Source: https://www.federalregister.gov/documents/2003/04/25/03-10015/medicare-program-changes-to-the-hospital-inpatient-prospective-payment-systems-and-fiscal-year-2003
Timestamp: 2019-07-22 11:50:06
Document Index: 417916204

Matched Legal Cases: ['§\u2009412', '§\u2009413', '§\u2009413', '§\u2009413', '§\u2009412', '§\u2009412']

Federal Register :: Medicare Program; Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2003 Rates; Correction
A Rule by the Centers for Medicare & Medicaid Services on 04/25/2003
All corrections except those listed in items 12(b) and 13 of section III of this notice are effective as of October 1, 2002. The corrections listed in items 12(b) and 13 of section III of this document are effective on April 28, 2003.
22267-22291 (25 pages)
CMS-1203-CN
0938-AL23
II. Summary of the Corrections to the August 1, 2002 Final Rule
A. Corrections Effective October 1, 2002
B. Corrections Effective April 28, 2003
IV. Hospitals Included In and Excluded From the Acute Care Hospital Inpatient Prospective Payment System
V. Impact on Excluded Hospitals and Hospital Units
VI. Quantitative Impact Analysis of the Policy Changes Under the Hospital Inpatient Prospective Payment System for Operating Costs
B. Impact of the Changes to the DRG Reclassifications and Recalibration of Relative Weights (Column 1)
C. Impact of Wage Index Changes (Columns 2, 3, and 4)
D. Combined Impact of DRG and Wage Index Changes—Including Budget Neutrality Adjustment (Column 5)
E. Impact of MGCRB Reclassifications (Column 6)
F. All Changes (Column 7)
VII. Impact of Specific Policy Changes
A. Impact of Changes Relating to EMTALA Provisions
B. Impact of Policy Changes Relating to Provider-Based Entities
VIII. Impact of Policies Affecting Rural Hospitals
A. Raising the Threshold To Qualify for the CRNA Pass-Through Payments
B. Removal of Requirement for CAHs To Use State Resident Assessment Instrument
C. Exclusion of Limited-Service Specialty Hospitals From the Definition of Like Hospitals for Purposes of Granting SCH Status
IX. Waiver of Proposed Rulemaking and Delay in Effective Date
https://www.federalregister.gov/d/03-10015 https://www.federalregister.gov/d/03-10015
Start Preamble Start Printed Page 22268
This document corrects technical errors that appeared in the final rule published in the Federal Register on August 1, 2002 entitled “Medicare Program; Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2003 Rates,” including three technical errors in the wage index values. Except for the three wage index corrections, these technical corrections are effective retrospectively to October 1, 2002. The corrections to the wage index values are effective prospectively for discharges occurring on or after April 28, 2003.
On page 50014 of the final rule, we discussed the new technology application for XigrisTM. In our discussion of our decision to approve the application to receive new technology add-on payments, we mistakenly listed the following criteria for use as “FDA-listed indications and contraindications”;
Recent (within 3 months) hemorrhagic stroke;
Recent (within 2 months) intracranial or intraspinal surgery or severe head trauma;
Trauma with an increase risk of life-threatening bleeding;
Presence of an epidural catheter;
Intracranial neoplasm or mass lesion or evidence of cerebral herniation.
We are correcting this error in section III of this notice and make note that the items in the list above are the FDA-labeled contraindications to the use of this drug. The FDA approval of XigrisTM also specified that its use is “indicated for the reduction of mortality in adult patients with severe sepsis (sepsis associated with acute organ dysfunction) who have a high risk of death.” In the study supporting the FDA approval of this drug risk of death was determined by the patient's Acute Physiology and Chronic Health Evaluation (APACHE II) score, which is commonly used in intensive care units to make this judgment. Patients with APACHE II scores of less than 25 were at a lower risk of death and had no advantage in mortality from the use of XigrisTM.
On page 50053 of the final rule, we discussed the amendment to the definition of “like hospital,” which is used for purposes of determining sole community hospital (SCH) status. The amended definition of “like hospital” excludes any hospital that provides 8 percent or less of the services furnished by the SCH. We also adopted inpatient days as the unit of measurement, as a proxy for measuring services. In the preamble discussion, there were references both to using Medicare inpatient days and total inpatient days as a proxy for measuring service overlap. It is total inpatient days, not Medicare inpatient days, that will be used as a proxy to measure service overlap. Accordingly, we are correcting the references regarding inpatient days and patient days that appeared on pages 50054 through 50056 of the final rule. However, we note that the revision to the regulations at § 412.92(c)(2) correctly reflects total inpatient days as the proxy for measuring service overlap.
On page 50126 we are correcting a typographical error in the budget neutrality factor. Therefore, the figure “0.994027” will be corrected to read “0.993209”.
On pages 50230 through 50239, we published table 5. This table contained several typographical errors (on pages 50236 and 50238, respectively) that we Start Printed Page 22269will correct in section III of this notice. These changes are not retroactive decisions, but simply constitute corrections to typographical errors in the table.
Appendix A—Regulatory Impact Analysis (pages 50276 through 50288) provides a detailed analysis of the impact of the final rule on hospitals included and excluded from the acute care hospital inpatient prospective payment systems. We note that there are technical and typographical errors in some of the explanatory language and the tables in sections I through VIII of the appendix, pages 50276 through 50285. These technical errors do not affect payment amounts or payment methodology. Therefore, they are not retroactive decisions, but simply constitute corrections to technical and typographical errors in the impact analysis section of the final rule. Because of the number of changes to this section, we are correcting the errors by reprinting the sections with the corrected text and providing the following list of corrections:
On page 50276, the revisions are as follows:
—Second column, first paragraph, 13th and 14th lines, the phrase “$0.3 billion increase” will be corrected to read “$300 million increase”;
—Second column, third full paragraph, 4th and 5th lines, the phrase “and the effects on some may be significant” will be corrected to read “and that the effects on some hospitals may be significant”;
—Second column, fourth full paragraph, 9th through 11th lines, the phrase “mandate any requirements for State, local, or tribal governments” will be corrected to read “result in any unfunded mandates for State, local, or tribal governments or the private sector as defined by section 202”;
—Third column, second full paragraph, 6th through 9th lines, the phrase “to adequately compensate hospitals for their legitimate costs” will be corrected to read “to compensate hospitals adequately for their legitimate costs”;
—Third column, second full paragraph, 9th line, the phrase “we share national goals” will be corrected to read “ we share the national goal”;
—Third column, fourth full paragraph, 14th line, the phrase “proposed rules, we solicited comments and” will be corrected to read “proposed rules, in the May 9, 2002 proposed rule, we solicited comments and”;
—Third column, seventh full paragraph, 4th through 7th lines, the sentence “We did include overall savings estimates attributable to the provision in the preamble discussion.” will be corrected to read “We did consider overall savings estimates attributable to the provision in the preamble discussion. Furthermore, we have not provided such an analysis in the impact tables in this final rule because we have decided not to make revisions to the postacute care transfer policy at this time. As stated elsewhere in the preamble, we will continue to assess whether further expansions or refinements of the transfer policy may be warranted for FY 2004 or subsequent years, and, if so, how to design such refinements and assess their impact.”;
On page 50277, the revisions are as follows:
—First column, first paragraph, 11th through 12th lines, the phrase “of the beneficiary and make more decisions based on solvency” will be corrected to read “on the needs of the beneficiary and force them to make more decisions based on solvency”;
—First column, first full paragraph, 6th through 9th lines, the phrase “high outlier payments hospitals are receiving in FY 2002 (approximately 7.2 percent of total DRG payments) compared to the FY 2003 estimated 5.1 percent” will be corrected to read “high total of outlier payments hospitals are receiving in FY 2002 (approximately 6.9 percent of total DRG payments) compared to the FY 2003 estimate of 5.1 percent”;
—First column, second full paragraph, 9th line, the phrase “the prospective payment method” will be corrected to read “the prospective payment methodology”;
—First column, the last paragraph, will be corrected to read as specified in section III of this notice.
—Third column, first full paragraph, 7th and 8th lines, the phrase “$0.3 billion” will be corrected to read “$300 million”;
—Third column, second full paragraph, 3rd line from the bottom, the phrase “available source overall” will be corrected to read “available data overall”;
On page 50278 the revisions are as follows:
—First column, second full paragraph, 4th line, the phrase “This allows” will be corrected to read “This methodology allows”;
—First column, third full paragraph, last 3 lines, the phrase “(MDHs) is also equal to the market basket increase of 3.5 percent minus 0.55 percentage points (for an update of 2.95 percent).” will be corrected to read “(MDHs) are also equal to the market basket increase of 3.5 percent minus 0.55 percentage points (for an update of 2.95 percent). We estimate the aggregate impact of this update will be to increase hospital payments by $500 million.”;
—First column, fourth full paragraph, 2nd line, the phrase “changes in hospitals’ ” will be corrected to read “changes in a hospital's”;
—First column, fourth full paragraph, last line, the line will be corrected by adding the following sentence “Because the impact of MGCRB reclassifications are budget neutral overall, the only impacts of these changes are on payments to individual hospitals and hospital groups.”
—First column, last paragraph, 3rd line, the figure “7.2” will be corrected to read “6.9”.
—Second column, first paragraph, last line, the line will be corrected by adding the following sentence “We estimate FY 2002 payments will be approximately $1.5 billion higher than if outlier payments had been 5.1 percent of total DRG payments.”
—Second column, second full paragraph, last line, the line will be corrected by adding the following sentence “We estimate the impact of this reduction will be to decrease aggregate payments by $1 billion.”
—Second column, seventh full paragraph, last line, the line will be corrected by adding the following sentence “We estimate the higher DSH payments will increase overall Medicare payments to hospitals by $200 million.”
On pages 50279 through 50280, Table I—Impact Analysis of Changes for FY 2003, Operating Prospective Payment System, we are correcting the numbering of the columns and some of the figures contained with the table. The corrected table is in section III of this notice. Start Printed Page 22270
On pages 50281 through 50283, we provide a detailed explanation of impact of the changes displayed in Table I. This explanation includes references to column numbers and to figures contained in Table I. We are correcting the numbering of the columns and some of the figures in the table; therefore, we will also correct these figures in our explanation of Table I. We also note the following corrections:
On page 50281,
—Third column, first full paragraph, line 9, the phrase “80 percent with” will be corrected to read “80 percent of”;
—Third column, last paragraph, lines 8 and 9, the figures “(343)” and “11” will be corrected to read “(344)” and “10” respectively;
—Chart showing the “percentage change in area wage index values”, third column of the chart, the figures “11” and “343” will be corrected to read “10” and “344” respectively;
—Third column, last paragraph, last two lines, the phrase “greater than 5 percent or with increases of more than 10 percent” will be corrected to read “greater than 5 percent but less than 10 percent. There are no rural hospitals with decreases in their wage index value greater than 10 percent.”;
On page 50282,
—Chart at the top of the page, the figures “2553” and “1975” will be corrected to read “2565” and “1985” respectively;
—Second column, second full paragraph, lines 1 through 3, the sentence “The overall effect of geographic reclassification is required by section 1886(d)(8)(D) of the Act to be budget neutral.” will be corrected to read “Section 1886(d)(8)(D) of the Act requires that the overall effect of geographic reclassification is budget neutral.”
—Second column, second full paragraph, line 5, the figure “0.990672” will be corrected to read “0.991095”;
—Second column, fourth full paragraph, lines 1 and 2, the sentence “A positive impact is evident among of the most rural hospital groups.” will be corrected to read “Geographic reclassification has a positive impact on most of the rural hospital groups.”;
—Second column, last paragraph, lines 9 and 10, the phrase “while rural reclassified hospitals are expected” will be corrected to read “while rural reclassified hospitals are also expected”;
—Third column, first full paragraph, line 3, the phrase “in this proposed rule” will be corrected to read “in this final rule”;
—Third column, first full paragraph, lines 6 and 7, the phrase “policy changes to date” will be corrected to read “policy changes”;
—Third column, second full paragraph, line 1, the phrase “It includes” will be corrected to read “Column 7 includes”;
—Third column, second full paragraph, line 9, the figure “7.2” will be corrected read “6.9”.
On page 50283,
—First column, third paragraph, lines 5 and 6, the phrase “Hospitals in rural areas, meanwhile, experience” will be corrected to read “Meanwhile, hospitals in rural areas experience”;
—Second column, first full paragraph—
++ Line 7, the phrase “This is primarily due” will be corrected to read “These reductions are primarily due”;
++ Line 11, the phrase “only hospital category” will be corrected to read “only rural hospital category”;
++ Line 14, the phrase “updated wage data” will be corrected to read “updated wage index data”;
++ Line 14, the phrase “In the East” will be corrected to read “In the rural East”;
++ Line 16, the phrase “Mountain and West” will be corrected to read “The rural Mountain and West”;
—Third column, first full paragraph, line 2, the phrase “receive a” will be corrected to read “receive an overall”;
On pages 50283 through 50284, Table II—Impact Analysis of Changes for FY 2003 Operating Prospective Payment System, the table will be corrected to read as specified in section III of this notice.
On page 50285—
—First column, first paragraph, last line, the phrase “from column 8 of Table I will be corrected to read “from column 7 of Table I”;
—First column, second full paragraph, the section entitled VII.A. Impact of Changes Relating to Payment for the Clinical Training Portion of Clinical Psychology Training Programs was inadvertently included in the final rule. Therefore, we are correcting this error by deleting the text of this section and renumbering sections VII.B. and VII.C. as sections VII.A. and VII.B. respectively. We are also making revisions to the heading of renumbered section VII.A. and to the discussions in the both of sections. Please see section III of this notice for the revised language;
—Second column, second paragraph, lines 7 through 9, the sentence “Currently, we have identified 622 hospitals that qualify under this provision” will be corrected to read “We have identified 622 hospitals that currently qualify under this provision”.;
—Second column, third paragraph—
++ Line 5, the phrase “appear to receive this adjustment” will be corrected to read “will receive pass-through payments”;
++ Lines 5 through 8, the sentence “In order to be eligible, hospitals must employ the CRNA and the CRNA must agree not to bill for services under Part B.” will be corrected to read “That is, another approximately 600 rural hospitals have similar volumes to hospitals that currently receive the pass-through. However, because in order to be eligible to receive pass-through payments, the hospital must employ the CRNA and the CRNA must agree not to bill for services under Part B, we estimate that half the hospitals that would otherwise qualify based on volume of procedures are not eligible because they either do not employ the CRNA or the CRNA does not agree not to bill for services under Part B.”;
++ Lines 11 through 15, the sentence “If one-half of these hospitals then met the other criteria, 45 additional hospitals would be eligible for these pass-through payments under this change” will be corrected to read “If one-half of these hospitals then met the other criteria (the CRNA is employed by the hospital and the CRNA does not bill for Part B), 45 additional hospitals would now be eligible for these pass-through payments under this change.”;
—Second column, fourth paragraph—
++ Line 5, the figure “600” will be corrected to read “630”;
++ Line 7, the figure “270” will be corrected to read “598”.
—Second column, after the fourth paragraph, we are adding a new section C to read as specified in section III of this notice.
This section summarizes three wage index corrections that result from our errors in the geographic reclassification designations and wage data that were used to calculate the FY 2003 wage indexes for three hospitals. Where errors are identified and corrections are made to the wage index, we believe it is appropriate to apply the revised wage index prospectively. As we stated in the January 3, 1984 final rule (49 FR 258), “Application of a retroactive adjustment to the rates [for corrections in the wage index] would erode the basis of the prospective payment system that payment will be made at a predetermined, specified rate.” Because we can only make prospective changes Start Printed Page 22271to the wage index values, these corrections are effective for discharges occurring on or after April 28, 2003.
“Comment: One commenter is opposed to the reassignment of code 436 from DRG 14 to DRG 15, citing that this will create a need for additional government oversight due to an increase in adverse coding compliance issues. The commenter is concerned that if code 436 is moved from the higher weighted DRG, coders may increase the use of the physician query process in an effort to obtain the higher-weighted DRG 14. The commenter states that CMS has previously expressed concerns regarding the physician query process, and the reassignment of this code may exacerbate the problem of “leading” physician queries. The commenter goes on to state that the Office of Inspector General (OIG) has previously identified DRG pair 14 and 15 as deserving of scrutiny for potential fraud and abuse issues, and that the movement of code 436 may also result in escalated monitoring.
Response: We have placed code 436 in DRG 15 strictly on the basis of historical hospital charge data, not with any punitive intent. We understand that strokes vary in the nature and intensity of their residual deficits. We also understand that very specific diagnostic tests or radiology examinations may be outside the scope of the treating facility and that physicians may opt to treat an obvious stroke patient without performing additional extensive studies that drive up the cost of medical care. We will continue to monitor the use of code 436, and will reexamine its DRG placement during the next fiscal year.”
2. On page 49994, in the second column, first full paragraph, fourth line, the figure “87.06” is corrected to read “86.07”.
3. On page 50005, second column, lines 12 through 14, the phrase “The principal diagnosis will consist of any principal diagnosis in MDC 5 except AMI:” is corrected to read “New DRG 527 (Percutaneous Cardiovascular Procedure with Drug-Eluting Stent with AMI) will have a principal diagnosis of any principal diagnosis in MDC5 except AMI:”.
“Xigris TM was found to carry an increased risk of bleeding and for this reason the FDA listed the following contradictions to Xigris TM use on the approved label:
Trauma with an increased risk of life-threatening bleeding;
Presence of an epidural catheter; and
In addition, patients with an APACHE II score of less than 25 were at lower risk of death and had no advantage in mortality from the use of XigrisTM.”
a. First column, fourth full paragraph, lines 1 and 2, the phrase “Medicare inpatient days” is corrected to read “total inpatient days”;
b. Second column, second full paragraph, lines 20 and 21, the phrase “inpatient days” is corrected to read “total inpatient days”.
a. First column, third full paragraph, line 12, the phrase “inpatient days” is corrected to read “total inpatient days”;
b. First column, third full paragraph, line 23, the phrase “The number of inpatient days” is corrected to read “The total number of inpatient days”;
c. First column, last paragraph, lines 1 and 2, the phrase “Medicare inpatient days” is corrected to read “total inpatient days”;
d. Second column, fourth full paragraph, line 13, the phrase “inpatient days” is corrected to read “total inpatient days”.
7. On page 50056, first column, first partial paragraph, line 2, the phrase “number of patient days” is corrected to read “total number of inpatient days”.
8. On page 50126, third column, third paragraph, line 16, the figure “0.994027” is corrected to read “0.993209”.
9. On page 50155, in Table 2—Hospital Average Hourly Wage for Federal Fiscal Years 2001 (1997 Wage Data), 2002 (1998 Wage Data), and 2003 (1999 Wage Data) Wage Indexes and 3-Year Average of Hospital Average Hourly Wages, line 12 (provider no. 140155),
a. Fourth column, the figure “13.0438” is corrected to read “24.2907”;
b. Fifth column, the figure “17.2026” is corrected to read “21.4743”;
10. On page 50199, in Table 2—Hospital Average Hourly Wage for Federal Fiscal Years 2001 (1997 Wage Data), 2002 (1998 Wage Data), and 2003 (1999 Wage Data) Wage Indexes and 3-Year Average of Hospital Average Hourly Wages, line 22 (provider no. 450054),
a. Fourth column, the figure “23.0492” is corrected to read “25.3285”;
b. Fifth column, the figure “21.9091” is corrected to read “22.6900”;
11. On page 50212, in Table 3A—FY 2003 and 3-Year Average Hourly Wage for Urban Areas, second set of columns,
a. Line 40 (Kankakee, IL),
(1) Second column, the figure “18.8681” is corrected to read “25.0641”
(2) Third column, the figure “20.7325” is corrected to read “22.8591”
b. Line 43 (Killeen-Temple, TX),
(1) Second column, the figure “22.2296” is corrected to read “24.1567” Start Printed Page 22272
(2) Third column, the figure “21.1752” is corrected to read “21.8355”.
12. On pages 50214 through 50221, in Table 4A—Wage Index and Capital Geographic Adjustment Factor (GAF) for Urban Areas,
a. On page 50217, second set of columns,
(a) Second column, the figure “0.8204” is corrected to read “1.0790”;
(b) Third column, the figure “0.8732” is corrected to read “1.0534”.
(a) Second column, the figure “0.9570” is corrected to read “1.0399”;
(b) Third column, the figure “0.9704” is corrected to read “1.0272”.
b. On page 50219,
(a) Second column, the figure “0.9674” is corrected to read “0.9372”;
(b) Third column, the figure “0.9776” is corrected to read “0.9566”.
(a) Second column, the figure “0.9984” is corrected to read “0.9879”;
(b) Third column, the figure “0.9989” is corrected to read “0.9917”.
13. On page 50222, in Table 4C—Wage Index and Capital Geographic Adjustment Factor (GAF) for Hospitals that are Reclassified,
a. First set of columns, line 56 (Huntsville, AL)
(1) Second column, the figure “0.8771” is corrected to read “0.8789”;
(2) Third column, the figure “0.9141” is corrected to read “0.9154”.
(a) Second column, the figure “0.9674” is corrected to read “0.9175”;
(b) Third column, the figure “0.9776” is corrected to read “0.9427”.
0040 Abilene, TX
0160 Albany-Schenectady-Troy, NY 0.8542
0460 Appleton-Oshkosh-Neenah, WI 0.9162
0470 Arecibo, PR 0.4356
0560 Atlantic-Cape May, NJ 1.1017
0680 Bakersfield, CA 0.9899
0870 Benton Harbor, MI 0.9042
0960 Binghamton, NY 0.8542
Start Printed Page 22273
1123 Boston-Worcester-Lawrence-Lowell-Brockton, MA-NH (NH Hospitals) 1.1288
1125 BoulderLongmont, CO 0.9689
1520 Charlotte-Gastonia-Rock Hill, NC-SC 0.9850
1580 Cheyenne, WY 0.9007
1620 Chico-Paradise, CA 0.9840
1900 Cumberland, MD-WV (WV Hospital) 0.7975
2020 Daytona Beach, FL 0.9062
2040 Decatur, IL 0.8204
Start Printed Page 22274
2290 Eau Claire, WI 0.9162
2335 Elmira, NY 0.8542
2440 Evansville-Henderson, IN-KY (IN Hospitals) 0.8755
2840 Fresno, CA 1.0216
2975 Glens Falls, NY 0.8542
3283 Hartford, CT 1.2394
3 285 2 Hattiesburg, MS 0.7680
3350 Houma, LA 0.8385
3605 Jacksonville, NC 0.8666
3610 Jamestown, NY 0.8542
Start Printed Page 22275
3680 Johnstown, PA 0.8462
3720 Kalamazoo-Battlecreek, MI 1.0595
3880 Lafayette, LA 0.8475
4100 Las Cruces, NM 0.8872
4150 Lawrence, KS 0.7923
4520 1 Louisville, KY-IN 0.9276
4940 Merced, CA 0.9840
Start Printed Page 22276
5523 New London-Norwich, CT 1.2394
6080 Pensacola, FL 0.8814
6323 Pittsfield, MA 1.1288
6520 Provo-Orem, UT 0.9879
6560 Pueblo, CO 0.9015
Start Printed Page 22277
6960 Saginaw-Bay City-Midland, MI 0.9650
7000 St. Joseph, MO 0.8021
7040 St. Louis, MOIL 0.8855
7080 Salem, OR 1.0367
7610 Sharon, PA 0.8462
7620 Sheboygan, WI 0.9162
7640 ShermanDenison, TX 0.9255
8003 Springfield, MA 1.1288
8080 Steubenville-Weirton, OH-WV (WV Hospitals) 0.8804
8140 Sumter, SC 0.8607
8240 Tallahassee, FL 0.8814
8320 Terre Haute, IN 0.8755
8680 Utica-Rome, NY 0.8542
8780 Visalia-Tulare-Porterville, CA 0.9840
8920 Waterloo-Cedar Falls, IA 0.8315
9000 Wheeling, WV-OH 0.7975
9270 Yolo, CA 0.9840
15. On page 50229, in Table 4H.—Pre-Reclassified Wage Index for Rural Areas, the table is corrected to read as follows:
Table 4H.—Pre-Reclassified Wage Index for Rural Areas
California 0.9840
Florida 0.8814
Kansas 0.7923
Louisiana 0.7567
Michigan 0.9000
Missouri 0.8021
New Hampshire 0.9796
North Carolina 0.8666
Oregon 1.0303
16. On page 50236, in Table 5—List of Diagnosis-Related Groups (DRGs), Relative Weighting Factors, Geometric and Arithmetic Mean Length of Stay (LOS), the fourth column (DRG Title), line 59 (DRG 386) “Extreme Immaturity” is corrected to read “Extreme Immaturity or Respiratory Distress Syndrome Neonate”.
17. On page 50238, in Table 5—List of Diagnosis-Related Groups (DRGs), Relative Weighting Factors, Geometric and Arithmetic Mean Length of Stay (LOS), the third column (Type), line 26 (DRG 473) “SURG” is corrected to read “MED”.
18. On pages 50264 through 50273, Table 9—Hospital Reclassifications and Redesignations by Individual Hospital—FY2003 is corrected by—
130018 13 6340
240036 6980 5120
b. Deleting the following entries:Start Printed Page 22279
c. Correcting the standardized amount MSA reclassification for the following entries:
340126 34 6640 6895
360175 36 1640 1840
470011 47 1123
d. Correcting the wage index MSA reclassification for the following entry:
010005 01 3440 1000
19. On pages 50276 through 50285, the text beginning with section “I. Introduction” and ending with section “VIII. Impact of Policies Affecting Rural Hospitals” is corrected to read as follows:
We have examined the impacts of this rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review) and the Regulatory Flexibility Act (RFA) (September 19, 1980, Public Law 96-354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Public Law 104-4), and Executive Order 13132.
Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct Start Printed Page 22280costs on State and local governments, preempts State law, or otherwise has Federalism implications. We have reviewed this final rule in light of Executive Order 13132 and have determined that it will not have any negative impact on the rights, roles, and responsibilities of State, local, or tribal governments.
Comment: Several commenters noted the impact that the large, legislated decreases in IME payments and the update factor (market basket increase minus 0.55 percentage point) will have on many hospitals. They argued that these decreases in payments, in combination with our proposals and an update factor of less than inflation, will have an even larger overall impact than indicated in our impact tables. The commenters indicated that, in a time when other health care costs are escalating due to nursing shortages, rising drug and technology costs, and “skyrocketing” professional and general insurance premiums, hospitals cannot absorb a reduction in inpatient Medicare payments. They argued that decreasing payments and increasing costs will make hospitals less able to make decisions based solely on the needs of the beneficiary and force them to make more decisions based on solvency.
The prospective payment systems for hospital inpatient operating and capital-related costs encompass nearly all general short-term, acute care hospitals that participate in the Medicare program. There were 44 Indian Health Service hospitals in our database, which we excluded from the analysis due to the special characteristics of the prospective payment methodology for these hospitals. Among other short-term, acute care hospitals, only the 67 such hospitals in Maryland remain excluded from the acute care hospital inpatient prospective payment system under the waiver at section 1814(b)(3) of the Act.
Thus, as of July 2002, we have included 4,230 hospitals in our analysis. This represents about 80 percent of all Medicare-participating hospitals. The majority of this impact analysis focuses on this set of hospitals.
As of July 2002, there were 1,076 specialty hospitals excluded from the acute care hospital inpatient prospective payment system. Broken down by specialty, there were 486 psychiatric, 220 rehabilitation, 279 long-term care, 80 children's, and 11 cancer hospitals. In addition, there were 1,427 psychiatric units and 962 rehabilitation units in hospitals otherwise subject to the acute care hospital inpatient prospective payment system. Under § 413.40(a)(2)(i)(A), the rate-of-increase ceiling is not applicable to the 67 specialty hospitals and units in Maryland that are paid in accordance with the waiver at section 1814(b)(3) of the Act.
In the past, hospitals and units excluded from the acute care hospital inpatient prospective payment system have been paid based on their reasonable costs subject to limits as established by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). Hospitals that continue to be paid based on their reasonable costs are subject to TEFRA limits for FY 2003. For these hospitals, the proposed update is the percentage increase in the excluded hospital market basket (currently estimated at 3.5 percent). Start Printed Page 22281
Effective for cost reporting periods beginning during FY 2003, we have proposed that long-term care hospitals would be paid under a long-term care hospital prospective payment system, where long-term care hospitals receive payment based on a 5-year transition period (see the March 22, 2002 proposed rule (67 FR 13416 through 13494)). However, under this proposed payment system, a long-term care hospital may also elect to be paid at 100 percent of the Federal prospective rate at the beginning of any of its cost reporting periods during the 5-year transition period. For purposes of the update factor, the portion of the proposed prospective payment system transition blend payment based on reasonable costs for inpatient operating services would be determined by updating the long-term care hospital's TEFRA limit by the estimate of the excluded hospital market basket (or 3.5 percent).
We note that, under § 413.40(d)(3), an excluded hospital or unit whose costs exceed 110 percent of its rate-of-increase limit receives its rate-of-increase limit plus 50 percent of the difference between its reasonable costs and 110 percent of the limit, not to exceed 110 percent of its limit. In addition, under the various provisions set forth in § 413.40, certain excluded hospitals and hospital units can obtain payment adjustments for justifiable increases in operating costs that exceed the limit. At the same time, however, by generally limiting payment increases, we continue to provide an incentive for excluded hospitals and hospital units to restrain the growth in their spending for patient services.
The effects of the annual reclassification of diagnoses and procedures and the recalibration of the DRG relative weights required by section 1886(d)(4)(C) of the Act.
The effects of the changes in hospitals' wage index values reflecting wage data from hospitals' cost reporting periods beginning during FY 1999, compared to the FY 1998 wage data, and the effects of removing from the wage data the costs and hours associated with GME and CRNAs.
The effects of geographic reclassifications by the Medicare Geographic Classification Review Board (MGCRB) that will be effective in FY 2003.
The total change in payments based on FY 2003 policies relative to payments based on FY 2002 policies.
Our final comparison illustrates the percent change in payments per case from FY 2002 to FY 2003. Six factors have significant impacts here. The first is the update to the standardized amounts. In accordance with section 1886(d)(3)(A)(iv) of the Act, as amended by section 301 of Public Law 106-554, we are updating the large urban and the other areas average standardized amounts for FY 2003 using the most recently forecasted hospital market basket increase for FY 2003 of 3.5 percent minus 0.55 percentage points (for an update of 2.95 percent). Under section 1886(b)(3) of the Act, the updates to the hospital-specific amounts for sole community hospitals (SCHs) and for Medicare-dependent small rural hospitals (MDHs) are also equal to the market basket increase of 3.5 percent minus 0.55 percentage points (for an update of 2.95 percent). We estimate the aggregate impact of this update will be to increase hospital payments by $500 million. Start Printed Page 22282
The next five rows examine the impacts of the proposed changes on rural hospitals by special payment groups (SCHs, rural referral centers (RRCs), and MDHs), as well as rural hospitals not receiving a special payment designation. The RRCs (160), SCHs (526), MDHs (241), and hospitals that are both SCH and RRC (76) shown Start Printed Page 22283here were not reclassified for purposes of the standardized amount.
Table I.—Impact Analysis of Changes for FY 2003
[Operating prospective payment system, [percent changes in payments per case]
Num. of Hosps. 1
DRG changes 2
New wage data 3
Remove GME & CRNA 80/20 4
Remove GME & CRNA 100 percent 5
DRG & WI changes 6
MGCRB reclassfication 7
All FY 2003 changes 8
All hospitals 4,230 0.4 0.0 0.0 0.1 0.0 0.0 0.4
Urban hospitals 2,620 0.5 0.0 0.0 0.1 0.0 −0.5 0.2
Large urban areas (populations over 1 million) 1,519 0.4 0.0 0.0 0.0 −0.1 −0.5 0.2
Other urban areas (populations of 1 million or fewer) 1,101 0.5 0.0 0.1 0.1 0.1 −0.4 0.7
Rural hospitals 1,610 0.1 0.2 0.1 0.1 −0.2 2.5 1.9
0-99 beds 645 0.3 0.0 0.1 0.1 0.0 −0.6 1.3
100-199 beds 909 0.3 −0.2 0.1 0.1 −0.3 −0.5 0.8
200-299 beds 523 0.5 0.0 0.1 0.1 0.0 −0.4 0.4
300-499 beds 398 0.6 −0.2 0.0 0.1 0.0 −0.4 −0.1
500 or more beds 145 0.6 0.2 0.0 0.0 0.2 −0.6 −0.6
0-49 beds 747 −0.3 0.3 0.1 0.1 −0.5 0.5 2.2
50-99 beds 501 −0.1 0.2 0.1 0.1 −0.3 0.9 2.1
100-149 beds 215 0.1 0.3 0.1 0.1 −0.1 2.9 1.9
150-199 beds 78 0.2 0.2 0.1 0.1 0.0 4.9 1.8
200 or more beds 69 0.6 0.1 0.1 0.1 0.2 4.0 1.4
New England 135 0.3 −0.1 0.1 0.1 0.6 −0.1 −0.2
Middle Atlantic 404 0.6 −0.4 0.0 −0.1 −0.5 0.0 −1.3
South Atlantic 384 0.5 0.0 0.1 0.1 0.0 −0.6 0.7
East North Central 429 0.5 0.1 0.0 0.1 0.0 −0.5 0.3
East South Central 159 0.4 −0.1 0.0 0.0 −0.3 −0.7 0.7
West North Central 178 0.5 0.2 0.1 0.1 0.3 −0.7 0.7
West South Central 335 0.5 0.5 0.0 0.0 0.3 −0.7 1.0
Mountain 132 0.7 0.5 0.1 0.1 0.8 −0.6 1.7
Pacific 417 0.3 −0.3 0.1 0.2 −0.3 −0.5 0.0
Puerto Rico 47 0.3 −0.8 0.0 0.0 −0.7 −0.9 0.6
New England 40 0.2 0.2 0.0 0.0 −0.2 −2.8 0.9
Middle Atlantic 67 0.1 −0.5 0.0 0.0 −1.0 2.7 1.2
South Atlantic 232 0.1 0.1 0.1 0.1 −0.3 2.9 1.5
East North Central 215 0.3 0.1 0.1 0.1 −0.1 2.4 2.4
East South Central 239 −0.1 0.7 0.1 0.1 0.2 2.5 2.0
West North Central 279 0.3 0.4 0.0 0.0 0.2 1.6 2.2
West South Central 285 −0.1 0.3 0.1 0.1 −0.3 3.3 1.9
Mountain 145 0.2 0.1 0.0 0.0 −0.3 1.2 2.0
Pacific 103 0.1 0.3 0.1 0.1 −0.1 2.3 2.0
Puerto Rico 5 0.1 −5.4 0.1 0.1 −5.6 −0.7 −2.7
Urban hospitals 2,650 0.5 0.0 0.0 0.1 0.0 −0.4 0.2
Large urban areas (populations over 1 million) 1,576 0.4 −0.1 0.0 0.0 −0.1 −0.4 −0.2
Other urban areas (populations of 1 million or fewer) 1,074 0.5 0.0 0.1 0.1 0.1 −0.5 0.7
Rural areas 1,580 0.1 0.2 0.1 0.1 −0.2 2.3 1.9
Non-teaching 3,119 0.3 0.0 0.1 0.1 −0.1 0.3 1.3
Fewer than 100 Residents 870 0.6 −0.1 0.0 0.1 0.0 −0.3 0.5
100 or more Residents 241 0.5 0.0 0.0 0.0 0.0 −0.3 −1.3
Non-DSH 1,549 0.6 0.0 0.0 0.1 0.0 0.2 0.6
100 or more beds 1,361 0.4 0.0 0.0 0.1 −0.1 −0.5 0.1
Less than 100 beds 286 0.0 0.1 0.1 0.1 −0.3 −0.4 1.3
Sole Community (SCH) 470 −0.2 0.2 0.1 0.1 −0.5 0.2 2.1
Referral Center (RRC) 156 0.2 0.3 0.1 0.1 0.0 4.7 1.5
100 or more beds 76 0.0 0.3 0.1 0.1 −0.1 1.3 1.7
Less than 100 beds 332 −0.2 0.4 0.1 0.1 −0.2 0.6 2.1
DSH 757 0.5 −0.1 0.0 0.0 0.0 −0.6 −0.4
Teaching and no DSH 284 0.7 0.0 0.0 0.0 0.1 0.0 −0.1
No teaching and DSH 890 0.3 0.0 0.1 0.1 −0.1 −0.4 1.2
No teaching and no DSH 719 0.5 −0.1 0.1 0.1 0.0 −0.4 0.8
Non special status hospitals 577 −0.1 0.4 0.1 0.1 −0.1 1.2 1.9
RRC 160 0.3 0.2 0.1 0.1 0.1 6.1 1.1
SCH 526 −0.1 0.2 0.0 0.0 −0.5 0.2 2.1
Medicare-dependent hospitals (MDH) 241 −0.2 0.4 0.1 0.1 −0.3 0.6 2.4
SCH and RRC 76 0.5 0.1 0.0 0.0 0.0 1.3 2.5
Voluntary 2,461 0.5 0.0 0.0 0.1 0.0 −0.1 0.4
Proprietary 723 0.4 0.1 0.1 0.1 0.0 −0.1 0.4
Government 869 0.2 0.2 0.1 0.1 −0.1 0.2 0.6
Unknown 177 0.4 −0.2 0.0 0.1 −0.3 −0.5 0.3
0-25 310 0.3 −0.1 0.1 0.1 −0.3 −0.3 −0.6
25-50 1,613 0.5 0.0 0.0 0.1 0.0 −0.3 0.1
50-65 1,677 0.4 0.0 0.1 0.1 0.0 0.3 1.0
Over 65 504 0.3 −0.1 0.0 0.1 −0.3 0.6 0.6
Unknown 126 0.9 0.1 0.0 0.0 0.3 −0.7 0.2
Hospitals Reclassified by the Medicare Geographic Classification Review Board: FY 2003 Reclassifications:
All Reclassified Hospitals 628 0.4 0.0 0.1 0.1 0.0 4.6 1.1
Standardized Amount Only 28 0.2 −0.1 0.1 0.1 −0.3 1.3 0.9
Wage Index Only 521 0.4 0.1 0.1 0.1 0.0 4.7 0.7
Both 38 0.4 0.0 0.1 0.1 −0.1 6.5 0.8
Non-reclassified Hospitals 3,605 0.4 0.0 0.0 0.1 0.0 −0.7 0.3
All Reclassified Urban Hospitals 113 0.6 −0.2 0.0 0.1 0.1 4.6 0.1
Standardized Amount Only 11 0.2 −0.9 0.1 0.1 −1.2 0.7 0.2
Wage Index Only 87 0.7 −0.2 0.0 0.0 0.2 4.8 −0.1
Both 15 0.5 0.2 0.1 0.2 0.4 5.9 3.1
Urban Non-reclassified Hospitals 2,473 0.5 0.0 0.0 0.1 0.0 −0.7 0.2
All Reclassified Rural Hospitals 515 0.3 0.2 0.1 0.1 0.0 4.6 1.7
Standardized Amount Only 11 0.5 0.4 0.1 0.1 0.4 5.3 3.2
Wage Index Only 485 0.3 0.2 0.1 0.1 0.0 4.5 1.7
Both 19 0.3 −0.1 0.1 0.1 −0.3 7.3 1.7
Rural Non-reclassified Hospitals 1,094 −0.1 0.3 0.1 0.1 −0.3 −0.6 2.1
Other Reclassified Hospitals (Section 1886(D)(8)(B)) 35 −0.1 −0.2 0.0 0.0 −0.9 −1.3 2.7
1 Because data necessary to classify some hospitals by category were missing, the total number of hospitals in each category may not equal the national total. Discharge data are from FY 2001, and hospital cost report data are from reporting periods beginning in FY 1999 and FY 1998.
2 This column displays the payment impact of the recalibration of the DRG weights based on FY 2001 MedPAR data and the DRG reclassification changes, in accordance with section 1886(d)(4)(C) of the Act.
3 This column displays the impact of updating the wage index with wage data from hospitals' FY 1999 cost reports.
4 This column displays the impact of an 80/20 percent blend of removing the labor costs and hours associated with graduate medical education (GME) and for the Part A costs of certified registered nurse anesthetists (CRNAs).
5 This column displays the impact of completely removing the labor costs and hours associated with GME and for the Part A costs of CRNAs.
6 This column displays the combined impact of the reclassification and recalibration of the DRGs, the updated and revised wage data used to calculate the wage index, the phase-out of GME and CRNA costs and hours, and the budget neutrality adjustment factor for DRG and wage index changes, in accordance with sections 1886(d)(4)(C)(iii) and 1886(d)(3)(E) of the Act. Thus, it represents the combined impacts shown in columns 1, 2, 3 and 4, and the FY 2003 budget neutrality factor of 0.993209.
7 Shown here are the effects of geographic reclassifications by the Medicare Geographic Classification Review Board (MGCRB). The effects demonstrate the FY 2003 payment impact of going from no reclassifications to the reclassifications scheduled to be in effect for FY 2003. Reclassification for prior years has no bearing on the payment impacts shown here.Start Printed Page 22285
8 This column shows changes in payments from FY 2002 to FY 2003. It incorporates all of the changes displayed in columns 5 and 6 (the changes displayed in columns 1, 2, 3, and 4 are included in column 5). It also displays the impact of the FY 2003 update, changes in hospitals' reclassification status in FY 2003 compared to FY 2002, and the difference in outlier payments from FY 2002 to FY 2003. It also reflects the gradual phase-in for some SCHs of the full 1996 hospital-specific rate. Finally, the impacts of the reduction in IME adjustment payments, and the increase in the DSH adjustment are shown in this column. The sum of these impacts may be different from the percentage changes shown here due to rounding and interactive effect.
The following chart compares the shifts in wage index values for labor market areas for FY 2002 relative to FY 2003. This chart demonstrates the impact of the changes for the FY 2003 wage index, including updating to FY 1999 wage data and removing 100 percent of GME and CRNA data. The majority of labor market areas (344) experience less than a 5-percent change. A total of 10 labor market areas experience an increase of more than 5 Start Printed Page 22286percent and less than 10 percent. Three areas experience an increase greater than 10 percent. A total of 15 areas experience decreases of more than 5 percent and less than 10 percent. Finally, 1 area experiences a decline of 10 percent or more.
Percentage change in area wage index values
Number of labor market areas
Increase more than 10 percent 2 3
Increase more than 5 percent and less than 10 percent 26 10
Increase or decrease less than 5 percent 335 344
Decrease more than 5 percent and less than 10 percent 10 15
Decrease more than 10 percent 1 1
Increase more than 10 percent 9 0
Increase more than 5 percent and less than 10 percent 42 22
Increase or decrease less than 5 percent 2565 1985
Decrease more than 5 percent and less than 10 percent 55 17
Decrease more than 10 percent 2 0
The impact of DRG reclassifications and recalibration on aggregate payments is required by section 1886(d)(4)(C)(iii) of the Act to be budget neutral. In addition, section 1886(d)(3)(E) of the Act specifies that any updates or adjustments to the wage index are to be budget neutral. As noted in the Addendum to this final rule, we compared simulated aggregate payments using the FY 2002 DRG relative weights and wage index to simulated aggregate payments using the FY 2003 DRG relative weights and blended wage index. In addition, we are required to ensure that any add-on payments for new technology under section 1886(d)(5)(K) of the Act are budget neutral. As discussed in section II.D. of this final rule, we are approving one new technology for add-on payments in FY 2003. We estimate the total add-on payments for this new technology will be $74.8 million.
As a group, rural hospitals benefit from geographic reclassification. Their payments rise 2.5 percent in column 6. Payments to urban hospitals decline 0.5 Start Printed Page 22287percent. Hospitals in other urban areas see a decrease in payments of 0.4 percent, while large urban hospitals lose 0.5 percent. Among urban hospital groups (that is, bed size, census division, and special payment status), payments generally decline.
Hospitals that were reclassified for FY 2003 are estimated to receive an overall 1.1 percent increase in payments. Urban hospitals reclassified for FY 2003 are anticipated to receive an increase of 0.1 percent, while rural reclassified hospitals are expected to benefit from reclassification with a 1.7 percent increase in payments. Overall, among hospitals reclassified for purposes of the standardized amount, a payment increase of 0.9 percent is expected, while those hospitals reclassified for purposes of the wage index only show an expected 0.7 percent increase in payments. Those hospitals located in rural counties but deemed to be urban under section 1886(d)(8)(B) of the Act are expected to receive an increase in payments of 2.7 percent. Start Printed Page 22288
Table II.—Impact Analysis of Changes for FY 2003
Operating prospective payment system, payments per case
Num. of hosps.
Average FY 2002 payment per case 1
Average FY 2003 payment per case 1
All FY 2003 changes
All hospitals 4,230 7,218 7,248 0.4
Urban hospitals 2,620 7,718 7,731 0.2
Large urban areas (populations over 1 million) 1,519 8,269 8,253 −0.2
Other urban areas (populations of 1 million of fewer) 1,101 7,002 7,053 0.7
Rural hospitals 1,610 5,168 5,265 1.9
0-99 beds 645 5,309 5,378 1.3
100-199 beds 909 6,424 6,477 0.8
200-299 beds 523 7,394 7,425 0.4
300-499 beds 398 8,345 8,336 −0.1
500 or more beds 145 10,007 9,948 −0.6
0-49 beds 747 4,260 4,353 2.2
50-99 beds 501 4,776 4,875 2.1
100-149 beds 215 5,106 5,204 1.9
150-199 beds 78 5,515 5,613 1.8
200 or more beds 69 6,750 6,846 1.4
New England 135 8,224 8,206 −0.2
Middle Atlantic 404 8,789 8,672 −1.3
South Atlantic 384 7,311 7,364 0.7
East North Central 429 7,293 7,315 0.3
East South Central 159 6,956 7,004 0.7
West North Central 178 7,358 7,407 0.7
West South Central 335 7,103 7,175 1.0
Mountain 132 7,417 7,543 1.7
Pacific 417 9,386 9,390 0.0
Puerto Rico 47 3,319 3,340 0.6
New England 40 6,405 6,460 0.9
Middle Atlantic 67 5,267 5,328 1.2
South Atlantic 232 5,245 5,325 1.5
East North Central 215 5,139 5,264 2.4
East South Central 239 4,746 4,841 2.0
West North Central 279 5,223 5,340 2.2
West South Central 285 4,536 4,620 1.9
Mountain 145 5,789 5,905 2.0
Pacific 103 6,652 6,785 2.0
Puerto Rico 5 2,753 2,679 −2.7
Urban hospitals 2,650 7,703 7,716 0.2
Large urban areas (populations over 1 million) 1,576 8,196 8,183 −0.2
Other urban areas (populations of 1 million of fewer) 1,074 7,027 7,077 0.7
Rural areas 1,580 5,155 5,252 1.9
Non-teaching 3,119 5,890 5,964 1.3
Fewer than 100 Residents 870 7,475 7,513 0.5
100 or more Residents 241 11,352 11,202 −1.3
Non-DSH 1,549 6,567 6,604 0.6
100 or more beds 1,361 8,296 8,302 0.1
Less than 100 beds 286 5,168 5,233 1.3
Sole Community (SCH) 470 4,942 5,048 2.1
Referral Center (RRC) 156 5,974 6,061 1.5
100 or more beds 76 4,517 4,592 1.7
Less than 100 beds 332 4,089 4,175 2.1
Both teaching and DSH 757 9,177 9,144 −0.4
Teaching and no DSH 284 7,773 7,766 −0.1
No teaching and DSH 890 6,535 6,611 1.2
No teaching and no DSH 719 6,041 6,089 0.8
Non special status hospitals 577 4,261 4,344 1.9
Start Printed Page 22289
RRC 160 5,677 5,740 1.1
SCH 526 5,280 5,393 2.1
Medicare-dependent hospitals (MDH) 241 4,048 4,146 2.4
SCH and RRC 76 6,626 6,794 2.5
Voluntary 2,461 7,342 7,370 0.4
Proprietary 723 6,945 6,971 0.4
Government 869 6,809 6,850 0.6
Unknown 177 7,302 7,321 0.3
0-25 310 9,845 9,790 −0.6
25-50 1,613 8,267 8,271 0.1
50-65 1,677 6,257 6,318 1.0
Over 65 504 5,647 5,682 0.6
Unknown 126 8,992 9,015 0.2
Hospitals Reclassified by the Medicare Geographic Classification Review Board: FY 2002 Reclassifications:
All Reclassified Hospitals 628 6,530 6,603 1.1
Standardized Amount Only 28 5,971 6,026 0.9
Wage Index Only 521 6,749 6,798 0.7
Both 38 5,901 5,950 0.8
All Nonreclassified Hospitals 3,605 7,327 7,353 0.3
All Urban Reclassified Hospitals 113 8,610 8,618 0.1
Urban Nonreclassified Hospitals 11 5,794 5,807 0.2
Standardized Amount Only 87 9,211 9,199 −0.1
Wage Index Only 15 5,870 6,050 3.1
Both 2,473 7,690 7,702 0.2
All Reclassified Rural Hospitals 515 5,721 5,819 1.7
Standardized Amount Only 11 4,848 5,003 3.2
Wage Index Only 485 5,728 5,826 1.7
Both 19 5,875 5,977 1.7
Rural Nonreclassified Hospitals 1,094 4,516 4,611 2.1
Other Reclassified Hospitals (Section 1886(D)(8)(B)) 35 4,894 5,024 2.7
In section V.K. of the preamble of this final rule, we discuss our Medicare payment policy changes relating to determinations of provider-based status for entities of main providers. These changes are intended to focus mainly on issues raised by the hospital industry surrounding the provider-based regulations and to allow for an orderly and uniform implementation strategy once the grandfathering provision for these entities expires on September 30, 2002.
As noted above, we attempted to solicit assistance from commenters in Start Printed Page 22290dealing with the issue of determining the impact of these changes. However, we did not receive any comments that would help resolve this issue. Thus, we remain unable to accurately determine the number of cases that would be determined not to be provider-based or to estimate the dollar impact of these determinations.
Section 1886(d)(5)(D)(iii) of the Act provides that, to qualify as an SCH, a hospital must be more than 35 road miles from another hospital. In addition, there are several other conditions under which a hospital may qualify as an SCH, including if it is the “* * * sole source of inpatient hospital services reasonably available to individuals in a geographic area * * *” because of factors such as the “* * * absence of other like hospitals. * * *” We have defined a “like hospital” in regulations as a hospital furnishing short-term, acute care (§ 412.92(c)(2)). “Like hospital” refers to a hospital paid under the acute care hospital inpatient prospective payment system.
We have become aware that, in some cases, new specialty hospitals that offer a very limited range of services have opened within the service area of an SCH and may be threatening the special status of the SCH. For example, a hospital that offers only a select type of surgery on an inpatient basis would qualify under our existing rules as an SCH “like hospital” if it met the hospital conditions of participation and was otherwise eligible for payment under the acute care hospital inpatient prospective payment system. Under our existing regulations, an SCH could lose its special status due to the opening of such a specialty hospital, even though there is little, if any, overlap in the types of services offered by the SCH and the specialty hospital. To prevent a hospital from losing its SCH status in such a situation, we are establishing criteria whereby a limited-service specialty hospital may be excluded from the definition of “like hospital”. To determine whether a hospital qualifies as an SCH, the fiscal intermediary will make a determination whether a nearby hospital paid under the acute care hospital inpatient prospective payment system is a like hospital by comparing the total acute inpatient days of the SCH applicant hospital with the total acute inpatient days of the nearby hospital. If the total acute inpatient days of the nearby hospital are greater than 8 percent of the total inpatient days reported by the SCH applicant hospital, the hospital is considered a like hospital for purposes of evaluating the application for SCH status. If the total acute inpatient days of the nearby hospital are 8 percent or less of the total acute inpatient days of the applicant hospital, the nearby hospital is not considered a like hospital for purposes of evaluating the application for SCH status under § 412.92.
The impact of this change would be: To allow some hospitals that are currently SCHs but whose status is jeopardized by the opening of a limited-service specialty hospital to retain their status; to allow hospitals that are applying for SCH status to exclude existing limited-service specialty hospitals from the list of like hospitals in their service area; or to allow some hospitals that previously lost their SCH status due to a specialty hospital opening in their service area to regain that status. We note that this change is effective for cost reporting periods beginning on or after October 1, 2002. Therefore, hospitals that lost their SCH status and are able to regain that status as a result of this change cannot have that status applied retroactively to prior periods.
We find it unnecessary to undertake notice and comment rulemaking because this notice merely provides technical corrections to the preamble language of the final rule. In this notice, the technical corrections include Start Printed Page 22291comments and responses that were inadvertently omitted from the August 1, 2002 final rule. We have incorporated these comments and responses into this correction notice to assure the commenters that we received their comments on the proposed rule and that their comments were given full consideration before publication of the final rule. Additional technical corrections include, corrections to entries in various tables and charts, replacing data inadvertently published with the correct data, and also making a variety of grammatical corrections. These corrections are necessary to ensure that the final rule accurately reflects our prospective payment methodology and rates. In addition, these corrections ensure that correct wage index values are used to calculate payments to hospitals. In light of the very technical nature of these corrections, notice-and-comment procedures are both unnecessary and impracticable. Therefore, we find good cause to waive notice and comment procedures.