42912 Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Health Care Financing Administration

[HCFA–1035–NC]

Medicare Program; Schedules of PerVisit and Per-Beneficiary Limitations

on Home Health Agency Costs for Cost

Reporting Periods Beginning On or

After October 1, 1998

AGENCY: Health Care Financing

Administration (HCFA), HHS.

ACTION: Notice with comment period.

SUMMARY: This notice with comment

period sets forth revised schedules of

limitations on home health agency costs

that may be paid under the Medicare

program for cost reporting periods

beginning on or after October 1, 1998.

These limitations replace the limitations

that were set forth in our January 2,

1998 notice with comment period (63

FR 89) and our March 31, 1998 final

rule with comment period (63 FR

15718).

DATES: Effective Date: These schedules

of limitations are effective for cost

reporting periods beginning on or after

October 1, 1998.

Comment Date: Written comments

will be considered if we receive them at

the appropriate address, as provided

below, no later than 5 p. m. on October

13, 1998.

ADDRESSES: Mail written comments (one

original and three copies) to the

following address: Health Care

Financing Administration, Department

of Health and Human Services,

Attention: HCFA–1035–NC, P.O. Box

7517, Baltimore, Maryland 21207–0517.

If you prefer, you may deliver your

written comments (one original and

three copies) to one of the following

addresses:

Room 309–G, Hubert H. Humphrey

Building, 200 Independence Avenue,

SW., Washington, DC 20201, or

Room C5–09–26, Central Building, 7500

Security Boulevard, Baltimore,

Maryland 21244–1850.

Comments may also be submitted

electronically to the following E-mail

address: HCFA1035NC@hcfa.gov. Email comments must include the full

name and address of the sender and

must be submitted to the referenced

address in order to be considered. All

comments must be incorporated in the

E-mail message because we may not be

able to access attachments.

Because of staffing and resource

limitations, we cannot accept comments

by facsimile (FAX) transmission. In

commenting, please refer to file code

HCFA–1035NC. Comments received

timely will be available for public

inspection as they are received,

generally beginning approximately 3

weeks after publication of a document,

in Room 309–G of the Department’s

offices at 200 Independence Avenue,

SW, Washington, DC, on Monday

through Friday of each week from 8:30

a.m. to 5:00 p.m. (Phone: (202) 690–

7890).

FOR FURTHER INFORMATION CONTACT:

Michael Bussacca, (410) 786–4602.

SUPPLEMENTARY INFORMATION: Copies: To

order copies of the Federal Register

containing this document, send your

request to: New Orders, Superintendent

of Documents, P.O. Box 371954,

Pittsburgh, PA 15250–7954. Specify the

date of the issue requested and enclose

a check or money order payable to the

Superintendent of Documents, or

enclose your VISA or MasterCard

number and expiration date. Credit card

orders can also be placed by calling the

order desk at (202) 512–1800 or by

faxing to (202) 512–2250. The cost for

each copy is $8.00. As an alternative,

you may view and photocopy the

Federal Register document at most

libraries designated as Federal Deposit

Libraries and at many other public and

academic libraries throughout the

country that receive the Federal

Register.

This Federal Register document is

also available from the Federal Register

online database through GPO Access, a

service of the U. S. Government Printing

Office. Free public access is available on

a Wide Area Information Server (WAIS)

through the Internet and via

asynchronous dial-in. Internet users can

access the database by using the World

Wide Web; the Superintendent of

Documents home page address is

http://www.access.gpo.gov/su docs/, by

using local WAIS client software, or by

telnet to swais.access.gpo.gov, then log

in as guest (no password required). Dialin users would use communications

software and modem to call (202) 512–

1661; type swais, then log in as guest

(no password required).

I. Background

Section 1861(v)(1)(A) of the Social

Security Act (the Act) authorizes the

Secretary to establish limitations on

allowable costs incurred by a provider

of services that may be paid under the

Medicare program, based on estimates

of the costs necessary for the efficient

delivery of needed health services.

Under this authority, we have

maintained limitations on home health

agency (HHA) costs since 1979.

Additional statutory provisions

specifically governing the limitations

applicable to HHAs are contained at

section 1861(v)(1)(L) of the Act.

Section 1861(v)(1)(L)(i)(IV) of the Act

specifies that the per-visit limits shall

not exceed 105 percent of the median of

the labor-related and nonlabor per-visit

costs for freestanding HHAs. The

reasonable costs used in the per-visit

calculations will be updated by the

home health market basket excluding

any change in the home health market

basket with respect to cost reporting

periods that began on or after July 1,

1994 and before July 1, 1996.

Section 1861(v)(1)(L)(v)(I) of the Act

requires the per-beneficiary annual

limitation be a blend of: (1), an agencyspecific per-beneficiary limitation based

on 75 percent of 98 percent of the

reasonable costs (including nonroutine

medical supplies) for the agency’s 12-

month cost reporting period ending

during Federal fiscal year (FY) 1994,

and (2), a census region division perbeneficiary limitation based on 25

percent of 98 percent of the regional

average of such costs for the agency’s

census division for cost reporting

periods ending during FY 1994,

standardized by the hospital wage

index. The reasonable costs used in the

per-beneficiary limitation calculations

in 1 and 2 above will be updated by the

home health market basket excluding

any changes in the home health market

basket with respect to cost reporting

periods that began on or after July 1,

1994 and before July 1, 1996. This perbeneficiary limitation based on the

blend of the agency-specific and census

region division per-beneficiary

limitations will then be multiplied by

the agency’s unduplicated census count

of beneficiaries (entitled to benefits

under Medicare) to calculate the HHA’s

aggregate per-beneficiary limitation for

the cost reporting period subject to the

limitation.

For new providers and providers

without a 12-month cost reporting

period ending in fiscal 1994, the perbeneficiary limitation will be a national

per-beneficiary limitation which will be

equal to the median of these limitations

applied to other HHAs as determined

under section 1861(v)(1)(L)(v) of the

Act.

Payments by Medicare under this

system of payment limitations must be

the lower of an HHA’s actual reasonable

allowable costs, per-visit limitations in

the aggregate, or a per-beneficiary

limitation in the aggregate.

This notice with comment period sets

forth cost limitations for cost reporting

periods beginning on or after October 1,

1998. As required by section

1861(v)(1)(L)(iii) of the Act, we are
Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices 42913

using the area wage index applicable

under section 1886(d)(3)(E) of the Act

determined using the survey of the most

recent available wages and wage-related

costs of hospitals located in the

geographic area in which the home

health service is rendered. For purposes

of this notice, the HHA wage index is

based on the most recent published final

hospital wage index, that is, the

preclassified hospital wage index

effective for hospital discharges on or

after October 1, 1997, which uses FY

1994 wage data. As the statute also

specifies, in applying the hospital wage

index to HHAs, no adjustments are to be

made to account for hospital

reclassifications under section

1886(d)(8)(B) of the Act, decisions of the

Medicare Geographic Classification

Board (MGCRB) under section

1886(d)(10) of the Act, or decisions by

the Secretary.

II. Analysis of and Responses to Public

Comments to the January 2, 1998 PerVisit Limitation Notice

We received 24 items of timely

correspondence on the January 2, 1998

notice with comment period. A large

percentage of the commenters also

expressed concern over various aspects

of the BBA ‘97 including the perbeneficiary limitations and the surety

bond requirement which are not

pertinent to the January 2, 1998 notice.

Nonetheless, we will address the

comments regarding the per-beneficiary

limitations under section IV. of this

notice. The issues not related to the

limitations will be taken into account

under separate notices specific to those

issues. The comments pertaining to the

per-visit limitations and our responses

are discussed below.

Comment: The hospital wage indices

do not include wages and wage-related

data for home health services. The most

appropriate measure would be a home

health agency specific wage index by

geographic area.

Response: The use of the hospital

wage indices is required by statute.

Section 1861(v)(1)(L)(iii) of the Act

specifically states, in part, ‘‘the

Secretary shall establish limits under

this subparagraph for cost reporting

periods beginning on or after such date

by utilizing the area wage index

applicable under section 1886 (d)(3)(E)

and determined using the survey of the

most recent available wages and wagerelated costs of hospitals located in the

geographic area in which the home

health service is furnished * * * ’’

Furthermore, in 1989 we published a

schedule of per-visit limitations using a

home health agency-specific wage index

in the Federal Register (54 FR 27742).

Even though we placed a limit of 20

percent on the amount that HHAs cost

limitation may increase or decrease

when compared to the prior year’s cost

limitation which applied the hospital

wage indices, the HHA industry

questioned the validity of the data used

in developing the HHA-specific wage

indices. A change in legislation was

pursued to prohibit the use of a HHAspecific wage index. In 1991 we had to

republish the 1989 per-visit limitations

in the Federal Register at 56 FR 12934

using the hospital wage indices as

required by section 6222 of the Budget

Reconciliation Act of 1989, Pub. L. 99–

239. From that time forward we have

been required to use the hospital wage

indices in developing the per-visit

limitations.

Comment: Agencies may be forced

into more stringent evaluations of what

patients are suitable for home care,

rejecting those whose needs are going to

make them candidates for lengthy and

expensive visits. Overall quality of care

to patients will fall as field staff are

placed under greater pressure to

perform more visits in a given time at

a lower cost.

Response: We recognize that there

will be valid circumstances not

anticipated by the per-visit limitation

methodology that will cause an agency

to incur cost in excess of that allowed

by the per-visit limitation. We provide

for those unique situations through the

exceptions process as ‘‘atypical’’ home

health services at 42 CFR 413.30(f)(1). It

is desirable for all agencies to monitor

continually the cost of providing each

discipline and to take steps to control

the cost of any discipline as soon as

there are indications that costs are

increasing. We believe that a per-visit

limitation of 105 percent of the median

will give all agencies an added incentive

to improve their management controls

with immediate and ongoing benefit to

the Medicare program and its

beneficiaries through a reduction in cost

and a moderation in the future rate of

increase in costs.

Comment: There are additional costs

which the home health industry must

bear in order to meet new HCFA

requirements such as implementation of

the home health patient Outcome and

Assessment Information Set (OASIS).

There should be an add-on to the pervisit limitations in recognition of the

costs associated with implementing

OASIS requirements.

Response: We recognize that when

agencies are required to implement

OASIS, the agencies will incur training

costs that they would not have

otherwise incurred for this activity.

These costs are almost exclusively

associated with training staff in the

disciplines (skilled nursing, physical,

speech pathology, and occupational

therapy) that will be performing OASIS

assessments at the start of care and on

a continuing basis. Accordingly, we

have calculated for these disciplines an

adjustment factor to be applied to the

labor portion of the per-visit limitations

applicable to these disciplines. This

adjustment is intended as an offset to

foregone patient care time that will be

required for the necessary OASIS

training and for gaining experience in

performing assessments during the year

of implementation. This offset is

applied as an adjustment factor to be

applied to the labor portion of the

affected disciplines. See section III.G.

for a discussion of the methodology

used to calculate the adjustment factor.

Comment: The rise in utilization of

home health has been due, in part, to

the implementation of the hospital

prospective payment system by

hospitals which now discharge the

patient quicker and sicker knowing that

the patient can be treated adequately at

home and the realization by physicians

that home health care is useful,

desirable, and economical alternative to

institutionalization.

Response: There are several reasons

why home health utilization has grown.

Although it has been said that the

hospital prospective payment system

has resulted in patients being

discharged sicker and quicker, and

transferred to the home health setting,

this is not the case overall. A study

published in The New England Journal

of Medicine in August 1996 found, ‘‘less

than a quarter of home health visits (22

percent) were preceded by a hospital

stay within 30 days. Nearly half the

visits (43 percent.) were unassociated

with an inpatient stay in the previous

six months.’’ Also, the hospital

prospective payment system has been in

existence since October 1983. Any

impact on the costs of services of

providing home health care should have

already been reflected in our data base

which is approximately ten years after

the implementation of the hospital

prospective payment system.

Comment: The per-visit limitations

should not be published and applied on

a retroactive basis.

Response: The statute is quite explicit

in establishing both the effective date of

the per-beneficiary limitation, as well as

the date by which the per-visit

limitations were to be published. As

much information as possible was

disseminated to the home health trade

organizations regarding the impact of

the limitations without jeopardizing our

rulemaking process. We were aware that
42914 Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices

these home health trade organizations

had been forwarding this information to

their home health care members as

quickly as possible so that agencies

could estimate the effect of the per-visit

on their financial operations. To the

extent possible we made as much

information available to the home

health industry as we could for

preparation to the revised per-visit

limitations.

Comment: The update factors

proposed by HCFA appear to be

understated by approximately 4.5

percent.

Response: The update factors

displayed in the notice which are

applied to the data used in developing

the per-visit limitations are reduced

update factors as mandated by the

statute. Section 1861(v)(1)(L)(iv) of the

Act specifically prohibits the Secretary

from taking into account any changes in

the home health market basket with

respect to cost reporting periods which

began on or after July 1, 1994 and before

July 1, 1996. Therefore, the update

factors displayed in the notice do not

include the changes for this period of

time.

Comment: A seventh discipline

should be established to set out chronic

illness (such as insulin dependent

diabetic and wound care) skilled

nursing services from other skilled

nursing visits. This would assist the

definition of patient acuity and would

create significant savings to the

Medicare program by developing a

lower level of skilled nursing visit

category that would account for reduced

time and effort associated with chronic

illness.

Response: The home health benefit as

set forth in 1861(m) of the Act sets forth

the disciplines covered for home health

services and does not provide for a

seventh discipline along the lines

suggested by the commenter.

Comment: The total impact on home

health agencies of the reduction in pervisit cost limitations has been

understated due to HCFA’s separate

analysis of the per-visit and the perbeneficiary limitations.

Response: The impact analysis on the

revised per-visit limitation notice is

correct in that the analysis can only

address the limitations addressed in that

notice. At the time the notice was

published, the per-beneficiary

limitations were not calculated and the

impact of both the per-visit and the perbeneficiary limitations was unknown.

We did, however, address the dual

impact of the revised per-visit

limitations and the new per-beneficiary

limitations in the final rule with

comment for the per-beneficiary

limitation which was published on

March 31, 1998. This impact is

addressed in the Federal Register

published on March 31, 1998 at 63 FR

15736.

Comment: After the adjustment of the

labor and nonlabor portions from 112

percent of the mean to 105 percent of

the median, the amount that would be

paid under the labor portion is

significantly smaller than what the 1982

wage-index would indicate. Therefore,

in order to remain budget neutral, it

would appear that a significantly larger

budget neutrality factor should be

applied to raise the labor-related portion

back up to be in line with the 1982

wage-index base.

Response: Budget neutrality with

respect to the wage index requires that

aggregate Medicare payments to home

health agencies be equal to the

payments that would have been made

had the 1982 wage index been used.

Because the level of the per-visit

limitations was adjusted downward

from the previous per-visit limitations

that were in effect, a different

distribution of HHAs are under the

revised per-visit limitations. These are

the HHAs that largely affect the budget

neutrality adjustment factor. These

HHAs would have been only slightly

better off using the 1982 wage index.

Therefore, the adjustment factor reflects

the slight increase in payments to obtain

budget neutrality.

Comment: HCFA has stated that fiscal

year 1994 is the most current

information available for computation of

the home health per-visit limitations.

Excluding the results of cost reports

finalized after October 10, 1995 from the

data base seriously skews the cost pervisit limitation calculations with older

cost and per-visit data, artificially

lowering the median.

Response: Unlike the per-beneficiary

limitations which require the use of

Federal FY 1994 as the base period for

establishing the limitations, neither the

statute nor the Medicare regulations

dictate the data base to be used in

establishing the per-visit limitations.

Moreover, we update the data base by

rates of increase in the home health

market basket from the end of the FYs

of the cost report data used in the data

base to the FY end to which the per-visit

limitations apply. In keeping with past

practices, we updated the data base

used for the July 1997 notice in

establishing the per-visit limitations. We

believe the per-visit limitations reflect

the per-visit costs reported by HHAs

and these per-visit limitations have been

updated appropriately in accordance

with the statute.

Comment: The home health marketbasket index does not measure specific

costs.

Response: The home health marketbasket is a measurement of costs and

inflation overall and is not a

measurement of increase in agencyspecific costs.

III. Update of Per-Visit Limitations

The methodology used to develop the

schedule of per-visit limitations in this

notice is the same as that used in setting

the limitations effective October 1, 1997.

We are using the latest settled cost

report data from freestanding HHAs to

develop the per-visit cost limitations.

We have updated the per-visit cost

limitations to reflect the expected cost

increases between the cost reporting

periods in the data base and September

30, 1999 excluding any changes in the

home health market basket with respect

to cost reporting periods which began

on or after July 1, 1994 and before July

1, 1996.

A. Data Used

To develop the schedule of per-visit

limitations effective for cost reporting

periods beginning on or after October 1,

1998, we extracted actual cost per-visit

data from the most recent settled

Medicare cost reports for periods

beginning on or after January 1, 1994

and settled by May 1998. The majority

of the cost reports were from Federal

fiscal year 1996. We then adjusted the

data using the latest available market

basket indexes to reflect expected cost

increases occurring between the cost

reporting periods contained in our data

base and September 30, 1999, excluding

any changes in the home health market

basket with respect to cost reporting

periods which began on or after July 1,

1994 and before July 1, 1996. Therefore,

we excluded this time period when we

adjusted the database for the market

basket increases.

B. Wage Index

A wage index is used to adjust the

labor-related portion of the per-visit

limitation to reflect differing wage levels

among areas. In establishing the pervisit limitation, we used the FY 1998

hospital wage index, which is based on

1994 hospital wage data.

Each HHA’s labor market area is

determined based on the definitions of

Metropolitan Statistical Areas (MSAs)

issued by the Office of Management and

Budget (OMB). Section 1861(v)(1)(L)(iii)

of the Act requires us to use the most

recently published hospital wage index

(that is, the FY 1998 hospital wage

index, which was published in the

Federal Register on August 29, 1997 (62
Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices 42915

FR 46070)) without regard to whether

such hospitals have been reclassified to

a new geographic area, to establish the

HHA cost limitations. Therefore, the

schedule of per-visit limitations reflects

the MSA definitions that are currently

in effect under the hospital prospective

payment system.

We are continuing to incorporate

exceptions to the MSA classification

system for certain New England

counties that were identified in the July

1, 1992 notice (57 FR 29410). These

exceptions have been recognized in

setting hospital cost limitations for cost

reporting periods beginning on and after

July 1, 1979 (45 FR 41218), and were

authorized under section 601(g) of the

Social Security Amendments of 1983

(Public Law 98–11). Section 601(g) of

Public Law 98–21 requires that any

hospital in New England that was

classified as being in an urban area

under the classification system in effect

in 1979 will be considered urban for

purposes of the hospital prospective

payment system. This provision is

intended to ensure equitable treatment

under the hospital prospective payment

system. Under this authority, the

following counties have been deemed to

be urban areas for purposes of payment

under the inpatient hospital prospective

system:

• Litchfield County, CT in the

Hartford, CT MSA

• York County, ME and Sagadahoc

County, ME in the Portland, ME MSA.

• Merrimack County, NH in the

Boston-Brockton-Nashua, MA–NH MSA

• Newport County, RI in the

Providence Fall-Warwick, RI MSA

We are continuing to grant these

urban exceptions for the purpose of

applying the Medicare hospital wage

index to the HHA per-visit limitations.

These exceptions result in the same

New England County Metropolitan Area

definitions for hospitals, skilled nursing

facilities, and HHAs. In New England,

MSAs are defined on town boundaries

rather than on county lines but exclude

parts of the four counties cited above

that would be considered urban under

the MSA definition. Under this notice,

these four counties are urban under

either definition, New England County

Metropolitan Area or MSA.

Section 1861(v)(1)(L)(iii) requires the

use of the area wage index applicable

under section 1886(d)(3)(E) of the Act

and determined using the survey of the

most recently published wages and

wage-related costs of hospitals located

in the geographic area in which the

home health service is furnished

without regard to whether such

hospitals have been reclassified to a

new geographic area pursuant to section

1886(d)(8)(B) of the Act. The wageindex, as applied to the labor portion of

the per-visit limitation, must be based

on the geographic location in which the

home health service is actually

furnished rather than the physical

location of the HHA itself.

C. Updating the Wage Index on a

Budget-Neutral Basis

Section 4207(d)(2) of the Omnibus

Budget Reconciliation Act of 1990

(OBRA ’90) (Public Law 101–508)

requires that, in updating the wage

index, aggregate payments to HHAs will

remain the same as they would have

been if the wage index had not been

updated. Therefore, overall payments to

HHAs are not affected by changes in the

wage index values.

To comply with the requirements of

section 4207(d)(2) of OBRA ’90 that

updating the wage index be budget

neutral, we determined that it is

necessary to apply a budget neutrality

adjustment factor of 1.03 to the laborrelated portion of the per-visit

limitations effective for cost reporting

periods beginning on or after October 1,

1998. This adjustment ensures that

aggregate payments to HHAs are not

affected by the change to a wage index

based on the hospital wage index

published on August 29, 1997.

To determine the adjustment factor,

we analyzed both the data obtained

from the freestanding agencies used to

determine the per-visit limitations and

the settled cost report data covering the

same time period for the provider-based

agencies. For each agency in this data

base, we replaced their current wage

index with the one corresponding to the

1982 hospital wage index. Some

Metropolitan Statistical Areas (MSAs)

that currently exist did not exist at the

time this index was created and

therefore have no matching 1982 wage

index. In the data base we are currently

using, these unmatchable MSAs

represented 1.3 percent of the total

visits. Since this percentage was small,

we deleted these agencies from the

analysis. We then determined what

Medicare program payments would be

using the 1982 wage index. Next, we

determined payments using the new

wage index and adjusted the labor

portion of the payment by the factor

necessary to match program payments if

the 1982 wage index was used. (See the

example in section VIII.B. of this notice

regarding the adjustment of per-visit

limitations by the wage index and the

budget neutrality factor.)

D. Standardization for Wage Levels

After adjustment by the market basket

index, we divided each HHA’s per-visit

costs into labor and nonlabor portions.

The labor portion of cost (77.668

percent as determined by the market

basket) represents the employee wage

and benefit factor plus the contract

services factor from the market basket.

We then divided the labor portion of

per-visit cost by the wage index

applicable to the HHA’s location to

arrive at an adjusted labor cost.

E. Adjustment for ‘‘Outliers’

We transformed all per-visit cost data

into their natural logarithms and

grouped them by type of service and

MSA, NECMA, or non-MSA location, in

order to determine the median cost and

standard deviation for each group. We

then eliminated all ‘‘outlier’’ costs

which were all per-visit costs less than

10 dollars and per-visit costs more than

800 dollars, retaining only those pervisit costs within two standard

deviations of the median in each

service.

F. Basic Service Limitation

We calculate a basic service limitation

to 105 percent of the median labor and

nonlabor portions of the per-visit costs

of freestanding HHAs for each type of

service. (See Table 3a in section VIII.)

G. Offset Adjustment for the

Implementation of the Home Health

Outcome Assessment Information

(OASIS)

When HHAs are required to use an

assessment tool, such as OASIS, for

ongoing collection of quality of care

data, they will incur costs associated

with this requirement. Any costs

associated with a new type of reporting

system are not reflected in the database

used to calculate the per-visit

limitations. We have, therefore, decided

to provide an offset adjustment factor to

be applied to the labor-related

component of the per-visit limitations

for skilled nursing, physical therapy,

speech pathology, and occupational

therapy which should be the only

disciplines affected by this new

requirement.

Since any new assessment

performance tool will replace or be

integrated into an agency’s existing

assessment activities, we believe that

there will be no permanent ongoing

incremental costs associated with these

types of assessment systems. This has

been shown through data derived from

the ongoing Medicare Quality and

Improvement Demonstration using

OASIS as an assessment tool. This

demonstration shows that the OASIS

assessment requires either the same

amount of time or less time than the
42916 Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices

patient assessment methods currently in

use.

Absent other types of data, we are

using the information from this

demonstration to derive an offset

adjustment for any new assessment tool

that may be imposed on the HHAs

effective during the per-visit limitations

effective for cost reporting periods

beginning on or after October 1, 1998.

Data from the OASIS demonstration

show that OASIS implementation

burden consists of foregone staff time

that would otherwise be devoted to

patient care activities. There are three

types of costs associated with staff time

for a typical 18-person staff. The first

would be training time for an agency

coordinator who conducts training or

supervision of the clinical staff. This

individual would probably need to

spend four hours reading the assessment

tool training manual and eight hours

attending an assessment tool training

session. Training would also be

necessary for staff who will be

performing the assessment process. The

affected disciplines are skilled nursing,

physical therapy, speech pathology, and

occupational therapy. Each member of

these disciplines would probably

require four to six hours of training.

Since agencies currently conduct

inservices for clinical staff, usually on a

monthly basis, the training for a new

assessment tool would replace at least

one of these sessions. The incremental

training costs would be approximately

half of the total costs, or two to three

hours per trained staff member.

The second type of costs would be

increases in assessment time during

initial implementation. Experience from

the demonstration indicates that total

visit time increases by approximately 15

minutes during the first six to seven

visits when newly trained staff have

begun to perform OASIS assessments.

After this initial period of becoming

familiar with and acquiring experience

with the new assessment tool, there is

no net increase in visit duration.

The third type of costs would be the

costs associated with the staff time to

revise assessment forms and integrate

OASIS elements. For a typical 18-person

professional staff this is estimated to

require sixteen hours of staff time:

twelve hours of professional staff time

(skill nursing, physical therapy, etc.

* * *) and 4 hours of clerical time.

The adjustment factor is calculated in

terms of per-FTE foregone staff time

spent on these training and form

revision activities as follows: (a) One

hour for the agency coordinator—based

on twelve hours total training time

allocated over an 18-person professional

staff, (b) three hours per staff for

training, (c) two hours for increased

assessment time during the initial

implementation—based on fifteen

minutes additional time for each of the

first eight visits (rounded up from 7)

during which the assessments are

performed, and (d) one hour of

supervisory time—based on sixteen

hours of time spent revising assessment

forms allocated over an 18-person

professional staff. These four items total

seven hours of time per-FTE during the

year of OASIS implementation. Using a

normal work year of 2000 hours (50

weeks times 40 hours) less the seven

hours for additional training time for a

new assessment program, the offset

adjustment for foregone patient care

would be .35 percent (2000 hours

divided by 1993 hours less one equals

.003513). This offset factor will be

applied to the labor portion of the

skilled nursing, physical therapy,

speech pathology and occupational

therapy per-visit limitations for both

urban and nonurban areas. This factor

will only be applied to the labor portion

of these per-visit limitations for cost

reporting periods beginning on or after

October 1, 1998 if HHAs are required to

implement OASIS.

In addition to training and forms

revision, agencies will incur printing

costs for the revised assessment forms.

Data from the OASIS demonstration

show that for the typical HHA, i.e., one

that has 486 admissions per year and an

18-person professional staff, printing the

new assessment forms will cost $280.

Cost report data for 1994 and 1995 show

that an HHA with 486, plus or minus

50, admissions, provides a total of thirty

thousand visits of all types annually to

patients. Allocating the $280 over 30

thousand visit yields an incremental

cost of .93 cents per visit, which for

estimation purposes is rounded up to

one cent per visit for all disciplines.

The total offset adjustment is applied

by first multiplying the labor portion of

the per-visit limitation for skill nursing,

physical therapy, speech pathology, and

occupational therapy by the factor of

1.003513 for training and forms revision

(the labor-portion is also adjusted by the

appropriate wage index and budget

neutrality factor), second, the non-labor

portion is added to the adjusted laborportion, and third, one cent is added for

printing costs. The OASIS adjustment is

only done after the implementation of

OASIS is effective.

Because we believe that there will be

no ongoing incremental costs to perform

assessments under a new protocol, this

adjustment offset will only apply to the

labor component of the specified pervisit limitations in the first year of

implementation of a new assessment

tool.

While we have based this adjustment

on the best data we have available to us,

we are concerned that we may not have

captured all relevant costs, particularly

ongoing and automation costs. In part,

this is because our data is based on

agencies whose costs in this regard may

not have been fully representative of

agency costs generally. Therefore, we

are asking for specific comments,

including documented data, which

would inform future decision making on

this issue.

IV. Analysis of and Responses to Public

Comments to the March 31, 1998 PerBeneficiary Final Rule

We received 125 comments with

respect to the March 31, 1998 Federal

Register final rule with comment

addressing the implementation of the

per-beneficiary limitations. A number of

comments were on the statutory

requirements for which we do not have

discretionary authority to change or not

implement. These included comments

such as: do not apply the perbeneficiary limitations for cost reporting

periods beginning on or after October 1,

1997, delay implementation of the perbeneficiary limitations to October 1,

1998, repeal the statutory provisions

requiring the application of the perbeneficiary limitations, and the use of

fiscal year 1994 as a base year for

establishing the per-beneficiary

limitations is inadequate and should not

be used in establishing the perbeneficiary limitations. These comments

cannot be adopted without legislative

amendments to the Act pertaining to the

per-beneficiary limitations. The

remaining comments are given below.

Comment: Agencies that have a perbeneficiary limitation lower than the

national per-beneficiary limitation

should be allowed to have the higher

national per-beneficiary limitation

apply.

Response: The statute is very specific

with respect to how the per-beneficiary

limitations are to be calculated for

agencies that have a 12-month cost

reporting period ending in Federal fiscal

year 1994 (‘‘clause v’’ agencies) and new

agencies (‘‘clause vi’’ agencies). Once

the agency is classified as either a

‘‘clause v’’ or ‘‘clause vi’’ provider, the

per-beneficiary limitation is established

by statute. We have no discretion to

apply a most beneficial test.

Comment: The requirement to prorate

the unduplicated census count of

Medicare beneficiaries when a

beneficiary is serviced by more than one

HHA for cost reporting periods

beginning on or after October 1, 1997
Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices 42917

should also apply in determining the

unduplicated census count of Medicare

beneficiaries for the base year, i.e., cost

reporting periods ending during Federal

FY 1994.

Response: The statute does not

provide for this. Section

1861(v)(1)(L)(vi)(II) of the Act, as added

by section 4602(c) of the BBA ’97, states,

‘‘For beneficiaries who use services

furnished by more than one home

health agency, the per-beneficiary

limitation shall be prorated among the

agencies.’’ This provision is specific for

services furnished by HHAs for cost

reporting periods beginning on or after

October 1, 1997. It applies to the

application of the per-beneficiary

limitation and not the calculation of the

per-beneficiary limitation.

Comment: Many agencies were

required to operate under a new system

of reimbursement for a full six months

before being told precisely what the

system was. HCFA should provide some

form of leniency for those agencies

which have large overpayments due to

the delay in publishing the new

limitations.

Response: We recognize that

providers with cost reporting periods

that began prior to the publication of the

per-beneficiary limitations may have

experienced some uncertainty in

budgeting their costs. Nonetheless, the

BBA ’97 is quite explicit in establishing

both the effective date of these

provisions and the date by which these

limitations needed to be established. We

made as much information as possible

available to the home health industry

prior to the publication of the

limitations. We tried to make a smooth

transition into the interim payment

system (IPS) for HHAs by providing

such information through major home

health trade organizations. The IPS was

highly publicized through home health

trade news articles such that the effect

of the IPS should have been anticipated

by the home health industry. While

there were certain technical issues

which could only be addressed through

the publication of the limitations,

agencies could, to a large degree,

estimate the effect of the new

limitations on the financial operations.

In fact, a trade organization developed

computer software packages for

estimating the impact of the IPS. Even

though the limitations were not

available prior to publication, we

believe the home health industry had

sufficient advanced knowledge to

properly react to an estimated impact of

the limitations on their operations. If an

agency had suspected that

overpayments might result from the

interim payments received prior to the

publication of the limitations, a prudent

agency would set the estimated

overpayment aside as a potential

liability. This way, the agency would

not put itself in a financial hardship to

pay back any overpayments resulting

from the newly published limitations.

Comment: The 1994 base period is not

reflective of the sicker patients being

released from the hospitals due to the

hospital prospective payment system.

Response: As stated in the comments

addressing the per-visit limitations,

although it has been said that the

hospital prospective payment system

has resulted in patients being

discharged quicker and sicker and

transferred to a home health setting, this

is not the case overall. A study

published in The New England Journal

of Medicine in August 1996 found ,

‘‘less than a quarter of home health

visits (22 percent) were preceded by a

hospital stay within 30 days. Nearly half

the visits (43 percent) were unassociated

with an inpatient stay in the previous

six months.’’ Also, the hospital

prospective payment system has been in

existence since October 1983. Any

impact on the costs of services of

providing home health care should have

already been reflected in our data base

which is approximately ten years after

the implementation of the hospital

prospective payment system.

Comment: The IPS per-beneficiary

limitation puts a cap on the expenses a

beneficiary can receive in one year.

Response: We cannot stress enough

that the per-beneficiary limitation is not

a cap on an individual beneficiary’s

amount of services or the costs of

services. The per-beneficiary limitation

is an aggregate limitation on each

agency’s total costs. Agencies now have

a global budget that increases with the

number of beneficiaries served and

promotes efficiency in planning and

delivering total services to all patients

throughout the entire home health

episodes. Applying the per-beneficiary

limitation in the aggregate, not just to an

individual patient, allows HHAs to

balance the costs of caring for one

patient against the cost of caring for

other patients. HHAs have the flexibility

to provide the appropriate amount of

care (duration of visits, number of visits,

and skill level of care given) for all

patients within the aggregate perbeneficiary limitation.

Comment: Do not apply the freeze to

inflation for the 1994–1996 period. This

freeze should only apply to the per-visit

limitations.

Response: The statute applies the

freeze to both the per-visit and the perbeneficiary limitations. Section

1861(v)(1)(L)(iv) of the Act states, ‘‘In

establishing limits under this

subparagraph for cost reporting periods

beginning after September 30,1997, the

Secretary shall not take into account any

changes in the home health market

basket, as determined by the Secretary,

with respect to cost reporting periods

which began on or after July 1, 1994,

and before July 1, 1996.’’ The

amendment in section 4601 of the

B.B.A. ’97 to amend section

1861(v)(1)(L) of the Act encompasses all

limits established under section

1861(v)(1)(L) of the Act, including the

per-beneficiary limitations. Therefore,

the application of the freeze in the

market basket increases to both the pervisit limitations and the per-beneficary

limitations is in accordance with the

statutory language.

Comment: The requirement to apply

the wage-index based on the location of

the service furnished rather than the

location of the HHA should only apply

to the per-visit limitations.

Response: Again the statute requires

the wage index based upon the location

of the service furnished be applied to

both the per-visit and the perbeneficiary limitations. Section

1861(v)(1)(L) of the Act, states in part,

‘‘ * * * the Secretary shall establish

limits under this subparagraph for cost

reporting periods beginning on or after

such date by utilizing the area wage

index applicable under section

1886(d)(3)(E) and determined using the

survey of the most recent available

wages and wage-related costs of

hospitals located in the geographic area

in which the home health service is

furnished * * * ’’ This language

encompasses all the limitations noted

under section 1861(v)(1)(L) of the Act,

which includes both the per-visit and

the per-beneficiary limitations.

Comment: HCFA should utilize the

median amount for each census region

for new providers. This will be the best

reflection of both wages and utilization

for agencies in a given area.

Response: Section 1861(v)(1)(L)(vi) of

the Act as added by section 4602(c) of

the B.B.A. ’97, states, ‘‘For new

providers and those providers without a

12-month cost reporting period ending

in fiscal year 1994, the per beneficiary

limitation shall be equal to the median

of these limits (or the Secretary’s best

estimates thereof) applied to other home

health agencies as determined by the

Secretary.’’ The statute clearly

contemplates the use of a single, and

therefore national, median as the basis

for the new provider limitation. The

statute requires the per-beneficiary

limitation to be ‘‘the median’’ of all the

per-beneficiary limitations applied to

the other HHAs, i.e., the per-beneficiary
42918 Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices

limitations of the old providers. The

statutory language refers to a single

median and not several medians, which

would be the case if the statute required

a regional system suggested by

commenters. Moreover, in direct

contrast to the language governing the

per-beneficiary limitation for old

providers, section 1861(v)(1)(L)(vi) does

not contain any reference to a

calculation based upon the home health

agency’s census division.

Comment: The base year for the

surviving provider number should be

utilized in computing the perbeneficiary limitation. Because the

agency still carries assets and liabilities

of the agency it purchased, the base year

and resulting per-beneficiary limitation

should be considered an asset or a

liability, as applicable.

Response: The per-beneficiary

limitation is neither an asset nor a

liability for an HHA. The perbeneficiary limitation is a limit on the

amount of payments made by Medicare.

The limitations are not intended to be

used as bargaining tools for selling or

buying agencies.

Comment: Extend authorizations for

exceptions to the new interim payment

system per-beneficiary limitations as

well as the per-visit limitations.

Response: As we stated in the March

31, 1998 Federal Register, we do not

believe that Congress intended the

general rules at 42 CFR 413.30 to apply

to the establishment of the perbeneficiary limitations. The statute does

not provide any such exceptions or

exemptions to the per-beneficiary

limitations.

Comment: On page 15725 of the

Federal Register the example references

index levels for the period of July 1998

through December 1998 from Table 6 for

calculating the market basket increase.

Table 6 in the March 31, 1998 Federal

Register stops at November 1997.

Response: We apologize for the

inadvertent omission of the index levels

for the months of December 1997

through September 1999. Table 6 at 63

FR 103 published on January 2, 1998

contains the same index levels that are

appropriate in calculating the applicable

market basket increase and the index

levels for the months of December 1997

through September 1999 can be

obtained from that table.

Comment: Under section 112 of the

Provider Reimbursement Manual, Part I,

State health department home health

agencies with subunits or branches are

permitted to file a combined cost report

under the 7800 series of provider

numbers. (1) How will those subunits

and branches that have separate

provider numbers and separately bill

that previously filed a combined cost

report be treated if some decide to no

longer file with the combined cost

report? (2) How will the remaining

agencies that wish to file a combined

report be treated? As clause ‘‘v’’ or

clause ‘‘vi’’, and will there be any

adjustment to costs for the agencyspecific portion? (3) If combined State

department home health agencies that

file a combined cost report has subunits,

and a beneficiary moves from one

subunit to another, is that beneficiary

counted as one beneficiary in each of

the subunits, or is it prorated?

Response: (1) State health

departments with subunits are allowed

to file a combined Medicare cost report

because of the administrative and

financial burden in filing separate

Medicare cost reports for all the

agencies within the department. The

State health departments were allowed

to obtain subunit provider numbers for

the purposes of tracking revenue and

claims processing. Also, it is our

understanding that the State health

departments did have the capability to

segregate the costs for each individual

agency within the department. If State

health departments decide to start

submitting individual Medicare cost

reports for the agencies within their

department, they will not be allowed to

pick and choose individual agencies for

which they would like to report

separately. The State agency health

would have to rescind the 7800 series

number and submit separate cost reports

for all the agencies.

(2) Since the State health department

filed a single cost report for all the

agencies under a 7800 number series,

and the individual subunits did not file

a separate Medicare cost report for

which an agency-specific perbeneficiary limitation can be calculated,

if the units start filing separate Medicare

cost reports under their own numbers,

they will be considered clause ‘‘vi’’ type

providers. Therefore, they will be

subject to the national per-beneficiary

limitation.

(3) State health departments that file

a single cost report under the 7800

number for all its units will count a

single beneficiary in its unduplicated

census count for the cost reporting

period regardless of the number of units

that service that beneficiary. However, if

the subunits report separately and the

beneficiary is serviced by more than one

subunit, the beneficiary must be

prorated among the subunits servicing

the beneficiary.

Comment: How do you determine

prorating between agencies when you

have one agency that was working hard

and saw a patient on a limited basis

versus the other agency who maximized

visits to reach the ceiling of the

beneficiary limitation and then

discharged the patient?

Response: We cannot emphasize

enough that the per-beneficiary

limitation is not a limitation on the

amount of services a beneficiary may

receive or a limitation on the costs of an

individual beneficiary. The perbeneficiary limitation is applied to the

total unduplicated census count of the

agency and compared to the lesser of the

agency’s actual costs or per-visit

limitation in the aggregate plus

nonroutine medical supplies. If an

agency discharges a beneficiary with the

assumption that the beneficiary has

exhausted its per-beneficiary limitation

and that beneficiary receives services

from another agency, each agency will

have less than one beneficiary in its

unduplicated census count. For

example, if agency ‘‘A’’ treats a

Medicare beneficiary and after 60 visits,

discharges the patient and subsequently

the patient receives 40 visits from

agency ‘‘B’’, agency ‘‘A’’ will count the

beneficiary as .60 in its unduplicated

census count and agency ‘‘B’’ will count

the beneficiary as .40 in its

unduplicated census count. Under a

system based on medians and averages,

such as the per-beneficiary limitations,

it should be expected that some

patients’ costs and amount of services

will be under the average and some

patients’ costs and amounts of services

will be above the average.

Comment: The blend of an agencyspecific component and a regional

census division component rewards

agencies that had high costs in Federal

FY 1994 and penalizes agencies that had

low costs in Federal FY 1994.

Response: By basing the perbeneficiary limitation on the HHA’s

own cost experience, the per-beneficiary

limitation should reflect the mix of

patients that the agency has been caring

for in the past. This mix of patients

should not change drastically as

compared to the mix of patients for

whom the HHA is currently providing

care. While variation does exist between

agencies, it is a reflection of their actual

cost experience. All agencies were

subject to the lower of their actual costs

or the aggregate per-visit limitation in

FY 1994. It is the lower of these

amounts that is incorporated into the

calculation of the per-beneficiary

limitations. If two agencies existing in

the same area with 1994 base periods

did not have a competitive advantage

over each other in 1994, it does not

follow that one would have a

competitive advantage due to the

application of a per-beneficiary
Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices 42919

limitation. As stated before, the average

per-beneficiary cost is a reflection of the

mix of patients that the HHA serviced

in the base period.

Comment: Home health agencies that

have reclassified branches to subunits

should be allowed to use the parent

agency’s FY 1994 cost report as the base

for establishing the per-beneficiary

limitation for the new subunit.

Response: Branches within home

health agencies are not providers as

recognized under Medicare principles of

reimbursement. Branches within home

health agencies are part of and under

the administrative control of the parent

home health agency. The branch itself

does not have its own administrative

function or control. They are not

independently certified by Medicare as

a provider nor are they required to file

a Medicare cost report. Because

branches are not providers of service but

an intricate part of a provider, they will

be considered new providers if they

become certified by Medicare as an

independent provider of home health

services subsequent to Federal FY 1994.

Comment: HCFA should allow

agencies which filed more than one cost

report during Federal FY 1994 to

combine the cost reporting periods

when they equal or exceed a 12-month

cost reporting period for establishing the

agency-specific per-beneficiary

limitation.

Response: We do not agree. Medicare

has always applied the terminology of a

12-month cost reporting period as being

twelve consecutive months as reported

in the Medicare cost report.

Comment: The impact analysis seems

almost entirely focused on total

Medicare expenditures. It gives short

shrift to the problems that will be

experienced by patients, HHAs, and

other payers such as Medicaid. In order

to maintain costs below the perbeneficiary limitation, HHAs will need

to reduce the average number of visits

provided to Medicare beneficiaries

below the levels patients received in

1997. The size of this reduction was not

estimated or its impact on Medicare

beneficiaries.

Response: The impact analysis did

not discuss the impact on beneficiaries

because this payment system does not

limit the amount of services a

beneficiary may receive from an agency.

It is designed to provide more efficient

delivery of services. No beneficiary

should be denied services as a result of

this payment system. These

beneficiaries continue to be eligible for

Medicare home health benefits without

a specific day limit.

Comment: The use of a two-thirds

offset in estimating the impact of the

aggregate per-beneficiary limitation on

HHAs was not explained adequately.

What analysis was performed to justify

such an offset?

Response: An impact analysis

requires that we estimate the impact of

a change in policy. While there are

questions about whether such an impact

analysis is needed for a notice that

announces rates for a statutorily

mandated policy for which there is

virtually no discretion, if we are to

estimate the impact of the home health

policy, we need to consider not just

changes in Medicare payments that

would be involved, but also the

incentives created by the new policy

and how providers are likely to react to

the change in policy.

Home health is the highest cost

Medicare service category which has no

cost-sharing. As a result, there is no

direct financial consequences to

beneficiaries for use of home health

services. Combined with the fact that

home health services are non-invasive

and the patient does not have to leave

home to receive them, there are not the

same kinds of constraints on their use

as with other medical services.

We believe that it is prudent to

assume that because of the incentives

created by the B.B.A. ’97 policy and the

demonstrated ability of the industry to

respond, that there would be a response.

This does not necessarily mean that

agencies will go out of business or

substitute care of Medicare beneficiaries

from other payers or sources of funds.

It does mean that there would be

changes in behavior to recoup some of

the financial effects that would

otherwise occur with the policy, such as

an increase in users serving particularly

low users, or reducing the intensity of

care in marginal cases, or reducing

services that should not be covered by

Medicare. For the purposes of this

impact analysis, it is our judgement that

a 50 percent offset for the per-visit

limitations and a 66 percent offset for

the per-beneficiary limitations is

reasonable. To the extent that actual

expenditures differ from projections,

after adjusting for other factors affecting

expenditure growth, we will review the

offsets used for future impact analysis.

Comment: Using HCFA’s own

analysis it is clear that agencies will

either have to go out of business or

subsidize care of Medicare beneficiaries

from other payers or sources of funds.

Layoffs of staff and closures of HHAs

will have a direct impact on access to

care that HCFA did not address.

Response: We did not address the

impact on access to care due to agency

closures because we were not expecting

this to be a necessary reaction to the

limitations as stated in the above

response. We are currently receiving

many new applications from agencies

wanting to become Medicare certified. If

there are any closures as a result of this

payment system, it is expected other

new agencies or agency expansions will

offset these closures.

Comment: HCFA mentions that 15

percent of the Medicare savings are

attributable to payments to managed

care plans in FY 1998 and 20 percent in

FY 1999. It is unclear what this means.

Are home health services to managed

care enrollees included in projected

expenditures? Does HCFA expect

managed care organizations to reduce

home health services even though it is

far below fee-for-service utilization?

Response: The impact notice

mentions that some of the savings from

this system are attributable to payments

to managed care plans. Payments to

Medicare managed care plans are based

on fee-for-service Medicare benefits. If

we expect to pay less to home health

agencies on a fee-for-service basis, then

the managed care rates will decrease.

Managed care payments, in total, are

included as part of our cost projections.

Since payments to managed care plans

are based on fee-for-service use, there is

no need to project managed care

payments by type. Since the B.B.A. ’97

is directed toward changes in fee-forservice, managed care plans are not

expected to reduce home health services

as a result of this notice.

Comment: The impact section did not

address the impact on per-visit costs of

reducing the average number of visits

provided per patient. It would seem

logical that agencies’ per-visit costs

would increase as the average

reimbursed cost per patient decreases.

This impact on per-visit costs will drive

agency per-visit costs higher which will

result in a greater proportion of agencies

exceeding the per-visit cost limitations

than HCFA anticipates in its analysis.

Response: We believe that this system

was implemented, in part, because the

number of visits per beneficiary had

been increasing at double-digit growth

rate until 1996. However, the cost pervisit was not increasing at a similar

level. The impact of these limitations

was not expected to reduce the cost pervisit significantly.

Comment: The impact analysis is

incomplete for two reasons. First, the

Regulatory Flexibility Act is insufficient

since it does not consider alternative

interpretations of the HHA Interim

Payment System provision. Second,

section 202 of the Unfunded Mandates

Reform Act requires its own assessment

of costs and benefits.
42920 Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices

Response: The HHA Interim Payment

System provision, generally section

4602 of the Balanced Budget Act of

1997, is narrowly constructed such that

it does not provide for exceptions or

consideration of options that reduce the

burden on small entities. We did not

prepare a separate assessment of costs

and benefits for purposes of Section 202

of the Unfunded Mandates Reform Act

because we believe that this regulation

did not meet the threshold requirement

of an annual expenditure by State, local,

or tribal governments, in the aggregate,

or by private sector, of $100 million

(adjusted annually for inflation).

Comment: HCFA describes 1,158 new

providers on the database as those with

December 1994 or December 1995 FY

ends. These agencies may not be

representative of all new agencies and

thus the database may be limited in its

use as a measure of the impact on new

agencies.

Response: In order to meet the

statutory dates for establishing the

limitation, we had a very limited time

in which to collect data, but obtained

the most recent data available to assess

the impact on new agencies. Because of

how new providers are defined, we are

limited by our resources in identifying

all types of new providers. We believe

that the data base was sufficient to

conduct a valid impact analysis.

Comment: We see no justification for

the additional two percent reduction to

the per-beneficiary limitation for new

agencies when determining a specific

agency’s per-beneficiary limitation as

shown on page 15726 of the notice.

Response: The national perbeneficiary calculations at 63 FR 15726

should not be multiplied by 98 percent.

The two percent reduction to the perbeneficiary limitations has already been

taken into account in the calculations of

the national per-beneficiary limitation.

The examples of the national perbeneficiary calculations at 63 FR 15726

should be $3,279.26 for the Dallas MSA

and $2,679.89 for rural Texas. We

apologize for any inconveniences this

may have caused.

Comment: The example of two

merged agencies at 63 FR 15721 does

not explain the new November 1, 1997

beginning cost reporting period. The

date does not match either the agencies’

previous cost reporting periods or the

merger date.

Response: The date in the example of

the two merged agencies should state

that the weighted per-beneficiary

limitation applies to the cost reporting

period which began December 1, 1997.

Comment: The counties listed for

MSA region 8840—Washington, DC in

the March 31, 1998 Federal Register

includes Charles County but those in

the January 2, 1998 Federal Register do

not. Is Charles County, Maryland in the

Washington, DC region for the wage

index for both the per-beneficiary

limitations and the per-visit limitations?

Response: Both Federal Registers at

63 FR 102 and 63 FR 15733 show

Charles, MD as part of the Washington,

DC MSA.

Comment: Step 2 of the example at 63

FR 15725 depicts a divisor of seven

instead of six. Shouldn’t the divisor be

six?

Response: Yes, the divisor at step 2 of

the example at 63 FR 15725 should be

six.

Comment: HCFA should have made

the database available when the notice

was published and should do so for all

future cost limit or payment rate

notices. The database should be

available for the full comment period.

Response: We made every attempt to

make the data available shortly after the

notice was published. Due to the limited

time available after finalizing the limits,

we were unable to post the data to the

Internet until one month after the notice

was published. We believe this allowed

sufficient time for analysis.

Comment: HCFA should make

provider numbers and other requested

data available immediately.

Response: We believe it is not

necessary to identify individual

providers in order to calculate the perbeneficiary limitations and therefore did

not include this information in our data

base on the public use file.

Comment: HCFA should provide a

detailed explanation of how the

database was constructed. The

discussion should include the method

for choosing agencies to include/

exclude, the editing and verification

process, and an explanation of how

denied claims were matched to claimsbased unduplicated census counts.

Response: We believe the calculations

were explained fully in the notice.

Because the statute is very explicit

about how the per-beneficiary

limitations are determined, we believe

the explanations provided in the notice

are adequate.

Comment: All outlying areas, such as

Guam, Puerto Rico, and the Virgin

Islands, should be combined into one

category for purposes of calculating the

census division components.

Response: The statute did not refer

specifically to Guam, Puerto Rico, or the

Virgin Islands in establishing perbeneficiary limitations. These areas do

not fall within any of the existing

census region divisions which are

required by statute in establishing the

regional per-beneficiary limitations. In

order to avoid advantaging or

disadvantaging any of the census

division regions, we treated these areas

as separate areas in establishing the

regional per-beneficiary limitations.

Puerto Rico and the Virgin Islands were

combined as one area and Guam as a

separate area. We note that the wage

indices for the Virgin Islands and Guam

were inadvertently omitted from the

notice. The wage index for the Virgin

Islands is .4588 and the wage index for

Guam is .6516.

Comment: The standardization of the

census division average per-beneficiary

costs by the appropriate wage indices

should only be applied to the laborrelated component of the perbeneficiary rates.

Response: The standardization of the

per-beneficiary limitations was applied

to the labor-related component of the

average costs per beneficiary. This

adjustment methodology is explained

on page 15723 of the notice with respect

to how the adjusted unduplicated

census counts of Medicare beneficiaries

are used in the calculation of the perbeneficiary limitations. We applied the

labor-related component percentage

before calculating the wage-index

weighted unduplicated beneficiary

counts.

Comment: Unless HCFA can provide

a reasonable explanation for including

nonroutine supplies in the costs that

were standardized by the wage index,

the cost of nonroutine supplies should

have been excluded from the

standardization of these costs.

Response: When doing the

standardization of the per-beneficiary

limitations, we do not separate out each

individual component of costs to

determine the labor and nonlabor

components. The labor-related and

nonlabor percentages are determined

with respect to all costs incurred by an

HHA, and are applied to total costs

accordingly.

Comment: HCFA should explain the

reasons for not computing urban and

rural costs separately and weighting by

patient rather than agency.

Response: The statute does not

provide for establishing urban and rural

per-beneficiary limitations. Since the

wage-index is applied based on the

location of the services rendered to the

beneficiaries, the standardization was

done through a weighting of the

beneficiaries rather than the location of

the HHA.

Comment: HCFA should ensure that

HHAs are reimbursed for additional

costs associated with new regulatory

requirements, such as OASIS costs.

Response: The statute requires the

per-beneficiary limitations to be based
Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices 42921

upon the costs incurred during a

particular base year, the Federal FY

1994, and does not contemplate

adjustments due to costs incurred

subsequent to the base year.

Comment: We received numerous

comments concerning the definition of

new providers under the IPS. In

particular, there are concerns over the

application of national per-beneficiary

limitations when there are mergers and

consolidations of unlike agencies, i.e.

provider-based and freestanding or

agencies without a FY ending during

Federal year 1994 with agencies with a

FY ending during Federal FY 1994.

Various scenarios were written in with

respect to whether HCFA would find if

such scenarios constituted a merger or

consolidation which took place since

Federal FY 1994. It was recommended

that HCFA limit new provider status to

those agencies without a 12-month cost

reporting ending during Federal FY

1994 and providers that did not exist at

the time of passage of the B.B.A. ’97.

Response: We do not believe the

policies set forth in the Federal Register

were unreasonable with respect to new

provider status under the interim

payment system. The policies are not

intended to redefine or impose new

policies regarding HCFA’s long standing

policies regarding mergers and

consolidations. With respect to

provider-based agencies or freestanding

agencies, we have always made a

distinction between the two types of

providers. In May 1998 we issued a

Program Memorandum (Transmittal No.

A–98–15) which clarified our policies

regarding provider-based and

freestanding designation. In that

memorandum we state that the main

purpose of provider or facility-based

designation is to accommodate the

appropriate accounting and allocation of

costs where there is more than one type

of provider activity taking place within

the same facility/organization. This cost

allocation and cost reimbursement more

often than not results in Medicare

program payments that exceed what

would have been paid for if the same

services were rendered by a freestanding entity.

Even though we believe our policies

as stated in the March 31, 1998 Federal

Register with respect to what is a

‘‘clause vi’’ agency are reasonable, we

have reevaluated our position based on

comments and are revising our

interpretation as to what constitutes a

new provider by adding an alternative

reading. In determining whether an

agency is a new or old provider, we will

consider whether the agency’s provider

number existed with a 12-month cost

reporting period ending during Federal

FY 1994. In such a case, that agency can

be considered an old provider/clause v

provider regardless of any changes that

took place in subsequent years.

However, those agencies that did not

have a 12-month cost reporting period

ending during Federal FY 1994 and

those agencies that were certified under

Medicare with provider numbers that

did not exist with a 12-month cost

reporting period ending during Federal

FY 1994 will continue to be considered

new providers/clause vi providers. For

greater detail on new providers, see

section V.C. ‘‘New Providers.’’

V. Update of the Per-Beneficiary

Limitations

The methodologies and data used to

develop the schedule of per-beneficiary

limitations set forth in this notice are

the same as that used in setting the perbeneficiary limitations that were

effective for cost reporting periods

beginning on or after October 1, 1997.

We have updated the per-beneficiary

limitations to reflect the expected cost

increases occurring between the cost

reporting periods ended during Federal

FY 1994 and September 30, 1999,

excluding any changes in the home

health market basket with respect to

cost reporting periods which began on

or after July 1, 1994 and before July 1,

1996. Therefore, we excluded this time

period when we adjusted the database

for the market basket increases.

A. Data Used

The cost report data used to develop

the schedule of per-beneficiary

limitations set forth in this notice are for

cost reporting periods ending in Federal

FY 1994, as required by section

1861(v)(1)(L) of the Act. We have

updated the per-beneficiary limitations

to reflect the expected cost increases

occurring between the cost reporting

periods for the data contained in the

database and September 30, 1999

(excluding, as required by statute, any

changes in the home health market

basket for cost reporting periods

beginning on or after July 1, 1994 and

before July 1, 1996).

The interim payment system sets

limitations according to two different

methodologies. For agencies with cost

reporting periods ending during Federal

FY 1994, the limitation is based on 75

percent of 98 percent of the agencies’

own reasonable costs and 25 percent of

98 percent of the average census region

division costs. At the end of the

agency’s cost reporting period subject to

the per-beneficiary limitations, the labor

component of the census region division

per-beneficiary limitation is adjusted by

a wage index based on where the home

health services are rendered.

For new providers and providers

without a cost reporting period ending

during Federal FY 1994, the perbeneficiary limitation is based on the

standardized national median of the

blended agency-specific and census

region division per-beneficiary

limitations described above. This is

done by simply arraying the agencies’

per-beneficiary limitations and selecting

the median case. This national perbeneficiary limitation is then

standardized for the effect of the wage

index. The wage index is applied to the

labor component of the national perbeneficiary limitation at the end of the

cost reporting period beginning on or

after October 1, 1998, and is based on

where the home health services are

rendered.

B. Wage Index

A wage index is used to adjust the

labor-related portion of the standardized

regional average per-beneficiary

limitation and the national perbeneficiary limitation to reflect differing

wage levels among areas. In establishing

the regional average per-beneficiary

limitation and national per-beneficiary

limitation, we used the FY 1998

hospital wage index, which is based on

1994 hospital wage data.

Each HHA’s labor market area is

determined based on the definitions of

Metropolitan Statistical Areas (MSAs)

issued by the Office of Management and

Budget (OMB). Section 1861(v)(1)(L)(iii)

of the Act requires us to use the current

hospital wage index (that is, the FY

1998 hospital wage index, which was

published in the Federal Register on

August 29, 1997 (62 FR 46070)) without

regard to whether such hospitals have

been reclassified to a new geographic

area, to establish the HHA cost

limitations. Therefore, the schedules of

standardized regional average perbeneficiary limitations and the national

per-beneficiary limitation reflects the

MSA definitions that are currently in

effect under the hospital prospective

payment system.

As we did for the per-visit limitations,

we are continuing to incorporate

exceptions to the MSA classification

system for certain New England

counties that were identified in the July

1, 1992 notice (57 FR 29410). These

exceptions have been recognized in

setting hospital cost limitations for cost

reporting periods beginning on and after

July 1, 1979 (45 FR 41218), and were

authorized under section 601(g) of the

Social Security Amendments of 1983

(Public Law 98–11). Section 601(g) of

Public Law 98–21 requires that any
42922 Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices

hospital in New England that was

classified as being in an urban area

under the classification system in effect

in 1979 will be considered urban for

purposes of the hospital prospective

payment system. This provision is

intended to ensure equitable treatment

under the hospital prospective payment

system. Under this authority, the

following counties have been deemed to

be urban areas for purposes of payment

under the inpatient hospital prospective

system:

• Litchfield County, CT in the

Hartford, CT MSA

• York County, ME and Sagadahoc

County, ME in the Portland, ME MSA.

• Merrimack County, NH in the

Boston-Brockton-Nashua, MA–NH MSA

• Newport County, RI in the

Providence Fall-Warwick, RI MSA

We are continuing to grant these

urban exceptions for the purpose of

applying the Medicare hospital wage

index to the HHA standardized regional

average per-beneficiary limitations and

the national per-beneficiary limitation.

These exceptions result in the same

New England County Metropolitan Area

definitions for hospitals, skilled nursing

facilities, and HHAs. In New England,

MSAs are defined on town boundaries

rather than on county lines but exclude

parts of the four counties cited above

that would be considered urban under

the MSA definition. Under this notice,

these four counties are urban under

either definition, New England County

Metropolitan Area or MSA.

Section 1861(v)(1)(L)(iii) requires the

use of the area wage index applicable

under section 1886(d)(3)(E) of the Act

and determined using the survey of the

most recent available wages and wagerelated costs of hospitals located in the

geographic area in which the home

health service is furnished without

regard to whether such hospitals have

been reclassified to a new geographic

area pursuant to section 1886(d)(8)(B) of

the Act. The wage-index, as applied to

the labor portion of the regional perbeneficiary limitation and the labor

portion of the national per-beneficiary

limitation, must be based on the

geographic location in which the home

health service is actually furnished.

C. New Providers

Section III. C. at 63 FR 15721 through

15722 provides the policy with respect

to the determination of whether an

agency is a new agency or an old agency

for applying the per-beneficiary

limitations. Considering the number of

comments and inquiries we have

received concerning the policies set

forth in this section, particularly with

respect to what a ‘‘clause vi’’ provider

is under the IPS, we have reevaluated

our position on this issue and are

modifying some of the policies.

In considering this policy we

recognize there are many changes an

HHA may undergo including changes

due to mergers, consolidations, and

changes in ownership. Regardless of

what constitutes the change there will

be a surviving entity resulting from the

change and the status of the surviving

entity will dictate how the agency will

be treated under the per-beneficiary

limitations. We believe that providers

fall within the following groupings: (a)

An HHA with an existing provider

number with a provider agreement with

HCFA, (b) an HHA accepts assignment

of the provider agreement and provider

number which had a FY 1994 base year

through a change in ownership after the

FY 1994 base year, or, (c) an HHA has

gone through the certification process

since the FY 1994 base period as a new

provider and has a new provider

number assigned after the applicable FY

1994 base year. Under (a) or (b), if the

provider number existed as an HHA

with a 12-month cost reporting period

ending during Federal FY 1994, that 12-

month cost reporting period will be the

cost reporting period for calculating the

agency-specific component of the perbeneficiary limitation and considered an

old provider with an agency-specific

per-beneficiary limitation. Under (c), the

agency will be a new provider and

subject to the national per-beneficiary

limitation.

We are permitting providers that

would be determined to be new

providers under the policies set forth in

the March 31, 1998 final notice, to elect

to be considered an old provider under

the policies set forth above.

Furthermore, providers that were

determined to be new providers under

the March 31, 1998 policies may

likewise choose to continue to be

considered new providers. These

choices must be made and conveyed to

the agency’s fiscal intermediary by

October 1, 1998. We note these

designations of provider status is solely

for purposes of determining the perbeneficiary limitation. However, those

providers that elect to continue to be

new providers pursuant to the March

31, 1998 final notice are subject to that

continued new provider status for so

long as there are no changes after their

October 1, 1998 election that would

affect their elected new provider option.

Our policy addressing HHA branches

that become subunits set forth at 63 FR

15722 is not affected by the change

addressed above.

VI. Market Basket

The 1993-based cost categories and

weights are listed in Table 1 below.

TABLE 1.—1993-BASED COST CATEGORIES, BASKET WEIGHTS, AND PRICE PROXIES

Compensation including allocated Contract Services’ Labor ...................... 77.668

Wages and Salaries including allocated Contract Services’ Labor ..... 64.226 HHA Occupational Wage Index.

Employee benefits, including allocated Contract Services’ Labor ....... 13.442 HHA Occupational Benefits Index.

Operations & Maintenance .......................................................................... 0.832 CPI–U Fuel & Other Utilities.

Administrative & General, including allocated Contract Services’ Nonlabor.9.569

Telephone ............................................................................................. 0.725 CPI–U Telephone.

Paper & Printing ................................................................................... 0.529 CPI–U Household Paper, Paper Products & Stationary

Supplies.

Postage ................................................................................................. 0.724 CPI–U Postage.

Other Administrative & General, including allocated Contract Services Non-Labor.7.591 CPI–Services.

Transportation .............................................................................................. 3.405 CPI–U Private Transportation.

Capital-Related ............................................................................................ 3.204

Insurance .............................................................................................. 0.560 CPI–U Household Insurance.

Fixed Capital ......................................................................................... 1.764 CPI–U Owner’s Equivalent.

Movable Capital .................................................................................... 0.880 PPI Machinery & Equipment.

Other Expenses, including allocated Contract Services’ Non-Labor .......... 5.322 CPI–U All Items Less Food & Energy.

Total .................................................................................................. 100.000
Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices 42923

VII. Update of Data Base

The data used to develop the cost per-visit limitations, the census region per-beneficiary limitations and the national

per-beneficiary limitation were adjusted using the latest available market basket factors to reflect expected cost increases

occurring between the cost reporting periods contained in our database and September 30, 1999, excluding any changes

in the home health market basket with respect to cost reporting periods which began on or after July 1, 1994 and

before July 1, 1996. The following inflation factors were used in calculating the per-visit, the census region per-beneficiary

limitations, and national per-beneficiary limitations:

TABLE 2.—FACTORS FOR INFLATING DATABASE DOLLARS TO SEPTEMBER 30,1999

[Inflation Adjustment Factors 1]

FY end 1993 1994 1995 1996 1997

October 31 ................................................................................................ 1.11846 1.08387 1.08361 1.08169 1.05773

November 30 ............................................................................................ 1.11568 1.08773 1.08361 1.08073 1.05507

December 31 ............................................................................................ 1.11291 1.08650 1.08361 1.07955 1.05241

January 31 ................................................................................................ .................... 1.11015 1.08553 1.08361 1.07816

February 28 .............................................................................................. .................... 1.10741 1.08483 1.08361 1.07656

March 31 ................................................................................................... .................... 1.10475 1.08428 1.08361 1.07477

April 30 ...................................................................................................... .................... 1.10215 1.08387 1.08361 1.07279

May 31 ...................................................................................................... .................... 1.09963 1.08361 1.08361 1.07064

June 30 ..................................................................................................... .................... 1.09709 1.08361 1.08361 1.06820

July 31 ...................................................................................................... .................... 1.09480 1.08361 1.08342 1.06566

August 31 .................................................................................................. .................... 1.09276 1.08361 1.08304 1.06303

September 30 ........................................................................................... .................... 1.09090 1.08361 1.08246 1.06039

1Source: The Home Health Agency Price Index, produced by HCFA. The forecasts are from Standard and Poor’s DRI 1st QTR 1998;

@USSIM/TREND25YR0298@CISSIM/Control981 forecast exercise which has historical data through 1998:1.

Multiplying nominal dollars for a

given FY end by their respective

inflation adjustment factor will express

those dollars in the dollar levels for the

FY ending September 30, 1998.

The procedure followed to develop

these tables, based on requirements

from BBA ’97, was to hold the June 1994

level for input price index constant

through June 1996. From July 1996

forward, we trended the revised index

forward using the percentage gain each

month from the HCFA Home Health

Agency Input Price Index.

Thus, the monthly trend of the

revised index is the same as that of the

HCFA market basket for the period from

July 1996 forward.

A. Short Period Adjustment Factors for

Cost Reporting Periods Consisting of

Fewer Than 12 Months

HHAs with cost reporting periods

beginning on or after October 1, 1998

may have cost reporting periods that are

less than 12 months in length. This may

happen, for example, when a new

provider enters the Medicare program

after its selected FY has already begun,

or when a provider experiences a

change of ownership before the end of

the cost reporting period. The data used

in calculating the limitations were

updated to September 30, 1999.

Therefore, the cost limitations

published in this notice are for a 12-

month cost reporting period beginning

October 1, 1998 and ending September

30, 1999. For 12-month cost reporting

periods beginning after October 1, 1998

and before October 1, 1999, cost

reporting period adjustment factors are

provided in Table 5. However, when a

cost reporting period consists of fewer

than 12 months, adjustments must be

made to the data that have been

developed for use with 12-month cost

reporting periods. To promote the

efficient dissemination of cost

limitations to agencies with cost

reporting periods of fewer than 12

months, we are publishing an example

and tables to enable intermediaries to

calculate the applicable adjustment

factors.

Cost reporting periods of fewer than

12 months may not necessarily begin on

the first of the month or end on the last

day of the month. In order to simplify

the process in calculating ‘‘short

period’’ adjustment factors, if the short

cost reporting period begins before the

sixteenth of the month, we will consider

the period to have begun on the first of

that month. If the start of the cost

reporting period begins on or after the

sixteenth of the month, it will be

considered to have begun at the

beginning of the next month. Also, if the

short period ends before the sixteenth of

the month, we will consider the period

to have ended at the end of the

preceding month; if the short period

ends on or after the sixteenth of the

month, it will be considered to have

ended at the end of that month.

Example:

1. After approval by its intermediary,

an HHA that had a 1994 base year

changed its FY end from June 30 to

December 31. Therefore, the HHA had a

short cost reporting period beginning on

July 1, 1999 and ending on December

31, 1999. The cost reporting period

ending during Federal FY 1994 would

have been the cost reporting period

ending on June 30, 1994. The

limitations that apply to this short

period must be adjusted as follows:

Step 1—From Table 6, sum the index

levels for the months of July 1999

through December 1999: 6.82716.

Step 2—Divide the results from Step

1 by the number of months in short

period:

6.82716÷6=1.13787.

Step 3—From Table 6, sum the index

levels for the months in the common

period of October 1998 through

September 1999: 13.45836.

Step 4—Divide the results in Step 3

by the number of months in the

common period:

13.45836÷12=1.12153.

Step 5—Divide the results from Step

2 by the results from Step 4. This is the

adjustment factor to be applied to the

published per-visit and per-beneficiary

limitations:

1.13787÷1.12153=1.0145693.

Step 6—Apply the results from Step

5 to the published limitations.

For example:

a. Urban skilled nursing per-visit

labor portion

$88.44×1.0145693=$89.73.

b. Urban skilled nursing per-visit

nonlabor portion

$19.73×.0145693=$20.02.
42924 Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices

c. West South Central Census region

division labor portion per-beneficiary

limitation

$4,588.26×1.0145693=$4,655.11.

d. West South Central Census region

division nonlabor portion perbeneficiary limitation

$1,319.27×1.0145693=$1,338.49.

Step 7. Also apply the results from

Step 5 to the calculated agency-specific

per-beneficiary amount which has been

updated to September 30, 1999 using

Table 2.

B. Adjustment Factor for Reporting Year

Beginning After October 1, 1998 and

Before October 1, 1999

If an HHA has a 12-month cost

reporting period beginning on or after

November 1, 1998, the per-visit

limitation and the adjusted census

region division per-beneficiary

limitation and the agency-specific perbeneficiary limitation or the adjusted

national per-beneficiary limitations are

again revised by an adjustment factor

from Table 5 that corresponds to the

month and year in which the cost

reporting period begins. Each factor

represents the compounded rate of

monthly increase derived from the

projected annual increase in the market

basket index, and is used to account for

inflation in costs that will occur after

the date on which the per-beneficiary

limitations become effective.

In adjusting the agency-specific perbeneficiary limitation for the market

basket increases since the end of the

cost reporting period ending during

Federal year 1994, the intermediary will

increase the agency-specific perbeneficiary limitation to September 30,

1999. That way when the limitations

need to be further adjusted for the cost

reporting period, all elements of the

limitation calculations can be adjusted

by the same factor. For example, if an

HHA providing services in the Dallas

MSA only and has a cost reporting

period beginning January 1, 1999, its

occupational therapy per-visit limitation

and its per-beneficiary limitation would

be further adjusted as follows:

COMPUTATION OF REVISED PER-VISIT FOR OCCUPATIONAL THERAPY

Adjusted per-visit limitation ................................................................................................................................................................ $123.05 1

Adjustment from Table 5 ................................................................................................................................................................... 1.00720

Revised per-visit limitation ................................................................................................................................................................. $123.94

1Adjusted by appropriate wage index applicable to the Dallas MSA and the budget neutrality adjustment factor of 1.03.

COMPUTATION OF REVISED PER-BENEFICIARY LIMITATIONS FOR AN HHA WITH A 1994 BASE PERIOD

Agency-specific component inflated through December 31, 1999:

$5400.00 × .98 × .75 .................................................................................................................................................................. $3,969.00

West south central division component adjusted by the Dallas MSA wage index:

$5,771.26 × .98 × .25 ................................................................................................................................................................. 1,413.96

Blended per-beneficiary limitation for Dallas-MSA ............................................................................................................................ $5,382.96

Adjustment factor from Table 5 ......................................................................................................................................................... 1.00720

Adjusted blended per-beneficiary limitation for Dallas MSA ............................................................................................................. $5,521.72

COMPUTATION OF REVISED PER-BENEFICIARY LIMITATION FOR A NEW PROVIDER IN THE DALLAS MSA

National per-beneficiary limitation for Dallas MSA ............................................................................................................................ $3,376.61 1

Adjustment factor from Table 5 ......................................................................................................................................................... 1.00720

Adjusted national per-beneficiary limitation ....................................................................................................................................... $3,400.92

1Published limitation reflects 98 percent factor.

VIII. Schedules of Per-visit and Perbeneficiary Limitations

The schedules of limitations set forth

below apply to cost reporting periods

beginning on or after October 1, 1998.

The intermediaries will compute the

adjusted limitations using the wage

index(s) published in Tables 4a and 4b

of section X. for each MSA and/or non

MSA for which the HHA provides

services to Medicare beneficiaries. The

intermediary will notify each HHA it

services of its applicable limitations for

the area(s) where the HHA furnishes

HHA services to Medicare beneficiaries.

Each HHA’s aggregate limitations

cannot be determined prospectively, but

depends on each HHA’s Medicare

utilization (visits and unduplicated

census count) by location of the HHA

services furnished for the cost reporting

periods subject to this document.

Section 1861(v)(1)(L)(vi)(II) of the Act,

requires the per-beneficiary limitations

to be prorated among HHAs for

Medicare beneficiaries who use services

furnished by more than one HHA. The

per-beneficiary limitation will be

prorated based on a ratio of the number

of visits furnished to the individual

beneficiary by the HHA during its cost

reporting period to the total number of

visits furnished by all HHAs to that

individual beneficiary during the same

period.

The proration of the per-beneficiary

limitation will be done based on the

fraction of services the beneficiary

received from the HHA. For example, if

an HHA furnished 100 visits to an

individual beneficiary during its cost

reporting period ending September 30,

1999, and that same individual received

a total of 400 visits during that same

period, the HHA would count the

beneficiary as a .25 unduplicated census

count of Medicare patient for the cost

reporting period ending September 30,

1999.

The HHA costs that are subject to the

per-visit limitations include the cost of

medical supplies routinely furnished in

conjunction with patient care. Durable

medical equipment orthotic, prosthetic,

and other medical supplies directly

identifiable as services to an individual

patient are excluded from the per-visit

costs and are paid without regard to the

per-visit schedule of limitations. (See

Chapter IV of the Home Health Agency

Manual (HCFA Pub. II).) The HHA costs

that are subject to the per-beneficiary

limitations include the costs of medical

supplies routinely furnished and

nonroutine medical supplies furnished

in conjunction with patient care.

Durable medical equipment directly

identifiable as services to an individual
Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices 42925

patient are excluded from the perbeneficiary limitations and are paid

without regard to this schedule of perbeneficiary limitations.

The intermediary will determine the

aggregate limitations for each HHA

according to the location where the

services are furnished by the HHA.

Medicare payment is based on the lower

of the HHA’s total allowable Medicare

costs plus the allowable Medicare costs

of nonroutine medical supplies, the

aggregate per-visit limitation plus the

allowable Medicare costs of nonroutine

medical supplies, or the aggregate perbeneficiary limitation. An example of

how the aggregate limitations are

computed for an HHA providing HHA

service to Medicare beneficiaries in both

Dallas, Texas and rural Texas are as

follows:

Example: HHA X, an HHA located in

Dallas, TX, has 11,500 skilled nursing

visits, 4,300 physical therapy visits,

8,900 home health aide visits and an

unduplicated census count of 400

Medicare beneficiaries in the Dallas

MSA and 5,000 skilled nursing visits,

2,300 physical therapy visits, 4,300

home health aide visits and an

unduplicated census count of 200

Medicare beneficiaries in rural Texas

during its 12-month cost reporting

period ending September 30, 1999. The

unadjusted agency-specific perbeneficiary amount for the base period

(cost reporting period ending September

30, 1994) is $4,825.00. The aggregate

limitations are calculated as follows:

DETERMINING THE AGGREGATE PER-BENEFICIARY LIMITATION

MSA/Non-MSA area Per beneficiary limitation

Unduplicated

census

count of

Medicare

beneficiaries

Total per

beneficiary

limitation

Dallas, TX ............... (4,825.00 × 1.09090 × .98 × .75) plus ((4,588.36 × .9703) plus 1,319.21)) × .98 × .25 .......... 400 2,113,080

Rural, TX ................. (4,825.00 × 1.09090 × .98 × .75) plus ((4,588.36 × .7404) plus 1,319.21)) × .98 × .25 .......... 200 1,004,852

Aggregate Limitation .................................................................................................................................................... ..................... 3,117,932

DETERMINING THE AGGREGATE PER-VISIT LIMITATION

Area/type of visit Number of

visits

Per-visit

limit 1 Total limit

Dallas-MSA:.

Skilled nursing ................................................................................................................................... 11,550 108.12 1,248,786

Physical therapy ................................................................................................................................ 4,300 121.08 520,644

Home health aide .............................................................................................................................. 8,900 45.14 401,746

Rural Texas:

Skilled nursing ................................................................................................................................... 5,000 77.37 386,850

Physical therapy ................................................................................................................................ 2,300 88.95 204.585

Home health aide .............................................................................................................................. 4,300 43.06 185,158

Aggregate limitation .................................................................................................................................. .................... .................... 2,947,769

1The per-visit has been adjusted by the appropriate wage-index and the budget neutrality adjustment factor of 1.03.

For the cost reporting period ending

September 30, 1999, the HHA incurred

$2,850,000 in Medicare costs for the

discipline services and $325,000 for the

costs of Medicare nonroutine medical

supplies. Medicare reimbursement for

this HHA would be $3,117,932, which

is the lesser of the actual costs of

$2,850,000 plus the costs of nonroutine

medical supplies of $325,000

($3,175,000) or the aggregate per-visit

limitation of $2,947,769 plus the costs

of nonroutine medical supplies of

$325,000 ($3,272,769) or the aggregate

per-beneficiary limitation of $3,117,932.

Before the limitations are applied

during settlement of the cost report, the

HHA’s actual costs are reduced by the

amount of individual items of costs (for

example, administrative compensation

and contract services) that are found to

be excessive under the Medicare

principles of provider payment. That is,

the intermediary reviews the various

reported costs, taking into account all

the Medicare payment principles, for

example, the cost guidelines for

physical therapy furnished under

arrangements (see 42 CFR 413.106) and

the limitation on costs that are

substantially out of line with those of

comparable HHAs (see 42 CFR 413.9).

TABLE 3A.—PER-VISIT LIMITATIONS

Type of Visit Per-visit

limitation

Labor

portion

Nonlabor

portion 1

MSA(NECMA) location:

Skilled nursing care ........................................................................................................................... 108.17 $88.4 $19.73

Physical therapy ................................................................................................................................ $121.14 98.82 22.32

Speech therapy ................................................................................................................................. 126.52 103.01 23.51

Occupational therapy ........................................................................................................................ 123.10 99.81 23.29

Medical social services ..................................................................................................................... 167.78 136.78 31.00

Home health aide .............................................................................................................................. 45.16 36.88 8.28

NonMSA location:

Skilled nursing care ........................................................................................................................... 94.97 74.13 20.84

Physical therapy ................................................................................................................................ 107.26 83.56 23.70

Speech therapy ................................................................................................................................. 107.97 83.99 23.98

Occupational therapy ........................................................................................................................ 108.15 84.05 24.10
42926 Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices

TABLE 3A.—PER-VISIT LIMITATIONS—Continued

Type of Visit Per-visit

limitation

Labor

portion

Nonlabor

portion 1

Medical social services ..................................................................................................................... 130.69 101.38 29.31

Home health aides ............................................................................................................................ 43.84 34.21 9.63

1 Nonlabor portion of per-visit limitations for HHAs located in Alaska, Hawaii, Puerto Rico, and the Virgin Islands are increased by multiplying

them by the following cost-of-living adjustment factors.

Location Adjustment

factor

Alaska ...................................................................................................................................................................................................... 1.150

Hawaii:

County of Hawaii .............................................................................................................................................................................. 1.225

County of Hawaii .............................................................................................................................................................................. 1.150

County of Kauai ................................................................................................................................................................................ 1.200

County of Maui ................................................................................................................................................................................. 1.2225

County of Kalawao ........................................................................................................................................................................... 1.225

Puerto Rico .............................................................................................................................................................................................. 1.100

Virgin Islands ........................................................................................................................................................................................... 1.125

TABLE 3B.—STANDARDIZED PER-BENEFICIARY LIMITATION BY CENSUS REGION DIVISION, LABOR/NONLABOR

Census region division Labor

component

Nonlabor

component

New England (CT, ME, MA, NH, RI, VT) ........................................................................................................................ $2,749.52 $790.58

Middle Atlantic (NJ, NY, PA) ............................................................................................................................................ 2,037.88 585.96

South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV) ................................................................................................ 3,073.90 883.84

East North Central (IL, IN, MI, OH, WI) ........................................................................................................................... 2,492.70 716.73

East South Central (AL, KY, MS, TN) ............................................................................................................................. 4,726.25 1,358.95

West North Central (IA, KS, MN, MO, NE, ND, SD) ....................................................................................................... 2,394.14 688.39

West South Central (AR, LA, OK, TX) ............................................................................................................................ 4,588.26 1,319.27

Mountain (AZ, CO, ID, MT, NV, NM, UT, WY) ................................................................................................................ 3,023.85 869.45

Pacific (AK, CA, HI, OR, WA) .......................................................................................................................................... 2,342.45 673.53

TABLE 3C.—STANDARDIZED PER-BENEFICIARY LIMITATION FOR NEW AGENCIES AND AGENCIES WITHOUT A 12–MONTH

COST REPORT ENDING DURING FEDERAL FY 1994

Labor

component

Nonlabor

component

National ............................................................................................................................................................................ $2,684.47 $771.87

TABLE 3D.—STANDARDIZED PER-BENEFICIARY LIMITATIONS FOR PUERTO RICO AND GUAM

Labor

component

Nonlabor

component

Puerto Rico ...................................................................................................................................................................... $1,996.22 $573.97

Guam ................................................................................................................................................................................ 1,929.22 554.71

IX. Wage Indexes

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS

Urban area

(Constituent counties or county

equivalents)

Wage

index

0040 Abilene, TX .......................... 0.8287

Taylor, TX

0060 Aguadilla, PR ...................... 0.4188

Aguada, PR

Aguadilla, PR

Moca, PR

0080 Akron, OH ........................... 0.9772

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

Portage, OH

Summit, OH

0120 Albany, GA .......................... 0.7914

Dougherty, GA

Lee, GA

0160 Albany-Schenectady-Troy,

NY ............................................... 0.8480

Albany, NY

Montgomery, NY

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

Rensselaer, NY

Saratoga, NY

Schenectady, NY

Schoharie, NY

0200 Albuquerque, NM ................ 0.9309

Bernalillo, NM

Sandoval, NM

Valencia, NM

0220 Alexandria, LA ..................... 0.8162
Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices 42927

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

Rapides, LA

0240 Allentown-Bethlehem-Easton, PA ........................................ 1.0086

Carbon, PA

Lehigh, PA

Northampton, PA

0280 Altoona, PA ......................... 0.9137

Blair, PA

0320 Amarillo, TX ......................... 0.9425

Potter, TX

Randall, TX

0380 Anchorage, AK .................... 1.2842

Anchorage, AK

0440 Ann Arbor, MI ...................... 1.1785

Lenawee, MI

Livingston, MI

Washtenaw, MI

0450 Anniston, AL ........................ 0.8266

Calhoun, AL

0460 Appleton-Oshkosh-Neenah,

WI ................................................ 0.8996

Calumet, WI

Outagamie, WI

Winnebago, WI

0470 Arecibo, PR ......................... 0.4218

Arecibo, PR

Camuy, PR

Hatillo, PR

0480 Asheville, NC ....................... 0.9072

Buncombe, NC

Madison, NC

0500 Athens, GA .......................... 0.9087

Clarke, GA

Madison, GA

Oconee, GA

0520 Atlanta, GA .......................... 0.9823

Barrow, GA

Bartow, GA

Carroll, GA

Cherokee, GA

Clayton, GA

Cobb, GA

Coweta, GA

DeKalb, GA

Douglas, GA

Fayette, GA

Forsyth, GA

Fulton, GA

Gwinnett, GA

Henry, GA

Newton, GA

Paulding, GA

Pickens, GA

Rockdale, GA

Spalding, GA

Walton, GA

0560 Atlantic City-Cape May, NJ 1.1155

Atlantic City, NJ

Cape May, NJ

0600 Augusta-Aiken, GA–SC ....... 0.9333

Columbia, GA

McDuffie, GA

Richmond, GA

Aiken, SC

Edgefield, SC

0640 Austin-San Marcos, TX ....... 0.9133

Bastrop, TX

Caldwell, TX

Hays, TX

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

Travis, TX

Williamson, TX

0680 Bakersfield, CA ................... 1.0014

Kern, CA

0720 Baltimore, MD ..................... 0.9689

Anne Arundel, MD

Baltimore, MD

Baltimore City, MD

Carroll, MD

Harford, MD

Howard, MD

Queen Anne, MD

0733 Bangor, ME ......................... 0.9478

Penobscot, ME

0743 Barnstable-Yarmouth, MA ... 1.4291

Barnstable, MA

0760 Baton Rouge, LA ................. 0.8382

Ascension, LA

East Baton Rouge, LA

Livingston, LA

West Baton Rouge, LA

0840 Beaumont-Port Arthur, TX .. 0.8593

Hardin, TX

Jefferson, TX

Orange, TX

0860 Bellingham, WA ................... 1.1221

Whatcom, WA

0870 Benton Harbor, MI ............... 0.8634

Berrien, MI

0875 Bergen-Passaic, NJ ............ 1.2156

Bergen, NJ

Passaic, NJ

0880 Billings, MT .......................... 0.9783

Yellowstone, MT

0920 Biloxi-Gulfport-Pascagoula,

MS ............................................... 0.8415

Hancock, MS

Harrison, MS

Jackson, MS

0960 Binghamton, NY .................. 0.8914

Broome, NY

Tioga, NY

1000 Birmingham, AL ................... 0.9005

Blount, AL

Jefferson, AL

St. Clair, AL

Shelby, AL

1010 Bismarck, ND ...................... 0.7695

Burleigh, ND

Morton, ND

1020 Bloomington, IN ................... 0.9128

Monroe, IN

1040 Bloomington-Normal, IL ...... 0.8733

McLean, IL

1080 Boise City, ID ...................... 0.8856

Ada, ID

Canyon, ID

1123 Boston-Worcester Lawrence-Lowell-Brockton, MA–NH .. 1.1506

Bristol, MA

Essex, MA

Middlesex, MA

Norfolk, MA

Plymouth, MA

Suffolk, MA

Worcester, MA

Hillsborough, NH

Merrimack, NH

Rockingham, NH

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

Strafford, NH

1125 Boulder-Longmont, CO ....... 1.0015

Boulder, CO

1145 Brazoria, TX ........................ 0.9341

Brazoria, TX

1150 Bremerton, WA .................... 1.0999

Kitsap, WA

1240 Brownsville-Harlingen-San

Benito, TX ................................... 0.8740

Cameron, TX

1260 Bryan-College Station, TX .. 0.8571

Brazos, TX

1280 Buffalo-Niagara Falls, NY ... 0.9272

Erie, NY

Niagara, NY

1303 Burlington, VT ..................... 1.0142

Chittenden, VT

Franklin, VT

Grand Isle, VT

1310 Caguas, PR ......................... 0.4459

Caguas, PR

Cayey, PR

Cidra, PR

Gurabo, PR

San Lorenzo, PR

1320 Canton-Massillon, OH ......... 0.8961

Carroll, OH

Stark, OH

1350 Casper, WY ......................... 0.9013

Natrona, WY

1360 Cedar Rapids, IA ................. 0.8529

Linn, IA

1400 Champaign-Urbana, IL ........ 0.8824

Champaign, IL

1440 Charleston-North Charleston, SC ........................................ 0.8807

Berkeley, SC

Charleston, SC

Dorchester, SC

1450 Charleston, WV ................... 0.9142

Kanawha, WV

Putnam, WV

1520 Charlotte-Gastonia-Rock

Hill, NC–SC ................................. 0.9710

Cabarrus, NC

Gaston, NC

Lincoln, NC

Mecklenburg, NC

Rowan, NC

Union, NC

York, SC

1540 Charlottesville, VA ............... 0.9051

Albemarle, VA

Charlottesville City, VA

Fluvanna, VA

Greene, VA

1560 Chattanooga, TN–GA .......... 0.8658

Catoosa, GA

Dade, GA

Walker, GA

Hamilton, TN

Marion, TN

1580 Cheyenne, WY .................... 0.7555

Laramie, WY

1600 Chicago, IL .......................... 1.0860

Cook, IL

DeKalb, IL

DuPage, IL

Grundy, IL
42928 Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

Kane, IL

Kendall, IL

Lake, IL

McHenry, IL

Will, IL

1620 Chico-Paradise, CA ............. 1.0429

Butte, CA

1640 Cincinnati, OH–KY–IN ......... 0.9474

Dearborn, IN

Ohio, IN

Boone, KY

Campbell, KY

Gallatin, KY

Grant, KY

Kenton, KY

Pendleton, KY

Brown, OH

Clermont, OH

Hamilton, OH

Warren, OH

1660 Clarksville-Hopkinsville, TN–

KY ................................................ 0.7852

Christian, KY

Montgomery, TN

1680 Cleveland-Lorain-Elyria, OH 0.9804

Ashtabula, OH

Cuyahoga, OH

Geauga, OH

Lake, OH

Lorain, OH

Medina, OH

1720 Colorado Springs, CO ......... 0.9316

El Paso, CO

1740 Columbia, MO ..................... 0.9001

Boone, MO

1760 Columbia, SC ...................... 0.9192

Lexington, SC

Richland, SC

1800 Columbus, GA–AL .............. 0.8288

Russell, AL

Chattanoochee, GA

Harris, GA

Muscogee, GA

1840 Columbus, OH ..................... 0.9793

Delaware, OH

Fairfield, OH

Franklin, OH

Licking, OH

Madison, OH

Pickaway, OH

1880 Corpus Christi, TX ............... 0.8945

Nueces, TX

San Patricio, TX

1900 Cumberland, MD–WV ......... 0.8822

Allegany, MD

Mineral, WV

1920 Dallas, TX ............................ 0.9703

Collin, TX

Dallas, TX

Denton, TX

Ellis, TX

Henderson, TX

Hunt, TX

Kaufman, TX

Rockwall, TX

1950 Danville, VA ......................... 0.8146

Danville City, VA

Pittsylvania, VA

1960 Davenport-Rock Island-Moline, IA–IL .................................... 0.8405

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

Scott, IA

Henry, IL

Rock Island, IL

2000 Dayton-Springfield, OH ....... 0.9584

Clark, OH

Greene, OH

Miami, OH

Montgomery, OH

2020 Daytona Beach, FL ............. 0.8375

Flagler, FL

Volusia, FL

2030 Decatur, AL ......................... 0.8286

Lawrence, AL

Morgan, AL

2040 Decatur, IL ........................... 0.7915

Macon, IL

2080 Denver, CO ......................... 1.0386

Adams, CO

Arapahoe, CO

Denver, CO

Douglas, CO

Jefferson, CO

2120 Des Moines, IA .................... 0.8837

Dallas, IA

Polk, IA

Warren, IA

2160 Detroit, MI ............................ 1.0825

Lapeer, MI

Macomb, MI

Monroe, MI

Oakland, MI

St. Clair, MI

Wayne, MI

2180 Dothan, AL .......................... 0.8070

Dale, AL

Houston, AL

2190 Dover, DE ............................ 0.9303

Kent, DE

2200 Dubuque, IA ........................ 0.8088

Dubuque, IA

2240 Duluth-Superior, MN–WI ..... 0.9779

St. Louis, MN

Douglas, WI

2281 Dutchess County, NY .......... 1.0632

Dutchess, NY

2290 Eau Claire, WI ..................... 0.8764

Chippewa, WI

Eau Claire, WI

2320 El Paso, TX ......................... 1.0123

El Paso, TX

2330 Elkhart-Goshen, IN .............. 0.9081

Elkhart, IN

2335 Elmira, NY ........................... 0.8247

Chemung, NY

2340 Enid, OK .............................. 0.7962

Garfield, OK

2360 Erie, PA ............................... 0.8862

Erie, PA

2400 Eugene-Springfield, OR ...... 1.1435

Lane, OR

2440 Evansville-Henderson, IN–

KY ................................................ 0.8641

Posey, IN

Vanderburgh, IN

Warrick, IN

Henderson, KY

2520 Fargo-Moorhead, ND–MN ... 0.8837

Clay, MN

Cass, ND

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

2560 Fayetteville, NC ................... 0.8734

Cumberland, NC

2580 Fayetteville-Springdale-Rogers, AR ........................................ 0.7461

Benton, AR

Washington, AR

2620 Flagstaff, AZ–UT ................. 0.9115

Coconino, AZ

Kane, UT

2640 Flint, MI ............................... 1.1171

Genesee, MI

2650 Florence, AL ........................ 0.7551

Colbert, AL

Lauderdale, AL

2655 Florence, SC ....................... 0.8711

Florence, SC

2670 Fort Collins-Loveland, CO ... 1.0248

Larimer, CO

2680 Ft. Lauderdale, FL ............... 1.0448

Broward, FL

2700 Fort Myers-Cape Coral, FL 0.8788

Lee, FL

2710 Fort Pierce-Port St. Lucie,

FL ................................................ 1.0257

Martin, FL

St. Lucie, FL

2720 Fort Smith, AR–OK ............. 0.7769

Crawford, AR

Sebastian, AR

Sequoyah, OK

2750 Fort Walton Beach, FL ........ 0.8765

Okaloosa, FL

2760 Fort Wayne, IN .................... 0.8901

Adams, IN

Allen, IN

DeKalb, IN

Huntington, IN

Wells, IN

Whitley, IN

2800 Forth Worth-Arlington, TX ... 0.9979

Hood, TX

Johnson, TX

Parker, TX

Tarrant, TX

2840 Fresno, CA .......................... 1.0607

Fresno, CA

Madera, CA

2880 Gadsden, AL ....................... 0.8815

Etowah, AL

2900 Gainesville, FL .................... 0.9616

Alachua, FL

2920 Galveston-Texas City, TX ... 1.0564

Galveston, TX

2960 Gary, IN ............................... 0.9633

Lake, IN

Porter, IN

2975 Glens Falls, NY ................... 0.8386

Warren, NY

Washington, NY

2980 Goldsboro, NC .................... 0.8443

Wayne, NC

2985 Grand Forks, ND–MN ......... 0.8745

Polk, MN

Grand Forks, ND

2995 Grand Junction, CO ............ 0.9090

Mesa, CO

3000 Grand Rapids-MuskegonHolland, MI .................................. 1.0147

Allegan, MI
Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices 42929

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

Kent, MI

Muskegon, MI

Ottawa, MI

3040 Great Falls, MT ................... 0.8803

Cascade, MT

3060 Greeley, CO ........................ 1.0097

Weld, CO

3080 Green Bay, WI .................... 0.9097

Brown, WI

3120 Greensboro-Winston-SalemHigh Point, NC ............................ 0.9351

Alamance, NC

Davidson, NC

Davie, NC

Forsyth, NC

Guilford, NC

Randolph, NC

Stokes, NC

Yadkin, NC

3150 Greenville, NC ..................... 0.9064

Pitt, NC

3160 Greenville-Spartanburg-Anderson, SC .................................. 0.9059

Anderson, SC

Cherokee, SC

Greenville, SC

Pickens, SC

Spartanburg, SC

3180 Hagerstown, MD ................. 0.9681

Washington, MD

3200 Hamilton-Middletown, OH ... 0.8767

Butler, OH

3240 Harrisburg-Lebanon-Carlisle, PA ....................................... 1.0187

Cumberland, PA

Dauphin, PA

Lebanon, PA

Perry, PA

3283 Hartford, CT ........................ 1.2562

Hartford, CT

Litchfield, CT

Middlesex, CT

Tolland, CT

3285 Hattiesburg, MS .................. 0.7192

Forrest, MS

Lamar, MS

3290 Hickory-Morganton-Lenoir,

NC ............................................... 0.8686

Alexander, NC

Burke, NC

Caldwell, NC

Catawba, NC

3320 Honolulu, HI ........................ 1.1816

Honolulu, HI

3350 Houma, LA .......................... 0.7854

Lafourche, LA

Terrebonne, LA

3360 Houston, TX ........................ 0.9855

Chambers, TX

Fort Bend, TX

Harris, TX

Liberty, TX

Montgomery, TX

Waller, TX

3400 Huntington-Ashland, WV–

KY–OH ........................................ 0.9160

Boyd, KY

Carter, KY

Greenup, KY

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

Lawrence, OH

Cabell, WV

Wayne, WV

3440 Huntsville, AL ...................... 0.8485

Limestone, AL

Madison, AL

3480 Indianapolis, IN ................... 0.9848

Boone, IN

Hamilton, IN

Hancock, IN

Hendricks, IN

Johnson, IN

Madison, IN

Marion, IN

Morgan, IN

Shelby, IN

3500 Iowa City, IA ........................ 0.9413

Johnson, IA

3520 Jackson, MI ......................... 0.9052

Jackson, MI

3560 Jackson, MS ........................ 0.7760

Hinds, MS

Madison, MS

Rankin, MS

3580 Jackson, TN ........................ 0.8522

Madison, TN

Chester, TN

3600 Jacksonville, FL ................... 0.8969

Clay, FL

Duval, FL

Nassau, FL

St. Johns, FL

3605 Jacksonville, NC .................. 0.6973

Onslow, NC

3610 Jamestown, NY ................... 0.7552

Chautaqua, NY

3620 Janesville-Beloit, WI ............ 0.8824

Rock, WI

3640 Jersey City, NJ .................... 1.1412

Hudson, NJ

3660 Johnson City-Kingsport-Bristol, TN–VA ................................... 0.9114

Carter, TN

Hawkins, TN

Sullivan, TN

Unicoi, TN

Washington, TN

Bristol City, VA

Scott, VA

Washington, VA

3680 Johnstown, PA .................... 0.8378

Cambria, PA

Somerset, PA

3700 Jonesboro, AR .................... 0.7443

Craighead, AR

3710 Joplin, MO ........................... 0.7510

Jasper, MO

Newton, MO

3720 Kalamazoo-Battlecreek, MI 1.0668

Calhoun, MI

Kalamazoo, MI

Van Buren, MI

3740 Kankakee, IL ....................... 0.8653

Kankakee, IL

3760 Kansas City, KS–MO .......... 0.9564

Johnson, KS

Leavenworth, KS

Miami, KS

Wyandotte, KS

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

Cass, MO

Clay, MO

Clinton, MO

Jackson, MO

Lafayette, MO

Platte, MO

Ray, MO

3800 Kenosha, WI ........................ 0.9196

Kenosha, WI

3810 Killeen-Temple, TX .............. 1.0252

Bell, TX

Coryell, TX

3840 Knoxville, TN ....................... 0.8831

Anderson, TN

Blount, TN

Knox, TN

Loudon, TN

Sevier, TN

Union, TN

3850 Kokomo, IN ......................... 0.8416

Howard, IN

Tipton, IN

3870 La Crosse, WI–MN .............. 0.8749

Houston, MN

La Crosse, WI

3880 Lafayette, LA ....................... 0.8206

Acadia, LA

Lafayette, LA

St. Landry, LA

St. Martin, LA

3920 Lafayette, IN ........................ 0.9174

Clinton, IN

Tippecanoe, IN

3960 Lake Charles, LA ................ 0.7776

Calcasieu, LA

3980 Lakeland-Winter Haven, FL 0.8806

Polk, FL

4000 Lancaster, PA ...................... 0.9481

Lancaster, PA

4040 Lansing-East Lansing, MI ... 1.0088

Clinton, MI

Eaton, MI

Ingham, MI

4080 Laredo, TX .......................... 0.7325

Webb, TX

4100 Las Cruces, NM .................. 0.8646

Dona Ana, NM

4120 Las Vegas, NV–AZ ............. 1.0592

Mohave, AZ

Clark, NV

Nye, NV

4150 Lawrence, KS ...................... 0.8608

Douglas, KS

4200 Lawton, OK ......................... 0.9045

Comanche, OK

4243 Lewiston-Auburn, ME .......... 0.9536

Androscoggin, ME

4280 Lexington, KY ...................... 0.8390

Bourbon, KY

Clark, KY

Fayette, KY

Jessamine, KY

Madison, KY

Scott, KY

Woodford, KY

4320 Lima, OH ............................. 0.9185

Allen, OH

Auglaize, OH

4360 Lincoln, NE .......................... 0.9231
42930 Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

Lancaster, NE

4400 Little Rock-North Little

Rock, AR ..................................... 0.8490

Faulkner, AR

Lonoke, AR

Pulaski, AR

Saline, AR

4420 Longview-Marshall, TX ........ 0.8613

Gregg, TX

Harrison, TX

Upshur, TX

4480 Los Angeles-Long Beach,

CA ............................................... 1.2232

Los Angeles, CA

4520 Louisville, KY–IN ................. 0.9507

Clark, IN

Floyd, IN

Harrison, IN

Scott, IN

Bullitt, KY

Jefferson, KY

Oldham, KY

4600 Lubbock, TX ........................ 0.8400

Lubbock, TX

4640 Lynchburg, VA ..................... 0.8228

Amherst, VA

Bedford, VA

Bedford City, VA

Campbell, VA

Lynchburg City, VA

4680 Macon, GA .......................... 0.9227

Bibb, GA

Houston, GA

Jones, GA

Peach, GA

Twiggs, GA

4720 Madison, WI ........................ 1.0055

Dane, WI

4800 Mansfield, OH ..................... 0.8639

Crawford, OH

Richland, OH

4840 Mayaguez, PR ..................... 0.4475

Anasco, PR

Cabo Rojo, PR

Hormigueros, PR

Mayaguez, PR

Sabana Grande, PR

San German, PR

4880 McAllen-Edinburg-Mission,

TX ................................................ 0.8371

Hidalgo, TX

4890 Medford-Ashland, OR ............ 1.0354

Jackson, OR

4900 Melbourne-Titusville-Palm

Bay, FL ........................................ 0.8819

Brevard, Fl

4920 Memphis, TN–AR–MS ........ 0.8589

Crittenden, AR

DeSoto, MS

Fayette, TN

Shelby, TN

Tipton, TN

4940 Merced, CA ......................... 1.0947

Merced, CA

5000 Miami, FL ............................ 0.9859

Dade, FL

5015 Middlesex-SomersetHunterdon, NJ ............................. 1.1059

Hunterdon, NJ

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

Middlesex, NJ

Somerset, NJ

5080 Milwaukee-Waukesha, WI ... 0.9819

Milwaukee, WI

Ozaukee, WI

Washington, WI

Waukesha, WI

5120 Minneapolis-St. Paul, MN–

WI ................................................ 1.0733

Anoka, MN

Carver, MN

Chisago, MN

Dakota, MN

Hennepin, MN

Isanti, MN

Ramsey, MN

Scott, MN

Sherburne, MN

Washington, MN

Wright, MN

Pierce, WI

St. Croix, WI

5160 Mobile, AL ........................... 0.8455

Baldwin, AL

Mobile, AL

5170 Modesto, CA ....................... 1.0794

Stanislaus, CA

5190 Monmouth-Ocean, NJ ......... 1.0934

Monmouth, NJ

Ocean, NJ

5200 Monroe, LA .......................... 0.8414

Ouachita, LA

5240 Montgomery, AL .................. 0.7671

Autauga, AL

Elmore, AL

Montgomery, AL

5280 Muncie, IN ........................... 0.9173

Delaware, IN

5330 Myrtle Beach, SC ................ 0.8072

Horry, SC

5345 Naples, FL ........................... 1.0109

Collier, FL

5360 Nashville, TN ....................... 0.9182

Cheatham, TN

Davidson, TN

Dickson, TN

Robertson, TN

Rutherford TN

Sumner, TN

Williamson, TN

Wilson, TN

5380 Nassau-Suffolk, NY ............. 1.3807

Nassau, NY

Suffolk, NY

5483 New Haven-BridgeportStamford-Danbury-Waterbury,

CT ................................................ 1.2618

Fairfield, CT

New Haven, CT

5523 New London-Norwich, CT ... 1.2013

New London, CT

5560 New Orleans, LA ................. 0.9566

Jefferson, LA

Orleans, LA

Plaquemines, LA

St. Bernard, LA

St. Charles, LA

St. James, LA

St. John Baptist, LA

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

St. Tammany, LA

5600 New York, NY ..................... 1.4449

Bronx, NY

Kings, NY

New York, NY

Putnam, NY

Queens, NY

Richmond, NY

Rockland, NY

Westchester, NY

5640 Newark, NJ .......................... 1.1980

Essex, NJ

Morris, NJ

Sussex, NJ

Union, NJ

Warren, NJ

5660 Newburgh, NY–PA .............. 1.1283

Orange, NY

Pike, PA

5720 Norfolk-Virginia Beach-Newport News, VA–NC ...................... 0.8316

Currituck, NC

Chesapeake City, VA

Gloucester, VA

Hampton City, VA

Isle of Wight, VA

James City, VA

Mathews, VA

Newport News City, VA

Norfolk City, VA

Poquoson City, VA

Portsmouth City, VA

Suffolk City, VA

Virginia Beach City, VA

Williamsburg City, VA

York, VA

5775 Oakland, CA ........................ 1.5068

Alameda, CA

Contra Costa, CA

5790 Ocala, FL ........................... 0.9032

Marion, FL

5800 Odessa-Midland, TX ........... 0.8660

Ector, TX

Midland, TX

5880 Oklahoma City, OK ............. 0.8481

Canadian, OK

Cleveland, OK

Logan, OK

McClain, OK

Oklahoma, OK

Pottawatomie, OK

5910 Olympia, WA ....................... 1.0901

Thurston, WA

5920 Omaha, NE–IA .................... 0.9421

Pottawattamie, IA

Cass, NE

Douglas, NE

Sarpy, NE

Washington, NE

5945 Orange County, CA ............. 1.1605

Orange, CA

5960 Orlando, FL ......................... 0.9397

Lake, FL

Orange, FL

Osceola, FL

Seminole, FL

5990 Owensboro, KY ................... 0.7480

Daviess, KY

6015 Panama City, FL ................. 0.8337
Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices 42931

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

Bay, FL

6020 Parkersburg-Marietta, WV–

OH ............................................... 0.8046

Washington, OH

Wood, WV

6080 Pensacola, FL ..................... 0.8193

Escambia, FL

Santa Rosa, FL

6120 Peoria-Pekin, IL ................... 0.8571

Peoria, IL

Tazewell, IL

Woodford, IL

6160 Philadelphia, PA–NJ ........... 1.1398

Burlington, NJ

Camden, NJ

Gloucester, NJ

Salem, NJ

Bucks, PA

Chester, PA

Delaware, PA

Montgomery, PA

Philadelphia, PA

6200 Phoenix-Mesa, AZ ............... 0.9606

Maricopa, AZ

Pinal, AZ

6240 Pine Bluff, AR ...................... 0.7826

Jefferson, AR

6280 Pittsburgh, PA ..................... 0.9725

Allegheny, PA

Beaver, PA

Butler, PA

Fayette, PA

Washington, PA

Westmoreland, PA

6323 Pittsfield, MA ...................... 1.0960

Berkshire, MA

6340 Pocatello, ID ........................ 0.9586

Bannock ID

6360 Ponce, PR ........................... 0.4589

Guayanilla, PR

Juana Diaz, PR

Penuelas, PR

Ponce, PR

Villalba, PR

Yauco, PR

6403 Portland, ME ....................... 0.9627

Cumberland, ME

Sagadahoc, ME

York, ME

6440 Portland-Vancouver, OR–

WA ............................................... 1.1344

Clackamas, OR

Columbia, OR

Multnomah, OR

Washington, OR

Yamhill, OR

Clark, WA

6483 Providence-Warwick-Pawtucket, RI ..................................... 1.1049

Bristol, RI

Kent, RI

Newport, RI

Providence, RI

Washington, RI

Statewide, RI

6520 Provo-Orem, UT .................. 1.0073

Utah, UT

6560 Pueblo, CO .......................... 0.8450

Pueblo, CO

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

6580 Punta Gorda, FL ................. 0.8725

Charlotte, FL

6600 Racine, WI ........................... 0.8934

Racine, WI

6640 Raleigh-Durham-Chapel Hill,

NC ............................................... 0.9818

Chatham, NC

Durham, NC

Franklin, NC

Johnston, NC

Orange, NC

Wake, NC

6660 Rapid City, SD .................... 0.8345

Pennington, SD

6680 Reading, PA ........................ 0.9516

Berks, PA

6690 Redding, CA ........................ 1.1790

Shasta, CA

6720 Reno, NV ............................. 1.0768

Washoe, NV

6740 Richland-Kennewick-Pasco,

WA ............................................... 0.9918

Benton, WA

Franklin, WA

6760 Richmond-Petersburg, VA .. 0.9152

Charles City County, VA

Chesterfield, VA

Colonial Heights City, VA

Dinwiddie, VA

Goochland, VA

Hanover, VA

Henrico, VA

Hopewell City, VA

New Kent, VA

Petersburg City, VA

Powhatan, VA

Prince George, VA

Richmond City, VA

6780 Riverside-San Bernardino,

CA ............................................... 1.1307

Riverside, CA

San Bernardino, CA

6800 Roanoke, VA ....................... 0.8402

Botetourt, VA

Roanoke, VA

Roanoke City, VA

Salem City, VA

6820 Rochester, MN .................... 1.0502

Olmsted, MN

6840 Rochester, NY ..................... 0.9524

Genesee, NY

Livingston, NY

Monroe, NY

Ontario, NY

Orleans, NY

Wayne, NY

6880 Rockford, IL ......................... 0.9081

Boone, IL

Ogle, IL

Winnebago, IL

6895 Rocky Mount, NC ................ 0.9029

Edgecombe, NC

Nash, NC

6920 Sacramento, CA .................. 1.2202

El Dorado, CA

Placer, CA

Sacramento, CA

6960 Saginaw-Bay City-Midland,

MI ................................................ 0.9564

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

Bay, MI

Midland, MI

Saginaw, MI

6980 St. Cloud, MN ...................... 0.9544

Benton, MN

Stearns, MN

7000 St. Joseph, MO ................... 0.8366

Andrews, MO

Buchanan, MO

7040 St. Louis, MO–IL ................. 0.9130

Clinton, IL

Jersey, IL

Madison, IL

Monroe, IL

St. Clair, IL

Franklin, MO

Jefferson, MO

Lincoln, MO

St. Charles, MO

St. Louis, MO

St. Louis City, MO

Warren, MO

7080 Salem, OR ........................... 0.9935

Marion, OR

Polk, OR

7120 Salinas, CA ......................... 1.4513

Monterey, CA

7160 Salt Lake City-Ogden, UT ... 0.9857

Davis, UT

Salt Lake, UT

Weber, UT

7200 San Angelo, TX ................... 0.7780

Tom Green, TX

7240 San Antonio, TX .................. 0.8499

Bexar, TX

Comal, TX

Guadalupe, TX

Wilson, TX

7320 San Diego, CA .................... 1.2193

San Diego, CA

7360 San Francisco, CA .............. 1.4180

Marin, CA

San Francisco, CA

San Mateo, CA

7400 San Jose, CA ...................... 1.4332

Santa Clara, CA

7440 San Juan-Bayamon, PR ..... 0.4625

Aguas Buenas, PR

Barceloneta, PR

Bayamon, PR

Canovanas, PR

Carolina, PR

Catano, PR

Ceiba, PR

Comerio, PR

Corozal, PR

Dorado, PR

Fajardo, PR

Florida, PR

Guaynabo, PR

Humacao, PR

Juncos, PR

Los Piedras, PR

Loiza, PR

Luguillo, PR

Manati, PR

Morovis, PR

Naguabo, PR

Naranjito, PR
42932 Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

Rio Grande, PR

San Juan, PR

Toa Alta, PR

Toa Baja, PR

Trujillo Alto, PR

Vega Alta, PR

Vega Baja, PR

Yabucoa, PR

7460 San Luis ObispoAtascadero-Paso Robles, CA ..... 1.1374

San Luis Obispo, CA

7480 Santa Barbara-Santa MariaLompoc, CA ................................ 1.0688

Santa Barbara, CA

7485 Santa Cruz-Watsonville, CA 1.4187

Santa Cruz, CA

7490 Santa Fe, NM ...................... 1.0332

Los Alamos, NM

Santa Fe, NM

7500 Santa Rosa, CA .................. 1.2815

Sonoma, CA

7510 Sarasota-Bradenton, FL ...... 0.9757

Manatee, FL

Sarasota, FL

7520 Savannah, GA ..................... 0.8638

Bryan, GA

Chatham, GA

Effingham, GA

7560 Scranton—Wilkes-Barre—

Hazleton, PA ............................... 0.8539

Columbia, PA

Lackawanna, PA

Luzerne, PA

Wyoming, PA

7600 Seattle-Bellevue-Everett,

WA ............................................... 1.1339

Island, WA

King, WA

Snohomish, WA

7610 Sharon, PA .......................... 0.8783

Mercer, PA

7620 Sheboygan, WI .................... 0.7862

Sheboygan, WI

7640 Sherman-Denison, TX ......... 0.8499

Grayson, TX

7680 Shreveport-Bossier City, LA 0.9381

Bossier, LA

Caddo, LA

Webster, LA

7720 Sioux City, IA–NE ............... 0.8031

Woodbury, IA

Dakota, NE

17760 Sioux Falls, SD ................. 0.8712

Lincoln, SD

Minnehaha, SD

7800 South Bend, IN .................... 0.9868

St. Joseph, IN

7840 Spokane, WA ...................... 1.0486

Spokane, WA

7880 Springfield, IL ...................... 0.8713

Menard, IL

Sangamon, IL

7920 Springfield, MO ................... 0.7989

Christian, MO

Greene, MO

Webster, MO

8003 Springfield, MA .................... 1.0740

Hampden, MA

Hampshire, MA

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

8050 State College, PA ................ 0.9635

Centre, PA

8080 Steubenville-Weirton, OH–

WV ............................................... 0.8645

Jefferson, OH

Brooke, WV

Hancock, WV

8120 Stockton-Lodi, CA ............... 1.1496

San Joaquin, CA

8140 Sumter, SC .......................... 0.7842

Sumter, SC

8160 Syracuse, NY ...................... 0.9464

Cayuga, NY

Madison, NY

Onondaga, NY

Oswego, NY

8200 Tacoma, WA ....................... 1.1016

Pierce, WA

8240 Tallahassee, FL ................... 0.8832

Gadsden, FL

Leon, FL

8280 Tampa-St. PetersburgClearwater, FL ............................. 0.9103

Hernando, FL

Hillsborough, FL

Pasco, FL

Pinellas, FL

8320 Terre Haute, IN ................... 0.8614

Clay, IN

Vermillion, IN

Vigo, IN

8360 Texarkana, AR-Texarkana,

TX ................................................ 0.8664

Miller, AR

Bowie, TX

8400 Toledo, OH .......................... 1.0390

Fulton, OH

Lucas, OH

Wood, OH

8440 Topeka, KS ......................... 0.9438

Shawnee, KS

8480 Trenton, NJ ......................... 1.0380

Mercer, NJ

8520 Tucson, AZ .......................... 0.9180

Pima, AZ

8560 Tulsa, OK ............................ 0.8074

Creek, OK

Osage, OK

Rogers, OK

Tulsa, OK

Wagoner, OK

8600 Tuscaloosa, AL ................... 0.8187

Tuscaloosa, AL

8640 Tyler, TX .............................. 0.9567

Smith, TX

8680 Utica-Rome, NY .................. 0.8398

Herkimer, NY

Oneida, NY

8720 Vallejo-Fairfield-Napa, CA ... 1.3754

Napa, CA

Solano, CA

8735 Ventura, CA ......................... 1.0946

Ventura, CA

8750 Victoria, TX .......................... 0.8474

Victoria, TX

8760 Vineland-Millville-Bridgeton,

NJ ................................................ 1.0110

Cumberland, NJ

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

8780 Visalia-Tulare-Porterville,

CA ............................................... 0.9924

Tulare, CA

8800 Waco, TX ............................ 0.7696

McLennan, TX

8840 Washington, DC–MD–VA–

WV ............................................... 1.0911

District of Columbia, DC

Calvert, MD

Charles, MD

Frederick, MD

Montgomery, MD

Prince Georges, MD

Alexandria City, VA

Arlington, VA

Clarke, VA

Culpepper, VA

Fairfax, VA

Fairfax City, VA

Falls Church City, VA

Fauquier, VA

Fredericksburg City, VA

King George, VA

Loudoun, VA

Manassas City, VA

Manassas Park City, VA

Prince William, VA

Spotsylvania, VA

Stafford, VA

Warren, VA

Berkeley, WV

Jefferson, WV

8920 Waterloo-Cedar Falls, IA ..... 0.8640

Black Hawk, IA

8940 Wausau, WI ......................... 1.0545

Marathon, WI

8960 West Palm Beach-Boca

Raton, FL .................................... 1.0372

Palm Beach, FL

9000 Wheeling, OH–WV .............. 0.7707

Belmont, OH

Marshall, WV

Ohio, WV

9040 Wichita, KS .......................... 0.9403

Butler, KS

Harvey, KS

Sedgwick, KS

9080 Wichita Falls, TX ................. 0.7646

Archer, TX

Wichita, TX

9140 Williamsport, PA .................. 0.8548

Lycoming, PA

9160 Wilmington-Newark, DE–MD 1.1538

New Castle, DE

Cecil, MD

9200 Wilmington, NC ................... 0.9322

New Hanover, NC

Brunswick, NC

9260 Yakima, WA ........................ 1.0102

Yakima, WA

9270 Yolo, CA .............................. 1.1431

Yolo, CA

9280 York, PA .............................. 0.9415

York, PA

9320 Youngstown-Warren, OH .... 0.9937

Columbiana, OH

Mahoning, OH

Trumbull, OH

9340 Yuba City, CA ..................... 1.0324
Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices 42933

TABLE 4a.—WAGE INDEX FOR URBAN

AREAS—Continued

Urban area

(Constituent counties or county

equivalents)

Wage

index

Sutter, CA

Yuba, CA

9360 Yuma, AZ ............................ 0.9732

Yuma, AZ

TABLE 4B.—WAGE INDEX FOR RURAL

AREAS

Nonurban area Wage

index

Alabama ........................................ 0.7260

Alaska ........................................... 1.2302

Arizona .......................................... 0.7989

Arkansas ....................................... 0.6995

California ....................................... 0.9977

Colorado ....................................... 0.8129

Connecticut ................................... 1.2617

Delaware ....................................... 0.8925

Florida ........................................... 0.8838

Georgia ......................................... 0.7761

Hawaii ........................................... 1.0229

Idaho ............................................. 0.8221

Illinois ............................................ 0.7644

Indiana .......................................... 0.8161

Iowa .............................................. 0.7391

Kansas .......................................... 0.7203

Kentucky ....................................... 0.7772

Louisiana ....................................... 0.7383

Maine ............................................ 0.8468

Maryland ....................................... 0.8617

Massachusetts .............................. 1.0718

Michigan ........................................ 0.8923

Minnesota ..................................... 0.8179

Mississippi ..................................... 0.6911

Missouri ......................................... 0.7205

Montana ........................................ 0.8302

Nebraska ....................................... 0.7401

Nevada .......................................... 0.8914

New Hampshire ............................ 0.9717

New Jersey 1 ................................. ................

New Mexico .................................. 0.8070

New York ...................................... 0.8401

North Carolina ............................... 0.7937

North Dakota ................................. 0.7360

Ohio .............................................. 0.8434

Oklahoma ...................................... 0.7072

Oregon .......................................... 0.9975

Pennsylvania ................................. 0.8421

Puerto Rico ................................... 0.3939

Rhode Island 1 .............................. ................

South Carolina .............................. 0.7921

South Dakota ................................ 0.6983

Tennessee .................................... 0.7353

Texas ............................................ 0.7404

Utah .............................................. 0.8926

Vermont ........................................ 0.9314

Virginia .......................................... 0.7782

Washington ................................... 1.0221

West Virginia ................................. 0.7938

Wisconsin ...................................... 0.8471

Wyoming ....................................... 0.8247

Guam ............................................ 0.6516

Virgin Islands ................................ 0.4588

1All counties within the State are classified

urban.

TABLE 5.—COST REPORTING YEAR—

ADJUSTMENT FACTOR 1

If the HHA cost reporting period

begins

The adjustment

factor is

November 1, 1998 ........................ 1.00239

December 1, 1998 ........................ 1.00478

January 1, 1999 ............................ 1.00720

February 1, 1999 .......................... 1.00964

March 1, 1999 ............................... 1.01210

April 1, 1999 ................................. 1.01456

May 1, 1999 .................................. 1.01702

June 1, 1999 ................................. 1.01948

July 1, 1999 .................................. 1.02197

August 1, 1999 ............................. 1.02448

September 1, 1999 ....................... 1.02701

1Based on compounded projected market

basket inflation rates.

Source: The Home Health Agency Input

Price Index, produced by HCFA for the period

between 1983:1 and 2008:4. The forecasts

are from Standard and Poor’s DRI 3rd QTR

1997: @USSIM/TREND25YR0897@CISSIM/

Control973 forecast exercise which has historical data through 1997:2.

TABLE 6.—MONTHLY INDEX LEVELS

FOR CALCULATING INFLATION FACTORS TO BE APPLIED TO HOME

HEALTH AGENCY

Per-beneficiary limitations month Index

level

October 1992 ................................ .98566

November 1992 ............................ .98800

December 1992 ............................ .99099

January 1993 ................................ .99399

February 1993 .............................. .99700

March 1993 ................................... .99933

April 1993 ...................................... 1.00166

May 1993 ...................................... 1.00400

June 1993 ..................................... 1.00666

July 1993 ...................................... 1.00933

August 1993 .................................. 1.01200

September 1993 ........................... 1.01400

October 1993 ................................ 1.01600

November 1993 ............................ 1.01800

December 1993 ............................ 1.02099

January 1994 ................................ 1.02399

February 1994 .............................. 1.02700

March 1994 ................................... 1.02866

April 1994 ...................................... 1.03033

May 1994 ...................................... 1.03200

June 1994 ..................................... 1.03499

July 1994 ...................................... 1.03499

August 1994 .................................. 1.03499

September 1994 ........................... 1.03499

October 1994 ................................ 1.03499

November 1994 ............................ 1.03499

December 1994 ............................ 1.03499

January 1995 ................................ 1.03499

February 1995 .............................. 1.03499

March 1995 ................................... 1.03499

April 1995 ...................................... 1.03499

May 1995 ...................................... 1.03499

June 1995 ..................................... 1.03499

July 1995 ...................................... 1.03499

August 1995 .................................. 1.03499

September 1995 ........................... 1.03499

October 1995 ................................ 1.03499

November 1995 ............................ 1.03499

December 1995 ............................ 1.03499

TABLE 6.—MONTHLY INDEX LEVELS

FOR CALCULATING INFLATION FACTORS TO BE APPLIED TO HOME

HEALTH AGENCY—Continued

Per-beneficiary limitations month Index

level

January 1996 ................................ 1.03499

February 1996 .............................. 1.03499

March 1996 ................................... 1.03499

April 1996 ...................................... 1.03499

May 1996 ...................................... 1.03499

June 1996 ..................................... 1.03499

July 1996 ...................................... 1.03720

August 1996 .................................. 1.03941

September 1996 ........................... 1.04162

October 1996 ................................ 1.04383

November 1996 ............................ 1.04604

December 1996 ............................ 1.04856

January 1997 ................................ 1.05108

February 1997 .............................. 1.05361

March 1997 ................................... 1.05582

April 1997 ...................................... 1.05803

May 1997 ...................................... 1.06024

June 1997 ..................................... 1.06370

July 1997 ...................................... 1.06717

August 1997 .................................. 1.07065

September 1997 ........................... 1.07317

October 1997 ................................ 1.07569

November 1997 ............................ 1.07822

December 1997 ............................ 1.08074

January 1998 ................................ 1.08327

February 1998 .............................. 1.08580

March 1998 ................................... 1.08769

April 1998 ...................................... 1.08958

May 1998 ...................................... 1.09148

June 1998 ..................................... 1.09494

July 1998 ...................................... 1.09841

August 1998 .................................. 1.10189

September 1998 ........................... 1.10441

October 1998 ................................ 1.10693

November 1998 ............................ 1.10946

December 1998 ............................ 1.11230

January 1999 ................................ 1.11514

February 1999 .............................. 1.11798

March 1999 ................................... 1.12019

April 1999 ...................................... 1.12240

May 1999 ...................................... 1.12461

June 1999 ..................................... 1.12776

July 1999 ...................................... 1.13091

August 1999 .................................. 1.13408

September 1999 ........................... 1.13660

October 1999 ................................ 1.13912

November 1999 ............................ 1.14165

December 1999 ............................ 1.14480

January 2000 ................................ 1.14795

February 2000 .............................. 1.15112

March 2000 ................................... 1.15332

April 2000 ...................................... 1.15553

May 2000 ...................................... 1.15774

June 2000 ..................................... 1.16120

July 2000 ...................................... 1.16467

August 2000 .................................. 1.16816

September 2000 ........................... 1.17099

October 2000 ................................ 1.17383

X. Regulatory Impact Statement

A. Introduction

HCFA has examined the impacts of

this notice with comment as required by

Executive Order 12866, the Regulatory

Flexibility Act (RFA) (Pub. L. 96–354),

and the Unfunded Mandates Reform Act
42934 Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices

of 1995 (Pub. L. 104–4). Executive Order

12866 directs agencies to assess all costs

and benefits of available regulatory

alternatives and, when regulation is

necessary, to select regulatory

approaches that maximize net benefits

(including potential economic,

environmental, public health and safety

effects; distributive impacts; and

equity). The RFA requires agencies to

analyze options for regulatory relief for

small businesses. For purposes of the

RFA, States and individuals are not

considered small entities. However,

most providers, physicians, and health

care suppliers are small entities, either

by nonprofit status or by having

revenues of $5 million or less annually.

Approximately 25 percent of HHAs are

identified as Visiting Nurse

Associations, combined in government

and voluntary, and official health

agency, and therefore, are considered

small entities. We anticipate this notice,

in total, will have a significant impact

on a substantial number of small entities

based on the estimates shown below.

We have examined the options for

lessening the burden on small entities,

however, the statute does not allow for

any exceptions to these limitations

based on size of entity. Therefore, there

are no options to lessen the regulatory

burden that are consistent with the

statute.

Section 202 of the Unfunded

Mandates Reform Act requires agencies

to prepare an assessment of anticipated

costs and benefits before proposing any

rule that may result in an annual

expenditure by State, local, or tribal

governments, in the aggregate, or by

private sector, of $100 million (adjusted

annually for inflation). We believe that

there are no costs associated with this

notice with comment that apply to these

governmental and private sectors.

Therefore, the law does not apply.

1. Effect of This Notice

This notice is a part of the HHA IPS.

As a result of rebasing the per-visit

limitations, we estimate that there will

be a cost to the Medicare program of

approximately $70 million in Federal

FY 1999. We estimate that the effect of

the offset adjustment for the

implementation of OASIS data

collection, as discussed in section III.G.

will result in negligible costs to the

Medicare program. We note that this

estimate differs from that published in

the Paperwork Reduction Act section of

the March 10, 1997 proposed rule on

OASIS collection requirements (62 FR

11035). This is due to several factors.

Unlike the OASIS proposed rule which

calculated impacts based on total HHA

costs on an agency basis, the offset

adjustment factor in this notice is

necessarily calculated on a per-visit,

Medicare basis. Moreover, we have

based these estimates on actual data

collected from the home health PPS

demonstration rather than using the

general estimates of the proposed

OASIS rule. We believe using actual

data which was not available at the time

the OASIS proposed rule was written

produces a more accurate estimate of

cost impact.

We should also note, however, that

the adjustment only incorporates the

incremental costs of data collection and

not any incremental costs, if any, which

may be incurred for OASIS reporting

because no reliable cost data were

available at this time. We are

specifically requesting comments on

these costs. Also, we cannot determine

the number of providers affected by our

revised new provider policy and

therefore cannot determine what the

financial impact, if any, will be.

2. Effect on March 31, 1998 Final Rule

With Comment Period

As stated in the March 31, 1998 final

rule with comment period (63 FR

15718) for Federal FY 1999, we estimate

that the imposition of the perbeneficiary limitations will result in

savings of $2.14 billion. However, the

changes imposed through this notice to

the per-visit limitations will result in

savings of $670 million instead of $740

million as stated in the March 31, 1998

final rule with comment period (63 FR

15718). This is the result of rebasing the

per-visit limitations. The total savings

from both limitations for Federal FY

1999 will be $2.81 billion rather than

$2.88 billion as stated in the March 31,

1998 rule.

This notice with comment is not a

major rule as defined in Title 5, United

States Code, section 804(2) and is not an

economically significant rule under

Executive Order 12866. However, we

are preparing a regulatory impact

statement because this notice with

comment is an integral part of the HHA

IPS.

It is clear that the changes being made

in this document will affect both a

substantial number of small HHAs as

well as other classes of HHAs, and the

effects on some may be significant.

Therefore, the discussion below, in

combination with the rest of this notice

with comment, constitutes a combined

regulatory impact analysis and

regulatory flexibility analysis.

B. Explanation of Per-Visit Limitations

Section 1861(v)(1)(L)(i) of the Act

specifies that the per-visit limitations

not exceed 105 percent of the median of

the labor-related and nonlabor per-visit

costs for freestanding HHAs. The

reasonable costs used in the per-visit

calculations will be updated by the

home health market basket excluding

any change in the home health market

basket with respect to cost reporting

periods that began on or after July 1,

1994 and before July 1, 1996.

The methodology used to develop the

schedule of per-visit limitations in this

notice with comment is the same as that

used in setting the limitations effective

October 1, 1997. We are using the latest

settled cost report data (as described in

Section III. Update of Per-Visit

Limitations) from freestanding HHAs to

develop the per-visit limitations.

C. Explanation of Per-Beneficiary

Limitations

Section 1861(v)(1)(L) requires the perbeneficiary limitation be a blend of: (1)

an agency-specific per-beneficiary

limitation based on 75 percent of 98

percent of the reasonable costs

(including nonroutine medical supplies)

for the agency’s 12-month cost reporting

period ending during FFY 1994, and (2)

a census region division per-beneficiary

limitation based on 25 percent of 98

percent of the regional average of such

costs for the agency’s census division

for cost reporting periods ending during

FFY 1994, standardized by the hospital

wage index. The reasonable costs used

in the per-beneficiary limitation

calculations in one and two above will

be updated by the home health market

basket excluding any changes in the

home health market basket with respect

to cost reporting periods that began on

or after July 1, 1994 and before July 1,

1996. This per-beneficiary limitation

based on the blend of the agencyspecific and census region division perbeneficiary limitations will then by

multiplied by the agency’s unduplicated

census count of beneficiaries (entitled to

benefits under Medicare) to calculate

the HHA’s per-beneficiary limitation for

the cost reporting period subject to the

limitation.

For new providers and providers

without a 12-month cost reporting

period ending in FFY 1994, the perbeneficiary limitation will be a national

per-beneficiary limitation which will be

equal to the median of these limitations

applied to other HHAs as determined

under section 1861(v)(1)(L)(v) of the

Act.

The methodologies and data used to

develop the schedule of per-beneficiary

limitations set forth in this notice are

the same as that used in setting the perbeneficiary limitations that were

effective for cost reporting periods

beginning on or after October 1, 1997.

We have updated the per-beneficiary
Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices 42935

limitations to reflect the expected cost

increases occurring between the cost

reporting periods ended during FFY

1994 and September 30, 1999, excluding

any changes in the home health market

basket with respect to cost reporting

periods which began on or after July 1,

1994 and before July 1, 1996. Therefore,

we excluded this time period when we

adjusted the database for the market

basket increases.

Payments by Medicare under this

system of payment limitations must be

the lower of an HHA’s actual reasonable

allowable costs, per-visit limitations in

the aggregate, or a per-beneficiary

limitation in the aggregate.

D. Effect on Home Health Agencies

This notice with comment period sets

forth revised schedules of limitations on

home health agency costs that may be

paid under the Medicare program for

cost reporting periods beginning on or

after October 1, 1998. These limitations

replace the limitations that were set

forth in our January 2, 1998 notice with

comment period, per-visit limitations,

(63 FR 89) and our March 31, 1998 final

rule with comment period, perbeneficiary limitations, (63 FR 15718).

The following quantitative analysis

presents the projected effects of the

statutory changes effective for FFY

1999. This notice with comment period

is necessary to implement the

provisions of section 1861(v)(1)(L) of the

Act, as amended by B.B.A. ‘97.

The settled cost report data that we

are using have been adjusted by the

most recent market basket factors,

excluding market basket increases for

cost reporting periods beginning on or

after July 1, 1994 and before July 1,

1996, to reflect the expected cost

increases occurring between the cost

reporting periods for the data contained

in the database and September 30, 1999.

We are unable to identify the effects

of the changes to the cost limits on

individual HHAs. However, Table 7

below illustrates the proportion of

HHAs that are likely to be affected by

the limits. This table is a model of our

estimate of the revision in the schedule

of the per-visit and per-beneficiary

limitations. The total number of HHAs

in this table, 6,414, is based on HHA

cost reports with a FFY ending in 1994

and for new providers whose cost

reports end on either December 31, 1994

or December 31, 1995. For both old and

new providers, the length of the cost

report is 12 months.

This table takes into account the

behaviors that we believe HHAs will

engage in order to reduce the adverse

effects of section 4602 of B.B.A. ‘97 on

their allowable costs. We believe these

behavioral offsets might include an

increase in the number of low cost

beneficiaries served, a general decrease

in the number of visits provided, and

earlier discharge of patients who are not

eligible for Medicare home health

benefits because they no longer need

skilled services but have only chronic,

custodial care needs. We believe that,

on average, these behavioral offsets will

result in a 65 percent reduction in the

effects these limits might otherwise

have on an individual HHA for the perbeneficiary limitations and a 50 percent

reduction for the per-visit limitations.

Column one of this table divides

HHAs by a number of characteristics

including their ownership, whether they

are old or new agencies, whether they

are located in an urban or rural area,

and the census region they are located

in. Column two shows the number of

agencies that fall within each

characteristic or group of characteristics,

for example, there are 1,197 rural

freestanding HHAs in our database.

Column three shows the percent of

HHAs within a group that are projected

to exceed the per-visit limitation and

therefore, not be affected by the perbeneficiary limitation, before the

behavioral offsets are taken into

account. Column four shows the average

percent of costs over the per-visit

limitation for an agency in that cell,

including behavioral offsets. Column

five shows the percent of HHAs within

a group that are projected to exceed the

per-beneficiary limitation and therefore,

not be affected by the per-visit

limitation, before the behavioral offsets

are taken into account. Column six

shows the average percent of costs over

the per-beneficiary limitation for an

agency in that category, including

behavioral offsets. It is important to note

that in determining the expected

percentage of an agency’s costs

exceeding the cost limitations, column

four (percent of costs exceeding visit

limits) and column six (percent of costs

exceeding beneficiary limits) are not to

be added together. Either the per-visit

limitation or the per-beneficiary

limitation is exceeded, but not both.

IMPACT OF THE IPS HHA LIMITS, EFFECTIVE 10/1/98

Number of

agencies

Percent of

agencies

exceeding

visit limits

Percent of

costs exceeding visit

limits

Percent of

agencies

exceeding

beneficiary

limits

Percent of

costs exceeding

beneficiary

limits

BY: GEOGRAPHIC AREA:

ALL AGENCIES ................................................................................. 6414 29.8 4.1 60.2 9.8

FREESTANDING ....................................................................... 4308 23.9 3.9 67.5 11.2

HOSPITAL BASED .................................................................... 2106 42.1 4.5 45.4 6.5

OLD AGENCIES ........................................................................ 5256 25.7 2.2 62.7 9.4

FREESTANDING ................................................................ 3245 15.8 1.0 73.4 11.0

HOSPITAL BASED ............................................................. 2011 41.7 4.5 45.4 6.4

NEW AGENCIES ....................................................................... 1158 48.6 19.5 49.3 12.6

FREESTANDING ................................................................ 1063 48.5 20.4 49.6 12.8

HOSPITAL BASED ............................................................. 95 49.5 5.3 46.3 9.2

ALL URBAN ....................................................................................... 4137 29.1 4.1 63.7 10.0

FREESTANDING ....................................................................... 3111 23.6 3.8 69.3 11.3

HOSPITAL BASED .................................................................... 1026 46.0 5.0 46.5 6.6

OLD AGENCIES ........................................................................ 3272 24.4 2.2 67.1 9.7

FREESTANDING ................................................................ 2292 15.2 1.0 75.9 11.1

HOSPITAL BASED ............................................................. 980 45.8 4.9 46.4 6.6

NEW AGENCIES ....................................................................... 865 47.2 19.0 50.9

12.3.

FREESTANDING ................................................................ 819 47.0 19.7 51.0 12.5

HOSPITAL BASED ............................................................. 46 50.0 6.1 47.8 8.8

ALL RURAL ....................................................................................... 2277 31.1 3.9 54.0 9.1
42936 Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices

IMPACT OF THE IPS HHA LIMITS, EFFECTIVE 10/1/98—Continued

Number of

agencies

Percent of

agencies

exceeding

visit limits

Percent of

costs exceeding visit

limits

Percent of

agencies

exceeding

beneficiary

limits

Percent of

costs exceeding

beneficiary

limits

FREESTANDING ....................................................................... 1197 24.6 4.3 62.7 11.0

HOSPITAL BASED .................................................................... 1080 38.3 3.3 44.4 6.1

OLD AGENCIES ........................................................................ 1984 27.9 1.9 55.4 8.5

FREESTANDING ................................................................ 953 17.2 0.9 67.4 10.5

HOSPITAL BASED ............................................................. 1031 37.8 3.3 44.3 6.0

NEW AGENCIES ....................................................................... 293 52.9 21.1 44.7 13.8

FREESTANDING ................................................................ 244 53.7 22.7 44.7 14.1

HOSPITAL BASED ............................................................. 49 49.0 3.6 44.9 10.1

BY: REGION:

OLD AGENCIES ................................................................................ 5256 25.7 2.2 62.7 9.4

NEW ENGLAND ......................................................................... 291 5.5 0.3 83.8 12.8

MIDDLE ATLANTIC ................................................................... 443 19.4 1.8 72.2 9.0

SOUTH ATLANTIC .................................................................... 739 24.1 1.7 65.4 9.9

EAST NORTH CENTRAL .......................................................... 866 21.6 1.6 68.6 10.3

EAST SOUTH CENTRAL .......................................................... 431 23.0 1.6 58.9 9.2

WEST NORTH CENTRAL ......................................................... 728 26.6 2.4 58.2 9.7

WEST SOUTH CENTRAL ......................................................... 936 30.1 3.1 56.3 8.6

MOUNTAIN ................................................................................ 354 37.0 3.4 50.0 7.4

PACIFIC ..................................................................................... 428 39.3 4.9 56.8 7.3

NEW AGENCIES ............................................................................... 1158 48.6 19.5 49.3 12.6

NEW ENGLAND ......................................................................... 44 4.5 0.0 93.2 17.0

MIDDLE ATLANTIC ................................................................... 51 49.0 21.9 47.1 5.1

SOUTH ATLANTIC .................................................................... 44 56.8 25.5 43.2 7.3

EAST NORTH CENTRAL .......................................................... 151 74.2 36.1 25.2 4.4

EAST SOUTH CENTRAL .......................................................... 25 44.0 18.7 56.0 14.7

WEST NORTH CENTRAL ......................................................... 117 65.8 17.9 29.1 9.9

WEST SOUTH CENTRAL ......................................................... 484 39.3 16.4 59.9 16.5

MOUNTAIN ................................................................................ 103 45.6 22.0 49.5 8.8

PACIFIC ..................................................................................... 138 52.9 19.8 43.5 10.1

E.1. Percent of Costs Exceeding Per Visit

Limitations (Column Four)

Results from this column indicate

that, for an HHA that reaches the pervisit limitation first, the average percent

of costs exceeding the per-visit

limitation for an HHA in the ‘‘all

agencies’’ category is 4.1 percent after

the behavioral offset. This should not be

surprising since the intent of section

4602 of the BBA is to control the soaring

expenditures of the Medicare home

health benefit which have been driven

largely by increased utilization. All

discussion of the analysis of the pervisit limitation is based on the fact that

HHAs in these categories reached the

per-visit limitation and therefore are not

affected by the per-beneficiary

limitation.

For the old agencies category, (HHAs

that filed a 12-month cost report that

ended during FFY 1994), the average

percent of costs exceeding the per-visit

limitation is 2.2 percent. For the new

agencies category, (such as HHAs that

did not have a 12-month cost reporting

period ended in FFY 1994 or that

entered the Medicare program after FFY

1994), the average percent of costs

exceeding the per-visit limitation is 19.5

percent. Old agencies will not be

affected as much by the per-visit

limitation the new agencies, on average,

because the new agencies have, in

general, reported higher per-visit costs.

For the urban areas HHA category, the

average percent of costs exceeding the

per-visit limitation is 4.1 percent, while

the rural areas HHA category is 3.9

percent. For the old agency census

division categories the average percent

of costs exceeding the per-visit

limitation ranges from a low of 0.3

percent in the New England census

region to a high of 4.9 percent in the

Pacific census region. The other census

regions fall between 1.6 percent and 3.4

percent.

For the new agency census region

categories the average percent of costs

exceeding the per-visit limitation ranges

from a low of 0.0 percent in the New

England census region to a high of 36.1

percent in the East North Central census

region. The other census regions fall

between 16.4 percent and 25.5 percent.

E.2. Percent of Costs Exceeding PerBeneficiary Limitation (Column Six)

Results from this column indicate

that, for an HHA that reaches the perbeneficiary limitation first, the average

percent of costs exceeding the perbeneficiary limitation for an HHA in the

‘‘all agencies’’ category is 9.8 percent

after the behavioral offset. All

discussion of the analysis of the perbeneficiary limitation is based on the

fact that HHAs in these categories

reached the per-beneficiary limitation

and therefore are not affected by the pervisit limitation.

For the old agencies category, (HHAs

that filed a 12-month cost report that

ended during FFY 1994), the average

percent of costs exceeding the perbeneficiary limitation is 9.4 percent. For

the new agencies category, (including

HHAs that did not have a 12-month cost

reporting period ended in Federal FY

1994 or that entered the Medicare

program after Federal FY 1994), the

average percent of costs exceeding the

per-visit limitation is 12.6 percent. Old

agencies will not be affected as much by

the per-beneficiary limitations as the

new agencies, on average, because the

new agenices have, in general, reported

higher costs related to higher levels of

utilization. Moreover, the statutory

provision for old providers which bases

75 percent of the limitation on their

own cost experience would implicitly

result in less of an impact than

experienced by the new providers

whose limitations are based on a

national median. Also, we believe the
Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices 42937

differing impacts of these limits is an

inherent result of beginning to draw

unexplained variation among providers

closer to national norms which existed

prior to the rapid increase in home

health expenditures of the post ’93–’94

period.

For the urban areas HHA category, the

average percent of costs exceeding the

per-visit limitation is 10.0 percent,

while the rural areas HHA category is

9.1 percent. For the old agency census

division categories the average percent

of costs exceeding the per-beneficiary

limitation ranges from a low of 7.3

percent in the Pacific census region to

a high of 12.8 percent in the New

England census region. The other

census regions fall between 7.4 percent

and 10.3 percent. The differences

between census regions reflect the

pattern of highly disparate costs that

have been reported historically between

geographic areas which cannot be

explained by differences in patient

characteristics but appear more related

to patterns of HHA practices.

For the new agency census region

categories the average percent of costs

exceeding the per-beneficiary limitation

ranges from a low of 4.4 percent in the

East North Central census region to a

high of 17.0 percent in the New England

census region. The other census regions

fall between 5.1 percent and 16.5

percent. In general, newer agencies in

census regions that have exceptionally

high cost histories are more impacted

due to their being limited to the national

median.

Although there is considerable

variation in these limitations, we

believe this is a reflection of the wide

variation in payments that have been

recognized under the present cost

reimbursement system. Moreover, we

believe the differing impacts of these

limitations is an inherent result of

beginning to draw unexplained

variation among providers closer to

which existed prior to the rapid increase

in home health expenditures of the post

’93–’94 period.

Because this rule limits payments to

HHAs to the lesser of actual cost, the

per-visit limitations, or the perbeneficiary limitation, we have

estimated the combined impact of these

limitations.

We estimate that in FFY 1999 and

2000, 30 percent of the HHAs will be

limited by the per-visit limitation while

60 percent will be limited to the perbeneficiary limitation. It is important to

note again that an HHA is affected either

by the per-visit limitation or the perbeneficiary. They will not be affected by

both.

Medicare payments to managed care

plans are based on fee-for-service

Medicare benefits. Although we do not

know what home health services are

supplied for these payments, we know

how much we pay the plans as a result

of fee-for-service home health payments.

Thus, managed care payments are

figured in as part of our cost/savings

estimates. Managed care plans are not

expected to reduce home health services

as a result of this notice. For Federal FY

1999, we estimate that 20 percent of the

Medicare cost will be for payments to

managed care plans, our estimate for

Federal FY 2000 is 26 percent.

We believe that the effect of this

notice on State Medicaid programs

overall will be small. However, because

of the flexibility and variation in State

Medicaid policies and service delivery

systems as well as differences in

provider behavior in reaction to these

limits, it is impossible to predict which

States will be affected or the magnitude

of the impact.

Under the Paperwork Reduction Act

of 1995, agencies are required to provide

a 60-day notice in the Federal Register

and solicit public comments before a

collection of information requirement is

submitted to the Office of Management

and Budget for review and approval.

This document does not impose

information collection and

recordkeeping requirements.

Consequently, it need not be reviewed

by the Office of Management and

Budget under the authority of the

Paperwork Reduction Act of 1995.

XI. Other Required Information

A. Waiver of Proposed Notice

In adopting notices such as this, we

ordinarily publish a proposed notice in

the Federal Register to provide a period

for public comment before the

provisions of the notice take effect.

However, we may waive this procedure

if for good cause we find that prior

notice and comment are impracticable,

unnecessary or contrary to public

interest. 5 U.S.C 553(b)(B).

Section 1861(v)(1)(L) of the Act

requires that the Secretary establish

revised HHA cost limits for cost

reporting periods beginning on or after

July 1, 1991 and annually thereafter

(except for cost reporting periods

beginning on or after July 1, 1994 and

before July 1, 1996). In accordance with

the statute, we have used the same

methodology to develop the schedules

of limits that were used in setting the

limits effective for cost reporting

periods beginning on or after October 1,

1997. These cost limits have been

updated by the appropriate market

basket adjustment factor to reflect the

cost increases occurring between the

cost reporting periods for the data

contained in the database and

September 30, 1999, excluding any

changes in the home health market

basket with respect to cost reporting

periods which began on or after July 1,

1994 and before July 1, 1996. In

addition, as required under section

1861(v)(1)(L) of the Act, we have used

the most recently published hospital

wage index.

Therefore, for good cause we find that

it was unnecessary to undertake notice

and comment procedures. Generally, the

methodology used to develop these

schedules of limits is dictated by statute

and does not require the exercise of

discretion. These methodologies have

also been previously published for

public comment. It was also necessary

to inform HHAs of their new cost

limitations in a timely manner such that

HHAs could benefit from the most

recently published wage index and

updated market basket adjustment

factor.

We also find that it was impracticable

to provide notice and comment

procedures before publishing this

notice. The per-beneficiary limitations

were published on March 31, 1998 with

a 60-day comment period. To fully

respond to the comments and establish

the limitation by August 1, 1998, it was

impracticable to publish a proposed

notice. Accordingly, for good cause, we

waive prior notice and comment

procedures. However, we are providing

a 60-day comment period for public

comment, as indicated at the beginning

of this notice.

B. Public Comments

Because of the large number of items

of correspondence we normally receive

on a notice with comment period, we

are not able to acknowledge or respond

to them individually. However, we will

consider all comments concerning the

provisions of this notice that we receive

by the date and time specified in the

DATES section of this notice, and we will

respond to those comments in a

subsequent document.

Authority: Section 1861(v)(1)(L) of the

Social Security Act (42 U.S.C.

1395x(v)(1)(L)); section 4207(d) of Pub. L.

101–508 (42 U.S.C. 1395x (note)).

(Catalog of Federal Domestic Assistance

Program No. 93.773 Medicare—Hospital

Insurance)
42938 Federal Register / Vol. 63, No. 154 /Tuesday, August 11, 1998 / Notices

Dated: July 28, 1998.

Nancy-Ann Min DeParle,

Administrator, Health Care Financing

Administration.

Dated: July 30, 1998.

Donna E. Shalala,

Secretary.

[FR Doc. 98–20878 Filed 7–31–98; 3:03 pm]

BILLING CODE 4120–01–P