44618 Federal Register / Vol. 77, No. 146 / Monday, July 30, 2012 / Notices 

language interpretation or other 

reasonable accommodations, should 

contact Shawn Woodhead Werth, 

Secretary and Clerk, at (202) 694–1040, 

at least 72 hours prior to the meeting 

date. 

PERSON TO CONTACT FOR INFORMATION: 

Judith Ingram, Press Officer, Telephone: 

(202) 694–1220. 

Shawn Woodhead Werth, 

Secretary and Clerk of the Commission. 

[FR Doc. 2012–18686 Filed 7–26–12; 4:15 pm] 

BILLING CODE 6715–01–P 

FEDERAL RESERVE SYSTEM 

Change in Bank Control Notices; 

Acquisitions of Shares of a Bank or 

Bank Holding Company 

The notificants listed below have 

applied under the Change in Bank 

Control Act (12 U.S.C. 1817(j)) and 

§ 225.41 of the Board’s Regulation Y (12 

CFR 225.41) to acquire shares of a bank 

or bank holding company. The factors 

that are considered in acting on the 

notices are set forth in paragraph 7 of 

the Act (12 U.S.C. 1817(j)(7)). 

The notices are available for 

immediate inspection at the Federal 

Reserve Bank indicated. The notices 

also will be available for inspection at 

the offices of the Board of Governors. 

Interested persons may express their 

views in writing to the Reserve Bank 

indicated for that notice or to the offices 

of the Board of Governors. Comments 

must be received not later than August 

14, 2012. 

A. Federal Reserve Bank of New York 

(Ivan Hurwitz, Vice President) 33 

Liberty Street, New York, New York 

10045–0001: 

1. Muhammad Habib, Kusnacht, 

Switzerland; Hamza Habib, and 

Khadijah Jumani, both of Dubai, United 

Arab Emirates; and Fazilat Jumani, 

London, England; to retain control of 

Maham Beteiligungsgessellschaft AG, 

Zurich, Switzerland, and thereby 

indirectly retain control of Habib 

American Bank, New York, New York. 

Board of Governors of the Federal Reserve 

System, July 25, 2012. 

Robert deV. Frierson, 

Deputy Secretary of the Board. 

[FR Doc. 2012–18510 Filed 7–27–12; 8:45 am] 

BILLING CODE 6210–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Disease Control and 

Prevention 

Disease, Disability, and Injury 

Prevention and Control Special 

Emphasis Panel (SEP): Initial Review 

The meeting announced below 

concerns the World Trade Center Health 

Program Outreach and Education Plan 

RFA–OH12–1201, initial review. 

In accordance with Section 10(a)(2) of 

the Federal Advisory Committee Act 

(Pub. L. 92–463), the Centers for Disease 

Control and Prevention (CDC) 

announces the aforementioned meeting: 

Time and Date: 8:00 a.m.–5:00 p.m., 

August 28, 2012 (Closed). 

Place: Embassy Suites—Old Town 

Alexandria, 1900 Diagonal Road, Alexandria, 

Virginia 22314, Telephone: (703) 684–5900. 

Status: The meeting will be closed to the 

public in accordance with provisions set 

forth in Section 552b(c)(4) and (6), Title 5 

U.S.C., and the Determination of the Director, 

Management Analysis and Services Office, 

CDC, pursuant to Public Law 92–463. 

Matters to be Discussed: The meeting will 

include the initial review, discussion, and 

evaluation of applications received in 

response to ‘‘World Trade Center Health 

Program Outreach and Education Plan RFA– 

OH12–1201.’’ 

Contact Person for More Information: Nina 

Turner, Ph.D., Scientific Review Officer, 

National Institute for Occupational Safety 

and Health, CDC, 1095 Willowdale Road, 

Mailstop G800, Morgantown, West Virginia 

26505–2845, Telephone: (304) 285–5976. 

The Director, Management Analysis and 

Services Office, has been delegated the 

authority to sign Federal Register notices 

pertaining to announcements of meetings and 

other committee management activities, for 

both the Centers for Disease Control and 

Prevention and the Agency for Toxic 

Substances and Disease Registry. 

Dated: July 18, 2012. 

Elaine L. Baker, 

Director, Management Analysis and Services 

Office, Centers for Disease Control and 

Prevention. 

[FR Doc. 2012–18427 Filed 7–27–12; 8:45 am] 

BILLING CODE 4163–18–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[CMS–1433–N] 

RIN 0938–AR21 

Medicare Program; Inpatient 

Rehabilitation Facility Prospective 

Payment System for Federal Fiscal 

Year 2013 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Notice. 

SUMMARY: This notice updates the 

payment rates for inpatient 

rehabilitation facilities (IRFs) for 

Federal fiscal year (FY) 2013 (for 

discharges occurring on or after October 

1, 2012 and on or before September 30, 

2013) as required under section 

1886(j)(3)(C) of the Social Security Act 

(the Act). Section 1886(j)(5) of the Act 

requires the Secretary to publish in the 

Federal Register on or before the August 

1 that precedes the start of each fiscal 

year, the classification and weighting 

factors for the IRF prospective payment 

system’s (PPS) case-mix groups and a 

description of the methodology and data 

used in computing the prospective 

payment rates for that fiscal year. 

DATES: Effective Date: The updated IRF 

prospective payment rates are effective 

for IRF discharges occurring on or after 

October 1, 2012 and on or before 

September 30, 2013 (FY 2013). 

FOR FURTHER INFORMATION CONTACT: 

Gwendolyn Johnson, (410) 786–6954, 

for general information about the notice. 

Susanne Seagrave, (410) 786–0044, for 

information about the payment policies 

and payment rates. 

SUPPLEMENTARY INFORMATION: 

Executive Summary 

I. Purpose 

This notice updates the payment rates 

for inpatient rehabilitation facilities 

(IRFs) for Federal fiscal year (FY) 2013 

(for discharges occurring on or after 

October 1, 2012 and on or before 

September 30, 2013) as required under 

section 1886(j)(3)(C) of the Social 

Security Act (the Act). Section 1886(j)(5) 

of the Act requires the Secretary to 

publish in the Federal Register on or 

before the August 1 that precedes the 

start of each fiscal year, the 

classification and weighting factors for 

the IRF prospective payment system’s 

(PPS) case-mix groups and a description 

of the methodology and data used in 

computing the prospective payment 

rates for that fiscal year. 

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Federal Register / Vol. 77, No. 146 / Monday, July 30, 2012 / Notices 44619 

Summary of Major Provisions 

In this notice, we use the methods 

described in the FY 2012 IRF PPS final 

rule (76 FR 47836) to update the Federal 

prospective payment rates for FY 2013 

using updated FY 2011 IRF claims and 

the most recent available IRF cost report 

data. No policy changes are being 

proposed in this notice. Furthermore, 

we explain the self-implementing 

changes resulting from the provisions in 

section 1886(j)(3)(C) and (D) of the Act. 

Summary of Cost and Benefits 

Provision description Total costs Total benefits 

FY 2013 IRF PPS payment rate update ............ The overall economic impact of this notice is 

an estimated $140 million in increased payments to IRFs during FY 2013.

The benefits of this notice include a net increase in payments to IRF providers. Overall, no IRFs are estimated to experience a 

net decrease in payments as a result of the 

updates in this notice. 

In the past, the Addenda referred to 

throughout the preamble of our annual 

IRF PPS proposed and final rules and 

notices were included in the printed 

Federal Register. However, effective 

with the FY 2013 IRF notice, the IRF 

Addenda will no longer appear in the 

Federal Register. Instead these Addenda 

to the annual proposed and final rules 

and notices will be available through 

the Internet. The IRF PPS Addenda 

along with other supporting documents 

and tables referenced in this notice are 

available through the Internet on the 

CMS Web site at http://www.cms.hhs.

gov/Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/. 

To assist readers in referencing 

sections contained in this document, we 

are providing the following Table of 

Contents. 

Table of Contents 

I. Background 

A. Historical Overview of the Inpatient 

Rehabilitation Facility Prospective 

Payment System (IRF PPS) 

B. Provisions of the Affordable Care Act 

Affecting the IRF PPS in FY 2012 and 

Beyond 

C. Operational Overview of the Current IRF 

PPS 

II. Summary of Provisions of the Notice 

III. Update to the Case-Mix Group (CMG) 

Relative Weights and Average Length of 

Stay Values for FY 2013 

IV. Updates to the Facility-Level Adjustment 

Factors 

V. FY 2013 IRF PPS Federal Prospective 

Payment Rates 

A. Market Basket Increase Factor, 

Productivity Adjustment, Other 

Adjustment, and Secretary’s 

Recommendation for FY 2013 

B. Labor-Related Share for FY 2013 

C. Area Wage Adjustment 

D. Description of the IRF Standard 

Conversion Factor and Payment Rates for 

FY 2013 

E. Example of the Methodology for 

Adjusting the Federal Prospective 

Payment Rates 

VI. Update to Payments for High-Cost 

Outliers Under the IRF PPS 

A. Update to the Outlier Threshold 

Amount for FY 2013 

B. Update to the IRF Cost-to-Charge Ratio 

Ceilings 

VII. Collection of Information Requirements 

VIII. Waiver of Proposed Rulemaking 

IX. Regulatory Impact Analysis 

A. Statement of Need 

B. Overall Impacts 

C. Anticipated Effects of the Notice 

D. Alternatives Considered 

E. Accounting Statement 

F. Conclusion 

I. Background 

A. Historical Overview of the Inpatient 

Rehabilitation Facility Prospective 

Payment System (IRF PPS) 

Section 1886(j) of the Social Security 

Act (the Act) provides for the 

implementation of a per discharge 

prospective payment system (PPS) for 

inpatient rehabilitation hospitals and 

inpatient rehabilitation units of a 

hospital (hereinafter referred to as IRFs). 

Payments under the IRF PPS 

encompass inpatient operating and 

capital costs of furnishing covered 

rehabilitation services (that is, routine, 

ancillary, and capital costs) but not 

direct graduate medical education costs, 

costs of approved nursing and allied 

health education activities, bad debts, 

and other services or items outside the 

scope of the IRF PPS. Although a 

complete discussion of the IRF PPS 

provisions appears in the original FY 

2002 IRF PPS final rule (66 FR 41316) 

and the FY 2006 IRF PPS final rule (70 

FR 47880), we are providing below a 

general description of the IRF PPS for 

fiscal years (FYs) 2002 through 2012. 

Under the IRF PPS from FY 2002 

through FY 2005, as described in the FY 

2002 IRF PPS final rule (66 FR 41316), 

the Federal prospective payment rates 

were computed across 100 distinct CaseMix Groups (CMGs). We constructed 95 

CMGs using rehabilitation impairment 

categories (RICs), functional status (both 

motor and cognitive), and age (in some 

cases, cognitive status and age may not 

be a factor in defining a CMG). In 

addition, we constructed 5 special 

CMGs to account for very short stays 

and for patients who expire in the IRF. 

For each of the CMGs, we developed 

relative weighting factors to account for 

a patient’s clinical characteristics and 

expected resource needs. Thus, the 

weighting factors accounted for the 

relative difference in resource use across 

all CMGs. Within each CMG, we created 

tiers based on the estimated effects that 

certain comorbidities would have on 

resource use. 

We established the Federal PPS rates 

using a standardized payment 

conversion factor (formerly referred to 

as the budget neutral conversion factor). 

For a detailed discussion of the budget 

neutral conversion factor, please refer to 

our FY 2004 IRF PPS final rule (68 FR 

45684 through 45685). In the FY 2006 

IRF PPS final rule (70 FR 47880), we 

discussed in detail the methodology for 

determining the standard payment 

conversion factor. 

We applied the relative weighting 

factors to the standard payment 

conversion factor to compute the 

unadjusted Federal prospective 

payment rates under the IRF PPS from 

FYs 2002 through 2005. Within the 

structure of the payment system, we 

then made adjustments to account for 

interrupted stays, transfers, short stays, 

and deaths. Finally, we applied the 

applicable adjustments to account for 

geographic variations in wages (wage 

index), the percentage of low-income 

patients, location in a rural area (if 

applicable), and outlier payments (if 

applicable) to the IRF’s unadjusted 

Federal prospective payment rates. 

For cost reporting periods that began 

on or after January 1, 2002 and before 

October 1, 2002, we determined the 

final prospective payment amounts 

using the transition methodology 

prescribed in section 1886(j)(1) of the 

Act. Under this provision, IRFs 

transitioning into the PPS were paid a 

blend of the Federal IRF PPS rate and 

the payment that the IRF would have 

received had the IRF PPS not been 

implemented. This provision also 

allowed IRFs to elect to bypass this 

blended payment and immediately be 

paid 100 percent of the Federal IRF PPS 

rate. The transition methodology 

expired as of cost reporting periods 

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44620 Federal Register / Vol. 77, No. 146 / Monday, July 30, 2012 / Notices 

beginning on or after October 1, 2002 

(FY 2003), and payments for all IRFs 

now consist of 100 percent of the 

Federal IRF PPS rate. 

We established a CMS Web site as a 

primary information resource for the 

IRF PPS. The Web site URL is http:// 

www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/ 

InpatientRehabFacPPS/ and may be 

accessed to download or view 

publications, software, data 

specifications, educational materials, 

and other information pertinent to the 

IRF PPS. 

Section 1886(j) of the Act confers 

broad statutory authority upon the 

Secretary to propose refinements to the 

IRF PPS. In the FY 2006 IRF PPS final 

rule (70 FR 47880) and in correcting 

amendments to the FY 2006 IRF PPS 

final rule (70 FR 57166) that we 

published on September 30, 2005, we 

finalized a number of refinements to the 

IRF PPS case-mix classification system 

(the CMGs and the corresponding 

relative weights) and the case-level and 

facility-level adjustments. These 

refinements included the adoption of 

the Office of Management and Budget’s 

(OMB) Core-Based Statistical Area 

(CBSA) market definitions, 

modifications to the CMGs, tier 

comorbidities, and CMG relative 

weights, implementation of a new 

teaching status adjustment for IRFs, 

revision and rebasing of the market 

basket index used to update IRF 

payments, and updates to the rural, lowincome percentage (LIP), and high-cost 

outlier adjustments. Beginning with the 

FY 2006 IRF PPS final rule (70 FR 47908 

through 47917) until it was rebased and 

revised in the FY 2012 IRF PPS final 

rule (76 FR 47838), the IRF PPS used the 

2002-based market basket as the market 

basket index to reflect the operating and 

capital cost structures for freestanding 

IRFs, freestanding inpatient psychiatric 

facilities (IPFs), and long-term care 

hospitals (LTCHs) (hereafter referred to 

as the rehabilitation, psychiatric, and 

long-term care (RPL) market basket). 

Any reference to the FY 2006 IRF PPS 

final rule in this notice also includes the 

provisions effective in the correcting 

amendments. For a detailed discussion 

of the final key policy changes for FY 

2006, please refer to the FY 2006 IRF 

PPS final rule (70 FR 47880 and 70 FR 

57166). 

In the FY 2007 IRF PPS final rule (71 

FR 48354), we further refined the IRF 

PPS case-mix classification system (the 

CMG relative weights) and the caselevel adjustments, to ensure that IRF 

PPS payments would continue to reflect 

as accurately as possible the costs of 

care. For a detailed discussion of the FY 

2007 policy revisions, please refer to the 

FY 2007 IRF PPS final rule (71 FR 

48354). 

In the FY 2008 IRF PPS final rule (72 

FR 44284), we updated the Federal 

prospective payment rates and the 

outlier threshold, revised the IRF wage 

index policy, and clarified how we 

determine high-cost outlier payments 

for transfer cases. For more information 

on the policy changes implemented for 

FY 2008, please refer to the FY 2008 IRF 

PPS final rule (72 FR 44284), in which 

we published the final FY 2008 IRF 

Federal prospective payment rates. 

After publication of the FY 2008 IRF 

PPS final rule (72 FR 44284), section 

115 of the Medicare, Medicaid, and 

SCHIP Extension Act of 2007 (MMSEA, 

Pub. L. 110–173, enacted December 29, 

2007), amended section 1886(j)(3)(C) of 

the Act to apply a zero percent increase 

factor for FYs 2008 and 2009, effective 

for IRF discharges occurring on or after 

April 1, 2008. Section 1886(j)(3)(C) of 

the Act requires the Secretary to 

develop an increase factor to update the 

IRF Federal prospective payment rates 

for each FY. Based on the legislative 

change to the increase factor, we revised 

the FY 2008 Federal prospective 

payment rates for IRF discharges 

occurring on or after April 1, 2008. 

Thus, the final FY 2008 IRF Federal 

prospective payment rates that were 

published in the FY 2008 IRF PPS final 

rule (72 FR 44284) were effective for 

discharges occurring on or after October 

1, 2007 and on or before March 31, 

2008; and the revised FY 2008 IRF 

Federal prospective payment rates were 

effective for discharges occurring on or 

after April 1, 2008 and on or before 

September 30, 2008. The revised FY 

2008 Federal prospective payment rates 

are available on the CMS Web site at 

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

Medicare-Fee-for-Service-Payment/ 

InpatientRehabFacPPS/Data-Files.html. 

In the FY 2009 IRF PPS final rule (73 

FR 46370), we updated the CMG relative 

weights, the average length of stay 

values, and the outlier threshold; 

clarified IRF wage index policies 

regarding the treatment of ‘‘New 

England deemed’’ counties and multicampus hospitals; and revised the 

regulation text in response to section 

115 of the MMSEA to set the IRF 

compliance percentage at 60 percent 

(‘‘the 60 percent rule’’) and continue the 

practice of including comorbidities in 

the calculation of compliance 

percentages. We also applied a zero 

percent market basket increase factor for 

FY 2009 in accordance with section 115 

of the MMSEA. For more information on 

the policy changes implemented for FY 

2009, please refer to the FY 2009 IRF 

PPS final rule (73 FR 46370), in which 

we published the final FY 2009 IRF 

Federal prospective payment rates. 

In the FY 2010 IRF PPS final rule (74 

FR 39762) and in correcting 

amendments to the FY 2010 IRF PPS 

final rule (74 FR 50712) that we 

published on October 1, 2009, we 

updated the Federal prospective 

payment rates, the CMG relative 

weights, the average length of stay 

values, the rural, LIP, and teaching 

status adjustment factors, and the 

outlier threshold; implemented new IRF 

coverage requirements for determining 

whether an IRF claim is reasonable and 

necessary; and revised the regulation 

text to require IRFs to submit patient 

assessments on Medicare Advantage 

(Medicare Part C) patients for use in the 

60 percent rule calculations. Any 

reference to the FY 2010 IRF PPS final 

rule in this notice also includes the 

provisions effective in the correcting 

amendments. For more information on 

the policy changes implemented for FY 

2010, please refer to the FY 2010 IRF 

PPS final rule (74 FR 39762 and 74 FR 

50712), in which we published the final 

FY 2010 IRF Federal prospective 

payment rates. 

After publication of the FY 2010 IRF 

PPS final rule (74 FR 39762), section 

3401(d) of the Patient Protection and 

Affordable Care Act (Pub. L. 111–148, 

enacted on March 23, 2010) (Affordable 

Care Act), as amended by section 10319 

of the same act and by section 1105 of 

the Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111– 

152, enacted on March 30, 2010) 

(collectively, hereafter referred to as 

‘‘The Affordable Care Act’’), amended 

section 1886(j)(3)(C) of the Act and 

added section 1886(j)(3)(D) of the Act. 

Section 1886(j)(3)(C)(ii)(I) of the Act 

requires the Secretary to estimate a 

multi-factor productivity adjustment to 

the market basket increase factor, and to 

apply other adjustments as defined by 

the Act. The productivity adjustment 

applies to FYs from 2012 forward. The 

other adjustments apply to FYs 2010– 

2019. 

Sections 1886(j)(3)(C)(ii)(II) and 

1886(j)(3)(D)(i) of the Act defined the 

adjustments that were to be applied to 

the market basket increase factors in 

FYs 2010 and 2011. Under these 

provisions, the Secretary was required 

to reduce the market basket increase 

factor in FY 2010 by a 0.25 percentage 

point adjustment. Notwithstanding this 

provision, in accordance with section 

3401(p) of the Affordable Care Act, the 

adjusted FY 2010 rate was only to be 

applied to discharges occurring on or 

after April 1, 2010. Based on the selfimplementing legislative changes to 

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Federal Register / Vol. 77, No. 146 / Monday, July 30, 2012 / Notices 44621 

section 1886(j)(3) of the Act, we 

adjusted the FY 2010 Federal 

prospective payment rates as required, 

and applied these rates to IRF 

discharges occurring on or after April 1, 

2010 and on or before September 30, 

2010. Thus, the final FY 2010 IRF 

Federal prospective payment rates that 

were published in the FY 2010 IRF PPS 

final rule (74 FR 39762) were used for 

discharges occurring on or after October 

1, 2009 and on or before March 31, 

2010; and the adjusted FY 2010 IRF 

Federal prospective payment rates 

applied to discharges occurring on or 

after April 1, 2010 and on or before 

September 30, 2010. The adjusted FY 

2010 Federal prospective payment rates 

are available on the CMS Web site at 

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

Medicare-Fee-for-Service-Payment/ 

InpatientRehabFacPPS/Data-Files.html. 

In addition, sections 1886(j)(3)(C) and 

(D) of the Act also affected the FY 2010 

IRF outlier threshold amount because 

they required an adjustment to the FY 

2010 RPL market basket increase factor, 

which changed the standard payment 

conversion factor for FY 2010. 

Specifically, the original FY 2010 IRF 

outlier threshold amount was 

determined based on the original 

estimated FY 2010 RPL market basket 

increase factor of 2.5 percent and the 

standard payment conversion factor of 

$13,661. However, as adjusted, the IRF 

prospective payments are based on the 

adjusted RPL market basket increase 

factor of 2.25 percent and the revised 

standard payment conversion factor of 

$13,627. In order to maintain estimated 

outlier payments for FY 2010 equal to 

the established standard of 3 percent of 

total estimated IRF PPS payments for FY 

2010, we revised the IRF outlier 

threshold amount for FY 2010 for 

discharges occurring on or after April 1, 

2010. The revised IRF outlier threshold 

amount for FY 2010 was $10,721. 

Sections 1886(j)(3)(ii)(II) and 

1886(j)(3)(D)(i) also required the 

Secretary to reduce the market basket 

increase factor in FY 2011 by a 0.25 

percentage point adjustment. The FY 

2011 IRF PPS notice (75 FR 42836) and 

the correcting amendments to the FY 

2011 IRF PPS notice (75 FR 70013, 

November 16, 2010) described the 

required adjustments to the FY 2011 

and FY 2010 IRF PPS Federal 

prospective payment rates and outlier 

threshold amount for IRF discharges 

occurring on or after April 1, 2010 and 

on or before September 30, 2011. It also 

updated the FY 2011 Federal 

prospective payment rates, the CMG 

relative weights, and the average length 

of stay values. Any reference to the FY 

2011 IRF PPS notice in this proposed 

rule also includes the provisions 

effective in the correcting amendments. 

For more information on the FY 2010 

and FY 2011 adjustments or the updates 

for FY 2011, please refer to the FY 2011 

IRF PPS notice (75 FR 42836 and 75 FR 

70013). 

In the FY 2012 IRF PPS final rule (76 

FR 47836), we updated the IRF Federal 

prospective payment rates, rebased and 

revised the RPL market basket, and 

established a new quality reporting 

program for IRFs in accordance with 

section 1886(j)(7) of the Act. We also 

revised regulations text for the purpose 

of updating and providing greater 

clarity. For more information on the 

policy changes implemented for FY 

2012, please refer to the FY 2012 IRF 

PPS final rule (76 FR 47836), in which 

we published the final FY 2012 IRF 

Federal prospective payment rates. 

B. Provisions of the Affordable Care Act 

Affecting the IRF PPS in FY 2012 and 

Beyond 

The Affordable Care Act included 

several provisions that affect the IRF 

PPS in FYs 2012 and beyond. Section 

3401(d) of the Affordable Care Act also 

added section 1886(j)(3)(C)(ii)(I) of the 

Act (providing for a ‘‘productivity 

adjustment’’ for fiscal year 2012 and 

each subsequent fiscal year). The 

productivity adjustment and the 0.1 

percentage point reduction are both 

discussed in section V.A. of this notice. 

Section 1886(j)(3)(C)(ii)(II) of the Act 

notes that the application of these 

adjustments to the market basket update 

may result in an update that is less than 

0.0 for a fiscal year and in payment rates 

for a fiscal year being less than payment 

rates for the preceding fiscal year. 

Section 3004(b) of the Affordable Care 

Act also addressed the IRF PPS 

program. It reassigned the previouslydesignated section 1886(j)(7) of the Act 

to section 1886(j)(8) and inserted a new 

section 1886(j)(7), which contains new 

requirements for the Secretary to 

establish a quality reporting program for 

IRFs. Under that program, data must be 

submitted in a form and manner, and at 

a time specified by the Secretary. 

Beginning in FY 2014, section 

1886(j)(7)(A)(i) will require application 

of a 2 percentage point reduction of the 

applicable market basket increase factor 

for IRFs that fail to comply with the 

quality data submission requirements. 

Application of the 2 percentage point 

reduction may result in an update that 

is less than 0.0 for a fiscal year and in 

payment rates for a fiscal year being less 

than such payment rates for the 

preceding fiscal year. Reporting-based 

reductions to the market basket increase 

factor will not be cumulative; they will 

only apply for the FY involved. 

Under section 1886(j)(7)(D)(i) and (ii) 

of the Act, the Secretary is generally 

required to select quality measures for 

the IRF quality reporting program from 

those that have been endorsed by the 

consensus-based entity which holds a 

performance measurement contract 

under section 1890(a) of the Act. This 

contract is currently held by the 

National Quality Forum (NQF). So long 

as due consideration is given to 

measures that have been endorsed or 

adopted by a consensus-based 

organization, section 1886(j)(7)(D)(ii) of 

the Act authorizes the Secretary to 

select non-endorsed measures for 

specified areas or medical topics when 

there are no feasible or practical 

endorsed measure(s). Under section 

1886(j)(7)(D)(iii) of the Act, the 

Secretary is required to publish the 

measures that will be used in FY 2014 

no later than October 1, 2012. 

Section 1886(j)(7)(E) of the Act 

requires the Secretary to establish 

procedures for making the IRF PPS 

quality reporting data available to the 

public. In so doing, the Secretary must 

ensure that IRFs have the opportunity to 

review any such data prior to its release 

to the public. Future rulemaking will 

address these public reporting 

obligations. 

C. Operational Overview of the Current 

IRF PPS 

As described in the FY 2002 IRF PPS 

final rule, upon the admission and 

discharge of a Medicare Part A fee-forservice patient, the IRF is required to 

complete the appropriate sections of a 

patient assessment instrument (PAI), 

designated as the Inpatient 

Rehabilitation Facility-Patient 

Assessment Instrument (IRF–PAI). In 

addition, beginning with IRF discharges 

occurring on or after October 1, 2009, 

the IRF is also required to complete the 

appropriate sections of the IRF–PAI 

upon the admission and discharge of 

each Medicare Part C (Medicare 

Advantage) patient, as described in the 

FY 2010 IRF PPS final rule. All required 

data must be electronically encoded into 

the IRF–PAI software product. 

Generally, the software product 

includes patient classification 

programming called the GROUPER 

software. The GROUPER software uses 

specific IRF–PAI data elements to 

classify (or group) patients into distinct 

CMGs and account for the existence of 

any relevant comorbidities. 

The GROUPER software produces a 

five-digit CMG number. The first digit is 

an alpha-character that indicates the 

comorbidity tier. The last four digits 

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44622 Federal Register / Vol. 77, No. 146 / Monday, July 30, 2012 / Notices 

represent the distinct CMG number. 

Free downloads of the Inpatient 

Rehabilitation Validation and Entry 

(IRVEN) software product, including the 

GROUPER software, are available on the 

CMS Web site at http:// 

www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/ 

InpatientRehabFacPPS/Software.html. 

Once a patient is discharged, the IRF 

submits a Medicare claim as a Health 

Insurance Portability and 

Accountability Act of 1996 (Pub. L. 

104–191, enacted August 21, 

1996)(HIPAA), compliant electronic 

claim or, if the Administrative 

Simplification Compliance Act of 2002 

(Pub. L. 107–105, enacted December 27, 

2002)(ASCA) permits, a paper claim (a 

UB–04 or a CMS–1450 as appropriate) 

using the five-digit CMG number and 

sends it to the appropriate Medicare 

fiscal intermediary (FI) or Medicare 

Administrative Contractor (MAC). 

Claims submitted to Medicare must 

comply with both ASCA and HIPAA. 

Section 3 of the ASCA amends section 

1862(a) of the Act by adding paragraph 

(22) which requires the Medicare 

program, subject to section 1862(h) of 

the Act, to deny payment under Part A 

or Part B for any expenses for items or 

services ‘‘for which a claim is submitted 

other than in an electronic form 

specified by the Secretary.’’ Section 

1862(h) of the Act, in turn, provides that 

the Secretary shall waive such denial in 

situations in which there is no method 

available for the submission of claims in 

an electronic form or the entity 

submitting the claim is a small provider. 

In addition, the Secretary also has the 

authority to waive such denial ‘‘in such 

unusual cases as the Secretary finds 

appropriate.’’ For more information we 

refer the reader to the final rule, 

‘‘Medicare Program; Electronic 

Submission of Medicare Claims’’ (70 FR 

71008, November 25, 2005). CMS 

instructions for the limited number of 

Medicare claims submitted on paper are 

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

Regulations-and-Guidance/Guidance/ 

Manuals/downloads//clm104c25.pdf.) 

Section 3 of the ASCA operates in the 

context of the administrative 

simplification provisions of HIPAA, 

which include, among others, the 

requirements for transaction standards 

and code sets codified in 45 CFR, parts 

160 and 162, subparts A and I through 

R (generally known as the Transactions 

Rule). The Transactions Rule requires 

covered entities, including covered 

healthcare providers, to conduct 

covered electronic transactions 

according to the applicable transaction 

standards. (See the program claim 

memoranda issued and published by 

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

Billing/ElectronicBillingEDITrans/ 

index.html?redirect=/ 

ElectronicBillingEDITrans/ and listed in 

the addenda to the Medicare 

Intermediary Manual, Part 3, section 

3600). 

The Medicare FI or MAC processes 

the claim through its software system. 

This software system includes pricing 

programming called the ‘‘PRICER’’ 

software. The PRICER software uses the 

CMG number, along with other specific 

claim data elements and providerspecific data, to adjust the IRF’s 

prospective payment for interrupted 

stays, transfers, short stays, and deaths, 

and then applies the applicable 

adjustments to account for the IRF’s 

wage index, percentage of low-income 

patients, rural location, and outlier 

payments. For discharges occurring on 

or after October 1, 2005, the IRF PPS 

payment also reflects the teaching status 

adjustment that became effective as of 

FY 2006, as discussed in the FY 2006 

IRF PPS final rule (70 FR 47880). 

II. Summary of Provisions of the Notice 

In this notice, we use the methods 

described in the FY 2012 IRF PPS final 

rule (76 FR 47836) to update the Federal 

prospective payment rates for FY 2013 

using updated FY 2011 IRF claims and 

the most recent available IRF cost report 

data. No policy changes are being 

proposed in this notice. Furthermore, 

we explain the self-implementing 

changes resulting from the provisions in 

section 1886(j)(3)(C) and (D) of the Act, 

as described above and in section V.A. 

of this notice. 

In summary, this notice will: 

• Update the FY 2013 IRF PPS 

relative weights and average length of 

stay values using the most current and 

complete Medicare claims and cost 

report data in a budget neutral manner, 

as discussed in section III of this notice. 

• Update the FY 2013 IRF PPS 

payments rates by a market basket 

increase factor, based upon the most 

current data available, with a 0.1 

percentage point reduction as required 

by sections 1886(j)(3)(C)(ii)(II) and 

1886(j)(3)(D)(ii) of the Act and a 0.8 

percent productivity adjustment 

required by section 1886(j)(3)(C)(ii)(I) of 

the Act, as described in section V.A. of 

this notice. 

• Discuss the Secretary’s 

Recommendation for updating IRF PPS 

payments for FY 2013, in accordance 

with the statutory requirements, as 

described in section V.A. of this notice. 

• Update the FY 2013 IRF PPS 

payment rates by the FY 2013 wage 

index and the labor-related share in a 

budget neutral manner, as discussed in 

sections V.B and V.C of this notice. 

• Describe the calculation of the IRF 

Standard Payment Conversion Factor for 

FY 2013, as discussed in section V.D of 

this notice. 

• Update the outlier threshold 

amount for FY 2013, as discussed in 

section VI.A. of this notice. 

• Update the cost-to-charge ratio 

(CCR) ceilings and urban/rural average 

CCRs for FY 2013, as discussed in 

section VI.B. of this notice. 

This notice does not contain any 

revisions to existing regulation text. 

III. Update to the Case-Mix Group 

(CMG) Relative Weights and Average 

Length of Stay Values for FY 2013 

As specified in 42 CFR 412.620(b)(1), 

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, on average, will 

cost twice as much as cases in a CMG 

with a relative weight of 1. Relative 

weights account for the variance in cost 

per discharge due to the variance in 

resource utilization among the payment 

groups, and their use helps to ensure 

that IRF PPS payments support 

beneficiary access to care as well as 

provider efficiency. 

As required by statute, we always use 

the most recent available data to update 

the CMG relative weights and average 

lengths of stay. For FY 2013, we used 

FY 2011 IRF claims and the most recent 

available IRF cost report data. These 

data are the most current and most 

complete data available at this time. 

Currently, only a small portion of the 

FY 2011 IRF cost report data are 

available for analysis, but the majority 

of the FY 2011 IRF claims data are 

available for analysis. 

We will apply these data using the 

methodologies that we have used to 

update the CMG relative weights and 

average length of stay values in the FY 

2010 IRF PPS final rule (74 FR 39762), 

the FY 2011 notice (75 FR 42836), and 

the FY 2012 final rule (76 FR 47836). In 

calculating the CMG relative weights, 

we use a hospital-specific relative value 

method to estimate operating (routine 

and ancillary services) and capital costs 

of IRFs. The process used to calculate 

the CMG relative weights for this notice 

is as follows: 

Step 1. We calculate the CMG relative 

weights by estimating the effects that 

comorbidities have on costs. 

Step 2. We adjust the cost of each 

Medicare discharge (case) to reflect the 

effects found in the first step. 

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Step 3. We use the adjusted costs from 

the second step to calculate CMG 

relative weights, using the hospitalspecific relative value method. 

Step 4. We normalize the FY 2013 

CMG relative weights to the same 

average CMG relative weight from the 

CMG relative weights implemented in 

the FY 2012 IRF PPS final rule (76 FR 

47836). 

Consistent with the methodology that 

we have used to update the IRF 

classification system in each instance in 

the past, we are updating the CMG 

relative weights for FY 2013 in such a 

way that total estimated aggregate 

payments to IRFs for FY 2013 are the 

same with or without the changes (that 

is, in a budget neutral manner) by 

applying a budget neutrality factor to 

the standard payment amount. To 

calculate the appropriate budget 

neutrality factor for use in updating the 

FY 2013 CMG relative weights, we use 

the following steps: 

Step 1. Calculate the estimated total 

amount of IRF PPS payments for FY 

2013 (with no changes to the CMG 

relative weights). 

Step 2. Calculate the estimated total 

amount of IRF PPS payments for FY 

2013 by applying the changes to the 

CMG relative weights (as discussed 

above). 

Step 3. Divide the amount calculated 

in step 1 by the amount calculated in 

step 2 to determine the budget 

neutrality factor (1.0000) that maintains 

the same total estimated aggregate 

payments in FY 2013 with and without 

the updates to the CMG relative weights. 

Step 4. Apply the budget neutrality 

factor (1.0000) to the FY 2012 IRF PPS 

standard payment amount after the 

application of the budget-neutral wage 

adjustment factor. 

In section V.D of this notice, we 

discuss the use of the existing 

methodology to calculate the standard 

payment conversion factor for FY 2013. 

The CMG relative weights and average 

length of stay values for FY 2013 are 

presented in Table 1. The average length 

of stay for each CMG is used to 

determine when an IRF discharge meets 

the definition of a short-stay transfer, 

which results in a per diem case level 

adjustment. 

TABLE 1—RELATIVE WEIGHTS AND AVERAGE LENGTH OF STAY VALUES FOR CASE-MIX GROUPS

CMG CMG Description (M = motor, 

C = cognitive, A = age) 

Relative weight Average length of stay 

Tier 1 Tier 2 Tier 3 None Tier 1 Tier 2 Tier 3 None 

0101 ........... Stroke M>51.05 ........................................ 0.8027 0.7192 0.6541 0.6254 10 10 9 8 

0102 ........... Stroke M>44.45 and M<51.05 and 

C>18.5.

0.9980 0.8942 0.8132 0.7776 12 10 10 10 

0103 ........... Stroke M>44.45 and M<51.05 and 

C<18.5.

1.1622 1.0414 0.9471 0.9056 12 13 12 12 

0104 ........... Stroke M>38.85 and M<44.45 ................. 1.2323 1.1041 1.0041 0.9602 13 12 12 12 

0105 ........... Stroke M>34.25 and M<38.85 ................. 1.4378 1.2883 1.1716 1.1203 15 16 14 14 

0106 ........... Stroke M>30.05 and M<34.25 ................. 1.6373 1.4670 1.3342 1.2758 17 18 16 16 

0107 ........... Stroke M>26.15 and M<30.05 ................. 1.8381 1.6469 1.4978 1.4322 18 19 17 18 

0108 ........... Stroke M<26.15 and A>84.5 .................... 2.2975 2.0585 1.8721 1.7901 23 23 22 21 

0109 ........... Stroke M>22.35 and M<26.15 and 

A<84.5.

2.1226 1.9018 1.7296 1.6539 20 22 20 20 

0110 ........... Stroke M<22.35 and A<84.5 .................... 2.7303 2.4463 2.2248 2.1274 30 29 25 25 

0201 ........... Traumatic brain injury M>53.35 and 

C>23.5.

0.8313 0.6948 0.6199 0.5869 10 10 8 8 

0202 ........... Traumatic brain injury M>44.25 and 

M<53.35 and C>23.5.

1.0169 0.8499 0.7583 0.7179 12 11 10 10 

0203 ........... Traumatic brain injury M>44.25 and 

C<23.5.

1.1804 0.9865 0.8803 0.8334 14 13 12 11 

0204 ........... Traumatic brain injury M>40.65 and 

M<44.25.

1.2938 1.0813 0.9648 0.9134 14 13 12 12 

0205 ........... Traumatic brain injury M>28.75 and 

M<40.65.

1.5550 1.2996 1.1596 1.0978 16 15 14 14 

0206 ........... Traumatic brain injury M>22.05 and 

M<28.75.

1.9383 1.6200 1.4455 1.3684 20 20 18 17 

0207 ........... Traumatic brain injury M<22.05 ............... 2.5535 2.1341 1.9042 1.8027 33 25 22 21 

0301 ........... Non-traumatic brain injury M>41.05 ........ 1.1218 0.9563 0.8462 0.7852 11 12 11 10 

0302 ........... Non-traumatic brain injury M>35.05 and 

M<41.05.

1.4026 1.1957 1.0579 0.9816 14 14 13 12 

0303 ........... Non-traumatic brain injury M>26.15 and 

M<35.05.

1.6605 1.4155 1.2525 1.1621 17 16 15 14 

0304 ........... Non-traumatic brain injury M<26.15 ........ 2.2065 1.8810 1.6643 1.5443 25 22 19 18 

0401 ........... Traumatic spinal cord injury M>48.45 ..... 1.0393 0.8778 0.7864 0.7109 13 12 11 10 

0402 ........... Traumatic spinal cord injury M>30.35 

and M<48.45.

1.4824 1.2521 1.1218 1.0141 17 15 14 13 

0403 ........... Traumatic spinal cord injury M>16.05 

and M<30.35.

2.3870 2.0161 1.8063 1.6329 31 23 22 20 

0404 ........... Traumatic spinal cord injury M<16.05 

and A>63.5.

4.3665 3.6881 3.3043 2.9870 60 41 33 35 

0405 ........... Traumatic spinal cord injury M<16.05 

and A<63.5.

3.3893 2.8627 2.5648 2.3186 41 41 29 24 

0501 ........... Non-traumatic spinal cord injury M>51.35 0.8436 0.6828 0.6306 0.5624 9 9 8 8 

0502 ........... Non-traumatic spinal cord injury M>40.15 

and M<51.35.

1.1283 0.9132 0.8434 0.7521 11 11 11 10 

0503 ........... Non-traumatic spinal cord injury M>31.25 

and M<40.15.

1.4284 1.1561 1.0677 0.9522 15 14 13 12 

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44624 Federal Register / Vol. 77, No. 146 / Monday, July 30, 2012 / Notices 

TABLE 1—RELATIVE WEIGHTS AND AVERAGE LENGTH OF STAY VALUES FOR CASE-MIX GROUPS—Continued 

CMG CMG Description (M = motor, C = cognitive, A = age) 

Relative weight Average length of stay 

Tier 1 Tier 2 Tier 3 None Tier 1 Tier 2 Tier 3 None 

0504 ........... Non-traumatic spinal cord injury M>29.25 

and M<31.25.

1.7220 1.3937 1.2872 1.1479 22 16 15 14 

0505 ........... Non-traumatic spinal cord injury M>23.75 

and M<29.25.

1.9656 1.5909 1.4693 1.3103 22 18 18 16 

0506 ........... Non-traumatic spinal cord injury M<23.75 2.7707 2.2425 2.0711 1.8470 30 26 24 22 

0601 ........... Neurological M>47.75 .............................. 0.9703 0.7915 0.7304 0.6647 10 10 9 9 

0602 ........... Neurological M>37.35 and M<47.75 ........ 1.2695 1.0356 0.9557 0.8697 13 12 11 11 

0603 ........... Neurological M>25.85 and M<37.35 ........ 1.6243 1.3250 1.2228 1.1128 16 15 14 14 

0604 ........... Neurological M<25.85 .............................. 2.1537 1.7568 1.6213 1.4755 22 20 18 17 

0701 ........... Fracture of lower extremity M>42.15 ....... 0.9343 0.7841 0.7481 0.6772 11 10 10 9 

0702 ........... Fracture of lower extremity M>34.15 and 

M<42.15.

1.2477 1.0471 0.9990 0.9044 13 13 12 12 

0703 ........... Fracture of lower extremity M>28.15 and 

M<34.15.

1.4984 1.2575 1.1996 1.0860 16 15 14 14 

0704 ........... Fracture of lower extremity M<28.15 ....... 1.8994 1.5940 1.5207 1.3767 19 18 18 17 

0801 ........... Replacement of lower extremity joint 

M>49.55.

0.7445 0.6142 0.5608 0.5156 8 8 8 7 

0802 ........... Replacement of lower extremity joint 

M>37.05 and M<49.55.

0.9839 0.8117 0.7412 0.6814 10 10 9 9 

0803 ........... Replacement of lower extremity joint 

M>28.65 and M<37.05 and A>83.5.

1.3381 1.1039 1.0080 0.9266 13 12 13 12 

0804 ........... Replacement of lower extremity joint 

M>28.65 and M<37.05 and A<83.5.

1.1889 0.9807 0.8955 0.8233 13 12 11 10 

0805 ........... Replacement of lower extremity joint 

M>22.05 and M<28.65.

1.4728 1.2150 1.1094 1.0199 15 14 13 13 

0806 ........... Replacement of lower extremity joint 

M<22.05.

1.7966 1.4821 1.3533 1.2441 17 17 15 15 

0901 ........... Other orthopedic M>44.75 ....................... 0.9086 0.7488 0.6954 0.6289 11 10 9 8 

0902 ........... Other orthopedic M>34.35 and M<44.75 1.1916 0.9820 0.9120 0.8248 12 12 11 11 

0903 ........... Other orthopedic M>24.15 and M<34.35 1.5421 1.2709 1.1803 1.0674 16 15 14 13 

0904 ........... Other orthopedic M<24.15 ....................... 1.9596 1.6149 1.4998 1.3564 20 19 17 16 

1001 ........... Amputation, lower extremity M>47.65 ..... 1.0168 0.9097 0.8224 0.7491 11 11 10 10 

1002 ........... Amputation, lower extremity M>36.25 

and M<47.65.

1.2813 1.1464 1.0364 0.9440 14 14 13 12 

1003 ........... Amputation, lower extremity M<36.25 ..... 1.8523 1.6572 1.4983 1.3647 18 19 17 16 

1101 ........... Amputation, non-lower extremity 

M>36.35.

1.1553 1.1084 1.1084 0.9005 13 18 12 11 

1102 ........... Amputation, non-lower extremity 

M<36.35.

1.6083 1.5429 1.5429 1.2536 17 24 16 16 

1201 ........... Osteoarthritis M>37.65 ............................. 0.9031 0.9031 0.8675 0.8070 9 12 11 10 

1202 ........... Osteoarthritis M>30.75 and M<37.65 ...... 1.0652 1.0652 1.0232 0.9518 10 13 12 12 

1203 ........... Osteoarthritis M<30.75 ............................. 1.3740 1.3740 1.3199 1.2278 12 17 15 15 

1301 ........... Rheumatoid, other arthritis M>36.35 ....... 1.2084 1.0270 0.9058 0.8066 13 12 11 10 

1302 ........... Rheumatoid, other arthritis M>26.15 and 

M<36.35.

1.5720 1.3360 1.1783 1.0492 16 15 14 13 

1303 ........... Rheumatoid, other arthritis M<26.15 ....... 2.0006 1.7003 1.4996 1.3354 19 20 17 16 

1401 ........... Cardiac M>48.85 ...................................... 0.8930 0.7627 0.6877 0.6266 9 9 9 8 

1402 ........... Cardiac M>38.55 and M<48.85 ............... 1.1528 0.9847 0.8877 0.8089 12 12 11 10 

1403 ........... Cardiac M>31.15 and M<38.55 ............... 1.3890 1.1864 1.0696 0.9747 14 14 13 12 

1404 ........... Cardiac M<31.15 ...................................... 1.7811 1.5213 1.3716 1.2498 19 18 16 15 

1501 ........... Pulmonary M>49.25 ................................. 0.9698 0.8491 0.7773 0.7364 10 10 9 9 

1502 ........... Pulmonary M>39.05 and M<49.25 .......... 1.2118 1.0610 0.9712 0.9201 12 12 11 11 

1503 ........... Pulmonary M>29.15 and M<39.05 .......... 1.4875 1.3025 1.1922 1.1295 16 14 13 13 

1504 ........... Pulmonary M<29.15 ................................. 1.8834 1.6491 1.5095 1.4301 19 18 16 16 

1601 ........... Pain syndrome M>37.15 .......................... 1.0499 0.9155 0.8350 0.7581 10 11 10 10 

1602 ........... Pain syndrome M>26.75 and M<37.15 ... 1.3826 1.2056 1.0997 0.9984 15 14 13 12 

1603 ........... Pain syndrome M<26.75 .......................... 1.7346 1.5124 1.3796 1.2525 14 18 16 15 

1701 ........... Major multiple trauma without brain or 

spinal cord injury M>39.25.

1.0736 0.9323 0.8505 0.7574 11 12 11 10 

1702 ........... Major multiple trauma without brain or 

spinal cord injury M>31.05 and 

M<39.25.

1.4056 1.2206 1.1136 0.9916 14 15 13 12 

1703 ........... Major multiple trauma without brain or 

spinal cord injury M>25.55 and 

M<31.05.

1.6353 1.4201 1.2956 1.1537 18 17 15 14 

1704 ........... Major multiple trauma without brain or 

spinal cord injury M<25.55.

2.0887 1.8138 1.6547 1.4735 22 21 19 18 

1801 ........... Major multiple trauma with brain or spinal 

cord injury M>40.85.

1.2365 0.9356 0.8675 0.7592 14 13 12 10 

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TABLE 1—RELATIVE WEIGHTS AND AVERAGE LENGTH OF STAY VALUES FOR CASE-MIX GROUPS—Continued 

CMG CMG Description (M = motor, C = cognitive, A = age) 

Relative weight Average length of stay 

Tier 1 Tier 2 Tier 3 None Tier 1 Tier 2 Tier 3 None 

1802 ........... Major multiple trauma with brain or spinal 

cord injury M>23.05 and M<40.85.

1.8710 1.4158 1.3127 1.1488 18 17 16 14 

1803 ........... Major multiple trauma with brain or spinal 

cord injury M<23.05.

3.3167 2.5096 2.3269 2.0364 38 32 25 23 

1901 ........... Guillain Barre M>35.95 ............................ 1.0467 0.9509 0.9185 0.8749 13 12 12 11 

1902 ........... Guillain Barre M>18.05 and M<35.95 ...... 1.9189 1.7433 1.6839 1.6041 23 20 18 19 

1903 ........... Guillain Barre M<18.05 ............................ 3.3119 3.0088 2.9062 2.7685 41 33 33 34 

2001 ........... Miscellaneous M>49.15 ........................... 0.8744 0.7276 0.6680 0.6095 9 9 9 8 

2002 ........... Miscellaneous M>38.75 and M<49.15 ..... 1.1796 0.9815 0.9012 0.8222 12 12 11 10 

2003 ........... Miscellaneous M>27.85 and M<38.75 ..... 1.4817 1.2329 1.1320 1.0328 15 14 13 13 

2004 ........... Miscellaneous M<27.85 ........................... 1.9594 1.6304 1.4970 1.3659 21 19 17 16 

2101 ........... Burns M>0 ................................................ 2.1947 1.9009 1.9009 1.6414 24 22 17 17 

5001 ........... Short-stay cases, length of stay is 3 days 

or fewer.

................ ................ ................ 0.1494 ............ ............ ............ 3 

5101 ........... Expired, orthopedic, length of stay is 13 

days or fewer.

................ ................ ................ 0.5866 ............ ............ ............ 7 

5102 ........... Expired, orthopedic, length of stay is 14 

days or more.

................ ................ ................ 1.5325 ............ ............ ............ 18 

5103 ........... Expired, not orthopedic, length of stay is 

15 days or fewer.

................ ................ ................ 0.7091 ............ ............ ............ 8 

5104 ........... Expired, not orthopedic, length of stay is 

16 days or more.

................ ................ ................ 1.9053 ............ ............ ............ 22 

Generally, updates to the CMG 

relative weights result in some increases 

and some decreases to the CMG relative 

weight values. Table 2 shows how the 

application of the revisions for FY 2013 

will affect particular CMG relative 

weight values, which affect the overall 

distribution of payments within CMGs 

and tiers. Note that, because we are 

implementing the CMG relative weight 

revisions in a budget neutral manner (as 

described above), total estimated 

aggregate payments to IRFs for FY 2013 

will not be affected as a result of the 

CMG relative weight revisions. 

However, the revisions will affect the 

distribution of payments within CMGs 

and tiers. 

TABLE 2—DISTRIBUTIONAL EFFECTS OF THE CHANGES TO THE CMG RELATIVE WEIGHTS

[FY 2012 values compared with FY 2013 values] 

Percentage change Number of 

cases affected 

Percentage of 

cases affected 

Increased by 15% or more ...................................................................................................................................... 1,894 0.5 

Increased by between 5% and 15% ....................................................................................................................... 3,932 1.0 

Changed by less than 5% ....................................................................................................................................... 359,907 95.5 

Decreased by between 5% and 15% ...................................................................................................................... 11,307 3.0 

Decreased by 15% or more .................................................................................................................................... 0 0.0 

Note: Percentages may not sum to 100% due to rounding. 

As Table 2 shows, over 95 percent of 

all IRF cases are in CMGs and tiers that 

will experience less than a 5 percent 

change (either increase or decrease) in 

the CMG relative weight value as a 

result of the revisions for FY 2013. The 

largest increase in the CMG relative 

weight values affecting the most cases is 

a 2.8 percent increase in the CMG 

relative weight value for CMG 0802— 

Replacement of Lower Extremity Joint, 

with a motor score between 37.05 and 

49.55—in the ‘‘no comorbidity’’ tier. In 

the FY 2011 data, 9,851 IRF discharges 

were classified into this CMG and tier. 

We believe that the higher costs 

reported by IRFs for this CMG and tier 

in FY 2011, compared with the costs 

reported in FY 2010, may continue to 

reflect the IRF trend away from 

admitting lower-severity joint 

replacement cases in favor of higherseverity joint replacement cases. We 

believe that this may be evidence of a 

response, at least in part, to Medicare’s 

‘‘60 percent’’ rule, and the increased 

focus on the medical review of IRF 

cases. These policies likely increase the 

complexity of patients being admitted to 

IRFs, especially among the lowerextremity joint replacement cases with 

no comorbidities, which often do not 

meet the 60 percent rule criteria and 

have been the focus of a lot of the 

medical review activities. 

The largest decrease in a CMG relative 

weight value affecting the most cases is 

a 2.3 percent decrease in the CMG 

relative weight for CMG D2004— 

Miscellaneous, with motor score less 

than 27.85. In the FY 2011 IRF claims 

data, this change affects 6,967 cases. 

The changes in the average length of 

stay values for FY 2013, compared with 

the FY 2012 average length of stay 

values, are small and do not show any 

particular trends in IRF length of stay 

patterns. 

IV. Updates to the Facility-Level 

Adjustment Factors 

Section 1886(j)(3)(A)(v) of the Act 

confers broad authority upon the 

Secretary to adjust the per unit payment 

rate ‘‘by such * * * factors as the 

Secretary determines are necessary to 

properly reflect variations in necessary 

costs of treatment among rehabilitation 

facilities.’’ For example, we adjust the 

Federal prospective payment amount 

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associated with a CMG to account for 

facility-level characteristics such as an 

IRF’s LIP percentage, teaching status, 

and location in a rural area, if 

applicable, as described in § 412.624(e). 

In the FY 2010 IRF PPS final rule (74 

FR 39762), we updated the adjustment 

factors for calculating the rural, LIP, and 

teaching status adjustments based on 

the most recent three consecutive years 

worth of IRF claims data (at that time, 

FY 2006, FY 2007, and FY 2008) and the 

most recent available corresponding IRF 

cost report data. As discussed in the FY 

2010 IRF PPS proposed rule (74 FR 

21060 through 21061), we observed 

relatively large year-to-year fluctuations 

in the underlying data used to compute 

the adjustment factors, especially the 

teaching status adjustment factor. 

Therefore, we implemented a 3-year 

moving average approach to updating 

the facility-level adjustment factors in 

the FY 2010 IRF PPS final rule (74 FR 

39762) to provide greater stability and 

predictability of Medicare payments for 

IRFs. 

Each year, we review the major 

components of the IRF PPS to maintain 

and enhance the accuracy of the 

payment system. For FY 2010, we 

implemented a change to our 

methodology that was designed to 

decrease the IRF PPS volatility by using 

a 3-year moving average to calculate the 

facility-level adjustment factors. For FY 

2011, we issued a notice to update the 

payment rates, which did not include 

any policy changes or changes to the 

IRF facility-level adjustments. However, 

in the FY 2012 IRF PPS proposed rule 

(76 FR 24214 at 24225 through 24226), 

we analyzed the use of a weighting 

methodology, which assigns greater 

weight to some facilities than to others, 

in the regression analysis used to 

estimate the facility-level adjustment 

factors. As we found that this weighting 

methodology inappropriately 

exaggerated the cost differences among 

different types of IRF facilities, we 

proposed to remove the weighting factor 

from our analysis and update the IRF 

facility-level adjustment factors for FY 

2012 using an un-weighted regression 

analysis. However, after carefully 

considering all of the comments that we 

received on the proposed FY 2012 

updates to the facility-level adjustment 

factors, we decided to hold the facilitylevel adjustment factors at FY 2011 

levels for FY 2012 in order to conduct 

further research on the underlying data 

and the best methodology for 

calculating the facility-level adjustment 

factors. We based this decision, in part, 

on comments we received about the 

financial hardships that the proposed 

updates would create for facilities with 

teaching programs and a higher 

disproportionate share of low-income 

patients. Thus, in the FY 2012 final rule 

(76 FR 47836 at 47845), we held the FY 

2012 facility-level adjustment factors at 

FY 2011 levels. We also stated in the FY 

2012 final rule that we would conduct 

further research on the underlying data 

and the best methodology for 

calculating the facility level adjustment 

factors. Our research efforts are still 

ongoing, as we continue to consider the 

best methodology for calculating the 

facility level adjustment factors. As a 

result, we are not making changes to the 

facility-level adjustments for FY 2013. 

V. FY 2013 IRF PPS Federal 

Prospective Payment Rates 

A. Market Basket Increase Factor, 

Productivity Adjustment, Other 

Adjustment, and Secretary’s 

Recommendation for FY 2013 

Section 1886(j)(3)(C) of the Act 

requires the Secretary to establish an 

increase factor that reflects changes over 

time in the prices of an appropriate mix 

of goods and services included in the 

covered IRF services, which is referred 

to as a market basket index. According 

to section 1886(j)(3)(A)(i) of the Act, the 

increase factor shall be used to update 

the IRF Federal prospective payment 

rates for each FY. Sections 

1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act 

require the application of a 0.1 

percentage point reduction to the 

market basket increase factor for FYs 

2012 and 2013. In addition, section 

1886(j)(3)(C)(ii)(I) of the Act requires the 

application of a productivity 

adjustment, as described below. Thus, 

in this notice, we are updating the IRF 

PPS payments for FY 2013 by a market 

basket increase factor based upon the 

most current data available, with a 

productivity adjustment as required by 

section 1886(j)(3)(C)(ii)(I) of the Act, as 

described below, and a 0.1 percentage 

point reduction as required by sections 

1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(ii) 

of the Act. 

For this notice, we have used the 

same methodology described in the FY 

2012 IRF PPS final rule (76 FR 47836 at 

47848 through 47863) to compute the 

FY 2013 market basket increase factor 

and labor-related share. In that final 

rule, we rebased the RPL market basket 

from a 2002 base year to a 2008 base 

year. Using this method and the IHS 

Global Insight, Inc. forecast for the 

second quarter of 2012 of the 2008- 

based RPL market basket, the FY 2013 

RPL market basket increase factor is 2.7 

percent. IHS Global Insight (IGI) is an 

economic and financial forecasting firm 

that contracts with CMS to forecast the 

components of providers’ market 

baskets. 

In accordance with section 

1886(j)(3)(C)(ii)(I) of the Act, and using 

the methodology described in the FY 

2012 IRF PPS final rule (76 FR 47836, 

47858 through 47859), we apply a 

productivity adjustment to the FY 2013 

RPL market basket increase factor. The 

statute defines the productivity 

adjustment to be equal to the 10-year 

moving average of changes in annual 

economy-wide private nonfarm business 

multifactor productivity (MFP) (as 

projected by the Secretary for the 10- 

year period ending with the applicable 

FY cost reporting period, or other 

annual period)(the ‘‘MFP adjustment’’). 

The Bureau of Labor Statistics (BLS) is 

the agency that publishes the official 

measure of private nonfarm business 

MFP. We refer readers to the BLS Web 

site at http://www.bls.gov/mfp to obtain 

the historical BLS-published MFP data. 

The projection of MFP is currently 

produced by IGI, using the methodology 

described in the FY 2012 IRF PPS final 

rule (76 FR 47836, 47859). The MFP 

adjustment (the 10-year moving average 

of MFP for the period ending FY 2013) 

that we apply to the market basket 

increase factor for FY 2013 is 0.7 

percent, which was calculated using the 

methodology described in the FY 2012 

IRF PPS final rule (76 FR 47836, 47858 

through 47859) and is based on IGI’s 

second quarter 2012 forecast. 

Thus, in accordance with section 

1886(j)(3)(C) of the Act, we will base the 

FY 2013 market basket update, which is 

used to determine the applicable 

percentage increase for the IRF 

payments, on the second quarter 2012 

forecast of the FY 2008-based RPL 

market basket (estimated to be 2.7 

percent). This percentage increase is 

then reduced by the MFP adjustment 

(the 10-year moving average of MFP for 

the period ending FY 2013) of 0.7 

percent, which was calculated as 

described in the FY 2012 IRF PPS final 

rule (76 FR 47836, 47859) and based on 

IGI’s second quarter 2012 forecast. 

Following application of the 

productivity adjustment, the applicable 

percentage increase is further reduced 

by 0.1 percentage point, as required by 

sections 1886(j)(3)(C)(ii)(II) and 

1886(j)(3)(D)(ii) of the Act. Therefore, 

the final FY 2013 IRF update is 1.9 

percent (2.7 percent market basket 

update less 0.7 percentage point MFP 

adjustment less 0.1 percentage point 

legislative adjustment). 

Secretary’s Final Recommendation 

For FY 2013, the Medicare Payment 

Advisory Commission (MedPAC) 

recommends that a 0 percent update be 

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applied to IRF PPS payment rates for FY 

2013. As discussed above, and in 

accordance with sections 1886(j)(3)(C) 

and 1886(j)(3)(D) of the Act, the 

Secretary is updating IRF PPS payment 

rates for FY 2013 by an adjusted market 

basket increase factor of 1.9 percent 

because section 1886(j)(3)(C) of the Act 

does not provide the Secretary with the 

authority to apply a different update 

factor to IRF PPS payment rates for FY 

2013. 

B. Labor-Related Share for FY 2013 

Using the methodology described in 

the FY 2012 IRF PPS final rule (76 FR 

47836, 47860 through 47863), we are 

updating the IRF labor-related share for 

FY 2013. Using this method and the IHS 

Global Insight, Inc. forecast for the 

second quarter of 2012 of the 2008- 

based RPL market basket, the IRF laborrelated share for FY 2013 is the sum of 

the FY 2013 relative importance of each 

labor-related cost category. This figure 

reflects the different rates of price 

change for these cost categories between 

the base year (FY 2008) and FY 2013. As 

shown in Table 3, the FY 2013 laborrelated share is 69.981 percent. 

TABLE 3—FY 2013 IRF RPL LABOR-RELATED SHARE RELATIVE IMPORTANCE

Cost category 

FY 2013 IRF 

labor-related share 

relative importance 

Wages and Salaries ............................................................................................................................................................ 48.796 

Employee Benefits ............................................................................................................................................................... 13.021 

Professional Fees: Labor-Related ....................................................................................................................................... 2.070 

Administrative and Business Support Services ................................................................................................................... 0.417 

All Other: Labor-Related Services ....................................................................................................................................... 2.077 

SUBTOTAL ................................................................................................................................................................... 66.381 

Labor-Related Share of Capital Costs (.46) ........................................................................................................................ 3.600 

TOTAL ................................................................................................................................................................... 69.981 

Source: IHS GLOBAL INSIGHT, INC, 2nd QTR, 2012; Historical Data through 1st QTR, 2012. 

C. Area Wage Adjustment 

Section 1886(j)(6) of the Act requires 

the Secretary to adjust the proportion of 

rehabilitation facilities’ costs 

attributable to wages and wage-related 

costs (as estimated by the Secretary from 

time to time) by a factor (established by 

the Secretary) reflecting the relative 

hospital wage level in the geographic 

area of the rehabilitation facility 

compared to the national average wage 

level for those facilities. The Secretary 

is required to update the IRF PPS wage 

index on the basis of information 

available to the Secretary on the wages 

and wage-related costs to furnish 

rehabilitation services. Any adjustments 

or updates made under section 

1886(j)(6) of the Act for a FY are made 

in a budget neutral manner. 

In the FY 2009 IRF PPS final rule (73 

FR 46378), we maintained the 

methodology described in the FY 2006 

IRF PPS final rule to determine the wage 

index, labor market area definitions, and 

hold harmless policy consistent with 

the rationale outlined in the FY 2006 

IRF PPS final rule (70 FR 47880, 47917 

through 47933). 

For FY 2013, we are maintaining the 

policies and methodologies described in 

the FY 2012 IRF PPS final rule relating 

to the labor market area definitions and 

the wage index methodology for areas 

with wage data. Thus, we are using the 

CBSA labor market area definitions and 

the FY 2012 pre-reclassification and 

pre-floor hospital wage index data. In 

accordance with section 1886(d)(3)(E) of 

the Act, the FY 2012 pre-reclassification 

and pre-floor hospital wage index is 

based on data submitted for hospital 

cost reporting periods beginning on or 

after October 1, 2007 and before October 

1, 2008 (that is, 2008 cost report data). 

The labor market designations made 

by the OMB include some geographic 

areas where there are no hospitals and, 

thus, no hospital wage index data on 

which to base the calculation of the IRF 

PPS wage index. We will continue to 

use the same methodology discussed in 

the FY 2008 IRF PPS final rule (72 FR 

44299) to address those geographic areas 

where there are no hospitals and, thus, 

no hospital wage index data on which 

to base the calculation of the FY 2013 

IRF PPS wage index. 

If applicable, we will continue to use 

the CBSA changes published in the 

most recent OMB bulletin that applies 

to the hospital wage data used to 

determine the current IRF PPS wage 

index. The OMB bulletins are available 

online at http://www.whitehouse.gov/ 

omb/bulletins/index.html. 

To calculate the wage-adjusted facility 

payment for the payment rates set forth 

in this notice, we multiply the 

unadjusted Federal payment rate for 

IRFs by the FY 2013 labor-related share 

based on the FY 2008-based RPL market 

basket (69.981 percent) to determine the 

labor-related portion of the standard 

payment amount. We then multiply the 

labor-related portion by the applicable 

IRF wage index from the tables in the 

addendum to this notice. These tables 

are available through the Internet on the 

CMS Web site at http://www.cms.hhs.

gov/Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/. Table 

A is for urban areas and Table B is for 

rural areas. 

Adjustments or updates to the IRF 

wage index made under section 

1886(j)(6) of the Act must be made in a 

budget neutral manner. We calculate a 

budget neutral wage adjustment factor 

as established in the FY 2004 IRF PPS 

final rule (68 FR 45689), codified at 

§ 412.624(e)(1), as described in the steps 

below. We use the listed steps to ensure 

that the FY 2013 IRF standard payment 

conversion factor reflects the update to 

the wage indexes (based on the FY 2008 

hospital cost report data) and the laborrelated share in a budget neutral 

manner: 

Step 1. Determine the total amount of 

the estimated FY 2012 IRF PPS rates, 

using the FY 2012 standard payment 

conversion factor and the labor-related 

share and the wage indexes from FY 

2012 (as published in the FY 2012 IRF 

PPS final rule (76 FR 47836)). 

Step 2. Calculate the total amount of 

estimated IRF PPS payments using the 

FY 2012 standard payment conversion 

factor and the FY 2013 labor-related 

share and CBSA urban and rural wage 

indexes. 

Step 3. Divide the amount calculated 

in step 1 by the amount calculated in 

step 2. The resulting quotient is the FY 

2013 budget neutral wage adjustment 

factor of 1.0000. 

Step 4. Apply the FY 2013 budget 

neutral wage adjustment factor from 

step 3 to the FY 2012 IRF PPS standard 

payment conversion factor after the 

application of the adjusted market 

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basket update to determine the FY 2013 

standard payment conversion factor. 

We discuss the calculation of the 

standard payment conversion factor for 

FY 2013 in section V.D. of this notice. 

D. Description of the IRF Standard 

Payment Conversion Factor and 

Payment Rates for FY 2013 

To calculate the standard payment 

conversion factor for FY 2013, as 

illustrated in Table 4, we begin by 

applying the adjusted market basket 

increase factor for FY 2013 that was 

adjusted in accordance with sections 

1886(j)(3)(C) and (D) of the Act, to the 

standard payment conversion factor for 

FY 2012 ($14,076). Applying the 1.9 

percent adjusted market basket increase 

factor for FY 2013 to the revised 

standard payment conversion factor for 

FY 2012 of $14,076 yields a standard 

payment amount of $14,343. Then, we 

apply the budget neutrality factor for the 

FY 2013 wage index and labor related 

share of 1.0000, which keeps the 

standard payment amount at $14,343. 

Finally, we apply the budget neutrality 

factor for the revised CMG relative 

weights of 1.0000, which results in a 

final standard payment conversion 

factor of $14,343 for FY 2013. 

TABLE 4—CALCULATIONS TO DETERMINE THE FINAL FY 2013 STANDARD PAYMENT CONVERSION FACTOR

Explanation for adjustment Calculations 

Standard Payment Conversion Factor for FY 2012 ........................................................................................................................ $14,076 

Market Basket Increase Factor for FY 2013 (2.7 percent), reduced by 0.1 percentage point in accordance with sections 

1886(j)(3)(C) and (D) of the Act and a 0.7 percent reduction for the productivity adjustment as required by section 

1886(j)(3)(C)(ii)(I) of the Act ......................................................................................................................................................... × 1.019 

Budget Neutrality Factor for the Wage Index and Labor-Related Share ........................................................................................ × 1.0000 

Budget Neutrality Factor for the Revisions to the CMG Relative Weights ..................................................................................... × 1.0000 

Final FY 2013 Standard Payment Conversion Factor .................................................................................................................... = $14,343 

After the application of the CMG 

relative weights described in section III 

of this notice, the resulting unadjusted 

IRF prospective payment rates for FY 

2013 are shown below in Table 5, ‘‘FY 

2013 Payment Rates.’’ 

TABLE 5—FY 2013 PAYMENT RATES

CMG Payment rate 

Tier 1 

Payment rate 

Tier 2 

Payment rate 

Tier 3 

Payment rate 

no comorbidity 

0101 ................................................................................................................. $11,513.13 $10,315.49 $9,381.76 $8,970.11 

0102 ................................................................................................................. 14,314.31 12,825.51 11,663.73 11,153.12 

0103 ................................................................................................................. 16,669.43 14,936.80 13,584.26 12,989.02 

0104 ................................................................................................................. 17,674.88 15,836.11 14,401.81 13,772.15 

0105 ................................................................................................................. 20,622.37 18,478.09 16,804.26 16,068.46 

0106 ................................................................................................................. 23,483.79 21,041.18 19,136.43 18,298.80 

0107 ................................................................................................................. 26,363.87 23,621.49 21,482.95 20,542.04 

0108 ................................................................................................................. 32,953.04 29,525.07 26,851.53 25,675.40 

0109 ................................................................................................................. 30,444.45 27,277.52 24,807.65 23,721.89 

0110 ................................................................................................................. 39,160.69 35,087.28 31,910.31 30,513.30 

0201 ................................................................................................................. 11,923.34 9,965.52 8,891.23 8,417.91 

0202 ................................................................................................................. 14,585.40 12,190.12 10,876.30 10,296.84 

0203 ................................................................................................................. 16,930.48 14,149.37 12,626.14 11,953.46 

0204 ................................................................................................................. 18,556.97 15,509.09 13,838.13 13,100.90 

0205 ................................................................................................................. 22,303.37 18,640.16 16,632.14 15,745.75 

0206 ................................................................................................................. 27,801.04 23,235.66 20,732.81 19,626.96 

0207 ................................................................................................................. 36,624.85 30,609.40 27,311.94 25,856.13 

0301 ................................................................................................................. 16,089.98 13,716.21 12,137.05 11,262.12 

0302 ................................................................................................................. 20,117.49 17,149.93 15,173.46 14,079.09 

0303 ................................................................................................................. 23,816.55 20,302.52 17,964.61 16,668.00 

0304 ................................................................................................................. 31,647.83 26,979.18 23,871.05 22,149.89 

0401 ................................................................................................................. 14,906.68 12,590.29 11,279.34 10,196.44 

0402 ................................................................................................................. 21,262.06 17,958.87 16,089.98 14,545.24 

0403 ................................................................................................................. 34,236.74 28,916.92 25,907.76 23,420.68 

0404 ................................................................................................................. 62,628.71 52,898.42 47,393.57 42,842.54 

0405 ................................................................................................................. 48,612.73 41,059.71 36,786.93 33,255.68 

0501 ................................................................................................................. 12,099.75 9,793.40 9,044.70 8,066.50 

0502 ................................................................................................................. 16,183.21 13,098.03 12,096.89 10,787.37 

0503 ................................................................................................................. 20,487.54 16,581.94 15,314.02 13,657.40 

0504 ................................................................................................................. 24,698.65 19,989.84 18,462.31 16,464.33 

0505 ................................................................................................................. 28,192.60 22,818.28 21,074.17 18,793.63 

0506 ................................................................................................................. 39,740.15 32,164.18 29,705.79 26,491.52 

0601 ................................................................................................................. 13,917.01 11,352.48 10,476.13 9,533.79 

0602 ................................................................................................................. 18,208.44 14,853.61 13,707.61 12,474.11 

0603 ................................................................................................................. 23,297.33 19,004.48 17,538.62 15,960.89 

0604 ................................................................................................................. 30,890.52 25,197.78 23,254.31 21,163.10 

0701 ................................................................................................................. 13,400.66 11,246.35 10,730.00 9,713.08 

0702 ................................................................................................................. 17,895.76 15,018.56 14,328.66 12,971.81 

0703 ................................................................................................................. 21,491.55 18,036.32 17,205.86 15,576.50 

0704 ................................................................................................................. 27,243.09 22,862.74 21,811.40 19,746.01 

0801 ................................................................................................................. 10,678.36 8,809.47 8,043.55 7,395.25 

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TABLE 5—FY 2013 PAYMENT RATES—Continued 

CMG Payment rate 

Tier 1 

Payment rate 

Tier 2 

Payment rate 

Tier 3 

Payment rate 

no comorbidity 

0802 ................................................................................................................. 14,112.08 11,642.21 10,631.03 9,773.32 

0803 ................................................................................................................. 19,192.37 15,833.24 14,457.74 13,290.22 

0804 ................................................................................................................. 17,052.39 14,066.18 12,844.16 11,808.59 

0805 ................................................................................................................. 21,124.37 17,426.75 15,912.12 14,628.43 

0806 ................................................................................................................. 25,768.63 21,257.76 19,410.38 17,844.13 

0901 ................................................................................................................. 13,032.05 10,740.04 9,974.12 9,020.31 

0902 ................................................................................................................. 17,091.12 14,084.83 13,080.82 11,830.11 

0903 ................................................................................................................. 22,118.34 18,228.52 16,929.04 15,309.72 

0904 ................................................................................................................. 28,106.54 23,162.51 21,511.63 19,454.85 

1001 ................................................................................................................. 14,583.96 13,047.83 11,795.68 10,744.34 

1002 ................................................................................................................. 18,377.69 16,442.82 14,865.09 13,539.79 

1003 ................................................................................................................. 26,567.54 23,769.22 21,490.12 19,573.89 

1101 ................................................................................................................. 16,570.47 15,897.78 15,897.78 12,915.87 

1102 ................................................................................................................. 23,067.85 22,129.81 22,129.81 17,980.38 

1201 ................................................................................................................. 12,953.16 12,953.16 12,442.55 11,574.80 

1202 ................................................................................................................. 15,278.16 15,278.16 14,675.76 13,651.67 

1203 ................................................................................................................. 19,707.28 19,707.28 18,931.33 17,610.34 

1301 ................................................................................................................. 17,332.08 14,730.26 12,991.89 11,569.06 

1302 ................................................................................................................. 22,547.20 19,162.25 16,900.36 15,048.68 

1303 ................................................................................................................. 28,694.61 24,387.40 21,508.76 19,153.64 

1401 ................................................................................................................. 12,808.30 10,939.41 9,863.68 8,987.32 

1402 ................................................................................................................. 16,534.61 14,123.55 12,732.28 11,602.05 

1403 ................................................................................................................. 19,922.43 17,016.54 15,341.27 13,980.12 

1404 ................................................................................................................. 25,546.32 21,820.01 19,672.86 17,925.88 

1501 ................................................................................................................. 13,909.84 12,178.64 11,148.81 10,562.19 

1502 ................................................................................................................. 17,380.85 15,217.92 13,929.92 13,196.99 

1503 ................................................................................................................. 21,335.21 18,681.76 17,099.72 16,200.42 

1504 ................................................................................................................. 27,013.61 23,653.04 21,650.76 20,511.92 

1601 ................................................................................................................. 15,058.72 13,131.02 11,976.41 10,873.43 

1602 ................................................................................................................. 19,830.63 17,291.92 15,773.00 14,320.05 

1603 ................................................................................................................. 24,879.37 21,692.35 19,787.60 17,964.61 

1701 ................................................................................................................. 15,398.64 13,371.98 12,198.72 10,863.39 

1702 ................................................................................................................. 20,160.52 17,507.07 15,972.36 14,222.52 

1703 ................................................................................................................. 23,455.11 20,368.49 18,582.79 16,547.52 

1704 ................................................................................................................. 29,958.22 26,015.33 23,733.36 21,134.41 

1801 ................................................................................................................. 17,735.12 13,419.31 12,442.55 10,889.21 

1802 ................................................................................................................. 26,835.75 20,306.82 18,828.06 16,477.24 

1803 ................................................................................................................. 47,571.43 35,995.19 33,374.73 29,208.09 

1901 ................................................................................................................. 15,012.82 13,638.76 13,174.05 12,548.69 

1902 ................................................................................................................. 27,522.78 25,004.15 24,152.18 23,007.61 

1903 ................................................................................................................. 47,502.58 43,155.22 41,683.63 39,708.60 

2001 ................................................................................................................. 12,541.52 10,435.97 9,581.12 8,742.06 

2002 ................................................................................................................. 16,919.00 14,077.65 12,925.91 11,792.81 

2003 ................................................................................................................. 21,252.02 17,683.48 16,236.28 14,813.45 

2004 ................................................................................................................. 28,103.67 23,384.83 21,471.47 19,591.10 

2101 ................................................................................................................. 31,478.58 27,264.61 27,264.61 23,542.60 

5001 ................................................................................................................. ........................ ........................ ........................ 2,142.84 

5101 ................................................................................................................. ........................ ........................ ........................ 8,413.60 

5102 ................................................................................................................. ........................ ........................ ........................ 21,980.65 

5103 ................................................................................................................. ........................ ........................ ........................ 10,170.62 

5104 ................................................................................................................. ........................ ........................ ........................ 27,327.72 

E. Example of the Methodology for 

Adjusting the Federal Prospective 

Payment Rates 

Table 6 illustrates the methodology 

for adjusting the Federal prospective 

payments (as described in sections V.A 

through V.D of this notice). The 

following examples are based on two 

hypothetical Medicare beneficiaries, 

both classified into CMG 0110 (without 

comorbidities). The unadjusted Federal 

prospective payment rate for CMG 0110 

(without comorbidities) appears in 

Table 5 above. 

Example: One beneficiary is in 

Facility A, an IRF located in rural 

Spencer County, Indiana, and another 

beneficiary is in Facility B, an IRF 

located in urban Harrison County, 

Indiana. Facility A, a rural non-teaching 

hospital has a disproportionate share 

hospital (DSH) percentage of 5 percent 

(which would result in a LIP adjustment 

of 1.0228), a wage index of 0.8551, and 

a rural adjustment of 18.4 percent. 

Facility B, an urban teaching hospital, 

has a DSH percentage of 15 percent 

(which would result in a LIP adjustment 

of 1.0666), a wage index of 0.8900, and 

a teaching status adjustment of 0.0610. 

To calculate each IRF’s labor and nonlabor portion of the Federal prospective 

payment, we begin by taking the 

unadjusted Federal prospective 

payment rate for CMG 0110 (without 

comorbidities) from Table 5 above. 

Then, we multiply the labor-related 

share for FY 2013 (69.981 percent) 

described in section V.B of this notice 

by the unadjusted Federal prospective 

payment rate. To determine the nonlabor portion of the Federal prospective 

payment rate, we subtract the labor 

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portion of the Federal payment from the 

unadjusted Federal prospective 

payment. 

To compute the wage-adjusted 

Federal prospective payment, we 

multiply the labor portion of the Federal 

payment by the appropriate wage index 

found in Table A and Table B. These 

tables are available through the Internet 

on the CMS Web site at http:// 

www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/ 

InpatientRehabFacPPS/. The resulting 

figure is the wage-adjusted labor 

amount. Next, we compute the wageadjusted Federal payment by adding the 

wage-adjusted labor amount to the nonlabor portion. 

Adjusting the wage-adjusted Federal 

payment by the facility-level 

adjustments involves several steps. 

First, we take the wage-adjusted Federal 

prospective payment and multiply it by 

the appropriate rural and LIP 

adjustments (if applicable). Second, to 

determine the appropriate amount of 

additional payment for the teaching 

status adjustment (if applicable), we 

multiply the teaching status adjustment 

(0.0610, in this example) by the wageadjusted and rural-adjusted amount (if 

applicable). Finally, we add the 

additional teaching status payments (if 

applicable) to the wage, rural, and LIPadjusted Federal prospective payment 

rates. Table 6 illustrates the components 

of the adjusted payment calculation. 

TABLE 6—EXAMPLE OF COMPUTING THE IRF FY 2013 FEDERAL PROSPECTIVE PAYMENT

Steps Rural Facility A 

(Spencer Co., IN) 

Urban Facility B 

(Harrison Co., IN) 

1 ............................. Unadjusted Federal Prospective Payment ......................................................... $30,513.30 $30,513.30 

2 ............................. Labor Share ........................................................................................................ × 0.69981 × 0.69981 

3 ............................. Labor Portion of Federal Payment ...................................................................... = $21,353.51 = $21,353.51 

4 ............................. CBSA Based Wage Index (shown in the Addendum, Tables 1 and 2) ............. × 0.8551 × 0.8900 

5 ............................. Wage-Adjusted Amount ...................................................................................... = $18,259.39 = $19,004.63 

6 ............................. Nonlabor Amount ................................................................................................ + $9,159.79 + $9,159.79 

7 ............................. Wage-Adjusted Federal Payment ....................................................................... = $27,419.18 = $28,164.41 

8 ............................. Rural Adjustment ................................................................................................. × 1.184 × 1.000 

9 ............................. Wage- and Rural-Adjusted Federal Payment ..................................................... = $32,464.30 = $28,164.41 

10 ........................... LIP Adjustment .................................................................................................... × 1.0228 × 1.0666 

11 ........................... FY 2013 Wage-, Rural- and LIP-Adjusted Federal Prospective Payment Rate = $33,204.49 = $30,040.16 

12 ........................... FY 2013 Wage- and Rural-Adjusted Federal Prospective Payment .................. $32,464.30 $28,164.41 

13 ........................... Teaching Status Adjustment ............................................................................... × 0 × 0.0610 

14 ........................... Teaching Status Adjustment Amount ................................................................. = $0.00 = $1,718.03 

15 ........................... FY 2013 Wage-, Rural-, and LIP-Adjusted Federal Prospective Payment Rate + $33,204.49 + $30,040.16 

16 ........................... Total FY 2013 Adjusted Federal Prospective Payment ..................................... = $33,204.49 = $31,758.19 

Thus, the adjusted payment for 

Facility A would be $33,204.49 and the 

adjusted payment for Facility B would 

be $31,758.19. 

VI. Update to Payments for High-Cost 

Outliers Under the IRF PPS 

A. Update to the Outlier Threshold 

Amount for FY 2013 

Section 1886(j)(4) of the Act provides 

the Secretary with the authority to make 

payments in addition to the basic IRF 

prospective payments for cases 

incurring extraordinarily high costs. A 

case qualifies for an outlier payment if 

the estimated cost of the case exceeds 

the adjusted outlier threshold. We 

calculate the adjusted outlier threshold 

by adding the IRF PPS payment for the 

case (that is, the CMG payment adjusted 

by all of the relevant facility-level 

adjustments) and the adjusted threshold 

amount (also, adjusted by all of the 

relevant facility-level adjustments). 

Then, we calculate the estimated cost of 

a case by multiplying the IRF’s overall 

CCR by the Medicare allowable covered 

charge. If the estimated cost of the case 

is higher than the adjusted outlier 

threshold, we make an outlier payment 

for the case equal to 80 percent of the 

difference between the estimated cost of 

the case and the outlier threshold. 

In the FY 2002 IRF PPS final rule (66 

FR 41362 through 41363), we discussed 

our rationale for setting the outlier 

threshold amount for the IRF PPS so 

that estimated outlier payments would 

equal 3 percent of total estimated 

payments. For the 2002 IRF PPS final 

rule, we analyzed various outlier 

policies using 3, 4, and 5 percent of the 

total estimated payments, and we 

concluded that an outlier policy set at 

3 percent of total estimated payments 

would optimize the extent to which we 

could reduce the financial risk to IRFs 

of caring for high-cost patients, while 

still providing for adequate payments 

for all other (non-high cost outlier) 

cases. 

Subsequently, we updated the IRF 

outlier threshold amount in the FYs 

2006 through 2012 IRF PPS final rules 

(70 FR 47880, 70 FR 57166, 71 FR 

48354, 72 FR 44284, 73 FR 46370, 74 FR 

39762, 75 FR 42836, 75 FR 42836, and 

76 FR 47836, respectively) to maintain 

estimated outlier payments at 3 percent 

of total estimated payments. We also 

stated in the FY 2009 final rule (73 FR 

46370 at 46385) that we would continue 

to analyze the estimated outlier 

payments for subsequent years and 

adjust the outlier threshold amount as 

appropriate to maintain the 3 percent 

target. 

To update the IRF outlier threshold 

amount for FY 2013, we use FY 2011 

claims data and the same methodology 

that we used to set the initial outlier 

threshold amount in the FY 2002 IRF 

PPS final rule (66 FR 41316 and 41362 

through 41363), which is also the same 

methodology that we used to update the 

outlier threshold amounts for FYs 2006 

through 2012. Based on an analysis of 

this updated data, we estimate that IRF 

outlier payments as a percentage of total 

estimated payments are approximately 

2.8 percent in FY 2012. Therefore, we 

will update the outlier threshold 

amount to $10,466 to maintain 

estimated outlier payments at 

approximately 3 percent of total 

estimated aggregate IRF payments for 

FY 2013. 

B. Update to the IRF Cost-to-Charge 

Ratio Ceilings 

In accordance with the methodology 

stated in the FY 2004 IRF PPS final rule 

(68 FR 45674, 45692 through 45694), we 

apply a ceiling to IRFs’ CCRs. Using the 

methodology described in that final 

rule, we update the national urban and 

rural CCRs for IRFs, as well as the 

national CCR ceiling for FY 2013, based 

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on analysis of the most recent data that 

is available. We apply the national 

urban and rural CCRs in the following 

situations: 

• New IRFs that have not yet 

submitted their first Medicare cost 

report. 

• IRFs whose overall CCR is in excess 

of the national CCR ceiling for FY 2013, 

as discussed below. 

• Other IRFs for which accurate data 

to calculate an overall CCR are not 

available. 

Specifically, for FY 2013, we estimate 

a national average CCR of 0.659 for rural 

IRFs, which we calculated by taking an 

average of the CCRs for all rural IRFs 

using their most recently submitted cost 

report data. Similarly, we estimate a 

national average CCR of 0.514 for urban 

IRFs, which we calculated by taking an 

average of the CCRs for all urban IRFs 

using their most recently submitted cost 

report data. We apply weights to both of 

these averages using the IRFs’ estimated 

costs, meaning that the CCRs of IRFs 

with higher costs factor more heavily 

into the averages than the CCRs of IRFs 

with lower costs. For this notice, we 

have used the most recent available cost 

report data (FY 2010). This includes all 

IRFs whose cost reporting periods began 

on or after October 1, 2009, and before 

October 1, 2010. If, for any IRF, the FY 

2010 cost report was missing or had an 

‘‘as submitted’’ status, we used data 

from the latest settled cost report for FY 

2004 through FY 2009. We do not use 

cost report data from before FY 2004 for 

any IRF because changes in IRF 

utilization since FY 2004 resulting from 

the 60 percent rule and IRF medical 

review activities suggest that these older 

data do not adequately reflect the 

current cost of care. 

In accordance with past practice, we 

set the national CCR ceiling at 3 

standard deviations above the mean 

CCR. Using this method, the national 

CCR ceiling is set at 1.57 for FY 2013. 

This means that, if an individual IRF’s 

CCR exceeds this ceiling of 1.57 for FY 

2013, we would replace the IRF’s CCR 

with the appropriate national average 

CCR (either rural or urban, depending 

on the geographic location of the IRF). 

We calculate the national CCR ceiling 

by: 

Step 1. Taking the national average 

CCR (weighted by each IRF’s total costs, 

as discussed above) of all IRFs for which 

we have sufficient cost report data (both 

rural and urban IRFs combined). 

Step 2. Estimating the standard 

deviation of the national average CCR 

computed in step 1. 

Step 3. Multiplying the standard 

deviation of the national average CCR 

computed in step 2 by a factor of 3 to 

compute a statistically significant 

reliable ceiling. 

Step 4. Adding the result from step 3 

to the national average CCR of all IRFs 

for which we have sufficient cost report 

data, from step 1. 

VII. Collection of Information 

Requirements 

This document does not impose any 

new information collection 

requirements. However, it does provide 

detailed information about a currently 

approved information collection request 

pertaining to the IRF PPS. Specifically, 

section I.C. of this notice references the 

Inpatient Rehabilitation Facility-Patient 

Assessment Instrument (IRF–PAI). As 

stated in section I.C of this notice, IRFs 

are required to complete the IRF–PAI 

upon the admission and discharge of a 

Medicare Part A fee-for-service patients 

and upon admission and discharge of 

each Medicare Part C (Medicare 

Advantage) patient. The IRF–PAI is 

currently approved under OMB control 

number: 0938–0842. 

VIII. Waiver of Notice and Comment 

We ordinarily publish a notice of 

proposed rulemaking in the Federal 

Register to provide a period for public 

comment before the provisions of a rule 

take effect. We can waive this 

procedure, however, if we find good 

cause that notice and comment 

procedures are impracticable, 

unnecessary, or contrary to the public 

interest and we incorporate a statement 

of finding and its reasons in the notice. 

We find that it is unnecessary to 

undertake notice and comment 

rulemaking for the updates in this 

notice because the updates contained in 

this Notice do not make any substantive 

changes in policy, but merely reflect the 

application of previously established 

methodologies. In addition, we applied 

the statutorily-required adjustments to 

the update to the IRF–PPS increase 

factor in sections 1886(j)(3)(C) and (D) of 

the Act in this notice. We find that 

notice and comment rulemaking is 

unnecessary to implement these 

statutory provisions because they are 

self-implementing provisions of law, not 

requiring the exercise of any discretion 

on the part of the Secretary. Finally, in 

accordance with 1886(e)(5)(B), we noted 

MEDPAC’s recommendations regarding 

an appropriate update for the FY 2013 

IRF PPS, and the Secretary’s inability to 

implement those recommendations due 

to the requirements in 1886(j) regarding 

the establishment of an update factor. 

As such, the Secretary’s 

recommendation (to follow the statutory 

requirements thereby applying a 1.9 

percent update rather than MEDPAC’s 

recommended 0 percent update) need 

not be published in a proposed and final 

rule as such publication is unnecessary 

in the absence of any discretion 

regarding the establishment of the 

update factor. Therefore, under 5 U.S.C. 

553(b)(3)(B), for good cause, we waive 

notice and comment procedures. 

IX. Regulatory Impact Analysis 

A. Statement of Need 

This notice updates the IRF 

prospective payment rates for FY 2013 

as required under section 1886(j)(3)(C) 

of the Act. It responds to Section 

1886(j)(5) of the Act, which requires the 

Secretary to publish in the Federal 

Register on or before the August 1 that 

precedes the start of each fiscal year, the 

classification and weighting factors for 

the IRF PPS’s case-mix groups and a 

description of the methodology and data 

used in computing the prospective 

payment rates for that fiscal year. 

This notice also implements sections 

1886(j)(3)(C) and (D) of the Act. Section 

1886(j)(3)(C)(ii)(I) of the Act requires the 

Secretary to apply a multi-factor 

productivity adjustment to the market 

basket increase factor, and to apply 

other adjustments as defined by the Act. 

The productivity adjustment applies to 

FYs from 2012 forward. The other 

adjustments apply to FYs 2010 through 

2019. 

B. Overall Impact 

We have examined the impacts of this 

notice as required by Executive Order 

12866 (September 30, 1993, Regulatory 

Planning and Review), Executive Order 

13563 (January 18, 2011, Improving 

Regulation and Regulatory Review), the 

Regulatory Flexibility Act (RFA, 

September 19, 1980, Pub. L. 96–354), 

section 1102(b) of the Social Security 

Act, section 202 of the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), Executive Order 13132 on 

Federalism (August 4, 1999), and the 

Congressional Review Act (5 U.S.C. 

804(2)). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. A 

regulatory impact analysis (RIA) must 

be prepared for a major notice with 

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economically significant effects ($100 

million or more in any one year). We 

estimate the total impact of the updates 

described in this notice by comparing 

the estimated payments in FY 2013 with 

those in FY 2012. This analysis results 

in an estimated $140 million increase 

for FY 2013 IRF PPS payments. As a 

result, this notice is designated as 

economically ‘‘significant’’ under 

section 3(f)(1) of Executive Order 12866, 

and hence a major notice under the 

Congressional Review Act. 

The Regulatory Flexibility Act (RFA) 

requires agencies to analyze options for 

regulatory relief of small entities, if a 

rule has a significant impact on a 

substantial number of small entities. For 

purposes of the RFA, small entities 

include small businesses, nonprofit 

organizations, and small governmental 

jurisdictions. Most IRFs and most other 

providers and suppliers are small 

entities, either by having revenues of $7 

million to $34.5 million in any 1 year, 

or by being nonprofit organizations that 

are not dominant in their markets. (For 

details, see the Small Business 

Administration’s final rule that set forth 

size standards for health care industries, 

at 65 FR 69432 at http://www.sba.gov/

sites/default/files/files/Size_Standards_

Table.pdf, effective March 26, 2012.) 

Because we lack data on individual 

hospital receipts, we cannot determine 

the number of small proprietary IRFs or 

the proportion of IRFs’ revenue that is 

derived from Medicare payments. 

Therefore, we assume that all IRFs (an 

approximate total of 1,200 IRFs, of 

which approximately 60 percent are 

nonprofit facilities) are considered small 

entities and that Medicare payment 

constitutes the majority of their 

revenues. The Department of Health and 

Human Services generally uses a 

revenue impact of 3 to 5 percent as a 

significance threshold under the RFA. 

As shown in Table 7, we estimate that 

the net revenue impact of this notice on 

all IRFs is to increase estimated 

payments by approximately 2.1 percent, 

with three categories of IRFs (6 rural 

IRFs in the New England region, 29 

rural IRFs in the West North Central 

region, and 8 rural IRFs in the Mountain 

region) estimated to receive an increase 

in estimated payments of 3 percent or 

more (3.2 percent, 3.0 percent, and 3.1, 

respectively). As a result, we anticipate 

this notice would have a positive impact 

on a substantial number of small 

entities. Medicare fiscal intermediaries, 

Medicare Administrative Contractors, 

and carriers are not considered to be 

small entities. Individuals and States are 

not included in the definition of a small 

entity. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 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 100 beds. As discussed in 

detail below, the rates and policies set 

forth in this notice will not have an 

adverse impact on rural hospitals based 

on the data of the 169 rural units and 

20 rural hospitals in our database of 

1,139 IRFs for which data were 

available. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–04, enacted on March 22, 1995) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any one year of 

$100 million in 1995 dollars, updated 

annually for inflation. In 2012, that 

threshold level is approximately $139 

million. This notice will not impose 

spending costs on State, local, or tribal 

governments, in the aggregate, or by the 

private sector, of greater than $139 

million. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a final 

rule that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

As stated above, this notice will not 

have a substantial effect on State and 

local governments, preempt State law, 

or otherwise have a Federalism 

implication. 

C. Anticipated Effects of the Notice 

1. Basis and Methodology of Estimates 

This notice sets forth updates to the 

IRF PPS rates contained in the FY 2012 

final rule (76 FR 47836). Specifically, 

this notice sets forth updates to the 

CMG relative weights and average 

length of stay values, the wage index, 

and the outlier threshold for high-cost 

cases. This notice also applies a 

productivity adjustment to the FY 2013 

RPL market basket increase factor in 

accordance with section 

1886(j)(3)(C)(ii)(I) of the Act, and a 0.1 

percentage point reduction to the FY 

2013 RPL market basket increase factor 

in accordance with sections 

1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act. 

We estimate that the FY 2013 impact 

will be a net increase of $140 million in 

payments to IRF providers. The impact 

analysis in Table 7 of this notice 

represents the projected effects of the 

updates to IRF PPS payments for FY 

2013 compared with the estimated IRF 

PPS payments in FY 2012. We 

determine the effects by estimating 

payments while holding all other 

payment variables constant. We use the 

best data available, but we do not 

attempt to predict behavioral responses 

to these changes, and we do not make 

adjustments for future changes in such 

variables as number of discharges or 

case-mix. 

We note that certain events may 

combine to limit the scope or accuracy 

of our impact analysis, because such an 

analysis is future-oriented and, thus, 

susceptible to forecasting errors because 

of other changes in the forecasted 

impact time period. Some examples 

could be legislative changes made by 

the Congress to the Medicare program 

that would impact program funding, or 

changes specifically related to IRFs. 

Although some of these changes may 

not necessarily be specific to the IRF 

PPS, the nature of the Medicare program 

is such that the changes may interact, 

and the complexity of the interaction of 

these changes could make it difficult to 

predict accurately the full scope of the 

impact upon IRFs. 

In updating the rates for FY 2013, we 

are implementing standard annual 

revisions described in this notice (for 

example, the update to the wage and 

market basket indexes used to adjust the 

Federal rates). We are also 

implementing a productivity adjustment 

to the FY 2013 RPL market basket 

increase factor in accordance with 

section 1886(j)(3)(C)(ii)(I) of the Act, and 

a 0.1 percentage point reduction to the 

FY 2013 RPL market basket increase 

factor in accordance with sections 

1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act. 

We estimate the total increase in 

payments to IRFs in FY 2013, relative to 

FY 2012, will be approximately $140 

million. 

This estimate is derived from the 

application of the FY 2013 RPL market 

basket increase factor, as reduced by a 

productivity adjustment in accordance 

with section 1886(j)(3)(C)(ii)(I) of the 

Act, and a 0.1 percentage point 

reduction in accordance with sections 

1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act, 

which yields an increase of aggregate 

payments to IRFs of $130 million. 

Furthermore, there is an additional 

estimated $10 million increase in 

aggregate payments to IRFs due to the 

update in the outlier threshold amount. 

Outlier payments are estimated to 

increase from approximately 2.8 percent 

in FY 2012 to 3.0 percent in FY 2013. 

Therefore, summed together, these 

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updates will result in a net increase in 

estimated payments of $140 million 

from FY 2012 to FY 2013. 

The effects of the updates that impact 

IRF PPS payment rates are shown in 

Table 7. The following updates that 

affect the IRF PPS payment rates are 

discussed separately below: 

• The effects of the update to the 

outlier threshold amount, from 

approximately 2.8 percent to 3.0 percent 

of total estimated payments for FY 2013, 

consistent with section 1886(j)(4) of the 

Act. 

• The effects of the annual market 

basket update (using the RPL market 

basket) to IRF PPS payment rates, as 

required by section 1886(j)(3)(A)(i) and 

sections 1886(j)(3)(C) and (D) of the Act, 

including a productivity adjustment in 

accordance with section 

1886(j)(3)(C)(i)(I) of the Act, and a 0.1 

percentage point reduction in 

accordance with sections 1886(j)(3)(C) 

and (D) of the Act. 

• The effects of applying the budgetneutral labor-related share and wage 

index adjustment, as required under 

section 1886(j)(6) of the Act. 

• The effects of the budget-neutral 

changes to the CMG relative weights 

and average length of stay values, under 

the authority of section 1886(j)(2)(C)(i) 

of the Act. 

• The total change in estimated 

payments based on the FY 2013 

payment updates relative to the 

estimated FY 2012 payments. 

2. Description of Table 7 

The table below categorizes IRFs by 

geographic location, including urban or 

rural location, and location with respect 

to CMS’s nine census divisions (as 

defined on the cost report) of the 

country. In addition, the table divides 

IRFs into those that are separate 

rehabilitation hospitals (otherwise 

called freestanding hospitals in this 

section), those that are rehabilitation 

units of a hospital (otherwise called 

hospital units in this section), rural or 

urban facilities, ownership (otherwise 

called for-profit, non-profit, and 

government), by teaching status, and by 

disproportionate share patient 

percentage (DSH PP). The top row of the 

table shows the overall impact on the 

1,139 IRFs included in the analysis. 

The next 12 rows of Table 7 contain 

IRFs categorized according to their 

geographic location, designation as 

either a freestanding hospital or a unit 

of a hospital, and by type of ownership; 

all urban, which is further divided into 

urban units of a hospital, urban 

freestanding hospitals, and by type of 

ownership; and all rural, which is 

further divided into rural units of a 

hospital, rural freestanding hospitals, 

and by type of ownership. There are 950 

IRFs located in urban areas included in 

our analysis. Among these, there are 739 

IRF units of hospitals located in urban 

areas and 211 freestanding IRF hospitals 

located in urban areas. There are 189 

IRFs located in rural areas included in 

our analysis. Among these, there are 169 

IRF units of hospitals located in rural 

areas and 20 freestanding IRF hospitals 

located in rural areas. There are 383 forprofit IRFs. Among these, there are 324 

IRFs in urban areas and 59 IRFs in rural 

areas. There are 697 non-profit IRFs. 

Among these, there are 579 urban IRFs 

and 118 rural IRFs. There are 59 

government-owned IRFs. Among these, 

there are 47 urban IRFs and 12 rural 

IRFs. 

The remaining four parts of Table 7 

show IRFs grouped by their geographic 

location within a region, by teaching 

status, and by DSH PP. First, IRFs 

located in urban areas are categorized 

with respect to their location within a 

particular one of the nine Census 

geographic regions. Second, IRFs 

located in rural areas are categorized 

with respect to their location within a 

particular one of the nine Census 

geographic regions. In some cases, 

especially for rural IRFs located in the 

New England, Mountain, and Pacific 

regions, the number of IRFs represented 

is small. IRFs are then grouped by 

teaching status, including non-teaching 

IRFs, IRFs with an intern and resident 

to average daily census (ADC) ratio less 

than 10 percent, IRFs with an intern and 

resident to ADC ratio greater than or 

equal to 10 percent and less than or 

equal to 19 percent, and IRFs with an 

intern and resident to ADC ratio greater 

than 19 percent. Finally, IRFs are 

grouped by DSH PP, including IRFs 

with zero DSH PP, IRFs with a DSH PP 

less than 5 percent, IRFs with a DSH PP 

between 5 and less than 10 percent, 

IRFs with a DSH PP between 10 and 20 

percent, and IRFs with a DSH PP greater 

than 20 percent. 

The estimated impacts of each 

payment update described in this notice 

to the facility categories listed above are 

shown in the columns of Table 7. The 

description of each column is as 

follows: 

• Column (1) shows the facility 

classification categories described 

above. 

• Column (2) shows the number of 

IRFs in each category in our FY 2011 

analysis file. 

• Column (3) shows the number of 

cases in each category in our FY 2011 

analysis file. 

• Column (4) shows the estimated 

effect of the adjustment to the outlier 

threshold amount. 

• Column (5) shows the estimated 

effect of the update to the IRF PPS 

payment rates, which includes a 

productivity adjustment in accordance 

with section 1886(j)(3)(C)(ii)(I) of the 

Act, and a 0.1 percentage point 

reduction in accordance with sections 

1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act. 

• Column (6) shows the estimated 

effect of the update to the IRF laborrelated share and wage index, in a 

budget neutral manner. 

• Column (7) shows the estimated 

effect of the update to the CMG relative 

weights and average length of stay 

values, in a budget neutral manner. 

• Column (8) compares our estimates 

of the payments per discharge, 

incorporating all of the payment 

updates reflected in this notice for FY 

2013 to our estimates of payments per 

discharge in FY 2012. 

The average estimated increase for all 

IRFs is approximately 2.1 percent. This 

estimated net increase includes the 

effects of the RPL market basket increase 

factor for FY 2013 of 2.7 percent, 

reduced by a productivity adjustment of 

0.7 percent in accordance with section 

1886(j)(3)(C)(ii)(I) of the Act, and further 

reduced by 0.1 percentage point in 

accordance with sections 

1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act. 

It also includes the approximate 0.2 

percent overall estimated increase in 

estimated IRF outlier payments from the 

update to the outlier threshold amount. 

Since we are making the updates to the 

IRF wage index and the CMG relative 

weights in a budget-neutral manner, 

they will not affect total estimated IRF 

payments in the aggregate. However, as 

described in more detail in each section, 

they will affect the estimated 

distribution of payments among 

providers. 

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TABLE 7—IRF IMPACT TABLE FOR FY 2013 

[Columns 4–8 in %] 

Facility classification Number of 

IRFs 

Number of 

cases Outlier 

Adjusted 

market basket 

increase 

factor for 

FY 2013 1

FY 2013 

CBSA wage 

index and 

labor-share 

CMG 

Total 

percent 

change 

(1) (2) (3) (4) (5) (6) (7) (8) 

Total ............................. 1,139 377,040 0.2 1.9 0.0 0.0 2.1 

Urban unit .................... 739 182,873 0.2 1.9 ¥0.1 0.1 2.2 

Rural unit ...................... 169 27,487 0.2 1.9 ¥0.1 0.2 2.3 

Urban hospital .............. 211 160,712 0.1 1.9 0.1 ¥0.2 1.9 

Rural hospital ............... 20 5,968 0.1 1.9 ¥0.1 ¥0.1 1.7 

Urban For-Profit ........... 324 150,510 0.1 1.9 0.1 ¥0.1 1.9 

Rural For-Profit ............ 59 10,972 0.2 1.9 ¥0.3 0.1 1.8 

Urban Non-Profit .......... 579 180,668 0.2 1.9 0.0 0.1 2.1 

Rural Non-Profit ........... 118 20,321 0.2 1.9 0.0 0.2 2.3 

Urban Government ...... 47 12,407 0.3 1.9 ¥0.2 0.0 1.9 

Rural Government ........ 12 2,162 0.2 1.9 0.3 0.4 2.8 

Urban ........................... 950 343,585 0.2 1.9 0.0 0.0 2.0 

Rural ............................. 189 33,455 0.2 1.9 ¥0.1 0.2 2.2 

Urban by region 2

Urban New England ..... 32 15,790 0.1 1.9 0.2 ¥0.1 2.2 

Urban Middle Atlantic ... 142 58,285 0.1 1.9 0.1 0.1 2.2 

Urban South Atlantic .... 132 62,379 0.1 1.9 ¥0.1 ¥0.1 1.8 

Urban East North Central ............................. 184 53,412 0.2 1.9 ¥0.3 0.0 1.7 

Urban East South Central ............................. 50 24,111 0.1 1.9 ¥0.4 ¥0.1 1.5 

Urban West North Central ............................. 72 17,926 0.2 1.9 ¥0.1 0.1 2.1 

Urban West South Central ............................. 170 65,263 0.1 1.9 0.5 0.1 2.6 

Urban Mountain ........... 68 22,572 0.2 1.9 0.0 ¥0.1 2.0 

Urban Pacific ................ 100 23,847 0.3 1.9 0.1 0.0 2.2 

Rural by region 2

Rural New England ...... 6 1,279 0.3 1.9 0.9 0.1 3.2 

Rural Middle Atlantic .... 15 2,807 0.1 1.9 ¥0.2 0.1 1.9 

Rural South Atlantic ..... 23 5,699 0.1 1.9 ¥0.7 0.0 1.4 

Rural East North Central ............................. 31 5,498 0.1 1.9 ¥0.3 0.2 1.9 

Rural East South Central ............................. 23 3,944 0.1 1.9 ¥0.5 0.2 1.7 

Rural West North Central ............................. 29 3,857 0.3 1.9 0.5 0.3 3.0 

Rural West South Central ............................. 50 9,336 0.2 1.9 0.2 0.2 2.5 

Rural Mountain ............. 8 656 0.3 1.9 0.3 0.5 3.1 

Rural Pacific ................. 4 379 0.6 1.9 0.3 0.1 2.9 

Teaching Status 

Non-teaching ................ 1,024 330,504 0.1 1.9 0.0 0.0 2.1 

Resident to ADC less 

than 10% .................. 64 30,956 0.2 1.9 ¥0.2 0.1 2.0 

Resident to ADC 10%– 

19% .......................... 39 13,961 0.2 1.9 0.2 ¥0.1 2.3 

Resident to ADC greater than 19% .............. 12 1,619 0.2 1.9 0.2 0.2 2.5 

Disproportionate Share Patient Percentage (DSH PP) 

DSH PP = 0% .............. 49 13,420 0.1 1.9 0.2 0.0 2.3 

DSH PP less than 5% 175 51,699 0.2 1.9 0.0 0.1 2.1 

DSH PP 5%–10% ........ 347 129,038 0.1 1.9 0.0 0.0 2.0 

DSH PP 10%–20% ...... 339 121,832 0.2 1.9 ¥0.1 0.0 2.0 

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Federal Register / Vol. 77, No. 146 / Monday, July 30, 2012 / Notices 44635 

TABLE 7—IRF IMPACT TABLE FOR FY 2013—Continued 

[Columns 4–8 in %] 

Facility classification Number of 

IRFs 

Number of 

cases Outlier 

Adjusted 

market basket 

increase 

factor for 

FY 2013 1

FY 2013 

CBSA wage 

index and 

labor-share 

CMG 

Total 

percent 

change 

(1) (2) (3) (4) (5) (6) (7) (8) 

DSH PP greater than 

20% .......................... 229 61,051 0.2 1.9 0.0 ¥0.1 2.0 

1This column reflects the impact of the RPL market basket increase factor for FY 2013 of 1.9 percent, which includes a market basket update 

of 2.7 percent, a 0.1 percentage point reduction in accordance with sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(ii) of the Act and a 0.7 percent 

reduction for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act. 2A map of states that comprise the 9 geographic regions can be found at: http://www.census.gov/geo/www/us_regdiv.pdf. 

3. Impact of the Update to the Outlier 

Threshold Amount 

The outlier threshold adjustment is 

presented in column 4 of Table 7. In the 

FY 2012 IRF PPS final rule (76 FR 47867 

through 47868), we used FY 2010 IRF 

claims data (the best, most complete 

data available at that time) to set the 

outlier threshold amount for FY 2012 so 

that estimated outlier payments would 

equal 3 percent of total estimated 

payments for FY 2012. 

For this notice, we are updating our 

analysis using FY 2011 IRF claims data 

and, based on this updated analysis, we 

estimate that IRF outlier payments as a 

percentage of total estimated IRF 

payments are 2.8 percent in FY 2012. 

Thus, we are adjusting the outlier 

threshold amount in this notice to set 

total estimated outlier payments equal 

to 3 percent of total estimated payments 

in FY 2013. The estimated change in 

total IRF payments for FY 2013, 

therefore, includes an approximate 0.2 

percent increase in payments because 

the estimated outlier portion of total 

payments is estimated to increase from 

approximately 2.8 percent to 3 percent. 

The impact of this outlier adjustment 

update (as shown in column 4 of Table 

7) is to increase estimated overall 

payments to IRFs by about 0.2 percent. 

We estimate the largest increase in 

payments from the update to the outlier 

threshold amount to be 0.6 percent for 

rural IRFs in the Pacific region. We do 

not estimate that any group of IRFs will 

experience a decrease in payments from 

this update. 

4. Impact of the Market Basket Update 

to the IRF PPS Payment Rates 

The adjusted market basket update to 

the IRF PPS payment rates is presented 

in column 5 of Table 7. In the aggregate 

the update would result in a net 1.9 

percent increase in overall estimated 

payments to IRFs. This net increase 

reflects the estimated RPL market basket 

increase factor for FY 2013 of 2.7 

percent, reduced by the 0.1 percentage 

point in accordance with sections 

1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(ii) 

of the Act, and further reduced by a 0.7 

percent productivity adjustment as 

required by section 1886(j)(3)(C)(ii)(I) of 

the Act. 

5. Impact of the CBSA Wage Index 

and Labor-Related Share 

In column 6 of Table 7, we present the 

effects of the budget neutral update of 

the wage index and labor-related share. 

The changes to the wage index and the 

labor-related share are discussed 

together because the wage index is 

applied to the labor-related share 

portion of payments, so the changes in 

the two have a combined effect on 

payments to providers. As discussed in 

section V.B of this notice, the laborrelated share decreased from 70.199 

percent in FY 2012 to 69.981 percent in 

FY 2013. 

In the aggregate, since these updates 

to the wage index and the labor-related 

share are applied in a budget-neutral 

manner as required under section 

1886(j)(6) of the Act, we do not estimate 

that these updates will affect overall 

estimated payments to IRFs. However, 

we estimate that these updates will have 

small distributional effects. For 

example, we estimate the largest 

increase in payments from the update to 

the CBSA wage index and labor-related 

share of 0.9 percent for rural IRFs in the 

New England region. We estimate the 

largest decrease in payments from the 

update to the CBSA wage index and 

labor-related share to be a 0.7 percent 

decrease for rural IRFs in the South 

Atlantic region. 

6. Impact of the Update to the CMG 

Relative Weights and Average Length of 

Stay Values 

In column 7 of Table 7, we present the 

effects of the budget neutral update of 

the CMG relative weights and average 

length of stay values. In the aggregate 

we do not estimate that these updates 

will affect overall estimated payments to 

IRFs. However, we estimate that these 

updates will have small distributional 

effects. The largest estimated decrease 

in payments as a result of these updates 

is a 0.2 percent decrease to urban 

freestanding IRFs. The largest estimated 

increase in payments as a result of these 

updates is a 0.5 percent increase to rural 

IRFs in the Mountain region. 

D. Alternatives Considered 

As stated in section 1X. B of this 

notice, the notice results in a positive 

economic impact on IRFs. The overall 

impact on all IRFs is an estimated 

increase in FY 2013 payments of 2.1 

percent, relative to FY 2012, with three 

categories of IRFs (6 rural IRFs in the 

New England region, 29 rural IRFs in 

the West North Central region, and 8 

rural IRFs in the Mountain region) 

estimated to receive an increase in 

estimated payments of 3 percent or 

more (3.2 percent, 3.0 percent, 3.1 

percent, respectively). The following is 

a discussion of the alternatives 

considered to the IRF PPS updates 

contained in this notice. 

Section 1886(j)(3)(C) of the Act 

requires the Secretary to update the IRF 

PPS payment rates by an increase factor 

that reflects changes over time in the 

prices of an appropriate mix of goods 

and services included in the covered 

IRF services. Thus, we did not consider 

alternatives to updating payments using 

the estimated RPL market basket 

increase factor for FY 2013. However, as 

noted previously in this notice, section 

1886(j)(3)(C)(ii)(I) requires the Secretary 

to apply a productivity adjustment to 

the market basket increase factor for FY 

2013 and sections 1886(j)(3)(C)(ii)(II) 

and 1886(j)(3)(D)(ii) of the Act require 

the Secretary to apply a 0.1 percentage 

point reduction to the market basket 

increase factor for FY 2013. Thus, in 

accordance with section 1886(j)(3)(C) of 

the Act, we are updating IRF Federal 

prospective payments in this notice by 

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44636 Federal Register / Vol. 77, No. 146 / Monday, July 30, 2012 / Notices 

1.9 percent (which equals the 2.7 

percent estimated RPL market basket 

increase factor for FY 2013 reduced by 

0.1 percentage points, and further 

reduced by a 0.7 percent productivity 

adjustment as required by section 

1886(j)(3)(C)(ii)(I) of the Act). 

We considered maintaining the 

existing CMG relative weights and 

average length of stay values for FY 

2013. However, in light of recently 

available data and our desire to ensure 

that the CMG relative weights and 

average length of stay values are as 

reflective as possible of recent changes 

in IRF utilization and case mix, we 

believe that it is appropriate to update 

the CMG relative weights and average 

length of stay values at this time to 

ensure that IRF PPS payments continue 

to reflect as accurately as possible the 

current costs of care in IRFs. 

We considered maintaining the 

existing outlier threshold amount for FY 

2013. However, analysis of updated FY 

2011 data indicates that estimated 

outlier payments would be lower than 3 

percent of total estimated payments for 

FY 2012, by approximately 0.2 percent, 

unless we updated the outlier threshold 

amount. Consequently, we are adjusting 

the outlier threshold amount in this 

notice to reflect a 0.2 percent increase 

thereby setting the total outlier 

payments equal to 3 percent, instead of 

2.8 percent, of aggregate estimated 

payments in FY 2013. 

E. Accounting Statement 

As required by OMB Circular A–4 

(available at http://www.whitehouse.

gov/sites/default/files/omb/assets/omb/

circulars/a004/a-4.pdf), in Table 8 

below, we have prepared an accounting 

statement showing the classification of 

the expenditures associated with the 

provisions of this notice. This table 

provides our best estimate of the 

increase in Medicare payments under 

the IRF PPS as a result of the updates 

presented in this notice based on the 

data for 1,139 IRFs in our database. 

TABLE 8—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES, FROM THE 2012 IRF PPS FISCAL

YEAR TO THE 2013 IRF PPS FISCAL YEAR

Category Transfers 

Annualized Monetized Transfers .............................................................. $140 million. 

From Whom to Whom? ............................................................................ Federal Government to IRF Medicare Providers. 

F. Conclusion 

Overall, the estimated payments per 

discharge for IRFs in FY 2013 are 

projected to increase by 2.1 percent, 

compared with the estimated payments 

in FY 2012, as reflected in column 8 of 

Table 7. IRF payments per discharge are 

estimated to increase 2.0 percent in 

urban areas and 2.2 percent in rural 

areas, compared with estimated FY 2012 

payments. Payments per discharge to 

rehabilitation units are estimated to 

increase 2.2 percent in urban areas and 

2.3 percent in rural areas. Payments per 

discharge to freestanding rehabilitation 

hospitals are estimated to increase 1.9 

percent in urban areas and 1.7 percent 

in rural areas. 

Overall, no IRFs are estimated to 

experience a net decrease in payments 

as a result of the updates in this notice. 

The largest payment increase is 

estimated to be a 3.2 percent increase 

for rural IRFs located in the New 

England region. This is due to the larger 

than average positive effect of the FY 

2013 CBSA wage index and laborrelated share updates for rural IRFs in 

this region. 

In accordance with the provisions of 

Executive Order 12866, this notice was 

reviewed by the Office of Management 

and Budget. 

Authority: (Catalog of Federal Domestic 

Assistance Program No. 93.773, Medicare— 

Hospital Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program). 

Dated: May 10, 2012. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: July 16, 2012. 

Kathleen Sebelius, 

Secretary. 

[FR Doc. 2012–18433 Filed 7–25–12; 4:15 pm] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Food and Drug Administration 

[Docket No. FDA–2012–D–0049] 

Agency Information Collection 

Activities; Submission for Office of 

Management and Budget Review; 

Comment Request; Reporting Harmful 

and Potentially Harmful Constituents 

in Tobacco Products and Tobacco 

Smoke Under the Federal Food, Drug, 

and Cosmetic Act 

AGENCY: Food and Drug Administration, 

HHS. 

ACTION: Notice. 

SUMMARY: The Food and Drug 

Administration (FDA) is announcing 

that a proposed collection of 

information has been submitted to the 

Office of Management and Budget 

(OMB) for review and clearance under 

Paperwork Reduction Act of 1995. 

DATES: Fax written comments on the 

collection of information by August 29, 

2012. 

ADDRESSES: To ensure that comments on 

the information collection are received, 

OMB recommends that written 

comments be faxed to the Office of 

Information and Regulatory Affairs, 

OMB, Attn: FDA Desk Officer, FAX: 

202–395–7285, or emailed to 

oira_submission@omb.eop.gov. All 

comments should be identified with the 

OMB control number 0910–NEW and 

title ‘‘Reporting Harmful and Potentially 

Harmful Constituents in Tobacco 

Products and Tobacco Smoke Under the 

Federal Food, Drug, and Cosmetic Act.’’ 

Also include the FDA docket number 

found in brackets in the heading of this 

document. 

FOR FURTHER INFORMATION CONTACT: 

Daniel Gittleson, Office of Information 

Management, Food and Drug 

Administration, 1350 Piccard Dr., PI50– 

400B, Rockville, MD 20850, 301–796– 

5156, Daniel.Gittleson@fda.hhs.gov. 

SUPPLEMENTARY INFORMATION: In 

compliance with 44 U.S.C. 3507, FDA 

has submitted the following proposed 

collection of information to OMB for 

review and clearance. 

Reporting Harmful and Potentially 

Harmful Constituents in Tobacco 

Products and Tobacco Smoke Under 

the Federal Food, Drug, and Cosmetic 

Act—(OMB Control Number 0910– 

NEW) 

On June 22, 2009, the President 

signed the Family Smoking Prevention 

and Tobacco Control Act (Public Law 

111–31) into law. This law amends the 

Federal Food, Drug, and Cosmetic Act 

(FD&C Act) and grants FDA authority to 

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