated with physical exertion.
    f. Chest pain/pressure at rest--The patient experiences any type 
of pain in the chest (or radiating to arm or jaw pain), which may be 
described as burning, pressure, stabbing, or discomfort, etc. that 
starts spontaneously and without physical exertion (at rest).
    g. Edema-generalized--Generalized abnormal pooling or 
accumulation of fluid in tissues throughout the body (not limited to 
specific site).
    h. Edema-localized--Abnormal pooling or accumulation of fluid in 
specific tissues (for example, pedal edema; lymphedema of upper 
extremity).
    i. Edema-pitting--Abnormal pooling or accumulation of fluid in 
tissues. Assessed by pressing the patient's skin firmly with the 
thumb for at least five seconds behind the medial malleolus, dorsum 
of the foot, or over the shin. If present, a ``thumb print'' will 
remain over the area of edema.
    j. Impaired aerobic capacity/endurance (tires easily, poor task 
endurance)--A symptom characterized by a limited ability to sustain 
a period of exercise or exertion due to decreased cardiac or 
respiratory function (may be as a result of disease or 
deconditioning).
    FLUID STATUS--It is often difficult to recognize when a frail, 
ill person is experiencing fluid overload that could precipitate 
congestive heart failure, or alternatively dehydration. Ways to 
monitor the problem, particularly in patients who are unable to 
recognize or report the common symptoms of fluid variation, are as 
follows:
    k. Constipation--The patient passes two or fewer bowel movements 
per week, or strains more than one out of four times when having a 
bowel movement.
    l. Dehydrated: output exceeds input (for example, BUN/creatinine 
ratio >25)--check this item if the patient's laboratory results 
reveal a blood urea nitrogen (BUN) to creatinine ratio greater than 
25 OR if the patient has 2 or more of the following indicators.
    <bullet> Patient's fluid intake is less than 2500 ml of fluids 
daily (water or liquids in beverages, water in food/supplements/
parenteral nutrition, IV fluids).
    <bullet> Patient has clinical signs of dehydration (for example, 
dry mucous membranes, decrease in skin elasticity).
    <bullet> Patient's fluid loss exceeds the amount of fluids he or 
she takes in (for example, loss from vomiting, fever, diarrhea that 
exceeds fluid replacement)--review the Input and Output record;
    m. Diarrhea--Frequent elimination of watery stools from any 
etiology (for example, diet, viral or bacterial infection).
    n. Internal bleeding--Includes gastrointestinal and other types 
of intestinal bleeding. Bleeding may be frank (such as bright red 
blood) or occult (such as guaiac positive stools); any documented 
bleeding as diagnosed by GI evaluation or any evidence of current 
bleeding through rectal exam or guaiac testing. Could also include: 
hematuria (blood in urine); hemoptysis (coughing up blood); or 
severe epistaxis (nosebleed), etc. present over the last 3 days that 
did not spontaneously resolve or that occurred more than once.
    o. Recurrent nausea/vomiting--Patient reports recurrent (more 
than one episode) sensations of having to vomit or actual 
regurgitation of stomach contents; code regardless of etiology (for 
example, drug side effect or toxicity; influenza; anxiety; 
obstruction; reaction to particular odors or sights).

[[Page 66428]]

    p. Refusal/inability to take liquids orally--Patient either 
rejects intake of fluids (for example, liquids, jello, sorbets, 
etc.) as a conscious decision or pushes them away, OR has a physical 
condition that inhibits intake of oral liquids (for example, nausea/
vomiting; dysphagia; severe candidiasis of oral mucosa, etc.).

OTHER

    q. Delusions/Hallucinations--Delusions are fixed, false beliefs 
not shared by others that the patient holds even when there is 
obvious proof or evidence to the contrary (for example, belief he or 
she is terminally ill; belief that spouse is having an affair; 
belief that food served by the hospital/facility is poisoned).
    Hallucinations are false perceptions that occur in the absence 
of any real stimuli. A hallucination may be auditory (for example, 
hearing voices), visual (for example, seeing people, animals), 
tactile (for example, feeling bugs crawling over skin), olfactory 
(for example, smelling fumes), or gustatory (for example, having 
strange tastes).
    r. Fever--Rectal temperatures above 100 deg.Fahrenheit 
(38 deg.Celsius) are considered significant. Many frail patients 
have normally low rectal baseline temperatures (for example, 
96 deg.). A fever is present when the patient's temperature ( deg.F) 
is 2.4 degrees greater than the baseline temperature.
    s. Hemi-neglect (inattention to one side)--For example, patient 
denies that their left arm belongs to them, shaves only on one side 
of face, ignores items to their left.
    t. Cachexia (severe malnutrition)--A condition of undernutrition 
and wasting that may occur in a variety of chronic diseases and 
malignancies.
    u. Morbid Obesity--According to a National Institute of Health 
consensus panel, a body weight that is double (twice) the ``ideal'' 
body weight of standard height-weight tables OR 100 pounds (45 g) 
overweight.
    Extremely obese persons are at great risk of serious disorders, 
including diabetes, hypertension, osteoarthritis, impairment in 
psychosocial well-being, and death from cardiovascular disease. 
(Refer to the latest (1983) Metropolitan Life Insurance Company 
standard height-weight table below to identify ideal/desirable body 
weights).

                                        Height and Weight Table For Women
----------------------------------------------------------------------------------------------------------------
                   Height (in feet and inches)                      Small frame    Medium frame     Large frame
----------------------------------------------------------------------------------------------------------------
4'10"...........................................................         102-111         109-121         118-131
4'11"...........................................................         103-113         111-123         120-134
5'0"............................................................         104-115         113-126         122-137
5'1"............................................................         106-118         115-129         125-140
5'2"............................................................         108-121         118-132         128-143
5'3"............................................................         111-124         121-135         131-147
5'4"............................................................         114-127         124-138         134-151
5'5"............................................................         117-130         127-141         137-155
5'6"............................................................         120-133         130-144         140-159
5'7"............................................................         123-136         133-147         143-163
5'8"............................................................         126-139         136-150         146-167
5'9"............................................................         129-142         139-153         149-170
5'10"...........................................................         132-145         142-156         152-173
5'11"...........................................................         135-148         145-159         155-176
6'0"............................................................         138-151         148-162         158-179
----------------------------------------------------------------------------------------------------------------


                                         Height and Weight Table for Men
----------------------------------------------------------------------------------------------------------------
                   Height (in feet and inches)                      Small frame    Medium frame     Large frame
----------------------------------------------------------------------------------------------------------------
5'2"............................................................         128-134         131-141         138-150
5'3"............................................................         130-136         133-143         140-153
5'4"............................................................         132-138         135-145         142-156
5'5"............................................................         134-140         137-148         144-160
5'6"............................................................         136-142         139-151         146-164
5'7"............................................................         138-145         142-154         149-168
5'8"............................................................         140-148         145-157         152-172
5'9"............................................................         142-151         148-160         155-176
5'10"...........................................................         144-154         151-163         158-180
5'11"...........................................................         146-157         154-166         161-184
6'0"............................................................         149-160         157-170         164-188
6'1"............................................................         152-164         160-174         168-192
6'2"............................................................         155-168         164-178         172-197
6'3"............................................................         158-172         167-182         176-202
6'4"............................................................         162-176         171-187         181-207
----------------------------------------------------------------------------------------------------------------

    v. End-stage disease, life expectancy of 6 or fewer months--The 
intent of this item is to heighten staff awareness of the potential 
terminal nature of the patient's condition so that an appropriate 
course of care can be developed. In one's best clinical judgement, 
the patient in the final (end) stage of a disease process (for 
example, COPD; malignancy; cardiac disease; Alzheimer's disease, 
etc.) and has only six or fewer months to live. Although it is often 
difficult to make such a prognosis, this judgement should be 
substantiated by a physician and the presence of a deteriorating 
clinical course.
    w. NONE OF THE ABOVE--The patient has not experienced any of the 
above conditions.
    Coding: Check all problems present in the last three days, 
unless other time frames are indicated. If none apply, check NONE OF 
THE ABOVE.

3. Respiratory Conditions

    Intent: To identify and record signs, symptoms or conditions of 
respiratory distress that could have a direct or indirect affect on 
the patient's ability to function, participate in rehabilitation and 
on the patient's plan of care, including discharge. More than one 
condition may apply.
    Definition: a. Inability to lie flat due to shortness of 
breath--In the last 3 days the patient reported feeling 
``breathless'' or short of breath (dyspneic), or has been observed 
to be short of breath, while lying supine; requires more than one 
pillow or has the head of the bed mechanically raised in order to 
breathe more comfortably.

[[Page 66429]]

    b. Shortness of breath with exertion--In the last 3 days the 
patient has reported becoming ``breathless'' or short of breath 
(dyspneic), or has been observed to be short of breath, even with 
mild exertion such as taking a bath, transferring from bed to chair, 
toileting.
    c. Shortness of breath at rest--In the last three days the 
patient reported feeling ``breathless'' or short of breath 
(dyspneic), or was observed being short of breath, at rest (for 
example, sitting, talking).
    d. Oxygen saturation  90 percent--In the last 3 days the 
patient's oxygen saturation level (obtained by oximeter) was less 
than 90 percent (either while receiving or not receiving oxygen 
therapy).
    e. Difficulty coughing and clearing airway secretions--In the 
last 3 days the patient reports or has been observed to be unable to 
cough effectively to expel respiratory secretions (for example, 
secondary to weakness, pain) or is unable to mobilize secretions or 
sputum from mouth (for example, secondary to dysphagia or pain) or 
tracheostomy (for example, secondary to viscosity of sputum; 
inability to physically remove secretions from tracheostomy 
entrance). Examples might include a post abdominal surgery patient 
unable to cough due to incisional pain, or a comatose patient that 
required suctioning to manage secretions.
    f. Recurrent aspiration--In the last 3 days a patient with a 
history of at least one or more episodes of aspiration (inspiration) 
of fluids/food/secretions, etc. into lungs, exhibits clinical signs 
and symptoms of another episode. Recurrence often occurs in patients 
with swallowing difficulties or who receive tube feedings (that is 
esophageal reflux of stomach contents). Clinical indicators include 
productive cough, shortness of breath, wheezing. It is not necessary 
that there be X-ray evidence of lung aspiration for this item to be 
checked.
    g. Recurrent Respiratory Infection--In the last 3 days patient 
with a history of respiratory infection (for example., pneumonia; 
bronchitis) with evidence of a recurrence (for example, prior 
infection not resolved with medical intervention; infection has been 
experienced multiple times).
    h. NONE OF THE ABOVE--In the last 3 days none of the above 
conditions were present.
    Process: Interview and observe the patient. Review the patient's 
medical record, including consultation reports by a respiratory 
therapist and laboratory data such as arterial blood gases (ABG's), 
as indicated.
    Coding: Check all conditions that were present in the last three 
days. If no conditions apply, check NONE OF THE ABOVE.

4. Pressure Ulcers

    Intent: To identify and document the presence, stage and number 
of pressure ulcers, and, if present, record the characteristics 
(that is the size, exudate, and predominant tissue) of the ulcer(s).
    Definition: Pressure Ulcer--Any lesion caused by unrelieved 
pressure resulting in damage of underlying tissue. Pressure ulcers 
usually occur over bony prominences and are graded or staged to 
classify the degree of tissue damage observed (Agency for Health 
Care Policy Research, 1992).
    Pressure Ulcer Stage--The following pressure ulcer staging 
definitions are consistent with the recommendations of the Agency 
for Health Care Policy Research (AHCPR, 1992) and the National 
Pressure Ulcer Advisory Panel (NPUAP, 1989). A shorter version of 
these definitions appear on the form as coding options for Items H4a 
(highest current pressure ulcer stage).
    a. Highest current pressure ulcer stage.
    0. No pressure ulcer.
    1. (Stage 1) Any area of persistent skin redness.
    2. (Stage 2) Partial loss of skin layers.
    3. (Stage 3) Deep craters in the skin.
    4. (Stage 4) Breaks in skin exposing muscle or bone.
    5. Not stageable (necrotic eschar predominant, no prior staging 
available).
    PUSH (Pressure Ulcer Healing Scale) Score--A tool to monitor 
pressure ulcer healing over time. The PUSH Score is measured by 
assessing wound size, amount of exudate, and characteristics of 
predominant tissue. The PUSH is used in Items 4c through 4f.
    (a) Highest current pressure ulcer stage.
    Intent: In conjunction with other items, to facilitate the 
monitoring of pressure ulcer healing or worsening over time.
    Process: Examine the patient for pressure ulcers and determine 
pressure ulcer stage. Without a full body inspection, an ulcer can 
be missed. If the patient has more than one ulcer, determine which 
ulcer has the highest (worst) ulcer stage. This type of information 
may be found in referral records (including discharge summaries), 
clinical progress notes, flow sheets, or patient care plans. Review 
these records to determine the highest ulcer ever achieved for any 
ulcer the patient currently has.
    Coding: Record the highest (worst) current pressure ulcer stage. 
If the predominant tissue of the ulcer is necrotic eschar, 
prohibiting accurate staging, code ``5'', Not Stageable (necrotic 
eschar predominant; no prior staging available). If the patient has 
no pressure ulcers, record ``0'' (No pressure ulcers) in the box 
provided.
    (b) Number of current pressure ulcers.
    Process: Examine the patient for pressure ulcers. Without a full 
body inspection, an ulcer can be missed. COUNT the number of 
pressure ulcers.
    Coding: Record the number of pressure ulcers, including ulcers 
that cannot be accurately staged (that is, if the predominant tissue 
of the ulcer is necrotic eschar). If the patient has no pressure 
ulcers, record ``0'' (No pressure ulcers) in the box provided.
    (c-f) PUSH Scale (Items c through f).
    The next four items (c through f) represent the PUSH Scale 3.0 
developed by the National Pressure Ulcer Advisory Panel (NPUAP, 
1998) to monitor pressure ulcer healing over time. For purposes of 
this assessment there are three important things to remember for 
this section:
    <bullet> The PUSH Scale (items ``c'' through ``f'') can only be 
calculated for ulcers of Stage 2 and higher OR for ulcers where 
necrotic eschar is the predominant tissue. If highest pressure ulcer 
stage is ``0'' or ``1'', enter code of ``0'' in c, d, e, and f.
    <bullet> Select the LARGEST ulcer. Note: The largest ulcer may 
not necessarily be the ulcer with the highest ulcer stage.
    <bullet> Although the PUSH Scale was designed to evaluate the 
healing of a pressure ulcer, its use in this assessment is to 
provide a ``snapshot'' of the status for the largest ulcer present 
at the time of the assessment. When tracked over time, we can know 
the highest PUSH score that characterizes the patient's pressure 
ulcer status.
    (c) Length multiplied by width (open wound surface area).
    Materials: You will need a centimeter ruler to measure the 
surface area of an open wound. Although it's not necessary, it is 
also helpful to use a calculator for multiplying ulcer measurements 
to calculate the total open wound surface area.
    Process: <bullet> Using a centimeter ruler, measure the greatest 
length (head to toe) and the greatest width (side to side) of the 
ulcer margins (for example, the edges of the ``open'' areas). If 
necrotic eschar is the predominant tissue and the ulcer is not 
``open'', measure from edge to edge of the eschar.
    <bullet> Multiply these two measurements (length x width) to 
obtain an estimate of the surface area in square centimeters 
(cm<SUP>2</SUP>). Do not guess! Always use a centimeter ruler and 
always use the same method each time the ulcer is measured.
    Coding: Record the number that corresponds to the largest 
pressure ulcer's open wound surface area using the following codes:
    0. 0 cm<SUP>2</SUP>.
    1. 0.3 cm<SUP>2</SUP>.
    2. 0.3-0.6 cm<SUP>2</SUP>.
    3. 0.7-1.0 cm<SUP>2</SUP>.
    4. 1.1-2.0 cm<SUP>2</SUP>.
    5. 2.1-3.0 cm<SUP>2</SUP>.
    6. 3.1-4.0 cm<SUP>2</SUP>.
    7. 4.1-8.0 cm<SUP>2</SUP>.
    8. 8.1-12.0 cm<SUP>2</SUP>.
    9. 12.1-24.0 cm<SUP>2</SUP>.
    10. >24 cm<SUP>2</SUP>.
    (d) Exudate amount.
    Process: Estimate the amount of exudate (drainage) present after 
removal of the dressing and before applying any topical agent to the 
ulcer for the selected (largest) pressure ulcer.
    Coding: Record the response that best estimates the amount of 
exudate (drainage).
    0. None.
    1. Light.
    2. Moderate.
    3. Heavy.
    (e) Tissue Type.
    Process: Inspect the selected (largest) pressure ulcer and note 
the tissue that occupies the majority of the ulcer bed. Divide the 
ulcer bed into four imaginary quadrants, each representing about \1/
4\ of the original ulcer surface. Estimate the portion or amount of 
each tissue type on the ulcer. Determine the predominant tissue type 
on the ulcer.
    Coding: Record the response that describes the most predominant 
tissue type.
    0. Closed/Resurfaced--The wound is completely covered with 
epithelium (new skin).
    1. Epithelial Tissue--For superficial ulcers, new pink or shiny 
tissue (skin) that grows in

[[Page 66430]]

from the edges or as islands on the ulcer surface.
    2. Granulation Tissue--Pink or beefy red tissue with a shiny, 
moist, granular appearance.
    3. Slough--Yellow or white tissue that adheres to the ulcer bed 
in strings or thick clumps/or is mucinous.
    4. Necrotic tissue (eschar)--Black, brown or tan tissue that 
adheres firmly to the wound bed or ulcer edges and may be either 
firmer or softer than surrounding skin.
    (f) Total PUSH (Pressure Ulcer Healing Scale) Score.
    Process: Add up the scores from Items H4c (open wound surface 
area) + H4d (exudate amount) + H4e (tissue type). This sum 
represents the total PUSH Score.
    Coding: Record the number that represents the Total PUSH Score 
in the box provided.

5. Other Skin Integrity

    (a) Number of stasis ulcers (in the last 24 hours).
    Definition: Stasis ulcer--An open lesion, usually of the ankle 
or lower third of the lower extremities, caused by chronic venous 
stasis or insufficiency. In the medical record one may also find 
this type of ulcer referred to as a ``venous ulcer'' or ulcer 
related to peripheral vascular disease (PVD).
    Process: Examine the patient and review the clinical record. 
COUNT the number of stasis ulcers present in the last 24 hours.
    Coding: Record the number of stasis ulcers in the box provided. 
If there are no stasis ulcers, code a ``0'' in the box.
    (b) Number of surgical wounds (in the last 24 hours).
    Definition: Surgical wounds--Includes healing and non-healing, 
open or recently closed (since onset of precipitating event in A7a) 
surgical incisions, skin grafts or drainage sites on any part of the 
body. This category does not include healed surgical sites or 
stomas.
    Process: Examine the patient's body and COUNT the number of 
surgical wounds present in the last 24 hours.
    Coding: Record the number of surgical wounds in the box 
provided. If there are no surgical wounds, code a ``0'' in the box.
    (c) Ulcer resolved or healed in last 90 days.
    Definition: Ulcer--For this item, the term ulcer refers to ANY 
lesion caused by pressure (that is, pressure ulcer; bedsore; 
decubitus ulcer) or venous stasis/insufficiency (that is, stasis 
ulcer).
    Process: Review the patient's clinical record over the last 90 
days for documentation of the presence of a pressure or stasis ulcer 
that has been healed (that is, closed/resurfaced; new tissue 
entirely covers the wound). Validate findings by examining the 
patient's body.
    Coding: Record the most appropriate response to indicate that 
the patient had an ulcer that was resolved or healed in the last 90 
days. If the patient did not have an ulcer that resolved in the last 
90 days, use a code of ``0'' in the box. Note: The patient may still 
have other ulcers in various stages of healing.
    0. No, or never had ulcer.
    1. Yes.

6. Other Skin Problems or Lesions Present

    Intent: To document the presence of skin problems other than 
ulcers or surgical wounds, and conditions that are risk factors for 
more serious problems.
    Definition: a. Burns (second or third degree)--Includes burns 
from any cause (for example, heat, electricity, chemicals, 
radiation, or gases) that affects skin deeper than the epidermis or 
outermost layer of skin. This category does not include first degree 
burns (changes in skin color only).
    b. Open lesions other than rashes, cuts (for example, cancer 
lesions, ulcers)--Any open area of the skin unrelated to pressure, 
venous stasis, surgery, trauma or rashes.
    c. Rashes--Includes inflammation or eruption of the skin that 
may include change in color, spotting, blistering, etc. and symptoms 
such as itching, burning, or pain. Record rashes from any cause (for 
example, eczema, heat, drugs, bacteria, fungus, viruses [such as 
herpes zoster, chicken pox], parasites [such as scabies, lice], 
contact with irritating substances such as urine or detergents, 
allergies, etc.). Intertrigo refers to rashes (dermatitis) within 
skin folds.
    d. Skin tears or cuts (other than surgery)--Any traumatic break 
in the skin penetrating to subcutaneous tissue not caused by 
surgical puncture or incision. Examples include lacerations, 
punctures wounds, etc.
    e. NONE OF THE ABOVE.
    Review the patient's record for documentation of impairment of 
this type. An obvious example of a patient with this problem is 
someone who is comatose. Other patients at high risk include those 
with quadriplegia, paraplegia, hemiplegia or hemiparesis, peripheral 
vascular disease and neurological disorders.
    Process: Ask the patient if he or she has any problem areas. Ask 
the nurse assistant and examine the patient. Review the patient's 
record. You are assessing for skin problem areas present over the 
last 24 hours.
    Coding: Check all that apply for the last 24 hours. If there is 
no evidence of such problems in the last 24 hours, check NONE OF THE 
ABOVE.

Section I. Pain Symptoms

    Intent: The intent of this section is to identify other health 
conditions that have an impact on the patient's quality of life, 
health risks, and plan of care, including the discharge plan.

1. Pain Symptoms

    Intent: To evaluate and record the presence, frequency and 
intensity of pain and how it is managed. Pain can impact the patient 
in many ways, including affecting his or her ability to meet 
established goals. It is essential that pain is assessed and an 
effective pain management plan put in place in order to optimize the 
patient's recovery and quality of life. Items I1a through I1b refer 
to pain in the last 3 days. In item I1c, how the patient's current 
perception of pain compares to pain status prior to precipitating 
event (item A7a). For care planning purposes these items can be used 
to determine the characteristics of the patient's pain and to 
monitor his or her response to pain management interventions.
    Definition: Pain--pain refers to any type of physical pain or 
discomfort in any part of the body. Pain may be localized to one 
area, or may be more generalized. It may be acute or chronic, 
continuous or intermittent (comes and goes), or occur at rest or 
with movement. The pain experience is very subjective; pain is 
whatever the patient says it is. If the patient complains of pain, 
record that pain is present.
    Pain assessment may depend on the observation of others (that 
is, cues), either because the patient does not complain, or is 
unable to verbalize or describe symptoms.
    Process: This evaluation is based solely on the patient's 
perception of pain, or in cases where the patient has limited 
ability to communicate, staff's interpretation of behaviors that 
might indicate pain. Ask the patient to categorize the highest level 
of pain they have experienced over each time period.
    Ask the patient if he or she has experienced any pain or 
discomfort in the last three days and ask him/her to describe it. If 
the patient states he or she has pain, take his or her word for it. 
Pain is a subjective experience.
    Observe the patient for indicators of pain. Observation is 
particularly important in patients who are unable to communicate 
their experiences of pain. Indicators may include moaning, crying, 
and other vocalizations; wincing or frowning and other facial 
expressions; or body posture such as guarding/protecting an area of 
the body, lying very still or decreasing usual activities (to 
prevent pain from occurring).
    In severely cognitively impaired patients, the pain experience 
is particularly difficult to discern. For example, in patients who 
cannot verbalize that they are feeling pain, discomfort may be 
manifested by behaviors such as calling out for help, pained facial 
expressions, refusing to eat, or striking out at a nurse assistant 
who tries to move them or touch a body part. Although such behaviors 
may not be solely indicative of pain, code for the frequency and 
intensity of symptoms if in your best clinical judgement it is 
possible that the behavior could be caused by the patient 
experiencing pain.
    Ask nurse assistants and therapists who work with the patient if 
the patient had complaints or indicators of pain the last three 
days.
    Coding: For each of the following items (I1a through I1b) code 
for the HIGHEST LEVEL OF PAIN the patient experienced in the last 
three days, even while receiving treatments.
    a. FREQUENCY--Measures how often the patient experiences pain 
(reports or shows evidence of pain).
    Codes: 0. No pain.
    1. Pain less than daily.
    2. Daily--single shift.
    3. Daily--multiple shifts.
    b. INTENSITY `` Measures the level of pain as the patient 
perceives it (described or manifested by the patient). Use the 
following scale to indicate the level of pain experienced:
    Codes: 0. No pain.
    1. Mild pain--Although the patient experiences some (``a 
little'') pain he or she is usually able to carry on with daily 
routines, socialization, or sleep.
    2. Moderate pain--Patient experiences ``a medium'' amount of 
pain.
    3. Severe pain--Patient experiences intense pain.

[[Page 66431]]

    4. Times when pain is horrible or excruciating--Worst possible 
pain the person can imagine.
    c. CURRENT PAIN STATUS as compared to pain status prior to 
precipitating event item (A7a). Patient's experience of pain NOW as 
compared to pain status prior to precipitating event. Note: If the 
patient has no pain now and no pain prior to precipitating event 
(item A7a), code ``0'', same.
    Coding: 0. Same.
    1. Better.
    2. Worse.
    8. UNKNOWN--The patient is unable to describe how the pain 
compares OR there is no available information in the clinical record 
or via family or professional caregivers.

Section J. Oral/Nutritional Status

1. Oral Problems

    Intent: To record any oral or nutritional problems in the last 3 
days.
    Definition: a. Chewing Problem--Inability to chew regular food 
easily and without pain or difficulties, regardless of cause (for 
example, poor mastication, immobile jaw, recent oral surgery, 
temporomandibular joint pain, decreased sensation/motor control).
    b. Dental Problem--Upon exam and interview of the patient, 
problems with teeth are identified (for example, ill--fitting or 
lack of dentures, painful tooth, poor dental hygiene).
    Process: Examine and interview the patient--this is the crucial 
part of the process, without this examination, oral problems often 
go undetected. Review clinical records. Talk to the nurse assistants 
who have recently helped the patient with his/her ADL's.
    Coding: Record the most appropriate response in the box 
provided. Code ``0'' for No and ``1'' for Yes.
    2. Swallowing
    Intent: The ability to swallow safely can be affected by many 
disease processes and functional decline. Alterations in one's 
ability to swallow can result in choking and aspiration, both of 
which can cause morbidity and mortality. Often patients with 
swallowing difficulties require altered consistencies of food and 
fluids OR may not be able to ingest nutrition by mouth. This item 
details the diet consistencies and modifications in place to address 
swallowing difficulties.
    Process: Observe patient. Review the patient's clinical record, 
including MD, dietitian and Speech Language Pathology notes if 
applicable.
    Coding: Using the codes provided, indicate which item best 
describes the dietary prescriptions to address swallowing 
difficulties.
    0. Normal--Safe and efficient swallowing of all diet 
consistencies.
    1. Requires diet modification to swallow solid foods (mechanical 
diet or able to ingest specific foods only).
    2. Requires modification to swallow solid foods and liquids 
(puree, thickened liquids).
    3. Combined oral and tube feeding [tube feeding (via NGT, GT, 
JT), and some oral intake]
    4. No oral intake (NPO)

3. Height and Weight

    Intent: To establish a height and weight in order to monitor 
nutrition and hydration status over time, to establish a baseline to 
monitor changes in weight over time.
    Process: Base weight on the most recent measure in the last 3 
days. Utilize your facility's standard of practice to ensure 
consistency in measuring weights (for example, in a.m. after 
voiding, before breakfast, with shoes off and in night clothes).
    Coding: Record in ``box a.''--Height in inches and in ``box 
b''--Weight in pounds.

4. Weight Change

    Intent: To assess any presence of weight loss or gain.
    Process: Review clinical record, weight records, and dietary 
notes to assess weight history. Since patient may have only been in 
your facility a few days, it may be difficult to obtain accurate 
factual information. Utilize patient and family interview to 
determine appropriate coding.
    a. Weight Loss.
    Definition:Weight loss in percentages (for example, 5 percent or 
more in last 30 days).
    Process: New admission `` Ask the patient or family about weight 
changes over the last 30 days. Consult physician, review transfer 
documentation and compare with admission weight. Calculate weight 
loss in percentages during the specified time periods.
    Current patient `` Review the clinical records and compare 
current weight with weights of 30 days ago. Calculate weight loss in 
percentages during the specified time periods.
    Coding: 0. No or unknown.
    1. Yes, planned loss.
    2. Yes, unplanned loss.
    b. Weight Gain.
    Definition: Weight gain in percentages (for example, 5 percent 
or more in last 30 days).
    Process: New admissions--Ask the patient or family about weight 
changes over the last 30 days. Consult physician, review transfer 
documentation and compare with admission weight. Calculate weight 
gain during the specified time periods.
    Current weight `` Review the clinical records and compare 
current weight with weights of 30 days ago. Calculate weight gain 
during the specified time periods.
    Coding: 0. No or unknown.
    1. Yes, planned gain.
    2. Yes, unplanned gain.
    5. Parenteral or Enteral Intake
    Intent: To record the proportion of all calories received, and 
the average fluid intake, through parenteral or tube feeding in the 
last 3 days.
    a. The proportion of total calories the patient received through 
parenteral or tube feedings in last 3 days.
    Definition:Proportion of total calories received--the proportion 
of all calories ingested during the last 3 days that the patient 
actually received (not just ordered) by parenteral or tube feedings. 
Determined by calorie count.
    Process: Review clinical record, particularly the intake flow 
sheets. Consult with the dietitian who can derive a calorie count 
received from parenteral or tube feedings.
    Coding: Code for the best response. If the patient took no food 
or fluids by parenteral or tube feedings, or took just sips of 
fluid, code ``0'' (None).
    0. None.
    1. 1 percent to 25 percent.
    2. 26 percent to 50 percent.
    3. 51 percent to 75 percent.
    4. 76 percent to 100 percent.
    b. Average fluid intake per day by IV or tube in last 3 days.
    Definition: Average fluid intake per day by IV or tube in last 3 
days refers to the actual amount of fluid the patient received by 
these modes (not the amount ordered).
    Process: Review the Intake and Output record from the last 3 
days. Add up the total amount of fluid received each day by IV and/
or tube feedings only. Divide the total fluid intake during this 
time by 3. This will give you the average of fluid intake per day.
    Coding: Code for the average number of cc's of fluid the patient 
received per day by IV or tube in last 3 days.
    Codes: 0. None.
    1. to 500 cc/day.
    2. 501 to 1000 cc/day.
    3. 1001 to 1500 cc/day.
    4. 1501 to 2000 cc/day.
    5. 2001 or more cc/day.

Section K. Procedures/Services

    Intent: To document the service, treatments, procedures and 
devices the patient received over the last 3 days.

1. Clinical Visits and Orders

    Intent: To document the number of physician, nurse practitioner, 
and physician assistant visits in which the patient was examined and 
notes written, as well as the number of order changes in the last 3 
days.
    Process: Review the medical record, including physician, nurse 
practitioner, and physician assistant orders over the last 3 days. 
See specific processes under each of the following definitions:
    Definition: a. Total number of physician visits (by attending, 
consultant, etc.) in which the patient was examined and MD notes 
written--This category also includes any primary care or consulting 
osteopath, podiatrist or dentist. Review the medical record and add 
up the total number of physician visits the patient had in the last 
three days. Count only those where the patient was actually seen and 
examined/assessed by the physician as indicated by physician notes 
specifically indicating findings/results of the examination. 
Examination/assessment may be a partial or full exam that occurs at 
the facility or physician's office/clinic. This category does not 
include exams conducted in an emergency room.
    b. Number of times physician or nurse practitioner called to 
bedside for emergency (for example, cardiorespiratory arrest, 
hemorrhaging, to evaluate change in condition)--Once again the 
physician category also includes bedside visits for emergencies by 
MD, osteopath, podiatrist, or dentist.
    c. Number of nurse practitioner (NP) visits in which patient 
examined and notes

[[Page 66432]]

written--Review the medical record and add up the total number of NP 
visits the patient had in the last 3 days. Count only those where 
the patient was actually seen and examined/assessed as indicated by 
NP notes specifically indicating findings/results of the 
examination.
    d. Number of physician assistant (PA) visits in which patient 
examined and notes written--Review the medical record and add up the 
total number of PA visits the patient had in the last 3 days. Count 
only those where the patient was actually seen and examined/assessed 
as indicated by PA notes specifically indicating findings/results of 
the examination.
    e. Number of new or changed orders--Includes written, telephone, 
fax, or consultation orders for new or altered treatment. Does NOT 
include admission orders, return admission orders or renewal orders 
without changes. Does include orders for lab tests. Review the 
physician order sheet in the medical record and add up the total 
amount of new or changed orders by M.D., osteopath, podiatrist, 
dentist, NP or PA.
    Coding: For each clinical visit or order, record how often it 
was provided to the patient in the last 3 days.

2. Treatments and Services

    Intent: To document the following:
    <bullet> Column A--over the last 3 days, code for treatment 
frequency [either daily (Code 3) or less than daily (Code 2) or 
ordered, not yet implemented (Code 1)].
    <bullet> Column B--Record whether patient will receive service 
after discharge.
    Process: Column A--Review patient's plan of care with the 
primary caregiver, and review the current medical record, referral 
information and hospital discharge summary. Use the following coding 
instructions to indicate how often each of these services was 
provided in the last 3 days. Note: These treatments and services 
must either be ordered by a physician or performed by a licensed 
professional and documented appropriately.
    Column B--This column is to be completed ONLY at the discharge 
assessment (Item AA3 = 5). Review the patient's plan of care with 
the primary caregiver, and review the current medical record. Use 
the coding instructions for Column B (below) to indicate whether the 
patient will receive the service/treatment after discharge.
    Coding: Column A--For each treatment or service indicate how 
often it was provided to the patient in the last 3 days. If none of 
these treatments were provided, check NONE OF ABOVE (Item K2aiA, 
located in the bottom right hand corner of Section K2, Treatments 
and Services). For any activity that did not occur, or was not 
ordered, leave the box next to that item blank. Code for most 
intense treatment on any one day using the following codes:
    [Leave blank] if treatment did not occur, not ordered.
    Code ``1'' If the treatment was ordered, but has not yet been 
implemented.
    Code ``2'' If the treatment occurred less than daily.
    Code ``3'' If the treatment occurred daily.
    Column B--For each treatment or service (``a'' through ``ah'') 
indicate whether the patient will receive it after discharge. Leave 
``Blank'' for No, Code ``1'' for Yes. This information is obtained 
on a Discharge Assessment only.

Definition: MEDICATION RELATED

    a. Diabetic management--Involves a variety of activities 
centered around stabilization of blood sugar, including determining 
sliding scale insulin dosages, and blood sugar monitoring. In order 
to use codes 1-3 in Column A, there must be documentation of changes 
in type of insulin, insulin dosing, or reports/documentation of 
blood sugar levels.
    b. Injections--Subcutaneous, intramuscular, or intradermal 
injections of any type of medication, antigen, or vaccine. Although 
antigens and vaccines are considered ``biologicals'' and not 
medication per se, it is important to track when they are given in 
order to monitor for systemic reactions. This category does not 
include intravenous fluids or medications. If the patient received 
IV medications, record in Item K2c. (If the patient received IV 
fluids, record in Item J5b).
    c. IV antibiotics/medications--Administration of antibiotics or 
other medications by means of infusion therapy. Includes any drug or 
biological (for example, contrast material) given by intravenous 
push or drip through a central or peripheral port. Does not include 
a saline or heparin flush to keep a heparin lock patent, or IV 
fluids without medication.

SKIN TREATMENT

    d. Application of dressing--Includes dry gauze dressings, 
dressings moistened with saline or other solutions, transparent 
dressings, hydrogel dressings, and dressings with hydrocolloid or 
hydroactive particles.
    e. Application of ointments, topical medications--Includes 
ointments or medications used to treat a skin condition (for 
example, cortisone, antifungal preparations, chemotherapeutic 
agents, etc.). This definition does not include ointments used to 
treat non-skin conditions (for example, nitropaste for chest pain).
    f. Debridement (chemical or surgical)--Chemical debridement is 
the process of removing dirt or dead tissue from a wound or burn 
using chemical agents or dressing change products to promote wound 
healing. Surgical debridement is the process of surgically removing 
dirt or dead tissue from a wound or burn to promote wound healing.
    g. Nutritional/hydration intervention to manage skin problems--
Any nutritional intervention whose purpose is to promote wound 
healing (for example, high protein drinks, TPN/PPN).
    h. Pressure relieving bed/chair--Pressure relieving devices for 
the bed include air fluidized, low airloss therapy beds, flotation, 
water, or bubble mattress or pad placed on the bed. Do not include 
egg crate mattresses in this category. Pressure relieving devices 
for the chair include gel, air (for example, Roho) or other 
cushioning placed on a chair or wheelchair. Do not include egg crate 
cushions in this category.
    i. Turning and repositioning--Includes a continuous, consistent 
program for changing the patient's position and realigning the body.
    j. Ulcer Care--Includes any intervention for treating an ulcer 
at any ulcer stage. Examples include use of dressings, chemical or 
surgical debridement, wound irrigations, and hydrotherapy.
    k. Wound care (surgical)--Includes any intervention for treating 
or protecting any type of surgical wound. Examples of care include 
topical cleansing, wound irrigation, application of microbial 
ointments, dressings of any type, suture removal, and warm soaks or 
heat application.

MANAGEMENT OF HEALTH PROBLEMS

    l. Bladder training--A planned program aimed at assessing and 
treating bladder incontinence.
    m. Scheduled toileting--A plan whereby staff members at 
scheduled times either take the patient to the toilet room, or give 
the patient a urinal, or remind the patient to go to the toilet. 
Includes habit training or prompted voiding.
    n. Bowel program--A planned program aimed at treating bowel 
incontinence. A bowel program also includes a program of planned 
bowel elimination as with patients with spinal cord injury.
    o. Cardiac monitoring/Rehabilitation--Cardiac monitoring 
includes electrical surveillance of heart rates and patterns either 
through EKG or telemetry. Rehabilitation is a formalized program 
focusing on regaining function and endurance that has been limited 
by either a chronic or acute cardiac disease.
    p. Cast(s)--A device used to immobilize limbs or joints to 
promote healing or as a treatment for various musculoskeletal 
problems.
    q. Continuous or bi-level positive airway pressure (CPAP or 
BiPAP)--Assistive breathing device which provides the patient with a 
continuous flow of air throughout the breathing cycle.
    r. Drains (cutaneous drains and other drains)--A heavy gauged 
tube used to remove air, fluid, or exudate from a body cavity or 
wound (exclude chest tubes).
    s. Dialysis (includes hemodialysis and peritoneal dialysis)--
Hemodialysis is a method for removing unwanted byproducts from the 
blood of patients with renal insufficiency or failure through the 
use of a machine (dialyzer). Peritoneal dialysis (CAPD) is a method 
of removing unwanted by-products from the body through the 
instillation of dialysate into the peritoneal cavity and using the 
abdominal wall as a filter.
    t. Enteral Feeding Tube--Any tube inserted into the 
gastrointestinal tract for the purpose of nutrition, hydration, or 
medication administration. (This includes, jejunostomy, gastrostomy, 
and PEG tubes).
    u. IV line-Central--A catheter which is placed in the more 
``central'' veins such as subclavian, jugular, or superior vena 
cava, for the purpose of monitoring, and administration of 
medications and fluids. This item includes the insertion, 
discontinuation, and maintenance of this IV line, including dressing 
changes, evaluation for patency, assessment for adverse effects (for 
example, infection), and flushes.

[[Page 66433]]

    v. IV line-peripheral--A catheter which is placed in a 
peripheral vein (usually hand or arm) for administration of 
medications and fluids. This item includes the insertion, 
discontinuation, and maintenance of this IV line, including dressing 
changes, evaluation for patency, assessment for adverse effects (for 
example, infiltration; infection; cellulitis) and flushes.
    w. NG feeding tube--A tube inserted through the nose and 
extending into the stomach.
    x. Oxygen--Either the intermittent or continuous use of oxygen 
to support, promote or maintain vital functions and comfort.
    y. Pain management other than drugs--Any documented non-
pharmaceutical intervention designed to decrease or alleviate pain. 
Examples may include (but are not limited to) acupuncture, 
relaxation therapy, hypnosis, TENS therapy.
    z. Suctioning-oral/nasopharyngeal--Removing secretions or other 
matter from the respiratory system through the mouth or nose.
    aa. Suctioning-tracheal--Removing secretions or other matter 
from the respiratory system through a tracheostomy.
    ab. Tracheostomy care--The process of maintaining a clean and 
functioning tracheostomy, includes assessing the surrounding skin, 
changing dressing around tracheostomy tube, cleaning and changing 
inner cannula, monitoring cuff pressures, and securing the 
tracheostomy tube.
    ac. Transfusion(s)--Giving whole blood or blood component (for 
example, red blood cells) to replace blood loss through injury, 
surgery, or disease.
    ad. Ventilator or respirator--Assures adequate ventilation in 
patients who are, or who may become, unable to support their own 
respiration. Includes any type of electrically or pneumatically 
powered closed system mechanical ventilatory support devices.
    ae. Ventilator weaning--Any patient who was in the process of 
being weaned off the ventilator or respirator in the last 3 days 
should be coded under this definition.

OTHER

    af. Family training in assistance to patient in health measures 
or skills required after return to the community--Any documented 
family teaching to support the patient's discharge home. Examples 
include, but are not limited to, observing for signs of declining 
health (for example, hypoglycemia; cognitive change; new or 
worsening urinary incontinence); administering medications; 
observing for drug side effects or adverse drug reactions; providing 
ostomy care or dressing changes; coaching strength training 
exercises; assisting in transferring and locomotion; providing 
appropriate verbal/physical cues for feeding; how to label closets 
and drawers so patient can retrieve clothes; application of 
behavioral management techniques; when to report change or request 
assistance.
    ag. Patient training in health maintenance or skills required 
after return to community--Any documented patient teaching to 
support the patient's discharge home. Examples include, but are not 
limited to, recognizing and reporting signs of declining health (for 
example, hypoglycemia; cognitive change; new or worsening urinary 
incontinence); self-administration of medications; recognizing and 
reporting drug side effects or adverse drug reaction; recording 
adherence to strength training exercises; self-ostomy care; how the 
Lifeline emergency response system works; how to access help in an 
emergency.
    ah. Design and implementation of discharge plan--Discharge plan 
developed by the interdisciplinary team; includes making the 
necessary arrangements and contacts with community services.
    ai. NONE OF THE ABOVE--Code if the patient has received NONE of 
the treatments or services above.

3. Nursing Practice or Restorative Care

    Intent: To determine the extent to which the patient receives 
nursing rehabilitation or restorative services from other than 
specialized therapy staff (for example, occupational therapist, 
physical therapist, etc.). Rehabilitative or restorative care refers 
to nursing interventions that promote the patient's ability to adapt 
and adjust to living as independently and safely as is possible. 
This concept actively focuses on achieving and maintaining optimal 
physical, mental, and psychosocial functioning.
    Skill practice in such activities as walking and mobility, 
dressing and grooming, eating and swallowing, transferring, 
amputation care, and communication can improve or maintain function 
in physical abilities and ADLs and prevent further impairment.
    Definition: Rehabilitation/restorative care--Included are 
nursing interventions that assist or promote the patient's ability 
to attain his or her maximum functional potential. This item does 
not include procedures or techniques carried out by or under the 
direction of qualified therapists, as identified in item K4. In 
addition, to be included in this section, a rehabilitation or 
restorative practice must meet all of the following additional 
criteria:
    <bullet> Measurable objectives and interventions must be 
documented in the care plan and in the clinical record.
    <bullet> Evidence of periodic evaluation by licensed nurse must 
be present in the clinical record.
    <bullet> Nurse assistants/aides must be trained in the 
techniques that promote patient involvement in the activity.
    <bullet> These activities are carried out or supervised by 
members of the nursing staff. Sometimes under licensed nurse 
supervision, other staff and volunteers will be assigned to work 
with specific patients.
    <bullet> This category does not include exercise groups with 
more than four patients per supervising helper or caregiver.
    Definition: a. Range of motion (passive)--The extent to which, 
or the limits between which, a part of the body can be passively 
moved around a fixed point, or joint. Passive range of motion 
exercise is a program of movements to maintain flexibility and 
useful motion in the joints of the body.
    b. Range of motion (active)--Exercises performed by a patient, 
with cuing or supervision by staff, that are planned, scheduled, and 
documented in the clinical record.
    c. Splint or orthotic assistance--Assistance can be of 2 types: 
(1) where staff provide verbal and physical guidance and direction 
that teaches the patient how to apply, manipulate, and care for an 
orthotic device or splint, or (2) where staff have a scheduled 
program of applying and removing a splint or brace, assess the 
patient's skin and circulation under the device, and reposition the 
limb in correct alignment. These sessions are planned, scheduled, 
and documented in the clinical record.
    Training and skill practice--Activities including repetition, 
physical or verbal cuing, and task segmentation provided by any 
staff member or volunteer under the supervision of a licensed nurse.
    d. Bed mobility--Activities used to improve or maintain the 
patient's self-performance in moving to and from a lying position, 
turning side to side, and positioning him or herself in bed.
    e. Bladder/Bowel--Activities used to improve or maintain the 
patient's self-performance in bladder and bowel evacuation (includes 
ostomy care).
    f. Transfer--Activities used to improve or maintain the 
patient's self-performance in moving between surfaces or planes 
either with or without assistive devices.
    g. Walking--Activities used to improve or maintain the patient's 
self-performance in walking, with or without assistive devices.
    h. Dressing or grooming--Activities used to improve or maintain 
the patient's self-performance in dressing and undressing, bathing 
and washing, and performing other personal hygiene tasks.
    i. Eating or swallowing--Activities used to improve or maintain 
the patient's self-performance in feeding oneself food and fluids, 
or activities used to improve or maintain the patient's ability to 
ingest nutrition and hydration by mouth.
    j. Amputation/prosthesis care--Activities used to improve or 
maintain the patient's self-performance in putting on and removing a 
prosthesis, caring for the prosthesis, and providing appropriate 
hygiene at the site where the prosthesis attaches to the body (for 
example, leg stump or eye socket).
    k. Communication--Activities used to improve or maintain the 
patient's self-performance in using newly acquired functional 
communication skills or assisting the patient in using residual 
communication skills and adaptive devices.
    Process: Review the clinical record and the current care plan. 
Consult with facility staff. Look for rehabilitation, restorative 
care schedule, assignment, and implementation record sheet on the 
nursing unit.
    Coding: For the last three days, enter the number of days on 
which the technique, procedure, or activity was practiced for a 
total of at least 15 minutes during each day (24-hour period). The 
15 minutes does not have to occur all at once. Remember that persons 
with dementia learn skills best through repetition that occurs 
multiple times per day. Review for each activity throughout the 24-
hour period. Enter zero ``0'' if none, or if the service was 
provided for less than 15 minutes per day in the last 3 days.

[[Page 66434]]

4. Therapy Services

    This item involves therapies that occurred after admission to 
the facility and meet the following criteria: (1) were ordered by a 
physician, (2) were performed by a qualified therapist (that is, one 
who meets state credentialing requirements) OR (3) were performed by 
therapy assistant under the direction of the therapist.
    The therapy treatment may occur either inside or outside the 
facility. Includes only therapies based on a therapist's assessment 
and treatment plan that is documented in the patient's clinical 
record.
    Intent: To record the (A) total number of days treatment was 
ordered in the last 3 days, (B) number of days administered (for 15 
minutes or more), (C) total number of minutes each of the following 
therapies was provided in the last 3 days (or ordered if days 
administered =0 and days ordered >0), and (D) whether the patient 
will receive the service after discharge. Note: In order for therapy 
minutes to be recorded in the most precise 15 minute increment, 
either the physician's order or the therapist's plan of care must 
indicate minutes of therapy ordered by the physician or recommended 
in the therapist's plan of care.
    Definition: a. Speech-language pathology, audiology services--
Services that are provided by a qualified speech-language 
pathologist.
    b. Occupational therapy--Therapy services that are provided or 
directly supervised by a qualified occupational therapist. A 
qualified occupational therapy assistant may provide therapy but not 
supervise others (aides or volunteers) giving therapy. Include 
services provided by a qualified occupational therapy assistant who 
is employed by (or under contract to) the facility only if he or she 
is under the direction of a qualified occupational therapist.
    c. Physical therapy--Therapy services that are provided or 
directly supervised by a qualified physical therapist. A qualified 
physical therapy assistant may provide therapy but not supervise 
others (aides or volunteers) giving therapy. Include service 
provided by a qualified physical therapy assistant who is employed 
by (or under contract to) the facility only if he or she is under 
the direction of a qualified physical therapist.
    d. Respiratory therapy--Included are coughing, deep breathing, 
administration of heated nebulizers, aerosol treatments, and 
mechanical ventilation, etc., which must be provided by a qualified 
professional (that is, trained nurse, respiratory therapist). This 
item does not include use of hand-held medication dispensers. Count 
only the time that the qualified professional spends with the 
patient. For high intensity respiratory patients who receive 24 deg. 
respiratory care, have a discussion with the therapist to get an 
estimate of the actual amount of time spent at the bedside providing 
care.
    e. Psychological therapy by any licensed mental health 
professional--Therapy given by any licensed mental health 
professional, such as a psychiatrist, psychologist, psychiatric 
nurse, or psychiatric social worker.
    f. Therapeutic recreation--Therapy ordered by a physician that 
provides therapeutic stimulation beyond the general activity program 
in a facility. The physician's order must include a statement of 
frequency, duration and scope of the treatment. Such therapy must be 
provided by a state licensed or nationally certified Therapeutic 
Recreation Specialist or Therapeutic Recreation Assistant. The 
Therapeutic Recreation Assistant must work under the direction of a 
Therapeutic Recreation Specialist.
    Process: Review the patient's clinical record and consult with 
each of the qualified therapists.
    Coding: For Boxes (Columns) A, B and C count only post-admission 
therapies (given in or outside the facility).
    Column A: Days ordered--In the first column, enter the number 
(#) of days the treatment was ordered during the last three days. 
Enter ``0'' if none. Maximum code is ``3''.
    Column B: Days administered--In the second column, enter the 
number (#) of days the therapy was administered for at least 15 
minutes or more in the last three days. Enter ``0'' if none. Maximum 
code is ``3''.
    Column C: Minutes delivered--In the third column, enter the 
total number (#) of minutes the particular therapy was provided in 
the last 3 days. The time should include only the actual treatment 
time (not time waiting, writing reports, or conducting an 
evaluation). Enter total number of minutes ordered if days 
administered (K4B) = 0 and days ordered (K4A) > 0. Enter ``0'' if 
the therapy was not ordered or administered. [Note--Enter cumulative 
time over all 3 days even when total time on a day (or days) was 
less than 15 minutes].
    Column D: Post Discharge Therapy--Code at discharge assessment 
only (A3=5). Record whether the patient will receive the therapy 
service after discharge. Code ``0'' for No, or ``1'' for Yes. This 
information is obtained on a Discharge Assessment only.

5. Devices and Restraints

    Intent: To record the frequency, over the last three days, with 
which the patient was restrained by any of the devices listed below 
at any time during the day or night.
    Definition: This category includes the use of any device (for 
example, physical or mechanical device, material, or equipment 
attached or adjacent to the patient's body) that the patient cannot 
easily remove and that restricts freedom of movement or normal 
access to his or her body. If device is used as an ``enabler,'' you 
still must code device in this item.
    a. Full bed rails--Full rails may be one or more rails along 
both sides of the patient's bed that block three-quarters to the 
whole length of the mattress from top to bottom. This definition 
also includes beds with one side placed against the wall 
(prohibiting the patient from entering and exiting on that side) and 
the other side blocked by a full rail (one or more rails). A veil 
screen (used in pediatric units) or veil bed is included in this 
category.
    b. Other types of side rails used (for example, one-side half 
rail, one-side full rail, two-sided half rails).
    c. Trunk restraint--Includes any device or equipment or material 
that the patient cannot easily remove (for example, vest or waist 
restraint).
    d. Chair prevents rising--Any type of chair with locked lap 
board or chair that places patient in a recumbent position that 
restricts rising or a chair that is soft and low to the floor (for 
example, bean bag chair). Includes ``comfort cushions'' (for 
example, lap buddy), ``merry walkers.''
    Process: Check the patient's clinical records and restraint 
device flow sheets. Consult nursing staff. Observe the patient.
    Coding: For each device type, enter the code that best describes 
the pattern of restraint or device use for the last 3 days:
    0. Not used in last three days
    1. Used, but used less than daily in last three days
    2. Daily use--night only in the last three days
    3. Daily use--days only in the last three days
    4. Night and day use, but not constant use in the last three 
days
    5. Constant use for full 24 hours (with periodic release) during 
the last three days

Section L. Functional Prognosis

    Intent: A major goal of post acute care is to rehabilitate the 
patient to a level of function and health that enables return to the 
patient's previous living arrangement or, if not appropriate, to the 
most independent living arrangement possible. Developing plans of 
care to achieve this goal and prepare for post-discharge needs 
requires (1) establishing individualized goals in specific areas of 
function and health, (2) estimating the degree to which the patient 
will improve, (3) evaluating the patient's and family's individual 
needs, values, motivation for participation in rehabilitation, and 
(4) estimating the rate of patient change (and goal achievement) and 
length of stay. This section asks the interdisciplinary team to take 
this information and make some predictions on rehabilitation 
prognosis. These predictions are essential in planning services 
needed during the stay as well as upon discharge.

1. Functional Improvement Goals

    Intent: This section looks at some key functional areas, and 
asks staff to make a prediction whether the patient will meet these 
goals in the indicated time frame.

Definition: ADLs

    a. Bed mobility/transfer--Goals that involve how patient moves 
to and from a lying position, turns side to side, and positions body 
while in bed. Also includes goals involving how patient moves 
between surfaces--to or from: bed, chair, wheelchair.
    b. Dressing--Goals that involve how the patient dresses and 
undresses (street clothes and underwear) including prostheses, 
orthotics, fasteners, pullovers, belts, pants, skirts, and shoes.
    c. Eating--Goals centering on how the patient eats and drinks 
(regardless of skill). This includes intake of nourishment by other 
means (for example, tube feeding, total parenteral nutrition).
    d. Locomotion--Goals involving how the patient moves between 
locations in his/her room and adjacent corridor on the same floor.

[[Page 66435]]

If patient uses a wheelchair, the goals would involve how the 
patient moves once the patient is in the wheelchair.
    e. Toileting--Goals that involve how the patient uses the toilet 
room (or commode, urinal, bedpan), cleanses himself/herself after 
toilet use or incontinent episode(s), changes pads, manages ostomy 
or catheter, and adjusts clothes. This item does include goals 
centering on transfers on and off the toilet or commode.

OTHER

    f. Medication Management--Goals involving how the patient 
manages medications ( remembering to take medications, opening 
bottles, taking correct drug dosages, filling syringe, giving 
injections, applying ointments).
    g. Pain Control--Goals involving the control (cessation or 
mitigation) of pain by the patient. Pain control goals could involve 
both pharmacologic and non-pharmacologic interventions.
    h. Managing Finances--In the inpatient environment this includes 
goals involving financial activities such as paying for the 
newspaper, paying for TV service. When considering home discharge, 
this item involves paying bills, managing checking account, or bank 
account.
    Process: Using your best clinical judgment, code each of these 
functional areas using the scale described below. A review of the 
physician orders, notes and plans of care would be essential in this 
process to confirm what goals have been established.
    Coding: Choose the response that best reflects the clinical 
staff's prognosis for goal attainment in each of the specified areas 
in the last 24 hours. Code for the most aggressive goal in each 
area. For admission assessment and reassessment, code for clinical 
staff expectations of patient goals in the areas listed below by 
time of discharge. For discharge assessments, code for staff 
expectation of patient functional goal in the post discharge period.
    0. No goal exists--There is currently no goal in the patient's 
plan of care that aims to improve or maintain the patient's current 
functional performance or health (in the area specified) in the area 
indicated.
    1. Goal--improvement, full recovery to premorbid status 
anticipated--Goals for improvement in the area specified have been 
set, and clinical staff project that the patient will improve to the 
level of function or health (in the area specified) that he or she 
experienced prior to the precipitating event (Item A7a).
    2. Goal--improvement, partial recovery anticipated--Goals for 
improvement in the specified area have been set, but given the 
patient's current status and availability of services within the 
expected length of stay, clinical staff project that the patient 
will not improve to the level of function or health (in the area 
specified) he or she experienced prior to the precipitating event 
(Item A7a).
    3. Goal--improvement, recovery uncertain--Goals for improvement 
in the specified area have been set, but given the patient's current 
health, functional or emotional status, clinical staff are unable to 
determine if the patient will partially or fully return to the level 
of function or health (in the specified area) he or she experienced 
prior to the precipitating event (Item A7a).
    4. Goal--maintenance, prevention of further decline--Goals for 
maintenance (preservation) of function or health in the specified 
area have been set, and clinical staff project that the patient will 
meet maintenance goals as evidenced by NO further deterioration in 
function or health (in the area specified).

2. Attributes Relevant to Rehabilitation

    Intent: The intent of this section is to measure the patient's 
and his or her family's motivation to participate in the 
rehabilitation program and goals. This is essential to establish the 
patient and the patient's support system's participation in the 
established plan of care. When conflicts arise, the plan of care 
needs to be modified to reflect efforts to resolve these conflicts. 
For example, if the patient is in the post-acute setting for 
rehabilitation after a stroke, but is ``refusing rehabilitation,'' 
this issue becomes the primary issue to deal with rather than the 
fact that the patient's mobility is limited.
    Definition: a. Patient believes he/she is capable of increased 
independence--The patient states that he/she has the capacity to 
improve or be more independent (albeit with therapeutic support) or 
demonstrates this belief by actively participating in rehabilitative 
programming.
    b. Patient unable to recognize new limitations--The patient 
lacks insight into the level of his/her altered function; may use 
poor judgement, thereby placing self at safety risk; may resist 
participation in therapeutic programming aimed at improving function 
or compensating for deficits.
    c. Patient fails to initiate or to continue to carry out ADLs 
(once initiated) for which he/she has some demonstrated capability--
The patient refrains from participating in self-care in one or more 
ADL areas in which he/she has shown self-care abilities.
    Process: Interview the patient. Get a sense of what his/her 
goals are from this post-acute admission. Also discuss what the 
patient's family or support person's perceptions are. Observe the 
patient's behavior and participation in plan of care. Are there 
differences in the Care Plan goals established by the team and the 
patient's and family's goals?
    Coding: Indicate ``0'' for No, ``1'' for Yes, or ``8'' for 
Unknown in the box corresponding to each item, indicating that they 
have been observed, verbalized or documented in the last 3 days.

3. Change Over the Last 3 Days

    Intent: To evaluate and predict the rate in which the patient 
will progress toward his or her established goals.
    Process: Obtain information via review of the medical record, 
staff and patient interview.
    Definition: a. Change in overall functional status over last 3 
days.
    b. Change in overall health status over last 3 days.
    Coding: From the following codes, choose the response that best 
reflects your best clinical judgement of the patient's rate of 
overall functional and health status change over the last 3 days.
    0. Improved.
    1. About the same as at admission (or last assessment if this is 
not an admission assessment).
    2. Worse.

4. Estimated Length of Stay From Date of Admission

    Intent: It is essential to put a time frame around established 
goals in the plan of care. The guiding time frame in this process is 
the anticipated length of stay. This is established based on a 
number of factors including but not limited to, diagnosis, 
functional ability and prognosis, medical complications, support 
systems, patient motivation, and anticipated living arrangement and 
payor source. All this information must be taken into consideration 
when making a prediction.
    Process: Use a chart review, patient/support system interview, 
or obtain interdisciplinary clinical input to code for the 
anticipated length of stay.
    Coding: Starting from (and including) the date entered in AA2b 
or if AA2b is blank AA2a (Admission Date), using your best clinical 
judgement, determine the patient's expected length of stay in the 
current setting prior to returning to a community setting. Choose 
the response that best reflects the anticipated time frame.
    0. 1-6 days.
    1. 7-13 days.
    2. 14--30 days.
    3. 31--90 days.
    4. 91 or more days.
    5. Discharge to community not expected--It is anticipated that 
the patient will never return to the community, even if they are 
transferred to another facility. This category also includes 
patients who are expected to die during this admission.
    6. Expected discharge will be to another health care setting 
prior to return to community--Examples include transfer to nursing 
facility with eventual discharge to the community.

Section M. Resources for Discharge

    Intent: In this section some key elements related to discharge 
planning are addressed. Before formulating a discharge plan, the 
resources available to support the patient's discharge home should 
be evaluated based on the patient's current needs. In conjunction 
with previous sections of the assessment, these items lay the ground 
work for developing a realistic discharge/transition plan.

1. Available Social Supports

    Intent: To identify the availability of family or friends to 
provide support during the post-acute phase and after discharge.
    Process: Information should be obtained through patient/family 
interview and through medical record review. Determine if there is 
any indication that family or close friends are present and 
available. Privately employed caregivers would not be coded in this 
item.
    Definition: a. Emotional Support--The provision of 
encouragement, comfort, attentive listening.
    b. Intermittent physical support with ADLs or IADLs--less than 
daily--The provision of ``hands on'' assistance to the patient with 
personal care, transfers, mobility, or doing

[[Page 66436]]

housework, shopping etc, on a less than daily basis.
    c. Intermittent physical support with ADLs or IADLs--daily--The 
provision of ``hands on'' assistance to the patient with personal 
care, transfers, mobility, or doing housework, shopping etc., on a 
daily basis (for example, once a day), but not full time.
    d. Full time physical support (as needed) with ADLs or IADLs--
The provision of ``hands on'' assistance to the patient with 
personal care, transfers, mobility, or doing housework, shopping 
etc., on a daily basis full time.
    e. All or most of necessary transportation--Includes providing 
transportation by driving patient in a car (or other motorized 
vehicle) OR accompanying patient using bus, subway, or other public 
transportation.
    Coding: Ask if one or more family members/close friends are 
willing and able to provide support after discharge. Enter the most 
appropriate response next to the type of support. Enter ``0'' for 
No, ``1'' for Possibly yes, and ``2'' for Definitely Yes.

2. Caregiver Status

    Intent: The following items identify issues with the patient's 
family or informal caregivers in preparation for discharge. Often, 
when a family member needs post-acute care, the entire family is 
affected. It is important to determine how the caregiver(s) is 
coping, whether he/she requires additional supports, or if he/she is 
willing and able to provide the patient with extended care in their 
home.
    Process: Interview the patient and family/caregiver, as well as 
staff who are closely involved with the patient's care. Review 
medical record, including Social Service notes.
    Coding: Enter a ``0'' for ``No'', and a ``1'' for ``Yes'' in the 
box next to each statement that applies to the patient and their 
care givers/family.
    0. No.
    1. Yes.
    a. Family (or close friend) overwhelmed by patient's illness.
    b. Family relationship(s) require unusual amounts of staff time.

3. Living Arrangement

    Intent: The intent of this item is to establish the permanent 
living arrangement both prior to admission [A] and that which is 
expected after discharge [B]. If the initial arrangement expected at 
discharge is different than column M3B--code in column C for 
Temporary Discharge arrangement (A3 = 5).
    Process: Obtain information through patient and family 
interview. Medical record review may also be helpful.
    Definition: a. Type of residence.
    0. Unknown.
    1. Private home--Any house or condominium in the community 
whether owned by the patient or another person. Also included in 
this category are retirement communities, and independent housing 
for the elderly or disabled.
    2. Private apartment--Any apartment in the community whether 
owned by the patient or another person.
    3. Rented Room--A rented room either part of a private house or 
a boarding room establishment.
    4. Board and Care/assisted living/group home--An alternative 
housing option which integrates shared living environment with some 
degree of supportive services such as home health services, personal 
care, meal service, transportation.
    5. Homeless (with or without shelter)--Person does not have a 
residence--lives out on streets, woods, etc. or uses a community 
based shelter for individuals who do not have a residential address.
    6. Long Term Care Facility (nursing home)--A residence that 
provides 24-hour skilled or intermediate nursing care.
    7. Post Acute Care SNF--Facility (or designated beds within a 
SNF) dedicated to the care of patients with intense rehabilitative 
or clinically complex needs. Most patients are admitted to the post 
acute care facility from an acute hospital, or rehabilitation 
hospital. These patients will have a short, intense stay in the post 
acute care SNF.
    8. Hospice--An interdisciplinary program of palliative care and 
support services that addresses the physical, social, spiritual, and 
financial needs of terminally ill patients and their families.
    9. Acute unit/hospital--A facility licensed as an acute care 
hospital or unit. Patients in acute care may receive comprehensive 
and complex diagnostic services, treatments, and surgery.
    10. Other--Any other setting not categorized above.
    b. Live(d) with.
    0. Unknown.
    1. Alone--Living with a pet is coded as living alone.
    2. Spouse only--If patient is living as married (common law 
marriage) with another person, use this code.
    3. Spouse and others--husband or wife, and other family members, 
friends, boarders.
    4. Child--Lives with child, no spouse present.
    5. Other relative(s)--Not spouse or children.
    6. Friends.
    7. Group setting--An alternative housing option which integrates 
a shared living environment with some degree of supportive services 
such as home health services, personal care, meal service, 
transportation.
    8. Personal Care Attendant--A health care worker either hired by 
an agency or the patient himself. This worker is trained to provide 
the patient with help in ADL's and other types of assistance.
    9. Other--Any other living arrangement not categorized above.
    Process: Review the medical record. Consult the patient and 
family. This is meant to measure permanent placement. If a patient 
is going to be discharged to a skilled nursing facility for a short 
period of time, and then discharged back to their home, the 
permanent living arrangement would be either 1 or 2 depending on 
home service arrangements.
    Coding: a. Type of residence--
    <bullet> In Column A--indicate the type of residence where the 
patient permanently resided prior to admission.
    <bullet> In Column B--indicate the type of residence where the 
patient is expected to permanently reside after discharge.
    <bullet> In Column C--indicate the type of residence where the 
patient is expected to temporarily reside initially after discharge. 
Code this item only if this arrangement is different than that coded 
in Column B.
    b. Lived with--
    <bullet> In Column A--indicate with whom the patient permanently 
resided prior to admission.
    <bullet> In Column B--indicate with whom the patient is expected 
to permanently reside after discharge.
    <bullet> In Column C--indicate with whom the patient is expected 
to temporarily reside initially after discharge. Code this item only 
if this arrangement is different than that coded in Column B.

Appendix C: List of Comorbidities

------------------------------------------------------------------------
            ICD9 code No.                    Abbreviated code title
------------------------------------------------------------------------
 011................................  Pulmonary tuberculosis*
 011.0..............................  TB of lung, infiltrative
 011.00.............................  TB lung infiltr-unspec
 011.01.............................  TB lung infiltr-no exam
 011.02.............................  TB lung infiltr-exm unkn
 011.03.............................  TB lung infiltr-micro DX
 011.04.............................  TB lung infiltr-cult DX
 011.05.............................  TB lung infiltr-histo DX
 011.06.............................  TB lung infiltr-oth test
 011.1..............................  TB of lung, nodular
 011.10.............................  TB lung nodular-unspec
 011.11.............................  TB lung nodular-no exam
 011.12.............................  TB lung nodul-exam unkn
 011.13.............................  TB lung nodular-micro DX
 011.14.............................  TB lung nodular-cult DX
 011.15.............................  TB lung nodular-histo DX
 011.16.............................  TB lung nodular-oth test
 011.2..............................  TB of lung w cavitation
 011.20.............................  TB lung w cavity-unspec
 011.21.............................  TB lung w cavity-no exam
 011.22.............................  TB lung cavity-exam unkn
 011.23.............................  TB lung w cavit-micro DX
 011.24.............................  TB lung w cavity-cult DX
 011.25.............................  TB lung w cavit-histo DX
 011.26.............................  TB lung w cavit-oth test
 011.3..............................  Tuberculosis of bronchus
 011.30.............................  TB of bronchus-unspec
 011.31.............................  TB of bronchus-no exam
 011.32.............................  TB of bronchus-exam unkn
 011.33.............................  TB of bronchus-micro DX
 011.34.............................  TB of bronchus-cult DX
 011.35.............................  TB of bronchus-histo DX
 011.36.............................  TB of bronchus-oth test
 011.4..............................  TB fibrosis of lung
 011.40.............................  TB lung fibrosis-unspec
 011.41.............................  TB lung fibrosis-no exam
 011.42.............................  TB lung fibros-exam unkn
 011.43.............................  TB lung fibros-micro DX
 011.44.............................  TB lung fibrosis-cult DX
 011.45.............................  TB lung fibros-histo DX
 011.46.............................  TB lung fibros-oth test
 011.5..............................  TB bronchiectasis
 011.50.............................  TB bronchiectasis-unspec
 011.51.............................  TB bronchiect-no exam
 011.52.............................  TB bronchiect-exam unkn
 011.53.............................  TB bronchiect-micro DX
 011.54.............................  TB bronchiect-cult DX
 011.55.............................  TB bronchiect-histo DX
 011.56.............................  TB bronchiect-oth test
 011.6..............................  Tuberculous pneumonia
 011.60.............................  TB pneumonia-unspec

[[Page 66437]]

 
 011.61.............................  TB pneumonia-no exam
 011.62.............................  TB pneumonia-exam unkn
 011.63.............................  TB pneumonia-micro DX
 011.64.............................  TB pneumonia-cult DX
 011.65.............................  TB pneumonia-histo DX
 011.66.............................  TB pneumonia-oth test
 011.7..............................  Tuberculous pneumothorax
 011.70.............................  TB pneumothorax-unspec
 011.71.............................  TB pneumothorax-no exam
 011.72.............................  TB pneumothorx-exam unkn
 011.73.............................  TB pneumothorax-micro DX
 011.74.............................  TB pneumothorax-cult DX
 011.75.............................  TB pneumothorax-histo DX
 011.76.............................  TB pneumothorax-oth test
 011.8..............................  Pulmonary TB nec
 011.80.............................  Pulmonary TB nec-unspec
 011.81.............................  Pulmonary TB nec-no exam
 011.82.............................  Pulmon TB nec-exam unkn
 011.83.............................  Pulmon TB nec-micro DX
 011.84.............................  Pulmon TB nec-cult DX
 011.85.............................  Pulmon TB nec-histo DX
 011.86.............................  Pulmon TB nec-oth test
 011.9..............................  Pulmonary TB nos
 011.90.............................  Pulmonary TB nos-unspec
 011.91.............................  Pulmonary TB nos-no exam
 011.92.............................  Pulmon TB nos-exam unkn
 011.93.............................  Pulmon TB nos-micro DX
 011.94.............................  Pulmon TB nos-cult DX
 011.95.............................  Pulmon TB nos-histo DX
 011.96.............................  Pulmon TB nos-oth test
 012................................  Other respiratory TB*
 012.0..............................  Tuberculous pleurisy
 012.00.............................  TB pleurisy-unspec
 012.01.............................  TB pleurisy-no exam
 012.2..............................  TB pleurisy-exam unkn
 012.3..............................  TB pleurisy-micro DX
 012.04.............................  TB pleurisy-cult DX
 012.5..............................  TB pleurisy-histolog DX
 012.6..............................  TB pleurisy-oth test
 012.1..............................  TB thoracic lymph nodes
 012.10.............................  TB thoracic nodes-unspec
 012.11.............................  TB thorax node-no exam
 012.12.............................  TB thorax node-exam unkn
 012.13.............................  TB thorax node-micro DX
 012.14.............................  TB thorax node-cult DX
 012.15.............................  TB thorax node-histo DX
 012.16.............................  TB thorax node-oth test
 012.2..............................  Isolated trach/bronch TB
 012.20.............................  Isol tracheal TB-unspec
 012.21.............................  Isol tracheal TB-no exam
 012.22.............................  Isol trach TB-exam unkn
 012.23.............................  Isolat trach TB-micro DX
 012.24.............................  Isol tracheal TB-cult DX
 012.25.............................  Isolat trach TB-histo DX
 012.26.............................  Isolat trach TB-oth test
 012.3..............................  Tuberculous laryngitis
 012.30.............................  TB laryngitis-unspec
 012.31.............................  TB laryngitis-no exam
 012.32.............................  TB laryngitis-exam unkn
 012.33.............................  TB laryngitis-micro DX
 012.34.............................  TB laryngitis-cult DX
 012.35.............................  TB laryngitis-histo DX
 012.36.............................  TB laryngitis-oth test
 012.8..............................  Respiratory TB nec
 012.80.............................  Resp TB nec-unspec
 012.81.............................  Resp TB nec-no exam
 012.82.............................  Resp TB nec-exam unkn
 012.83.............................  Resp TB nec-micro DX
 012.84.............................  Resp TB nec-cult DX
 012.85.............................  Resp TB nec-histo DX
012.86..............................  Resp TB nec-oth test
013.................................  CNS tuberculosis*
013.0...............................  Tuberculous meningitis
013.00..............................  TB meningitis-unspec
013.01..............................  TB meningitis-no exam
013.02..............................  TB meningitis-exam unkn
013.03..............................  TB meningitis-micro DX
013.04..............................  TB meningitis-cult DX
013.05..............................  TB meningitis-histo DX
013.06..............................  TB meningitis-oth test
013.1...............................  Tuberculoma of Meninges
013.10..............................  Tubrclma meninges-unspec
013.11..............................  Tubrclma mening-no exam
013.12..............................  Tubrclma menin-exam unkn
013.13..............................  Tubrclma mening-micro DX
013.14..............................  Tubrclma mening-cult DX
013.15..............................  Tubrclma mening-histo DX
013.16..............................  Tubrclma mening-oth test
013.2...............................  Tuberculoma of brain
013.20..............................  Tuberculoma brain-unspec
013.21..............................  Tubrcloma brain-no exam
013.22..............................  Tubrclma brain-exam unkn
013.23..............................  Tubrcloma brain-micro DX
013.24..............................  Tubrcloma brain-cult DX
013.25..............................  Tubrcloma brain-histo DX
013.26..............................  Tubrcloma brain-oth test
013.3...............................  TB abscess of brain
013.30..............................  TB brain abscess-unspec
013.31..............................  TB brain abscess-no exam
013.32..............................  TB brain absc-exam unkn
013.33..............................  TB brain absc-micro DX
013.34..............................  TB brain abscess-cult DX
013.35..............................  TB brain absc-histo DX
013.36..............................  TB brain absc-oth test
013.4...............................  Tuberculoma spinal cord
013.40..............................  Tubrclma sp cord-unspec
013.41..............................  Tubrclma sp cord-no exam
013.42..............................  Tubrclma sp cd-exam unkn
013.43..............................  Tubrclma sp crd-micro DX
013.44..............................  Tubrclma sp cord-cult DX
013.45..............................  Tubrclma sp crd-histo DX
013.46..............................  Tubrclma sp crd-oth test
013.5...............................  TB abscess spinal cord
013.50..............................  TB sp crd abscess-unspec
013.51..............................  TB sp crd absc-no exam
013.52..............................  TB sp crd absc-exam unkn
013.53..............................  TB sp crd absc-micro DX
013.54..............................  TB sp crd absc-cult DX
013.55..............................  TB sp crd absc-histo DX
013.56..............................  TB sp crd absc-oth test
013.6...............................  TB encephalitis/myelitis
013.60..............................  TB encephalitis-unspec
013.61..............................  TB encephalitis-no exam
013.62..............................  TB encephalit-exam unkn
013.63..............................  TB encephalitis-micro DX
013.64..............................  TB encephalitis-cult DX
013.65..............................  TB encephalitis-histo DX
013.66..............................  TB encephalitis-oth test
013.8...............................  CNS tuberculosis nec
013.80..............................  CNS tb nec-unspec
013.81..............................  CNS tb nec-no exam
013.82..............................  CNS tb nec-exam unkn
013.83..............................  CNS tb nec-micro DX
013.84..............................  CNS tb nec-cult DX
013.85..............................  CNS tb nec-histo DX
013.86..............................  CNS tb nec-oth test
013.9...............................  CNS tuberculosis nos
013.90..............................  CNS tb nos-unspec
013.91..............................  CNS tb nos-no exam
013.92..............................  CNS tb nos-exam unkn
013.93..............................  CNS tb nos-micro DX
013.94..............................  CNS tb nos-cult DX
013.95..............................  CNS tb nos-histo DX
013.96..............................  CNS tb nos-oth test
014.................................  Intestinal tb*
014.0...............................  tuberculous peritonitis
014.00..............................  TB peritonitis-unspec
014.01..............................  TB peritonitis-no exam
014.02..............................  TB peritonitis-exam unkn
014.03..............................  TB peritonitis-micro DX
014.04..............................  TB peritonitis-cult DX
014.05..............................  TB peritonitis-histo DX
014.06..............................  TB peritonitis-oth test
014.8...............................  Intestinal tb nec
014.80..............................  Intestinal tb nec-unspec
014.81..............................  Intestin tb nec-no exam
014.82..............................  Intest tb nec-exam unkn
014.83..............................  Intestin tb nec-micro DX
014.84..............................  Intestin tb nec-cult DX
014.85..............................  Intestin tb nec-histo DX
014.86..............................  Intestin tb nec-oth test
015.................................  TB of bone and joint*
015.0...............................  TB of vertebral column
015.00..............................  TB of vertebra-unspec
015.01..............................  TB of vertebra-no exam
015.02..............................  TB of vertebra-exam unkn
015.03..............................  TB of vertebra-micro DX
015.04..............................  TB of vertebra-cult DX
015.05..............................  TB of vertebra-histo DX
015.06..............................  TB of vertebra-oth test
015.1...............................  TB of hip
015.10..............................  TB of hip-unspec
015.11..............................  TB of hip-no exam
015.12..............................  TB of hip-exam unkn
015.13..............................  TB of hip-micro DX
015.14..............................  TB of hip-cult DX
015.15..............................  TB of hip-histo DX
015.16..............................  TB of hip-oth test
015.2...............................  TB of knee
015.20..............................  TB of knee-unspec
015.21..............................  TB of knee-no exam
015.22..............................  TB of knee-exam unkn
015.23..............................  TB of knee-micro DX
015.24..............................  TB of knee-cult DX
015.25..............................  TB of knee-histo DX
015.26..............................  TB of knee-oth test
015.5...............................  TB of limb bones
015.50..............................  TB of limb bones-unspec
015.51..............................  TB limb bones-no exam
015.52..............................  TB limb bones-exam unkn
015.53..............................  TB limb bones-micro EX
015.54..............................  TB limb bones-cult DX
015.55..............................  TB limb bones-histo DX
015.56..............................  TB Limb bones-oth test
015.6...............................  TB of mastoid
015.60..............................  TB of mastoid-unspec
015.61..............................  TB of mastoid-no exam
015.62..............................  TB of mastoid-exam unkn
015.63..............................  TB of mastoid-micro DX
015.64..............................  TB of mastoid-cult DX
015.65..............................  TB of mastoid-histo DX
015.66..............................  TB of mastoid-oth test
015.7...............................  TB of bone nec
015.70..............................  TB of bone nec-unspec
015.71..............................  TB of bone nec-no exam
015.72..............................  TB of bone nec-exam unkn
015.73..............................  TB of bone nec-micro DX
015.74..............................  TB of bone nec-cult DX
015.75..............................  TB of bone nec-histo DX
015.76..............................  TB of bone nec-oth test
015.8...............................  TB of joint nec
015.80..............................  TB of joint nec-unspec
015.81..............................  TB of joint nec-no exam
015.82..............................  TB joint nec-exam unkn
015.83..............................  TB of joint nec-micro DX
015.84..............................  TB of joint nec-cult DX
015.85..............................  TB of joint nec-histo DX
015.86..............................  TB of joint nec-oth test
015.9...............................  TB of bone & joint nos

[[Page 66438]]

 
015.90..............................  TB bone/joint nos-unspec
015.91..............................  TB bone/jt nos-no exam
015.92..............................  TB bone/jt nos-exam unkn
015.93..............................  TB bone/jt nos-micro DX
015.94..............................  TB bone/jt nos-cult DX
015.95..............................  TB bone/jt nos-histo DX
015.96..............................  TB bone/jt nos-oth test
016.................................  Genitourinary TB*
016.0...............................  TB of kidney
016.00..............................  TB of kidney-unspec
016.01..............................  TB of kidney-no exam
016.02..............................  TB of kidney-exam unkn
016.03..............................  TB of kidney-micro DX
016.04..............................  TB of kidney-cult DX
016.05..............................  TB of kidney-histo DX
016.06..............................  TB of kidney-oth Test
016.1...............................  TB of bladder*
106.10..............................  TB of bladder-unspec
016.11..............................  TB of bladder-no exam
016.12..............................  TB of bladder-exam unkn
016.13..............................  TB of bladder-micro DX
016.14..............................  TB of bladder-cult DX
016.15..............................  TB of bladder-histo DX
016.16..............................  TB of bladder-oth test
106.2...............................  TB of ureter
016.20..............................  TB of ureter-unspec
016.21..............................  TB of ureter-no exam
016.22..............................  TB of ureter-exam unkn
016.23..............................  TB of ureter-micro DX
016.24..............................  TB of ureter-cult DX
016.25..............................  TB of ureter-histo DX
016.26..............................  TB of ureter-oth test
016.3...............................  TB of urinary organ nec
016.30..............................  TB urinary nec-unspec
016.31..............................  TB urinary nec-no exam
016.32..............................  TB urinary nec-exam unkn
016.33..............................  TB urinary nec-micro DX
016.34..............................  TB urinary nec-cult DX
016.35..............................  TB urinary nec-histo DX
016.36..............................  TB urinary nec-oth test
016.4...............................  TB of epididymis
016.40..............................  TB epididymis-unspec
016.41..............................  TB epididymis-no exam
016.42..............................  TB epididymis-exam unkn
016.43..............................  TB epididymis-micro DX
016.44..............................  TB epididymis-cult DX
016.45..............................  TB epididymis-histo DX
016.46..............................  TB epididymis-oth test
016.5...............................  TB male genital org nec
016.50..............................  TB male genit nec-unspec
016.51..............................  TB male gen nec-no exam
016.52..............................  TB male gen nec-ex unkn
016.53..............................  TB male gen nec-micro DX
016.54..............................  TB male gen nec-cult DX
016.55..............................  TB male gen nec-histo DX
016.56..............................  TB male gen nec-oth test
016.6...............................  TB of ovary and tube
016.60..............................  TB ovary & tube-unspec
016.61..............................  TB ovary & tube-no exam
016.62..............................  TB ovary/tube-exam unkn
016.63..............................  TB ovary & tube-micro DX
016.64..............................  TB ovary & tube-cult DX
016.65..............................  TB ovary & tube-histo DX
016.66..............................  TB ovary & tube-oth test
016.7...............................  TB female genit org nec
016.70..............................  TB female gen nec-unspec
016.71..............................  TB fem gen nec-no exam
016.72..............................  TB fem gen nec-exam unkn
016.73..............................  TB fem gen nec-micro DX
016.74..............................  TB fem gen nec-cult DX
016.75..............................  TB fem gen nec-histo DX
016.76..............................  TB fem gen nec-oth test
016.9...............................  Genitourinary TB nos
016.90..............................  GU TB nos-unspec
016.91..............................  GU TB nos-no exam
016.92..............................  GU TB nos-exam unkn
016.93..............................  GU TB nos-micro DX
016.94..............................  GU TB nos-cult DX
016.95..............................  GU TB nos-histo DX
016.96..............................  GU TB nos-oth test
017.................................  Tuberculosis nec*
017.0...............................  TB skin & subcutaneous
017.00..............................  TB skin/subcutan-unspec
017.01..............................  TB skin/subcut-no exam
017.02..............................  TB skin/subcut-exam unkn
017.03..............................  TB skin/subcut-micro DX
017.04..............................  TB skin/subcut-cult DX
017.05..............................  TB skin/subcut-histo DX
017.06..............................  TB skin/subcut-oth Test
017.1...............................  Erythema nodosum in TB
017.10..............................  Erythema nodos TB-unspec
017.11..............................  Erythem nodos TB-no exam
017.12..............................  Erythem nod TB-exam unkn
017.13..............................  Erythem nod TB-micro DX
017.14..............................  Erythem nodos TB-cult DX
017.15..............................  Erythem nod TB-histo DX
017.16..............................  Erythem nod TB-oth test
017.2...............................  TB of periph lymph node
017.20..............................  TB periph lymph-unspec
017.21..............................  TB periph lymph-no exam
017.22..............................  TB periph lymph-exam unk
017.23..............................  TB periph lymph-micro DX
017.24..............................  TB periph lymph-cult DX
017.25..............................  TB periph lymph-histo DX
017.26..............................  TB periph lymph-oth test
017.3...............................  TB of eye
017.30..............................  TB of eye-unspec
017.31..............................  TB of eye-no exam
017.32..............................  TB of eye-exam unkn
017.33..............................  TB of eye-micro DX
017.34..............................  TB of eye-cult DX
017.35..............................  TB of eye-histo DX
017.36..............................  TB of eye-oth test
107.4...............................  TB of ear
017.40..............................  TB of ear-unspec
017.41..............................  TB of ear-no exam
017.42..............................  TB of ear-exam unkn
017.43..............................  TB of ear-micro DX
017.44..............................  TB of ear-cult DX
017.45..............................  TB of ear-histo DX
017.46..............................  TB of ear-oth test
017.5...............................  TB of thyroid gland
017.50..............................  TB of thyroid-unspec
017.51..............................  TB of thyroid-no exam
017.52..............................  TB of thyroid-exam unkn
017.53..............................  TB of thyroid-micro DX
017.54..............................  TB of thyroid-cult DX
017.55..............................  TB of thyroid-histo DX
017.56..............................  TB of thyroid-oth test
017.6...............................  TB of adrenal gland
017.60..............................  TB of adrenal-unspec
017.61..............................  TB of adrenal-no exam
017.62..............................  TB of adrenal-exam unkn
017.63..............................  TB of adrenal-micro DX
017.64..............................  TB of adrenal-cult DX
017.65..............................  TB of adrenal-histo DX
017.66..............................  TB of adrenal-oth test
017.7...............................  TB of spleen
017.70..............................  TB of spleen-unspec
017.71..............................  TB of spleen-no exam
017.72..............................  TB of spleen-exam unkn
017.73..............................  TB of spleen-micro DX
017.74..............................  TB of spleen-cult DX
017.75..............................  TB of spleen-histo DX
017.76..............................  TB of spleen-oth test
017.8...............................  TB of esophagus
017.80..............................  TB esophagus-unspec
017.81..............................  TB esophagus-no exam
017.82..............................  TB esophagus-exam unkn
017.83..............................  TB esophagus-micro DX
017.84..............................  TB esophagus-cult DX
017.85..............................  TB esophagus-histo DX
017.86..............................  TB esophagus-oth test
017.9...............................  TB of organ nec
017.90..............................  TB of organ nec-unspec
017.91..............................  TB of organ nec-no exam
017.92..............................  TB organ nec-exam unkn
017.93..............................  TB of organ nec-micro DX
017.94..............................  TB of organ nec-cult DX
017.95..............................  TB of organ nec-histo DX
017.96..............................  TB of organ nec-oth test
018.................................  Miliary tuberculosis*
018.0...............................  Acute miliary TB
018.00..............................  Acute miliary TB-unspec
018.01..............................  Acute miliary TB-no exam
018.02..............................  AC miliary TB-exam unkn
018.03..............................  AC miliary TB-micro DX
018.04..............................  Acute miliary TB-cult DX
018.05..............................  AC miliary TB-histo DX
018.06..............................  AC miliary TB-oth test
018.8...............................  Miliary TB nec
018.80..............................  Miliary TB nec-unspec
018.81..............................  Miliary TB nec-no exam
018.82..............................  Miliary TB nec-exam unkn
018.83..............................  Miliary TB nec-micro DX
018.84..............................  Miliary TB nec-cult DX
018.85..............................  Miliary TB nec-histo DX
018.86..............................  Miliary TB nec-oth test
018.9...............................  Miliary tuberculosis nos
018.90..............................  Miliary TB nos-unspec
018.91..............................  Miliary TB nos-no exam
018.92..............................  Miliary TB nos-exam unkn
018.93..............................  Miliary TB nos-micro DX
018.94..............................  Miliary TB nos-cult DX
018.95..............................  Miliary TB nos-histo DX
018.96..............................  Miliary TB nos-oth test
027.0...............................  Listeriosis
027.1...............................  Erysipelothrix infection
027.2...............................  Pasteurellosis
027.8...............................  Zoonotic bact dis nec
027.9...............................  Zoonotic bact dis nos
036.0...............................  Meningococcal meningitis
036.2...............................  Meningococcemia
036.3...............................  Meningococc adrenal synd
036.40..............................  Meningococc carditis nos
036.42..............................  Meningococc endocarditis
036.43..............................  Meningococc myocarditis
037.................................  Tetanus
038.0...............................  Streptococcal septicemia
038.1...............................  Staphylococc septicemia
038.10..............................  Staphylcocc septicem nos
038.11..............................  Staph aureus septicemia
038.19..............................  Staphylcocc septicem nec
038.2...............................  Pneumococcal septicemia
038.3...............................  Anaerobic septicemia
038.4...............................  Gram-neg septicemia nec
038.40..............................  Gram-neg septicemia nos
038.41..............................  H. influenae septicemia
038.42..............................  E coli septicemia
038.43..............................  Pseudomonas septicemia
038.44..............................  Serratia septicemia
038.49..............................  Gram-neg septicemia nec
038.8...............................  Septicemia nec
038.9...............................  Septicemia nos
042.................................  Human immuno virus dis
052.0...............................  Postvaricella encephalit
052.1...............................  Varicella pneumonitis
053.0...............................  Herpes zoster meningitis
054.3...............................  Herpetic encephalitis

[[Page 66439]]

 
054.5...............................  Herpetic septicemia
054.72..............................  H Simplex meningitis
054.79..............................  H Simplex Complicat nec
055.0...............................  Postmeasles Encephalitis
055.1...............................  Postmeasles Pneumonia
070.20..............................  Hpt B acte coma wo dlta
070.21..............................  Hpt B acte coma w dlta
070.22..............................  Hpt B chrn coma wo dlta
070.23..............................  Hpt B chrn coma w dlta
070.41..............................  Hpt C acute w hepat coma
070.42..............................  Hpt DLT wo b w hpt coma
070.43..............................  Hpt E w hepat coma
070.44..............................  Chrnc hpt C w hepat coma
070.49..............................  Oth vrl hepat w hpt coma
070.06..............................  Viral hepat nos w coma
072.1...............................  Mumps meningitis
072.2...............................  Mumps encephalitis
072.3...............................  Mumps pancreatitis
079.5...............................  Retrovirus
090.42..............................  Congen syph meningitis
093.20..............................  Syphil endocarditis nos
093.82..............................  Syphilitic myocarditis
094.2...............................  Syphilitic meningitis
094.87..............................  Syph rupt cereb aneurysm
098.89..............................  Gonococcal inf site nec
112.4...............................  Candidiasis of lung
112.5...............................  Disseminated candidiasis
112.81..............................  Candidal endocarditis
112.83..............................  Candidal meningitis
114.2...............................  Coccidioidal meningitis
115.................................  Histoplasmosis*
115.1...............................  Histoplasma capsulatum
115.00..............................  Histoplasma capsulat nos
115.01..............................  Histoplasm capsul mening
115.02..............................  Histoplasm capsul retina
115.03..............................  Histoplasm caps pericard
115.04..............................  Histoplasm caps endocard
115.05..............................  Histoplasm caps pneumon
115.09..............................  Histoplasma capsulat nec
115.1...............................  Histoplasma duboisii
115.10..............................  Histoplasma duboisii nos
115.11..............................  Histoplasm dubois mening
115.12..............................  Histoplasm dubois retina
115.13..............................  Histoplasm dub pericard
115.14..............................  Histoplasm dub endocard
115.15..............................  Histoplasm dub pneumonia
115.19..............................  Histoplasma duboisii nec
115.9...............................  Histoplasmosis, unspec
115.90..............................  Histoplasmosis nos
115.91..............................  Histoplasmosis meningit
115.92..............................  Histoplasmosis retinitis
115.93..............................  Histoplasmosis pericard
115.94..............................  Histoplasmosis endocard
115.95..............................  Histoplasmosis pneumonia
115.99..............................  Histoplasmosis nec
130.0...............................  Toxoplasm meningoenceph
130.3...............................  Toxoplasma myocarditis
130.4...............................  Toxoplasma pneumonitis
136.3...............................  Pneumocystosis
204.00..............................  Act lym leuk w/o rmsion
205.00..............................  Act myl leuk w/o rmsion
206.00..............................  Act mono leuk w/o rmsion
207.00..............................  Act erth/erylk w/o rmson
208.00..............................  Act leuk uns cl w/o rmsn
260.................................  Kwashiorkor
261.................................  Nutritional marasmus
262.................................  Oth severe malnutrition
277.00..............................  Cystic fibros w/o ileus
277.01..............................  Cystic fibrosis w ileus
286.0...............................  Cong factor viii diord
286.1...............................  Cong factor ix disorder
286.6...............................  Defibrination syndrome
320.0...............................  Hemophilus meningitis
320.1...............................  Pneumococcal meningitis
320.2...............................  Streptococcal meningitis
320.3...............................  Staphylococc meningitis
320.7...............................  Mening in oth bact dis
320.81..............................  Anaerobic meningitis
320.82..............................  Mningts gram-neg bct nec
320.89..............................  Meningitis oth spcf bact
320.9...............................  Bacterial meningitis nos
321.0...............................  Cryptococcal meningitis
321.1...............................  Mening in oth fungal dis
321.4...............................  Meningit d/t sarcoidosis
321.8...............................  Mening in oth nonbac dis
324.0...............................  Intracranial abscess
324.1...............................  Intraspinal abscess
324.9...............................  CNS abscess nos
345.11..............................  Gen CNV epil w intr epil
345.3...............................  Grand mal status
348.1...............................  Anoxic brain damage
376.01..............................  Orbital cellulitis
376.02..............................  Orbital periostitis
376.03..............................  Orbital osteomyelitis
398.0...............................  Rheumatic myocarditis
403.01..............................  Mal hyp ren w renal fail
404.01..............................  Mal hyper hrt/ren w chf
404.03..............................  Mal hyp hrt/ren w chf&rf
410.01..............................  Ami anterolateral, init
410.11..............................  Ami anterior wall, init
410.21..............................  Ami inferolateral, init
410.31..............................  Ami inferopost, initial
410.41..............................  Ami inferior wall, init
410.51..............................  Ami lateral nec, initial
410.61..............................  True post infarct, init
410.71..............................  Subendo infarct, initial
410.81..............................  Ami nec, initial
410.91..............................  Ami nos, initial
415.1...............................  Pulmon embolism/infarct
415.11..............................  Iatrogen pulm emb/infarc
415.19..............................  Pulm embol/infarct nec
421.0...............................  AC/subac bact endocard
421.1...............................  AC endocardit in oth dis
421.9...............................  AC/subac endocardit nos
422.0...............................  AC myocardit in oth dis
422.90..............................  Acute myocarditis nos
422.91..............................  Idiopathic myocarditis
422.92..............................  Septic myocarditis
422.93..............................  Toxic myocarditis
422.99..............................  Acute myocarditis nec
427.41..............................  Ventricular fibrillation
427.5...............................  Cardiac arrest
430.................................  Subarachnoid hemorrhage
431.................................  Intracerebral hemorrhage
432.0...............................  Nontraum extradural hem
432.1...............................  Subdural hemorrhage
433.01..............................  OCL bslr art w infrct
433.11..............................  OCL crtd art w infrct
433.21..............................  OCL vrtb art w infrct
433.31..............................  OCL mlt bi art w infrct
433.81..............................  OCL spcf art w infrct
433.91..............................  OCL art nos w infrct
434.01..............................  CRBL thrmbs w infrct
434.11..............................  CRBL emblsm w infrct
434.91..............................  CRBL art ocl nos w infrc
436.................................  CVA
440.23..............................  ATH ext ntv art ulcrtion
440.24..............................  ATH ext ntv art gngrene
441.0...............................  Dissecting aneurysm
441.00..............................  DSCT of aorta unsp site
441.01..............................  DSCT of thoracic aorta
441.02..............................  DSCT of abdominal aorta
441.03..............................  DSCT of thoracoabd aorta
441.1...............................  RUPTUR thoracic aneurysm
441.3...............................  RUPT abd aortic aneurysm
441.5...............................  RUPT aortic aneurysm nos
441.6...............................  Thoracoabd aneurysm rupt
446.3...............................  Lethal midline granuloma
451.89..............................  Thrombophlebitis nec
452.................................  Portal vein thrombosis
453.................................  OTH venous thrombosis*
453.0...............................  BUDD-Chiari syndrome
453.1...............................  Thrombophlebitis migrans
453.2...............................  Vena cava thrombosis
453.3...............................  Renal vein thrombosis
464.11..............................  AC tracheitis w obstruct
464.21..............................  AC laryngotrach w obstr
464.31..............................  AC epiglottitis w obstr
466.1...............................  Acute bronchiolitis
480.0...............................  Adenoviral pneumonia
480.1...............................  RESP syncyt viral pneum
480.2...............................  Parinfluenza viral pneum
480.8...............................  Viral pneumonia nec
480.9...............................  Viral pneumonia nos
481.................................  Pneumococcal pneumonia
482.................................  Oth bacterial pneumonia*
482.0...............................  K. pneumoniae pneumonia
482.1...............................  Pseudomonal pneumonia
482.2...............................  H.influenzae pneumonia
482.3...............................  Streptococcal pneumonia
482.30..............................  Streptococcal pneumn nos
482.31..............................  Pneumonia strptococcus A
482.32..............................  Pneumonia strptococcus B
482.39..............................  Pneumonia oth strep
482.4...............................  Staphylococcal pneumonia
482.40..............................  Staphylococcal pneu nos
482.41..............................  Staph aureus pneumonia
482.49..............................  Staph pneumonia nec
482.8...............................  Bacterial pneumonia nec
482.81..............................  Pneumonia anaerobes
482.82..............................  Pneumonia e coli
482.83..............................  Pneumo oth grm-neg bact
482.84..............................  Legionnaires' disease
482.89..............................  Pneumonia oth spcf bact
482.9...............................  Bacterial pneumonia nos
483.................................  Pneumonia: organism nec*
483.0...............................  Pneu mycplsm pneumoniae
483.1...............................  Pneumonia d/t chlamydia
483.8...............................  Pneumon oth spec orgnsm
484.................................  Pneum in oth infec dis*
484.1...............................  Pneum w cytomeg incl dis
484.3...............................  Pneumonia in whoop cough
484.5...............................  Pneumonia in anthrax
484.6...............................  Pneum in aspergillosis
484.7...............................  Pneum in oth sys mycoses
484.8...............................  Pneum in infect dis nec
485.................................  Bronchopneumonia org nos
486.................................  Pneumonia, organism nos
487.................................  Influenza*
487.0...............................  Influenza with pneumonia
506.0...............................  Fum/vapor bronc/pneumon
506.1...............................  Fum/vapor ac pulm edema
507.0...............................  Food/vomit pneumonitis
507.1...............................  Oil/essence pneumonitis
507.8...............................  Solid/liq pneumonit nec
510.0...............................  Empyema with fistula
510.9...............................  Empyema w/o fistula
511.1...............................  Bact pleur/effus not tb
513.0...............................  Abscess of lung
513.1...............................  Abscess of mediastinum
514.................................  Pulm congest/hypostasis
515.................................  Postinflam pulm fibrosis
518.3...............................  Pulmonary eosinophilia
518.5...............................  Post traum pulm insuffic
518.81..............................  Acute respiratry failure
519.2...............................  Mediastinitis
528.3...............................  Cellulitis/abscess mouth
530.4...............................  Perforation of esophagus
530.82..............................  Esophageal hemorrhage

[[Page 66440]]

 
531.00..............................  AC stomach ulcer w hem
531.01..............................  AC stomac ulc w hem-obst
531.10..............................  AC stomach ulcer w perf
531.11..............................  AC stom ulc w perf-obst
531.20..............................  AC stomac ulc w hem/perf
531.21..............................  AC stom ulc hem/perf-obs
531.40..............................  CHR stomach ulc w hem
531.41..............................  CHR stom ulc w hem-obstr
531.50..............................  CHR stomach ulcer w perf
531.51..............................  CHR stom ulc w perf-obst
531.60..............................  CHR stomach ulc hem/perf
531.61..............................  CHR stom ulc hem/perf-ob
532.00..............................  AC duodenal ulcer w hem
532.01..............................  AC duoden ulc w hem-obst
532.10..............................  AC duodenal ulcer w perf
532.11..............................  AC duoden ulc perf-obstr
532.20..............................  AC duoden ulc w hem/perf
532.21..............................  AC duod ulc hem/perf-obs
532.40..............................  CHR duoden ulcer w hem
532.41..............................  CHR duoden ulc hem-obstr
532.50..............................  CHR duoden ulcer w perf
532.51..............................  CHR duoden ulc perf-obst
532.60..............................  CHR duoden ulc hem/perf
532.61..............................  CHR duod ulc hem/perf-ob
533.00..............................  AC peptic ulcer w hemorr
533.01..............................  AC peptic ulc w hem-obst
533.10..............................  AC peptic ulcer w perfor
533.11..............................  AC peptic ulc w perf-obs
533.20..............................  AC peptic ulc w hem/perf
533.21..............................  AC pept ulc hem/perf-obs
533.40..............................  CHR peptic ulcer w hem
533.41..............................  CHR peptic ulc w hem-obs
533.50..............................  CHR peptic ulcer w perf
533.51..............................  CHR peptic ulc perf-obst
533.60..............................  CHR pept ulc w hem/perf
533.61..............................  CHR pept ulc hem/perf-ob
534.00..............................  AC marginal ulcer w hem
534.01..............................  AC margin ulc w hem-obst
534.10..............................  AC marginal ulcer w perf
534.11..............................  AC margin ulc w perf-obs
534.20..............................  AC margin ulc w hem/perf
534.21..............................  AC marg ulc hem/perf-obs
534.40..............................  CHR marginal ulcer w hem
534.41..............................  CHR margin ulc w hem-obs
534.50..............................  CHR marginal ulc w perf
534.51..............................  CHR margin ulc perf-obst
534.60..............................  CHR margin ulc hem/perf
534.61..............................  CHR marg ulc hem/perf-ob
535.01..............................  Acute gastritis w hmrhg
535.11..............................  ATRPH gastritis w hmrhg
535.21..............................  GSTR Mcsl Hyprt w hmrg
535.31..............................  ALCHL Gstritis w hmrhg
535.41..............................  OTH SPF Gastrt w hmrhg
535.51..............................  GSTR/DDNTS NOS w hmrhg
535.61..............................  Duodenitis w hmrhg
537.4...............................  Gastric/Duodenal fistula
537.83..............................  Angio Stm/dudn w hmrhg
540.0...............................  AC Append w peritonitis
557.0...............................  AC VASC insuff intestine
562.02..............................  DVRTCLO SML Int w hmrhg
562.03..............................  DVRTCLI SML Int w hmrhg
562.12..............................  DVRTCLO colon w hmrhg
562.13..............................  DVRTCLI colon w hmrhg
567.0...............................  Peritonitis in infec dis
567.1...............................  Pneumococcal peritonitis
567.2...............................  Suppurat peritonitis nec
567.8...............................  Peritonitis nec
567.9...............................  Peritonitis nos
569.60..............................  Colstomy/enter comp nos
569.61..............................  Colosty/enterost infectn
569.69..............................  Colstmy/enteros comp nec
569.83..............................  Perforation of intestine
569.85..............................  Angio intes w hmrhg
570.................................  Acute necrosis of liver
572.0...............................  Abscess of liver
572.4...............................  Hepatorenal syndrome
573.4...............................  Hepatic infarction
575.4...............................  Perforation gallbladder
576.3...............................  Perforation of bile duct
577.2...............................  Pancreat cyst/pseudocyst
579.3...............................  Intest postop nonabsorb
580.0...............................  AC proliferat nephritis
580.4...............................  AC rapidly progr nephrit
580.81..............................  AC nephritis in oth dis
580.89..............................  Acute nephritis nec
580.9...............................  Acute nephritis nos
583.4...............................  Rapidly prog nephrit nos
584.5...............................  Lower nephron nephrosis
584.6...............................  AC renal fail, cort necr
584.7...............................  AC ren fail, medull necr
584.8...............................  AC renal failure nec
584.9...............................  Acute renal failure nos
590.2...............................  Renal/perirenal abscess
596.6...............................  Bladder rupt, nontraum
659.30..............................  Septicemia in labor-unsp
659.31..............................  Septicem in labor-deliv
665.00..............................  Prelabor rupt uter-unsp
665.01..............................  Prelabor rupt uterus-del
665.03..............................  Prelab rupt uter-antepar
665.10..............................  Rupture uterus nos-unsp
665.11..............................  Rupture uterus nos-deliv
669.10..............................  Obstetric shock-unspec
669.11..............................  Obstetric shock-deliver
669.12..............................  Obstet shock-deliv w p/p
669.13..............................  Obstetric shock-antepar
669.14..............................  Obstetric shock-postpart
669.30..............................  AC ren fail w deliv-unsp
669.32..............................  AC ren fail-deliv w p/p
669.34..............................  AC renal failure-postpar
673.00..............................  OB air embolism-unspec
673.01..............................  OB air embolism-deliver
673.02..............................  OB air embol-deliv w p/p
673.03..............................  OB air embolism-antepart
673.04..............................  OB air embolism-postpart
673.10..............................  Amniotic embolism-unspec
673.11..............................  Amniotic embolism-deliv
673.12..............................  Amniot embol-deliv w p/p
673.13..............................  Amniotic embol-antepart
673.14..............................  Amniotic embol-postpart
673.20..............................  OB pulm embol nos-unspec
673.22..............................  Pulm embol nos-del w p/p
673.23..............................  Pulm embol nos-antepart
673.24..............................  Pulm embol nos-postpart
673.30..............................  OB pyemic embol-unspec
673.31..............................  OB pyemic embol-deliver
673.32..............................  OB pyem embol-del w p/p
673.33..............................  OB pyemic embol-antepart
673.34..............................  OB pyemic embol-postpart
673.80..............................  OB pulmon embol nec-unsp
673.81..............................  Pulmon embol nec-deliver
673.82..............................  Pulm embol nec-del w p/p
673.83..............................  Pulmon embol nec-antepar
673.84..............................  Pulmon embol nec-postpar
674.00..............................  Puerp cerebvasc dis-unsp
682.................................  Other cellulitis/abscess*
682.0...............................  Cellulitis of face
682.1...............................  Cellulitis of neck
682.22..............................  Cellulitis of trunk
682.3...............................  Cellulitis of arm
682.4...............................  Cellulitis of hand
682.5...............................  Cellulitis of buttock
682.6...............................  Cellulitis of leg
682.7...............................  Cellulitis of foot
682.8...............................  Cellulitis, site nec
765.01..............................  Extreme immatur 500G
765.02..............................  Extreme immatur 500-749G
765.03..............................  Extreme immatur 750-999G
781.7...............................  Tetany
785.51..............................  Cardiogenic shock
785.59..............................  Shock w/o trauma nec
799.1...............................  Respiratory arrest
958.0...............................  Air embolism
958.1...............................  Fat embolism
958.5...............................  Traumatic anuria
996.02..............................  Malfunc prosth hrt valve
996.61..............................  React-cardiac dev/graft
996.62..............................  React-oth vasc dev/graft
996.63..............................  React-nerv sys dev/graft
996.64..............................  React-indwell urin cath
996.66..............................  React-inter joint prost
996.67..............................  React-oth int ortho dev
996.69..............................  React-int pros devic nec
997.62..............................  Infection amputat stump
998.0...............................  Postoperative shock
998.3...............................  Postop wound disruption
998.5...............................  Postoperative infection
998.6...............................  Persist postop fistula
999.1...............................  Air embol comp med care
V440................................  Tracheostomy status
V451................................  Renal dialysis status
V461................................  Dependence on respirator
------------------------------------------------------------------------
* Denotes this is a category rather than a code.

Appendix D--The IRF Market Basket

    Section 1886(j)(3)(C) of the Act requires the Secretary to 
establish an increase factor (for purposes of setting prospective 
payment system rates) based on a market basket index. The proposed 
market basket includes both operating and capital costs of 
rehabilitation facilities (that is, freestanding rehabilitation 
hospitals and rehabilitation hospital units). The index currently 
used for operating costs for rehabilitation facilities is the 
excluded hospital market basket. This market basket is based on 1992 
cost report data and includes Medicare participating rehabilitation, 
long term care, psychiatric, cancer, and children's hospitals. Since 
freestanding rehabilitation hospitals are a component of the 
excluded hospital market basket, this index most closely reflects 
the cost shares of rehabilitation facilities. Because the excluded 
hospital market basket only includes operating costs, we are 
proposing to use the excluded hospital market basket with the 
addition of a capital portion to the index. We provide a brief 
explanation of the methodology used to develop our proposed index 
for rehabilitation facilities. We refer to this index as the 
excluded hospital (with capital) market basket. In the following 
discussion we describe: the methodology used to determine the 
operating portion of the market basket, the methodology used to 
determine the capital portion of the market basket, and additional 
analyses that help support the extent to which rehabilitation cost 
shares are reflected in the market basket that we are proposing.
    The operating portion of the excluded hospital market basket 
consists of major cost categories and their respective weights. The 
major cost categories include wages, benefits, drugs, and a 
residual. The weights for the major cost categories are developed 
from the Medicare cost reports for FY 1992. The cost

[[Page 66441]]

report data used includes those hospitals excluded from the 
inpatient hospital prospective payment system where the Medicare 
average length of stay is within 15 percent (higher or lower) of the 
total facility average length of stay. Limiting the sample in this 
way provides a more accurate reflection of the structure of costs 
for Medicare. The detailed cost categories are derived from the 
Asset and Expenditure Survey, 1992 Census of Service Industries, by 
the Bureau of the Census, Economics and Statistics Administration, 
U.S. Department of Commerce. This is used in conjunction with the 
1992 Input-Output Tables published by the Bureau of Economic 
Analysis, U.S. Department of Commerce. A more detailed description 
of the development of this index can be found in our final rule, 
Medicare Program; Changes to the Hospital Inpatient Prospective 
Payment Systems and Fiscal Year 1998 Rates; published in the Federal 
Register at 62 FR 45965-45996, on August 29, 1997.
    As previously stated, the market basket we are proposing needs 
to reflect both operating and capital costs. Capital costs include 
depreciation, interest, and other capital-related costs. The cost 
categories for the capital portion of the market basket that we are 
proposing is developed in a similar manner as those for the 
inpatient hospital prospective payment system capital input price 
index, which is explained in the August 30, 1996 Federal Register. 
We calculated weights for capital costs, using the same set of 
Medicare cost reports used to develop the operating share for 
excluded hospitals. The resulting capital weight for the 1992 base 
year is 9.080 percent.
    Because capital is consumed over time, depreciation and interest 
costs in the current year reflect both current and previous capital 
purchases. We use vintage weighting of current and previous capital 
price changes to capture this effect. Vintage weighting, which is 
explained in the August 30, 1996 Federal Register (61 FR 46197 
through 46203), is the process of weighting price changes for 
individual years in proportion to that year's share of total 
purchases still being consumed.
    In order to vintage weight the capital portion of the index as 
described above, the average useful life of both assets and debt 
instruments (for example, a loan, bond, or promissory note) needs to 
be developed. For depreciation expenses, the useful life of fixed 
and movable assets is calculated from the Medicare cost reports for 
excluded hospitals, including freestanding rehabilitation hospitals. 
The average useful life for fixed assets is 21 years and the average 
useful life for movable assets is 13 years. For interest expenses, 
we use the same useful life of debt instruments used in the hospital 
prospective payment system capital input price index. We believe 
that this useful life is appropriate, because it reflects the 
average useful life of hospital issuances of commercial and 
municipal bonds from all hospitals, including rehabilitation 
facilities. The average useful life of interest expense is 
determined to be 22 years. After the useful life is determined, a 
set of weights is calculated by determining the average proportion 
of depreciation or interest expense incurred during any given year 
during the useful life. This information is developed using the 
Medicare cost reports. These calculations are the same as those 
described for the inpatient hospital prospective payment system 
capital input price index in the August 30, 1996 Federal Register. 
The price proxies for each of the capital cost categories are the 
same as those used for the inpatient hospital prospective payment 
system capital input price index. The cost categories, price 
proxies, and base-year fiscal year 1992 weights for the excluded 
hospital (with capital) market basket are presented in Table 1. The 
vintage weights for the index are presented in Table 2.

   Table 1.--HCFA Excluded Hospital Input Price Index With Capital (FY
                       1992) Structure and Weights
------------------------------------------------------------------------
                                                            Weights (%)
         Cost category             Price/wage variable      Base-year:
                                                               1992
------------------------------------------------------------------------
TOTAL..........................  .......................         100.000
Compensation...................  .......................          57.935
    Wages and Salaries.........  HCFA Prospective                 47.417
                                  payment system
                                  Occupational.
    Employee Benefits..........  HCFA Prospective                 10.519
                                  payment system.
Professional fees: Non-Medical.  ECI--Compensation:                1.908
                                  Prof. & Tech.
Utilities......................  .......................           1.523
    Electricity................  WPI--Commercial                   0.916
                                  Electric Power.
    Fuel Oil, Coal, etc........  WPI--Commercial Natural           0.365
                                  Gas.
    Water and Sewerage.........  CPI-U--Water & Sewage..           0.243
Professional Liability           HCFA--Prof. Liab. Prem.           0.983
 Insurance.
All Other Products and Services  .......................          28.572
    All Other Products.........  .......................          22.027
        Pharmaceuticals........  WPI--Prescription Drugs           2.791
        Food: Direct Purchase..  WPI--Processed Foods...           2.155
        Food: Contract Service.  CPI-U--Food Away fr.              0.998
                                  Home.
        Chemicals..............  WPI--Industrial                   3.413
                                  Chemicals.
        Medical Instruments....  WPI--Med. Inst. & Equip           2.868
        Photographic Supplies..  WPI--Photo Supplies....           0.364
        Rubber and Plastics....  WPI--Rub. & Plast.                4.423
                                  Products.
        Paper Products.........  WPI--Convert. Paper and           1.984
                                  Paperboard.
        Apparel................  WPI--Apparel...........           0.809
        Machinery and Equipment  WPI--Mach. & Equipment.           0.193
        Miscellaneous Products.  WPI--Finished Goods....           2.029
    All Other Services.........  .......................           6.544
        Telephone..............  CPI-U--Telephone                  0.574
                                  Services.
        Postage................  CPI-U--Postage.........           0.268
        All Other: Labor         ECI--Compensation:                4.945
         Intensive.               Service Workers.
        All Other: Non-Labor     CPI-U--All Items                  0.757
         Intensive.               (Urban).
Capital-Related Costs..........  .......................           9.080
    Depreciation...............  .......................           5.611
        Fixed Assets...........  Boeckh-Institutional              3.570
                                  Construction: 21 year
                                  useful life.
        Movable Equipment......  WPI--Machinery &                  2.041
                                  Equipment: 13 year
                                  useful life.
    Interest Costs.............  .......................           3.212
        Non-profit.............  Avg. Yield Municipal              2.730
                                  Bonds: 22 year useful
                                  life.
        For-profit.............  Avg, Yield AAA Bonds:             0.482
                                  22 year useful life.
    Other Capital-Related Costs  CPI-U--Residential Rent          0.257
------------------------------------------------------------------------
* The wage and benefit proxies are a blend of 10 employment cost indices
  (ECI). A detailed discussion of the price proxies can be found in the
  August 30, 1996 Federal Register final rule.


[[Page 66442]]


            Table 2.--HCFA Excluded Hospital Input Price Index With Capital (FY 1992) Vintage Weights
----------------------------------------------------------------------------------------------------------------
                                                                                              Interest:  capital-
                        Year                           Fixed assets  (21    Movable assets     related  (22 year
                                                         year weights)     (13 year weights)       weights)
----------------------------------------------------------------------------------------------------------------
1...................................................              0.0201              0.0454              0.0071
2...................................................              0.0225              0.0505              0.0082
3...................................................              0.0225              0.0562              0.0100
4...................................................              0.0285              0.0620              0.0119
5...................................................              0.0301              0.0660              0.0139
6...................................................              0.0321              0.0710              0.0161
7...................................................              0.0336              0.0764              0.0185
8...................................................              0.0353              0.0804              0.0207
9...................................................              0.0391              0.0860              0.0244
10..................................................              0.0431              0.0923              0.0291
11..................................................              0.0474              0.0987              0.0350
12..................................................              0.0513              0.1047              0.0409
13..................................................              0.0538              0.1104              0.0474
14..................................................              0.0561  ..................              0.0525
15..................................................              0.0600  ..................              0.0590
16..................................................              0.0628  ..................              0.0670
17..................................................              0.0658  ..................              0.0742
18..................................................              0.0695  ..................              0.0809
19..................................................              0.0720  ..................              0.0875
20..................................................              0.0748  ..................              0.0931
21..................................................              0.0769  ..................              0.0993
22..................................................  ..................  ..................              0.1034
Total...............................................              1.0000              1.0000              1.0000
----------------------------------------------------------------------------------------------------------------

We further analyzed the extent to which the weights in the excluded 
hospital (with capital) market basket that we are proposing reflects 
the cost weights in rehabilitation hospitals; particularly since 
more than 50 percent of excluded hospitals are psychiatric 
hospitals. For this purpose, we conducted an analysis comparing the 
cost weights of rehabilitation hospitals to the cost weights for 
excluded hospitals. We analyzed the variations of major costs, such 
as wages, drugs, and capital for rehabilitation and excluded 
hospitals. This analysis showed that while these weights differed 
slightly between rehabilitation hospitals and excluded hospitals, 
the difference is very small. When these weights are substituted 
into the market basket structure for sensitivity analysis, the 
effect is never more than 0.2 percentage points in any given year. 
This difference is less than the 0.25 percentage point criteria that 
determines whether a forecast error adjustment under the inpatient 
hospital prospective payment system is warranted. We conducted this 
analysis in both the base year (FY 1992), and for the most recent 
set of cost reports (FY 1997) to determine if the difference in 
weights changed over time. Again, the differences were very small. 
Based on this analysis, we concluded that using the excluded 
hospital (with capital) market basket for the IRF prospective 
payment system will provide a reasonable measure of the price 
changes facing rehabilitation hospitals. We request comments on any 
other data sources that may be available to provide detailed cost 
category information on rehabilitation hospitals, or on data sources 
for cost categories in rehabilitation units.
[FR Doc. 00-27646 Filed 11-2-00; 8:45 am]
BILLING CODE 4120-03-P


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