Federal Register / Vol. 66, No. 126 / Friday, June 29, 2001 / Notices 34687

TABLE 2.—ESTIMATED ANNUAL RECORDKEEPING BURDEN1

21 CFR Section No. of

Recordkeepers

Annual Frequency per

Recordkeeping Total Annual Records Hours per Recordkeeper Total Hours

80.39 41 106 4,3462 0.25 1,086

1There are no capital costs or operating and maintenance costs associated with this collection of information.

2 Due to a clerical error, the total annual records that appeared in tables 1 and 2 in the FEDERAL REGISTER notice of April 13, 2001 (66 FR

19175), was incorrect. Tables 1 and 2 of this document contains the correct total.

The estimated total annual burden for

this information collection is 2,172

hours. Over the period fiscal year (FY)

1998 to 2000, FDA processed an average

of 4,346 requests for certification of

batches of color additives.

Approximately 41 different respondents

submitted requests for certification each

year over the period FY 1998 to 2000.

FDA obtained the estimates for the

length of time necessary to prepare

certification requests and accompanying

samples and to comply with

recordkeeping requirements from

industry program area personnel.

Dated: June 22, 2001.

Margaret M. Dotzel,

Associate Commissioner for Policy.

[FR Doc. 01–16325 Filed 6–28–01; 8:45 am]

BILLING CODE 4160–01–S

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Health Care Financing Administration

[HCFA–1147–NC]

RIN 0938–AK51

Medicare Program; Update to the

Prospective Payment System for Home

Health Agencies for FY 2002

AGENCY: Health Care Financing

Administration (HCFA), HHS.

ACTION: Notice with comment period.

SUMMARY: This notice with comment

period sets forth an update to the 60-day

national episode rates and the national

per-visit amounts under the Medicare

prospective payment system for home

health agencies.

DATES: Effective Date: The rate updates

in this notice with comment period are

effective on October 1, 2001.

Comment Period: We will consider

comments if we receive them at the

appropriate address, as provided below,

no later than 5 p.m. on August 28, 2001.

ADDRESSES: Mail written comments (1

original and 3 copies) to the following

address: Health Care Financing

Administration, Department of Health

and Human Services, Attention: HCFA–

1147–NC, P.O. Box 8016, Baltimore, MD

21244–8016.

To ensure that mailed comments are

received in time for us to consider them,

please allow for possible delays in

delivering them.

If you prefer, you may deliver your

written comments (1 original and 3

copies) to one of the following

addresses:

Room 443–G, Hubert H. Humphrey

Building, 200 Independence Avenue,

SW., Washington, DC 20201, or

Room C5–16–03, 7500 Security

Boulevard, Baltimore, MD 21244.

Comments mailed to the above

addresses may be delayed and received

too late for us to consider them.

Because of staff and resource

limitations, we cannot accept comments

by facsimile (FAX) transmission. In

commenting, please refer to file code

HCFA–1147–NC. Comments received

timely will be available for public

inspection as they are received,

generally beginning appropriately 3

weeks after publication of a document,

in Room C5–12–08 of the headquarters

Health Care Financing Administration,

7500 Security Blvd., Baltimore, MD, on

Monday through Friday of each week

from 8:30 to 5 p.m. (phone: (410) 786–

7197).

FOR FURTHER INFORMATION CONTACT:

Bob Wardwell (Project Manager), (410)

786–3254.

Susan Levy (Policy), (410) 786–9364.

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 Master Card

number and expiration date. Credit card

orders can also be placed by calling the

order desk at (202) 512–1800 or by

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

each copy is $9. As an alternative, you

can view and photocopy the Federal

Register document at most libraries

designated as Federal Depository

Libraries and at many other public and

academic libraries throughout the

country that receive the Federal

Register.

This Federal Register document is

also available from the Federal Register

online database through GPO Access, a

service of the U.S. Government Printing

Office.

I. Background; Recent Legislation on

Payment to Home Health Agencies

A. Balanced Budget Act of 1997

The Balanced Budget Act of 1997

(BBA), Pub. L. 105–33, enacted on

August 5, 1997, significantly changed

the way Medicare pays for Medicare

home health services. Until the

implementation of a home health

prospective payment system (HH PPS)

on October 1, 2000, home health

agencies (HHAs) received payment

under a cost-based reimbursement

system. Section 4603 of the BBA

governed the development of HH PPS.

Section 4603(a) of the BBA provides

the authority for the development of a

PPS for all Medicare-covered home

health services provided under a plan of

care that were paid on a reasonable cost

basis by adding section 1895, entitled

‘‘Prospective Payment For Home Health

Services,’’ to the Social Security Act

(the Act).

Section 1895(b)(1) of the Act requires

the Secretary to establish a PPS for all

costs of home health services paid

under Medicare.

Section 1895(b)(2) of the Act requires

the Secretary in defining a prospective

payment amount to consider an

appropriate unit of service and the

number, type, and duration of visits

furnished within that unit, potential

changes in the mix of services provided

within that unit and their cost, and a

general system design that provides for

continued access to quality services.

Section 1895(b)(3)(A) of the Act

requires that (1) the computation of a

standard prospective payment amount

include all costs of home health services

covered and paid for on a reasonable

cost basis and be initially based on the

most recent audited cost report data

available to the Secretary, and (2) the

prospective payment amounts be

standardized to eliminate the effects of

case-mix and wage levels among HHAs.

Section 1895(b)(3)(C) of the Act

requires the Secretary to reduce the

prospective payment amounts if the

34688 Federal Register / Vol. 66, No. 126 / Friday, June 29, 2001 / Notices

Secretary accounts for an addition or

adjustment to the payment amount

made in the case of outlier payments.

Section 1895(b)(4) of the Act governs

the payment computation. Sections

1895(b)(4)(A)(i) and (b)(4)(A)(ii) of the

Act require the standard prospective

payment amount to be adjusted for casemix and geographic differences in wage

levels. Section 1895(b)(4)(B) of the Act

requires the establishment of an

appropriate case-mix adjustment factor

that explains a significant amount of the

variation in cost among different units

of services. Similarly, section

1895(b)(4)(C) of the Act requires the

establishment of wage adjustment

factors that reflect the relative level of

wages and wage-related costs applicable

to the furnishing of home health

services in a geographic area compared

to the national average applicable level.

These wage-adjustment factors may be

the factors used by the Secretary for the

different area wage levels for purposes

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

Section 1895(b)(5) of the Act gives the

Secretary the option to grant additions

or adjustments to the payment amount

otherwise made in the case of outliers

because of unusual variations in the

type or amount of medically necessary

care. Total outlier payments in a given

fiscal year cannot exceed 5 percent of

total payments projected or estimated.

Section 1895(b)(6) of the Act provides

for the proration of prospective payment

amounts between the HHAs involved in

the case of a patient electing to transfer

or receive services from another HHA

within the period covered by the

prospective payment amount.

Section 1895(d) of the Act limits

review of certain aspects of the HH PPS.

Specifically, there is no administrative

or judicial review under sections 1869

or 1878 of the Act, or otherwise, of the

following:

• The establishment of the transition

period under section 1895(b)(1) of the

Act.

• The definition and application of

payment units under section 1895(b)(2)

of the Act.

• The computation of initial standard

prospective amounts under section

1895(b)(3)(A) of the Act (including the

reduction described in section

1895(b)(3)(A)(ii) of the Act).

• The establishment of the

adjustment for outliers under section

1895(b)(3)(C) of the Act.

• The establishment of case-mix and

area wage adjustments under section

1895(b)(4) of the Act.

• The establishment of any

adjustments for outliers under section

1895(b)(5) of the Act.

Section 4603(b) of the BBA amends

section 1815(e)(2) of the Act by

eliminating periodic interim payments

for HHAs effective October 1, 2000.

Section 4603(c) of the BBA sets forth

the following conforming amendments:

• Section 1814(b)(1) of the Act is

amended to indicate that payments

under Part A will also be made under

section 1895 of the Act.

• Section 1833(a)(2)(A) of the Act is

amended to require that home health

services, other than a covered

osteoporosis drug, are paid under HH

PPS.

• Section 1833(a)(2) of the Act is

amended by adding a new subparagraph

(G) regarding payment of Part B services

at section 1861(s)(10)(A) of the Act.

• Section 1842(b)(6)(F) is added to

the Act and section 1832(a)(1) of the Act

is amended to include a reference to

section 1842(b)(6)(F) of the Act, both

governing the consolidated billing

requirements.

B. Omnibus Consolidated and

Emergency Supplemental

Appropriations Act for FY 1999

On October 21, 1998, the Omnibus

Consolidated and Emergency

Supplemental Appropriations Act for

FY 1999 (OCESAA), Pub. L. 105–277,

was enacted.

Section 5101(c) of the OCESAA

amends section 1895(a) of the Act by

removing the transition into the HH PPS

by cost-reporting periods and requiring

all HHAs to be paid under HH PPS

effective upon the implementation date

of the system.

Section 5101(c) of the OCESAA also

modifies the effective date of the

budget-neutrality targets for HH PPS by

amending section 1895(b)(3)(A)(ii) of

the Act. Section 1895(b)(3)(A) of the

Act, as amended, requires that the

standard prospective payment

limitation amounts be budget neutral.

Section 5101(d)(2) of the OCESAA

also modifies the statutory provisions

dealing with the home health market

basket percentage increase. For FY 2002

or FY 2003, sections 1895(b)(3)(B)(i) and

(b)(3)(B)(ii) of the Act, as modified,

require that the standard prospective

payment amounts be increased by a

factor equal to the home health market

basket minus 1.1 percentage points. In

addition, for any subsequent fiscal

years, the statute requires the rates to be

increased by the applicable home health

market basket index change.

Section 5101(c)(2) of the OCESAA

amends section 4603(d) of the BBA by

changing the effective date language for

the HH PPS and the other changes made

by section 4603 of the BBA. Section

4603(d) of the BBA now provides that

‘‘Except as otherwise provided, the

amendments made by this section shall

apply to portions of cost reporting

periods occurring on or after October 1,

2000.’’ This change required all HHAs

to be paid under HH PPS effective

October 1, 2000.

C. Medicare, Medicaid, and SCHIP

Balanced Budget Refinement Act of

1999

Section 305 of the Medicare,

Medicaid, and SCHIP Balanced Budget

Refinement Act of 1999 (BBRA), Pub. L.

106–113, refines the consolidated

billing requirements under HH PPS. The

BBRA excludes durable medical

equipment (DME) from the home health

consolidated billing requirements.

Section 306 of BBRA amends the

statute to provide a technical correction

clarifying the applicable market basket

increase for HH PPS in each of FY 2002

and FY 2003. The technical correction

clarifies that the update in HH PPS in

FY 2002 and FY 2003 will be the home

health market basket minus 1.1

percentage points.

D. Medicare, Medicaid, and SCHIP

Benefits Improvement and Protection

Act of 2000

Section 501 of the Medicare,

Medicaid, and SCHIP Benefits

Improvement and Protection Act of

2000 (BIPA), Pub. L. 106–554, sets forth

a 1 year additional delay in application

of the 15 percent reduction on payment

limits for home health services. This

section also amends section 302(C) of

the BBRA to now require a Report to

Congress by the Comptroller General of

the United States no later than April 1,

2002 on the 15 percent reduction issue.

Section 502 of the BIPA sets forth a

special rule for payment for FY 2001

based on adjustment of the published

prospective payment amounts. This

special payment rule has the effect of

restoring the market basket reduction

already incorporated into the HH PPS

rates. The adjustment provides the effect

of a full market basket adjustment to the

HH PPS rates for FY 2001. The statute

also requires paying episodes and

national per-visit amounts for low

utilization payment adjustments

(LUPAs) ending on or after April 1, 2001

and before October 1, 2001 an

additional 2.2 percent.

Section 508 of the BIPA also requires,

for home health services furnished in a

rural area (as defined in section

1886(d)(2)(D) of the Act) on or after

April 1, 2001 and before April 1, 2003,

that the Secretary increase the payment

amount otherwise made under section

1895 of the Act for the services by 10

percent. The statute waives budget

Federal Register / Vol. 66, No. 126 / Friday, June 29, 2001 / Notices 34689

neutrality for purposes of this increase

since it specifically states that the

Secretary not reduce the standard

prospective payment amount (or

amounts) under section 1895 of the Act

applicable to home health services

furnished during a period to offset the

increase in payments resulting in the

application of this section of the statute.

II. Provisions of This Notice With

Comment Period

A. National Standardized 60-Day

Episode Rate

Medicare HH PPS has been effective

since October 1, 2000. As set forth in the

final rule published July 3, 2000 in the

Federal Register (65 FR 41128), the unit

of payment under Medicare HH PPS is

a national standardized 60-day episode

rate. The standardized 60-day episode

rate for FY 2001 published in the final

rule in Table 5 (65 FR 41184) was

$2,115.30. As discussed in the budget

neutrality analysis in the July 3, 2000

final rule, phasing in all patients to HH

PPS at the October 1, 2000 effective date

for all HHAs created an anomaly in

terms of increasing the projected

number of episodes in the first year of

HH PPS. Because all patients who were

already under a home health plan of

care at the beginning of FY 2001 were

deemed to have started a new episode

on October 1, 2000, more episodes are

projected to occur during the first year

compared to what would have been

projected otherwise. As discussed in the

July 3, 2000 final rule accounting for the

anomaly of the first year of PPS, the

rates for FY 2001 would have been $79

higher if the anomaly did not exist.

As set forth in the July 3, 2000 final

rule at 42 CFR 484.220, we adjust the

national standardized 60-day episode

rate by case-mix and wage index based

on the site of service for the beneficiary.

The FY 2002 HH PPS rates use the same

case-mix methodology and application

of the wage index adjustment to the

labor portion of the HH PPS rates as set

forth in the July 3, 2000 final rule. We

multiply the national 60-day episode

rate by the patient’s applicable case-mix

weight. We divide the case-mix adjusted

amount into a labor and non-labor

portion. We multiply the labor portion

by the applicable wage index based on

the site of service of the beneficiary. We

add the wage adjusted portion to the

non-labor portion yielding the case-mix

and wage adjusted 60-day episode rate

subject to applicable adjustments.

For FY 2002, we use again the design

and case-mix methodology described in

section III.G of the HH PPS July 3, 2000

final rule (65 FR 41192 through 41203).

For FY 2002, we base the wage index

adjustment to the labor portion of the

PPS rates on the most recent pre-floor

and pre-reclassified hospital wage index

available at the time of publication of

this notice, which is discussed in

section II.D of this notice with comment

period.

As discussed in the July 3, 2000 home

health PPS final rule, for episodes with

four or fewer visits, Medicare pays the

national per-visit amount by discipline,

referred to as a low utilization payment

adjustment (LUPA). We update the

national per-visit amounts by discipline

annually by the applicable home health

market basket. We adjust the national

per-visit amount by the appropriate

wage index based on the site of service

for the beneficiary as set forth in

§ 484.230. We adjust the labor portion of

the updated national per-visit amounts

by discipline used to calculate the

LUPA by the most recent pre-floor and

pre-reclassified hospital wage index

available at the time of publication of

this notice, as discussed in section II.D

of this notice with comment period.

As outlined in the July 3, 2000 HH

PPS final rule, Medicare pays the 60-day

case-mix and wage adjusted episode

payment on a split percentage payment

approach. The split percentage payment

approach includes an initial percentage

payment and a final percentage payment

as set forth in § 484.205(b)(1) and (b)(2).

We may base the initial percentage

payment on the submission of a request

for anticipated payment and the final

percentage payment on the submission

of the claim for the episode, as

discussed in regulations in § 409.43.

The claim for the episode that the HHA

submits for the final percentage

payment determines the total payment

amount for the episode and whether we

make an applicable adjustment to the

60-day case-mix and wage adjusted

episode payment. The end date of the

60-day episode as reported on the claim

determines the rate level at which

Medicare will pay the claim for the

fiscal period.

As discussed in the HH PPS July 3,

2000 final rule, we may adjust the 60-

day case-mix and wage adjusted episode

payment based on the information

submitted on the claim to reflect the

following:

• A low utilization payment provided

on a per-visit basis as set forth in

§ 484.205(c) and § 484.230.

• A partial episode payment

adjustment as set forth in § 484.205(d)

and § 484.235.

• A significant change in condition

adjustment as set forth in § 484.205(e)

and § 484.237.

• An outlier payment as set forth in

§ 484.205(f) and § 484.240.

This notice with comment period

reflects the updated FY 2002 rates that

are effective October 1, 2001.

B. Update to the Home Health Market

Basket Index

Section 1895(b)(3)(B)(ii) of the Act

requires the standard prospective

payment amounts to be increased by a

factor equal to the home health market

basket minus 1.1 percentage points for

FY 2002. This has been codified in

regulations in § 484.225.

• FY 2001 Adjustments

As discussed in section I.D of this

notice with comment period, section

502 of the BIPA sets forth a special rule

for payment for FY 2001 based on

adjusted prospective payment amounts.

The adjustment provides the effect of a

full market basket adjustment to the PPS

rates for FY 2001. Section 502 of the

BIPA specifically states,

‘‘Notwithstanding the amendments

made by subsection (a), for purposes of

making payments under section 1895(b)

of the Act (42 U.S.C. 1395fff(b)) for

home health services for FY 2001, the

Secretary of Health and Human Services

shall—(A) with respect to episodes and

visits ending on or after October 1, 2000,

and before April 1, 2001, use the final

standardized and budget neutral

prospective payment amounts for 60

day episodes and standardized average

per-visit amounts for FY 2001 as

published by the Secretary in the July 3,

2000 Federal Register (65 FR 41128–

41214); and (B) with respect to episodes

and visits ending on or after April 1,

2001, and before October 1, 2001, use

these amounts increased by 2.2

percent.’’ Thus, the statute requires

paying episodes and national per-visit

amounts for LUPAs ending on or after

April 1, 2001 and before October 1, 2001

by an additional 2.2 percent. Due to this

legislation, during FY 2001 Medicare

pays $2,115.30 for episodes ending on

or before March 31, 2001 and Medicare

pays $2,161.84 (= $2,115.30 * 1.022) for

episodes ending on or after April 1,

2001 and before October 1, 2001, prior

to any applicable adjustment. We

implemented this provision on April 1,

2001 through the HCFA Program

Memorandum, ‘‘Restoration of Full

Home Health Market Basket Update for

Home Health Services for Fiscal Year

2001 and Temporary 10 Percent

Payment Increase for Home Health

Services Furnished in a Rural Area for

24 Months Under the Home Health

Prospective Payment System (HH PPS)’’

(Transmittal A–01–06, issued January

16, 2001).

34690 Federal Register / Vol. 66, No. 126 / Friday, June 29, 2001 / Notices

• FY 2002 Adjustments

In calculating the annual update for

the FY 2002 60-day episode rates, we

first looked at the FY 2001 rates as a

starting point. We took into account two

factors in determining the starting point

for the FY 2001 rates: section 502 of the

BIPA, enacted mid-FY 2001, that

restored the full market basket for FY

2001; and the first-year anomaly

associated with increased payments at

the start-up of HH PPS. In determining

the starting point for the annual update

for FY 2002, we adjusted the

standardized 60-day episode rate for FY

2001 to offset the anomaly of the first

year of PPS ($2,115.30 + $79 =

$2,194.30). We then divide that amount

by 1 minus 1.1 percent ($2,194.30/(1–

0.011)) to restore the full market basket.

This yields the starting point for the FY

2001 rates with the full market basket

adjustment for FY 2001 required to

calculate the update for FY 2002.

The annual update for FY 2002 is the

home health market basket minus 1.1

percentage points as defined in section

1895(b)(3)(B)(ii) of the Act. The home

health market basket increase for FY

2002 is 3.6 percent. In order to calculate

the updated FY 2002 rates, we

multiplied the FY 2001 amount that we

restored to the full market basket by 1

plus the home health market basket

minus 1.1 percentage points (1+0.036 ¥

0.011 = 1.025) to yield the updated

national 60-day episode amount for FY

2002 ($2,274.17).

NATIONAL 60-DAY EPISODE AMOUNTS UPDATED BY THE HOME HEALTH MARKET BASKET MINUS 1.1% FOR FY 2002

PRIOR TO CASE-MIX ADJUSTMENT, WAGE INDEX ADJUSTMENT BASED ON THE SITE OF SERVICE FOR THE BENEFICIARY OR APPLICABLE PAYMENT ADJUSTMENT

Total standardized prospective

payment amount per 60-day episode for FY 2001 ($2,115.30) published in July 3, 2000 Federal

Register plus additional $79 to

offset implementation of first year

of PPS

Restore to full Market Basket Multiply by 1 plus the HH Market

Basket minus 1.1%

Final updated 60-day episode

payment amount for FY 2002

$2,194.30 /(1–0.011) x1.025 $2,274.17

• National Per-Visit Amounts Used to

Pay LUPAs and Compute Imputed Costs

Used in Outlier Calculations

As discussed previously in this notice

with comment period, the policies

governing the LUPAs and outlier

calculations set forth in the July 3, 2000

HH PPS final rule will continue during

FY 2002. In calculating the annual

update for the FY 2002 national pervisit amounts we use to pay LUPAs and

to compute the imputed costs in outlier

calculations, we again looked at the FY

2001 rates as a starting point. We used

the same methodology that we used to

restore the 60-day episode rate to the

full market basket for FY 2001 to restore

the national per-visit amounts to

calculate the LUPAs and to impute costs

in the outlier calculations. We then

multiplied those amounts by 1 plus the

home health market basket minus 1.1

percentage points to yield the updated

per-visit amounts for each home health

discipline for FY 2002. (See table

below.)

NATIONAL PER-VISIT AMOUNTS FOR LUPAS AND OUTLIER CALCULATIONS UPDATED BY THE HOME HEALTH MARKET BASKET MINUS 1.1% FOR FY 2002 PRIOR TO WAGE ADJUSTMENT BASED ON THE SITE OF SERVICE FOR THE BENEFICIARY OR THE APPLICABLE PAYMENT ADJUSTMENT

Home Health Discipline type

Final standardized pervisit amounts per 60-day

episode for FY 2001 for

LUPAs published in July

3, 2000 Federal Register

Restore to full Market

Basket

Multiply by 1 plus Home

Health Market Basket

minus 1.1%

Final standardized pervisit payment amount

per discipline for FY

2002 for LUPAs

Home Health Aide ........................... $ 43.37 /(1–0.011) x1.025 $ 44.95

Medical Social Services ................... 153.55 /(1–0.011) x1.025 159.14

Occupational Therapy ...................... 105.44 /(1–0.011) x1.025 109.28

Physical Therapy ............................. 104.74 /(1–0.011) x1.025 108.55

Skilled Nursing ................................. 95.79 /(1–0.011) x1.025 99.28

Speech-Language Pathology .......... 113.81 /(1–0.011) x1.025 117.95

C. Rural Add-On as Required by the

BIPA

Section 508 of the BIPA requires, for

home health services furnished in a

rural area (as defined in section

1886(d)(2)(D) of the Act) on or after

April 1, 2001 and before April 1, 2003,

that the Secretary increase the payment

amount otherwise made under section

1895 of the Act for services by 10

percent. The statute waives budget

neutrality related to this provision as it

specifically states that the Secretary

shall not reduce the standard

prospective payment amount (or

amounts) under section 1895 of the Act

applicable to home health services

furnished during a period to offset the

increase in payments resulting in the

application of this section of the statute.

Section 508 provides for payment for

the national standardized episode

amounts and LUPA national per-visit

amounts for the entire FY 2002 by an

additional 10 percent for home health

services furnished in rural areas where

the site of service for the beneficiary is

a non-MSA area. The applicable casemix and wage index adjustment is

subsequently applied to the 60-day

episode amount for the provision of

home health services where the site of

service is the non-MSA area of the

beneficiary. Similarly, the applicable

wage index adjustment is subsequently

applied to the LUPA per-visit amounts

Federal Register / Vol. 66, No. 126 / Friday, June 29, 2001 / Notices 34691

adjusted for the provision of home

health services where the site of service

for the beneficiary is a non-MSA area.

We implemented this provision for FY

2001 on April 1, 2001 through the

HCFA Program Memorandum,

‘‘Restoration of Full Home Health

Market Basket Update for Home Health

Services for Fiscal Year 2001 and

Temporary 10 Percent Payment Increase

for Home Health Services Furnished in

a Rural Area for 24 Months Under the

Home Health Prospective Payment

System (HH PPS)’’ (Transmittal A–01–

06 issued January 16, 2001). (See FY

2002 add-on noted in tables below:)

FY 2002 RURAL ADD-ON TO 60-DAY EPISODE PAYMENT AMOUNTS FOR BENEFICIARIES WHO RESIDE IN A NON-MSA

AREA PRIOR TO CASE-MIX ADJUSTMENT, WAGE INDEX ADJUSTMENT BASED ON THE SITE OF SERVICE OF THE BENEFICIARY, OR APPLICABLE PAYMENT ADJUSTMENT

Payment amount per 60-day episode for FY 2002 10% add-on

Final payment amount

per 60-day episode for

FY 2002 for a beneficiary who resides in a

rural non-MSA area.

$2,274.17 ..................................................................................................................................... x1.10 $2,501.59

FY 2002 RURAL ADD-ON TO LUPA PER-VISIT AMOUNTS PRIOR TO WAGE ADJUSTMENT BASED ON THE SITE OF SERVICE

OF THE BENEFICIARY WHO RESIDES IN A NON-MSA AREA OR PAYMENT APPLICABLE ADJUSTMENT

Home health discipline type

Final per-visit payment

amount per 60-day episodes for FY 2002 for

LUPAs

10% add-on

Final per-visit amount

per 60-day episodes for

FY 2002 for LUPAs for a

payment beneficiary who

resides in a non-MSA

area

Home Health Aide ........................................................................... $44.95 x1.10 $49.45

Medical Social Services ................................................................... 159.14 x1.10 175.05

Occupational Therapy ...................................................................... 109.28 x1.10 120.21

Physical Therapy ............................................................................. 108.55 x1.10 119.41

Skilled Nursing ................................................................................. 99.28 x1.10 109.21

Speech-Language Pathology .......................................................... 117.95 x1.10 129.75

D. Hospital Wage Index

Sections 1895(b)(4)(A)(ii) and (b)(4)(C)

of the Act require the Secretary to

establish area wage adjustment factors

that reflect the relative level of wages

and wage-related costs applicable to the

furnishing of home health services and

to provide appropriate adjustments to

the episode payment amounts under HH

PPS to account for area wage

differences. We apply the appropriate

wage index value to the labor portion of

the HH PPS rates based on the

geographic area in which the beneficiary

received home health services. We

determine each HHA’s labor market area

based on definitions of Metropolitan

Statistical Areas (MSAs) issued by the

Office of Management and Budget

(OMB).

As discussed previously and set forth

in the July 3, 2000 final rule, the statute

provides that the wage adjustment

factors may be the factors used by the

Secretary for purposes of section

1886(d)(3)(E) of the Act for hospital

wage adjustment factors. Again, as

discussed in the July 3, 2000 final rule,

we used the most recent pre-floor and

pre-reclassified hospital wage index

available at the time of publication of

this notice to adjust the labor portion of

the HH PPS rates based on the

geographic area in which the beneficiary

receives the home health services. We

believe the use of the most recent

available pre-floor and pre-reclassified

hospital wage index data results in the

appropriate adjustment to the labor

portion of the costs as required by

statute. (See addenda A and B of this

notice with comment period,

respectively, for the rural and urban

hospital wage indexes.)

III. Waiver of Proposed Rulemaking

We ordinarily publish a notice of

proposed rulemaking in the Federal

Register to provide a period for public

comment before the provisions of a

notice such as this take effect. We can

waive this procedure, however, if we

find good cause that a notice-andcomment procedure is impracticable,

unnecessary, or contrary to the public

interest and incorporates a statement of

finding and its reasons in the notice

issued.

We believe it is unnecessary to

undertake proposed notice and

comment rulemaking as the statute

requires annual updates to the HH PPS

rates, the methodologies used to update

the rate have been previously subject to

public comment, and this notice reflects

the application of previously

established methodologies. Further, the

new rural add-on and adjustments to FY

2001 HH PPS rates that were required

by the BIPA prior to this required

annual update for the FY 2002 PPS rates

are dictated by statute and do not

require an exercise of discretion.

Therefore, for good cause, we waive

prior notice and comment procedures.

As indicated previously, we are,

however, providing a 60-day comment

period for public comment.

IV. Collection of Information

Requirements

This document does not impose

information collection and

recordkeeping requirements.

Consequently, it need not be reviewed

by the Office of Management and

Budget under the authority of the

Paperwork Reduction Act of 1995 (44

U.S.C. 3501 et seq.).

V. Response to Comments

Because of the large number of items

of correspondence we normally receive

on Federal Register documents

published for comment, we are not able

to acknowledge or respond to them

individually. We will consider all

comments we receive by the date and

time specified in the DATES section of

34692 Federal Register / Vol. 66, No. 126 / Friday, June 29, 2001 / Notices

this preamble, and, if we proceed with

a subsequent document, we will

respond to the major comments in the

preamble to that document.

VI. Regulatory Impact Analysis

A. Overall Impact

We have examined the impacts of this

notice as required by Executive Order

12866 (September 1993, Regulatory

Planning and Review) and the

Regulatory Flexibility Act (RFA)

(September 19, 1980 Public Law 96–

354). Executive Order 12866 directs

agencies to assess all costs and benefits

of available regulatory alternatives and,

if regulation is necessary, to select

regulatory approaches that maximize

net benefits (including potential

economic, environmental, public health

and safety effects, distributive impacts,

and equity). A regulatory impact

analysis (RIA) must be prepared for

major rules with economically

significant effects ($100 million or more

in any 1 year). The update set forth in

this notice applies to Medicare

payments under HH PPS in FY 2002.

Accordingly, the analysis that follows

describes the impact in FY 2002 only.

We estimate that there will be an

additional $350 million in FY 2002

expenditures attributable to the FY 2002

market basket increase of 2.5 percent.

In addition, section 1102(b) of the Act

requires us to prepare a regulatory

impact analysis if a rule may have a

significant impact on the operations of

a substantial number of small rural

hospitals. This analysis must conform to

the provisions of section 604 of the

RFA. For purposes of section 1102(b) of

the Act, we define a small rural hospital

as a hospital that is located outside of

a MSA and has fewer than 50 beds. We

have determined that this notice with

comment period will not have a

significant economic impact on the

operations of a substantial number of

small rural hospitals.

The RFA requires agencies to analyze

options for regulatory relief of small

businesses. For purposes of the RFA,

small entities include small businesses,

nonprofit organizations, and

government agencies. Most hospitals

and most other providers and suppliers

are small entities, either by nonprofit

status or by having revenues of $10

million or less annually. For purposes of

the RFA, we consider most HHAs to be

small entities. Individuals and States are

not included in the definition of a small

entity. As stated above, this notice with

comment period provides an update to

all HHAs for FY 2002 as required by

statute. This notice with comment

period reflects the statutory update to

the HH PPS rates published in the July

3, 2000 final rule as amended by the

BIPA of 2000, but will have a significant

positive effect upon small entities.

Section 202 of the Unfunded Mandate

Reform Act of 1995 also requires that

agencies assess anticipated costs and

benefits before issuing any rule that may

result in expenditure in any 1 year by

State, local, or tribal governments, in the

aggregate, or by the private sector, of

$100 million. We believe this notice

with comment period will not mandate

expenditures in that amount.

Executive Order 13132 establishes

certain requirements that an agency

must meet when it promulgates a

proposed rule (and subsequent final

rule) that imposes substantial direct

requirement costs on State and local

governments, preempts State law, or

otherwise has Federalism implications.

We have reviewed this notice under the

threshold criteria of Executive Order

13132, Federalism. We have determined

that this notice would not have

substantial direct effects on the rights,

roles, and responsibilities of States.

B. Anticipated Effects

In accordance with the requirements

of section 1895(b)(3) of the Act, we

publish an update for each subsequent

fiscal year that will provide an update

to the payment rates. Section 1895(b)(3)

of the Act requires us, for FY 2002, to

increase the prospective payment

amounts by the home health market

basket increase minus 1.1 percentage

points. The home health market basket

increase for FY 2002 is 3.6 percent.

Taking into account the provisions of

section 1895(b)(3) of the Act, the

increase for FY 2002 is 2.5 percent (that

is, 3.6 percent–1.1 percent). This notice

with comment period is confined to

implementing the home health market

basket increase for FY 2002. For the

sake of clarity, we have also included

the amounts as increased by the rural

add-on provision under section 508 of

the BIPA. We implemented the rural

add-on amounts for FY 2002, effective

on April 1, 2001 through the HCFA

Program Memorandum, ‘‘Restoration of

Full Home Health Market Basket Update

for Home Health Services for Fiscal Year

2001 and Temporary 10 Percent

Payment Increase for Home Health

Services Furnished in a Rural Area for

24 Months Under the Home Health

Prospective Payment System (HH PPS)’’

(Transmittal A–01–06, issued January

16, 2001). Section 508 of the BIPA

provides a 10 percent rural add-on for

home health services furnished to

beneficiaries whose site of service is a

rural area (non-MSA) for 24 months

beginning with episodes ending on or

after April 1, 2001 and before April 1,

2003.

1. Effects on the Medicare Program

This notice with comment period

merely provides a percentage update to

all Medicare HHAs. Therefore, we have

not furnished any impact tables. We

increase the payment to each Medicare

HHA equally by the home health market

basket update for FY 2002, as required

by statute. There is no differential

impact among provider types. The

impact is in the aggregate. We estimate

that there will be an additional $350

million in FY 2002 expenditures

attributable to the FY 2002 market

basket increase of 2.5 percent. Thus, the

anticipated expenditures outlined in

this notice exceed the $100 million

annual threshold for a major rule as

defined in Title 5, U.S.C., section

804(2).

As discussed previously, several

sections of the BIPA impact the

estimated Medicare home health

expenditures in FY 2002. Section 501 of

the BIPA sets forth an additional 1-year

delay in application of the 15-percent

reduction. The delay of the 15-percent

reduction for 1 year results in an

additional $890 million in estimated

Medicare home health expenditures in

FY 2002. Section 502 of the BIPA

restores the full home health market

basket update for FY 2001. We estimate

that there will be an additional $170

million in FY 2002 expenditures due to

the restoration of the full home health

market basket in FY 2001. Section 508

of the BIPA requires a 10-percent

payment increase to the episode and

per-visit payment amounts under the

HH PPS for Medicare home health

services furnished in a rural area for a

24-month period. The 10-percent rural

add-on provides an additional payment

for Medicare home health services that

are provided where the site of service of

the beneficiary is a rural area. The 10-

percent rural add-on increases estimated

Medicare home health expenditures by

$310 million in FY 2002. (Source:

President’s Fiscal 2002 Budget) (See

tables below.)

Federal Register / Vol. 66, No. 126 / Friday, June 29, 2001 / Notices 34693

Provision of Medicare, Medicaid, and SCHIP Benefits

Improvement and Protection Act of 2000 (BIPA)

Additional FY 2002 Medicare

Home Health Estimated Expenditures Due to the BIPA

Provision

Section 501—additional year delay of 15-percent reduction ..................................................................................... $890 million.

Section 502—restoration of full home health market basket in FY 2001 .................................................................. $170 million.

Section 508—10-percent rural add-on for Medicare home health services furnished in a rural area ...................... $310 million.

FY 2002 Update to Home Health PPS Rates Required by the Act

Additional FY 2002 Medicare Home Health Estimated Expenditures Due to

Annual Update Required by

Law

Section 1895(b)(3)(B) of the Act requires HH PPS rates increased by home health market basket minus 1.1 percentage points in FY 2002 (2.5% increase).$350 million.

2. Effects on Providers

This notice with comment period will

have a positive effect on providers of

Medicare home health services by

increasing their rate of Medicare

payment. We do not anticipate specific

effects on other providers. This notice

with comment period reflects the

statutorily required annual update to the

HH PPS rates published in the July 3,

2000 final rule. Also, as discussed

above, this notice with comment period

provides an update to all Medicare

HHAs. We do not believe there is a

differential impact due to the consistent

and aggregate nature of the update.

C. Alternatives Considered

As discussed in section II, this notice

with comment period reflects an annual

update to the HH PPS rates as required

by statute. Due to the lack of discretion

provided in the statutory requirements

governing this notice with comment

period, we believe the statute provides

no latitude for alternatives other than

the approach set forth in this notice

reflecting the FY 2002 annual update to

the HH PPS rates. Also, as discussed in

section II for clarification, this notice

addresses the 10 percent rural add-on

required under section 508 of the BIPA

for home health services furnished to

beneficiaries who reside in a rural nonMSA area. Other than the positive effect

of the market basket increase, this notice

with comment will not have a

significant economic impact nor will it

impose an additional burden on small

entities. When a regulation or notice

imposes additional burden on small

entities, we are required under the RFA

to examine alternatives for reducing

burden. Since this notice with comment

period will not impose an additional

burden, we have not examined

alternatives.

D. Conclusion

We have examined the economic

impact of this notice with comment

period on small entities and have

determined that the economic impact is

positive, significant, and that all HHAs

will be affected. To the extent that small

rural hospitals are affiliated with HHAs,

the impact on these facilities will also

be positive. Finally, we have

determined that the economic effects

described above are largely the result of

the BIPA provisions which this notice

serves to announce.

We continue to analyze the

appropriateness and accuracy of

payments for differing case mixes. In the

fall of 2001, we intend to undertake a

re-evaluation of the OASIS reporting

system’s utility in ensuring more

accurate and equitable PPS payments.

In accordance with the provisions of

notice with comment Executive Order

12866, this was reviewed by the Office

of Management and Budget.

(Catalog of Federal Domestic Assistance

Program No. 93.773, Medicare—Hospital

Insurance; and Program No. 93.774,

Medicare—Supplementary Medical

Insurance Program)

Dated: March 15, 2001.

Michael McMullan,

Acting Deputy Administrator, Health Care

Financing Administration.

Dated: April 23, 2001.

Tommy G. Thompson,

Secretary.

[FR Doc. 01–16384 Filed 6–28–01; 8:45 am]

BILLING CODE 4120–01–P

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Health Care Financing Administration

[HCFA–1186–N]

Medicare Program; Public Meeting for

New Clinical Laboratory Tests—

Payment Determinations for Calendar

Year 2002

AGENCY: Health Care Financing

Administration (HCFA), HHS.

ACTION: Notice of meeting.

SUMMARY: This notice announces a

public meeting to discuss the

assignment of payment rates for specific

new Current Procedural Terminology

(CPT) codes for clinical laboratory tests.

These codes will be included in

Medicare’s Clinical Laboratory Fee

Schedule for calendar year 2002, which

will be effective on January 1, 2002. The

meeting is directed towards the

discussion of technical issues relating to

payment determinations for a specified

list of new codes, and discussion will be

limited to the codes on that list.

DATES: The Meeting: August 6, 2001,

from 8:30 a.m. until 4 p.m., E.D.T.

Deadline for Registration: Individuals

may register by sending a fax to the

attention of Anita Greenberg at (410)

786–0169, no later than July 25, 2001.

Please provide name, company name,

address, telephone number, and

indicate whether interested in making

an oral presentation.

Special Accommodations: Persons

attending the meeting who are hearing

or visually impaired and have special

requirements, or a condition that

requires special assistance or

accommodations, should notify Anita

Greenberg at fax number (410) 786–0169

or at telephone number (410) 786–4601

so that accommodations can be made.

ADDRESSES: The Meeting: The meeting

will be held at the Health Care

Financing Administration (HCFA)

Auditorium, 7500 Security Boulevard,

Baltimore, Maryland 21244.

Website: A summary of the meeting

will be posted on HCFA’s Internet

website (www.hcfa.gov) within 1 month

after the meeting.

General Information: The meeting

will be held in a government building;

therefore, security measures will be

applicable. Anyone without government

identification will need to present photo

identification, sign-in, and supply

registration information.