5342 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 412 

[CMS–1393–P] 

RIN 0938–AO94 

Medicare Program; Prospective 

Payment System for Long-Term Care 

Hospitals RY 2009: Proposed Annual 

Payment Rate Updates, Policy 

Changes, and Clarifications 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

update the annual payment rates for the 

Medicare prospective payment system 

(PPS) for inpatient hospital services 

provided by long-term care hospitals 

(LTCHs). In addition, we are proposing 

to consolidate the annual July 1 update 

for payment rates and the October 1 

update for Medicare severity long-term 

care diagnosis related group (MS–LTC– 

DRG) weights to a single fiscal year (FY) 

update. 

In this proposed rule, we are also 

clarifying various policy issues. 

This proposed rule would also 

describe our evaluation of the possible 

one-time adjustment to the Federal 

payment rate. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on March 24, 2008. 

ADDRESSES: In commenting, please refer 

to file code CMS–1393–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on specific issues 

in this regulation to http:// 

www.regulations.gov/. Follow the 

instructions for ‘‘Comment or 

Submission’’ and enter the filecode to 

find the document accepting comment. 

2. By regular mail. You may mail 

written comments (one original and two 

copies) to the following address ONLY: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: CMS–1393– 

P, P.O. Box 8013, Baltimore, MD 21244– 

8013. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments (one 

original and two copies) to the following 

address ONLY: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: CMS–1393– 

P, Mail Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments (one original 

and two copies) before the close of the 

comment period to one of the following 

addresses. If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786– 

7195 in advance to schedule your 

arrival with one of our staff members. 

Room 445–G, Hubert H. Humphrey 

Building, 200 Independence Avenue, 

SW., Washington, DC 20201; or 7500 

Security Boulevard, Baltimore, MD 

21244–1850. 

(Because access to the interior of the 

HHH Building is not readily available to 

persons without Federal Government 

identification, commenters are 

encouraged to leave their comments in 

the CMS drop slots located in the main 

lobby of the building. A stamp-in clock 

is available for persons wishing to retain 

a proof of filing by stamping in and 

retaining an extra copy of the comments 

being filed.) 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

Submission of comments on 

paperwork requirements. You may 

submit comments on this document’s 

paperwork requirements by mailing 

your comments to the addresses 

provided at the end of the ‘‘Collection 

of Information Requirements’’ section in 

this document. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Tzvi Hefter, (410) 786–4487 (General 

information). 

Judy Richter, (410) 786–2590 (General 

information, payment adjustments for 

special cases, onsite discharges and 

readmissions, interrupted stays, colocated providers, and short-stay 

outliers). 

Michele Hudson, (410) 786–5490 

(Calculation of the payment rates, MS– 

LTC–DRGs, relative weights and casemix index, market basket, wage index, 

budget neutrality, and other payment 

adjustments). 

Ann Fagan, (410) 786–5662 (Patient 

classification system). 

Linda McKenna, (410) 786–4537 

(Payment adjustments and interrupted 

stay). 

Elizabeth Truong, (410) 786–6005 

(Federal rate update, budget neutrality, 

other adjustments, and calculation of 

the payment rates). 

Michael Treitel, (410) 786–4552 (High 

cost outliers and cost-to-charge ratios). 

Table of Contents 

I. Background 

A. Legislative and Regulatory Authority 

B. Criteria for Classification as a LTCH 

1. Classification as a LTCH 

2. Hospitals Excluded From the LTCH PPS 

C. Transition Period for Implementation of 

the LTCH PPS 

D. Limitation on Charges to Beneficiaries 

E. Administrative Simplification 

Compliance Act (ASCA) and Health 

Insurance Portability and Accountability 

Act (HIPAA) Compliance 

II. Summary of the Provisions of This 

Proposed Rule 

III. Medicare Severity Long-Term Care 

Diagnosis-Related Group (LTC–DRG) 

Classifications and Relative Weights 

A. Background 

B. Patient Classifications into MS–LTC– 

DRGs 

C. Organization of MS–LTC–DRGs 

D. Method for Updating the MS–LTC–DRG 

Classifications and Relative Weights 

1. Background 

2. FY 2008 MS–LTC–DRG Relative Weights 

IV. Proposed Changes to the LTCH PPS 

Payment Rates and other Proposed 

Changes for the 2009 LTCH PPS Rate 

Year 

A. Overview of the Development of the 

Payment Rates 

B. Proposed Consolidation of the Annual 

Updates for Payment and MS–LTC–DRG 

Weights to One Annual Update 

C. LTCH PPS Market Basket 

1. Overview of the RPL Market Basket 

2. Market Basket Estimate for the 2009 

LTCH PPS Rate Year 

D. Discussion of a One-time Prospective 

Adjustment to the Standard Federal Rate 

E. Proposed Standard Federal Rate for the 

2009 LTCH PPS Rate Year 

1. Background 

2. Proposed Standard Federal Rate for the 

2009 LTCH PPS Rate Year 

F. Calculation of Proposed LTCH 

Prospective Payments for the 2009 LTCH 

PPS Rate Year 

1. Proposed Adjustment for Area Wage 

Levels 

a. Background 

b. Proposed Updates to the Geographic 

Classifications/Labor Market Area 

Definitions 

(1) Background 

(2) Proposed Update to the CBSA-based 

Labor Market Area Definitions 

(3) New England Deemed Counties 

(4) Proposed Codification of the Definitions 

of urban and rural under 42 CFR Part 

412, subpart O 

c. Proposed Labor-Related Share 

d. Proposed Wage Index Data 

2. Proposed Adjustment for Cost-of-Living 

in Alaska and Hawaii 


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3. Proposed Adjustment for High-Cost 

Outliers (HCOs) 

a. Background 

b. Cost-to-Charge Ratios (CCRs) 

c. Establishment of the Fixed-Loss Amount 

d. Application of Outlier Policy to ShortStay Outlier (SSO) Cases 

4. Other Proposed Payment Adjustments 

5. Technical Correction to the Budget 

Neutrality Requirement at 

§ 412.523(d)(2) 

G. Proposed Conforming Changes 

V. Computing the Proposed Adjusted Federal 

Prospective Payments for the 2009 LTCH 

PPS Rate Year 

VI. Monitoring 

VII. Method of Payment 

VIII. RTIs Research 

IX. Collection of Information Requirements 

X. Regulatory Impact Analysis 

A. Introduction 

1. Executive Order 12866 

2. Regulatory Flexibility Act (RFA) 

3. Impact on Rural Hospitals 

4. Unfunded Mandates 

5. Federalism 

6. Alternatives Considered 

B. Anticipated Effects of Proposed Payment 

Rate Changes 

1. Budgetary Impact 

2. Impact on Providers 

3. Calculation of Prospective Payments 

4. Results 

a. Location 

b. Participation Date 

c. Ownership Control 

d. Census Region 

e. Bed size 

5. Effects on the Medicare Program 

6. Effects on Medicare Beneficiaries 

C. Accounting Statement 

Regulations Text 

Addendum 

Table 1: Proposed Long-Term Care 

Hospital Wage Index for Urban Areas for 

Discharges Occurring from July 1, 2008 

through September 30, 2009. 

Table 2: Proposed Long-Term Care 

Hospital Wage Index for Rural Areas for 

Discharges Occurring from July 1, 2008 

through September 30, 2009. 

Table 3: FY 2008 MS–LTC–DRG Relative 

Weights, Geometric Average Length of Stay, 

Short-Stay Outlier Threshold and IPPSComparable Threshold (for Short-Stay 

Outlier Cases). 

Acronyms 

Because of the many terms to which we 

refer by acronym in this proposed rule, we 

are listing the acronyms used and their 

corresponding terms in alphabetical order 

below: 

3M 3M Health Information System 

AHA American Hospital Association 

AHIMA American Health Information 

Management Association 

ALOS Average length of stay 

ALTHA Acute Long Term Hospital 

Association 

ASCA Administrative Simplification 

Compliance Act of 2002 (Pub. L. 107–

105) 

BBA Balanced Budget Act of 1997 (Pub. L. 

105–33) 

BBRA Medicare, Medicaid, and SCHIP 

[State Children’s Health Insurance 

Program] Balanced Budget Refinement 

Act of 1999 (Pub. L. 106–113) 

BIPA Medicare, Medicaid, and SCHIP [State 

Children’s Health Insurance Program] 

Benefits Improvement and Protection 

Act of 2000 (Pub. L. 106–554) 

BLS Bureau of Labor Statistics 

BN Budget neutrality 

CBSA Core-based statistical area 

CC Complications and comorbidities 

CCR Cost-to-charge ratio 

C&M Coordination and maintenance 

CMI Case-mix index 

CMS Centers for Medicare & Medicaid 

Services 

COLA Cost of living adjustment 

COP Condition of participation 

CPI Consumer Price Index 

CY Calendar year 

DSH Disproportionate share of low–income 

patients 

DRGs Diagnosis–related groups 

ECI Employment Cost Index 

FI Fiscal intermediary 

FY Fiscal year 

FFY Federal fiscal year 

HCO High-cost outlier 

HCRIS Hospital cost report information 

system 

HHA Home health agency 

HHS (Department of) Health and Human 

Services 

HIPAA Health Insurance Portability and 

Accountability Act (Pub. L. 104–191) 

HIPC Health Information Policy Council 

HwHs Hospitals within hospitals 

ICD–9–CM International Classification of 

Diseases, Ninth Revision, Clinical 

Modification (codes) 

IME Indirect medical education 

I–O Input-Output 

IPF Inpatient psychiatric facility 

IPPS [Acute Care Hospital] Inpatient 

Prospective Payment System 

IRF Inpatient rehabilitation facility 

LOS Length of stay 

LTC-DRG Long-term care diagnosis-related 

group 

LTCH Long-term care hospital 

MAC Medicare Administrative Contractor 

MCE Medicare code editor 

MDC Major diagnostic categories 

MedPAC Medicare Payment Advisory 

Commission 

MedPAR Medicare provider analysis and 

review 

MMA Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (Pub. L. 108–173) 

MMSEA Medicare, Medicaid, and SCHIP 

Extension Act of 2007 (Pub. L. 110–173) 

MSA Metropolitan statistical area 

MS–DRG Medicare severity diagnosisrelated group 

MS–LTC–DRG Medicare severity long-term 

care diagnosis-related group 

NAICS North American Industrial 

Classification System 

NALTH National Association of Long Term 

Hospitals 

NCHS National Center for Health Statistics 

OACT [CMS’] Office of the Actuary 

OBRA 86 Omnibus Budget Reconciliation 

Act of 1986 (Pub. L. 99–509) 

OMB Office of Management and Budget 

OPM U.S. Office of Personnel Management 

O.R. Operating room 

OSCAR Online Survey Certification and 

Reporting (System) 

PIP Periodic interim payment 

PLI Professional liability insurance 

PMSA Primary metropolitan statistical area 

PPI Producer Price Indexes 

PPS Prospective payment system 

PSF Provider specific file 

QIO Quality Improvement Organization 

(formerly Peer Review organization 

(PRO)) 

RIA Regulatory impact analysis 

RPL Rehabilitation psychiatric long-term 

care (hospital) 

RTI Research Triangle Institute, 

International 

RY Rate year (begins July 1 and ends June 

30) 

SIC Standard industrial code 

SNF Skilled nursing facility 

SSO Short-stay outlier 

TEFRA Tax Equity and Fiscal 

Responsibility Act of 1982 (Pub. L. 97–

248) 

TEP Technical expert panel 

UHDDS Uniform hospital discharge data set 

I. Background 

A. Legislative and Regulatory Authority 

Section 123 of the Medicare, 

Medicaid, and SCHIP (State Children’s 

Health Insurance Program) Balanced 

Budget Refinement Act of 1999 (BBRA) 

(Pub. L. 106–113) as amended by 

section 307(b) of the Medicare, 

Medicaid, and SCHIP Benefits 

Improvement and Protection Act of 

2000 (BIPA) (Pub. L. 106–554) provides 

for payment for both the operating and 

capital-related costs of hospital 

inpatient stays in long-term care 

hospitals (LTCHs) under Medicare Part 

A based on prospectively set rates. The 

Medicare prospective payment system 

(PPS) for LTCHs applies to hospitals 

described in section 1886(d)(1)(B)(iv) of 

the Social Security Act (the Act), 

effective for cost reporting periods 

beginning on or after October 1, 2002. 

Section 1886(d)(1)(B)(iv)(I) of the Act 

defines a LTCH as ‘‘a hospital which has 

an average inpatient length of stay (as 

determined by the Secretary) of greater 

than 25 days.’’ Section 

1886(d)(1)(B)(iv)(II) of the Act also 

provides an alternative definition of 

LTCHs: Specifically, a hospital that first 

received payment under section 1886(d) 

of the Act in 1986 and has an average 

inpatient length of stay (LOS) (as 

determined by the Secretary of Health 

and Human Services (the Secretary)) of 

greater than 20 days and has 80 percent 

or more of its annual Medicare inpatient 

discharges with a principal diagnosis 

that reflects a finding of neoplastic 

disease in the 12-month cost reporting 

period ending in fiscal year (FY) 1997. 

Section 123 of the BBRA requires the 

PPS for LTCHs to be a ‘‘per discharge’’


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system with a diagnosis-related group 

(DRG) based patient classification 

system that reflects the differences in 

patient resources and costs in LTCHs. 

Section 307(b)(1) of the BIPA, among 

other things, mandates that the 

Secretary shall examine, and may 

provide for, adjustments to payments 

under the LTCH PPS, including 

adjustments to DRG weights, area wage 

adjustments, geographic reclassification, 

outliers, updates, and a disproportionate 

share adjustment. 

In the August 30, 2002 Federal 

Register, we issued a final rule that 

implemented the LTCH PPS authorized 

under BBRA and BIPA (67 FR 55954). 

This system uses information from 

LTCH patient records to classify 

patients into distinct MS-long-term care 

diagnosis-related groups (MS-LTCDRGs) based on clinical characteristics 

and expected resource needs. Payments 

are calculated for each MS-LTC-DRG 

and provisions are made for appropriate 

payment adjustments. Payment rates 

under the LTCH PPS are updated 

annually and published in the Federal 

Register. 

The LTCH PPS replaced the 

reasonable cost-based payment system 

under the Tax Equity and Fiscal 

Responsibility Act of 1982 (TEFRA) 

(Pub. L. 97–248) for payments for 

inpatient services provided by a LTCH 

with a cost reporting period beginning 

on or after October 1, 2002. (The 

regulations implementing the TEFRA 

reasonable cost-based payment 

provisions are located at 42 CFR part 

413.) With the implementation of the 

PPS for acute care hospitals authorized 

by the Social Security Amendments of 

1983 (Pub. L. 98–21), which added 

section 1886(d) to the Act, certain 

hospitals, including LTCHs, were 

excluded from the PPS for acute care 

hospitals and were paid their reasonable 

costs for inpatient services subject to a 

per discharge limitation or target 

amount under the TEFRA system. For 

each cost reporting period, a hospitalspecific ceiling on payments was 

determined by multiplying the 

hospital’s updated target amount by the 

number of total current year Medicare 

discharges. (Generally, in this document 

when we refer to discharges, the intent 

is to describe Medicare discharges.) The 

August 30, 2002 final rule further 

details the payment policy under the 

TEFRA system (67 FR 55954). 

In the August 30, 2002 final rule, we 

also presented an in-depth discussion of 

the LTCH PPS, including the patient 

classification system, relative weights, 

payment rates, additional payments, 

and the BN requirements mandated by 

section 123 of the BBRA. The same final 

rule that established regulations for the 

LTCH PPS under 42 CFR part 412, 

subpart O, also contained LTCH 

provisions related to covered inpatient 

services, limitation on charges to 

beneficiaries, medical review 

requirements, furnishing of inpatient 

hospital services directly or under 

arrangement, and reporting and 

recordkeeping requirements. We refer 

readers to the August 30, 2002 final rule 

for a comprehensive discussion of the 

research and data that supported the 

establishment of the LTCH PPS (67 FR 

55954). 

In the June 6, 2003 Federal Register, 

we published a final rule that set forth 

the FY 2004 annual update of the 

payment rates for the Medicare PPS for 

inpatient hospital services furnished by 

LTCHs (68 FR 34122). It also changed 

the annual period for which the 

payment rates are effective. The annual 

updated rates are now effective from 

July 1 through June 30 instead of from 

October 1 through September 30. We 

refer to the July through June time 

period as a ‘‘long-term care hospital rate 

year’’ (LTCH PPS rate year). In addition, 

we changed the publication schedule for 

the annual update to allow for an 

effective date of July 1. The payment 

amounts and factors used to determine 

the annual update of the LTCH PPS 

Federal rate are based on a LTCH PPS 

rate year. While the LTCH payment rate 

update is effective July 1, the annual 

update of the DRG classifications and 

relative weights for LTCHs are linked to 

the annual adjustments of the acute care 

hospital inpatient DRGs and are 

effective each October 1. 

In the Prospective Payment System 

for Long-Term Care Hospitals RY 2007: 

Annual Payment Rate Updates, Policy 

Changes, and Clarifications final rule 

(71 FR 27798) (hereinafter referred to as 

the RY 2007 LTCH PPS final rule), we 

set forth the 2007 LTCH PPS rate year 

annual update of the payment rates for 

the Medicare PPS for inpatient hospital 

services provided by LTCHs. We also 

adopted the ‘‘Rehabilitation, 

Psychiatric, Long-Term Care (RPL)’’

market basket under the LTCH PPS in 

place of the excluded hospital with 

capital market basket. In addition, we 

implemented a zero percent update to 

the LTCH PPS Federal rate for RY 2007. 

We also revised the existing payment 

adjustment for short stay outlier (SSO) 

cases by reducing part of the existing 

payment formula and adding a fourth 

component to that payment formula. We 

also sunsetted the surgical DRG 

exception to the payment policy 

established under the 3-day or less 

interruption of stay policy. Finally, we 

clarified the policy at § 412.534(c) for 

adjusting the LTCH PPS payment so that 

the LTCH PPS payment is equivalent to 

what would otherwise be payable under 

§ 412.1(a). 

The Medicare, Medicaid and SCHIP 

Extension Act of 2007 (MMSEA) (Pub.L. 

110–173) was enacted on December 29, 

2007 and has various effects on the 

LTCH PPS. The new law’s provisions 

also have varying time frames of 

applicability. First, we note that certain 

provisions of the MMSEA provided that 

Secretary shall not apply, for cost 

reporting periods beginning on or after 

the date of the enactment of the Act 

(December 29, 2007) for a 3-year period: 

the extension of payment adjustments at 

§ 412.534 to ‘‘grandfathered LTCHs’’ (a 

long term care hospital identified by the 

amendment made by section 4417(a) of 

Pub. L. 105–33); and the payment 

adjustment at § 412.536 to 

‘‘freestanding’’ LTCHs. In addition, the 

new law provides that the Secretary 

shall not apply, for the 3-year period 

beginning on the date of enactment of 

the Act the revision to the SSO policy 

at § 412.529(c)(3)(i) that was finalized in 

72 FR 26904 and 26992 and the onetime adjustment to the payment rates 

provided for in § 412.523(d)(3). The 

statute also provides that the base rate 

for RY 2008 be the same as the base rate 

for RY 2007 (the revised base rate, 

however, does not apply to discharges 

occurring on or after July 1, 2007 and 

before April 1, 2008); for a 3-year 

moratorium (with specified exceptions) 

on the establishment of new LTCHs, 

LTCH satellites, and on the increase in 

the number of LTCH beds. The new law 

also revises in the threshold percentages 

for certain co-located LTCHs and LTCH 

satellites governed under § 412.534. 

Finally, the Act provides for an 

expanded review of medical necessity 

for admission and continued stay at 

LTCHs. In this proposed rule we are 

proposing to establish the applicable 

Federal rates for RY 2009 consistent 

with section 1886(m)(2) of the Act as 

amended by MMSEA. We are also 

proposing to amend our regulations at 

§ 412.523(d)(3) to change the 

methodology for the one-time budget 

neutrality adjustment and to comply 

with section 114(c)(4) of Pub. L. 110–

173. We intend to address all other 

policy revisions necessitated by the 

statutory changes of the new law in the 

future. 

B. Criteria for Classification as a LTCH 

1. Classification as a LTCH 

Under the existing regulations at 

§ 412.23(e)(1) and (e)(2)(i), which 

implement section 1886(d)(1)(B)(iv)(I) of 

the Act, to qualify to be paid under the 


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LTCH PPS, a hospital must have a 

provider agreement with Medicare and 

must have an average Medicare 

inpatient LOS of greater than 25 days. 

Alternatively, § 412.23(e)(2)(ii) states 

that for cost reporting periods beginning 

on or after August 5, 1997, a hospital 

that was first excluded from the PPS in 

1986 and can demonstrate that at least 

80 percent of its annual Medicare 

inpatient discharges in the 12-month 

cost reporting period ending in FY 1997 

have a principal diagnosis that reflects 

a finding of neoplastic disease must 

have an average inpatient LOS for all 

patients, including both Medicare and 

non-Medicare inpatients, of greater than 

20 days. 

Section 412.23(e)(3) provides that, 

subject to the provisions of paragraphs 

(e)(3)(ii) through (e)(3)(iv) of this 

section, the average Medicare inpatient 

LOS, specified under § 412.23(e)(2)(i) is 

calculated by dividing the total number 

of covered and noncovered days of stay 

for Medicare inpatients (less leave or 

pass days) by the number of total 

Medicare discharges for the hospital’s 

most recent complete cost reporting 

period. Section 412.23 also provides 

that subject to the provisions of 

paragraphs (e)(3)(ii) through (e)(3)(iv) of 

this section, the average inpatient LOS 

specified under § 412.23(e)(2)(ii) is 

calculated by dividing the total number 

of days for all patients, including both 

Medicare and non-Medicare inpatients 

(less leave or pass days) by the number 

of total discharges for the hospital’s 

most recent complete cost reporting 

period. 

In the RY 2005 LTCH PPS final rule 

(69 FR 25674), we specified the 

procedure for calculating a hospital’s 

inpatient average length of stay (ALOS) 

for purposes of classification as a LTCH. 

That is, if a patient’s stay includes days 

of care furnished during two or more 

separate consecutive cost reporting 

periods, the total days of a patient’s stay 

would be reported in the cost reporting 

period during which the patient is 

discharged (69 FR 25705). Therefore, we 

revised § 412.23(e)(3)(ii) to specify that, 

effective for cost reporting periods 

beginning on or after July 1, 2004, in 

calculating a hospital’s ALOS, if the 

days of an inpatient stay involve days of 

care furnished during two or more 

separate consecutive cost reporting 

periods, the total number of days of the 

stay are considered to have occurred in 

the cost reporting period during which 

the inpatient was discharged. 

Fiscal intermediaries (FIs) verify that 

LTCHs meet the ALOS requirements. 

We note that the inpatient days of a 

patient who is admitted to a LTCH 

without any remaining Medicare days of 

coverage, regardless of the fact that the 

patient is a Medicare beneficiary, will 

not be included in the above 

calculation. Because Medicare would 

not be paying for any of the patient’s 

treatment, data on the patient’s stay 

would not be included in the Medicare 

claims processing systems. In order for 

both covered and noncovered days of a 

LTCH hospitalization to be included, a 

patient admitted to the LTCH must have 

at least 1 remaining benefit day (68 FR 

34123). 

The FI’s determination of whether or 

not a hospital qualifies as an LTCH is 

based on the hospital’s discharge data 

from the hospital’s most recent 

complete cost reporting period as 

specified in § 412.23(e)(3) and is 

effective at the start of the hospital’s 

next cost reporting period as specified 

in § 412.22(d). However, if the hospital 

does not meet the ALOS requirement as 

specified in § 412.23(e)(2)(i) or (ii), the 

hospital may provide the FI with data 

indicating a change in the ALOS by the 

same method for the period of at least 

5 months of the immediately preceding 

6-month period (69 FR 25676). Our 

interpretation of § 412.23(e)(3) was to 

allow hospitals to submit data using a 

period of at least 5 months of the most 

recent data from the immediately 

preceding 6-month period. 

As we stated in the FY 2004 Hospital 

Inpatient Prospective Payment System 

(IPPS) final rule, published in the 

August 1, 2003 Federal Register, prior 

to the implementation of the LTCH PPS, 

we did rely on data from the most 

recently submitted cost report for 

purposes of calculating the ALOS (68 

FR 45464). The calculation to determine 

whether an acute care hospital qualifies 

for LTCH status was based on total days 

and discharges for LTCH inpatients. 

However, with the implementation of 

the LTCH PPS, for the ALOS specified 

under § 412.23(e)(2)(i), we revised 

§ 412.23(e)(3)(i) to only count total days 

and discharges for Medicare inpatients 

(67 FR 55970 through 55974). In 

addition, the ALOS specified under 

§ 412.23(e)(2)(ii) is calculated by 

dividing the total number of days for all 

patients, including both Medicare and 

non-Medicare inpatients (less leave or 

pass days) by the number of total 

discharges for the hospital’s most recent 

complete cost reporting period. As we 

discussed in the FY 2004 IPPS final 

rule, we are unable to capture the 

necessary data from our existing cost 

reporting forms (68 FR 45464). 

Therefore, we notified FIs and LTCHs 

that until the cost reporting forms are 

revised, for purposes of calculating the 

ALOS, we will be relying upon census 

data extracted from Medicare Provider 

Analysis and Review (MedPAR) files 

that reflect each LTCH’s cost reporting 

period (68 FR 45464). Requirements for 

hospitals seeking classification as 

LTCHs that have undergone a change in 

ownership, as described in § 489.18, are 

set forth in § 412.23(e)(3)(iv). 

2. Hospitals Excluded From the LTCH 

PPS 

The following hospitals are paid 

under special payment provisions, as 

described in § 412.22(c), and therefore, 

are not subject to the LTCH PPS rules: 

• Veterans Administration hospitals. 

• Hospitals that are reimbursed under 

State cost control systems approved 

under 42 CFR part 403. 

• Hospitals that are reimbursed in 

accordance with demonstration projects 

authorized under section 402(a) of the 

Social Security Amendments of 1967 

(Pub. L. 90–248) (42 U.S.C. 1395b–1) or 

section 222(a) of the Social Security 

Amendments of 1972 (Pub. L. 92–603) 

(42 U.S.C. 1395b–1 (note)) (Statewide 

all-payer systems, subject to the rate-ofincrease test at section 1814(b) of the 

Act). 

• Nonparticipating hospitals 

furnishing emergency services to 

Medicare beneficiaries. 

C. Transition Period for Implementation 

of the LTCH PPS 

In the August 30, 2002 final rule (67 

FR 55954), we provided for a 5-year 

transition period. During this 5-year 

transition period, a LTCH’s total 

payment under the PPS was based on an 

increasing percentage of the Federal rate 

with a corresponding decrease in the 

percentage of the LTCH PPS payment 

that is based on reasonable cost 

concepts. However, effective for cost 

reporting periods beginning on or after 

October 1, 2006, total LTCH PPS 

payments are based on 100 percent of 

the Federal rate. 

D. Limitation on Charges to 

Beneficiaries 

In the August 30, 2002 final rule, we 

presented an in-depth discussion of 

beneficiary liability under the LTCH 

PPS (67 FR 55974 through 55975). In the 

RY 2005 LTCH PPS final rule (69 FR 

25676), we clarified that the discussion 

of beneficiary liability in the August 30, 

2002 final rule was not meant to 

establish rates or payments for, or define 

Medicare-eligible expenses. Under 

§ 412.507, if the Medicare payment to 

the LTCH is the full LTC–DRG payment 

amount, as consistent with other 

established hospital prospective 

payment systems, a LTCH may not bill 

a Medicare beneficiary for more than the 

deductible and coinsurance amounts as 


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specified under § 409.82, § 409.83, and 

§ 409.87 and for items and services as 

specified under § 489.30(a). However, 

under the LTCH PPS, Medicare will 

only pay for days for which the 

beneficiary has coverage until the SSO 

threshold is exceeded. Therefore, if the 

Medicare payment was for a SSO case 

(§ 412.529) that was less than the full 

LTC–DRG payment amount because the 

beneficiary had insufficient remaining 

Medicare days, the LTCH could also 

charge the beneficiary for services 

delivered on those uncovered days 

(§ 412.507). 

E. Administrative Simplification 

Compliance Act (ASCA) and Health 

Insurance Portability and 

Accountability Act (HIPAA) Compliance 

Claims submitted to Medicare must 

comply with both the Administrative 

Simplification Compliance Act (ASCA) 

(Pub. L. 107–105), and Health Insurance 

Portability and Accountability Act of 

1996 (HIPAA) (Pub. L. 104–191). 

Section 3 of the ASCA requires that the 

Medicare Program deny payment under 

Part A or Part B for any expenses 

incurred for items or services ‘‘for 

which a claim is submitted other than 

in an electronic form specified by the 

Secretary.’’ Section 1862(h) of the Act 

(as added by section 3(a) of the ASCA) 

provides that the Secretary shall waive 

such denial in two specific types of 

cases and may also waive such denial 

‘‘in such unusual cases as the Secretary 

finds appropriate’’ (68 FR 48805). 

Section 3 of the ASCA operates in the 

context of the HIPAA regulations, which 

include, among other provisions, the 

transactions and code sets standards 

requirements codified as 45 CFR parts 

160 and 162, subparts A and I through 

R (generally known as the Transactions 

Rule). The Transactions Rule requires 

covered entities, including covered 

health care providers, to conduct certain 

electronic healthcare transactions 

according to the applicable transactions 

and code sets standards. 

II. Summary of the Provisions of This 

Proposed Rule 

In this proposed rule, we propose to 

revise the LTCH PPS payment rate 

update cycle and make other policy 

changes and clarifications. The 

following is a summary of the major 

areas that we are addressing in this 

proposed rule. 

In section III. of this proposed rule, 

we discuss the LTCH PPS patient 

classification and the relative weights 

which are linked to the annual 

adjustments of the acute care hospital 

inpatient DRG system, and are based on 

the annual revisions to the International 

Classification of Diseases, Ninth 

Revision, Clinical Modification (ICD–9–

CM) codes effective each October 1. In 

this section, we also summarize the 

severity adjusted MS–LTC–DRGs and 

the development of the relative weights 

for FY 2008 as established in the FY 

2008 IPPS final rule with comment 

period. 

In section IV.B. of this proposed rule, 

we are proposing to extend the rate year 

cycle for RY 2009 to a 15-month period, 

from July 1, 2008 through September 30, 

2009. We would continue to have an 

update to the MS–LTC–DRG 

classifications and weights effective for 

October 1, 2008. We are proposing to 

have one consolidated annual update to 

both the rates and the classifications 

and weights beginning October 1, 2009. 

As discussed in section IV.E.2. of this 

proposed rule, we are proposing a 3.5 

percent market basket update to the 

LTCH PPS Federal rate for the 2009 

LTCH PPS rate year based on the most 

recent market basket estimate for the 

proposed 15-month 2009 LTCH PPS rate 

year. Also in section IV. of this 

proposed rule, we discuss the 

prospective payment rate for RY 2009. 

In section IV. D. of this proposed rule, 

we discuss the possible one-time 

adjustment to the Federal payment rate 

under § 412.523(d)(3). Consistent with 

section 114(c)(4) of Public Law 110–173, 

we are not proposing any adjustment 

under § 412.523(d)(3). However, at this 

time, we are proposing to make a change 

to the methodology and changes 

reflecting the requirements of section 

114(c)(4) of Public Law 110–173 to the 

regulatory text. 

In section VI. of this proposed rule, 

we discuss the proposed updates to the 

payment rates, including the proposed 

revisions to the wage index, the laborrelated share, the cost-of-living 

adjustment (COLA) factors, and the 

outlier threshold, for the 2009 LTCH 

PPS rate year. 

In section IX. of this proposed rule, 

we discuss our on-going monitoring 

protocols under the LTCH PPS. 

In section X. of this proposed rule, we 

present an update of Research Triangle 

Institute’s (RTI) analysis relating to the 

development of LTCH patient- and 

facility-level criteria. 

In section XII. of this proposed rule, 

we analyze the impact of the proposed 

changes presented in this proposed rule 

on Medicare expenditures, Medicareparticipating LTCHs, and Medicare 

beneficiaries. 

III. Medicare Severity Long-Term Care 

Diagnosis-Related Group (MS–LTC– 

DRG) Classifications and Relative 

Weights 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘MS–LTC–DRG CLASSIFICATIONS 

AND RELATIVE WEIGHTS’’ at the 

beginning of your comments.] 

A. Background 

Section 123 of the BBRA requires that 

the Secretary implement a PPS for 

LTCHs (that is, a per discharge system 

with a DRG-based patient classification 

system reflecting the differences in 

patient resources and costs). Section 

307(b)(1) of the BIPA modified the 

requirements of section 123 of the BBRA 

by requiring that the Secretary examine 

‘‘the feasibility and the impact of basing 

payment under such a system (the 

LTCH PPS) on the use of existing (or 

refined) hospital DRGs that have been 

modified to account for different 

resource use of LTCH patients, as well 

as the use of the most recently available 

hospital discharge data.’’

When the LTCH PPS was 

implemented for cost reporting periods 

beginning on or after October 1, 2002, 

we adopted the same DRG patient 

classification system (that is, the CMS 

DRGs) that was utilized at that time 

under the hospital inpatient prospective 

payment system (IPPS). As a component 

of the LTCH PPS, we refer to the patient 

classification system as the ‘‘LTC–

DRGs.’’ As discussed in greater detail 

below, although the patient 

classification system used under both 

the LTCH PPS and the IPPS are the 

same, the relative weights are different. 

The established relative weight 

methodology and data used under the 

LTCH PPS result in LTC–DRG relative 

weights that reflect ‘‘the different 

resource use of long-term care hospital 

patients consistent with the statute’’. 

As part of our efforts to better 

recognize severity of illness among 

patients, in the FY 2008 IPPS final rule 

with comment period (72 FR 47130), the 

Medicare Severity diagnosis related 

groups (MS–DRGs) and the Medicare 

Severity long-term care diagnosis 

related groups (MS–LTC–DRGs) were 

adopted for the IPPS and the LTCH PPS, 

respectively, effective October 1, 2007 

(FY 2008). For a full description of the 

development and implementation of the 

MS–DRGs and MS–LTC–DRGs, see the 

FY 2008 IPPS final rule with comment 

period (72 FR 47141 through 47175 and 

47277 through 47299). (We note that in 

that same final rule, we revised the 

regulations at § 412.503 to specify that 

for LTCH discharges occurring on or 


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after October 1, 2007, when applying 

the provisions of this subpart for policy 

descriptions and payment calculations, 

all references to LTC–DRGs would be 

considered a reference to MS–LTC–

DRGs. For the remainder of this section, 

we present the discussion in terms of 

the current MS–LTC–DRG patient 

classification unless specifically 

referring to the previous LTC–DRG 

patient classification system (that was in 

effect before October 1, 2007).) We 

believe the MS–DRGs (and by extension, 

the MS–LTC–DRGs) represent a 

substantial improvement over the 

previous CMS DRGs in their ability to 

differentiate cases based on severity of 

illness and resource consumption. 

The MS–DRGs represent an increase 

in the number of DRGs by 207 (that is, 

from 538 to 745) (72 FR 47171). In 

addition to improving the DRG system’s 

recognition of severity of illness, we 

believe the MS–DRGs are responsive to 

the public comments that were made on 

the FY 2007 IPPS proposed rule with 

respect to how we should undertake 

further DRG reform. The MS–DRGs use 

the CMS DRGs as the starting point for 

revising the DRG system to better 

recognize resource complexity and 

severity of illness. We have generally 

retained all of the refinements and 

improvements that have been made to 

the base DRGs over the years that 

recognize the significant advancements 

in medical technology and changes to 

medical practice. 

In accordance with section 123 of the 

BBRA as amended by section 307(b)(1) 

of the BIPA and § 412.515, we use 

information derived from LTCH PPS 

patient records to classify LTCH 

discharges into distinct MS–LTC–DRGs 

based on clinical characteristics and 

estimated resource needs. As stated 

above, the MS–LTC–DRGs used as the 

patient classification component of the 

LTCH PPS correspond to the hospital 

inpatient MS–DRGs in the IPPS. We 

assign an appropriate weight to the MS–

LTC–DRGs to account for the difference 

in resource use by patients exhibiting 

the case complexity and multiple 

medical problems characteristic of 

LTCHs. 

In a departure from the IPPS, we use 

low volume MS–LTC–DRGs (less than 

25 LTCH cases) in determining the MS–

LTC–DRG relative weights, since LTCHs 

do not typically treat the full range of 

diagnoses as do acute care hospitals. To 

manage the large number of low volume 

MS–LTC–DRGs (all MS–LTC–DRGs 

with fewer than 25 LTCH cases), for 

purposes of determining the relative 

weights, we group low volume MS–

LTC–DRGs into 5 quintiles based on 

average charge per discharge. (A 

detailed discussion of the application of 

the Lewin Group ‘‘quintile’’ model that 

was used to develop the LTC–DRGs 

appears in the August 30, 2002 LTCH 

PPS final rule (67 FR 55978).) We also 

account for adjustments to payments for 

short-stay outlier (SSO) cases (that is, 

cases where the covered length of stay 

(LOS) at the LTCH is less than or equal 

to five-sixths of the geometric ALOS for 

the MS–LTC–DRG), and we make 

adjustments to account for 

nonmonotonicity, when necessary (as 

described below in this section). 

B. Patient Classifications Into MS–LTC– 

DRGs 

Generally, under the LTCH PPS, a 

Medicare payment is made at a 

predetermined specific rate for each 

discharge; that payment varies by the 

MS–LTC–DRG to which a beneficiary’s 

stay is assigned. Cases are classified into 

MS–LTC–DRGs for payment based on 

the following six data elements: 

• Principal diagnosis. 

• Up to eight additional diagnoses. 

• Up to six procedures performed. 

• Age. 

• Sex. 

• Discharge status of the patient. 

Upon the discharge of the patient 

from a LTCH, the LTCH must assign 

appropriate diagnosis and procedure 

codes from the most current version of 

the International Classification of 

Diseases, Ninth Revision, Clinical 

Modification (ICD–9–CM). HIPAA 

Transactions and Code Sets Standards 

regulations at 45 CFR parts 160 and 162 

require that no later than October 16, 

2003, all covered entities must comply 

with the applicable requirements of 

subparts A and I through R of part 162. 

Among other requirements, those 

provisions direct covered entities to use 

the ASC X12N 837 Health Care Claim: 

Institutional, Volumes 1 and 2, version 

4010, and the applicable standard 

medical data code sets for the 

institutional health care claim or 

equivalent encounter information 

transaction (see 45 CFR 162.1002 and 45 

CFR 162.1102). For additional 

information on the ICD–9–CM Coding 

System, refer to the FY 2008 IPPS final 

rule with comment period (72 FR 47241 

through 47243 and 47277 through 

47281). We also refer readers to the 

detailed discussion on correct coding 

practices in the August 30, 2002 LTCH 

PPS final rule (67 FR 55981 through 

55983). Additional coding instructions 

and examples are published in the 

Coding Clinic for ICD–9–CM. 

Medicare contractors (that is, fiscal 

intermediaries (FIs), now called 

Medicare Administrative Contractors 

(MACs)) enter the clinical and 

demographic information into their 

claims processing systems and subject 

this information to a series of automated 

screening processes called the Medicare 

Code Editor (MCE). These screens are 

designed to identify cases that require 

further review before assignment into a 

MS–LTC–DRG can be made. During this 

process, the following types of cases are 

selected for further development: 

• Cases that are improperly coded. 

(For example, diagnoses are shown that 

are inappropriate, given the sex of the 

patient. Code 68.69, Other and 

unspecified radical abdominal 

hysterectomy, would be an 

inappropriate code for a male.) 

• Cases including surgical procedures 

not covered under Medicare. (For 

example, organ transplant in a nonapproved transplant center.) 

• Cases requiring more information. 

(For example, ICD–9–CM codes are 

required to be entered at their highest 

level of specificity. There are valid 3- 

digit, 4-digit, and 5-digit codes. That is, 

code 262, Other severe protein-calorie 

malnutrition, contains all appropriate 

digits, but if it is reported with either 

fewer or more than 3 digits, the claim 

will be rejected by the MCE as invalid.) 

After screening through the MCE, 

each claim is classified into the 

appropriate MS–LTC–DRG by the 

Medicare LTCH GROUPER software. 

The Medicare GROUPER software, 

which is used under the LTCH PPS, is 

specialized computer software, and is 

the same GROUPER software program 

used under the IPPS. The GROUPER 

software was developed as a means of 

classifying each case into a MS–LTC–

DRG on the basis of diagnosis and 

procedure codes and other demographic 

information (age, sex, and discharge 

status). Following the MS–LTC–DRG 

assignment, the Medicare contractor (FI 

or MAC) determines the prospective 

payment amount by using the Medicare 

PRICER program, which accounts for 

hospital-specific adjustments. Under the 

LTCH PPS, we provide an opportunity 

for the LTCH to review the MS–LTC–

DRG assignments made by the Medicare 

contractor and to submit additional 

information within a specified 

timeframe as specified in § 412.513(c). 

The GROUPER software is used both 

to classify past cases to measure relative 

hospital resource consumption to 

establish the DRG weights and to 

classify current cases for purposes of 

determining payment. The records for 

all Medicare hospital inpatient 

discharges are maintained in the 

MedPAR file. The data in this file are 

used to evaluate possible MS–DRG 

classification changes and to recalibrate 

the MS–DRG and MS–LTC–DRG relative 


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weights during CMS’ annual update 

under both the IPPS (§ 412.60(e)) and 

the LTCH PPS (§ 412.517), respectively. 

As discussed in greater detail in section 

III.D. of this preamble, with the 

implementation of section 503(a) of the 

Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (MMA) (Pub. L. 108–173), there is 

the possibility that one feature of the 

GROUPER software program may be 

updated twice during a Federal FY 

(FFY) (October 1 and April 1) as 

required by the statute for the IPPS (69 

FR 48954 through 48957). Specifically, 

as we discussed in the FY 2008 IPPS 

final rule with comment period (72 FR 

47227 through 47278), diagnosis and 

procedure codes for new medical 

technology have the potential to be 

created and added to existing MS–DRGs 

(and MS–LTC–DRGs) in the middle of 

the FFY on April 1. New codes would 

be added to their predecessor MS–DRGs 

and MS–LTC–DRGs; no new MS–DRGs 

would be created. Additionally, this 

policy change will have no effect on the 

MS–LTC–DRG relative weights (during 

the FY), which will continue to be 

updated only once a year (October 1), 

nor will there be any impact on 

Medicare payments under the LTCH 

PPS during the FY as result of this 

policy. The use of the ICD–9–CM code 

set is also compliant with the current 

requirements of the Transactions and 

Code Sets Standards regulations at 45 

CFR parts 160 and 162, published in 

accordance with HIPAA. 

C. Organization of the MS–LTC–DRGs 

The MS–DRGs (used under the IPPS) 

and the MS–LTC–DRGs (used under the 

LTCH PPS) are based on the CMS DRG 

structure. As noted above in this 

section, we refer to the DRGs under the 

LTCH PPS as MS–LTC–DRGs although 

they are structurally identical to the 

DRGs used under the IPPS. The MS–

DRGs are organized into 25 major 

diagnostic categories (MDCs), most of 

which are based on a particular organ 

system of the body; the remainder 

involve multiple organ systems (such as 

MDC 22, Burns). Within most MDCs, 

cases are then divided into surgical 

DRGs and medical DRGs. Surgical DRGs 

are assigned based on a surgical 

hierarchy that orders operating room 

(O.R.) procedures or groups of O.R. 

procedures by resource intensity. The 

GROUPER software program does not 

recognize all ICD–9–CM procedure 

codes as procedures affecting DRG 

assignment, that is, procedures which 

are not surgical (for example, EKG), or 

minor surgical procedures (for example, 

86.11, Biopsy of skin and subcutaneous 

tissue). 

In developing Version 25.0 of the 

GROUPER program (the FY 2008 MS–

DRGs), the diagnoses comprising the CC 

list were completely redefined. The 

revised CC list is primarily comprised of 

significant acute disease, acute 

exacerbations of significant chronic 

diseases, advanced or end stage chronic 

diseases, and chronic diseases 

associated with extensive debility. In 

general, most chronic diseases were not 

included on the revised CC list. For a 

patient with a chronic disease, a 

significant acute manifestation of the 

chronic disease was required to be 

present and coded for the patient to be 

assigned a CC. 

In addition to the revision of the CC 

list, each CC was also categorized as a 

major CC (MCC) or a CC based on 

relative resource use. Approximately 12 

percent of all diagnoses codes were 

classified as a major CC (MCC), 24 

percent as a CC, and 64 percent as a non 

CC. Diagnoses closely associated with 

mortality (ventricular fibrillation, 

cardiac arrest, shock, and respiratory 

arrest) were assigned as an MCC if the 

patient lived but as a non CC if the 

patient died. 

The MCC, CC, and non CC 

categorization was used to subdivide the 

surgical and medical DRGs into up to 

three levels, with a case being assigned 

to the most resource intensive level (for 

example, a case with two secondary 

diagnoses that are categorized as an 

MCC and a CC is assigned to the MCC 

level). To create the MS–DRGs (and by 

extension, the MS–LTC–DRGs) 

individual DRGs were subdivided into 

three, two, or one level, depending on 

the CC impact on resources used for 

those cases. 

As noted above in this section, further 

information on the development and 

implementation of the MS–DRGs and 

MS–LTC–DRGs can be found in the FY 

2008 IPPS final rule with comment 

period (72 FR 47138 through 47175 and 

47277 through 47299). 

D. Method for Updating the MS–LTC–

DRG Classifications and Relative 

Weights 

1. Background 

Under the LTCH PPS, relative weights 

for each MS–LTC–DRG are a primary 

element used to account for the 

variations in cost per discharge and 

resource utilization among the payment 

groups (that is, the MS–LTC–DRGs). To 

ensure that Medicare patients classified 

to each MS–LTC–DRG have access to an 

appropriate level of services and to 

encourage efficiency, each year based on 

the best available data, we calculate a 

relative weight for each MS–LTC–DRG 

that represents the resources needed by 

an average inpatient LTCH case in that 

MS–LTC–DRG. For example, cases in a 

MS–LTC–DRG with a relative weight of 

2 will, on average, cost twice as much 

as cases in a MS–LTC–DRG with a 

relative weight of 1. Under § 412.517, 

the MS–LTC–DRG classifications and 

weighting factors (that is, relative 

weights) are adjusted annually to reflect 

changes in factors affecting the relative 

use of LTCH resources, including 

treatment patterns, technology and 

number of discharges. 

In the June 6, 2003 LTCH PPS final 

rule (68 FR 34122 through 34125), we 

changed the LTCH PPS annual payment 

rate update cycle to be effective July 1 

through June 30 instead of October 1 

through September 30. In addition, 

because the patient classification system 

utilized under the LTCH PPS is the 

same DRG system that is used under the 

IPPS, in that same final rule, we 

explained that the annual update of the 

LTC–DRG classifications and relative 

weights will continue to remain linked 

to the annual reclassification and 

recalibration of the CMS DRGs used 

under the IPPS (as is the case with the 

MS–DRGs effective for discharges 

occurring on or after October 1, 2007 

(see § 412.503)). Therefore, we specified 

that we will continue to update the 

LTC–DRG classifications and relative 

weights to be effective for discharges 

occurring on or after October 1 through 

September 30 each year. We further 

stated at that time that we will publish 

the annual proposed and final update of 

the LTC–DRGs in same notice as the 

proposed and final update for the IPPS 

(69 FR 34125). (We note that in section 

IV.B. of this preamble, we are proposing 

to revise § 412.535 in order to 

consolidate the annual July 1 and 

October 1 LTCH PPS update cycles, so 

that beginning with FY 2010, both the 

annual update to the standard Federal 

rate (and other rate and policy changes) 

and the annual update to the MS–LTC–

DRGs would be presented in a single 

Federal Register publication to be 

effective on October 1 each year.) Under 

existing § 412.535(b), the FY 2008 

update of the LTCH PPS patient 

classification system and relative 

weights was presented in the FY 2008 

IPPS final rule with comment (72 FR 

47277 through 47299). For the reader’s 

benefit, we are providing a summary of 

the discussion presented in that final 

rule with comment in section III.D.2. of 

this preamble. 

For FY 2008, the MS–LTC–DRG 

classifications and relative weights were 

updated based on LTCH data from the 

FY 2006 MedPAR file, which contained 

hospital bills data from the March 2007 


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update. The MS–LTC–DRG patient 

classification system for FY 2008 

consists of 745 DRGs that formed the 

basis of the Version 25.0 GROUPER 

program utilized under the LTCH PPS. 

The 745 MS–LTC–DRGs included two 

‘‘error DRGs.’’ As in the IPPS, we 

included two error DRGs in which cases 

that cannot be assigned to valid DRGs 

will be grouped. These two error DRGs 

are MS–LTC–DRG 998 (Principal 

Diagnosis Invalid as a Discharge 

Diagnosis) and MS–LTC–DRG 999 

(Ungroupable). The other 743 MS–LTC–

DRGs are the same DRGs used in the 

IPPS GROUPER program for FY 2008 

(Version 25.0). 

In the past, the annual update to the 

CMS DRGs was based on the annual 

revisions to the ICD–9–CM codes and 

was effective each October 1. The ICD–

9–CM coding update process was 

revised as discussed in greater detail in 

the FY 2005 IPPS final rule (69 FR 

48953 through 48957). Specifically, 

section 503(a) of the MMA includes a 

requirement for updating diagnosis and 

procedure codes twice a year instead of 

the former process of annual updates on 

October 1 of each year. This 

requirement is included as part of the 

amendments to the Act relating to 

recognition of new medical technology 

under the IPPS. (For additional 

information on this provision, including 

its implementation and its impact on 

the LTCH PPS, refer to the FY 2005 IPPS 

final rule (69 FR 48953 through 48957) 

and the RY 2006 LTCH PPS final rule 

(70 FR 24172 through 24177).) As noted 

above in this section, with the 

implementation of section 503(a) of the 

MMA, there is the possibility that one 

feature of the GROUPER software 

program may be updated twice during a 

FFY (October 1 and April 1) as required 

by the statute for the IPPS. Specifically, 

diagnosis and procedure codes for new 

medical technology may be created and 

added to existing DRGs in the middle of 

the FFY on April 1. No new MS–LTC–

DRGs will be created or deleted. 

Consistent with our current practice, 

any changes to the MS–DRGs or relative 

weights will be made at the beginning 

of the next FFY (October 1). Therefore, 

there will not be any impact on MS–

LTC–DRG payments under the LTCH 

PPS until the following October 1 

(although the new ICD–9–CM diagnosis 

and procedure codes would be 

recognized April 1). 

As we explained in the FY 2008 IPPS 

final rule with comment period (72 FR 

47277), annual changes to the ICD–9–

CM codes historically were effective for 

discharges occurring on or after October 

1 each year. Thus, the manual and 

electronic versions of the GROUPER 

software, which are based on the ICD–

9–CM codes, were also revised annually 

and effective for discharges occurring on 

or after October 1 each year. The patient 

classification system used under the 

LTCH PPS (MS–LTC–DRGs) is the same 

DRG patient classification system used 

under the IPPS, which historically had 

been updated annually and was 

effective for discharges occurring on or 

after October 1 through September 30 

each year. We have also explained that 

since we do not publish a mid–year 

IPPS rule, we will assign any new 

diagnosis or procedure codes 

implemented on April 1 to the same 

DRG in which its predecessor code was 

assigned, so that there will be no impact 

on the DRG assignments until the 

following October 1. Any coding 

updates will be available through the 

Web sites provided in section II.G.10. of 

the preamble of the FY 2008 IPPS final 

rule with comment period (72 FR 47241 

through 47243) and through the Coding 

Clinic for ICD–9–CM. Publishers and 

software vendors currently obtain code 

changes through these sources to update 

their code books and software system. If 

new codes are implemented on April 1, 

revised code books and software 

systems, including the GROUPER 

software program, will be necessary 

because we must use current ICD–9–CM 

codes. Therefore, for purposes of the 

LTCH PPS, because each ICD–9–CM 

code must be included in the GROUPER 

algorithm to classify each case into a 

MS–LTC–DRG, the GROUPER software 

program used under the LTCH PPS 

would need to be revised to 

accommodate any new codes. 

At the September 2007 ICD–9–CM 

C&M Committee meeting, there were no 

compelling requests for an April 1, 2008 

implementation of new ICD–9–CM 

codes, and therefore, we expect that the 

next update to the ICD–9–CM coding 

system will not occur until October 1, 

2008 (FY 2009). Therefore, we expect 

that the ICD–9–CM coding set 

implemented on October 1, 2007, will 

continue through September 30, 2008 

(FY 2008). The next update to the MS–

LTC–DRGs and relative weights for FY 

2009 will be presented in the FY 2009 

IPPS proposed and final rules. 

2. FY 2008 MS–LTC–DRG Relative 

Weights 

In accordance with § 412.523(c), we 

adjust the LTCH PPS standard Federal 

rate by the MS–LTC–DRG relative 

weights in determining payment to 

LTCHs for each case. Relative weights 

for each MS–LTC–DRG are a primary 

element used to account for the 

variations in cost per discharge and 

resource utilization among the payment 

groups as described in § 412.515. To 

ensure that Medicare patients who are 

classified to each MS–LTC–DRG have 

access to services and to encourage 

efficiency, we calculate a relative weight 

for each MS–LTC–DRG that represents 

the resources needed by an average 

inpatient LTCH case in that MS–LTC–

DRG. For example, cases in a MS–LTC–

DRG with a relative weight of 2 will, on 

average, cost twice as much as cases in 

a MS–LTC–DRG with a weight of 1. 

As we discussed in the FY 2008 IPPS 

final rule with comment period (72 FR 

47282), the MS–LTC–DRG relative 

weights effective under the LTCH PPS 

for Federal FY 2008 were calculated 

using the March 2007 update of FY 2006 

MedPAR data and Version 25.0 of the 

GROUPER software. 

LTCHs often specialize in certain 

areas, such as ventilator-dependent 

patients and rehabilitation or wound 

care. Some case types (DRGs) may be 

treated, to a large extent, in hospitals 

that have (from a perspective of charges) 

relatively high (or low) charges. 

Distribution of cases with relatively 

high (or low) charges in specific MS–

LTC–DRGs has the potential to 

inappropriately distort the measure of 

average charges. To account for the fact 

that cases may not be randomly 

distributed across LTCHs, we use a 

hospital-specific relative value (HSRV) 

method to calculate relative weights. We 

believe this method removes this 

hospital-specific source of bias in 

measuring average charges. Specifically, 

we reduce the impact of the variation in 

charges across providers on any 

particular MS–LTC–DRG relative weight 

by converting each LTCH’s charge for a 

case to a relative value based on that 

LTCH’s average charge. (See the FY 

2008 IPPS final rule with comment 

period for further information on the 

application of the HSRV methodology 

under the LTCH PPS (72 FR 47282).) 

To account for MS–LTC–DRGs with 

low volume (that is, with fewer than 25 

LTCH cases), we grouped those ‘‘low 

volume’’ MS–LTC–DRGs into 1 of 5 

categories (quintiles) based on average 

charges for the purposes of determining 

relative weights. Each of the low volume 

MS–LTC–DRGs grouped to a specific 

quintile received the same relative 

weight and ALOS using the formula 

applied to the regular MS–LTC–DRGs 

(25 or more cases). (See the FY 2008 

IPPS final rule with comment period for 

further explanation of the development 

and composition of each of the 5 low 

volume quintiles for FY 2008 (72 FR 

47283 through 47288).) 

After grouping the cases in the 

appropriate MS–LTC–DRG, generally, 

we calculated the relative weights by 


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first removing statistical outliers and 

cases with a LOS of 7 days or less. Next, 

we adjusted the number of cases 

remaining in each MS–LTC–DRG for the 

effect of SSO cases under § 412.529. The 

short-stay adjusted discharges and 

corresponding charges were used to 

calculate ‘‘relative adjusted weights’’ in 

each MS–LTC–DRG using the HSRV 

method. In determining the FY 2008 

MS–LTC–DRG relative weights, we also 

made adjustments, as necessary, to 

adjust for nonmonotonicity for the 

severity levels within a specific base 

MS–LTC–DRG. (Refer to the FY 2008 

IPPS final rule with comment period for 

further information on the treatment of 

severity levels and adjustments for 

nonmonotically increasing relative 

weights for FY 2008 (72 FR 47282 

through 47283 and 47293 through 

47295).) Furthermore, we determined 

FY 2008 MS–LTC–DRG relative weights 

for the 185 MS–LTC–DRGs for which 

there were no LTCH cases in the 

database (that is, LTCH claims from the 

FY 2006 LTCH MedPAR files). (A list of 

the FY 2008 ‘‘no-volume’’ MS–LTC–

DRGs and further explanation of their 

FY 2008 relative weight assignment can 

be found in the FY 2008 IPPS final rule 

with comment period (72 FR 47289 

through 47293).) 

In adopting the MS–LTC–DRGs 

beginning in FY 2008, we established a 

2-year transition. Specifically, for FY 

2008, the first year of the transition, 50 

percent of the relative weight for a MS–

LTC–DRG is based on the average LTC–

DRG relative weight under Version 24.0 

of the LTC–DRG GROUPER. The 

remaining 50 percent of the relative 

weight is based on the MS–LTC–DRG 

relative weight under Version 25.0 of 

the MS–LTC–DRG GROUPER. (See the 

FY 2008 IPPS final rule with comment 

period (72 FR 47295) for additional 

details on the methodology used to 

determine the transition blended MS–

LTC–DRG relative weights for FY 2008.) 

In the RY 2008 LTCH PPS final rule 

(72 FR 26882), under the broad 

authority conferred upon the Secretary 

under section 123 of Public Law 106–

113 as amended by section 307(b) of 

Public Law 106–554 to develop the 

LTCH PPS, we established that 

beginning with the update for FY 2008, 

the annual update to the MS–LTC–DRG 

classifications and relative weights will 

be done in a budget neutral manner 

such that estimated aggregate LTCH PPS 

payments would be unaffected, that is, 

would be neither greater than nor less 

than the estimated aggregate LTCH PPS 

payments that would have been made 

without the MS–LTC–DRG classification 

and relative weight changes. 

Historically, we had not updated the 

LTC–DRGs in a budget neutral manner 

because we believed that past 

fluctuations in the relative weights were 

primarily due to changes in LTCH 

coding practices rather than changes in 

patient severity. In light of the most 

recently available LTCH claims data at 

that time, which indicated that LTCH 

claims data no longer appeared to 

significantly reflect changes in LTCH 

coding practices in response to the 

implementation of the LTCH PPS, we 

believed that, beginning with FY 2008, 

it is appropriate to update the MS–LTC–

DRGs in a budget neutral manner (that 

is, so that estimated aggregate LTCH 

PPS payments will neither increase nor 

decrease). Accordingly, in that same 

final rule with comment period, we 

established under § 412.517(b) that the 

annual update to the MS–LTC–DRG 

classifications and relative weights be 

done in a budget neutral manner. (As 

noted above in section III.A. of this 

preamble, we revised the regulations at 

§ 412.503 to specify that ‘‘MS–LTC–

DRG’’ is used in place of ‘‘LTC–DRG’’

for discharges occurring on or after 

October 1, 2007.) Consistent with that 

provision, we updated the MS–LTC–

DRG classifications and relative weights 

for FY 2008 based on the most recent 

available data and included a budget 

neutrality adjustment. For further 

details on the methodology and 

calculation of the FY 2008 MS–LTC–

DRG budget neutrality factor, refer to 

the FY 2008 IPPS final rule with 

comment period (72 FR 47295 through 

47296). 

Table 11 of the Addendum to the FY 

2008 IPPS final rule with comment 

period lists the MS–LTC–DRGs and 

their respective transition blended 

budget neutral relative weights, 

geometric mean LOS, ‘‘short-stay outlier 

threshold’’ (that is, five-sixths of the 

geometric mean LOS), and the ‘‘IPPS 

Comparable Threshold’’ (that is, the 

IPPS geometric average length of stay 

plus one standard deviation) for each 

MS–LTC–DRG for FY 2008 (see (72 FR 

48143 through 48157), and the technical 

correction made in the October 10, 2007 

correction notice (72 FR 57733), which 

has been reprinted in Table 3 of the 

Addendum of this proposed rule for 

convenience). 

As we noted previously in this 

section, there were no new ICD–9–CM 

code requests for an April 1, 2008 

update. Therefore, we expect that 

Version 25.0 of the MS–DRG GROUPER 

software established in the FY 2008 

IPPS final rule with comment period 

will continue to be effective until 

October 1, 2008. Moreover, the MS–

LTC–DRGs and relative weights for FY 

2008 established in Table 11 of that 

same IPPS final rule with comment 

period (78 FR 48143 through 48157) 

will continue to be effective until 

October 1, 2008, (just as they would 

have been even if there had been any 

new ICD–9–CM code requests for an 

April 1, 2008 update). We note that 

Table 11 was corrected in the FY 2008 

IPPS correction notice that appeared in 

the October 10, 2007 Federal Register 

(72 FR 57733) and is hereinafter referred 

to as the second FY 2008 IPPS 

correction notice. Accordingly, Table 3 

in the Addendum of this proposed rule 

lists the MS–LTC–RGs and their 

respective relative weights, geometric 

ALOS, ‘‘Short-Stay Outlier Threshold’’

and ‘‘IPPS Comparable Threshold’’ that 

we will continue to use for the period 

of July 1, 2008 through September 30, 

2009. (As noted above, this table is the 

same as Table 11 of the Addendum to 

the FY 2008 IPPS final rule with 

comment period, including the 

technical correction made in the second 

FY 2008 IPPS correction notice (72 FR 

57733), which has been reprinted in 

Table 3 of the Addendum of this 

proposed rule for the reader’s 

convenience.) We expect the next 

update to the ICD–9–CM coding system 

to be presented in the FY 2009 IPPS 

proposed rule (since we expect that 

there will be no April 1, 2008 updates 

to the ICD–9–CM coding system). In 

addition, the proposed MS–DRGs and 

GROUPER for FY 2009 that would be 

used for the IPPS and the LTCH PPS, 

effective October 1, 2008, and the 

proposed update to the MS–LTC–DRG 

relative weights for FY 2009 will be 

presented in the IPPS FY 2009 proposed 

rule that will be published in the 

Federal Register. 

IV. Proposed Changes to the LTCH PPS 

Payment Rates and Other Proposed 

Changes for the 2009 LTCH PPS Rate 

Year 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘PROPOSED CHANGES TO 

LTCH PPS PAYMENT RATES FOR THE 

2009 LTCH PPS RATE YEAR’’ at the 

beginning of your comments.] 

A. Overview of the Development of the 

Payment Rates 

The LTCH PPS was effective 

beginning with a LTCH’s first cost 

reporting period beginning on or after 

October 1, 2002. Effective with that cost 

reporting period, LTCHs are paid, 

during a 5-year transition period, a total 

LTCH prospective payment that is 

comprised of an increasing proportion 

of the LTCH PPS Federal rate and a 

decreasing proportion based on 

reasonable cost-based principles, unless 


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the hospital makes a one-time election 

to receive payment based on 100 

percent of the Federal rate, as specified 

in § 412.533. New LTCHs (as defined at 

§ 412.23(e)(4)) are paid based on 100 

percent of the Federal rate, with no 

phase-in transition payments. 

The basic methodology for 

determining LTCH PPS Federal 

prospective payment rates is set forth at 

§ 412.515 through § 412.536. In this 

section, we discuss the proposed factors 

that would be used to update the LTCH 

PPS standard Federal rate for the 2009 

LTCH PPS rate year that would be 

effective for LTCH discharges occurring 

on or after July 1, 2008 through 

September 30, 2009. When we 

implemented the LTCH PPS in the 

August 30, 2002 LTCH PPS final rule 

(67 FR 56029 through 56031), we 

computed the LTCH PPS standard 

Federal payment rate for FY 2003 by 

updating the best latest available (FY 

1998 or FY 1999) Medicare inpatient 

operating and capital cost data, using 

the excluded hospital market basket. 

Section 123(a)(1) of the BBRA 

requires that the PPS developed for 

LTCHs be budget neutral for the initial 

year of implementation. Therefore, in 

calculating the standard Federal rate 

under § 412.523(d)(2), we set total 

estimated LTCH PPS payments equal to 

estimated payments that would have 

been made under the reasonable costbased payment methodology had the 

LTCH PPS not been implemented. 

Section 307(a)(2) of the BIPA specified 

that the increases to the target amounts 

and the cap on the target amounts for 

LTCHs for FY 2002 provided for by 

section 307(a)(1) of the BIPA shall not 

be considered in the development and 

implementation of the LTCH PPS. 

Section 307(a)(2) of the BIPA also 

specified that enhanced bonus 

payments for LTCHs provided for by 

section 122 of Public Law 106–113 were 

not to be taken into account in the 

development and implementation of the 

LTCH PPS. 

Furthermore, as specified at 

§ 412.523(d)(1), the standard Federal 

rate is reduced by an adjustment factor 

to account for the estimated proportion 

of outlier payments under the LTCH 

PPS to total estimated LTCH PPS 

payments (8 percent). For further details 

on the development of the FY 2003 

standard Federal rate, see the August 30, 

2002 LTCH PPS final rule (67 FR 56027 

through 56037), and for subsequent 

updates to the LTCH PPS Federal rate, 

refer to the following final rules: RY 

2004 LTCH PPS final rule (68 FR 34134 

through 34140), RY 2005 LTCH PPS 

final rule (69 FR 25682 through 25684), 

RY 2006 LTCH PPS final rule (70 FR 

24179 through 24180), RY 2007 LTCH 

PPS final rule (71 FR 27819 through 

27827), and RY 2008 LTCH PPS final 

rule (72 FR 26870 through 27029). 

B. Proposed Consolidation of the 

Annual Updates for Payment and MS–

LTC–DRG Relative Weights to One 

Annual Update 

In the August 30, 2002 final rule for 

the implementation of the LTCH PPS, 

we established a publication schedule at 

§ 412.535 for publishing information 

pertaining to the LTCH PPS. That 

schedule set a publication date of on or 

before August 1 prior to the beginning 

of each FFY, which coincided with the 

statutorily mandated publication 

schedule for the IPPS (67 FR 55954). In 

the June 6, 2003 LTCH PPS final rule, 

we amended § 412.535 to provide that 

‘‘(a) Information on the unadjusted 

Federal payment rates and a description 

of the methodology and data used to 

calculate the payment rates are 

published on or before May 1 prior to 

the start of each long-term care hospital 

prospective payment system rate year 

which begins July 1, unless for good 

cause it is published after May 1, but 

before June 1. (b) Information on the 

LTC–DRG classification and associated 

weighting factors is published on or 

before August 1 prior to the beginning 

of each Federal fiscal year.’’ At the time, 

we explained that the LTC–DRG patient 

classifications used by the LTCH PPS 

for FY 2003 are based directly on the 

same version of DRGs used by the IPPS, 

that is, Grouper 20 (68 FR 34126). (We 

note, as discussed above in section III of 

this proposed rule, effective for LTCH 

PPS discharges occurring on or after 

October 1, 2007, all references to LTC–

DRGs and DRGs in the existing 

regulations are understood to represent 

MS–LTC–DRGs. (See § 412.503.)) 

Therefore, we did not make any changes 

to the timing for the annual update for 

LTC–DRG classifications and relative 

weights. The annual update to the DRG 

classifications and relative weights 

continues to be published on a FFY 

cycle, as is the update of the acute care 

hospital IPPS DRG system. Our intent in 

making the change in the payment rate 

update schedule for the LTCH PPS was 

to avoid concurrent publications of the 

annual updates for these two significant 

payment systems for purposes of 

administrative feasibility and efficiency. 

With this in mind, we changed the 

effective date for the annual update of 

the LTCH PPS payment rate from 

October 1 to July 1 of each year 

beginning with July 1, 2003. We 

believed this change would help use our 

limited resources effectively and 

facilitate a timely publication of both 

the IPPS and LTCH PPS proposed and 

final rules. Thus, currently the annual 

update of the LTCH PPS Federal rates 

do not coincide with the start of the 

FFY, but rather, are effective prior to the 

FFY. 

In this proposed rule, we are 

proposing a change to the current 

schedule for the annual updates of the 

LTCH PPS Federal payment rates. We 

propose to consolidate the rulemaking 

cycle for the annual update of the LTCH 

PPS Federal payment rates and 

description of the methodology and data 

used to calculate these payment rates, 

with the annual updating of the MS–

LTC–DRG classifications and associated 

weighting factors for LTCHs so that the 

updates to the rates and the weights 

would both be effective on October 1 

each FFY. Under this proposal, the 

annual updates to the LTCH PPS 

Federal rates would no longer be 

published with a July 1 effective date. 

In proposing this change to the LTCH 

PPS rulemaking schedule, we took into 

account comments on prior rules as well 

as recent input from the LTCH industry. 

After further considering those 

comments and concerns, we agree that 

having the effective date of the annual 

update of the LTCH PPS Federal 

payment rates on July 1 of each year 

while retaining the October 1 effective 

date for updating LTC–DRG 

classifications and weights has proved 

both burdensome and time-consuming 

for all parties involved. Although a 

consolidated update may also be 

resource intensive, it would eliminate 

some duplicative resource use. For 

example, some of our resources used for 

the payment simulations that are used 

to estimate LTCH PPS payments for 

purposes of the respective impact 

analyses are duplicated for the annual 

LTCH PPS rate update and the annual 

MS-LTC-DRG update. Moreover, we 

understand the concern that there are 

increased costs involved in updating the 

billing systems of LTCHs to 

accommodate two separate updates, one 

for the Federal rate and one for the DRG 

weights, in the same cost reporting 

period. 

We also considered the possibility 

that two separate updates could increase 

the potential for calculating payment 

errors under the LTCH PPS. 

In order to revise the payment rate 

update to an October 1 through 

September 30 period, we propose to first 

extend the 2009 rate period to 

September 30, 2009 such that RY 2009 

would be 15 months. This proposed 15- 

month rate period would extend from 

July 1, 2008 through September 30, 

2009. We believe that the additional 3 

months to RY 2009 (July, August and 


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September), would provide for a smooth 

transition to a consolidated annual 

update for both the LTCH PPS payment 

rates and the LTCH PPS MS–LTC–DRG 

classifications and weighting factors. 

(We believe that proposing to revise the 

payment rate update to an October 1 

through September 30 period by 

proposing to shorten RY 2009 such that 

it would only be 3 months (that is, July 

1, 2008 through September 30, 2008), 

would exacerbate the current 

burdensome and time-consuming 

biannual update process by resulting in 

two payment rate changes within a very 

short (3 month) period of time.) Under 

this proposal, after the 2009 rate period, 

the rate period for the LTCH PPS 

payment rate and other policy changes 

would be October 1 through September 

30. (The annual update to the MS–LTC–

DRG classifications and relative weights 

would continue to be effective on 

October 1.) The October through 

September rate period would first begin 

with October 1, 2009. The next update 

to the LTCH PPS Federal rates after RY 

2009 would be for RY 2010. (We note 

that if we finalize this proposal to move 

the annual LTCH PPS rate update cycle 

to October 1 effective October 1, 2009, 

the LTCH PPS rate year would coincide 

with Federal FY beginning in 2010.) We 

are proposing to make a change to the 

regulations at § 412.503 to redefine the 

LTCH PPS’ rate year to mean October 1 

through September 30. We are also 

proposing to revise § 412.535 to reflect 

the proposed change to the annual 

payment rate update cycle described 

above. The discussion of the proposed 

15-month market basket update for the 

proposed 2009 rate year can be found 

below in sections IV.D.2. and 3. of this 

proposed rule. 

C. LTCH PPS Market Basket 

1. Overview of the RPL Market Basket 

Historically, the Medicare program 

has used a market basket to account for 

price increases in the services furnished 

by providers. The market basket used 

for the LTCH PPS includes both 

operating and capital-related costs of 

LTCHs because the LTCH PPS uses a 

single payment rate for both operating 

and capital-related costs. The 

development of the initial LTCH PPS 

standard Federal rate for FY 2003, using 

the excluded hospital with capital 

market basket, is discussed in further 

detail in the August 30, 2002 LTCH PPS 

final rule (67 FR 56027 through 56033). 

In the August 30, 2002 final rule (67 

FR 56016 through 56017 and 56030), 

which implemented the LTCH PPS, we 

established the use of the excluded 

hospital with capital market basket as 

the LTCH PPS market basket. The 

excluded hospital with capital market 

basket was also used to update the 

limits on LTCHs’ operating costs for 

inflation under the TEFRA reasonable 

cost-based payment system. We 

explained that we believe the use of the 

excluded hospital with capital market 

basket to update LTCHs’ costs for 

inflation was appropriate because the 

excluded hospital market basket (with a 

capital component) measures price 

increases of the services furnished by 

excluded hospitals, including LTCHs. 

For further details on the development 

of the excluded hospital with capital 

market basket, see the RY 2004 LTCH 

PPS final rule (68 FR 34134 through 

34137). 

In the RY 2007 LTCH PPS final rule 

(71 FR 27810), we noted that based on 

our research, we did not develop a 

market basket specific to LTCH services. 

We are still unable to create a separate 

market basket specifically for LTCHs 

due to the small number of facilities and 

the limited amount of data that is 

reported (for instance, only 

approximately 15 percent of LTCHs 

reported contract labor cost data for 

2002). In that same final rule, under the 

broad authority conferred upon the 

Secretary by section 123 of the BBRA as 

amended by section 307(b) of the BIPA, 

we adopted the ‘‘Rehabilitation, 

Psychiatric and Long-Term Care (RPL) 

market basket’’ as the appropriate 

market basket of goods and services 

under the LTCH PPS for discharges 

occurring on or after July 1, 2006. 

Specifically, beginning with the 2007 

LTCH PPS rate year, for the LTCH PPS, 

we adopted the use of the RPL market 

basket based on FY 2002 cost report 

data. We choose to use the FY 2002 

Medicare cost report data because it was 

the most recent, relatively complete cost 

data for inpatient rehabilitation facilities 

(IRFs), inpatient psychiatric facilities 

(IPF), and LTCHs available at the time 

of rebasing. 

The RPL market basket is determined 

based on the operating and capital costs 

of IRFs, IPFs and LTCHs. All IRFs are 

now paid under the IRF PPS Federal 

payment rate, all LTCHs are now paid 

100 percent of the Federal rate under 

the LTCH PPS, and most IPFs are 

transitioning to payment based on 100 

percent of the Federal per diem 

payment amount under the IPF PPS 

(payments to IPFs will be based 

exclusively on 100 percent of the 

Federal rate for cost reporting periods 

beginning on or after January 1, 2008). 

As we explained in that same final rule, 

we believe a market basket based on the 

data of IRFs, IPFs and LTCHs is 

appropriate to use under the LTCH PPS 

since it is the best available data that 

reflects the cost structures of LTCHs. 

For further details on the 

development of the RPL market basket, 

including the methodology for 

determining the operating and capital 

portions of the RPL market basket, see 

the RY 2007 LTCH PPS final rule (71 FR 

27810 through 27817). 

2. Proposed Market Basket Estimate for 

the 2009 LTCH PPS Rate Year 

As discussed in greater detail above in 

this section, for the 2009 LTCH PPS rate 

year, we are proposing to consolidate 

the current LTCH PPS rate year 

(payment rates and other policy 

changes) update and fiscal year MS–

LTC–DRG update into one annual 

update cycle. Presently, the next 

payment rate update cycle would be 

effective July 1, 2008 through June 30, 

2009. In proposing to consolidate the 

annual payment rate and MS–LTC–DRG 

updates to be effective October 1 each 

year, we would extend the next rate year 

update by 3 months (through September 

30, 2009), which would make the RY 

2009 rate effective for a 15-month 

period. Accordingly, for the proposed 

2009 LTCH PPS rate year, we are 

proposing to use a 15-month (that is, 

July 1, 2008 through September 30, 

2009) estimate of the RPL market basket 

based on the best available data. 

Consistent with our historical 

practice, we estimate the RPL market 

basket update based on Global Insight, 

Inc.’s forecast using the most recent 

available data. Global Insight, Inc. is a 

nationally recognized economic and 

financial forecasting firm that contracts 

with CMS to forecast the components of 

CMS’ market baskets. To determine a 

15-month market basket update for RY 

2009, we calculate the 5-quarter moving 

average index level for July 1, 2008 

through September 30, 2009 and the 4- 

quarter moving average index level for 

July 1, 2007 through June 30, 2008. The 

percent change in these two values 

represents the proposed 15-month 

market basket update. 

Based on Global Insight’s 4th quarter 

2007 forecast with history through the 

3rd quarter of 2007, the projected 15- 

month market basket estimate for the 

proposed 15-month 2009 LTCH PPS rate 

year is 3.5 percent. Therefore, consistent 

with our historical practice of 

estimating market basket increases 

based on the best available data, we are 

proposing a market basket update of 3.5 

percent for the proposed 15-month 2009 

rate year based on the proposed 

consolidation of the annual updates for 

payment rates and MS–LTC–DRGs. 

Furthermore, because the proposed RY 

2009 update is based on the most recent 


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market basket estimate for the 15-month 

period (currently 3.5 percent), we are 

also proposing that if more recent data 

are subsequently available (for example, 

a more recent estimate of the market 

basket), we would use such data, if 

appropriate, to determine the RY 2009 

update in the final rule. (The proposed 

update to the standard Federal rate for 

RY 2009 is discussed below in section 

IV.E. of this preamble.) 

We note that the most recent estimate 

of the RPL market basket for July 1, 2008 

through June 30, 2009, based on Global 

Insight’s 4th quarter 2007 forecast with 

history through the 3rd quarter of 2007, 

is 3.1 percent. We determine this 12- 

month market basket update by 

calculating the 4-quarter moving average 

index level for July 1, 2008 through June 

30, 2009 and the 4-quarter moving 

average index level for July 1, 2007 

through June 30, 2008. The percent 

change in these two values represents 

the proposed 12-month market basket 

update. Consistent with our historical 

practice of using market basket 

estimates based on the most recent 

available data, if we were not proposing 

to consolidate the two annual LTCH 

PPS payment system updates by 

proposing to extend the 2009 LTCH PPS 

rate year by 3 months, we would have 

proposed a market basket update for a 

12 month RY 2009 of 3.1 percent, based 

on the most recent estimate of the 12- 

month RPL market basket for July 1, 

2008 through June 30, 2009. 

D. One-time Prospective Adjustment to 

the Standard Federal Rate 

As we discussed in the August 30, 

2002 LTCH PPS final rule (67 FR 

56027), consistent with the statutory 

requirement for budget neutrality in 

section 123(a)(1) of the BBRA, we 

estimated aggregate payments under the 

LTCH PPS for FY 2003 to be equal to the 

estimated aggregate payments that 

would be made if the LTCH PPS were 

not implemented. Our methodology for 

estimating payments for purposes of the 

budget neutrality calculations used the 

best available data at the time and 

necessarily reflected several 

assumptions (for example, costs, 

inflation factors and intensity of 

services provided). In conducting our 

budget neutrality calculations, we took 

into account the statutory requirement 

that certain statutory provisions that 

affect the level of payments to LTCHs in 

years prior to the implementation of the 

LTCH PPS shall not be taken into 

account in the development and 

implementation of the LTCH PPS. 

Specifically, section 307(a)(2) of the 

BIPA requires that the increases to the 

target amounts and the increases to the 

cap on the target amounts for LTCHs 

provided for by section 307(a)(1) of the 

BIPA (as set forth in section 

1886(b)(3)(J) of the Act) and the 

enhanced bonus payments for LTCHs 

provided for by section 122 of the BBRA 

(as set forth in section 1886(b)(2)(E) of 

the Act) are not to be taken into account 

in the development and implementation 

of the LTCH PPS. 

As the LTCH PPS has progressed, we 

have been monitoring payment data in 

order to evaluate whether there is a 

significant difference between the 

payments estimated on the basis of the 

data available at the time of the August 

30, 2002 LTCH PPS final rule (67 FR 

56027 through 56037) and payment 

estimates based on more complete data 

that have become available since that 

time. We indicated from the inception 

of the LTCH PPS that it was possible for 

the aggregate amount of actual payments 

in FY 2003 to be significantly higher or 

lower than the estimates on which the 

budget neutrality calculations were 

based to the extent that later, more 

complete data differ significantly from 

the data that were available at the time 

of the original calculations. 

Section 123(a)(1) of the BBRA, as 

amended by section 307(b) of BIPA, 

provides broad authority to the 

Secretary in developing the LTCH PPS, 

including the authority for establishing 

appropriate adjustments. Under this 

broad authority to make appropriate 

adjustments, we provided in 

§ 412.523(d)(3) of the regulations, for the 

possibility of making a one-time 

prospective adjustment to the LTCH 

PPS rates by July 1, 2008, so that the 

effect of any significant difference 

between actual payments and estimated 

payments for the first year of the LTCH 

PPS would not be perpetuated in the 

LTCH PPS rates for future years. 

In the RY 2008 LTCH PPS final rule 

(72 FR 26902), based on the best 

available data at that time, we estimated 

that total Medicare program payments 

for LTCH services over the next 5 LTCH 

PPS rate years would be $4.65 billion 

for the 2008 LTCH PPS rate year; $4.85 

billion for the 2009 LTCH PPS rate year; 

$5.04 billion for the 2010 LTCH PPS 

rate year; $5.25 billion for the 2011 

LTCH PPS rate year; and $5.50 billion 

for the 2012 LTCH PPS rate year. 

In this proposed rule, consistent with 

the methodology established in the 

August 30, 2002 final rule (67 FR 

56036), and based on the most recent 

available data, we estimate that total 

Medicare program payments for LTCH 

services for the next 5 LTCH PPS rate 

years would be as shown in Table 4. 

TABLE 4 

LTCH PPS rate year 

Estimated payments 

($ in billions) 

2009 ...................................... 4.67 

2010 ...................................... 4.82 

2011 ...................................... 5.06 

2012 ...................................... 5.36 

2013 ...................................... 5.73 

In accordance with the methodology 

established in the August 30, 2002 

LTCH PPS final rule (67 FR 56027 

through 56037), these estimates are 

based on the most recent available data. 

These estimates are also based on our 

estimate of LTCH PPS rate year 

payments to LTCHs using CMS’ Office 

of the Actuary’s (OACT) most recent 

estimate of the RPL market basket of 3.1 

percent for the 2009 LTCH PPS rate 

year, 2.8 percent for the 2010 LTCH PPS 

rate year, 3.0 percent for the 2011 LTCH 

PPS and 2012 rate years, and 3.1 percent 

for the 2013 LTCH PPS rate year. (We 

note that OACT develops its spending 

projections based on existing policy. 

Therefore, changes that have not yet 

been implemented, including those 

proposed in this proposed rule, and 

changes as a result of the recent 

Medicare, Medicaid, and SCHIP 

Extension Act of 2007, are not reflected 

in the spending projections shown in 

this section.) We also considered 

OACT’s most recent projections of 

changes in Medicare beneficiary 

enrollment that estimate increases in 

Medicare fee-for-service beneficiary 

enrollment of 0.6 percent in the 2009 

LTCH PPS rate year, 0.7 percent in the 

2010 LTCH PPS rate year, 1.2 percent in 

the 2011 LTCH PPS rate year, 2.0 

percent in the 2012 LTCH PPS rate year, 

and 2.5 percent in the 2013 LTCH PPS 

rate year. It is important to note that, 

while we provide these estimates of 

future payments under the LTCH PPS in 

order to provide a projected estimate of 

payments to LTCHs, these estimates will 

be neither the basis for determining 

whether the one-time budget neutrality 

adjustment available under 

§ 412.523(d)(3) should be proposed, nor 

are these estimates the basis for any of 

the proposed policy changes presented 

in this proposed rule. It is important to 

note that any proposal regarding the 

one-time budget neutrality adjustment 

would be based solely on the data 

related to FY 2003 that would be 

available at the time of the proposal, 

rather than on projections of payments 

under LTCH PPS for future years. 

In the August 30, 2002 LTCH PPS 

final rule implementing the LTCH PPS 

(67 FR 55954), we set forth the 

implementing regulations, based upon 


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the broad authority granted to the 

Secretary, under section 123 of the 

BBRA (as amended by section 307(b) of 

the BIPA). Section 123(a)(1) of the 

BBRA required that the system 

‘‘maintain budget neutrality.’’ The 

statute requires the LTCH PPS to be 

budget neutral in FY 2003, so that 

estimated aggregate payments under the 

LTCH PPS for FY 2003 should be equal 

to the estimated aggregate payments that 

would be made if the LTCH PPS were 

not implemented for FY 2003. The 

methodology for determining the LTCH 

PPS standard Federal rate for FY 2003 

that would ‘‘maintain budget neutrality’’

is described in considerable detail in the 

August 30, 2002 final rule (67 FR 56027 

through 56037). As we discussed 

previously in this section, our 

methodology for estimating payments 

for the purposes of budget neutrality 

calculations used the best available 

data, and necessarily reflected 

assumptions in estimating aggregate 

payments that would be made if the 

LTCH PPS was not implemented. In the 

August 30, 2002 final rule, we also 

stated our intentions to monitor LTCH 

PPS payment data to evaluate whether 

later data varied significantly from the 

data available at the time of the original 

budget neutrality calculations (for 

example, data related to inflation 

factors, intensity of services provided, 

or behavioral response to the 

implementation of the LTCH PPS). To 

the extent the later data significantly 

differ from the data employed in the 

original calculations, the aggregate 

amount of payments during FY 2003 

based on later data may be higher or 

lower than the estimates upon which 

the budget neutrality calculations were 

based. In that same final rule, the 

Secretary exercised his broad authority 

in establishing the LTCH PPS and 

provided for the possibility of a onetime prospective adjustment to the 

LTCH PPS rates by October 1, 2006, in 

§ 412.523(d)(3). This deadline was 

revised to July 1, 2008, in the RY 2007 

LTCH PPS final rule. As we discussed 

in the RY 2007 LTCH PPS final rule (71 

FR 27842 through 27844), because the 

LTCH PPS was only recently 

implemented, sufficient new data had 

not yet been generated that would 

enable us to conduct a comprehensive 

reevaluation of our budget neutrality 

calculations. Therefore, in that same 

final rule, we did not implement the 

one-time adjustment provided under 

§ 412.523(d)(3) so that the effect of any 

significant difference between actual 

payments and estimated payments for 

the first year of the LTCH PPS would 

not be perpetuated in the PPS rates for 

future years. However, we stated that we 

would continue to collect and interpret 

new data as it became available in order 

to determine whether we should 

propose such an adjustment in the 

future. Therefore, we revised 

§ 412.523(d)(3) by changing the original 

October 1, 2006 deadline (established in 

the August 30, 2002 final rule that 

implemented the LTCH PPS) to July 1, 

2008, to postpone the possible one-time 

adjustment due to the time lag in the 

availability of Medicare data upon 

which a proposed adjustment would be 

based. We noted that there is a lag time 

between the submission of claims data 

and cost report data, and the availability 

of that data in the MedPAR files and 

HCRIS, respectively. As also explained 

in that same final rule, we believed that 

postponing the deadline of the possible 

one-time prospective adjustment to the 

LTCH PPS rates provided for in 

§ 412.523(d)(3) to July 1, 2008, would 

allow our decisions regarding a possible 

adjustment to be based on more 

complete and up-to-date data. It should 

be noted that, in the years following the 

initial implementation of the LTCH PPS, 

we have already adopted some revised 

policies and adjustments to LTCH PPS 

payment levels. However, none of these 

revised policies and payment 

adjustments have addressed the 

intended purpose of the adjustment 

allowed under § 412.523(d)(3) of the 

regulations, to ensure that any 

significant difference between the 

original estimates and calculations 

based on more recent data are not 

perpetuated in the LTCH PPS rates for 

future years. For example, the 

adjustments that we have made to 

account for coding changes in excess of 

real severity increases in RY 2007 and 

RY 2008 were made to account for 

changes in coding behavior in the years 

following the implementation of the 

LTCH PPS, and not to address any issue 

regarding the budget neutrality 

calculations that were used to establish 

the base rate for the LTCH PPS. 

Section 114(c)(4) of MMSEA provides 

that the ‘‘Secretary shall not, for the 3- 

year period beginning on the date of the 

enactment of this Act, make the onetime prospective adjustment to longterm care hospital prospective payment 

rates provided for in section 

412.523(d)(3) of title 42, Code of Federal 

Regulations, or any similar provision.’’

That provision delays the effective date 

of any one-time budget neutrality 

adjustment until no earlier than 

December 29, 2010. Therefore, we are 

proposing to revise § 412.523(d)(3) of 

the regulations to conform with this 

requirement. 

Prior to the enactment of the 

Medicare, Medicaid, and SCHIP 

Extension Act of 2007, we had 

developed a methodology for evaluating 

whether to propose a one-time budget 

neutrality adjustment under 

§ 412.523(d)(3) of the regulations. In 

order to inform the public of our 

thinking, and to stimulate comments for 

our consideration during the 3-year 

delay in implementing any one-time 

budget neutrality adjustment under the 

law referenced above, we have decided 

to discuss our analysis and its results in 

this proposed rule. Evaluating the 

appropriateness of the possible one-time 

prospective adjustment under 

§ 412.523(d)(3) requires a thorough 

review of the relevant LTCH data (as 

described below). When we established 

the FY 2003 standard Federal rate in a 

budget neutral manner, we used the 

most recent LTCH cost data available at 

that time (that is, FY 1999 data), and 

trended that data forward to estimate 

what Medicare would have paid to 

LTCHs in FY 2003 under the TEFRA 

payment system if the PPS were not 

implemented for FY 2003 (67 FR 

56033). We have conducted a thorough 

review of the relevant data. We now 

have cost data from FY 2002, 

representing the final year LTCHs were 

paid under the TEFRA payment system. 

The cost report data for FY 2002 is 

comprised of a high proportion of 

settled and audited cost reports 

submitted by LTCHs. We also have 

payment data on the first year of the 

LTCH PPS (that is, FY 2003). On the 

basis of our review of these data 

sources, we developed a potential 

methodology for determining whether 

the one-time adjustment available under 

§ 412.523(d)(3) of the regulations should 

be proposed. On the basis of this 

methodology, we have also determined 

a potential method for computing an 

adjustment, if appropriate. Employing 

that methodology, our analysis has 

indicated that a permanent adjustment 

factor of 0.9625 to the LTCH PPS 

standard Federal rate could be 

warranted. Consistent with the 

requirements of section 114(c)(4) of the 

recently enacted Medicare, Medicaid, 

and SCHIP Extension Act of 2007, we 

are not proposing any adjustment for the 

upcoming rate year. However, we 

welcome public comment on our 

analysis, which we are presenting in 

this proposed rule. We will consider 

these comments if and when we decide 

to propose an actual adjustment. We 

note that in the final rule, we will 

respond to any comments on our 

proposed changes to § 412.523(d)(3) of 

the regulations that would—(1) specify 


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the methodology for the one-time 

budget neutrality adjustment; and (2) 

implement the requirements of section 

114(c)(4) of Public Law 110–173, in the 

final rule. 

In order to determine whether a onetime budget neutrality adjustment could 

be warranted, it is necessary to estimate 

both aggregate payments under the 

LTCH PPS for FY 2003 and the 

estimated aggregate payments that 

would have been made under the 

TEFRA system in FY 2003 if the LTCH 

PPS were not implemented. While we 

know actual TEFRA payments to LTCHs 

for FY 2002, the last year of payment 

under that methodology, it is necessary 

to estimate what TEFRA payments 

would have been in FY 2003 if the new 

LTCH PPS had not been implemented. 

In developing our methodology for 

evaluating a one-time adjustment, we 

considered whether we should employ 

actual FY 2003 costs to calculate 

estimated TEFRA payments for FY 2003 

or employ costs for FY 2002 trended 

forward to FY 2003 as the basis for the 

calculation. Basing the estimate on 

actual FY 2003 costs would avoid the 

need to employ any factor to update 

costs from FY 2002 to FY 2003. 

However, since FY 2003 was the first 

year of payment under the LTCH PPS, 

the cost experience of LTCHs in that 

year would reflect their response to the 

incentives provided by the new 

payment system, instead of reflecting 

behavior under the reasonable cost 

payment system. Indeed, 

implementation of an LTCH PPS should 

directly affect the behavior of LTCHs, 

and therefore, the level of costs in 

LTCHs. One of the incentives of a PPS 

is to improve efficiency in the delivery 

of care, which generally results in 

decreased cost per discharge. For this 

reason, employing FY 2003 costs 

directly could be a poor basis for 

estimating payments that ‘‘would have 

been made if the LTCH PPS were not 

implemented.’’ On balance, we believe 

that trending forward for 1 year the 

costs incurred under the last year of the 

TEFRA payment system poses a smaller 

prospect for distortion than using costs 

incurred during the subsequent year, 

when the incentives faced by LTCHs to 

reduce costs could have had a 

significant effect. Therefore, we could 

base our calculation of the estimated 

aggregate payments that would have 

been made if the LTCH PPS were not 

implemented (that is, estimated FY 2003 

TEFRA payments) on FY 2002 costs, 

trended forward to FY 2003 using the 

excluded hospital market basket. It may 

be worth noting in this context that 

some representatives of LTCHs have 

expressed concern that employing FY 

2003 costs directly would provide a 

poor basis upon which to estimate 

payments that ‘‘would have been made 

if the LTCH PPS were not 

implemented’’ for precisely the reasons 

we have just discussed. We believe that 

basing the estimate of FY 2003 TEFRA 

payments on FY 2002 costs trended 

forward should satisfy these concerns. 

In determining whether a one-time 

budget neutrality adjustment could be 

warranted, the estimate of the payments 

that would have been made in FY 2003 

under the TEFRA methodology should 

be compared to estimated payments 

under the new LTCH PPS in FY 2003. 

The most direct way to determine 

payments under the new LTCH PPS, of 

course, is simply to aggregate the actual 

payments calculated under the LTCH 

PPS methodology for the discharges that 

occurred during the first year of the 

LTCH PPS (FY 2003). However, that 

approach raises an issue of consistency 

in the use of data. The discharges for 

which we paid under the LTCH PPS 

during FY 2003 are obviously not the 

same as the discharges for which costs 

were incurred during the last year of 

payment under the TEFRA 

methodology, FY 2002. For the reasons 

we have just discussed, we believe that 

the best way to estimate the TEFRA 

payments that would have been made to 

LTCHs during FY 2003 is to use inflated 

FY 2002 costs as a proxy for FY 2003 

costs. Comparing actual FY 2003 LTCH 

PPS payments to FY 2003 TEFRA 

payments estimated on the basis of FY 

2002 discharges would amount to a 

comparison between payments related 

to two different sets of discharges, 

potentially skewing the results. 

Therefore consistency suggests that, 

rather than comparing TEFRA payments 

based on FY 2002 costs updated to FY 

2003, to aggregate LTCH PPS payments 

for discharges that actually occurred in 

FY 2003, it would be preferable to 

compare estimated TEFRA payments 

based on updated FY 2002 costs to the 

estimated payments that would have 

been made under LTCH PPS 

methodology in FY 2003 for those same 

FY 2002 discharges. In other words, we 

believe that the best approach would be 

to compare—

• Estimated aggregate FY 2003 

TEFRA payments calculated on the 

basis of FY 2002 costs updated to FY 

2003; to 

• Estimated aggregate payments that 

would have been made in FY 2003 

under the LTCH PPS methodology, by 

applying the FY 2003 LTCH payment 

rules to the discharges that occurred in 

FY 2002. 

In this way, we would ensure that we 

are comparing the estimated FY 2003 

TEFRA payments, which are based on 

updated costs incurred for FY 2002 

discharges to the estimated PPS 

payments that would have been made 

for those same FY 2002 discharges 

under the new LTCH PPS payment 

methodology. 

Therefore, in the absence of the 

Medicare, Medicaid, and SCHIP 

Extension Act of 2007, we would have 

proposed to employ the general 

methodology we have just described to 

determine: (1) Whether the one-time 

adjustment available under 

§ 412.523(d)(3) of the regulations should 

be proposed for RY 2009, and (2) if such 

adjustment should be proposed, the 

actual proposed adjustment factor. In 

this proposed rule, we would revise the 

current language of § 412.523(d)(3) of 

the regulations to conform more 

specifically with this preferred 

methodology. At the time of the final 

LTCH PPS rule in 2002, we described 

the nature of the one-time adjustment in 

very general terms. Specifically, that 

section currently provides the 

following: 

The Secretary reviews payments under this 

prospective payment system and may make 

a one-time prospective adjustment to the 

long-term care hospital prospective payment 

system rates on or before July 1, 2008 so that 

the effect of any significant difference 

between actual payments and estimated 

payments for the first year of the long term 

care hospital prospective payment system is 

not perpetuated in the prospective payment 

rates for future years. 

Our policy objective in providing for 

this one-time budget neutrality 

adjustment has always been to ensure 

that computations based on the earlier, 

necessarily limited (but at that time best 

available) data available at the inception 

of the LTCH PPS would not be built 

permanently into the rates if data 

available at a later date could provide 

more accurate results. Prior to the 

thorough analysis we conducted in 

preparation for this rate year, we had 

believed that the only appropriate 

method for meeting this policy objective 

involved employing actual payment 

data from the first year of payment 

under the LTCH. As we have just 

discussed, we believe after a thorough 

evaluation of the currently available 

data in the light of this policy objective, 

that the most appropriate methodology 

for evaluating an adjustment to the 

original budget neutrality adjustment 

does not involve comparing the 

payments estimated in the original 

calculations against the ‘‘actual 

payments * * * for the first year,’’

strictly speaking. Rather, as just 


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discussed, considerations of consistency 

and other factors suggest that the most 

appropriate comparison would employ 

an estimate of FY 2003 LTCH PPS 

payments based on the same set of 

discharges (from FY 2002) which are the 

basis for the best estimate of what 

would have been paid in FY 2003 under 

the TEFRA system. As a result of this 

methodological determination, under 

the broad authority of section 123 of the 

BBRA, as amended by section 307(b) of 

BIPA, to make appropriate adjustments 

to the LTCH PPS, we are proposing to 

revise § 412.523(d)(3) to reflect the 

preferred methodology more clearly. As 

we have discussed previously, we are 

also proposing to revise that section of 

the regulations to correspond with the 

requirements of section 114(c)(4) of the 

Medicare, Medicaid, and SCHIP 

Extension Act of 2007. Specifically, we 

are now proposing to revise 

§ 412.523(d)(3) of the regulations to read 

as follows: 

The Secretary reviews payments under this 

prospective payment system and may make 

a one-time prospective adjustment to the 

long-term care hospital prospective payment 

system rates no earlier than December 29, 

2010, so that the effect of any significant 

difference between the data used in the 

original computations and more recent data 

to determine budget neutrality is not 

perpetuated in the prospective payment rates 

for future years. 

Our proposed revision to § 412.523(d)(3) 

of the regulations would continue to 

provide that the Secretary may make a 

one-time adjustment to the LTCH PPS 

rates in order to ensure that any 

‘‘significant’’ difference is not 

perpetuated in the LTCH PPS rates for 

future years. The regulation does not 

specifically define what constitutes a 

significant difference for this purpose. 

In the absence of section 114(c)(4) of the 

Medicare, Medicaid, and SCHIP 

Extension Act of 2007, we would have 

proposed to consider as ‘‘significant’’

any difference greater than or equal to 

a 0.25 percentage point difference 

between the original budget neutrality 

calculations and budget neutrality 

calculations based on the more recent 

data now available. This threshold 

avoids making an adjustment to account 

for very minor deviations between 

earlier and later estimates of budget 

neutrality. It is also consistent with 

thresholds that we have employed for 

similar purposes in prospective 

payment systems. For example, under 

the capital IPPS, we make a forecast 

error correction in the framework used 

to update the capital Federal rate if a 

previous forecast of input prices varies 

by at least a 0.25 percentage point from 

actual input price changes (72 FR 

47425). We do not believe that we 

should treat differences greater than or 

equal to 0.25 percent as not 

‘‘significant,’’ since the effect of any 

difference will be magnified as the rates 

are updated each year. 

As discussed previously, absent the 

requirement of section 114(c)(4) of the 

Medicare, Medicaid and SCHIP 

Extension Act of 2007, we would have 

proposed to use FY 2002 LTCH costs as 

a basis for estimating FY 2003 LTCH 

TEFRA payments in evaluating whether 

to propose a one-time prospective 

adjustment under § 412.523(d)(3). We 

also would have proposed to update the 

FY 2002 costs for inflation to FY 2003 

by our Office of the Actuary’s current 

estimate of the actual increase in the 

excluded hospital market basket from 

FY 2002 to FY 2003 of 4.2 percent. This 

updated amount would serve as the 

proxy for actual FY 2003 TEFRA costs 

in the proposed budget neutrality 

computation for purposes of 

§ 412.523(d)(3). We estimated FY 2003 

LTCH TEFRA payments using a 

methodology that is similar in concept 

to the methodology we used to estimate 

FY 2003 LTCH total payments under the 

TEFRA system when we determined the 

initial standard Federal rate in the 

August 30, 2002 final rule (67 FR 56030 

through 56033). We also made 

modifications to the methodology we 

initially used to estimate FY 2003 LTCH 

TEFRA payments because we are using 

data from a later period, as discussed in 

greater detail below. In general, we 

estimated total payments under the 

TEFRA payment system using the 

following steps: 

• Estimate each LTCH’s payment per 

discharge for inpatient operating costs 

under the TEFRA system for FY 2003; 

• Estimate each LTCH’s payment per 

discharge for capital-related costs for FY 

2003; and 

• Sum each LTCH’s estimated 

operating and capital payment per case 

to determine its estimated total FY 2003 

TEFRA payment system payment per 

discharge. 

We discuss each of these steps in greater 

detail below. 

The first step in the process of 

estimating total FY 2003 payments 

under the TEFRA payment system is to 

estimate each LTCH’s payment per 

discharge for inpatient operating costs 

under the TEFRA. Until FY 1998, the 

payment methodology for inpatient 

operating costs under the TEFRA 

payment system was a relatively 

straightforward process. First, we 

calculated a target amount by dividing 

the Medicare total inpatient operating 

costs in a base year by the number of 

Medicare discharges. The provider’s 

TEFRA target amount was then updated 

by a rate-of-increase percentage 

(§ 413.40(c)(3) of the regulations, as 

established by the Congress, to 

determine the TEFRA target amount for 

the subsequent cost reporting period 

(§ 413.40(c)(4)(i), (ii)). For any particular 

cost reporting period, the Medicare 

payment for inpatient operating costs 

would be the lesser of the hospital’s 

reasonable costs, or the updated target 

amount multiplied by the number of 

Medicare discharges during the cost 

reporting period, that is, the TEFRA 

ceiling (§ 413.40(a)(3)). 

The methodology described above, 

broadly speaking, is the general 

approach that we would use to arrive at 

an estimate of what Medicare payments 

for hospital inpatient operating costs 

would have been in FY 2003 under the 

TEFRA payment system: each LTCH’s 

FY 2003 target amount would be 

calculated by updating its estimated FY 

2002 target amount per discharge by the 

full market basket percentage increase. 

The sum of all LTCH payments for 

operating costs (TEFRA target amount 

multiplied by Medicare discharges), 

bonus or relief payments, continuous 

improvement bonus payments, and 

payments for capital-related costs 

yields, in general, the estimate of what 

total Medicare payments to LTCHs 

would be in FY 2003 under the TEFRA 

payment system if the LTCH PPS had 

not been implemented. 

However, because sections 4413 

through 4419 of the BBA of 1997, 

section 122 of the BBRA of 1999, and 

section 307(a)(1) of the BIPA made 

numerous changes to the TEFRA 

payment system, we had to make 

variations in the method described 

above to arrive at the estimate of FY 

2003 payments for the inpatient 

operating costs of each LTCH under the 

TEFRA system, depending on the 

participation date of the hospital. 

Specifically, we must make the requisite 

computations differently for two classes 

of hospitals, ‘‘existing’’ hospitals and 

‘‘new’’ hospitals. (A detailed 

explanation of the provisions affecting 

LTCHs, established by each of the 

amendments, is found in the August 30, 

2002 final rule that implemented the 

LTCH PPS (67 FR 55959).) We discuss 

below these specific BBA, BBRA, and 

BIPA changes, and their impact on the 

calculations of estimated FY 2003 

TEFRA payments for ‘‘existing’’ and 

‘‘new’’ hospitals. As discussed in greater 

detail below, we would employ two 

approaches to estimate Medicare 

payments under the TEFRA system to 

LTCHs in FY 2003, depending on how 

these changes in calculating TEFRA 


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payments, as established by the 

amendments, applied to each LTCH. 

The first set of changes that we had 

to take into account were included in 

the BBA. The BBA made significant 

changes to the TEFRA payment 

methodology starting with cost 

reporting periods beginning on or after 

October 1, 1997. While the changes 

were applicable to three types of PPSexcluded providers (rehabilitation 

hospitals and units, psychiatric 

hospitals and units, and LTCHs), the 

following discussion will address the 

provisions of the amendments as they 

relate to LTCHs. 

The first change to consider under 

BBA is section 4414 that established 

caps on the TEFRA target amounts for 

cost reporting periods beginning on or 

after October 1, 1997, for LTCHs that 

were paid as IPPS excluded providers 

prior to that date. The cap was 

determined by taking the 75th 

percentile of target amounts for cost 

reporting periods ending in FY 1996 for 

each class of provider (rehabilitation 

hospitals and units, psychiatric 

hospitals and units, and LTCHs), 

updating that amount by the market 

basket percentage increases to FY 1998, 

and applying it to the cost reporting 

period beginning on or after October 1, 

1997 (62 FR 46018). The cap calculated 

for FY 1998 was updated by the 

applicable market basket percentages to 

determine the cap amounts for cost 

reporting periods beginning during FY 

1999 through 2002. Providers subject to 

the 75th percentile cap were paid the 

lesser of their inpatient operating costs 

or the TEFRA target amount, which was 

limited by the 75th percentile cap 

amount (67 FR 55959). In addition, 

section 4411 of the BBA established a 

formula for calculating the update factor 

for FY 1999 through FY 2002 that was 

dependent on the relationship of a 

provider’s inpatient operating costs to 

its ceiling amount based on data from 

the most recently available cost report. 

Section 121 of the BBRA provided that 

the 75th percentile cap amount should 

be wage adjusted starting with cost 

reporting periods beginning on or after 

October 1, 1999 and before October 1, 

2002. 

The second change that we had to 

take into account was section 4415 of 

the BBA. This provision revised the 

percentage factors used to determine the 

amount of bonus and relief payments for 

LTCHs meeting specific criteria. If a 

provider’s net inpatient operating costs 

did not exceed the hospital’s ceiling, a 

bonus payment was made to the LTCH 

(§ 413.40(d)(2) of the regulations). The 

bonus payment was the lower of 15 

percent of the difference between the 

hospital’s inpatient operating costs and 

the ceiling, or 2 percent of the ceiling. 

In addition, relief payments were made 

to providers whose net inpatient 

operating costs were greater than 110 

percent of the ceiling (or the adjusted 

ceiling, if applicable). These relief 

payments were the lower of 50 percent 

of the costs in excess of 110 percent of 

the ceiling or (or the adjusted ceiling, if 

applicable) or 10 percent of the ceiling 

(or adjusted ceiling, if applicable) 

(§ 413.40(d)(3)(ii) of the regulations). 

The third change was an additional 

incentive established by section 4415 of 

the BBA, the continuous improvement 

bonus payment (CIB) for providers 

meeting certain conditions and that kept 

their costs below the target amount. 

Eligibility for the CIB required that a 

provider had three full cost reporting 

periods as an IPPS-excluded provider 

prior to the applicable fiscal year (62 FR 

46019). To qualify for a CIB, a provider’s 

operating costs per discharge in the 

current cost reporting period had to be 

lower than the least any of the 

following: its target amount; its 

expected costs, that is, the lower of its 

target amount or inpatient operating 

costs per discharge from the previous 

cost reporting period, updated; or, its 

trended costs, that is, the inpatient 

operating costs per discharge from its 

third full cost reporting period, updated 

by the market basket percentage 

increase to the applicable fiscal year (62 

FR 46019, § 413.40(d)(5)(ii)(B) of the 

regulations). For providers with their 

third or subsequent full cost reporting 

period ending in FY 1996, trended costs 

are the lower of their inpatient operating 

costs per discharge or target amount 

updated forward to the current year 

(§ 413.40(d)(5)(ii)(A) of the regulations). 

The CIB payment equals the lesser of 50 

percent of the amount by which the 

operating costs were less than expected 

costs, or, 1 percent of the ceiling 

(§ 413.40(d)(4) of the regulations). 

Section 122 of the BBRA increased this 

percentage for LTCH’s for FY 2001 to 

1.5 percent of the ceiling, and beginning 

in FY 2002, to 2 percent of the ceiling 

(§ 413.40(d)(4)(ii) and (iii) of the 

regulations). The increase in the CIB 

percentage is not to be accounted for in 

the development and implementation of 

the LTCH PPS in accordance with 

section 307(a)(2) of BIPA. 

The fourth change that we had to take 

into account was section 4416 of the 

BBA which significantly revised the 

payment methodology for ‘‘new’’ IPPSexcluded providers. This provision 

applies to three classes of providers—

psychiatric hospitals and units, 

rehabilitation hospitals and units, and 

LTCHs—that were not paid as excluded 

hospitals prior to October 1, 1997. The 

payment amount for a new provider for 

the first 12-month cost reporting period 

is the lower of its Medicare inpatient 

operating cost per discharge or a limit 

based on 110 percent of the national 

median of target amounts for the same 

class of hospital for cost reporting 

periods ending in FY 1996, updated by 

the market basket percentage increases 

to the applicable period, and wageadjusted. The payment limit in the 

second 12-month cost reporting period 

is the same 110 percent limit as for the 

first year (§ 413.40(f)(2)(ii) of the 

regulations). A new provider’s target 

amount would be established in its third 

cost reporting period by updating the 

amount paid in its second cost reporting 

period by the market basket percentage 

increase for hospitals and hospital units 

excluded from the IPPS, applicable to 

the specific year, as published annually 

in the Federal Register, which then 

becomes the target amount for its third 

cost reporting period. The target amount 

for the fourth and subsequent cost 

reporting periods is determined by 

updating the target amount from the 

previous cost reporting period by the 

applicable market basket percentage 

increase. 

Finally, two provisions under BIPA 

were directed specifically at LTCHs. 

Section 307(a)(1) of BIPA provided a 2 

percent increase to the wage-adjusted 

75th percentile cap for existing LTCHs 

for cost reporting periods beginning in 

FY 2001, and a 25 percent increase to 

the target amount for LTCHs, subject to 

the increased 75th percentile cap. 

However, it is important to note that in 

accordance with section 307(a)(2) of 

BIPA, the 2 percent increase to the 75th 

percentile cap and the 25 percent 

increase to the target amount were not 

to be taken into account in the 

development and implementation of the 

LTCH PPS. 

In order to determine what a LTCH’s 

estimated payments would be under 

TEFRA in FY 2003, we utilized cost 

report data for LTCHs from the Hospital 

Cost Reporting Information System 

(HCRIS) for FYs 1999 through 2002. In 

addition, to determine whether a LTCH 

is ‘‘new,’’ the certification date for each 

LTCH was obtained from the On-line 

Survey & Certification Automated 

Reporting (OSCAR) file. Based on the 

certification date, a LTCH would either 

be a ‘‘new’’ LTCH, meaning a LTCH that 

was not paid as an excluded hospital 

prior to October 1, 1997, or, an 

‘‘existing’’ LTCH, meaning a LTCH that 

was paid as an excluded hospital prior 

to October 1, 1997. This could include 

a LTCH that was certified as an LTCH 

on or after October 1, 1997, but was 


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previously paid as another type of IPPSexcluded provider prior to October 1, 

1997. Our approach to estimating 

Medicare payments in FY 2003 under 

the TEFRA payment system varied 

somewhat, depending on whether an 

LTCH was ‘‘existing’’ or ‘‘new’’ (as 

discussed in greater detail below). 

Based on all these statutory changes 

mentioned above, the first step would 

be to estimate FY 2003 inpatient 

operating payments under the TEFRA 

system for ‘‘existing’’ LTCHs. ‘‘Existing’’

LTCHs are those receiving payment as 

IPPS-excluded providers in cost 

reporting periods prior to FY 1998. 

These LTCHs were subject to the 75th 

percentile cap on their target amounts. 

While section 307(a)(1) of BIPA 

provided for a 2 percent increase to the 

75th percentile cap amount for LTCH’s 

for cost reporting periods beginning in 

FY 2001 and a 25 percent increase to the 

target amount for cost reporting periods 

beginning in FY 2001 (subject to the 

limiting or cap amount determined 

under section 1886(b)(3)(H) of the Act), 

section 307(a)(2) of BIPA precluded 

accounting for these increases in 

developing the LTCH PPS. In addition, 

section 122 of the BBRA increased the 

CIB payment percentage to 1.5 percent 

for FY 2001 and 2.0 percent for FY 2002 

(§ 413.40(d)(4)(ii) and (iii) of the 

regulations). But these increases, also, 

are not to be accounted for in the 

development and implementation of the 

LTCH PPS in accordance with section 

307(a)(2) of BIPA. Therefore, to ensure 

that these increases would be excluded 

from the computations, as required by 

the statute, we estimated an existing 

LTCH’s FY 2003 target amount by 

starting with the hospital’s target 

amount from the FY 2000 cost report, 

the year prior to when these increases 

were effective. Target amounts and 

payments for FY 2003 were simulated 

using the FY 2000 target amount in the 

hospital’s cost report and updating the 

target amount for each subsequent cost 

reporting period by the applicable rateof-increase percentage as described in 

§ 413.40(c)(3)(vii) through FY 2002. The 

target amount from FY 2002 is updated 

by the forecasted market basket 

percentage increase of 3.5 percent to 

arrive at the FY 2003 target amount 

(§ 413.40(c)(3)(viii)). (Note, the 

forecasted increase in the excluded 

hospital market basket for FY 2003 of 

3.5 percent was the applicable rate-ofincrease percentage used to update 

TEFRA target amounts in accordance 

with § 413.40(c)(3)(viii) in the FY 2003 

IPPS final rule (August 1, 2002, 67 FR 

50289)). Based on more recent data, our 

Office of the Actuary currently estimates 

an increase of 4.2 percent in the 

excluded hospital market basket for FY 

2003, which we used to update LTCHs’

FY 2002 costs to FY 2003, as described 

below.) In a small number of cases 

where FY 2002 operating cost data were 

not available, we used operating cost 

data from the most recent year available 

and trended it forward to FY 2003. In 

addition, we estimated FY 2003 bonus 

or relief payments without the inclusion 

of the 2 percent and 25 percent 

increases to the cap amount and target 

amount, respectively, and without the 

1.5 percent and 2.0 percent increases to 

the CIB payments, consistent with 

section 307(a)(2) of BIPA as discussed 

above. 

In addition, since comparisons are 

made between the target amount and 

Medicare inpatient operating costs to 

determine bonus or relief payments, we 

estimated FY 2003 operating costs for 

each LTCH by updating its FY 2002 

operating costs by the actual percentage 

increase in operating costs for PPSexcluded hospitals from FY 2002 to FY 

2003 (4.2 percent, as determined by 

OACT). The 3.5 percent market basket 

increase used to update the TEFRA 

target amounts from FY 2002 to FY 2003 

was the forecast increase used at that 

time based on the most recent 

information from OACT, at that time. 

However, because we now have more 

recent data available for estimating the 

market basket increase for IPPSexcluded hospitals from FY 2002 to FY 

2003, we are using that more recent data 

which OACT currently estimates that 

the IPPS-excluded hospital market 

basket increase from FY 2002 to FY 

2003 is 4.2 percent. As discussed 

earlier, we estimated the FY 2003 

operating costs using FY 2002 costs 

rather than use the costs reported on the 

FY 2003 cost report. 

The 75th percentile cap for LTCHs for 

FY 2002, without the 2 percent and 25 

percent increases to the cap and target 

amount, respectively, was $30,783 for 

the wage-index adjusted labor-related 

share, and $12,238 for the nonlaborrelated share. If a LTCH’s costs and 

hospital-specific target amount were 

above the 75th percentile cap, 

Medicare’s payment under the TEFRA 

system would be the wage-index 

adjusted cap amount. If under our 

payment model a LTCH’s estimated FY 

2002 TEFRA payment would have been 

limited by the wage-adjusted 75th 

percentile cap in FY 2002, that amount 

would be updated by the forecasted 

market basket percentage increase (of 

3.5 percent) to FY 2003 to determine the 

LTCH’s FY 2003 target amount that was 

used to estimate its TEFRA payment 

amount for FY 2003. 

The second approach that we used to 

estimate FY 2003 hospital operating 

payments under the TEFRA system 

applied to ‘‘new’’ LTCHs. A ‘‘new’’

LTCH is one that was first paid as an 

IPPS excluded hospital on or after 

October 1, 1997. For a ‘‘new’’ LTCH, 

payment in the hospital’s first 12-month 

cost reporting period is the lower of its 

Medicare net inpatient operating costs 

per discharge or the wage-adjusted 110 

percent median amount determined for 

that particular year (§ 413.40(f)(2)(ii) of 

the regulations). For the hospital’s 

second 12-month cost reporting period, 

payment is the lower of their costs, or 

the same 110 percent median amount 

that was used in the first cost reporting 

period, that is, it is not updated. The 

hospital’s ‘‘target amount’’ is established 

in the third cost reporting period by 

updating the per discharge amount that 

was paid in the prior cost reporting 

period by the estimated market basket 

percentage increase for hospitals and 

hospital units excluded from the IPPS, 

applicable to the specific year, as 

published annually in the Federal 

Register. Therefore, if the LTCH was 

paid its costs in the previous cost 

reporting period because costs were 

lower than the 110 percent median 

amount, the hospital’s cost per 

discharge for the second cost reporting 

period is updated and becomes the 

target amount for the hospital’s third 

cost reporting period. Target amounts 

for subsequent cost reporting periods 

are determined by updating the 

previous year’s target amount by the 

applicable market basket percentage 

increase. 

New LTCHs with their first 12-month 

cost reporting period beginning in FY 

1998, would have had a target amount 

calculated under section 

1886(b)(7)(A)(ii) of the Act, in FY 2000. 

Therefore, as with the ‘‘existing’’

LTCH’s, in estimating the FY 2003 target 

amount, we used the target amount from 

the FY 2000 cost report for those LTCHs 

and update that target amount by the 

applicable estimated market basket 

percentage increases as published 

annually in the Federal Register for the 

IPPS final rule, without the 25 percent 

increase, to FY 2003. For LTCH’s with 

their first 12-month cost reporting 

period beginning in FY 1999, we used 

the lower of their costs or target amount 

from their FY 2000 cost report, and 

updated that amount by the applicable 

estimated market basket percentage 

increase to establish the target amount 

in FY 2001, without the 25 percent 

increase. From this point, we would 

continue to update that target amount 

by the estimated market basket 


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percentage increases to FY 2003. It is 

necessary to compute an estimated 

target amount for LTCHs that are ‘‘new’’

in FY 1999 in order to eliminate the 

potential inclusion of the increase to the 

target amounts provided for by section 

307(a)(1) of BIPA (consistent with the 

statute). 

The 25 percent increase (under 

section 307(a) of the BIPA) to the target 

amount was not an issue for LTCH’s 

with their first 12-month cost reporting 

period beginning in FYs 2000, 2001, and 

2002 because they would not have a 

‘‘target amount’’ based on sections 

1886(b)(7)(A)(ii) of the Act, in FY 2001. 

Rather, for these LTCHs, we would have 

proposed to determine the estimated 

payment amount for their first 12-month 

cost reporting period by looking at their 

certification date from the OSCAR file, 

the applicable 110 percent median 

amount (adjusted by their wage-index) 

and their costs from the applicable cost 

report, and then proceed in accordance 

with the policy in § 413.40(f)(2)(ii) of 

the regulations, to arrive at estimated FY 

2003 TEFRA payments. 

In addition to the TEFRA payments 

for operating costs, and any bonus or 

relief payments made, we also added 

$10 million as an estimate of the CIB 

payments that would have been made in 

FY 2003 under the TEFRA payment 

system. We estimated this payment by 

using actual CIB payments from the cost 

reports for FYs 1999 and 2000 as they 

would not include the statutory 

increases to the target amount as 

discussed above, and recalculated CIB 

payments for FYs 2001 and 2002 based 

on cost report data. Based on these 

historical CIB payments, we estimated 

that CIB payments in FY 2003 would 

have been approximately $10 million. 

Just as the TEFRA payments and bonus 

and relief payments had to be 

recalculated in particular years to 

eliminate percentage increases that were 

not to be included in our budget 

neutrality calculations, it was necessary 

to recalculate the CIB payments in FYs 

2001 and 2002 to eliminate the 

percentage increases to these payments 

as provided for under section 122 of 

BBRA, but not to be accounted for in the 

development of the LTCH in accordance 

with section 307(a)(2) of BIPA. 

As we discussed above, the second 

step in estimating total payments under 

the TEFRA payment system is to 

estimate each LTCH’s payment per 

discharge for capital-related costs. 

Under the TEFRA system, in accordance 

with section 1886(g) of the Act, 

Medicare allowable capital costs are 

paid on a reasonable cost basis. 

Therefore, we took each LTCH’s 

payment for capital-related costs 

directly from the FY 2002 cost report 

and updated it for inflation using the FY 

2003 capital excluded hospital market 

basket estimate of 0.7 percent, 

consistent with the methodology used 

in the August 30, 2002 final rule (67 FR 

56032) in which we established the 

initial standard Federal rate. Thus, we 

determined capital-related costs per 

case using capital cost data from 

Worksheets D, Parts I and II, and total 

Medicare discharges for the cost 

reporting period from worksheet S–3. 

(We note that since payments for 

capital-related costs are on a reasonablecost basis, capital payments were the 

same for ‘‘existing’’ and ‘‘new’’ LTCHs.) 

Once we have estimated total TEFRA 

payments as the sum of each LTCH’s 

estimated operating and capital 

payment per case, it is necessary to 

estimate FY 2003 payments under the 

LTCH PPS. As we discussed above, in 

evaluating the one-time prospective 

adjustment at § 412.523(d)(3), we 

believe that the best approach is to use 

FY 2002 LTCH claims data as a proxy 

for estimating FY 2003 LTCH PPS 

payments. We note (as explained below) 

that we used the same FY 2002 LTCH 

MedPAR data that was used to develop 

the FY 2004 LTC–DRG relative weights 

in the FY 2004 IPPS final rule (68 FR 

45376). As we discussed in that final 

rule, there is a data problem with the FY 

2002 claims data for LTCHs where 

multiple bills for the stay were 

submitted. Specifically, given the long 

stays at LTCHs, some providers had 

submitted multiple bills for payment 

under the reasonable cost-based 

reimbursement system for the same stay. 

In certain LTCHs, hospital personnel 

apparently reported a different principal 

diagnosis on each bill since, under the 

reasonable cost-based (TEFRA) 

reimbursement system, payment was 

not dependent upon principal 

diagnosis, as it is under a DRG-based 

PPS system. As a result of this billing 

practice, we discovered that only data 

from the final bills were being extracted 

for the MedPAR file. Therefore, it was 

possible that the original MedPAR file 

was not receiving the correct principal 

diagnosis. In that same IPPS final rule, 

we discussed how we addressed this 

problem in the LTCH FY 2002 MedPAR 

data when we used that data to 

determine the FY 2004 LTC–DRG 

relative weights. As stated above, for the 

evaluation of the one-time budget 

neutrality adjustment at § 412.523(d)(3) 

in this proposed rule, we used the same 

‘‘corrected’’ FY 2002 LTCH MedPAR 

data that was used to develop the FY 

2004 LTC–DRG relative weights. For the 

reader’s benefit, we are providing a 

summary of how we addressed the 

multiple bill problem in the FY 2002 

LTCH MedPAR data below. As we 

explained in the FY 2004 IPPS final rule 

(68 FR 45376), we addressed this 

problem by identifying all LTCH cases 

in the FY 2002 MedPAR file for which 

multiple bills were submitted. For each 

of these cases, beginning with the first 

bill and moving forward consecutively 

through subsequent bills for that stay, 

we recorded the first unique diagnosis 

codes up to 10 and the first unique 

procedure codes up to 10. We then used 

these codes to appropriately group each 

LTCH case to a LTC–DRG for FY 2004. 

We estimated FY 2003 LTCH PPS 

payments using the same general 

methodology that we used to estimate 

FY 2003 payments under the LTCH PPS 

(without a budget neutrality adjustment) 

when we determined the initial 

standard Federal rate in the August 30, 

2002 final rule (67 FR 56032). 

Specifically, we estimated FY 2003 

LTCH PPS payments for each LTCH by 

simulating payments on a case-by-case 

basis by applying the final FY 2003 

payment policies established in the 

August 30, 2002 final rule that 

implemented the LTCH PPS (67 FR 

55954) based on the LTCH case-specific 

discharge information from the FY 2002 

MedPAR files (as explained above), and 

we also used LTCH provider-specific 

data from the FY 2003 provider specific 

file (PSF), as these were the data used 

by FIs to make LTCH payments during 

the first year of the LTCH PPS (FY 

2003). We used the FY 2003 LTC–DRG 

Grouper (Version 22.0) software 

program, relative weights, and average 

length of stay (see 67 FR 55979 through 

55995); we made adjustments for 

differences in area wage levels 

established for FY 2003 as set forth at 

§ 412.525(c) using the appropriate 

phase-in wage index values and cost-ofliving for Alaska and Hawaii as set forth 

at § 412.525(b) established for FY 2003 

(see 67 FR 56015 through 56020 and 

56022, respectively); we made 

adjustments for short-stay outlier cases 

based on the method for determining 

payment applicable for discharges 

occurring during FY 2003 in accordance 

with § 412.529(c)(1) (see 67 FR 55975 

and 55995–56002); and we included 

additional payments for high cost 

outlier cases as initially implemented in 

accordance with former § 412.525(a) for 

determining payments for discharges 

occurring in FY 2003 and the FY 2003 

fixed-loss amount of $24,450 (see 67 FR 

56023). (We note that correctly billed 

interrupted stay cases under § 412.531 

are single LTCH cases in the MedPAR 

files, and therefore, we estimated a 


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single LTCH PPS payment for those 

cases.) For purposes of this calculation, 

we simulated case-by-case payments for 

each LTCH as if it were paid based on 

100 percent of the standard Federal rate 

in FY 2003 rather than the transition 

blend methodology set forth at 

§ 412.533. To determine total estimated 

PPS payments for all LTCHs, we 

summed the individual estimated LTCH 

PPS payments for each LTCH. 

The next step we did to evaluate a 

potential one-time adjustment under 

§ 412.523(d)(3) was to determine a caseweighted average estimated TEFRA 

payment, consistent with the 

methodology used when we determined 

the initial standard Federal rate in the 

August 30, 2002 final rule (68 FR 

56032). This step is necessary in order 

to determine if there is any difference 

between estimated total TEFRA 

payments and estimated LTCH PPS 

payments in FY 2003. Each LTCH’s 

estimated total FY 2003 TEFRA 

payment per discharge was determined 

by summing its estimated FY 2003 

operating and capital payments under 

the TEFRA payment system based on 

FY 2002 cost report data (as described 

above), and dividing that amount by the 

number of discharges from the FY 2002 

cost report data. Next, we determined 

each LTCH’s average estimated TEFRA 

payment weighted for its number of 

discharges in the FY 2002 MedPAR file 

(for the purpose of estimating FY 2003 

LTCH PPS payments, as discussed 

above) by multiplying its average 

estimated total TEFRA payment per 

discharge by its number of discharges in 

the FY 2002 MedPAR file. We then 

estimated total case-weighted TEFRA 

payments by summing each LTCH’s 

(MedPAR) case-weighted estimated FY 

2003 TEFRA payments. This estimated 

FY 2003 total TEFRA payment is 

compared to the estimated FY 2003 total 

LTCH PPS payment in order to 

determine whether a one-time budget 

neutrality adjustment would be 

appropriate. (As discussed in greater 

detail above, we are determining both 

estimated total FY 2003 TEFRA 

payments and estimated total FY 2003 

LTCH PPS payments based on FY 2002 

cost report and claims data, 

respectively.) Adjusting our estimate of 

FY 2003 TEFRA payments for the 

number of discharges that we are using 

to estimate FY 2003 LTCH PPS 

payments ensures that the comparison 

of estimated aggregate FY 2003 TEFRA 

payments to estimated aggregate FY 

2003 LTCH PPS payments is based on 

the same number of LTCH discharges. 

Using the methodology and data 

described above, we have calculated 

that estimated FY 2003 LTCH PPS 

payments are approximately 2.5 percent 

higher than estimated payments to the 

same LTCHs in FY 2003 if the LTCH 

PPS had not been implemented (that is, 

estimated total FY 2003 TEFRA 

payments). This analysis was based on 

approximately 91,300 LTCH cases for 

250 LTCHs. As discussed above, we 

would have proposed that any 

difference greater than or equal to 0.25 

percentage points ‘‘significant’’ for 

purposes of determining whether the 

one-time budget neutrality adjustment 

provided under § 412.523(d)(3) may be 

warranted. Although we project that 

estimated FY 2003 LTCH PPS payments 

are approximately 2.5 percent higher 

than estimated FY 2003 TEFRA 

payments, reducing the standard 

Federal rate by 2.5 percent would not 

‘‘maintain budget neutrality’’ for FY 

2003 (that is, estimated FY 2003 LTCH 

PPS payments would not be equal to 

estimated FY 2003 TEFRA payments) 

because a considerable number of LTCH 

discharges are projected to have 

received a LTCH PPS payment in FY 

2003 based on the estimated cost of the 

case (rather than a payment based on 

the standard Federal rate) under the 

payment adjustment for short-stay 

outlier (SSO) cases at § 412.529. 

Specifically, our payment data indicate 

that nearly 20 percent of estimated FY 

2003 LTCH PPS payments are SSO 

payments that were paid based on 

estimated cost and not based on the 

LTCH PPS standard Federal rate. These 

SSO cases that receive a payment based 

on the estimated cost of the case are 

generally unaffected by any changes to 

the Federal rate because the estimated 

cost of the case is determined by 

multiplying the Medicare allowable 

charges by the LTCH’s cost-to-charge 

ratio (see § 412.529(d)(2)). In other 

words, if we were to reduce the Federal 

rate by 2.5 percent, estimated total FY 

2003 LTCH PPS payments would still be 

greater than estimated total FY 2003 

TEFRA payments, and therefore would 

not be budget neutral. This is because 

the estimated LTCH PPS payments for 

those SSO cases that in FY 2003 were 

estimated to have been paid 120 percent 

of the estimated cost of the case 

generally are not affected (that is, in this 

case, not lowered) by any budget 

neutrality factor that would be applied 

to the standard Federal rate since those 

payments are not derived from the 

Federal rate (as explained above). 

Therefore, it would be necessary to 

propose to offset the standard Federal 

rate by a factor that is larger than 2.5 

percent in order to ensure that estimated 

total FY 2003 LTCH PPS payments 

would be equal to estimated total FY 

2003 TEFRA payments in order to 

‘‘maintain budget neutrality.’’ To 

determine the necessary adjustment 

factor that would need to be applied to 

the standard Federal rate in order to 

‘‘maintain budget neutrality,’’ we 

simulated FY 2003 LTCH PPS payments 

using the same payment simulation 

model discussed above (that we used to 

estimate FY 2003 LTCH PPS payments 

without a budget neutrality factor). 

Using iterative payment simulations 

using the data from the 250 LTCHs in 

our database, we determined that a 

factor of 0.9625 (that is, approximately 

3.75 percent (rather than 2.5 percent)) 

would need to be applied to the 

standard Federal rate in order to make 

estimated total FY 2003 LTCH PPS 

payments equal to estimated total FY 

2003 TEFRA payments. 

In the absence of section 114(c)(4)of 

the Medicare, Medicaid, and SCHIP 

Extension Act of 2007, we would have 

proposed to employ this methodology in 

determining whether it would have 

been appropriate to propose a one-time 

budget neutrality adjustment. As the 

discussion above indicates, that analysis 

suggests that an adjustment of 3.75 

percent to the standard Federal rate 

would have been warranted. We expect 

to address the issue again when it is 

closer to the time section 114(c)(4) of 

the MMSEA permits us to implement a 

one-time adjustment under 

§ 412.523(d)(3). In the meantime, we 

welcome comments on the methodology 

that we have described. We would take 

these comments into account in 

proposing to implement a one-time 

budget neutrality adjustment on or after 

December 29, 2010. As noted above, we 

will respond to any comments on our 

proposed changes to the methodology 

for the one-time budget neutrality 

adjustment and proposed change to 

implement the requirements of section 

114(c)(4) of Public Law 110–173. 

E. Proposed Standard Federal Rate for 

the 2008 LTCH PPS Rate Year 

1. Background 

At § 412.523(c)(3)(ii), for LTCH PPS 

rate years beginning RY 2004 through 

RY 2006, we updated the standard 

Federal rate by a rate increase factor to 

adjust for the most recent estimate of the 

increases in prices of an appropriate 

market basket of goods and services for 

LTCHs. We established the policy of 

annually updating the standard Federal 

rate because at that time we believed 

that was the most appropriate method 

for updating the LTCH PPS standard 

Federal rate annually for years after FY 

2003. When we moved the date of the 

annual update of the LTCH PPS from 


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October 1 to July 1 in the RY 2004 LTCH 

PPS final rule (68 FR 34138), we revised 

§ 412.523(c)(3)accordingly. At that time, 

we believed that was the most 

appropriate method for updating the 

LTCH PPS standard Federal rate 

annually for years after RY 2004. 

In the RY 2007 LTCH PPS final rule 

(71 FR 27818), we explained that rather 

than solely using the most recent 

estimate of the LTCH PPS market basket 

as the basis of the update factor for the 

Federal rate for RY 2007, we believed it 

was appropriate to adjust the Federal 

rate to account for the changes in coding 

practices (rather than patient severity) 

as indicated by our ongoing monitoring 

activities. We established at 

§ 412.523(c)(3)(iii) that the update to the 

standard Federal rate for the 2007 LTCH 

PPS rate year was zero percent, based on 

the most recent estimate of the LTCH 

PPS market basket at the time which 

was offset by an adjustment to account 

for changes in case-mix in prior periods 

due to changes in coding practices 

rather than increased patient severity in 

FY 2004. Therefore, effective from July 

1, 2006 through June 30, 2007, the 

standard rate was $38,086.04 (71 FR 

27818). For the following year, we also 

considered changes in coding practices 

(rather than patient severity) in 

establishing the update to the Federal 

rate for the 2008 LTCH PPS rate year. In 

the RY 2008 final rule (72 FR 26887 

through 27890), we adjusted the Federal 

rate based on the most recent estimate 

of market basket (3.2 percent) and an 

adjustment to account for changes in 

coding practices (2.49 percent) in FY 

2005. Accordingly, we established at 

§ 412.523(c)(3)(iv) that the update to the 

standard Federal rate for RY 2008 was 

0.71 percent. Consequently, in the RY 

2008 final rule, we established the 

LTCH PPS standard Federal rate, 

effective from July 1, 2007 through June 

30, 2008, of $38,356.45 (see 72 FR 

26890). 

As stated in section I.A. of this 

preamble, section 114(e)(1) of the 

Medicare, Medicaid, and SCHIP 

Extension Act of 2007, enacted on 

December 29, 2007 revises the base rate 

for RY 2008. Specifically, section 

114(e)(1) of Public Law 110–173 adds a 

new subsection to the Act at 1886(m)(2), 

which provides that the base rate for RY 

2008 ‘‘shall be the same as the base rate 

for discharges for the hospital occurring 

during the rate year ending in 2007.’’ In 

addition, section 114(e)(2) of Public Law 

110–173 indicates that section 

1886(m)(2) of the Act ‘‘shall not apply 

to discharges occurring on or after July 

1, 2007, and before April 1, 2008’’ (that 

is, the first 9 months of RY 2008). We 

note that the statute uses the term ‘‘base 

rate,’’ which is an undefined term in 

§ 1886(m) of the ACT and in 42 CFR 

Part 412, subpart O. We are interpreting 

that term to mean the standard Federal 

rate because we believe the Congress 

meant to eliminate the 0.71 percent 

update from the RY 2008 standard 

Federal rate. 

If the term ‘‘base rate’’ used in the 

statute refers to the standard Federal 

rate, then the standard Federal rate for 

RY 2008 would be the same as the 

standard Federal rate for RY 2007 and 

the 0.71 percent update finalized in the 

RY 2008 final rule would be reversed. 

We do not believe that the term ‘‘base 

rate’’ could refer to the ‘‘unadjusted 

rate’’ (that is, to determine the standard 

Federal rate for any given rate year, the 

previous year’s standard Federal rate, 

referred herein as the ‘‘unadjusted rate’’, 

is updated by the current year’s update 

factor.) If the interpretation of ‘‘base 

rate’’ is the ‘‘unadjusted rate,’’ it would 

render meaningless the provision at the 

section 114(e)(1) of the MMSEA and 

Congress does not legislate a nullity. 

The provision would be meaningless 

under such an interpretation because 

even though the unadjusted rate for RY 

2008 would be the same as the 

unadjusted rate for RY 2007, this 

unadjusted rate must still be updated by 

0.71 percent, and doing so would result 

in the same standard Federal rate for RY 

2008 as was adopted in the RY 2008 

final rule. (The unadjusted rate must be 

updated by 0.71 percent in order to 

determine the standard Federal rate 

because it is the standard Federal rate 

that is the basis for Federal prospective 

LTCH PPS payments.) Consequently, 

LTCH PPS payments would be 

unaffected by section 114(e)(1) of the 

Medicare, Medicaid, and SCHIP 

Extension Act of 2007. We explain 

below why RY 2008 LTCH PPS 

payments would be unaffected by 

section 114(e)(1) of Public Law 110–173 

if ‘‘base rate’’ means ‘‘unadjusted rate.’’

Specifically, if ‘‘base rate’’ means the 

‘‘unadjusted rate,’’ the RY 2007 ‘‘base 

rate’’ (that is, $38,086.04) would be the 

same as the standard Federal rate for RY 

2007 (also $38,086.04) since we 

established a zero percent update for RY 

2007. Consequently, if ‘‘base rate’’ is 

interpreted to mean ‘‘unadjusted rate,’’

the ‘‘unadjusted rate’’ for RY 2008 

($38,086.04) would be the same as the 

RY 2007 ‘‘unadjusted rate’’ ($38,086.04). 

The RY 2008 ‘‘unadjusted rate’’ of 

$38,086.04 would subsequently be 

updated by the 0.71 percent update 

factor finalized in the RY 2008 final 

rule, resulting in a standard Federal rate 

for RY 2008 of $38,356.45, which is the 

same standard Federal rate that was 

actually finalized in the RY 2008 final 

rule and which would continue to be 

the standard Federal rate for RY 2008 

even if section 114(e)(1) of MMSEA had 

not been enacted. Since as we noted 

above, Congress does not legislate a 

nullity, we therefore believe that the 

term ‘‘base rate’’ used in section 

114(e)(1) of MMSEA refers to the 

standard Federal rate and not the 

‘‘unadjusted rate.’’ In subsequent 

sections of this preamble, we shall be 

using the term standard Federal rate 

instead of ‘‘base rate’’ when referencing 

the provision in section 114(e)(1) of 

MMSEA in order to avoid further 

confusion. As noted above, the standard 

Federal rate for RY 2007 was $38,086.04 

(71 FR 27818). 

2. Proposed Standard Federal Rate for 

the 2009 LTCH PPS Rate Year 

In the RY 2008 LTCH PPS final rule 

(72 FR 26890), we established a 

standard Federal rate of $38,356.45 for 

the 2008 LTCH PPS rate year that was 

based on the best available data and 

policies established in that final rule. As 

discussed above, the Medicare, 

Medicaid, and SCHIP Extension Act of 

2007, enacted on December 29, 2007, 

revises the standard Federal rate for RY 

2008 while specifying that this rate 

‘‘shall not apply to discharges occurring 

on or after July 1, 2007, and before April 

1, 2008’’ (that is, the first 9 months of 

RY 2008). Specifically, section 114(e)(1) 

of MMSEA provides that under the new 

1886(m)(2) to the Act the standard 

Federal rate for RY 2008 shall be the 

same as the standard Federal rate for RY 

2007 (which shall not apply to 

discharges occurring before April 1, 

2008). Thus, the standard Federal rate 

for RY 2008 will be $38,086.04 (the 

same as standard Federal rate for 2007). 

In this proposed rule, consistent with 

our historical practice, we are proposing 

to update the standard Federal rate from 

the previous year ($38,086.04) to 

determine the proposed standard 

Federal rate for RY 2009. Under the 

broad authority conferred upon the 

Secretary by section 123 of the BBRA as 

amended by section 307(b) of the BIPA, 

we are proposing an annual update to 

the standard Federal rate for the 

proposed 15-month 2009 rate year based 

on the most recent LTCH PPS market 

basket estimate of 3.5 percent, as 

discussed above in section IV.C. of the 

preamble of this proposed rule, and an 

adjustment of 0.9 percent to account for 

the increase in case-mix in a prior 

period (FY 2006) that resulted from 

changes in coding practices rather than 

an increase in patient severity. 

As we discussed in greater detail in 

the RY 2007 and RY 2008 LTCH PPS 


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final rules (71 FR 27819 through 27827 

and 72 FR 26887 through 26890, 

respectively), while we continue to 

believe that an update to the LTCH PPS 

Federal rate year should be based on the 

most recent estimate of the LTCH PPS 

market basket, we believe it is 

appropriate that the rate be offset by an 

adjustment to account for any changes 

in coding practices that do not reflect 

increased patient severity. Such an 

adjustment protects the integrity of the 

Medicare Trust Funds by ensuring that 

the LTCH PPS payment rates better 

reflect the true costs of treating LTCH 

patients (71 FR 27819 through 27827). 

We continue to believe that a 

proposed update to the LTCH PPS 

Federal rate year should be based on the 

most recent estimate of the LTCH PPS 

market basket, offset if appropriate by 

an adjustment to account for changes in 

coding practices that do not reflect 

increased patient severity. Furthermore, 

in the FY 2008 IPPS final rule, we did 

not finalize the proposed case-mix 

budget neutrality factor for the adoption 

of the severity adjusted MS–LTC–DRG 

patient classification system to the FY 

2008 MS–LTC–DRG relative weights. 

We stated in that rule that since we have 

an established mechanism to adjust 

prospectively LTCH payments to 

account for the effect of changes in 

coding from a previous year and 

documentation which is based on actual 

LTCH data, and because at the time of 

the final rule we were unable to 

determine an appropriate adjustment 

factor applicable to LTCHs, we believed 

it was appropriate to continue using the 

established process rather than making 

a prospective adjustment based on an 

estimate of projected LTCH specific 

case-mix change due to improved 

coding and documentation. We also 

stated that consistent with past LTCH 

payment policy, we could propose to 

make future adjustments to account for 

improvements in coding and 

documentation that do not reflect real 

changes in case mix during these years 

that we are implementing MS–LTC–

DRGs. We also stated in that final rule 

that we continue to believe more 

accurate and complete documentation 

and coding will occur, and that we will 

continue to monitor LTCHs’ response to 

the MS–LTC–DRG transition and would 

propose an adjustment factor to LTCHs 

to account prospectively for coding and 

documentation changes if CMS is able 

to estimate an appropriate adjustment 

factor applicable to LTCHs. In 

determining the proposed update to the 

standard Federal rate for the 2009 LTCH 

PPS rate year, we performed a CMI 

analysis using the most recent available 

LTCH claims data (FY 2006 MedPAR 

files) and estimated the observed CMI 

change for FY 2006 to be 1.9 percent 

(based on the most recent available 

LTCH case-mix data from FY 2005 

compared to FY 2006). We continue to 

believe, as discussed and for the same 

reasons stated in the RY 2008 final rule 

(72 FR 26888 through 26890), that it is 

appropriate to utilize the estimate of 

real CMI increase of 1.0 percent, based 

on the well-established RAND study 

referred to in the RY 2008 final rule, as 

the proxy for the portion of the observed 

1.9 percent CMI increase from FY 2005 

to FY 2006 that represents real CMI 

changes for use in determining the 

proposed RY 2009 Federal rate update. 

(A more detailed discussion on the use 

of the RAND study estimate for real CMI 

change can be found in the RY 2008 

final rule appearing in the Federal 

Register on May 11, 2007. (72 FR 26887 

through 26890)). Accordingly, we 

believe that 0.9 percent (1.9 ¥ 1.0 = 0.9) 

of the observed 1.9 percent CMI increase 

from FY 2005 to FY 2006 reflects CMS 

increase that is due to changes in coding 

practices (rather than patient severity). 

At this time, the most recent estimate 

of the LTCH PPS market basket is 3.5 

percent as discussed above in section 

IV.C.2. of this proposed rule. We are 

proposing to update the standard 

Federal Rate for RY 2009 based on the 

full LTCH PPS market basket estimate of 

3.5 percent and a proposed adjustment 

to account for the increase in case-mix 

in the prior period (FY 2006) that 

resulted from changes in coding 

practices of 0.9 percent. Therefore, the 

proposed update factor to the standard 

Federal rate for RY 2009 is 2.6 percent 

(3.5 ¥ 0.9 = 2.6). That is, under the 

broad authority conferred upon the 

Secretary under the BBRA and the 

BIPA, we are proposing to specify under 

§ 412.523(c)(3)(v), that, for discharges 

occurring on or after July 1, 2008 and on 

or before September 30, 2009, the 

standard Federal rate from the previous 

year would be updated by 2.6 percent. 

In determining the proposed standard 

Federal rate for RY 2009, we are 

applying the proposed 2.6 percent 

update to the RY 2008 Federal rate of 

$38,086.04), which is the same standard 

Federal rate for discharges occurring 

during the rate year ending in 2007, 

consistent with section 114(e)(1) of the 

Medicare, Medicaid, and SCHIP 

Extension Act of 2007. Consequently, 

the proposed standard Federal rate for 

RY 2009 would be $39,076.28. 

We also propose that if more recent 

data becomes available (such as a more 

recent estimate of the LTCH PPS market 

basket), we would use that data, if 

appropriate, to determine the update to 

the standard Federal rate for the RY 

2009 final rule, and thus, the Federal 

rate update noted in the proposed 

regulation text at § 412.523(c)(3)(v) 

could change. 

F. Calculation of Proposed LTCH 

Prospective Payments for the 2009 

LTCH PPS Rate Year 

1. Proposed Adjustment for Area Wage 

Levels 

a. Background 

Under the authority of section 123 of 

the BBRA as amended by section 307(b) 

of the BIPA, we established an 

adjustment to the LTCH PPS Federal 

rate to account for differences in LTCH 

area wage levels at § 412.525(c). The 

labor-related share of the LTCH PPS 

Federal rate, currently estimated by the 

FY 2002-based RPL market basket (as 

discussed in greater detail in section 

IV.C.1. of this preamble), is adjusted to 

account for geographic differences in 

area wage levels by applying the 

applicable LTCH PPS wage index. The 

applicable LTCH PPS wage index is 

computed using wage data from 

inpatient acute care hospitals without 

regard to reclassification under sections 

1886(d)(8) or 1886(d)(10) of the Act. 

As we discussed in the August 30, 

2002 LTCH PPS final rule (67 FR 

56015), when the LTCH PPS was 

implemented, we established a 5-year 

transition to the full wage adjustment. 

The wage index adjustment was 

completely phased-in beginning with 

cost reporting periods beginning in FY 

2007. Therefore, for cost reporting 

periods beginning on or after October 1, 

2006, the applicable LTCH wage index 

values are the full (five-fifths) LTCH 

PPS wage index values calculated based 

on acute-care hospital inpatient wage 

index data without taking into account 

geographic reclassification under 

sections 1886(d)(8) and (d)(10) of the 

Act. For additional information on the 

phase-in of the wage index adjustment 

under the LTCH PPS, refer to the August 

30, 2002 LTCH PPS final rule (67 FR 

56017 through 56019) and the RY 2008 

LTCH PPS final rule (72 FR 26891). 

b. Proposed Updates to the Geographic 

Classifications/Labor Market Area 

Definitions 

(1) Background 

As discussed in the August 30, 2002 

LTCH PPS final rule, which 

implemented the LTCH PPS (67 FR 

56015 through 56019), in establishing 

an adjustment for area wage levels 

under § 412.525(c), the labor-related 

portion of a LTCH’s Federal prospective 

payment is adjusted by using an 

appropriate wage index based on the 


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labor market area in which the LTCH is 

located. In the RY 2006 LTCH PPS final 

rule (70 FR 24184 through 24185), in 

regulations at § 412.525(c), we revised 

the labor market area definitions used 

under the LTCH PPS effective for 

discharges occurring on or after July 1, 

2005 based on the Office of Management 

and Budget’s (OMB’s) Core Based 

Statistical Area (CBSA) designations 

based on 2000 Census data. We made 

this revision because we believe that 

those new CBSA-based labor market 

area definitions will ensure that the 

LTCH PPS wage index adjustment most 

appropriately accounts for and reflects 

the relative hospital wage levels in the 

geographic area of the hospital as 

compared to the national average 

hospital wage level. As set forth in 

existing § 412.525(c)(2), a LTCH’s wage 

index is determined based on the 

location of the LTCH in an urban or 

rural area as defined in 

§ 412.64(b)(1)(ii)(A) through (C). An 

urban area under the LTCH PPS is 

currently defined at § 412.64(b)(1)(ii)(A) 

and (B). Under § 412.64(b)(1)(ii)(C), a 

rural area is defined as any area outside 

of an urban area. 

We note that these are the same 

CBSA-based designations implemented 

for acute care hospitals under the IPPS 

at § 412.64(b) effective October 1, 2004 

(69 FR 49026 through 49034). For 

further discussion of the labor market 

area (geographic classification) 

definitions currently used under the 

LTCH PPS, see the RY 2006 LTCH PPS 

final rule (70 FR 24182 through 24191). 

(2) Proposed Update to the CBSA-based 

Labor Market Area Definitions 

On December 18, 2006, OMB 

announced the inclusion of two new 

CBSAs and the revision of designations 

for six areas (OMB Bulletin No. 07–01). 

This OMB bulletin is available on the 

OMB Web site at http:// 

www.whitehouse.gov/omb/bulletins/ 

fy2007/b07–01.pdf. The two new CBSAs 

outlined in this bulletin are as follows: 

• Lake Havasu-Kingman, Arizona 

(CBSA code 29420). This CBSA comes 

from Mohave County, Arizona. 

• Palm Coast, Florida (CBSA code 

37380). This CBSA comes from Flager 

County, Florida. 

The six revised CBSA designations 

outlined in this bulletin are as follows: 

• Mauldin, South Carolina and 

Easley, South Carolina qualify as new 

principal cities of the GreenvilleMauldin-Easley, South Carolina CBSA 

(CBSA code 24860). 

• Conway, Arkansas qualifies as a 

new principal city of the Little RockNorth Little Rock-Conway, Arkansas 

CBSA (CBSA code 30780). 

• Goleta, California qualifies as a new 

principal city of the Santa Barbara-Santa 

Maria-Goleta, California CBSA (CBSA 

code 42060). 

• Franklin, Tennessee qualifies as a 

new principal city of the NashvilleDavidson-Murfreesboro-Franklin, 

Tennessee CBSA (CBSA code 34980). 

• Fort Pierce, Florida no longer 

qualifies as a principal city of the Port 

St. Lucie-Fort Pierce, Florida CBSA; the 

new designation is Port St. Lucie, 

Florida CBSA (CBSA code 38940). 

• Essex County, Massachusetts 

Metropolitan Division was renamed as 

the Peabody, Massachusetts 

Metropolitan Division, which changed 

the CBSA code from 21604 to 37764. 

We note that these six revised CBSA 

designations made in OMB Bulletin No. 

07–01 do not change the composition 

(constituent counties) of the affected 

CBSAs; they only revise the CBSA titles 

(and the CBSA code for the CBSA that 

consists of Essex County, MA). 

In this proposed rule, under the broad 

authority conferred upon the Secretary 

by section 123 of the BBRA, as amended 

by section 307(b) of BIPA to determine 

appropriate adjustments under the 

LTCH PPS, we are proposing to apply 

these changes to the current CBSAbased labor market area definitions and 

geographic classifications used under 

the LTCH PPS effective for discharges 

occurring on or after July 1, 2008. We 

believe these revisions to the LTCH PPS 

CBSA-based labor market area 

definitions, which are based on the most 

recent available data, would ensure that 

the LTCH PPS wage index adjustment 

most appropriately accounts for and 

reflects the relative hospital wage levels 

in the geographic area of the hospital as 

compared to the national average 

hospital wage level. (We note that we 

are currently not aware of any LTCHs 

located in the two new proposed CBSAs 

(that is, proposed CBSA 29420 and 

proposed CBSA 37380), and as 

discussed above, the six proposed 

revisions to the CBSA designations 

would only revise the CBSA titles (and 

the CBSA code for the CBSA that 

consists of Essex County, MA).) 

Accordingly, the proposed RY 2009 

LTCH PPS wage index values presented 

in Tables 1 and 2 in the Addendum of 

this proposed rule were calculated 

based on the proposed revisions to the 

CBSA-based labor market area 

definitions described above. We also 

note that these revisions to the CBSAbased designations were adopted under 

the IPPS effective beginning October 1, 

2007 (72 FR 47308 through 47309). 

(3) Clarification of New England 

Deemed Counties 

We are also taking this opportunity to 

address the change in the treatment of 

‘‘New England deemed counties’’ (that 

is, those counties in New England listed 

in § 412.64(b)(1)(ii)(B) that were deemed 

to be parts of urban areas under section 

601(g) of the Social Security 

Amendments of 1983) that was made in 

the FY 2008 IPPS final rule with 

comment period. These counties 

include the following: Litchfield 

County, Connecticut; York County, 

Maine; Sagadahoc County, Maine; 

Merrimack County, New Hampshire; 

and Newport County, Rhode Island. Of 

these five ‘‘New England deemed 

counties,’’ three (York County, 

Sagadahoc County, and Newport 

County) are also included in 

metropolitan statistical areas defined by 

OMB and are considered urban under 

both the current IPPS and LTCH PPS 

labor market area definitions in 

§ 412.64(b)(1)(ii)(A) (they would also be 

urban under the proposed conforming 

changes to § 412.503). The remaining 

two, Litchfield County and Merrimack 

County, are geographically located in 

areas that are considered rural under the 

current IPPS (and LTCH PPS) labor 

market area definitions (however, they 

have been previously deemed urban 

under the IPPS in certain circumstances 

as discussed below). 

In the FY 2008 IPPS final rule with 

comment period (72 FR 47337 through 

47338), § 412.64(b)(1)(ii)(B) was revised 

such that the two ‘‘New England 

deemed counties’’ that are still 

considered rural by OMB (Litchfield 

county, CT and Merrimack county, NH) 

are no longer considered urban effective 

for discharges occurring on or after 

October 1, 2007, and therefore, are 

considered rural in accordance with 

§ 412.64(b)(1)(ii)(C). However, for 

purposes of payment under the IPPS, 

acute-care hospitals located within 

those areas are treated as being 

reclassified to their deemed urban area 

effective for discharges occurring on or 

after October 1, 2007 (see 72 FR 47337 

through 47338). (We note that the LTCH 

PPS does not provide for such 

geographic reclassification (67 FR 56019 

through 56020)). Also in the FY 2008 

IPPS final rule with comment period (72 

FR 47338), we explained that we have 

limited this policy change for the ‘‘New 

England deemed counties’’ only to IPPS 

hospitals, and any change to non-IPPS 

provider wage indices would be 

addressed in the respective payment 

system rules. Accordingly, as stated 

above, we are taking this opportunity to 

clarify the treatment of ‘‘New England 


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deemed counties’’ under the LTCH PPS 

in this proposed rule. 

As discussed above, under existing 

§ 412.525(c)(2), a LTCH’s wage index is 

determined based on the location of the 

LTCH in an urban or rural area as 

defined in § 412.64(b)(1)(ii)(A) through 

(C). Under existing § 412.525(c)(2), an 

urban area under the LTCH PPS is 

currently defined at § 412.64(b)(1)(ii)(A) 

and (B), and a rural area is defined as 

any area outside of an urban area in 

§ 412.64(b)(1)(ii)(C). 

Historical changes to the labor market 

area/geographic classifications and 

annual updates to the wage index values 

under the LTCH PPS have been made 

effective July 1 each year. When we 

established the most recent LTCH PPS 

payment rate update, effective for LTCH 

discharges occurring on or after July 1, 

2007 through June 30, 2008, we 

considered the ‘‘New England deemed 

counties’’ (including Litchfield county, 

CT and Merrimack county, NH) as urban 

for RY 2008 (in accordance with the 

definitions of urban and rural stated in 

the RY 2008 LTCH PPS final rule (72 FR 

26891) and as evidenced by the 

inclusion of Litchfield county as one of 

the constituent counties of urban CBSA 

25540 (Hartford-West Hartford-East 

Hartford, CT), and the inclusion of 

Merrimack county as one of the 

constituent counties of urban CBSA 

31700 (Manchester-Nashua, NH)). (See 

72 FR 27004 and 27008, respectively). 

As noted above, existing 

§ 412.525(c)(2) indicates that the terms 

‘‘rural’’ and ‘‘urban’’ as areas are defined 

according to the definitions of those 

terms in § 412.64(b)(1)(ii)(A) through 

(C). As Litchfield county, CT and 

Merrimack county, NH would be 

considered rural areas in accordance 

with our regulations at (§ 412.525(c)(2), 

these two counties will be ‘‘rural’’ under 

the LTCH PPS effective with the next 

update of the LTCH PPS payment rates, 

which will be July 1, 2008 (under the 

LTCH PPS effective for discharges on or 

after July 1, 2008, Litchfield County, CT 

and Merrimack County, NH are not 

urban under § 412.64(b)(1)(ii)(A–B) and 

therefore are rural under 

§ 412.64(b)(1)(ii)(c)). (We note that 

Litchfield and Merrimack counties will 

also be rural under our proposed 

§ 412.503, discussed in greater detail 

below, that would incorporate the 

existing definitions of ‘‘urban’’ and 

‘‘rural’’ areas.) Therefore, Litchfield 

county, CT and Merrimack county, NH 

will be considered ‘‘rural’’ effective for 

LTCH PPS discharges occurring on or 

after July 1, 2008, and will no longer be 

considered as being part of urban CBSA 

25540 (Hartford-West Hartford-East 

Hartford, CT) and urban CBSA 31700 

(Manchester-Nashua, NH), respectively. 

We note that currently we are not aware 

of any LTCHs located in either 

Litchfield county, CT or Merrimack 

county, NH. We also note that this 

policy is consistent with our policy of 

not taking into account IPPS geographic 

reclassifications in determining 

payments under the LTCH PPS. In 

addition, as discussed above, in this 

section, effective for discharges on or 

after July 1, 2008, § 412.64(b)(1)(ii)(B) is 

no longer applicable under the LTCH 

PPS. 

(4) Proposed Codification of the 

Definitions of Urban and Rural Under 

42 CFR Part 412 Subpart O 

Under the current regulations at 

§ 412.525(c), the labor-related portion of 

the LTCH PPS Federal rate is adjusted 

to account for geographical differences 

in the area wage levels using an 

appropriate wage index to reflect the 

relative level of hospital wages and 

wage-related costs in the geographic 

area (that is, urban or rural area) of the 

hospital compared to the national 

average level of hospital wages and 

wage-related costs annually. Currently, 

the application of the wage index under 

existing § 412.525(c)(2) is made on the 

basis of the location of the facility in an 

urban or rural area as defined in 

§ 412.64(b)(1)(ii)(A) through (C) (in 42 

CFR Part 412 subpart D). 

In light of regulatory construct 

discussed above where § 412.525(c) 

indicated that the terms ‘‘rural area’’

and ‘‘urban area’’ as defined according 

to the definitions of those terms’’ under 

the IPPS in 42 CFR Part 412 subpart D, 

we believe it may be administratively 

simpler to have the LTCH PPS urban 

and rural labor market area definitions 

self-contained in (§ 412.503) 42 CFR 

Part 412 subpart O rather than crossreferring to the definitions of urban and 

rural in the IPPS regulations in 42 CFR 

Part 412, Subpart D. This approach is 

similar to the change we made in 

§ 412.525(a) for high cost outliers and 

§ 412.529 for short-stay outliers in the 

FY 2007 IPPS final rule when we 

embedded within Subpart O the 

regulatory provisions concerning the 

determination of cost-to-charge ratios 

(CCRs) and the reconciliation of outlier 

payments (71 FR 48115 through 48122). 

Under the broad authority of § 123 of 

the BBRA as amended by § 307(b) of 

BIPA we are proposing to codify in 

§ 412.503 the definitions for ‘‘urban 

area’’ and ‘‘rural area.’’ The proposed 

definitions for ‘‘urban area’’ and ‘‘rural 

area’’ in § 412.503 would incorporate 

the provisions of § 412.62(f)(1)(ii) and 

(f)(1)(iii) as well as § 412.64(b)(1)(ii)(A) 

through (C). Furthermore, since, as 

explained above in section IV.F.1.b.3., 

the definition of ‘‘urban area’’ at 

§ 412.64(b)(1)(ii)(B) is no longer 

applicable under the LTCH PPS 

effective for discharges occurring on or 

after July 1, 2008, and therefore, the 

only remaining definition of ‘‘urban 

area’’ will be that of a Metropolitan 

Statistical Area (MSA) as defined by the 

Executive Office of Management and 

Budget. (See 72 FR 47337 through 

47338). Thus, we omit the language of 

§ 412.64(b)(1)(ii)(B) from the proposed 

definition of ‘‘urban area’’ that would be 

applicable to discharges occurring on or 

after July 1, 2008 in proposed 412.503. 

We, however, included the language 

from § 412.64(b)(1)(ii)(A) in the 

proposed definition of ‘‘urban area’’ that 

would be applicable to discharges 

occurring on or after July 1, 2008 in 

proposed 412.503. For the reason just 

described, we note that the proposed 

definitions of ‘‘urban’’ and ‘‘rural’’ that 

would be effective for discharges 

occurring on or after July 1, 2008 (in 

subparagraph (3) in the both the 

proposed definition of ‘‘rural area’’ and 

the proposed definition of ‘‘urban area’’) 

vary slightly from the wording in the 

current regulations at 

§ 412.64(b)(1)(ii)(A) through (C); 

however, substantively the definitions 

are the same. We believe that the slight 

difference in the wording of 412.503 

more precisely conveys the treatment of 

New England deemed counties under 

the LTCH PPS, as discussed above. As 

a conforming change, we are also 

proposing to replace the crossreferences to § 412.62(f)(1)(iii) and 

§ 412.64(b)(1)(ii)(A) through (C) in 

§ 412.525(c) with references to the 

proposed definitions of ‘‘urban area’’

and ‘‘rural area’’ at § 412.503. 

Accordingly, we are proposing to revise 

§ 412.525(c) to specify that the 

application of the LTCH PPS wage 

index would be made on the basis of the 

location of the LTCH in an urban or 

rural area as defined in proposed 

§ 412.503. As discussed in section 

VI.G.3. of this proposed rule, we are also 

proposing to make conforming changes 

to the regulations governing short-stay 

outlier payments (at § 412.529) and the 

special payment provisions for colocated LTCHs (at § 412.534) and freestanding LTCHs (at § 412.536), which 

refer to the definition of urban and rural 

under the LTCH PPS. 

c. Proposed Labor-Related Share 

In the August 30, 2002 LTCH PPS 

final rule (67 FR 56016), we established 

a labor-related share of 72.885 percent 

based on the relative importance of the 

labor-related share of operating costs 

(wages and salaries, employee benefits, 


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professional fees, postal services, and all 

other labor-intensive services) and 

capital costs of the excluded hospital 

with capital market basket based on FY 

1992 data. We did not revise the laborrelated share in RYs 2004 through 2006 

while we conducted further analysis to 

determine the most appropriate 

methodology and data for determining 

the labor-related share under the LTCH 

PPS (70 FR 24182). After our research 

into the labor-related share methodology 

was complete, we revised the laborrelated share under the LTCH PPS in the 

RY 2007 final rule (71 FR 27829). 

Specifically, beginning in RY 2007, we 

established a labor-related share based 

on the relative importance of the laborrelated share of operating costs (wages 

and salaries, employee benefits, 

professional fees, postal services, and all 

other labor-intensive services) and 

capital costs of the RPL market basket 

based on FY 2002 data, as it is the best 

available data that reflect the cost 

structure of LTCHs. 

Consistent with our historical 

practice, the labor-related share 

currently used under the LTCH PPS is 

determined by identifying the national 

average proportion of operating costs 

and capital costs that are related to, 

influenced by, or vary with the local 

labor market. Accordingly, in the RY 

2008 LTCH PPS final rule (72 FR 

26892), we updated the LTCH PPS 

labor-related share to 75.788 percent 

based on the relative importance of the 

labor-related share of operating costs 

(wages and salaries, employee benefits, 

professional fees, and all other laborintensive services) and capital costs of 

the RPL market basket based on FY 2002 

data from the first quarter of 2007. 

As discussed in section IV.C.2. of this 

preamble, we now have data from the 

4th quarter of 2007 (with history 

through the 3rd quarter of 2007) 

available for determining the laborrelated share of the FY 2002-based RPL 

market basket. Based on this more 

recent data, in this proposed rule, under 

the broad authority conferred upon the 

Secretary by section 123 of the BBRA as 

amended by section 307(b) of the BIPA, 

consistent with our historical practice of 

determining the labor-related share by 

identifying the national average 

proportion of operating costs and capital 

costs that are related to, influenced by, 

or varies with the local labor market, we 

are proposing to revise the LTCH PPS 

labor-related share from 75.788 percent 

to 75.920 percent based on the relative 

importance of the labor-related share of 

operating costs (wages and salaries, 

employee benefits, professional fees, 

and all other labor-intensive services) 

and capital costs of the FY 2002-based 

RPL market basket from the fourth 

quarter of 2007, as shown in Table 1. 

The proposed labor-related share is the 

sum of the relative importance of wages 

and salaries, fringe benefits, 

professional fees, labor-intensive 

services, and a portion of the capital 

share from an appropriate market 

basket. 

In this proposed rule, for RY 2009, we 

are proposing to use the FY 2002-based 

RPL market basket costs based on data 

from the fourth quarter of 2007 to 

determine the labor-related share for the 

LTCH PPS effective for discharges 

occurring on or after July 1, 2008 and 

before September 30, 2009, as this is the 

most recent available data. The 

proposed labor-related share for RY 

2009 LTCH PPS would continue to be 

the sum of the relative importance of 

each labor-related cost category, and 

would reflect the different rates of price 

change for these cost categories between 

the base year (FY 2002) and the (15- 

month) 2009 LTCH PPS rate year. (As 

discussed in greater detail above in 

section IV.B. of this proposed rule, we 

are proposing to move the LTCH PPS 

annual payment rate year beginning July 

1st to a rate year beginning October 1st 

and have a 15-month rate year for 2009 

(that is, July 1, 2008 through September 

30, 2009). Accordingly, we are 

proposing to use the 15-month RY 2009 

RPL market basket, discussed above, to 

determine the proposed labor-related 

share for RY 2009 in this proposed rule. 

Consistent with our historical practice 

of using the best data available, if more 

recent data are available to determine 

the labor-related share of the RPL 

market basket (used under the LTCH 

PPS), we propose to use it for 

determining the labor-related share for 

the 2009 LTCH PPS rate year in the final 

rule. 

Based on the most recent available 

data, we are proposing that the sum of 

the relative importance for the 2009 

LTCH PPS rate year for operating costs 

(wages and salaries, employee benefits, 

professional fees, and labor-intensive 

services) would be 71.965, as shown in 

Table 1. The portion of capital that is 

influenced by the local labor market is 

still estimated to be 46 percent, which 

is the same percentage used when we 

established the current labor-related 

share in the RY 2008 LTCH PPS final 

rule. Since, based on the most recent 

available data, the relative importance 

for capital would be 8.597 percent of the 

FY 2002-based RPL market basket for 

the 2009 LTCH PPS rate year, we are 

proposing to multiply the estimated 

portion of capital influenced by the 

local labor market (46 percent) by the 

relative importance for capital (8.597 

percent) to determine the proposed 

labor-related share of capital for the 

2009 LTCH PPS rate year. The result 

would be 3.955 percent (0.46 x 8.597 

percent), which we would add to the 

proposed 71.965 percent for the 

operating cost amount to determine the 

proposed total labor-related share for 

the 2009 LTCH PPS rate year. Thus, 

based on the latest available data, we are 

proposing to use a labor-related share of 

75.920 percent (71.965 percent + 3.955 

percent) under the LTCH PPS for the 

2009 LTCH PPS rate year. As noted 

above in this section, this proposed 

labor-related share is determined using 

the same methodology as employed in 

calculating the current LTCH laborrelated share (72 FR 26892) and the 

labor-related shares used under the IRF 

PPS and IPF PPS, which also use the 

RPL market basket. 

Table 1 shows the 2008 LTCH PPS 

rate year relative importance laborrelated share of the FY 2002-based RPL 

market basket (established in the RY 

2008 LTCH PPS final rule) and the 

proposed 2009 LTCH PPS rate year 

relative importance labor-related share 

of the FY 2002-based RPL market 

basket. 

TABLE 1.—RY 2008 LABOR-RELATED SHARE RELATIVE IMPORTANCE AND PROPOSED RY 2009 LABOR-RELATED SHARE

RELATIVE IMPORTANCE OF THE FY 2002-BASED RPL MARKET BASKET

Cost category 

RY 2008 

relative 

importance* 

Proposed RY 

2009 relative 

importance 

Wages and Salaries ................................................................................................................................................ 52.588 52.830 

Employee Benefits ................................................................................................................................................... 14.127 14.079 

Professional fees ..................................................................................................................................................... 2.907 2.907 

All other labor intensive services ............................................................................................................................. 2.145 2.149 


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TABLE 1.—RY 2008 LABOR-RELATED SHARE RELATIVE IMPORTANCE AND PROPOSED RY 2009 LABOR-RELATED SHARE

RELATIVE IMPORTANCE OF THE FY 2002-BASED RPL MARKET BASKET—Continued 

Cost category 

RY 2008 

relative 

importance* 

Proposed RY 

2009 relative 

importance 

Subtotal ............................................................................................................................................................. 71.767 71.965 

Labor share of capital costs .................................................................................................................................... 4.021 3.955 

Total Labor-related share ................................................................................................................................. 75.788 75.920 

* As established in the RY 2008 LTCH PPS final rule (72 FR 26892). 

** Other labor intensive services includes landscaping services, services to buildings, detective and protective services, repair services, laundry 

services, advertising, auto parking and repairs, physical fitness facilities, and other government enterprises. 

d. Proposed Wage Index Data 

Historically, under the LTCH PPS, we 

have established LTCH PPS wage index 

values calculated from acute care IPPS 

hospital wage data without taking into 

account geographic reclassification 

under sections 1886(d)(8) and (d)(10) of 

the Act. As we discussed in the August 

30, 2002 LTCH PPS final rule (67 FR 

56019), since hospitals that are 

excluded from the IPPS are not required 

to provide wage-related information on 

the Medicare cost report. Therefore, we 

would need to establish instructions for 

the collection of this LTCH data as well 

as develop some type of application and 

determination process before a 

geographic reclassification adjustment 

under the LTCH PPS could be 

implemented. Thus, the wage 

adjustment established under the LTCH 

PPS is based on a LTCH’s actual 

location without regard to the urban or 

rural designation of any related or 

affiliated provider. Acute care hospital 

inpatient wage index data are also used 

to establish the wage index adjustment 

used in other Medicare PPSs, such as 

the IRF PPS, IPF PPS, HHA PPS, and 

SNF PPS. 

In the RY 2008 LTCH PPS final rule 

(72 FR 26893), we established LTCH 

PPS wage index values for the RY 2008 

calculated from the same data (collected 

from cost reports submitted by hospitals 

for cost reporting periods beginning 

during FY 2003) used to compute the 

FY 2007 acute care hospital inpatient 

wage index data without taking into 

account geographic reclassification 

under sections 1886(d)(8) and (d)(10) of 

the Act because that was the best 

available data at that time. The LTCH 

PPS wage index values applicable for 

discharges occurring on or after July 1, 

2007 through June 30, 2008 are shown 

in Table 1 (for urban areas) and Table 

2 (for rural areas) in the Addendum to 

the RY 2008 LTCH PPS final rule (72 FR 

26996 through 27019). 

In this proposed rule, under the broad 

authority conferred upon the Secretary 

by section 123 of the BBRA as amended 

by section 307(b) of BIPA to determine 

appropriate adjustments under the 

LTCH PPS, we are proposing that, for 

the RY 2009, the same data (collected 

from cost reports submitted by hospitals 

for cost reporting periods beginning 

during FY 2004) used to compute the 

FY 2008 acute care hospital inpatient 

wage index data without taking into 

account geographic reclassification 

under sections 1886(d)(8) and (d)(10) of 

the Act would be used to determine the 

applicable wage index values under the 

LTCH PPS because these data (FY 2004) 

are the most recent complete data. (For 

information on the data used to 

compute the FY 2008 IPPS wage index 

refer to the FY 2008 IPPS final rule with 

comment period (72 FR 47308 through 

47309, 47315)). We are proposing to 

continue to use IPPS wage data as a 

proxy to determine the proposed LTCH 

wage index values for RY 2009 because 

both LTCHs and acute-care hospitals are 

required to meet the same certification 

criteria set forth in section 1861(e) of the 

Act to participate as a hospital in the 

Medicare program and they both 

compete in the same labor markets, and 

therefore, experience similar wagerelated costs. We note that the IPPS 

wage data used to determine the 

proposed RY 2009 LTCH wage index 

values reflects our policy that was 

adopted under the IPPS beginning in FY 

2008 that apportions the wage data for 

multicampus hospitals’ located in 

different labor market areas (CBSAs) to 

each CBSA where the campuses are 

located (see the FY 2008 IPPS final rule 

with comment period (72 FR 47317 

through 47320)). For the proposed RY 

2009 LTCH PPS wage index, which is 

computed from IPPS wage data 

submitted by hospitals for cost reporting 

periods beginning in FY 2004 (just like 

the FY 2008 IPPS wage index), we 

allocated salaries and hours to the 

campuses of two multicampus hospitals 

with campuses that are located in 

different labor areas, one in 

Massachusetts and another in Illinois. 

Thus, the proposed RY 2009 LTCH PPS 

wage index values for the following 

CBSAs are affected by this policy: 

Boston-Quincy, MA (CBSA 14484), 

Providence-New Bedford-Falls River, 

RI-MA (CBSA 39300), ChicagoNaperville-Joliet, IL (CBSA 16974) and 

Lake County-Kenosha County, IL-WI 

(CBSA 29404) (refer to Table 1 in the 

Addendum of this proposed rule). 

Furthermore, the proposed RY 2009 

LTCH PPS wage index values presented 

in this proposed rule were computed 

consistent with the urban and rural 

geographic classifications (labor market 

areas) discussed above in section 

IV.F.1.b. of this proposed rule and 

consistent with pre-reclassified IPPS 

wage index policy (that is, our historical 

policy of not taking into account IPPS 

geographic reclassifications in 

determining payments under the LTCH 

PPS). Specifically, we note that the 

wage data of the IPPS hospitals located 

in Litchfield county, CT, and Merrimack 

county, NH, were included in the 

calculation of the proposed RY 2009 

LTCH PPS statewide rural wage index 

values for Connecticut and New 

Hampshire, respectively (rather than 

urban CBSA 25540 (Hartford-West 

Hartford-East Hartford, CT) and urban 

CBSA 31700 (Manchester-Nashua, NH), 

respectively). In addition, the proposed 

RY 2009 wage index reflects our 

proposals (discussed in greater detail 

below) to establish wage index values in 

urban and rural areas in which there are 

no IPPS wage data from which to 

compute a wage index value under our 

methodology described above. As noted 

above, the IPPS wage data we are 

proposing to use are the same FY 2004 

acute care hospital inpatient wage data 

that were used to compute the FY 2008 

wage index currently used under the 

IPPS. 

In this proposed rule, under the broad 

authority conferred upon the Secretary 

by section 123 of the BBRA as amended 

by section 307(b) of BIPA to determine 

appropriate adjustments under the 

LTCH PPS, we are also proposing to 

establish a policy for determining LTCH 


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PPS wage index values for labor market 

areas in which there is no IPPS hospital 

wage data from which to compute a 

wage index value under our 

methodology described above. 

Currently, there are no LTCHs located in 

labor areas where there is no IPPS 

hospital wage data (or IPPS hospitals). 

However, we believe it is appropriate to 

establish a methodology for determining 

LTCH PPS wage index values for these 

areas in the event that in the future a 

LTCH should open in one of those areas. 

Thus, any LTCH that would open in 

area in which there is no IPPS wage data 

for which to compute a wage index 

based on our established methodology 

would have a wage index value assigned 

to them for determining their LTCH PPS 

payments. Under this proposal, each 

year we would determine a wage index 

value for any area in which there is no 

IPPS wage data based on the proposed 

methodologies described below. As 

IPPS hospitals may open or close at any 

time, the number of areas without any 

IPPS wage data may change from year 

to year, and even when an IPPS hospital 

does open in area where there are 

currently no IPPS hospitals, because 

there is a lag-time between the time a 

hospital opens or becomes an IPPS 

provider and when the hospital’s cost 

report wage data are available to include 

in calculating the area wage index (see 

72 FR 47323), we believe it is 

appropriate to establish a methodology 

for determining LTCH PPS wage index 

values for these areas, if necessary. Our 

proposed policies for determining LTCH 

PPS wage index values for areas with no 

IPPS hospital wage data are consistent 

with the policies that have been 

established under other Medicare postacute care PPSs, such as SNF and HHA, 

as well as the IPPS. 

The first situation for which we are 

proposing to establish a policy for 

determining a LTCH PPS wage index 

value is for urban CBSAs with no IPPS 

wage data. As discussed above, as IPPS 

wage data is dynamic, it is possible that 

urban areas without IPPS wage data will 

vary in the future. Consistent with the 

policy established under other PPSs, 

such as the HHA (70 FR 40795 and 71 

FR 65892 through 65893), we are 

proposing to use an average of all of the 

urban areas within the State to serve as 

a reasonable proxy for determining the 

LTCH PPS wage index for an urban area 

without specific IPPS hospital wage 

index data. We believe that an average 

of all of the urban areas within the State 

would be a reasonable proxy for 

determining the LTCH PPS wage index 

for an urban area in the State with no 

wage data because it is based on prereclassified IPPS wage data, it is easy to 

evaluate, and it uses the most 

geographically similar relative wagerelated costs data available. (Our 

rationale for using pre-reclassified IPPS 

wage data is discussed above in the 

beginning of this section.) Based on the 

FY 2004 IPPS wage data that we are 

proposing to use to determine the 

proposed RY 2009 LTCH PPS wage 

index (discussed above), there is no 

IPPS wage data for the urban area of 

Hinesville-Fort Stewart, GA (CBSA 

25980). Consistent with our proposal for 

determining a LTCH PPS wage index 

value for urban areas with no IPPS wage 

data, in this proposed rule, we 

calculated the proposed wage index 

value for RY 2009 for CBSA 25980 as 

the average of the wage index values for 

all of the other urban areas within the 

State of Georgia (that is, CBSAs 10500, 

12020, 12060, 12260, 15260, 16860, 

17980, 19140, 23580, 31420, 40660, 

42340, 46660 and 47580) (refer to Table 

1 of the Addendum of this proposed 

rule). (As noted above, there are 

currently no LTCHs located in CBSA 

25980). We believe that this policy 

could be readily applied to other urban 

CBSAs (besides CBSA 25980) that lack 

IPPS wage data (possibly due to acutecare hospitals converting to a different 

provider type that does not submit the 

appropriate wage data). However, if the 

proposed policy is adopted, we may reexamine the application of this 

proposed policy should a similar 

situation arise in the future. 

The other situation for which we are 

proposing to establish a policy for 

determining a LTCH PPS wage index 

value is for rural areas with no IPPS 

wage data. As discussed above, as IPPS 

wage data is dynamic, it is possible that 

rural areas without IPPS wage data will 

vary in the future. Consistent with the 

policy established under other PPSs, 

such as the HHA (71 FR 65905 through 

65906) and the IPPS (72 FR 47323 

through 47324), we are proposing to use 

the unweighted average of the wage 

indices from all of the CBSAs that are 

contiguous to the rural counties of the 

State to serve as a reasonable proxy in 

determining the LTCH PPS wage index 

for a rural area without specific IPPS 

hospital wage index data. For this 

purpose, we would define ‘‘contiguous’’

as sharing a border. We are not able to 

apply a similar averaging in rural areas 

with no wage data as we proposed 

above for urban areas with no wage data 

because there is no rural hospital data 

available for averaging on a state-wide 

basis. We believe that using an 

unweighted average of the wage indices 

from all of the CBSAs that are 

contiguous to the rural counties of the 

State would be a reasonable proxy for 

determining the wage index for rural 

areas in a State with no wage data 

because it is based on pre-reclassified 

IPPS wage data, it is easy to evaluate, 

and it uses the most geographically 

similar relative wage-related costs data 

available. (Our rationale for using prereclassified IPPS wage data is discussed 

above in the beginning of this section.) 

Based on the FY 2004 IPPS data that 

we are proposing to use to determine 

the proposed RY 2009 LTCH PPS wage 

index (discussed above), rural 

Massachusetts (CBSA code 11) does not 

have any IPPS wage data. Consistent 

with our proposal for determining a 

LTCH PPS wage index value for rural 

areas with no IPPS hospital wage data, 

in this proposed rule, we determined 

the proposed wage index value for RY 

2009 rural Massachusetts by computing 

the unweighted average of the wage 

indices from all of the CBSAs that are 

contiguous to the rural counties in that 

State. Specifically, in the case of 

Massachusetts, the entire rural area 

consists of Dukes and Nantucket 

counties. We determined that the 

borders of Dukes and Nantucket 

counties are ‘‘contiguous’’ with 

Barnstable County, MA, and Bristol 

County, MA. Therefore, the proposed 

RY 2009 LTCH PPS wage index value 

for rural Massachusetts would be 

computed as the unweighted average of 

the proposed RY 2009 wage indexes for 

Barnstable county and Bristol county 

(refer to Tables 1 and 2 of the 

Addendum of this proposed rule). (As 

noted above, there are currently no 

LTCHs located in rural Massachusetts.) 

We believe that this proposed policy 

could be readily applied to other rural 

areas (besides Massachusetts) that lack 

IPPS wage data (possibly due to acutecare hospitals converting to a different 

provider type that does not submit the 

appropriate wage data). However, if the 

proposed policy is adopted, we may reexamine the application of this 

proposed policy should a similar 

situation arise in the future. 

The proposed RY 2009 LTCH wage 

index values that would be applicable 

for LTCH discharges occurring on or 

after July 1, 2008 through September 30, 

2009, are presented in Table 1 (for urban 

areas) and Table 2 (for rural areas) in the 

Addendum of this proposed rule. As 

discussed in greater detail above in 

section IV.B. of this preamble, we are 

proposing to move the LTCH PPS 

annual payment rate update cycle from 

July 1 to October 1 and to have a 15- 

month rate year for 2009 (that is, July 1, 

2008 through September 30, 2009). 

Therefore, we note that if our proposal 


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to move the LTCH PPS annual payment 

rate update cycle is finalized, the next 

proposed update to the LTCH wage 

index values would be effective for 

discharges occurring on or after October 

1, 2009 (FY 2010). In addition, as noted 

above, the wage index adjustment under 

the LTCH PPS was completely phased 

in beginning with cost reporting periods 

beginning in FY 2007 (that is, for cost 

reporting periods beginning on or after 

October 1, 2006). Therefore, for LTCH 

PPS discharges occurring during RY 

2009, the labor related portion of the 

standard Federal rate will be adjusted 

by the applicable full (five fifths) 

proposed RY 2009 LTCH PPS wage 

index value. (As noted above, the 

proposed RY 2009 LTCH PPS wage 

index values are shown in Tables 1 and 

2 of the Addendum to this proposed 

rule). 

2. Proposed Adjustment for Cost-ofLiving in Alaska and Hawaii 

In the August 30, 2002 final rule (67 

FR 56022), we established, under 

§ 412.525(b), a COLA for LTCHs located 

in Alaska and Hawaii to account for the 

higher costs incurred in those States. In 

the RY 2008 LTCH PPS final rule (72 FR 

26894), for RY 2008, we established a 

COLA to payments for LTCHs located in 

Alaska and Hawaii by multiplying the 

standard Federal payment rate by the 

appropriate factor listed in Table 3 of 

that same final rule. 

Similarly, in this proposed rule, 

under the broad authority conferred 

upon the Secretary by section 123 of the 

BBRA as amended by section 307(b) of 

BIPA to determine appropriate 

adjustments under the LTCH PPS, for 

RY 2009 we are proposing a COLA to 

payments to LTCHs located in Alaska 

and Hawaii by multiplying the proposed 

standard Federal payment rate by the 

proposed factors listed below in Table 2 

because these are currently the most 

recent available data. These proposed 

factors are obtained from the U.S. Office 

of Personnel Management (OPM) and 

are currently also used under the IPPS 

(72 FR 47422). In addition, we propose 

that if OPM releases revised COLA 

factors before March 1, 2008, we would 

use them for the development of LTCH 

PPS payments for RY 2009 and publish 

those revised COLA factors in the final 

rule. 

TABLE 2.—PROPOSED COST-OF-LIVING

ADJUSTMENT FACTORS FOR ALASKA

AND HAWAII HOSPITALS FOR THE

2009 LTCH PPS RATE YEAR

Alaska: 

City of Anchorage and 80-kilometer (50-mile) radius by road .. 1.24 

City of Fairbanks and 80-kilometer 

(50-mile) radius by road ............ 1.24 

City of Juneau and 80-kilometer 

(50-mile) radius by road ............ 1.24 

All other areas of Alaska .............. 1.25 

Hawaii: 

City and County of Honolulu ......... 1.25 

County of Hawaii ........................... 1.17 

County of Kauai ............................ 1.25 

County of Maui and County of 

Kalawao ..................................... 1.25 

3. Proposed Adjustment for High-Cost 

Outliers (HCOs) 

a. Background 

Under the broad authority conferred 

upon the Secretary by section 123 of the 

BBRA as amended by section 307(b) of 

BIPA, in the regulations at § 412.525(a), 

we established an adjustment for 

additional payments for outlier cases 

that have extraordinarily high costs 

relative to the costs of most discharges. 

Providing additional payments for 

outliers strongly improves the accuracy 

of the LTCH PPS in determining 

resource costs at the patient and 

hospital level. These additional 

payments reduce the financial losses 

that would otherwise be incurred when 

treating patients who require more 

costly care and, therefore, reduce the 

incentives to underserve these patients. 

We set the outlier threshold before the 

beginning of the applicable rate year so 

that total estimated outlier payments are 

projected to equal 8 percent of total 

estimated payments under the LTCH 

PPS. Outlier payments under the LTCH 

PPS are determined consistent with the 

instructions issued for the IPPS outlier 

policy. 

Under § 412.525(a) (in conjunction 

with the revised definition of ‘‘LTC–

DRG’’ at § 412.503), we make outlier 

payments for any discharges if the 

estimated cost of a case exceeds the 

adjusted LTCH PPS payment for the 

MS–LTC–DRG plus a fixed-loss amount. 

Specifically, in accordance with 

§ 412.525(a)(3) (in conjunction with the 

revised definition of ‘‘LTC–DRG’’ at 

§ 412.503), we pay outlier cases 80 

percent of the difference between the 

estimated cost of the patient case and 

the outlier threshold (the sum of the 

adjusted Federal prospective payment 

for the MS–LTC–DRG and the fixed-loss 

amount). The fixed-loss amount is the 

amount used to limit the loss that a 

hospital will incur under the outlier 

policy for a case with unusually high 

costs. This results in Medicare and the 

LTCH sharing financial risk in the 

treatment of extraordinarily costly cases. 

Under the LTCH PPS HCO policy, the 

LTCH’s loss is limited to the fixed-loss 

amount and a fixed percentage 

(currently 80 percent) of costs above the 

outlier threshold (LTCH DRG payment 

plus the fixed loss amount). The fixed 

percentage of costs is called the 

marginal cost factor. We calculate the 

estimated cost of a case by multiplying 

the Medicare allowable covered charge 

by the overall hospital cost-to-charge 

ratio (CCR). 

Under the LTCH PPS, we determine a 

fixed-loss amount, that is, the maximum 

loss that a LTCH can incur under the 

LTCH PPS for a case with unusually 

high costs before the LTCH will receive 

any additional payments. We calculate 

the fixed-loss amount by estimating 

aggregate payments with and without an 

outlier policy. The fixed-loss amount 

will result in estimated total outlier 

payments being projected to be equal to 

8 percent of projected total LTCH PPS 

payments. Currently, MedPAR claims 

data and CCRs based on data from the 

most recent provider specific file (PSF) 

(or to the applicable Statewide average 

CCR if a LTCH’s CCR data are faulty or 

unavailable) are used to establish a 

fixed-loss threshold amount under the 

LTCH PPS. 

b. Cost-to-Charge Ratios (CCRs) 

The following is a discussion of costto-charge ratios (CCRs) used in 

determining payments for high cost and 

short-stay outlier cases under the LTCH 

PPS, at § 412.525(a) and § 412.529, 

respectively. Although this section is 

specific to high cost outlier cases, 

because CCRs and the policies and 

methodologies pertaining to them are 

used in determining payments for both 

high cost and short-stay outlier cases, 

(as explained below), we are discussing 

the determination of CCRs under the 

LTCH PPS for both of these type of cases 

simultaneously. In section IV.G. of this 

proposed rule, which discusses shortstay outlier (SSO) cases, we refer the 

reader to this section of the preamble for 

a complete discussion on the 

determination of CCRs. 

In determining both high-cost outlier 

payments (at § 412.525(a)) and shortstay outlier payments (at § 412.529), we 

calculate the estimated cost of the case 

by multiplying the LTCH’s overall CCR 

by the Medicare allowable charges for 

the case. In general, we use the LTCH’s 

overall CCR, which is computed based 

on either the most recently settled cost 

report or the most recent tentatively 

settled cost report, whichever is from 


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the latest cost reporting period, in 

accordance with § 412.525(a)(4)(iv)(B) 

and § 412.529(c)(4)(iv)(B) for high cost 

outliers and SSOs, respectively. (We 

note that in some instances we use an 

alternative CCR, such as the statewide 

average CCR in accordance with the 

regulations at § 412.525(a)(4)(iv)(C) and 

§ 412.529(c)(4)(iv)(C), or a CCR that is 

specified by CMS or that is requested by 

the hospital under the provisions of the 

regulations at § 412.525(a)(4)(iv)(A) and 

§ 412.529(c)(4)(iv)(A).) Under the LTCH 

PPS, a single prospective payment per 

discharge is made for both inpatient 

operating and capital-related costs. 

Therefore, we compute a single 

‘‘overall’’ or ‘‘total’’ LTCH-specific CCR 

based on the sum of LTCH operating 

and capital costs (as described in 

Chapter 3, section 150.24, of the 

Medicare Claims Processing Manual 

(CMS Pub. 100–4)) as compared to total 

charges. Specifically, a LTCH’s CCR is 

calculated by dividing a LTCH’s total 

Medicare costs (that is, the sum of its 

operating and capital inpatient routine 

and ancillary costs) by its total Medicare 

charges (that is, the sum of its operating 

and capital inpatient routine and 

ancillary charges). 

Generally, a LTCH is assigned the 

applicable statewide average CCR if, 

among other things, a LTCH’s CCR is 

found to be in excess of the applicable 

maximum CCR threshold (that is, the 

LTCH CCR ceiling). This is because 

CCRs above this threshold are most 

likely due to faulty data reporting or 

entry, and, therefore, these CCRs should 

not be used to identify and make 

payments for outlier cases. Such data 

are clearly errors and should not be 

relied upon. Thus, under our 

established policy, generally, if a 

LTCH’s calculated CCR is above the 

applicable ceiling, the applicable LTCH 

PPS statewide average CCR is assigned 

to the LTCH instead of the CCR 

computed from its most recent (settled 

or tentatively settled) cost report data. 

In the FY 2008 IPPS final rule with 

comment period, in accordance with 

§ 412.525(a)(4)(iv)(C)(2) for high-cost 

outliers and § 412.529(c)(4)(iv)(C)(2) for 

short-stay outliers, using our established 

methodology for determining the LTCH 

total CCR ceiling, based on IPPS total 

CCR data from the March 2007 update 

to the Provider-Specific File (PSF), we 

established a total CCR ceiling of 1.284 

under the LTCH PPS effective October 

1, 2007 through September 30, 2008. 

(For further detail on our methodology 

for annually determining the LTCH total 

CCR ceiling, we refer readers to the FY 

2007 IPPS final rule (71 FR 48119 

through 48121) and the FY 2008 IPPS 

final rule with comment period (72 FR 

47403 through 47404).) 

Our general methodology established 

for determining the statewide average 

CCRs used under the LTCH PPS is 

similar to our established methodology 

for determining the LTCH total CCR 

ceiling (described above) since it is 

based on ‘‘total’’ IPPS CCR data. Under 

the LTCH PPS HCO policy at 

§ 412.525(a)(4)(iv)(C) and the short-stay 

outlier policy at § 412.529(c)(4)(iv)(C), 

the FI may use a statewide average CCR, 

which is established annually by CMS, 

if it is unable to determine an accurate 

CCR for a LTCH in one of the following 

circumstances: (1) New LTCHs that have 

not yet submitted their first Medicare 

cost report (for this purpose, consistent 

with current policy, a new LTCH would 

be defined as an entity that has not 

accepted assignment of an existing 

hospital’s provider agreement in 

accordance with § 489.18); (2) LTCHs 

whose CCR is in excess of the LTCH 

CCR ceiling (as discussed above); and 

(3) other LTCHs for whom data with 

which to calculate a CCR are not 

available (for example, missing or faulty 

data). (Other sources of data that the FI 

may consider in determining a LTCH’s 

CCR include data from a different cost 

reporting period for the LTCH, data 

from the cost reporting period preceding 

the period in which the hospital began 

to be paid as a LTCH (that is, the period 

of at least 6 months that it was paid as 

a short-term acute care hospital), or data 

from other comparable LTCHs, such as 

LTCHs in the same chain or in the same 

region.) 

In the FY 2008 IPPS final rule with 

comment period, in accordance with 

§ 412.525(a)(4)(iv)(C) for high-cost 

outliers and § 412.529(c)(4)(iv)(C) for 

short-stay outliers, using our established 

methodology for determining the LTCH 

statewide average CCRs, based on the 

most recent complete IPPS total CCR 

data from the March 2007 update of the 

PSF, the LTCH PPS statewide average 

total CCRs for urban and rural hospitals 

effective for discharges occurring on or 

after October 1, 2007, and before 

October 1, 2008, are presented in Table 

8C of the Addendum to that final rule 

with comment period (72 FR 48127). 

(For further detail on our methodology 

for annually determining the LTCH 

urban and rural statewide average CCRs, 

we refer readers to the FY 2007 IPPS 

final rule (71 FR 48119 through 48121) 

and FY 2008 IPPS final rule with 

comment period (72 FR 47403 through 

47404).) 

We note, under the LTCH PPS high 

cost outlier policy at 

§ 412.525(a)(4)(iv)(D) and the LTCH PPS 

SSO policy at § 412.529(c)(4)(iv)(D), the 

payments for high cost outlier and SSO 

cases, respectively, are subject to 

reconciliation. Specifically, any 

reconciliation of outlier payments is 

based on the CCR calculated based on 

a ratio of costs to charges computed 

from the relevant cost report and charge 

data determined at the time the cost 

report coinciding with the discharge is 

settled. For additional information, refer 

to the RY 2008 LTCH PPS final rule (72 

FR 26899 through 26900). 

c. Establishment of the Proposed FixedLoss Amount 

When we implemented the LTCH 

PPS, as discussed in the August 30, 

2002 LTCH PPS final rule (67 FR 56022 

through 56026), under the broad 

authority of section 123 of the BBRA as 

amended by section 307(b) of BIPA, we 

established a fixed-loss amount so that 

total estimated outlier payments are 

projected to equal 8 percent of total 

estimated payments under the LTCH 

PPS. To determine the fixed-loss 

amount, we estimate outlier payments 

and total LTCH PPS payments for each 

case using claims data from the 

MedPAR files. Specifically, to 

determine the outlier payment for each 

case, we estimate the cost of the case by 

multiplying the Medicare covered 

charges from the claim by the LTCH’s 

hospital specific CCR. Under 

§ 412.525(a)(3) (in conjunction with the 

revised definition of ‘‘LTC–DRG’’ at 

§ 412.503), if the estimated cost of the 

case exceeds the outlier threshold (the 

sum of the adjusted Federal prospective 

payment for the MS–LTC–DRG and the 

fixed-loss amount), we pay an outlier 

payment equal to 80 percent of the 

difference between the estimated cost of 

the case and the outlier threshold (the 

sum of the adjusted Federal prospective 

payment for the MS–LTC–DRG and the 

fixed-loss amount). 

In the RY 2008 LTCH PPS final rule 

(72 FR 26898), in calculating the fixedloss amount that would result in 

estimated outlier payments projected to 

be equal to 8 percent of total estimated 

payments for the 2008 LTCH PPS rate 

year, we used claims data from the 

December 2006 update of the FY 2006 

MedPAR files and CCRs from the 

December 2006 update of the PSF, as 

that was the best available data at that 

time. We believe that CCRs from the 

PSF are the best available CCR data for 

determining estimated LTCH PPS 

payments for a given LTCH PPS rate 

year because they are the most recently 

available CCRs actually used to make 

LTCH PPS payments. 

As we also discussed in the RY 2008 

LTCH PPS rate year final rule (72 FR 

26898), we calculated a single fixed-loss 


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amount for the 2008 LTCH PPS rate year 

based on the version 24.0 of the 

GROUPER, which was the version in 

effect as of the beginning of the LTCH 

PPS rate year (that is, July 1, 2007 for 

the 2008 LTCH PPS rate year). In 

addition, we applied the outlier policy 

under § 412.525(a) in determining the 

fixed-loss amount for the 2008 LTCH 

PPS rate year; that is, we assigned the 

applicable Statewide average CCR only 

to LTCHs whose CCRs exceeded the 

ceiling (and not when they fell below 

the floor). Accordingly, we used the FY 

2007 LTCH PPS total CCR ceiling of 

1.321 (72 FR 26898). As noted in that 

same final rule, in determining the 

fixed-loss amount for the 2008 LTCH 

PPS rate year using the CCRs from the 

PSF, there were no LTCHs with missing 

CCRs or with CCRs in excess of the 

current ceiling and, therefore, there was 

no need for us to independently assign 

the applicable Statewide average CCR to 

any LTCHs in determining the fixed-loss 

amount for the 2008 LTCH PPS rate year 

(as this may have already been done by 

the FI in the PSF in accordance with the 

established policy). 

Accordingly, in 2008 LTCH PPS rate 

year final rule (72 FR 26898), as 

amended by the RY 2008 correction 

notice (72 FR 36613), we established a 

fixed-loss amount of $20,738 for the 

2008 LTCH PPS rate year. Thus, we pay 

an outlier case 80 percent of the 

difference between the estimated cost of 

the case and the outlier threshold (the 

sum of the adjusted Federal LTCH PPS 

payment for the MS–LTC–DRG and the 

fixed-loss amount of $20,738). 

In this proposed rule, for the 2009 

LTCH PPS rate year, we used the March 

2006 update of the FY 2006 MedPAR 

claims data to determine a proposed 

fixed-loss amount that would result in 

estimated outlier payments projected to 

be equal to 8 percent of total estimated 

payments, based on the policies 

described in this proposed rule, because 

these data are the most recent complete 

LTCH data available. Consistent with 

our historical practice of using the best 

data available, if more recent LTCH 

claims data become available, we 

propose to use it for determining the 

fixed-loss amount for the 2009 LTCH 

PPS rate year in the final rule. 

Furthermore, as noted previously, we 

determined the proposed fixed-loss 

amount based on the version of the 

GROUPER that would be in effect as of 

the beginning of the 2009 LTCH PPS 

rate year (July 1, 2008), that is, Version 

25.0 of the GROUPER (as established in 

the FY 2008 IPPS final rule (72 FR 

47278)). 

We also used CCRs from the July 2007 

update of the PSF for determining the 

proposed fixed-loss amount for the 2009 

LTCH PPS rate year as they are 

currently the most recent complete 

available data. Consistent with our 

historical practice of using the best data 

available, if more recent CCR data are 

available, we propose to use it for 

determining the fixed-loss amount for 

the 2009 LTCH PPS rate year in the final 

rule. Furthermore, in determining the 

proposed fixed-loss amount for the 2009 

LTCH PPS rate year, we used the 

current FY 2008 applicable LTCH 

‘‘total’’ CCR ceiling of 1.284 and LTCH 

Statewide average ‘‘total’’ CCRs 

established in the FY 2008 IPPS final 

rule (72 FR 47404 and 48126 through 

48127) such that the current applicable 

Statewide average CCR would be 

assigned if, among other things, a 

LTCH’s CCR exceeded the current 

ceiling (1.284). We note that in 

determining the proposed fixed-loss 

amount for the 2009 LTCH PPS rate year 

using the CCRs from the PSF, there was 

no need for us to independently assign 

the applicable Statewide average CCR to 

any LTCHs (as this may have already 

been done by the FI in the PSF in 

accordance with our established policy). 

(Currently, the applicable FY 2008 

LTCH Statewide average CCRs can be 

found in Table 8C of the FY 2008 IPPS 

final rule (72 FR 48126 through 48127).) 

Accordingly, based on the data and 

policies described in this proposed rule, 

we are proposing a fixed-loss amount of 

$21,199 for the 2009 LTCH PPS rate 

year. Thus, we would pay an outlier 

case 80 percent of the difference 

between the estimated cost of the case 

and the proposed outlier threshold (the 

sum of the adjusted proposed Federal 

LTCH payment for the MS–LTC–DRG 

and the proposed fixed-loss amount of 

$21,199). We note that the proposed 

fixed-loss amount for the 2009 LTCH 

PPS rate year is somewhat higher than 

the current fixed-loss amount of 

$20,738. In addition to being based on 

the most recent available LTCH data to 

estimate the cost of each LTCH case, 

this proposed change in the fixed-loss 

amount is primarily due to the projected 

increase in estimated aggregate LTCH 

PPS payments that is expected to result 

from the proposed 2.6 percent update to 

the Federal rate (discussed in greater 

detail in section IV.E. of this preamble), 

in conjunction with the proposed 

changes to the area wage adjustment 

(discussed in greater detail in section 

IV.F.1. of this preamble) and the 

changes to the MS–LTC–DRG relative 

weights for FY 2008 (as discussed in the 

FY 2008 IPPS final rule (72 FR 47277 

through 47299)). As discussed in greater 

detail in the impact analysis presented 

in section XII. of this proposed rule, we 

are projecting that the proposed changes 

would result in a 1.7 percent increase in 

estimated payments per discharge in RY 

2009 as compared to RY 2008, on 

average, for all LTCHs. Because of the 

estimated increase in aggregate LTCH 

PPS payments proposed for the 2009 

LTCH PPS rate year (as discussed above 

in this section), we believe that an 

increase in the proposed fixed-loss 

amount is appropriate and necessary to 

maintain the requirement that estimated 

outlier payments would be projected to 

be equal to 8 percent of estimated total 

LTCH PPS payments, as required under 

§ 412.525(a). As we discussed in the RY 

2008 final rule (72 FR 26897), 

maintaining the fixed-loss amount at the 

current level would result in HCO 

payments above the current regulatory 

requirement that estimated outlier 

payments would be projected to equal 8 

percent of estimated total LTCH PPS 

payments. Based on the regression 

analysis that was performed when we 

implemented the LTCH PPS (August 30, 

2002 final rule (67 FR 56022 through 

56027)), we established the outlier target 

at 8 percent of estimated total LTCH 

PPS payments to allow us to achieve a 

balance between the ‘‘conflicting 

considerations of the need to protect 

hospitals with costly cases, while 

maintaining incentives to improve 

overall efficiency’’ (67 FR 56024). That 

regression analysis also showed that 

additional increments of outlier 

payments over 8 percent (that is, raising 

the outlier target to a larger percentage 

than 8 percent) would reduce financial 

risk, but by successively smaller 

amounts. Outlier payments are budget 

neutral, and therefore, outlier payments 

are funded by prospectively reducing 

the non-outlier PPS payment rates by 

projected total outlier payments. The 

higher the outlier target, the greater the 

(prospective) reduction to the base 

payment would need to be applied to 

the Federal rate to maintain BN. 

As we discussed in the RY 2008 

LTCH PPS final rule (72 FR 26898 

through 26899), as an alternative to 

proposing to lower the fixed-loss 

amount for RY 2009, we examined 

adjusting the marginal cost factor (that 

is, the percentage that Medicare will pay 

of the estimated cost of a case that 

exceeds the sum of the adjusted Federal 

prospective payment for the MS–LTC–

DRG and the fixed-loss amount for 

LTCH PPS outlier cases as specified in 

§ 412.525(a)(3) in conjunction with the 

revised definition of ‘‘LTC–DRG’’ at 

§ 412.503), which is currently equal to 

80 percent, as a means of ensuring that 

estimated outlier payments would be 


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projected to equal 8 percent of estimated 

total LTCH PPS payments. When we 

initially established the 80 percent 

marginal cost factor in the August 30, 

2002 final rule (67 FR 56022 through 

56027), we explained that our analysis 

of payment-to-cost ratios for HCO cases 

showed that a marginal cost factor of 80 

percent appropriately addresses outlier 

cases that are significantly more 

expensive than nonoutlier cases, while 

simultaneously maintaining the 

integrity of the LTCH PPS. 

In proposing increases to the fixedloss amount for RY 2007 and RY 2008 

(71 FR 27834 and 72 FR 4799 through 

4800 respectively), we also solicited 

comments on whether we should revisit 

the regression analysis discussed above 

in this section that was used to establish 

the existing 8 percent outlier target and 

80 percent marginal cost factor, using 

the most recent available data to 

evaluate whether the current outlier 

target of 8 percent or the 80 percent 

marginal cost factor should be adjusted, 

and therefore, could have resulted in 

less of an increase in the fixed-loss 

amount for RY 2007 and RY 2008, 

respectively. In response to this 

solicitation in the RY 2007 proposed 

rule (as summarized in the RY 2007 

LTCH PPS final rule (71 FR 27834 

through 27835)), several commenters 

opposed any option that would allow us 

to revisit the regression analysis that 

was used to establish the existing 80 

percent marginal cost factor and existing 

outlier target of 8 percent. The 

commenters stated their belief that the 

LTCH PPS is still in its early stages and 

further changes to the 80 percent 

marginal cost factor or 8 percent outlier 

target would result in instability to the 

system. The commenters cautioned 

against making any premature changes 

to the factors affecting HCO payments to 

LTCHs, particularly the marginal cost 

factor and outlier target established by 

regulation when the LTCH PPS was 

implemented. Also, the commenters 

agreed that keeping the marginal cost 

factor at 80 percent and the outlier pool 

at 8 percent better identifies LTCH 

patients that are truly unusually costly 

cases, and that this policy appropriately 

addresses outlier cases that are 

significantly more expensive than nonoutlier cases. Similarly, as summarized 

in the RY 2008 final rule (72 FR 26897), 

we received no comments in support of 

revisiting the regression analysis 

discussed above that was used to 

establish the existing 8 percent outlier 

target and 80 percent marginal cost 

factor, using the most recent available 

data to evaluate whether the current 

outlier target of 8 percent or the 80 

percent marginal cost factor should be 

adjusted in response to our solicitation 

on this issue. 

In response to these comments, we 

agreed with the commenters that, based 

on the regression analysis done for the 

implementation of the LTCH PPS 

(August 30, 2002; 68 FR 56022 through 

56026), a marginal cost factor of 80 

percent and a outlier target of 8 percent 

best identifies LTCH patients that are 

truly unusually costly cases, and that 

such a policy appropriately addresses 

LTCH HCO cases that are significantly 

more expensive than non-outlier cases, 

which is consistent with our intent of 

the LTCH HCO policy as stated when 

we implemented the LTCH PPS in the 

August 30, 2002 final rule (67 FR 

56025). Therefore, as supported by 

many commenters, in both the RY 2007 

final rule (71 FR 27835) and the RY 

2008 final rule (72 FR 26898), we did 

not revisit the regression analysis that 

was used to establish the existing 80 

percent marginal cost factor and existing 

outlier target of 8 percent, and therefore, 

did not make any changes to the 

marginal cost factor or outlier target in 

either of those final rules. 

Although proposing to increase the 

fixed-loss amount from $20,738 to 

$21,199 (based on the policies presented 

in this proposed rule) would increase 

the amount of the ‘‘loss’’ that a LTCH 

must incur under the LTCH PPS for a 

case with unusually high costs before 

the LTCH would receive any additional 

Medicare payments, as we discussed 

above and as we explained in greater 

detail in the RY 2006 LTCH PPS final 

rule (70 FR 24195 through 24196), we 

continue to believe that the existing 8 

percent outlier target and 80 percent 

marginal cost factor continue to 

adequately maintain the LTCHs’ share 

of the financial risk in treating the most 

costly patients and ensure the efficient 

delivery of services. Accordingly, we are 

not proposing to adjust the existing 8 

percent outlier target or 80 percent 

marginal cost factor under the LTCH 

PPS HCO policy at this time. However, 

we continue to be interested in any 

comments that would support revisiting 

the analysis that was used to establish 

the existing 8 percent outlier target and 

the existing 80 percent marginal cost 

factor, using the most recent available 

data to evaluate whether any changes to 

the current HCO policy should be made, 

and therefore, may result in a smaller 

increase (or even a decrease) in the 

fixed-loss amount for RY 2009. 

For the reasons described above, we 

believe the proposed fixed-loss amount 

of $21,199 would appropriately identify 

unusually costly LTCH cases while 

maintaining the integrity of the LTCH 

PPS. Thus, under the broad authority of 

section 123(a)(1) of the BBRA and 

section 307(b)(1) of BIPA, we are 

proposing a fixed-loss amount of 

$21,199 based on the best available 

LTCH data and the policies presented in 

this proposed rule because we believe a 

proposed increase in the fixed-loss 

amount is appropriate and necessary to 

maintain estimated outlier payments are 

projected to be equal to 8 percent of 

estimated total LTCH PPS payments, as 

required under § 412.525(a). 

d. Application of Outlier Policy to 

Short-Stay Outlier (SSO) Cases 

As we discussed in the August 30, 

2002 final rule (67 FR 56026), under 

some rare circumstances, a LTCH 

discharge could qualify as a SSO case 

(as defined under § 412.529 and 

discussed in section IV.G. of this 

preamble) and also as a HCO case. In 

this scenario, a patient could be 

hospitalized for less than five-sixths of 

the geometric ALOS for the specific 

MS–LTC–DRG, and yet incur 

extraordinarily high treatment costs. If 

the costs exceeded the high cost outlier 

threshold (that is, the SSO payment plus 

the fixed-loss amount), the discharge is 

eligible for payment as a HCO. Thus, for 

a SSO case in the 2009 LTCH PPS rate 

year, the HCO payment would be 80 

percent of the difference between the 

estimated cost of the case and the 

proposed outlier threshold (the sum of 

the proposed fixed-loss amount of 

$21,199 and the amount paid under the 

SSO policy as specified in § 412.529). 

4. Other Payment Adjustments 

Section 123(a)(1) of the BBRA, as 

amended by section 307(b) of BIPA, 

granted the Secretary broad authority to 

determine appropriate adjustments 

under the LTCH PPS, including whether 

(and how) to provide for adjustments to 

reflect variations in the necessary costs 

of treatment among LTCHs. In 

developing the LTCH PPS payment 

methodology, we conducted extensive 

regression analyses of the relationship 

between LTCH costs (including both 

operating and capital-related costs per 

case) and several factors that may affect 

costs such as the percent of Medicaid 

patients treated, the percent of 

Supplemental Security Income (SSI) 

patients treated, the hospital’s 

geographic location, and training 

residents in approved medical 

education programs (67 FR 56014). The 

appropriateness of potential payment 

adjustments were evaluated based upon 

whether including each adjustment 

increased the accuracy of payments to 

LTCHs. 


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In the August 30, 2002 LTCH PPS 

final rule, we detailed the extensive data 

analysis performed by our contractor, 

3M Health Information Systems (3M) 

and our resulting decisions to 

implement a COLA for LTCHs in Alaska 

and Hawaii (§ 412.525(b)) and an 

adjustment to account for geographical 

differences in area wage levels 

(§ 412.525(c)). In addition, we discussed 

the extensive data analyses that led to 

the decision not to implement 

adjustments for geographic 

reclassification, rural location, the 

treatment of a disproportionate share of 

low-income patients (DSH), or indirect 

medical education (IME) costs. We also 

noted that we would continue to collect 

data and revisit these determinations as 

additional data became available. (For 

more detailed information, see 67 FR 

56014 through 56027.) 

When we implemented the LTCH PPS 

for FY 2003, we provided for a 5-year 

transition period (§ 412.533), to allow 

LTCHs time to adjust to the new 

payment system (67 FR 56038). For cost 

reporting periods beginning on or after 

October 1, 2006, the final year of the 5- 

year transition, LTCHs are paid based 

on 100 percent of the Federal rate. 

We continued to collect and interpret 

new data as they became available to 

determine if these data support 

proposing any additional payment 

adjustments. In both the RY 2007 and 

the RY 2008 LTCH PPS final rules, we 

stated that we believed that it was 

appropriate to wait for the conclusion of 

the 5-year transition to 100 percent of 

the Federal rate under the LTCH PPS to 

maximize the availability of data that 

reflected LTCH behavior in response to 

the implementation of the LTCH PPS. 

The availability of this data would allow 

us to conduct a comprehensive 

reevaluation of payment adjustments 

under the LTCH PPS. (See the RY 2007 

and RY 2008 LTCH PPS final rules (71 

FR 27839) and (72 FR 26900), 

respectively.) 

Therefore, similar to the data analyses 

conducted at the inception of the LTCH 

PPS for FY 2003, 3M evaluated LTCH 

data from the most recent cost report 

files in our HCRIS database (updated 

through June 30, 2007) for providers’

cost reports beginning during fiscal 

years 2004 through 2006. We believe 

that in the 5 years since the start of the 

LTCH PPS, there has been sufficient 

new data generated to allow for a 

comprehensive reevaluation of the 

appropriateness of payment adjustments 

such as geographic reclassification, rural 

location, DSH, and IME under the LTCH 

PPS at this time. 

Our most recent data analysis which 

is based on the comprehensive data 

analysis by 3M (referenced above), 

indicates that proposing payment 

adjustments for geographic 

reclassification, rural location, DSH, or 

indirect medical education (IME) costs 

would not improve the accuracy of 

payments to LTCHs. (3M’s ‘‘Report on 

LTCH Payment Methodology Review 

and Results’’ is posted on our Web site 

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

LongTermCareHospitalPPS/ 

08_download.asp#TopOfPage. 

We believe that these analyses 

confirm our initial determinations as we 

developed the LTCH PPS regarding the 

applicability of PPS payment 

adjustments. Therefore, we are not 

proposing to adopt any additional 

payment adjustments such as 

geographic reclassification, rural 

location, DSH, or IME, as features of the 

LTCH PPS. Proposed policies for the RY 

2009 wage index adjustment and the 

COLA are discussed in sections IV.D.1 

and 2. of this proposed rule, 

respectively. Furthermore, now that the 

5-year transition to the LTCH PPS is 

completed, we have collected data that 

reflects LTCH behavior in response to 

the implementation of the LTCH PPS. 

We believe that our above described 

analyses of LTCH PPS data do not 

support the adoption of any additional 

payment adjustments. We further 

believe that since 3M’s recent analyses 

confirm policy determinations that have 

been in place since the implementation 

of the LTCH PPS for FY 2003, that 

annual data analyses related to potential 

payment adjustments for geographic 

reclassification, rural location, DSH or 

IME will not be necessary barring 

significant transformations in the nature 

of the LTCH universe or substantial 

changes in Medicare payment outcomes 

that warrant additional evaluation. 

5. Technical Correction to the Budget 

Neutrality Requirement at 

§ 412.523(d)(2) 

Section 123(a)(1) of the Public Law 

106–113 requires that the PPS 

developed for LTCHs be budget neutral 

for the initial year of implementation. 

Furthermore, under section 307(a)(2) of 

the Public Law 106–554, the increases 

to the target amounts and the cap on the 

target amounts for LTCHs provided for 

by section 307(a)(1) of Public Law 106–

554 (as set forth in section 1886(b)(3)(J) 

of the Act), and the enhanced bonus 

payments for LTCHs provided for by 

section 122 of Public Law 106–113 (as 

set forth in section 1886(b)(2)(E) of the 

Act) were not to be taken into account 

in the development and implementation 

of the LTCH PPS. Therefore, when we 

implemented the LTCH PPS, in the 

August 30, 2002 final rule (67 FR 

56052), we established a budget 

neutrality requirement at § 412.523(d)(2) 

for calculating the standard Federal rate 

for FY 2003 such that estimated 

aggregate LTCH PPS payments were 

estimated to be equal to estimated 

payments that would have been made to 

LTCHs under the reasonable cost-based 

payment methodology had the PPS for 

LTCHs not been implemented, and, to 

implement section 307(a)(2) of the 

Public Law 106–554, we excluded the 

effects of sections 1886(b)(2) and (b)(3) 

of the Act. 

We are proposing a technical 

correction to existing § 412.523(d)(2) 

that would more precisely describe the 

provisions of sections 1886(b)(2) and 

(b)(3) of the Act that were not taken into 

account when determining the standard 

Federal rate under § 412.523(d). The 

current regulatory language at 

§ 412.523(d)(2) cites the general sections 

of the Act which contain the specific 

provisions set forth in § 307(a)(2) of 

Public Law 106–554 that the Secretary 

is required to not take into account in 

developing the PPS. We believe that it 

is clearer and more precise to cite the 

specific subparagraphs the Secretary did 

not take into account rather than to cite 

the general sections of the Act of which 

such subparagraphs are a part. In order 

to mitigate any confusion that may be 

caused by existing regulations, we are 

proposing to make a technical 

correction at § 412.523(d)(2). 

Specifically, we are proposing to revise 

§ 412.523(d)(2) to state that the effects of 

section 1886(b)(2)(E) of the Act 

(enhanced bonus payments for LTCHs, 

as described above) and section 

1886(b)(3)(J) of the Act (increases to the 

hospital-specific target amounts and the 

cap on the target amounts for LTCHs, as 

described above) were excluded in the 

development of the FY 2003 LTCH PPS 

standard Federal rate. This technical 

correction would make the regulatory 

language consistent with section 

307(a)(2) of Public Law 106–113 and 

consistent with the methodology we 

used to determine the LTCH PPS 

standard Federal rate under § 412.523, 

and it is not a change in policy. 

(Accordingly, no adjustments to the 

LTCH PPS standard Federal rate 

computed under § 412.523(d) have been 

proposed in conjunction with this 

proposed technical correction to 

§ 412.523(d)(2).) 

G. Proposed Conforming Changes 

Various regulations throughout 42 

CFR Part 412 Subpart O indicate that 

the terms ‘‘urban area’’ and ‘‘rural area’’

are defined according to the definitions 

of ‘‘urban area’’ and ‘‘rural area’’ found 

in 42 CFR Part 412 Subpart D (the IPPS 


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regulations). Specifically, §§ 412.525(c), 

412.529(d)(4)(ii)(B) and (d)(4)(iii)(B), 

412.534(d)(1), (f)(2)(ii), and (f)(3)(ii), and 

412.536(c)(1), (e)(2)(ii), and (e)(3)(ii) of 

Subpart O refer to the definitions of 

‘‘urban area’’ and ‘‘rural area’’ in either 

§ 412.62(f)(1)(ii) and (f)(1)(iii) or 

§ 412.64(b)(1)(ii)(A)–(C) in 42 CFR Part 

412 Subpart D. As stated elsewhere in 

the preamble, we believe that it is 

administratively simpler to define the 

terms ‘‘urban area’’ and ‘‘rural area’’ in 

§ 412.503 rather than cross-referencing 

the definitions of ‘‘urban area’’ and 

‘‘rural area’’ in § 412.62(f)(1)(ii) and 

§ 412.62(f)(1)(iii) and 

§ 412.64(b)(1)(ii)(A)–(C). Consequently, 

in section IV.F.1.b(4). of this regulation, 

we propose to add definitions for 

‘‘urban area’’ and ‘‘rural area’’ in 

§ 412.503 which would incorporate the 

provisions of § 412.62(f)(1)(ii) and 

(f)(1)(iii) as well as § 412.64(b)(1)(ii)(A) 

through (C). Because we are proposing 

to define ‘‘urban area’’ and ‘‘rural area’’

in § 412.503, the citations to the 

definitions of ‘‘urban area’’ and ‘‘rural 

area’’ in § 412.62(f)(1)(ii) and § 412.62 

(f)(1)(iii) and § 412.64(b)(1)(ii)(A)–(C) 

which are found in §§ 412.525(c), 

412.529(d)(4)(ii)(B) and (d)(4)(iii)(B), 

412.534(d)(1), (f)(2)(ii), and (f)(3)(ii), and 

412.536(c)(1), (e)(2)(ii), and (e)(3)(ii) 

would need to be replaced with 

references to § 412.503. We are 

proposing to replace the abovedescribed references with § 412.503. 

(We note that provisions of the 

Medicare, Medicaid, and SCHIP 

Extension Act of 2007, enacted on 

December 29, 2007 require a 3-year 

suspension of the payment adjustments 

at § 412.534 to ‘‘grandfathered LTCHs’’

and application of § 412.536 to 

‘‘freestanding’’ LTCHs for cost reporting 

periods beginning on or after the date of 

enactment of the legislation. In addition, 

revisions to the short stay outlier policy, 

as well as other changes to the 

regulations necessitated by MMSEA will 

be addressed in a future notice.) 

VI. Computing the Proposed Adjusted 

Federal Prospective Payments for the 

2008 LTCH PPS Rate Year 

In accordance with § 412.525 and as 

discussed in section IV.C. of this 

proposed rule, the standard Federal rate 

is adjusted to account for differences in 

area wages by multiplying the laborrelated share of the standard Federal 

rate by the appropriate LTCH PPS wage 

index (as shown in Tables 1 and 2 of 

Addendum A to this proposed rule). 

The standard Federal rate is also 

adjusted to account for the higher costs 

of hospitals in Alaska and Hawaii by 

multiplying the nonlabor-related share 

of the standard Federal rate by the 

appropriate cost-of-living factor (shown 

in Table 3 in section IV.D.2 of this 

preamble). In the RY 2008 LTCH PPS 

final rule (72 FR 4776), we established 

a standard Federal rate of $38,356.45 for 

the 2008 LTCH PPS rate year. In this 

proposed rule, based on the best 

available data and the proposed policies 

described in this proposed rule, we are 

proposing that the standard Federal rate 

for the 2009 LTCH PPS rate year would 

be $39,076.28 as discussed in section 

IV.C.3. of this preamble. We illustrate 

the methodology that would be used to 

adjust the proposed Federal prospective 

payments for the 2009 LTCH PPS rate 

year in the following examples: 

Example: During the 2009 LTCH PPS rate 

year, a Medicare patient is in a LTCH located 

in Chicago, Illinois (CBSA 16974). The 

proposed full LTCH PPS wage index value 

for CBSA 16974 is 1.0715 (see Table 1 in 

Addendum A to this proposed rule). The 

Medicare patient is classified into MS–LTC–

DRG 28 (Spinal Procedures with MCC), 

which has a current relative weight of 1.1417 

(see Table 3 of Addendum A to this proposed 

rule). 

To calculate the LTCH’s proposed total 

adjusted Federal prospective payment for 

this Medicare patient, we compute the 

proposed wage-adjusted Federal prospective 

payment amount by multiplying the 

proposed unadjusted standard Federal rate 

($39,076.28) by the proposed labor-related 

share (75.920 percent) and the proposed 

wage index value (1.0715). This proposed 

wage-adjusted amount is then added to the 

nonlabor-related portion of the proposed 

unadjusted standard Federal rate (24.080 

percent; adjusted for cost of living, if 

applicable) to determine the proposed 

adjusted Federal rate, which is then 

multiplied by the MS–LTC–DRG relative 

weight (1.1417) to calculate the proposed 

total adjusted Federal prospective payment 

for the 2009 LTCH PPS rate year 

($47,035.13). Table 6 illustrates the 

components of the calculations in this 

example. 

TABLE 6 

Unadjusted Proposed Standard Federal Prospective Payment Rate .................................. $39,076.28 

Proposed Labor-Related Share ............................................................................................ × 0.75920 

Proposed Labor-Related Portion of the Federal Rate .......................................................... = $29,666.71 

Proposed Wage Index (CBSA 16974) .................................................................................. × 1.0715 

Proposed Wage-Adjusted Labor Share of Federal Rate ...................................................... = $31,787.88 

Proposed Nonlabor-Related Portion of the Federal Rate ($39,076.28 x 0.24080) .............. + $ 9,409.57 

Proposed Adjusted Federal Rate Amount ............................................................................ = $41,197.45 

MS–LTC–DRG 9 Relative Weight ......................................................................................... × 1.1417 

Proposed Total Adjusted Federal Prospective Payment ...................................................... = $47,035.13 

VII. Monitoring 

In the August 30, 2002 final rule (67 

FR 56014), we described an on-going 

monitoring component to the new LTCH 

PPS. Specifically, we discussed ongoing analysis of the various policies 

that we believe would provide equitable 

payment for stays that reflect less than 

the full course of treatment and reduce 

the incentives for inappropriate 

admissions, transfers, or premature 

discharges of patients that are present in 

a discharge-based PPS. As a result of our 

data analysis, we have revisited a 

number of our original policies and 

have identified behaviors by certain 

LTCHs that lead to inappropriate 

Medicare payments. 

In the RY 2005 LTCH PPS final rule 

(69 FR 25692) we revised the 

interruption of stay policy. We also 

established a payment adjustment for 

LTCH HwHs and satellites in the FY 

2005 IPPS final rule (69 FR 49191 

through 49214). In the RY 2008 final 

rule, at § 412.536, based on additional 

data monitoring and analysis, we 

expanded this payment adjustment to 

apply to LTCHs and LTCH satellites that 

were not co-located with their referring 

hospitals. 

In the RY 2007 and 2008 final rules 

(71 FR 27798 and 72 FR 28670), we 

revised the SSO payment adjustment 

formula as a consequence of data 

analyses which indicated that Medicare 

was overpaying for certain SSO cases. 

Although at this time, we are not 

proposing any new payment 

adjustments that have resulted from our 

monitoring activity, we continue to 

pursue our on-going monitoring 

program that involves the CMS Office of 

Research and Development (ORDI), 

existing QIO monitoring, and studies 

described in the RY 2006 LTCH PPS 

final rule (70 FR 24211). 


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As we discussed in the RY 2004 

LTCH PPS final rule (68 FR 34157), the 

Medicare Payment Advisory 

Commission (MedPAC) endorsed our 

monitoring activity. Furthermore, the 

Commission pursued an independent 

research initiative that led to a section 

in MedPAC’s June 2004 Report to 

Congress entitled ‘‘Defining long-term 

care hospitals’’. This study included 

recommendations that we develop 

facility and patient criteria for LTCH 

admission and treatment and that we 

require a review by QIOs to evaluate 

whether LTCH admissions meet criteria 

for medical necessity once the 

recommended facility and patient 

criteria are established (70 FR 24210). In 

response to the recommendation in 

MedPAC’s June 2004 Report, we 

awarded a contract to Research Triangle 

Institute, International (RTI), on 

September 27, 2004, to conduct a 

thorough examination of the feasibility 

of implementing MedPAC’s 

recommendations. 

Both Part 1 and Part 2 of the RTI 

Report are available on our Web site at 

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

LongTermCareHospitalPPS/ 

02a_RTIReports.asp#TopOfPage. We 

also included the Executive Summary of 

RTI’s final report in Addendum B of the 

RY 2008 proposed rule (72 FR 4884 

through 4886). (A comprehensive 

discussion of RTI’s continuing work is 

included at section XI of this proposed 

rule.) 

VIII. Method of Payment 

Under § 412.513, a Medicare LTCH 

patient is classified into a MS–LTC–

DRG based on the principal diagnosis, 

up to eight additional (secondary) 

diagnoses, and up to six procedures 

performed during the stay, as well as 

age, sex, and discharge status of the 

patient. The MS–LTC–DRG is used to 

determine the Federal prospective 

payment that the LTCH will receive for 

the Medicare-covered Part A services 

the LTCH furnished during the 

Medicare patient’s stay. Under 

§ 412.541(a), the payment is based on 

the submission of the discharge bill. The 

discharge bill also provides data to 

allow for reclassifying the stay from 

payment at the full MS–LTC–DRG rate 

to payment for a case as a SSO (under 

§ 412.529) or as an interrupted stay 

(under § 412.531), or to determine if the 

case will qualify for a HCO payment 

(under § 412.525(a)). 

Accordingly, the ICD–9–CM codes 

and other information used to determine 

if an adjustment to the full MS–LTC–

DRG payment is necessary (for example, 

LOS or interrupted stay status) are 

recorded by the LTCH on the Medicare 

patient’s discharge bill and submitted to 

the Medicare FI for processing. The 

payment represents payment in full, 

under § 412.521(b), for inpatient 

operating and capital-related costs, but 

not for the costs of an approved medical 

education program, bad debts, blood 

clotting factors, anesthesia services by 

hospital-employed nonphysician 

anesthetists or the costs of photocopying 

and mailing medical records requested 

by a Quality Improvement Organization 

(QIO), which are costs paid outside the 

LTCH PPS. 

As under the previous reasonable 

cost-based payment system, under 

§ 412.541(b), a LTCH may elect to be 

paid using the periodic interim payment 

(PIP) method described in § 413.64(h), 

based on the estimated prospective 

payment for the year, and may be 

eligible to receive accelerated payments 

as described in § 413.64(g). We exclude 

HCO payments that are paid upon 

submission of a discharge bill from the 

PIP amounts. In addition, Part A costs 

that are not paid for under the LTCH 

PPS, including Medicare costs of an 

approved medical education program, 

bad debts, blood clotting factors, 

anesthesia services by hospitalemployed nonphysician anesthetists 

and the costs of photocopying and 

mailing medical records requested by a 

QIO, are subject to the interim payment 

provisions as specified in § 412.541(c). 

Under § 412.541(d), LTCHs with 

unusually long lengths of stay that are 

not receiving payment under the PIP 

method may bill on an interim basis (60 

days after an admission and at intervals 

of at least 60 days after the date of the 

first interim bill) and this should 

include any HCO payment determined 

as of the last day for which the services 

have been billed. 

IX. RTI’s Research 

With the recommendations of 

MedPAC’s June 2004 Report to Congress 

as a point of departure, we awarded a 

contract to Research Triangle Institute, 

International (RTI) at the start of FY 

2005 for a comprehensive evaluation of 

the feasibility of developing patient and 

facility level characteristics for LTCHs 

that could distinguish LTCH patients 

from those treated in other hospitals. 

RTI completed this project in two 

phases. In Phase I, RTI prepared a 

background report summarizing existing 

information regarding LTCHs’ current 

role in the Medicare system: their 

history as Medicare participating 

providers; the types of patients they 

treat; the criteria QIOs currently use to 

review appropriateness of care in these 

settings; and the types of regulations 

they face as Medicare participating 

providers. This work reviewed prior 

analyses of these issues and included 

discussions with MedPAC, other 

researchers, CMS, the QIOs, and the 

hospital associations. 

In Phase II, RTI collected additional 

information on tools currently used by 

the QIOs and the industry to assess 

patient appropriateness for admission; 

analyzed claims to understand 

differences between short term acute 

care hospital patients with outlier stays 

who were subsequently treated in 

LTCHs compared to those who were not 

and differences between patients who 

continued treatment as outliers in acute 

care hospitals with patients who had 

been admitted to LTCH with the same 

DRGs; and visited different types of 

hospitals to observe first-hand how 

LTCH patients differ from those in other 

settings and how this pattern varies in 

different parts of the country. RTI 

worked with different associations, 

including the National Association of 

Long Term Hospitals (NALTH), the 

Acute Long Term Hospital Association 

(ALTHA), the American Hospital 

Association (AHA), and the American 

Medical Rehabilitation Providers 

Association (AMRPA), as well as several 

of the larger LTCH chains. The final 

report for those phases submitted by RTI 

summarizes these efforts and makes 

recommendations to CMS regarding 

LTCHs. 

(We have posted the reports on both 

Phase I and Phase II of RTI’s research on 

our Web site at http://www.cms.hhs.gov/ 

LongTermCareHospitalPPS/ 

02a_RTIReports.asp#TopOfPage.) 

In summary, RTI’s research has 

resulted in an extensive and careful 

analysis of the Medicare populations 

served by LTCHs, a comparison of these 

populations with those treated in other 

acute settings, including IPPS, IRFs, and 

Inpatient Psychiatric populations, as 

well as those treated in less intensive 

settings such as SNFs. This work 

included analysis of Medicare data to 

compare patient characteristics and 

provider costs for certain types of 

patients; regulatory requirements 

governing program conditions of 

participation for these different types of 

facilities; interviews with private sector 

developers of level of care 

determinations; and site visits and 

interviews with physicians treating 

these typical and frequently overlapping 

populations. 

The results suggested that while there 

are some patients who require very long 

term acute care hospitalization there are 

also many patients whose LOS at the 

LTCH may trigger a short stay outlier 

payment, suggesting that not all LTCH 

admissions had a LOS consistent with 


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the need for prolonged acute care 

hospitalization in an LTCH. While 

existing patient criteria such as 

Interqual are useful for distinguishing 

between the need for hospital-level 

treatment and a less intensive level, 

such as SNF care, RTI’s analysis has 

determined that, in fact, the private 

sector criteria failed to distinguish 

between patients at LTCHs and patients 

at acute care hospitals. The criteria 

proposed by the National Association 

for Long Term Hospitals (NALTH) also 

had this shortcoming. While they 

identified the acute care patient, they 

failed to identify differences between 

LTCH admissions’ clinical 

characteristics and those treated in a 

general acute care hospital, in either a 

step down unit, or in some cases, a 

general medical/surgery unit. 

On January 30, 2007, RTI convened a 

Technical Expert Panel (TEP) comprised 

of physicians, nurses, and hospital 

administrators representing, LTCHs, 

acute care hospitals, IRFs, and SNFs, all 

of which represent the range of 

inpatient settings for treating medically 

complex patients. The goal of this 

meeting was to identify a set of clinical 

indicators that distinguish between the 

medically complex populations at 

LTCHs and acute care hospitals , 

including ICU, step-down, and general 

acute care. The panelists examined 

severity measures and treatment needs 

for medically complex patients to define 

the point at which ICU or acute care 

patients become appropriate for care at 

LTCHs. They focused on patient criteria 

currently used by some providers and 

QIOs. Presentations described existing 

systems for identifying medical 

complexity and severity of illness for a 

particular patient. In exchanges between 

the presenters and panel members , 

however, acute care hospital physicians 

stated that acute care hospitals treated 

severely ill patients with medically 

complex conditions for their entire 

episode of care and that these measures 

were not useful for determining whether 

the patient should be treated in an acute 

care hospital or a LTCH. After 

discussion, the TEP participants 

reached a consensus that LTCHs 

provide a service that is comparable to 

general acute step-down units and is not 

unique to LTCHs. 

Discussions with LTCH physicians 

and acute care hospital physicians 

practicing in areas that lack LTCHs 

confirmed the results of RTI’s data 

analyses in demonstrating the 

widespread overlap in the patient 

populations treated in LTCHs and those 

treated in acute care hospitals. Though 

representatives from the LTCHs clearly 

described the medical complexity and 

severity of illness of their patient 

populations, much of the difference 

between the LTCH and acute hospital 

patient populations was driven by 

geography and access to LTCH facilities. 

In the many areas of the country 

without access to LTCH services, acute 

hospitals treat the medically complex 

patients and receive an acute hospital 

IPPS payment, or outlier payment in 

cases where the costs of care are very 

high, rather than the much higher LTCH 

payment. As a result of the discussion, 

claims by the LTCH industry that 

medically complex patients treated in 

LTCHs were significantly different from 

medically complex patients treated in 

acute settings were not confirmed, 

though panel members did agree that 

more work may need to be done to 

measure outcomes for medically 

complex patients treated in each of 

these settings. There was also consensus 

among the panelists that quality of care 

was related to treating a sufficient 

volume of these difficult cases, 

regardless of provider setting. 

On November 6, 2007, RTI convened 

a second TEP based upon the earlier 

meeting and participant responses. As 

with the first TEP, panel members 

included LTCH physicians and 

administrators, acute care physicians in 

areas without LTCHs (for example, New 

York and northern New England), 

physicians from SNFs in areas without 

LTCHs, and several IRF physicians. 

There was an intentional focus at the 

second TEP on Medicare patients with 

respiratory conditions requiring 

mechanical ventilation (vent patients). 

RTI presented data showing the 

mechanical ventilator patients were 

relatively homogenous in their 

likelihood of using LTCHs whereas the 

medically complex (respiratory) patients 

were much more diverse in their 

distributions making it more difficult to 

develop measurable medical parameters 

and widely accepted treatment 

protocols for this group. However, it 

was acknowledged that ventilator 

patients (referred to as ‘‘vent patients’’

in the following discussion) comprise 

less than 15 percent of all LTCH 

patients. RTI believed that the category 

of ‘‘medically complex’’ cases was too 

amorphous and the focus on vent 

patients would allow for more 

meaningful comparisons between the 

provider types. Nationwide, vent 

patients are treated in acute care 

hospitals and in LTCHs while some 

IRFs and SNFs accept and treat this 

group of patients. (We would also note 

that, as MedPAC found in its June, 2004 

Report to Congress, the highest 

predictor of LTCH use is whether a 

patient has had a tracheotomy which is 

common in long-term ventilatordependent patients. (p. 125)) 

RTI presented two analyses of 

Medicare claims data based on episodes 

of care constructed for beneficiaries 

with vent-related DRGs during their 

initial (acute) admission. The first 

analysis compared outcomes for 

patients living in areas with LTCHs, to 

outcomes for clinically similar patients 

living in geographically comparable 

areas that had no LTCHs. The second 

examined episodes of care only for 

beneficiaries in specific states with 

several LTCHs, and compared outcomes 

for clinically similar cases that 

remained in the acute care setting with 

those that were referred to an LTCH. 

Both analyses used a ‘‘propensity score 

approach’’ which groups patients 

according to the clinical and 

demographic characteristics that predict 

LTCH referral. 

The first analysis found that there was 

very little difference in average episode 

length, Medicare cost, mortality or 

length of time before being discharged 

home, between areas that have LTCHs 

and those that do not. The second 

analysis found that results differed 

between cases with the highest 

probability of using LTCHs (those 

medically complex vent cases with 

tracheotomies, longer prior ICU stays), 

and ventilator cases with lower 

probability of using LTCHs. In the small 

group with a high likelihood, mortality 

was lower and the 60-day likelihood of 

being discharged home was higher for 

those referred to LTCHs than for those 

staying in acute settings, while 

Medicare payments were the same or 

less. Among the less complex cases, 

however, RTI found that LTCH referral 

was associated with much higher costs 

and same or worse performance in other 

outcome measures. These findings are 

very similar to those noted by MedPAC 

in the Commission’s June 2004 Report 

to the Congress. (p. 126–127). 

RTI also asked TEP members to 

evaluate 6 case vignettes and assess 

which patients were appropriate for 

admission to their type of facility. The 

case vignettes consisted of detailed 

medical histories of two ventilatordependent patients admitted for 

weaning, two wound care patients, and 

two ‘‘medically complex’’ patients. 

The TEP indicated that there were 

significant differences between the level 

of patient morbidity that the acute care 

hospitals and LTCHs would admit and 

treat as compared to the IRFs and also 

the SNFs, but that LTCH patients and 

patients treated in IPPS acute care 

hospital step-down units were virtually 

indistinguishable. In further discussion 

of individual case vignettes, LTCH and 


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acute care hospital physicians were in 

accord regarding appropriate 

therapeutic dispositions for the 

stabilized, post-ICU ‘‘critical care’’

patients and they agreed that such 

patients could be appropriately treated 

in either acute care hospital step-down 

units or in LTCHs. Therefore, although 

there was consensus regarding the 

medical profile of such patients, it was 

also noted by one acute care physician 

that this indicated that ‘‘there is no such 

thing as an LTCH-only patient.’’ On the 

other hand, acute care hospital 

physicians noted that typically, in their 

facilities, their step-down units may 

take a slightly less stable ‘‘critical care’’

patient than would be treated in a 

LTCH, that is, patients that may have 

some unresolved medical issues still 

being diagnosed especially if there was 

a need to free-up an ICU bed. This was 

possible because such a patient would 

continue treatment by the same 

physicians and have access to the full 

range of acute care hospital services but 

also could return to the ICU without 

significant difficulty, if necessary. 

The panelists also discussed a 

realistic definition of patient stability 

for ‘‘critical care’’ patients in different 

settings and whether this was typically 

based upon ‘‘vital signs,’’ dependence 

on ‘‘pressors,’’ (intravenous drugs 

administered to raise blood pressure) or 

whether patient stability was based on 

a physician’s subjective determination 

(for example, ‘‘I know it when I see it’’). 

There was additional clinically-oriented 

discussion of measures of medical 

stability. (It was also noted that while 

some of the ‘‘medically complex’’

patients currently being treated in 

LTCHs would fall into the ‘‘critical 

care’’ category, this is not the case for 

all of their patients.) 

Panelists also addressed the intensity 

of nursing care required by a ‘‘critical 

care’’ patient and the central role of the 

nurse to patient ratio in identifying the 

level of care offered in a hospital. Both 

LTCHs and IPPS step-down units 

typically have a RN to patient ratio of 

1-to-4 or 1-to-5. LTCH physicians 

emphasized the value of the LTCH 

‘‘team approach’’ to patient care to the 

agreement of the TEP’s acute care 

hospital physicians who noted that this 

approach is also the model that is in 

place in their facilities. One physician 

noted that he had little doubt that a 

‘‘critical care’’ patient hospitalized at 

any of the acute care hospitals or LTCHs 

represented at the TEP would receive an 

equivalent and high level of treatment. 

Members of the panel also indicated 

that discharges from acute care hospitals 

to LTCHs (in areas where this is an 

option) often occur because the LTCH is 

known to provide specialized treatment 

for particular types of patients. It was 

also noted, however, that commonly, 

hospital resources drive patient 

placement regarding the treatment of 

very sick and expensive patients when 

there is an LTCH placement option. 

Following the above exchanges, it was 

widely acknowledged by panelists that 

measures distinguishing appropriate 

LTCH patients from patients being 

treated in step-down units of acute care 

hospitals were not going to be 

developed by the TEP. There were 

serious questions raised as to whether 

developing such a product was even 

feasible. The group concurred on the 

recommendations, listed below, for a 

treatment model for the type of ‘‘critical 

care’’ patients who had been the focus 

of TEP: 

• CMS should pay similar rates for 

similar patients regardless of setting if 

certain objective parameters associated 

with patient care were present, among 

which were: 

++ A critical mass of patients with 

the targeted conditions to ensure 

sufficient experience in those areas for 

the health professionals in that setting; 

++ Patient-level criteria to identify 

appropriate cases for this level of care, 

applicable regardless of setting; 

++ Quality of care should be based on 

structure and process standards; 

++ Interdisciplinary teams with 

physician leads, appropriate nurse 

staffing levels; and inclusion of treating 

therapists (for example, physical, 

respiratory, occupational); 

• Both LTCHs and these IPPS stepdown units meeting these standards 

could be recognized as ‘‘Centers of 

Excellence’’ for patients defined as 

critically ill. 

TEP members decided not to include 

‘‘patient outcomes’’ on the list of 

recommendations because of concerns 

that a facility’s recognition and/or 

payment based on patient outcomes 

could lead to ‘‘cherry-picking’’ of less 

sick patients which could lead to access 

problems for otherwise appropriate 

patients. 

In summary, there was a consensus at 

the end of RTI’s second TEP that LTCHs 

treat patients who are also treated by 

acute care hospitals. The ‘‘critical care’’

post-ICU patient who LTCHs describe as 

their targeted patient are treated 

throughout most of the country in acute 

care hospital step-down units. The 

interdisciplinary team treatment model 

is the standard both in many LTCHs and 

in many acute care hospitals with stepdown units. While by definition, the 

patients appropriate for treatment in a 

LTCH require hospital-level care (as 

opposed to SNF level), it is not clear 

that any criteria can be developed 

which identifies patients who belong in 

a LTCH exclusively. 

RTI will continue to work on these 

issues in preparing its final report. The 

results thus far have shown empirically, 

that LTCHs treat medically stable but 

critically ill patients that are clinically 

indistinguishable from those treated in 

step-down units of acute care hospitals. 

The work has also confirmed earlier 

research showing that for cases other 

than the vent patients discussed above 

in this section, that in the absence of 

compelling data on patient outcomes, 

that treatment at an LTCH is less costeffective for the same DRGs than is 

treatment at acute care hospitals for the 

same DRGs. 

These TEPs have been important for 

furthering the discussion regarding the 

feasibility of developing unique criteria 

for LTCH patients. Over the past few 

years, the clinicians have agreed that 

LTCHs specialize in treating critically ill 

patients with multiple comorbidities 

and other longer term, acute level needs. 

This consensus contributes to 

identifying an appropriate LTCH patient 

by acuity of illness as well as LOS. Over 

the next few months, RTI will continue 

working with the clinical community to 

make recommendations regarding 

payment and treatment of critically ill 

patients, particularly in LTCHs. Further 

work will expand on the Centers of 

Excellence concept to examine the 

structure and process needed for such a 

designation. Additional analysis will 

examine the relative costs and payments 

for these patients under different 

payment systems. 

X. Collection of Information 

Requirements 

This document does not impose 

information collection and 

recordkeeping requirements. 

Consequently, it need not be reviewed 

by the Office of Management and 

Budget under the authority of the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 35). 

XI. Regulatory Impact Analysis 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘IMPACT’’ at the beginning of your 

comments.] 

A. Introduction 

We have examined the impacts of this 

proposed rule as required by Executive 

Order 12866 (September 1993, 

Regulatory Planning and Review), the 

Regulatory Flexibility Act (RFA) 

(September 19, 1980, Pub. L. 96–354), 

section 1102(b) of the Act, the 

Unfunded Mandates Reform Act of 1995 


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(UMRA) (Pub. L. 104–4), and Executive 

Order 13132. 

1. Executive Order 12866 

Executive Order 12866 (as amended 

by Executive Order 13258) 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 one year). In the impact analysis, 

we are using the proposed rates, factors 

and policies presented in this proposed 

rule, including updated proposed wage 

index values, and the best available 

claims and CCR data to estimate the 

change in proposed payments for the 

2009 LTCH PPS rate year. As stated in 

section I.A. of this preamble section 

114(e)(1) of the MMSEA at the new 

section 1886(m)(2) to the Act revises the 

standard Federal rate for RY 2008 by 

providing that the base rate for RY 2008 

shall be the same as the base rate for RY 

2007 (in other words, the standard 

Federal rate for RY 2008 is the same as 

the standard Federal rate for 2007). 

Also, section 114(e)(2) of the MMSEA 

provides that the revised rate does not 

apply to discharges occurring on or after 

July 1, 2007, and before April 1, 2008. 

As noted in section IV.E. of this 

preamble, the standard Federal rate for 

RY 2007 was $38,086.04. Furthermore, 

we note that section 114(c)(3) of 

MMSEA requires a 3-year suspension of 

our implementation of the revisions to 

the SSO policy at § 412.529(c)(3)(i) that 

was finalized in the RY 2008 final rule. 

Both of these revisions to RY 2008 

LTCH PPS payments (that is, sections 

114(c)(3) and (e)(1) through (2) of 

MMSEA) affect the modeling of 

payments in this impact analysis, which 

we will discuss in greater detail in 

section XVI.B.3. of this proposed rule. 

Based on the best available data for 394 

LTCHs, we estimate that the proposed 

update to the standard Federal rate for 

RY 2009 (discussed in section IV.C. of 

the preamble of this proposed rule) and 

the proposed changes to the area wage 

adjustment (discussed in section IV.F.1. 

of the preamble of this proposed rule), 

for the 2009 LTCH PPS rate year, in 

addition to an estimated increase in 

short-stay and high cost outlier 

payments (as discussed in greater detail 

below) would result in an increase in 

estimated payments from the 2008 

LTCH PPS rate year of approximately 

$124 million (or about 2.9 percent) for 

the 394 LTCHs in our database. Based 

on the 394 LTCHs in our database, we 

estimate RY 2008 LTCH PPS payments 

to be approximately $4.32 billion and 

RY 2009 LTCH PPS payments to be 

approximately $4.44 billion. Because 

the combined distributional effects and 

estimated changes to the Medicare 

program payments would be greater 

than $100 million, this proposed rule 

would be considered a major economic 

rule, as defined in this section. We note 

the approximately $124 million for the 

projected increase in estimated 

aggregate LTCH PPS payments resulting 

from the provisions presented in this 

proposed rule does not reflect changes 

in LTCH admissions or case-mix 

intensity in estimated LTCH PPS 

payments, which would also affect 

overall payment changes. (We note that 

due to rounding, the approximation of 

$124 million is closer to the projected 

increase in estimated aggregate LTCH 

PPS payments than the difference 

between the approximately $4.44 billion 

and approximately $4.32 billion in 

estimated RY 2008 and RY 2009 LTCH 

PPS payments, respectively.) 

We note that the average combined 

effect of the proposed standard Federal 

rate and area wage adjustment changes 

on estimated aggregate payments cannot 

be computed by simply adding up the 

estimated averages in columns 6 and 7 

of Table 9 because each of those two 

columns are intended to show the 

isolated impact of the respective 

proposed change (that is, the proposed 

change to the standard Federal rate or 

the proposed change to the area wage 

adjustment) on estimated payments for 

RY 2009 as compared to RY 2008, and 

the interactive effects resulting from 

both the proposed change to the 

standard Federal rate and proposed 

change to the area wage adjustment are 

not accounted for in the modeling of 

estimated payments to produce the 

percent change in each of these 

columns. However, the interactive 

effects of all proposed changes are taken 

into account in the modeling of 

estimated payments for RY 2009 as 

compared to RY 2008 in Column 8 of 

Table 9. Notwithstanding this limitation 

in comparing the various columns in 

Table 9, the difference between the 

projected increase in payments per 

discharge from RY 2008 to RY 2009 for 

all changes of 2.9 percent (column 8) 

and the sum of the projected increase 

due to proposed change to the standard 

Federal rate (2.2 percent in column 6) 

and the proposed change due to the area 

wage adjustment (¥0.1 percent in 

column 7) of 2.1 percent (that is, 2.2 

percent + (¥0.1 percent) = 2.1 percent) 

is mostly attributable to the effect of the 

estimated increase in payments for HCO 

and SSO cases in RY 2009 as compared 

to RY 2008. That is, in calculating the 

estimated increase in payments from RY 

2008 to RY 2009 for HCO and SSO 

cases, we increased estimated costs by 

the applicable proposed market basket 

(approximately 3.5 percent). We note, 

SSO cases comprise approximately 16 

percent of estimated total LTCH PPS 

payments and HCO cases comprise 

approximately 8 percent of estimated 

total LTCH PPS payments. The vast 

majority of the payments for SSO cases 

(over 80 percent) are based on the 

estimated cost of the case. 

While the effects of the estimated 

increase in SSO and HCO payments and 

the proposed change to the standard 

Federal rate which are projected to 

increase estimated payments per 

discharge from RY 2008 to RY 2009, the 

proposed changes to the area wage 

adjustment from RY 2008 to RY 2009 

are expected to result in a small 

decrease of 0.1 percent in estimated 

aggregate LTCH PPS payments from the 

2008 LTCH PPS rate year to the 2009 

LTCH PPS rate year (see column 7 of 

Table 9). As discussed in section IV.F.1. 

of this proposed rule, we are proposing 

to update the wage index values for RY 

2009 based on the most recent available 

data. In addition, we are proposing to 

increase the labor-related share from 

75.788 percent to 75.920 percent under 

the LTCH PPS for RY 2009 based on the 

most recent available data on the 

relative importance of the labor-related 

share of operating and capital costs of 

the market basket applicable to the 

LTCH PPS (also discussed in section 

IV.F.1. of this proposed rule). 

2. Regulatory Flexibility Act (RFA) 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. Most 

hospitals and most other providers and 

suppliers are small entities, either by 

nonprofit status or by having revenues 

of $6.5 million to $31.5 million in any 

1 year. For further information, see the 

Small Business Administration’s 

regulation at 70 FR 72577, December 6, 

2005. Individuals and States are not 

included in the definition of a small 

entity. Because we lack data on 

individual hospital receipts, we cannot 

determine the number of small 

proprietary LTCHs. Therefore, we 

assume that all LTCHs are considered 

small entities for the purpose of the 

analysis that follows. Medicare FIs are 

not considered to be small entities. The 


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Secretary certifies that this proposed 

rule would not have a significant 

economic impact on a substantial 

number of small entities. 

Currently, our database of 394 LTCHs 

includes the data for 88 non-profit 

(voluntary ownership control) LTCHs 

and 265 proprietary LTCHs. Of the 

remaining 41 LTCHs, 25 LTCHs are 

Government-owned and operated and 

the ownership type of the other 16 

LTCHs is unknown (as shown in Table 

9). The impact of the proposed payment 

rate and policy changes for the 2009 

LTCH PPS rate year (including the 

proposed update to the standard Federal 

rate and the proposed changes to the 

area wage adjustment) is discussed in 

section XVI.B.4.c. of this proposed rule. 

As we discuss in detail throughout 

the preamble of this proposed rule, 

based on the most recent available 

LTCH data, we believe that the 

provisions of this proposed rule would 

result in an increase in estimated 

aggregate LTCH PPS payments and that 

the resulting LTCH PPS payment 

amounts result in appropriate Medicare 

payments. 

The impact analysis of the proposed 

payment rate and policy changes in 

Table 9 shows that estimated payments 

per discharge are expected to increase 

approximately 2.9 percent, on average, 

for all LTCHs from the 2008 LTCH PPS 

rate year as compared to the 2009 LTCH 

PPS rate year. We are proposing a 2.6 

percent increase to the standard Federal 

rate for RY 2009 (as discussed in section 

IV.E. of this proposed rule). The 

projected 2.9 percent increase in 

estimated payments per discharge from 

the 2008 LTCH PPS rate year to the 2009 

LTCH PPS rate year is attributable to the 

proposed change to the rate, the area 

wage adjustment (discussed in section 

IV.F.1. of this proposed rule) and 

estimated increases in short-stay outlier 

(SSO) and high cost outlier (HCO) 

payments (as discussed in greater detail 

below). That is, as Table 9 shows, the 

proposed change to the standard Federal 

rate is projected to result in an 

estimated average increase of 2.2 

percent in estimated payments per 

discharge from RY 2008 to RY 2009, on 

average, for all LTCHs, while the 

proposed changes to the area wage 

adjustment are projected to result in an 

estimated decrease of 0.1 percent, on 

average, for all LTCHs (columns 6 and 

7 of Table 9, respectively). A thorough 

discussion of the regulatory impact 

analysis for the proposed changes 

presented in this proposed rule can be 

found below in section XVI.B.3. of this 

proposed rule. 

3. Impact on Rural Hospitals 

For purposes of section 1102(b) of the 

Act, we define a small rural hospital as 

a hospital that is located outside of a 

Metropolitan Statistical Area and has 

fewer than 100 beds. As shown in Table 

9, we are projecting a 2.6 percent 

increase in estimated payments per 

discharge from the 2008 LTCH PPS rate 

year as compared to the 2009 LTCH PPS 

rate year for rural LTCHs as a result of 

the proposed changes presented in this 

proposed rule (that is, the proposed 

update to the standard Federal rate 

discussed in section IV.E. of the 

preamble of this proposed rule and the 

proposed changes to the area wage 

adjustment as discussed in section 

IV.F.1. of the preamble of this proposed 

rule) based on the data of the 25 rural 

LTCHs in our database of 394 LTCHs for 

which complete data were available. 

As shown in Table 9, the estimated 

increase in estimated LTCH PPS 

payments from the 2008 LTCH PPS rate 

year as compared to the 2009 LTCH PPS 

rate year for rural LTCHs is primarily 

due to the proposed update to the 

standard Federal rate (as discussed in 

greater detail in section IV.E. of the 

preamble of this proposed rule) and the 

proposed change in the area wage 

adjustment (as discussed in greater 

detail in section V.F.1. of the preamble 

of this proposed rule) in conjunction 

with the estimated increased payments 

for SSO and HCO cases (as discussed 

below in section XVI.B.3. of this 

proposed rule). We believe that the 

changes to the area wage adjustment 

presented in this proposed rule (that is, 

the proposed use of updated wage data 

and the proposed change in the laborrelated share) would result in accurate 

and appropriate LTCH PPS payments in 

RY 2009 since they are based on the 

most recent available data. Such 

updated data appropriately reflect 

national differences in area wage levels 

and identifies the portion of the 

proposed standard Federal rate that 

should be adjusted to account for such 

differences in area wages, thereby 

resulting in accurate and appropriate 

LTCH PPS payments. 

4. Unfunded Mandates 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any one year of 

$100 million in 1995 dollars, updated 

annually for inflation. That threshold 

level is currently approximately $120 

million. This proposed rule would not 

mandate any requirements for State, 

local, or tribal governments, nor would 

it result in expenditures by the private 

sector of $120 million or more in any 1 

year. 

5. Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it publishes 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 examined this proposed rule 

under the criteria set forth in Executive 

Order 13132 and have determined that 

this proposed rule would not have any 

significant impact on the rights, roles, 

and responsibilities of State, local, or 

tribal governments or preempt State 

law, based on the 25 State and local 

LTCHs (that is, Government ownership 

type) in our database of 394 LTCHs for 

which data were available. 

6. Alternatives Considered 

In the preamble of this proposed rule, 

we are setting forth the proposed annual 

update to the payment rates for the 

LTCH PPS for RY 2009. In this 

preamble, we specify the statutory 

authority for the provisions that are 

presented, identify those proposed 

policies when discretion has been 

exercised, and present rationale for our 

decisions as well as alternatives that 

were considered, and solicit comments 

on suggested alternatives from 

commenters (where relevant). 

B. Anticipated Effects of Proposed 

Payment Rate Changes 

We discuss the impact of the 

proposed changes to the payment rates, 

factors, and other payment rate policies 

presented in the preamble of this 

proposed rule in terms of their 

estimated fiscal impact on the Medicare 

budget and on LTCHs. 

1. Budgetary Impact 

Section 123(a)(1) of the BBRA 

requires that the PPS developed for 

LTCHs ‘‘maintain budget neutrality.’’

We believe that the statute’s mandate for 

budget neutrality (BN) applies only to 

the first year of the implementation of 

the LTCH PPS (that is, FY 2003). 

Therefore, in calculating the FY 2003 

standard Federal rate under 

§ 412.523(d)(2), we set total estimated 

payments for FY 2003 under the LTCH 

PPS so that estimated aggregate 

payments under the LTCH PPS are 

estimated to equal the amount that 

would have been paid if the LTCH PPS 

had not been implemented. 


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2. Impact on Providers 

The basic methodology for 

determining a per discharge LTCH PPS 

payment is set forth in § 412.515 

through § 412.536. In addition to the 

basic MS–LTC–DRG payment (standard 

Federal rate multiplied by the MS–LTC–

DRG relative weight), we make 

adjustments for differences in area wage 

levels, COLA for Alaska and Hawaii, 

and SSOs. Furthermore, LTCHs may 

also receive HCO payments for those 

cases that qualify based on the threshold 

established each rate year. 

To understand the impact of the 

proposed changes to the LTCH PPS 

payments discussed in section IV. of 

this proposed rule on different 

categories of LTCHs for the 2009 LTCH 

PPS rate year, it is necessary to estimate 

payments per discharge for the 2008 

LTCH PPS rate year using the rates, 

factors and policies established in the 

RY 2008 LTCH PPS final rule (72 FR 

26870 through 27029), the RY 2008 

LTCH PPS correction notice (72 FR 

36613 through 36616) and the 

applicable sections of MMSEA (as 

described in greater detail below in 

section XVI.B.3. of this proposed rule). 

It is also necessary to estimate the 

proposed payments per discharge that 

would be made under the proposed 

LTCH PPS rates, factors and policies for 

the 2009 LTCH PPS rate year (as 

discussed in the preamble of this 

proposed rule). We also evaluated the 

change in estimated 2008 LTCH PPS 

rate year payments to estimated 

proposed 2009 LTCH PPS rate year 

payments (on a per discharge basis) for 

each category of LTCHs. 

Hospital groups were based on 

characteristics provided in the OSCAR 

data, FY 2003 through FY 2005 cost 

report data in HCRIS, and PSF data. 

Hospitals with incomplete 

characteristics were grouped into the 

‘‘unknown’’ category. Hospital groups 

include the following: 

• Location: Large Urban/Other Urban/ 

Rural. 

• Participation date. 

• Ownership control. 

• Census region. 

• Bed size. 

To estimate the impacts of the 

proposed payment rates and policy 

changes among the various categories of 

existing providers, we used LTCH cases 

from the FY 2006 MedPAR file to 

estimate payments for RY 2008 and to 

estimate proposed payments for RY 

2009 for 394 LTCHs. While currently 

there are just under 400 LTCHs, the 

most recent growth is predominantly in 

for-profit LTCHs that provide 

respiratory and ventilator-dependent 

patient care. We believe that the 

discharges from the FY 2006 MedPAR 

data for the 394 LTCHs in our database, 

which includes 265 proprietary LTCHs, 

provide sufficient representation in the 

MS–LTC–DRGs containing discharges 

for patients who received LTCH care for 

the most commonly treated LTCH 

patients’ diagnoses. 

3. Calculation of Prospective Payments 

For purposes of this impact analysis, 

to estimate per discharge payments 

under the LTCH PPS, we simulated 

payments on a case-by-case basis using 

LTCH claims for the FY 2006 MedPAR 

files. In modeling estimated LTCH PPS 

payments for both RY 2008 and RY 2009 

in this impact analysis, we applied the 

RY 2008 standard Federal rate (that is, 

$38,086.04) provided for by sections 

114(e)(1) and (2) of Public Law 110–173, 

and the SSO policy provided for by 

section 114(c)(3) of the MMSEA7 (that 

is, excluding the revisions to the SSO 

policy at § 412.529(c)(3)(i) of the 

regulations). Although we realize that 

the effective date for the change in the 

SSO policy during RY 2008 in the 

MMSEA is December 29, 2007, and the 

revised standard Federal rate for RY 

2008 is not applicable for discharges 

occurring on or after July 1, 2007 and 

before April 1, 2008, for purposes of this 

impact analysis, in estimating RY 2008 

LTCH PPS payments we applied both 

the revised SSO policy and revised 

standard Federal rate for all of RY 2008. 

Similarly, in modeling LTCH PPS 

payments to project the average change 

in estimated payments per discharge 

from RY 2008 to RY 2009 due to the 

proposed change in the standard 

Federal rate (column 6 of Table 9), 

rather than using the RY 2008 standard 

Federal rate finalized in the RY 2008 

final rule, we compared the RY 2008 

‘‘base rate’’ (which we interpret to mean 

the standard Federal rate) mandated by 

section 114(e)(1) of the Medicare, 

Medicaid and SCHIP Extension Act of 

2007 (that is, $38,086.04), to the 

proposed RY 2009 standard Federal rate 

of $39,076.28 (that is, $38,086.04 

updated by 2.6 percent, as discussed in 

section IV.E. of this proposed rule) in 

order to appropriately estimate the 

effect of updating the rate by 2.6 

percent. We took this approach for the 

impact analysis in this proposed rule 

since for the last 3 months of the 2008 

LTCH PPS rate year (that is, April 2008 

through June 2008), which is the 3- 

month period immediately preceding 

the start of the 2009 LTCH PPS rate 

year, LTCHs will be paid in accordance 

with the RY 2008 standard Federal rate 

and SSO policy established by section 

114 of the Medicare, Medicaid, and 

SCHIP Extension Act of 2007. Therefore, 

for purposes of the impact analysis in 

this proposed rule, we modeled the 

projected changes in estimated 

payments from RY 2008 to RY 2009 

based on computing estimated RY 2008 

LTCH PPS payments using a standard 

Federal rate of $38,086.04 and the 

corresponding change to the SSO 

policy, which excludes the revisions to 

the SSO policy at § 412.529(c)(3)(i), as if 

those policies were applicable to all 

discharges occurring during RY 2008. 

(Additional information on section 114 

of the Medicare, Medicaid and SCHIP 

Extension Act of 2007 can be found at 

section I.A. of this proposed rule.) 

Furthermore, in modeling estimated 

LTCH PPS payments for both RY 2008 

and RY 2009 in this impact analysis, we 

applied the RY 2008 and proposed RY 

2009 adjustments for area wage 

differences (as described in section 

IV.F.1. of the preamble of this proposed 

rule), and the COLA for Alaska and 

Hawaii (as described in section IV.F.2. 

of the preamble of this proposed rule). 

Specifically, we adjusted for area wage 

differences for estimated 2008 LTCH 

PPS rate year payments using the 

current LTCH PPS labor-related share of 

75.788 percent (72 FR 26892), the wage 

index values established in the Tables 1 

and 2 of the Addendum of the RY 2008 

final rule (72 FR 26996 through 27019) 

and the COLA factors established in 

Table 3 of the preamble of the RY 2008 

final rule (72 FR 26894). Similarly, we 

adjusted for area wage differences for 

estimated 2009 LTCH PPS rate year 

payments using the proposed LTCH PPS 

labor-related share of 75.920 percent 

(see section IV.D.1.c. of this proposed 

rule), the proposed wage index values 

presented in the Tables 1 and 2 of the 

Addendum of this proposed rule and 

the proposed COLA factors established 

in Table 3 of the preamble of this 

proposed rule. 

As discussed above, we also 

accounted for the payment policy for 

SSOs. We also estimated additional 

payments that would be made for HCOs 

(as described in section IV.F.3. of this 

proposed rule). As noted in section 

IV.F.4. of this proposed rule, we are not 

proposing to make adjustments for rural 

location, geographic reclassification, 

indirect medical education costs, or a 

DSH payment for the treatment of lowincome patients because our most recent 

data analysis that reflects LTCH 

behavior subsequent to the 

implementation of the LTCH PPS 

indicates that proposing payment 

adjustments for geographic 

reclassification, rural location, DSH, or 

indirect medical education costs would 

not improve the accuracy of payments 


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made under the LTCH PPS to LTCHs. 

(See Section IV.F.4 ). 

These impacts reflect the estimated 

‘‘losses’’ or ‘‘gains’’ among the various 

classifications of LTCHs for the 2008 

LTCH PPS rate year compared to the 

2009 LTCH PPS rate year based on the 

proposed payment rates and policy 

changes presented in this proposed rule. 

Table 9 illustrates the estimated 

aggregate impact of the LTCH PPS 

among various classifications of LTCHs. 

• The first column, LTCH 

Classification, identifies the type of 

LTCH. 

• The second column lists the 

number of LTCHs of each classification 

type. 

• The third column identifies the 

number of LTCH cases. 

• The fourth column shows the 

estimated payment per discharge for the 

2008 LTCH PPS rate year (as described 

above). 

• The fifth column shows the 

estimated proposed payment per 

discharge for the 2009 LTCH PPS rate 

year (as described above). 

• The sixth column shows the 

percentage change in estimated 

payments per discharge from the 2008 

LTCH PPS rate year to the 2009 LTCH 

PPS rate year for proposed changes to 

the standard Federal rate (as discussed 

in section IV.E. of the preamble of this 

proposed rule). 

• The seventh column shows the 

percentage change in estimated 

payments per discharge from the 2008 

LTCH PPS rate year to the 2009 LTCH 

PPS rate year for proposed changes to 

the area wage adjustment at § 412.525(c) 

(as discussed in section IV.D.1. of the 

preamble of this proposed rule). 

• The eighth column shows the 

percentage change in estimated 

payments per discharge from the 2008 

LTCH PPS rate year (column 4) to the 

2009 LTCH PPS rate year (column 5) for 

all proposed changes. 

TABLE 9.—PROJECTED IMPACT OF PROPOSED PAYMENT RATE AND PAYMENT RATE POLICY CHANGES TO LTCH PPS 

PAYMENTS FOR RY 2009 

(Estimated 2008 LTCH PPS Rate Year Payments Compared to Estimated Proposed 2009 LTCH PPS Rate Year Payments *) 

LTCH Classification Number of 

LTCHs 

Number of 

LTCH PPS 

cases 

Average estimated RY 

2008 LTCH 

PPS payment per 

case 1

Average estimated proposed RY 

2009 LTCH 

PPS payment per 

case 2

Percent 

change in 

estimated 

payments 

per discharge from 

RY 2008 to 

RY 2009 for 

proposed 

changes to 

the Federal 

rate 3

Percent 

change in 

estimated 

payments 

per discharge from 

RY 2008 to 

RY 2009 for 

proposed 

changes to 

the area 

wage adjustment 4

Percent 

change in 

estimated 

payments 

per discharge from 

RY 2008 to 

RY 2009 for 

all 

changes 5

ALL PROVIDERS .................................... 394 134,160 $32,166 $33,092 2.2 ¥0.1 2.9 

BY LOCATION: 

RURAL .............................................. 25 6,076 26,951 27,643 2.4 ¥0.5 2.6 

URBAN ............................................. 369 128,084 32,414 33,351 2.2 ¥0.1 2.9 

LARGE ....................................... 193 78,292 33,732 34,736 2.2 ¥0.1 3.0 

OTHER ...................................... 176 49,792 30,341 31,172 2.3 ¥0.3 2.7 

BY PARTICIPATION DATE: 

BEFORE OCT. 1983 ........................ 28 9,779 27,864 28,849 2.2 0.4 3.5 

OCT. 1983—SEPT. 1993 ................. 46 21,101 33,189 34,175 2.2 ¥0.1 3.0 

OCT. 1993—SEPT. 2002 ................. 204 74,145 32,207 33,082 2.3 ¥0.3 2.7 

AFTER OCTOBER 2002 .................. 112 28,598 32,793 33,783 2.3 0.0 3.0 

UNKNOWN ....................................... 4 537 31,300 32,442 2.3 0.7 3.6 

BY OWNERSHIP TYPE: 

VOLUNTARY .................................... 88 27,948 31,061 32,017 2.2 0.0 3.1 

PROPRIETARY ................................ 265 100,047 32,415 33,314 2.2 ¥0.2 2.8 

GOVERNMENT ................................ 25 3,692 33,984 35,155 2.1 0.1 3.4 

UNKNOWN ....................................... 16 2,473 31,864 33,177 2.3 1.1 4.1 

BY CENSUS REGION: 

NEW ENGLAND ............................... 20 9,776 27,177 28,213 2.2 0.7 3.8 

MIDDLE ATLANTIC .......................... 36 10,756 31,851 32,629 2.2 ¥0.6 2.4 

SOUTH ATLANTIC ........................... 50 13,544 35,730 36,822 2.2 0.0 3.1 

EAST NORTH CENTRAL ................. 70 19,552 35,316 36,289 2.2 ¥0.2 2.8 

EAST SOUTH CENTRAL ................. 30 8,667 32,736 33,565 2.2 ¥0.5 2.5 

WEST NORTH CENTRAL ................ 18 5,350 34,325 35,378 2.2 0.0 3.1 

WEST SOUTH CENTRAL ................ 130 51,441 28,779 29,538 2.3 ¥0.3 2.6 

MOUNTAIN ....................................... 22 5,804 35,089 36,143 2.2 0.0 3.0 

PACIFIC ............................................ 18 9,270 41,129 42,633 2.1 0.6 3.7 

BY BED SIZE: 

BEDS: 0–24 ...................................... 33 4,797 30,110 30,888 2.4 ¥0.5 2.6 

BEDS: 25–49 .................................... 195 45,212 32,404 33,305 2.2 ¥0.2 2.8 

BEDS: 50–74 .................................... 72 26,064 32,145 33,040 2.2 ¥0.2 2.8 

BEDS: 75–124 .................................. 52 23,503 33,212 34,246 2.2 0.1 3.1 

BEDS: 125–199 ................................ 21 17,567 32,088 33,013 2.2 ¥0.2 2.9 

BEDS: 200 + ..................................... 21 17,017 30,781 31,717 2.2 0.0 3.0 

1Estimated 2009 LTCH PPS rate year payments based on the proposed payment rates and policy changes presented in the preamble of this 

proposed rule. 


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2Estimated 2008 LTCH PPS rate year payments based on the rates, factors and policies established in the RY 2008 LTCH PPS final rule (72 

FR 26870 through 27029), the RY 2008 LTCH PPS correction notice (72 FR 36613 through 36616) and the applicable sections of the Medicare, 

Medicaid, and SCHIP Extension Act of 2007. As described in section XVI.B.3. of this proposed rule, although we are aware that there are different effective dates for the various provisions of MMSEA that affect RY 2008 LTCH PPS payments, for the purpose of this impact analysis, we 

modeled estimated RY 2008 payments as if those provisions were applicable to discharges for the entire 2008 LTCH PPS rate year. Specifically, 

in estimating RY 2008 LTCH PPS payments, we applied the RY 2008 Federal rate provided for by sections 114(e)(1) of the MMSEA (that is, 

$38,086.04), and the SSO policy provided for by section 114(c)(3) of the MMSA (that is, excluding the revisions to the SSO policy at 

§ 412.529(c)(3)(i)). 

3Percent change in estimated payments per discharge from the 2008 LTCH PPS rate year to the 2009 LTCH PPS rate year for the proposed 

changes to the Federal rate, as discussed in section IV.E. of the preamble of this proposed rule. (Note, because about 34 percent of all LTCH 

cases are projected to receive a payment adjustment under the SSO policy that is based either on the estimated cost of the case or the ‘‘blend 

option’’ (which is based in part on the ‘‘IPPS comparable amount’’) rather than the proposed Federal rate in RY 2009, the percent change in estimated payments per discharge due to the proposed changes to the Federal rate for most of the categories of LTCHs, 2.2 percent, is somewhat 

less than the proposed update to the Federal rate of 2.6 percent.) 4Percent change in estimated payments per discharge from the 2008 LTCH PPS rate year to the 2009 LTCH PPS rate year for proposed

changes to the area wage adjustment at § 412.525(c) (as discussed in section V.F.1. of the preamble of this proposed rule). 5Percent change in estimated payments per discharge from the 2008 LTCH PPS rate year (as described in section XVI.B.3. of this proposed 

rule) to the 2009 LTCH PPS rate year for all of the proposed changes presented in the preamble of this proposed rule. Note, this column, which 

shows the percent change in estimated payments per discharge for all proposed changes, may not equal the sum of the percent changes in estimated payments per discharge for proposed changes to the Federal rate (column 6) and the proposed changes to the area wage adjustment 

(column 7) due to the effect of estimated changes in both payments to SSO cases that are paid based on estimated costs and aggregate HCO 

payments (as discussed this proposed rule), as well as other interactive effects that cannot be isolated. 

4. Results 

Based on the most recent available 

data (as described previously for 394 

LTCHs), we have prepared the following 

summary of the impact (as shown in 

Table 9) of the proposed LTCH PPS 

payment rate and policy changes 

presented in this proposed rule. The 

impact analysis in Table 9 shows that 

estimated payments per discharge are 

expected to increase approximately 2.9 

percent, on average, for all LTCHs from 

the 2008 LTCH PPS rate year as 

compared to the 2009 LTCH PPS rate 

year as a result of the proposed payment 

rate and policy changes presented in 

this proposed rule. We note that 

although we are proposing a 2.6 percent 

increase to the standard Federal rate for 

RY 2009, based on the latest proposed 

market basket estimate (3.5 percent) and 

offset by the proposed coding and 

documentation adjustment (0.9 percent), 

for most categories of LTCHs, the impact 

analysis shown in Table 9 (column 7) 

only shows a 2.2 percent increase in 

estimated payments per discharge from 

RY 2008 to RY 2009 as a result of the 

proposed change to the standard Federal 

rate. The reason that this column shows 

an estimated 2.2 percent increase rather 

than an estimated 2.6 percent increase 

(based on the proposed 2.6 percent 

update to the standard Federal rate) is 

because about 34 percent of all LTCH 

cases are projected to receive an SSO 

payment that would be based either on 

the estimated cost of the case or the 

‘‘blend option’’ (which is based in part 

on the ‘‘IPPS comparable amount’’) 

rather than a LTCH PPS payment based 

on the proposed standard Federal rate. 

Therefore, because over 30 percent of all 

LTCH PPS cases would receive a 

payment that is not based fully on the 

proposed standard Federal rate, the 

percent change in estimated payments 

per discharge due to the proposed 

changes to the standard Federal rate for 

most categories of LTCHs shown in 

Table 9 is projected to be 2.2 percent, 

which is somewhat less than the 2.6 

percent proposed update to the standard 

Federal rate. In addition to the proposed 

2.6 percent increase to the standard 

Federal rate for RY 2009, the projected 

percent increase in estimated payments 

per discharge from the 2008 LTCH PPS 

rate year to the 2009 LTCH PPS rate year 

of 2.9 percent shown in Table 9 (see 

column 8) reflects the effect of increased 

HCO and SSO payments as we 

discussed previously. That is, in 

calculating the estimated increase in 

payments for HCO and SSO from RY 

2008 to RY 2009, we increased costs by 

applying the proposed market basket 

(approximately 3.5 percent). As noted 

above, SSOs comprise approximately 16 

percent of total LTCH PPS payments 

and high cost outliers comprise 

approximately 8 percent of estimated 

total LTCH PPS payments. Furthermore, 

as discussed previously in this 

regulatory impact analysis, the average 

increase in estimated payments per 

discharge from the 2008 LTCH PPS rate 

year to the 2009 LTCH PPS rate year, on 

average, for all LTCHs of approximately 

2.9 (as shown in Table 9) was 

determined by comparing estimated RY 

2009 LTCH PPS payments (using the 

proposed rates and policies discussed in 

the preamble of this rule) to estimated 

RY 2008 LTCH PPS payments (as 

described above in section XVI.B.3. of 

this regulatory impact analysis). 

a. Location 

Based on the most recent available 

data, the majority of LTCHs are in urban 

areas. Approximately 6 percent of the 

LTCHs are identified as being located in 

a rural area, and approximately 5 

percent of all LTCH cases are treated in 

these rural hospitals. The impact 

analysis presented in Table 9 shows that 

the average percent increase in 

estimated payments per discharge for 

the 2008 LTCH PPS rate year compared 

to the 2009 LTCH PPS rate year for all 

hospitals is 2.9 percent for all proposed 

changes. For rural LTCHs, the percent 

change for all proposed changes is 

estimated to be 2.6 percent, while for 

urban LTCHs, we estimate this increase 

to be 2.9 percent. Large urban LTCHs 

are projected to experience a 3.0 percent 

increase in estimated payments per 

discharge from the 2008 LTCH PPS rate 

year compared to the 2009 LTCH PPS 

rate year, while other urban LTCHs are 

projected to experience a 2.7 percent 

increase in estimated payments per 

discharge from the 2008 LTCH PPS rate 

year compared to the 2009 LTCH PPS 

rate year, as shown in Table 9. Rural 

LTCHs are projected to experience a 

somewhat lower than average increase 

in estimated payments per discharge for 

all proposed changes primarily due to 

the proposed changes to the area wage 

adjustment. That is, 68 percent of the 

LTCHs in these areas are expected to 

experience a decrease in their wage 

index value from RY 2008 to RY 2009. 

In addition, because all LTCHs in rural 

areas have a wage index value that is 

less than 1.0, the proposed increase to 

the labor-related share (from 75.788 

percent to 75.920 percent) would also 

contribute to the estimated lower than 

average increase in estimated payments 

from RY 2008 to RY 2009 shown in 

column 8 of Table 9. 

b. Participation Date 

LTCHs are grouped by participation 

date into four categories: (1) Before 

October 1983; (2) between October 1983 

and September 1993; (3) between 

October 1993 and September 2002; and 

(4) after October 2002. Based on the 

most recent available data, the majority 

(approximately 52 percent) of the LTCH 

cases are in hospitals that began 


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participating between October 1993 and 

September 2002, and are projected to 

experience a slightly lower than average 

increase of 2.7 percent in estimated 

payments per discharge from the 2008 

LTCH PPS rate year compared to the 

2009 LTCH PPS rate year, as shown in 

Table 9, mostly because approximately 

66 percent of hospitals in this category 

are projected to experience a decrease in 

their wage index value from RY 2008 to 

RY 2009. In addition, because the 

majority of hospitals (80 percent) in this 

category have a wage index of less than 

1.0, the proposed increase to the laborrelated share (from 75.788 percent to 

75.920 percent) would also contribute to 

the slightly lower than average increase 

in payments from RY 2008 to RY 2009 

shown in column 8 of Table 9. 

LTCHs that began participating in 

Medicare between October 1983 and 

September 1993, and those LTCHs that 

began participating in Medicare after 

October 2002 are projected to 

experience close to the average percent 

increase (3.0 percent) in estimated 

payments per discharge from the 2008 

LTCH PPS rate year compared to the 

2009 LTCH PPS rate year, as shown in 

Table 9. Approximately 12 percent of 

LTCHs began participating in Medicare 

between October 1983 and September 

1993 while approximately 28 percent of 

LTCHs began participating in Medicare 

after October 2002 (that is, the 

beginning of the LTCH PPS, which was 

implemented for cost reporting periods 

beginning on or after October 1, 2002). 

LTCHs that began participating before 

October 1983 are projected to 

experience a 3.5 percent increase in 

estimated payments per discharge from 

the 2008 LTCH PPS rate year compared 

to the 2009 LTCH PPS rate year (see 

Table 9). We are projecting that LTCHs 

that began participating in Medicare 

before October 1983 would experience a 

larger than average increase in estimated 

payments for RY 2009 as compared to 

RY 2008 primarily due to the proposed 

changes to the area wage adjustment. 

This is because approximately 68 

percent of the LTCHs that began 

participating in Medicare before October 

1983 are located in areas where the 

proposed RY 2009 wage index value 

would be greater than the RY 2008 wage 

index value. In addition, because a 

significant number (75 percent) of 

hospitals in this category have a wage 

index of greater than 1.0, the proposed 

increase to the labor-related share (from 

75.788 percent to 75.920 percent) would 

also contribute to the larger than average 

increase in estimated payments from RY 

2008 to RY 2009. 

c. Ownership Control 

Other than LTCHs whose ownership 

control type is unknown, LTCHs are 

grouped into three categories based on 

ownership control type: Voluntary; 

proprietary; and government. Based on 

the most recent available data, 

approximately 6 percent of LTCHs are 

identified as government-owned and 

operated (see Table 9). We expect that 

for these government-owned and 

operated LTCHs, estimated 2009 LTCH 

PPS rate year payments per discharge 

would increase 3.4 percent in 

comparison to the 2008 LTCH PPS rate 

year, as shown in Table 9. We are 

projecting that government-run LTCHs 

would experience a somewhat higher 

than average increase in estimated 

payments in RY 2009 as compared to 

RY 2008 primarily due to the effect of 

the proposed changes to the area wage 

adjustment. Specifically, LTCHs in this 

category are projected to experience a 

higher than average increase in their 

estimated payments from RY 2008 to RY 

2009 due to the proposed changes to the 

area wage adjustment primarily because 

the majority (60 percent) of hospitals in 

this category would experience an 

increase in their wage index value from 

RY 2008 to RY 2009. 

We project that estimated 2009 LTCH 

PPS rate year payments per discharge 

for voluntary LTCHs, which account for 

approximately 22 percent of LTCHs, 

would increase near the average (3.1 

percent) in comparison to estimated 

2008 LTCH PPS rate year payments (see 

Table 9). 

The majority (approximately 67 

percent) of LTCHs are identified as 

proprietary. We project that 2009 LTCH 

PPS rate year estimated payments per 

discharge for these proprietary LTCHs 

would increase 2.8 percent (nearly 

average) in comparison to the 2008 

LTCH PPS rate year (see Table 9). 

d. Census Region 

Estimated payments per discharge for 

the 2009 LTCH PPS rate year are 

projected to increase for LTCHs located 

in all regions in comparison to the 2008 

LTCH PPS rate year. The percent 

increase in estimated payments per 

discharge from the 2008 LTCH PPS rate 

year to the 2009 LTCH PPS rate year for 

all regions is largely attributable to the 

proposed increase in the standard 

Federal rate. 

Of the 9 census regions, we project 

that the increase in proposed 2009 

LTCH PPS rate year estimated payments 

per discharge in comparison to the 2008 

LTCH PPS rate year would have the 

largest impact on LTCHs in the New 

England and Pacific regions (3.8 percent 

and 3.7 percent, respectively; see Table 

9). LTCHs located in both the New 

England and Pacific regions are 

expected to experience a larger than 

average increase in estimated payments 

due to the proposed changes in the area 

wage adjustment (0.7 percent for the 

New England region, and 0.6 percent for 

the Pacific region, as shown in Table 9). 

This is because approximately 85 

percent of LTCHs located in the New 

England region and all of the LTCHs in 

the Pacific region are projected to 

experience an increase in their wage 

index values for proposed RY 2009 as 

compared to RY 2008. 

We project that in comparison to the 

2008 LTCH PPS rate year, the proposed 

2009 LTCH PPS rate year estimated 

payments per discharge for LTCHs in 

the East North Central region would 

increase by approximately 2.8 percent 

(nearly average). For LTCHs located in 

the South Atlantic and West North 

Central regions, we estimate that the 

slightly higher than average projected 

increase (3.1 percent for each region) in 

estimated payments per discharge for 

the 2009 LTCH PPS rate year compared 

to the 2008 LTCH PPS rate year is 

largely a result of the proposed changes 

to the area wage adjustment. That is, we 

estimate that approximately 58 percent 

of hospitals in the South Atlantic region 

and approximately 55 percent of 

hospitals in the West North Central 

region would experience an increase in 

their wage index values from RY 2008 

to RY 2009. For LTCHs located in the 

Middle Atlantic, East South Central and 

West South Central regions, we estimate 

that the somewhat lower than average 

projected increase (2.4 percent, 2.5 

percent, and 2.6 percent, respectively) 

in estimated payments per discharge for 

the 2009 LTCH PPS rate year compared 

to the 2008 LTCH PPS rate year is 

largely a result of the proposed changes 

to the area wage adjustment. 

Specifically, nearly all LTCHs in the 

Middle Atlantic region (approximately 

89 percent) and the majority of the 

hospitals in the East South Central 

region (approximately 67 percent) and 

West South Central region 

(approximately 75 percent) would 

experience a decrease in their wage 

index value from RY 2008 to RY 2009. 

Furthermore, because a significant 

number of hospitals in these categories 

have a wage index of less than 1.0, the 

proposed increase to the labor-related 

share (from 75.788 percent to 75.920 

percent) would also contribute to the 

lower than average estimated increase in 

payments from RY 2008 to RY 2009. 


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e. Bed Size 

LTCHs were grouped into seven 

categories based on bed size: 0–24 beds; 

25–49 beds; 50–74 beds; 75–124 beds; 

125–199 beds; greater than 200 beds; 

and unknown bed size. 

We are projecting an increase in 

estimated 2009 LTCH PPS rate year 

payments per discharge in comparison 

to the 2008 LTCH PPS rate year for all 

bed size categories. Most LTCHs are in 

bed size categories where estimated 

2009 LTCH PPS rate year payments per 

discharge are projected to increase at or 

near the average increase of 2.9 percent 

for all LTCHs, in comparison to the 

2008 LTCH PPS rate year (that is, all 

LTCH bed size categories except the 

category of LTCHs with 0–24 beds). 

Specifically, estimated payments per 

discharge for the 2009 LTCH PPS rate 

year are projected to increase for LTCHs 

with 25–49 and 50–74 beds at 2.8 

percent, for LTCHs with 75–124 beds at 

3.1 percent, for LTCHs with 125–199 

beds at 2.9 percent, and for LTCHs with 

more than 200 beds, at 3.0 percent. 

Estimated payments per discharge for 

the 2009 LTCH PPS rate year for LTCHs 

with 0–24 beds are projected to have a 

somewhat lower than average increase 

in comparison to all hospitals (2.6 

percent; see Table 9). This lower than 

average increase in estimated payments 

per discharge for LTCHs with 0–24 beds 

is largely due to the proposed changes 

to the area wage adjustment. 

Specifically, LTCHs in this category are 

expected to experience a larger than 

average decrease in their payments from 

RY 2008 to RY 2009 due to the proposed 

changes to the area wage adjustment 

primarily because approximately 73 

percent of the hospitals in this category 

are projected to experience a decrease in 

their wage index value from RY 2008 to 

RY 2009. In addition, because the 

majority (approximately 91 percent) of 

hospitals in this category have a wage 

index of less than 1.0, the proposed 

increase to the labor-related share (from 

75.788 percent to 75.920 percent) would 

also contribute to the smaller than 

average increase in estimated payments 

from RY 2008 to RY 2009 shown in 

Table 9. 

5. Effect on the Medicare Program 

Based on actuarial projections, an 

estimate of Medicare spending (total 

estimated Medicare program payments) 

for LTCH services over the next 5 years 

based on current LTCH PPS policy (as 

established in previous LTCH PPS final 

rules) is shown in Table 4 in section 

IV.D. of the preamble of this proposed 

rule. As noted previously, we project 

that the provisions of this proposed rule 

would result in an increase in estimated 

aggregate LTCH PPS payments in RY 

2009 of approximately 124 million (or 

about 2.9 percent) for the 394 LTCHs in 

our database. 

Consistent with the statutory 

requirement for BN, as we discussed in 

the August 30, 2002 final rule that 

implemented the LTCH PPS, in 

developing the LTCH PPS, we intended 

estimated aggregate payments under the 

LTCH PPS in FY 2003 be projected to 

equal the estimated aggregate payments 

that would have been made if the LTCH 

PPS were not implemented. Our 

methodology for estimating payments 

for purposes of the BN calculations for 

determining the FY 2003 standard 

Federal rate used the best available data 

and necessarily reflects assumptions. As 

discussed in section IV.D. of this 

proposed rule, section 114(c)(4) of the 

Medicare, Medicaid and SCHIP 

Extension Act of 2007 provides that the 

‘‘Secretary shall not, for the 3-year 

period beginning on the date of the 

enactment of this Act, make the onetime prospective adjustment to longterm care hospital prospective payment 

rates provided for in section 

412.523(d)(3) of title 42, Code of Federal 

Regulations, or any similar provision.’’

That provision delays the effective date 

of any one-time budget neutrality 

adjustment until no earlier than 

December 29, 2010. However, prior to 

the enactment of the MMSEA of 2007, 

we had developed a methodology for 

evaluating the appropriateness of 

proposing a one-time budget neutrality 

adjustment under existing 

§ 412.523(d)(3). In order to inform the 

public of our thinking, and to stimulate 

comments for our consideration during 

the three-year delay in implementing 

any adjustment under the recent 

legislation, we have presented our 

analysis and its results in section IV.D. 

of the preamble of this proposed rule. 

6. Effect on Medicare Beneficiaries 

Under the LTCH PPS, hospitals 

receive payment based on the average 

resources consumed by patients for each 

diagnosis. We do not expect any 

changes in the quality of care or access 

to services for Medicare beneficiaries 

under the LTCH PPS, but we expect that 

paying prospectively for LTCH services 

would enhance the efficiency of the 

Medicare program. 

D. Accounting Statement 

As discussed in section XVI.A.1., the 

impact analysis of this proposed rule 

results in an increase in estimated 

aggregate payments of approximately 

$124 million (or about 2.9 percent) for 

the 394 LTCHs in our database. 

Therefore, as required by OMB Circular 

A–4 (available at http:// 

www.whitehouse.gov/omb/circulars/ 

a004/a-4.pdf), in Table 10, we have 

prepared an accounting statement 

showing the classification of the 

expenditures associated with the 

provisions of this proposed rule. Table 

10 provides our best estimate of the 

proposed increase in Medicare 

payments under the LTCH PPS as a 

result of the provisions presented in this 

proposed rule based on the data for the 

394 LTCHs in our database. All 

expenditures are classified as transfers 

to Medicare providers (that is, LTCHs). 

TABLE 10.—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES, FROM THE 2008 LTCH PPS RATE

YEAR TO THE 2009 LTCH PPS RATE YEAR

[In millions] 

Category Transfers 

Annualized Monetized Transfers .............................................................. Positive transfer—Estimated increase in expenditures: $124 million. 

From Whom To Whom? ........................................................................... Federal Government To LTCH Medicare Providers. 

In accordance with the provisions of 

Executive Order 12866, this proposed 

rule was reviewed by the Office of 

Management and Budget. 

List of Subjects in 42 CFR Part 412 

Administrative practice and 

procedure, Health facilities, Medicare, 

Puerto Rico, Reporting and 

recordkeeping requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services would amend 42 CFR 

chapter IV as set forth below: 


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5384 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

PART 412—PROSPECTIVE PAYMENT 

SYSTEMS FOR INPATIENT HOSPITAL 

SERVICES 

1. The authority citation for part 412 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh) and section 124 of Pub. L. 106–113 

(113 Stat. 1501A–332). 

Subpart O—Prospective Payment 

System for Long Term Care Hospitals 

2. Section 412.503 is amended by—

A. Revising the definition of ‘‘Longterm care hospital prospective payment 

system rate year’’. 

B. Adding new definitions of ‘‘rural’’

and ‘‘urban’’ in alphabetical order. 

The revision and additions read as 

follows: 

§ 412.503 Definitions. 

* * * * * 

Long-term care hospital prospective 

payment system rate year means—

(1) From July 1, 2003 and ending on 

or before June 30, 2008, the 12-month 

period of July 1 through June 30. 

(2) From July 1, 2008 and ending on 

September 30, 2009, the 15-month 

period of July 1, 2008 through 

September 30, 2009. 

(3) Beginning on or after October 1, 

2009, the 12-month period of October 1 

through September 30. 

* * * * * 

Rural area means—(1) For cost 

reporting periods beginning on or after 

October 1, 2002, with respect to 

discharges occurring during the period 

covered by such cost reports but before 

July 1, 2005, an area defined in 

§ 412.62(f)(1)(iii); 

(2) For discharges occurring on or 

after July 1, 2005, and before July 1, 

2008, an area as defined in 

§ 412.64(b)(1)(ii)(C); and 

(3) For discharges occurring on or 

after July 1, 2008, any area outside an 

urban area. 

Urban area means—(1) For cost 

reporting periods beginning on or after 

October 1, 2002, with respect to 

discharges occurring during the period 

covered by such cost reports but before 

July 1, 2005, an area defined in 

§ 412.62(f)(1)(ii); 

(2) For discharges occurring on or 

after July 1, 2005, and before July 1, 

2008, an urban area means an area as 

defined in § 412.64(b)(1)(ii)(A) and (B); 

and 

(3) For discharges occurring on or 

after July 1, 2008, a Metropolitan 

Statistical Area, as defined by the 

Executive Office of Management and 

Budget. 

3. Section 412.523 is amended by—

A. Adding new paragraph (c)(3)(v). 

B. Revising paragraph (d)(2) by 

removing the phrase ‘‘sections 

1886(b)(2) and (b)(3) of the Act’’ and 

adding ‘‘section 1886(b)(2)(E) and 

(b)(3)(J) of the Act’’ in its place. 

C. Revising paragraph (d)(3). 

The addition and revisions read as 

follows: 

§ 412.523 Methodology for calculating the 

Federal prospective payment rates. 

* * * * * 

(c) * * * 

(3) * * * 

(v) For long-term care hospital 

prospective payment system rate year 

beginning July 1, 2008 and ending 

September 30, 2009. The standard 

Federal rate for long-term care hospital 

prospective payment system rate year 

beginning July 1, 2008 and ending 

September 30, 2009 is the standard 

Federal rate for the previous long-term 

care hospital prospective payment 

system rate year updated by 2.6 percent. 

The standard Federal rate is adjusted, as 

appropriate, as described in paragraph 

(d) of this section. 

* * * * * 

(d)(3) The Secretary reviews payments 

under this prospective payment system 

and may make a one-time prospective 

adjustment to the long-term care 

hospital prospective payment system 

rates no earlier than December 29, 2010, 

so that the effect of any significant 

difference between the data used in the 

original computations and more recent 

data to determine budget neutrality is 

not perpetuated in the prospective 

payment rates for future years. 

* * * * * 

4. Section 412.525 is amended by 

revising paragraph (c) to read as follows: 

§ 412.525 Adjustments to the Federal 

prospective payment. 

* * * * * 

(c) Adjustments for area levels. The 

labor portion of a long-term care 

hospital’s Federal prospective payment 

is adjusted to account for geographical 

differences in the area wage levels using 

an appropriate wage index (established 

by CMS), which reflects the relative 

level of hospital wages and wage-related 

costs in the geographic area (that is, 

urban or rural area as determined in 

accordance with the definitions set forth 

in § 412.503) of the hospital compared 

to the national average level of hospital 

wages and wage-related costs. The 

appropriate wage index (established by 

CMS) is updated annually. 

5. Section 412.529 is amended by 

revising paragraphs (d)(4)(ii)(B) and 

(d)(4)(iii)(B) to read as follows: 

§ 412.529 Special payment provision for 

short-stay outliers. 

* * * * * 

(d) * * * 

(4) * * * 

(ii) * * * 

(B) Is adjusted for different area wage 

levels based on the geographic 

classifications set forth at § 412.503 and 

the applicable hospital inpatient 

prospective payment system laborrelated share, using the applicable 

hospital inpatient prospective payment 

system wage index value for 

nonreclassified hospitals. For LTCHs 

located in Alaska and Hawaii, this 

amount is also adjusted by the 

applicable hospital inpatient 

prospective payment system cost of 

living adjustment factors. 

* * * * * 

(iii) * * * 

(B) Is adjusted for the applicable 

geographic adjustment factors, 

including local cost variation based on 

the geographic classifications set forth at 

§ 412.503 and the applicable full 

hospital inpatient prospective payment 

system wage index value for 

nonreclassified hospitals, and 

applicable large urban location cost of 

living adjustment factors for LTCHs in 

Alaska and Hawaii, if applicable. 

* * * * * 

6. Section 412.534 is amended by 

revising paragraphs (d)(1), (f)(2)(ii), and 

(f)(3)(ii) to read as follows: 

§ 412.534 Special payment provisions for 

long-term care hospitals within hospitals 

and satellites of long-term care hospitals. 

* * * * * 

(d) * * * 

(1) Subject to paragraphs (g) and (h) 

of this section, in the case of a long-term 

care hospital or satellite facility that is 

located in a rural area as defined in 

§ 412.503 and is co-located with another 

hospital for any cost reporting period 

beginning on or after October 1, 2004 in 

which the long-term care hospital or 

satellite facility has a discharged 

Medicare inpatient population of whom 

more than 50 percent were admitted to 

the long-term care hospital or satellite 

facility from the co-located hospital, 

payments for the patients who are 

admitted from the co-located hospital 

and who cause the long-term care 

hospital or satellite facility to exceed the 

50 percent threshold for discharged 

patients who were admitted from the colocated hospital are the lesser of the 

amount otherwise payable under this 

subpart or the amount payable under 

this subpart that is equivalent, as set 

forth in paragraph (f) of this section, to 

the amount that were otherwise payable 

under subpart A, § 412.1(a). Payments 


rwilkins on PROD1PC63 with PROPOSALS2
Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5385 

for the remainder of the long-term care 

hospital’s or satellite facility’s patients 

are made under the rules in this subpart 

at § 412.500 through § 412.541 with no 

adjustment under this section. 

* * * * * 

(f) * * * 

(2) * * * 

(ii) Is adjusted for different area wage 

levels based on the geographic 

classifications set forth at § 412.503 and 

the applicable hospital inpatient 

prospective payment system laborrelated share, using the applicable 

hospital inpatient prospective payment 

system wage index value for nonreclassified hospitals. For LTCHs 

located in Alaska and Hawaii, this 

amount is also adjusted by the 

applicable hospital inpatient 

prospective payment system cost of 

living adjustment factors; 

* * * * * 

(3) * * * 

(ii) Is adjusted by the applicable 

geographic adjustment factors, 

including local cost variation based on 

the applicable geographic classifications 

set forth at § 412.503 and the applicable 

full hospital inpatient prospective 

payment system wage index value for 

nonreclassified hospitals, applicable 

large urban location and cost of living 

adjustment factors for LTCHs for Alaska 

and Hawaii, if applicable; 

* * * * * 

7. Section 412.535 is amended by—

A. Revising the introductory text. 

B. Revising paragraph (a). 

C. Redesignating paragraph (b) as 

paragraph (d). 

D. Adding new paragraphs (b) and (c). 

The revisions and additions read as 

follows: 

§ 412.535 Publication of the Federal 

prospective payment rates. 

Except as specified in paragraph (b) of 

this section, CMS publishes information 

pertaining to the long-term care hospital 

prospective payment system effective 

for each annual update in the Federal 

Register. 

(a) For the period beginning on or 

after July 1, 2003, and ending on June 

30, 2008, information on the unadjusted 

Federal payment rates and a description 

of the methodology and data used to 

calculate the payment rates are 

published on or before May 1 prior to 

the start of each long term care hospital 

prospective payment system rate year 

which begins July 1, unless for good 

cause it is published after May 1, but 

before June 1. 

(b) For the period beginning on July 

1, 2008 and ending on September 30, 

2009, information of the unadjusted 

Federal payment rates and a description 

of the methodology and data used to 

calculate the payment rates are 

published on or before May 1 prior to 

the start of the long-term care hospital 

prospective payment system rate year 

which begins July 1, unless for good 

cause it is published after May 1, but 

before June 1. 

(c) For the period beginning on or 

after October 1, 2009, information on 

the unadjusted Federal payment rates 

and a description of the methodology 

and data used to calculate the payment 

rates are published on or before August 

1 prior to the start of the Federal fiscal 

year which begins October 1, unless for 

good cause it is published after August 

1, but before September 1. 

* * * * * 

7. Section 412.536 is amended by 

revising paragraphs (c)(1), (e)(2)(ii), and 

(e)(3)(ii) to read as follows. 

§ 412.536 Special payment provisions for 

long-term care hospitals and satellites of 

long-term care hospitals that discharged 

Medicare patients admitted from a hospital 

not located in the same building or on the 

same campus as the long term care 

hospital or satellite of the long-term care 

hospital. 

* * * * * 

(c) Special treatment of rural 

hospitals. (1) Subject to paragraph (f) of 

this section, in the case of a long-term 

care hospital or long-term care hospital 

satellite facility that is located in a rural 

area as defined in § 412.503 that has a 

discharged Medicare inpatient 

population of whom more than 50 

percent were admitted to the long-term 

care hospital or long term care hospital 

satellite facility from a hospital not colocated with the long-term care hospital 

or with the satellite of a long-term care 

hospital, payment for the Medicare 

discharges who are admitted from that 

hospital and who cause the long-term 

care hospital or satellite facility to 

exceed the 50 percent threshold for 

Medicare discharges is determined at 

the lesser of the amount otherwise 

payable under this subpart or the 

amount payable under this subpart that 

is equivalent, as set forth in paragraph 

(e) of this section, to the amount that is 

otherwise payable under subpart A, 

§ 412.1(a). Payments for the remainder 

of the long-term care hospital’s or longterm care hospital satellite facility’s 

Medicare discharges admitted from that 

referring hospital are made under the 

rules in this subpart at § 412.500 

through § 412.541 with no adjustment 

under this section. 

* * * * * 

(e) * * * 

(2) * * * 

(ii) Is adjusted for different area wage 

levels based on the geographic 

classifications defined at § 412.503 and 

the applicable hospital inpatient 

prospective payment system laborrelated share, using the applicable 

hospital inpatient prospective payment 

system wage index value for nonreclassified hospitals. For long-term care 

hospitals located in Alaska and Hawaii, 

this amount is also adjusted by the 

applicable hospital inpatient 

prospective payment system cost of 

living adjustment factors; 

* * * * * 

(3) * * * 

(ii) Is adjusted by the applicable 

geographic adjustment factors, 

including local cost variation based on 

the applicable geographic classifications 

set forth at § 412.503 and the applicable 

full hospital inpatient prospective 

payment system wage index value for 

nonreclassified hospitals, applicable 

large urban location and cost of living 

adjustment factors for long-term care 

hospitals for Alaska and Hawaii, if 

applicable; 

* * * * * 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare— Supplementary Medical 

Insurance Program) 

Dated: December 13, 2007. 

Kerry Weems, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: January 16, 2008. 

Michael O. Leavitt, 

Secretary. 

The following addenda will not 

appear in the Code of Federal 

Regulations. 

Addendum 

Addendum A contains the tables 

referred to throughout the preamble to 

this proposed rule. The tables presented 

below are as follows: 

Table 1.—Proposed Long-Term Care 

Hospital Wage Index for Urban Areas 

for Discharges Occurring from July 1, 

2008 through September 30, 2009 

Table 2.—Proposed Long-Term Care 

Hospital Wage Index for Rural Areas 

for Discharges Occurring from July 1, 

2008 through September 30, 2009 

Table 3.—FY 2008 MS–LTC–DRG 

Relative Weights, Geometric Average 

Length of Stay, Short-Stay Outlier 

Threshold and IPPS-Comparable 

Threshold (for Short-Stay Outlier 

Cases) (effective for discharges 

occurring on or after July 1, 2008 

through September 30, 2009). (Note: 

This table is the same information 

provided in Table 11 of the FY 2008 


rwilkins on PROD1PC63 with PROPOSALS2
5386 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

IPPS final rule (72 FR 48143 through 48157), which has been reprinted here 

for convenience.) 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009 

CBSA code Urban area (constituent counties) Proposed 

wage index 

10180 ........ Abilene, TX ....................................................................................................................................................................... 0.7957 

Callahan County, TX.

Jones County, TX.

Taylor County, TX.

10380 ........ Aguadilla-Isabela-San Sebastia ́n, PR .............................................................................................................................. 0.3448 

Aguada Municipio, PR.

Aguadilla Municipio, PR.

An ̃asco Municipio, PR.

Isabela Municipio, PR.

Lares Municipio, PR.

Moca Municipio, PR.

Rinco ́n Municipio, PR.

San Sebastia ́n Municipio, PR.

10420 ........ Akron, OH ......................................................................................................................................................................... 0.8794 

Portage County, OH.

Summit County, OH.

10500 ........ Albany, GA ....................................................................................................................................................................... 0.8514 

Baker County, GA.

Dougherty County, GA.

Lee County, GA.

Terrell County, GA.

Worth County, GA.

10580 ........ Albany-Schenectady-Troy, NY ......................................................................................................................................... 0.8588 

Albany County, NY.

Rensselaer County, NY.

Saratoga County, NY.

Schenectady County, NY.

Schoharie County, NY.

10740 ........ Albuquerque, NM ............................................................................................................................................................. 0.9554 

Bernalillo County, NM.

Sandoval County, NM.

Torrance County, NM.

Valencia County, NM.

10780 ........ Alexandria, LA .................................................................................................................................................................. 0.7979 

Grant Parish, LA.

Rapides Parish, LA.

10900 ........ Allentown-Bethlehem-Easton, PA–NJ .............................................................................................................................. 0.9865 

Warren County, NJ.

Carbon County, PA.

Lehigh County, PA.

Northampton County, PA.

11020 ........ Altoona, PA ...................................................................................................................................................................... 0.8618 

Blair County, PA.

11100 ........ Amarillo, TX ...................................................................................................................................................................... 0.9116 

Armstrong County, TX.

Carson County, TX.

Potter County, TX.

Randall County, TX.

11180 ........ Ames, IA ........................................................................................................................................................................... 1.0046 

Story County, IA.

11260 ........ Anchorage, AK ................................................................................................................................................................. 1.1913 

Anchorage Municipality, AK.

Matanuska-Susitna Borough, AK.

11300 ........ Anderson, IN .................................................................................................................................................................... 0.8827 

Madison County, IN.

11340 ........ Anderson, SC ................................................................................................................................................................... 0.9086 

Anderson County, SC.

11460 ........ Ann Arbor, MI ................................................................................................................................................................... 1.0539 

Washtenaw County, MI.

11500 ........ Anniston-Oxford, AL ......................................................................................................................................................... 0.7926 

Calhoun County, AL.

11540 ........ Appleton, WI ..................................................................................................................................................................... 0.9598 

Calumet County, WI.

Outagamie County, WI.

11700 ........ Asheville, NC .................................................................................................................................................................... 0.9185 

Buncombe County, NC.

Haywood County, NC.


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Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5387 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Henderson County, NC.

Madison County, NC.

12020 ........ Athens-Clarke County, GA ............................................................................................................................................... 1.0517 

Clarke County, GA.

Madison County, GA.

Oconee County, GA.

Oglethorpe County, GA.

12060 ........ Atlanta-Sandy Springs-Marietta, GA ................................................................................................................................ 0.9828 

Barrow County, GA.

Bartow County, GA.

Butts County, GA.

Carroll County, GA.

Cherokee County, GA.

Clayton County, GA.

Cobb County, GA.

Coweta County, GA.

Dawson County, GA.

DeKalb County, GA.

Douglas County, GA.

Fayette County, GA.

Forsyth County, GA.

Fulton County, GA.

Gwinnett County, GA.

Haralson County, GA.

Heard County, GA.

Henry County, GA.

Jasper County, GA.

Lamar County, GA.

Meriwether County, GA.

Newton County, GA.

Paulding County, GA.

Pickens County, GA.

Pike County, GA.

Rockdale County, GA.

Spalding County, GA.

Walton County, GA.

12100 ........ Atlantic City, NJ ................................................................................................................................................................ 1.2198 

Atlantic County, NJ.

12220 ........ Auburn-Opelika, AL .......................................................................................................................................................... 0.8090 

Lee County, AL.

12260 ........ Augusta-Richmond County, GA–SC ................................................................................................................................ 0.9645 

Burke County, GA.

Columbia County, GA.

McDuffie County, GA.

Richmond County, GA.

Aiken County, SC.

Edgefield County, SC.

12420 ........ Austin-Round Rock, TX .................................................................................................................................................... 0.9544 

Bastrop County, TX.

Caldwell County, TX.

Hays County, TX.

Travis County, TX.

Williamson County, TX.

12540 ........ Bakersfield, CA ................................................................................................................................................................. 1.1051 

Kern County, CA.

12580 ........ Baltimore-Towson, MD ..................................................................................................................................................... 1.0134 

Anne Arundel County, MD.

Baltimore County, MD.

Carroll County, MD.

Harford County, MD.

Howard County, MD.

Queen Anne’s County, MD.

Baltimore City, MD.

12620 ........ Bangor, ME ...................................................................................................................................................................... 0.9978 

Penobscot County, ME.

12700 ........ Barnstable Town, MA ....................................................................................................................................................... 1.2603 

Barnstable County, MA.

12940 ........ Baton Rouge, LA .............................................................................................................................................................. 0.8034 

Ascension Parish, LA.

East Baton Rouge Parish, LA.


rwilkins on PROD1PC63 with PROPOSALS2
5388 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

East Feliciana Parish, LA.

Iberville Parish, LA.

Livingston Parish, LA.

Pointe Coupee Parish, LA.

St. Helena Parish, LA.

West Baton Rouge Parish, LA.

West Feliciana Parish, LA.

12980 ........ Battle Creek, MI ............................................................................................................................................................... 1.0179 

Calhoun County, MI.

13020 ........ Bay City, MI ...................................................................................................................................................................... 0.8897 

Bay County, MI.

13140 ........ Beaumont-Port Arthur, TX ................................................................................................................................................ 0.8531 

Hardin County, TX.

Jefferson County, TX.

Orange County, TX.

13380 ........ Bellingham, WA ................................................................................................................................................................ 1.1474 

Whatcom County, WA.

13460 ........ Bend, OR .......................................................................................................................................................................... 1.0942 

Deschutes County, OR.

13644 ........ Bethesda-Gaithersburg-Frederick, MD ............................................................................................................................ 1.0511 

Frederick County, MD.

Montgomery County, MD.

13740 ........ Billings, MT ....................................................................................................................................................................... 0.8666 

Carbon County, MT.

Yellowstone County, MT.

13780 ........ Binghamton, NY ............................................................................................................................................................... 0.8949 

Broome County, NY.

Tioga County, NY.

13820 ........ Birmingham-Hoover, AL ................................................................................................................................................... 0.8898 

Bibb County, AL.

Blount County, AL.

Chilton County, AL.

Jefferson County, AL.

St. Clair County, AL.

Shelby County, AL.

Walker County, AL.

13900 ........ Bismarck, ND ................................................................................................................................................................... 0.7225 

Burleigh County, ND.

Morton County, ND.

13980 ........ Blacksburg-Christiansburg-Radford, VA .......................................................................................................................... 0.8192 

Giles County, VA.

Montgomery County, VA.

Pulaski County, VA.

Radford City, VA.

14020 ........ Bloomington, IN ................................................................................................................................................................ 0.8915 

Greene County, IN.

Monroe County, IN.

Owen County, IN.

14060 ........ Bloomington-Normal, IL .................................................................................................................................................... 0.9325 

McLean County, IL.

14260 ........ Boise City-Nampa, ID ....................................................................................................................................................... 0.9465 

Ada County, ID.

Boise County, ID.

Canyon County, ID.

Gem County, ID.

Owyhee County, ID.

14484 ........ Boston-Quincy, MA .......................................................................................................................................................... 1.1792 

Norfolk County, MA.

Plymouth County, MA.

Suffolk County, MA.

14500 ........ Boulder, CO ...................................................................................................................................................................... 1.0426 

Boulder County, CO.

14540 ........ Bowling Green, KY ........................................................................................................................................................... 0.8159 

Edmonson County, KY.

Warren County, KY.

14740 ........ Bremerton-Silverdale, WA ................................................................................................................................................ 1.0904 

Kitsap County, WA.

14860 ........ Bridgeport-Stamford-Norwalk, CT .................................................................................................................................... 1.2735 

Fairfield County, CT.

15180 ........ Brownsville-Harlingen, TX ................................................................................................................................................ 0.8914 


rwilkins on PROD1PC63 with PROPOSALS2
Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5389 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Cameron County, TX.

15260 ........ Brunswick, GA .................................................................................................................................................................. 0.9475 

Brantley County, GA.

Glynn County, GA.

McIntosh County, GA.

15380 ........ Buffalo-Niagara Falls, NY ................................................................................................................................................. 0.9568 

Erie County, NY.

Niagara County, NY.

15500 ........ Burlington, NC .................................................................................................................................................................. 0.8747 

Alamance County, NC.

15540 ........ Burlington-South Burlington, VT ....................................................................................................................................... 0.9660 

Chittenden County, VT.

Franklin County, VT.

Grand Isle County, VT.

15764 ........ Cambridge-Newton-Framingham, MA .............................................................................................................................. 1.1215 

Middlesex County, MA.

15804 ........ Camden, NJ ..................................................................................................................................................................... 1.0411 

Burlington County, NJ.

Camden County, NJ.

Gloucester County, NJ.

15940 ........ Canton-Massillon, OH ...................................................................................................................................................... 0.8935 

Carroll County, OH.

Stark County, OH.

15980 ........ Cape Coral-Fort Myers, FL .............................................................................................................................................. 0.9396 

Lee County, FL.

16180 ........ Carson City, NV ............................................................................................................................................................... 1.0003 

Carson City, NV.

16220 ........ Casper, WY ...................................................................................................................................................................... 0.9385 

Natrona County, WY.

16300 ........ Cedar Rapids, IA .............................................................................................................................................................. 0.8852 

Benton County, IA.

Jones County, IA.

Linn County, IA.

16580 ........ Champaign-Urbana, IL ..................................................................................................................................................... 0.9392 

Champaign County, IL.

Ford County, IL.

Piatt County, IL.

16620 ........ Charleston, WV ................................................................................................................................................................ 0.8289 

Boone County, WV.

Clay County, WV.

Kanawha County, WV.

Lincoln County, WV.

Putnam County, WV.

16700 ........ Charleston-North Charleston, SC .................................................................................................................................... 0.9124 

Berkeley County, SC.

Charleston County, SC.

Dorchester County, SC.

16740 ........ Charlotte-Gastonia-Concord, NC–SC .............................................................................................................................. 0.9520 

Anson County, NC.

Cabarrus County, NC.

Gaston County, NC.

Mecklenburg County, NC.

Union County, NC.

York County, SC.

16820 ........ Charlottesville, VA ............................................................................................................................................................ 0.9277 

Albemarle County, VA.

Fluvanna County, VA.

Greene County, VA.

Nelson County, VA.

Charlottesville City, VA.

16860 ........ Chattanooga, TN–GA ....................................................................................................................................................... 0.8994 

Catoosa County, GA.

Dade County, GA.

Walker County, GA.

Hamilton County, TN.

Marion County, TN.

Sequatchie County, TN.

16940 ........ Cheyenne, WY ................................................................................................................................................................. 0.9308 

Laramie County, WY.

16974 ........ Chicago-Naperville-Joliet, IL ............................................................................................................................................ 1.0715 


rwilkins on PROD1PC63 with PROPOSALS2
5390 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Cook County, IL.

DeKalb County, IL.

DuPage County, IL.

Grundy County, IL.

Kane County, IL.

Kendall County, IL.

McHenry County, IL.

Will County, IL.

17020 ........ Chico, CA ......................................................................................................................................................................... 1.1290 

Butte County, CA.

17140 ........ Cincinnati-Middletown, OH–KY–IN .................................................................................................................................. 0.9784 

Dearborn County, IN.

Franklin County, IN.

Ohio County, IN.

Boone County, KY.

Bracken County, KY.

Campbell County, KY.

Gallatin County, KY.

Grant County, KY.

Kenton County, KY.

Pendleton County, KY.

Brown County, OH.

Butler County, OH.

Clermont County, OH.

Hamilton County, OH.

Warren County, OH.

17300 ........ Clarksville, TN–KY ........................................................................................................................................................... 0.8251 

Christian County, KY.

Trigg County, KY.

Montgomery County, TN.

Stewart County, TN.

17420 ........ Cleveland, TN ................................................................................................................................................................... 0.8052 

Bradley County, TN.

Polk County, TN.

17460 ........ Cleveland-Elyria-Mentor, OH ........................................................................................................................................... 0.9339 

Cuyahoga County, OH.

Geauga County, OH.

Lake County, OH.

Lorain County, OH.

Medina County, OH.

17660 ........ Coeur d’Alene, ID ............................................................................................................................................................. 0.9532 

Kootenai County, ID.

17780 ........ College Station-Bryan, TX ................................................................................................................................................ 0.9358 

Brazos County, TX.

Burleson County, TX.

Robertson County, TX.

17820 ........ Colorado Springs, CO ...................................................................................................................................................... 0.9719 

El Paso County, CO.

Teller County, CO.

17860 ........ Columbia, MO .................................................................................................................................................................. 0.8658 

Boone County, MO.

Howard County, MO.

17900 ........ Columbia, SC ................................................................................................................................................................... 0.8800 

Calhoun County, SC.

Fairfield County, SC.

Kershaw County, SC.

Lexington County, SC.

Richland County, SC.

Saluda County, SC.

17980 ........ Columbus, GA–AL ............................................................................................................................................................ 0.8729 

Russell County, AL.

Chattahoochee County, GA.

Harris County, GA.

Marion County, GA.

Muscogee County, GA.

18020 ........ Columbus, IN .................................................................................................................................................................... 0.9537 

Bartholomew County, IN.

18140 ........ Columbus, OH .................................................................................................................................................................. 1.0085 

Delaware County, OH.

Fairfield County, OH.


rwilkins on PROD1PC63 with PROPOSALS2
Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5391 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Franklin County, OH.

Licking County, OH.

Madison County, OH.

Morrow County, OH.

Pickaway County, OH.

Union County, OH.

18580 ........ Corpus Christi, TX ............................................................................................................................................................ 0.8588 

Aransas County, TX.

Nueces County, TX.

San Patricio County, TX.

18700 ........ Corvallis, OR .................................................................................................................................................................... 1.0959 

Benton County, OR.

19060 ........ Cumberland, MD–WV ...................................................................................................................................................... 0.8294 

Allegany County, MD.

Mineral County, WV.

19124 ........ Dallas-Plano-Irving, TX .................................................................................................................................................... 0.9915 

Collin County, TX.

Dallas County, TX.

Delta County, TX.

Denton County, TX.

Ellis County, TX.

Hunt County, TX.

Kaufman County, TX.

Rockwall County, TX.

19140 ........ Dalton, GA ........................................................................................................................................................................ 0.8760 

Murray County, GA.

Whitfield County, GA.

19180 ........ Danville, IL ........................................................................................................................................................................ 0.8957 

Vermilion County, IL.

19260 ........ Danville, VA ...................................................................................................................................................................... 0.8240 

Pittsylvania County, VA.

Danville City, VA.

19340 ........ Davenport-Moline-Rock Island, IA–IL .............................................................................................................................. 0.8830 

Henry County, IL.

Mercer County, IL.

Rock Island County, IL.

Scott County, IA.

19380 ........ Dayton, OH ....................................................................................................................................................................... 0.9190 

Greene County, OH.

Miami County, OH.

Montgomery County, OH.

Preble County, OH.

19460 ........ Decatur, AL ...................................................................................................................................................................... 0.7885 

Lawrence County, AL.

Morgan County, AL.

19500 ........ Decatur, IL ........................................................................................................................................................................ 0.8074 

Macon County, IL.

19660 ........ Deltona-Daytona Beach-Ormond Beach, FL ................................................................................................................... 0.9031 

Volusia County, FL.

19740 ........ Denver-Aurora, CO .......................................................................................................................................................... 1.0718 

Adams County, CO.

Arapahoe County, CO.

Broomfield County, CO.

Clear Creek County, CO.

Denver County, CO.

Douglas County, CO.

Elbert County, CO.

Gilpin County, CO.

Jefferson County, CO.

Park County, CO.

19780 ........ Des Moines-West Des Moines, IA ................................................................................................................................... 0.9226 

Dallas County, IA.

Guthrie County, IA.

Madison County, IA.

Polk County, IA.

Warren County, IA.

19804 ........ Detroit-Livonia-Dearborn, MI ............................................................................................................................................ 0.9999 

Wayne County, MI.

20020 ........ Dothan, AL ....................................................................................................................................................................... 0.7270 

Geneva County, AL.


rwilkins on PROD1PC63 with PROPOSALS2
5392 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Henry County, AL.

Houston County, AL.

20100 ........ Dover, DE ......................................................................................................................................................................... 1.0099 

Kent County, DE.

20220 ........ Dubuque, IA ..................................................................................................................................................................... 0.9058 

Dubuque County, IA.

20260 ........ Duluth, MN–WI ................................................................................................................................................................. 0.9975 

Carlton County, MN.

St. Louis County, MN.

Douglas County, WI.

20500 ........ Durham, NC ..................................................................................................................................................................... 0.9816 

Chatham County, NC.

Durham County, NC.

Orange County, NC.

Person County, NC.

20740 ........ Eau Claire, WI .................................................................................................................................................................. 0.9475 

Chippewa County, WI.

Eau Claire County, WI.

20764 ........ Edison, NJ ........................................................................................................................................................................ 1.1181 

Middlesex County, NJ.

Monmouth County, NJ.

Ocean County, NJ.

Somerset County, NJ.

20940 ........ El Centro, CA ................................................................................................................................................................... 0.8914 

Imperial County, CA.

21060 ........ Elizabethtown, KY ............................................................................................................................................................ 0.8711 

Hardin County, KY.

Larue County, KY.

21140 ........ Elkhart-Goshen, IN ........................................................................................................................................................... 0.9611 

Elkhart County, IN.

21300 ........ Elmira, NY ........................................................................................................................................................................ 0.8264 

Chemung County, NY.

21340 ........ El Paso, TX ...................................................................................................................................................................... 0.8989 

El Paso County, TX.

21500 ........ Erie, PA ............................................................................................................................................................................ 0.8495 

Erie County, PA.

21660 ........ Eugene-Springfield, OR ................................................................................................................................................... 1.0932 

Lane County, OR.

21780 ........ Evansville, IN–KY ............................................................................................................................................................. 0.8662 

Gibson County, IN.

Posey County, IN.

Vanderburgh County, IN.

Warrick County, IN.

Henderson County, KY.

Webster County, KY.

21820 ........ Fairbanks, AK ................................................................................................................................................................... 1.1050 

Fairbanks North Star Borough, AK.

21940 ........ Fajardo, PR ...................................................................................................................................................................... 0.4375 

Ceiba Municipio, PR.

Fajardo Municipio, PR.

Luquillo Municipio, PR.

22020 ........ Fargo, ND–MN ................................................................................................................................................................. 0.8042 

Cass County, ND.

Clay County, MN.

22140 ........ Farmington, NM ................................................................................................................................................................ 0.9587 

San Juan County, NM.

22180 ........ Fayetteville, NC ................................................................................................................................................................ 0.9368 

Cumberland County, NC.

Hoke County, NC.

22220 ........ Fayetteville-Springdale-Rogers, AR–MO ......................................................................................................................... 0.8742 

Benton County, AR.

Madison County, AR.

Washington County, AR.

McDonald County, MO.

22380 ........ Flagstaff, AZ ..................................................................................................................................................................... 1.1687 

Coconino County, AZ.

22420 ........ Flint, MI ............................................................................................................................................................................. 1.1220 

Genesee County, MI.

22500 ........ Florence, SC .................................................................................................................................................................... 0.8249 

Darlington County, SC.


rwilkins on PROD1PC63 with PROPOSALS2
Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5393 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Florence County, SC.

22520 ........ Florence-Muscle Shoals, AL ............................................................................................................................................ 0.7680 

Colbert County, AL.

Lauderdale County, AL.

22540 ........ Fond du Lac, WI ............................................................................................................................................................... 0.9667 

Fond du Lac County, WI.

22660 ........ Fort Collins-Loveland, CO ................................................................................................................................................ 0.9897 

Larimer County, CO.

22744 ........ Fort Lauderdale-Pompano Beach-Deerfield Beach, FL ................................................................................................... 1.0229 

Broward County, FL.

22900 ........ Fort Smith, AR–OK .......................................................................................................................................................... 0.7933 

Crawford County, AR.

Franklin County, AR.

Sebastian County, AR.

Le Flore County, OK.

Sequoyah County, OK.

23020 ........ Fort Walton Beach-Crestview-Destin, FL ......................................................................................................................... 0.8743 

Okaloosa County, FL.

23060 ........ Fort Wayne, IN ................................................................................................................................................................. 0.9284 

Allen County, IN.

Wells County, IN.

Whitley County, IN.

23104 ........ Fort Worth-Arlington, TX .................................................................................................................................................. 0.9693 

Johnson County, TX.

Parker County, TX.

Tarrant County, TX.

Wise County, TX.

23420 ........ Fresno, CA ....................................................................................................................................................................... 1.0993 

Fresno County, CA.

23460 ........ Gadsden, AL .................................................................................................................................................................... 0.8159 

Etowah County, AL.

23540 ........ Gainesville, FL .................................................................................................................................................................. 0.9196 

Alachua County, FL.

Gilchrist County, FL.

23580 ........ Gainesville, GA ................................................................................................................................................................. 0.9216 

Hall County, GA.

23844 ........ Gary, IN ............................................................................................................................................................................ 0.9224 

Jasper County, IN.

Lake County, IN.

Newton County, IN.

Porter County, IN.

24020 ........ Glens Falls, NY ................................................................................................................................................................ 0.8256 

Warren County, NY.

Washington County, NY.

24140 ........ Goldsboro, NC .................................................................................................................................................................. 0.9288 

Wayne County, NC.

24220 ........ Grand Forks, ND–MN ...................................................................................................................................................... 0.7881 

Polk County, MN.

Grand Forks County, ND.

24300 ........ Grand Junction, CO ......................................................................................................................................................... 0.9864 

Mesa County, CO.

24340 ........ Grand Rapids-Wyoming, MI ............................................................................................................................................. 0.9315 

Barry County, MI.

Ionia County, MI.

Kent County, MI.

Newaygo County, MI.

24500 ........ Great Falls, MT ................................................................................................................................................................ 0.8675 

Cascade County, MT.

24540 ........ Greeley, CO ..................................................................................................................................................................... 0.9658 

Weld County, CO.

24580 ........ Green Bay, WI .................................................................................................................................................................. 0.9727 

Brown County, WI.

Kewaunee County, WI.

Oconto County, WI.

24660 ........ Greensboro-High Point, NC ............................................................................................................................................. 0.9010 

Guilford County, NC.

Randolph County, NC.

Rockingham County, NC.

24780 ........ Greenville, NC .................................................................................................................................................................. 0.9402 

Greene County, NC.


rwilkins on PROD1PC63 with PROPOSALS2
5394 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Pitt County, NC.

24860 ........ Greenville-Mauldin-Easley, SC ........................................................................................................................................ 0.9860 

Greenville County, SC.

Laurens County, SC.

Pickens County, SC.

25020 ........ Guayama, PR ................................................................................................................................................................... 0.3064 

Arroyo Municipio, PR.

Guayama Municipio, PR.

Patillas Municipio, PR.

25060 ........ Gulfport-Biloxi, MS ........................................................................................................................................................... 0.8773 

Hancock County, MS.

Harrison County, MS.

Stone County, MS.

25180 ........ Hagerstown-Martinsburg, MD–WV ................................................................................................................................... 0.9013 

Washington County, MD.

Berkeley County, WV.

Morgan County, WV.

25260 ........ Hanford-Corcoran, CA ...................................................................................................................................................... 1.0499 

Kings County, CA.

25420 ........ Harrisburg-Carlisle, PA ..................................................................................................................................................... 0.9280 

Cumberland County, PA.

Dauphin County, PA.

Perry County, PA.

25500 ........ Harrisonburg, VA .............................................................................................................................................................. 0.8867 

Rockingham County, VA.

Harrisonburg City, VA.

25540 ........ Hartford-West Hartford-East Hartford, CT ....................................................................................................................... 1.0959 

Hartford County, CT.

Middlesex County, CT.

Tolland County, CT.

25620 ........ Hattiesburg, MS ................................................................................................................................................................ 0.7366 

Forrest County, MS.

Lamar County, MS.

Perry County, MS.

25860 ........ Hickory-Lenoir-Morganton, NC ......................................................................................................................................... 0.9028 

Alexander County, NC.

Burke County, NC.

Caldwell County, NC.

Catawba County, NC.

25980 ........ Hinesville-Fort Stewart, GA .............................................................................................................................................. 0.9187 

Liberty County, GA.

Long County, GA.

26100 ........ Holland-Grand Haven, MI ................................................................................................................................................ 0.9006 

Ottawa County, MI.

26180 ........ Honolulu, HI ...................................................................................................................................................................... 1.1556 

Honolulu County, HI.

26300 ........ Hot Springs, AR ............................................................................................................................................................... 0.9109 

Garland County, AR.

26380 ........ Houma-Bayou Cane-Thibodaux, LA ................................................................................................................................ 0.7892 

Lafourche Parish, LA.

Terrebonne Parish, LA.

26420 ........ Houston-Sugar Land-Baytown, TX .................................................................................................................................. 0.9939 

Austin County, TX.

Brazoria County, TX.

Chambers County, TX.

Fort Bend County, TX.

Galveston County, TX.

Harris County, TX.

Liberty County, TX.

Montgomery County, TX.

San Jacinto County, TX.

Waller County, TX.

26580 ........ Huntington-Ashland, WV–KY–OH .................................................................................................................................... 0.9041 

Boyd County, KY.

Greenup County, KY.

Lawrence County, OH.

Cabell County, WV.

Wayne County, WV.

26620 ........ Huntsville, AL ................................................................................................................................................................... 0.9146 

Limestone County, AL.


rwilkins on PROD1PC63 with PROPOSALS2
Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5395 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Madison County, AL.

26820 ........ Idaho Falls, ID .................................................................................................................................................................. 0.9264 

Bonneville County, ID.

Jefferson County, ID.

26900 ........ Indianapolis-Carmel, IN .................................................................................................................................................... 0.9844 

Boone County, IN.

Brown County, IN.

Hamilton County, IN.

Hancock County, IN.

Hendricks County, IN.

Johnson County, IN.

Marion County, IN.

Morgan County, IN.

Putnam County, IN.

Shelby County, IN.

26980 ........ Iowa City, IA ..................................................................................................................................................................... 0.9568 

Johnson County, IA.

Washington County, IA.

27060 ........ Ithaca, NY ......................................................................................................................................................................... 0.9630 

Tompkins County, NY.

27100 ........ Jackson, MI ...................................................................................................................................................................... 0.9329 

Jackson County, MI.

27140 ........ Jackson, MS ..................................................................................................................................................................... 0.8011 

Copiah County, MS.

Hinds County, MS.

Madison County, MS.

Rankin County, MS.

Simpson County, MS.

27180 ........ Jackson, TN ..................................................................................................................................................................... 0.8676 

Chester County, TN.

Madison County, TN.

27260 ........ Jacksonville, FL ................................................................................................................................................................ 0.9021 

Baker County, FL.

Clay County, FL.

Duval County, FL.

Nassau County, FL.

St. Johns County, FL.

27340 ........ Jacksonville, NC ............................................................................................................................................................... 0.8079 

Onslow County, NC.

27500 ........ Janesville, WI ................................................................................................................................................................... 0.9702 

Rock County, WI.

27620 ........ Jefferson City, MO ........................................................................................................................................................... 0.8478 

Callaway County, MO.

Cole County, MO.

Moniteau County, MO.

Osage County, MO.

27740 ........ Johnson City, TN .............................................................................................................................................................. 0.7677 

Carter County, TN.

Unicoi County, TN.

Washington County, TN.

27780 ........ Johnstown, PA ................................................................................................................................................................. 0.7543 

Cambria County, PA.

27860 ........ Jonesboro, AR .................................................................................................................................................................. 0.7790 

Craighead County, AR.

Poinsett County, AR.

27900 ........ Joplin, MO ........................................................................................................................................................................ 0.8951 

Jasper County, MO.

Newton County, MO.

28020 ........ Kalamazoo-Portage, MI .................................................................................................................................................... 1.0433 

Kalamazoo County, MI.

Van Buren County, MI.

28100 ........ Kankakee-Bradley, IL ....................................................................................................................................................... 1.0238 

Kankakee County, IL.

28140 ........ Kansas City, MO–KS ....................................................................................................................................................... 0.9504 

Franklin County, KS.

Johnson County, KS.

Leavenworth County, KS.

Linn County, KS.

Miami County, KS.

Wyandotte County, KS.


rwilkins on PROD1PC63 with PROPOSALS2
5396 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Bates County, MO.

Caldwell County, MO.

Cass County, MO.

Clay County, MO.

Clinton County, MO.

Jackson County, MO.

Lafayette County, MO.

Platte County, MO.

Ray County, MO.

28420 ........ Kennewick-Richland-Pasco, WA ...................................................................................................................................... 1.0075 

Benton County, WA.

Franklin County, WA.

28660 ........ Killeen-Temple-Fort Hood, TX ......................................................................................................................................... 0.8249 

Bell County, TX.

Coryell County, TX.

Lampasas County, TX.

28700 ........ Kingsport-Bristol-Bristol, TN–VA ...................................................................................................................................... 0.7658 

Hawkins County, TN.

Sullivan County, TN.

Bristol City, VA.

Scott County, VA.

Washington County, VA.

28740 ........ Kingston, NY .................................................................................................................................................................... 0.9556 

Ulster County, NY.

28940 ........ Knoxville, TN .................................................................................................................................................................... 0.8036 

Anderson County, TN.

Blount County, TN.

Knox County, TN.

Loudon County, TN.

Union County, TN.

29020 ........ Kokomo, IN ....................................................................................................................................................................... 0.9591 

Howard County, IN.

Tipton County, IN.

29100 ........ La Crosse, WI–MN ........................................................................................................................................................... 0.9685 

Houston County, MN.

La Crosse County, WI.

29140 ........ Lafayette, IN ..................................................................................................................................................................... 0.8869 

Benton County, IN.

Carroll County, IN.

Tippecanoe County, IN.

29180 ........ Lafayette, LA .................................................................................................................................................................... 0.8247 

Lafayette Parish, LA.

St. Martin Parish, LA.

29340 ........ Lake Charles, LA .............................................................................................................................................................. 0.7777 

Calcasieu Parish, LA.

Cameron Parish, LA.

29404 ........ Lake County-Kenosha County, IL–WI .............................................................................................................................. 1.0603 

Lake County, IL.

Kenosha County, WI.

29420 ........ Lake Havasu City-Kingman, AZ ....................................................................................................................................... 0.9333 

Mohave County, AZ.

29460 ........ Lakeland, FL ..................................................................................................................................................................... 0.8661 

Polk County, FL.

29540 ........ Lancaster, PA ................................................................................................................................................................... 0.9252 

Lancaster County, PA.

29620 ........ Lansing-East Lansing, MI ................................................................................................................................................. 1.0119 

Clinton County, MI.

Eaton County, MI.

Ingham County, MI.

29700 ........ Laredo, TX ........................................................................................................................................................................ 0.8093 

Webb County, TX.

29740 ........ Las Cruces, NM ............................................................................................................................................................... 0.8676 

Dona Ana County, NM.

29820 ........ Las Vegas-Paradise, NV .................................................................................................................................................. 1.1799 

Clark County, NV.

29940 ........ Lawrence, KS ................................................................................................................................................................... 0.8227 

Douglas County, KS.

30020 ........ Lawton, OK ....................................................................................................................................................................... 0.8025 

Comanche County, OK.

30140 ........ Lebanon, PA ..................................................................................................................................................................... 0.8192 


rwilkins on PROD1PC63 with PROPOSALS2
Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5397 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Lebanon County, PA.

30300 ........ Lewiston, ID–WA .............................................................................................................................................................. 0.9454 

Nez Perce County, ID.

Asotin County, WA.

30340 ........ Lewiston-Auburn, ME ....................................................................................................................................................... 0.9193 

Androscoggin County, ME.

30460 ........ Lexington-Fayette, KY ...................................................................................................................................................... 0.9191 

Bourbon County, KY.

Clark County, KY.

Fayette County, KY.

Jessamine County, KY.

Scott County, KY.

Woodford County, KY.

30620 ........ Lima, OH .......................................................................................................................................................................... 0.9424 

Allen County, OH.

30700 ........ Lincoln, NE ....................................................................................................................................................................... 1.0051 

Lancaster County, NE.

Seward County, NE.

30780 ........ Little Rock-North Little Rock-Conway, AR ....................................................................................................................... 0.8863 

Faulkner County, AR.

Grant County, AR.

Lonoke County, AR.

Perry County, AR.

Pulaski County, AR.

Saline County, AR.

30860 ........ Logan, UT–ID ................................................................................................................................................................... 0.9183 

Franklin County, ID.

Cache County, UT.

30980 ........ Longview, TX .................................................................................................................................................................... 0.8717 

Gregg County, TX.

Rusk County, TX.

Upshur County, TX.

31020 ........ Longview, WA .................................................................................................................................................................. 1.0827 

Cowlitz County, WA.

31084 ........ Los Angeles-Long Beach-Glendale, CA .......................................................................................................................... 1.1771 

Los Angeles County, CA.

31140 ........ Louisville-Jefferson County, KY–IN .................................................................................................................................. 0.9065 

Clark County, IN.

Floyd County, IN.

Harrison County, IN.

Washington County, IN.

Bullitt County, KY.

Henry County, KY.

Jefferson County, KY.

Meade County, KY.

Nelson County, KY.

Oldham County, KY.

Shelby County, KY.

Spencer County, KY.

Trimble County, KY.

31180 ........ Lubbock, TX ..................................................................................................................................................................... 0.8680 

Crosby County, TX.

Lubbock County, TX.

31340 ........ Lynchburg, VA .................................................................................................................................................................. 0.8732 

Amherst County, VA.

Appomattox County, VA.

Bedford County, VA.

Campbell County, VA.

Bedford City, VA.

Lynchburg City, VA.

31420 ........ Macon, GA ....................................................................................................................................................................... 0.9541 

Bibb County, GA.

Crawford County, GA.

Jones County, GA.

Monroe County, GA.

Twiggs County, GA.

31460 ........ Madera, CA ...................................................................................................................................................................... 0.8069 

Madera County, CA.

31540 ........ Madison, WI ..................................................................................................................................................................... 1.0935 

Columbia County, WI.


rwilkins on PROD1PC63 with PROPOSALS2
5398 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Dane County, WI.

Iowa County, WI.

31700 ........ Manchester-Nashua, NH .................................................................................................................................................. 1.0273 

Hillsborough County, NH.

31900 ........ Mansfield, OH ................................................................................................................................................................... 0.9271 

Richland County, OH.

32420 ........ Mayagu ̈ez, PR .................................................................................................................................................................. 0.3711 

Hormigueros Municipio, PR.

Mayagu ̈ez Municipio, PR.

32580 ........ McAllen-Edinburg-Mission, TX ......................................................................................................................................... 0.9123 

Hidalgo County, TX.

32780 ........ Medford, OR ..................................................................................................................................................................... 1.0318 

Jackson County, OR.

32820 ........ Memphis, TN–MS–AR ...................................................................................................................................................... 0.9250 

Crittenden County, AR.

DeSoto County, MS.

Marshall County, MS.

Tate County, MS.

Tunica County, MS.

Fayette County, TN.

Shelby County, TN.

Tipton County, TN.

32900 ........ Merced, CA ...................................................................................................................................................................... 1.2120 

Merced County, CA.

33124 ........ Miami-Miami Beach-Kendall, FL ...................................................................................................................................... 1.0002 

Miami-Dade County, FL.

33140 ........ Michigan City-La Porte, IN ............................................................................................................................................... 0.8914 

LaPorte County, IN.

33260 ........ Midland, TX ...................................................................................................................................................................... 1.0017 

Midland County, TX.

33340 ........ Milwaukee-Waukesha-West Allis, WI ............................................................................................................................... 1.0214 

Milwaukee County, WI.

Ozaukee County, WI.

Washington County, WI.

Waukesha County, WI.

33460 ........ Minneapolis-St. Paul-Bloomington, MN–WI ..................................................................................................................... 1.1093 

Anoka County, MN.

Carver County, MN.

Chisago County, MN.

Dakota County, MN.

Hennepin County, MN.

Isanti County, MN.

Ramsey County, MN.

Scott County, MN.

Sherburne County, MN.

Washington County, MN.

Wright County, MN.

Pierce County, WI.

St. Croix County, WI.

33540 ........ Missoula, MT .................................................................................................................................................................... 0.8953 

Missoula County, MT.

33660 ........ Mobile, AL ........................................................................................................................................................................ 0.8033 

Mobile County, AL.

33700 ........ Modesto, CA ..................................................................................................................................................................... 1.1962 

Stanislaus County, CA.

33740 ........ Monroe, LA ....................................................................................................................................................................... 0.7832 

Ouachita Parish, LA.

Union Parish, LA.

33780 ........ Monroe, MI ....................................................................................................................................................................... 0.9414 

Monroe County, MI.

33860 ........ Montgomery, AL ............................................................................................................................................................... 0.8088 

Autauga County, AL.

Elmore County, AL.

Lowndes County, AL.

Montgomery County, AL.

34060 ........ Morgantown, WV .............................................................................................................................................................. 0.8321 

Monongalia County, WV.

Preston County, WV.

34100 ........ Morristown, TN ................................................................................................................................................................. 0.7388 

Grainger County, TN.


rwilkins on PROD1PC63 with PROPOSALS2
Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5399 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Hamblen County, TN.

Jefferson County, TN.

34580 ........ Mount Vernon-Anacortes, WA ......................................................................................................................................... 1.0529 

Skagit County, WA.

34620 ........ Muncie, IN ........................................................................................................................................................................ 0.8214 

Delaware County, IN.

34740 ........ Muskegon-Norton Shores, MI .......................................................................................................................................... 0.9836 

Muskegon County, MI.

34820 ........ Myrtle Beach-Conway-North Myrtle Beach, SC ............................................................................................................... 0.8634 

Horry County, SC.

34900 ........ Napa, CA .......................................................................................................................................................................... 1.4476 

Napa County, CA.

34940 ........ Naples-Marco Island, FL .................................................................................................................................................. 0.9487 

Collier County, FL.

34980 ........ Nashville-Davidson-Murfreesboro-Franklin, TN ............................................................................................................... 0.9689 

Cannon County, TN.

Cheatham County, TN.

Davidson County, TN.

Dickson County, TN.

Hickman County, TN.

Macon County, TN.

Robertson County, TN.

Rutherford County, TN.

Smith County, TN.

Sumner County, TN.

Trousdale County, TN.

Williamson County, TN.

Wilson County, TN.

35004 ........ Nassau-Suffolk, NY .......................................................................................................................................................... 1.2640 

Nassau County, NY.

Suffolk County, NY.

35084 ........ Newark-Union, NJ–PA ..................................................................................................................................................... 1.1862 

Essex County, NJ.

Hunterdon County, NJ.

Morris County, NJ.

Sussex County, NJ.

Union County, NJ.

Pike County, PA.

35300 ........ New Haven-Milford, CT .................................................................................................................................................... 1.1871 

New Haven County, CT.

35380 ........ New Orleans-Metairie-Kenner, LA ................................................................................................................................... 0.8897 

Jefferson Parish, LA.

Orleans Parish, LA.

Plaquemines Parish, LA.

St. Bernard Parish, LA.

St. Charles Parish, LA.

St. John the Baptist Parish, LA.

St. Tammany Parish, LA.

35644 ........ New York-White Plains-Wayne, NY–NJ .......................................................................................................................... 1.3115 

Bergen County, NJ.

Hudson County, NJ.

Passaic County, NJ.

Bronx County, NY.

Kings County, NY.

New York County, NY.

Putnam County, NY.

Queens County, NY.

Richmond County, NY.

Rockland County, NY.

Westchester County, NY.

35660 ........ Niles-Benton Harbor, MI ................................................................................................................................................... 0.9141 

Berrien County, MI.

35980 ........ Norwich-New London, CT ................................................................................................................................................ 1.1432 

New London County, CT.

36084 ........ Oakland-Fremont-Hayward, CA ....................................................................................................................................... 1.5685 

Alameda County, CA.

Contra Costa County, CA.

36100 ........ Ocala, FL .......................................................................................................................................................................... 0.8627 

Marion County, FL.

36140 ........ Ocean City, NJ ................................................................................................................................................................. 1.0988 


rwilkins on PROD1PC63 with PROPOSALS2
5400 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Cape May County, NJ.

36220 ........ Odessa, TX ...................................................................................................................................................................... 1.0042 

Ector County, TX.

36260 ........ Ogden-Clearfield, UT ....................................................................................................................................................... 0.9000 

Davis County, UT.

Morgan County, UT.

Weber County, UT.

36420 ........ Oklahoma City, OK .......................................................................................................................................................... 0.8815 

Canadian County, OK.

Cleveland County, OK.

Grady County, OK.

Lincoln County, OK.

Logan County, OK.

McClain County, OK.

Oklahoma County, OK.

36500 ........ Olympia, WA .................................................................................................................................................................... 1.1512 

Thurston County, WA.

36540 ........ Omaha-Council Bluffs, NE–IA .......................................................................................................................................... 0.9561 

Harrison County, IA.

Mills County, IA.

Pottawattamie County, IA.

Cass County, NE.

Douglas County, NE.

Sarpy County, NE.

Saunders County, NE.

Washington County, NE.

36740 ........ Orlando-Kissimmee, FL .................................................................................................................................................... 0.9226 

Lake County, FL.

Orange County, FL.

Osceola County, FL.

Seminole County, FL.

36780 ........ Oshkosh-Neenah, WI ....................................................................................................................................................... 0.9551 

Winnebago County, WI.

36980 ........ Owensboro, KY ................................................................................................................................................................ 0.8652 

Daviess County, KY.

Hancock County, KY.

McLean County, KY.

37100 ........ Oxnard-Thousand Oaks-Ventura, CA .............................................................................................................................. 1.1852 

Ventura County, CA.

37340 ........ Palm Bay-Melbourne-Titusville, FL .................................................................................................................................. 0.9325 

Brevard County, FL.

37380 ........ Palm Coast, FL ................................................................................................................................................................ 0.8945 

Flager County, FL.

37460 ........ Panama City-Lynn Haven, FL .......................................................................................................................................... 0.8313 

Bay County, FL.

37620 ........ Parkersburg-Marietta-Vienna, WV–OH ............................................................................................................................ 0.8105 

Washington County, OH.

Pleasants County, WV.

Wirt County, WV.

Wood County, WV.

37700 ........ Pascagoula, MS ............................................................................................................................................................... 0.8647 

George County, MS.

Jackson County, MS.

37764 ........ Peabody, MA .................................................................................................................................................................... 1.0650 

Essex County, MA.

37860 ........ Pensacola-Ferry Pass-Brent, FL ...................................................................................................................................... 0.8281 

Escambia County, FL.

Santa Rosa County, FL.

37900 ........ Peoria, IL .......................................................................................................................................................................... 0.9299 

Marshall County, IL.

Peoria County, IL.

Stark County, IL.

Tazewell County, IL.

Woodford County, IL.

37964 ........ Philadelphia, PA ............................................................................................................................................................... 1.0925 

Bucks County, PA.

Chester County, PA.

Delaware County, PA.

Montgomery County, PA.

Philadelphia County, PA.


rwilkins on PROD1PC63 with PROPOSALS2
Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5401 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

38060 ........ Phoenix-Mesa-Scottsdale, AZ .......................................................................................................................................... 1.0264 

Maricopa County, AZ.

Pinal County, AZ.

38220 ........ Pine Bluff, AR ................................................................................................................................................................... 0.7839 

Cleveland County, AR.

Jefferson County, AR.

Lincoln County, AR.

38300 ........ Pittsburgh, PA .................................................................................................................................................................. 0.8525 

Allegheny County, PA.

Armstrong County, PA.

Beaver County, PA.

Butler County, PA.

Fayette County, PA.

Washington County, PA.

Westmoreland County, PA.

38340 ........ Pittsfield, MA .................................................................................................................................................................... 1.0091 

Berkshire County, MA.

38540 ........ Pocatello, ID ..................................................................................................................................................................... 0.9465 

Bannock County, ID.

Power County, ID.

38660 ........ Ponce, PR ........................................................................................................................................................................ 0.4450 

Juana Dı ́az Municipio, PR.

Ponce Municipio, PR.

Villalba Municipio, PR.

38860 ........ Portland-South Portland-Biddeford, ME ........................................................................................................................... 1.0042 

Cumberland County, ME.

Sagadahoc County, ME.

York County, ME.

38900 ........ Portland-Vancouver-Beaverton, OR–WA ......................................................................................................................... 1.1498 

Clackamas County, OR.

Columbia County, OR.

Multnomah County, OR.

Washington County, OR.

Yamhill County, OR.

Clark County, WA.

Skamania County, WA.

38940 ........ Port St. Lucie, FL ............................................................................................................................................................. 1.0016 

Martin County, FL.

St. Lucie County, FL.

39100 ........ Poughkeepsie-Newburgh-Middletown, NY ....................................................................................................................... 1.0982 

Dutchess County, NY.

Orange County, NY.

39140 ........ Prescott, AZ ...................................................................................................................................................................... 1.0020 

Yavapai County, AZ.

39300 ........ Providence-New Bedford-Fall River, RI–MA .................................................................................................................... 1.0574 

Bristol County, MA.

Bristol County, RI.

Kent County, RI.

Newport County, RI.

Providence County, RI.

Washington County, RI.

39340 ........ Provo-Orem, UT ............................................................................................................................................................... 0.9557 

Juab County, UT.

Utah County, UT.

39380 ........ Pueblo, CO ....................................................................................................................................................................... 0.8851 

Pueblo County, CO.

39460 ........ Punta Gorda, FL ............................................................................................................................................................... 0.9254 

Charlotte County, FL.

39540 ........ Racine, WI ........................................................................................................................................................................ 0.9498 

Racine County, WI.

39580 ........ Raleigh-Cary, NC ............................................................................................................................................................. 0.9839 

Franklin County, NC.

Johnston County, NC.

Wake County, NC.

39660 ........ Rapid City, SD .................................................................................................................................................................. 0.8811 

Meade County, SD.

Pennington County, SD.

39740 ........ Reading, PA ..................................................................................................................................................................... 0.9356 

Berks County, PA.

39820 ........ Redding, CA ..................................................................................................................................................................... 1.3541 


rwilkins on PROD1PC63 with PROPOSALS2
5402 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Shasta County, CA.

39900 ........ Reno-Sparks, NV ............................................................................................................................................................. 1.0715 

Storey County, NV.

Washoe County, NV.

40060 ........ Richmond, VA .................................................................................................................................................................. 0.9425 

Amelia County, VA.

Caroline County, VA.

Charles City County, VA.

Chesterfield County, VA.

Cumberland County, VA.

Dinwiddie County, VA.

Goochland County, VA.

Hanover County, VA.

Henrico County, VA.

King and Queen County, VA.

King William County, VA.

Louisa County, VA.

New Kent County, VA.

Powhatan County, VA.

Prince George County, VA.

Sussex County, VA.

Colonial Heights City, VA.

Hopewell City, VA.

Petersburg City, VA.

Richmond City, VA.

40140 ........ Riverside-San Bernardino-Ontario, CA ............................................................................................................................ 1.1100 

Riverside County, CA.

San Bernardino County, CA.

40220 ........ Roanoke, VA .................................................................................................................................................................... 0.8691 

Botetourt County, VA.

Craig County, VA.

Franklin County, VA.

Roanoke County, VA.

Roanoke City, VA.

Salem City, VA.

40340 ........ Rochester, MN ................................................................................................................................................................. 1.0755 

Dodge County, MN.

Olmsted County, MN.

Wabasha County, MN.

40380 ........ Rochester, NY .................................................................................................................................................................. 0.8858 

Livingston County, NY.

Monroe County, NY.

Ontario County, NY.

Orleans County, NY.

Wayne County, NY.

40420 ........ Rockford, IL ...................................................................................................................................................................... 0.9814 

Boone County, IL.

Winnebago County, IL.

40484 ........ Rockingham County-Strafford County, NH ...................................................................................................................... 1.0111 

Rockingham County, NH.

Strafford County, NH.

40580 ........ Rocky Mount, NC ............................................................................................................................................................. 0.9001 

Edgecombe County, NC.

Nash County, NC.

40660 ........ Rome, GA ......................................................................................................................................................................... 0.9042 

Floyd County, GA.

40900 ........ Sacramento–Arden-Arcade–Roseville, CA ...................................................................................................................... 1.3505 

El Dorado County, CA.

Placer County, CA.

Sacramento County, CA.

Yolo County, CA.

40980 ........ Saginaw-Saginaw Township North, MI ............................................................................................................................ 0.8812 

Saginaw County, MI.

41060 ........ St. Cloud, MN ................................................................................................................................................................... 1.0549 

Benton County, MN.

Stearns County, MN.

41100 ........ St. George, UT ................................................................................................................................................................. 0.9358 

Washington County, UT.

41140 ........ St. Joseph, MO–KS .......................................................................................................................................................... 0.8762 

Doniphan County, KS.


rwilkins on PROD1PC63 with PROPOSALS2
Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5403 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Andrew County, MO.

Buchanan County, MO.

DeKalb County, MO.

41180 ........ St. Louis, MO–IL .............................................................................................................................................................. 0.9024 

Bond County, IL.

Calhoun County, IL.

Clinton County, IL.

Jersey County, IL.

Macoupin County, IL.

Madison County, IL.

Monroe County, IL.

St. Clair County, IL.

Crawford County, MO.

Franklin County, MO.

Jefferson County, MO.

Lincoln County, MO.

St. Charles County, MO.

St. Louis County, MO.

Warren County, MO.

Washington County, MO.

St. Louis City, MO.

41420 ........ Salem, OR ........................................................................................................................................................................ 1.0572 

Marion County, OR.

Polk County, OR.

41500 ........ Salinas, CA ....................................................................................................................................................................... 1.4775 

Monterey County, CA.

41540 ........ Salisbury, MD ................................................................................................................................................................... 0.8994 

Somerset County, MD.

Wicomico County, MD.

41620 ........ Salt Lake City, UT ............................................................................................................................................................ 0.9399 

Salt Lake County, UT.

Summit County, UT.

Tooele County, UT.

41660 ........ San Angelo, TX ................................................................................................................................................................ 0.8579 

Irion County, TX.

Tom Green County, TX.

41700 ........ San Antonio, TX ............................................................................................................................................................... 0.8834 

Atascosa County, TX.

Bandera County, TX.

Bexar County, TX.

Comal County, TX.

Guadalupe County, TX.

Kendall County, TX.

Medina County, TX.

Wilson County, TX.

41740 ........ San Diego-Carlsbad-San Marcos, CA ............................................................................................................................. 1.1492 

San Diego County, CA.

41780 ........ Sandusky, OH .................................................................................................................................................................. 0.8822 

Erie County, OH.

41884 ........ San Francisco-San Mateo-Redwood City, CA ................................................................................................................. 1.5195 

Marin County, CA.

San Francisco County, CA.

San Mateo County, CA.

41900 ........ San Germa ́n-Cabo Rojo, PR ........................................................................................................................................... 0.4729 

Cabo Rojo Municipio, PR.

Lajas Municipio, PR.

Sabana Grande Municipio, PR.

San Germa ́n Municipio, PR.

41940 ........ San Jose-Sunnyvale-Santa Clara, CA ............................................................................................................................. 1.5735 

San Benito County, CA.

Santa Clara County, CA.

41980 ........ San Juan-Caguas-Guaynabo, PR .................................................................................................................................... 0.4528 

Aguas Buenas Municipio, PR.

Aibonito Municipio, PR.

Arecibo Municipio, PR.

Barceloneta Municipio, PR.

Barranquitas Municipio, PR.

Bayamo ́n Municipio, PR.

Caguas Municipio, PR.

Camuy Municipio, PR.


rwilkins on PROD1PC63 with PROPOSALS2
5404 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Cano ́vanas Municipio, PR.

Carolina Municipio, PR.

Catan ̃o Municipio, PR.

Cayey Municipio, PR.

Ciales Municipio, PR.

Cidra Municipio, PR.

Comer ́ıo Municipio, PR.

Corozal Municipio, PR.

Dorado Municipio, PR.

Florida Municipio, PR.

Guaynabo Municipio, PR.

Gurabo Municipio, PR.

Hatillo Municipio, PR.

Humacao Municipio, PR.

Juncos Municipio, PR.

Las Piedras Municipio, PR.

Lo ́ıza Municipio, PR.

Manat ́ı Municipio, PR.

Maunabo Municipio, PR.

Morovis Municipio, PR.

Naguabo Municipio, PR.

Naranjito Municipio, PR.

Orocovis Municipio, PR.

Quebradillas Municipio, PR.

R ́ıo Grande Municipio, PR.

San Juan Municipio, PR.

San Lorenzo Municipio, PR.

Toa Alta Municipio, PR.

Toa Baja Municipio, PR.

Trujillo Alto Municipio, PR.

Vega Alta Municipio, PR.

Vega Baja Municipio, PR.

Yabucoa Municipio, PR.

42020 ........ San Luis Obispo-Paso Robles, CA .................................................................................................................................. 1.2488 

San Luis Obispo County, CA.

42044 ........ Santa Ana-Anaheim-Irvine, CA ........................................................................................................................................ 1.1766 

Orange County, CA.

42060 ........ Santa Barbara-Santa Maria-Goleta, CA .......................................................................................................................... 1.1714 

Santa Barbara County, CA.

42100 ........ Santa Cruz-Watsonville, CA ............................................................................................................................................. 1.6122 

Santa Cruz County, CA.

42140 ........ Santa Fe, NM ................................................................................................................................................................... 1.0734 

Santa Fe County, NM.

42220 ........ Santa Rosa-Petaluma, CA ............................................................................................................................................... 1.4696 

Sonoma County, CA.

42260 ........ Sarasota-Bradenton-Venice, FL ....................................................................................................................................... 0.9933 

Manatee County, FL.

Sarasota County, FL.

42340 ........ Savannah, GA .................................................................................................................................................................. 0.9131 

Bryan County, GA.

Chatham County, GA.

Effingham County, GA.

42540 ........ Scranton–Wilkes-Barre, PA .............................................................................................................................................. 0.8457 

Lackawanna County, PA.

Luzerne County, PA.

Wyoming County, PA.

42644 ........ Seattle-Bellevue-Everett, WA ........................................................................................................................................... 1.1572 

King County, WA.

Snohomish County, WA.

42680 ........ Sebastian-Vero Beach, FL ............................................................................................................................................... 0.9412 

Indian River County, FL.

43100 ........ Sheboygan, WI ................................................................................................................................................................. 0.8975 

Sheboygan County, WI.

43300 ........ Sherman-Denison, TX ...................................................................................................................................................... 0.8320 

Grayson County, TX.

43340 ........ Shreveport-Bossier City, LA ............................................................................................................................................. 0.8476 

Bossier Parish, LA.

Caddo Parish, LA.

De Soto Parish, LA.

43580 ........ Sioux City, IA–NE–SD ...................................................................................................................................................... 0.9251 


rwilkins on PROD1PC63 with PROPOSALS2
Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5405 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Woodbury County, IA.

Dakota County, NE.

Dixon County, NE.

Union County, SD.

43620 ........ Sioux Falls, SD ................................................................................................................................................................. 0.9563 

Lincoln County, SD.

McCook County, SD.

Minnehaha County, SD.

Turner County, SD.

43780 ........ South Bend-Mishawaka, IN–MI ........................................................................................................................................ 0.9617 

St. Joseph County, IN.

Cass County, MI.

43900 ........ Spartanburg, SC ............................................................................................................................................................... 0.9422 

Spartanburg County, SC.

44060 ........ Spokane, WA ................................................................................................................................................................... 1.0455 

Spokane County, WA.

44100 ........ Springfield, IL ................................................................................................................................................................... 0.8944 

Menard County, IL.

Sangamon County, IL.

44140 ........ Springfield, MA ................................................................................................................................................................. 1.0366 

Franklin County, MA.

Hampden County, MA.

Hampshire County, MA.

44180 ........ Springfield, MO ................................................................................................................................................................. 0.8695 

Christian County, MO.

Dallas County, MO.

Greene County, MO.

Polk County, MO.

Webster County, MO.

44220 ........ Springfield, OH ................................................................................................................................................................. 0.8694 

Clark County, OH.

44300 ........ State College, PA ............................................................................................................................................................. 0.8768 

Centre County, PA.

44700 ........ Stockton, CA .................................................................................................................................................................... 1.1855 

San Joaquin County, CA.

44940 ........ Sumter, SC ....................................................................................................................................................................... 0.8599 

Sumter County, SC.

45060 ........ Syracuse, NY ................................................................................................................................................................... 0.9910 

Madison County, NY.

Onondaga County, NY.

Oswego County, NY.

45104 ........ Tacoma, WA ..................................................................................................................................................................... 1.1055 

Pierce County, WA.

45220 ........ Tallahassee, FL ................................................................................................................................................................ 0.9025 

Gadsden County, FL.

Jefferson County, FL.

Leon County, FL.

Wakulla County, FL.

45300 ........ Tampa-St. Petersburg-Clearwater, FL ............................................................................................................................. 0.9020 

Hernando County, FL.

Hillsborough County, FL.

Pasco County, FL.

Pinellas County, FL.

45460 ........ Terre Haute, IN ................................................................................................................................................................ 0.8805 

Clay County, IN.

Sullivan County, IN.

Vermillion County, IN.

Vigo County, IN.

45500 ........ Texarkana, TX-Texarkana, AR ........................................................................................................................................ 0.7770 

Miller County, AR.

Bowie County, TX.

45780 ........ Toledo, OH ....................................................................................................................................................................... 0.9431 

Fulton County, OH.

Lucas County, OH.

Ottawa County, OH.

Wood County, OH.

45820 ........ Topeka, KS ....................................................................................................................................................................... 0.8538 

Jackson County, KS.

Jefferson County, KS.

Osage County, KS.


rwilkins on PROD1PC63 with PROPOSALS2
5406 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Shawnee County, KS.

Wabaunsee County, KS.

45940 ........ Trenton-Ewing, NJ ............................................................................................................................................................ 1.0699 

Mercer County, NJ.

46060 ........ Tucson, AZ ....................................................................................................................................................................... 0.9245 

Pima County, AZ.

46140 ........ Tulsa, OK ......................................................................................................................................................................... 0.8340 

Creek County, OK.

Okmulgee County, OK.

Osage County, OK.

Pawnee County, OK.

Rogers County, OK.

Tulsa County, OK.

Wagoner County, OK.

46220 ........ Tuscaloosa, AL ................................................................................................................................................................. 0.8303 

Greene County, AL.

Hale County, AL.

Tuscaloosa County, AL.

46340 ........ Tyler, TX ........................................................................................................................................................................... 0.9114 

Smith County, TX.

46540 ........ Utica-Rome, NY ............................................................................................................................................................... 0.8486 

Herkimer County, NY.

Oneida County, NY.

46660 ........ Valdosta, GA .................................................................................................................................................................... 0.8098 

Brooks County, GA.

Echols County, GA.

Lanier County, GA.

Lowndes County, GA.

46700 ........ Vallejo-Fairfield, CA .......................................................................................................................................................... 1.4666 

Solano County, CA.

47020 ........ Victoria, TX ....................................................................................................................................................................... 0.8302 

Calhoun County, TX.

Goliad County, TX.

Victoria County, TX.

47220 ........ Vineland-Millville-Bridgeton, NJ ........................................................................................................................................ 1.0133 

Cumberland County, NJ.

47260 ........ Virginia Beach-Norfolk-Newport News, VA–NC ............................................................................................................... 0.8818 

Currituck County, NC.

Gloucester County, VA.

Isle of Wight County, VA.

James City County, VA.

Mathews County, VA.

Surry County, VA.

York County, VA.

Chesapeake City, VA.

Hampton City, VA.

Newport News City, VA.

Norfolk City, VA.

Poquoson City, VA.

Portsmouth City, VA.

Suffolk City, VA.

Virginia Beach City, VA.

Williamsburg City, VA.

47300 ........ Visalia-Porterville, CA ....................................................................................................................................................... 1.0091 

Tulare County, CA.

47380 ........ Waco, TX .......................................................................................................................................................................... 0.8518 

McLennan County, TX.

47580 ........ Warner Robins, GA .......................................................................................................................................................... 0.9128 

Houston County, GA.

47644 ........ Warren-Troy-Farmington Hills, MI .................................................................................................................................... 1.0001 

Lapeer County, MI.

Livingston County, MI.

Macomb County, MI.

Oakland County, MI.

St. Clair County, MI.

47894 ........ Washington-Arlington-Alexandria, DC–VA–MD–WV ....................................................................................................... 1.0855 

District of Columbia, DC.

Calvert County, MD.

Charles County, MD.

Prince George’s County, MD.


rwilkins on PROD1PC63 with PROPOSALS2
Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5407 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Arlington County, VA.

Clarke County, VA.

Fairfax County, VA.

Fauquier County, VA.

Loudoun County, VA.

Prince William County, VA.

Spotsylvania County, VA.

Stafford County, VA.

Warren County, VA.

Alexandria City, VA.

Fairfax City, VA.

Falls Church City, VA.

Fredericksburg City, VA.

Manassas City, VA.

Manassas Park City, VA.

Jefferson County, WV.

47940 ........ Waterloo-Cedar Falls, IA .................................................................................................................................................. 0.8519 

Black Hawk County, IA.

Bremer County, IA.

Grundy County, IA.

48140 ........ Wausau, WI ...................................................................................................................................................................... 0.9679 

Marathon County, WI.

48260 ........ Weirton-Steubenville, WV–OH ......................................................................................................................................... 0.7924 

Jefferson County, OH.

Brooke County, WV.

Hancock County, WV.

48300 ........ Wenatchee, WA ............................................................................................................................................................... 1.1469 

Chelan County, WA.

Douglas County, WA.

48424 ........ West Palm Beach-Boca Raton-Boynton Beach, FL ........................................................................................................ 0.9728 

Palm Beach County, FL.

48540 ........ Wheeling, WV–OH ........................................................................................................................................................... 0.6961 

Belmont County, OH.

Marshall County, WV.

Ohio County, WV.

48620 ........ Wichita, KS ....................................................................................................................................................................... 0.9062 

Butler County, KS.

Harvey County, KS.

Sedgwick County, KS.

Sumner County, KS.

48660 ........ Wichita Falls, TX .............................................................................................................................................................. 0.7920 

Archer County, TX.

Clay County, TX.

Wichita County, TX.

48700 ........ Williamsport, PA ............................................................................................................................................................... 0.8043 

Lycoming County, PA.

48864 ........ Wilmington, DE–MD–NJ ................................................................................................................................................... 1.0824 

New Castle County, DE.

Cecil County, MD.

Salem County, NJ.

48900 ........ Wilmington, NC ................................................................................................................................................................ 0.9410 

Brunswick County, NC.

New Hanover County, NC.

Pender County, NC.

49020 ........ Winchester, VA–WV ......................................................................................................................................................... 0.9913 

Frederick County, VA.

Winchester City, VA.

Hampshire County, WV.

49180 ........ Winston-Salem, NC .......................................................................................................................................................... 0.9118 

Davie County, NC.

Forsyth County, NC.

Stokes County, NC.

Yadkin County, NC.

49340 ........ Worcester, MA .................................................................................................................................................................. 1.1287 

Worcester County, MA.

49420 ........ Yakima, WA ...................................................................................................................................................................... 1.0267 

Yakima County, WA.

49500 ........ Yauco, PR ........................................................................................................................................................................ 0.3284 

Gua ́nica Municipio, PR.

Guayanilla Municipio, PR.


rwilkins on PROD1PC63 with PROPOSALS2
5408 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued 

CBSA code Urban area (constituent counties) Proposed 

wage index 

Pen ̃uelas Municipio, PR.

Yauco Municipio, PR.

49620 ........ York-Hanover, PA ............................................................................................................................................................ 0.9359 

York County, PA.

49660 ........ Youngstown-Warren-Boardman, OH–PA ......................................................................................................................... 0.9002 

Mahoning County, OH.

Trumbull County, OH.

Mercer County, PA.

49700 ........ Yuba City, CA ................................................................................................................................................................... 1.0756 

Sutter County, CA.

Yuba County, CA.

49740 ........ Yuma, AZ ......................................................................................................................................................................... 0.9488 

Yuma County, AZ.

TABLE 2.—PROPOSED LONG-TERM

CARE HOSPITAL WAGE INDEX FOR

RURAL AREAS FOR DISCHARGES

OCCURRING FROM JULY 1, 2008 

THROUGH SEPTEMBER 30, 2009 

CBSA 

code Nonurban area 

Proposed 

wage 

index 

01 ....... Alabama ....................... 0.7533 

02 ....... Alaska .......................... 1.2109 

03 ....... Arizona ......................... 0.8479 

04 ....... Arkansas ...................... 0.7371 

05 ....... California ...................... 1.2023 

06 ....... Colorado ...................... 0.9704 

07 ....... Connecticut .................. 1.1119 

08 ....... Delaware ...................... 0.9727 

10 ....... Florida .......................... 0.8465 

11 ....... Georgia ........................ 0.7659 

12 ....... Hawaii .......................... 1.0612 

13 ....... Idaho ............................ 0.7920 

14 ....... Illinois ........................... 0.8335 

15 ....... Indiana ......................... 0.8576 

16 ....... Iowa ............................. 0.8566 

17 ....... Kansas ......................... 0.7981 

18 ....... Kentucky ...................... 0.7793 

19 ....... Louisiana ...................... 0.7373 

20 ....... Maine ........................... 0.8476 

TABLE 2.—PROPOSED LONG-TERM

CARE HOSPITAL WAGE INDEX FOR

RURAL AREAS FOR DISCHARGES

OCCURRING FROM JULY 1, 2008 

THROUGH SEPTEMBER 30, 2009—

Continued 

CBSA 

code Nonurban area 

Proposed 

wage 

index 

21 ....... Maryland ...................... 0.9034 

22 ....... Massachusetts ............. 1.1589 

23 ....... Michigan ....................... 0.8953 

24 ....... Minnesota .................... 0.9079 

25 ....... Mississippi .................... 0.7700 

26 ....... Missouri ........................ 0.7930 

27 ....... Montana ....................... 0.8379 

28 ....... Nebraska ...................... 0.8849 

29 ....... Nevada ......................... 0.9272 

30 ....... New Hampshire ........... 1.0470 

31 ....... New Jersey * ................ ................

32 ....... New Mexico ................. 0.8940 

33 ....... New York ..................... 0.8268 

34 ....... North Carolina .............. 0.8603 

35 ....... North Dakota ................ 0.7182 

36 ....... Ohio ............................. 0.8714 

37 ....... Oklahoma ..................... 0.7492 

TABLE 2.—PROPOSED LONG-TERM

CARE HOSPITAL WAGE INDEX FOR

RURAL AREAS FOR DISCHARGES

OCCURRING FROM JULY 1, 2008 

THROUGH SEPTEMBER 30, 2009—

Continued 

CBSA 

code Nonurban area 

Proposed 

wage 

index 

38 ....... Oregon ......................... 0.9906 

39 ....... Pennsylvania ................ 0.8385 

41 ....... Rhode Island * .............. ................

42 ....... South Carolina ............. 0.8656 

43 ....... South Dakota ............... 0.8549 

44 ....... Tennessee ................... 0.7723 

45 ....... Texas ........................... 0.7968 

46 ....... Utah ............................. 0.8116 

47 ....... Vermont ....................... 0.9919 

49 ....... Virginia ......................... 0.7896 

50 ....... Washington .................. 1.0259 

51 ....... West Virginia ................ 0.7454 

52 ....... Wisconsin ..................... 0.9667 

53 ....... Wyoming ...................... 0.9287 

* All counties within the State are classified 

as urban. 

TABLE 3.—FY 2008 MS–LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, SHORT-STAY

OUTLIER THRESHOLD AND IPPS-COMPARABLE THRESHOLD

MS–LTC–

DRG MS–DRG title Relative weight 1

Geometric 

average 

length of 

stay 

Short stay 

outlier 

threshold 2

IPPS comparable 

threshold 3

001 ........... Heart transplant or implant of heart assist system w MCC ...................... 0.0000 0.0 0.0 0.0 

002 ........... Heart transplant or implant of heart assist system w/o MCC ................... 0.0000 0.0 0.0 0.0 

003 ........... ECMO or trach w MV 96+ hrs or PDX exc face, mouth & neck w maj 

O.R.

4.2380 64.3 53.6 53.6 

004 ........... Trach w MV 96+ hrs or PDX exc face, mouth & neck w/o maj O.R ........ 3.0249 46.7 38.9 38.9 

005 ........... Liver transplant w MCC or intestinal transplant ........................................ 0.0000 0.0 0.0 0.0 

006 ........... Liver transplant w/o MCC .......................................................................... 0.0000 0.0 0.0 0.0 

007 ........... Lung transplant .......................................................................................... 0.0000 0.0 0.0 0.0 

008 ........... Simultaneous pancreas/kidney transplant ................................................. 0.0000 0.0 0.0 0.0 

009 ........... Bone marrow transplant ............................................................................ 1.1417 29.0 24.2 24.2 

010 ........... Pancreas transplant ................................................................................... 1.1417 29.0 24.2 0.0 

011 ........... Tracheostomy for face, mouth & neck diagnoses w MCC ....................... 1.5545 35.2 29.3 25.2 

012 ........... Tracheostomy for face, mouth & neck diagnoses w CC .......................... 1.5545 35.2 29.3 16.7 

013 ........... Tracheostomy for face, mouth & neck diagnoses w/o CC/MCC .............. 1.5545 35.2 29.3 11.2 

020 ........... Intracranial vascular procedures w PDX hemorrhage w MCC ................. 1.5545 35.2 29.3 29.3 

021 ........... Intracranial vascular procedures w PDX hemorrhage w CC .................... 0.5472 20.3 16.9 16.9 


rwilkins on PROD1PC63 with PROPOSALS2
Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5409 

TABLE 3.—FY 2008 MS–LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, SHORT-STAY

OUTLIER THRESHOLD AND IPPS-COMPARABLE THRESHOLD—Continued 

MS–LTC–

DRG MS–DRG title Relative weight 1

Geometric 

average 

length of 

stay 

Short stay 

outlier 

threshold 2

IPPS comparable 

threshold 3

022 ........... Intracranial vascular procedures w PDX hemorrhage w/o CC/MCC ........ 0.5472 20.3 16.9 16.1 

023 ........... Cranio w major dev impl/acute complex CNS PDX w MCC or chemo 

implant.

1.5545 35.2 29.3 22.2 

024 ........... Cranio w major dev impl/acute complex CNS PDX w/o MCC .................. 0.5472 20.3 16.9 15.8 

025 ........... Craniotomy & endovascular intracranial procedures w MCC ................... 1.5545 35.2 29.3 22.1 

026 ........... Craniotomy & endovascular intracranial procedures w CC ...................... 1.5545 35.2 29.3 13.2 

027 ........... Craniotomy & endovascular intracranial procedures w/o CC/MCC .......... 1.5545 35.2 29.3 7.5 

028 ........... Spinal procedures w MCC ......................................................................... 1.1417 29.0 24.2 24.2 

029 ........... Spinal procedures w CC or spinal neurostimulators ................................. 1.1417 29.0 24.2 12.4 

030 ........... Spinal procedures w/o CC/MCC ............................................................... 0.5472 20.3 16.9 5.9 

031 ........... Ventricular shunt procedures w MCC ....................................................... 1.5545 35.2 29.3 22.9 

032 ........... Ventricular shunt procedures w CC .......................................................... 0.5472 20.3 16.9 9.4 

033 ........... Ventricular shunt procedures w/o CC/MCC .............................................. 0.5472 20.3 16.9 4.7 

034 ........... Carotid artery stent procedure w MCC ..................................................... 1.5545 35.2 29.3 12.5 

035 ........... Carotid artery stent procedure w CC ........................................................ 1.1417 29.0 24.2 4.4 

036 ........... Carotid artery stent procedure w/o CC/MCC ............................................ 1.1417 29.0 24.2 2.2 

037 ........... Extracranial procedures w MCC ................................................................ 1.5545 35.2 29.3 14.9 

038 ........... Extracranial procedures w CC ................................................................... 1.1417 29.0 24.2 5.8 

039 ........... Extracranial procedures w/o CC/MCC ...................................................... 1.1417 29.0 24.2 2.6 

040 ........... Periph/cranial nerve & other nerv syst proc w MCC ................................. 1.2704 36.2 30.2 22.7 

041 ........... Periph/cranial nerve & other nerv syst proc w CC or periph neurostim ... 1.0810 34.3 28.6 12.3 

042 ........... Periph/cranial nerve & other nerv syst proc w/o CC/MCC ....................... 0.7305 22.9 19.1 5.7 

052 ........... Spinal disorders & injuries w CC/MCC ..................................................... 1.0629 32.3 26.9 10.7 

053 ........... Spinal disorders & injuries w/o CC/MCC .................................................. 1.0629 32.3 26.9 6.4 

054 ........... Nervous system neoplasms w MCC ......................................................... 0.7205 23.6 19.7 11.7 

055 ........... Nervous system neoplasms w/o MCC ...................................................... 0.6779 22.0 18.3 8.1 

056 ........... Degenerative nervous system disorders w MCC ...................................... 0.7407 26.4 22.0 12.3 

057 ........... Degenerative nervous system disorders w/o MCC ................................... 0.6309 24.4 20.3 7.6 

058 ........... Multiple sclerosis & cerebellar ataxia w MCC ........................................... 0.7305 22.9 19.1 12.5 

059 ........... Multiple sclerosis & cerebellar ataxia w CC .............................................. 0.5595 22.6 18.8 8.0 

060 ........... Multiple sclerosis & cerebellar ataxia w/o CC/MCC .................................. 0.5472 20.3 16.9 6.2 

061 ........... Acute ischemic stroke w use of thrombolytic agent w MCC ..................... 0.7897 24.2 20.2 16.0 

062 ........... Acute ischemic stroke w use of thrombolytic agent w CC ........................ 0.6563 22.7 18.9 9.6 

063 ........... Acute ischemic stroke w use of thrombolytic agent w/o CC/MCC ........... 0.5472 20.3 16.9 6.8 

064 ........... Intracranial hemorrhage or cerebral infarction w MCC ............................. 0.7746 25.1 20.9 12.7 

065 ........... Intracranial hemorrhage or cerebral infarction w CC ................................ 0.6691 23.3 19.4 8.2 

066 ........... Intracranial hemorrhage or cerebral infarction w/o CC/MCC .................... 0.5472 20.3 16.9 5.8 

067 ........... Nonspecific cva & precerebral occlusion w/o infarct w MCC ................... 0.5472 20.3 16.9 10.1 

068 ........... Nonspecific cva & precerebral occlusion w/o infarct w/o MCC ................ 0.5472 20.3 16.9 5.6 

069 ........... Transient ischemia ..................................................................................... 0.5472 20.3 16.9 4.7 

070 ........... Nonspecific cerebrovascular disorders w MCC ........................................ 0.7897 24.2 20.2 12.7 

071 ........... Nonspecific cerebrovascular disorders w CC ........................................... 0.6563 22.7 18.9 8.8 

072 ........... Nonspecific cerebrovascular disorders w/o CC/MCC ............................... 0.5472 20.3 16.9 5.8 

073 ........... Cranial & peripheral nerve disorders w MCC ........................................... 0.7849 25.6 21.3 10.2 

074 ........... Cranial & peripheral nerve disorders w/o MCC ........................................ 0.6260 23.4 19.5 6.9 

075 ........... Viral meningitis w CC/MCC ....................................................................... 0.7305 22.9 19.1 12.1 

076 ........... Viral meningitis w/o CC/MCC .................................................................... 0.5472 20.3 16.9 6.5 

077 ........... Hypertensive encephalopathy w MCC ...................................................... 0.7305 22.9 19.1 11.4 

078 ........... Hypertensive encephalopathy w CC ......................................................... 0.7305 22.9 19.1 7.2 

079 ........... Hypertensive encephalopathy w/o CC/MCC ............................................. 0.5472 20.3 16.9 5.3 

080 ........... Nontraumatic stupor & coma w MCC ........................................................ 0.6312 24.6 20.5 7.8 

081 ........... Nontraumatic stupor & coma w/o MCC ..................................................... 0.5618 23.1 19.3 5.3 

082 ........... Traumatic stupor & coma, coma >1 hr w MCC ........................................ 0.8864 29.5 24.6 10.9 

083 ........... Traumatic stupor & coma, coma >1 hr w CC ........................................... 0.7305 22.9 19.1 8.6 

084 ........... Traumatic stupor & coma, coma >1 hr w/o CC/MCC ............................... 0.7305 22.9 19.1 4.9 

085 ........... Traumatic stupor & coma, coma <1 hr w MCC ........................................ 0.9044 28.3 23.6 13.2 

086 ........... Traumatic stupor & coma, coma <1 hr w CC ........................................... 0.7437 25.1 20.9 8.2 

087 ........... Traumatic stupor & coma, coma <1 hr w/o CC/MCC ............................... 0.6361 20.4 17.0 5.3 

088 ........... Concussion w MCC ................................................................................... 1.1417 29.0 24.2 9.9 

089 ........... Concussion w CC ...................................................................................... 1.1417 29.0 24.2 6.0 

090 ........... Concussion w/o CC/MCC .......................................................................... 1.1417 29.0 24.2 3.7 

091 ........... Other disorders of nervous system w MCC .............................................. 0.8019 25.6 21.3 10.7 

092 ........... Other disorders of nervous system w CC ................................................. 0.6704 22.0 18.3 6.9 

093 ........... Other disorders of nervous system w/o CC/MCC ..................................... 0.5811 20.1 16.8 4.9 

094 ........... Bacterial & tuberculous infections of nervous system w MCC ................. 1.0328 27.9 23.3 20.8 

095 ........... Bacterial & tuberculous infections of nervous system w CC .................... 0.9306 27.0 22.5 14.9 

096 ........... Bacterial & tuberculous infections of nervous system w/o CC/MCC ........ 0.9306 27.0 22.5 10.1 

097 ........... Non-bacterial infect of nervous sys exc viral meningitis w MCC .............. 0.9289 26.8 22.3 19.6 


rwilkins on PROD1PC63 with PROPOSALS2
5410 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

TABLE 3.—FY 2008 MS–LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, SHORT-STAY

OUTLIER THRESHOLD AND IPPS-COMPARABLE THRESHOLD—Continued 

MS–LTC–

DRG MS–DRG title Relative weight 1

Geometric 

average 

length of 

stay 

Short stay 

outlier 

threshold 2

IPPS comparable 

threshold 3

098 ........... Non-bacterial infect of nervous sys exc viral meningitis w CC ................. 0.8629 22.7 18.9 13.7 

099 ........... Non-bacterial infect of nervous sys exc viral meningitis w/o CC/MCC ..... 0.7305 22.9 19.1 10.1 

100 ........... Seizures w MCC ........................................................................................ 0.7904 26.5 22.1 10.1 

101 ........... Seizures w/o MCC ..................................................................................... 0.6177 21.4 17.8 5.8 

102 ........... Headaches w MCC .................................................................................... 0.8249 25.0 20.8 8.1 

103 ........... Headaches w/o MCC ................................................................................. 0.8249 25.0 20.8 5.0 

113 ........... Orbital procedures w CC/MCC .................................................................. 0.7305 22.9 19.1 9.2

114 ........... Orbital procedures w/o CC/MCC ............................................................... 0.7305 22.9 19.1 4.1 

115 ........... Extraocular procedures except orbit .......................................................... 0.8249 25.0 20.8 7.2

116 ........... Intraocular procedures w CC/MCC ........................................................... 0.8249 25.0 20.8 5.2 

117 ........... Intraocular procedures w/o CC/MCC ........................................................ 0.8249 25.0 20.8 2.8 

121 ........... Acute major eye infections w CC/MCC ..................................................... 0.7305 22.9 19.1 9.1 

122 ........... Acute major eye infections w/o CC/MCC .................................................. 0.5472 20.3 16.9 6.3 

123 ........... Neurological eye disorders ........................................................................ 0.5472 20.3 16.9 4.5 

124 ........... Other disorders of the eye w MCC ........................................................... 1.1417 29.0 24.2 8.4 

125 ........... Other disorders of the eye w/o MCC ........................................................ 0.8249 25.0 20.8 5.5 

129 ........... Major head & neck procedures w CC/MCC or major device .................... 1.1977 26.4 22.0 8.1 

130 ........... Major head & neck procedures w/o CC/MCC ........................................... 0.7305 22.9 19.1 4.8 

131 ........... Cranial/facial procedures w CC/MCC ........................................................ 1.5545 35.2 29.3 9.5 

132 ........... Cranial/facial procedures w/o CC/MCC ..................................................... 1.5545 35.2 29.3 4.0 

133 ........... Other ear, nose, mouth & throat O.R. procedures w CC/MCC ................ 0.7305 22.9 19.1 9.4 

134 ........... Other ear, nose, mouth & throat O.R. procedures w/o CC/MCC ............. 0.7305 22.9 19.1 3.2 

135 ........... Sinus & mastoid procedures w CC/MCC .................................................. 0.7305 22.9 19.1 10.8 

136 ........... Sinus & mastoid procedures w/o CC/MCC ............................................... 0.7305 22.9 19.1 3.9 

137 ........... Mouth procedures w CC/MCC .................................................................. 1.5545 35.2 29.3 8.7 

138 ........... Mouth procedures w/o CC/MCC ............................................................... 1.5545 35.2 29.3 3.7 

139 ........... Salivary gland procedures ......................................................................... 1.5545 35.2 29.3 2.5 

146 ........... Ear, nose, mouth & throat malignancy w MCC ......................................... 1.1977 26.4 22.0 16.9 

147 ........... Ear, nose, mouth & throat malignancy w CC ............................................ 1.0416 24.9 20.8 9.3 

148 ........... Ear, nose, mouth & throat malignancy w/o CC/MCC ............................... 0.7305 22.9 19.1 5.6 

149 ........... Dysequilibrium ........................................................................................... 0.5472 20.3 16.9 4.2 

150 ........... Epistaxis w MCC ....................................................................................... 0.7305 22.9 19.1 8.8 

151 ........... Epistaxis w/o MCC .................................................................................... 0.7305 22.9 19.1 4.5 

152 ........... Otitis media & URI w MCC ........................................................................ 0.7305 22.9 19.1 7.4 

153 ........... Otitis media & URI w/o MCC ..................................................................... 0.7305 22.9 19.1 5.2 

154 ........... Nasal trauma & deformity w MCC ............................................................. 0.7703 21.0 17.5 10.5 

155 ........... Nasal trauma & deformity w CC ................................................................ 0.7703 21.0 17.5 7.2

156 ........... Nasal trauma & deformity w/o CC/MCC ................................................... 0.7305 22.9 19.1 4.9 

157 ........... Dental & Oral Diseases w MCC ................................................................ 0.8249 25.0 20.8 11.3

158 ........... Dental & Oral Diseases w CC ................................................................... 0.8249 25.0 20.8 7.1 

159 ........... Dental & Oral Diseases w/o CC/MCC ....................................................... 0.5472 20.3 16.9 4.8 

163 ........... Major chest procedures w MCC ................................................................ 2.2157 39.7 33.1 23.6

164 ........... Major chest procedures w CC ................................................................... 1.5545 35.2 29.3 13.0 

165 ........... Major chest procedures w/o CC/MCC ....................................................... 1.5545 35.2 29.3 8.3 

166 ........... Other resp system O.R. procedures w MCC ............................................ 2.4392 42.3 35.3 20.6 

167 ........... Other resp system O.R. procedures w CC ............................................... 2.1594 38.0 31.7 13.1 

168 ........... Other resp system O.R. procedures w/o CC/MCC ................................... 1.1417 29.0 24.2 8.9 

175 ........... Pulmonary embolism w MCC .................................................................... 0.7160 22.0 18.3 11.6

176 ........... Pulmonary embolism w/o MCC ................................................................. 0.5989 20.1 16.8 8.4 

177 ........... Respiratory infections & inflammations w MCC ........................................ 0.8393 23.5 19.6 14.9 

178 ........... Respiratory infections & inflammations w CC ........................................... 0.7671 22.2 18.5 11.7 

179 ........... Respiratory infections & inflammations w/o CC/MCC ............................... 0.6885 19.0 15.8 8.9 

180 ........... Respiratory neoplasms w MCC ................................................................. 0.8140 20.2 16.8 13.1

181 ........... Respiratory neoplasms w CC .................................................................... 0.7103 19.3 16.1 9.7 

182 ........... Respiratory neoplasms w/o CC/MCC ........................................................ 0.5472 20.3 16.9 6.9 

183 ........... Major chest trauma w MCC ....................................................................... 0.5472 20.3 16.9 11.5 

184 ........... Major chest trauma w CC .......................................................................... 0.5472 20.3 16.9 7.3 

185 ........... Major chest trauma w/o CC/MCC ............................................................. 0.5472 20.3 16.9 5.0 

186 ........... Pleural effusion w MCC ............................................................................. 0.8259 23.6 19.7 12.2 

187 ........... Pleural effusion w CC ................................................................................ 0.7042 21.1 17.6 8.8 

188 ........... Pleural effusion w/o CC/MCC .................................................................... 0.7042 21.1 17.6 6.5 

189 ........... Pulmonary edema & respiratory failure ..................................................... 0.9743 24.0 20.0 10.1 

190 ........... Chronic obstructive pulmonary disease w MCC ....................................... 0.6858 20.9 17.4 10.2 

191 ........... Chronic obstructive pulmonary disease w CC .......................................... 0.6256 19.5 16.3 7.9 

192 ........... Chronic obstructive pulmonary disease w/o CC/MCC .............................. 0.5832 17.2 14.3 6.2 

193 ........... Simple pneumonia & pleurisy w MCC ....................................................... 0.7088 21.6 18.0 10.9 

194 ........... Simple pneumonia & pleurisy w CC .......................................................... 0.6429 19.8 16.5 8.2 

195 ........... Simple pneumonia & pleurisy w/o CC/MCC ............................................. 0.5962 18.2 15.2 6.3 


rwilkins on PROD1PC63 with PROPOSALS2
Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5411 

TABLE 3.—FY 2008 MS–LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, SHORT-STAY

OUTLIER THRESHOLD AND IPPS-COMPARABLE THRESHOLD—Continued 

MS–LTC–

DRG MS–DRG title Relative weight 1

Geometric 

average 

length of 

stay 

Short stay 

outlier 

threshold 2

IPPS comparable 

threshold 3

196 ........... Interstitial lung disease w MCC ................................................................. 0.6529 20.0 16.7 11.6 

197 ........... Interstitial lung disease w CC .................................................................... 0.6133 19.6 16.3 8.5 

198 ........... Interstitial lung disease w/o CC/MCC ........................................................ 0.5956 19.7 16.4 6.7 

199 ........... Pneumothorax w MCC .............................................................................. 0.8249 25.0 20.8 13.8 

200 ........... Pneumothorax w CC ................................................................................. 0.7305 22.9 19.1 8.3 

201 ........... Pneumothorax w/o CC/MCC ..................................................................... 0.5472 20.3 16.9 6.5 

202 ........... Bronchitis & asthma w CC/MCC ............................................................... 0.6903 21.1 17.6 6.9 

203 ........... Bronchitis & asthma w/o CC/MCC ............................................................ 0.5650 17.1 14.3 5.3 

204 ........... Respiratory signs & symptoms .................................................................. 0.8187 22.0 18.3 4.4 

205 ........... Other respiratory system diagnoses w MCC ............................................ 0.8207 22.4 18.7 9.0 

206 ........... Other respiratory system diagnoses w/o MCC ......................................... 0.7667 21.5 17.9 5.5 

207 ........... Respiratory system diagnosis w ventilator support 96+ hours ................. 2.0266 34.3 28.6 22.6 

208 ........... Respiratory system diagnosis w ventilator support <96 hours ................. 1.5514 27.8 23.2 12.5 

215 ........... Other heart assist system implant ............................................................. 0.8249 25.0 20.8 20.5 

216 ........... Cardiac valve & oth maj cardiothoracic proc w card cath w MCC ........... 1.5545 35.2 29.3 28.7 

217 ........... Cardiac valve & oth maj cardiothoracic proc w card cath w CC .............. 0.8249 25.0 20.8 17.7 

218 ........... Cardiac valve & oth maj cardiothoracic proc w card cath w/o CC/MCC .. 0.8249 25.0 20.8 12.7 

219 ........... Cardiac valve & oth maj cardiothoracic proc w/o card cath w MCC ........ 1.5545 35.2 29.3 22.6 

220 ........... Cardiac valve & oth maj cardiothoracic proc w/o card cath w CC ........... 0.8249 25.0 20.8 12.5 

221 ........... Cardiac valve & oth maj cardiothoracic proc w/o card cath w/o CC/MCC 0.8249 25.0 20.8 8.7 

222 ........... Cardiac defib implant w cardiac cath w AMI/HF/shock w MCC ............... 1.5545 35.2 29.3 20.9 

223 ........... Cardiac defib implant w cardiac cath w AMI/HF/shock w/o MCC ............ 1.5545 35.2 29.3 11.0 

224 ........... Cardiac defib implant w cardiac cath w/o AMI/HF/shock w MCC ............ 1.5545 35.2 29.3 18.2 

225 ........... Cardiac defib implant w cardiac cath w/o AMI/HF/shock w/o MCC ......... 1.5545 35.2 29.3 9.2 

226 ........... Cardiac defibrillator implant w/o cardiac cath w MCC .............................. 1.5545 35.2 29.3 16.8 

227 ........... Cardiac defibrillator implant w/o cardiac cath w/o MCC ........................... 1.5545 35.2 29.3 4.1 

228 ........... Other cardiothoracic procedures w MCC .................................................. 1.5410 35.0 29.2 23.2 

229 ........... Other cardiothoracic procedures w CC ..................................................... 1.2681 30.8 25.7 13.5 

230 ........... Other cardiothoracic procedures w/o CC/MCC ......................................... 0.8249 25.0 20.8 10.2 

231 ........... Coronary bypass w PTCA w MCC ............................................................ 1.5545 35.2 29.3 20.9 

232 ........... Coronary bypass w PTCA w/o MCC ......................................................... 0.8249 25.0 20.8 13.1 

233 ........... Coronary bypass w cardiac cath w MCC .................................................. 1.5545 35.2 29.3 21.0 

234 ........... Coronary bypass w cardiac cath w/o MCC ............................................... 0.8249 25.0 20.8 12.2 

235 ........... Coronary bypass w/o cardiac cath w MCC ............................................... 1.5545 35.2 29.3 17.0 

236 ........... Coronary bypass w/o cardiac cath w/o MCC ............................................ 0.8249 25.0 20.8 9.0 

237 ........... Major cardiovasc procedures w MCC or thoracic aortic anuerysm repair 1.5545 35.2 29.3 19.6 

238 ........... Major cardiovasc procedures w/o MCC .................................................... 0.8249 25.0 20.8 8.1 

239 ........... Amputation for circ sys disorders exc upper limb & toe w MCC .............. 1.3794 37.4 31.2 24.7 

240 ........... Amputation for circ sys disorders exc upper limb & toe w CC ................. 1.2872 36.1 30.1 16.6 

241 ........... Amputation for circ sys disorders exc upper limb & toe w/o CC/MCC ..... 1.1417 29.0 24.2 10.7 

242 ........... Permanent cardiac pacemaker implant w MCC ........................................ 1.5545 35.2 29.3 14.5 

243 ........... Permanent cardiac pacemaker implant w CC ........................................... 1.5545 35.2 29.3 8.5 

244 ........... Permanent cardiac pacemaker implant w/o CC/MCC .............................. 1.1417 29.0 24.2 4.6 

245 ........... AICD lead & generator procedures ........................................................... 0.7305 22.9 19.1 4.9 

246 ........... Perc cardiovasc proc w drug-eluting stent w MCC or 4+ vessels/stents 0.8249 25.0 20.8 9.1 

247 ........... Perc cardiovasc proc w drug-eluting stent w/o MCC ................................ 0.8249 25.0 20.8 3.3 

248 ........... Perc cardiovasc proc w non-drug-eluting stent w MCC or 4+ ves/stents 1.5545 35.2 29.3 10.3 

249 ........... Perc cardiovasc proc w non-drug-eluting stent w/o MCC ......................... 1.5545 35.2 29.3 3.9 

250 ........... Perc cardiovasc proc w/o coronary artery stent or AMI w MCC .............. 0.8249 25.0 20.8 12.7 

251 ........... Perc cardiovasc proc w/o coronary artery stent or AMI w/o MCC ........... 0.8249 25.0 20.8 4.6 

252 ........... Other vascular procedures w MCC ........................................................... 1.5410 35.0 29.2 15.1 

253 ........... Other vascular procedures w CC .............................................................. 1.2681 30.8 25.7 10.2

254 ........... Other vascular procedures w/o CC/MCC .................................................. 0.8249 25.0 20.8 4.3 

255 ........... Upper limb & toe amputation for circ system disorders w MCC ............... 1.1713 33.7 28.1 16.7 

256 ........... Upper limb & toe amputation for circ system disorders w CC .................. 0.9516 29.4 24.5 12.3 

257 ........... Upper limb & toe amputation for circ system disorders w/o CC/MCC ..... 0.9516 29.4 24.5 8.2 

258 ........... Cardiac pacemaker device replacement w MCC ...................................... 1.5545 35.2 29.3 12.6 

259 ........... Cardiac pacemaker device replacement w/o MCC ................................... 1.5545 35.2 29.3 4.0 

260 ........... Cardiac pacemaker revision except device replacement w MCC ............ 1.5545 35.2 29.3 17.4 

261 ........... Cardiac pacemaker revision except device replacement w CC ............... 0.5472 20.3 16.9 6.4 

262 ........... Cardiac pacemaker revision except device replacement w/o CC/MCC ... 0.5472 20.3 16.9 3.7 

263 ........... Vein ligation & stripping ............................................................................. 0.8249 25.0 20.8 9.2 

264 ........... Other circulatory system O.R. procedures ................................................ 1.0667 31.6 26.3 15.4 

280 ........... Acute myocardial infarction, discharged alive w MCC .............................. 0.7263 21.4 17.8 12.0 

281 ........... Acute myocardial infarction, discharged alive w CC ................................. 0.6931 22.8 19.0 7.8 

282 ........... Acute myocardia infarction, discharged alive w/o CC/MCC ..................... 0.6931 22.8 19.0 5.1 

283 ........... Acute myocardial infarction, expired w MCC ............................................ 0.6609 17.0 14.2 9.0 

284 ........... Acute myocardial infarction, expired w CC ............................................... 0.6609 17.0 14.2 5.4 


rwilkins on PROD1PC63 with PROPOSALS2
5412 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

TABLE 3.—FY 2008 MS–LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, SHORT-STAY

OUTLIER THRESHOLD AND IPPS-COMPARABLE THRESHOLD—Continued 

MS–LTC–

DRG MS–DRG title Relative weight 1

Geometric 

average 

length of 

stay 

Short stay 

outlier 

threshold 2

IPPS comparable 

threshold 3

285 ........... Acute myocardial infarction, expired w/o CC/MCC ................................... 0.6609 17.0 14.2 3.3 

286 ........... Circulatory disorders except AMI, w card cath w MCC ............................ 1.1417 29.0 24.2 11.6 

287 ........... Circulatory disorders except AMI, w card cath w/o MCC ......................... 0.8249 25.0 20.8 5.0 

288 ........... Acute & subacute endocarditis w MCC ..................................................... 0.9082 26.4 22.0 19.7 

289 ........... Acute & subacute endocarditis w CC ........................................................ 0.8580 26.4 22.0 13.7 

290 ........... Acute & subacute endocarditis w/o CC/MCC ........................................... 0.7664 25.5 21.3 10.6 

291 ........... Heart failure & shock w MCC .................................................................... 0.6968 21.4 17.8 10.7 

292 ........... Heart failure & shock w CC ....................................................................... 0.6252 20.4 17.0 7.7 

293 ........... Heart failure & shock w/o CC/MCC ........................................................... 0.5775 18.5 15.4 5.6 

294 ........... Deep vein thrombophlebitis w CC/MCC .................................................... 0.8249 25.0 20.8 8.6 

295 ........... Deep vein thrombophlebitis w/o CC/MCC ................................................. 0.8249 25.0 20.8 6.7 

296 ........... Cardiac arrest, unexplained w MCC ......................................................... 0.6609 17.0 14.2 4.8 

297 ........... Cardiac arrest, unexplained w CC ............................................................ 0.6609 17.0 14.2 2.7 

298 ........... Cardiac arrest, unexplained w/o CC/MCC ................................................ 0.6609 17.0 14.2 1.9 

299 ........... Peripheral vascular disorders w MCC ....................................................... 0.7152 24.8 20.7 11.2 

300 ........... Peripheral vascular disorders w CC .......................................................... 0.6150 22.2 18.5 8.2 

301 ........... Peripheral vascular disorders w/o CC/MCC .............................................. 0.5557 19.4 16.2 6.0 

302 ........... Atherosclerosis w MCC ............................................................................. 0.6170 21.9 18.3 6.9 

303 ........... Atherosclerosis w/o MCC .......................................................................... 0.5673 20.5 17.1 3.9 

304 ........... Hypertension w MCC ................................................................................. 0.8249 25.0 20.8 8.3 

305 ........... Hypertension w/o MCC .............................................................................. 0.5856 22.6 18.8 4.4 

306 ........... Cardiac congenital & valvular disorders w MCC ....................................... 0.8786 24.2 20.2 10.2 

307 ........... Cardiac congenital & valvular disorders w/o MCC .................................... 0.7767 23.1 19.3 5.5 

308 ........... Cardiac arrhythmia & conduction disorders w MCC ................................. 0.7431 24.7 20.6 9.3 

309 ........... Cardiac arrhythmia & conduction disorders w CC .................................... 0.5940 20.4 17.0 6.2 

310 ........... Cardiac arrhythmia & conduction disorders w/o CC/MCC ........................ 0.5184 17.0 14.2 4.2 

311 ........... Angina pectoris .......................................................................................... 0.7305 22.9 19.1 3.5 

312 ........... Syncope & collapse ................................................................................... 0.5336 19.7 16.4 4.9 

313 ........... Chest pain .................................................................................................. 0.5472 20.3 16.9 3.1 

314 ........... Other circulatory system diagnoses w MCC ............................................. 0.8123 23.1 19.3 11.8 

315 ........... Other circulatory system diagnoses w CC ................................................ 0.7114 21.6 18.0 7.3 

316 ........... Other circulatory system diagnoses w/o CC/MCC .................................... 0.6243 18.9 15.8 4.7 

326 ........... Stomach, esophageal & duodenal proc w MCC ....................................... 1.8646 36.2 30.2 28.1 

327 ........... Stomach, esophageal & duodenal proc w CC .......................................... 1.5545 35.2 29.3 16.8 

328 ........... Stomach, esophageal & duodenal proc w/o CC/MCC .............................. 0.5472 20.3 16.9 7.2 

329 ........... Major small & large bowel procedures w MCC ......................................... 1.5545 35.2 29.3 25.3 

330 ........... Major small & large bowel procedures w CC ............................................ 1.5545 35.2 29.3 14.6 

331 ........... Major small & large bowel procedures w/o CC/MCC ............................... 0.5472 20.3 16.9 8.7 

332 ........... Rectal resection w MCC ............................................................................ 1.5057 36.1 30.1 22.6 

333 ........... Rectal resection w CC ............................................................................... 1.3309 30.7 25.6 13.0 

334 ........... Rectal resection w/o CC/MCC ................................................................... 0.8249 25.0 20.8 8.6 

335 ........... Peritoneal adhesiolysis w MCC ................................................................. 1.5545 35.2 29.3 22.9 

336 ........... Peritoneal adhesiolysis w CC .................................................................... 0.7305 22.9 19.1 14.6 

337 ........... Peritoneal adhesiolysis w/o CC/MCC ........................................................ 0.7305 22.9 19.1 9.3 

338 ........... Appendectomy w complicated principal diag w MCC ............................... 0.8884 24.1 20.1 16.7 

339 ........... Appendectomy w complicated principal diag w CC .................................. 0.7667 22.2 18.5 10.8 

340 ........... Appendectomy w complicated principal diag w/o CC/MCC ...................... 0.6856 19.9 16.6 6.6 

341 ........... Appendectomy w/o complicated principal diag w MCC ............................ 0.8884 24.1 20.1 12.0 

342 ........... Appendectomy w/o complicated principal diag w CC ............................... 0.7667 22.2 18.5 6.8 

343 ........... Appendectomy w/o complicated principal diag w/o CC/MCC ................... 0.6856 19.9 16.6 3.4 

344 ........... Minor small & large bowel procedures w MCC ......................................... 0.8884 24.1 20.1 19.1 

345 ........... Minor small & large bowel procedures w CC ............................................ 0.7667 22.2 18.5 10.9 

346 ........... Minor small & large bowel procedures w/o CC/MCC ............................... 0.6856 19.9 16.6 7.4 

347 ........... Anal & stomal procedures w MCC ............................................................ 1.1417 29.0 24.2 13.8 

348 ........... Anal & stomal procedures w CC ............................................................... 0.8249 25.0 20.8 8.9 

349 ........... Anal & stomal procedures w/o CC/MCC ................................................... 0.5472 20.3 16.9 4.7 

350 ........... Inguinal & femoral hernia procedures w MCC .......................................... 1.5545 35.2 29.3 13.6 

351 ........... Inguinal & femoral hernia procedures w CC ............................................. 1.1417 29.0 24.2 7.4 

352 ........... Inguinal & femoral hernia procedures w/o CC/MCC ................................. 0.8249 25.0 20.8 3.7 

353 ........... Hernia procedures except inguinal & femoral w MCC .............................. 0.8249 25.0 20.8 14.5 

354 ........... Hernia procedures except inguinal & femoral w CC ................................. 0.8249 25.0 20.8 8.2 

355 ........... Hernia procedures except inguinal & femoral w/o CC/MCC ..................... 0.8249 25.0 20.8 4.4 

356 ........... Other digestive system O.R. procedures w MCC ..................................... 1.5057 36.1 30.1 22.5 

357 ........... Other digestive system O.R. procedures w CC ........................................ 1.3309 30.7 25.6 13.3 

358 ........... Other digestive system O.R. procedures w/o CC/MCC ............................ 0.8249 25.0 20.8 7.6 

368 ........... Major esophageal disorders w MCC ......................................................... 1.1417 29.0 24.2 10.5 

369 ........... Major esophageal disorders w CC ............................................................ 1.1417 29.0 24.2 7.1 

370 ........... Major esophageal disorders w/o CC/MCC ................................................ 1.1417 29.0 24.2 5.2 


rwilkins on PROD1PC63 with PROPOSALS2
Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5413 

TABLE 3.—FY 2008 MS–LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, SHORT-STAY

OUTLIER THRESHOLD AND IPPS-COMPARABLE THRESHOLD—Continued 

MS–LTC–

DRG MS–DRG title Relative weight 1

Geometric 

average 

length of 

stay 

Short stay 

outlier 

threshold 2

IPPS comparable 

threshold 3

371 ........... Major gastrointestinal disorders & peritoneal infections w MCC .............. 0.8884 24.1 20.1 14.1 

372 ........... Major gastrointestinal disorders & peritoneal infections w CC ................. 0.7667 22.2 18.5 10.6 

373 ........... Major gastrointestinal disorders & peritoneal infections w/o CC/MCC ..... 0.6856 19.9 16.6 7.7 

374 ........... Digestive malignancy w MCC .................................................................... 0.8340 22.9 19.1 14.4 

375 ........... Digestive malignancy w CC ....................................................................... 0.7563 19.7 16.4 9.7 

376 ........... Digestive malignancy w/o CC/MCC .......................................................... 0.5472 20.3 16.9 6.5 

377 ........... G.I. hemorrhage w MCC ........................................................................... 0.7032 22.5 18.8 10.3 

378 ........... G.I. hemorrhage w CC .............................................................................. 0.6334 21.5 17.9 6.8 

379 ........... G.I. hemorrhage w/o CC/MCC .................................................................. 0.5472 20.3 16.9 5.2 

380 ........... Complicated peptic ulcer w MCC .............................................................. 0.8249 25.0 20.8 11.4

381 ........... Complicated peptic ulcer w CC ................................................................. 0.8249 25.0 20.8 7.9 

382 ........... Complicated peptic ulcer w/o CC/MCC ..................................................... 0.7305 22.9 19.1 5.5 

383 ........... Uncomplicated peptic ulcer w MCC .......................................................... 0.8249 25.0 20.8 9.1 

384 ........... Uncomplicated peptic ulcer w/o MCC ....................................................... 0.7305 22.9 19.1 5.9 

385 ........... Inflammatory bowel disease w MCC ......................................................... 0.8874 24.6 20.5 14.4 

386 ........... Inflammatory bowel disease w CC ............................................................ 0.7655 22.9 19.1 9.0 

387 ........... Inflammatory bowel disease w/o CC/MCC ................................................ 0.7655 22.9 19.1 6.9 

388 ........... G.I. obstruction w MCC ............................................................................. 0.8967 22.8 19.0 12.0 

389 ........... G.I. obstruction w CC ................................................................................ 0.7893 21.9 18.3 8.0 

390 ........... G.I. obstruction w/o CC/MCC .................................................................... 0.7893 21.9 18.3 5.5 

391 ........... Esophagitis, gastroent & misc digest disorders w MCC ........................... 0.8509 24.4 20.3 8.7 

392 ........... Esophagitis, gastroent & misc digest disorders w/o MCC ........................ 0.6943 20.4 17.0 5.5 

393 ........... Other digestive system diagnoses w MCC ............................................... 0.9915 25.5 21.3 11.4 

394 ........... Other digestive system diagnoses w CC .................................................. 0.8523 22.0 18.3 7.7 

395 ........... Other digestive system diagnoses w/o CC/MCC ...................................... 0.7214 20.9 17.4 5.3 

405 ........... Pancreas, liver & shunt procedures w MCC ............................................. 1.5545 35.2 29.3 29.0 

406 ........... Pancreas, liver & shunt procedures w CC ................................................ 1.5545 35.2 29.3 16.0 

407 ........... Pancreas, liver & shunt procedures w/o CC/MCC .................................... 1.1417 29.0 24.2 9.2 

408 ........... Biliary tract proc except only cholecyst w or w/o c.d.e. w MCC ............... 1.5545 35.2 29.3 23.7 

409 ........... Biliary tract proc except only cholecyst w or w/o c.d.e. w CC .................. 1.5545 35.2 29.3 15.4 

410 ........... Biliary tract proc except only cholecyst w or w/o c.d.e. w/o CC/MCC ...... 1.5545 35.2 29.3 10.6 

411 ........... Cholecystectomy w c.d.e. w MCC ............................................................. 1.1417 29.0 24.2 20.3 

412 ........... Cholecystectomy w c.d.e. w CC ................................................................ 1.1417 29.0 24.2 13.5 

413 ........... Cholecystectomy w c.d.e. w/o CC/MCC ................................................... 1.1417 29.0 24.2 9.3 

414 ........... Cholecystectomy except by laparoscope w/o c.d.e. w MCC .................... 1.1417 29.0 24.2 18.4 

415 ........... Cholecystectomy except by laparoscope w/o c.d.e. w CC ....................... 1.1417 29.0 24.2 11.6 

416 ........... Cholecystectomy except by laparoscope w/o c.d.e. w/o CC/MCC ........... 1.1417 29.0 24.2 7.5 

417 ........... Laparoscopic cholecystectomy w/o c.d.e. w MCC .................................... 1.5545 35.2 29.3 13.5 

418 ........... Laparoscopic cholecystectomy w/o c.d.e. w CC ....................................... 1.1417 29.0 24.2 9.0 

419 ........... Laparoscopic cholecystectomy w/o c.d.e. w/o CC/MCC ........................... 1.1417 29.0 24.2 5.0 

420 ........... Hepatobiliary diagnostic procedures w MCC ............................................ 1.1417 29.0 24.2 24.2 

421 ........... Hepatobiliary diagnostic procedures w CC ............................................... 0.8249 25.0 20.8 12.9 

422 ........... Hepatobiliary diagnostic procedures w/o CC/MCC ................................... 0.8249 25.0 20.8 7.3 

423 ........... Other hepatobiliary or pancreas O.R. procedures w MCC ....................... 1.1417 29.0 24.2 24.2 

424 ........... Other hepatobiliary or pancreas O.R. procedures w CC .......................... 0.8249 25.0 20.8 17.1 

425 ........... Other hepatobiliary or pancreas O.R. procedures w/o CC/MCC .............. 0.8249 25.0 20.8 9.2 

432 ........... Cirrhosis & alcoholic hepatitis w MCC ...................................................... 0.6223 19.0 15.8 11.1 

433 ........... Cirrhosis & alcoholic hepatitis w CC ......................................................... 0.6223 19.0 15.8 7.7

434 ........... Cirrhosis & alcoholic hepatitis w/o CC/MCC ............................................. 0.5472 20.3 16.9 5.7 

435 ........... Malignancy of hepatobiliary system or pancreas w MCC ......................... 0.7422 20.2 16.8 12.6 

436 ........... Malignancy of hepatobiliary system or pancreas w CC ............................ 0.7086 19.6 16.3 9.5 

437 ........... Malignancy of hepatobiliary system or pancreas w/o CC/MCC ................ 0.7086 19.6 16.3 7.1 

438 ........... Disorders of pancreas except malignancy w MCC ................................... 1.0057 24.3 20.3 12.5 

439 ........... Disorders of pancreas except malignancy w CC ...................................... 0.8437 21.9 18.3 8.5 

440 ........... Disorders of pancreas except malignancy w/o CC/MCC .......................... 0.7204 18.8 15.7 5.9 

441 ........... Disorders of liver except malig,cirr,alc hepa w MCC ................................ 0.7588 21.8 18.2 11.3 

442 ........... Disorders of liver except malig, cirr, alc hepa w CC ................................. 0.6925 21.2 17.7 8.1 

443 ........... Disorders of liver except malig,cirr,alc hepa w/o CC/MCC ....................... 0.6925 21.2 17.7 6.0 

444 ........... Disorders of the biliary tract w MCC ......................................................... 0.8181 24.0 20.0 10.7 

445 ........... Disorders of the biliary tract w CC ............................................................ 0.6977 21.7 18.1 7.6 

446 ........... Disorders of the biliary tract w/o CC/MCC ................................................ 0.5472 20.3 16.9 5.2 

453 ........... Combined anterior/posterior spinal fusion w MCC .................................... 1.5545 35.2 29.3 24.9 

454 ........... Combined anterior/posterior spinal fusion w CC ....................................... 1.5545 35.2 29.3 12.7 

455 ........... Combined anterior/posterior spinal fusion w/o CC/MCC .......................... 1.5545 35.2 29.3 7.1 

456 ........... Spinal fus exc cerv w spinal curv/malig/infec or 9+ fus w MCC ............... 1.5545 35.2 29.3 24.9 

457 ........... Spinal fus exc cerv w spinal curv/malig/infec or 9+ fus w CC .................. 1.5545 35.2 29.3 11.6 

458 ........... Spinal fus exc cerv w spinal curv/malig/infec or 9+ fus w/o CC/MCC ...... 1.5545 35.2 29.3 6.8 

459 ........... Spinal fusion except cervical w MCC ........................................................ 1.5545 35.2 29.3 14.7 


rwilkins on PROD1PC63 with PROPOSALS2
5414 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

TABLE 3.—FY 2008 MS–LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, SHORT-STAY

OUTLIER THRESHOLD AND IPPS-COMPARABLE THRESHOLD—Continued 

MS–LTC–

DRG MS–DRG title Relative weight 1

Geometric 

average 

length of 

stay 

Short stay 

outlier 

threshold 2

IPPS comparable 

threshold 3

460 ........... Spinal fusion except cervical w/o MCC ..................................................... 1.5545 35.2 29.3 6.4 

461 ........... Bilateral or multiple major joint procs of lower extremity w MCC ............. 1.5545 35.2 29.3 12.6 

462 ........... Bilateral or multiple major joint procs of lower extremity w/o MCC .......... 1.1417 29.0 24.2 5.8 

463 ........... Wnd debrid & skn grft exc hand, for musculo-conn tiss dis w MCC ........ 1.3514 38.8 32.3 27.4 

464 ........... Wnd debrid & skn grft exc hand, for musculo-conn tiss dis w CC ........... 1.1906 36.3 30.3 16.8 

465 ........... Wnd debrid & skn grft exc hand, for musculo-conn tiss dis w/o CC/MCC 1.0747 29.6 24.7 10.0 

466 ........... Revision of hip or knee replacement w MCC ........................................... 1.5545 35.2 29.3 14.5 

467 ........... Revision of hip or knee replacement w CC .............................................. 1.5545 35.2 29.3 8.0 

468 ........... Revision of hip or knee replacement w/o CC/MCC .................................. 1.5545 35.2 29.3 5.5 

469 ........... Major joint replacement or reattachment of lower extremity w MCC ........ 1.5545 35.2 29.3 12.6 

470 ........... Major joint replacement or reattachment of lower extremity w/o MCC ..... 1.5545 35.2 29.3 5.4 

471 ........... Cervical spinal fusion w MCC ................................................................... 1.5545 35.2 29.3 17.3 

472 ........... Cervical spinal fusion w CC ...................................................................... 1.5545 35.2 29.3 7.0 

473 ........... Cervical spinal fusion w/o CC/MCC .......................................................... 1.5545 35.2 29.3 2.9 

474 ........... Amputation for musculoskeletal sys & conn tissue dis w MCC ................ 1.3338 36.6 30.5 20.4 

475 ........... Amputation for musculoskeletal sys & conn tissue dis w CC ................... 1.1390 32.7 27.3 13.9 

476 ........... Amputation for musculoskeletal sys & conn tissue dis w/o CC/MCC ....... 1.1390 32.7 27.3 8.0 

477 ........... Biopsies of musculoskeletal system & connective tissue w MCC ............ 1.5545 35.2 29.3 20.7 

478 ........... Biopsies of musculoskeletal system & connective tissue w CC ............... 1.1417 29.0 24.2 11.9 

479 ........... Biopsies of musculoskeletal system & connective tissue w/o CC/MCC ... 1.1417 29.0 24.2 4.3 

480 ........... Hip & femur procedures except major joint w MCC ................................. 1.5545 35.2 29.3 14.1 

481 ........... Hip & femur procedures except major joint w CC .................................... 1.5545 35.2 29.3 8.4 

482 ........... Hip & femur procedures except major joint w/o CC/MCC ........................ 1.1417 29.0 24.2 6.8 

483 ........... Major joint & limb reattachment proc of upper extremity w CC/MCC ....... 1.5545 35.2 29.3 6.6 

484 ........... Major joint & limb reattachment proc of upper extremity w/o CC/MCC .... 1.1417 29.0 24.2 3.6 

485 ........... Knee procedures w pdx of infection w MCC ............................................. 1.5545 35.2 29.3 18.9 

486 ........... Knee procedures w pdx of infection w CC ................................................ 1.1417 29.0 24.2 12.3 

487 ........... Knee procedures w pdx of infection w/o CC/MCC ................................... 1.1417 29.0 24.2 8.5 

488 ........... Knee procedures w/o pdx of infection w CC/MCC ................................... 1.5545 35.2 29.3 7.8 

489 ........... Knee procedures w/o pdx of infection w/o CC/MCC ................................ 1.5545 35.2 29.3 4.7 

490 ........... Back & neck proc exc spinal fusion w CC/MCC or disc device/neurostim 1.1417 29.0 24.2 7.6 

491 ........... Back & neck proc exc spinal fusion w/o CC/MCC .................................... 1.1417 29.0 24.2 3.4 

492 ........... Lower extrem & humer proc except hip, foot, femur w MCC ................... 1.5545 35.2 29.3 13.6 

493 ........... Lower extrem & humer proc except hip, foot, femur w CC ...................... 1.1417 29.0 24.2 8.2 

494 ........... Lower extrem & humer proc except hip, foot, femur w/o CC/MCC .......... 0.8249 25.0 20.8 5.1 

495 ........... Local excision & removal int fix devices exc hip & femur w MCC ........... 1.3650 38.1 31.8 18.2 

496 ........... Local excision & removal int fix devices exc hip & femur w CC .............. 1.1981 36.8 30.7 9.8 

497 ........... Local excision & removal int fix devices exc hip & femur w/o CC/MCC .. 1.1417 29.0 24.2 4.9 

498 ........... Local excision & removal int fix devices of hip & femur w CC/MCC ........ 1.5545 35.2 29.3 13.4 

499 ........... Local excision & removal int fix devices of hip & femur w/o CC/MCC ..... 0.7305 22.9 19.1 4.9 

500 ........... Soft tissue procedures w MCC .................................................................. 1.3212 35.2 29.3 18.8 

501 ........... Soft tissue procedures w CC ..................................................................... 1.2903 30.7 25.6 9.6 

502 ........... Soft tissue procedures w/o CC/MCC ........................................................ 0.8249 25.0 20.8 4.5 

503 ........... Foot procedures w MCC ........................................................................... 1.1417 29.0 24.2 14.6 

504 ........... Foot procedures w CC .............................................................................. 0.8249 25.0 20.8 10.5 

505 ........... Foot procedures w/o CC/MCC .................................................................. 0.5472 20.3 16.9 5.3 

506 ........... Major thumb or joint procedures ............................................................... 0.7305 22.9 19.1 5.0 

507 ........... Major shoulder or elbow joint procedures w CC/MCC .............................. 0.8249 25.0 20.8 8.4 

508 ........... Major shoulder or elbow joint procedures w/o CC/MCC ........................... 0.8249 25.0 20.8 3.0 

509 ........... Arthroscopy ................................................................................................ 0.5472 20.3 16.9 4.2 

510 ........... Shoulder,elbow or forearm proc,exc major joint proc w MCC .................. 1.1417 29.0 24.2 10.7 

511 ........... Shoulder,elbow or forearm proc,exc major joint proc w CC ..................... 1.1417 29.0 24.2 6.2 

512 ........... Shoulder,elbow or forearm proc,exc major joint proc w/o CC/MCC ......... 0.5472 20.3 16.9 3.1 

513 ........... Hand or wrist proc, except major thumb or joint proc w CC/MCC ........... 1.5545 35.2 29.3 8.4 

514 ........... Hand or wrist proc, except major thumb or joint proc w/o CC/MCC ........ 0.7305 22.9 19.1 4.0 

515 ........... Other musculoskelet sys & conn tiss O.R. proc w MCC .......................... 1.3230 34.8 29.0 18.1 

516 ........... Other musculoskelet sys & conn tiss O.R. proc w CC ............................. 1.1417 29.0 24.2 10.1 

517 ........... Other musculoskelet sys & conn tiss O.R. proc w/o CC/MCC ................. 0.8249 25.0 20.8 4.5 

533 ........... Fractures of femur w MCC ........................................................................ 0.8249 25.0 20.8 11.2 

534 ........... Fractures of femur w/o MCC ..................................................................... 0.7305 22.9 19.1 6.3 

535 ........... Fractures of hip & pelvis w MCC .............................................................. 0.7305 22.9 19.1 10.1 

536 ........... Fractures of hip & pelvis w/o MCC ........................................................... 0.5998 23.7 19.8 6.0 

537 ........... Sprains, strains, & dislocations of hip, pelvis & thigh w CC/MCC ............ 0.5472 20.3 16.9 7.3 

538 ........... Sprains, strains, & dislocations of hip, pelvis & thigh w/o CC/MCC ......... 0.5472 20.3 16.9 4.8 

539 ........... Osteomyelitis w MCC ................................................................................ 0.9013 29.7 24.8 16.2 

540 ........... Osteomyelitis w CC ................................................................................... 0.8107 28.7 23.9 11.3 

541 ........... Osteomyelitis w/o CC/MCC ....................................................................... 0.7787 26.9 22.4 8.9 

542 ........... Pathological fractures & musculoskelet & conn tiss malig w MCC .......... 0.7359 21.7 18.1 14.0 


rwilkins on PROD1PC63 with PROPOSALS2
Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5415 

TABLE 3.—FY 2008 MS–LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, SHORT-STAY

OUTLIER THRESHOLD AND IPPS-COMPARABLE THRESHOLD—Continued 

MS–LTC–

DRG MS–DRG title Relative weight 1

Geometric 

average 

length of 

stay 

Short stay 

outlier 

threshold 2

IPPS comparable 

threshold 3

543 ........... Pathological fractures & musculoskelet & conn tiss malig w CC ............. 0.6347 21.3 17.8 9.4 

544 ........... Pathological fractures & musculoskelet & conn tiss malig w/o CC/MCC 0.5472 20.3 16.9 6.8 

545 ........... Connective tissue disorders w MCC ......................................................... 0.8501 23.9 19.9 14.7 

546 ........... Connective tissue disorders w CC ............................................................ 0.6492 20.7 17.3 8.7 

547 ........... Connective tissue disorders w/o CC/MCC ................................................ 0.5472 20.3 16.9 6.1 

548 ........... Septic arthritis w MCC ............................................................................... 0.8584 28.2 23.5 15.0 

549 ........... Septic arthritis w CC .................................................................................. 0.7347 26.4 22.0 9.8 

550 ........... Septic arthritis w/o CC/MCC ...................................................................... 0.6704 23.5 19.6 7.2 

551 ........... Medical back problems w MCC ................................................................. 0.7305 26.6 22.2 11.6

552 ........... Medical back problems w/o MCC .............................................................. 0.6022 22.8 19.0 6.5 

553 ........... Bone diseases & arthropathies w MCC .................................................... 0.8249 25.0 20.8 9.6 

554 ........... Bone diseases & arthropathies w/o MCC ................................................. 0.4822 20.5 17.1 5.8 

555 ........... Signs & symptoms of musculoskeletal system & conn tissue w MCC ..... 0.7305 22.9 19.1 7.8 

556 ........... Signs & symptoms of musculoskeletal system & conn tissue w/o MCC .. 0.7305 22.9 19.1 5.0 

557 ........... Tendonitis, myositis & bursitis w MCC ...................................................... 0.8177 25.9 21.6 11.0 

558 ........... Tendonitis, myositis & bursitis w/o MCC ................................................... 0.6919 21.4 17.8 6.6 

559 ........... Aftercare, musculoskeletal system & connective tissue w MCC .............. 0.7157 26.2 21.8 11.9 

560 ........... Aftercare, musculoskeletal system & connective tissue w CC ................. 0.6393 24.6 20.5 7.5 

561 ........... Aftercare, musculoskeletal system & connective tissue w/o CC/MCC ..... 0.5889 21.7 18.1 4.2 

562 ........... Fx, sprn, strn & disl except femur, hip, pelvis & thigh w MCC ................. 1.1417 29.0 24.2 10.4 

563 ........... Fx, sprn, strn & disl except femur, hip, pelvis & thigh w/o MCC .............. 0.5472 20.3 16.9 5.7 

564 ........... Other musculoskeletal sys & connective tissue diagnoses w MCC ......... 0.8134 24.9 20.8 11.6 

565 ........... Other musculoskeletal sys & connective tissue diagnoses w CC ............ 0.7382 24.8 20.7 8.1 

566 ........... Other musculoskeletal sys & connective tissue diagnoses w/o CC/MCC 0.6862 22.1 18.4 5.9 

573 ........... Skin graft &/or debrid for skn ulcer or cellulitis w MCC ............................ 1.3068 38.0 31.7 22.2 

574 ........... Skin graft &/or debrid for skn ulcer or cellulitis w CC ............................... 1.1567 37.1 30.9 14.9 

575 ........... Skin graft &/or debrid for skn ulcer or cellulitis w/o CC/MCC ................... 0.9938 31.7 26.4 9.4 

576 ........... Skin graft &/or debrid exc for skin ulcer or cellulitis w MCC .................... 1.5545 35.2 29.3 20.3 

577 ........... Skin graft &/or debrid exc for skin ulcer or cellulitis w CC ....................... 1.1417 29.0 24.2 9.9 

578 ........... Skin graft &/or debrid exc for skin ulcer or cellulitis w/o CC/MCC ........... 0.7305 22.9 19.1 5.4 

579 ........... Other skin, subcut tiss & breast proc w MCC ........................................... 1.2793 36.8 30.7 18.5 

580 ........... Other skin, subcut tiss & breast proc w CC .............................................. 1.1001 34.8 29.0 9.0 

581 ........... Other skin, subcut tiss & breast proc w/o CC/MCC .................................. 0.9100 29.9 24.9 3.9 

582 ........... Mastectomy for malignancy w CC/MCC ................................................... 1.5545 35.2 29.3 4.3 

583 ........... Mastectomy for malignancy w/o CC/MCC ................................................ 1.5545 35.2 29.3 2.6 

584 ........... Breast biopsy, local excision & other breast procedures w CC/MCC ...... 1.1417 29.0 24.2 9.5 

585 ........... Breast biopsy, local excision & other breast procedures w/o CC/MCC ... 1.1417 29.0 24.2 3.2 

592 ........... Skin ulcers w MCC .................................................................................... 0.8875 27.1 22.6 14.2 

593 ........... Skin ulcers w CC ....................................................................................... 0.7877 26.8 22.3 10.0 

594 ........... Skin ulcers w/o CC/MCC ........................................................................... 0.7342 24.3 20.3 7.7 

595 ........... Major skin disorders w MCC ..................................................................... 0.7525 24.5 20.4 13.2 

596 ........... Major skin disorders w/o MCC .................................................................. 0.6155 23.8 19.8 7.6 

597 ........... Malignant breast disorders w MCC ........................................................... 0.8249 25.0 20.8 13.7 

598 ........... Malignant breast disorders w CC .............................................................. 0.7305 22.9 19.1 9.0

599 ........... Malignant breast disorders w/o CC/MCC .................................................. 0.7305 22.9 19.1 5.7 

600 ........... Non-malignant breast disorders w CC/MCC ............................................. 0.7305 22.9 19.1 8.5 

601 ........... Non-malignant breast disorders w/o CC/MCC .......................................... 0.7305 22.9 19.1 6.0 

602 ........... Cellulitis w MCC ........................................................................................ 0.6643 22.5 18.8 11.1 

603 ........... Cellulitis w/o MCC ..................................................................................... 0.5528 19.4 16.2 7.3 

604 ........... Trauma to the skin, subcut tiss & breast w MCC ..................................... 0.8249 25.0 20.8 8.8 

605 ........... Trauma to the skin, subcut tiss & breast w/o MCC .................................. 0.5685 21.2 17.7 5.4 

606 ........... Minor skin disorders w MCC ..................................................................... 0.8324 23.2 19.3 9.5 

607 ........... Minor skin disorders w/o MCC .................................................................. 0.6776 22.6 18.8 5.9 

614 ........... Adrenal & pituitary procedures w CC/MCC ............................................... 1.2008 33.1 27.6 11.6 

615 ........... Adrenal & pituitary procedures w/o CC/MCC ............................................ 0.7305 22.9 19.1 5.1 

616 ........... Amputat of lower limb for endocrine, nutrit, & metabol dis w MCC .......... 1.4505 41.0 34.2 24.2 

617 ........... Amputat of lower limb for endocrine, nutrit, & metabol dis w CC ............. 1.2414 33.3 27.8 14.5 

618 ........... Amputat of lower limb for endocrine, nutrit, & metabol dis w/o CC/MCC 0.8249 25.0 20.8 9.9 

619 ........... O.R. procedures for obesity w MCC ......................................................... 0.8249 25.0 20.8 14.6 

620 ........... O.R. procedures for obesity w CC ............................................................ 0.8249 25.0 20.8 6.3 

621 ........... O.R. procedures for obesity w/o CC/MCC ................................................ 0.8249 25.0 20.8 3.6 

622 ........... Skin grafts & wound debrid for endoc, nutrit & metab dis w MCC ........... 1.1462 35.6 29.7 21.1 

623 ........... Skin grafts & wound debrid for endoc, nutrit & metab dis w CC .............. 1.0197 32.2 26.8 13.5 

624 ........... Skin grafts & wound debrid for endoc, nutrit & metab dis w/o CC/MCC .. 0.8249 25.0 20.8 9.4 

625 ........... Thyroid, parathyroid & thyroglossal procedures w MCC .......................... 1.3385 36.6 30.5 12.4 

626 ........... Thyroid, parathyroid & thyroglossal procedures w CC ............................. 1.2008 33.1 27.6 5.0 

627 ........... Thyroid, parathyroid & thyroglossal procedures w/o CC/MCC ................. 0.7305 22.9 19.1 2.1 

628 ........... Other endocrine, nutrit & metab O.R. proc w MCC .................................. 1.3385 36.6 30.5 20.1 


rwilkins on PROD1PC63 with PROPOSALS2
5416 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

TABLE 3.—FY 2008 MS–LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, SHORT-STAY

OUTLIER THRESHOLD AND IPPS-COMPARABLE THRESHOLD—Continued 

MS–LTC–

DRG MS–DRG title Relative weight 1

Geometric 

average 

length of 

stay 

Short stay 

outlier 

threshold 2

IPPS comparable 

threshold 3

629 ........... Other endocrine, nutrit & metab O.R. proc w CC ..................................... 1.2008 33.1 27.6 14.3 

630 ........... Other endocrine, nutrit & metab O.R. proc w/o CC/MCC ......................... 0.7305 22.9 19.1 8.4 

637 ........... Diabetes w MCC ........................................................................................ 0.7726 25.8 21.5 9.8 

638 ........... Diabetes w CC ........................................................................................... 0.6757 24.0 20.0 6.7 

639 ........... Diabetes w/o CC/MCC .............................................................................. 0.6064 20.6 17.2 4.7 

640 ........... Nutritional & misc metabolic disorders w MCC ......................................... 0.7879 23.2 19.3 9.1 

641 ........... Nutritional & misc metabolic disorders w/o MCC ...................................... 0.6889 22.0 18.3 6.0 

642 ........... Inborn errors of metabolism ...................................................................... 0.7305 22.9 19.1 8.3 

643 ........... Endocrine disorders w MCC ...................................................................... 0.7358 24.9 20.8 12.4 

644 ........... Endocrine disorders w CC ......................................................................... 0.7358 24.9 20.8 8.6 

645 ........... Endocrine disorders w/o CC/MCC ............................................................ 0.5472 20.3 16.9 6.1 

652 ........... Kidney transplant ....................................................................................... 0.0000 0.0 0.0 0.0 

653 ........... Major bladder procedures w MCC ............................................................ 1.1417 29.0 24.2 24.2 

654 ........... Major bladder procedures w CC ............................................................... 0.7305 22.9 19.1 14.7

655 ........... Major bladder procedures w/o CC/MCC ................................................... 0.5472 20.3 16.9 10.0 

656 ........... Kidney & ureter procedures for neoplasm w MCC ................................... 0.8249 25.0 20.8 16.8 

657 ........... Kidney & ureter procedures forneoplasm w CC ....................................... 0.8249 25.0 20.8 9.2 

658 ........... Kidney & ureter procedures for neoplasm w/o CC/MCC .......................... 0.8249 25.0 20.8 5.7 

659 ........... Kidney & ureter procedures for non-neoplasm w MCC ............................ 1.1417 29.0 24.2 18.5 

660 ........... Kidney & ureter procedures for non-neoplasm w CC ............................... 0.7305 22.9 19.1 10.6 

661 ........... Kidney & ureter procedures for non-neoplasm w/o CC/MCC ................... 0.5472 20.3 16.9 5.1 

662 ........... Minor bladder procedures w MCC ............................................................ 0.8249 25.0 20.8 17.7 

663 ........... Minor bladder procedures w CC ............................................................... 0.8249 25.0 20.8 8.5 

664 ........... Minor bladder procedures w/o CC/MCC ................................................... 1.5545 35.2 29.3 3.0 

665 ........... Prostatectomy w MCC ............................................................................... 0.8249 25.0 20.8 20.2 

666 ........... Prostatectomy w CC .................................................................................. 0.8249 25.0 20.8 10.7 

667 ........... Prostatectomy w/o CC/MCC ...................................................................... 1.1417 29.0 24.2 4.0 

668 ........... Transurethral procedures w MCC ............................................................. 1.5545 35.2 29.3 14.4 

669 ........... Transurethral procedures w CC ................................................................ 1.5545 35.2 29.3 7.0

670 ........... Transurethral procedures w/o CC/MCC .................................................... 0.8249 25.0 20.8 3.7 

671 ........... Urethral procedures w CC/MCC ................................................................ 0.7305 22.9 19.1 9.6 

672 ........... Urethral procedures w/o CC/MCC ............................................................. 0.5472 20.3 16.9 3.8 

673 ........... Other kidney & urinary tract procedures w MCC ...................................... 1.3255 33.6 28.0 17.6 

674 ........... Other kidney & urinary tract procedures w CC ......................................... 1.2557 30.6 25.5 11.1 

675 ........... Other kidney & urinary tract procedures w/o CC/MCC ............................. 1.1417 29.0 24.2 2.7 

682 ........... Renal failure w MCC ................................................................................. 0.8553 23.6 19.7 12.1 

683 ........... Renal failure w CC .................................................................................... 0.7752 21.8 18.2 9.0 

684 ........... Renal failure w/o CC/MCC ........................................................................ 0.7121 20.5 17.1 5.9 

685 ........... Admit for renal dialysis .............................................................................. 0.7726 26.0 21.7 5.4 

686 ........... Kidney & urinary tract neoplasms w MCC ................................................ 0.8933 23.6 19.7 13.2 

687 ........... Kidney & urinary tract neoplasms w CC ................................................... 0.7305 22.9 19.1 8.5 

688 ........... Kidney & urinary tract neoplasms w/o CC/MCC ....................................... 0.5472 20.3 16.9 5.1 

689 ........... Kidney & urinary tract infections w MCC .................................................. 0.6624 22.9 19.1 9.9 

690 ........... Kidney & urinary tract infections w/o MCC ............................................... 0.5655 20.2 16.8 6.6 

691 ........... Urinary stones w esw lithotripsy w CC/MCC ............................................ 1.5545 35.2 29.3 6.6 

692 ........... Urinary stones w esw lithotripsy w/o CC/MCC ......................................... 1.5545 35.2 29.3 3.4 

693 ........... Urinary stones w/o esw lithotripsy w MCC ................................................ 0.7305 22.9 19.1 8.4 

694 ........... Urinary stones w/o esw lithotripsy w/o MCC ............................................. 0.7305 22.9 19.1 3.9 

695 ........... Kidney & urinary tract signs & symptoms w MCC .................................... 0.8249 25.0 20.8 9.1 

696 ........... Kidney & urinary tract signs & symptoms w/o MCC ................................. 0.5472 20.3 16.9 5.0 

697 ........... Urethral stricture ........................................................................................ 0.5472 20.3 16.9 5.1 

698 ........... Other kidney & urinary tract diagnoses w MCC ........................................ 0.7919 22.6 18.8 10.9 

699 ........... Other kidney & urinary tract diagnoses w CC ........................................... 0.7293 22.1 18.4 7.7 

700 ........... Other kidney & urinary tract diagnoses w/o CC/MCC .............................. 0.6052 19.6 16.3 5.4 

707 ........... Major male pelvic procedures w CC/MCC ................................................ 0.7305 22.9 19.1 6.9 

708 ........... Major male pelvic procedures w/o CC/MCC ............................................. 0.5472 20.3 16.9 3.5 

709 ........... Penis procedures w CC/MCC ................................................................... 1.1417 29.0 24.2 10.3

710 ........... Penis procedures w/o CC/MCC ................................................................ 1.1417 29.0 24.2 2.7 

711 ........... Testes procedures w CC/MCC .................................................................. 1.1417 29.0 24.2 13.2

712 ........... Testes procedures w/o CC/MCC ............................................................... 1.1417 29.0 24.2 4.6 

713 ........... Transurethral prostatectomy w CC/MCC .................................................. 1.5545 35.2 29.3 6.5 

714 ........... Transurethral prostatectomy w/o CC/MCC ............................................... 0.5472 20.3 16.9 2.9 

715 ........... Other male reproductive system O.R. proc for malignancy w CC/MCC .. 1.5545 35.2 29.3 10.1 

716 ........... Other male reproductive system O.R. proc for malignancy w/o CC/MCC 1.5545 35.2 29.3 2.0 

717 ........... Other male reproductive system O.R. proc exc malignancy w CC/MCC 1.1417 29.0 24.2 12.4 

718 ........... Other male reproductive system O.R. proc exc malignancy w/o CC/ 

MCC.

0.5472 20.3 16.9 4.1 

722 ........... Malignancy, male reproductive system w MCC ........................................ 0.8249 25.0 20.8 12.1 


rwilkins on PROD1PC63 with PROPOSALS2
Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5417 

TABLE 3.—FY 2008 MS–LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, SHORT-STAY

OUTLIER THRESHOLD AND IPPS-COMPARABLE THRESHOLD—Continued 

MS–LTC–

DRG MS–DRG title Relative weight 1

Geometric 

average 

length of 

stay 

Short stay 

outlier 

threshold 2

IPPS comparable 

threshold 3

723 ........... Malignancy, male reproductive system w CC ........................................... 0.7305 22.9 19.1 8.6 

724 ........... Malignancy, male reproductive system w/o CC/MCC ............................... 0.5472 20.3 16.9 5.3 

725 ........... Benign prostatic hypertrophy w MCC ........................................................ 1.1417 29.0 24.2 9.0 

726 ........... Benign prostatic hypertrophy w/o MCC ..................................................... 0.5472 20.3 16.9 5.5 

727 ........... Inflammation of the male reproductive system w MCC ............................ 0.7754 25.9 21.6 10.4 

728 ........... Inflammation of the male reproductive system w/o MCC ......................... 0.6172 20.8 17.3 6.2 

729 ........... Other male reproductive system diagnoses w CC/MCC .......................... 1.0319 26.6 22.2 8.4 

730 ........... Other male reproductive system diagnoses w/o CC/MCC ....................... 0.7305 22.9 19.1 4.9 

734 ........... Pelvic evisceration, rad hysterectomy & rad vulvectomy w CC/MCC ...... 1.1417 29.0 24.2 11.8 

735 ........... Pelvic evisceration, rad hysterectomy & rad vulvectomy w/o CC/MCC ... 0.5472 20.3 16.9 5.3 

736 ........... Uterine & adnexa proc for ovarian or adnexal malignancy w MCC ......... 1.1417 29.0 24.2 21.5 

737 ........... Uterine & adnexa proc for ovarian or adnexal malignancy w CC ............ 0.8249 25.0 20.8 11.0 

738 ........... Uterine & adnexa proc for ovarian or adnexal malignancy w/o CC/MCC 0.5472 20.3 16.9 5.6 

739 ........... Uterine,adnexa proc for non-ovarian/adnexal malig w MCC .................... 1.1417 29.0 24.2 15.9 

740 ........... Uterine,adnexa proc for non-ovarian/adnexal malig w CC ....................... 0.8249 25.0 20.8 7.7 

741 ........... Uterine,adnexa proc for non-ovarian/adnexal malig w/o CC/MCC ........... 0.5472 20.3 16.9 4.5 

742 ........... Uterine & adnexa proc for non-malignancy w CC/MCC ........................... 0.8249 25.0 20.8 6.9 

743 ........... Uterine & adnexa proc for non-malignancy w/o CC/MCC ........................ 0.5472 20.3 16.9 3.3 

744 ........... D&C, conization, laparascopy & tubal interruption w CC/MCC ................ 0.8249 25.0 20.8 9.3 

745 ........... D&C, conization, laparascopy & tubal interruption w/o CC/MCC ............. 0.8249 25.0 20.8 3.8 

746 ........... Vagina, cervix & vulva procedures w CC/MCC ........................................ 0.8249 25.0 20.8 6.4 

747 ........... Vagina, cervix & vulva procedures w/o CC/MCC ..................................... 0.8249 25.0 20.8 2.8 

748 ........... Female reproductive system reconstructive procedures ........................... 0.8249 25.0 20.8 2.6 

749 ........... Other female reproductive system O.R. procedures w CC/MCC ............. 0.8249 25.0 20.8 16.3 

750 ........... Other female reproductive system O.R. procedures w/o CC/MCC .......... 0.8249 25.0 20.8 5.1 

754 ........... Malignancy, female reproductive system w MCC ..................................... 1.1417 29.0 24.2 14.7 

755 ........... Malignancy, female reproductive system w CC ........................................ 0.8249 25.0 20.8 9.1 

756 ........... Malignancy, female reproductive system w/o CC/MCC ............................ 0.5472 20.3 16.9 5.1 

757 ........... Infections, female reproductive system w MCC ........................................ 0.8375 22.6 18.8 13.9 

758 ........... Infections, female reproductive system w CC ........................................... 0.8317 27.2 22.7 9.5 

759 ........... Infections, female reproductive system w/o CC/MCC ............................... 0.5472 20.3 16.9 7.2 

760 ........... Menstrual & other female reproductive system disorders w CC/MCC ..... 1.1417 29.0 24.2 6.0 

761 ........... Menstrual & other female reproductive system disorders w/o CC/MCC .. 0.5472 20.3 16.9 3.8 

765 ........... Cesarean section w CC/MCC ................................................................... 0.8249 25.0 20.8 7.4 

766 ........... Cesarean section w/o CC/MCC ................................................................ 0.7305 22.9 19.1 4.3 

767 ........... Vaginal delivery w sterilization &/or D&C .................................................. 0.7305 22.9 19.1 4.1 

768 ........... Vaginal delivery w O.R. proc except steril &/or D&C ................................ 0.7305 22.9 19.1 8.9 

769 ........... Postpartum & post abortion diagnoses w O.R. procedure ....................... 0.7305 22.9 19.1 8.6 

770 ........... Abortion w D&C, aspiration curettage or hysterotomy .............................. 0.7305 22.9 19.1 3.5 

774 ........... Vaginal delivery w complicating diagnoses ............................................... 0.7305 22.9 19.1 4.5 

775 ........... Vaginal delivery w/o complicating diagnoses ............................................ 0.7305 22.9 19.1 3.1 

776 ........... Postpartum & post abortion diagnoses w/o O.R. procedure .................... 1.1417 29.0 24.2 5.4 

777 ........... Ectopic pregnancy ..................................................................................... 0.7305 22.9 19.1 3.0 

778 ........... Threatened abortion .................................................................................. 0.5472 20.3 16.9 4.2 

779 ........... Abortion w/o D&C ...................................................................................... 0.5472 20.3 16.9 3.6 

780 ........... False labor ................................................................................................. 0.5472 20.3 16.9 2.7 

781 ........... Other antepartum diagnoses w medical complications ............................. 1.1417 29.0 24.2 5.9 

782 ........... Other antepartum diagnoses w/o medical complications .......................... 0.5472 20.3 16.9 3.6 

789 ........... Neonates, died or transferred to another acute care facility ..................... 0.5472 20.3 16.9 1.5 

790 ........... Extreme immaturity or respiratory distress syndrome, neonate ............... 0.5472 20.3 16.9 16.9 

791 ........... Prematurity w major problems ................................................................... 1.1417 29.0 24.2 13.3 

792 ........... Prematurity w/o major problems ................................................................ 0.5472 20.3 16.9 8.6 

793 ........... Full term neonate w major problems ......................................................... 1.1417 29.0 24.2 17.6 

794 ........... Neonate w other significant problems ....................................................... 1.1417 29.0 24.2 1.7 

795 ........... Normal newborn ........................................................................................ 0.5472 20.3 16.9 3.1 

799 ........... Splenectomy w MCC ................................................................................. 1.1417 29.0 24.2 23.5 

800 ........... Splenectomy w CC .................................................................................... 0.8249 25.0 20.8 13.0 

801 ........... Splenectomy w/o CC/MCC ........................................................................ 0.8249 25.0 20.8 7.5 

802 ........... Other O.R. proc of the blood & blood forming organs w MCC ................. 1.5545 35.2 29.3 21.4 

803 ........... Other O.R. proc of the blood & blood forming organs w CC .................... 0.7305 22.9 19.1 10.8 

804 ........... Other O.R. proc of the blood & blood forming organs w/o CC/MCC ....... 0.7305 22.9 19.1 5.2 

808 ........... Major hematol/immun diag exc sickle cell crisis & coagul w MCC ........... 0.8009 20.7 17.3 12.8 

809 ........... Major hematol/immun diag exc sickle cell crisis & coagul w CC .............. 0.8009 20.7 17.3 7.9 

810 ........... Major hematol/immun diag exc sickle cell crisis & coagul w/o CC/MCC 0.8009 20.7 17.3 6.2 

811 ........... Red blood cell disorders w MCC ............................................................... 0.6655 23.2 19.3 9.0

812 ........... Red blood cell disorders w/o MCC ............................................................ 0.5699 19.5 16.3 5.9 

813 ........... Coagulation disorders ................................................................................ 0.8015 21.5 17.9 8.3 

814 ........... Reticuloendothelial & immunity disorders w MCC .................................... 0.7474 22.6 18.8 11.7 


rwilkins on PROD1PC63 with PROPOSALS2
5418 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 

TABLE 3.—FY 2008 MS–LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, SHORT-STAY

OUTLIER THRESHOLD AND IPPS-COMPARABLE THRESHOLD—Continued 

MS–LTC–

DRG MS–DRG title Relative weight 1

Geometric 

average 

length of 

stay 

Short stay 

outlier 

threshold 2

IPPS comparable 

threshold 3

815 ........... Reticuloendothelial & immunity disorders w CC ....................................... 0.7305 22.9 19.1 7.8 

816 ........... Reticuloendothelial & immunity disorders w/o CC/MCC ........................... 0.7305 22.9 19.1 5.3 

820 ........... Lymphoma & leukemia w major O.R. procedure w MCC ......................... 0.8249 25.0 20.8 20.8 

821 ........... Lymphoma & leukemia w major O.R. procedure w CC ............................ 0.8249 25.0 20.8 13.3 

822 ........... Lymphoma & leukemia w major O.R. procedure w/o CC/MCC ................ 0.8249 25.0 20.8 5.9 

823 ........... Lymphoma & non-acute leukemia w other O.R. proc w MCC .................. 1.1417 29.0 24.2 24.2 

824 ........... Lymphoma & non-acute leukemia w other O.R. proc w CC ..................... 1.1417 29.0 24.2 14.8 

825 ........... Lymphoma & non-acute leukemia w other O.R. proc w/o CC/MCC ........ 0.5472 20.3 16.9 7.8 

826 ........... Myeloprolif disord or poorly diff neopl w maj O.R. proc w MCC .............. 0.8249 25.0 20.8 20.8 

827 ........... Myeloprolif disord or poorly diff neopl w maj O.R. proc w CC ................. 0.8249 25.0 20.8 12.4 

828 ........... Myeloprolif disord or poorly diff neopl w maj O.R. proc w/o CC/MCC ..... 0.8249 25.0 20.8 5.9 

829 ........... Myeloprolif disord or poorly diff neopl w other O.R. proc w CC/MCC ...... 1.5545 35.2 29.3 17.8 

830 ........... Myeloprolif disord or poorly diff neopl w other O.R. proc w/o CC/MCC ... 1.5545 35.2 29.3 5.5 

834 ........... Acute leukemia w/o major O.R. procedure w MCC .................................. 1.1417 29.0 24.2 24.2 

835 ........... Acute leukemia w/o major O.R. procedure w CC ..................................... 0.8249 25.0 20.8 13.5 

836 ........... Acute leukemia w/o major O.R. procedure w/o CC/MCC ......................... 0.5472 20.3 16.9 8.0 

837 ........... Chemo w acute leukemia as sdx or w high dose chemo agent w MCC .. 1.5545 35.2 29.3 29.3 

838 ........... Chemo w acute leukemia as sdx w CC or high dose chemo agent ........ 0.8249 25.0 20.8 13.7 

839 ........... Chemo w acute leukemia as sdx w/o CC/MCC ........................................ 1.5545 35.2 29.3 9.1 

840 ........... Lymphoma & non-acute leukemia w MCC ................................................ 0.8718 20.8 17.3 16.1 

841 ........... Lymphoma & non-acute leukemia w CC ................................................... 0.8026 20.1 16.8 10.7 

842 ........... Lymphoma & non-acute leukemia w/o CC/MCC ...................................... 0.7305 22.9 19.1 6.9 

843 ........... Other myeloprolif dis or poorly diff neopl diag w MCC ............................. 1.1417 29.0 24.2 14.5 

844 ........... Other myeloprolif dis or poorly diff neopl diag w CC ................................ 1.1417 29.0 24.2 9.7 

845 ........... Other myeloprolif dis or poorly diff neopl diag w/o CC/MCC .................... 1.1417 29.0 24.2 6.8 

846 ........... Chemotherapy w/o acute leukemia as secondary diagnosis w MCC ....... 1.6788 37.4 31.2 13.8 

847 ........... Chemotherapy w/o acute leukemia as secondary diagnosis w CC .......... 1.4350 27.6 23.0 5.0 

848 ........... Chemotherapy w/o acute leukemia as secondary diagnosis w/o CC/ 

MCC.

0.7305 22.9 19.1 4.6 

849 ........... Radiotherapy .............................................................................................. 0.8994 23.5 19.6 9.5 

853 ........... Infectious & parasitic diseases w O.R. procedure w MCC ....................... 1.7687 38.1 31.8 27.6 

854 ........... Infectious & parasitic diseases w O.R. procedure w CC .......................... 1.4381 30.8 25.7 17.4 

855 ........... Infectious & parasitic diseases w O.R. procedure w/o CC/MCC .............. 0.7305 22.9 19.1 12.2 

856 ........... Postoperative or post-traumatic infections w O.R. proc w MCC .............. 1.4470 36.1 30.1 26.5 

857 ........... Postoperative or post-traumatic infections w O.R. proc w CC ................. 1.1886 31.5 26.3 14.1 

858 ........... Postoperative or post-traumatic infections w O.R. proc w/o CC/MCC ..... 1.1109 28.4 23.7 9.5 

862 ........... Postoperative & post-traumatic infections w MCC .................................... 0.8670 25.2 21.0 13.4 

863 ........... Postoperative & post-traumatic infections w/o MCC ................................. 0.7478 23.4 19.5 8.2 

864 ........... Fever of unknown origin ............................................................................ 0.7305 22.9 19.1 6.4 

865 ........... Viral illness w MCC ................................................................................... 0.7823 21.8 18.2 11.0 

866 ........... Viral illness w/o MCC ................................................................................ 0.6431 21.2 17.7 5.4 

867 ........... Other infectious & parasitic diseases diagnoses w MCC ......................... 1.0954 23.6 19.7 16.2 

868 ........... Other infectious & parasitic diseases diagnoses w CC ............................ 0.8869 22.0 18.3 9.3 

869 ........... Other infectious & parasitic diseases diagnoses w/o CC/MCC ................ 0.5472 20.3 16.9 6.8 

870 ........... Septicemia w MV 96+ hours ..................................................................... 1.9505 30.5 25.4 23.6 

871 ........... Septicemia w/o MV 96+ hours w MCC ..................................................... 0.8299 23.5 19.6 13.0 

872 ........... Septicemia w/o MV 96+ hours w/o MCC .................................................. 0.7340 21.9 18.3 9.1 

876 ........... O.R. procedure w principal diagnoses of mental illness ........................... 0.7305 22.9 19.1 19.1 

880 ........... Acute adjustment reaction & psychosocial dysfunction ............................ 0.5472 20.3 16.9 5.0 

881 ........... Depressive neuroses ................................................................................. 0.5472 20.3 16.9 6.6 

882 ........... Neuroses except depressive ..................................................................... 0.5472 20.3 16.9 6.9 

883 ........... Disorders of personality & impulse control ................................................ 0.5472 20.3 16.9 11.8 

884 ........... Organic disturbances & mental retardation ............................................... 0.4883 23.3 19.4 8.3 

885 ........... Psychoses .................................................................................................. 0.4140 23.8 19.8 12.3 

886 ........... Behavioral & developmental disorders ...................................................... 0.5472 20.3 16.9 9.4 

887 ........... Other mental disorder diagnoses .............................................................. 0.5472 20.3 16.9 7.1

894 ........... Alcohol/drug abuse or dependence, left ama ........................................... 0.5472 20.3 16.9 4.5 

895 ........... Alcohol/drug abuse or dependence w rehabilitation therapy .................... 0.5472 20.3 16.9 16.8 

896 ........... Alcohol/drug abuse or dependence w/o rehabilitation therapy w MCC .... 0.8249 25.0 20.8 10.6 

897 ........... Alcohol/drug abuse or dependence w/o rehabilitation therapy w/o MCC 0.5472 20.3 16.9 6.4 

901 ........... Wound debridements for injuries w MCC ................................................. 1.3395 35.2 29.3 23.7 

902 ........... Wound debridements for injuries w CC .................................................... 1.1605 33.5 27.9 12.9 

903 ........... Wound debridements for injuries w/o CC/MCC ........................................ 0.7305 22.9 19.1 7.9 

904 ........... Skin grafts for injuries w CC/MCC ............................................................ 1.3351 40.8 34.0 18.8 

905 ........... Skin grafts for injuries w/o CC/MCC ......................................................... 0.7305 22.9 19.1 7.7 

906 ........... Hand procedures for injuries ..................................................................... 0.5472 20.3 16.9 4.9 

907 ........... Other O.R. procedures for injuries w MCC ............................................... 1.6622 36.8 30.7 19.4 

908 ........... Other O.R. procedures for injuries w CC .................................................. 1.3966 34.1 28.4 11.3 


rwilkins on PROD1PC63 with PROPOSALS2
Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5419 

TABLE 3.—FY 2008 MS–LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, SHORT-STAY

OUTLIER THRESHOLD AND IPPS-COMPARABLE THRESHOLD—Continued 

MS–LTC–

DRG MS–DRG title Relative weight 1

Geometric 

average 

length of 

stay 

Short stay 

outlier 

threshold 2

IPPS comparable 

threshold 3

909 ........... Other O.R. procedures for injuries w/o CC/MCC ...................................... 0.8249 25.0 20.8 5.7 

913 ........... Traumatic injury w MCC ............................................................................ 0.8462 26.9 22.4 10.0 

914 ........... Traumatic injury w/o MCC ......................................................................... 0.6448 21.9 18.3 5.3 

915 ........... Allergic reactions w MCC .......................................................................... 0.5472 20.3 16.9 7.5 

916 ........... Allergic reactions w/o MCC ....................................................................... 0.5472 20.3 16.9 3.2 

917 ........... Poisoning & toxic effects of drugs w MCC ................................................ 0.7305 22.9 19.1 8.3 

918 ........... Poisoning & toxic effects of drugs w/o MCC ............................................. 0.7305 22.9 19.1 4.2 

919 ........... Complications of treatment w MCC ........................................................... 0.9858 26.3 21.9 10.1 

920 ........... Complications of treatment w CC .............................................................. 0.8518 24.6 20.5 6.8

921 ........... Complications of treatment w/o CC/MCC ................................................. 0.7511 23.0 19.2 4.5 

922 ........... Other injury, poisoning & toxic effect diag w MCC ................................... 0.5472 20.3 16.9 10.0 

923 ........... Other injury, poisoning & toxic effect diag w/o MCC ................................ 0.5472 20.3 16.9 5.0 

927 ........... Extensive burns or full thickness burns w MV 96+ hrs w skin graft ......... 1.5545 35.2 29.3 29.3 

928 ........... Full thickness burn w skin graft or inhal inj w CC/MCC ........................... 1.1417 29.0 24.2 24.2 

929 ........... Full thickness burn w skin graft or inhal inj w/o CC/MCC ........................ 0.7305 22.9 19.1 13.1 

933 ........... Extensive burns or full thickness burns w MV 96+ hrs w/o skin graft ...... 1.5545 35.2 29.3 8.5 

934 ........... Full thickness burn w/o skin grft or inhal inj .............................................. 0.6998 24.2 20.2 11.1

935 ........... Non-extensive burns .................................................................................. 0.7525 24.9 20.8 8.8 

939 ........... O.R. proc w diagnoses of other contact w health services w MCC ......... 1.2500 33.8 28.2 18.9 

940 ........... O.R. proc w diagnoses of other contact w health services w CC ............ 1.1066 33.8 28.2 10.5 

941 ........... O.R. proc w diagnoses of other contact w health services w/o CC/MCC 0.9719 28.8 24.0 4.8 

945 ........... Rehabilitation w CC/MCC .......................................................................... 0.5867 22.2 18.5 16.3 

946 ........... Rehabilitation w/o CC/MCC ....................................................................... 0.4935 18.9 15.8 11.7 

947 ........... Signs & symptoms w MCC ........................................................................ 0.6340 22.7 18.9 7.9 

948 ........... Signs & symptoms w/o MCC ..................................................................... 0.5642 23.4 19.5 5.3

949 ........... Aftercare w CC/MCC ................................................................................. 0.6693 22.1 18.4 6.1 

950 ........... Aftercare w/o CC/MCC .............................................................................. 0.5735 18.5 15.4 5.1 

951 ........... Other factors influencing health status ...................................................... 1.5837 26.2 21.8 5.0

955 ........... Craniotomy for multiple significant trauma ................................................ 1.5545 35.2 29.3 21.9 

956 ........... Limb reattachment, hip & femur proc for multiple significant trauma ....... 0.7305 22.9 19.1 14.4 

957 ........... Other O.R. procedures for multiple significant trauma w MCC ................ 1.5545 35.2 29.3 29.1 

958 ........... Other O.R. procedures for multiple significant trauma w CC ................... 1.1417 29.0 24.2 17.9 

959 ........... Other O.R. procedures for multiple significant trauma w/o CC/MCC ....... 1.1417 29.0 24.2 9.9 

963 ........... Other multiple significant trauma w MCC .................................................. 1.5545 35.2 29.3 16.5 

964 ........... Other multiple significant trauma w CC ..................................................... 0.7305 22.9 19.1 10.2 

965 ........... Other multiple significant trauma w/o CC/MCC ........................................ 0.5472 20.3 16.9 6.5 

969 ........... HIV w extensive O.R. procedure w MCC .................................................. 1.5545 35.2 29.3 29.3 

970 ........... HIV w extensive O.R. procedure w/o MCC ............................................... 1.5545 35.2 29.3 15.8 

974 ........... HIV w major related condition w MCC ...................................................... 0.8908 21.9 18.3 17.5 

975 ........... HIV w major related condition w CC ......................................................... 0.7492 21.3 17.8 11.5 

976 ........... HIV w major related condition w/o CC/MCC ............................................. 0.7382 18.0 15.0 7.7 

977 ........... HIV w or w/o other related condition ......................................................... 0.7305 22.9 19.1 8.3

981 ........... Extensive O.R. procedure unrelated to principal diagnosis w MCC ......... 2.2339 42.0 35.0 24.6 

982 ........... Extensive O.R. procedure unrelated to principal diagnosis w CC ............ 1.8277 37.6 31.3 16.3 

983 ........... Extensive O.R. procedure unrelated to principal diagnosis w/o CC/MCC 1.1417 29.0 24.2 9.0 

984 ........... Prostatic O.R. procedure unrelated to principal diagnosis w MCC .......... 1.5545 35.2 29.3 23.7 

985 ........... Prostatic O.R. procedure unrelated to principal diagnosis w CC ............. 1.1417 29.0 24.2 16.6 

986 ........... Prostatic O.R. procedure unrelated to principal diagnosis w/o CC/MCC 1.1417 29.0 24.2 8.5 

987 ........... Non-extensive O.R. proc unrelated to principal diagnosis w MCC ........... 1.6972 37.9 31.6 21.9 

988 ........... Non-extensive O.R. proc unrelated to principal diagnosis w CC .............. 1.3386 33.2 27.7 13.2 

989 ........... Non-extensive O.R. proc unrelated to principal diagnosis w/o CC/MCC 0.8249 25.0 20.8 6.7 

998 ........... Principal diagnosis invalid as discharge diagnosis ................................... 0.0000 0.0 0.0 0.0 

999 ........... Ungroupable .............................................................................................. 0.0000 0.0 0.0 0.0 

1Transition blended relative weights for FY 2008 determined as described in Step 7 in section II.I.4. of the preamble of the FY 2008 IPPS final 

rule (72 FR 47295). 2The ‘‘short-stay outlier threshold’’ is calculated as 5/6ths of the geometric average length of stay of the LTC–DRG (as specified at 

§ 412.529(a), in conjunction with § 412.503). 3The ‘‘IPPS-comparable threshold’’ is calculated as one standard deviation from the geometric average length of stay of the same DRG under 

the IPPS as specified at § 412.529(c)(3)(i). 

[FR Doc. 08–297 Filed 1–22–08; 4:26 pm] 

BILLING CODE 4120–01–P 


rwilkins on PROD1PC63 with PROPOSALS2