Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2010; Minimum Data Set, Version 3.0 for Skilled Nursing Facilities and Medicaid Nursing Facilities, 22208-22316 [E9-10461]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 74, Number 90 (Tuesday, May 12, 2009)]
[Proposed Rules]
[Pages 22208-22316]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-10461]



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Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Part 483



Medicare Program; Prospective Payment System and Consolidated Billing 
for Skilled Nursing Facilities for FY 2010; Minimum Data Set, Version 
3.0 for Skilled Nursing Facilities and Medicaid Nursing Facilities; 
Proposed Rule

Federal Register / Vol. 74, No. 90 / Tuesday, May 12, 2009 / Proposed 
Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 483

[CMS-1410-P]
RIN 0938-AP46


Medicare Program; Prospective Payment System and Consolidated 
Billing for Skilled Nursing Facilities for FY 2010; Minimum Data Set, 
Version 3.0 for Skilled Nursing Facilities and Medicaid Nursing 
Facilities

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would update the payment rates used under 
the prospective payment system for skilled nursing facilities, for 
fiscal year 2010. In addition, it would recalibrate the case-mix 
indexes so that they more accurately reflect parity in expenditures 
related to the implementation of case-mix refinements in January 2006. 
It also discusses the results of our ongoing analysis of nursing home 
staff time measurement data collected in the Staff Time and Resource 
Intensity Verification project, and proposes a new RUG-IV case-mix 
classification model that will use the updated Minimum Data Set (MDS) 
3.0 resident assessment for case-mix classification. In addition, this 
proposed rule includes a request for public comment on a possible 
requirement for the quarterly reporting of nursing home staffing data, 
and would revise the regulations to incorporate certain technical 
corrections. Finally, this proposed rule includes a request for public 
comments on applying the quality monitoring mechanism in place for all 
other SNF PPS facilities to rural swing-bed hospitals.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on June 30, 2009.

ADDRESSES: In commenting, please refer to file code CMS-1410-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 https://www.regulations.gov. Follow the instructions under 
the ``More Search Options'' tab.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1410-P, P.O. Box 8016, 
Baltimore, MD 21244-8016.
    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 to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1410-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. Centers for Medicare & Medicaid Services, Department of Health & 
Human Services, Room 445-G, Hubert H. Humphrey Building, 200 
Independence Avenue, SW., Washington, DC 20201.
    (Because access to the interior of the Hubert H. Humphrey 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. Centers for Medicare & Medicaid Services, Department of Health & 
Human Services, 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: Ellen Berry, (410) 786-4528 (for 
information related to clinical issues).
    Trish Brooks, (410) 786-4561 (for information related to Resident 
Assessment Protocols (RAPs) under the Minimum Data Set (MDS)).
    Jeanette Kranacs, (410) 786-9385 (for information related to the 
development of the payment rates and case-mix indexes).
    Abby Ryan, (410) 786-4343 (for information related to the STRIVE 
project).
    Jean Scott, (410) 786-6327 (for information related to the request 
for comment on the possible quarterly reporting of nursing home 
staffing data).
    Bill Ullman, (410) 786-5667 (for information related to level of 
care determinations, consolidated billing, and general information).

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: https://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.
    To assist readers in referencing sections contained in this 
document, we are providing the following Table of Contents.

Table of Contents

I. Background
    A. Current System for Payment of SNF Services Under Part A of 
the Medicare Program
    B. Requirements of the Balanced Budget Act of 1997 (BBA) for 
Updating the Prospective Payment System for Skilled Nursing 
Facilities
    C. The Medicare, Medicaid, and SCHIP Balanced Budget Refinement 
Act of 1999 (BBRA)
    D. The Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000 (BIPA)
    E. The Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA)
    F. Skilled Nursing Facility Prospective Payment--General 
Overview
    1. Payment Provisions--Federal Rate
    2. FY 2010 Rate Updates Using the Skilled Nursing Facility 
Market Basket Index
II. FY 2010 Annual Update of Payment Rates Under the Prospective 
Payment System for Skilled Nursing Facilities
    A. Federal Prospective Payment System
    1. Costs and Services Covered by the Federal Rates

[[Page 22209]]

    2. Methodology Used for the Calculation of the Federal Rates
    B. Case-Mix Adjustments
    1. Background
    2. Development of the Case-Mix Indexes
    C. Wage Index Adjustment to Federal Rates
    D. Updates to Federal Rates
    E. Relationship of RUG-III Classification System to Existing 
Skilled Nursing Facility Level-of-Care Criteria
    F. Example of Computation of Adjusted PPS Rates and SNF Payment
III. Resource Utilization Groups, Version 4 (RUG-IV)
    A. Staff Time and Resource Intensity Verification (STRIVE) 
Project
    1. Data Collection
    2. Developing the Analytical Data Base
    a. Concurrent Therapy
    b. Adjustments to STRIVE Therapy Minutes
    c. ADL Adjustments
    d. ``Look-Back'' Period
    e. Organizing the Nursing and Therapy Minutes
    B. The RUG-IV Classification System
    C. Development of the FY 2011 Case-Mix Indexes
    D. Relationship of RUG-IV Classification System to Existing 
Skilled Nursing Facility Level-of-Care Criteria
    E. Prospective Payment for SNF Nontherapy Ancillary Costs
    1. Previous Research
    2. Conceptual Analysis
    3. Analytic Sample
    4. Approach to Analysis
    5. Payment Methodology
    6. Temporary AIDS Add-On Payment Under Section 511 of the MMA
IV. Minimum Data Set, Version 3.0 (MDS 3.0)
    A. Description of the MDS 3.0
    B. MDS Elements, Common Definitions, and Resident Assessment 
Protocols (RAPs) Used Under the MDS
    C. Data Submission Requirements Under the MDS 3.0
    D. Proposed Change to Section T of the Resident Assessment 
Instrument (RAI) under the MDS 3.0
    1. Short Stay Patients
    2. Starting Therapy between MDS Observation Periods
    3. Reporting the Discontinuation of Therapy Services
V. Other Issues
    A. Invitation of Comments on Possible Quarterly Reporting of 
Nursing Home Staffing Data
    B. Miscellaneous Technical Corrections and Clarifications
VI. The Skilled Nursing Facility Market Basket Index
    A. Use of the Skilled Nursing Facility Market Basket Percentage
    B. Market Basket Forecast Error Adjustment
    C. Federal Rate Update Factor
VII. Consolidated Billing
VIII. Application of the SNF PPS to SNF Services Furnished by Swing-
Bed Hospitals; Quality Monitoring of Swing-Bed Hospitals
IX. Provisions of the Proposed Rule
X. Collection of Information Requirements
XI. Response to Comments
XII. Regulatory Impact Analysis
    A. Overall Impact
    B. Anticipated Effects
    C. Alternatives Considered
    D. Accounting Statement
    E. Conclusion
    Regulation Text
    Addendum:
    FY 2010 CBSA-Based Wage Index Tables (Tables A & B)
    RUG-III to RUG-IV Comparison (Table C)

Abbreviations

    In addition, because of the many terms to which we refer by 
abbreviation in this proposed rule, we are listing these abbreviations 
and their corresponding terms in alphabetical order below:

ADLs Activities of Daily Living
AIDS Acquired Immune Deficiency Syndrome
AOTA American Occupational Therapy Association
APTA American Physical Therapy Association
ARD Assessment Reference Date
ASHA American Speech-Language-Hearing Association
BBA Balanced Budget Act of 1997, Pub. L. 105-33
BBRA Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999, Pub. L. 106-113
BIMS Brief Interview for Mental Status
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000, Pub. L. 106-554
CAH Critical Access Hospital
CAM Confusion Assessment Method
CARE Continuity Assessment Record and Evaluation
CAT Care Area Trigger
CBSA Core-Based Statistical Area
CFR Code of Federal Regulations
CMI Case-Mix Index
CMS Centers for Medicare & Medicaid Services
CMSO Center for Medicaid and State Operations
DRA Deficit Reduction Act of 2005, Pub. L. 109-171
DSM-IV Diagnostic and Statistical Manual of Mental Disorders, 4th 
Revision
FQHC Federally Qualified Health Center
FR Federal Register
FY Fiscal Year
GAO Government Accountability Office
HCPCS Healthcare Common Procedure Coding System
HHA Home Health Agencies
HIPPS Health Insurance Prospective Payment System
HIT Health Information Technology
HIV Human Immunodeficiency Virus Infection
IFC Interim Final Rule with Comment Period
IPPS Hospital Inpatient Prospective Payment System
IRF Inpatient Rehabilitation Facilities
LTCH Long-Term Care Hospital
MAC Medicare Administrative Contractor
MMACS Medicare/Medicaid Automated Certification System
MDS Minimum Data Set
MIPPA Medicare Improvements for Patients and Providers Act of 2008, 
Pub. L. 110-275
MMA Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003, Pub. L. 108-173
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Pub. L. 
110-173
MSA Metropolitan Statistical Area
MS-DRG Medicare Severity Diagnosis-Related Group
NCQA National Committee for Quality Assurance
NF Nursing Facility
NRST Non-Resident Specific Time
NTA Non-Therapy Ancillary
OIG Office of the Inspector General
OMB Office of Management and Budget
OMRA Other Medicare Required Assessment
OSCAR Online Survey Certification and Reporting System
PAC Post-Acute Care
PHQ-9 9-Item Patient Health Questionnaire
PPS Prospective Payment System
QM Quality Measure
RAI Resident Assessment Instrument
RAP Resident Assessment Protocol
RAVEN Resident Assessment Validation Entry
RFA Regulatory Flexibility Act, Pub. L. 96-354
RHC Rural Health Clinic
RIA Regulatory Impact Analysis
RST Resident Specific Time
RUG-III Resource Utilization Groups, Version 3
RUG-IV Resource Utilization Groups, Version 4
RUG-53 Refined 53--Group RUG-III Case-Mix Classification System
SCHIP State Children's Health Insurance Program
SNF Skilled Nursing Facility
SOM State Operations Manual
STM Staff Time Measurement
STRIVE Staff Time and Resource Intensity Verification
TEP Technical Expert Panel
UMRA Unfunded Mandates Reform Act, Pub. L. 104-4

I. Background

    Annual updates to the prospective payment system (PPS) rates for 
skilled nursing facilities (SNFs) are required by section 1888(e) of 
the Social Security Act (the Act), as added by section 4432 of the 
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33, enacted on August 5, 
1997), and amended by the Medicare, Medicaid, and State Children's 
Health Insurance Program (SCHIP) Balanced Budget Refinement Act of 1999 
(BBRA) (Pub. L. 106-113, enacted on November 29, 1999), the Medicare, 
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 
(BIPA) (Pub. L. 106-554, enacted December 21, 2000), and the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) 
(Pub. L. 108-173, enacted on December 8, 2003). Our most recent

[[Page 22210]]

annual update occurred in a final rule (73 FR 46416, August 8, 2008) 
that set forth updates to the SNF PPS payment rates for fiscal year 
(FY) 2009. We subsequently published a correction notice (73 FR 56998, 
October 1, 2008) with respect to those payment rate updates.

A. Current System for Payment of Skilled Nursing Facility Services 
Under Part A of the Medicare Program

    Section 4432 of the BBA amended section 1888 of the Act to provide 
for the implementation of a per diem PPS for SNFs, covering all costs 
(routine, ancillary, and capital-related) of covered SNF services 
furnished to beneficiaries under Part A of the Medicare program, 
effective for cost reporting periods beginning on or after July 1, 
1998. In this proposed rule, we propose to update the per diem payment 
rates for SNFs for FY 2010. Major elements of the SNF PPS include:
     Rates. As discussed in section I.F.1. of this proposed 
rule, we established per diem Federal rates for urban and rural areas 
using allowable costs from FY 1995 cost reports. These rates also 
included a ``Part B add-on'' (an estimate of the cost of those services 
that, before July 1, 1998, were paid under Part B but furnished to 
Medicare beneficiaries in a SNF during a Part A covered stay). We 
adjust the rates annually using a SNF market basket index, and we 
adjust them by the hospital inpatient wage index to account for 
geographic variation in wages. We also apply a case-mix adjustment to 
account for the relative resource utilization of different patient 
types. This adjustment utilizes a refined, 53-group version of the 
Resource Utilization Groups, version III (RUG-III) case-mix 
classification system, based on information obtained from the required 
resident assessments using the Minimum Data Set (MDS) 2.0. 
Additionally, as noted in the final rule for FY 2006 (70 FR 45028, 
August 4, 2005), the payment rates at various times have also reflected 
specific legislative provisions, including section 101 of the BBRA, 
sections 311, 312, and 314 of the BIPA, and section 511 of the MMA.
     Transition. Under sections 1888(e)(1)(A) and (e)(11) of 
the Act, the SNF PPS included an initial, three-phase transition that 
blended a facility-specific rate (reflecting the individual facility's 
historical cost experience) with the Federal case-mix adjusted rate. 
The transition extended through the facility's first three cost 
reporting periods under the PPS, up to and including the one that began 
in FY 2001. Thus, the SNF PPS is no longer operating under the 
transition, as all facilities have been paid at the full Federal rate 
effective with cost reporting periods beginning in FY 2002. As we now 
base payments entirely on the adjusted Federal per diem rates, we no 
longer include adjustment factors related to facility-specific rates 
for the coming FY.
     Coverage. The establishment of the SNF PPS did not change 
Medicare's fundamental requirements for SNF coverage. However, because 
the RUG-III classification is based, in part, on the beneficiary's need 
for skilled nursing care and therapy, we have attempted, where 
possible, to coordinate claims review procedures with the existing 
resident assessment process and case-mix classification system. This 
approach includes an administrative presumption that utilizes a 
beneficiary's initial classification in one of the upper 35 RUGs of the 
refined 53-group system to assist in making certain SNF level of care 
determinations. In the July 30, 1999 final rule (64 FR 41670), we 
indicated that we would announce any changes to the guidelines for 
Medicare level of care determinations related to modifications in the 
RUG-III classification structure (see section II.E. of this proposed 
rule for a discussion of the relationship between the case-mix 
classification system and SNF level of care determinations, and section 
III.D for a discussion of this process in the context of the proposed 
conversion to version 4 of the RUGs (RUG-IV)).
     Consolidated Billing. The SNF PPS includes a consolidated 
billing provision that requires a SNF to submit consolidated Medicare 
bills to its fiscal intermediary or Medicare Administrative Contractor 
for almost all of the services that its residents receive during the 
course of a covered Part A stay. In addition, this provision places 
with the SNF the Medicare billing responsibility for physical, 
occupational, and speech-language therapy that the resident receives 
during a noncovered stay. The statute excludes a small list of services 
from the consolidated billing provision (primarily those of physicians 
and certain other types of practitioners), which remain separately 
billable under Part B when furnished to a SNF's Part A resident. A more 
detailed discussion of this provision appears in section VII of this 
proposed rule.
     Application of the SNF PPS to SNF services furnished by 
swing-bed hospitals. Section 1883 of the Act permits certain small, 
rural hospitals to enter into a Medicare swing-bed agreement, under 
which the hospital can use its beds to provide either acute or SNF 
care, as needed.
    For critical access hospitals (CAHs), Part A pays on a reasonable 
cost basis for SNF services furnished under a swing-bed agreement. 
However, in accordance with section 1888(e)(7) of the Act, these 
services furnished by non-CAH rural hospitals are paid under the SNF 
PPS, effective with cost reporting periods beginning on or after July 
1, 2002. A more detailed discussion of this provision appears in 
section VIII of this proposed rule.

B. Requirements of the Balanced Budget Act of 1997 (BBA) for Updating 
the Prospective Payment System for Skilled Nursing Facilities

    Section 1888(e)(4)(H) of the Act requires that we provide for 
publication annually in the Federal Register:
    1. The unadjusted Federal per diem rates to be applied to days of 
covered SNF services furnished during the upcoming FY.
    2. The case-mix classification system to be applied with respect to 
these services during the upcoming FY.
    3. The factors to be applied in making the area wage adjustment 
with respect to these services.
    Along with other revisions proposed later in this preamble, this 
proposed rule provides these required annual updates to the Federal 
rates.

C. The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999 (BBRA)

    There were several provisions in the BBRA that resulted in 
adjustments to the SNF PPS. We described these provisions in detail in 
the SNF PPS final rule for FY 2001 (65 FR 46770, July 31, 2000). In 
particular, section 101(a) of the BBRA provided for a temporary 20 
percent increase in the per diem adjusted payment rates for 15 
specified RUG-III groups. In accordance with section 101(c)(2) of the 
BBRA, this temporary payment adjustment expired on January 1, 2006, 
upon the implementation of case-mix refinements (see section I.F.1. of 
this proposed rule). We included further information on BBRA provisions 
that affected the SNF PPS in Program Memorandums A-99-53 and A-99-61 
(December 1999).
    Also, section 103 of the BBRA designated certain additional 
services for exclusion from the consolidated billing requirement, as 
discussed in section VII. of this proposed rule. Further, for swing-bed 
hospitals with more than 49 (but less than 100) beds, section 408 of 
the BBRA provided for the repeal of certain statutory restrictions on 
length of stay and

[[Page 22211]]

aggregate payment for patient days, effective with the end of the SNF 
PPS transition period described in section 1888(e)(2)(E) of the Act. In 
the final rule for FY 2002 (66 FR 39562, July 31, 2001), we made 
conforming changes to the regulations at Sec.  413.114(d), effective 
for services furnished in cost reporting periods beginning on or after 
July 1, 2002, to reflect section 408 of the BBRA.

D. The Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000 (BIPA)

    The BIPA also included several provisions that resulted in 
adjustments to the SNF PPS. We described these provisions in detail in 
the final rule for FY 2002 (66 FR 39562, July 31, 2001). In particular:
     Section 203 of the BIPA exempted CAH swing-beds from the 
SNF PPS. We included further information on this provision in Program 
Memorandum A-01-09 (Change Request 1509), issued January 16, 
2001, which is available online at www.cms.hhs.gov/transmittals/downloads/a0109.pdf.
     Section 311 of the BIPA revised the statutory update 
formula for the SNF market basket, and also directed us to conduct a 
study of alternative case-mix classification systems for the SNF PPS. 
In 2006, we submitted a report to the Congress on this study, which is 
available online at www.cms.hhs.gov/SNFPPS/Downloads/RC_2006_PC-PPSSNF.pdf.
     Section 312 of the BIPA provided for a temporary increase 
of 16.66 percent in the nursing component of the case-mix adjusted 
Federal rate for services furnished on or after April 1, 2001, and 
before October 1, 2002; accordingly, this add-on is no longer in 
effect. This section also directed the Government Accountability Office 
(GAO) to conduct an audit of SNF nursing staff ratios and submit a 
report to the Congress on whether the temporary increase in the nursing 
component should be continued. The report (GAO-03-176), which GAO 
issued in November 2002, is available online at https://www.gao.gov/new.items/d03176.pdf.
     Section 313 of the BIPA repealed the consolidated billing 
requirement for services (other than physical, occupational, and 
speech-language therapy) furnished to SNF residents during noncovered 
stays, effective January 1, 2001. (A more detailed discussion of this 
provision appears in section VII. of this proposed rule.)
     Section 314 of the BIPA corrected an anomaly involving 
three of the RUGs that section 101(a) of the BBRA had designated to 
receive the temporary payment adjustment discussed above in section 
I.C. of this proposed rule. (As noted previously, in accordance with 
section 101(c)(2) of the BBRA, this temporary payment adjustment 
expired upon the implementation of case-mix refinements on January 1, 
2006.)
     Section 315 of the BIPA authorized us to establish a 
geographic reclassification procedure that is specific to SNFs, but 
only after collecting the data necessary to establish a SNF wage index 
that is based on wage data from nursing homes. To date, this has proven 
to be infeasible due to the volatility of existing SNF wage data and 
the significant amount of resources that would be required to improve 
the quality of that data.
    We included further information on several of the BIPA provisions 
in Program Memorandum A-01-08 (Change Request 1510), issued 
January 16, 2001, which is available online at www.cms.hhs.gov/transmittals/downloads/a0108.pdf.

E. The Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (MMA)

    The MMA included a provision that results in a further adjustment 
to the SNF PPS. Specifically, section 511 of the MMA amended section 
1888(e)(12) of the Act, to provide for a temporary increase of 128 
percent in the PPS per diem payment for any SNF residents with Acquired 
Immune Deficiency Syndrome (AIDS), effective with services furnished on 
or after October 1, 2004. This special AIDS add-on was to remain in 
effect until ``* * * the Secretary certifies that there is an 
appropriate adjustment in the case mix * * * to compensate for the 
increased costs associated with [such] residents * * *.'' The AIDS add-
on is also discussed in Program Transmittal 160 (Change 
Request 3291), issued on April 30, 2004, which is available 
online at https://www.cms.hhs.gov/transmittals/downloads/r160cp.pdf. As 
discussed in the SNF PPS final rule for FY 2006 (70 FR 45028, August 4, 
2005), we did not address the certification of the AIDS add-on in that 
final rule's implementation of the case-mix refinements, thus allowing 
the temporary add-on payment created by section 511 of the MMA to 
remain in effect.
    For the limited number of SNF residents that qualify for the AIDS 
add-on, implementation of this provision results in a significant 
increase in payment. For example, using FY 2007 data, we identified 
slightly more than 2,700 SNF residents with a diagnosis code of 042 
(Human Immunodeficiency Virus (HIV) Infection). For FY 2010, an urban 
facility with a resident with AIDS in RUG group ``SSA'' would have a 
case-mix adjusted payment of $252.71 (see Table 4) before the 
application of the MMA adjustment. After an increase of 128 percent, 
this urban facility would receive a case-mix adjusted payment of 
approximately $576.18. A further discussion of the AIDS add-on in the 
context of research conducted during the recent STRIVE study appears in 
section III.E.6. of this proposed rule.
    In addition, section 410 of the MMA contained a provision that 
excluded from consolidated billing certain practitioner and other 
services furnished to SNF residents by rural health clinics (RHCs) and 
Federally Qualified Health Centers (FQHCs). (Further information on 
this provision appears in section VII. of this proposed rule.)

F. Skilled Nursing Facility Prospective Payment--General Overview

    We implemented the Medicare SNF PPS effective with cost reporting 
periods beginning on or after July 1, 1998. This PPS pays SNFs through 
prospective, case-mix adjusted per diem payment rates applicable to all 
covered SNF services. These payment rates cover all costs of furnishing 
covered skilled nursing services (routine, ancillary, and capital-
related costs) other than costs associated with approved educational 
activities. Covered SNF services include post-hospital services for 
which benefits are provided under Part A, as well as those items and 
services (other than physician and certain other services specifically 
excluded under the BBA) which, before July 1, 1998, had been paid under 
Part B but furnished to Medicare beneficiaries in a SNF during a 
covered Part A stay. A comprehensive discussion of these provisions 
appears in the May 12, 1998 interim final rule (63 FR 26252).
1. Payment Provisions--Federal Rate
    The PPS uses per diem Federal payment rates based on mean SNF costs 
in a base year (FY 1995) updated for inflation to the first effective 
period of the PPS. We developed the Federal payment rates using 
allowable costs from hospital-based and freestanding SNF cost reports 
for reporting periods beginning in FY 1995. The data used in developing 
the Federal rates also incorporated an estimate of the amounts that 
would be payable under Part B for covered SNF services furnished to 
individuals during the course of a covered Part A stay in a SNF.

[[Page 22212]]

    In developing the rates for the initial period, we updated costs to 
the first effective year of the PPS (the 15-month period beginning July 
1, 1998) using a SNF market basket index, and then standardized for the 
costs of facility differences in case mix and for geographic variations 
in wages. In compiling the database used to compute the Federal payment 
rates, we excluded those providers that received new provider 
exemptions from the routine cost limits, as well as costs related to 
payments for exceptions to the routine cost limits. Using the formula 
that the BBA prescribed, we set the Federal rates at a level equal to 
the weighted mean of freestanding costs plus 50 percent of the 
difference between the freestanding mean and weighted mean of all SNF 
costs (hospital-based and freestanding) combined. We computed and 
applied separately the payment rates for facilities located in urban 
and rural areas. In addition, we adjusted the portion of the Federal 
rate attributable to wage-related costs by a wage index.
    The Federal rate also incorporates adjustments to account for 
facility case-mix, using a classification system that accounts for the 
relative resource utilization of different patient types. The RUG-III 
classification system uses beneficiary assessment data from the Minimum 
Data Set (MDS) completed by SNFs to assign beneficiaries to one of 53 
RUG-III groups. The original RUG-III case-mix classification system 
included 44 groups. However, under incremental refinements that became 
effective on January 1, 2006, we added nine new groups--comprising a 
new Rehabilitation plus Extensive Services category--at the top of the 
RUG hierarchy. The May 12, 1998 interim final rule (63 FR 26252) 
included a detailed description of the original 44-group RUG-III case-
mix classification system. A comprehensive description of the refined 
53-group RUG-III case-mix classification system (RUG-53) appeared in 
the proposed and final rules for FY 2006 (70 FR 29070, May 19, 2005, 
and 70 FR 45026, August 4, 2005).
    Further, in accordance with section 1888(e)(4)(E)(ii)(IV) of the 
Act, the Federal rates in this proposed rule reflect an update to the 
rates that we published in the final rule for FY 2009 (73 FR 46416, 
August 8, 2008) and the associated correction notice (73 FR 56998, 
October 1, 2008), equal to the full change in the SNF market basket 
index. A more detailed discussion of the SNF market basket index and 
related issues appears in section I.F.2. and section VI. of this 
proposed rule.
2. FY 2010 Rate Updates Using the Skilled Nursing Facility Market 
Basket Index
    Section 1888(e)(5) of the Act requires us to establish a SNF market 
basket index that reflects changes over time in the prices of an 
appropriate mix of goods and services included in covered SNF services. 
We use the SNF market basket index to update the Federal rates on an 
annual basis. In the SNF PPS final rule for FY 2008 (72 FR 43425 
through 43430, August 3, 2007), we revised and rebased the market 
basket, which included updating the base year from FY 1997 to FY 2004. 
The proposed FY 2010 market basket increase is 2.1 percent, which is 
based on IHS Global Insight, Inc. first quarter 2009 forecast with 
historical data through fourth quarter 2008.
    In addition, as explained in the final rule for FY 2004 (66 FR 
46058, August 4, 2003) and in section VI.B. of this proposed rule, the 
annual update of the payment rates includes, as appropriate, an 
adjustment to account for market basket forecast error. As described in 
the final rule for FY 2008, the threshold percentage that serves to 
trigger an adjustment to account for market basket forecast error is 
0.5 percentage point effective for FY 2008 and subsequent years. This 
adjustment takes into account the forecast error from the most recently 
available FY for which there is final data, and applies whenever the 
difference between the forecasted and actual change in the market 
basket exceeds a 0.5 percentage point threshold. For FY 2008 (the most 
recently available FY for which there is final data), the estimated 
increase in the market basket index was 3.3 percentage points, while 
the actual increase was 3.6 percentage points, resulting in a 
difference of 0.3 percentage point. Accordingly, as the difference 
between the estimated and actual amount of change does not exceed the 
0.5 percentage point threshold, the payment rates for FY 2010 do not 
include a forecast error adjustment. Table 1 shows the forecasted and 
actual market basket amounts for FY 2008.

            Table 1--Difference Between the Forecasted and Actual Market Basket Increases for FY 2008
----------------------------------------------------------------------------------------------------------------
                                                                Forecasted  FY
                            Index                               2008  increase   Actual FY 2008      FY 2008
                                                                      *           increase **     difference ***
----------------------------------------------------------------------------------------------------------------
SNF..........................................................             3.3              3.6              0.3
----------------------------------------------------------------------------------------------------------------
* Published in Federal Register; based on second quarter 2007 IHS Global Insight Inc. forecast (2004-based
  index).
** Based on the first quarter 2009 IHS Global Insight forecast (2004-based index).
*** The FY 2008 forecast error correction for the PPS Operating portion will be applied to the FY 2010 PPS
  update recommendations. Any forecast error less than 0.5 percentage points will not be reflected in the update
  recommendation.

II. FY 2010 Annual Update of Payment Rates Under the Prospective 
Payment System for Skilled Nursing Facilities

A. Federal Prospective Payment System

    This proposed rule sets forth a schedule of Federal prospective 
payment rates applicable to Medicare Part A SNF services beginning 
October 1, 2009. The schedule incorporates per diem Federal rates that 
provide Part A payment for almost all costs of services furnished to a 
beneficiary in a SNF during a Medicare-covered stay.
1. Costs and Services Covered by the Federal Rates
    In accordance with section 1888(e)(2)(B) of the Act, the Federal 
rates apply to all costs (routine, ancillary, and capital-related) of 
covered SNF services other than costs associated with approved 
educational activities as defined in Sec.  413.85. Under section 
1888(e)(2)(A)(i) of the Act, covered SNF services include post-hospital 
SNF services for which benefits are provided under Part A (the hospital 
insurance program), as well as all items and services (other than those 
services excluded by statute) that, before July 1, 1998, were paid 
under Part B (the supplementary medical insurance program) but 
furnished to Medicare beneficiaries in a SNF during a Part A covered 
stay. (These excluded service categories are discussed in greater 
detail in section V.B.2. of the May 12, 1998 interim final rule (63 FR 
26295 through 26297)).

[[Page 22213]]

2. Methodology Used for the Calculation of the Federal Rates
    The proposed FY 2010 rates would reflect an update using the full 
amount of the latest market basket index. The proposed FY 2010 market 
basket increase factor is 2.1 percent. A complete description of the 
multi-step process used to calculate Federal rates initially appeared 
in the May 12, 1998 interim final rule (63 FR 26252), as further 
revised in subsequent rules. We note that in accordance with section 
101(c)(2) of the BBRA, the previous temporary increases in the per diem 
adjusted payment rates for certain designated RUGs, as specified in 
section 101(a) of the BBRA and section 314 of the BIPA, are no longer 
in effect due to the implementation of case-mix refinements as of 
January 1, 2006. However, the temporary increase of 128 percent in the 
per diem adjusted payment rates for SNF residents with AIDS, enacted by 
section 511 of the MMA, remains in effect.
    We used the SNF market basket to adjust each per diem component of 
the Federal rates forward to reflect cost increases occurring between 
the midpoint of the Federal FY beginning October 1, 2008, and ending 
September 30, 2009, and the midpoint of the Federal FY beginning 
October 1, 2009, and ending September 30, 2010, to which the payment 
rates apply. In accordance with section 1888(e)(4)(E)(ii)(IV) of the 
Act, we would update the payment rates for FY 2010 by a factor equal to 
the full market basket index percentage increase. We further adjust the 
rates by a wage index budget neutrality factor, described later in this 
section. Tables 2 and 3 reflect the updated components of the 
unadjusted Federal rates for FY 2010.

                             Table 2--FY 2010 Unadjusted Federal Rate per Diem Urban
----------------------------------------------------------------------------------------------------------------
                                                     Nursing--case-  Therapy--case-  Therapy--non-
                   Rate component                          mix             mix          case-mix    Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount....................................       $155.08         $116.82          $15.38        $79.15
----------------------------------------------------------------------------------------------------------------


                             Table 3--FY 2010 Unadjusted Federal Rate per Diem Rural
----------------------------------------------------------------------------------------------------------------
                                                     Nursing--case-  Therapy--case-  Therapy--non-
                   Rate component                          mix             mix          case-mix    Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount....................................       $148.16         $134.70          $16.43        $80.61
----------------------------------------------------------------------------------------------------------------

B. Case-Mix Adjustments

1. Background
    Section 1888(e)(4)(G)(i) of the Act requires the Secretary to make 
an adjustment to account for case-mix. The statute specifies that the 
adjustment is to reflect both a resident classification system that the 
Secretary establishes to account for the relative resource use of 
different patient types, as well as resident assessment and other data 
that the Secretary considers appropriate. In first implementing the SNF 
PPS (63 FR 26252, May 12, 1998), we developed the Resource Utilization 
Groups, version III (RUG-III) case-mix classification system, which 
tied the amount of payment to resident resource use in combination with 
resident characteristic information. Staff time measurement (STM) 
studies conducted in 1990, 1995, and 1997 provided information on 
resource use (time spent by staff members on residents) and resident 
characteristics that enabled us not only to establish RUG-III, but also 
to create case-mix indexes.
    Although the establishment of the SNF PPS did not change Medicare's 
fundamental requirements for SNF coverage, there is a correlation 
between level of care and provider payment. One of the elements 
affecting the SNF PPS per diem rates is the RUG-III case-mix adjustment 
classification system based on beneficiary assessments using the MDS 
2.0. RUG-III classification is based, in part, on the beneficiary's 
need for skilled nursing care and therapy. As discussed previously in 
section I.F.1 of this proposed rule, the SNF PPS final rule for FY 2006 
(70 FR 45026, August 4, 2005) refined the case-mix classification 
system effective January 1, 2006, by adding nine new Rehabilitation 
Plus Extensive Services RUGs at the top of the original, 44-group 
system, for a total of 53 groups. This nine-group addition was designed 
to better account for the higher costs of beneficiaries requiring both 
rehabilitation and certain high intensity medical services. When we 
developed the refined RUG-53 system, we constructed new case-mix 
indexes, using the Staff Time Measurement (STM) study data that was 
collected during the 1990s and originally used in creating the SNF PPS 
case-mix classification system and case-mix indexes. In addition, the 
RUG-III system was standardized with the intent of ensuring parity in 
payments under the 44-group and 53-group models. In section II.B.2 of 
this proposed rule, we discuss further adjustments to those new case-
mix indexes.
    The RUG-III case-mix classification system uses clinical data from 
the MDS 2.0, and wage-adjusted staff time measurement data, to assign a 
case-mix group to each patient record that is then used to calculate a 
per diem payment under the SNF PPS. The existing RUG-III grouper logic 
was based on clinical data collected in 1990, 1995, and 1997. As 
discussed in section III.A.1, we have recently completed a multi-year 
data collection and analysis under the Staff Time and Resource 
Intensity Verification (STRIVE) project to update the RUG-III case-mix 
classification system for FY 2011. As discussed later in this preamble, 
we are proposing to introduce a revised case-mix classification system, 
the RUG-IV, based on the data collected in 2006-2007 during the STRIVE 
project. At the same time, we plan to introduce an updated new resident 
assessment instrument, the MDS 3.0, to collect the clinical data that 
will be used for case-mix classification under RUG-IV. We believe that 
the coordinated introduction of the RUG-IV and MDS 3.0 reflects current 
medical practice and resource use in SNFs across the country, and will 
enhance the accuracy of the SNF PPS. Further, we are proposing to defer 
implementation of the RUG-IV and MDS 3.0 until October 1, 2010, to 
allow all stakeholders adequate time for the systems updates and staff 
training needed to assure a smooth transition. We discuss the RUG-IV 
methodology

[[Page 22214]]

and the MDS 3.0 in greater detail in sections III.B. and IV.A., 
respectively.
    Under the BBA, each update of the SNF PPS payment rates must 
include the case-mix classification methodology applicable for the 
coming Federal FY. As indicated in section I.F.1 of this proposed rule, 
the payment rates set forth herein reflect the use of the refined RUG-
53 system that we discussed in detail in the proposed and final rules 
for FY 2006.
2. Development of the Case-Mix Indexes
    In the SNF PPS final rule for FY 2006 (70 FR 45032, August 4, 
2005), we introduced two incremental refinements to the case-mix 
classification system:
     The addition of nine new case-mix groups at the top of the 
original 44-group hierarchy, designed to account for the care needs of 
beneficiaries requiring both extensive medical and rehabilitation 
services; and
     An adjustment to reflect the variability in the use of 
non-therapy ancillaries (NTAs).

We made these refinements by using the resource minute data from the 
original 44-group RUG-III model to create a new set of relative 
weights, or case-mix indexes (CMIs), for the 53 group RUG-III model. We 
then compared the CMIs for the two models in a way that was intended to 
ensure that estimated total payments under the 53-group model would be 
equal to those payments that would have been made under the 44-group 
model.
    In conducting this analysis, we used FY 2001 claims data (the most 
current claims data available at the time) to compare the distribution 
of payment days by RUG category in the 44-group model with the 
anticipated payments by RUG category in the refined 53-group model. 
Using the FY 2001 claims data, our initial projections of future 
utilization patterns under the refined case-mix system indicated that 
the new 53-group model would produce lower overall payments than under 
the original 44-group model. As the purpose of the refinements was to 
allocate payments more accurately rather than reduce overall 
expenditures, we adjusted the new case-mix indexes (CMIs) upward in 
order to ensure that our implementation of the case-mix refinements 
would achieve ``parity'' between the old and new models (that is, would 
not cause any change in overall payment levels). However, as noted in 
the SNF PPS proposed rule for FY 2009 (73 FR 25923, May 7, 2008), our 
continued monitoring of claims data subsequently showed that actual 
utilization patterns under the refined case-mix system differed 
significantly from the previous projections. As a consequence, rather 
than simply achieving parity, the 2006 adjustment inadvertently 
triggered a significant increase in overall payment levels, 
representing substantial overpayments to SNFs.
    Accordingly, the FY 2009 proposed rule included a proposal to 
recalibrate the parity adjustment in order to restore the intended 
budget neutrality to the 2006 case-mix refinements. While many of the 
commenters on this proposal characterized it as an unwarranted 
reduction in the level of SNF payments, the actual purpose of the 
recalibration proposal was not to reduce overall SNF payments below 
their appropriate level, but rather, to restore those payments to their 
appropriate level by correcting the inadvertent increase in overall 
payments that had resulted from the original parity adjustment. 
Moreover, our intent was to establish a more accurate baseline for SNF 
expenditures under the SNF PPS even as we were evaluating broader 
health care initiatives that could affect payment to SNFs. Thus, the 
recalibration was proposed as a prospective adjustment, and did not 
require recovery of any SNF PPS expenditures that had already been 
made. Commenters also expressed concern about the potential impact of 
the proposed recalibration on beneficiaries, providers, and the overall 
economy. As explained in the FY 2009 final rule (73 FR 46422, August 8, 
2008), even though our analysis did not substantiate the commenters' 
concerns, we concluded that it nevertheless would be prudent to take 
additional time to evaluate the proposal, in order to allow for further 
consideration of any consequences that might result from it. For that 
reason, we did not proceed with the proposed recalibration at that 
time, but instead continued to evaluate this issue with the full 
expectation of implementing such an adjustment in the future.
    In the course of this further evaluation, we conducted a thorough 
review of the recalibration methodology that we had proposed, and 
determined that it is, in fact, correct and appropriate to achieve the 
intended result of establishing parity in overall payments between the 
44-group and 53-group models. In addition, as we stated in the FY 2009 
final rule (73 FR 46424, August 8, 2008), we further considered the 
effects of the proposed recalibration on beneficiaries, SNF clinical 
staff, and quality of care. As discussed above, while the purpose of 
the original parity adjustment was to maintain the same overall 
payments under the 44-group and 53-group models, the effect of the 
adjustment was an inadvertent increase in overall payments under the 
53-group model, resulting in overpayments to SNFs. By recalibrating the 
CMIs under the 53-group model, we expect to restore SNF payments to 
their appropriate level by correcting this inadvertent increase in 
overall payments. Because the recalibration would simply remove an 
unintended overpayment rather than decrease an otherwise appropriate 
payment amount, we do not believe that the recalibration should 
negatively affect beneficiaries, clinical staff, or quality of care, or 
create an undue hardship on providers. The purpose of the FY 2006 
refinements was to reallocate payments so that they more accurately 
reflect resources used, not to increase or decrease overall 
expenditures. Thus, we believe that it is appropriate to proceed with 
the recalibration in order to ensure that we correctly accomplish the 
purpose of the FY 2006 case-mix refinements (that is, reallocating 
payments, rather than increasing or decreasing overall payments) and 
restore payments to their appropriate level. In addition, we believe 
that it is imperative that we proceed with this recalibration for FY 
2010 so that the proper baseline can be established before we move to 
the RUG-IV model, as discussed previously in the SNF PPS proposed rule 
for FY 2009 (73 FR 25938, May 7, 2008).
    Accordingly, we are now proposing to proceed with the recalibration 
using the methodology described in the FY 2009 proposed and final rules 
(73 FR 25923, 73 FR 46421-24). As we explained in the FY 2009 proposed 
rule, we would use actual 2006 claims data to recalibrate both of the 
adjustments to the CMIs: The parity adjustment designed to make the 
change from the 44-group model to the 53-group model in a budget 
neutral manner, and the factor used to recognize the variability in NTA 
utilization. A detailed description of the method proposed to 
recalibrate the two adjustments appears in the FY 2009 SNF PPS proposed 
and final rules (73 FR 25923, 73 FR 46421-24). Under this proposed 
recalibration, the parity and NTA adjustments to the CMIs (which had 
initially produced a combined increase of 17.9 percent in the FY 2006 
refinement), would instead result in an overall 9.68 percent increase 
for FY 2010. Thus, for FY 2010, the aggregate impact of this proposed 
recalibration of the CMIs would be the difference between payments 
calculated using the original FY 2006 total CMI increase of 17.9 
percent and payments calculated using the recalibrated total CMI 
increase of 9.68 percent. The

[[Page 22215]]

difference is a decrease of $1.05 billion (on an incurred basis) in 
payments for FY 2010.
    Again, we want to emphasize that, by proposing to implement the 
recalibration on a prospective basis, we have chosen the correction 
strategy that best mitigates the potential impact on providers. 
However, we believe that our responsibility for maintaining the fiscal 
integrity of the SNF PPS requires that we proceed with the adjustment. 
By using the actual claims data that are now available (rather than the 
projections upon which we had initially relied in estimating the impact 
of the case-mix refinements), the SNF PPS would better reflect the 
resources used, resulting in more accurate payment. To that end, we 
have developed our proposed recalibration of the parity and NTA 
adjustments to the CMIs using actual claims distribution data. Although 
the 2001 data were the best source available at the time the FY 2006 
refinements were introduced, the calendar year (CY) 2006 data represent 
actual RUG-53 utilization for the first full year after implementation 
(that is, the data that we were trying to project). Therefore, we 
believe the CY 2006 data provide the most accurate source of RUG-53 
utilization for this parity adjustment. We also note that the negative 
$1.05 billion adjustment described above would be partially offset by 
the FY 2010 market basket adjustment factor of 2.1 percent, or $660 
million, with a net result of a negative annual update of approximately 
$390 million. Moreover, this proposed recalibration would further the 
overall objective of the refinement provision implemented in January 
2006; that is, to have PPS payments account more accurately for 
resource utilization in SNFs. We also note that after MedPAC conducted 
a thorough review of SNF profit margins, it concluded that, in the 
aggregate, SNFs are operating on a sound financial basis. MedPAC's 
recent recommendation for a zero percent update for SNFs in FY 2010 
(see section 2.D (``Skilled Nursing Facility Services'') of its Report 
to the Congress on Medicare Payment Policy (March 2009), available 
online at https://www.medpac.gov/chapters/Mar09_Ch02D.pdf) supports our 
assessment that this recalibration could be made without creating undue 
hardship on providers.
    We list the case-mix adjusted payment rates separately for urban 
and rural SNFs in Tables 4 and 5, with the corresponding case-mix 
values. These tables do not reflect the AIDS add-on enacted by section 
511 of the MMA, which we apply only after making all other adjustments 
(wage and case-mix).

                                      Table 4--RUG-53 Case-Mix Adjusted Federal Rates and Associated Indexes Urban
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Non-case     Non-case
                       RUG-III category                          Nursing      Therapy      Nursing      Therapy    mix therapy      mix       Total rate
                                                                  index        index      component    component       comp      component
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUX..........................................................         1.77         2.25       274.49       262.85  ...........        79.15       616.49
RUL..........................................................         1.31         2.25       203.15       262.85  ...........        79.15       545.15
RVX..........................................................         1.44         1.41       223.32       164.72  ...........        79.15       467.19
RVL..........................................................         1.24         1.41       192.30       164.72  ...........        79.15       436.17
RHX..........................................................         1.33         0.94       206.26       109.81  ...........        79.15       395.22
RHL..........................................................         1.27         0.94       196.95       109.81  ...........        79.15       385.91
RMX..........................................................         1.80         0.77       279.14        89.95  ...........        79.15       448.24
RML..........................................................         1.57         0.77       243.48        89.95  ...........        79.15       412.58
RLX..........................................................         1.22         0.43       189.20        50.23  ...........        79.15       318.58
RUC..........................................................         1.20         2.25       186.10       262.85  ...........        79.15       528.10
RUB..........................................................         0.92         2.25       142.67       262.85  ...........        79.15       484.67
RUA..........................................................         0.78         2.25       120.96       262.85  ...........        79.15       462.96
RVC..........................................................         1.14         1.41       176.79       164.72  ...........        79.15       420.66
RVB..........................................................         1.01         1.41       156.63       164.72  ...........        79.15       400.50
RVA..........................................................         0.77         1.41       119.41       164.72  ...........        79.15       363.28
RHC..........................................................         1.13         0.94       175.24       109.81  ...........        79.15       364.20
RHB..........................................................         1.03         0.94       159.73       109.81  ...........        79.15       348.69
RHA..........................................................         0.88         0.94       136.47       109.81  ...........        79.15       325.43
RMC..........................................................         1.07         0.77       165.94        89.95  ...........        79.15       335.04
RMB..........................................................         1.01         0.77       156.63        89.95  ...........        79.15       325.73
RMA..........................................................         0.97         0.77       150.43        89.95  ...........        79.15       319.53
RLB..........................................................         1.06         0.43       164.38        50.23  ...........        79.15       293.76
RLA..........................................................         0.79         0.43       122.51        50.23  ...........        79.15       251.89
SE3..........................................................         1.72  ...........       266.74  ...........        15.38        79.15       361.27
SE2..........................................................         1.38  ...........       214.01  ...........        15.38        79.15       308.54
SE1..........................................................         1.17  ...........       181.44  ...........        15.38        79.15       275.97
SSC..........................................................         1.14  ...........       176.79  ...........        15.38        79.15       271.32
SSB..........................................................         1.05  ...........       162.83  ...........        15.38        79.15       257.36
SSA..........................................................         1.02  ...........       158.18  ...........        15.38        79.15       252.71
CC2..........................................................         1.13  ...........       175.24  ...........        15.38        79.15       269.77
CC1..........................................................         0.99  ...........       153.53  ...........        15.38        79.15       248.06
CB2..........................................................         0.91  ...........       141.12  ...........        15.38        79.15       235.65
CB1..........................................................         0.84  ...........       130.27  ...........        15.38        79.15       224.80
CA2..........................................................         0.83  ...........       128.72  ...........        15.38        79.15       223.25
CA1..........................................................         0.75  ...........       116.31  ...........        15.38        79.15       210.84
IB2..........................................................         0.69  ...........       107.01  ...........        15.38        79.15       201.54
IB1..........................................................         0.67  ...........       103.90  ...........        15.38        79.15       198.43
IA2..........................................................         0.57  ...........        88.40  ...........        15.38        79.15       182.93
IA1..........................................................         0.53  ...........        82.19  ...........        15.38        79.15       176.72
BB2..........................................................         0.68  ...........       105.45  ...........        15.38        79.15       199.98
BB1..........................................................         0.65  ...........       100.80  ...........        15.38        79.15       195.33
BA2..........................................................         0.56  ...........        86.84  ...........        15.38        79.15       181.37
BA1..........................................................         0.48  ...........        74.44  ...........        15.38        79.15       168.97

[[Page 22216]]

 
PE2..........................................................         0.79  ...........       122.51  ...........        15.38        79.15       217.04
PE1..........................................................         0.77  ...........       119.41  ...........        15.38        79.15       213.94
PD2..........................................................         0.72  ...........       111.66  ...........        15.38        79.15       206.19
PD1..........................................................         0.70  ...........       108.56  ...........        15.38        79.15       203.09
PC2..........................................................         0.66  ...........       102.35  ...........        15.38        79.15       196.88
PC1..........................................................         0.65  ...........       100.80  ...........        15.38        79.15       195.33
PB2..........................................................         0.52  ...........        80.64  ...........        15.38        79.15       175.17
PB1..........................................................         0.50  ...........        77.54  ...........        15.38        79.15       172.07
PA2..........................................................         0.49  ...........        75.99  ...........        15.38        79.15       170.52
PA1..........................................................         0.46  ...........        71.34  ...........        15.38        79.15       165.87
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                      Table 5--RUG-53 Case-Mix Adjusted Federal Rates and Associated Indexes Rural
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Non-case     Non-case
                       RUG-III category                          Nursing      Therapy      Nursing      Therapy    mix therapy      mix       Total rate
                                                                  index        index      component    component       comp      component
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUX..........................................................         1.77         2.25       262.24       303.08  ...........        80.61       645.93
RUL..........................................................         1.31         2.25       194.09       303.08  ...........        80.61       577.78
RVX..........................................................         1.44         1.41       213.35       189.93  ...........        80.61       483.89
RVL..........................................................         1.24         1.41       183.72       189.93  ...........        80.61       454.26
RHX..........................................................         1.33         0.94       197.05       126.62  ...........        80.61       404.28
RHL......................................