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[Federal Register Volume 75, Number 167 (Monday, August 30, 2010)]
[Notices]
[Pages 52960-52961]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-21512]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-5051-N]

Medicare Program; Rural Community Hospital Demonstration Program: 
Solicitation of Additional Participants

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

ACTION: Notice.

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SUMMARY: This notice announces a solicitation for up to 20 additional 
eligible hospitals to participate in the Rural Community Hospital 
Demonstration program for a 5-year period.

DATES: Application Submission Deadline: Applications must be received 
by 5 p.m. on or before October 14, 2010. Only applications that are 
considered ``timely'' will be reviewed and considered by the technical 
panel.

ADDRESSES: The applications should be mailed or sent by an overnight 
delivery service to the following address: Centers for Medicare & 
Medicaid Services, ATTN: Sid Mazumdar, Rural Community Hospital 
Demonstration, Medicare Demonstrations Program Group, Mail Stop C4-17-
27, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    Please allow sufficient time for mailed information to be received 
in a timely manner in the event of delivery delays. Because of staffing 
and resource limitations, and because we require an application 
containing an original signature, we cannot accept applications by 
facsimile (Fax) transmission.

FOR FURTHER INFORMATION CONTACT: Sid Mazumdar at (410) 786-6673 or by 
e-mail at [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    Section 410A(a) of Public Law 108-173 required the Secretary to 
establish a demonstration program to test the feasibility and 
advisability of establishing cost-based reimbursement for ``rural 
community hospitals'' to furnish covered inpatient hospital services to 
Medicare beneficiaries. The demonstration pays rural community 
hospitals for such services under a cost-based methodology for Medicare 
payment purposes for covered inpatient hospital services furnished to 
Medicare beneficiaries. A rural community hospital, as defined in 
section 410A(f)(1) of Public Law 108-173, is a hospital that--
     Has fewer than 51 acute care inpatient beds (excluding 
beds in a distinct psychiatric or rehabilitation unit of the hospital) 
as reported in its most recent cost report;
     Provides 24-hour emergency care services; and
     Is not designated or eligible for designation as a 
critical access hospital under section 1820 of the Social Security Act 
(the Act).
    Section 410A(a)(4) of Public Law 108-173 specified that the 
Secretary was to select for participation from among the applicants no 
more than 15 rural community hospitals in rural areas of States that 
the Secretary identified as having low population densities. Using 2002 
data from the U.S. Census Bureau, we identified the 10 States with the 
lowest population density in which rural community hospitals were to be 
located in order to participate in the demonstration: Alaska, Idaho, 
Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota, 
Utah, and Wyoming. (Source: U.S. Census Bureau, Statistical Abstract of 
the United States: 2003). We solicited eligible hospitals among these 
States in 2004 and again in 2008. There are currently 10 hospitals 
participating in the demonstration.
    The demonstration is designed to test the feasibility and 
advisability of reasonable cost reimbursement for inpatient services to 
small rural hospitals. The demonstration is aimed at increasing the 
capability of the selected rural hospitals to meet the needs of their 
service areas.
    Section 410A(a)(5) of Public Law 108-173 required a 5-year 
demonstration period of participation. The 5-year periods of 
performance for the hospitals originally selected will end by June 30, 
2010. For the hospitals selected in 2008, the initial period of 
performance is scheduled to end on September 30, 2010. Section 10313 of 
the Patient Protection and Affordable Care Act (ACA), (Pub. L. 111-148) 
mandates an extension and expansion of the Rural Community Hospital 
demonstration for 5 years. In order for other hospitals to begin 
participation in this new demonstration for the 5-year extension 
period, rural community hospitals must be located among the 20 States 
with the lowest population density--according to the same criteria and 
data as the original demonstration. These States are: Alaska, Arizona, 
Arkansas, Colorado, Idaho, Iowa, Kansas, Maine, Minnesota, Mississippi, 
Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, 
South Dakota, Utah, and Wyoming. (Source: U.S. Census Bureau, 
Statistical Abstract of the United States: 2003). The statute States 
that no more than 30 rural community hospitals can participate, and 
that those hospitals participating in the demonstration program as of 
the date of the last day of the initial 5-year period will be allowed 
to continue in the program. Up to 20 additional hospitals will be able 
to begin participation in the demonstration.

II. Provisions of the Notice

    This notice announces the solicitation for up to 20 additional 
hospitals to participate in the Rural Community Hospital Demonstration 
Program. Hospitals that enter the demonstration under this solicitation 
will be able to participate for 5 years.

A. Demonstration Payment Methodology

    Hospitals selected for the demonstration will be paid the 
reasonable costs of providing covered inpatient hospital services, with 
the exclusion of services furnished in a psychiatric or rehabilitation 
unit that is a distinct part of the hospital, using the following 
rules. For discharges occurring--
     In the first cost report period upon the hospital's 
participation in the demonstration, reasonable costs for covered 
inpatient services; or
     During the second or subsequent cost reporting period, the 
lesser of their reasonable costs or a target amount. The target amount 
in the second cost reporting period is defined as the reasonable costs 
of providing covered inpatient hospital services in the first cost 
reporting period, increased by the inpatient prospective payment system 
update factor (as defined in section 1886(b)(3)(B) of the Act) for that 
particular cost reporting period. The target amount in subsequent cost

[[Page 52961]]

reporting periods is defined as the preceding cost reporting period's 
target amount increased by the hospital inpatient prospective payment 
system (IPPS) update factor for that particular cost reporting period.
    Covered inpatient hospital services means inpatient hospital 
services (defined in section 1861(b) of the Act) and includes extended 
care services furnished under an agreement under section 1883 of the 
Act.
    Section 410A of Public Law 108-173 requires that, ``in conducting 
the demonstration program under this section, the Secretary shall 
ensure that the aggregate payments made by the Secretary do not exceed 
the amount which the Secretary would have paid if the demonstration 
program under this section was not implemented.'' In order to achieve 
budget neutrality for this demonstration program in fiscal years (FYs) 
2005, 2006, 2007, 2008, 2009, and 2010, we adjusted the national IPPS 
rates by an amount sufficient to offset the added costs of this 
demonstration program. We presented an estimate of the amount to offset 
additional costs due to the demonstration program in FY 2011, including 
the costs of additional rural community hospitals, in the FY 2011 
inpatient prospective payment system/long-term care hospital 
prospective payment system (IPPS/LTCH PPS) supplemental proposed rule 
(see the June 2, 2010 Federal Register (75 FR 30918)).

B. Participation in the Demonstration

    To participate in the demonstration, a hospital must be located in 
one of the identified States with low-population density and meet the 
criteria for a rural community hospital. Eligible hospitals that desire 
to participate in the demonstration must properly submit a timely 
application. Information about the demonstration and details on how to 
apply can be found on the CMS Web site: http://www.cms.gov/DemoProjectsEvalRpts/downloads/2004_Rural_Community_ Hospital_
Demonstration_Program.pdf.

III. Collection of Information Requirements

    The information collection requirements contained in this notice 
are subject to the Paperwork Reduction Act of 1995. As discussed in 
section II.B. of this notice, a hospital must submit the required 
information on the cover sheet of the CMS Medicare Waiver Demonstration 
Application to receive consideration by the technical review panel. The 
burden associated is the time and effort necessary to complete the 
Medicare Waiver Application and submit the information to CMS. The 
burden associated with this requirement is currently approved under the 
Office of Management and Budget control number 0938-0880 with an 
expiration date of November 20, 2010.

    Authority:  Section 10313 of the Patient Protection and 
Affordable Care Act (Pub. L. 111-148)

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

    Dated: June 22, 2010.
Marilyn Tavenner,
Acting Administrator and Chief Operating Officer, Centers for Medicare 
& Medicaid Services.
[FR Doc. 2010-21512 Filed 8-27-10; 8:45 am]
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