Federal Register / Vol. 78, No. 45 / Thursday, March 7, 2013 / Rules and Regulations 14689 

§ 52.930 Control strategy: Ozone. 

* * * * * 

(l) Disapproval. EPA is disapproving 

in part, the Commonwealth of 

Kentucky’s Infrastructure SIP for the 

2008 8-hour Ozone National Ambient 

Air Quality Standards addressing 

section 110(a)(2)(D)(i)(I) concerning 

interstate transport requirements, 

submitted July 17, 2012. 

[FR Doc. 2013–05352 Filed 3–6–13; 8:45 am] 

BILLING CODE 6560–50–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 412 

[CMS–1588–N] 

RIN 0938–AR12 

Medicare Program; Extension of the 

Payment Adjustment for Low-volume 

Hospitals and the Medicare-dependent 

Hospital (MDH) Program Under the 

Hospital Inpatient Prospective 

Payment Systems (IPPS) for Acute 

Care Hospitals for Fiscal Year 2013 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Notice of extension. 

SUMMARY: This notice announces 

changes to the payment adjustment for 

low-volume hospitals and to the 

Medicare-dependent hospital (MDH) 

program under the hospital inpatient 

prospective payment systems (IPPS) for 

FY 2013 in accordance with sections 

605 and 606, respectively, of the 

American Taxpayer Relief Act of 2012. 

DATES: Effective date: March 4, 2013. 

Applicability dates: The provisions 

described in this notice are applicable 

for discharges on or after October 1, 

2012 and on or before September 30, 

2013. 

FOR FURTHER INFORMATION CONTACT: 

Michele Hudson, (410) 786–5490. 

Maria Navarro, (410) 786–4553. 

Shevi Marciano, (410) 786–2874. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On January 2, 2013, the American 

Taxpayer Relief Act of 2012 (ATRA) 

(Pub. L. 112–240) was enacted. Section 

605 of the ATRA extends changes to the 

payment adjustment for low-volume 

hospitals for an additional year, through 

fiscal year (FY) 2013. Section 606 of the 

ATRA extends the Medicare-dependent 

hospital (MDH) program for an 

additional year, through FY 2013. 

II. Provisions of the Notice 

A. Extension of the Payment Adjustment 

for Low-Volume Hospitals 

1. Background 

Section 1886(d)(12) of the Social 

Security Act (the Act) provides for an 

additional payment to each qualifying 

low-volume hospital under the hospital 

inpatient prospective payment systems 

(IPPS) beginning in FY 2005. Sections 

3125 and 10314 of the Affordable Care 

Act provided for a temporary change in 

the low-volume hospital payment policy 

for FYs 2011 and 2012. Prior to the 

enactment of the ATRA, beginning with 

FY 2013, the low-volume hospital 

qualifying criteria and payment 

adjustment returned to the statutory 

requirements under section 1886(d)(12) 

of the Act that were in effect prior to the 

amendments made by the Affordable 

Care Act. (For additional information on 

the expiration of the provisions of the 

Affordable Care Act that amended the 

low-volume hospital adjustment at 

section 1886(d)(12) of the Act, we refer 

readers to the FY 2013 IPPS/LTCH PPS 

final rule (77 FR 53406 through 53408).) 

The regulations describing the payment 

adjustment for low-volume hospitals are 

at 42 CFR 412.101. 

2. Low-Volume Hospital Payment 

Adjustment for FYs 2011 and 2012 

For FYs 2011 and 2012, sections 3125 

and 10314 of the Affordable Care Act 

expanded the definition of low-volume 

hospital and modified the methodology 

for determining the payment adjustment 

for hospitals meeting that definition. 

Specifically, the provisions of the 

Affordable Care Act amended the 

qualifying criteria for low-volume 

hospitals under section 1886(d)(12)(C)(i) 

of the Act to specify that, for FYs 2011 

and 2012, a hospital qualifies as a lowvolume hospital if it is more than 15 

road miles from another subsection (d) 

hospital and has less than 1,600 

discharges of individuals entitled to, or 

enrolled for, benefits under Part A 

during the fiscal year. In addition, 

section 1886(d)(12)(D) of the Act, as 

added by the Affordable Care Act, 

provides that the low-volume hospital 

payment adjustment (that is, the 

percentage increase) is to be determined 

‘‘using a continuous linear sliding scale 

ranging from 25 percent for low-volume 

hospitals with 200 or fewer discharges 

of individuals entitled to, or enrolled 

for, benefits under Part A in the fiscal 

year to zero percent for low-volume 

hospitals with greater than 1,600 

discharges of such individuals in the 

fiscal year.’’ 

We revised the regulations at 42 CFR 

412.101 to reflect the changes to the 

qualifying criteria and the payment 

adjustment for low-volume hospitals 

according to the provisions of the 

Affordable Care Act in the FY 2011 

IPPS/LTCH PPS final rule (75 FR 50238 

through 50275 and 50414). In addition, 

we also defined, at § 412.101(a), the 

term ‘‘road miles’’ to mean ‘‘miles’’ as 

defined at § 412.92(c)(1), and clarified 

the existing regulations to indicate that 

a hospital must continue to qualify as a 

low-volume hospital in order to receive 

the payment adjustment in that year 

(that is, it is not based on a one-time 

qualification). Furthermore, in that same 

final rule, we discussed the process for 

requesting and obtaining the lowvolume hospital payment adjustment for 

FY 2011 (75 FR 50240). For the second 

year of the changes to the low-volume 

hospital adjustment provided for by the 

provisions of the Affordable Care Act 

(that is, FY 2012), consistent with the 

regulations at § 412.101(b)(2)(ii), we 

updated the discharge data source used 

to identify qualifying low-volume 

hospitals and calculate the payment 

adjustment (percentage increase) in the 

FY 2012 IPPS/LTCH PPS final rule (76 

FR 51677 through 51680). Under 

§ 412.101(b)(2)(ii), for FYs 2011 and 

2012, a hospital’s Medicare discharges 

from the most recently available 

MedPAR data, as determined by CMS, 

are used to determine if the hospital 

meets the discharge criteria to receive 

the low-volume payment adjustment in 

the current year. In that same final rule, 

we established that, for FY 2012, 

qualifying low-volume hospitals and 

their payment adjustment are 

determined using Medicare discharge 

data from the March 2011 update of the 

FY 2010 MedPAR file, as these data 

were the most recent data available at 

that time. In addition, we noted that 

eligibility for the low-volume payment 

adjustment for FY 2012 was also 

dependent upon meeting (if the hospital 

was qualifying for the low-volume 

payment adjustment for the first time in 

FY 2012), or continuing to meet (if the 

hospital qualified in FY 2011) the 

mileage criteria specified at 

§ 412.101(b)(2)(ii). Furthermore, we 

established a procedure for a hospital to 

request low-volume hospital status for 

FY 2012 (which was consistent with the 

process we employed for the lowvolume hospital payment adjustment for 

FY 2011). 


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14690 Federal Register / Vol. 78, No. 45 / Thursday, March 7, 2013 / Rules and Regulations 

3. Implementation of the Extension of 

the Low-Volume Hospital Payment 

Adjustment for FY 2013 

Section 605 of the ATRA extends, for 

FY 2013, the temporary changes in the 

low-volume hospital payment policy 

provided for in FYs 2011 and 2012 by 

the Affordable Care Act. As noted 

previously, prior to the enactment of 

section 605 of the ATRA, beginning 

with FY 2013, the low-volume hospital 

definition and payment adjustment 

methodology returned to the policy 

established under statutory 

requirements that were in effect prior to 

the amendments made by the Affordable 

Care Act. Specifically, section 605 of the 

ATRA extends the changes made by the 

Affordable Care Act by amending 

section 1886(d)(12)(B) of the Act by 

striking ‘‘2013’’ and inserting ‘‘2014’’ 

and by amending sections 

1886(d)(12)(C)(i) and (D) of the Act by 

striking ‘‘and 2012’’ and inserting ‘‘, 

2012, and 2013’’. 

Prior to the enactment of the ATRA, 

in the FY 2013 IPPS/LTCH PPS final 

rule (77 FR 53406 through 53409), we 

discussed the low-volume hospital 

payment adjustment for FY 2013 and 

subsequent fiscal years. Specifically, we 

discussed that in accordance with 

section 1886(d)(12) of the Act, 

beginning with FY 2013, the lowvolume hospital definition and payment 

adjustment methodology reverted back 

to the statutory requirements that were 

in effect prior to the amendments made 

by the Affordable Care Act. Therefore, 

we explained, as specified under the 

existing regulations at § 412.101, 

effective for FY 2013 and subsequent 

years, in order to qualify as a lowvolume hospital, a subsection (d) 

hospital must be more than 25 road 

miles from another subsection (d) 

hospital and have less than 200 

discharges (that is, less than 200 total 

discharges, including both Medicare 

and non-Medicare discharges) during 

the fiscal year. We also established a 

procedure for hospitals to request lowvolume hospital status for FY 2013 

(which was consistent with our 

previously established procedures for 

FYs 2011 and 2012). 

To implement the extension of the 

temporary change in the low-volume 

hospital payment policy for FY 2013 

provided for by the ATRA, in 

accordance with the existing regulations 

at § 412.101(b)(2)(ii) and consistent with 

our implementation of the changes in 

FYs 2011 and 2012, we are updating the 

discharge data source used to identify 

qualifying low-volume hospitals and 

calculate the payment adjustment 

(percentage increase) for FY 2013. As 

noted previously, under 

§ 412.101(b)(2)(ii), for FYs 2011 and FY 

2012, a hospital’s Medicare discharges 

from the most recently available 

MedPAR data, as determined by us, are 

used to determine if the hospital meets 

the discharge criteria to receive the lowvolume payment adjustment in the 

current year. The applicable lowvolume percentage increase provided 

for by the provisions of the Affordable 

Care Act is determined using a 

continuous linear sliding scale equation 

that results in a low-volume adjustment 

ranging from an additional 25 percent 

for hospitals with 200 or fewer Medicare 

discharges to a zero percent additional 

payment adjustment for hospitals with 

1,600 or more Medicare discharges. 

For FY 2013, consistent with our 

historical policy, qualifying low-volume 

hospitals and their payment adjustment 

will be determined using Medicare 

discharge data from the March 2012 

update of the FY 2011 MedPAR file, as 

these data were the most recent data 

available at the time of the development 

of the FY 2013 payment rates and 

factors established in the FY 2013 IPPS/ 

LTCH PPS final rule. Table 14 of this 

notice (which is available only through 

the Internet on the CMS Web site at 

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

AcuteInpatientPPS/01_overview.asp) 

lists the ‘‘subsection (d)’’ hospitals with 

fewer than 1,600 Medicare discharges 

based on the March 2012 update of the 

FY 2011 MedPAR files and their FY 

2013 low-volume payment adjustment 

(if eligible). Eligibility for the lowvolume hospital payment adjustment for 

FY 2013 is also dependent upon 

meeting (in the case of a hospital that 

did not qualify for the low-volume 

hospital payment adjustment in FY 

2012) or continuing to meet (in the case 

of a hospital that did qualify for the lowvolume hospital payment adjustment in 

FY 2012) the mileage criterion specified 

at § 412.101(b)(2)(ii). We note that the 

list of hospitals with fewer than 1,600 

Medicare discharges in Table 14 does 

not reflect whether or not the hospital 

meets the mileage criterion, and a 

hospital also must be located more than 

15 road miles from any other IPPS 

hospital in order to qualify for a lowvolume hospital payment adjustment in 

FY 2013. 

In order to receive a low-volume 

hospital payment adjustment under 

§ 412.101, in accordance with our 

previously established procedure, a 

hospital must notify and provide 

documentation to its fiscal intermediary 

or Medicare Administrative Contractor 

(MAC) that it meets the mileage 

criterion. The use of a Web-based 

mapping tool, such as MapQuest, as part 

of documenting that the hospital meets 

the mileage criterion for low-volume 

hospitals, is acceptable. The fiscal 

intermediary or MAC will determine if 

the information submitted by the 

hospital, such as the name and street 

address of the nearest hospitals, location 

on a map, and distance (in road miles, 

as defined in the regulations at 

§ 412.101(a)) from the hospital 

requesting low-volume hospital status, 

is sufficient to document that it meets 

the mileage criterion. The fiscal 

intermediary or MAC may follow up 

with the hospital to obtain additional 

necessary information to determine 

whether or not the hospital meets the 

low-volume mileage criterion. In 

addition, the fiscal intermediary or 

MAC will refer to the hospital’s 

Medicare discharge data determined by 

CMS to determine whether or not the 

hospital meets the discharge criterion, 

and the amount of the FY 2013 payment 

adjustment, once it is determined that 

the mileage criterion has been met. The 

Medicare discharge data shown in Table 

14, as well as the Medicare discharge 

data for all ‘‘subsection (d)’’ hospitals 

with claims in the March 2012 update 

of the FY 2011 MedPAR file, is also 

available on the CMS Web site for 

hospitals to view their Medicare 

discharges to help hospitals to decide 

whether or not to apply for low-volume 

hospital status. 

Consistent with our previously 

established procedure, we are 

implementing the following procedure 

for a hospital to request low-volume 

hospital status for FY 2013. In order for 

the applicable low-volume percentage 

increase to be applied to payments for 

its discharges beginning on or after 

October 1, 2012 (that is, the beginning 

of FY 2013), a hospital must make its 

request for low-volume hospital status 

in writing to its fiscal intermediary or 

MAC by March 22, 2013. A hospital that 

qualified for the low-volume payment 

adjustment in FY 2012 may continue to 

receive a low-volume payment 

adjustment in FY 2013 without 

reapplying, if it continues to meet the 

Medicare discharge criterion, based on 

the March 2012 update of the FY 2011 

MedPAR data (shown in Table 14) and 

the distance criterion; however, the 

hospital must verify in writing to its 

fiscal intermediary or MAC no later than 

March 22, 2013, that it continues to be 

more than 15 miles from any other 

‘‘subsection (d)’’ hospital. Furthermore, 

for requests for low-volume hospital 

status for FY 2013 received after March 

22, 2013, if the hospital meets the 

criteria to qualify as a low-volume 

hospital, the fiscal intermediary or MAC 


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Federal Register / Vol. 78, No. 45 / Thursday, March 7, 2013 / Rules and Regulations 14691 

will apply the applicable low-volume 

adjustment in determining payments to 

the hospital’s FY 2013 discharges 

prospectively effective within 30 days of 

the date of the fiscal intermediary’s or 

MAC’s low-volume status 

determination. (As noted previously, 

this procedure is similar to the policy 

we established for a hospital to request 

low-volume hospital status for FYs 2011 

and 2012 in the FY 2011 IPPS/LTCH 

PPS final rule (75 FR 20574 through 

20575) and FY 2012 IPPS/LTCH PPS 

final rule (76 FR 51680), respectively.) 

Program guidance on the systems 

implementation of these provisions, 

including changes to PRICER software 

used to make payments, will be 

announced in an upcoming transmittal. 

We intend to make conforming changes 

to the regulations text at 42 CFR 412.101 

to reflect the changes to the qualifying 

criteria and the payment adjustment for 

low-volume hospitals according to the 

amendments made by section 605 of the 

ATRA in future rulemaking. 

B. Extension of the MedicareDependent, Small Rural Hospital (MDH) 

Program 

Section 606 of the ATRA provides for 

a 1-year extension of the Medicaredependent, small rural hospital (MDH) 

program effective from October 1, 2012 

to September 30, 2013. Specifically, 

section 606 of the ATRA of 2012 

amended sections 1886(d)(5)(G)(i) and 

1886(d)(5)(G)(ii)(II) of the Act by 

striking ‘‘October 1, 2012’’ and inserting 

‘‘October 1, 2013’’. Section 606 of the 

ATRA of 2012 also made conforming 

amendments to sections 1886(b)(3)(D)(i) 

and 1886(b)(3)(D)(iv) of the Act. 

Generally, as a result of the section 606 

extension, a provider that was classified 

as an MDH prior to the September 30, 

2012 expiration of the MDH program 

will be reinstated as an MDH effective 

October 1, 2012, with no need to 

reapply for MDH classification. 

Prior to the enactment of section 606 

of the ATRA, under section 3124 of the 

Affordable Care Act, the MDH program 

authorized by section 1886(d)(5)(G) of 

the Act was set to expire at the end of 

FY 2012. (For additional information on 

the MDH program and the payment 

methodology, we refer readers to the FY 

2012 IPPS/LTCH PPS final rule (76 FR 

51683 through 51684). 

In the FY 2011 IPPS/LTCH PPS final 

rule (75 FR 50287 and 50414), we 

amended the regulations at 

§ 412.108(a)(1) and (c)(2)(iii) to reflect 

the Affordable Care Act extension of the 

MDH program through FY 2012. We 

intend to amend the regulations at 

§ 412.108(a)(1) and (c)(2)(iii) to reflect 

the statutory extension of the MDH 

program through FY 2013 provided for 

by the provisions of the ATRA in future 

rulemaking. 

Since MDH status is now extended by 

statute through the end of FY 2013, 

generally, hospitals that previously 

qualified for MDH status will be 

reinstated as an MDH retroactively to 

October 1, 2012. However, in the 

following two situations, the effective 

date of MDH status may not be 

retroactive to October 1, 2012. 

1. MDHs That Classified as Sole 

Community Hospitals (SCHs) on or 

After October 1, 2012 

In anticipation of the September 30, 

2012 expiration of the MDH provision, 

we allowed MDHs that applied for 

reclassification as sole community 

hospitals (SCHs) by August 31, 2012, to 

have such status be effective on October 

1, 2012 under the regulations at 

§ 412.92(b)(2)(v). Hospitals that applied 

by the August 31, 2012 deadline and 

were approved for SCH classification 

received SCH status effective October 1, 

2012. Additionally, some hospitals that 

had MDH status as of the September 30, 

2012 expiration of the MDH program 

may have missed the August 31, 2012 

application deadline. These hospitals 

applied for SCH status in the usual 

manner instead and were approved for 

SCH status effective 30 days from the 

date of approval, resulting in an 

effective date later than October 1, 2012. 

These hospitals must reapply for MDH 

status under § 412.108(b). 

2. MDHs That Requested a Cancellation 

of Their Rural Classification Under 

§ 412.103(b) 

One of the criteria to be classified as 

an MDH is that the hospital must be 

located in a rural area. To qualify for 

MDH status, some MDHs reclassified 

from an urban to a rural hospital 

designation, under the regulations at 

§ 412.103(b). With the expiration of the 

MDH provision, some of these providers 

may have requested a cancellation of 

their rural classification. Therefore, in 

order to qualify for MDH status, these 

hospitals must request to be reclassified 

as rural under § 412.103(b) and must 

reapply for MDH status under 

§ 412.108(b). 

Any provider that falls within either 

of the two exceptions listed previously 

may not have its MDH status 

automatically reinstated effective 

October 1, 2012. That is, if a provider 

reclassified to SCH status or cancelled 

its rural status effective October 1, 2012, 

its MDH status will not be retroactive to 

October 1, 2012, but will instead be 

applied prospectively based on the date 

the hospital is notified that it again 

meets the requirements for MDH status 

in accordance with § 412.108(b)(4) after 

reapplying for MDH status. Once 

granted, this status will remain in effect 

through FY 2013, subject to the 

requirements at § 412.108. However, if a 

provider reclassified to SCH status or 

cancelled its rural status effective on a 

date later than October 1, 2012, MDH 

status will be reinstated effective from 

October 1, 2012 but will end on the date 

on which the provider changed its 

status to an SCH or cancelled its rural 

status. Those hospitals may also reapply 

for MDH status to be effective again 30 

days from the date the hospital is 

notified of the determination, in 

accordance with § 412.108(b)(4). Once 

granted, this status will remain in effect 

through FY 2013, subject to the 

requirements at § 412.108. Providers 

that fall within either of the two 

exceptions will have to reapply for 

MDH status according to the 

classification procedures in 42 CFR 

412.108(b). Specifically, the regulations 

at § 412.108(b) require the following: 

• The hospital submit a written 

request along with qualifying 

documentation to its contractor to be 

considered for MDH status. 

• The contractor make its 

determination and notify the hospital 

within 90 days from the date that it 

receives the request for MDH 

classification and all required 

documentation. 

• The determination of MDH status 

be effective 30 days after the date of the 

contractor’s written notification to the 

hospital. 

The following are examples of various 

scenarios that illustrate how and when 

MDH status will be determined for 

hospitals that were MDHs as of the 

September 30, 2012 expiration of the 

MDH program: 

Example 1: Hospital A was classified 

as an MDH prior to the September 30, 

2012 expiration of the MDH program. 

Hospital A retained its rural 

classification and did not reclassify as 

an SCH. Hospital A’s MDH status will 

be automatically reinstated to October 1, 

2012. 

Example 2: Hospital B was classified 

as an MDH prior to the September 30, 

2012 expiration of the MDH program. 

per the regulations at § 412.92(b)(2)(v) 

and in anticipation of the expiration of 

the MDH program, Hospital B applied 

for reclassification as an SCH by August 

31, 2012, and was approved for SCH 

status effective on October 1, 2012. 

Hospital B’s MDH status will not be 

automatically reinstated. In order to 

reclassify as an MDH, Hospital B must 

cancel its SCH status, in accordance 

with § 412.92(b)(4), and reapply for 


emcdonald on DSK67QTVN1PROD with RULES
14692 Federal Register / Vol. 78, No. 45 / Thursday, March 7, 2013 / Rules and Regulations 

MDH status under the regulations at 

§ 412.108(b). 

Example 3: Hospital C was classified 

as an MDH prior to the September 30, 

2012 expiration of the MDH program. 

Hospital C missed the application 

deadline of August 31, 2012 for 

reclassification as an SCH under the 

regulations at § 412.92(b)(2)(v) and was 

not eligible for its SCH status to be 

effective as of October 1, 2012. Hospitals 

C’s Medicare contractor approved its 

request for SCH status effective 

November 16, 2012. Hospital C’s MDH 

status will be reinstated effective 

October 1, 2012 through November 15, 

2012 and will subsequently be cancelled 

effective November 16, 2012. In order to 

reclassify as an MDH, Hospital C must 

cancel its SCH status, in accordance 

§ 412.92(b)(4), and reapply for MDH 

status under the regulations at 

§ 412.108(b). 

Example 4: Hospital D was classified 

as an MDH prior to the September 30, 

2012 expiration of the MDH program. In 

anticipation of the expiration of the 

MDH program, Hospital D requested 

that its rural classification be cancelled 

per the regulations at § 412.103(g). 

Hospital D’s rural classification was 

cancelled effective October 1, 2012. 

Hospital D’s MDH status will not be 

automatically reinstated. In order to 

reclassify as an MDH, Hospital D must 

request to be reclassified as rural under 

§ 412.103(b) and must reapply for MDH 

status under § 412.108(b). 

Example 5: Hospital E was classified 

as an MDH prior to the September 30, 

2012 expiration of the MDH program. In 

anticipation of the expiration of the 

MDH program, Hospital E requested that 

its rural classification be cancelled per 

the regulations at § 412.103(g). Hospital 

E’s rural classification was cancelled 

effective January 1, 2013. Hospital E’s 

MDH status will be reinstated but only 

for the period of time during which it 

met the criteria for MDH status. Since 

Hospital E cancelled its rural status and 

was classified as urban effective January 

1, 2013, MDH status will only be 

reinstated effective October 1, 2012 

through December 31, 2012 and will be 

cancelled effective January 1, 2013. In 

order to reclassify as an MDH, Hospital 

E must request to be reclassified as rural 

under § 412.103(b) and must reapply for 

MDH status under § 412.108(b). 

We note that hospitals that were 

MDHs as of the September 30, 2012 

expiration of the MDH program that 

have returned to urban status will first 

need to apply for rural status under 

§ 412.103(b), and hospitals that became 

SCHs will first need to request 

cancellation of SCH status under 

§ 412.92(b)(4). 

Finally, we note that hospitals 

continue to be bound by 

§ 412.108(b)(4)(i) through (iii) to report 

a change in the circumstances under 

which the status was approved. Thus, if 

a hospital’s MDH status has been 

extended and it no longer meets the 

requirements for MDH status, it is 

required under § 412.108(b)(4)(i) 

through (iii) to make such a report to its 

fiscal intermediary or MAC. 

Additionally, under the regulations at 

§ 412.108(b)(5), Medicare contractors are 

required to evaluate on an ongoing basis 

whether or not a hospital continues to 

qualify for MDH status. 

A provider affected by the MDH 

program extension will receive a notice 

from its Medicare contractor detailing 

its status in light of the MDH program 

extension. 

Program guidance on the systems 

implementation of these provisions, 

including changes to PRICER software 

used to make payments, will be 

announced in an upcoming transmittal. 

We intend to make the conforming 

changes to the regulations text at 42 CFR 

412.108 to reflect the changes made by 

section 606 of the ATRA in future 

rulemaking. 

III. Collection of Information 

Requirements 

This document does not impose 

information collection and 

recordkeeping requirements. 

Consequently, it need not be reviewed 

by the Office of Management and 

Budget under the authority of the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 35). 

IV. Waiver of Proposed Rulemaking 

and Delay of Effective Date 

We ordinarily publish a notice of 

proposed rulemaking in the Federal 

Register and invite public comment 

prior to a rule taking effect in 

accordance with section 553(b) of the 

Administrative Procedure Act (APA) 

and section 1871 of the Act. In addition, 

in accordance with section 553(d) of the 

APA and section 1871(e)(1)(B)(i) of the 

Act, we ordinarily provide a 30-day 

delay to a substantive rule’s effective 

date. For substantive rules that 

constitute major rules, in accordance 

with 5 U.S.C. 801, we ordinarily provide 

a 60-day delay in the effective date. 

None of the processes or effective date 

requirements apply, however, when the 

rule in question is interpretive, a general 

statement of policy, or a rule of agency 

organization, procedure or practice. 

They also do not apply when the 

Congress itself has created the rules that 

are to be applied, leaving no discretion 

or gaps for an agency to fill in through 

rulemaking. 

In addition, an agency may waive 

notice and comment rulemaking, as well 

as any delay in effective date, when the 

agency for good cause finds that notice 

and public comment on the rule as well 

the effective date delay are 

impracticable, unnecessary, or contrary 

to the public interest. In cases where an 

agency finds good cause, the agency 

must incorporate a statement of this 

finding and its reasons in the rule 

issued. 

The policies being publicized in this 

notice do not constitute agency 

rulemaking. Rather, the Congress, in the 

ATRA, has already required that the 

agency make these changes, and we are 

simply notifying the public of the 

extension of the changes to the payment 

adjustment for low-volume hospitals 

and the MDH program for an additional 

year effective October 1, 2012. As this 

notice merely informs the public of 

these extensions, it is not a rule and 

does not require any notice and 

comment rulemaking. To the extent any 

of the policies articulated in this notice 

constitute interpretations of the 

Congress’s requirements or procedures 

that will be used to implement the 

Congress’s directive; they are 

interpretive rules, general statements of 

policy, and rules of agency procedure or 

practice, which are not subject to notice 

and comment rulemaking or a delayed 

effective date. 

However, to the extent that notice and 

comment rulemaking or a delay in 

effective date or both would otherwise 

apply, we find good cause to waive such 

requirements. Specifically, we find it 

unnecessary to undertake notice and 

comment rulemaking in this instance as 

this notice does not propose to make 

any substantive changes to the policies 

or methodologies already in effect as a 

matter of law, but simply applies rate 

adjustments under the ATRA to these 

existing policies and methodologies. As 

the changes outlined in this notice have 

already taken effect, it would also be 

impracticable to undertake notice and 

comment rulemaking. For these reasons, 

we also find that a waiver of any delay 

in effective date, if it were otherwise 

applicable, is necessary to comply with 

the requirements of the ATRA. 

Therefore, we find good cause to waive 

notice and comment procedures as well 

as any delay in effective date, if such 

procedures or delays are required at all. 

V. Regulatory Impact Analysis 

A. Introduction 

We have examined the impacts of this 

notice as required by Executive Order 


emcdonald on DSK67QTVN1PROD with RULES
Federal Register / Vol. 78, No. 45 / Thursday, March 7, 2013 / Rules and Regulations 14693 

12866 on Regulatory Planning and 

Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (January 18, 

2011), the Regulatory Flexibility Act 

(RFA) (September 19, 1980, Pub. L. 96– 

354), section 1102(b) of the 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 regulatory actions with 

economically significant effects ($100 

million or more in any 1 year). Although 

we do not consider this notice to 

constitute a substantive rule or 

regulatory action, the changes 

announced in this notice are 

‘‘economically’’ significant, under 

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

and therefore we have prepared a RIA, 

that to the best of our ability, presents 

the costs and benefits of this notice. In 

accordance with Executive Order 12866, 

the notice has been reviewed by the 

Office of Management and Budget. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses, 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 

government jurisdictions. We estimate 

that most hospitals and most other 

providers and suppliers are small 

entities as that term is used in the RFA. 

The great majority of hospitals and most 

other health care providers and 

suppliers are small entities, either by 

being nonprofit organizations or by 

meeting the SBA definition of a small 

business (having revenues of less than 

$7.5 to $34.5 million in any 1 year). (For 

details on the latest standard for health 

care providers, we refer readers to page 

33 of the Table of Small Business Size 

Standards at the Small Business 

Administration’s Web site at http:// 

www.sba.gov/services/ 

contractingopportunities/ 

sizestandardstopics/tableofsize/ 

index.html.) For purposes of the RFA, 

all hospitals and other providers and 

suppliers are considered to be small 

entities. Individuals and States are not 

included in the definition of a small 

entity. We believe that this notice will 

have a significant impact on small 

entities. Because we acknowledge that 

many of the affected entities are small 

entities, the analysis discussed in this 

section would fulfill any requirement 

for a final regulatory flexibility analysis. 

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. With the exception of hospitals 

located in certain New England 

counties, for purposes of section 1102(b) 

of the Act, we now define a small rural 

hospital as a hospital that is located 

outside of an urban area and has fewer 

than 100 beds. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

(Pub. L. 104–4) also requires that 

agencies assess anticipated costs and 

benefits before issuing any rule whose 

mandates require spending in any 1 year 

of $100 million in 1995 dollars, updated 

annually for inflation. In 2012, that 

threshold is approximately $136 

million. This notice will not mandate 

any requirements for State, local, or 

tribal governments, nor will it affect 

private sector costs. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

This notice will not have a substantial 

effect on State and local governments. 

Although this notice merely reflects 

the implementation of two provisions of 

the ATRA and does not constitute a 

substantive rule, we nevertheless 

prepared this impact analysis in the 

interest of ensuring that the impacts of 

these changes are fully understood. The 

following analysis, in conjunction with 

the remainder of this document, 

demonstrates that this notice is 

consistent with the regulatory 

philosophy and principles identified in 

Executive Order 12866 and 13563, the 

RFA, and section 1102(b) of the Act. 

The notice will positively affect 

payments to a substantial number of 

small rural hospitals and providers, as 

well as other classes of hospitals and 

providers, and the effects on some 

hospitals and providers may be 

significant. The impact analysis, which 

discusses the effect on total payments to 

IPPS hospitals and providers, is 

presented in this section. 

B. Statement of Need 

This notice is necessary to update the 

IPPS final FY 2013 payment policies to 

reflect changes required by the 

implementation of two provisions of the 

ATRA. Section 605 of the ATRA 

extends the payment adjustment for 

low-volume hospitals through FY 2013. 

Section 606 of the ATRA extends the 

MDH program through FY 2013. As 

noted previously, program guidance on 

the systems implementation of these 

provisions, including changes to 

PRICER software used to make 

payments, will be announced in an 

upcoming transmittal. 

C. Overall Impact 

The FY 2013 IPPS/LTCH PPS final 

rule included an impact analysis for the 

changes to the IPPS included in that 

rule. This notice updates those impacts 

to the IPPS to reflect the changes made 

by sections 605 and 606 of the ATRA. 

Since these sections were not budget 

neutral, the overall estimates for 

hospitals have changed from our 

estimates that were published in the FY 

2013 IPPS/LTCH PPS final rule (77 FR 

53748). We estimate that the changes in 

the FY 2013 IPPS/LTCH PPS final rule, 

in conjunction with the changes 

included in this notice, will result in an 

approximate $2.54 billion increase in 

total payments to IPPS hospitals relative 

to FY 2012. In the FY 2013 IPPS/LTCH 

PPS final rule (77 FR 53748), we had 

projected that total payments to IPPS 

hospitals would increase by $2.04 

billion relative to FY 2012. However, 

since the changes in this notice will 

increase payments by an estimated $509 

million relative to what was projected in 

the FY 2013 IPPS/LTCH PPS final rule, 

these changes will result in a net 

increase of $2.54 billion in total 

payments to IPPS hospitals relative to 

FY 2012, as noted previously. 

D. Anticipated Effects 

The impact analysis reflects the 

change in estimated payments to IPPS 

hospitals in FY 2013 due to sections 605 

and 606 of the ATRA relative to 

estimated FY 2013 payments to IPPS 

hospitals published in the FY 2013 

IPPS/LTCH PPS final rule (77 FR 

53748). As described later in the 

regulatory impact analysis, FY 2013 

IPPS payments to hospitals affected by 

sections 605 and 606 of the ATRA are 

projected to increase by $509 million 

(relative to the FY 2013 payments 

estimated for these hospitals for the FY 


emcdonald on DSK67QTVN1PROD with RULES
14694 Federal Register / Vol. 78, No. 45 / Thursday, March 7, 2013 / Rules and Regulations 

2013 IPPS/LTCH PPS final rule). 

Furthermore, we project that, on the 

average, overall IPPS payments in FY 

2013 for all hospitals will increase by 

0.5 percent due to these provisions in 

the ATRA compared to the previous 

estimate of FY 2013 payments to all 

IPPS hospitals published in the FY 2013 

IPPS/LTCH PPS final rule. 

1. Effects of the Extension of the 

Payment Adjustment for Low-Volume 

Hospitals 

The extension, for FY 2013, of the 

temporary changes to the payment 

adjustment for low-volume hospitals 

(originally provided for by the 

Affordable Care Act for FYs 2011 and 

2012) as provided for under section 605 

of the ATRA is a non-budget neutral 

payment provision. The provisions of 

the Affordable Care Act expanded the 

definition of low-volume hospital and 

modified the methodology for 

determining the payment adjustment for 

hospitals meeting that definition for FYs 

2011 and 2012. Prior to the enactment 

of the ATRA, beginning with FY 2013, 

the low-volume hospital definition and 

payment adjustment methodology was 

to return to the statutory requirements 

that were in effect prior to the 

amendments made by the Affordable 

Care Act. With the additional year 

extension provided for by the ATRA, 

based on FY 2011 claims data (March 

2012 update of the MedPAR file), we 

estimate that approximately 600 

hospitals will now qualify as a lowvolume hospital for FY 2013. We project 

that these hospitals will experience an 

increase in payments of approximately 

$326 million compared to our previous 

estimates of payments to these hospitals 

for FY 2013 published in the FY 2013 

IPPS/LTCH PPS final rule. 

2. Effects of the Extension of the MDH 

Program 

The extension of the MDH program in 

FY 2013 as provided for under section 

606 of the ATRA is a non-budget neutral 

payment provision. Hospitals that 

qualify to be MDHs receive the higher 

of operating IPPS payments made under 

the Federal standardized amount or the 

payments made under the Federal 

standardized amount plus 75 percent of 

the difference between the Federal 

standardized amount and the hospitalspecific rate (a hospital-specific costbased rate). Because this provision is 

not budget neutral, we estimate that the 

extension of this payment provision will 

result in a 0.2 percent increase in 

payments overall. Prior to the extension 

of the MDH program, there were 213 

MDHs, of which 98 were estimated to be 

paid under the blended payment of the 

Federal standardized amount and 

hospital-specific rate in FY 2013. 

Because those 98 MDHs will now 

receive the blended payment (that is, 

the Federal standardized amount plus 

75 percent of the difference between the 

Federal standardized amount and the 

hospital-specific rate) in FY 2013, we 

estimate that those hospitals will 

experience an overall increase in 

payments of approximately $183 

million compared to our previous 

estimates of payments to these hospitals 

for FY 2013 published in the FY 2013 

IPPS/LTCH PPS final rule. 

E. Alternatives Considered 

This notice provides descriptions of 

the statutory provisions that are 

addressed and identifies policies for 

implementing these provisions. Due to 

the prescriptive nature of the statutory 

provisions, no alternatives were 

considered. 

F. Accounting Statement and Table 

As required by OMB Circular A–4 

(available at http://www.whitehousegov/ 

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

below, we have prepared an accounting 

statement showing the classification of 

expenditures associated with the 

provisions of this notice as they relate 

to acute care hospitals. This table 

provides our best estimate of the change 

in Medicare payments to providers as a 

result of the changes to the IPPS 

presented in this notice. All 

expenditures are classified as transfers 

from the Federal government to 

Medicare providers. As previously 

discussed, relative to what was 

projected in the FY 2013 IPPS/LTCH 

PPS final rule, the changes in this notice 

for implementing sections 605 and 606 

of the ATRA are projected to increase 

FY 2013 payments to IPPS hospitals by 

$509 million. 

TABLE I—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES UNDER THE IPPS FROM PUBLISHED

FY 2013 TO REVISED FY 2013 

Category Transfers 

Annualized Monetized Transfers .............................................................. $509 million 

From Whom to Whom .............................................................................. Federal Government to IPPS Medicare Providers 

Total ................................................................................................... $509 million 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: January 30, 2013. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: March 1, 2013. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2013–05263 Filed 3–4–13; 11:15 am] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Federal Emergency Management 

Agency 

44 CFR Part 64 

[Docket ID FEMA–2013–0002; Internal 

Agency Docket No. FEMA–8273] 

Suspension of Community Eligibility 

AGENCY: Federal Emergency 

Management Agency, DHS. 

ACTION: Final rule. 

SUMMARY: This rule identifies 

communities where the sale of flood 

insurance has been authorized under 

the National Flood Insurance Program 

(NFIP) that are scheduled for 

suspension on the effective dates listed 

within this rule because of 

noncompliance with the floodplain 

management requirements of the 

program. If the Federal Emergency 

Management Agency (FEMA) receives 

documentation that the community has 

adopted the required floodplain 

management measures prior to the 

effective suspension date given in this 

rule, the suspension will not occur and 

a notice of this will be provided by 

publication in the Federal Register on a 

subsequent date. Also, information 

identifying the current participation 

status of a community can be obtained 


emcdonald on DSK67QTVN1PROD with RULES