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[Federal Register Volume 78, Number 151 (Tuesday, August 6, 2013)]
[Rules and Regulations]
[Pages 47935-47978]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-18776]

[[Page 47935]]

Vol. 78

Tuesday,

No. 151

August 6, 2013

Part IV

Department of Health and Human Services

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 Centers for Medicare and Medicaid Services

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42 CFR Parts 413 and 424

 Medicare Program; Prospective Payment System and Consolidated Billing 
for Skilled Nursing Facilities for FY 2014; Rules

Federal Register / Vol. 78 , No. 151 / Tuesday, August 6, 2013 / 
Rules and Regulations

[[Page 47936]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 413 and 424

[CMS-1446-F]
RIN 0938-AR65

Medicare Program; Prospective Payment System and Consolidated 
Billing for Skilled Nursing Facilities for FY 2014

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule updates the payment rates used under the 
prospective payment system for skilled nursing facilities (SNFs) for 
fiscal year (FY) 2014. In addition, it revises and rebases the SNF 
market basket, revises and updates the labor related share, and makes 
certain technical and conforming revisions in the regulations text. 
This final rule also includes a policy for reporting the SNF market 
basket forecast error in certain limited circumstances and adds a new 
item to the Minimum Data Set (MDS), Version 3.0 for reporting the 
number of distinct therapy days. Finally, this final rule adopts a 
change to the diagnosis code used to determine which residents will 
receive the AIDS add-on payment, effective for services provided on or 
after the October 1, 2014 implementation date for conversion to ICD-10-
CM.

DATES: Effective Date: This final rule is effective on October 1, 2013.

FOR FURTHER INFORMATION CONTACT:
    Penny Gershman, (410) 786-6643, for information related to clinical 
issues.
    John Kane, (410) 786-0557, for information related to the 
development of the payment rates and case-mix indexes.
    Kia Sidbury, (410) 786-7816, for information related to the wage 
index.
    Bill Ullman, (410) 786-5667, for information related to level of 
care determinations, consolidated billing, and general information.

SUPPLEMENTARY INFORMATION: 

Availability of Certain Information Exclusively Through the Internet on 
the CMS Web site

    The Wage Index for Urban Areas Based on CBSA Labor Market Areas 
(Table A) and the Wage Index Based on CBSA Labor Market Areas for Rural 
Areas (Table B) are published in the Federal Register as an Addendum to 
the annual SNF PPS rulemaking (that is, the SNF PPS proposed and final 
rules or, when applicable, the current update notice). However, as of 
FY 2012, a number of other Medicare payment systems adopted an approach 
in which such tables are no longer published in the Federal Register in 
this manner, and instead are made available exclusively through the 
Internet; see, for example, the FY 2012 Hospital Inpatient PPS (IPPS) 
final rule (76 FR 51476). To be consistent with these other Medicare 
payment systems and streamline the published content to focus on policy 
discussion, we proposed to use a similar approach for the SNF PPS as 
well. We also proposed to revise the applicable regulations text at 
Sec.  413.345 to accommodate this approach, consistent with the wording 
of the corresponding statutory authority at section 1888(e)(4)(H)(iii) 
of the Social Security Act (the Act). We did not receive any comments 
on this proposal. Therefore, as discussed in greater detail in section 
V. of this final rule, we are finalizing this proposal and revising the 
applicable regulations text at Sec.  413.345 to accommodate this 
approach. Under this approach, effective October 1, 2013, the 
individual wage index values displayed in Tables A and B of this rule 
will no longer be published in the Federal Register as part of the 
annual SNF PPS rulemaking, and instead will be made available 
exclusively through the Internet on CMS's SNF PPS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html. Consistent with the provisions of section 
1888(e)(4)(H)(iii) of the Act, we will continue to publish in the 
Federal Register the specific ``factors to be applied in making the 
area wage adjustment'' (for example, the SNF prospective payment 
system's use of the hospital wage index exclusive of its occupational 
mix adjustment) as part of our annual SNF PPS rulemaking process, but 
that document will no longer include a listing of the individual wage 
index values themselves, which will instead be made available 
exclusively through the Internet on the CMS Web site.
    In addition, we note that in previous years, each rule or update 
notice issued under the annual SNF PPS rulemaking cycle has included a 
detailed reiteration of the various individual legislative provisions 
that have affected the SNF PPS over the years, a number of which 
represented temporary measures that have long since expired. That 
discussion, along with detailed background information on various other 
aspects of the SNF PPS, will henceforth be made available exclusively 
on the CMS Web site as well, at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html.
    To assist readers in referencing sections contained in this 
document, we are providing the following Table of Contents.

Table of Contents

I. Executive Summary
    A. Purpose
    B. Summary of Major Provisions
    C. Summary of Cost, Transfers, and Benefits
II. Background
    A. Statutory Basis and Scope
    B. Initial Transition
    C. Required Annual Rate Updates
III. Summary of the Provisions of the FY 2014 SNF PPS Proposed Rule
IV. Analysis of and Responses to Public Comments on the FY 2014 SNF 
PPS Proposed Rule
    A. General Comments on the FY 2014 SNF PPS Proposed Rule
    B. SNF PPS Rate Setting Methodology and FY 2014 Update
    1. Federal Base Rates
    2. SNF Market Basket Update
    a. Revising and Rebasing the SNF Market Basket Index
    i. Effect on the Labor-Related Share of Revising and Rebasing 
the SNF Market Basket Index
    3. Forecast Error Adjustment
    4. Multifactor Productivity Adjustment
    a. Incorporating the Multifactor Productivity Adjustment in the 
Market Basket Update
    5. Market Basket Update Factor for FY 2014
    6. Case-Mix Adjustment
    7. Wage Index Adjustment
    8. Adjusted Rate Computation Example
    C. Additional Aspects of the SNF PPS
    1. SNF Level of Care--Administrative Presumption
    2. Consolidated Billing
    3. Payment for SNF-Level Swing-Bed Services
    D. Other Issues
    1. Monitoring Impact of FY 2012 Policy Changes
    2. Ensuring Accuracy in Grouping to Rehabilitation RUG-IV 
Categories
    3. SNF Therapy Research Project
V. Provisions of the Final Rule; Regulations Text
VI. Collection of Information Requirements
VII. Economic Analyses
    A. Regulatory Impact Analysis
    1. Introduction
    2. Statement of Need
    3. Overall Impacts
    4. Detailed Economic Analysis
    5. Alternatives Considered
    6. Accounting Statement
    7. Conclusion
    B. Regulatory Flexibility Act Analysis
    C. Unfunded Mandates Reform Act Analysis
    D. Federalism Analysis

[[Page 47937]]

Regulations Text

Acronyms

    In addition, because of the many terms to which we refer by 
acronym in this final rule, we are listing these abbreviations and 
their corresponding terms in alphabetical order below:
AIDS Acquired Immune Deficiency Syndrome
ARD Assessment reference date
BBA Balanced Budget Act of 1997, Pub. L. 105-33
BBRA Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999, Pub. L. 106-113
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000, Pub. L. 106-554
CAH Critical access hospital
CBSA Core-based statistical area
CFR Code of Federal Regulations
CMI Case-mix index
CMS Centers for Medicare & Medicaid Services
COT Change of therapy
ECI Employment Cost Index
EOT End of therapy
EOT-R End of therapy-resumption
FQHC Federally qualified health center
FR Federal Register
FY Fiscal year
GAO Government Accountability Office
HCPCS Healthcare Common Procedure Coding System
HOMER Home office Medicare records
IGI IHS (Information Handling Services) Global Insight, Inc.
MDS Minimum data set
MFP Multifactor productivity
MMA Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003, Pub. L. 108-173
MSA Metropolitan statistical area
NAICS North American Industrial Classification System
NTA Non-Therapy Ancillary
OMB Office of Management and Budget
OMRA Other Medicare Required Assessment
PPS Prospective Payment System
RAI Resident assessment instrument
RAVEN Resident assessment validation entry
RFA Regulatory Flexibility Act, Pub. L. 96-354
RHC Rural health clinic
RIA Regulatory impact analysis
RUG-III Resource Utilization Groups, Version 3
RUG-IV Resource Utilization Groups, Version 4
RUG-53 Refined 53-Group RUG-III Case-Mix Classification System
SCHIP State Children's Health Insurance Program
SNF Skilled nursing facility
STM Staff time measurement
STRIVE Staff time and resource intensity verification
UMRA Unfunded Mandates Reform Act, Pub. L. 104-4

I. Executive Summary

A. Purpose

    This final rule updates the SNF prospective payment rates for FY 
2014 as required under section 1888(e)(4)(E) of the Act. It also 
responds to section 1888(e)(4)(H) of the Act, which requires the 
Secretary to ``provide for publication in the Federal Register'' before 
the August 1 that precedes the start of each fiscal year, the 
unadjusted federal per diem rates, the case-mix classification system, 
and the factors to be applied in making the area wage adjustment used 
in computing the prospective payment rates for that fiscal year.

B. Summary of Major Provisions

    In accordance with sections 1888(e)(4)(E)(ii)(IV) and 1888(e)(5) of 
the Act, the federal rates in this final rule reflect an update to the 
rates that we published in the SNF PPS update notice for FY 2013 (77 FR 
46214) which reflects the SNF market basket index, adjusted by the 
forecast error correction, if applicable, and the multifactor 
productivity adjustment for FY 2014.

C. Summary of Cost, Transfers, and Benefits

------------------------------------------------------------------------
    Provision description                   Total transfers
------------------------------------------------------------------------
FY 2014 SNF PPS payment rate   The economic impact of this final rule is
 update.                        an estimated increase of $470 million in
                                aggregate payments to SNFs during FY
                                2014.
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II. Background

A. Statutory Basis and Scope

    As amended by section 4432 of the Balanced Budget Act of 1997 (BBA, 
Pub. L. 105-33, enacted on August 5, 1997), section 1888(e) of the Act 
provides for the implementation of a PPS for Medicare payment for 
covered SNF services. This methodology uses prospective, case-mix 
adjusted per diem payment rates applicable to all covered SNF services 
defined in section 1888(e)(2)(A) of the Act. The SNF PPS is effective 
for cost reporting periods beginning on or after July 1, 1998, and 
covers all costs of furnishing covered SNF services (routine, 
ancillary, and capital-related costs) other than costs associated with 
approved educational activities and bad debts. Under section 
1888(e)(2)(A)(i) of the Act, covered SNF services include post-hospital 
extended care services for which benefits are provided under Part A, as 
well as those items and services (other than a certain limited number 
of excluded services described in clauses (ii), (iii), and (iv) of 
section 1888(e)(2)(A), such as physician services) for which payment 
may otherwise be made under Part B and which are furnished to Medicare 
beneficiaries who are residents in a SNF during a covered Part A stay. 
A comprehensive discussion of these provisions appears in the May 12, 
1998 interim final rule (63 FR 26252).

B. Initial Transition

    Under sections 1888(e)(1)(A) and 1888(e)(11) of the Act, the SNF 
PPS included an initial, three-phase transition that blended a 
facility-specific rate (reflecting the individual facility's historical 
cost experience) with the federal case-mix adjusted rate. The 
transition extended through the facility's first three cost reporting 
periods under the PPS, up to and including the one that began in FY 
2001. Thus, the SNF PPS is no longer operating under the transition, as 
all facilities have been paid at the full federal rate effective with 
cost reporting periods beginning in FY 2002. Currently, we base 
payments for SNFs entirely on the adjusted federal per diem rates, and 
we no longer include adjustment factors under the transition related to 
facility-specific rates for the upcoming FY.

C. Required Annual Rate Updates

    Section 1888(e)(4)(E) of the Act requires the SNF PPS payment rates 
to be updated annually. The most recent annual update occurred in an 
update notice that set forth updates to the SNF PPS payment rates for 
FY 2013 (77 FR 46214).
    Under this requirement, section 1888(e)(4)(H) of the Act specifies 
that we provide for publication annually in the Federal Register of the 
following:
     The unadjusted federal per diem rates to be applied to 
days of covered SNF services furnished during the upcoming FY.
     The case-mix classification system to be applied with 
respect to these services during the upcoming FY.
     The factors to be applied in making the area wage 
adjustment with respect to these services.
    Along with other revisions discussed later in this preamble, this 
final rule also provides the required annual

[[Page 47938]]

updates to the per diem payment rates for SNFs for FY 2014.

III. Summary of the Provisions of the FY 2014 SNF PPS Proposed Rule

    In the FY 2014 SNF PPS proposed rule (78 FR 26438), we proposed an 
update to the payment rates used under the PPS for SNFs for FY 2014. 
Additionally, we proposed to revise and rebase the SNF market basket, 
to use this revised and rebased SNF market basket to determine the SNF 
PPS update for FY 2014; to update and revise the labor related share; 
and to make certain technical and conforming revisions in the 
regulations text. The proposed rule also included a proposed policy for 
revising how we report the SNF market basket forecast error in certain 
limited circumstances. In addition, we proposed a new item to be 
included on the Minimum Data Set (MDS), Version 3.0. Finally, we 
proposed to transition to the ICD-10-CM diagnosis code B20 in order to 
identify those residents for whom it is appropriate to apply the AIDS 
add-on payment under section 511 of the MMA, effective upon the October 
1, 2014 implementation date for conversion to ICD-10-CM.

IV. Analysis of and Responses to Public Comments on the FY 2014 SNF PPS 
Proposed Rule

    In response to the publication of the FY 2014 SNF PPS proposed 
rule, we received 20 timely public comments from individual providers, 
corporations, government agencies, private citizens, trade 
associations, and major organizations. The following are brief 
summaries of each proposed provision, a summary of the public comments 
that we received related to that proposal, and our responses to the 
comments.

A. General Comments on the FY 2014 SNF PPS Proposed Rule

    In addition to the comments we received on the proposed rule's 
discussion of specific aspects of the SNF PPS (which we address later 
in this final rule), commenters also submitted the following, more 
general observations on the payment system. A discussion of these 
comments, along with our responses, appears below.
    Comment: We received a number of comments about the MDS. Commenters 
noted the complexity of the MDS 3.0, particularly with regard to 
several of the newer assessment types, the need to clarify the Resident 
Assessment Instrument (RAI) Manual, the manual update process, and the 
time required to become trained on the new MDS 3.0 requirements.
    Response: We appreciate these concerns and we recognize that the 
MDS 3.0 is a complex assessment tool. We provided extensive training 
and opportunities to assist with questions about the MDS 3.0 both prior 
to and after its October 1, 2010 implementation on audio conferences, 
at national training conferences, in the form of the RAI Manual and 
subsequent clarification updates, and postings to the MDS 3.0 and SNF 
PPS Web sites.
    We have also provided support in response to oral and written 
inquiries, and issued clarification during Open Door Forums, RAI Manual 
updates, and through online and telephone technical assistance. We are 
committed to continuing training on both the MDS 3.0 and RUG-IV 
systems. Additionally, as we receive provider input through these 
efforts, we will continue to update and clarify the RAI Manual to 
ensure that it continues to provide accurate information and guidance 
on CMS policies in a timely fashion.
    Comment: A few commenters raised the issue of Non-Therapy 
Ancillaries (NTAs). All of the comments we received on this issue 
supported CMS's broad objective to develop a new method for paying for 
NTAs received in the SNF. These commenters urged CMS to expedite the 
research necessary to develop a new model for NTA payment and to 
implement such a model shortly thereafter.
    Response: We appreciate all of the comments on this topic and the 
broad support for our objective to address this issue. Furthermore, the 
comments we received provided a number of interesting and creative 
ideas for consideration during the research process. We look forward to 
working with providers and stakeholders in the future as we continue to 
research this possible refinement to the SNF PPS.

B. SNF PPS Rate Setting Methodology and FY 2014 Update

    In the FY 2014 SNF PPS proposed rule (78 FR 26441 through 26463), 
we outlined the basic methodology used to set the rates for the SNF 
PPS. We also discussed several proposals associated with our rate 
setting methodology, including proposals associated with revising and 
rebasing the SNF market basket for FY 2014, using the revised and 
rebased SNF market basket to update the SNF payment rates, and updating 
and revising the labor-related share, as well as a proposal associated 
with how CMS reports the SNF forecast error correction for a given 
year. Our discussion of the rate setting methodology, our proposed 
changes associated with this methodology, and the comments, along with 
our responses, on these proposals appear below.
1. Federal Base Rates
    Under section 1888(e)(4) of the Act, the SNF PPS uses per diem 
federal payment rates based on mean SNF costs in a base year (FY 1995) 
updated for inflation to the first effective period of the PPS. We 
developed the federal payment rates using allowable costs from 
hospital-based and freestanding SNF cost reports for reporting periods 
beginning in FY 1995. The data used in developing the federal rates 
also incorporated a ``Part B add-on,'' which is an estimate of the 
amounts that, prior to the SNF PPS, would have been payable under Part 
B for covered SNF services furnished to individuals during the course 
of a covered Part A stay in a SNF.
    In developing the rates for the initial period, we updated costs 
from FY 1995 to the first effective year of the PPS (which was the 15-
month period beginning July 1, 1998) using a SNF market basket index, 
and then standardized for geographic variations in wages and for the 
costs of facility differences in case mix. In compiling the database 
used to compute the federal payment rates, we excluded those providers 
that received new provider exemptions from the routine cost limits, as 
well as costs related to payments for exceptions to the routine cost 
limits. Using the formula that the BBA prescribed, we set the federal 
rates at a level equal to the weighted mean of freestanding costs plus 
50 percent of the difference between the freestanding mean and weighted 
mean of all SNF costs (hospital-based and freestanding) combined. We 
computed and applied separately the payment rates for facilities 
located in urban and rural areas, and adjusted the portion of the 
federal rate attributable to wage-related costs by a wage index to 
reflect geographic variations in wages.
2. SNF Market Basket Update
    Section 1888(e)(5)(A) of the Act requires us to establish a SNF 
market basket index that reflects changes over time in the prices of an 
appropriate mix of goods and services included in covered SNF services. 
Accordingly, we have developed a SNF market basket index that 
encompasses the most commonly used cost categories for SNF routine 
services, ancillary services, and capital-related expenses. Section 
1888(e)(5)(B) of the Act defines the SNF market basket percentage as 
the percentage change in the SNF market basket index from the midpoint 
of the

[[Page 47939]]

previous FY to the midpoint of the current FY. For the federal rates 
set forth in this final rule, we use the percentage change in the SNF 
market basket index to compute the update factor for FY 2014, based on 
the IGI second quarter 2013 forecast (with historical data through 
first quarter of 2013) of the FY 2014 percentage increase in the FY 
2010-based SNF market basket for routine, ancillary, and capital 
related expenses. In the FY 2014 SNF PPS proposed rule, the FY 2014 SNF 
market basket percentage was based on the IGI first quarter 2013 
forecast (with historical data through the fourth quarter 2012) of the 
FY 2014 percentage increase in the FY 2010-based SNF market basket 
index for routine, ancillary, and capital-related expenses. The final 
SNF market basket update is discussed in section IV.B.5 of this final 
rule. As discussed in sections IV.B of this final rule, this market 
basket percentage change is reduced by the forecast error correction 
(Sec.  413.337(d)(2)), and by the MFP adjustment as required by section 
1888(e)(5)(B)(ii) of the Act.
a. Revising and Rebasing the SNF Market Basket Index
    In the FY 2008 SNF PPS final rule (72 FR 43425 through 43430), we 
revised and rebased the SNF market basket, which included updating the 
base year from FY 1997 to FY 2004. For FY 2014, we proposed to rebase 
the market basket to reflect FY 2010 Medicare allowable total cost data 
(routine, ancillary, and capital-related) and to revise the cost 
categories, cost weights, and price proxies used to determine the 
market basket (78 FR 26451 through 26461).
    Specifically, we proposed to develop cost category weights for the 
FY 2010-based SNF market basket in two stages. First, we proposed to 
derive base weights for seven major categories (wages and salaries, 
employee benefits, contract labor, pharmaceuticals, professional 
liability insurance, capital-related, and a residual ``all other'') 
from the FY 2010 Medicare cost report (MCR) data for freestanding SNFs. 
Second, we proposed to divide the residual ``all other'' cost category 
into subcategories, using U.S. Department of Commerce Bureau of 
Economic Analysis' (BEA) 2002 Benchmark Input-Output (I-O) tables for 
the nursing home industry aged forward using price changes. 
Furthermore, we proposed to continue to use the same overall 
methodology as was used for the FY 2004-based SNF market basket to 
develop the capital related cost weights of the FY 2010-based SNF 
market basket.
    We proposed to include five new cost categories in the FY 2010-
based SNF market basket: (1) Medical Instruments and Supplies; (2) 
Apparel; (3) Machinery and Equipment; (4) Administrative and Facilities 
Support Services; and (5) Financial Services. We also proposed to 
divide the Nonmedical Professional Fees cost category into Nonmedical 
Professional Fees: Labor-Related and Nonmedical Professional Fees: 
Nonlabor-Related; and to revise our labels for the Labor-Intensive 
Services and Nonlabor-Intensive Services cost categories to All Other: 
Labor-Related Services and All Other: Nonlabor-Related Services, 
respectively.
    In addition, we proposed to revise several price proxies, including 
using the ECI for Wages and Salaries for Nursing Care Facilities (NAICS 
6231) to measure price growth of the Wages and Salaries cost category, 
and using the ECI for Benefits for Nursing Care Facilities (NAICS 6231) 
to measure price growth of the Benefits cost category.
    We refer readers to the FY 2014 SNF PPS proposed rule (78 FR 26450-
26461) for a complete discussion of our proposals and associated 
rationale related to revising and rebasing the SNF market basket. We 
received a number of public comments on the proposed revising and 
rebasing of the SNF market basket. A discussion of these comments, with 
our responses, appears below.
    Comment: Several commenters were in agreement with our efforts to 
revise and rebase the SNF Market Basket. One commenter recommended that 
we forgo rebasing the SNF market basket index until cost data that 
adequately reflects recent and upcoming changes to the SNF cost 
structure are available. Furthermore, the commenter stated that the 
expenses reflected in the proposed FY 2010 base year do not account for 
system-wide and industry-wide changes that have occurred since FY 2010, 
which impose additional costs on SNFs. Specifically, they stated the 
following changes have occurred since 2010 or are about to occur: (1) 
Effective beginning FY 2011, CMS implemented changes to the reporting 
of therapy minutes on the MDS; (2) effective beginning FY 2012, CMS 
implemented a new therapy-related assessment and reporting changes; and 
(3) significant new requirements and costs on SNFs as employers due to 
the implementation of the Affordable Care Act.
    Response: We last rebased and revised the SNF market basket in the 
FY 2008 SNF PPS final rule (72 FR 43412, 43425-29), reflecting a FY 
2004 base year. In the FY 2014 SNF PPS proposed rule, we proposed to 
rebase and revise the SNF market basket to reflect FY 2010 data as 
these were the most recent Medicare cost report data available; a 
decision that was supported by numerous commenters. We do not agree 
with the commenter's suggestion to postpone the rebasing of the SNF 
market basket and continue to use a FY 2004-based SNF market basket, 
which is less relevant with regard to the costs faced by SNFs and, 
thus, is not as technically appropriate as the FY 2010-based index. We 
will actively monitor the MCR data to determine if the cost structure 
changes in a meaningful way as future years of data become available 
and will propose any appropriate revisions or rebasing of the SNF 
market basket in future rulemaking.
    Comment: One commenter supported our efforts to improve payment 
accuracy by rebasing and revising the market basket. However, they 
expressed concern about the accuracy of the Medicare SNF cost reports 
on which we rely. They stated that since payments are now based on the 
SNF PPS, and have for an increasing time been divorced from an 
individual facility's costs, less attention has been given to assuring 
their accuracy.
    The commenter also expressed concern that there has not been a 
recent federal study on the accuracy of the SNF Medicare Cost Reports. 
They recommended that we commission a study of the accuracy of SNF 
Medicare cost reports and commit to revising applicable parts of the 
new market basket index, if the study shows that such changes are 
warranted.
    The commenter also stated that there may be accuracy issues with 
the SNF cost reports, as evidenced by MedPAC's use of unpublished 
screens to select SNF cost reports for its analyses. Therefore, they 
recommended that we explain what, if any, screens, exclusions, or other 
mechanisms were used in the selection of the FY 2010 SNF cost reports 
on which the new market basket weights are computed.
    Response: We appreciate the commenter's concern over the accuracy 
of the Medicare cost report data. Similar to MedPAC, we do apply edits 
to the MCR data to remove reporting errors and outliers. Specifically, 
MCR data are excluded if total facility costs, total operating costs, 
Medicare general inpatient routine service costs, and Medicare payments 
are less than or equal to zero. Additionally, for each of the major 
cost weights (wages and salaries, employee benefits, contract labor, 
pharmaceuticals, professional liability insurance, capital-related 
expenses) the data are trimmed by: (1) Requiring that major expenses 
(such as salary costs) and total Medicare

[[Page 47940]]

allowable costs are greater than zero; and (2) excluding the top and 
bottom 5 percent of the major cost weight (for example, salary costs as 
a percent of total Medicare allowable costs). These are the same types 
of edits utilized for the FY 2004-based SNF market basket, as well as 
other PPS market baskets (including but not limited to IPPS and HHA). 
We believe this trimming process considerably improves the accuracy of 
the data used to compute the major cost weights.
    In response to the commenters' recommendation that we commission a 
study of the accuracy of Medicare SNF cost reports, we note that 
implementing such a recommendation would require significant resources 
and approval through OMB's standard survey and auditing process (see 
``Standards and Guidelines for Statistical Surveys'' http://www.whitehouse.gov/sites/default/files/omb/assets/omb/inforeg/statpolicy/standards_stat_surveys.pdf and ``Guidance on Agency Survey 
and Statistical Information Collections'' http://www.whitehouse.gov/sites/default/files/omb/assets/omb/inforeg/pmc_survey_guidance_2006.pdf). In the past, cost report audits have been conducted but were 
limited to specific fields and a small sample of providers. At this 
time, we believe this approach is the most efficient and appropriate 
way to identify and address cost report errors and to improve the 
accuracy of the MCR data used to develop the SNF market basket cost 
weights. We would appreciate industry representatives communicating to 
their members the importance of completing the cost reports as 
accurately as possible, the implications of misreported data, and the 
possible impacts on their future payments.
    Comment: One commenter was supportive of periodic rebasing and 
revisions to the SNF market basket, but recommended that we hold off on 
updating the weights and price proxies this year pending refinements to 
the underlying Medicare cost reports to correct data issues that they 
believe may bias the major cost categories weights. Their concerns 
included:
    (1) The effect of excluding cost reports where the Medicare General 
Inpatient Routine. Service Costs are less than or equal to zero. They 
expressed concern about the effect of the exclusion of providers whose 
Medicare general inpatient routine service costs (as reported on 
Worksheet D1 of the SNF MCR) are less than or equal to zero, noting 
that this edit alone is responsible for excluding over 4,000 Medicare 
cost reports (approximately 30 percent of all SNFs filing a Medicare 
cost report) from the analytic database and the subsequent weight 
calculations. They acknowledged that the exclusion makes sense on its 
face and that clearly facilities with zero or negative inpatient 
routine service costs should be excluded. Upon reviewing the cost 
reports, however, they asserted that the issue is not that inpatient 
routine service costs are zero or negative, but rather that the 
Worksheet D1 is an optional worksheet. They also encouraged CMS to 
examine, develop, and evaluate other exclusion criteria that target the 
same issue that CMS seeks to address with the Medicare inpatient 
routine services cost exclusion.
    (2) Some of the cost category methodology descriptions in the 
proposed rule were unclear and requested that CMS in both this year's 
final rule and future proposed rules provide more specificity in the 
precise methodology for estimating the market basket cost weights using 
the Medicare cost reports. The commenter requested that CMS make 
available a detailed item-by-item description of the formulas used in 
the calculation of the major cost category weights in the final rule 
and that CMS provide the analytic databases used to support the major 
cost category weight calculations on the CMS Web site.
    (3) The commenter claims that the CMS methodology for wages and 
salaries (specifically the numerator for wages and salaries), benefits, 
contract labor, and pharmaceuticals is inaccurate. The commenter based 
this conclusion on their own estimates, which were an attempt to re-
create the CMS methodology and were provided in their comments. 
Additionally, the commenter requested more information be provided in 
the final rule to ensure that the results and analysis are valid and 
accurate.
    Response: We disagree with the commenter's recommendation to hold 
off on updating the weights and price proxies this year. We believe our 
methodology is technically sound and does not have any of the data 
issues that the commenter suggests may bias the major cost category 
weights. We are using the same general methodology used to develop the 
FY 2004-based SNF market basket, as finalized in the FY 2008 SNF PPS 
final rule (72 FR 43412, 43425-43429) . In our response below, we 
address the three main concerns identified by the commenter.
    The commenter suggested that we explore alternative edits and 
examine, develop, and evaluate other exclusion criteria that target the 
same issue that we seek to address with the Medicare inpatient services 
routine cost exclusion. However, we continue to believe that this edit 
(exclusion of providers whose Medicare general inpatient routine 
service costs are less than or equal to zero) is appropriate as our 
goal is to create a market basket that is representative of 
freestanding SNF providers serving Medicare patients.
    Worksheet D1 is ``optional'' to those provider's filing a low 
Medicare utilization cost report (See Provider Reimbursement Manual, 
part II, Section 110 http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021935.html). The cost 
structure of these providers would reflect the expenses required to 
serve predominately non-Medicare patients. Therefore, we believe 
excluding these providers is appropriate.
    Our market basket sample, which included approximately 10,000 
providers, represents 70 percent of all freestanding SNF providers that 
submitted a Medicare cost report for FY 2010. In addition, we note that 
a sensitivity analysis that removed the Medicare general inpatient 
routine service cost edit had a minor impact on the salary cost weight 
of -0.2 percentage point. Therefore, we believe the resulting cost 
weights are representative of the average across all SNFs serving 
Medicare patients, even though we exclude some reports. The final 
sample of SNF Medicare Cost Reports used to calculate the market basket 
cost weights excluded any providers that reported costs less than or 
equal to zero for the following categories: total facility costs, total 
operating costs, Medicare general inpatient routine service costs, and 
Medicare payments. Therefore, the final sample used included roughly 
10,000 of the 14,000 providers that submitted a Medicare cost report 
for FY 2010.
    After we apply these edits, we calculate the cost weights as 
specified in the FY 2014 SNF PPS proposed rule (78 FR 26451 through 
26461); this method is further clarified below. For each of the major 
cost weights (wages and salaries, employee benefits, contract labor, 
pharmaceuticals, professional liability insurance, and capital-related 
expenses), the data are trimmed by: (1) Requiring that major expenses 
(such as wages and salary costs) and total Medicare allowable costs are 
greater than zero; and (2) excluding the top and bottom 5 percent of 
the major cost weight (for example, salary costs as a percent of total 
Medicare allowable costs). We would note that this trimming process is 
done for each cost weight individually. For example,

[[Page 47941]]

providers excluded from the drug cost weight calculation are not 
automatically excluded from the other cost weight calculations and 
trimming process. These are the same types of edits utilized for the FY 
2004-based SNF market basket as well as other PPS market baskets 
(including but not limited to IPPS and HHA). We believe this trimming 
process considerably improves the accuracy of the data used to compute 
the major cost weights.
    For all of the cost weights, Medicare allowable total costs were 
equal to total expenses from Worksheet B, lines 16, 21 through 30, 32, 
33, and 48 plus Medicaid drug costs as defined below.
    We included estimated Medicaid drug costs in the pharmacy cost 
weight as well as the denominator for total Medicare allowable costs. 
This is the same methodology used for the FY 2004-based SNF market 
basket revision and rebasing. During that revision and rebasing, 
commenters expressed concern over the exclusion of these Medicaid drug 
expenses. In response, we revised the market basket drug cost weight 
methodology to include these costs in the Medicare allowable 
methodology. We finalized this methodology in the FY 2008 SNF PPS final 
rule (72 FR 43425 through 43430), and for the same reasons set forth in 
that final rule, we believe it is appropriate to continue to use this 
methodology in the proposed FY 2010-based SNF market basket. The 
methodology used in the FY 2010-based SNF market basket includes 
Medicaid drug costs in the Medicare allowable MCR total costs (as 
calculated using Worksheet B, lines 16, 21 through 30, 32, 33, 48) for 
each of the cost weights prior to trimming them as specified above. An 
alternative methodology would be to calculate and trim the nondrug cost 
weights using only Medicare allowable total costs from Worksheet B and 
then adjust the resulting cost weights for the inclusion of Medicaid 
drug costs. We believe our approach is technically appropriate as it 
allows for this adjustment to be applied at the individual (that is, 
provider) level, which is preferable.
    Finally, we would clarify that the final weights of the proposed FY 
2010-based SNF market basket are based on weighted means. For example, 
the final salary cost weight after trimming is equal to the sum of 
total Medicare allowable wages and salaries divided by the sum of total 
Medicare allowable costs (including Medicaid drug costs) where 
providers with larger wages and salary costs have a larger weight in 
the final wages and salaries cost weight. This methodology is 
consistent with the methodology used to calculate the FY 2004-based SNF 
market basket cost weights and other PPS market basket cost weights.
    We believe the proposed rule included sufficient information 
regarding CMS's methodology and the underlying data used for revising 
and rebasing the SNF market basket. As stated in the FY 2014 SNF PPS 
proposed rule, the cost category weights for the proposed rebased and 
revised market basket were derived using freestanding Skilled Nursing 
Facility Medicare Cost Reports and Bureau of Economic Analysis 2002 
Input-Output data. Both databases are publicly available on the CMS and 
BEA Web sites, respectively. We would note that the databases used for 
the other market basket rebasings (such as, the hospital Medicare cost 
report data for the IPPS market basket) are also publicly available on 
the CMS and BEA Web sites, as well.
    However, in order to respond to the commenter's suggestion for more 
information on the detailed methodology for calculating the proposed FY 
2010-based SNF market basket major cost weights, we have provided a 
detailed discussion of the methodology, as requested. These 
clarifications should allow the commenter to adequately re-create the 
market basket weights so that discrepancies between their results and 
the proposed FY 2010-based SNF market basket cost weights (that they 
believed produced inaccurate results) can be reconciled. We believe 
that the commenter's estimates and conclusions were based on a 
misunderstanding of the formulas used to calculate the major cost 
weights for the FY 2010-based SNF market basket, and thus we believe 
the additional clarification provided below should address commenter's 
concerns.
    Specifically, we provide additional clarification on the specific 
Medicare cost report fields used to calculate the major cost weights: 
(1) The wages and salaries; (2) employee benefits; (3) contract labor; 
(4) pharmaceutical; (5) professional liability insurance; (6) capital; 
and (7) All Other ``residual'':
    (1) Wages and Salaries (before the allocation of contract labor): 
We derived the wages and salaries cost category using the FY 2010 SNF 
MCRs. We determined Medicare allowable wages and salaries mostly from 
Worksheet S-3, part II data. Medicare allowable wages and salaries are 
equal to total wages and salaries (Worksheet S3, part II, line 1, 
column 3) minus: (1) Excluded salaries from Worksheet S-3, part II; and 
(2) nursing facility and non-reimbursable salaries from Worksheet A, 
lines 18, 34 through 36. Specifically, we determined excluded salaries 
in three steps: (1) Sum of data from Worksheet S3, part II, lines 3-5, 
and 8-14; Worksheet A, lines 18, 31, 34-36, 51, and 56; (2) estimated 
overhead salaries attributable to the non-Medicare allowable cost 
centers defined as (total overhead salaries (Worksheet S3, Part III, 
line 14) as a percent of total salaries Worksheet S3, Part II, line 1, 
column 3) * excluded salaries as defined in step (1); (3) total 
excluded salaries is equal to the sum of (1) and (2).
    (2) Employee Benefits (before the allocation of contract labor): We 
determined the weight for employee benefits using FY 2010 SNF MCR data. 
We derived Medicare allowable benefit costs from Worksheet S-3, part 
II. Medicare allowable benefits are equal to total benefits from 
Worksheet S-3, part II, (lines 19-21) minus excluded (non-Medicare 
allowable) benefits. Non-Medicare allowable benefits are derived by 
multiplying non-Medicare allowable salaries (otherwise referred to as 
excluded salaries above) times the ratio of total benefit costs for the 
SNF to the total wage costs for the SNF.
    (3) Contract Labor: We determined the weight for contract labor 
using 2010 SNF MCR data. We derived Medicare allowable contract labor 
costs from Worksheet S-3, part II line 17 minus Nursing Facility (NF) 
contract labor costs, and Medicare allowable total costs from Worksheet 
B. (Worksheet S-3, part II line 17 includes only those costs 
attributable to services rendered in the SNF and/or NF for contracted 
direct patient care services, that is, nursing, therapeutic, 
rehabilitative, or diagnostic services furnished under contract rather 
than by employees, and management contract services costs, defined as 
those individuals who are working at the facility in the capacity of 
chief executive, chief operating officer, chief financial officer, or 
nursing administrator.) NF contract labor costs, which are not 
reimbursable under Medicare, are derived by multiplying total contract 
labor costs by the ratio of NF wages and salaries (Worksheet A, column 
1, line 18), to the sum of NF and SNF wages and salaries (Worksheet A, 
column 1, line 16).
    (4) Pharmaceuticals: First, we calculated pharmaceutical costs 
using the non-salary costs from the Pharmacy cost center (Worksheet B, 
column 0, line 11 less Worksheet A, column 1, line 11) and the Drugs 
Charged to Patients' cost center (Worksheet B, column 0, line 30 less 
Worksheet A, column 1, line 30), both found on Worksheet B of the SNF 
MCRs. Since these drug costs were attributable to the entire SNF and 
not limited to Medicare allowable services,

[[Page 47942]]

we adjusted the drug costs by the ratio of Medicare allowable pharmacy 
total costs to total pharmacy costs from Worksheet B, part I, column 
11. Worksheet B, part I allocates the general service cost centers, 
which are often referred to as ``overhead costs'' (in which pharmacy 
costs are included) to the Medicare allowable and non-Medicare 
allowable cost centers.
    Second, for the FY 2010-based SNF market basket, we proposed to 
continue to adjust the drug expenses reported on the MCR to include an 
estimate of total Medicaid drug costs, which are not represented in the 
Medicare-allowable drug cost weight. Similar to the last rebasing, we 
are estimating Medicaid drug costs based on data representing dual-
eligible Medicaid beneficiaries. Medicaid drug costs are estimated by 
multiplying Medicaid dual-eligible drug costs per day times the number 
of Medicaid days as reported in the Medicare allowable skilled nursing 
cost center in the SNF MCR. Medicaid dual-eligible drug costs per day 
(where the day represents an unduplicated drug supply day) were 
estimated using a sample of 2010 Part D claims for those dual-eligible 
beneficiaries who had a Medicare SNF stay during the year. Medicaid 
dual-eligible beneficiaries would receive their drugs through the 
Medicare Part D benefit, which would work directly with the pharmacy, 
and therefore, these costs would not be represented in the Medicare SNF 
MCRs. A random 20 percent sample of Medicare Part D claims data yielded 
a Medicaid drug cost per day of $17.39. We note that the FY 2004-based 
SNF market basket relied on data from the Medicaid Statistical 
Information System, which yielded a dual-eligible Medicaid drug cost 
per day of $13.65 for 2004. For the revised and rebased FY 2010-based 
SNF market basket, we used Part D claims to estimate total Medicaid 
drug costs as this provides drug expenditure data for dual-eligible 
beneficiaries for 2010. The Medicaid Statistical Information system is 
no longer a comprehensive database for dual-eligible beneficiaries' 
drug costs.
    (5) Professional Liability Insurance: We calculated the 
professional liability insurance costs from Worksheet S-2 of the MCRs 
as the sum of premiums, paid losses, and self-insurance (Worksheet S-2, 
column 1, line 45 plus Worksheet S-2, column 2, line 45 plus Worksheet 
S-2, column 3, line 45).
    (6) Capital-Related: We derived the capital-related costs using the 
FY 2010 SNF MCRs. We calculated the Medicare allowable capital-related 
cost weight from Worksheet B, part II (Worksheet B, part II, column 18, 
line 16 plus Worksheet B, part II, column 18, lines 21 to 30 plus 
Worksheet B, part II, column 18, line 32 plus Worksheet B, part II, 
column 18, line 33 plus Worksheet B, part II, column 18, line 48 plus 
Worksheet B, part II, column 18, lines 52 to 54).
    (7) All Other Expenses: The ``all other'' cost weight is a 
residual, calculated by subtracting the major cost weights (wages and 
salaries, employee benefits, contract labor, pharmaceuticals, 
professional liability insurance, and capital-related expenses) from 
100. As stated in the FY 2014 SNF proposed rule (78 FR 26451), we then 
proposed to divide the residual ``all other'' cost category (21.534 
percent) into subcategories, using U.S. Department of Commerce Bureau 
of Economic Analysis' (BEA) 2002 Benchmark Input-Output (I-O) tables 
for the nursing home industry aged forward to FY 2014 using price 
changes. We also proposed that if more recent BEA Benchmark I-O data 
for 2007 were released between the proposed and final rule with 
sufficient time to incorporate such data into the final rule that we 
would incorporate these data, as appropriate, into the FY 2010-based 
SNF PPS market basket for the final rule, so that the SNF market basket 
reflects the most recent BEA data available.
    Comment: One commenter had questions on our methodology for the 
proposed FY 2010-based SNF market basket contract labor cost weight. 
They stated that the contract labor in a nursing facility is primarily 
comprised of agency nursing (commonly called nursing pool) and 
contracted therapy. They further stated that we calculate Allowable 
Contract Labor by multiplying total contract labor cost by the ratio of 
SNF salaries and wages to SNF and NF salaries and wages, which they 
indicated is reasonable to assume because agency nursing would provide 
services to patients in skilled units and in NF units. However, they 
asserted that while this allocation approach is reasonable for agency 
nursing, it is not appropriate for contracted therapy. They further 
stated that contract therapy costs relate almost exclusively to skilled 
patients and are reported as ancillary costs (Worksheet B Part I, lines 
25-27), which are Medicare allowable expenses. They indicated that 
allocating these costs on the ratio of SNF and NF salaries results in a 
percentage of these costs being considered as non-allowable, which is 
inaccurate. Therefore, they proposed that prior to determining the 
Allowable Contract Labor using the ratio methodology described above, 
that contract therapy costs (which they calculate as Worksheet A, lines 
25-27, column 2) be removed. Total Medicare allowable contract labor 
would be equal to the Allowable Contract Labor plus the contract 
therapy costs.
    Response: We appreciate the commenter bringing to our attention a 
potential issue with contracted therapy costs weight methodology. While 
the commenter has raised an issue that would require further analysis, 
our preliminary analysis indicates that the impact to the cost weight 
for a change like this would be negligible (0.001 percentage points to 
the cost weight). Therefore, we will continue to use our current 
methodology but will conduct further analysis and communicate any 
findings in future rulemaking.
    Comment: One commenter suggested that we should provide the public 
with a meaningful opportunity to comment on the incorporation of more 
recent BEA Benchmark Input-Output (I-O) data into the FY 2014 market 
basket update before using this data as proposed.
    Response: The 2007 Benchmark I-O data has not been published by the 
BEA and, therefore, we will not be incorporating this data into the FY 
2010-based SNF market basket. The 2007 Benchmark I-O data is expected 
to be published in December 2013. Any future use of this 2007 data in 
the SNF market basket will be proposed in rulemaking, which will 
provide the public with a meaningful opportunity to comment.
    Comment: Several commenters disagreed with our proposal in the FY 
2014 SNF PPS proposed rule (78 FR 26458) to use the ECI for Nursing 
Care Facilities (Private Industry) (NAICS 6231; BLS series code 
CIU2026231000000I) to measure price growth of the wages and salaries 
and employee benefit cost category. They stated that the proposed wages 
and salaries price proxy index may be too heavily weighted with a 
lower-skilled labor mix to be adequately representative of the mix of 
labor skills necessary to deliver care to Medicare SNF patients. In 
addition, they stated that according to the Census Bureau, there were 
16,320 establishments classified in NAICS 6231 in 2007. For that year, 
13,841 SNFs submitted cost reports, suggesting that approximately 15 
percent of establishments in this industry classification are 
facilities providing care to residents who are less complex and 
resource-intensive than SNF residents, especially SNF post-acute care 
patients. These commenters stated that if these facilities have a less-
skilled workforce whose wages and salaries increase at a slower rate 
than higher-skilled occupations, using the

[[Page 47943]]

ECI for NAICS 6231 as the price proxy for wages and salaries in the SNF 
market basket index could bias the SNF market basket update downward. 
Furthermore, one commenter proposed that we use a blended price proxy 
based on 25 percent of the ECI for wages and salaries for nursing and 
residential care facilities (NAICS 623) and 75 percent of the ECI for 
wages and salaries for hospital workers (NAICS 622). The commenter 
suggested that we collect data for a sample of Medicare SNFs to 
determine the appropriate weighting.
    Response: We do not agree with the commenter's suggestion to 
continue to use a blended price proxy similar to that used for the FY 
2004-based SNF market basket to measure the price growth of wages and 
salaries and employee benefit cost category. The FY 2004-based SNF 
market basket used a blended index of a more general nursing home ECI 
for Nursing and Residential Facilities (NAICS 623, representing 
facilities that provide a mix of health and social services) and the 
ECI for wages and salaries of hospital workers (NAICS 622) as a result 
of the discontinuation of an ECI for Nursing and Personal Care 
Facilities based on the Standard Industrial Classification (SIC) 805. 
The blended index was proposed and finalized in the FY 2008 SNF PPS 
rulemaking (72 FR 25550-51 and 72 FR 43425-29, respectively) to address 
the industry's and CMS's concern about the lack of an ECI that best 
represented Medicare-certified SNFs. After requests from CMS and the 
SNF industry, BLS began publishing the ECI for Nursing Care Facilities 
(6231) in 2006. Because BLS had just begun publishing ECI data for 
Nursing Care Facilities (NAICS 6231) at the time of the last SNF market 
revision and rebasing, IGI, the economic forecasting firm, was unable 
to forecast this price proxy at that time.
    As stated by the commenter, according to the 2007 Economic Census 
there were 16,320 establishments classified in NAICS 6231 in 2007; 
however, 15,335 establishments operated for the entire year (as also 
reported in the 2007 Economic Census). Of the 13,841 SNF providers 
submitting a Medicare cost report, 13,830 were open for an entire year. 
Therefore, 85-90 percent of the 2007 NAICS 6231 establishments are 
likely Medicare-certified SNFs. The commenter proposes that we continue 
to use NAICS 623 (Nursing and Residential Facilities), which is less 
representative of Medicare-certified SNFs since it also includes other 
types of facilities such as Residential care facilities, in the blended 
price proxy.
    Because we believe the ECI for Nursing Care Facilities (NAICS 6231) 
is representative of the SNF industry as discussed above, we continue 
to believe it is the most technically appropriate proxy for the 
compensation price inflation faced by Medicare-certified SNFs. As such, 
we believe that a blended price proxy is no longer necessary.
    After considering the comments we received, for the reasons 
discussed above and in the FY 2014 SNF PPS proposed rule, we are 
finalizing without modification our proposals as presented in the FY 
2014 SNF PPS proposed rule (78 FR 26451 through 26461) to revise the FY 
2004-based SNF market basket and to rebase it to reflect a base year of 
FY 2010, effective October 1, 2013. Table 1 presents the final revised 
and rebased FY 2010-based SNF market basket index.

                Table 1--FY 2010-Based SNF Market Basket
------------------------------------------------------------------------
         Cost category               Weight        Proposed price proxy
------------------------------------------------------------------------
Compensation...................          62.093
    Wages and Salaries.........          50.573  ECI for Wages and
                                                  Salaries for Nursing
                                                  Care Facilities.
    Employee Benefits..........          11.520  ECI for Benefits for
                                                  Nursing Care
                                                  Facilities.
Utilities......................           2.223
    Electricity................           1.411  PPI for Commercial
                                                  Electric Power.
    Fuels, Nonhighway..........           0.667  PPI for Commercial
                                                  Natural Gas.
    Water and Sewerage.........           0.145  CPI-U for Water and
                                                  Sewerage Maintenance.
Professional Liability                    1.141  CMS Hospital
 Insurance.                                       Professional Liability
                                                  Insurance Index.
All Other......................          27.183
    Other Products.............          16.148
        Pharmaceuticals........           7.872  PPI for Pharmaceuticals
                                                  for Human Use,
                                                  Prescription.
        Food, Wholesale                   3.661  PPI for Processed Foods
         Purchase.                                and Feeds.
        Food, Retail Purchases.           1.190  CPI-U for Food Away
                                                  From Home.
        Chemicals..............           0.166  Blend of Chemical PPIs.
        Medical Instruments and           0.764  PPI for Medical,
         Supplies.                                Surgical, and Personal
                                                  Aid Devices.
        Rubber and Plastics....           0.981  PPI for Rubber and
                                                  Plastic Products.
        Paper and Printing                0.838  PPI for Converted Paper
         Products.                                and Paperboard
                                                  Products.
        Apparel................           0.195  PPI for Apparel.
        Machinery and Equipment           0.190  PPI for Machinery and
                                                  Equipment.
        Miscellaneous Products.           0.291  PPI for Finished Goods
                                                  Less Food and Energy.
    All Other Services.........          11.035
        Labor-Related Services.           6.227
            Nonmedical                    3.427  ECI for Total
             Professional Fees:                   Compensation for
             Labor-related.                       Professional and
                                                  Related Occupations.
            Administrative and            0.497  ECI for Total
             Facilities Support.                  Compensation for
                                                  Office and
                                                  Administrative
                                                  Support.
            All Other: Labor-             2.303  ECI for Total
             Related Services.                    Compensation for
                                                  Service Occupations.
        Non Labor-Related                 4.808
         Services.
            Nonmedical                    2.042  ECI for Total
             Professional Fees:                   Compensation for
             Non Labor-Related.                   Professional and
                                                  Related Occupations.
        Financial Services.....           0.899  ECI for Total
                                                  Compensation for
                                                  Financial Activities.
        Telephone Services.....           0.572  CPI-U for Telephone
                                                  Services.
        Postage................           0.240  CPI-U for Postage and
                                                  Delivery Services.
        All Other: Nonlabor-              1.055  CPI-U for All Items
         Related Services.                        Less Food and Energy.
Capital-Related Expenses.......           7.360
    Total Depreciation.........           3.180

[[Page 47944]]

 
        Building and Fixed                2.701  BEA chained price index
         Equipment.                               for nonresidential
                                                  construction for
                                                  hospitals and special
                                                  care facilities--
                                                  vintage weighted (25
                                                  years).
        Movable Equipment......           0.479  PPI for Machinery and
                                                  Equipment--vintage
                                                  weighted (6 years).
    Total Interest.............           2.096
        For-Profit SNFs........           0.869  Average yield on
                                                  municipal bonds (Bond
                                                  Buyer Index 20 bonds)--
                                                  vintage weighted (22
                                                  years).
        Government and                    1.227  Average yield on
         Nonprofit SNFs.                          Moody's AAA corporate
                                                  bonds--vintage
                                                  weighted (22 years).
    Other Capital-Related                 2.084  CPI-U for Rent of
     Expenses.                                    Primary Residence.
                                ----------------
Total..........................         100.000
------------------------------------------------------------------------

i. Effect of Revising and Rebasing the SNF Market Basket Index on the 
Labor-Related Share
    We define the labor-related share (LRS) as those expenses that are 
labor-intensive and vary with, or are influenced by, the local labor 
market. Each year, we calculate a revised labor-related share based on 
the relative importance of labor-related cost categories in the input 
price index. In the FY 2014 SNF PPS proposed rule (78 FR 26462-63), we 
proposed to revise and update the labor-related share to reflect the 
relative importance of the following FY 2010-based SNF market basket 
cost weights that we believe are labor-intensive and vary with, or are 
influenced by, the local labor market: (1) Wages and salaries; (2) 
employee benefits; (3) contract labor; (4) the labor-related portion of 
nonmedical professional fees; (5) administrative and facilities support 
services; (6) all other: Labor-related services (previously referred to 
in the FY 2004-based SNF market basket as labor-intensive); and (7) a 
proportion of capital-related expenses. We proposed to continue to 
include a proportion of capital-related expenses because a portion of 
these expenses are deemed to be labor-intensive and vary with, or are 
influenced by, the local labor market. For example, a proportion of 
construction costs for a medical building would be attributable to 
local construction workers' compensation expenses.
    Consistent with previous SNF market basket revisions and rebasings, 
the ``all other: labor-related services'' cost category is mostly 
comprised of building maintenance and security services (including, but 
not limited to, commercial and industrial machinery and equipment 
repair, nonresidential maintenance and repair, and investigation and 
security services). Because these services tend to be labor-intensive 
and are mostly performed at the SNF facility (and therefore, unlikely 
to be purchased in the national market), we believe that they meet our 
definition of labor-related services.
    The inclusion of the administrative and facilities support services 
cost category into the labor-related share remains consistent with the 
current labor-related share, since this cost category was previously 
included in the FY 2004-based SNF market basket labor-intensive cost 
category. As stated in the FY 2014 SNF PPS proposed rule (78 FR 26462), 
we proposed to establish a separate administrative and facilities 
support services cost category so that we can use the ECI for Total 
Compensation for Office and Administrative Support Services to reflect 
the specific price changes associated with these services.
    For the FY 2004-based SNF market basket, we assumed that all 
nonmedical professional services (including accounting and auditing 
services, engineering services, legal services, and management and 
consulting services) were purchased in the local labor market and, 
thus, all of their associated fees varied with the local labor market. 
As a result, we previously included 100 percent of these costs in the 
labor-related share. As we discussed in the FY 2014 SNF PPS proposed 
rule (78 FR 26462), in an effort to determine more accurately the share 
of nonmedical professional fees that should be included in the labor-
related share, we surveyed SNFs regarding the proportion of those fees 
that are attributable to local firms and the proportion that are 
purchased from national firms. Based on these weighted results, we 
determined that SNFs purchase, on average, the following portions of 
contracted professional services inside their local labor market:
     86 percent of accounting and auditing services.
     89 percent of architectural, engineering services.
     78 percent of legal services.
     87 percent of management consulting services.
    Together, these four categories represent 2.672 percentage points 
of the total costs for the proposed FY 2010-based SNF market basket. We 
applied the percentages from this special survey to their respective 
SNF market basket weights to separate them into labor-related and 
nonlabor-related costs. As a result, we are designating 2.285 of the 
2.672 total to the labor-related share, with the remaining 0.387 
categorized as nonlabor-related.
    In addition to the professional services listed above, we also 
classified expenses under NAICS 55, Management of Companies and 
Enterprises, into the nonmedical professional fees cost category. The 
NAICS 55 data are mostly comprised of corporate, subsidiary, and 
regional managing offices, or otherwise referred to as home offices. 
Formerly, all of the expenses within this category were considered to 
vary with, or be influenced by, the local labor market, and thus, were 
included in the labor-related share. Because many SNFs are not located 
in the same geographic area as their home office, we analyzed data from 
a variety of sources to determine what proportion of these costs should 
be appropriately included in the labor-related share. As discussed in 
the FY 2014 SNF PPS proposed rule (78 FR 26462), we proposed a 
methodology to determine the proportion of NAICS 55 costs that should 
be allocated to the labor-related share based on the percent of SNF 
home office compensation attributable to those SNFs that had home 
offices located in their respective labor markets. Our proposed 
methodology was based on data from MCRs, as well as a CMS database of 
Home Office Medicare Records (HOMER). Using this proposed methodology, 
we determined that 32 percent of SNF home office compensation costs 
were for SNFs that

[[Page 47945]]

had home offices located in their respective local labor markets; 
therefore, we proposed to allocate 32 percent of NAICS 55 expenses to 
the labor-related share. We believe that this methodology provides a 
reasonable estimate of the NAICS 55 expenses that are appropriately 
allocated to the labor-related share, because we primarily rely on data 
on home office compensation costs as provided by SNFs on Medicare cost 
reports. By combining these data with the specific MSAs for the SNF and 
their associated home office, we believe we have a reasonable estimate 
of the proportion of SNF's home office costs that would be incurred in 
the local labor market.
    In the proposed FY 2010-based SNF market basket, NAICS 55 expenses 
that were subject to allocation based on the home office allocation 
methodology represent 1.833 percent of the total costs. Based on the 
home office results, we are apportioning 0.587 percentage point of the 
1.833 percentage points figure into the labor-related share and 
designating the remaining 1.247 percentage points as nonlabor-related.
    The Benchmark I-O data contains other smaller cost categories that 
we allocate fully to either nonmedical professional fees: labor-related 
or nonmedical professional fees: nonlabor-related. Together, the sum of 
these smaller cost categories, the four nonmedical professional fees 
cost categories where survey results were available, and the NAICS 55 
expenses represent all nonmedical professional fees, or 5.469 percent 
of total costs in the SNF market basket. Of the 5.469 percentage 
points, 3.427 percentage points represent professional fees: labor-
related while 2.042 percentage points represent nonmedical professional 
fees: nonlabor-related.
    For a complete discussion of our proposals related to the labor-
related share and associated rationale, we refer readers to the FY 2014 
SNF PPS proposed rule (78 FR 26462-63). A discussion of the comments we 
received related to these proposals, with our responses, appears below.
    Comment: One commenter disagreed with our use of the professional 
fees survey to determine the labor-related portion of Nonmedical 
Professional Fees costs associated with accounting and auditing 
services; architectural, engineering services; legal services; and 
management and consulting services. They stated that the survey of 141 
providers only represents 0.94 percent of the approximately 15,000 SNFs 
nationwide. Furthermore, they contended that even when the services are 
purchased from ``national firms,'' those services are priced by 
national firms according to local market costs.
    Response: We believe a method that distributes these professional 
fees based on empirical research and data, and not on assumption, 
represents a technical improvement to the construction of the market 
basket and the estimate of the labor-related share. In an effort to 
draw a nationally representative sample of skilled nursing facilities, 
we used data on full-time equivalents (FTE's) to represent the sizes of 
each SNF and then selected institutions for participation in the 
survey, across various strata (to be representative across Census 
Region and Urban/Rural status), based on their relative FTE size. That 
is, the greater the number of one's FTEs, the greater the chance of 
being selected to participate in the sample from one's specific 
stratum.
    The survey itself prompted sample institutions to select from 
multiple choice answers the proportions of their professional fees that 
are purchased from firms located outside of their respective local 
labor market. The multiple choice answers for each type of professional 
service included the following options: 0 percent of fees; 1-20 percent 
of fees; 21-40 percent of fees; 41-60 percent of fees; 61-80 percent of 
fees; 81-99 percent of fees; and 100 percent of fees. We chose this 
type of approach, as opposed to asking firms for more detailed 
approximations of their spending, in an attempt to reduce variability 
within the data.
    Responses were gathered with each participating institution being 
assigned a sample weight equal to the inverse of their selection 
probability (with adjustments for non-response bias to ensure the 
representativeness of the data). This type of application represents a 
very common survey approach and is based on valid and widely-accepted 
statistical techniques. We believe that this methodology of weighting 
responses allows for an adequate sample size to draw inferences for 
this purpose.
    We noted generally that, depending on the exact professional 
service, between 25 percent and 50 percent of the institutions 
indicated that they purchased at least some percentage of those 
services from firms beyond their local labor market. Given these 
findings, we developed a weighted average of the results to determine 
the final proportion to be excluded from the labor-related share for 
each of the four types of professional services surveyed.
    The following represents a description of the steps we used in 
developing the weighted averages to designate these fees as labor-
related or nonlabor-related:
    First, for those institutions that spent between 1 percent and 20 
percent of the professional services fees on firms located beyond their 
local labor markets, we multiplied their weighted count by the mid-
point of that range (or 10 percent) as those estimates tended to have 
very low variability around their respective point estimates. As an 
example, for Accounting and Auditing services, if a weighted count of 
500 SNFs responded that they paid ``1 to 20 percent'' of their 
professional fees for these services to firms located outside of their 
local labor market, we would multiply 500 times 10 percent. This would 
represent our first subtotal.
    Second, for those firms that spent more than 20 percent of their 
fees on firms located outside of their local labor markets, the 
variance around the point estimates tended to be higher. As a result we 
multiplied the weighted number of firms by the low point within each 
multiple choice answer's range in order to develop our overall weighted 
estimates. Using a similar example as above, if a weighted count of 300 
SNFs responded that they paid ``21 to 40 percent'' of their 
professional fees to firms located outside of their local labor market, 
we would multiply 300 times 21 percent. This would be repeated for the 
other categories, as well and represent our next set of subtotals.
    For the last step in the calculations, we added the subtotals 
together and then divided by the total number of weighted SNFs in order 
to determine what proportion of their professional fees went to firms 
inside and outside of their local labor markets.
    Additionally, we disagree with the commenter that services 
purchased from national firms are always priced at local labor market 
cost rates. We believe, for example, that an accounting firm that 
employs accountants located at their headquarters would have a standard 
pricing structure that is developed to ensure that their costs of 
operation are covered, regardless of the location of their clients. 
Finally, in the absence of a creditable data source from the commenter, 
we do not believe it would be appropriate to include costs associated 
with professional services purchased from nationally based firms 
located beyond the SNF's local labor market in the labor-related share.
    After considering the comments we received, for the reasons 
discussed above and in the FY 2014 SNF PPS proposed rule, we are 
finalizing our proposal, as presented in the FY 2014 SNF PPS proposed 
rule (78 FR 26462 through 26463), to update and revise the

[[Page 47946]]

labor-related share effective October 1, 2013, to reflect the relative 
importance of the following FY 2010-based SNF market basket cost 
weights that we believe are labor-intensive and vary with, or are 
influenced by, the local labor market: (1) Wages and salaries; (2) 
employee benefits; (3) contract labor; (4) the labor-related portion of 
nonmedical professional fees; (5) administrative and facilities support 
services; (6) all other: labor-related services (previously referred to 
in the FY 2004-based SNF market basket as labor-intensive); and (7) a 
proportion of capital-related expenses. Furthermore, in the FY 2014 SNF 
PPS proposed rule (78 FR 26443), we also proposed if more recent data 
became available (for example, a more recent estimate of the FY 2010-
based SNF market basket, MFP adjustment, and/or FY 2004-based SNF 
market basket used for the forecast error calculation), we would use 
such data, if appropriate, to determine the FY 2014 SNF market basket 
update, FY 2014 labor-related share relative importance, and MFP 
adjustment in the FY 2014 SNF PPS final rule. Accordingly, Table 2 
below summarizes the revised and updated labor-related share for FY 
2014, which is based on IGI's most recent forecast (second quarter 2013 
forecast with historical data through first quarter 2013) of the 
rebased and revised FY 2010-based SNF market basket, compared to the 
labor-related share that was used for the FY 2013 SNF PPS update.

          Table 2--FY 2013 and FY 2014 SNF Labor-Related Share
------------------------------------------------------------------------
                                             Relative        Relative
                                            importance,     importance,
                                          labor-related,  labor-related,
                                            FY 2013 (FY     FY 2014 (FY
                                            2004-based      2010-based
                                            index) 12:2     index) 13:2
                                             forecast        forecast
------------------------------------------------------------------------
Wages and salaries \1\..................          49.847          49.118
Employee benefits.......................          11.532          11.423
Nonmedical Professional fees: labor-               1.307           3.446
 related................................
Administrative and facilities support                N/A           0.499
 services...............................
All Other: Labor-related services \2\...           3.364           2.287
Capital-related (.391)..................           2.333           2.772
                                         -------------------------------
    Total...............................          68.383          69.545
------------------------------------------------------------------------
\1\ The wages and salaries and employee benefits cost weight reflect
  contract labor costs.
\2\ Previously referred to as labor-intensive services cost category in
  the FY 2004-based SNF market basket.

2. Market Basket Estimate for the FY 2014 SNF PPS Update
    We also proposed to determine the FY 2014 SNF market basket 
percentage under section 1888(e)(5)(B)(i) of the Act based on the 
percentage increase in the revised and rebased FY 2010-based SNF market 
basket (78 FR 26441). As discussed above, we are finalizing our 
proposal to revise and rebase the SNF market basket to reflect a base 
year of FY 2010. Thus, we are finalizing our proposal to use the FY 
2010-based SNF market basket to determine the SNF market basket 
percentage increase for FY 2014. Section IV.B.5 of this final rule 
includes further discussion of the SNF market basket percentage 
increase for FY 2014.
3. Forecast Error Adjustment
    As discussed in the June 10, 2003 supplemental proposed rule (68 FR 
34768) and finalized in the August 4, 2003, final rule (68 FR 46057 
through 46059), the regulations at Sec.  413.337(d)(2) provide for an 
adjustment to account for market basket forecast error. The initial 
adjustment for market basket forecast error applied to the update of 
the FY 2003 rate for FY 2004, and took into account the cumulative 
forecast error for the period from FY 2000 through FY 2002, resulting 
in an increase of 3.26 percent to the FY 2004 update. Subsequent 
adjustments in succeeding FYs take into account the forecast error from 
the most recently available FY for which there is final data, and apply 
the difference between the forecasted and actual change in the market 
basket when the difference exceeds a specified threshold. We originally 
used a 0.25 percentage point threshold for this purpose; however, for 
the reasons specified in the FY 2008 SNF PPS final rule (72 FR 43425, 
August 3, 2007), we adopted a 0.5 percentage point threshold effective 
for FY 2008 and subsequent fiscal years. As we stated in the FY 2004 
SNF PPS final rule that first issued the market basket forecast error 
adjustment (68 FR 46058, August 4, 2003), the adjustment will ``. . . 
reflect both upward and downward adjustments, as appropriate.''
    In the FY 2014 SNF PPS proposed rule (78 FR 26441 through 26442), 
we discussed the forecast error for FY 2012 (the most recently 
available FY for which there is final data), and proposed a new method 
for reporting the forecast error in situations where the forecast error 
calculation is equal to 0.5 percentage point when rounded to one 
significant digit (otherwise referred to as a tenth of a percentage 
point). For FY 2012, the estimated increase in the market basket index 
was 2.7 percentage points, while the actual increase was 2.2 percentage 
points, resulting in the actual increase being 0.5 percentage point 
lower than the estimated increase. As the forecast error calculation in 
this instance does not permit one to determine definitively if the 
forecast error adjustment threshold has been exceeded, we proposed to 
report the forecast error to two significant digits so that we may 
determine whether the forecast error correction threshold has been 
exceeded and whether the forecast error adjustment should be applied 
under Sec.  413.337(d)(2). This policy would apply only in those 
instances where the forecast error, when rounded to one significant 
digit, is 0.5 percentage point. Furthermore, we stated that we would 
apply the proposed policy where the difference between the actual and 
projected market basket is either positive or negative 0.5 percentage 
point. We believe this approach is necessary and appropriate to ensure 
that the necessity for a forecast error adjustment is accurately 
determined in accordance with Sec.  413.337(d)(2). Therefore, we 
proposed that, following the policy outlined above, we would determine 
the forecast error for FY 2012 to the second significant digit, or the 
hundredth of a percentage point. The forecasted FY 2012 SNF market 
basket

[[Page 47947]]

percentage change was 2.7 percent. When rounded to the second 
significant digit, it was 2.69 percent. This would be subtracted from 
the actual FY 2012 SNF market basket percentage change, rounded to the 
second significant digit, of 2.18 percent to yield a negative forecast 
error correction of 0.51 percentage point. As the forecast error 
correction, when rounded to two significant digits, exceeds 0.5 
percentage point, a forecast error adjustment would be warranted under 
the policy outlined in the FY 2008 SNF PPS final rule (72 FR 43425) 
(see Sec.  413.337(d)(2)).
    We stated in the proposed rule that, consistent with prior 
applications of the forecast error adjustment since establishing the 
0.5 percentage point threshold, and consistent with our applications of 
both the market basket adjustment and productivity adjustment described 
below, once we have determined that a forecast error adjustment is 
warranted, we will continue to apply the adjustment itself at one 
significant digit (otherwise referred to as a tenth of a percentage 
point). Therefore, the FY 2014 SNF market basket percentage change of 
2.3 percent would be adjusted downward by the forecast error correction 
of 0.5 percentage point, resulting in a net SNF market basket increase 
factor of 1.8 percent.
    We received a number of comments on the proposed change to how the 
forecast error is reported in these limited circumstances, as well as 
more general comments on the SNF forecast error adjustment. A 
discussion of these comments, with our responses, appears below.
    Comment: The comments received on this topic supported the approach 
proposed in the FY 2014 SNF PPS proposed rule for reporting the 
forecast error in situations where the forecast error calculation is 
equal to 0.5 percentage point when rounded to one significant digit. 
Some commenters did, however, state that we should consider using a 
0.45 percentage point threshold instead of the 0.5 percentage point 
threshold, where we would apply a forecast error adjustment when the 
forecast error exceeded 0.45 percentage point. According to the 
commenters, this would permit us to continue applying an adjustment at 
the one significant digit level without requiring different methods for 
reporting the forecast error in a given year. Finally, it was requested 
that we confirm that in cases where the threshold rounds to 0.50 
percentage point, at the two significant digit level, that a forecast 
error adjustment would not be applied.
    Response: We appreciate the support for our proposal from 
commenters. With respect to the commenters' suggestion that we adopt a 
0.45 percentage point threshold rather than the current 0.5 percentage 
point threshold, we note that we did not propose to change the forecast 
error threshold in the FY 2014 SNF PPS proposed rule, and thus we are 
not adopting such a change at this time. We proposed only to change how 
the forecast error is reported to create greater transparency, in those 
limited cases where the forecast error rounds to 0.5 percentage point 
at the one significant digit level, as to whether and why the forecast 
error adjustment is or is not being applied in a given year. We 
continue to believe that a 0.5 percentage point threshold is 
appropriate and enables us to identify those instances where the 
difference between the actual and projected market basket becomes 
sufficiently significant to indicate that the historical price changes 
are not being adequately reflected.
    In response to the comment concerning whether, under our proposed 
policy, the forecast error adjustment would be applied in cases where 
the forecast error rounds to 0.50 percentage point at the two 
significant digit level, we would not apply the forecast error 
adjustment in such a case as the forecast error would not exceed the 
0.5 percentage point threshold.
    Comment: Several commenters suggested that we apply a cumulative 
forecast error adjustment to account for all of the variations in the 
market basket forecasts since FY 2003. These commenters stated that 
while the industry has tolerated the adjustment process, the lack of 
any cumulative adjustment in recent years violates the precedent set by 
CMS in 2003 when the last cumulative adjustment was made and that the 
cumulative adjustment in 2003 demonstrated recognition by us of the 
cumulatively erosive effect of multi-year forecasting errors. The 
commenters recommended that we adopt a policy which recognizes the 
cumulative effect of multi-year market basket forecast errors and that 
an adjustment be made to account for the cumulative errors since FY 
2003.
    Response: In the FY 2004 SNF PPS final rule, we applied a one-time, 
cumulative forecast error adjustment resulting in an increase of 3.26 
percent (68 FR 46036, 46058). Since that time, the forecast errors have 
been relatively small and clustered near zero. As stated in prior 
rulemaking on the SNF PPS--including, most recently, the FY 2012 SNF 
PPS final rule (76 FR 48527, August 8, 2011)--we believe the forecast 
error correction should be applied only when the degree of forecast 
error in any given year is such that the SNF base payment rate does not 
adequately reflect the historical price changes faced by SNFs. 
Accordingly, we continue to believe that the forecast error adjustment 
mechanism should appropriately be reserved for the type of major, 
unexpected change that initially gave rise to this policy, rather than 
the minor year-to-year variances that are a routine and inherent aspect 
of this type of statistical measurement.
    Accordingly, for the reasons discussed in this final rule and in 
the FY 2014 SNF PPS proposed rule (78 FR 26441 through 26442), we are 
finalizing our proposal to report the forecast error to the second 
significant digit in only those instances where the forecast error 
rounds to 0.5 percentage point at one significant digit. Effective 
October 1, 2013, we will report the forecast error to the second 
significant digit in those instances where the forecast error rounds to 
0.5 percentage point at one significant digit, so that we may determine 
whether the forecast error adjustment threshold has been exceeded. As 
discussed above, once we have determined that a forecast error 
adjustment is warranted, we will continue to apply the adjustment 
itself at one significant digit (otherwise referred to as a tenth of a 
percentage point).
4. Multifactor Productivity Adjustment
    Section 3401(b) of the Affordable Care Act (consisting of the 
Patient Protection and Affordable Care Act, Pub. L. 111-148, enacted on 
March 23, 2010, and the Health Care and Education Reconciliation Act of 
2010, Pub. L. 111-152, enacted on March 30, 2010) requires that, in FY 
2012 (and in subsequent FYs), the market basket percentage under the 
SNF payment system as described in section 1888(e)(5)(B)(i) of the Act 
is to be reduced annually by the productivity adjustment described in 
section 1886(b)(3)(B)(xi)(II) of the Act. Section 1886(b)(3)(B)(xi)(II) 
of the Act, added by section 3401(a) of the Affordable Care Act, sets 
forth the definition of this productivity adjustment. The statute 
defines the productivity adjustment to be equal to ``the 10-year moving 
average of changes in annual economy-wide private nonfarm business 
multi-factor productivity (as projected by the Secretary for the 10-
year period ending with the applicable fiscal year, year, cost-
reporting period, or other annual period)'' (the MFP adjustment). The 
Bureau of Labor Statistics (BLS) is the agency that publishes the 
official measure of private nonfarm business

[[Page 47948]]

multifactor productivity (MFP). Please see http://www.bls.gov/mfp to 
obtain the BLS historical published MFP data.
    The projection of MFP is currently produced by IGI, an economic 
forecasting firm. To generate a forecast of MFP, IGI replicated the MFP 
measure calculated by the BLS, using a series of proxy variables 
derived from IGI's U.S. macroeconomic models. This process is described 
in greater detail in section III.F.3 of the FY 2012 SNF PPS final rule 
(76 FR 48527 through 48529).
a. Incorporating the Multifactor Productivity Adjustment Into the 
Market Basket Update
    Section 1888(e)(5)(A) of the Act requires the Secretary to 
``establish a skilled nursing facility market basket index that 
reflects changes over time in the prices of an appropriate mix of goods 
and services included in covered skilled nursing facility services.'' 
Section 1888(e)(5)(B)(ii) of the Act, added by section 3401(b) of the 
Affordable Care Act, requires that for FY 2012 and each subsequent FY, 
after determining the market basket percentage described in section 
1888(e)(5)(B)(i) of the Act, ``the Secretary shall reduce such 
percentage by the productivity adjustment described in section 
1886(b)(3)(B)(xi)(II)'' (which we refer to as the multifactor 
productivity (MFP) adjustment). Section 1888(e)(5)(B)(ii) of the Act 
further states that the reduction of the market basket percentage by 
the MFP adjustment may result in the market basket percentage being 
less than zero for a FY, and may result in payment rates under section 
1888(e) of the Act for a FY being less than such payment rates for the 
preceding FY. Thus, if the application of the MFP adjustment to the 
market basket percentage calculated under section 1888(e)(5)(B)(i) of 
the Act results in an MFP-adjusted market basket percentage that is 
less than zero, then the annual update to the unadjusted federal per 
diem rates under section 1888(e)(4)(E)(ii) of the Act would be 
negative, and such rates would decrease relative to the prior FY.
    For the FY 2014 SNF PPS update, the MFP adjustment is calculated as 
the 10-year moving average of changes in MFP for the period ending 
September 30, 2014. In accordance with section 1888(e)(5)(B)(i) of the 
Act and Sec.  413.337(d)(2) of the regulations, the SNF PPS market 
basket percentage for FY 2014 is based on IGI's second quarter 2013 
forecast of the FY 2010-based SNF market basket update (which is 2.3 
percent), as adjusted by the forecast error adjustment (which is 0.5 
percent), and is estimated to be 1.8 percent. In accordance with 
section 1888(e)(5)(B)(ii) of the Act (as added by section 3401(b) of 
the Affordable Care Act) and Sec.  413.337(d)(3), this market basket 
percentage is then reduced by the MFP adjustment (which is the 10-year 
moving average of changes in MFP for the period ending September 30, 
2014) of 0.5 percent. In the FY 2014 SNF PPS proposed rule (78 FR 
26443), we proposed that if more recent data became available, we would 
use that data, if appropriate, to determine the FY 2014 MFP adjustment. 
The MFP adjustment of 0.4 percent set forth in the proposed rule was 
based on IGI's first quarter 2013 forecast. The 0.5 percent MFP 
adjustment set forth in this final rule is based on updated IGI data 
(that is, IGI second quarter 2013 forecast). The resulting MFP-adjusted 
SNF market basket update is equal to 1.3 percent, or 1.8 percent less 
the 0.5 percentage point MFP adjustment.
5. Market Basket Update Factor for FY 2014
    Sections 1888(e)(4)(E)(ii)(IV) and 1888(e)(5)(i) of the Act require 
that SNF PPS unadjusted federal per diem rates for the previous fiscal 
year be adjusted by the market basket index percentage change for the 
fiscal year involved, in order to compute the unadjusted federal per 
diem rates for the current year. Accordingly, we determined the total 
growth from the average market basket index for the period of October 
1, 2012 through September 30, 2013 to the average market basket index 
for the period of October 1, 2013 through September 30, 2014. This 
process yields a market basket update factor of 2.3 percent. As further 
explained in section IV.B.3 of this final rule, as applicable, we 
adjust the market basket update factor to reflect the forecast error 
from the most recently available FY for which there is final data and 
apply this adjustment whenever the difference between the forecasted 
and actual percentage change in the market basket exceeds a 0.5 
percentage point threshold. Since the forecasted FY 2012 SNF market 
basket percentage change exceeded the actual FY 2012 SNF market basket 
percentage change (FY 2012 is the most recently available FY for which 
there is final data) by more than 0.5 percentage point, the FY 2014 
market basket update factor of 2.3 percent would be adjusted downward 
by the applicable difference, in this case 0.5 percentage points, which 
reduces the FY 2014 market basket update factor to 1.8 percent. In 
addition, for FY 2014, section 1888(e)(5)(B) of the Act requires us to 
reduce the market basket percentage by the MFP adjustment (the 10-year 
moving average of changes in MFP for the period ending September 30, 
2014) of 0.5 percent, as described in section IV.B.4. of this final 
rule. The resulting MFP-adjusted SNF market basket update would be 
equal to 1.3 percent, or 1.8 percent less 0.5 percentage point. We used 
the FY 2010-based SNF market basket percentage, adjusted as described 
above, to adjust each per diem component of the federal rates forward 
to reflect the change in the average prices for FY 2014 from average 
prices for FY 2013. We further adjust the rates by a wage index budget 
neutrality factor, described later in this section. Tables 3 and 4 
reflect the updated components of the unadjusted federal rates for FY 
2014, prior to adjustment for case-mix.

                            Table 3--FY 2014 Unadjusted Federal Rate per Diem--Urban
----------------------------------------------------------------------------------------------------------------
                                              Nursing-- case-  Therapy-- case-   Therapy-- non-
               Rate component                       mix              mix            case-mix       Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount.............................         $165.81          $124.90           $16.45           $84.62
----------------------------------------------------------------------------------------------------------------

                            Table 4--FY 2014 Unadjusted Federal Rate per Diem--Rural
----------------------------------------------------------------------------------------------------------------
                                              Nursing-- case-  Therapy-- case-   Therapy-- non-
               Rate component                       mix              mix            case-mix       Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount.............................         $158.41          $144.01           $17.57           $86.19
----------------------------------------------------------------------------------------------------------------

[[Page 47949]]

6. Case-Mix Adjustment
    Under section 1888(e)(4)(G)(i) of the Act, the federal rate also 
incorporates an adjustment to account for case-mix, using a 
classification system that accounts for the relative resource 
utilization of different patient types. The statute specifies that the 
adjustment is to reflect both a resident classification system 
established by the Secretary to account for the relative resource use 
of different patient types, as well as resident assessment data and 
other data that the Secretary considers appropriate. In the May 12, 
1998 interim final rule with comment period that initially implemented 
the SNF PPS (63 FR 26252), we developed the RUG-III case-mix 
classification system, which tied the amount of payment to resident 
resource use in combination with resident characteristic information. 
Staff time measurement (STM) studies conducted in 1990, 1995, and 1997 
provided information on resource use (time spent by staff members on 
residents) and resident characteristics that enabled us not only to 
establish RUG-III, but also to create case-mix indexes (CMIs). The 
original RUG-III grouper logic was based on clinical data collected in 
1990, 1995, and 1997. As discussed in the FY 2010 SNF PPS proposed rule 
(74 FR 22208), we subsequently conducted a multi-year data collection 
and analysis under the Staff Time and Resource Intensity Verification 
(STRIVE) project to update the case-mix classification system for FY 
2011. The resulting Resource Utilization Groups, Version 4 (RUG-IV) 
case-mix classification system reflected the data collected in 2006 
through 2007 during the STRIVE project, and the RUG-IV model was 
finalized in the FY 2010 SNF PPS final rule (74 FR 40288) to take 
effect in FY 2011 concurrently with an updated new resident assessment 
instrument, version 3.0 of the Minimum Data Set (MDS 3.0), which 
collects the clinical data used for case-mix classification under RUG-
IV.
    We note that case-mix classification is based, in part, on the 
beneficiary's need for skilled nursing care and therapy services. The 
case-mix classification system uses clinical data from the MDS to 
assign a case-mix group to each patient that is then used to calculate 
a per diem payment under the SNF PPS. Further, because the MDS is used 
as a basis for payment as well as a clinical assessment, we have 
provided extensive training on proper coding and the time frames for 
MDS completion in the RAI Manual. For an MDS to be considered valid for 
use in determining payment, the MDS assessment must be completed in 
compliance with the instructions in the RAI Manual in effect at the 
time the assessment is completed. For payment and quality monitoring 
purposes, the RAI Manual consists of both the Manual instructions and 
the interpretive guidance and policy clarifications posted on the 
appropriate MDS Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/MDS30RAIManual.html.
    Under section 1888(e)(4)(H), each update of the payment rates must 
include the case-mix classification methodology applicable for the 
upcoming FY. The payment rates set forth in this final rule reflect the 
use of the RUG-IV case-mix classification system from October 1, 2013, 
through September 30, 2014. We list the case-mix adjusted RUG-IV 
payment rates, provided separately for urban and rural SNFs, in Tables 
5 and 6 with corresponding case-mix values. These tables do not reflect 
the add-on for SNF residents with AIDS enacted by section 511 of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(MMA, Pub. L. 108-173) discussed below, which we apply only after 
making all other adjustments (including the wage index and case-mix 
adjustments).

                                      Table 5--RUG-IV Case-Mix Adjusted Federal Rates and Associated Indexes--Urban
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Nursing         Therapy      Non-case mix    Non-case mix
             RUG-IV Category               Nursing index   Therapy index     component       component     therapy comp      component      Total rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUX.....................................            2.67            1.87         $442.71         $233.56  ..............          $84.62         $760.89
RUL.....................................            2.57            1.87          426.13          233.56  ..............           84.62          744.31
RVX.....................................            2.61            1.28          432.76          159.87  ..............           84.62          677.25
RVL.....................................            2.19            1.28          363.12          159.87  ..............           84.62          607.61
RHX.....................................            2.55            0.85          422.82          106.17  ..............           84.62          613.61
RHL.....................................            2.15            0.85          356.49          106.17  ..............           84.62          547.28
RMX.....................................            2.47            0.55          409.55           68.70  ..............           84.62          562.87
RML.....................................            2.19            0.55          363.12           68.70  ..............           84.62          516.44
RLX.....................................            2.26            0.28          374.73           34.97  ..............           84.62          494.32
RUC.....................................            1.56            1.87          258.66          233.56  ..............           84.62          576.84
RUB.....................................            1.56            1.87          258.66          233.56  ..............           84.62          576.84
RUA.....................................            0.99            1.87          164.15          233.56  ..............           84.62          482.33
RVC.....................................            1.51            1.28          250.37          159.87  ..............           84.62          494.86
RVB.....................................            1.11            1.28          184.05          159.87  ..............           84.62          428.54
RVA.....................................            1.10            1.28          182.39          159.87  ..............           84.62          426.88
RHC.....................................            1.45            0.85          240.42          106.17  ..............           84.62          431.21
RHB.....................................            1.19            0.85          197.31          106.17  ..............           84.62          388.10
RHA.....................................            0.91            0.85          150.89          106.17  ..............           84.62          341.68
RMC.....................................            1.36            0.55          225.50           68.70  ..............           84.62          378.82
RMB.....................................            1.22            0.55          202.29           68.70  ..............           84.62          355.61
RMA.....................................            0.84            0.55          139.28           68.70  ..............           84.62          292.60
RLB.....................................            1.50            0.28          248.72           34.97  ..............           84.62          368.31
RLA.....................................            0.71            0.28          117.73           34.97  ..............           84.62          237.32
ES3.....................................            3.58  ..............          593.60  ..............           16.45           84.62          694.67
ES2.....................................            2.67  ..............          442.71  ..............           16.45           84.62          543.78
ES1.....................................            2.32  ..............          384.68  ..............           16.45           84.62          485.75
HE2.....................................            2.22  ..............          368.10  ..............           16.45           84.62          469.17
HE1.....................................            1.74  ..............          288.51  ..............           16.45           84.62          389.58
HD2.....................................            2.04  ..............          338.25  ..............           16.45           84.62          439.32
HD1.....................................            1.60  ..............          265.30  ..............           16.45           84.62          366.37
HC2.....................................            1.89  ..............          313.38  ..............           16.45           84.62          414.45
HC1.....................................            1.48  ..............          245.40  ..............           16.45           84.62          346.47

[[Page 47950]]

 
HB2.....................................            1.86  ..............          308.41  ..............           16.45           84.62          409.48
HB1.....................................            1.46  ..............          242.08  ..............           16.45           84.62          343.15
LE2.....................................            1.96  ..............          324.99  ..............           16.45           84.62          426.06
LE1.....................................            1.54  ..............          255.35  ..............           16.45           84.62          356.42
LD2.....................................            1.86  ..............          308.41  ..............           16.45           84.62          409.48
LD1.....................................            1.46  ..............          242.08  ..............           16.45           84.62          343.15
LC2.....................................            1.56  ..............          258.66  ..............           16.45           84.62          359.73
LC1.....................................            1.22  ..............          202.29  ..............           16.45           84.62          303.36
LB2.....................................            1.45  ..............          240.42  ..............           16.45           84.62          341.49
LB1.....................................            1.14  ..............          189.02  ..............           16.45           84.62          290.09
CE2.....................................            1.68  ..............          278.56  ..............           16.45           84.62          379.63
CE1.....................................            1.50  ..............          248.72  ..............           16.45           84.62          349.79
CD2.....................................            1.56  ..............          258.66  ..............           16.45           84.62          359.73
CD1.....................................            1.38  ..............          228.82  ..............           16.45           84.62          329.89
CC2.....................................            1.29  ..............          213.89  ..............           16.45           84.62          314.96
CC1.....................................            1.15  ..............          190.68  ..............           16.45           84.62          291.75
CB2.....................................            1.15  ..............          190.68  ..............           16.45           84.62          291.75
CB1.....................................            1.02  ..............          169.13  ..............           16.45           84.62          270.20
CA2.....................................            0.88  ..............          145.91  ..............           16.45           84.62          246.98
CA1.....................................            0.78  ..............          129.33  ..............           16.45           84.62          230.40
BB2.....................................            0.97  ..............          160.84  ..............           16.45           84.62          261.91
BB1.....................................            0.90  ..............          149.23  ..............           16.45           84.62          250.30
BA2.....................................            0.70  ..............          116.07  ..............           16.45           84.62          217.14
BA1.....................................            0.64  ..............          106.12  ..............           16.45           84.62          207.19
PE2.....................................            1.50  ..............          248.72  ..............           16.45           84.62          349.79
PE1.....................................            1.40  ..............          232.13  ..............           16.45           84.62          333.20
PD2.....................................            1.38  ..............          228.82  ..............           16.45           84.62          329.89
PD1.....................................            1.28  ..............          212.24  ..............           16.45           84.62          313.31
PC2.....................................            1.10  ..............          182.39  ..............           16.45           84.62          283.46
PC1.....................................            1.02  ..............          169.13  ..............           16.45           84.62          270.20
PB2.....................................            0.84  ..............          139.28  ..............           16.45           84.62          240.35
PB1.....................................            0.78  ..............          129.33  ..............           16.45           84.62          230.40
PA2.....................................            0.59  ..............           97.83  ..............           16.45           84.62          198.90
PA1.....................................            0.54  ..............           89.54  ..............           16.45           84.62          190.61
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                      Table 6--RUG-IV Case-Mix Adjusted Federal Rates and Associated Indexes--Rural
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Nursing         Therapy      Non-case mix    Non-case mix
             RUG-IV Category               Nursing index   Therapy index     component       component     therapy comp      component      Total rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUX.....................................            2.67            1.87         $422.95         $269.30  ..............          $86.19         $778.44
RUL.....................................            2.57            1.87          407.11          269.30  ..............           86.19          762.60
RVX.....................................            2.61            1.28          413.45          184.33  ..............           86.19          683.97
RVL.....................................            2.19            1.28          346.92          184.33  ..............           86.19          617.44
RHX.....................................            2.55            0.85          403.95          122.41  ..............           86.19          612.55
RHL.....................................            2.15            0.85          340.58          122.41  ..............           86.19          549.18
RMX.....................................            2.47            0.55          391.27           79.21  ..............           86.19          556.67
RML.....................................            2.19            0.55          346.92           79.21  ..............           86.19          512.32
RLX.....................................            2.26            0.28          358.01           40.32  ..............           86.19          484.52
RUC.....................................            1.56            1.87          247.12          269.30  ..............           86.19          602.61
RUB.....................................            1.56            1.87          247.12          269.30  ..............           86.19          602.61
RUA.....................................            0.99            1.87          156.83          269.30  ..............           86.19          512.32
RVC.....................................            1.51            1.28          239.20          184.33  ..............           86.19          509.72
RVB.....................................            1.11            1.28          175.84          184.33  ..............           86.19          446.36
RVA.....................................            1.10            1.28          174.25          184.33  ..............           86.19          444.77
RHC.....................................            1.45            0.85          229.69          122.41  ..............           86.19          438.29
RHB.....................................            1.19            0.85          188.51          122.41  ..............           86.19          397.11
RHA.....................................            0.91            0.85          144.15          122.41  ..............           86.19          352.75
RMC.....................................            1.36            0.55          215.44           79.21  ..............           86.19          380.84
RMB.....................................            1.22            0.55          193.26           79.21  ..............           86.19          358.66
RMA.....................................            0.84            0.55          133.06           79.21  ..............           86.19          298.46
RLB.....................................            1.50            0.28          237.62           40.32  ..............           86.19          364.13
RLA.....................................            0.71            0.28          112.47           40.32  ..............           86.19          238.98
ES3.....................................            3.58  ..............          567.11  ..............           17.57           86.19          670.87
ES2.....................................            2.67  ..............          422.95  ..............           17.57           86.19          526.71
ES1.....................................            2.32  ..............          367.51  ..............           17.57           86.19          471.27
HE2.....................................            2.22  ..............          351.67  ..............           17.57           86.19          455.43
HE1.....................................            1.74  ..............          275.63  ..............           17.57           86.19          379.39
HD2.....................................            2.04  ..............          323.16  ..............           17.57           86.19          426.92
HD1.....................................            1.60  ..............          253.46  ..............           17.57           86.19          357.22

[[Page 47951]]

 
HC2.....................................            1.89  ..............          299.39  ..............           17.57           86.19          403.15
HC1.....................................            1.48  ..............          234.45  ..............           17.57           86.19          338.21
HB2.....................................            1.86  ..............          294.64  ..............           17.57           86.19          398.40
HB1.....................................            1.46  ..............          231.28  ..............           17.57           86.19          335.04
LE2.....................................            1.96  ..............          310.48  ..............           17.57           86.19          414.24
LE1.....................................            1.54  ..............          243.95  ..............           17.57           86.19          347.71
LD2.....................................            1.86  ..............          294.64  ..............           17.57           86.19          398.40
LD1.....................................            1.46  ..............          231.28  ..............           17.57           86.19          335.04
LC2.....................................            1.56  ..............          247.12  ..............           17.57           86.19          350.88
LC1.....................................            1.22  ..............          193.26  ..............           17.57           86.19          297.02
LB2.....................................            1.45  ..............          229.69  ..............           17.57           86.19          333.45
LB1.....................................            1.14  ..............          180.59  ..............           17.57           86.19          284.35
CE2.....................................            1.68  ..............          266.13  ..............           17.57           86.19          369.89
CE1.....................................            1.50  ..............          237.62  ..............           17.57           86.19          341.38
CD2.....................................            1.56  ..............          247.12  ..............           17.57           86.19          350.88
CD1.....................................            1.38  ..............          218.61  ..............           17.57           86.19          322.37
CC2.....................................            1.29  ..............          204.35  ..............           17.57           86.19          308.11
CC1.....................................            1.15  ..............          182.17  ..............           17.57           86.19          285.93
CB2.....................................            1.15  ..............          182.17  ..............           17.57           86.19          285.93
CB1.....................................            1.02  ..............          161.58  ..............           17.57           86.19          265.34
CA2.....................................            0.88  ..............          139.40  ..............           17.57           86.19          243.16
CA1.....................................            0.78  ..............          123.56  ..............           17.57           86.19          227.32
BB2.....................................            0.97  ..............          153.66  ..............           17.57           86.19          257.42
BB1.....................................            0.90  ..............          142.57  ..............           17.57           86.19          246.33
BA2.....................................            0.70  ..............          110.89  ..............           17.57           86.19          214.65
BA1.....................................            0.64  ..............          101.38  ..............           17.57           86.19          205.14
PE2.....................................            1.50  ..............          237.62  ..............           17.57           86.19          341.38
PE1.....................................            1.40  ..............          221.77  ..............           17.57           86.19          325.53
PD2.....................................            1.38  ..............          218.61  ..............           17.57           86.19          322.37
PD1.....................................            1.28  ..............          202.76  ..............           17.57           86.19          306.52
PC2.....................................            1.10  ..............          174.25  ..............           17.57           86.19          278.01
PC1.....................................            1.02  ..............          161.58  ..............           17.57           86.19          265.34
PB2.....................................            0.84  ..............          133.06  ..............           17.57           86.19          236.82
PB1.....................................            0.78  ..............          123.56  ..............           17.57           86.19          227.32
PA2.....................................            0.59  ..............           93.46  ..............           17.57           86.19          197.22
PA1.....................................            0.54  ..............           85.54  ..............           17.57           86.19          189.30
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Section 511 of the MMA amended section 1888(e)(12) of the Act to 
provide for a temporary increase of 128 percent in the PPS per diem 
payment for SNF residents with Acquired Immune Deficiency Syndrome 
(AIDS) to reflect increased costs associated with these residents, 
effective for services furnished on or after October 1, 2004. This 
special add-on for SNF residents with AIDS is required to remain in 
effect until ``. . . the Secretary certifies that there is an 
appropriate adjustment in the case mix . . . to compensate for the 
increased costs associated with [such] residents . . . .'' The add-on 
for SNF residents with AIDS is also discussed in Program Transmittal 
160 (Change Request 3291), issued on April 30, 2004, 
which is available online at www.cms.gov/transmittals/downloads/r160cp.pdf. In the FY 2010 SNF PPS final rule (74 FR 40288) (in which 
we finalized the RUG-IV case-mix classification system), we did not 
address the certification of a case mix adjustment alternative to the 
add-on for SNF residents with AIDS, thus allowing the add-on payment 
required by section 511 of the MMA to remain in effect. For the limited 
number of SNF residents that qualify for this add-on, there is a 
significant increase in payments. Using FY 2011 data, we identified 
fewer than 4,100 SNF residents with a diagnosis code of 042 (Human 
Immunodeficiency Virus (HIV) Infection) who qualify for this add-on. 
For FY 2014, an urban facility with a resident with AIDS in RUG-IV 
group ``HC2'' would have a case-mix adjusted payment of $414.45 (see 
Table 4) before the application of the add-on required by the MMA. 
After application of the add-on, an increase of 128 percent, this urban 
facility would receive a case-mix adjusted payment of approximately 
$944.95 for this resident.
    Currently, we use the International Classification of Diseases, 9th 
revision, Clinical Modification (ICD-9-CM) code 042 to identify those 
residents for whom it is appropriate to apply the AIDS add-on 
established by section 511 of the MMA. In this context, we note that, 
in accordance with the requirements of the final rule published in the 
Federal Register on September 5, 2012 (77 FR 54664), we will be 
discontinuing our current use of the ICD-9-CM, effective with the 
compliance date for using the International Classification of Diseases, 
10th revision, Clinical Modification (ICD-10-CM) of October 1, 2014. In 
the FY 2014 SNF PPS proposed rule (78 FR 26444), with regard to the 
above-referenced ICD-9-CM diagnosis code of 042, we proposed to 
transition to the equivalent ICD-10-CM diagnosis code of B20 upon the 
October 1, 2014 implementation date for conversion to ICD-10-CM in 
order to identify those residents for whom it is appropriate to apply 
the AIDS add-on. We invited public comment on this proposal. We 
received only one comment that included a reference to this proposal, 
and this comment simply acknowledged the proposal without offering any 
specific observations about it. Accordingly, in this final rule, we are 
finalizing this proposal without any modification. Therefore, effective 
with services furnished on or after October 1, 2014, for the reasons 
set forth above and in the FY 2014 SNF PPS proposed rule (78 FR 26444), 
the AIDS add-on established by section 511 of the MMA

[[Page 47952]]

will apply to beneficiaries with an ICD-10-CM diagnosis code of B20.
7. Wage Index Adjustment
    Section 1888(e)(4)(G)(ii) of the Act requires that we adjust the 
portion of the federal rates attributable to wages and wage-related 
costs for the area in which the facility is located compared to the 
national average of such costs using a wage index that we find 
appropriate. Since the implementation of the SNF PPS, we have used 
hospital wage data in developing a wage index to be applied to SNFs. In 
the FY 2014 SNF PPS proposed rule (78 FR 26446 through 26447), we 
proposed to continue that practice, as we continue to believe that in 
the absence of SNF-specific wage data, using the hospital inpatient 
wage index is appropriate and reasonable for the SNF PPS. As explained 
in the update notice for FY 2005 (69 FR 45786, July 30, 2004), the SNF 
PPS does not use the hospital area wage index's occupational mix 
adjustment, as this adjustment serves specifically to define the 
occupational categories more clearly in a hospital setting; moreover, 
the collection of the occupational wage data also excludes any wage 
data related to SNFs. Therefore, we believe that using the updated wage 
data exclusive of the occupational mix adjustment continues to be 
appropriate for the SNF PPS.
    In the FY 2014 SNF PPS proposed rule (78 FR 26447), we also 
proposed to continue using the same methodology discussed in the FY 
2008 SNF PPS final rule (72 FR 43423) to address those geographic areas 
in which there are no hospitals and, thus, no hospital wage index data 
on which to base the calculation of the FY 2014 SNF PPS wage index. For 
rural geographic areas that do not have hospitals and, therefore, lack 
hospital wage data on which to base an area wage adjustment, we 
proposed to use the average wage index from all contiguous CBSAs as a 
reasonable proxy. For FY 2014, there are no rural geographic areas that 
do not have hospitals, and thus this methodology will not be applied. 
Furthermore, we indicated that we would not apply this methodology to 
rural Puerto Rico, but instead would continue using the most recent 
wage index previously available for that area due to the distinct 
economic circumstances that exist there (for example, due to the close 
proximity to one another of almost all of Puerto Rico's various urban 
and non-urban areas, using the methodology discussed in the FY 2008 
final rule would produce a wage index for rural Puerto Rico that is 
inappropriately higher than that in half of its urban areas). For urban 
areas without specific hospital wage index data, we proposed to use the 
average wage indexes of all of the urban areas within the state to 
serve as a reasonable proxy for the wage index of that urban CBSA. For 
FY 2014, the only urban area without wage index data available is CBSA 
25980, Hinesville-Fort Stewart, GA.
    In the SNF PPS final rule for FY 2006 (70 FR 45026, August 4, 
2005), we adopted the changes discussed in the OMB Bulletin No. 03-04 
(June 6, 2003), available online at http://www.whitehouse.gov/omb/bulletins/b03-04.html, which announced revised definitions for 
metropolitan statistical areas (MSAs), and the creation of micropolitan 
statistical areas and combined statistical areas. In addition, OMB 
published subsequent bulletins regarding CBSA changes, including 
changes in CBSA numbers and titles. We indicated in the FY 2008 SNF PPS 
final rule (72 FR 43423), that all subsequent SNF PPS rules and notices 
are considered to incorporate the CBSA changes published in the most 
recent OMB bulletin that applies to the hospital wage data used to 
determine the current SNF PPS wage index. The OMB bulletins are 
available online at http://www.whitehouse.gov/omb/bulletins/index.html.
    On February 28, 2013, OMB issued OMB Bulletin No. 13-01, announcing 
revisions to the delineation of Metropolitan Statistical Areas, 
Micropolitian Statistical Areas, and Combined Statistical Areas, and 
guidance on uses of the delineation of these areas. A copy of this 
bulletin may be obtained at http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf. This bulletin states that it 
provides the delineations of all Metropolitan Statistical Areas, 
Metropolitan Divisions, Micropolitan Statistical Areas, Combined 
Statistical Areas, and New England City and Town Areas in the United 
States and Puerto Rico based on the standards published in the June 28, 
2010 Federal Register (75 FR 37246-37252) and Census Bureau data.
    While the revisions OMB published on February 28, 2013 are not as 
sweeping as the changes made when we adopted the CBSA geographic 
designations for FY 2006, the February 28, 2013 bulletin does contain a 
number of significant changes. For example, there are new CBSAs, urban 
counties that become rural, rural counties that become urban, and 
existing CBSAs that are being split apart.
    The changes made by the bulletin and their ramifications must be 
extensively reviewed and assessed by CMS before using them for the SNF 
PPS wage index. Because the bulletin was not issued until February 28, 
2013, we were unable to undertake such a lengthy process before 
publication of the FY 2014 proposed rule. By the time the bulletin was 
issued, the FY 2014 SNF PPS proposed rule was in the advanced stages of 
development. We had already developed the FY 2014 proposed wage index 
based on the previous OMB definitions. As we stated in the FY 2014 SNF 
PPS proposed rule (78 FR 26448), to allow for sufficient time to assess 
the new changes and their ramifications, we intend to propose changes 
to the wage index based on the newest CBSA changes in the FY 2015 SNF 
PPS proposed rule, and thus we would continue to use the previous OMB 
definitions (that is, those used for the FY 2013 SNF PPS update notice) 
for the FY 2014 SNF PPS wage index.
    A discussion of the comments that we received on the wage index 
adjustment to the federal rates, and our responses to those comments, 
appears below.
    Comment: Commenters recommend that we reconsider developing a SNF-
specific wage index suggesting that ``hospital cost data may not be the 
most reliable resource when determining geographical differences in 
salary structure for skilled nursing facilities.'' Additionally, one 
commenter recommends that this rule reflect any changes needed to 
ensure that adjustments more accurately reflect salary experiences of 
facilities. Commenters request that we provide an update in the final 
rule on its efforts and plans for wage index reform for the SNF PPS 
that aims to minimize fluctuations, match the costs of labor in the 
market, and provides for a single wage index policy.
    Response: Tables A and B in the Addendum of this final rule reflect 
updated hospital wage data used to develop the SNF PPS wage index 
published in the FY 2014 SNF PPS proposed rule (78 FR 26471 through 
26480). Consistent with our previous responses to these recurring 
comments (most recently published in the FY 2010 SNF PPS final rule (74 
FR 40301)), developing a wage index that utilizes data specific to SNFs 
would require us to engage in a resource-intensive audit process. Also, 
we note that section 315 of the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554, enacted 
on December 21, 2000) authorized us to establish a geographic 
reclassification procedure that is specific to SNFs, but only after 
collecting the data necessary to establish

[[Page 47953]]

a SNF wage index that is based on wage data from nursing homes. 
However, to date, this has proven to be unfeasible due to the 
volatility of existing SNF wage data and the significant amount of 
resources that would be required to improve the quality of that data. 
As discussed above, we continue to believe that in the absence of SNF-
specific wage data, using the hospital inpatient wage index (without 
the occupational mix adjustment) is appropriate and reasonable for the 
SNF PPS.
    In addition, we note that we have engaged in research efforts 
relating to the development of an alternative hospital wage index for 
the IPPS, which examined the issues the commenters mentioned about 
ensuring that the wage index minimizes fluctuations, matches the costs 
of labor in the market, and provides for a single wage index policy. 
Section 3137(b) of the Affordable Care Act required the Secretary of 
Health and Human Services to submit to Congress a report that includes 
a plan to reform the hospital wage index under section 1886 of the Act. 
In developing the plan, the Secretary was directed to take into account 
the goals for reforming such system set forth in the June 2007 MedPAC 
report entitled ``Report to Congress: Promoting Greater Efficiency in 
Medicare'' (available at http://www.medpac.gov/documents/jun07_entirereport.pdf.), including establishing a new hospital compensation 
index system that:
     Uses Bureau of Labor Statistics data, or other data or 
methodologies, to calculate relative wages for each geographic area 
involved;
     Minimizes wage index adjustments between and within MSAs 
and Statewide rural areas;
     Includes methods to minimize the volatility of wage index 
adjustments that result from implementation of policy, while 
maintaining budget neutrality in applying such adjustments;
     Takes into account the effect that implementation of the 
system would have on health care providers and on each region of the 
country.
     Addresses issues related to occupational mix, such as 
staffing practices and ratios, and any evidence on the effect on 
quality of care or patient safety as a result of the implementation of 
the system; and
     Provides for a transition.
    As delegated by the Secretary, CMS contracted with Acumen, L.L.C. 
(Acumen) to review the June 2007 MedPAC report and recommend a 
methodology for an improved Medicare wage index system. After 
consultation with relevant parties during the development of the plan, 
the Secretary submitted the report to Congress, which is available via 
the Internet at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Reform.html. We will continue to 
monitor closely research efforts surrounding the development of an 
alternative hospital wage index for the IPPS and the potential impact 
or influence of that research on the SNF PPS.
    Once calculated, we apply the wage index adjustment to the labor-
related portion of the federal rate, which is 69.545 percent of the 
total rate. This percentage reflects the labor-related relative 
importance for FY 2014, using the FY 2010-based SNF market basket. Each 
year, we calculate a revised labor-related share, based on the relative 
importance of labor-related cost categories (that is, those cost 
categories that are sensitive to local area wage costs) in the input 
price index. As discussed in section IV.B.2 of this final rule, for the 
FY 2014 SNF PPS update, we revised the labor-related share to reflect 
the relative importance of the revised FY 2010-based SNF market basket 
cost weights for the following cost categories: wages and salaries; 
employee benefits; contract labor; the labor-related portion of 
nonmedical professional fees; administrative and facilities support 
services; all other: labor-related services (previously referred to in 
the FY 2004-based SNF market basket as labor-intensive); and a 
proportion of capital-related expenses.
    We calculate the labor-related relative importance from the SNF 
market basket, and it approximates the labor-related portion of the 
total costs after taking into account historical and projected price 
changes between the base year, FY 2010, and FY 2014. The price proxies 
that move the different cost categories in the market basket do not 
necessarily change at the same rate, and the relative importance 
captures these changes. Accordingly, the relative importance figure 
more closely reflects the cost-share weights for FY 2014 than the base-
year weights from the SNF market basket.
    We calculate the labor-related relative importance for FY 2014 in 
four steps. First, we compute the FY 2014 price index level for the 
total market basket and each cost category of the market basket. 
Second, we calculate a ratio for each cost category by dividing the FY 
2014 price index level for that cost category by the total market 
basket price index level. Third, we determine the FY 2014 relative 
importance for each cost category by multiplying this ratio by the base 
year (FY 2010) weight. Finally, we add the FY 2014 relative importance 
for each of the labor-related cost categories to produce the FY 2014 
labor-related relative importance. Tables 7 and 8 show the case-mix 
adjusted RUG-IV federal rates by labor-related and non-labor-related 
components. Table 2 in section IV.B.4 provides the FY 2014 labor-
related share components based on the revised and rebased FY 2010-based 
SNF market basket.

 Table 7--RUG-IV Case-Mix Adjusted Federal Rates for Urban SNFs by Labor
                         and Non-Labor Component
------------------------------------------------------------------------
                                                   Labor      Non-labor
         RUG-IV category            Total rate    portion      portion
------------------------------------------------------------------------
RUX..............................      $760.89      $529.16      $231.73
RUL..............................       744.31       517.63       226.68
RVX..............................       677.25       470.99       206.26
RVL..............................       607.61       422.56       185.05
RHX..............................       613.61       426.74       186.87
RHL..............................       547.28       380.61       166.67
RMX..............................       562.87       391.45       171.42
RML..............................       516.44       359.16       157.28
RLX..............................       494.32       343.77       150.55
RUC..............................       576.84       401.16       175.68
RUB..............................       576.84       401.16       175.68
RUA..............................       482.33       335.44       146.89
RVC..............................       494.86       344.15       150.71
RVB..............................       428.54       298.03       130.51
RVA..............................       426.88       296.87       130.01

[[Page 47954]]

 
RHC..............................       431.21       299.88       131.33
RHB..............................       388.10       269.90       118.20
RHA..............................       341.68       237.62       104.06
RMC..............................       378.82       263.45       115.37
RMB..............................       355.61       247.31       108.30
RMA..............................       292.60       203.49        89.11
RLB..............................       368.31       256.14       112.17
RLA..............................       237.32       165.04        72.28
ES3..............................       694.67       483.11       211.56
ES2..............................       543.78       378.17       165.61
ES1..............................       485.75       337.81       147.94
HE2..............................       469.17       326.28       142.89
HE1..............................       389.58       270.93       118.65
HD2..............................       439.32       305.53       133.79
HD1..............................       366.37       254.79       111.58
HC2..............................       414.45       288.23       126.22
HC1..............................       346.47       240.95       105.52
HB2..............................       409.48       284.77       124.71
HB1..............................       343.15       238.64       104.51
LE2..............................       426.06       296.30       129.76
LE1..............................       356.42       247.87       108.55
LD2..............................       409.48       284.77       124.71
LD1..............................       343.15       238.64       104.51
LC2..............................       359.73       250.17       109.56
LC1..............................       303.36       210.97        92.39
LB2..............................       341.49       237.49       104.00
LB1..............................       290.09       201.74        88.35
CE2..............................       379.63       264.01       115.62
CE1..............................       349.79       243.26       106.53
CD2..............................       359.73       250.17       109.56
CD1..............................       329.89       229.42       100.47
CC2..............................       314.96       219.04        95.92
CC1..............................       291.75       202.90        88.85
CB2..............................       291.75       202.90        88.85
CB1..............................       270.20       187.91        82.29
CA2..............................       246.98       171.76        75.22
CA1..............................       230.40       160.23        70.17
BB2..............................       261.91       182.15        79.76
BB1..............................       250.30       174.07        76.23
BA2..............................       217.14       151.01        66.13
BA1..............................       207.19       144.09        63.10
PE2..............................       349.79       243.26       106.53
PE1..............................       333.20       231.72       101.48
PD2..............................       329.89       229.42       100.47
PD1..............................       313.31       217.89        95.42
PC2..............................       283.46       197.13        86.33
PC1..............................       270.20       187.91        82.29
PB2..............................       240.35       167.15        73.20
PB1..............................       230.40       160.23        70.17
PA2..............................       198.90       138.33        60.57
PA1..............................       190.61       132.56        58.05
------------------------------------------------------------------------

 Table 8--RUG-IV Case-Mix Adjusted Federal Rates for Rural SNFs by Labor
                         and Non-Labor Component
------------------------------------------------------------------------
                                                   Labor      Non-labor
         RUG-IV category            Total rate    portion      portion
------------------------------------------------------------------------
RUX..............................      $778.44      $541.37      $237.07
RUL..............................       762.60       530.35       232.25
RVX..............................       683.97       475.67       208.30
RVL..............................       617.44       429.40       188.04
RHX..............................       612.55       426.00       186.55
RHL..............................       549.18       381.93       167.25
RMX..............................       556.67       387.14       169.53
RML..............................       512.32       356.29       156.03
RLX..............................       484.52       336.96       147.56
RUC..............................       602.61       419.09       183.52
RUB..............................       602.61       419.09       183.52
RUA..............................       512.32       356.29       156.03

[[Page 47955]]

 
RVC..............................       509.72       354.48       155.24
RVB..............................       446.36       310.42       135.94
RVA..............................       444.77       309.32       135.45
RHC..............................       438.29       304.81       133.48
RHB..............................       397.11       276.17       120.94
RHA..............................       352.75       245.32       107.43
RMC..............................       380.84       264.86       115.98
RMB..............................       358.66       249.43       109.23
RMA..............................       298.46       207.56        90.90
RLB..............................       364.13       253.23       110.90
RLA..............................       238.98       166.20        72.78
ES3..............................       670.87       466.56       204.31
ES2..............................       526.71       366.30       160.41
ES1..............................       471.27       327.74       143.53
HE2..............................       455.43       316.73       138.70
HE1..............................       379.39       263.85       115.54
HD2..............................       426.92       296.90       130.02
HD1..............................       357.22       248.43       108.79
HC2..............................       403.15       280.37       122.78
HC1..............................       338.21       235.21       103.00
HB2..............................       398.40       277.07       121.33
HB1..............................       335.04       233.00       102.04
LE2..............................       414.24       288.08       126.16
LE1..............................       347.71       241.81       105.90
LD2..............................       398.40       277.07       121.33
LD1..............................       335.04       233.00       102.04
LC2..............................       350.88       244.02       106.86
LC1..............................       297.02       206.56        90.46
LB2..............................       333.45       231.90       101.55
LB1..............................       284.35       197.75        86.60
CE2..............................       369.89       257.24       112.65
CE1..............................       341.38       237.41       103.97
CD2..............................       350.88       244.02       106.86
CD1..............................       322.37       224.19        98.18
CC2..............................       308.11       214.28        93.83
CC1..............................       285.93       198.85        87.08
CB2..............................       285.93       198.85        87.08
CB1..............................       265.34       184.53        80.81
CA2..............................       243.16       169.11        74.05
CA1..............................       227.32       158.09        69.23
BB2..............................       257.42       179.02        78.40
BB1..............................       246.33       171.31        75.02
BA2..............................       214.65       149.28        65.37
BA1..............................       205.14       142.66        62.48
PE2..............................       341.38       237.41       103.97
PE1..............................       325.53       226.39        99.14
PD2..............................       322.37       224.19        98.18
PD1..............................       306.52       213.17        93.35
PC2..............................       278.01       193.34        84.67
PC1..............................       265.34       184.53        80.81
PB2..............................       236.82       164.70        72.12
PB1..............................       227.32       158.09        69.23
PA2..............................       197.22       137.16        60.06
PA1..............................       189.30       131.65        57.65
------------------------------------------------------------------------

    Section 1888(e)(4)(G)(ii) of the Act also requires that we apply 
this wage index adjustment in a manner that does not result in 
aggregate payments under the SNF PPS that are greater or less than 
would otherwise be made in the absence of the wage adjustment. For FY 
2014 (federal rates effective October 1, 2013), we apply an adjustment 
to fulfill the budget neutrality requirement. We meet this requirement 
by multiplying each of the components of the unadjusted federal rates 
by a budget neutrality factor equal to the ratio of the weighted 
average wage adjustment factor for FY 2013 to the weighted average wage 
adjustment factor for FY 2014. For this calculation, we use the same 
2012 claims utilization data for both the numerator and denominator of 
this ratio. We define the wage adjustment factor used in this 
calculation as the labor share of the rate component multiplied by the 
wage index plus the non-labor share of the rate component. The budget 
neutrality factor for FY 2014 is 1.0006. The wage index applicable to 
FY 2014 is set forth in Tables A and B, which appear in the Addendum of 
this final rule, and is also available on the CMS Web site at http://cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.

[[Page 47956]]

    After consideration of the comments we received, for the reasons 
discussed in this final rule and in the FY 2014 SNF PPS proposed rule, 
we are finalizing the wage index adjustment and related policies as 
proposed in the FY 2014 SNF PPS proposed rule (78 FR 24446 through 
26449) without modification.
8. Adjusted Rate Computation Example
    Using the hypothetical SNF XYZ described below, Table 9 shows the 
adjustments made to the federal per diem rates to compute the 
provider's actual per diem PPS payment under the described scenario. We 
derive the Labor and Non-labor columns from Table 7. As illustrated in 
Table 9, SNF XYZ's total PPS payment would equal $41,718.20.

                 Table 9--Adjusted Rate Computation Example SNF XYZ: Located in Cedar Rapids, IA (Urban CBSA 16300), Wage Index: 0.8964
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Adjusted                  Adjusted     Percent      Medicare
                  RUG-IV group                       Labor      Wage index     labor      Non-labor       rate      adjustment      days       Payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
RVX.............................................      $470.99       0.8964      $422.20      $206.26      $628.46      $628.46           14    $8,798.44
ES2.............................................       378.17       0.8964       338.99       165.61       504.60       504.60           30    15,138.00
RHA.............................................       237.62       0.8964       213.00       104.06       317.06       317.06           16     5,072.96
CC2 *...........................................       219.04       0.8964       196.35        95.92       292.27       666.38           10     6,663.80
BA2.............................................       151.01       0.8964       135.37        66.13       201.50       201.50           30     6,045.00
                                                 -------------------------------------------------------------------------------------------------------
                                                  ...........  ...........  ...........  ...........  ...........  ...........          100    41,718.20
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Reflects a 128 percent adjustment from section 511 of the MMA.

C. Additional Aspects of the SNF PPS

1. SNF Level of Care--Administrative Presumption
    The establishment of the SNF PPS did not change the fundamental 
requirements for SNF coverage under Medicare. However, because the 
case-mix classification reflects the beneficiary's need for skilled 
nursing care and therapy, we have attempted, where possible, to 
coordinate claims review procedures with the existing resident 
assessment process and case-mix classification system discussed in 
section IV.B of this final rule. This approach includes an 
administrative presumption that utilizes a beneficiary's initial 
classification in one of the upper 52 RUGs of the 66-group RUG-IV case-
mix classification system to assist in making certain SNF level of care 
determinations.
    In accordance with section 1888(e)(4)(H)(ii) of the Act and the 
regulations at Sec.  413.345, we include in each update of the federal 
payment rates in the Federal Register the designation of those specific 
RUGs under the classification system that represent the required SNF 
level of care for Medicare coverage, as provided in Sec.  409.30. As 
set forth in the FY 2011 SNF PPS update notice (75 FR 42910), this 
designation reflects an administrative presumption under the 66-group 
RUG-IV system that beneficiaries who are correctly assigned to one of 
the upper 52 RUG-IV groups on the initial 5-day, Medicare-required 
assessment are automatically classified as meeting the SNF level of 
care definition up to and including the assessment reference date on 
the 5-day Medicare-required assessment.
    A beneficiary assigned to any of the lower 14 RUG-IV groups is not 
automatically classified as either meeting or not meeting the SNF level 
of care definition, but instead receives an individual level of care 
determination using the existing administrative criteria. This 
presumption recognizes the strong likelihood that beneficiaries 
assigned to one of the upper 52 RUG-IV groups during the immediate 
post-hospital period require a covered level of care, which would be 
less likely for those beneficiaries assigned to one of the lower 14 
RUG-IV groups.
    In the July 30, 1999 final rule (64 FR 41670), we indicated that we 
would announce any changes to the guidelines for Medicare level of care 
determinations related to modifications in the case-mix classification 
structure. In this final rule, we continue to designate the upper 52 
RUG-IV groups for purposes of this administrative presumption, 
consisting of all groups encompassed by the following RUG-IV 
categories:
     Rehabilitation plus Extensive Services;
     Ultra High Rehabilitation;
     Very High Rehabilitation;
     High Rehabilitation;
     Medium Rehabilitation;
     Low Rehabilitation;
     Extensive Services;
     Special Care High;
     Special Care Low; and,
     Clinically Complex.
    However, we note that this administrative presumption policy does 
not supersede the SNF's responsibility to ensure that its decisions 
relating to level of care are appropriate and timely, including a 
review to confirm that the services prompting the beneficiary's 
assignment to one of the upper 52 RUG-IV groups (which, in turn, serves 
to trigger the administrative presumption) are themselves medically 
necessary. As we explained in the FY 2000 SNF PPS final rule (64 FR 
41667), the administrative presumption:

. . . is itself rebuttable in those individual cases in which the 
services actually received by the resident do not meet the basic 
statutory criterion of being reasonable and necessary to diagnose or 
treat a beneficiary's condition (according to section 1862(a)(1) of 
the Act). Accordingly, the presumption would not apply, for example, 
in those situations in which a resident's assignment to one of the 
upper . . . groups is itself based on the receipt of services that 
are subsequently determined to be not reasonable and necessary.

    Moreover, we want to stress the importance of careful monitoring 
for changes in each patient's condition to determine the continuing 
need for Part A SNF benefits after the assessment reference date of the 
5-day assessment.
2. Consolidated Billing
    Sections 1842(b)(6)(E) and 1862(a)(18) of the Act (as added by 
section 4432(b) of the BBA) require a SNF to submit consolidated 
Medicare bills to its fiscal intermediary or Medicare Administrative 
Contractor for almost all of the services that its residents receive 
during the course of a covered Part A stay. In addition, section 
1862(a)(18) places the responsibility with the SNF for billing Medicare 
for physical therapy, occupational therapy, and speech-language 
pathology services that the resident receives during a noncovered stay. 
Section 1888(e)(2)(A) of the Act excludes a certain limited number of 
services from the consolidated billing provision (primarily those 
services furnished by physicians and certain other types of 
practitioners), which remain separately

[[Page 47957]]

billable under Part B when furnished to a SNF's Part A resident. These 
excluded service categories are discussed in greater detail in section 
V.B.2 of the May 12, 1998 interim final rule (63 FR 26295 through 
26297).
    We note that section 103 of the Medicare, Medicaid, and SCHIP 
Balanced Budget Refinement Act of 1999 (BBRA, Pub. L. 106-113, enacted 
on November 29, 1999) amended section 1888(e)(2)(A) of the Act by 
further excluding a number of individual ``high-cost, low probability'' 
services, identified by Healthcare Common Procedure Coding System 
(HCPCS) codes, within several broader categories (chemotherapy items, 
chemotherapy administration services, radioisotope services, and 
customized prosthetic devices) that otherwise remained subject to this 
provision. We discuss this BBRA amendment in greater detail in the FY 
2001 SNF PPS proposed and final rules (65 FR 19231 through 19232, April 
10, 2000, and 65 FR 46790 through 46795, July 31, 2000), as well as in 
Program Memorandum AB-00-18 (Change Request 1070), issued 
March 2000, which is available online at www.cms.gov/transmittals/downloads/ab001860.pdf.
    As explained in the FY 2001 SNF PPS proposed rule (65 FR 19232), 
the amendments enacted in section 103 of the BBRA not only identified 
for exclusion from this provision a number of particular service codes 
within four specified categories (that is, chemotherapy items, 
chemotherapy administration services, radioisotope services, and 
customized prosthetic devices), but also gave the Secretary ``. . . the 
authority to designate additional, individual services for exclusion 
within each of the specified service categories.'' In the FY 2001 SNF 
PPS proposed rule, we also noted that the BBRA Conference report (H.R. 
Rep. No. 106-479 at 854 (1999) (Conf. Rep.)) characterizes the 
individual services that this legislation targets for exclusion as ``. 
. . high-cost, low probability events that could have devastating 
financial impacts because their costs far exceed the payment [SNFs] 
receive under the prospective payment system . . . .'' According to the 
conferees, section 103(a) of the BBRA ``is an attempt to exclude from 
the PPS certain services and costly items that are provided 
infrequently in SNFs . . . .'' By contrast, we noted that the Congress 
declined to designate for exclusion any of the remaining services 
within those four categories (thus, leaving all of those services 
subject to SNF consolidated billing), because they are relatively 
inexpensive and are furnished routinely in SNFs.
    As we further explained in the FY 2001 SNF PPS final rule (65 FR 
46790), and as our longstanding policy, any additional service codes 
that we might designate for exclusion under our discretionary authority 
must meet the same statutory criteria used in identifying the original 
codes excluded from consolidated billing under section 103(a) of the 
BBRA: The code must fall within one of the four service categories 
specified in the BBRA, and the code also must meet the same standards 
of high cost and low probability in the SNF setting, as discussed in 
the BBRA Conference report. Accordingly, we characterized this 
statutory authority to identify additional service codes for exclusion 
``. . . as essentially affording the flexibility to revise the list of 
excluded codes in response to changes of major significance that may 
occur over time (for example, the development of new medical 
technologies or other advances in the state of medical practice)'' (65 
FR 46791). In the FY 2014 SNF PPS proposed rule (78 FR 26449-26450), we 
specifically invited public comments identifying HCPCS codes in any of 
these four service categories (chemotherapy items, chemotherapy 
administration services, radioisotope services, and customized 
prosthetic devices) representing recent medical advances that might 
meet our criteria for exclusion from SNF consolidated billing. A 
discussion of the public comments received on this topic, along with 
our responses, appears below.
    Comment: One commenter suggested that we should categorically 
exclude all chemotherapy and radiation therapy services from 
consolidated billing. Another commenter reiterated a recommendation 
that commenters had repeatedly urged us to adopt in previous years, to 
expand the existing exclusion for certain high-intensity outpatient 
hospital services (such as radiation therapy) to encompass services 
furnished in other, nonhospital settings.
    Response: With respect to chemotherapy services, we have noted 
repeatedly in prior rulemaking on the SNF PPS--including, most 
recently, the FY 2012 SNF PPS final rule (76 FR 48532 through 48533, 
August 8, 2011)--that in creating a statutory carve-out for 
chemotherapy and certain other designated types of services, the BBRA

. . . did not categorically exclude all such services from SNF 
consolidated billing. Instead, the legislation specifically 
identified individual excluded services within designated 
categories, by Healthcare Common Procedure Coding System (HCPCS) 
code. The BBRA's Conference Report explained that this legislation 
specifically targeted those `high-cost, low probability' items and 
services that `. . . are not typically administered in a SNF, or are 
exceptionally expensive, or are given as infusions, thus requiring 
special staff expertise to administer' (H.R. Conf. Rep. No. 106-479 
at 854). By contrast, other types of services within those 
categories that `. . . are relatively inexpensive and are 
administered routinely in SNFs' remain subject to SNF consolidated 
billing under this legislation.

    Radiation therapy, by contrast, is not one of the service 
categories designated for exclusion under the BBRA legislation, but 
instead is encompassed within the administrative exclusion for certain 
types of exceptionally intensive outpatient services under the 
regulations at Sec.  411.15(p)(3)(iii). As such, all types of radiation 
therapy services are, in fact, already excluded from consolidated 
billing, but only when furnished in the hospital or CAH setting. In 
response to the recurring calls for expanding this exclusion to 
encompass services furnished in freestanding (nonhospital/CAH) 
settings, we have repeatedly noted--most recently, in the FY 2012 SNF 
PPS final rule (76 FR 48532, August 8, 2011)--that the existing law 
does not provide us with the authority to ``. . . establish a 
categorical exclusion for these services that would apply irrespective 
of the setting in which they are furnished.'' In addition, as we 
initially noted in the FY 2009 SNF PPS final rule (73 FR 46436, August 
8, 2008) and then reiterated in a number of subsequent final rules, the 
repeated calls to expand the administrative exclusion for high-
intensity outpatient services in this manner would appear to reflect

. . . a continued misunderstanding of the underlying purpose of this 
provision. As we have consistently noted in response to comments on 
this issue in previous years . . . and as also explained in Medicare 
Learning Network (MLN) Matters article SE0432 . . . the rationale 
for establishing this exclusion was to address those types of 
services that are so far beyond the normal scope of SNF care that 
they require the intensity of the hospital setting in order to be 
furnished safely and effectively.

    Moreover, we note that when the Congress enacted the consolidated 
billing exclusion for certain RHC and FQHC services in section 410 of 
the MMA, the accompanying legislative history's description of present 
law acknowledged that the existing exclusions for exceptionally 
intensive outpatient services are specifically limited to `. . . 
certain outpatient services from a Medicare-participating hospital or 
critical access hospital . . .' (emphasis added). (See the House Ways

[[Page 47958]]

and Means Committee Report (H. Rep. No. 108-178, Part 2 at 209), and 
the Conference Report (H. Conf. Rep. No. 108-391 at 641)). Therefore, 
these services are excluded from SNF consolidated billing only when 
furnished in the outpatient hospital or CAH setting, and not when 
furnished in other, freestanding (non-hospital or non-CAH) settings.
    Comment: One commenter cited the longstanding chemotherapy 
exclusion for Rituximab (Rituxan, HCPCS code J9310), which it 
characterized as a ``non-cancer chemotherapy . . . drug used to treat 
rheumatoid arthritis'' (emphasis added), and presented this as a 
precedent for expanding this exclusion to encompass a number of other 
drugs that are not used in the treatment of cancer. The commenter 
asserted that in the absence of such an exclusion, suppliers of these 
drugs who do not have ``an executed contract in place with the SNF 
prior to administration'' would be ``forced to absorb the significant 
cost of the drug or biologic.''
    Response: We note that the description of Rituximab as a ``non-
cancer'' chemotherapy drug is not entirely accurate, and requires a 
more detailed discussion. As explained on MedlinePlus, the Web site of 
the National Institutes of Health's U.S. National Library of Medicine 
(http://www.nlm.nih.gov/medlineplus/druginfo/meds/a607038.html),

    Rituximab is used alone or with other medications to treat 
certain types of non-Hodgkin's lymphoma (NHL; a type of cancer that 
begins in a type of white blood cells that normally fights 
infection). Rituximab is also used with another medication to treat 
the symptoms of rheumatoid arthritis (RA; a condition in which the 
body attacks its own joints, causing pain, swelling, and loss of 
function) in people who have already been treated with a certain 
type of medication called a tumor necrosis factor (TNF) inhibitor.

    Thus, while it is true that this drug is approved for use in 
treating certain non-cancer conditions such as rheumatoid arthritis, it 
is actually approved for use in treating cancer as well, and it is this 
latter application that represents the basis for its exclusion from 
consolidated billing as a chemotherapy drug. In this context, we note 
that when an otherwise excluded chemotherapy drug is prescribed for a 
use that does not involve treating cancer, the drug would not qualify 
as an excluded ``chemotherapy'' drug in that instance. This is 
consistent with the discussion of the chemotherapy exclusion in the FY 
2010 SNF PPS final rule (74 FR 40354), which notes that this exclusion 
does not encompass drugs that ``are not anti-cancer drugs,'' as well as 
in the FY 2012 SNF PPS final rule (76 FR 48531), which similarly notes 
that this exclusion does not extend to drugs that ``are actually used 
to treat diseases other than cancer'' (emphasis added). Moreover, the 
commenter appears to be concerned that the absence of an executed 
contract would serve to absolve the SNF of its liability to pay the 
supplier for a bundled service. We note that this is not the case. In 
MLN Matters article MM3592 (available online at http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM3592.pdf), while emphasizing the 
importance of written agreements between SNFs and their suppliers, we 
clearly specify that an arrangement between a SNF and its supplier ``is 
validated not by the presence of specific supporting written 
documentation but rather by their actual compliance with the 
requirements governing such `arrangements','' and that ``the absence of 
an agreement with its supplier (written or not) does not relieve the 
SNF of its responsibility to pay suppliers for services `bundled' in 
the SNF PPS payment from Medicare.''
    Comment: Some commenters advocated the exclusion of other types of 
services that do not fall within the categories identified in the BBRA. 
We received a comment requesting that DIFICID[supreg] (fidaxomicin) be 
excluded from consolidated billing. DIFICID[supreg] is an orally 
administered tablet that is used specifically for treating severe cases 
of diarrhea associated with certain potentially life-threatening 
infections of the gastrointestinal tract. The commenter noted this 
drug's potential to reduce the recurrence of such infections (along 
with associated hospitalizations and physician office visits), and to 
improve patient quality of life. The commenter cited as precedents the 
existing authority for excluding certain ``high-cost, low probability'' 
services under the BBRA, as well as the separate payment made for 
certain drugs under the heading of screening and preventive services, 
as discussed in MLN Matters Special Edition article SE0436 
(available online at http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/SE0436.pdf). 
The commenter then urged the creation of a similar exclusion for 
DIFICID[supreg] on public policy grounds, expressing concern that the 
continued inclusion of DIFICID[supreg] within the SNF PPS bundle might 
prompt SNFs to opt for alternate treatments that are less expensive, 
but also less efficacious.
    Response: As we have consistently stated (most recently, in the FY 
2012 SNF PPS final rule (76 FR 48530, August 8, 2011)), the BBRA 
authorizes us to identify additional services for exclusion only within 
those particular service categories--chemotherapy items; chemotherapy 
administration services; radioisotope services; and, customized 
prosthetic devices--that it has designated for this purpose, and does 
not give us the authority simply to carve out additional categories of 
services beyond those specified in the law on ``public policy 
grounds.'' Accordingly, as DIFICID[supreg] does not fall within one of 
the specific service categories designated for this purpose in the 
statute itself, we are unable to exclude it from consolidated billing 
under this authority. Further, we note that while the cited MLN Matters 
article does indeed discuss certain drugs that are separately covered 
under Medicare Part B or Part D when furnished to Part A SNF residents, 
those particular drugs are vaccines that are preventive rather than 
therapeutic in nature and, as such, are by definition outside the scope 
of the Part A SNF benefit (see Pub. L. 100-04, ch.6, Sec.  20.4); by 
contrast, therapeutic drugs such as DIFICID[supreg] would fall within 
the scope of SNF coverage under Part A. Regarding the commenter's 
concern that the continued inclusion of DIFICID[supreg] within the SNF 
PPS bundle could affect the extent to which SNFs may be inclined to 
consider its use, we note that while bundling provides incentives for 
SNFs to be efficient in the provision of care, SNFs are still required 
to provide ``the necessary care and services to attain or maintain the 
highest practicable physical, mental, and psychosocial well-being'' of 
each resident in accordance with the resident's assessment and plan of 
care (Sec.  483.25).
    Comment: One commenter reiterated a number of recommendations that 
commenters had urged us to adopt in previous years. These included 
expanding the existing chemotherapy exclusion to encompass related 
drugs that are commonly administered in conjunction with chemotherapy 
to ameliorate the side effects of the chemotherapy drugs, and excluding 
additional categories of services beyond those specified in the BBRA, 
such as positron emission tomography (PET) scans.
    Response: Regarding the exclusion of chemotherapy-related drugs, we 
have noted repeatedly in this and previous final rules--most recently, 
the FY 2012 SNF PPS final rule (76 FR 48532, August 8, 2011)--that the 
BBRA authorizes us to identify additional

[[Page 47959]]

service codes for exclusion only within those particular service 
categories (chemotherapy items; chemotherapy administration services; 
radioisotope services; and, customized prosthetic devices) that it has 
designated for this purpose, and does not give us the authority to 
exclude other services which, though they may be related, fall outside 
of the specified service categories themselves. Thus, while anti-
emetics (anti-nausea drugs), for example, are commonly administered in 
conjunction with chemotherapy, they are not inherently chemotherapeutic 
in nature (that is, they do not actively destroy cancer cells) and, 
consequently, do not fall within the excluded chemotherapy category 
designated in the BBRA. Regarding the exclusion of PET scans, we noted 
in the FY 2012 SNF PPS final rule that ``. . . we decline to add to the 
exclusion list those services submitted by commenters that have already 
been considered and not excluded in previous years based on their being 
outside the particular service categories that the statute authorizes 
for exclusion'' (76 FR 48531, August 8, 2011). Such services would 
include PET scans, as discussed previously in the FY 2006 SNF PPS final 
rule (70 FR 45049, August 4, 2005).
    Comment: One commenter recommended that the surgical debridement 
procedures represented by HCPCS codes 11040 through 11044 be excluded 
from consolidated billing.
    Response: We note that debridement codes 11040 (skin, partial 
thickness) and 11041 (skin, full thickness) were discontinued as of 
December 2010. The remaining debridement codes that the commenter 
cited--11042 (skin, and subcutaneous tissue), 11043 (skin, subcutaneous 
tissue, and muscle), and 11044 (skin, subcutaneous tissue, muscle, and 
bone)--are listed correctly in Carrier/A/B MAC File 1 as physician 
services that are excluded from consolidated billing. However, these 
same three codes (along with the two discontinued ones) currently 
appear erroneously in Major Category I.F of the FI/A/B MAC Annual 
Update as included (that is, bundled) ambulatory surgery codes. 
Accordingly, we will make the appropriate corrections to the FI/A/B MAC 
Annual Update to ensure that it no longer lists these codes incorrectly 
as ambulatory surgery inclusions.
    Comment: One commenter suggested that, rather than relying solely 
on feedback through the public comment process on possible exclusions 
from consolidated billing, CMS should convene an official expert group 
to review the codes and make formal recommendations.
    Response: In the FY 2010 SNF PPS final rule (74 FR 40354, August 
11, 2009), we noted that the Congress gave specific direction regarding 
the review of consolidated billing codes that it envisioned: In the 
BBRA Conference Report (H.R. Rep. No. 106-479 at 854 (1999) (Conf. 
Rep.)), it specified that the GAO was to conduct a special, one-time 
comprehensive review of the existing code set, and it then conferred on 
the Secretary the authority ``. . . to review periodically and modify, 
as needed, the list of excluded services.'' However, as we explained in 
the FY 2002 SNF PPS final rule (66 FR 39588, July 31, 2001), this 
ongoing review function must be considered within the context of the 
overall process in which it takes place:

. . . we do not view making additions to the list of excluded 
services as a part of a process of continual expansion to encompass 
an ever-broadening array of excluded services. Further, . . . the 
fundamental purpose of the consolidated billing provision . . . is 
to make the SNF responsible for billing Medicare for essentially all 
of its residents' services, other than those identified in a small 
number of narrow and specifically delimited statutory exclusions 
(emphasis added).

Thus, the purpose of this ongoing review is not to devise new and 
increasingly expansive rationales for the unbundling of services, but 
rather, simply to ensure that services which meet the already-
established criteria for exclusion are not overlooked. We believe that 
our longstanding practice of periodically inviting input through the 
public comment process (which is already open to any interested parties 
who may wish to provide the benefit of their expertise in this area) is 
both appropriate and sufficient to achieve this objective.
3. Payment for SNF-Level Swing-Bed Services
    Section 1883 of the Act permits certain small, rural hospitals to 
enter into a Medicare swing-bed agreement, under which the hospital can 
use its beds to provide either acute- or SNF-level care, as needed. For 
critical access hospitals (CAHs), Medicare pays on a reasonable cost 
basis under Part A for SNF-level services furnished under a swing-bed 
agreement. However, in accordance with section 1888(e)(7) of the Act, 
these SNF-level services when furnished by non-CAH rural hospitals are 
paid under the SNF PPS, effective with cost reporting periods beginning 
on or after July 1, 2002. As explained in the FY 2002 SNF PPS final 
rule (66 FR 39562), this effective date is consistent with the 
statutory provision to integrate swing-bed rural hospitals into the SNF 
PPS by the end of the transition period, June 30, 2002.
    Accordingly, all non-CAH swing-bed rural hospitals are being paid 
under the SNF PPS. Therefore, all rates and wage indexes outlined in 
earlier sections of this final rule for the SNF PPS also apply to all 
non-CAH swing-bed rural hospitals. A complete discussion of assessment 
schedules, the MDS, and the transmission software (RAVEN-SB for Swing 
Beds) appears in the FY 2002 final rule (66 FR 39562) and in the FY 
2010 final rule (74 FR 40288). As finalized in the FY 2010 SNF PPS 
final rule (74 FR 40356-57), effective October 1, 2010, non-CAH swing-
bed rural hospitals are required to complete an MDS 3.0 swing-bed 
assessment, which is limited to the required demographic, payment, and 
quality items. The latest changes in the MDS for swing-bed rural 
hospitals appear on the SNF PPS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html. We 
received no comments on this aspect of the proposed rule.

D. Other Issues

1. Monitoring Impact of FY 2012 Policy Changes
    In the FY 2014 SNF PPS proposed rule (78 FR 26463 through 26465), 
we discussed our monitoring efforts associated with impacts of certain 
policy changes finalized in the FY 2012 SNF PPS final rule (76 FR 
48486). Specifically, we have been monitoring the impact of the 
following changes:
     Recalibration of the FY 2011 SNF parity adjustment to 
align overall payments under RUG-IV with those under RUG-III.
     Allocation of group therapy time to pay more appropriately 
for group therapy services based on resource utilization and cost.
     Implementation of changes to the MDS 3.0 patient 
assessment instrument, most notably the introduction of the Change-of-
Therapy (COT) Other Medicare Required Assessment (OMRA).
    We have posted quarterly memos to the SNF PPS Web site which 
highlight some of the trends we have observed over a given time period. 
These memos may be accessed through the SNF PPS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/SNF_Monitoring.zip. In the FY 2014 SNF PPS proposed rule (78 FR 
26465), we stated that based on the data reviewed thus far, we have 
found no evidence of possible negative impacts on SNF providers cited

[[Page 47960]]

in the comments in the FY 2012 SNF PPS final rule (see 76 FR 48497-98, 
48537), particularly references to a ``double hit'' from the combined 
impact of the recalibration of the FY 2011 SNF parity adjustment and 
the FY 2012 policy changes. Therefore, we stated that while we will 
continue our SNF monitoring efforts, we will post information to the 
aforementioned Web site only as appropriate.
    A discussion of the comments we received on these efforts, with our 
responses, appears below.
    Comment: One commenter stated that they appreciate the transparency 
demonstrated by releasing the quarterly findings memos and urged us to 
continue this practice into the future.
    Response: We appreciate the support for our efforts to provide this 
data on the FY 2012 policy changes. As stated in the FY 2014 SNF PPS 
proposed rule (78 FR 26465), this level of analysis was being conducted 
to determine if any evidence existed of possible negative impacts on 
SNF providers cited in the comments in the FY 2012 SNF PPS final rule 
(76 FR 48497-48498, 48537), particularly references to a ``double hit'' 
from the combined impact of the recalibration of the FY 2011 SNF parity 
adjustment and the FY 2012 policy changes (for example, allocation of 
group therapy and introduction of the COT OMRA). Based on the data we 
have examined so far, there is no evidence of such negative impacts--
overall case mix has not been affected significantly and providers 
appear to have adjusted their internal processes and care planning 
activities well to accommodate the FY 2012 policy changes. Given these 
findings, we do not regard the continued publishing of quarterly memos, 
in the absence of some marked finding, as still being necessary at this 
point. Therefore, as stated in the FY 2014 SNF PPS proposed rule (78 FR 
26465), we will continue our SNF monitoring efforts but will henceforth 
only post information regarding our monitoring activities discussed 
above to the SNF PPS Web site as appropriate.
    Comment: One commenter asked that we reevaluate the potential 
negative impacts of implementing the COT OMRA; specifically, that the 
COT OMRA is unnecessarily burdensome and inflexible. This commenter 
requested that we consider ways to make the COT OMRA more flexible for 
providers.
    Response: As noted in the FY 2012 SNF PPS final rule (76 FR 48518), 
the COT OMRA was implemented because the then-existing range of PPS 
assessments did not give providers adequate opportunity to report 
changes in the resident's therapy services that occur outside the 
observation window which, as always, should be based on medical 
evidence. Since implementing the COT OMRA, we have continued to monitor 
its utilization and determine if any negative impacts have resulted for 
facilities and/or SNF residents. Our monitoring efforts have revealed, 
as demonstrated in Table 21 of the FY 2014 SNF PPS proposed rule (78 FR 
26465), that the COT OMRA comprises just 11 percent of all assessments 
completed for SNF residents. As such, based on the limited number of 
COT OMRAs being completed, we do not believe that the COT OMRA 
represents a significant burden for providers.
    With respect to the flexibility of the assessment, the limited 
number of COT OMRAs might also be the result of the flexibility in 
completing the COT OMRA afforded in the MDS RAI Manual (for example, 
the flexibility discussed in Chapter 2 of the MDS RAI Manual, whereby 
the COT observation period for a resident is reset if a scheduled or 
unscheduled assessment is completed on or prior to day 7 of the COT 
observation period). Additionally, as the COT OMRA may be used to 
report either an increase or decrease in therapy services relative to 
the resident's previous therapy RUG classification, the COT OMRA has 
helped ensure greater accuracy of SNF payments and ensure that 
providers are appropriately reimbursed for the level of care delivered 
to their residents. Therefore, while we will continue to monitor for 
potential negative impacts associated with the FY 2012 policy changes, 
as noted above, we have not yet found any evidence of such an adverse 
impact.
2. Ensuring Accuracy in Grouping to Rehabilitation RUG-IV Categories
    In the FY 2014 SNF PPS proposed rule (78 FR 26465-26466), we 
clarified that our classification criteria for the Rehabilitation RUG 
categories require that the resident receive the requisite number of 
distinct calendar days of therapy to be classified into the 
Rehabilitation RUG category, and focused particularly on issues related 
to classification into the Medium and Low Rehabilitation categories. We 
explained that in requiring distinct calendar days of therapy, our 
classification criteria are consistent with the SNF level of care 
requirement under Sec.  409.31(b)(1), which provides that skilled 
services must be needed and received on a daily basis, and Sec.  
409.34(a)(2),which specifies that the ``daily basis'' criterion can be 
met by skilled rehabilitation services that are needed and provided at 
least 5 days per week. However, we explained in the FY 2014 SNF PPS 
proposed rule (78 FR 26465-66) that the MDS item set currently does not 
contain an item that permits SNFs to report the total number of 
distinct calendar days of therapy provided by all rehabilitation 
disciplines. Instead, the MDS item set requires the SNF to record, 
separately by each therapy discipline, the number of days therapy was 
received during the 7-day look-back period, without distinguishing 
between distinct calendar days. As we explained in the FY 2014 SNF PPS 
proposed rule, currently, the RUG grouper adds these days together 
which results in some residents being classified into the Medium and 
Low Rehabilitation RUG categories when they do not actually meet our 
classification criteria. Thus, we proposed to add an item to the MDS 
3.0 item set (item O0420) which would permit SNF providers to code the 
total number of distinct calendar days that the resident received 
therapy services across all rehabilitation disciplines during the 
assessment look-back period to ensure that residents are classified 
into the correct Rehabilitation RUG in accordance with our existing 
classification criteria. We stated that effective October 1, 2013, 
facilities would be required to record under this item the number of 
distinct calendar days of therapy provided by all the rehabilitation 
disciplines over the 7-day look-back period for the current assessment, 
which would be used to classify the resident into the correct 
Rehabilitation RUG category. A discussion of the comments we received 
on this proposal, and our responses, appear below.
    Comment: Many commenters supported the proposal to add a new item 
to the MDS 3.0 to capture distinct therapy days and agreed that 
patients should be appropriately categorized into the applicable RUG 
category to ensure accurate payment. Several commenters appeared to be 
under the impression that this proposal will change the policy on how 
many days of therapy are required in order to group to specific 
rehabilitation RUG categories. Furthermore, some commenters stated that 
we did not provide any clinical basis for this addition to the MDS 3.0, 
and that therapist judgment should be the deciding factor for 
scheduling therapy services to best meet the residents' needs.
    Response: We appreciate that many commenters supported the proposal 
to add item O0420 to the MDS 3.0 to capture distinct therapy days and 
to pay more accurately for therapy services. We emphasize that we did 
not propose to add item O0420 as a result of a change

[[Page 47961]]

in policy; instead, we proposed to add this item to enable us to 
implement our existing policy more accurately. As explained in the FY 
2014 SNF PPS proposed rule (78 FR 26465 through 26466), throughout all 
iterations of the SNF PPS from 1998 until the present time, in order to 
qualify for the Medium Rehabilitation (Medium Rehab) RUG category, a 
resident must receive at least 150 minutes of therapy per week (a 
seven-day time period) and 5 days of any combination of the three 
rehabilitation disciplines (physical therapy, occupational therapy, or 
speech-language pathology). The policy has always been that the term 
``days'' in this context denotes distinct calendar days of therapy. 
Similarly, for the Low, High, Very High, and Ultra High Rehabilitation 
RUG categories, the policy has always been that distinct calendar days 
of therapy are required to classify into these RUG categories (for 
example, for the Low Rehabilitation category, 3 distinct calendar days 
of therapy are required). Thus, in the proposed rule, we clarified that 
our classification criteria for the Rehabilitation RUG categories 
require that the resident receive the requisite number of distinct 
calendar days of therapy to be classified into the Rehabilitation RUG 
category. However, there has not been a way until now to record on the 
MDS 3.0 the number of distinct calendar days of therapy provided across 
all rehabilitation disciplines in order to ensure accurate calculation 
of these days in the RUG grouper software. It is true that our proposed 
change to the MDS 3.0 item set will require an additional item for 
reporting of therapy services; however, this change solely addresses 
the manner of reporting (and not the manner of providing) these 
services. We agree that licensed therapists are to use their clinical 
judgment to treat the patients in the most appropriate manner, and to 
maintain professional standards while providing all necessary services. 
Providers are not required to change clinical practice patterns based 
on this additional reporting requirement; rather, they could continue 
to provide therapy as they always have and would use the new item to 
report more accurately the days on which they provided therapy 
services, in order to ensure that the patient is assigned to the 
correct RUG.
    In addition, we note that under section 1814(a)(2)(B) of the Act, 
one of the basic elements of the SNF level of care (which constitutes a 
precondition for SNF coverage under Part A) is that a beneficiary must 
need and receive skilled care on a daily basis. Under an exception in 
the regulations at Sec.  409.34(a)(2), when skilled rehabilitation 
services are not available 7 days a week, they can still be considered 
furnished on a ``daily basis'' when needed and provided at least 5 days 
a week. However, it is important to note that merely scheduling therapy 
services on 5 distinct calendar days during the week would be 
insufficient to satisfy this requirement unless the beneficiary also 
has an actual clinical need for the services to be scheduled in this 
manner. As noted in Sec.  30.6 of the Medicare Benefit Policy Manual, 
Chapter 8:

    It is not sufficient for the scheduling of therapy sessions to 
be arranged so that some therapy is furnished each day, unless the 
patient's medical needs indicate that daily therapy is required. For 
example, if physical therapy is furnished on 3 days each week and 
occupational therapy is furnished on 2 other days each week, the 
``daily basis'' requirement would be satisfied only if there is a 
valid medical reason why both cannot be furnished on the same day. 
The basic issue here is not whether the services are needed, but 
when they are needed. Unless there is a legitimate medical need for 
scheduling a therapy session each day, the ``daily basis'' 
requirement for SNF coverage would not be met.

    Accordingly, we do not expect that the addition of this MDS item, 
which is intended to facilitate more accurate reporting, will result in 
any changes in clinical practice patterns, as SNFs should already be 
appropriately providing skilled rehabilitation services on a daily 
basis only in those instances where the beneficiary has an actual need 
for therapy to be furnished on at least 5 distinct calendar days during 
the week.
    Comment: Some commenters stated that the proposal to add item O0420 
to the MDS 3.0 would have a significant impact on the ability of 
residents to qualify for a rehabilitation RUG for the 5-day PPS 
assessment because the Assessment Reference Date (ARD) for the 5-day 
PPS assessment must be set for no later than Day 8 of the stay. They 
expressed concern that residents who miss therapy for clinical or 
scheduling reasons are not being appropriately classified into 
rehabilitation RUG categories. Additionally, these commenters explained 
that it is difficult to provide therapy to a resident for 5 distinct 
days over a 7-day period and this challenge correlates to residents 
being placed in non-rehabilitation RUGs. They suggested that CMS does 
not adequately reimburse for rehabilitation services that are delivered 
beyond the minimum number of minutes required for a specific RUG 
category and that this amounts to unpaid therapy services provided to 
residents.
    Additionally, these commenters stated that this proposal will 
result in greater burden for providers; for example, requiring 
scheduling changes for therapists, requiring therapists to work on 
weekends, evenings, and holidays, and requiring part-time therapists to 
work on full-time schedules. They explained that the need for two 
different therapy disciplines does not change, irrespective of whether 
these therapies are received on distinct days or on the same days. Some 
commenters requested that we implement an ``exceptions'' policy to 
account for missed or rescheduled therapy sessions beyond provider 
control which result in different therapies being provided on the same 
day.
    Finally, several commenters expressed concern related to a possible 
conflict between the proposal to add item O0420 to the MDS item set to 
capture more appropriately the distinct days of therapy provided and 
instructions from CMS in recent guidance which clarified the term 
``daily skilled services defined'' (CMS Transmittal 161, October 26, 
2012) which states, ``A patient whose inpatient stay is based solely on 
the need for skilled rehabilitation services would meet the ``daily 
basis'' requirement when they need and receive those services on at 
least 5 days a week. (If therapy services are provided less than 5 days 
a week, the ``daily'' requirement would not be met.) This requirement 
should not be applied so strictly that it would not be met merely 
because there is an isolated break of a day or two during which no 
skilled rehabilitation services are furnished and discharge from the 
facility would not be practical.'' For the above reasons, several 
commenters suggested we postpone the proposed addition to the MDS 3.0 
of item O0420 requiring that facilities report the number of distinct 
calendar days of therapy and carefully review the impact of the change 
as discussed in these comments.
    Response: We do not agree with the commenters' assertion that the 
proposal to add item O0420 to the MDS 3.0 item set will make it more 
difficult to classify residents into rehabilitation RUGs during the 5-
day PPS assessment period because the ARD must be set for no later than 
Day 8 of the stay. As we discussed in the FY 2014 SNF PPS proposed rule 
(78 FR 26465-66) and in this final rule, the addition of this item was 
not proposed as a result of a change in policy. Our policy has always 
been that distinct calendar days of therapy are

[[Page 47962]]

required to classify into a Rehabilitation RUG. The new MDS item was 
proposed to provide for more accurate reporting and calculation of 
these therapy days, and to ensure that patients are appropriately 
classified into Rehabilitation RUG categories in accordance with our 
existing classification policy. Furthermore, given that residents 
currently classify on the 5-day PPS assessment for Rehabilitation RUGs 
which require 5 calendar days of therapy (Medium, High, Very High, or 
Ultra High), it appears that providers are clearly able to provide the 
necessary therapy time within the first days of the SNF stay regardless 
of this new item. More generally, if facilities are having difficulty 
meeting the daily skilled needs of the residents in their care, then 
this might indicate a need for the facility to revisit its admissions 
policies and determine if the facility is accepting such patients only 
when it can appropriately meet their care needs.
    Furthermore, with regard to the comments that it is difficult to 
provide therapy to a resident for 5 distinct days over a 7-day period, 
we would note that, based on the monitoring reports we have published 
to the SNF PPS Web site (http://cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Spotlight.html), in FY 2012, 84.3 percent of the 
days billed to Medicare Part A were billed at one of the upper three 
rehabilitation RUG categories (Ultra-High, Very-High, and High) which 
require that 1 discipline provide at least 5 days of therapy. This is a 
longstanding requirement that appeared in the applicable instructions 
at least as far back as 2006, as noted on page 3-216 of the MDS RAI 
Manual, Version 2.0:

    If orders are received for more than one therapy discipline, 
enter the number of days at least one therapy service is performed. 
For example, if PT is provided on MWF, and OT is provided on MWF, 
the MDS should be coded as 3 days, not 6 days.

    Accordingly, since multiple therapy disciplines furnished on the 
same calendar day would still comprise only a single calendar day's 
worth of therapy, this means that those residents being classified into 
one of these RUG categories must have received at least one therapy 
discipline on 5 distinct calendar days during the look-back period for 
the assessment. Therefore, given that 84.3 percent of patient days are 
billed at one of these upper three rehabilitation RUG categories, the 
vast majority of SNF residents should be currently receiving at least 5 
distinct calendar days of therapy per week. If this is the standard of 
practice that exists within the SNF industry currently, as evidenced by 
the current billing and care delivery patterns, we do not agree with 
the comment that it is difficult for SNFs to provide therapy to their 
residents for 5 distinct days over a 7-day period. Again, the new MDS 
item is not being added as a result of any change in policy, but simply 
to provide for more accurate reporting of therapy days so we can ensure 
that patients are appropriately classified into Rehabilitation RUGs in 
accordance with our current classification criteria.
    In addition, commenters suggested that CMS does not adequately 
reimburse for rehabilitation services that are delivered beyond the 
minimum number of minutes required for a specific RUG category. We 
recognize that residents who do not meet the minimum qualifying 
minutes/days of therapy services may not be placed into Rehabilitation 
RUGs. However, we do not consider this a flaw of the SNF PPS RUG-IV 
system, as some commenters have suggested. The RUG-IV system was 
designed so that RUG payment levels are based on an average amount of 
minutes of therapy provided, not the minimum threshold of minutes for 
each RUG category. The original RUG-III grouper logic was based on 
clinical data collected in 1990, 1995, and 1997. As discussed in the 
SNF PPS proposed rule for FY 2010 (74 FR 22208, May 12, 2009), we 
subsequently conducted a multi-year data collection and analysis under 
the Staff Time and Resource Intensity Verification (STRIVE) project to 
update the case-mix classification system for FY 2011. The resulting 
RUG-IV case-mix classification system reflected the data collected in 
2006 and 2007 during the STRIVE project, and was finalized in the FY 
2010 SNF PPS final rule (74 FR 40288, August 11, 2009) for 
implementation in FY 2011. In the FY 2010 SNF PPS proposed rule (74 FR 
22208, 22223-25) and final rule (74 FR 40288, 40319-21, we explained 
the process of calculating therapy time to determine RUG payment 
levels. As part of this explanation, we discussed how we adjusted the 
therapy time for the calculations: ``We give the maximum credit 
possible for any day that therapy time was recorded for 15 or more 
minutes to avoid underestimating the actual amounts of therapy 
furnished to patients'' (74 FR 22225). Therapy reimbursement for each 
RUG is based on the average utilization between the thresholds, so 
those at the minimum thresholds are, in fact, being adequately paid 
relative to the average resource amount used to determine the 
reimbursement level. Moreover, the majority of MDS assessments 
submitted to CMS show that the number of therapy minutes provided to 
beneficiaries cluster at the minimum threshold amount necessary to 
qualify for a given RUG group. This would suggest that, for the 
majority of billed therapy days, the resource intensity used to 
determine the reimbursement for that RUG group is greater than the 
resource intensity of the therapy provided to the resident. Therefore, 
we do not agree that the system allows for a significant amount of 
unpaid therapy provided to SNF residents.
    In addition, we do not agree with the assertion that adding item 
O0420 to the MDS 3.0 item set will result in greater burden to the 
providers. As discussed previously, this item is not being added as a 
result of a change in policy. Facilities should not change practice 
patterns merely because of the additional item for reporting therapy. 
Until now, facilities have been calculating the days of therapy that 
each discipline provided to a specific resident. The new item will 
require the providers to use the exact same clinical information found 
on daily notes or therapy logs to count the days that therapy was 
provided to a patient; however, instead of counting each discipline's 
days separately they will now have to count each distinct calendar day 
that any therapy was provided. We agree that the need for different 
therapy disciplines does not change regardless of whether these 
therapies are provided on the same or distinct calendar days. However, 
as explained previously, the ``daily basis'' requirement for Part A SNF 
coverage can be met only when therapy is not merely scheduled but is 
actually needed and provided on each of 5 distinct calendar days during 
the week. In addition, the design of the SNF PPS RUG-IV system requires 
very specific calculation of therapy minutes and days in order to place 
patients most appropriately into the correct case-mix classification. 
Therefore, we do not believe it would be appropriate to establish an 
``exceptions'' policy to allow for counting of different therapies on 
the same day when residents experience missed or rescheduled therapy 
sessions beyond provider control.
    Finally, with respect to the comments raising the issue of a 
potential conflict between the proposed MDS item and the daily basis 
discussion in Transmittal 161, we would note that the particular 
language being cited was not, in fact, introduced by this transmittal. 
Rather, it has long appeared in the manual instructions and was also 
discussed as

[[Page 47963]]

far back as the FY 2000 SNF PPS final rule (64 FR 41670, July 30, 
1999):

    * * * Some comments reflected certain longstanding 
misconceptions regarding the SNF level of care definition, in terms 
of a beneficiary's need for and receipt of skilled services on a 
daily basis which, as a practical matter, can be furnished only in 
an SNF on an inpatient basis. One recurring misconception with 
regard to the ``daily basis'' requirement (which some of the 
commenters expressed as well) is that Medicare coverage guidelines 
provide for specific breaks in skilled therapy services for the 
observance of a prescribed list of national holidays. Another 
longstanding misconception shared by some commenters is that the 
cessation of therapy for so much as a single day due, for example, 
to the beneficiary's temporary illness or fatigue, would mandate an 
automatic discontinuance of coverage * * * As explained below, these 
interpretations of Medicare SNF coverage requirements are incorrect.
    [T]he requirement for daily skilled services should not be 
applied so strictly that it would not be met merely because there is 
a brief, isolated absence from the facility in a situation where 
discharge from the facility would not be practical * * * [W]ith 
regard to the ``daily basis'' requirement, the Medicare program does 
not specify in regulations or guidelines an official list of 
holidays or other specific occasions that a facility may observe as 
breaks in rehabilitation services, but recognizes that the 
resident's own condition dictates the amount of service that is 
appropriate. Accordingly, the facility itself must judge whether a 
brief, temporary pause in the delivery of therapy services would 
adversely affect the resident's condition (emphasis added).

    Similarly, section 409.34(b) states that a ``. . . break of one or 
two days in the furnishing of rehabilitation services will not preclude 
coverage if discharge would not be practical for the one or two days 
during which, for instance, the physician has suspended the therapy 
sessions because the patient exhibited extreme fatigue.'' We note that 
the references in the manual (see Pub. L. 100-02, ch. 8, Sec.  30.6) 
and the regulations in this context to an isolated break in therapy 
denote a situation in which such a lapse represents a rare exception 
rather than a regular or frequent occurrence. Accordingly, the policy 
reflected in the above-cited manual, rule preamble, and regulation is 
intended to indicate that such a lapse would not necessarily result in 
discontinuing coverage that is already ongoing.
    While coverage may continue where there is a brief, isolated break 
in therapy as discussed above, the patient's RUG classification and the 
level of payment are still based on the number of days and minutes of 
therapy provided to the patient as reported on the MDS 3.0, and the new 
MDS item will ensure that these days are calculated correctly. Thus, we 
do not believe that the addition of the new MDS item presents a 
conflict with existing coverage policy as set forth in the manual, as 
they address separate issues. The manual and regulatory provisions 
cited above provide that in certain exceptional circumstances coverage 
of a SNF stay will not necessarily be discontinued because of a brief, 
isolated break in therapy; and the new MDS item provides the 
information necessary (total number of days that therapy was provided 
during the look-back period) to enable us to determine the appropriate 
RUG classification and payment for that SNF stay. We believe that this 
MDS item, by permitting more accurate reporting of therapy days, 
enables us to ensure that residents are appropriately classified into 
Rehabilitation RUG categories in accordance with our existing 
classification criteria. In addition, we note that if a resident's stay 
is also based on receipt of non-rehabilitation related skilled services 
(for example, ventilator care) in combination with rehabilitation 
services (which we believe to characterize the majority of SNF stays), 
then such non-rehabilitation care would also constitute care provided 
toward meeting the daily basis requirement. Therefore, the new MDS item 
would not appear to present a conflict with the daily basis requirement 
discussed in Transmittal 161, but instead permits providers to report 
the precise number of distinct calendar days their residents receive 
therapy during the assessment observation period. Furthermore, because 
this new MDS item allows for more accurate reporting and thus more 
accurate RUG classification and payment, we do not see any reason to 
postpone the addition of the item to MDS 3.0 item set.
    Comment: Some commenters expressed concern over the practical 
implementation of adding item O0420 to the MDS 3.0 item set. They 
stated that October 1, 2013 is too soon for software vendors to 
incorporate the new reporting requirement into SNF and therapy software 
systems and to program, test, and implement the changes. Additionally, 
although the commenters appreciated that CMS released draft programming 
specifications, they criticized the accompanying warning which stated 
that this version of the specifications should be considered 
provisional and subject to change until the final specifications are 
published. They stated that the timeframe between CMS issuing the final 
rule and the effective date of October 1, 2013 does not give the 
software vendors and facilities that are already overburdened with the 
implementation of electronic health records sufficient time to make 
these changes.
    Response: We appreciate the concern that commenters expressed about 
implementing the additional reporting requirement for the MDS 3.0. We 
recognize the need for software vendors to program, test, and implement 
the changes that will need to be made. However, we remind commenters 
that CMS offers j-RAVEN, which is a free software option that allows 
facilities to collect and maintain facility, patient, and assessment 
information for subsequent submission to the appropriate data 
repository. This software will be available and ready for the 
implementation of the new MDS 3.0 reporting requirement and facilities 
that contract with alternative software vendors may choose to utilize 
the CMS-provided software until the vendor-created software is ready 
for implementation. With regard to the draft specifications, CMS 
released these specifications at the same time as we released the 
proposed rule. Software vendors had the ability to begin planning for 
any potential programming requirements with the release of draft 
specifications. We believe that software vendors should be structuring 
projects in a manner that is responsive to potentially changing 
requirements.
    Accordingly, for the reasons specified in this final rule and in 
the FY 2014 SNF PPS proposed rule (78 FR 26465-26466), we are 
finalizing our proposal to add an item to the MDS item set (Item O0420) 
effective October 1, 2013, which will capture the number of distinct 
calendar days that the resident received therapy services during the 
assessment look-back period across all rehabilitation disciplines. As 
proposed, effective October 1, 2013, facilities will be required to 
record under this item the number of distinct calendar days of therapy 
provided by all rehabilitation disciplines over the 7-day look-back 
period for the current assessment, which will be used to classify the 
resident into the correct Rehabilitation RUG category.
3. SNF Therapy Research Project
    In the FY 2014 SNF PPS proposed rule (78 FR 26466), we discussed 
our current research efforts associated with SNF payments for therapy 
services. As stated in the FY 2014 SNF PPS proposed rule (78 FR 26466), 
we contracted with Acumen, LLC and the Brookings Institution to 
identify

[[Page 47964]]

potential alternatives to the existing methodology used to pay for 
therapy services received under the SNF PPS. A discussion of the 
comments on this topic, with our responses, appears below.
    Comment: All of the comments we received on this work supported 
CMS's broad objective to develop a new methodology for paying for 
therapy services received in the SNF. These commenters urged CMS to 
expedite the research necessary to develop a new therapy payment model, 
with one commenter stating that CMS should be prepared to implement a 
new system by FY 2015. A few commenters stated that CMS should seek 
input from stakeholders on how best to revise the current therapy 
payment model.
    Response: We appreciate the broad support for this research 
initiative and understand well the importance and urgency of completing 
this work in both a timely and efficient manner. We also recognize the 
importance of seeking input from stakeholders on how best to revise the 
current therapy payment model, which is why we had created the therapy 
research email box at SNFTherapyPayments@cms.hhs.gov. Stakeholders can 
send input on a revised therapy payment model at any time.
    In terms of the timeframe for completing this work and implementing 
a new payment model, we believe it would be premature to speculate on 
when a new model will be ready to be implemented. As many of the 
comments on this issue indicate, it is very important to ensure that 
any change to the current therapy payment model addresses any concerns 
with the existing model and provides sufficient time for providers to 
understand and prepare for implementation of such a model.

V. Provisions of the Final Rule; Regulations Text

    In this final rule, in addition to accomplishing the required 
annual update of the SNF PPS payment rates and finalizing the other 
policies discussed above, we are also finalizing certain revisions to 
the regulations text. One of these revisions relates to the regulations 
dealing with SNF level of care certifications and recertifications. In 
the calendar year (CY) 2011 Medicare Physician Fee Schedule (MPFS) 
final rule with comment period (75 FR 73387, 73602, 73626-73627), we 
revised the regulations at Sec.  424.20(e)(2) to implement section 3108 
of the Affordable Care Act, which amended section 1814(a)(2) of the Act 
by adding physician assistants to the provision authorizing nurse 
practitioners and clinical nurse specialists to sign SNF level of care 
certifications and recertifications. However, as we stated in the FY 
2014 SNF PPS proposed rule, we inadvertently neglected to make a 
conforming change in the regulations text at Sec.  424.11(e)(4). 
Therefore, we proposed to make a minor technical correction in the 
regulations text at Sec.  424.11(e)(4) regarding the types of 
practitioners (in addition to physicians) who can sign the required SNF 
level of care certification and recertifications. The correction 
consisted of a conforming change to reflect that physician assistants 
``as defined in section 1861(aa)(5) of the Act'' are now authorized to 
perform this function, in accordance with section 1814(a)(2) of the Act 
(as amended by section 3108 of the Affordable Care Act) and the 
implementing regulations at Sec.  424.20(e)(2). We received no comments 
on this proposal and, therefore, are finalizing this provision 
essentially as proposed. However, we are revising the statutory 
citation of the physician assistant definition to read ``section 
1861(aa)(5)(A) of the Act'' in order to provide greater clarity and 
specificity as to the precise location of this definition in the 
statute. In addition, we inadvertently neglected to make a similar 
conforming technical change in the second paragraph of Sec.  424.10(a), 
which describes the general purpose of this subpart of the regulations, 
and describes the types of practitioners (in addition to physicians) 
permitted under section 1814(a)(2) of the Act to certify and recertify 
the need for post-hospital extended care services. Thus, in this final 
rule, we also are making a similar minor technical correction to the 
regulations text at Sec.  424.10(a) so that it accurately reflects that 
physician assistants are now permitted under section 1814(a)(2) of the 
Act to certify and recertify the need for post-hospital extended care 
services and so that it conforms with the regulations text at Sec.  
424.20(e)(2) and Sec.  424.11(e)(4) (as revised in this rule).
    Additionally, in the FY 2014 SNF PPS proposed rule (78 FR 26438), 
we proposed to make the wage index tables available exclusively through 
the Internet on CMS's SNF PPS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html. In order to 
accommodate this approach, we also proposed to revise the phrase ``wage 
index'' that currently appears in the second sentence of Sec.  413.345 
to read ``factors to be applied in making the area wage adjustment,'' 
consistent with the wording of the corresponding statutory authority at 
section 1888(e)(4)(H)(iii) of the Act. We received no comments on this 
proposal, and therefore, are finalizing this provision as proposed.

VI. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), we are required to 
provide 30-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
OMB for review and approval. In order to evaluate fairly whether an 
information collection should be approved by OMB, section 3506(c)(2)(A) 
of the PRA requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    In the May 6, 2013 proposed rule (78 FR 26437) we solicited public 
comment on each of the section 3506(c)(2)(A)-required issues for the 
following information collection requirements (ICRs). We did not 
receive any comments.

ICRs Regarding Nursing Home and Swing Bed PPS Item Sets

    Under sections 4204(b) and 4214(d) of the Omnibus Budget 
Reconciliation Act of 1987 (OBRA 1987, Pub. L. 100-203 enacted on 
December 22, 1987), the submission and retention of resident assessment 
data for purposes of carrying out OBRA 1987 are not subject to the PRA. 
While certain data items that are collected under the SNF resident 
assessment instrument (or MDS 3.0) fall under the OBRA 1987 exemption, 
MDS 3.0's PPS-related item sets are outside the scope of OBRA 1987 and 
require PRA consideration.
    As discussed in section IV.D.2 of this rule, we are finalizing our 
proposal to add Item O0420 to the MDS 3.0 form to capture the number of 
distinct calendar days a SNF resident has received therapy across all 
rehabilitation disciplines in a seven-day look-back period. The item 
would not be added as a result of any change in statute or policy; 
rather, it would be added to ensure that our existing Rehabilitation 
RUG classification policies are properly implemented as intended. We do 
not believe this action will cause any

[[Page 47965]]

measureable adjustments to our burden estimates.
    While we are not revising the form's burden estimates, we are 
revising OCN 0938-1140 (CMS-10387) by adding item O0420 to the Nursing 
Home and Swing Bed PPS Item Sets.
    If you comment on these information collection and recordkeeping 
requirements, please do either of the following:
    1. Submit your comments electronically as specified in the 
ADDRESSES section of the proposed rule; or
    2. Submit your comments to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, Attention: CMS Desk Officer, 
[CMS-1446-F] by fax: (202) 395-6974 or by email: OIRA_submission@omb.eop.gov.

VII. Economic Analyses

A. Regulatory Impact Analysis

1. Introduction
    We have examined the impacts of this final rule as required by 
Executive Order 12866 on Regulatory Planning and Review (September 30, 
1993), Executive Order 13563 on Improving Regulation and Regulatory 
Review (January 18, 2011), the Regulatory Flexibility Act (RFA) 
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA, March 
22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 
4, 1999), and the Congressional Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule has been designated an economically significant 
rule, under section 3(f)(1) of Executive Order 12866, and thus a major 
rule under the Congressional Review Act. Also, the rule has been 
reviewed by OMB.
2. Statement of Need
    This final rule updates the SNF prospective payment rates for FY 
2014 as required under section 1888(e)(4)(E) of the Act. It also 
responds to section 1888(e)(4)(H) of the Act, which requires the 
Secretary to ``provide for publication in the Federal Register'' before 
the August 1 that precedes the start of each fiscal year, of the 
unadjusted federal per diem rates, the case-mix classification system, 
and the factors to be applied in making the area wage adjustment. As 
these statutory provisions prescribe a detailed methodology for 
calculating and disseminating payment rates under the SNF PPS, we do 
not have the discretion to adopt an alternative approach.
3. Overall Impacts
    This final rule sets forth the updates of the SNF PPS rates 
contained in the update notice for FY 2013 (77 FR 46214). Based on the 
above, we estimate that the aggregate impact would be an increase of 
$470 million in payments to SNFs, resulting from the SNF market basket 
update to the payment rates, as adjusted by the forecast error 
correction and MFP adjustment. The impact analysis of this final rule 
represents the projected effects of the changes in the SNF PPS from FY 
2013 to FY 2014. Although the best data available are utilized, there 
is no attempt to predict behavioral responses to these changes, or to 
make adjustments for future changes in such variables as days or case-
mix.
    Certain events may occur to limit the scope or accuracy of our 
impact analysis, as this analysis is future-oriented and, thus, very 
susceptible to forecasting errors due to certain events that may occur 
within the assessed impact time period. Some examples of possible 
events may include legislated general Medicare program funding changes 
by the Congress, or changes specifically related to SNFs. In addition, 
changes to the Medicare program may continue to be made as a result of 
previously-enacted legislation, or new statutory provisions. Although 
these changes may not be specific to the SNF PPS, the nature of the 
Medicare program is such that the changes may interact and, thus, the 
complexity of the interaction of these changes could make it difficult 
to predict accurately the full scope of the impact upon SNFs.
    In accordance with sections 1888(e)(4)(E) and 1888(e)(5) of the 
Act, we update the FY 2013 payment rates by a factor equal to the 
market basket index percentage change adjusted by the forecast error 
for FY 2012, the latest FY for which final data are available, and the 
MFP adjustment to determine the payment rates for FY 2014. As discussed 
previously, for FY 2012 and each subsequent FY, as required by section 
1888(e)(5)(B) of the Act as amended by section 3401(b) of the 
Affordable Care Act, the market basket percentage is reduced by the MFP 
adjustment. The special AIDS add-on established by section 511 of the 
MMA remains in effect until ``. . . such date as the Secretary 
certifies that there is an appropriate adjustment in the case mix . . . 
.'' We have not provided a separate impact analysis for the MMA 
provision. Our latest estimates indicate that there are fewer than 
4,100 beneficiaries who qualify for the add-on payment for SNF 
residents with AIDS. The impact to Medicare is included in the 
``total'' column of Table 10. In updating the SNF PPS rates for FY 
2014, we made a number of standard annual revisions and clarifications 
mentioned elsewhere in this final rule (for example, the update to the 
wage and market basket indexes used for adjusting the federal rates).
    The annual update set forth in this final rule applies to SNF 
payments in FY 2014. Accordingly, the analysis that follows only 
describes the impact of this single year. In accordance with the 
requirements of the Act, we will publish a notice or rule in the 
Federal Register for each subsequent FY that will provide for an update 
to the SNF payment rates and include an associated impact analysis.
4. Detailed Economic Analysis
    The FY 2014 SNF PPS impacts appear in Table 10. Using the most 
recently available data, in this case FY 2012, we apply the current FY 
2013 wage index and labor-related share value to the number of payment 
days to simulate FY 2013 payments. Then, using the same FY 2012 data, 
we apply the FY 2014 wage index and labor-related share value to 
simulate FY 2014 payments. We tabulate the resulting payments according 
to the classifications in Table 10, for example, facility type, 
geographic region, facility ownership, and compare the difference 
between current and FY 2014 payments to determine the overall impact. 
The breakdown of the various categories of data in the table follows.
    The first column shows the breakdown of all SNFs by urban or rural 
status, hospital-based or freestanding status, census region, and 
ownership.
    The first row of figures describes the estimated effects of the 
various changes on all facilities. The next six rows show the effects 
on facilities split by hospital-based, freestanding, urban, and rural 
categories. The urban and rural designations are based on the location 
of the facility under the CBSA designation. The next nineteen rows show 
the effects on facilities by urban versus rural status by census 
region. The last three rows

[[Page 47966]]

show the effects on facilities by ownership (that is, government, 
profit, and non-profit status).
    The second column in the table shows the number of facilities in 
the impact database.
    The third column of the table shows the effect of the annual update 
to the wage index. This represents the effect of using the most recent 
wage data available. The total impact of this change is zero percent; 
however, there are distributional effects of the change.
    The fourth column shows the effect of all of the changes on the FY 
2014 SNF PPS payments. The FY 2014 update of 1.3 percent (consisting of 
the market basket increase of 2.3 percentage points, reduced by the 0.5 
percentage point forecast error correction and further reduced by the 
0.5 percentage point MFP adjustment) is constant for all providers and, 
though not shown individually, is included in the total column. It is 
projected that aggregate payments will increase by 1.3 percent, 
assuming facilities do not change their care delivery and billing 
practices in response.
    As illustrated in Table 10, the combined effects of all of the 
changes vary by specific types of providers and by location. Though all 
facilities would experience payment increases, the projected impact on 
providers for FY 2014 varies due to the impact of the wage index 
update. For example, due to changes from updating the wage index, 
providers in the rural Pacific region would experience a 2.8 percent 
increase in FY 2014 total payments and providers in the urban East 
South Central region would experience a 0.8 percent increase in FY 2014 
total payments.

                          Table 10--RUG-IV Projected Impact to the SNF PPS for FY 2014
----------------------------------------------------------------------------------------------------------------
                                                                Number of
                                                              facilities FY   Update wage data    Total FY 2014
                                                                  2014            (percent)     change (percent)
----------------------------------------------------------------------------------------------------------------
Group:
Total.....................................................            15,380               0.0               1.3
    Urban.................................................            10,582               0.1               1.4
    Rural.................................................             4,798              -0.3               1.0
    Hospital based urban..................................               758               0.2               1.5
    Freestanding urban....................................             9,824               0.1               1.4
    Hospital based rural..................................               402              -0.3               1.0
    Freestanding rural....................................             4,396              -0.3               1.0
Urban by region:
    New England...........................................               804               0.3               1.6
    Middle Atlantic.......................................             1,452               0.8               2.1
    South Atlantic........................................             1,741              -0.6               0.7
    East North Central....................................             2,049              -0.2               1.1
    East South Central....................................               526              -0.5               0.8
    West North Central....................................               868              -0.7               0.6
    West South Central....................................             1,241              -0.4               0.9
    Mountain..............................................               490              -0.1               1.2
    Pacific...............................................             1,405               1.1               2.5
    Outlying..............................................                 6               0.1               1.4
Rural by region:
    New England...........................................               153               0.2               1.5
    Middle Atlantic.......................................               262               0.2               1.5
    South Atlantic........................................               608              -0.6               0.7
    East North Central....................................               928              -0.6               0.7
    East South Central....................................               551              -0.6               0.7
    West North Central....................................             1,114               0.5               1.8
    West South Central....................................               813              -0.9               0.4
    Mountain..............................................               246               0.2               1.5
    Pacific...............................................               123               1.4               2.8
Ownership:
    Government............................................               832               0.2               1.5
    Profit................................................            10,724               0.0               1.3
    Non-profit............................................             3,824               0.0               1.3
----------------------------------------------------------------------------------------------------------------
Note: The Total column includes the 2.3 percent market basket increase, reduced by the 0.5 percentage point
  forecast error correction and further reduced by the 0.5 percentage point MFP adjustment. Additionally, we
  found no SNFs in rural outlying areas.

5. Alternatives Considered
    As described above, we estimate that the aggregate impact for FY 
2014 would be an increase of $470 million in payments to SNFs, 
resulting from the SNF market basket update to the payment rates, as 
adjusted by the forecast error correction and the MFP adjustment.
    Section 1888(e) of the Act establishes the SNF PPS for payment of 
Medicare SNF services for cost reporting periods beginning on or after 
July 1, 1998. This section of the statute prescribes a detailed formula 
for calculating payment rates under the SNF PPS, and does not provide 
for the use of any alternative methodology. This section of the statute 
specifies that the base year cost data to be used for computing the SNF 
PPS payment rates are from FY 1995 (October 1, 1994, through September 
30, 1995). In accordance with the statute, we also incorporated a 
number of elements into the SNF PPS (for example, case-mix 
classification methodology, a market basket index, a wage index, and 
the urban and rural distinction used in the development or adjustment 
of the federal rates). Further, section 1888(e)(4)(H) of the Act 
specifically requires us to provide for publication of the payment 
rates for each new FY in the Federal Register, and to do so before the 
August 1 that precedes the start of the new FY.

[[Page 47967]]

Accordingly, we are not pursuing alternatives with respect to the 
payment methodology as discussed above.
    We received a number of comments on the potential impact of 
finalizing the proposals in the FY 2014 SNF PPS proposed rule. A 
discussion of those comments, and our responses, appear below.
    Comment: In their March 2013 report (available at: http://www.medpac.gov/documents/Mar13_entirereport.pdf), and in their comment 
on this proposed rule, MedPAC recommended that CMS eliminate the market 
basket update for SNFs and rebase payments for the SNF PPS, beginning 
with a 4 percent reduction in FY 2014. Several commenters raised 
concerns with MedPAC's recommendations, specifically that the cost and 
margin data used by MedPAC to justify their recommendations did not 
adequately represent the costs of providing SNF care. A few commenters 
also noted that any cuts in Medicare rates can have a cascading effect 
in combination with increased fiscal pressures deriving from reduced 
Medicaid funding.
    Response: With regard to MedPAC's proposals to eliminate the market 
basket update for SNFs and to implement a 4 percent reduction to the 
SNF PPS rates, we would note that CMS does not have the statutory 
authority to act on either one of these proposals at the current time.
    In addition, as we have stated in previous years--most recently, in 
the FY 2012 SNF PPS final rule (76 FR 48496, August 8, 2011)--we 
believe that it is not the appropriate role of the Medicare SNF benefit 
to cross-subsidize nursing home payments made under the Medicaid 
program. As noted by several commenters, the primary purpose of the SNF 
PPS is to provide accurate payment for Medicare Part A services 
provided in a SNF setting. Further, we note that MedPAC has also 
indicated that it is inappropriate for the Medicare payments to SNFs to 
serve as a remedy for any Medicaid shortfalls. Specifically, on page 
177 of its March 2013 Report to Congress on Medicare Payment Policy 
(which is available online at http://www.medpac.gov/documents/Mar13_
EntireReport.pdf), MedPAC stated:

    The Commission believes such cross-subsidization is not 
advisable for several reasons. First, the strategy of using Medicare 
rates to supplement low payments from other payers results in poorly 
targeted subsidies. Facilities with high shares of Medicare 
payments--presumably the facilities that need revenues the least--
would receive the most in subsidies from higher Medicare payments, 
while facilities with low Medicare shares--presumably the facilities 
with the greatest need--would receive the smallest subsidies * * * 
In addition, Medicare's subsidy does not discriminate among states 
with relatively high and low payments * * * Finally, Medicare's 
current overpayments represent a subsidy of trust fund dollars (and 
its taxpayer support) to the low payments made by states and private 
payers.

    We agree with MedPAC, and therefore, do not agree with the 
commenters that cited cross-subsidizing Medicaid as a justification for 
maintaining Medicare SNF payments at any specific level.
    Comment: A few commenters requested that CMS consider a larger 
update to account for the forthcoming costs associated with the 
implementation of the Affordable Care Act employer responsibility 
requirements, which, at a general level, would require that employers 
with 50 or more full-time-equivalent employees provide health care 
coverage to their full-time employees (those working on average 30 or 
more hours per week) or face a penalty.
    Response: As discussed in section IV.B of this proposed rule, CMS 
is required by statute to follow a specific methodology for updating 
the payment rates each year. We are not permitted to increase the 
update to account for these types of additional costs under existing 
authority.
6. Accounting Statement
    As required by OMB Circular A-4 (available online at 
www.whitehouse.gov/sites/default/files/omb/assets/regulatory_matters_pdf/a-4.pdf), in Table 11, we have prepared an accounting statement 
showing the classification of the expenditures associated with the 
provisions of this final rule. Table 11 provides our best estimate of 
the possible changes in Medicare payments under the SNF PPS as a result 
of the policies in this final rule, based on the data for 15,380 SNFs 
in our database. All expenditures are classified as transfers to 
Medicare SNF providers.

       Table 11--Accounting Statement: Classification of Estimated
   Expenditures, From the 2013 SNF PPS Fiscal Year to the 2014 SNF PPS
                               Fiscal Year
------------------------------------------------------------------------
              Category                             Transfers
------------------------------------------------------------------------
Annualized monetized transfers......  $470 million*
From Whom To Whom...................  Federal Government to SNF Medicare
                                       Providers
------------------------------------------------------------------------
* The net increase of $470 million in transfer payments is a result of
  the SNF market basket update to the payment rates, as adjusted by the
  forecast error correction and the MFP adjustment.

7. Conclusion
    This final rule sets forth updates of the SNF PPS rates contained 
in the update notice for FY 2013 (77 FR 46214). Based on the above, we 
estimate the overall estimated payments for SNFs in FY 2014 are 
projected to increase by $470 million, or 1.3 percent, compared with 
those in FY 2013. We estimate that in FY 2014, SNFs in urban and rural 
areas would experience, on average, a 1.4 and 1.0 percent increase, 
respectively, in estimated payments compared with FY 2013. Providers in 
the rural Pacific region would experience the largest estimated 
increase in payments of approximately 2.8 percent. Providers in the 
rural West South Central region would experience the smallest increase 
in payments of 0.4 percent.

B. Regulatory Flexibility Act Analysis

    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, non-profit organizations, and small 
governmental jurisdictions. Most SNFs and most other providers and 
suppliers are small entities, either by their non-profit status or by 
having revenues of $25.5 million or less in any 1 year. For purposes of 
the RFA, approximately 91 percent of SNFs are considered small 
businesses according to the Small Business Administration's latest size 
standards (NAICS 623110), with total revenues of $25.5 million or less 
in any 1 year. (For details, see the Small Business Administration's 
Web site at http://www.sba.gov/category/navigation-structure/contracting/contracting-officials/eligibility-size-standards). 
Individuals and States are not included in the definition of a small 
entity. In addition, approximately 25 percent of SNFs classified as 
small entities are non-profit organizations. Finally, the estimated 
number of small

[[Page 47968]]

business entities does not distinguish provider establishments that are 
within a single firm and, therefore, the number of SNFs classified as 
small entities may be higher than the estimate above.
    This final rule sets forth updates of the SNF PPS rates contained 
in the update notice for FY 2013 (77 FR 46214). Based on the above, we 
estimate that the aggregate impact would be an increase of $470 million 
in payments to SNFs, resulting from the SNF market basket update to the 
payment rates, as adjusted by the forecast error correction and the MFP 
adjustment. While it is projected in Table 10 that all groups of 
providers would experience a net increase in payments, we note that 
some individual providers within the same group but different regions 
may experience different impacts on payments than others due to the 
distributional impact of the FY 2014 wage indexes and the degree of 
Medicare utilization.
    Guidance issued by the Department of Health and Human Services on 
the proper assessment of the impact on small entities in rulemakings, 
utilizes a cost or revenue impact of 3 to 5 percent as a significance 
threshold under the RFA. According to MedPAC, Medicare covers 
approximately 12 percent of total patient days in freestanding 
facilities and 23 percent of facility revenue. However, they note that 
the distribution of days and payments is highly variable. That is, the 
majority of SNFs have significantly lower Medicare utilization (Report 
to the Congress: Medicare Payment Policy, March 2013, available at 
http://www.medpac.gov/documents/Mar13_EntireReport.pdf). As a result, 
for most facilities, when all payers are included in the revenue 
stream, the overall impact on total revenues should be substantially 
less than those impacts presented in Table 10. As indicated in Table 
10, the effect on facilities is projected to be an aggregate positive 
impact of 1.3 percent. As the overall impact on the industry as a 
whole, and thus on small entities specifically, is less than the 3 to 5 
percent threshold discussed above, the Secretary has determined that 
this final rule would not have a significant impact on a substantial 
number of small entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 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. This final rule would 
affect small rural hospitals that (a) furnish SNF services under a 
swing-bed agreement or (b) have a hospital-based SNF. We anticipate 
that the impact on small rural hospitals would be similar to the impact 
on SNF providers overall. Moreover, as noted in the FY 2012 final rule 
(76 FR 48539), the category of small rural hospitals would be included 
within the analysis of the impact of this final rule on small entities 
in general. As indicated in Table 10, the effect on facilities is 
projected to be an aggregate positive impact of 1.3 percent. As the 
overall impact on the industry as a whole is less than the 3 to 5 
percent threshold discussed above, the Secretary has determined that 
this final rule would not have a significant impact on a substantial 
number of small rural hospitals.

C. Unfunded Mandates Reform Act Analysis

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2013, that 
threshold is approximately $141 million. This final rule would not 
impose spending costs on State, local, or tribal governments in the 
aggregate, or by the private sector, of $141 million.

D. Federalism Analysis

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that impose substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has federalism 
implications. This final rule would have no substantial direct effect 
on State and local governments, preempt State law, or otherwise have 
federalism implications.

List of Subjects

42 CFR Part 413

    Health facilities, Kidney diseases, Medicare, Reporting and 
recordkeeping requirements.

42 CFR Part 424

    Emergency medical services, Health facilities, Health professions, 
Medicare, Reporting and recordkeeping requirements.
    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services amends 42 CFR chapter IV as set forth below:

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

0
1. The authority citation for part 413 continues to read as follows:

    Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i), and 
(n), 1861(v), 1871, 1881, 1883, and 1886 of the Social Security Act 
(42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and (n), 
1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); sec. 124 of Pub. L. 
106-133 (113 Stat. 1501A-332) and sec. 3201 of Pub. L. 112-96 (126 
Stat. 156).

0
2. Section 413.345 is revised to read as follows:

Sec.  413.345  Publication of Federal prospective payment rates.

    CMS publishes information pertaining to each update of the Federal 
payment rates in the Federal Register. This information includes the 
standardized Federal rates, the resident classification system that 
provides the basis for case-mix adjustment (including the designation 
of those specific Resource Utilization Groups under the resident 
classification system that represent the required SNF level of care, as 
provided in Sec.  409.30 of this chapter), and the factors to be 
applied in making the area wage adjustment. This information is 
published before May 1 for the fiscal year 1998 and before August 1 for 
the fiscal years 1999 and after.

PART 424--CONDITIONS FOR MEDICARE PAYMENT

0
3. The authority citation for part 424 continues to read as follows:

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

0
4. In Sec.  424.10, paragraph (a) is amended by removing the phrase 
``nurse practitioners or clinical nurse specialists'' and adding in its 
place ``nurse practitioners, clinical nurse specialists, or physician 
assistants''.
0
5. Section 424.11 is amended by revising paragraph (e)(4) to read as 
follows:

Sec.  424.11  General procedures.

* * * * *
    (e) * * *
    (4) A nurse practitioner or clinical nurse specialist as defined in 
paragraph (e)(5) or (e)(6) of this section, or a physician assistant as 
defined in section

[[Page 47969]]

1861(aa)(5)(A) of the Act, in the circumstances specified in Sec.  
424.20(e).
* * * * *

    Authority:  (Catalog of Federal Domestic Assistance Program No. 
93.773, Medicare--Hospital Insurance; and Program No. 93.774, 
Medicare--Supplementary Medical Insurance Program)

    Dated: July 19, 2013.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
Approved: July 29, 2013.

Kathleen Sebelius,
Secretary.

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

Addendum--FY 2014 CBSA Wage Index Tables

    In this addendum, we provide the wage index tables referred to 
in the preamble to this final rule. Tables A and B display the CBSA-
based wage index values for urban and rural providers. As noted 
previously in this final rule, we are adopting an approach already 
being followed by other Medicare payment systems, whereby for SNF 
PPS rules and notices published on or after October 1, 2013, these 
wage index tables will henceforth be made available exclusively 
through the Internet on the CMS Web site rather than being published 
in the Federal Register as part of the annual SNF PPS rulemaking.

 Table A--FY 2014 Wage Index for Urban Areas Based on CBSA Labor Market
                                  Areas
------------------------------------------------------------------------
                                    Urban area (constituent        Wage
          CBSA Code                        counties)              index
------------------------------------------------------------------------
10180........................  Abilene, TX.....................   0.8225
                               Callahan County, TX.............
                               Jones County, TX................
                               Taylor County, TX...............
10380........................  Aguadilla-Isabela-San              0.3647
                                Sebasti[aacute]n, PR.
                               Aguada Municipio, PR............
                               Aguadilla Municipio, PR.........
                               A[ntilde]asco Municipio, PR.....
                               Isabela Municipio, PR...........
                               Lares Municipio, PR.............
                               Moca Municipio, PR..............
                               Rinc[oacute]n Municipio, PR.....
                               San Sebasti[aacute]n Municipio,
                                PR.
10420........................  Akron, OH.......................   0.8521
                               Portage County, OH..............
                               Summit County, OH...............
10500........................  Albany, GA......................   0.8713
                               Baker County, GA................
                               Dougherty County, GA............
                               Lee County, GA..................
                               Terrell County, GA..............
                               Worth County, GA................
10580........................  Albany-Schenectady-Troy, NY.....   0.8600
                               Albany County, NY...............
                               Rensselaer County, NY...........
                               Saratoga County, NY.............
                               Schenectady County, NY..........
                               Schoharie County, NY............
10740........................  Albuquerque, NM.................   0.9663
                               Bernalillo County, NM...........
                               Sandoval County, NM.............
                               Torrance County, NM.............
                               Valencia County, NM.............
10780........................  Alexandria, LA..................   0.7788
                               Grant Parish, LA................
                               Rapides Parish, LA..............
10900........................  Allentown-Bethlehem-Easton, PA-    0.9215
                                NJ.
                               Warren County, NJ...............
                               Carbon County, PA...............
                               Lehigh County, PA...............
                               Northampton County, PA..........
11020........................  Altoona, PA.....................   0.9101
                               Blair County, PA................
11100........................  Amarillo, TX....................   0.8302
                               Armstrong County, TX............
                               Carson County, TX...............
                               Potter County, TX...............
                               Randall County, TX..............
11180........................  Ames, IA........................   0.9425
                               Story County, IA................
11260........................  Anchorage, AK...................   1.2221
                               Anchorage Municipality, AK......
                               Matanuska-Susitna Borough, AK...
11300........................  Anderson, IN....................   0.9654
                               Madison County, IN..............
11340........................  Anderson, SC....................   0.8766
                               Anderson County, SC.............
11460........................  Arbor, MI.......................   1.0086
                               Washtenaw County, MI............
11500........................  Anniston-Oxford, AL.............   0.7402
                               Calhoun County, AL..............
11540........................  Appleton, WI....................   0.9445
                               Calumet County, WI..............
                               Outagamie County, WI............
11700........................  Asheville, NC...................   0.8511
                               Buncombe County, NC.............
                               Haywood County, NC..............
                               Henderson County, NC............
                               Madison County, NC..............
12020........................  Athens-Clarke County, GA........   0.9244
                               Clarke County, GA...............
                               Madison County, GA..............
                               Oconee County, GA...............
                               Oglethorpe County, GA...........
12060........................  Atlanta-Sandy Springs-Marietta,    0.9452
                                GA.
                               Barrow County, GA...............
                               Bartow County, GA...............
                               Butts County, GA................
                               Carroll County, GA..............
                               Cherokee County, GA.............
                               Clayton County, GA..............
                               Cobb County, GA.................
                               Coweta County, GA...............
                               Dawson County, GA...............
                               DeKalb County, GA...............
                               Douglas County, GA..............
                               Fayette County, GA..............
                               Forsyth County, GA..............
                               Fulton County, GA...............
                               Gwinnett County, GA.............
                               Haralson County, GA.............
                               Heard County, GA................
                               Henry County, GA................
                               Jasper County, GA...............
                               Lamar County, GA................
                               Meriwether County, GA...........
                               Newton County, GA...............
                               Paulding County, GA.............
                               Pickens County, GA..............
                               Pike County, GA.................
                               Rockdale County, GA.............
                               Spalding County, GA.............
                               Walton County, GA...............
12100........................  Atlantic City-Hammonton, NJ.....   1.2258
                               Atlantic County, NJ.............
12220........................  Auburn-Opelika, AL..............   0.7771
                               Lee County, AL..................
12260........................  Augusta-Richmond County, GA-SC..   0.9150
                               Burke County, GA................
                               Columbia County, GA.............
                               McDuffie County, GA.............
                               Richmond County, GA.............
                               Aiken County, SC................
                               Edgefield County, SC............
12420........................  Austin-Round Rock, TX...........   0.9576
                               Bastrop County, TX..............
                               Caldwell County, TX.............
                               Hays County, TX.................
                               Travis County, TX...............
                               Williamson County, TX...........
12540........................  Bakersfield, CA.................   1.1579
                               Kern County, CA.................
12580........................  Baltimore-Towson, MD............   0.9873
                               Anne Arundel County, MD.........
                               Baltimore County, MD............
                               Carroll County, MD..............
                               Harford County, MD..............
                               Howard County, MD...............
                               Queen Anne's County, MD.........
                               Baltimore City, MD..............
12620........................  Bangor, ME......................   0.9710
                               Penobscot County, ME............
12700........................  Barnstable Town, MA.............   1.3007
                               Barnstable County, MA...........
12940........................  Baton Rouge, LA.................   0.8078
                               Ascension Parish, LA............
                               East Baton Rouge Parish, LA.....
                               East Feliciana Parish, LA.......
                               Iberville Parish, LA............
                               Livingston Parish, LA...........
                               Pointe Coupee Parish, LA........
                               St. Helena Parish, LA...........
                               West Baton Rouge Parish, LA.....
                               West Feliciana Parish, LA.......
12980........................  Battle Creek, MI................   0.9915
                               Calhoun County, MI..............
13020........................  Bay City, MI....................   0.9486
                               Bay County, MI..................

[[Page 47970]]

 
13140........................  Beaumont-Port Arthur, TX........   0.8598
                               Hardin County, TX...............
                               Jefferson County, TX............
                               Orange County, TX...............
13380........................  Bellingham, WA..................   1.1890
                               Whatcom County, WA..............
13460........................  Bend, OR........................   1.1807
                               Deschutes County, OR............
13644........................  Bethesda-Frederick-Gaithersburg,   1.0319
                                MD.
                               Frederick County, MD............
                               Montgomery County, MD...........
13740........................  Billings, MT....................   0.8691
                               Carbon County, MT...............
                               Yellowstone County, MT..........
13780........................  Binghamton, NY..................   0.8602
                               Broome County, NY...............
                               Tioga County, NY................
13820........................  Birmingham-Hoover, AL...........   0.8367
                               Bibb County, AL.................
                               Blount County, AL...............
                               Chilton County, AL..............
                               Jefferson County, AL............
                               St. Clair County, AL............
                               Shelby County, AL...............
                               Walker County, AL...............
13900........................  Bismarck, ND....................   0.7282
                               Burleigh County, ND.............
                               Morton County, ND...............
13980........................  Blacksburg-Christiansburg-         0.8319
                                Radford, VA.
                               Giles County, VA................
                               Montgomery County, VA...........
                               Pulaski County, VA..............
                               Radford City, VA................
14020........................  Bloomington, IN.................   0.9304
                               Greene County, IN...............
                               Monroe County, IN...............
                               Owen County, IN.................
14060........................  Bloomington-Normal, IL..........   0.9310
                               McLean County, IL...............
14260........................  Boise City-Nampa, ID............   0.9259
                               Ada County, ID..................
                               Boise County, ID................
                               Canyon County, ID...............
                               Gem County, ID..................
                               Owyhee County, ID...............
14484........................  Boston-Quincy, MA...............   1.2453
                               Norfolk County, MA..............
                               Plymouth County, MA.............
                               Suffolk County, MA..............
14500........................  Boulder, CO.....................   0.9850
                               Boulder County, CO..............
14540........................  Bowling Green, KY...............   0.8573
                               Edmonson County, KY.............
                               Warren County, KY...............
14740........................  Bremerton-Silverdale, WA........   1.0268
                               Kitsap County, WA...............
14860........................  Bridgeport-Stamford-Norwalk, CT.   1.3252
                               Fairfield County, CT............
15180........................  Brownsville-Harlingen, TX.......   0.8179
                               Cameron County, TX..............
15260........................  Brunswick, GA...................   0.8457
                               Brantley County, GA.............
                               Glynn County, GA................
                               McIntosh County, GA.............
15380........................  Buffalo-Niagara Falls, NY.......   1.0045
                               Erie County, NY.................
                               Niagara County, NY..............
15500........................  Burlington, NC..................   0.8529
                               Alamance County, NC.............
15540........................  Burlington-South Burlington, VT.   1.0130
                               Chittenden County, VT...........
                               Franklin County, VT.............
                               Grand Isle County, VT...........
15764........................  Cambridge-Newton-Framingham, MA.   1.1146
                               Middlesex County, MA............
15804........................  Camden, NJ......................   1.0254
                               Burlington County, NJ...........
                               Camden County, NJ...............
                               Gloucester County, NJ...........
15940........................  Canton-Massillon, OH............   0.8730
                               Carroll County, OH..............
                               Stark County, OH................
15980........................  Cape Coral-Fort Myers, FL.......   0.8683
                               Lee County, FL..................
16020........................  Cape Girardeau-Jackson, MO-IL...   0.9174
                               Alexander County, IL............
                               Bollinger County, MO............
                               Cape Girardeau County, MO.......
16180........................  Carson City, NV.................   1.0721
                               Carson City, NV.................
16220........................  Casper, WY......................   1.0111
                               Natrona County, WY..............
16300........................  Cedar Rapids, IA................   0.8964
                               Benton County, IA...............
                               Jones County, IA................
                               Linn County, IA.................
16580........................  Champaign-Urbana, IL............   0.9416
                               Champaign County, IL............
                               Ford County, IL.................
                               Piatt County, IL................
16620........................  Charleston, WV..................   0.8119
                               Boone County, WV................
                               Clay County, WV.................
                               Kanawha County, WV..............
                               Lincoln County, WV..............
                               Putnam County, WV...............
16700........................  Charleston-North Charleston-       0.8972
                                Summerville, SC.
                               Berkeley County, SC.............
                               Charleston County, SC...........
                               Dorchester County, SC...........
16740........................  Charlotte-Gastonia-Concord, NC-    0.9447
                                SC.
                               Anson County, NC................
                               Cabarrus County, NC.............
                               Gaston County, NC...............
                               Mecklenburg County, NC..........
                               Union County, NC................
                               York County, SC.................
16820........................  Charlottesville, VA.............   0.9209
                               Albemarle County, VA............
                               Fluvanna County, VA.............
                               Greene County, VA...............
                               Nelson County, VA...............
                               Charlottesville City, VA........
16860........................  Chattanooga, TN-GA..............   0.8783
                               Catoosa County, GA..............
                               Dade County, GA.................
                               Walker County, GA...............
                               Hamilton County, TN.............
                               Marion County, TN...............
                               Sequatchie County, TN...........
16940........................  Cheyenne, WY....................   0.9494
                               Laramie County, WY..............
16974........................  Chicago-Naperville-Joliet, IL...   1.0418
                               Cook County, IL.................
                               DeKalb County, IL...............
                               DuPage County, IL...............
                               Grundy County, IL...............
                               Kane County, IL.................
                               Kendall County, IL..............
                               McHenry County, IL..............
                               Will County, IL.................
17020........................  Chico, CA.......................   1.1616
                               Butte County, CA................
17140........................  Cincinnati-Middletown, OH-KY-IN.   0.9470
                               Dearborn County, IN.............
                               Franklin County, IN.............
                               Ohio County, IN.................
                               Boone County, KY................
                               Bracken County, KY..............
                               Campbell County, KY.............
                               Gallatin County, KY.............
                               Grant County, KY................
                               Kenton County, KY...............
                               Pendleton County, KY............
                               Brown County, OH................
                               Butler County, OH...............
                               Clermont County, OH.............
                               Hamilton County, OH.............
                               Warren County, OH...............
17300........................  Clarksville, TN-KY..............   0.7802
                               Christian County, KY............
                               Trigg County, KY................
                               Montgomery County, TN...........
                               Stewart County, TN..............
17420........................  Cleveland, TN...................   0.7496
                               Bradley County, TN..............
                               Polk County, TN.................
17460........................  Cleveland-Elyria-Mentor, OH.....   0.9303
                               Cuyahoga County, OH.............
                               Geauga County, OH...............
                               Lake County, OH.................
                               Lorain County, OH...............
                               Medina County, OH...............
17660........................  Coeur d'Alene, ID...............   0.9064
                               Kootenai County, ID.............
17780........................  College Station-Bryan, TX.......   0.9497
                               Brazos County, TX...............
                               Burleson County, TX.............
                               Robertson County, TX............
17820........................  Colorado Springs, CO............   0.9282
                               El Paso County, CO..............
                               Teller County, CO...............

[[Page 47971]]

 
17860........................  Columbia, MO....................   0.8196
                               Boone County, MO................
                               Howard County, MO...............
17900........................  Columbia, SC....................   0.8601
                               Calhoun County, SC..............
                               Fairfield County, SC............
                               Kershaw County, SC..............
                               Lexington County, SC............
                               Richland County, SC.............
                               Saluda County, SC...............
17980........................  Columbus, GA-AL.................   0.8170
                               Russell County, AL..............
                               Chattahoochee County, GA........
                               Harris County, GA...............
                               Marion County, GA...............
                               Muscogee County, GA.............
18020........................  Columbus, IN....................   0.9818
                               Bartholomew County, IN..........
18140........................  Columbus, OH....................   0.9803
                               Delaware County, OH.............
                               Fairfield County, OH............
                               Franklin County, OH.............
                               Licking County, OH..............
                               Madison County, OH..............
                               Morrow County, OH...............
                               Pickaway County, OH.............
                               Union County, OH................
18580........................  Corpus Christi, TX..............   0.8433
                               Aransas County, TX..............
                               Nueces County, TX...............
                               San Patricio County, TX.........
18700........................  Corvallis, OR...................   1.0596
                               Benton County, OR...............
18880........................  Crestview-Fort Walton Beach-       0.8911
                                Destin, FL.
                               Okaloosa County, FL.............
19060........................  Cumberland, MD-WV...............   0.8054
                               Allegany County, MD.............
                               Mineral County, WV..............
19124........................  Dallas-Plano-Irving, TX.........   0.9831
                               Collin County, TX...............
                               Dallas County, TX...............
                               Delta County, TX................
                               Denton County, TX...............
                               Ellis County, TX................
                               Hunt County, TX.................
                               Kaufman County, TX..............
                               Rockwall County, TX.............
19140........................  Dalton, GA......................   0.8625
                               Murray County, GA...............
                               Whitfield County, GA............
19180........................  Danville, IL....................   0.9460
                               Vermilion County, IL............
19260........................  Danville, VA....................   0.7888
                               Pittsylvania County, VA.........
                               Danville City, VA...............
19340........................  Davenport-Moline-Rock Island, IA-  0.9306
                                IL.
                               Henry County, IL................
                               Mercer County, IL...............
                               Rock Island County, IL..........
                               Scott County, IA................
19380........................  Dayton, OH......................   0.9034
                               Greene County, OH...............
                               Miami County, OH................
                               Montgomery County, OH...........
                               Preble County, OH...............
19460........................  Decatur, AL.....................   0.7165
                               Lawrence County, AL.............
                               Morgan County, AL...............
19500........................  Decatur, IL.....................   0.8151
                               Macon County, IL................
19660........................  Deltona-Daytona Beach-Ormond       0.8560
                                Beach, FL.
                               Volusia County, FL..............
19740........................  Denver-Aurora-Broomfield, CO....   1.0395
                               Adams County, CO................
                               Arapahoe County, CO.............
                               Broomfield County, CO...........
                               Clear Creek County, CO..........
                               Denver County, CO...............
                               Douglas County, CO..............
                               Elbert County, CO...............
                               Gilpin County, CO...............
                               Jefferson County, CO............
                               Park County, CO.................
19780........................  Des Moines-West Des Moines, IA..   0.9393
                               Dallas County, IA...............
                               Guthrie County, IA..............
                               Madison County, IA..............
                               Polk County, IA.................
                               Warren County, IA...............
19804........................  Detroit-Livonia-Dearborn, MI....   0.9237
                               Wayne County, MI................
20020........................  Dothan, AL......................   0.7108
                               Geneva County, AL...............
                               Henry County, AL................
                               Houston County, AL..............
20100........................  Dover, DE.......................   0.9939
                               Kent County, DE.................
20220........................  Dubuque, IA.....................   0.8790
                               Dubuque County, IA..............
20260........................  Duluth, MN-WI...................   1.0123
                               Carlton County, MN..............
                               St. Louis County, MN............
                               Douglas County, WI..............
20500........................  Durham-Chapel Hill, NC..........   0.9669
                               Chatham County, NC..............
                               Durham County, NC...............
                               Orange County, NC...............
                               Person County, NC...............
20740........................  Eau Claire, WI..................   1.0103
                               Chippewa County, WI.............
                               Eau Claire County, WI...........
20764........................  Edison-New Brunswick, NJ........   1.0985
                               Middlesex County, NJ............
                               Monmouth County, NJ.............
                               Ocean County, NJ................
                               Somerset County, NJ.............
20940........................  El Centro, CA...................   0.8848
                               Imperial County, CA.............
21060........................  Elizabethtown, KY...............   0.7894
                               Hardin County, KY...............
                               Larue County, KY................
21140........................  Elkhart-Goshen, IN..............   0.9337
                               Elkhart County, IN..............
21300........................  Elmira, NY......................   0.8725
                               Chemung County, NY..............
21340........................  El Paso, TX.....................   0.8404
                               El Paso County, TX..............
21500........................  Erie, PA........................   0.7940
                               Erie County, PA.................
21660........................  Eugene-Springfield, OR..........   1.1723
                               Lane County, OR.................
21780........................  Evansville, IN-KY...............   0.8381
                               Gibson County, IN...............
                               Posey County, IN................
                               Vanderburgh County, IN..........
                               Warrick County, IN..............
                               Henderson County, KY............
                               Webster County, KY..............
21820........................  Fairbanks, AK...................   1.0997
                               Fairbanks North Star Borough, AK
21940........................  Fajardo, PR.....................   0.3728
                               Ceiba Municipio, PR.............
                               Fajardo Municipio, PR...........
                               Luquillo Municipio, PR..........
22020........................  Fargo, ND-MN....................   0.7802
                               Cass County, ND.................
                               Clay County, MN.................
22140........................  Farmington, NM..................   0.9735
                               San Juan County, NM.............
22180........................  Fayetteville, NC................   0.8601
                               Cumberland County, NC...........
                               Hoke County, NC.................
22220........................  Fayetteville-Springdale-Rogers,    0.8955
                                AR-MO.
                               Benton County, AR...............
                               Madison County, AR..............
                               Washington County, AR...........
                               McDonald County, MO.............
22380........................  Flagstaff, AZ...................   1.2786
                               Coconino County, AZ.............
22420........................  Flint, MI.......................   1.1238
                               Genesee County, MI..............
22500........................  Florence, SC....................   0.7999
                               Darlington County, SC...........
                               Florence County, SC.............
22520........................  Florence-Muscle Shoals, AL......   0.7684
                               Colbert County, AL..............
                               Lauderdale County, AL...........
22540........................  Fond du Lac, WI.................   0.9477
                               Fond du Lac County, WI..........
22660........................  Fort Collins-Loveland, CO.......   0.9704
                               Larimer County, CO..............
22744........................  Fort Lauderdale-Pompano Beach-     1.0378
                                Deerfield Beach, FL.
                               Broward County, FL..............
22900........................  Fort Smith, AR-OK...............   0.7561
                               Crawford County, AR.............
                               Franklin County, AR.............
                               Sebastian County, AR............
                               Le Flore County, OK.............
                               Sequoyah County, OK.............
23060........................  Fort Wayne, IN..................   0.9010
                               Allen County, IN................
                               Wells County, IN................
                               Whitley County, IN..............
23104........................  Fort Worth-Arlington, TX........   0.9535
                               Johnson County, TX..............
                               Parker County, TX...............

[[Page 47972]]

 
                               Tarrant County, TX..............
                               Wise County, TX.................
23420........................  Fresno, CA......................   1.1768
                               Fresno County, CA...............
23460........................  Gadsden, AL.....................   0.7983
                               Etowah County, AL...............
23540........................  Gainesville, FL.................   0.9710
                               Alachua County, FL..............
                               Gilchrist County, FL............
23580........................  Gainesville, GA.................   0.9253
                               Hall County, GA.................
23844........................  Gary, IN........................   0.9418
                               Jasper County, IN...............
                               Lake County, IN.................
                               Newton County, IN...............
                               Porter County, IN...............
24020........................  Glens Falls, NY.................   0.8367
                               Warren County, NY...............
                               Washington County, NY...........
24140........................  Goldsboro, NC...................   0.8550
                               Wayne County, NC................
24220........................  Grand Forks, ND-MN..............   0.7290
                               Polk County, MN.................
                               Grand Forks County, ND..........
24300........................  Grand Junction, CO..............   0.9270
                               Mesa County, CO.................
24340........................  Grand Rapids-Wyoming, MI........   0.9091
                               Barry County, MI................
                               Ionia County, MI................
                               Kent County, MI.................
                               Newaygo County, MI..............
24500........................  Great Falls, MT.................   0.9235
                               Cascade County, MT..............
24540........................  Greeley, CO.....................   0.9653
                               Weld County, CO.................
24580........................  Green Bay, WI...................   0.9587
                               Brown County, WI................
                               Kewaunee County, WI.............
                               Oconto County, WI...............
24660........................  Greensboro-High Point, NC.......   0.8320
                               Guilford County, NC.............
                               Randolph County, NC.............
                               Rockingham County, NC...........
24780........................  Greenville, NC..................   0.9343
                               Greene County, NC...............
                               Pitt County, NC.................
24860........................  Greenville-Mauldin-Easley, SC...   0.9604
                               Greenville County, SC...........
                               Laurens County, SC..............
                               Pickens County, SC..............
25020........................  Guayama, PR.....................   0.3707
                               Arroyo Municipio, PR............
                               Guayama Municipio, PR...........
                               Patillas Municipio, PR..........
25060........................  Gulfport-Biloxi, MS.............   0.8575
                               Hancock County, MS..............
                               Harrison County, MS.............
                               Stone County, MS................
25180........................  Hagerstown-Martinsburg, MD-WV...   0.9234
                               Washington County, MD...........
                               Berkeley County, WV.............
                               Morgan County, WV...............
25260........................  Hanford-Corcoran, CA............   1.1124
                               Kings County, CA................
25420........................  Harrisburg-Carlisle, PA.........   0.9533
                               Cumberland County, PA...........
                               Dauphin County, PA..............
                               Perry County, PA................
25500........................  Harrisonburg, VA................   0.9090
                               Rockingham County, VA...........
                               Harrisonburg City, VA...........
25540........................  Hartford-West Hartford-East        1.1050
                                Hartford, CT.
                               Hartford County, CT.............
                               Middlesex County, CT............
                               Tolland County, CT..............
25620........................  Hattiesburg, MS.................   0.7938
                               Forrest County, MS..............
                               Lamar County, MS................
                               Perry County, MS................
25860........................  Hickory-Lenoir-Morganton, NC....   0.8492
                               Alexander County, NC............
                               Burke County, NC................
                               Caldwell County, NC.............
                               Catawba County, NC..............
25980........................  Hinesville-Fort Stewart, GA \1\.   0.8700
                               Liberty County, GA..............
                               Long County, GA.................
26100........................  Holland-Grand Haven, MI.........   0.8016
                               Ottawa County, MI...............
26180........................  Honolulu, HI....................   1.2321
                               Honolulu County, HI.............
26300........................  Hot Springs, AR.................   0.8474
                               Garland County, AR..............
26380........................  Houma-Bayou Cane-Thibodaux, LA..   0.7525
                               Lafourche Parish, LA............
                               Terrebonne Parish, LA...........
26420........................  Houston-Sugar Land-Baytown, TX..   0.9915
                               Austin County, TX...............
                               Brazoria County, TX.............
                               Chambers County, TX.............
                               Fort Bend County, TX............
                               Galveston County, TX............
                               Harris County, TX...............
                               Liberty County, TX..............
                               Montgomery County, TX...........
                               San Jacinto County, TX..........
                               Waller County, TX...............
26580........................  Huntington-Ashland, WV-KY-OH....   0.8944
                               Boyd County, KY.................
                               Greenup County, KY..............
                               Lawrence County, OH.............
                               Cabell County, WV...............
                               Wayne County, WV................
26620........................  Huntsville, AL..................   0.8455
                               Limestone County, AL............
                               Madison County, AL..............
26820........................  Idaho Falls, ID.................   0.9312
                               Bonneville County, ID...........
                               Jefferson County, ID............
26900........................  Indianapolis-Carmel, IN.........   1.0108
                               Boone County, IN................
                               Brown County, IN................
                               Hamilton County, IN.............
                               Hancock County, IN..............
                               Hendricks County, IN............
                               Johnson County, IN..............
                               Marion County, IN...............
                               Morgan County, IN...............
                               Putnam County, IN...............
                               Shelby County, IN...............
26980........................  Iowa City, IA...................   0.9854
                               Johnson County, IA..............
                               Washington County, IA...........
27060........................  Ithaca, NY......................   0.9326
                               Tompkins County, NY.............
27100........................  Jackson, MI.....................   0.8944
                               Jackson County, MI..............
27140........................  Jackson, MS.....................   0.8162
                               Copiah County, MS...............
                               Hinds County, MS................
                               Madison County, MS..............
                               Rankin County, MS...............
                               Simpson County, MS..............
27180........................  Jackson, TN.....................   0.7729
                               Chester County, TN..............
                               Madison County, TN..............
27260........................  Jacksonville, FL................   0.8956
                               Baker County, FL................
                               Clay County, FL.................
                               Duval County, FL................
                               Nassau County, FL...............
                               St. Johns County, FL............
27340........................  Jacksonville, NC................   0.7861
                               Onslow County, NC...............
27500........................  Janesville, WI..................   0.9071
                               Rock County, WI.................
27620........................  Jefferson City, MO..............   0.8465
                               Callaway County, MO.............
                               Cole County, MO.................
                               Moniteau County, MO.............
                               Osage County, MO................
27740........................  Johnson City, TN................   0.7226
                               Carter County, TN...............
                               Unicoi County, TN...............
                               Washington County, TN...........
27780........................  Johnstown, PA...................   0.8450
                               Cambria County, PA..............
27860........................  Jonesboro, AR...................   0.7983
                               Craighead County, AR............
                               Poinsett County, AR.............
27900........................  Joplin, MO......................   0.7983
                               Jasper County, MO...............
                               Newton County, MO...............
28020........................  Kalamazoo-Portage, MI...........   0.9959
                               Kalamazoo County, MI............
                               Van Buren County, MI............
28100........................  Kankakee-Bradley, IL............   0.9657
                               Kankakee County, IL.............
28140........................  Kansas City, MO-KS..............   0.9447
                               Franklin County, KS.............
                               Johnson County, KS..............
                               Leavenworth County, KS..........
                               Linn County, KS.................
                               Miami County, KS................
                               Wyandotte County, KS............
                               Bates County, MO................
                               Caldwell County, MO.............
                               Cass County, MO.................
                               Clay County, MO.................
                               Clinton County, MO..............

[[Page 47973]]

 
                               Jackson County, MO..............
                               Lafayette County, MO............
                               Platte County, MO...............
                               Ray County, MO..................
28420........................  Kennewick-Pasco-Richland, WA....   0.9459
                               Benton County, WA...............
                               Franklin County, WA.............
28660........................  Killeen-Temple-Fort Hood, TX....   0.8925
                               Bell County, TX.................
                               Coryell County, TX..............
                               Lampasas County, TX.............
28700........................  Kingsport-Bristol-Bristol, TN-VA   0.7192
                               Hawkins County, TN..............
                               Sullivan County, TN.............
                               Bristol City, VA................
                               Scott County, VA................
                               Washington County, VA...........
28740........................  Kingston, NY....................   0.9066
                               Ulster County, NY...............
28940........................  Knoxville, TN...................   0.7432
                               Anderson County, TN.............
                               Blount County, TN...............
                               Knox County, TN.................
                               Loudon County, TN...............
                               Union County, TN................
29020........................  Kokomo, IN......................   0.9061
                               Howard County, IN...............
                               Tipton County, IN...............
29100........................  La Crosse, WI-MN................   1.0205
                               Houston County, MN..............
                               La Crosse County, WI............
29140........................  Lafayette, IN...................   0.9954
                               Benton County, IN...............
                               Carroll County, IN..............
                               Tippecanoe County, IN...........
29180........................  Lafayette, LA...................   0.8231
                               Lafayette Parish, LA............
                               St. Martin Parish, LA...........
29340........................  Lake Charles, LA................   0.7765
                               Calcasieu Parish, LA............
                               Cameron Parish, LA..............
29404........................  Lake County-Kenosha County, IL-    1.0658
                                WI.
                               Lake County, IL.................
                               Kenosha County, WI..............
29420........................  Lake Havasu City-Kingman, AZ....   0.9912
                               Mohave County, AZ...............
29460........................  Lakeland-Winter Haven, FL.......   0.8283
                               Polk County, FL.................
29540........................  Lancaster, PA...................   0.9695
                               Lancaster County, PA............
29620........................  Lansing-East Lansing, MI........   1.0618
                               Clinton County, MI..............
                               Eaton County, MI................
                               Ingham County, MI...............
29700........................  Laredo, TX......................   0.7586
                               Webb County, TX.................
29740........................  Las Cruces, NM..................   0.9265
                               Dona Ana County, NM.............
29820........................  Las Vegas-Paradise, NV..........   1.1627
                               Clark County, NV................
29940........................  Lawrence, KS....................   0.8664
                               Douglas County, KS                .......
30020........................  Lawton, OK......................   0.7893
                               Comanche County, OK.............
30140........................  Lebanon, PA.....................   0.8157
                               Lebanon County, PA..............
30300........................  Lewiston, ID-WA.................   0.9215
                               Nez Perce County, ID............
                               Asotin County, WA...............
30340........................  Lewiston-Auburn, ME.............   0.9048
                               Androscoggin County, ME.........
30460........................  Lexington-Fayette, KY...........   0.8902
                               Bourbon County, KY..............
                               Clark County, KY................
                               Fayette County, KY..............
                               Jessamine County, KY............
                               Scott County, KY................
                               Woodford County, KY.............
30620........................  Lima, OH........................   0.9158
                               Allen County, OH................
30700........................  Lincoln, NE.....................   0.9465
                               Lancaster County, NE............
                               Seward County, NE...............
30780........................  Little Rock-North Little Rock-     0.8629
                                Conway, AR.
                               Faulkner County, AR.............
                               Grant County, AR................
                               Lonoke County, AR...............
                               Perry County, AR................
                               Pulaski County, AR..............
                               Saline County, AR...............
30860........................  Logan, UT-ID....................   0.8754
                               Franklin County, ID.............
                               Cache County, UT................
30980........................  Longview, TX....................   0.8933
                               Gregg County, TX................
                               Rusk County, TX.................
                               Upshur County, TX...............
31020........................  Longview, WA....................   1.0460
                               Cowlitz County, WA..............
31084........................  Los Angeles-Long Beach-Glendale,   1.2417
                                CA.
                               Los Angeles County, CA..........
31140........................  Louisville-Jefferson County, KY-   0.8852
                                IN.
                               Clark County, IN................
                               Floyd County, IN................
                               Harrison County, IN.............
                               Washington County, IN...........
                               Bullitt County, KY..............
                               Henry County, KY................
                               Meade County, KY................
                               Nelson County, KY...............
                               Oldham County, KY...............
                               Shelby County, KY...............
                               Spencer County, KY..............
                               Trimble County, KY..............
31180........................  Lubbock, TX.....................   0.8956
                               Crosby County, TX...............
                               Lubbock County, TX..............
31340........................  Lynchburg, VA...................   0.8771
                               Amherst County, VA..............
                               Appomattox County, VA...........
                               Bedford County, VA..............
                               Campbell County, VA.............
                               Bedford City, VA................
                               Lynchburg City, VA..............
31420........................  Macon, GA.......................   0.9014
                               Bibb County, GA.................
                               Crawford County, GA.............
                               Jones County, GA................
                               Monroe County, GA...............
                               Twiggs County, GA...............
31460........................  Madera-Chowchilla, CA...........   0.8317
                               Madera County, CA...............
31540........................  Madison, WI.....................   1.1414
                               Columbia County, WI.............
                               Dane County, WI.................
                               Iowa County, WI.................
31700........................  Manchester-Nashua, NH...........   1.0057
                               Hillsborough County, NH.........
31740........................  Manhattan, KS...................   0.7843
                               Geary County, KS................
                               Pottawatomie County, KS.........
                               Riley County, KS................
31860........................  Mankato-North Mankato, MN.......   0.9277
                               Blue Earth County, MN...........
                               Nicollet County, MN.............
31900........................  Mansfield, OH...................   0.8509
                               Richland County, OH.............
32420........................  Mayag[uuml]ez, PR...............   0.3762
                               Hormigueros Municipio, PR.......
                               Mayag[uuml]ez Municipio, PR.....
32580........................  McAllen-Edinburg-Mission, TX....   0.8393
                               Hidalgo County, TX..............
32780........................  Medford, OR.....................   1.0690
                               Jackson County, OR..............
32820........................  Memphis, TN-MS-AR...............   0.9038
                               Crittenden County, AR...........
                               DeSoto County, MS...............
                               Marshall County, MS.............
                               Tate County, MS.................
                               Tunica County, MS...............
                               Fayette County, TN..............
                               Shelby County, TN...............
                               Tipton County, TN...............
32900........................  Merced, CA......................   1.2734
                               Merced County, CA...............
33124........................  Miami-Miami Beach-Kendall, FL...   0.9870
                               Miami-Dade County, FL...........
33140........................  Michigan City-La Porte, IN......   0.9216
                               LaPorte County, IN..............
33260........................  Midland, TX.....................   1.0049
                               Midland County, TX..............
33340........................  Milwaukee-Waukesha-West Allis,     0.9856
                                WI.
                               Milwaukee County, WI............
                               Ozaukee County, WI..............
                               Washington County, WI...........
                               Waukesha County, WI.............
33460........................  Minneapolis-St. Paul-              1.1213
                                Bloomington, MN-WI.
                               Anoka County, MN................
                               Carver County, MN...............
                               Chisago County, MN..............
                               Dakota County, MN...............
                               Hennepin County, MN.............
                               Isanti County, MN...............

[[Page 47974]]

 
                               Ramsey County, MN...............
                               Scott County, MN................
                               Sherburne County, MN............
                               Washington County, MN...........
                               Wright County, MN...............
                               Pierce County, WI...............
                               St. Croix County, WI............
33540........................  Missoula, MT....................   0.9142
                               Missoula County, MT.............
33660........................  Mobile, AL......................   0.7507
                               Mobile County, AL...............
33700........................  Modesto, CA.....................   1.3629
                               Stanislaus County, CA...........
33740........................  Monroe, LA......................   0.7530
                               Ouachita Parish, LA.............
                               Union Parish, LA................
33780........................  Monroe, MI......................   0.8718
                               Monroe County, MI...............
33860........................  Montgomery, AL..................   0.7475
                               Autauga County, AL..............
                               Elmore County, AL...............
                               Lowndes County, AL..............
                               Montgomery County, AL...........
34060........................  Morgantown, WV..................   0.8339
                               Monongalia County, WV...........
                               Preston County, WV..............
34100........................  Morristown, TN..................   0.6861
                               Grainger County, TN.............
                               Hamblen County, TN..............
                               Jefferson County, TN.             .......
34580........................  Mount Vernon-Anacortes, WA......   1.0652
                               Skagit County, WA...............
34620........................  Muncie, IN......................
                               Delaware County, IN.............   0.8743
34740........................  Muskegon-Norton Shores, MI......   1.1076
                               Muskegon County, MI.............
34820........................  Myrtle Beach-North Myrtle Beach-   0.8700
                                Conway, SC.
                               Horry County, SC................
34900........................  Napa, CA........................   1.5375
                               Napa County, CA.................
34940........................  Naples-Marco Island, FL.........   0.9108
                               Collier County, FL..............
34980........................  Nashville-Davidson--Murfreesboro-  0.9141
                                Franklin, TN.
                               Cannon County, TN...............
                               Cheatham County, TN.............
                               Davidson County, TN.............
                               Dickson County, TN..............
                               Hickman County, TN..............
                               Macon County, TN................
                               Robertson County, TN............
                               Rutherford County, TN...........
                               Smith County, TN................
                               Sumner County, TN...............
                               Trousdale County, TN............
                               Williamson County, TN...........
                               Wilson County, TN...............
35004........................  Nassau-Suffolk, NY..............   1.2755
                               Nassau County, NY...............
                               Suffolk County, NY..............
35084........................  Newark-Union, NJ-PA.............   1.1268
                               Essex County, NJ................
                               Hunterdon County, NJ............
                               Morris County, NJ...............
                               Sussex County, NJ...............
                               Union County, NJ................
                               Pike County, PA.................
35300........................  New Haven-Milford, CT...........   1.1883
                               New Haven County, CT............
35380........................  New Orleans-Metairie-Kenner, LA.   0.8752
                               Jefferson Parish, LA............
                               Orleans Parish, LA..............
                               Plaquemines Parish, LA..........
                               St. Bernard Parish, LA..........
                               St. Charles Parish, LA..........
                               St. John the Baptist Parish, LA.
                               St. Tammany Parish, LA..........
35644........................  New York-White Plains-Wayne, NY-   1.3089
                                NJ.
                               Bergen County, NJ...............
                               Hudson County, NJ...............
                               Passaic County, NJ..............
                               Bronx County, NY................
                               Kings County, NY................
                               New York County, NY.............
                               Putnam County, NY...............
                               Queens County, NY...............
                               Richmond County, NY.............
                               Rockland County, NY.............
                               Westchester County, NY..........
35660........................  Niles-Benton Harbor, MI.........   0.8444
                               Berrien County, MI..............
35840........................  North Port-Bradenton-Sarasota-     0.9428
                                Venice, FL.
                               Manatee County, FL..............
                               Sarasota County, FL.............
35980........................  Norwich-New London, CT..........   1.1821
                               New London County, CT...........
36084........................  Oakland-Fremont-Hayward, CA.....   1.7048
                               Alameda County, CA..............
                               Contra Costa County, CA.........
36100........................  Ocala, FL.......................   0.8425
                               Marion County, FL...............
36140........................  Ocean City, NJ..................   1.0584
                               Cape May County, NJ.............
36220........................  Odessa, TX......................   0.9661
                               Ector County, TX................
36260........................  Ogden-Clearfield, UT............   0.9170
                               Davis County, UT................
                               Morgan County, UT...............
                               Weber County, UT................
36420........................  Oklahoma City, OK...............   0.8879
                               Canadian County, OK.............
                               Cleveland County, OK............
                               Grady County, OK................
                               Lincoln County, OK..............
                               Logan County, OK................
                               McClain County, OK..............
                               Oklahoma County, OK.............
36500........................  Olympia, WA.....................   1.1601
                               Thurston County, WA.............
36540........................  Omaha-Council Bluffs, NE-IA.....   0.9756
                               Harrison County, IA.............
                               Mills County, IA................
                               Pottawattamie County, IA........
                               Cass County, NE.................
                               Douglas County, NE..............
                               Sarpy County, NE................
                               Saunders County, NE.............
                               Washington County, NE...........
36740........................  Orlando-Kissimmee, FL...........   0.9063
                               Lake County, FL.................
                               Orange County, FL...............
                               Osceola County, FL..............
                               Seminole County, FL.............
36780........................  Oshkosh-Neenah, WI..............   0.9398
                               Winnebago County, WI............
36980........................  Owensboro, KY...................   0.7790
                               Daviess County, KY..............
                               Hancock County, KY..............
                               McLean County, KY...............
37100........................  Oxnard-Thousand Oaks-Ventura, CA   1.3113
                               Ventura County, CA..............
37340........................  Palm Bay-Melbourne-Titusville,     0.8790
                                FL.
                               Brevard County, FL..............
37380........................  Palm Coast, FL..................   0.8174
                               Flagler County, FL..............
37460........................  Panama City-Lynn Haven-Panama      0.7876
                                City Beach, FL.
                               Bay County, FL..................
37620........................  Parkersburg-Marietta-Vienna, WV-   0.7569
                                OH.
                               Washington County, OH...........
                               Pleasants County, WV............
                               Wirt County, WV.................
                               Wood County, WV.................
37700........................  Pascagoula, MS..................   0.7542
                               George County, MS...............
                               Jackson County, MS..............
37764........................  Peabody, MA.....................   1.0553
                               Essex County, MA................
37860........................  Pensacola-Ferry Pass-Brent, FL..   0.7767
                               Escambia County, FL.............
                               Santa Rosa County, FL...........
37900........................  Peoria, IL......................   0.8434
                               Marshall County, IL.............
                               Peoria County, IL...............
                               Stark County, IL................
                               Tazewell County, IL.............
                               Woodford County, IL.............
37964........................  Philadelphia, PA................   1.0849
                               Bucks County, PA................
                               Chester County, PA..............
                               Delaware County, PA.............
                               Montgomery County, PA...........
                               Philadelphia County, PA.........
38060........................  Phoenix-Mesa-Scottsdale, AZ.....   1.0465
                               Maricopa County, AZ.............
                               Pinal County, AZ................
38220........................  Pine Bluff, AR..................   0.8069
                               Cleveland County, AR............
                               Jefferson County, AR............
                               Lincoln County, AR..............
38300........................  Pittsburgh, PA..................   0.8669

[[Page 47975]]

 
                               Allegheny County, PA............
                               Armstrong County, PA............
                               Beaver County, PA...............
                               Butler County, PA...............
                               Fayette County, PA..............
                               Washington County, PA...........
                               Westmoreland County, PA.........
38340........................  Pittsfield, MA..................   1.0920
                               Berkshire County, MA............
38540........................  Pocatello, ID...................   0.9754
                               Bannock County, ID..............
                               Power County, ID................
38660........................  Ponce, PR.......................   0.4594
                               Juana D[iacute]az Municipio, PR.
                               Ponce Municipio, PR.............
                               Villalba Municipio, PR..........
38860........................  Portland-South Portland-           0.9981
                                Biddeford, ME.
                               Cumberland County, ME...........
                               Sagadahoc County, ME............
                               York County, ME.................
38900........................  Portland-Vancouver-Beaverton, OR-  1.1766
                                WA.
                               Clackamas County, OR............
                               Columbia County, OR.............
                               Multnomah County, OR............
                               Washington County, OR...........
                               Yamhill County, OR..............
                               Clark County, WA................
                               Skamania County, WA.............
38940........................  Port St. Lucie, FL..............   0.9352
                               Martin County, FL...............
                               St. Lucie County, FL............
39100........................  Poughkeepsie-Newburgh-             1.1544
                                Middletown, NY.
                               Dutchess County, NY.............
                               Orange County, NY...............
39140........................  Prescott, AZ....................   1.0161
                               Yavapai County, AZ..............
39300........................  Providence-New Bedford-Fall        1.0539
                                River, RI-MA.
                               Bristol County, MA..............
                               Bristol County, RI..............
                               Kent County, RI.................
                               Newport County, RI..............
                               Providence County, RI...........
                               Washington County, RI...........
39340........................  Provo-Orem, UT..................   0.9461
                               Juab County, UT.................
                               Utah County, UT.................
39380........................  Pueblo, CO......................   0.8215
                               Pueblo County, CO...............
39460........................  Punta Gorda, FL.................   0.8734
                               Charlotte County, FL............
39540........................  Racine, WI......................   0.8903
                               Racine County, WI...............
39580........................  Raleigh-Cary, NC................   0.9304
                               Franklin County, NC.............
                               Johnston County, NC.............
                               Wake County, NC.................
39660........................  Rapid City, SD..................   0.9568
                               Meade County, SD................
                               Pennington County, SD...........
39740........................  Reading, PA.....................   0.9220
                               Berks County, PA................
39820........................  Redding, CA.....................   1.4990
                               Shasta County, CA...............
39900........................  Reno-Sparks, NV.................   1.0326
                               Storey County, NV...............
                               Washoe County, NV...............
40060........................  Richmond, VA....................   0.9723
                               Amelia County, VA...............
                               Caroline County, VA.............
                               Charles City County, VA.........
                               Chesterfield County, VA.........
                               Cumberland County, VA...........
                               Dinwiddie County, VA............
                               Goochland County, VA............
                               Hanover County, VA..............
                               Henrico County, VA..............
                               King and Queen County, VA.......
                               King William County, VA.........
                               Louisa County, VA...............
                               New Kent County, VA.............
                               Powhatan County, VA.............
                               Prince George County, VA........
                               Sussex County, VA...............
                               Colonial Heights City, VA.......
                               Hopewell City, VA...............
                               Petersburg City, VA.............
                               Richmond City, VA...............
40140........................  Riverside-San Bernardino-          1.1497
                                Ontario, CA.
                               Riverside County, CA............
                               San Bernardino County, CA.......
40220........................  Roanoke, VA.....................   0.9195
                               Botetourt County, VA............
                               Craig County, VA................
                               Franklin County, VA.............
                               Roanoke County, VA..............
                               Roanoke City, VA................
                               Salem City, VA..................
40340........................  Rochester, MN...................   1.1662
                               Dodge County, MN................
                               Olmsted County, MN..............
                               Wabasha County, MN..............
40380........................  Rochester, NY...................   0.8749
                               Livingston County, NY...........
                               Monroe County, NY...............
                               Ontario County, NY..............
                               Orleans County, NY..............
                               Wayne County, NY................
40420........................  Rockford, IL....................   0.9751
                               Boone County, IL................
                               Winnebago County, IL............
40484........................  Rockingham County-Strafford        1.0172
                                County, NH.
                               Rockingham County, NH...........
                               Strafford County, NH............
40580........................  Rocky Mount, NC.................   0.8750
                               Edgecombe County, NC............
                               Nash County, NC.................
40660........................  Rome, GA........................   0.8924
                               Floyd County, GA................
40900........................  Sacramento-Arden-Arcade-           1.5498
                                Roseville, CA.
                               El Dorado County, CA............
                               Placer County, CA...............
                               Sacramento County, CA...........
                               Yolo County, CA.................
40980........................  Saginaw-Saginaw Township North,    0.8849
                                MI.
                               Saginaw County, MI..............
41060........................  St. Cloud, MN...................   1.0658
                               Benton County, MN...............
                               Stearns County, MN..............
41100........................  St. George, UT..................   0.9345
                               Washington County, UT...........
41140........................  St. Joseph, MO-KS...............   0.9834
                               Doniphan County, KS.............
                               Andrew County, MO...............
                               Buchanan County, MO.............
                               DeKalb County, MO...............
41180........................  St. Louis, MO-IL................   0.9336
                               Bond County, IL.................
                               Calhoun County, IL..............
                               Clinton County, IL..............
                               Jersey County, IL...............
                               Macoupin County, IL.............
                               Madison County, IL..............
                               Monroe County, IL...............
                               St. Clair County, IL............
                               Crawford County, MO.............
                               Franklin County, MO.............
                               Jefferson County, MO............
                               Lincoln County, MO..............
                               St. Charles County, MO..........
                               St. Louis County, MO............
                               Warren County, MO...............
                               Washington County, MO...........
                               St. Louis City, MO..............
41420........................  Salem, OR.......................   1.1148
                               Marion County, OR...............
                               Polk County, OR.................
41500........................  Salinas, CA.....................   1.5820
                               Monterey County, CA.............
41540........................  Salisbury, MD...................   0.8948
                               Somerset County, MD.............
                               Wicomico County, MD.............
41620........................  Salt Lake City, UT..............   0.9350
                               Salt Lake County, UT............
                               Summit County, UT...............
                               Tooele County, UT...............
41660........................  San Angelo, TX..................   0.8169
                               Irion County, TX................
                               Tom Green County, TX............
41700........................  San Antonio, TX.................   0.8911
                               Atascosa County, TX.............
                               Bandera County, TX..............
                               Bexar County, TX................
                               Comal County, TX................
                               Guadalupe County, TX............
                               Kendall County, TX..............
                               Medina County, TX...............
                               Wilson County, TX...............
41740........................  San Diego-Carlsbad-San Marcos,     1.2213
                                CA.
                               San Diego County, CA............
41780........................  Sandusky, OH....................   0.7788
                               Erie County, OH.................

[[Page 47976]]

 
41884........................  San Francisco-San Mateo-Redwood    1.6743
                                City, CA.
                               Marin County, CA................
                               San Francisco County, CA........
                               San Mateo County, CA............
41900........................  San Germ[aacute]n-Cabo Rojo, PR.   0.4550
                               Cabo Rojo Municipio, PR.........
                               Lajas Municipio, PR.............
                               Sabana Grande Municipio, PR.....
                               San Germ[aacute]n Municipio, PR.
41940........................  San Jose-Sunnyvale-Santa Clara,    1.7086
                                CA.
                               San Benito County, CA...........
                               Santa Clara County, CA..........
41980........................  San Juan-Caguas-Guaynabo, PR....   0.4356
                               Aguas Buenas Municipio, PR......
                               Aibonito Municipio, PR..........
                               Arecibo Municipio, PR...........
                               Barceloneta Municipio, PR.......
                               Barranquitas Municipio, PR......
                               Bayam[oacute]n Municipio, PR....
                               Caguas Municipio, PR............
                               Camuy Municipio, PR.............
                               Can[oacute]vanas Municipio, PR..
                               Carolina Municipio, PR..........
                               Cata[ntilde]o Municipio, PR.....
                               Cayey Municipio, PR.............
                               Ciales Municipio, PR............
                               Cidra Municipio, PR.............
                               Comer[iacute]o Municipio, PR....
                               Corozal Municipio, PR...........
                               Dorado Municipio, PR............
                               Florida Municipio, PR...........
                               Guaynabo Municipio, PR..........
                               Gurabo Municipio, PR............
                               Hatillo Municipio, PR...........
                               Humacao Municipio, PR...........
                               Juncos Municipio, PR............
                               Las Piedras Municipio, PR.......
                               Lo[iacute]za Municipio, PR......
                               Manat[iacute] Municipio, PR.....
                               Maunabo Municipio, PR...........
                               Morovis Municipio, PR...........
                               Naguabo Municipio, PR...........
                               Naranjito Municipio, PR.........
                               Orocovis Municipio, PR..........
                               Quebradillas Municipio, PR......
                               R[iacute]o Grande Municipio, PR.
                               San Juan Municipio, PR..........
                               San Lorenzo Municipio, PR.......
                               Toa Alta Municipio, PR..........
                               Toa Baja Municipio, PR..........
                               Trujillo Alto Municipio, PR.....
                               Vega Alta Municipio, PR.........
                               Vega Baja Municipio, PR.........
                               Yabucoa Municipio, PR...........
42020........................  San Luis Obispo-Paso Robles, CA.   1.3036
                               San Luis Obispo County, CA......
42044........................  Santa Ana-Anaheim-Irvine, CA....   1.2111
                               Orange County, CA...............
42060........................  Santa Barbara-Santa Maria-         1.2825
                                Goleta, CA.
                               Santa Barbara County, CA........
42100........................  Santa Cruz-Watsonville, CA......   1.7937
                               Santa Cruz County, CA...........
42140........................  Santa Fe, NM....................   1.0136
                               Santa Fe County, NM.............
42220........................  Santa Rosa-Petaluma, CA.........   1.6679
                               Sonoma County, CA...............
42340........................  Savannah, GA....................   0.8757
                               Bryan County, GA................
                               Chatham County, GA..............
                               Effingham County, GA............
42540........................  Scranton-Wilkes-Barre, PA.......   0.8331
                               Lackawanna County, PA...........
                               Luzerne County, PA..............
                               Wyoming County, PA..............
42644........................  Seattle-Bellevue-Everett, WA....   1.1733
                               King County, WA.................
                               Snohomish County, WA............
42680........................  Sebastian-Vero Beach, FL........   0.8760
                               Indian River County, FL.........
43100........................  Sheboygan, WI...................   0.9203
                               Sheboygan County, WI............
43300........................  Sherman-Denison, TX.............   0.8723
                               Grayson County, TX..............   0.8723
43340........................  Shreveport-Bossier City, LA.....   0.8262
                               Bossier Parish, LA..............
                               Caddo Parish, LA................
                               De Soto Parish, LA..............
43580........................  Sioux City, IA-NE-SD............   0.9163
                               Woodbury County, IA.............
                               Dakota County, NE...............
                               Dixon County, NE................
                               Union County, SD................
43620........................  Sioux Falls, SD.................   0.8275
                               Lincoln County, SD..............
                               McCook County, SD...............
                               Minnehaha County, SD............
                               Turner County, SD...............
43780........................  South Bend-Mishawaka, IN-MI.....   0.9425
                               St. Joseph County, IN...........
                               Cass County, MI.................
43900........................  Spartanburg, SC.................   0.8782
                               Spartanburg County, SC..........
44060........................  Spokane, WA.....................   1.1174
                               Spokane County, WA..............
44100........................  Springfield, IL.................   0.9165
                               Menard County, IL...............
                               Sangamon County, IL.............
44140........................  Springfield, MA.................   1.0378
                               Franklin County, MA.............
                               Hampden County, MA..............
                               Hampshire County, MA............
44180........................  Springfield, MO.................   0.8440
                               Christian County, MO............
                               Dallas County, MO...............
                               Greene County, MO...............
                               Polk County, MO.................
                               Webster County, MO..............
44220........................  Springfield, OH.................   0.8447
                               Clark County, OH                  .......
44300........................  State College, PA...............   0.9575
                               Centre County, PA...............
44600........................  Steubenville-Weirton, OH-WV.....   0.7598
                               Jefferson County, OH............
                               Brooke County, WV...............
                               Hancock County, WV..............
44700........................  Stockton, CA....................   1.3734
                               San Joaquin County, CA..........
44940........................  Sumter, SC......................   0.7594
                               Sumter County, SC...............
45060........................  Syracuse, NY....................   0.9897
                               Madison County, NY..............
                               Onondaga County, NY.............
                               Oswego County, NY...............
45104........................  Tacoma, WA......................   1.1574
                               Pierce County, WA...............
45220........................  Tallahassee, FL.................   0.8391
                               Gadsden County, FL..............
                               Jefferson County, FL............
                               Leon County, FL.................
                               Wakulla County, FL..............
45300........................  Tampa-St. Petersburg-Clearwater,   0.9075
                                FL.
                               Hernando County, FL.............
                               Hillsborough County, FL.........
                               Pasco County, FL................
                               Pinellas County, FL.............
45460........................  Terre Haute, IN.................   0.9706
                               Clay County, IN.................
                               Sullivan County, IN.............
                               Vermillion County, IN...........
                               Vigo County, IN.................
45500........................  Texarkana, TX-Texarkana, AR.....   0.7428
                               Miller County, AR...............
                               Bowie County, TX................
45780........................  Toledo, OH......................   0.9013
                               Fulton County, OH...............
                               Lucas County, OH................
                               Ottawa County, OH...............
                               Wood County, OH.................
45820........................  Topeka, KS......................   0.8974
                               Jackson County, KS..............
                               Jefferson County, KS............
                               Osage County, KS................
                               Shawnee County, KS..............
                               Wabaunsee County, KS............
45940........................  Trenton-Ewing, NJ...............   1.0648
                               Mercer County, NJ...............
46060........................  Tucson, AZ......................   0.8953

[[Page 47977]]

 
                               Pima County, AZ.................
46140........................  Tulsa, OK.......................   0.8145
                               Creek County, OK................
                               Okmulgee County, OK.............
                               Osage County, OK................
                               Pawnee County, OK...............
                               Rogers County, OK...............
                               Tulsa County, OK................
                               Wagoner County, OK..............
46220........................  Tuscaloosa, AL..................   0.8500
                               Greene County, AL...............
                               Hale County, AL.................
                               Tuscaloosa County, AL...........
46340........................  Tyler, TX.......................   0.8526
                               Smith County, TX................
46540........................  Utica-Rome, NY..................   0.8769
                               Herkimer County, NY.............
                               Oneida County, NY...............
46660........................  Valdosta, GA....................   0.7527
                               Brooks County, GA...............
                               Echols County, GA...............
                               Lanier County, GA...............
                               Lowndes County, GA..............
46700........................  Vallejo-Fairfield, CA...........   1.6286
                               Solano County, CA...............
47020........................  Victoria, TX....................   0.8949
                               Calhoun County, TX..............
                               Goliad County, TX...............
                               Victoria County, TX.............
47220........................  Vineland-Millville-Bridgeton, NJ   1.0759
                               Cumberland County, NJ...........
47260........................  Virginia Beach-Norfolk-Newport     0.9121
                                News, VA-NC.
                               Currituck County, NC............
                               Gloucester County, VA...........
                               Isle of Wight County, VA........
                               James City County, VA...........
                               Mathews County, VA..............
                               Surry County, VA................
                               York County, VA.................
                               Chesapeake City, VA.............
                               Hampton City, VA................
                               Newport News City, VA...........
                               Norfolk City, VA................
                               Poquoson City, VA...............
                               Portsmouth City, VA.............
                               Suffolk City, VA................
                               Virginia Beach City, VA.........
                               Williamsburg City, VA...........
47300........................  Visalia-Porterville, CA.........   0.9947
                               Tulare County, CA...............
47380........................  Waco, TX........................   0.8213
                               McLennan County, TX.............
47580........................  Warner Robins, GA...............   0.7732
                               Houston County, GA..............
47644........................  Warren-Troy-Farmington Hills, MI   0.9432
                               Lapeer County, MI...............
                               Livingston County, MI...........
                               Macomb County, MI...............
                               Oakland County, MI..............
                               St. Clair County, MI............
47894........................  Washington-Arlington-Alexandria,   1.0533
                                DC-VA-MD-WV.
                               District of Columbia, DC........
                               Calvert County, MD..............
                               Charles County, MD..............
                               Prince George's County, MD......
                               Arlington County, VA............
                               Clarke County, VA...............
                               Fairfax County, VA..............
                               Fauquier County, VA.............
                               Loudoun County, VA..............
                               Prince William County, VA.......
                               Spotsylvania County, VA.........
                               Stafford County, VA.............
                               Warren County, VA...............
                               Alexandria City, VA.............
                               Fairfax City, VA................
                               Falls Church City, VA...........
                               Fredericksburg City, VA.........
                               Manassas City, VA...............
                               Manassas Park City, VA..........
                               Jefferson County, WV............
47940........................  Waterloo-Cedar Falls, IA........   0.8331
                               Black Hawk County, IA...........
                               Bremer County, IA...............
                               Grundy County, IA...............
48140........................  Wausau, WI......................   0.8802
                               Marathon County, WI.............
48300........................  Wenatchee-East Wenatchee, WA....   1.0109
                               Chelan County, WA...............
                               Douglas County, WA..............
48424........................  West Palm Beach-Boca Raton-        0.9597
                                Boynton Beach, FL.
                               Palm Beach County, FL...........
48540........................  Wheeling, WV-OH.................   0.6673
                               Belmont County, OH..............
                               Marshall County, WV.............
                               Ohio County, WV.................
48620........................  Wichita, KS.....................   0.8674
                               Butler County, KS...............
                               Harvey County, KS...............
                               Sedgwick County, KS.............
                               Sumner County, KS...............
48660........................  Wichita Falls, TX...............   0.9537
                               Archer County, TX...............
                               Clay County, TX.................
                               Wichita County, TX..............
48700........................  Williamsport, PA................   0.8268
                               Lycoming County, PA.............
48864........................  Wilmington, DE-MD-NJ............   1.0593
                               New Castle County, DE...........
                               Cecil County, MD................
                               Salem County, NJ................
48900........................  Wilmington, NC..................
                               Brunswick County, NC............   0.8862
                               New Hanover County, NC..........
                               Pender County, NC...............
49020........................  Winchester, VA-WV...............   0.9034
                               Frederick County, VA............
                               Winchester City, VA.............
                               Hampshire County, WV............
49180........................  Winston-Salem, NC...............   0.8560
                               Davie County, NC................
                               Forsyth County, NC..............
                               Stokes County, NC...............
                               Yadkin County, NC...............
49340........................  Worcester, MA...................   1.1584
                               Worcester County, MA............
49420........................  Yakima, WA......................   1.0355
                               Yakima County, WA...............
49500........................  Yauco, PR.......................   0.3782
                               Gu[aacute]nica Municipio, PR....
                               Guayanilla Municipio, PR........
                               Pe[ntilde]uelas Municipio, PR...
                               Yauco Municipio, PR.............
49620........................  York-Hanover, PA................   0.9540
                               York County, PA.................
49660........................  Youngstown-Warren-Boardman, OH-    0.8262
                                PA.
                               Mahoning County, OH.............
                               Trumbull County, OH.............
                               Mercer County, PA...............
49700........................  Yuba City, CA...................   1.1759
                               Sutter County, CA...............
                               Yuba County, CA.................
49740........................  Yuma, AZ........................   0.9674
                               Yuma County, AZ.................
------------------------------------------------------------------------
\1\ At this time, there are no hospitals located in this urban area on
  which to base a wage index.

 Table B--FY 2014 Wage Index Based on CBSA Labor Market Areas for Rural
                                  Areas
------------------------------------------------------------------------
                                                                   Wage
             State  code                     Nonurban area        index
------------------------------------------------------------------------
1....................................  Alabama.................   0.7147
2....................................  Alaska..................   1.3662
3....................................  Arizona.................   0.9166
4....................................  Arkansas................   0.7343
5....................................  California..............   1.2788
6....................................  Colorado................   0.9802
7....................................  Connecticut.............   1.1311
8....................................  Delaware................   1.0092
10...................................  Florida.................   0.7985
11...................................  Georgia.................   0.7459
12...................................  Hawaii..................   1.0739
13...................................  Idaho...................   0.7605
14...................................  Illinois................   0.8434
15...................................  Indiana.................   0.8513
16...................................  Iowa....................   0.8434
17...................................  Kansas..................   0.7929
18...................................  Kentucky................   0.7784
19...................................  Louisiana...............   0.7585
20...................................  Maine...................   0.8238
21...................................  Maryland................   0.8696
22...................................  Massachusetts...........   1.3614
23...................................  Michigan................   0.8270
24...................................  Minnesota...............   0.9133
25...................................  Mississippi.............   0.7568
26...................................  Missouri................   0.7775
27...................................  Montana.................   0.9098
28...................................  Nebraska................   0.8855
29...................................  Nevada..................   0.9781
30...................................  New Hampshire...........   1.0339
31...................................  New Jersey\1\...........       --
32...................................  New Mexico..............   0.8922
33...................................  New York................   0.8220
34...................................  North Carolina..........   0.8100
35...................................  North Dakota............   0.6785
36...................................  Ohio....................   0.8377
37...................................  Oklahoma................   0.7704
38...................................  Oregon..................   0.9435

[[Page 47978]]

 
39...................................  Pennsylvania............   0.8430
40...................................  Puerto Rico\1\..........   0.4047
41...................................  Rhode Island\1\.........       --
42...................................  South Carolina..........   0.8329
43...................................  South Dakota............   0.8164
44...................................  Tennessee...............   0.7444
45...................................  Texas...................   0.7874
46...................................  Utah....................   0.8732
47...................................  Vermont.................   0.9740
48...................................  Virgin Islands..........   0.7060
49...................................  Virginia................   0.7758
50...................................  Washington..............   1.0529
51...................................  West Virginia...........   0.7407
52...................................  Wisconsin...............   0.8904
53...................................  Wyoming.................   0.9243
65...................................  Guam....................   0.9611
------------------------------------------------------------------------
\1\ All counties within the State are classified as urban, with the
  exception of Puerto Rico. Puerto Rico has areas designated as rural;
  however, no short-term, acute care hospitals are located in the
  area(s) for FY 2014. The Puerto Rico wage index is the same as FY
  2013.

[FR Doc. 2013-18776 Filed 7-31-13; 4:15 pm]
BILLING CODE 4120-01-P
```