[Federal Register: April 25, 2008 (Volume 73, Number 81)] [Proposed Rules] [Page 22673-22714] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr25ap08-16] [[Page 22673]] ----------------------------------------------------------------------- Part IV Department of Health and Human Services ----------------------------------------------------------------------- Centers for Medicare & Medicaid ----------------------------------------------------------------------- 42 CFR Part 412 Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2009; Proposed Rule [[Page 22674]] ----------------------------------------------------------------------- DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Part 412 [CMS-1554-P] RIN 0938-AP19 Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2009 AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Proposed rule. ----------------------------------------------------------------------- SUMMARY: This proposed rule would update the prospective payment rates for inpatient rehabilitation facilities (IRFs) for Federal fiscal year (FY) 2009 (for discharges occurring on or after October 1, 2008 and on or before September 30, 2009) as required under section 1886(j)(3)(C) of the Social Security Act (the Act). Section 1886(j)(5) of the Act requires the Secretary to publish in the Federal Register on or before the August 1 that precedes the start of each fiscal year, the classification and weighting factors for the IRF prospective payment system's (PPS) case-mix groups and a description of the methodology and data used in computing the prospective payment rates for that fiscal year. We are proposing to revise existing policies regarding the PPS within the authority granted under section 1886(j) of the Act. DATES: To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on June 20, 2008. ADDRESSES: In commenting, please refer to file code CMS-1554-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 this regulation to http://www.regulations.gov. Follow the instructions for ``Comment or Submission'' and enter the filecode to find the document accepting comments. 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-1554-P, P.O. Box 8012, Baltimore, MD 21244-8012. 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-1554-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-8012. 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 either of the following addresses. a. Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201 (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.) b. 7500 Security Boulevard, Baltimore, MD 21244-1850. 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. Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period. For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section. FOR FURTHER INFORMATION CONTACT: Susanne Seagrave, (410) 786-0044, for information regarding the payment policies. Jeanette Kranacs, (410) 786-9385, for information regarding the wage index. SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to view public comments. Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1-800-743-3951. Table of Contents I. Background A. Historical Overview of the Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) B. Operational Overview of the Current IRF PPS C. Brief Summary of Proposed Revisions to the IRF PPS for Federal Fiscal Year (FY) 2009 II. Proposed Update to the Case-Mix Group (CMG) Relative Weights and Average Length of Stay Values for FY 2009 III. Proposed FY 2009 IRF PPS Federal Prospective Payment Rates A. Increase Factor for FY 2009 and Proposed FY 2009 Labor- Related Share B. Proposed Area Wage Adjustment C. Description of the Proposed IRF Standard Payment Conversion Factor and Proposed Payment Rates for FY 2009 D. Example of the Methodology for Adjusting the Proposed Federal Prospective Payment Rates IV. Proposed Update to Payments for High-Cost Outliers Under the IRF PPS A. Proposed Update to the Outlier Threshold Amount for FY 2009 B. Update to the IRF Cost-to-Charge Ratio Ceilings V. Revisions to the Regulation Text in Response to the Medicare, Medicaid, and SCHIP Extension Act of 2007 VI. Post Acute Care Payment Reform VII. Provisions of the Proposed Rule VIII. Collection of Information Requirements IX. Response to Public Comments X. Regulatory Impact Statement Regulation Text Addendum 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. ASCA Administrative Simplification Compliance Act, 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 CBSA Core-Based Statistical Area CCR Cost-to-Charge Ratio CFR Code of Federal Regulations CMG Case-Mix Group DRA Deficit Reduction Act of 2005, Pub. L. 109-171 [[Page 22675]] DSH Disproportionate Share Hospital ECI Employment Cost Index FI Fiscal Intermediary FR Federal Register FY Federal Fiscal Year GDP Gross Domestic Product HHH Hubert H. Humphrey Building HIPAA Health Insurance Portability and Accountability Act, Pub. L. 104-191 IFMC Iowa Foundation for Medical Care IPF Inpatient Psychiatric Facility IPPS Inpatient Prospective Payment System IRF Inpatient Rehabilitation Facility IRF-PAI Inpatient Rehabilitation Facility-Patient Assessment Instrument IRF PPS Inpatient Rehabilitation Facility Prospective Payment System IRVEN Inpatient Rehabilitation Validation and Entry LIP Low-Income Percentage LTCH Long-Term Care Hospital MAC Medicare Administrative Contractor MEDPAR Medicare Provider Analysis and Review MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. 108-173 MSA Metropolitan Statistical Area NAICS North American Industrial Classification System OMB Office of Management and Budget PAI Patient Assessment Instrument PPS Prospective Payment System RAND RAND Corporation RFA Regulatory Flexibility Act, Pub. L. 96-354 RIA Regulatory Impact Analysis RIC Rehabilitation Impairment Category RPL Rehabilitation, Psychiatric, and Long-Term Care Hospital Market Basket SCHIP State Children's Health Insurance Program SIC Standard Industrial Code TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97- 248 I. Background A. Historical Overview of the Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) Section 4421 of the Balanced Budget Act of 1997 (BBA, Pub. L. 105- 33), as amended by section 125 of the Medicare, Medicaid, and SCHIP (State Children's Health Insurance Program) Balanced Budget Refinement Act of 1999 (BBRA, Pub. L. 106-113), and by section 305 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA, Pub. L. 106-554), provides for the implementation of a per discharge prospective payment system (PPS) under section 1886(j) of the Social Security Act (the Act) for inpatient rehabilitation hospitals and inpatient rehabilitation units of a hospital (hereinafter referred to as IRFs). Payments under the IRF PPS encompass inpatient operating and capital costs of furnishing covered rehabilitation services (that is, routine, ancillary, and capital costs) but not direct graduate medical education costs, costs of approved nursing and allied health education activities, bad debts, and other services or items outside the scope of the IRF PPS. Although a complete discussion of the IRF PPS provisions appears in the original, FY 2002 IRF PPS final rule (66 FR 41316) as revised in the FY 2006 IRF PPS final rule (70 FR 47880), we are providing below a general description of the IRF PPS for fiscal years (FYs) 2002 through 2005. Under the IRF PPS from FY 2002 through FY 2005, as described in the FY 2002 IRF PPS final rule (66 FR 41316), the Federal prospective payment rates were computed across 100 distinct case-mix groups (CMGs). We constructed 95 CMGs using rehabilitation impairment categories (RICs), functional status (both motor and cognitive), and age (in some cases, cognitive status and age may not be a factor in defining a CMG). In addition, we constructed five special CMGs to account for very short stays and for patients who expire in the IRF. For each of the CMGs, we developed relative weighting factors to account for a patient's clinical characteristics and expected resource needs. Thus, the weighting factors accounted for the relative difference in resource use across all CMGs. Within each CMG, we created tiers based on the estimated effects that certain comorbidities would have on resource use. We established the Federal PPS rates using a standardized payment conversion factor (formerly referred to as the budget neutral conversion factor). For a detailed discussion of the budget neutral conversion factor, please refer to our FY 2004 IRF PPS final rule (68 FR 45684 through 45685). In the FY 2006 IRF PPS final rule (70 FR 47880), we discussed in detail the methodology for determining the standard payment conversion factor. We applied the relative weighting factors to the standard payment conversion factor to compute the unadjusted Federal prospective payment rates under the IRF PPS from FYs 2002 through 2005. We then applied adjustments for geographic variations in wages (wage index), the percentage of low-income patients, and location in a rural area (if applicable) to the IRF's unadjusted Federal prospective payment rates. In addition, we made adjustments to account for short-stay transfer cases, interrupted stays, and high cost outliers. For cost reporting periods that began on or after January 1, 2002 and before October 1, 2002, we determined the final prospective payment amounts using the transition methodology prescribed in section 1886(j)(1) of the Act. Under this provision, IRFs transitioning into the PPS were paid a blend of the Federal IRF PPS rate and the payment that the IRF would have received had the IRF PPS not been implemented. This provision also allowed IRFs to elect to bypass this blended payment and immediately be paid 100 percent of the Federal IRF PPS rate. The transition methodology expired as of cost reporting periods beginning on or after October 1, 2002 (FY 2003), and payments for all IRFs now consist of 100 percent of the Federal IRF PPS rate. We established a CMS Web site as a primary information resource for the IRF PPS. The Web site URL is http://www.cms.hhs.gov/ InpatientRehabFacPPS/ and may be accessed to download or view publications, software, data specifications, educational materials, and other information pertinent to the IRF PPS. Section 1886(j) of the Act confers broad statutory authority upon the Secretary to propose refinements to the IRF PPS. In the FY 2006 IRF PPS final rule (70 FR 47880) and in correcting amendments to the FY 2006 IRF PPS final rule (70 FR 57166) that we published on September 30, 2005, we finalized a number of refinements to the IRF PPS case-mix classification system (the CMGs and the corresponding relative weights) and the case-level and facility-level adjustments. Any reference to the FY 2006 IRF PPS final rule in this proposed rule also includes the provisions effective in the correcting amendments. For a detailed discussion of the final key policy changes for FY 2006, please refer to the FY 2006 IRF PPS final rule (70 FR 47880 and 70 FR 57166). In the FY 2007 IRF PPS final rule (71 FR 48354), we further refined the IRF PPS case-mix classification system (the CMG relative weights) and the case-level adjustments, to ensure that IRF PPS payments continue to reflect as accurately as possible the costs of care. For a detailed discussion of the FY 2007 policy revisions, please refer to the FY 2007 IRF PPS final rule (71 FR 48354). In the FY 2008 IRF PPS final rule (72 FR 44284), we updated the Federal prospective payment rates and the outlier threshold, revised the IRF wage index policy, and clarified how we determine high-cost outlier payments for transfer cases. For more information on the policy changes implemented for FY 2008, please refer to the FY 2008 IRF PPS final rule (72 FR 44284), in which we published the final FY 2008 IRF Federal prospective payment rates. [[Page 22676]] After publication of the FY 2008 IRF PPS final rule (72 FR 44284), section 115 of the Medicare, Medicaid, and SCHIP Extension Act of 2007, Public Law 110-173, amended section 1886(j)(3)(C) of the Act to apply a zero percent increase factor for FYs 2008 and 2009, effective for IRF discharges occurring on or after April 1, 2008. Section 1886(j)(3)(C) of the Act requires the Secretary to develop an increase factor to update the IRF Federal prospective payment rates for each FY. Based on the legislative change to the increase factor, we revised the FY 2008 Federal prospective payment rates for IRF discharges occurring on or after April 1, 2008. Thus, the final FY 2008 IRF Federal prospective payment rates that were published in the FY 2008 IRF PPS final rule (72 FR 44284) were effective for discharges occurring on or after October 1, 2007 and on or before March 31, 2008; and the revised FY 2008 IRF Federal prospective payment rates will be effective for discharges occurring on or after April 1, 2008 and on or before September 30, 2008. The revised FY 2008 Federal prospective payment rates are available on the CMS Web site at http://www.cms.hhs.gov/ InpatientRehabFacPPS/07_DataFiles.asp#TopOfPage. B. Operational Overview of the Current IRF PPS As described in the FY 2002 IRF PPS final rule, upon the admission and discharge of a Medicare Part A fee-for-service patient, the IRF is required to complete the appropriate sections of a patient assessment instrument, the Inpatient Rehabilitation Facility-Patient Assessment Instrument (IRF-PAI). All required data must be electronically encoded into the IRF-PAI software product. Generally, the software product includes patient grouping programming called the GROUPER software. The GROUPER software uses specific IRF-PAI data elements to classify (or group) patients into distinct CMGs and account for the existence of any relevant comorbidities. The GROUPER software produces a five-digit CMG number. The first digit is an alpha-character that indicates the comorbidity tier. The last four digits represent the distinct CMG number. Free downloads of the Inpatient Rehabilitation Validation and Entry (IRVEN) software product, including the GROUPER software, are available on the CMS Web site at http://www.cms.hhs.gov/InpatientRehabFacPPS/06_Software.asp. Once a patient is discharged, the IRF submits a Medicare claim (a Health Insurance Portability and Accountability Act (HIPAA, Pub. L. 104-191) compliant electronic claim or, if the Administrative Compliance Act (ASCA, Pub. L. 107-105,) permits a paper claim, a UB-04 or a CMS-1450, as appropriate) using the five-digit CMG number and sends it to the appropriate Medicare fiscal intermediary (FI) or Medicare Administrative Contractor (MAC). Claims submitted to Medicare must comply with both ASCA and HIPAA. Section 3 of the ASCA amends section 1862(a) of the Act by adding paragraph (22) which requires the Medicare program, subject to section 1862(h) of the Act, to deny payment under Part A or Part B for any expenses 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, in turn, provides that the Secretary shall waive such denial in situations in which there is no method available for the submission of claims in an electronic form or the entity submitting the claim is a small provider. In addition, the Secretary also has the authority to waive such denial ``in such unusual cases as the Secretary finds appropriate.'' See also the final rule, ``Medicare Program; Electronic Submission of Medicare Claims'' (70 FR 71008, November 25, 2005). Section 3 of the ASCA operates in the context of the administrative simplification provisions of HIPAA, which include, among others, the requirements for transaction standards and code sets codified in 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 healthcare providers, to conduct covered electronic transactions according to the applicable transaction standards. (See the program claim memoranda issued and published by CMS at: http:// www.cms.hhs.gov/ElectronicBillingEDITrans/ and listed in the addenda to the Medicare Intermediary Manual, Part 3, section 3600. CMS instructions for the limited number of Medicare claims submitted on paper are available at: http://www.cms.hhs.gov/manuals/downloads/ clm104c25.pdf.) The Medicare FI or MAC processes the claim through its software system. This software system includes pricing programming called the ``PRICER'' software. The PRICER software uses the CMG number, along with other specific claim data elements and provider-specific data, to adjust the IRF's prospective payment for interrupted stays, transfers, short stays, and deaths, and then applies the applicable adjustments to account for the IRF's wage index, percentage of low-income patients, rural location, and outlier payments. For discharges occurring on or after October 1, 2005, the IRF PPS payment also reflects the new teaching status adjustment that became effective as of FY 2006, as discussed in the FY 2006 IRF PPS final rule (70 FR 47880). C. Brief Summary of Proposed Revisions to the IRF PPS for FY 2009 In this proposed rule, we are proposing to make the following updates to the IRF PPS: Update the FY 2009 IRF PPS relative weights and average length of stay values using the most current and complete Medicare claims and cost report data, as discussed in section II. Update the FY 2009 IRF PPS payment rates by the proposed wage index and labor related share in a budget neutral manner, as discussed in sections III.A and B. Update the outlier threshold amount for FY 2009, as discussed in section IV.A. Update the cost-to-charge ratio ceiling and the national average urban and rural cost-to-charge ratios for purposes of determining outlier payments under the IRF PPS, as discussed in section IV.B. II. Proposed Update to the CMG Relative Weights and Average Length of Stay Values for FY 2009 As specified in 42 CFR 412.620(b)(1), we calculate a relative weight for each CMG that is proportional to the resources needed by an average inpatient rehabilitation case in that CMG. For example, cases in a CMG with a relative weight of 2, on average, will cost twice as much as cases in a CMG with a relative weight of 1. Relative weights account for the variance in cost per discharge due to the variance in resource utilization among the payment groups, and their use helps to ensure that IRF PPS payments support beneficiary access to care as well as provider efficiency. In this proposed rule, we propose to update the CMG relative weights and average length of stay values using the most recent available data (FY 2006). We propose to do this using the same methodology, with one change, that was described in the original, FY 2002 IRF PPS final rule (66 FR 41316) and the FY 2006 IRF PPS final rule (70 FR 47880, 47887 through 47888). The proposed change to the methodology involves using new, more detailed cost-to-charge ratio (CCR) data from the cost reports of IRF subprovider units of primary acute care hospitals, instead of CCR data from the associated primary acute care [[Page 22677]] hospitals, to calculate IRFs' average costs per case. For freestanding IRFs, we propose to continue using CCR data from the freestanding IRF's (that is, the primary hospital's) cost report. Previously, we were only able to use the CCR data from the cost reports of the primary acute care hospitals to estimate the relationship between costs and charges for the IRF subprovider units because those were the best data we had available. However, conceptually, the relationship between costs and charges in the primary acute care hospital could differ from the relationship between costs and charges in the IRF subprovider units. Since the two types of facilities provide a different range of services and treat different populations of patients, it might not be as precise to use the data from the primary acute care hospital to estimate the relationship between costs and charges in the IRF subprovider unit. When we analyzed the CMG relative weights for FY 2009, using both the primary acute care hospital CCRs and the IRF subprovider unit CCRs, we found that the CCRs we used made very little difference in the CMG relative weights. Since the data needed to calculate the IRF subprovider units' CCRs are now available in enough detail, and since conceptually it is more appropriate to use the cost report data from the IRF subprovider units to estimate the relationship between costs and charges in these IRF subprovider units, we are proposing this change to the methodology. As indicated previously, for freestanding IRFs, we propose to continue using CCR data from the freestanding IRF's (that is, the primary hospital's) cost report. In future years, we would continue to estimate the CMG relative weights using both the primary acute care hospital CCRs and the IRF subprovider unit CCRs to ensure that we continue to use the most appropriate data in updating the CMG relative weights. In calculating the CMG relative weights, we use a hospital-specific relative value method to estimate operating (routine and ancillary services) and capital costs of IRFs. To estimate these costs for FY 2009, we propose to use the CCRs from the IRF subprovider units of primary acute care hospitals, except for the freestanding IRFs (for which we will continue to use the data from the cost report of the primary hospital, as discussed above). For FY 2009, we propose to use the same methodology we used to compute the CMG relative weights for FYs 2002 through 2008, with the one change described above, to update the CMG relative weights to reflect the most recent available data (FY 2006). The process used to calculate the CMG relative weights for this proposed rule follows below: Step 1. We calculate the CMG relative weights by estimating the effects that comorbidities have on costs. Step 2. We adjust the cost of each Medicare discharge (case) to reflect the effects found in the first step. Step 3. We use the adjusted costs from the second step to calculate CMG relative weights, using the hospital-specific relative value method. Step 4. We normalize to the same average CMG relative weight from the CMG relative weights implemented in the FY 2002 IRF PPS final rule (66 FR 41316), the FY 2006 IRF PPS final rule (70 FR 47880), and the FY 2007 IRF PPS final rule (71 FR 48354). (Note that we did not revise the CMG relative weights in the FY 2008 IRF PPS final rule (72 FR 44284)). Consistent with the way we implemented changes to the IRF classification system in the FY 2006 IRF PPS final rule (70 FR 47880 and 70 FR 57166) and the FY 2007 IRF PPS final rule (71 FR 48354), we are proposing to make the revisions to the CMG relative weights for FY 2009 in such a way that total estimated aggregate payments to IRFs for FY 2009 are the same with or without the proposed changes (that is, in a budget neutral manner) by applying a budget neutrality factor to the standard payment amount. To calculate the appropriate proposed budget neutrality factor to apply to the standard payment amount, we propose to use the following steps: Step 1. Calculate the estimated total amount of IRF PPS payments for FY 2009 (with no proposed changes to the CMG relative weights). Step 2. Apply the proposed changes to the CMG relative weights (as discussed above) to calculate the estimated total amount of IRF PPS payments for FY 2009. Step 3. Divide the amount calculated in step 1 by the amount calculated in step 2 to determine the proposed factor (0.9969) that would maintain the same total estimated aggregate payments in FY 2009 with and without the proposed changes to the CMG relative weights. Step 4. Apply the proposed budget neutrality factor (0.9969) to the FY 2008 IRF PPS standard payment amount after the application of the budget-neutral wage adjustment factor. In section III.C of this proposed rule, we discuss the proposed methodology for calculating the standard payment conversion factor for FY 2009. Table 1 below, ``Proposed Relative Weights and Average Lengths of Stay for Case-Mix Groups,'' presents the CMGs, the comorbidity tiers, the proposed corresponding relative weights, and the proposed average length of stay values for each CMG and tier for FY 2009. The average length of stay for each CMG is used to determine when an IRF discharge meets the definition of a short-stay transfer, which results in a per diem case level adjustment. The proposed relative weights and average length of stay values shown in Table 1 are subject to change for the final rule based on analysis of updated data. Table 1.-- Proposed Relative Weights and Average Lengths of Stay for Case-Mix Groups -------------------------------------------------------------------------------------------------------------------------------------------------------- Proposed relative weight Proposed average length of stay CMG CMG Description (M = motor, C = --------------------------------------------------------------------------------------- cognitive, A = age) Tier 1 Tier 2 Tier 3 None Tier 1 Tier 2 Tier 3 None -------------------------------------------------------------------------------------------------------------------------------------------------------- 0101.......................... Stroke M>51.05.................. 0.7741 0.7243 0.6463 0.6222 8 9 9 9 0102.......................... Stroke M>44.45 and M<51.05 and 0.9569 0.8953 0.7989 0.7691 11 11 11 10 C>18.5. 0103.......................... Stroke M>44.45 and M<51.05 and 1.1184 1.0465 0.9338 0.8990 13 15 12 12 C<18.5. 0104.......................... Stroke M>38.85 and M<44.45...... 1.2008 1.1235 1.0025 0.9651 14 15 13 13 0105.......................... Stroke M>34.25 and M<38.85...... 1.4207 1.3293 1.1861 1.1419 16 17 15 15 0106.......................... Stroke M>30.05 and M<34.25...... 1.6395 1.5341 1.3688 1.3178 17 19 17 17 0107.......................... Stroke M>26.15 and M<30.05...... 1.8826 1.7615 1.5718 1.5132 19 22 20 19 0108.......................... Stroke M<26.15 and A>84.5....... 2.2430 2.0987 1.8726 1.8028 29 27 24 23 0109.......................... Stroke M>22.35 and M<26.15 and 2.1639 2.0247 1.8066 1.7393 22 25 22 22 A<84.5. 0110.......................... Stroke M<22.35 and A<84.5....... 2.6983 2.5247 2.2528 2.1688 30 31 27 27 [[Page 22678]] 0201.......................... Traumatic brain injury M>53.35 0.7957 0.6567 0.5947 0.5509 10 9 8 8 and C>23.5. 0202.......................... Traumatic brain injury M>44.25 1.0090 0.8327 0.7541 0.6985 13 12 10 10 and M<53.35 and C>23.5. 0203.......................... Traumatic brain injury M>44.25 1.2165 1.0040 0.9092 0.8422 14 13 12 12 and C<23.5. 0204.......................... Traumatic brain injury M>40.65 1.3278 1.0959 0.9924 0.9193 15 15 13 13 and M<44.25. 0205.......................... Traumatic brain injury M>28.75 1.6060 1.3255 1.2004 1.1119 17 17 16 15 and M<40.65. 0206.......................... Traumatic brain injury M>22.05 2.0505 1.6923 1.5326 1.4197 21 21 20 19 and M<28.75. 0207.......................... Traumatic brain injury M<22.05.. 2.6905 2.2205 2.0109 1.8627 36 27 25 23 0301.......................... Non-traumatic brain injury 1.0947 0.9303 0.8501 0.7640 12 12 11 10 M>41.05. 0302.......................... Non-traumatic brain injury 1.4084 1.1969 1.0937 0.9829 14 15 14 13 M>35.05 and M<41.05. 0303.......................... Non-traumatic brain injury 1.6925 1.4384 1.3144 1.1812 17 18 16 15 M>26.15 and M<35.05. 0304.......................... Non-traumatic brain injury 2.3001 1.9548 1.7862 1.6053 28 24 21 20 M<26.15. 0401.......................... Traumatic spinal cord injury 0.9524 0.8236 0.7692 0.7107 12 11 10 10 M>48.45. 0402.......................... Traumatic spinal cord injury 1.3448 1.1629 1.0862 1.0035 17 16 15 13 M>30.35 and M<48.45. 0403.......................... Traumatic spinal cord injury 2.2969 1.9863 1.8552 1.7140 30 25 23 22 M>16.05 and M<30.35. 0404.......................... Traumatic spinal cord injury 4.1471 3.5864 3.3497 3.0946 66 44 38 36 M<16.05 and A>63.5. 0405.......................... Traumatic spinal cord injury 3.3687 2.9132 2.7209 2.5138 42 30 30 32 M<16.05 and A<63.5. 0501.......................... Non-traumatic spinal cord injury 0.7485 0.6643 0.5859 0.5236 9 9 8 8 M>51.35. 0502.......................... Non-traumatic spinal cord injury 1.0121 0.8982 0.7922 0.7080 12 12 11 10 M>40.15 and M<51.35. 0503.......................... Non-traumatic spinal cord injury 1.3269 1.1777 1.0387 0.9282 15 15 14 12 M>31.25 and M<40.15. 0504.......................... Non-traumatic spinal cord injury 1.6143 1.4327 1.2637 1.1293 19 19 17 15 M>29.25 and M<31.25. 0505.......................... Non-traumatic spinal cord injury 1.9083 1.6936 1.4938 1.3349 21 19 19 17 M>23.75 and M<29.25. 0506.......................... Non-traumatic spinal cord injury 2.6059 2.3127 2.0399 1.8229 30 29 24 23 M<23.75. 0601.......................... Neurological M>47.75............ 0.9507 0.7701 0.7182 0.6558 11 11 9 9 0602.......................... Neurological M>37.35 and M<47.75 1.2627 1.0228 0.9539 0.8710 14 13 12 12 0603.......................... Neurological M>25.85 and M<37.35 1.6055 1.3005 1.2129 1.1075 16 16 15 15 0604.......................... Neurological M<25.85............ 2.1200 1.7172 1.6016 1.4624 25 21 20 18 0701.......................... Fracture of lower extremity 0.9081 0.7815 0.7372 0.6629 10 10 10 9 M>42.15. 0702.......................... Fracture of lower extremity 1.1867 1.0212 0.9633 0.8662 14 14 13 12 M>34.15 and M<42.15. 0703.......................... Fracture of lower extremity 1.4492 1.2471 1.1765 1.0579 16 16 15 14 M>28.15 and M<34.15. 0704.......................... Fracture of lower extremity 1.8522 1.5939 1.5037 1.3520 19 20 19 18 M<28.15. 0801.......................... Replacement of lower extremity 0.6786 0.5637 0.5166 0.4690 8 8 7 7 joint M>49.55. 0802.......................... Replacement of lower extremity 0.9002 0.7477 0.6853 0.6221 10 10 9 9 joint M>37.05 and M<49.55. 0803.......................... Replacement of lower extremity 1.2808 1.0639 0.9750 0.8851 13 13 13 12 joint M>28.65 and M<37.05 and A>83.5. 0804.......................... Replacement of lower extremity 1.1331 0.9412 0.8625 0.7830 13 12 11 11 joint M>28.65 and M<37.05 and A<83.5. 0805.......................... Replacement of lower extremity 1.4300 1.1879 1.0886 0.9882 16 15 14 13 joint M>22.05 and M<28.65. [[Page 22679]] 0806.......................... Replacement of lower extremity 1.7498 1.4535 1.3320 1.2092 21 19 16 15 joint M<22.05. 0901.......................... Other orthopedic M>44.75........ 0.8724 0.7428 0.6672 0.5950 12 9 10 9 0902.......................... Other orthopedic M>34.35 and 1.1764 1.0016 0.8997 0.8023 13 13 12 11 M<44.75. 0903.......................... Other orthopedic M>24.15 and 1.5455 1.3159 1.1821 1.0541 16 17 15 14 M<34.35. 0904.......................... Other orthopedic M<24.15........ 1.9922 1.6963 1.5238 1.3588 23 21 20 18 1001.......................... Amputation, lower extremity 0.9530 0.9074 0.7850 0.7218 11 16 10 10 M>47.65. 1002.......................... Amputation, lower extremity 1.2690 1.2083 1.0452 0.9611 14 15 13 13 M>36.25 and M<47.65. 1003.......................... Amputation, lower extremity 1.8511 1.7625 1.5246 1.4019 19 21 19 18 M<36.25. 1101.......................... Amputation, non-lower extremity 1.1511 1.0159 0.9562 0.8734 12 13 12 12 M>36.35. 1102.......................... Amputation, non-lower extremity 1.7909 1.5805 1.4877 1.3589 19 21 18 16 M<36.35. 1201.......................... Osteoarthritis M>37.65.......... 1.0383 0.8996 0.8403 0.7356 12 11 11 10 1202.......................... Osteoarthritis M>30.75 and 1.3069 1.1323 1.0576 0.9258 13 15 13 12 M<37.65. 1203.......................... Osteoarthritis M<30.75.......... 1.6806 1.4561 1.3600 1.1906 16 18 17 16 1301.......................... Rheumatoid, other arthritis 1.2933 0.9197 0.8468 0.7603 13 12 11 10 M>36.35. 1302.......................... Rheumatoid, other arthritis 1.7330 1.2324 1.1347 1.0188 18 15 14 14 M>26.15 and M<36.35. 1303.......................... Rheumatoid, other arthritis 2.2338 1.5885 1.4625 1.3132 18 21 19 17 M<26.15. 1401.......................... Cardiac M>48.85................. 0.8468 0.7331 0.6541 0.5895 10 10 10 9 1402.......................... Cardiac M>38.55 and M<48.85..... 1.1260 0.9748 0.8697 0.7838 13 13 12 11 1403.......................... Cardiac M>31.15 and M<38.55..... 1.4026 1.2142 1.0833 0.9764 14 15 14 13 1404.......................... Cardiac M<31.15................. 1.7824 1.5430 1.3767 1.2407 19 19 17 16 1501.......................... Pulmonary M>49.25............... 0.8979 0.8644 0.7627 0.7277 10 11 10 10 1502.......................... Pulmonary M>39.05 and M<49.25... 1.1288 1.0867 0.9588 0.9149 12 14 12 12 1503.......................... Pulmonary M>29.15 and M<39.05... 1.3885 1.3367 1.1795 1.1254 16 15 15 14 1504.......................... Pulmonary M<29.15............... 1.7937 1.7267 1.5236 1.4537 22 20 19 17 1601.......................... Pain syndrome M>37.15........... 0.9517 0.8382 0.7807 0.6881 13 11 11 10 1602.......................... Pain syndrome M>26.75 and 1.3184 1.1611 1.0815 0.9532 15 15 13 13 M<37.15. 1603.......................... Pain syndrome M<26.75........... 1.6571 1.4593 1.3593 1.1981 15 19 17 16 1701.......................... Major multiple trauma without 1.0571 0.9515 0.8114 0.7336 12 14 12 10 brain or spinal cord injury M>39.25. 1702.......................... Major multiple trauma without 1.4300 1.2870 1.0976 0.9924 16 15 14 13 brain or spinal cord injury M>31.05 and M<39.25. 1703.......................... Major multiple trauma without 1.6793 1.5114 1.2889 1.1654 20 19 16 15 brain or spinal cord injury M>25.55 and M<31.05. 1704.......................... Major multiple trauma without 2.1809 1.9629 1.6740 1.5135 25 23 20 20 brain or spinal cord injury M<25.55. 1801.......................... Major multiple trauma with brain 0.9865 0.9494 0.7674 0.7313 14 13 11 10 or spinal cord injury M>40.85. 1802.......................... Major multiple trauma with brain 1.6484 1.5864 1.2823 1.2221 20 19 17 16 or spinal cord injury M>23.05 and M<40.85. 1803.......................... Major multiple trauma with brain 2.8473 2.7401 2.2149 2.1108 38 33 27 25 or spinal cord injury M<23.05. 1901.......................... Guillain Barre M>35.95.......... 1.1894 0.8847 0.8847 0.8847 18 11 13 12 1902.......................... Guillain Barre M>18.05 and 2.3954 1.7817 1.7817 1.7817 30 23 21 22 M<35.95. 1903.......................... Guillain Barre M<18.05.......... 3.8382 2.8549 2.8549 2.8549 40 36 34 36 2001.......................... Miscellaneous M>49.15........... 0.8681 0.7274 0.6556 0.5908 10 10 9 8 2002.......................... Miscellaneous M>38.75 and 1.1547 0.9676 0.8721 0.7859 12 12 11 11 M<49.15. 2003.......................... Miscellaneous M>27.85 and 1.4947 1.2525 1.1288 1.0173 16 15 14 13 M<38.75. [[Page 22680]] 2004.......................... Miscellaneous M<27.85........... 1.9862 1.6644 1.5000 1.3518 23 20 19 17 2101.......................... Burns M>0....................... 2.0633 1.8370 1.8370 1.3345 33 23 18 16 5001.......................... Short-stay cases, length of stay ......... ......... ......... 0.1503 ......... ......... ......... 3 is 3 days or fewer. 5101.......................... Expired, orthopedic, length of ......... ......... ......... 0.6577 ......... ......... ......... 8 stay is 13 days or fewer. 5102.......................... Expired, orthopedic, length of ......... ......... ......... 1.6370 ......... ......... ......... 20 stay is 14 days or more. 5103.......................... Expired, not orthopedic, length ......... ......... ......... 0.6924 ......... ......... ......... 8 of stay is 15 days or fewer. 5104.......................... Expired, not orthopedic, length ......... ......... ......... 1.9305 ......... ......... ......... 23 of stay is 16 days or more. -------------------------------------------------------------------------------------------------------------------------------------------------------- Generally, updates to the CMG relative weights result in some increases and some decreases to the CMG relative weight values. Table 2 shows, overall, how the proposed revisions in this proposed rule would affect particular CMG relative weight values, which affect the overall distribution of payments within CMGs and tiers. Note that, because we propose to implement the CMG relative weight revisions in a budget neutral manner, total estimated aggregate payments to IRFs for FY 2009 would not be affected. However, the proposed revisions would affect the distribution of payments within CMGs and tiers. Table 2.--Distributional Effects of the Proposed Changes to the CMG Relative Weights (FY 2008 Values Compared With FY 2009 Values) ------------------------------------------------------------------------ Number of Percentage of Percentage change cases affected cases affected ------------------------------------------------------------------------ Increased by 15% or more................ 65 0.0 Increased by between 5% and 15%......... 4,979 1.2 Changed by less than 5%................. 390,600 96.1 Decreased by between 5% and 15%......... 1,706 0.4 Decreased by 15% or more................ 2,531 2.3 ------------------------------------------------------------------------ As Table 2 shows, over 96 percent of all IRF cases are in CMGs and tiers that would experience less than a 5 percent change (either increase or decrease) in the CMG relative weight value as a result of the proposed revisions. The most significant increase in the proposed CMG relative weight values, in terms of the largest number of cases affected, would be a 3.3 percent increase in the CMG relative weight value for CMG A0802--Replacement of lower extremity joint, motor score greater than 37.05 and motor score less than 49.55--in the ``no- comorbidity'' tier. In the FY 2006 data, 25,822 IRF discharges were classified into this CMG and tier. We believe that the higher costs reported in this CMG and tier in FY 2006, compared with those reported for this CMG and tier in FY 2003, may reflect recent IRF case mix changes caused, at least in part, by the phase-in of the ``75 percent'' rule and increased medical review of IRF discharges. These changes to the system have likely increased the complexity of patients being admitted to IRFs, especially among the lower-extremity joint replacement cases with no comorbidities, which do not meet the 75 percent rule criteria and have been the focus of a lot of the medical review activities. These same trends explain the most significant decrease in the proposed CMG relative weight values, in terms of the largest number of cases affected. The proposed revisions would reduce the CMG relative weight value for CMG 5001--Short-stay cases, length of stay is 3 days or fewer--by 31.7 percent. This decrease is associated with a substantial decrease in the number of cases classified into this extremely short-stay CMG, from 10,222 IRF discharges in FY 2003 to 2,376 IRF discharges in FY 2006. We believe that increases in the complexity of IRF patients resulting from the ``75 percent'' rule and the IRF medical review activities may mean that fewer IRF patients can effectively be treated in IRFs for 3 days or fewer. The changes in the proposed average length of stay values in this proposed rule, compared with the current (FY 2008) average length of stay values, are small and primarily distributional. Some values increase and some decrease, compared with the FY 2008 values. The only notable changes are in 3 of the CMGs for traumatic spinal cord injuries, B0403, B0404, and B0405 (all in tier 1), for which the proposed average length of stay values increased by 8.55 days, 14.92 days, and 9.72 days, respectively. This may, again, be due to increases in the complexity of IRF patients resulting from the ``75 percent'' rule and the IRF medical review activities. The overall average length of stay in IRFs also increased from 12.8 days in FY 2003 to 13.9 days in FY 2006, which may be attributable to increases in IRFs' case mix over this period. Given the recent changes in IRFs' case mix, we believe that it is especially important to update the CMG relative weights and average length of stay values at this time to reflect these changes. III. Proposed FY 2009 IRF PPS Federal Prospective Payment Rates A. Increase Factor for FY 2009 and Proposed FY 2009 Labor-Related Share Section 1886(j)(3)(C) of the Act requires the Secretary to establish an increase factor that reflects changes over time in the prices of an appropriate mix [[Page 22681]] of goods and services included in the covered IRF services, which is referred to as a market basket index. According to section 1886(j)(3)(A)(i) of the Act, the increase factor shall be used to update the IRF Federal prospective payment rates for each FY. However, section 115 of the Medicare, Medicaid, and SCHIP Extension Act of 2007, Public Law 110-173, amended section 1886(j)(3)(C) of the Act to apply a zero percent increase factor for FYs 2008 and 2009, effective for IRF discharges occurring on or after April 1, 2008. In accordance with section 1886(j)(3)(C) of the Act, as amended by the legislation, we are applying an increase factor of zero percent to update the proposed IRF Federal prospective payment rates for FY 2009 in this proposed rule. We continue to use the methodology described in the FY 2006 IRF PPS final rule to update the labor-related share for FY 2009. In FY 2004, we updated the 1992 market basket data to 1997 based on the methodology described in the FY 2004 IRF PPS final rule (68 FR 45688 through 45689). As discussed in the FY 2006 IRF PPS final rule (70 FR 47915 through 47917), we rebased and revised the market basket for FY 2006 using the 2002-based cost structures for IRFs, inpatient psychiatric facilities (IPFs), and long-term care hospitals (LTCHs) to determine the FY 2006 labor-related share. For FYs 2007 and 2008, we used the same methodology discussed in the FY 2006 IRF PPS final rule (70 FR at 47908 through 47917) to determine the IRF labor-related share. For FY 2009, we continue to use the same methodology discussed in the FY 2006 IRF PPS final rule. The labor-related share for FY 2009 is the sum of the FY 2009 relative importance of each labor-related cost category, and reflects the different rates of price change for these cost categories between the base year (FY 2002) and FY 2009. For this proposed rule, the labor-related share reflects Global Insight's first quarter 2008 forecast. As shown in Table 3, the total FY 2009 Rehabilitation, Psychiatric, and Long-Term Care Hospital Market Basket (RPL) labor-related share in this proposed rule is 75.691 percent. We propose to update the labor-related share with the most recent available data for the final rule. Table 3.--Proposed FY 2009 IRF RPL Labor-Related Share Relative Importance ------------------------------------------------------------------------ Proposed FY 2009 IRF Cost category labor-related share relative importance ------------------------------------------------------------------------ Wages and salaries............................. 52.683 Employee benefits.............................. 14.039 Professional fees.............................. 2.896 All other labor intensive services............. 2.137 ------------------------ Subtotal:.................................. 71.755 ======================== Labor-related share of capital costs (.46)..... 3.936 ------------------------ Total:..................................... 75.691 ------------------------------------------------------------------------ Source: GLOBAL INSIGHT, INC, 1st QTR, 2008; @USMACRO/CONTROL0308 @CISSIM/ TL0208.SIM Historical Data through 4th QTR, 2007. B. Proposed Area Wage Adjustment Section 1886(j)(6) of the Act requires the Secretary to adjust the proportion (as estimated by the Secretary from time to time) of rehabilitation facilities' costs attributable to wages and wage-related costs by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the rehabilitation facility compared to the national average wage level for those facilities. The Secretary is required to update the IRF PPS wage index on the basis of information available to the Secretary on the wages and wage-related costs to furnish rehabilitation services. Any adjustments or updates made under section 1886(j)(6) of the Act for a FY are made in a budget neutral manner. In the FY 2008 IRF PPS final rule (72 FR 44299), we maintained the methodology described in the FY 2006 IRF PPS final rule to determine the wage index, labor market area definitions, and hold harmless policy consistent with the rationale outlined in the FY 2006 IRF PPS final rule (70 FR 47917 through 47933). For FY 2009, we propose to maintain the policies and methodologies described in the FY 2008 IRF PPS final rule relating to the labor market area definitions and the wage index methodology for areas with wage data. Therefore, this proposed rule continues to use the Core- Based Statistical Area (CBSA) labor market area definitions and the pre-reclassification and pre-floor hospital wage index data based on 2004 cost report data. When adopting new labor market designations made by the Office of Management and Budget (OMB), we identified some geographic areas where there were no hospitals and, thus, no hospital wage index data on which to base the calculation of the IRF PPS wage index. We continue to use the same methodology discussed in the FY 2008 IRF PPS final rule (72 FR 44299) to address those geographic areas where there are no hospitals and, thus, no hospital wage index data on which to base the calculation of the FY 2009 IRF PPS wage index. Additionally, this proposed rule incorporates the CBSA changes published in the most recent OMB bulletin that applies to the hospital wage data used to determine the current IRF PPS wage index. The changes were nomenclature and did not represent substantive changes to the CBSA-based designations. Specifically, OMB added or deleted certain CBSA numbers and revised certain titles. The OMB bulletins are available online at http://www.whitehouse.gov/omb/bulletins/index.html. Finally, as discussed in the FY 2008 IRF PPS final rule (72 FR 44298), FY 2008 was the third and final year of the 3-year phase-out of the budget neutral hold harmless policy. For FY 2008 and beyond, we no longer apply an adjustment for IRFs that meet the criteria described in the FY 2006 final rule (70 FR 47923 through 47926). 1. Clarification of New England Deemed Counties We are taking this opportunity to address the change in the treatment of ``New England deemed counties'' (that is, those counties in New England listed in Sec. 412.64(b)(1)(ii)(B) that were deemed [[Page 22682]] to be parts of urban areas under section 601(g) of the Social Security Amendments of 1983) that was made in the FY 2008 Inpatient Prospective Payment System (IPPS) final rule with comment period (72 FR 47337). These counties include the following: Litchfield County, CT; York County, ME; Sagadahoc County, ME; Merrimack County, NH; and Newport County, RI. Of these five ``New England deemed counties,'' three (York County, ME, Sagadahoc County, ME, and Newport County, RI) are also included in metropolitan statistical areas (MSAs) defined by OMB and are considered urban under both the current IPPS and IRF PPS labor market area definitions in Sec. 412.64(b)(1)(ii)(A). The remaining two, Litchfield County, CT and Merrimack County, NH, are geographically located in areas that are considered rural under the current IPPS (and IRF PPS) labor market area definitions, but 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), Sec. 412.64(b)(1)(ii)(B) was revised that the two ``New England deemed counties'' that are still considered rural under the OMB definitions (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 Sec. 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 IRF PPS does not provide for geographic reclassification. Also, in the FY 2008 IPPS final rule with comment period (72 FR 47338), we explained that we limited this policy change for the ``New England deemed counties'' only to IPPS hospitals, and any change to non-IPPS provider wage indexes 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 deemed counties'' under the IRF PPS in this proposed rule. As discussed above, the IRF PPS has consistently used the IPPS definition of ``urban'' and ``rural'' with regard to the wage index used in the IRF PPS. Under existing Sec. 412.602, an IRF's wage index is determined based on the location of the IRF in an urban or rural area as defined in Sec. Sec. 412.64(b)(1)(ii)(A) through (C). Historical changes to the labor market area/geographic classifications and annual updates to the wage index values under the IRF PPS are made effective October 1 each year. When we established the most recent IRF PPS payment rate update, effective for discharges occurring on or after October 1, 2007 through September 30, 2008, we considered the ``New England deemed counties'' (including Litchfield County, CT and Merrimack County, NH) as urban for FY 2008, as evidenced by the inclusion of Litchfield County, CT as one of the constituent counties of urban CBSA 25540 (Hartford-West Hartford-East Hartford, CT), and the inclusion of Merrimack County, NH as one of the constituent counties of urban CBSA 31700 (Manchester-Nashua, NH). As noted above, Sec. 412.602 indicates that the terms ``rural'' and ``urban'' are defined according to the definitions of those terms in Sec. Sec. 412.64(b)(1)(ii)(A) through (C). Applying the IPPS definitions, Litchfield County, CT and Merrimack County, NH are not considered ``urban'' under Sec. Sec. 412.64(b)(1)(ii)(A) and (B) as revised under the FY 2008 IPPS final rule and, therefore, are considered ``rural'' under Sec. 412.64(b)(1)(ii)(C). Accordingly, reflecting our policy to use the IPPS definitions of ``urban'' and ``rural'', these two counties would be considered ``rural'' under the IRF PPS effective with the next update of the IRF PPS payment rates, October 1, 2008, and would no longer be included in urban CBSA 25540 (Hartford-West Hartford-East Hartford, CT) and urban CBSA 31700 (Manchester-Nashua, NH), respectively. We note that this policy is consistent with our policy of not taking into account IPPS geographic reclassifications in determining payments under the IRF PPS. We do not need to make any changes to our regulations to effectuate this change. There is one IRF (in Merrimack County, NH) that greatly benefits from treating these counties as rural. This IRF would begin to receive a higher wage index value and the 21.3 percent adjustment that is applied to IRF PPS payments for rural facilities. Currently, there are no IRFs in the following areas: Litchfield County, CT; rural Connecticut; or rural New Hampshire. 2. Multi-Campus Hospital Wage Index Data In the FY 2008 IRF PPS final rule (72 FR 44284, August 7, 2007), we established IRF PPS wage index values for FY 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, without taking into account geographic reclassification under sections 1886(d)(8) and (d)(10) of the Act. The IRF PPS wage index values applicable for discharges occurring on or after October 1, 2007 through September 30, 2008 are shown in Table 1 (for urban areas) and Table 2 (for rural areas) in the addendum to the FY 2008 IRF PPS final rule (72 FR 44312 through 44335). We are continuing to use IPPS wage data for the FY 2009 IRF PPS Wage Index, because we believe that using the hospital inpatient wage data is appropriate and reasonable for the IRF PPS. We note that the IPPS wage data used to determine the FY 2009 IRF wage index values reflect our policy that was adopted under the IPPS beginning in FY 2008, which apportions the wage data for multi-campus 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)). We computed the FY 2009 IRF PPS wage index values presented in this notice consistent with our pre-reclassified IPPS wage index policy (that is, our historical policy of not taking into account IPPS geographic reclassifications in determining payments under the IRF PPS). For the FY 2009 IRF PPS, we computed the wage index from IPPS wage data (submitted by hospitals for cost reporting periods beginning in FY 2004 and used in the FY 2008 IPPS wage index), which allocated salaries and hours to the campuses of two multi-campus hospitals with campuses that are located in different labor areas, one in Massachusetts and another in Illinois. Thus, the proposed FY 2009 IRF 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), Chicago-Naperville-Joliet, IL (CBSA 16974) and Lake County-Kenosha County, IL-WI (CBSA 29404) (please refer to Table 1 in the addendum of this proposed rule). 3. Methodology for Applying the Proposed Revisions to the Area Wage Adjustment for FY 2009 in a Budget-Neutral Manner To calculate the wage-adjusted facility payment for the payment rates set forth in this proposed rule, we multiply the unadjusted Federal prospective payment by the proposed FY 2009 RPL labor-related share (75.691 percent) to determine the labor-related portion of [[Page 22683]] the Federal prospective payments. We then multiply this labor-related portion by the applicable proposed IRF wage index shown in Table 1 for urban areas and Table 2 for rural areas in the addendum. Adjustments or updates to the IRF wage index made under section 1886(j)(6) of the Act must be made in a budget neutral manner; therefore, we calculated a budget neutral wage adjustment factor as established in the FY 2004 IRF PPS final rule and codified at Sec. 412.624(e)(1), and described in the steps below. We propose to use the following steps to ensure that the FY 2009 IRF standard payment conversion factor reflects the update to the proposed wage indexes (based on the FY 2004 pre-reclassified and pre-floor hospital wage data) and the proposed labor-related share in a budget neutral manner: Step 1. Determine the total amount of the estimated FY 2008 IRF PPS rates, using the FY 2008 standard payment conversion factor and the labor-related share and the wage indexes from FY 2008 (as published in the FY 2008 IRF PPS final rule). Step 2. Calculate the total amount of estimated IRF PPS payments, using the FY 2008 standard payment conversion factor and the proposed FY 2009 labor-related share and proposed CBSA urban and rural wage indexes. Step 3. Divide the amount calculated in step 1 by the amount calculated in step 2, which equals the FY 2009 budget neutral wage adjustment factor of 1.0004. Step 4. Apply the FY 2009 budget neutral wage adjustment factor from step 3 to the