Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2014, 47935-47978 [2013-18776]

Download as PDF Vol. 78 Tuesday, No. 151 August 6, 2013 Part IV Department of Health and Human Services tkelley on DSK3SPTVN1PROD with RULES3 Centers for Medicare and Medicaid Services 42 CFR Parts 413 and 424 Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2014; Rules VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\06AUR3.SGM 06AUR3 47936 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 413 and 424 [CMS–1446–F] RIN 0938–AR65 Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2014 Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Final rule. AGENCY: This final rule updates the payment rates used under the prospective payment system for skilled nursing facilities (SNFs) for fiscal year (FY) 2014. In addition, it revises and rebases the SNF market basket, revises and updates the labor related share, and makes certain technical and conforming revisions in the regulations text. This final rule also includes a policy for reporting the SNF market basket forecast error in certain limited circumstances and adds a new item to the Minimum Data Set (MDS), Version 3.0 for reporting the number of distinct therapy days. Finally, this final rule adopts a change to the diagnosis code used to determine which residents will receive the AIDS add-on payment, effective for services provided on or after the October 1, 2014 implementation date for conversion to ICD–10–CM. DATES: Effective Date: This final rule is effective on October 1, 2013. FOR FURTHER INFORMATION CONTACT: Penny Gershman, (410) 786–6643, for information related to clinical issues. John Kane, (410) 786–0557, for information related to the development of the payment rates and case-mix indexes. Kia Sidbury, (410) 786–7816, for information related to the wage index. Bill Ullman, (410) 786–5667, for information related to level of care determinations, consolidated billing, and general information. SUPPLEMENTARY INFORMATION: SUMMARY: tkelley on DSK3SPTVN1PROD with RULES3 Availability of Certain Information Exclusively Through the Internet on the CMS Web site The Wage Index for Urban Areas Based on CBSA Labor Market Areas (Table A) and the Wage Index Based on CBSA Labor Market Areas for Rural Areas (Table B) are published in the Federal Register as an Addendum to the annual SNF PPS rulemaking (that is, the VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 SNF PPS proposed and final rules or, when applicable, the current update notice). However, as of FY 2012, a number of other Medicare payment systems adopted an approach in which such tables are no longer published in the Federal Register in this manner, and instead are made available exclusively through the Internet; see, for example, the FY 2012 Hospital Inpatient PPS (IPPS) final rule (76 FR 51476). To be consistent with these other Medicare payment systems and streamline the published content to focus on policy discussion, we proposed to use a similar approach for the SNF PPS as well. We also proposed to revise the applicable regulations text at § 413.345 to accommodate this approach, consistent with the wording of the corresponding statutory authority at section 1888(e)(4)(H)(iii) of the Social Security Act (the Act). We did not receive any comments on this proposal. Therefore, as discussed in greater detail in section V. of this final rule, we are finalizing this proposal and revising the applicable regulations text at § 413.345 to accommodate this approach. Under this approach, effective October 1, 2013, the individual wage index values displayed in Tables A and B of this rule will no longer be published in the Federal Register as part of the annual SNF PPS rulemaking, and instead will be made available exclusively through the Internet on CMS’s SNF PPS Web site at https://www.cms.gov/Medicare/ Medicare-Fee-for-Service-Payment/ SNFPPS/WageIndex.html. Consistent with the provisions of section 1888(e)(4)(H)(iii) of the Act, we will continue to publish in the Federal Register the specific ‘‘factors to be applied in making the area wage adjustment’’ (for example, the SNF prospective payment system’s use of the hospital wage index exclusive of its occupational mix adjustment) as part of our annual SNF PPS rulemaking process, but that document will no longer include a listing of the individual wage index values themselves, which will instead be made available exclusively through the Internet on the CMS Web site. In addition, we note that in previous years, each rule or update notice issued under the annual SNF PPS rulemaking cycle has included a detailed reiteration of the various individual legislative provisions that have affected the SNF PPS over the years, a number of which represented temporary measures that have long since expired. That discussion, along with detailed background information on various other aspects of the SNF PPS, will PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 henceforth be made available exclusively on the CMS Web site as well, at https://www.cms.gov/Medicare/ Medicare-Fee-for-Service-Payment/ SNFPPS/. To assist readers in referencing sections contained in this document, we are providing the following Table of Contents. Table of Contents I. Executive Summary A. Purpose B. Summary of Major Provisions C. Summary of Cost, Transfers, and Benefits II. Background A. Statutory Basis and Scope B. Initial Transition C. Required Annual Rate Updates III. Summary of the Provisions of the FY 2014 SNF PPS Proposed Rule IV. Analysis of and Responses to Public Comments on the FY 2014 SNF PPS Proposed Rule A. General Comments on the FY 2014 SNF PPS Proposed Rule B. SNF PPS Rate Setting Methodology and FY 2014 Update 1. Federal Base Rates 2. SNF Market Basket Update a. Revising and Rebasing the SNF Market Basket Index i. Effect on the Labor-Related Share of Revising and Rebasing the SNF Market Basket Index 3. Forecast Error Adjustment 4. Multifactor Productivity Adjustment a. Incorporating the Multifactor Productivity Adjustment in the Market Basket Update 5. Market Basket Update Factor for FY 2014 6. Case-Mix Adjustment 7. Wage Index Adjustment 8. Adjusted Rate Computation Example C. Additional Aspects of the SNF PPS 1. SNF Level of Care—Administrative Presumption 2. Consolidated Billing 3. Payment for SNF-Level Swing-Bed Services D. Other Issues 1. Monitoring Impact of FY 2012 Policy Changes 2. Ensuring Accuracy in Grouping to Rehabilitation RUG–IV Categories 3. SNF Therapy Research Project V. Provisions of the Final Rule; Regulations Text VI. Collection of Information Requirements VII. Economic Analyses A. Regulatory Impact Analysis 1. Introduction 2. Statement of Need 3. Overall Impacts 4. Detailed Economic Analysis 5. Alternatives Considered 6. Accounting Statement 7. Conclusion B. Regulatory Flexibility Act Analysis C. Unfunded Mandates Reform Act Analysis D. Federalism Analysis E:\FR\FM\06AUR3.SGM 06AUR3 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations Regulations Text Acronyms In addition, because of the many terms to which we refer by acronym in this final rule, we are listing these abbreviations and their corresponding terms in alphabetical order below: AIDS Acquired Immune Deficiency Syndrome ARD Assessment reference date 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 BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, Pub. L. 106–554 CAH Critical access hospital CBSA Core-based statistical area CFR Code of Federal Regulations CMI Case-mix index CMS Centers for Medicare & Medicaid Services COT Change of therapy ECI Employment Cost Index EOT End of therapy EOT–R End of therapy–resumption FQHC Federally qualified health center FR Federal Register FY Fiscal year GAO Government Accountability Office HCPCS Healthcare Common Procedure Coding System HOMER Home office Medicare records IGI IHS (Information Handling Services) Global Insight, Inc. MDS Minimum data set MFP Multifactor productivity MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. 108–173 MSA Metropolitan statistical area NAICS North American Industrial Classification System NTA Non-Therapy Ancillary OMB Office of Management and Budget OMRA Other Medicare Required Assessment PPS Prospective Payment System RAI Resident assessment instrument RAVEN Resident assessment validation entry RFA Regulatory Flexibility Act, Pub. L. 96– 354 RHC Rural health clinic RIA Regulatory impact analysis RUG–III Resource Utilization Groups, Version 3 RUG–IV Resource Utilization Groups, Version 4 RUG–53 Refined 53-Group RUG–III CaseMix Classification System SCHIP State Children’s Health Insurance Program SNF Skilled nursing facility STM Staff time measurement STRIVE Staff time and resource intensity verification UMRA Unfunded Mandates Reform Act, Pub. L. 104–4 47937 I. Executive Summary A. Purpose This final rule updates the SNF prospective payment rates for FY 2014 as required under section 1888(e)(4)(E) of the Act. It also responds to section 1888(e)(4)(H) of the Act, which requires the Secretary to ‘‘provide for publication in the Federal Register’’ before the August 1 that precedes the start of each fiscal year, the unadjusted federal per diem rates, the case-mix classification system, and the factors to be applied in making the area wage adjustment used in computing the prospective payment rates for that fiscal year. B. Summary of Major Provisions In accordance with sections 1888(e)(4)(E)(ii)(IV) and 1888(e)(5) of the Act, the federal rates in this final rule reflect an update to the rates that we published in the SNF PPS update notice for FY 2013 (77 FR 46214) which reflects the SNF market basket index, adjusted by the forecast error correction, if applicable, and the multifactor productivity adjustment for FY 2014. C. Summary of Cost, Transfers, and Benefits Provision description Total transfers FY 2014 SNF PPS payment rate update ........... The economic impact of this final rule is an estimated increase of $470 million in aggregate payments to SNFs during FY 2014. II. Background tkelley on DSK3SPTVN1PROD with RULES3 A. Statutory Basis and Scope As amended by section 4432 of the Balanced Budget Act of 1997 (BBA, Pub. L. 105–33, enacted on August 5, 1997), section 1888(e) of the Act provides for the implementation of a PPS for Medicare payment for covered SNF services. This methodology uses prospective, case-mix adjusted per diem payment rates applicable to all covered SNF services defined in section 1888(e)(2)(A) of the Act. The SNF PPS is effective for cost reporting periods beginning on or after July 1, 1998, and covers all costs of furnishing covered SNF services (routine, ancillary, and capital-related costs) other than costs associated with approved educational activities and bad debts. Under section 1888(e)(2)(A)(i) of the Act, covered SNF services include post-hospital extended care services for which benefits are provided under Part A, as well as those items and services (other than a certain limited number of excluded services described in clauses (ii), (iii), and (iv) of section 1888(e)(2)(A), such as physician VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 services) for which payment may otherwise be made under Part B and which are furnished to Medicare beneficiaries who are residents 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). B. Initial Transition Under sections 1888(e)(1)(A) and 1888(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. Currently, we base payments for SNFs entirely on the adjusted federal per diem rates, and we no longer include PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 adjustment factors under the transition related to facility-specific rates for the upcoming FY. C. Required Annual Rate Updates Section 1888(e)(4)(E) of the Act requires the SNF PPS payment rates to be updated annually. The most recent annual update occurred in an update notice that set forth updates to the SNF PPS payment rates for FY 2013 (77 FR 46214). Under this requirement, section 1888(e)(4)(H) of the Act specifies that we provide for publication annually in the Federal Register of the following: • The unadjusted federal per diem rates to be applied to days of covered SNF services furnished during the upcoming FY. • The case-mix classification system to be applied with respect to these services during the upcoming FY. • The factors to be applied in making the area wage adjustment with respect to these services. Along with other revisions discussed later in this preamble, this final rule also provides the required annual E:\FR\FM\06AUR3.SGM 06AUR3 47938 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations updates to the per diem payment rates for SNFs for FY 2014. III. Summary of the Provisions of the FY 2014 SNF PPS Proposed Rule In the FY 2014 SNF PPS proposed rule (78 FR 26438), we proposed an update to the payment rates used under the PPS for SNFs for FY 2014. Additionally, we proposed to revise and rebase the SNF market basket, to use this revised and rebased SNF market basket to determine the SNF PPS update for FY 2014; to update and revise the labor related share; and to make certain technical and conforming revisions in the regulations text. The proposed rule also included a proposed policy for revising how we report the SNF market basket forecast error in certain limited circumstances. In addition, we proposed a new item to be included on the Minimum Data Set (MDS), Version 3.0. Finally, we proposed to transition to the ICD–10–CM diagnosis code B20 in order to identify those residents for whom it is appropriate to apply the AIDS add-on payment under section 511 of the MMA, effective upon the October 1, 2014 implementation date for conversion to ICD–10–CM. IV. Analysis of and Responses to Public Comments on the FY 2014 SNF PPS Proposed Rule In response to the publication of the FY 2014 SNF PPS proposed rule, we received 20 timely public comments from individual providers, corporations, government agencies, private citizens, trade associations, and major organizations. The following are brief summaries of each proposed provision, a summary of the public comments that we received related to that proposal, and our responses to the comments. tkelley on DSK3SPTVN1PROD with RULES3 A. General Comments on the FY 2014 SNF PPS Proposed Rule In addition to the comments we received on the proposed rule’s discussion of specific aspects of the SNF PPS (which we address later in this final rule), commenters also submitted the following, more general observations on the payment system. A discussion of these comments, along with our responses, appears below. Comment: We received a number of comments about the MDS. Commenters noted the complexity of the MDS 3.0, particularly with regard to several of the newer assessment types, the need to clarify the Resident Assessment Instrument (RAI) Manual, the manual update process, and the time required to become trained on the new MDS 3.0 requirements. VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 Response: We appreciate these concerns and we recognize that the MDS 3.0 is a complex assessment tool. We provided extensive training and opportunities to assist with questions about the MDS 3.0 both prior to and after its October 1, 2010 implementation on audio conferences, at national training conferences, in the form of the RAI Manual and subsequent clarification updates, and postings to the MDS 3.0 and SNF PPS Web sites. We have also provided support in response to oral and written inquiries, and issued clarification during Open Door Forums, RAI Manual updates, and through online and telephone technical assistance. We are committed to continuing training on both the MDS 3.0 and RUG–IV systems. Additionally, as we receive provider input through these efforts, we will continue to update and clarify the RAI Manual to ensure that it continues to provide accurate information and guidance on CMS policies in a timely fashion. Comment: A few commenters raised the issue of Non-Therapy Ancillaries (NTAs). All of the comments we received on this issue supported CMS’s broad objective to develop a new method for paying for NTAs received in the SNF. These commenters urged CMS to expedite the research necessary to develop a new model for NTA payment and to implement such a model shortly thereafter. Response: We appreciate all of the comments on this topic and the broad support for our objective to address this issue. Furthermore, the comments we received provided a number of interesting and creative ideas for consideration during the research process. We look forward to working with providers and stakeholders in the future as we continue to research this possible refinement to the SNF PPS. B. SNF PPS Rate Setting Methodology and FY 2014 Update In the FY 2014 SNF PPS proposed rule (78 FR 26441 through 26463), we outlined the basic methodology used to set the rates for the SNF PPS. We also discussed several proposals associated with our rate setting methodology, including proposals associated with revising and rebasing the SNF market basket for FY 2014, using the revised and rebased SNF market basket to update the SNF payment rates, and updating and revising the labor-related share, as well as a proposal associated with how CMS reports the SNF forecast error correction for a given year. Our discussion of the rate setting methodology, our proposed changes associated with this methodology, and PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 the comments, along with our responses, on these proposals appear below. 1. Federal Base Rates Under section 1888(e)(4) of the Act, the SNF 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 a ‘‘Part B add-on,’’ which is an estimate of the amounts that, prior to the SNF PPS, would have been payable under Part B for covered SNF services furnished to individuals during the course of a covered Part A stay in a SNF. In developing the rates for the initial period, we updated costs from FY 1995 to the first effective year of the PPS (which was the 15-month period beginning July 1, 1998) using a SNF market basket index, and then standardized for geographic variations in wages and for the costs of facility differences in case mix. 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, and adjusted the portion of the federal rate attributable to wage-related costs by a wage index to reflect geographic variations in wages. 2. SNF Market Basket Update Section 1888(e)(5)(A) 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. Accordingly, we have developed a SNF market basket index that encompasses the most commonly used cost categories for SNF routine services, ancillary services, and capital-related expenses. Section 1888(e)(5)(B) of the Act defines the SNF market basket percentage as the percentage change in the SNF market basket index from the midpoint of the E:\FR\FM\06AUR3.SGM 06AUR3 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations previous FY to the midpoint of the current FY. For the federal rates set forth in this final rule, we use the percentage change in the SNF market basket index to compute the update factor for FY 2014, based on the IGI second quarter 2013 forecast (with historical data through first quarter of 2013) of the FY 2014 percentage increase in the FY 2010-based SNF market basket for routine, ancillary, and capital related expenses. In the FY 2014 SNF PPS proposed rule, the FY 2014 SNF market basket percentage was based on the IGI first quarter 2013 forecast (with historical data through the fourth quarter 2012) of the FY 2014 percentage increase in the FY 2010based SNF market basket index for routine, ancillary, and capital-related expenses. The final SNF market basket update is discussed in section IV.B.5 of this final rule. As discussed in sections IV.B of this final rule, this market basket percentage change is reduced by the forecast error correction (§ 413.337(d)(2)), and by the MFP adjustment as required by section 1888(e)(5)(B)(ii) of the Act. tkelley on DSK3SPTVN1PROD with RULES3 a. Revising and Rebasing the SNF Market Basket Index In the FY 2008 SNF PPS final rule (72 FR 43425 through 43430), we revised and rebased the SNF market basket, which included updating the base year from FY 1997 to FY 2004. For FY 2014, we proposed to rebase the market basket to reflect FY 2010 Medicare allowable total cost data (routine, ancillary, and capital-related) and to revise the cost categories, cost weights, and price proxies used to determine the market basket (78 FR 26451 through 26461). Specifically, we proposed to develop cost category weights for the FY 2010based SNF market basket in two stages. First, we proposed to derive base weights for seven major categories (wages and salaries, employee benefits, contract labor, pharmaceuticals, professional liability insurance, capitalrelated, and a residual ‘‘all other’’) from the FY 2010 Medicare cost report (MCR) data for freestanding SNFs. Second, we proposed to divide the residual ‘‘all other’’ cost category into subcategories, using U.S. Department of Commerce Bureau of Economic Analysis’ (BEA) 2002 Benchmark Input-Output (I–O) tables for the nursing home industry aged forward using price changes. Furthermore, we proposed to continue to use the same overall methodology as was used for the FY 2004-based SNF market basket to develop the capital related cost weights of the FY 2010based SNF market basket. VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 We proposed to include five new cost categories in the FY 2010-based SNF market basket: (1) Medical Instruments and Supplies; (2) Apparel; (3) Machinery and Equipment; (4) Administrative and Facilities Support Services; and (5) Financial Services. We also proposed to divide the Nonmedical Professional Fees cost category into Nonmedical Professional Fees: LaborRelated and Nonmedical Professional Fees: Nonlabor-Related; and to revise our labels for the Labor-Intensive Services and Nonlabor-Intensive Services cost categories to All Other: Labor-Related Services and All Other: Nonlabor-Related Services, respectively. In addition, we proposed to revise several price proxies, including using the ECI for Wages and Salaries for Nursing Care Facilities (NAICS 6231) to measure price growth of the Wages and Salaries cost category, and using the ECI for Benefits for Nursing Care Facilities (NAICS 6231) to measure price growth of the Benefits cost category. We refer readers to the FY 2014 SNF PPS proposed rule (78 FR 26450–26461) for a complete discussion of our proposals and associated rationale related to revising and rebasing the SNF market basket. We received a number of public comments on the proposed revising and rebasing of the SNF market basket. A discussion of these comments, with our responses, appears below. Comment: Several commenters were in agreement with our efforts to revise and rebase the SNF Market Basket. One commenter recommended that we forgo rebasing the SNF market basket index until cost data that adequately reflects recent and upcoming changes to the SNF cost structure are available. Furthermore, the commenter stated that the expenses reflected in the proposed FY 2010 base year do not account for system-wide and industry-wide changes that have occurred since FY 2010, which impose additional costs on SNFs. Specifically, they stated the following changes have occurred since 2010 or are about to occur: (1) Effective beginning FY 2011, CMS implemented changes to the reporting of therapy minutes on the MDS; (2) effective beginning FY 2012, CMS implemented a new therapyrelated assessment and reporting changes; and (3) significant new requirements and costs on SNFs as employers due to the implementation of the Affordable Care Act. Response: We last rebased and revised the SNF market basket in the FY 2008 SNF PPS final rule (72 FR 43412, 43425–29), reflecting a FY 2004 base year. In the FY 2014 SNF PPS proposed rule, we proposed to rebase and revise the SNF market basket to reflect FY PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 47939 2010 data as these were the most recent Medicare cost report data available; a decision that was supported by numerous commenters. We do not agree with the commenter’s suggestion to postpone the rebasing of the SNF market basket and continue to use a FY 2004based SNF market basket, which is less relevant with regard to the costs faced by SNFs and, thus, is not as technically appropriate as the FY 2010-based index. We will actively monitor the MCR data to determine if the cost structure changes in a meaningful way as future years of data become available and will propose any appropriate revisions or rebasing of the SNF market basket in future rulemaking. Comment: One commenter supported our efforts to improve payment accuracy by rebasing and revising the market basket. However, they expressed concern about the accuracy of the Medicare SNF cost reports on which we rely. They stated that since payments are now based on the SNF PPS, and have for an increasing time been divorced from an individual facility’s costs, less attention has been given to assuring their accuracy. The commenter also expressed concern that there has not been a recent federal study on the accuracy of the SNF Medicare Cost Reports. They recommended that we commission a study of the accuracy of SNF Medicare cost reports and commit to revising applicable parts of the new market basket index, if the study shows that such changes are warranted. The commenter also stated that there may be accuracy issues with the SNF cost reports, as evidenced by MedPAC’s use of unpublished screens to select SNF cost reports for its analyses. Therefore, they recommended that we explain what, if any, screens, exclusions, or other mechanisms were used in the selection of the FY 2010 SNF cost reports on which the new market basket weights are computed. Response: We appreciate the commenter’s concern over the accuracy of the Medicare cost report data. Similar to MedPAC, we do apply edits to the MCR data to remove reporting errors and outliers. Specifically, MCR data are excluded if total facility costs, total operating costs, Medicare general inpatient routine service costs, and Medicare payments are less than or equal to zero. Additionally, for each of the major cost weights (wages and salaries, employee benefits, contract labor, pharmaceuticals, professional liability insurance, capital-related expenses) the data are trimmed by: (1) Requiring that major expenses (such as salary costs) and total Medicare E:\FR\FM\06AUR3.SGM 06AUR3 tkelley on DSK3SPTVN1PROD with RULES3 47940 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations allowable costs are greater than zero; and (2) excluding the top and bottom 5 percent of the major cost weight (for example, salary costs as a percent of total Medicare allowable costs). These are the same types of edits utilized for the FY 2004-based SNF market basket, as well as other PPS market baskets (including but not limited to IPPS and HHA). We believe this trimming process considerably improves the accuracy of the data used to compute the major cost weights. In response to the commenters’ recommendation that we commission a study of the accuracy of Medicare SNF cost reports, we note that implementing such a recommendation would require significant resources and approval through OMB’s standard survey and auditing process (see ‘‘Standards and Guidelines for Statistical Surveys’’ https://www.whitehouse.gov/sites/ default/files/omb/assets/omb/inforeg/ statpolicy/standards_stat_surveys.pdf and ‘‘Guidance on Agency Survey and Statistical Information Collections’’ https://www.whitehouse.gov/sites/ default/files/omb/assets/omb/inforeg/ pmc_survey_guidance_2006.pdf). In the past, cost report audits have been conducted but were limited to specific fields and a small sample of providers. At this time, we believe this approach is the most efficient and appropriate way to identify and address cost report errors and to improve the accuracy of the MCR data used to develop the SNF market basket cost weights. We would appreciate industry representatives communicating to their members the importance of completing the cost reports as accurately as possible, the implications of misreported data, and the possible impacts on their future payments. Comment: One commenter was supportive of periodic rebasing and revisions to the SNF market basket, but recommended that we hold off on updating the weights and price proxies this year pending refinements to the underlying Medicare cost reports to correct data issues that they believe may bias the major cost categories weights. Their concerns included: (1) The effect of excluding cost reports where the Medicare General Inpatient Routine. Service Costs are less than or equal to zero. They expressed concern about the effect of the exclusion of providers whose Medicare general inpatient routine service costs (as reported on Worksheet D1 of the SNF MCR) are less than or equal to zero, noting that this edit alone is responsible for excluding over 4,000 Medicare cost reports (approximately 30 percent of all SNFs filing a Medicare cost report) from VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 the analytic database and the subsequent weight calculations. They acknowledged that the exclusion makes sense on its face and that clearly facilities with zero or negative inpatient routine service costs should be excluded. Upon reviewing the cost reports, however, they asserted that the issue is not that inpatient routine service costs are zero or negative, but rather that the Worksheet D1 is an optional worksheet. They also encouraged CMS to examine, develop, and evaluate other exclusion criteria that target the same issue that CMS seeks to address with the Medicare inpatient routine services cost exclusion. (2) Some of the cost category methodology descriptions in the proposed rule were unclear and requested that CMS in both this year’s final rule and future proposed rules provide more specificity in the precise methodology for estimating the market basket cost weights using the Medicare cost reports. The commenter requested that CMS make available a detailed item-by-item description of the formulas used in the calculation of the major cost category weights in the final rule and that CMS provide the analytic databases used to support the major cost category weight calculations on the CMS Web site. (3) The commenter claims that the CMS methodology for wages and salaries (specifically the numerator for wages and salaries), benefits, contract labor, and pharmaceuticals is inaccurate. The commenter based this conclusion on their own estimates, which were an attempt to re-create the CMS methodology and were provided in their comments. Additionally, the commenter requested more information be provided in the final rule to ensure that the results and analysis are valid and accurate. Response: We disagree with the commenter’s recommendation to hold off on updating the weights and price proxies this year. We believe our methodology is technically sound and does not have any of the data issues that the commenter suggests may bias the major cost category weights. We are using the same general methodology used to develop the FY 2004-based SNF market basket, as finalized in the FY 2008 SNF PPS final rule (72 FR 43412, 43425–43429) . In our response below, we address the three main concerns identified by the commenter. The commenter suggested that we explore alternative edits and examine, develop, and evaluate other exclusion criteria that target the same issue that we seek to address with the Medicare PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 inpatient services routine cost exclusion. However, we continue to believe that this edit (exclusion of providers whose Medicare general inpatient routine service costs are less than or equal to zero) is appropriate as our goal is to create a market basket that is representative of freestanding SNF providers serving Medicare patients. Worksheet D1 is ‘‘optional’’ to those provider’s filing a low Medicare utilization cost report (See Provider Reimbursement Manual, part II, Section 110 https://www.cms.gov/Regulationsand-Guidance/Guidance/Manuals/ Paper-Based-Manuals-Items/ CMS021935.html). The cost structure of these providers would reflect the expenses required to serve predominately non-Medicare patients. Therefore, we believe excluding these providers is appropriate. Our market basket sample, which included approximately 10,000 providers, represents 70 percent of all freestanding SNF providers that submitted a Medicare cost report for FY 2010. In addition, we note that a sensitivity analysis that removed the Medicare general inpatient routine service cost edit had a minor impact on the salary cost weight of ¥0.2 percentage point. Therefore, we believe the resulting cost weights are representative of the average across all SNFs serving Medicare patients, even though we exclude some reports. The final sample of SNF Medicare Cost Reports used to calculate the market basket cost weights excluded any providers that reported costs less than or equal to zero for the following categories: total facility costs, total operating costs, Medicare general inpatient routine service costs, and Medicare payments. Therefore, the final sample used included roughly 10,000 of the 14,000 providers that submitted a Medicare cost report for FY 2010. After we apply these edits, we calculate the cost weights as specified in the FY 2014 SNF PPS proposed rule (78 FR 26451 through 26461); this method is further clarified below. For each of the major cost weights (wages and salaries, employee benefits, contract labor, pharmaceuticals, professional liability insurance, and capital-related expenses), the data are trimmed by: (1) Requiring that major expenses (such as wages and salary costs) and total Medicare allowable costs are greater than zero; and (2) excluding the top and bottom 5 percent of the major cost weight (for example, salary costs as a percent of total Medicare allowable costs). We would note that this trimming process is done for each cost weight individually. For example, E:\FR\FM\06AUR3.SGM 06AUR3 tkelley on DSK3SPTVN1PROD with RULES3 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations providers excluded from the drug cost weight calculation are not automatically excluded from the other cost weight calculations and trimming process. These are the same types of edits utilized for the FY 2004-based SNF market basket as well as other PPS market baskets (including but not limited to IPPS and HHA). We believe this trimming process considerably improves the accuracy of the data used to compute the major cost weights. For all of the cost weights, Medicare allowable total costs were equal to total expenses from Worksheet B, lines 16, 21 through 30, 32, 33, and 48 plus Medicaid drug costs as defined below. We included estimated Medicaid drug costs in the pharmacy cost weight as well as the denominator for total Medicare allowable costs. This is the same methodology used for the FY 2004-based SNF market basket revision and rebasing. During that revision and rebasing, commenters expressed concern over the exclusion of these Medicaid drug expenses. In response, we revised the market basket drug cost weight methodology to include these costs in the Medicare allowable methodology. We finalized this methodology in the FY 2008 SNF PPS final rule (72 FR 43425 through 43430), and for the same reasons set forth in that final rule, we believe it is appropriate to continue to use this methodology in the proposed FY 2010-based SNF market basket. The methodology used in the FY 2010-based SNF market basket includes Medicaid drug costs in the Medicare allowable MCR total costs (as calculated using Worksheet B, lines 16, 21 through 30, 32, 33, 48) for each of the cost weights prior to trimming them as specified above. An alternative methodology would be to calculate and trim the nondrug cost weights using only Medicare allowable total costs from Worksheet B and then adjust the resulting cost weights for the inclusion of Medicaid drug costs. We believe our approach is technically appropriate as it allows for this adjustment to be applied at the individual (that is, provider) level, which is preferable. Finally, we would clarify that the final weights of the proposed FY 2010based SNF market basket are based on weighted means. For example, the final salary cost weight after trimming is equal to the sum of total Medicare allowable wages and salaries divided by the sum of total Medicare allowable costs (including Medicaid drug costs) where providers with larger wages and salary costs have a larger weight in the final wages and salaries cost weight. This methodology is consistent with the methodology used to calculate the FY VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 2004-based SNF market basket cost weights and other PPS market basket cost weights. We believe the proposed rule included sufficient information regarding CMS’s methodology and the underlying data used for revising and rebasing the SNF market basket. As stated in the FY 2014 SNF PPS proposed rule, the cost category weights for the proposed rebased and revised market basket were derived using freestanding Skilled Nursing Facility Medicare Cost Reports and Bureau of Economic Analysis 2002 Input-Output data. Both databases are publicly available on the CMS and BEA Web sites, respectively. We would note that the databases used for the other market basket rebasings (such as, the hospital Medicare cost report data for the IPPS market basket) are also publicly available on the CMS and BEA Web sites, as well. However, in order to respond to the commenter’s suggestion for more information on the detailed methodology for calculating the proposed FY 2010-based SNF market basket major cost weights, we have provided a detailed discussion of the methodology, as requested. These clarifications should allow the commenter to adequately re-create the market basket weights so that discrepancies between their results and the proposed FY 2010-based SNF market basket cost weights (that they believed produced inaccurate results) can be reconciled. We believe that the commenter’s estimates and conclusions were based on a misunderstanding of the formulas used to calculate the major cost weights for the FY 2010-based SNF market basket, and thus we believe the additional clarification provided below should address commenter’s concerns. Specifically, we provide additional clarification on the specific Medicare cost report fields used to calculate the major cost weights: (1) The wages and salaries; (2) employee benefits; (3) contract labor; (4) pharmaceutical; (5) professional liability insurance; (6) capital; and (7) All Other ‘‘residual’’: (1) Wages and Salaries (before the allocation of contract labor): We derived the wages and salaries cost category using the FY 2010 SNF MCRs. We determined Medicare allowable wages and salaries mostly from Worksheet S– 3, part II data. Medicare allowable wages and salaries are equal to total wages and salaries (Worksheet S3, part II, line 1, column 3) minus: (1) Excluded salaries from Worksheet S–3, part II; and (2) nursing facility and nonreimbursable salaries from Worksheet A, lines 18, 34 through 36. Specifically, we PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 47941 determined excluded salaries in three steps: (1) Sum of data from Worksheet S3, part II, lines 3–5, and 8–14; Worksheet A, lines 18, 31, 34–36, 51, and 56; (2) estimated overhead salaries attributable to the non-Medicare allowable cost centers defined as (total overhead salaries (Worksheet S3, Part III, line 14) as a percent of total salaries Worksheet S3, Part II, line 1, column 3) * excluded salaries as defined in step (1); (3) total excluded salaries is equal to the sum of (1) and (2). (2) Employee Benefits (before the allocation of contract labor): We determined the weight for employee benefits using FY 2010 SNF MCR data. We derived Medicare allowable benefit costs from Worksheet S–3, part II. Medicare allowable benefits are equal to total benefits from Worksheet S–3, part II, (lines 19–21) minus excluded (nonMedicare allowable) benefits. NonMedicare allowable benefits are derived by multiplying non-Medicare allowable salaries (otherwise referred to as excluded salaries above) times the ratio of total benefit costs for the SNF to the total wage costs for the SNF. (3) Contract Labor: We determined the weight for contract labor using 2010 SNF MCR data. We derived Medicare allowable contract labor costs from Worksheet S–3, part II line 17 minus Nursing Facility (NF) contract labor costs, and Medicare allowable total costs from Worksheet B. (Worksheet S– 3, part II line 17 includes only those costs attributable to services rendered in the SNF and/or NF for contracted direct patient care services, that is, nursing, therapeutic, rehabilitative, or diagnostic services furnished under contract rather than by employees, and management contract services costs, defined as those individuals who are working at the facility in the capacity of chief executive, chief operating officer, chief financial officer, or nursing administrator.) NF contract labor costs, which are not reimbursable under Medicare, are derived by multiplying total contract labor costs by the ratio of NF wages and salaries (Worksheet A, column 1, line 18), to the sum of NF and SNF wages and salaries (Worksheet A, column 1, line 16). (4) Pharmaceuticals: First, we calculated pharmaceutical costs using the non-salary costs from the Pharmacy cost center (Worksheet B, column 0, line 11 less Worksheet A, column 1, line 11) and the Drugs Charged to Patients’ cost center (Worksheet B, column 0, line 30 less Worksheet A, column 1, line 30), both found on Worksheet B of the SNF MCRs. Since these drug costs were attributable to the entire SNF and not limited to Medicare allowable services, E:\FR\FM\06AUR3.SGM 06AUR3 tkelley on DSK3SPTVN1PROD with RULES3 47942 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations we adjusted the drug costs by the ratio of Medicare allowable pharmacy total costs to total pharmacy costs from Worksheet B, part I, column 11. Worksheet B, part I allocates the general service cost centers, which are often referred to as ‘‘overhead costs’’ (in which pharmacy costs are included) to the Medicare allowable and nonMedicare allowable cost centers. Second, for the FY 2010-based SNF market basket, we proposed to continue to adjust the drug expenses reported on the MCR to include an estimate of total Medicaid drug costs, which are not represented in the Medicare-allowable drug cost weight. Similar to the last rebasing, we are estimating Medicaid drug costs based on data representing dual-eligible Medicaid beneficiaries. Medicaid drug costs are estimated by multiplying Medicaid dual-eligible drug costs per day times the number of Medicaid days as reported in the Medicare allowable skilled nursing cost center in the SNF MCR. Medicaid dualeligible drug costs per day (where the day represents an unduplicated drug supply day) were estimated using a sample of 2010 Part D claims for those dual-eligible beneficiaries who had a Medicare SNF stay during the year. Medicaid dual-eligible beneficiaries would receive their drugs through the Medicare Part D benefit, which would work directly with the pharmacy, and therefore, these costs would not be represented in the Medicare SNF MCRs. A random 20 percent sample of Medicare Part D claims data yielded a Medicaid drug cost per day of $17.39. We note that the FY 2004-based SNF market basket relied on data from the Medicaid Statistical Information System, which yielded a dual-eligible Medicaid drug cost per day of $13.65 for 2004. For the revised and rebased FY 2010-based SNF market basket, we used Part D claims to estimate total Medicaid drug costs as this provides drug expenditure data for dual-eligible beneficiaries for 2010. The Medicaid Statistical Information system is no longer a comprehensive database for dual-eligible beneficiaries’ drug costs. (5) Professional Liability Insurance: We calculated the professional liability insurance costs from Worksheet S–2 of the MCRs as the sum of premiums, paid losses, and self-insurance (Worksheet S– 2, column 1, line 45 plus Worksheet S– 2, column 2, line 45 plus Worksheet S– 2, column 3, line 45). (6) Capital-Related: We derived the capital-related costs using the FY 2010 SNF MCRs. We calculated the Medicare allowable capital-related cost weight from Worksheet B, part II (Worksheet B, part II, column 18, line 16 plus VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 Worksheet B, part II, column 18, lines 21 to 30 plus Worksheet B, part II, column 18, line 32 plus Worksheet B, part II, column 18, line 33 plus Worksheet B, part II, column 18, line 48 plus Worksheet B, part II, column 18, lines 52 to 54). (7) All Other Expenses: The ‘‘all other’’ cost weight is a residual, calculated by subtracting the major cost weights (wages and salaries, employee benefits, contract labor, pharmaceuticals, professional liability insurance, and capital-related expenses) from 100. As stated in the FY 2014 SNF proposed rule (78 FR 26451), we then proposed to divide the residual ‘‘all other’’ cost category (21.534 percent) into subcategories, using U.S. Department of Commerce Bureau of Economic Analysis’ (BEA) 2002 Benchmark Input–Output (I–O) tables for the nursing home industry aged forward to FY 2014 using price changes. We also proposed that if more recent BEA Benchmark I–O data for 2007 were released between the proposed and final rule with sufficient time to incorporate such data into the final rule that we would incorporate these data, as appropriate, into the FY 2010-based SNF PPS market basket for the final rule, so that the SNF market basket reflects the most recent BEA data available. Comment: One commenter had questions on our methodology for the proposed FY 2010-based SNF market basket contract labor cost weight. They stated that the contract labor in a nursing facility is primarily comprised of agency nursing (commonly called nursing pool) and contracted therapy. They further stated that we calculate Allowable Contract Labor by multiplying total contract labor cost by the ratio of SNF salaries and wages to SNF and NF salaries and wages, which they indicated is reasonable to assume because agency nursing would provide services to patients in skilled units and in NF units. However, they asserted that while this allocation approach is reasonable for agency nursing, it is not appropriate for contracted therapy. They further stated that contract therapy costs relate almost exclusively to skilled patients and are reported as ancillary costs (Worksheet B Part I, lines 25–27), which are Medicare allowable expenses. They indicated that allocating these costs on the ratio of SNF and NF salaries results in a percentage of these costs being considered as non-allowable, which is inaccurate. Therefore, they proposed that prior to determining the Allowable Contract Labor using the ratio methodology described above, that contract therapy costs (which they PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 calculate as Worksheet A, lines 25–27, column 2) be removed. Total Medicare allowable contract labor would be equal to the Allowable Contract Labor plus the contract therapy costs. Response: We appreciate the commenter bringing to our attention a potential issue with contracted therapy costs weight methodology. While the commenter has raised an issue that would require further analysis, our preliminary analysis indicates that the impact to the cost weight for a change like this would be negligible (0.001 percentage points to the cost weight). Therefore, we will continue to use our current methodology but will conduct further analysis and communicate any findings in future rulemaking. Comment: One commenter suggested that we should provide the public with a meaningful opportunity to comment on the incorporation of more recent BEA Benchmark Input–Output (I–O) data into the FY 2014 market basket update before using this data as proposed. Response: The 2007 Benchmark I–O data has not been published by the BEA and, therefore, we will not be incorporating this data into the FY 2010-based SNF market basket. The 2007 Benchmark I–O data is expected to be published in December 2013. Any future use of this 2007 data in the SNF market basket will be proposed in rulemaking, which will provide the public with a meaningful opportunity to comment. Comment: Several commenters disagreed with our proposal in the FY 2014 SNF PPS proposed rule (78 FR 26458) to use the ECI for Nursing Care Facilities (Private Industry) (NAICS 6231; BLS series code CIU2026231000000I) to measure price growth of the wages and salaries and employee benefit cost category. They stated that the proposed wages and salaries price proxy index may be too heavily weighted with a lower-skilled labor mix to be adequately representative of the mix of labor skills necessary to deliver care to Medicare SNF patients. In addition, they stated that according to the Census Bureau, there were 16,320 establishments classified in NAICS 6231 in 2007. For that year, 13,841 SNFs submitted cost reports, suggesting that approximately 15 percent of establishments in this industry classification are facilities providing care to residents who are less complex and resource-intensive than SNF residents, especially SNF postacute care patients. These commenters stated that if these facilities have a lessskilled workforce whose wages and salaries increase at a slower rate than higher-skilled occupations, using the E:\FR\FM\06AUR3.SGM 06AUR3 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations ECI for NAICS 6231 as the price proxy for wages and salaries in the SNF market basket index could bias the SNF market basket update downward. Furthermore, one commenter proposed that we use a blended price proxy based on 25 percent of the ECI for wages and salaries for nursing and residential care facilities (NAICS 623) and 75 percent of the ECI for wages and salaries for hospital workers (NAICS 622). The commenter suggested that we collect data for a sample of Medicare SNFs to determine the appropriate weighting. Response: We do not agree with the commenter’s suggestion to continue to use a blended price proxy similar to that used for the FY 2004-based SNF market basket to measure the price growth of wages and salaries and employee benefit cost category. The FY 2004-based SNF market basket used a blended index of a more general nursing home ECI for Nursing and Residential Facilities (NAICS 623, representing facilities that provide a mix of health and social services) and the ECI for wages and salaries of hospital workers (NAICS 622) as a result of the discontinuation of an ECI for Nursing and Personal Care Facilities based on the Standard Industrial Classification (SIC) 805. The blended index was proposed and finalized in the FY 2008 SNF PPS rulemaking (72 FR 25550–51 and 72 FR 43425–29, respectively) to address the industry’s and CMS’s concern about the lack of an ECI that best represented Medicare-certified SNFs. After requests from CMS and the SNF industry, BLS began publishing the ECI for Nursing Care Facilities (6231) in 2006. Because BLS had just begun publishing ECI data for Nursing Care Facilities (NAICS 6231) at the time of the last SNF market revision and rebasing, IGI, the economic forecasting firm, was unable to forecast this price proxy at that time. As stated by the commenter, according to the 2007 Economic Census there were 16,320 establishments classified in NAICS 6231 in 2007; however, 15,335 establishments operated for the entire year (as also reported in the 2007 Economic Census). Of the 13,841 SNF providers submitting a Medicare cost report, 13,830 were open for an entire year. Therefore, 85– 90 percent of the 2007 NAICS 6231 establishments are likely Medicarecertified SNFs. The commenter proposes that we continue to use NAICS 47943 623 (Nursing and Residential Facilities), which is less representative of Medicare-certified SNFs since it also includes other types of facilities such as Residential care facilities, in the blended price proxy. Because we believe the ECI for Nursing Care Facilities (NAICS 6231) is representative of the SNF industry as discussed above, we continue to believe it is the most technically appropriate proxy for the compensation price inflation faced by Medicare-certified SNFs. As such, we believe that a blended price proxy is no longer necessary. After considering the comments we received, for the reasons discussed above and in the FY 2014 SNF PPS proposed rule, we are finalizing without modification our proposals as presented in the FY 2014 SNF PPS proposed rule (78 FR 26451 through 26461) to revise the FY 2004-based SNF market basket and to rebase it to reflect a base year of FY 2010, effective October 1, 2013. Table 1 presents the final revised and rebased FY 2010-based SNF market basket index. TABLE 1—FY 2010-BASED SNF MARKET BASKET Cost category Weight 62.093 50.573 11.520 2.223 1.411 0.667 0.145 1.141 27.183 16.148 7.872 3.661 1.190 0.166 0.764 0.981 0.838 0.195 0.190 0.291 11.035 6.227 3.427 Administrative and Facilities Support .................... tkelley on DSK3SPTVN1PROD with RULES3 Compensation ............................................................................. Wages and Salaries ............................................................ Employee Benefits ............................................................... Utilities ......................................................................................... Electricity .............................................................................. Fuels, Nonhighway .............................................................. Water and Sewerage ........................................................... Professional Liability Insurance .................................................. All Other ...................................................................................... Other Products ..................................................................... Pharmaceuticals ........................................................... Food, Wholesale Purchase .......................................... Food, Retail Purchases ................................................ Chemicals ..................................................................... Medical Instruments and Supplies ............................... Rubber and Plastics ..................................................... Paper and Printing Products ........................................ Apparel ......................................................................... Machinery and Equipment ............................................ Miscellaneous Products ................................................ All Other Services ................................................................ Labor-Related Services ................................................ Nonmedical Professional Fees: Labor-related ...... 0.497 All Other: Labor-Related Services ........................ Non Labor-Related Services ........................................ Nonmedical Professional Fees: Non Labor-Related. Financial Services ........................................................ Telephone Services ...................................................... Postage ......................................................................... All Other: Nonlabor-Related Services .......................... Capital-Related Expenses .......................................................... Total Depreciation ................................................................ 2.303 4.808 2.042 VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 PO 00000 Frm 00009 0.899 0.572 0.240 1.055 7.360 3.180 Fmt 4701 Sfmt 4700 Proposed price proxy ECI for Wages and Salaries for Nursing Care Facilities. ECI for Benefits for Nursing Care Facilities. PPI for Commercial Electric Power. PPI for Commercial Natural Gas. CPI–U for Water and Sewerage Maintenance. CMS Hospital Professional Liability Insurance Index. PPI for Pharmaceuticals for Human Use, Prescription. PPI for Processed Foods and Feeds. CPI–U for Food Away From Home. Blend of Chemical PPIs. PPI for Medical, Surgical, and Personal Aid Devices. PPI for Rubber and Plastic Products. PPI for Converted Paper and Paperboard Products. PPI for Apparel. PPI for Machinery and Equipment. PPI for Finished Goods Less Food and Energy. ECI for Total Compensation for Professional and Related Occupations. ECI for Total Compensation for Office and Administrative Support. ECI for Total Compensation for Service Occupations. ECI for Total Compensation for Professional and Related Occupations. ECI for Total Compensation for Financial Activities. CPI–U for Telephone Services. CPI–U for Postage and Delivery Services. CPI–U for All Items Less Food and Energy. E:\FR\FM\06AUR3.SGM 06AUR3 47944 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations TABLE 1—FY 2010-BASED SNF MARKET BASKET—Continued Cost category Weight Building and Fixed Equipment ..................................... 2.701 Movable Equipment ...................................................... 0.479 Total Interest ........................................................................ For-Profit SNFs ............................................................. 2.096 0.869 Government and Nonprofit SNFs ................................. 1.227 Other Capital-Related Expenses ......................................... 2.084 Total ............................................................................................ 100.000 i. Effect of Revising and Rebasing the SNF Market Basket Index on the LaborRelated Share tkelley on DSK3SPTVN1PROD with RULES3 Proposed price proxy We define the labor-related share (LRS) as those expenses that are laborintensive and vary with, or are influenced by, the local labor market. Each year, we calculate a revised laborrelated share based on the relative importance of labor-related cost categories in the input price index. In the FY 2014 SNF PPS proposed rule (78 FR 26462–63), we proposed to revise and update the labor-related share to reflect the relative importance of the following FY 2010-based SNF market basket cost weights that we believe are labor-intensive and vary with, or are influenced by, the local labor market: (1) Wages and salaries; (2) employee benefits; (3) contract labor; (4) the laborrelated portion of nonmedical professional fees; (5) administrative and facilities support services; (6) all other: Labor-related services (previously referred to in the FY 2004-based SNF market basket as labor-intensive); and (7) a proportion of capital-related expenses. We proposed to continue to include a proportion of capital-related expenses because a portion of these expenses are deemed to be laborintensive and vary with, or are influenced by, the local labor market. For example, a proportion of construction costs for a medical building would be attributable to local construction workers’ compensation expenses. Consistent with previous SNF market basket revisions and rebasings, the ‘‘all other: labor-related services’’ cost category is mostly comprised of building maintenance and security services (including, but not limited to, commercial and industrial machinery and equipment repair, nonresidential maintenance and repair, and investigation and security services). Because these services tend to be labor- VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 BEA chained price index for nonresidential construction for hospitals and special care facilities—vintage weighted (25 years). PPI for Machinery and Equipment—vintage weighted (6 years). Average yield on municipal bonds (Bond Buyer Index 20 bonds)—vintage weighted (22 years). Average yield on Moody’s AAA corporate bonds—vintage weighted (22 years). CPI–U for Rent of Primary Residence. intensive and are mostly performed at the SNF facility (and therefore, unlikely to be purchased in the national market), we believe that they meet our definition of labor-related services. The inclusion of the administrative and facilities support services cost category into the labor-related share remains consistent with the current labor-related share, since this cost category was previously included in the FY 2004-based SNF market basket laborintensive cost category. As stated in the FY 2014 SNF PPS proposed rule (78 FR 26462), we proposed to establish a separate administrative and facilities support services cost category so that we can use the ECI for Total Compensation for Office and Administrative Support Services to reflect the specific price changes associated with these services. For the FY 2004-based SNF market basket, we assumed that all nonmedical professional services (including accounting and auditing services, engineering services, legal services, and management and consulting services) were purchased in the local labor market and, thus, all of their associated fees varied with the local labor market. As a result, we previously included 100 percent of these costs in the laborrelated share. As we discussed in the FY 2014 SNF PPS proposed rule (78 FR 26462), in an effort to determine more accurately the share of nonmedical professional fees that should be included in the labor-related share, we surveyed SNFs regarding the proportion of those fees that are attributable to local firms and the proportion that are purchased from national firms. Based on these weighted results, we determined that SNFs purchase, on average, the following portions of contracted professional services inside their local labor market: • 86 percent of accounting and auditing services. • 89 percent of architectural, engineering services. PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 • 78 percent of legal services. • 87 percent of management consulting services. Together, these four categories represent 2.672 percentage points of the total costs for the proposed FY 2010based SNF market basket. We applied the percentages from this special survey to their respective SNF market basket weights to separate them into laborrelated and nonlabor-related costs. As a result, we are designating 2.285 of the 2.672 total to the labor-related share, with the remaining 0.387 categorized as nonlabor-related. In addition to the professional services listed above, we also classified expenses under NAICS 55, Management of Companies and Enterprises, into the nonmedical professional fees cost category. The NAICS 55 data are mostly comprised of corporate, subsidiary, and regional managing offices, or otherwise referred to as home offices. Formerly, all of the expenses within this category were considered to vary with, or be influenced by, the local labor market, and thus, were included in the laborrelated share. Because many SNFs are not located in the same geographic area as their home office, we analyzed data from a variety of sources to determine what proportion of these costs should be appropriately included in the laborrelated share. As discussed in the FY 2014 SNF PPS proposed rule (78 FR 26462), we proposed a methodology to determine the proportion of NAICS 55 costs that should be allocated to the labor-related share based on the percent of SNF home office compensation attributable to those SNFs that had home offices located in their respective labor markets. Our proposed methodology was based on data from MCRs, as well as a CMS database of Home Office Medicare Records (HOMER). Using this proposed methodology, we determined that 32 percent of SNF home office compensation costs were for SNFs that E:\FR\FM\06AUR3.SGM 06AUR3 tkelley on DSK3SPTVN1PROD with RULES3 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations had home offices located in their respective local labor markets; therefore, we proposed to allocate 32 percent of NAICS 55 expenses to the labor-related share. We believe that this methodology provides a reasonable estimate of the NAICS 55 expenses that are appropriately allocated to the laborrelated share, because we primarily rely on data on home office compensation costs as provided by SNFs on Medicare cost reports. By combining these data with the specific MSAs for the SNF and their associated home office, we believe we have a reasonable estimate of the proportion of SNF’s home office costs that would be incurred in the local labor market. In the proposed FY 2010-based SNF market basket, NAICS 55 expenses that were subject to allocation based on the home office allocation methodology represent 1.833 percent of the total costs. Based on the home office results, we are apportioning 0.587 percentage point of the 1.833 percentage points figure into the labor-related share and designating the remaining 1.247 percentage points as nonlabor-related. The Benchmark I–O data contains other smaller cost categories that we allocate fully to either nonmedical professional fees: labor-related or nonmedical professional fees: nonlaborrelated. Together, the sum of these smaller cost categories, the four nonmedical professional fees cost categories where survey results were available, and the NAICS 55 expenses represent all nonmedical professional fees, or 5.469 percent of total costs in the SNF market basket. Of the 5.469 percentage points, 3.427 percentage points represent professional fees: laborrelated while 2.042 percentage points represent nonmedical professional fees: nonlabor-related. For a complete discussion of our proposals related to the labor-related share and associated rationale, we refer readers to the FY 2014 SNF PPS proposed rule (78 FR 26462–63). A discussion of the comments we received related to these proposals, with our responses, appears below. Comment: One commenter disagreed with our use of the professional fees survey to determine the labor-related portion of Nonmedical Professional Fees costs associated with accounting and auditing services; architectural, engineering services; legal services; and management and consulting services. They stated that the survey of 141 providers only represents 0.94 percent of the approximately 15,000 SNFs nationwide. Furthermore, they contended that even when the services are purchased from ‘‘national firms,’’ VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 those services are priced by national firms according to local market costs. Response: We believe a method that distributes these professional fees based on empirical research and data, and not on assumption, represents a technical improvement to the construction of the market basket and the estimate of the labor-related share. In an effort to draw a nationally representative sample of skilled nursing facilities, we used data on full-time equivalents (FTE’s) to represent the sizes of each SNF and then selected institutions for participation in the survey, across various strata (to be representative across Census Region and Urban/Rural status), based on their relative FTE size. That is, the greater the number of one’s FTEs, the greater the chance of being selected to participate in the sample from one’s specific stratum. The survey itself prompted sample institutions to select from multiple choice answers the proportions of their professional fees that are purchased from firms located outside of their respective local labor market. The multiple choice answers for each type of professional service included the following options: 0 percent of fees; 1– 20 percent of fees; 21–40 percent of fees; 41–60 percent of fees; 61–80 percent of fees; 81–99 percent of fees; and 100 percent of fees. We chose this type of approach, as opposed to asking firms for more detailed approximations of their spending, in an attempt to reduce variability within the data. Responses were gathered with each participating institution being assigned a sample weight equal to the inverse of their selection probability (with adjustments for non-response bias to ensure the representativeness of the data). This type of application represents a very common survey approach and is based on valid and widely-accepted statistical techniques. We believe that this methodology of weighting responses allows for an adequate sample size to draw inferences for this purpose. We noted generally that, depending on the exact professional service, between 25 percent and 50 percent of the institutions indicated that they purchased at least some percentage of those services from firms beyond their local labor market. Given these findings, we developed a weighted average of the results to determine the final proportion to be excluded from the labor-related share for each of the four types of professional services surveyed. The following represents a description of the steps we used in developing the weighted averages to PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 47945 designate these fees as labor-related or nonlabor-related: First, for those institutions that spent between 1 percent and 20 percent of the professional services fees on firms located beyond their local labor markets, we multiplied their weighted count by the mid-point of that range (or 10 percent) as those estimates tended to have very low variability around their respective point estimates. As an example, for Accounting and Auditing services, if a weighted count of 500 SNFs responded that they paid ‘‘1 to 20 percent’’ of their professional fees for these services to firms located outside of their local labor market, we would multiply 500 times 10 percent. This would represent our first subtotal. Second, for those firms that spent more than 20 percent of their fees on firms located outside of their local labor markets, the variance around the point estimates tended to be higher. As a result we multiplied the weighted number of firms by the low point within each multiple choice answer’s range in order to develop our overall weighted estimates. Using a similar example as above, if a weighted count of 300 SNFs responded that they paid ‘‘21 to 40 percent’’ of their professional fees to firms located outside of their local labor market, we would multiply 300 times 21 percent. This would be repeated for the other categories, as well and represent our next set of subtotals. For the last step in the calculations, we added the subtotals together and then divided by the total number of weighted SNFs in order to determine what proportion of their professional fees went to firms inside and outside of their local labor markets. Additionally, we disagree with the commenter that services purchased from national firms are always priced at local labor market cost rates. We believe, for example, that an accounting firm that employs accountants located at their headquarters would have a standard pricing structure that is developed to ensure that their costs of operation are covered, regardless of the location of their clients. Finally, in the absence of a creditable data source from the commenter, we do not believe it would be appropriate to include costs associated with professional services purchased from nationally based firms located beyond the SNF’s local labor market in the labor-related share. After considering the comments we received, for the reasons discussed above and in the FY 2014 SNF PPS proposed rule, we are finalizing our proposal, as presented in the FY 2014 SNF PPS proposed rule (78 FR 26462 through 26463), to update and revise the E:\FR\FM\06AUR3.SGM 06AUR3 47946 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations labor-related share effective October 1, 2013, to reflect the relative importance of the following FY 2010-based SNF market basket cost weights that we believe are labor-intensive and vary with, or are influenced by, the local labor market: (1) Wages and salaries; (2) employee benefits; (3) contract labor; (4) the labor-related portion of nonmedical professional fees; (5) administrative and facilities support services; (6) all other: labor-related services (previously referred to in the FY 2004-based SNF market basket as labor-intensive); and (7) a proportion of capital-related expenses. Furthermore, in the FY 2014 SNF PPS proposed rule (78 FR 26443), we also proposed if more recent data became available (for example, a more recent estimate of the FY 2010-based SNF market basket, MFP adjustment, and/or FY 2004-based SNF market basket used for the forecast error calculation), we would use such data, if appropriate, to determine the FY 2014 SNF market basket update, FY 2014 labor-related share relative importance, and MFP adjustment in the FY 2014 SNF PPS final rule. Accordingly, Table 2 below summarizes the revised and updated labor-related share for FY 2014, which is based on IGI’s most recent forecast (second quarter 2013 forecast with historical data through first quarter 2013) of the rebased and revised FY 2010-based SNF market basket, compared to the labor-related share that was used for the FY 2013 SNF PPS update. TABLE 2—FY 2013 AND FY 2014 SNF LABOR-RELATED SHARE Relative importance, labor-related, FY 2013 (FY 2004-based index) 12:2 forecast Relative importance, labor-related, FY 2014 (FY 2010-based index) 13:2 forecast Wages and salaries 1 ............................................................................................................................................... Employee benefits ................................................................................................................................................... Nonmedical Professional fees: labor-related ........................................................................................................... Administrative and facilities support services .......................................................................................................... All Other: Labor-related services 2 ........................................................................................................................... Capital-related (.391) ............................................................................................................................................... 49.847 11.532 1.307 N/A 3.364 2.333 49.118 11.423 3.446 0.499 2.287 2.772 Total .................................................................................................................................................................. 68.383 69.545 1 The wages and salaries and employee benefits cost weight reflect contract labor costs. referred to as labor-intensive services cost category in the FY 2004-based SNF market basket. 2 Previously 2. Market Basket Estimate for the FY 2014 SNF PPS Update We also proposed to determine the FY 2014 SNF market basket percentage under section 1888(e)(5)(B)(i) of the Act based on the percentage increase in the revised and rebased FY 2010-based SNF market basket (78 FR 26441). As discussed above, we are finalizing our proposal to revise and rebase the SNF market basket to reflect a base year of FY 2010. Thus, we are finalizing our proposal to use the FY 2010-based SNF market basket to determine the SNF market basket percentage increase for FY 2014. Section IV.B.5 of this final rule includes further discussion of the SNF market basket percentage increase for FY 2014. tkelley on DSK3SPTVN1PROD with RULES3 3. Forecast Error Adjustment As discussed in the June 10, 2003 supplemental proposed rule (68 FR 34768) and finalized in the August 4, 2003, final rule (68 FR 46057 through 46059), the regulations at § 413.337(d)(2) provide for an adjustment to account for market basket forecast error. The initial adjustment for market basket forecast error applied to the update of the FY 2003 rate for FY 2004, and took into account the cumulative forecast error for the period from FY 2000 through FY 2002, VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 resulting in an increase of 3.26 percent to the FY 2004 update. Subsequent adjustments in succeeding FYs take into account the forecast error from the most recently available FY for which there is final data, and apply the difference between the forecasted and actual change in the market basket when the difference exceeds a specified threshold. We originally used a 0.25 percentage point threshold for this purpose; however, for the reasons specified in the FY 2008 SNF PPS final rule (72 FR 43425, August 3, 2007), we adopted a 0.5 percentage point threshold effective for FY 2008 and subsequent fiscal years. As we stated in the FY 2004 SNF PPS final rule that first issued the market basket forecast error adjustment (68 FR 46058, August 4, 2003), the adjustment will ‘‘. . . reflect both upward and downward adjustments, as appropriate.’’ In the FY 2014 SNF PPS proposed rule (78 FR 26441 through 26442), we discussed the forecast error for FY 2012 (the most recently available FY for which there is final data), and proposed a new method for reporting the forecast error in situations where the forecast error calculation is equal to 0.5 percentage point when rounded to one significant digit (otherwise referred to as a tenth of a percentage point). For FY 2012, the estimated increase in the PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 market basket index was 2.7 percentage points, while the actual increase was 2.2 percentage points, resulting in the actual increase being 0.5 percentage point lower than the estimated increase. As the forecast error calculation in this instance does not permit one to determine definitively if the forecast error adjustment threshold has been exceeded, we proposed to report the forecast error to two significant digits so that we may determine whether the forecast error correction threshold has been exceeded and whether the forecast error adjustment should be applied under § 413.337(d)(2). This policy would apply only in those instances where the forecast error, when rounded to one significant digit, is 0.5 percentage point. Furthermore, we stated that we would apply the proposed policy where the difference between the actual and projected market basket is either positive or negative 0.5 percentage point. We believe this approach is necessary and appropriate to ensure that the necessity for a forecast error adjustment is accurately determined in accordance with § 413.337(d)(2). Therefore, we proposed that, following the policy outlined above, we would determine the forecast error for FY 2012 to the second significant digit, or the hundredth of a percentage point. The forecasted FY 2012 SNF market basket E:\FR\FM\06AUR3.SGM 06AUR3 tkelley on DSK3SPTVN1PROD with RULES3 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations percentage change was 2.7 percent. When rounded to the second significant digit, it was 2.69 percent. This would be subtracted from the actual FY 2012 SNF market basket percentage change, rounded to the second significant digit, of 2.18 percent to yield a negative forecast error correction of 0.51 percentage point. As the forecast error correction, when rounded to two significant digits, exceeds 0.5 percentage point, a forecast error adjustment would be warranted under the policy outlined in the FY 2008 SNF PPS final rule (72 FR 43425) (see § 413.337(d)(2)). We stated in the proposed rule that, consistent with prior applications of the forecast error adjustment since establishing the 0.5 percentage point threshold, and consistent with our applications of both the market basket adjustment and productivity adjustment described below, once we have determined that a forecast error adjustment is warranted, we will continue to apply the adjustment itself at one significant digit (otherwise referred to as a tenth of a percentage point). Therefore, the FY 2014 SNF market basket percentage change of 2.3 percent would be adjusted downward by the forecast error correction of 0.5 percentage point, resulting in a net SNF market basket increase factor of 1.8 percent. We received a number of comments on the proposed change to how the forecast error is reported in these limited circumstances, as well as more general comments on the SNF forecast error adjustment. A discussion of these comments, with our responses, appears below. Comment: The comments received on this topic supported the approach proposed in the FY 2014 SNF PPS proposed rule for reporting the forecast error in situations where the forecast error calculation is equal to 0.5 percentage point when rounded to one significant digit. Some commenters did, however, state that we should consider using a 0.45 percentage point threshold instead of the 0.5 percentage point threshold, where we would apply a forecast error adjustment when the forecast error exceeded 0.45 percentage point. According to the commenters, this would permit us to continue applying an adjustment at the one significant digit level without requiring different methods for reporting the forecast error in a given year. Finally, it was requested that we confirm that in cases where the threshold rounds to 0.50 percentage point, at the two significant digit level, that a forecast error adjustment would not be applied. VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 Response: We appreciate the support for our proposal from commenters. With respect to the commenters’ suggestion that we adopt a 0.45 percentage point threshold rather than the current 0.5 percentage point threshold, we note that we did not propose to change the forecast error threshold in the FY 2014 SNF PPS proposed rule, and thus we are not adopting such a change at this time. We proposed only to change how the forecast error is reported to create greater transparency, in those limited cases where the forecast error rounds to 0.5 percentage point at the one significant digit level, as to whether and why the forecast error adjustment is or is not being applied in a given year. We continue to believe that a 0.5 percentage point threshold is appropriate and enables us to identify those instances where the difference between the actual and projected market basket becomes sufficiently significant to indicate that the historical price changes are not being adequately reflected. In response to the comment concerning whether, under our proposed policy, the forecast error adjustment would be applied in cases where the forecast error rounds to 0.50 percentage point at the two significant digit level, we would not apply the forecast error adjustment in such a case as the forecast error would not exceed the 0.5 percentage point threshold. Comment: Several commenters suggested that we apply a cumulative forecast error adjustment to account for all of the variations in the market basket forecasts since FY 2003. These commenters stated that while the industry has tolerated the adjustment process, the lack of any cumulative adjustment in recent years violates the precedent set by CMS in 2003 when the last cumulative adjustment was made and that the cumulative adjustment in 2003 demonstrated recognition by us of the cumulatively erosive effect of multiyear forecasting errors. The commenters recommended that we adopt a policy which recognizes the cumulative effect of multi-year market basket forecast errors and that an adjustment be made to account for the cumulative errors since FY 2003. Response: In the FY 2004 SNF PPS final rule, we applied a one-time, cumulative forecast error adjustment resulting in an increase of 3.26 percent (68 FR 46036, 46058). Since that time, the forecast errors have been relatively small and clustered near zero. As stated in prior rulemaking on the SNF PPS— including, most recently, the FY 2012 SNF PPS final rule (76 FR 48527, August 8, 2011)—we believe the forecast error correction should be applied only PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 47947 when the degree of forecast error in any given year is such that the SNF base payment rate does not adequately reflect the historical price changes faced by SNFs. Accordingly, we continue to believe that the forecast error adjustment mechanism should appropriately be reserved for the type of major, unexpected change that initially gave rise to this policy, rather than the minor year-to-year variances that are a routine and inherent aspect of this type of statistical measurement. Accordingly, for the reasons discussed in this final rule and in the FY 2014 SNF PPS proposed rule (78 FR 26441 through 26442), we are finalizing our proposal to report the forecast error to the second significant digit in only those instances where the forecast error rounds to 0.5 percentage point at one significant digit. Effective October 1, 2013, we will report the forecast error to the second significant digit in those instances where the forecast error rounds to 0.5 percentage point at one significant digit, so that we may determine whether the forecast error adjustment threshold has been exceeded. As discussed above, once we have determined that a forecast error adjustment is warranted, we will continue to apply the adjustment itself at one significant digit (otherwise referred to as a tenth of a percentage point). 4. Multifactor Productivity Adjustment Section 3401(b) of the Affordable Care Act (consisting of the Patient Protection and Affordable Care Act, Pub. L. 111– 148, enacted on March 23, 2010, and the Health Care and Education Reconciliation Act of 2010, Pub. L. 111– 152, enacted on March 30, 2010) requires that, in FY 2012 (and in subsequent FYs), the market basket percentage under the SNF payment system as described in section 1888(e)(5)(B)(i) of the Act is to be reduced annually by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. Section 1886(b)(3)(B)(xi)(II) of the Act, added by section 3401(a) of the Affordable Care Act, sets forth the definition of this productivity adjustment. The statute defines the productivity adjustment to be equal to ‘‘the 10-year moving average of changes in annual economy-wide private nonfarm business multi-factor productivity (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, year, cost-reporting period, or other annual period)’’ (the MFP adjustment). The Bureau of Labor Statistics (BLS) is the agency that publishes the official measure of private nonfarm business E:\FR\FM\06AUR3.SGM 06AUR3 47948 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations multifactor productivity (MFP). Please see https://www.bls.gov/mfp to obtain the BLS historical published MFP data. The projection of MFP is currently produced by IGI, an economic forecasting firm. To generate a forecast of MFP, IGI replicated the MFP measure calculated by the BLS, using a series of proxy variables derived from IGI’s U.S. macroeconomic models. This process is described in greater detail in section III.F.3 of the FY 2012 SNF PPS final rule (76 FR 48527 through 48529). a. Incorporating the Multifactor Productivity Adjustment Into the Market Basket Update Section 1888(e)(5)(A) of the Act requires the Secretary to ‘‘establish a skilled nursing facility market basket index that reflects changes over time in the prices of an appropriate mix of goods and services included in covered skilled nursing facility services.’’ Section 1888(e)(5)(B)(ii) of the Act, added by section 3401(b) of the Affordable Care Act, requires that for FY 2012 and each subsequent FY, after determining the market basket percentage described in section 1888(e)(5)(B)(i) of the Act, ‘‘the Secretary shall reduce such percentage by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II)’’ (which we refer to as the multifactor productivity (MFP) adjustment). Section 1888(e)(5)(B)(ii) of the Act further states that the reduction of the market basket percentage by the MFP adjustment may result in the market basket percentage being less than zero for a FY, and may result in payment rates under section 1888(e) of the Act for a FY being less than such payment rates for the preceding FY. Thus, if the application of the MFP adjustment to the market basket percentage calculated under section 1888(e)(5)(B)(i) of the Act results in an MFP-adjusted market basket percentage that is less than zero, then the annual update to the unadjusted federal per diem rates under section 1888(e)(4)(E)(ii) of the Act would be negative, and such rates would decrease relative to the prior FY. For the FY 2014 SNF PPS update, the MFP adjustment is calculated as the 10year moving average of changes in MFP for the period ending September 30, 2014. In accordance with section 1888(e)(5)(B)(i) of the Act and § 413.337(d)(2) of the regulations, the SNF PPS market basket percentage for FY 2014 is based on IGI’s second quarter 2013 forecast of the FY 2010-based SNF market basket update (which is 2.3 percent), as adjusted by the forecast error adjustment (which is 0.5 percent), and is estimated to be 1.8 percent. In accordance with section 1888(e)(5)(B)(ii) of the Act (as added by section 3401(b) of the Affordable Care Act) and § 413.337(d)(3), this market basket percentage is then reduced by the MFP adjustment (which is the 10-year moving average of changes in MFP for the period ending September 30, 2014) of 0.5 percent. In the FY 2014 SNF PPS proposed rule (78 FR 26443), we proposed that if more recent data became available, we would use that data, if appropriate, to determine the FY 2014 MFP adjustment. The MFP adjustment of 0.4 percent set forth in the proposed rule was based on IGI’s first quarter 2013 forecast. The 0.5 percent MFP adjustment set forth in this final rule is based on updated IGI data (that is, IGI second quarter 2013 forecast). The resulting MFP-adjusted SNF market basket update is equal to 1.3 percent, or 1.8 percent less the 0.5 percentage point MFP adjustment. 5. Market Basket Update Factor for FY 2014 Sections 1888(e)(4)(E)(ii)(IV) and 1888(e)(5)(i) of the Act require that SNF PPS unadjusted federal per diem rates for the previous fiscal year be adjusted by the market basket index percentage change for the fiscal year involved, in order to compute the unadjusted federal per diem rates for the current year. Accordingly, we determined the total growth from the average market basket index for the period of October 1, 2012 through September 30, 2013 to the average market basket index for the period of October 1, 2013 through September 30, 2014. This process yields a market basket update factor of 2.3 percent. As further explained in section IV.B.3 of this final rule, as applicable, we adjust the market basket update factor to reflect the forecast error from the most recently available FY for which there is final data and apply this adjustment whenever the difference between the forecasted and actual percentage change in the market basket exceeds a 0.5 percentage point threshold. Since the forecasted FY 2012 SNF market basket percentage change exceeded the actual FY 2012 SNF market basket percentage change (FY 2012 is the most recently available FY for which there is final data) by more than 0.5 percentage point, the FY 2014 market basket update factor of 2.3 percent would be adjusted downward by the applicable difference, in this case 0.5 percentage points, which reduces the FY 2014 market basket update factor to 1.8 percent. In addition, for FY 2014, section 1888(e)(5)(B) of the Act requires us to reduce the market basket percentage by the MFP adjustment (the 10-year moving average of changes in MFP for the period ending September 30, 2014) of 0.5 percent, as described in section IV.B.4. of this final rule. The resulting MFP-adjusted SNF market basket update would be equal to 1.3 percent, or 1.8 percent less 0.5 percentage point. We used the FY 2010based SNF market basket percentage, adjusted as described above, to adjust each per diem component of the federal rates forward to reflect the change in the average prices for FY 2014 from average prices for FY 2013. We further adjust the rates by a wage index budget neutrality factor, described later in this section. Tables 3 and 4 reflect the updated components of the unadjusted federal rates for FY 2014, prior to adjustment for case-mix. TABLE 3—FY 2014 UNADJUSTED FEDERAL RATE PER DIEM—URBAN Nursing— case-mix Therapy— case-mix Therapy— non-case-mix Non-case-mix Per Diem Amount ............................................................................................ tkelley on DSK3SPTVN1PROD with RULES3 Rate component $165.81 $124.90 $16.45 $84.62 TABLE 4—FY 2014 UNADJUSTED FEDERAL RATE PER DIEM—RURAL Rate component Nursing— case-mix Therapy— case-mix Therapy— non-case-mix Non-case-mix Per Diem Amount ............................................................................................ $158.41 $144.01 $17.57 $86.19 VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 E:\FR\FM\06AUR3.SGM 06AUR3 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 6. Case-Mix Adjustment Under section 1888(e)(4)(G)(i) of the Act, the federal rate also incorporates an adjustment to account for case-mix, using a classification system that accounts for the relative resource utilization of different patient types. The statute specifies that the adjustment is to reflect both a resident classification system established by the Secretary to account for the relative resource use of different patient types, as well as resident assessment data and other data that the Secretary considers appropriate. In the May 12, 1998 interim final rule with comment period that initially implemented the SNF PPS (63 FR 26252), we developed the RUG–III casemix 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 (CMIs). The original RUG–III grouper logic was based on clinical data collected in 1990, 1995, and 1997. As discussed in the FY 2010 SNF PPS proposed rule (74 FR 22208), we subsequently conducted a multi-year data collection and analysis under the Staff Time and Resource Intensity Verification (STRIVE) project to update the case-mix classification system for FY 2011. The resulting Resource Utilization Groups, Version 4 (RUG–IV) case-mix classification system reflected the data collected in 2006 through 2007 during the STRIVE project, and the RUG–IV model was finalized in the FY 2010 SNF PPS final rule (74 FR 40288) to take effect in FY 2011 concurrently with an updated new resident assessment instrument, version 3.0 of the Minimum Data Set (MDS 3.0), which collects the clinical data used for case-mix classification under RUG–IV. We note that case-mix classification is based, in part, on the beneficiary’s need for skilled nursing care and therapy services. The case-mix classification system uses clinical data from the MDS to assign a case-mix group to each patient that is then used to calculate a per diem payment under the SNF PPS. Further, because the MDS is used as a basis for payment as well as a clinical assessment, we have provided extensive training on proper coding and the time frames for MDS completion in the RAI Manual. For an MDS to be considered valid for use in determining payment, the MDS assessment must be completed 47949 in compliance with the instructions in the RAI Manual in effect at the time the assessment is completed. For payment and quality monitoring purposes, the RAI Manual consists of both the Manual instructions and the interpretive guidance and policy clarifications posted on the appropriate MDS Web site at https://www.cms.gov/Medicare/ Quality-Initiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/ MDS30RAIManual.html. Under section 1888(e)(4)(H), each update of the payment rates must include the case-mix classification methodology applicable for the upcoming FY. The payment rates set forth in this final rule reflect the use of the RUG–IV case-mix classification system from October 1, 2013, through September 30, 2014. We list the casemix adjusted RUG–IV payment rates, provided separately for urban and rural SNFs, in Tables 5 and 6 with corresponding case-mix values. These tables do not reflect the add-on for SNF residents with AIDS enacted by section 511 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, Pub. L. 108–173) discussed below, which we apply only after making all other adjustments (including the wage index and case-mix adjustments). TABLE 5—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES—URBAN tkelley on DSK3SPTVN1PROD with RULES3 RUG–IV Category Nursing index Therapy index Nursing component Therapy component Non-case mix therapy comp Non-case mix component 2.67 2.57 2.61 2.19 2.55 2.15 2.47 2.19 2.26 1.56 1.56 0.99 1.51 1.11 1.10 1.45 1.19 0.91 1.36 1.22 0.84 1.50 0.71 3.58 2.67 2.32 2.22 1.74 2.04 1.60 1.89 1.48 1.87 1.87 1.28 1.28 0.85 0.85 0.55 0.55 0.28 1.87 1.87 1.87 1.28 1.28 1.28 0.85 0.85 0.85 0.55 0.55 0.55 0.28 0.28 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ $442.71 426.13 432.76 363.12 422.82 356.49 409.55 363.12 374.73 258.66 258.66 164.15 250.37 184.05 182.39 240.42 197.31 150.89 225.50 202.29 139.28 248.72 117.73 593.60 442.71 384.68 368.10 288.51 338.25 265.30 313.38 245.40 $233.56 233.56 159.87 159.87 106.17 106.17 68.70 68.70 34.97 233.56 233.56 233.56 159.87 159.87 159.87 106.17 106.17 106.17 68.70 68.70 68.70 34.97 34.97 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 $84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 RUX .............................. RUL .............................. RVX .............................. RVL .............................. RHX .............................. RHL .............................. RMX ............................. RML .............................. RLX .............................. RUC ............................. RUB .............................. RUA .............................. RVC .............................. RVB .............................. RVA .............................. RHC ............................. RHB .............................. RHA .............................. RMC ............................. RMB ............................. RMA ............................. RLB .............................. RLA .............................. ES3 .............................. ES2 .............................. ES1 .............................. HE2 .............................. HE1 .............................. HD2 .............................. HD1 .............................. HC2 .............................. HC1 .............................. VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 E:\FR\FM\06AUR3.SGM 06AUR3 Total rate $760.89 744.31 677.25 607.61 613.61 547.28 562.87 516.44 494.32 576.84 576.84 482.33 494.86 428.54 426.88 431.21 388.10 341.68 378.82 355.61 292.60 368.31 237.32 694.67 543.78 485.75 469.17 389.58 439.32 366.37 414.45 346.47 47950 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations TABLE 5—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES—URBAN—Continued RUG–IV Category Nursing index Therapy index Nursing component Therapy component Non-case mix therapy comp Non-case mix component 1.86 1.46 1.96 1.54 1.86 1.46 1.56 1.22 1.45 1.14 1.68 1.50 1.56 1.38 1.29 1.15 1.15 1.02 0.88 0.78 0.97 0.90 0.70 0.64 1.50 1.40 1.38 1.28 1.10 1.02 0.84 0.78 0.59 0.54 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 308.41 242.08 324.99 255.35 308.41 242.08 258.66 202.29 240.42 189.02 278.56 248.72 258.66 228.82 213.89 190.68 190.68 169.13 145.91 129.33 160.84 149.23 116.07 106.12 248.72 232.13 228.82 212.24 182.39 169.13 139.28 129.33 97.83 89.54 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 16.45 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 84.62 HB2 .............................. HB1 .............................. LE2 ............................... LE1 ............................... LD2 ............................... LD1 ............................... LC2 ............................... LC1 ............................... LB2 ............................... LB1 ............................... CE2 .............................. CE1 .............................. CD2 .............................. CD1 .............................. CC2 .............................. CC1 .............................. CB2 .............................. CB1 .............................. CA2 .............................. CA1 .............................. BB2 .............................. BB1 .............................. BA2 .............................. BA1 .............................. PE2 .............................. PE1 .............................. PD2 .............................. PD1 .............................. PC2 .............................. PC1 .............................. PB2 .............................. PB1 .............................. PA2 .............................. PA1 .............................. Total rate 409.48 343.15 426.06 356.42 409.48 343.15 359.73 303.36 341.49 290.09 379.63 349.79 359.73 329.89 314.96 291.75 291.75 270.20 246.98 230.40 261.91 250.30 217.14 207.19 349.79 333.20 329.89 313.31 283.46 270.20 240.35 230.40 198.90 190.61 TABLE 6—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES—RURAL tkelley on DSK3SPTVN1PROD with RULES3 RUG–IV Category Nursing index Therapy index Nursing component Therapy component Non-case mix therapy comp Non-case mix component 2.67 2.57 2.61 2.19 2.55 2.15 2.47 2.19 2.26 1.56 1.56 0.99 1.51 1.11 1.10 1.45 1.19 0.91 1.36 1.22 0.84 1.50 0.71 3.58 2.67 2.32 2.22 1.74 2.04 1.60 1.87 1.87 1.28 1.28 0.85 0.85 0.55 0.55 0.28 1.87 1.87 1.87 1.28 1.28 1.28 0.85 0.85 0.85 0.55 0.55 0.55 0.28 0.28 ........................ ........................ ........................ ........................ ........................ ........................ ........................ $422.95 407.11 413.45 346.92 403.95 340.58 391.27 346.92 358.01 247.12 247.12 156.83 239.20 175.84 174.25 229.69 188.51 144.15 215.44 193.26 133.06 237.62 112.47 567.11 422.95 367.51 351.67 275.63 323.16 253.46 $269.30 269.30 184.33 184.33 122.41 122.41 79.21 79.21 40.32 269.30 269.30 269.30 184.33 184.33 184.33 122.41 122.41 122.41 79.21 79.21 79.21 40.32 40.32 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 17.57 17.57 17.57 17.57 17.57 17.57 17.57 $86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 RUX .............................. RUL .............................. RVX .............................. RVL .............................. RHX .............................. RHL .............................. RMX ............................. RML .............................. RLX .............................. RUC ............................. RUB .............................. RUA .............................. RVC .............................. RVB .............................. RVA .............................. RHC ............................. RHB .............................. RHA .............................. RMC ............................. RMB ............................. RMA ............................. RLB .............................. RLA .............................. ES3 .............................. ES2 .............................. ES1 .............................. HE2 .............................. HE1 .............................. HD2 .............................. HD1 .............................. VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 E:\FR\FM\06AUR3.SGM 06AUR3 Total rate $778.44 762.60 683.97 617.44 612.55 549.18 556.67 512.32 484.52 602.61 602.61 512.32 509.72 446.36 444.77 438.29 397.11 352.75 380.84 358.66 298.46 364.13 238.98 670.87 526.71 471.27 455.43 379.39 426.92 357.22 47951 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations TABLE 6—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES—RURAL—Continued RUG–IV Category Nursing index Therapy index Nursing component Therapy component Non-case mix therapy comp Non-case mix component 1.89 1.48 1.86 1.46 1.96 1.54 1.86 1.46 1.56 1.22 1.45 1.14 1.68 1.50 1.56 1.38 1.29 1.15 1.15 1.02 0.88 0.78 0.97 0.90 0.70 0.64 1.50 1.40 1.38 1.28 1.10 1.02 0.84 0.78 0.59 0.54 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 299.39 234.45 294.64 231.28 310.48 243.95 294.64 231.28 247.12 193.26 229.69 180.59 266.13 237.62 247.12 218.61 204.35 182.17 182.17 161.58 139.40 123.56 153.66 142.57 110.89 101.38 237.62 221.77 218.61 202.76 174.25 161.58 133.06 123.56 93.46 85.54 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 17.57 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 86.19 tkelley on DSK3SPTVN1PROD with RULES3 HC2 .............................. HC1 .............................. HB2 .............................. HB1 .............................. LE2 ............................... LE1 ............................... LD2 ............................... LD1 ............................... LC2 ............................... LC1 ............................... LB2 ............................... LB1 ............................... CE2 .............................. CE1 .............................. CD2 .............................. CD1 .............................. CC2 .............................. CC1 .............................. CB2 .............................. CB1 .............................. CA2 .............................. CA1 .............................. BB2 .............................. BB1 .............................. BA2 .............................. BA1 .............................. PE2 .............................. PE1 .............................. PD2 .............................. PD1 .............................. PC2 .............................. PC1 .............................. PB2 .............................. PB1 .............................. PA2 .............................. PA1 .............................. 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 SNF residents with Acquired Immune Deficiency Syndrome (AIDS) to reflect increased costs associated with these residents, effective for services furnished on or after October 1, 2004. This special add-on for SNF residents with AIDS is required 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 add-on for SNF residents with AIDS is also discussed in Program Transmittal #160 (Change Request #3291), issued on April 30, 2004, which is available online at www.cms.gov/transmittals/downloads/ r160cp.pdf. In the FY 2010 SNF PPS final rule (74 FR 40288) (in which we finalized the RUG–IV case-mix classification system), we did not address the certification of a case mix adjustment alternative to the add-on for SNF residents with AIDS, thus allowing the add-on payment required by section VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 511 of the MMA to remain in effect. For the limited number of SNF residents that qualify for this add-on, there is a significant increase in payments. Using FY 2011 data, we identified fewer than 4,100 SNF residents with a diagnosis code of 042 (Human Immunodeficiency Virus (HIV) Infection) who qualify for this add-on. For FY 2014, an urban facility with a resident with AIDS in RUG–IV group ‘‘HC2’’ would have a case-mix adjusted payment of $414.45 (see Table 4) before the application of the add-on required by the MMA. After application of the add-on, an increase of 128 percent, this urban facility would receive a case-mix adjusted payment of approximately $944.95 for this resident. Currently, we use the International Classification of Diseases, 9th revision, Clinical Modification (ICD–9–CM) code 042 to identify those residents for whom it is appropriate to apply the AIDS addon established by section 511 of the MMA. In this context, we note that, in accordance with the requirements of the final rule published in the Federal Register on September 5, 2012 (77 FR 54664), we will be discontinuing our PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 Total rate 403.15 338.21 398.40 335.04 414.24 347.71 398.40 335.04 350.88 297.02 333.45 284.35 369.89 341.38 350.88 322.37 308.11 285.93 285.93 265.34 243.16 227.32 257.42 246.33 214.65 205.14 341.38 325.53 322.37 306.52 278.01 265.34 236.82 227.32 197.22 189.30 current use of the ICD–9–CM, effective with the compliance date for using the International Classification of Diseases, 10th revision, Clinical Modification (ICD–10–CM) of October 1, 2014. In the FY 2014 SNF PPS proposed rule (78 FR 26444), with regard to the abovereferenced ICD–9–CM diagnosis code of 042, we proposed to transition to the equivalent ICD–10–CM diagnosis code of B20 upon the October 1, 2014 implementation date for conversion to ICD–10–CM in order to identify those residents for whom it is appropriate to apply the AIDS add-on. We invited public comment on this proposal. We received only one comment that included a reference to this proposal, and this comment simply acknowledged the proposal without offering any specific observations about it. Accordingly, in this final rule, we are finalizing this proposal without any modification. Therefore, effective with services furnished on or after October 1, 2014, for the reasons set forth above and in the FY 2014 SNF PPS proposed rule (78 FR 26444), the AIDS add-on established by section 511 of the MMA E:\FR\FM\06AUR3.SGM 06AUR3 47952 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations tkelley on DSK3SPTVN1PROD with RULES3 will apply to beneficiaries with an ICD– 10–CM diagnosis code of B20. 7. Wage Index Adjustment Section 1888(e)(4)(G)(ii) of the Act requires that we adjust the portion of the federal rates attributable to wages and wage-related costs for the area in which the facility is located compared to the national average of such costs using a wage index that we find appropriate. Since the implementation of the SNF PPS, we have used hospital wage data in developing a wage index to be applied to SNFs. In the FY 2014 SNF PPS proposed rule (78 FR 26446 through 26447), we proposed to continue that practice, as we continue to believe that in the absence of SNFspecific wage data, using the hospital inpatient wage index is appropriate and reasonable for the SNF PPS. As explained in the update notice for FY 2005 (69 FR 45786, July 30, 2004), the SNF PPS does not use the hospital area wage index’s occupational mix adjustment, as this adjustment serves specifically to define the occupational categories more clearly in a hospital setting; moreover, the collection of the occupational wage data also excludes any wage data related to SNFs. Therefore, we believe that using the updated wage data exclusive of the occupational mix adjustment continues to be appropriate for the SNF PPS. In the FY 2014 SNF PPS proposed rule (78 FR 26447), we also proposed to continue using the same methodology discussed in the FY 2008 SNF PPS final rule (72 FR 43423) to address those geographic areas in which there are no hospitals and, thus, no hospital wage index data on which to base the calculation of the FY 2014 SNF PPS wage index. For rural geographic areas that do not have hospitals and, therefore, lack hospital wage data on which to base an area wage adjustment, we proposed to use the average wage index from all contiguous CBSAs as a reasonable proxy. For FY 2014, there are no rural geographic areas that do not have hospitals, and thus this methodology will not be applied. Furthermore, we indicated that we would not apply this methodology to rural Puerto Rico, but instead would continue using the most recent wage index previously available for that area due to the distinct economic circumstances that exist there (for example, due to the close proximity to one another of almost all of Puerto Rico’s various urban and non-urban areas, using the methodology discussed in the FY 2008 final rule would produce a wage index for rural Puerto Rico that is inappropriately higher than that in VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 half of its urban areas). For urban areas without specific hospital wage index data, we proposed to use the average wage indexes of all of the urban areas within the state to serve as a reasonable proxy for the wage index of that urban CBSA. For FY 2014, the only urban area without wage index data available is CBSA 25980, Hinesville-Fort Stewart, GA. In the SNF PPS final rule for FY 2006 (70 FR 45026, August 4, 2005), we adopted the changes discussed in the OMB Bulletin No. 03–04 (June 6, 2003), available online at https:// www.whitehouse.gov/omb/bulletins/ b03-04.html, which announced revised definitions for metropolitan statistical areas (MSAs), and the creation of micropolitan statistical areas and combined statistical areas. In addition, OMB published subsequent bulletins regarding CBSA changes, including changes in CBSA numbers and titles. We indicated in the FY 2008 SNF PPS final rule (72 FR 43423), that all subsequent SNF PPS rules and notices are considered to incorporate the CBSA changes published in the most recent OMB bulletin that applies to the hospital wage data used to determine the current SNF PPS wage index. The OMB bulletins are available online at https://www.whitehouse.gov/omb/ bulletins/. On February 28, 2013, OMB issued OMB Bulletin No. 13–01, announcing revisions to the delineation of Metropolitan Statistical Areas, Micropolitian Statistical Areas, and Combined Statistical Areas, and guidance on uses of the delineation of these areas. A copy of this bulletin may be obtained at https:// www.whitehouse.gov/sites/default/files/ omb/bulletins/2013/b-13-01.pdf. This bulletin states that it provides the delineations of all Metropolitan Statistical Areas, Metropolitan Divisions, Micropolitan Statistical Areas, Combined Statistical Areas, and New England City and Town Areas in the United States and Puerto Rico based on the standards published in the June 28, 2010 Federal Register (75 FR 37246– 37252) and Census Bureau data. While the revisions OMB published on February 28, 2013 are not as sweeping as the changes made when we adopted the CBSA geographic designations for FY 2006, the February 28, 2013 bulletin does contain a number of significant changes. For example, there are new CBSAs, urban counties that become rural, rural counties that become urban, and existing CBSAs that are being split apart. The changes made by the bulletin and their ramifications must be extensively PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 reviewed and assessed by CMS before using them for the SNF PPS wage index. Because the bulletin was not issued until February 28, 2013, we were unable to undertake such a lengthy process before publication of the FY 2014 proposed rule. By the time the bulletin was issued, the FY 2014 SNF PPS proposed rule was in the advanced stages of development. We had already developed the FY 2014 proposed wage index based on the previous OMB definitions. As we stated in the FY 2014 SNF PPS proposed rule (78 FR 26448), to allow for sufficient time to assess the new changes and their ramifications, we intend to propose changes to the wage index based on the newest CBSA changes in the FY 2015 SNF PPS proposed rule, and thus we would continue to use the previous OMB definitions (that is, those used for the FY 2013 SNF PPS update notice) for the FY 2014 SNF PPS wage index. A discussion of the comments that we received on the wage index adjustment to the federal rates, and our responses to those comments, appears below. Comment: Commenters recommend that we reconsider developing a SNFspecific wage index suggesting that ‘‘hospital cost data may not be the most reliable resource when determining geographical differences in salary structure for skilled nursing facilities.’’ Additionally, one commenter recommends that this rule reflect any changes needed to ensure that adjustments more accurately reflect salary experiences of facilities. Commenters request that we provide an update in the final rule on its efforts and plans for wage index reform for the SNF PPS that aims to minimize fluctuations, match the costs of labor in the market, and provides for a single wage index policy. Response: Tables A and B in the Addendum of this final rule reflect updated hospital wage data used to develop the SNF PPS wage index published in the FY 2014 SNF PPS proposed rule (78 FR 26471 through 26480). Consistent with our previous responses to these recurring comments (most recently published in the FY 2010 SNF PPS final rule (74 FR 40301)), developing a wage index that utilizes data specific to SNFs would require us to engage in a resource-intensive audit process. Also, we note that section 315 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106–554, enacted on December 21, 2000) authorized us to establish a geographic reclassification procedure that is specific to SNFs, but only after collecting the data necessary to establish E:\FR\FM\06AUR3.SGM 06AUR3 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations a SNF wage index that is based on wage data from nursing homes. However, to date, this has proven to be unfeasible 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. As discussed above, we continue to believe that in the absence of SNF-specific wage data, using the hospital inpatient wage index (without the occupational mix adjustment) is appropriate and reasonable for the SNF PPS. In addition, we note that we have engaged in research efforts relating to the development of an alternative hospital wage index for the IPPS, which examined the issues the commenters mentioned about ensuring that the wage index minimizes fluctuations, matches the costs of labor in the market, and provides for a single wage index policy. Section 3137(b) of the Affordable Care Act required the Secretary of Health and Human Services to submit to Congress a report that includes a plan to reform the hospital wage index under section 1886 of the Act. In developing the plan, the Secretary was directed to take into account the goals for reforming such system set forth in the June 2007 MedPAC report entitled ‘‘Report to Congress: Promoting Greater Efficiency in Medicare’’ (available at https:// www.medpac.gov/documents/ jun07_entirereport.pdf.), including establishing a new hospital compensation index system that: • Uses Bureau of Labor Statistics data, or other data or methodologies, to calculate relative wages for each geographic area involved; • Minimizes wage index adjustments between and within MSAs and Statewide rural areas; • Includes methods to minimize the volatility of wage index adjustments that result from implementation of policy, while maintaining budget neutrality in applying such adjustments; • Takes into account the effect that implementation of the system would have on health care providers and on each region of the country. • Addresses issues related to occupational mix, such as staffing practices and ratios, and any evidence on the effect on quality of care or patient safety as a result of the implementation of the system; and • Provides for a transition. As delegated by the Secretary, CMS contracted with Acumen, L.L.C. (Acumen) to review the June 2007 MedPAC report and recommend a methodology for an improved Medicare wage index system. After consultation with relevant parties during the development of the plan, the Secretary submitted the report to Congress, which is available via the Internet at https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/Wage-IndexReform.html. We will continue to monitor closely research efforts surrounding the development of an alternative hospital wage index for the IPPS and the potential impact or influence of that research on the SNF PPS. Once calculated, we apply the wage index adjustment to the labor-related portion of the federal rate, which is 69.545 percent of the total rate. This percentage reflects the labor-related relative importance for FY 2014, using the FY 2010-based SNF market basket. Each year, we calculate a revised laborrelated share, based on the relative importance of labor-related cost categories (that is, those cost categories that are sensitive to local area wage costs) in the input price index. As discussed in section IV.B.2 of this final rule, for the FY 2014 SNF PPS update, we revised the labor-related share to reflect the relative importance of the revised FY 2010-based SNF market basket cost weights for the following 47953 cost categories: wages and salaries; employee benefits; contract labor; the labor-related portion of nonmedical professional fees; administrative and facilities support services; all other: labor-related services (previously referred to in the FY 2004-based SNF market basket as labor-intensive); and a proportion of capital-related expenses. We calculate the labor-related relative importance from the SNF market basket, and it approximates the labor-related portion of the total costs after taking into account historical and projected price changes between the base year, FY 2010, and FY 2014. The price proxies that move the different cost categories in the market basket do not necessarily change at the same rate, and the relative importance captures these changes. Accordingly, the relative importance figure more closely reflects the costshare weights for FY 2014 than the baseyear weights from the SNF market basket. We calculate the labor-related relative importance for FY 2014 in four steps. First, we compute the FY 2014 price index level for the total market basket and each cost category of the market basket. Second, we calculate a ratio for each cost category by dividing the FY 2014 price index level for that cost category by the total market basket price index level. Third, we determine the FY 2014 relative importance for each cost category by multiplying this ratio by the base year (FY 2010) weight. Finally, we add the FY 2014 relative importance for each of the labor-related cost categories to produce the FY 2014 labor-related relative importance. Tables 7 and 8 show the case-mix adjusted RUG–IV federal rates by labor-related and nonlabor-related components. Table 2 in section IV.B.4 provides the FY 2014 labor-related share components based on the revised and rebased FY 2010based SNF market basket. TABLE 7—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES FOR URBAN SNFS BY LABOR AND NON-LABOR COMPONENT tkelley on DSK3SPTVN1PROD with RULES3 RUG–IV category Total rate RUX ......................................................................................................................................................... RUL .......................................................................................................................................................... RVX .......................................................................................................................................................... RVL .......................................................................................................................................................... RHX ......................................................................................................................................................... RHL .......................................................................................................................................................... RMX ......................................................................................................................................................... RML ......................................................................................................................................................... RLX .......................................................................................................................................................... RUC ......................................................................................................................................................... RUB ......................................................................................................................................................... RUA ......................................................................................................................................................... RVC ......................................................................................................................................................... RVB .......................................................................................................................................................... RVA .......................................................................................................................................................... VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 E:\FR\FM\06AUR3.SGM $760.89 744.31 677.25 607.61 613.61 547.28 562.87 516.44 494.32 576.84 576.84 482.33 494.86 428.54 426.88 06AUR3 Labor portion $529.16 517.63 470.99 422.56 426.74 380.61 391.45 359.16 343.77 401.16 401.16 335.44 344.15 298.03 296.87 Non-labor portion $231.73 226.68 206.26 185.05 186.87 166.67 171.42 157.28 150.55 175.68 175.68 146.89 150.71 130.51 130.01 47954 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations TABLE 7—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES FOR URBAN SNFS BY LABOR AND NON-LABOR COMPONENT— Continued RUG–IV category Total rate RHC ......................................................................................................................................................... RHB ......................................................................................................................................................... RHA ......................................................................................................................................................... RMC ......................................................................................................................................................... RMB ......................................................................................................................................................... RMA ......................................................................................................................................................... RLB .......................................................................................................................................................... RLA .......................................................................................................................................................... ES3 .......................................................................................................................................................... ES2 .......................................................................................................................................................... ES1 .......................................................................................................................................................... HE2 .......................................................................................................................................................... HE1 .......................................................................................................................................................... HD2 .......................................................................................................................................................... HD1 .......................................................................................................................................................... HC2 .......................................................................................................................................................... HC1 .......................................................................................................................................................... HB2 .......................................................................................................................................................... HB1 .......................................................................................................................................................... LE2 ........................................................................................................................................................... LE1 ........................................................................................................................................................... LD2 .......................................................................................................................................................... LD1 .......................................................................................................................................................... LC2 .......................................................................................................................................................... LC1 .......................................................................................................................................................... LB2 ........................................................................................................................................................... LB1 ........................................................................................................................................................... CE2 .......................................................................................................................................................... CE1 .......................................................................................................................................................... CD2 .......................................................................................................................................................... CD1 .......................................................................................................................................................... CC2 .......................................................................................................................................................... CC1 .......................................................................................................................................................... CB2 .......................................................................................................................................................... CB1 .......................................................................................................................................................... CA2 .......................................................................................................................................................... CA1 .......................................................................................................................................................... BB2 .......................................................................................................................................................... BB1 .......................................................................................................................................................... BA2 .......................................................................................................................................................... BA1 .......................................................................................................................................................... PE2 .......................................................................................................................................................... PE1 .......................................................................................................................................................... PD2 .......................................................................................................................................................... PD1 .......................................................................................................................................................... PC2 .......................................................................................................................................................... PC1 .......................................................................................................................................................... PB2 .......................................................................................................................................................... PB1 .......................................................................................................................................................... PA2 .......................................................................................................................................................... PA1 .......................................................................................................................................................... 431.21 388.10 341.68 378.82 355.61 292.60 368.31 237.32 694.67 543.78 485.75 469.17 389.58 439.32 366.37 414.45 346.47 409.48 343.15 426.06 356.42 409.48 343.15 359.73 303.36 341.49 290.09 379.63 349.79 359.73 329.89 314.96 291.75 291.75 270.20 246.98 230.40 261.91 250.30 217.14 207.19 349.79 333.20 329.89 313.31 283.46 270.20 240.35 230.40 198.90 190.61 Labor portion 299.88 269.90 237.62 263.45 247.31 203.49 256.14 165.04 483.11 378.17 337.81 326.28 270.93 305.53 254.79 288.23 240.95 284.77 238.64 296.30 247.87 284.77 238.64 250.17 210.97 237.49 201.74 264.01 243.26 250.17 229.42 219.04 202.90 202.90 187.91 171.76 160.23 182.15 174.07 151.01 144.09 243.26 231.72 229.42 217.89 197.13 187.91 167.15 160.23 138.33 132.56 Non-labor portion 131.33 118.20 104.06 115.37 108.30 89.11 112.17 72.28 211.56 165.61 147.94 142.89 118.65 133.79 111.58 126.22 105.52 124.71 104.51 129.76 108.55 124.71 104.51 109.56 92.39 104.00 88.35 115.62 106.53 109.56 100.47 95.92 88.85 88.85 82.29 75.22 70.17 79.76 76.23 66.13 63.10 106.53 101.48 100.47 95.42 86.33 82.29 73.20 70.17 60.57 58.05 TABLE 8—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES FOR RURAL SNFS BY LABOR AND NON-LABOR COMPONENT Total rate tkelley on DSK3SPTVN1PROD with RULES3 RUG–IV category RUX ......................................................................................................................................................... RUL .......................................................................................................................................................... RVX .......................................................................................................................................................... RVL .......................................................................................................................................................... RHX ......................................................................................................................................................... RHL .......................................................................................................................................................... RMX ......................................................................................................................................................... RML ......................................................................................................................................................... RLX .......................................................................................................................................................... RUC ......................................................................................................................................................... RUB ......................................................................................................................................................... RUA ......................................................................................................................................................... VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 E:\FR\FM\06AUR3.SGM $778.44 762.60 683.97 617.44 612.55 549.18 556.67 512.32 484.52 602.61 602.61 512.32 06AUR3 Labor portion $541.37 530.35 475.67 429.40 426.00 381.93 387.14 356.29 336.96 419.09 419.09 356.29 Non-labor portion $237.07 232.25 208.30 188.04 186.55 167.25 169.53 156.03 147.56 183.52 183.52 156.03 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 47955 TABLE 8—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES FOR RURAL SNFS BY LABOR AND NON-LABOR COMPONENT— Continued Total rate RUG–IV category tkelley on DSK3SPTVN1PROD with RULES3 RVC ......................................................................................................................................................... RVB .......................................................................................................................................................... RVA .......................................................................................................................................................... RHC ......................................................................................................................................................... RHB ......................................................................................................................................................... RHA ......................................................................................................................................................... RMC ......................................................................................................................................................... RMB ......................................................................................................................................................... RMA ......................................................................................................................................................... RLB .......................................................................................................................................................... RLA .......................................................................................................................................................... ES3 .......................................................................................................................................................... ES2 .......................................................................................................................................................... ES1 .......................................................................................................................................................... HE2 .......................................................................................................................................................... HE1 .......................................................................................................................................................... HD2 .......................................................................................................................................................... HD1 .......................................................................................................................................................... HC2 .......................................................................................................................................................... HC1 .......................................................................................................................................................... HB2 .......................................................................................................................................................... HB1 .......................................................................................................................................................... LE2 ........................................................................................................................................................... LE1 ........................................................................................................................................................... LD2 .......................................................................................................................................................... LD1 .......................................................................................................................................................... LC2 .......................................................................................................................................................... LC1 .......................................................................................................................................................... LB2 ........................................................................................................................................................... LB1 ........................................................................................................................................................... CE2 .......................................................................................................................................................... CE1 .......................................................................................................................................................... CD2 .......................................................................................................................................................... CD1 .......................................................................................................................................................... CC2 .......................................................................................................................................................... CC1 .......................................................................................................................................................... CB2 .......................................................................................................................................................... CB1 .......................................................................................................................................................... CA2 .......................................................................................................................................................... CA1 .......................................................................................................................................................... BB2 .......................................................................................................................................................... BB1 .......................................................................................................................................................... BA2 .......................................................................................................................................................... BA1 .......................................................................................................................................................... PE2 .......................................................................................................................................................... PE1 .......................................................................................................................................................... PD2 .......................................................................................................................................................... PD1 .......................................................................................................................................................... PC2 .......................................................................................................................................................... PC1 .......................................................................................................................................................... PB2 .......................................................................................................................................................... PB1 .......................................................................................................................................................... PA2 .......................................................................................................................................................... PA1 .......................................................................................................................................................... Section 1888(e)(4)(G)(ii) of the Act also requires that we apply this wage index adjustment in a manner that does not result in aggregate payments under the SNF PPS that are greater or less than would otherwise be made in the absence of the wage adjustment. For FY 2014 (federal rates effective October 1, 2013), we apply an adjustment to fulfill the budget neutrality requirement. We meet this requirement by multiplying each of VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 the components of the unadjusted federal rates by a budget neutrality factor equal to the ratio of the weighted average wage adjustment factor for FY 2013 to the weighted average wage adjustment factor for FY 2014. For this calculation, we use the same 2012 claims utilization data for both the numerator and denominator of this ratio. We define the wage adjustment factor used in this calculation as the PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 509.72 446.36 444.77 438.29 397.11 352.75 380.84 358.66 298.46 364.13 238.98 670.87 526.71 471.27 455.43 379.39 426.92 357.22 403.15 338.21 398.40 335.04 414.24 347.71 398.40 335.04 350.88 297.02 333.45 284.35 369.89 341.38 350.88 322.37 308.11 285.93 285.93 265.34 243.16 227.32 257.42 246.33 214.65 205.14 341.38 325.53 322.37 306.52 278.01 265.34 236.82 227.32 197.22 189.30 Labor portion 354.48 310.42 309.32 304.81 276.17 245.32 264.86 249.43 207.56 253.23 166.20 466.56 366.30 327.74 316.73 263.85 296.90 248.43 280.37 235.21 277.07 233.00 288.08 241.81 277.07 233.00 244.02 206.56 231.90 197.75 257.24 237.41 244.02 224.19 214.28 198.85 198.85 184.53 169.11 158.09 179.02 171.31 149.28 142.66 237.41 226.39 224.19 213.17 193.34 184.53 164.70 158.09 137.16 131.65 Non-labor portion 155.24 135.94 135.45 133.48 120.94 107.43 115.98 109.23 90.90 110.90 72.78 204.31 160.41 143.53 138.70 115.54 130.02 108.79 122.78 103.00 121.33 102.04 126.16 105.90 121.33 102.04 106.86 90.46 101.55 86.60 112.65 103.97 106.86 98.18 93.83 87.08 87.08 80.81 74.05 69.23 78.40 75.02 65.37 62.48 103.97 99.14 98.18 93.35 84.67 80.81 72.12 69.23 60.06 57.65 labor share of the rate component multiplied by the wage index plus the non-labor share of the rate component. The budget neutrality factor for FY 2014 is 1.0006. The wage index applicable to FY 2014 is set forth in Tables A and B, which appear in the Addendum of this final rule, and is also available on the CMS Web site at https://cms.gov/ Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/WageIndex.html. E:\FR\FM\06AUR3.SGM 06AUR3 47956 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations After consideration of the comments we received, for the reasons discussed in this final rule and in the FY 2014 SNF PPS proposed rule, we are finalizing the wage index adjustment and related policies as proposed in the FY 2014 SNF PPS proposed rule (78 FR 24446 through 26449) without modification. 8. Adjusted Rate Computation Example Using the hypothetical SNF XYZ described below, Table 9 shows the adjustments made to the federal per diem rates to compute the provider’s actual per diem PPS payment under the described scenario. We derive the Labor and Non-labor columns from Table 7. As illustrated in Table 9, SNF XYZ’s total PPS payment would equal $41,718.20. TABLE 9—ADJUSTED RATE COMPUTATION EXAMPLE SNF XYZ: LOCATED IN CEDAR RAPIDS, IA (URBAN CBSA 16300), WAGE INDEX: 0.8964 RUG–IV group RVX .................................. ES2 .................................. RHA .................................. CC2 * ................................ BA2 .................................. Labor Wage index $470.99 378.17 237.62 219.04 151.01 Adjusted labor 0.8964 0.8964 0.8964 0.8964 0.8964 $422.20 338.99 213.00 196.35 135.37 Non-labor $206.26 165.61 104.06 95.92 66.13 Adjusted rate Percent adjustment $628.46 504.60 317.06 292.27 201.50 Medicare days $628.46 504.60 317.06 666.38 201.50 Payment 14 30 16 10 30 $8,798.44 15,138.00 5,072.96 6,663.80 6,045.00 100 41,718.20 * Reflects a 128 percent adjustment from section 511 of the MMA. tkelley on DSK3SPTVN1PROD with RULES3 C. Additional Aspects of the SNF PPS 1. SNF Level of Care—Administrative Presumption The establishment of the SNF PPS did not change the fundamental requirements for SNF coverage under Medicare. However, because the casemix classification reflects 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 casemix classification system discussed in section IV.B of this final rule. This approach includes an administrative presumption that utilizes a beneficiary’s initial classification in one of the upper 52 RUGs of the 66-group RUG–IV casemix classification system to assist in making certain SNF level of care determinations. In accordance with section 1888(e)(4)(H)(ii) of the Act and the regulations at § 413.345, we include in each update of the federal payment rates in the Federal Register the designation of those specific RUGs under the classification system that represent the required SNF level of care for Medicare coverage, as provided in § 409.30. As set forth in the FY 2011 SNF PPS update notice (75 FR 42910), this designation reflects an administrative presumption under the 66-group RUG–IV system that beneficiaries who are correctly assigned to one of the upper 52 RUG–IV groups on the initial 5-day, Medicare-required assessment are automatically classified as meeting the SNF level of care definition up to and including the assessment reference date on the 5-day Medicare-required assessment. A beneficiary assigned to any of the lower 14 RUG–IV groups is not VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 automatically classified as either meeting or not meeting the SNF level of care definition, but instead receives an individual level of care determination using the existing administrative criteria. This presumption recognizes the strong likelihood that beneficiaries assigned to one of the upper 52 RUG– IV groups during the immediate posthospital period require a covered level of care, which would be less likely for those beneficiaries assigned to one of the lower 14 RUG–IV groups. 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 case-mix classification structure. In this final rule, we continue to designate the upper 52 RUG–IV groups for purposes of this administrative presumption, consisting of all groups encompassed by the following RUG–IV categories: • Rehabilitation plus Extensive Services; • Ultra High Rehabilitation; • Very High Rehabilitation; • High Rehabilitation; • Medium Rehabilitation; • Low Rehabilitation; • Extensive Services; • Special Care High; • Special Care Low; and, • Clinically Complex. However, we note that this administrative presumption policy does not supersede the SNF’s responsibility to ensure that its decisions relating to level of care are appropriate and timely, including a review to confirm that the services prompting the beneficiary’s assignment to one of the upper 52 RUG– IV groups (which, in turn, serves to trigger the administrative presumption) PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 are themselves medically necessary. As we explained in the FY 2000 SNF PPS final rule (64 FR 41667), the administrative presumption: . . . is itself rebuttable in those individual cases in which the services actually received by the resident do not meet the basic statutory criterion of being reasonable and necessary to diagnose or treat a beneficiary’s condition (according to section 1862(a)(1) of the Act). Accordingly, the presumption would not apply, for example, in those situations in which a resident’s assignment to one of the upper . . . groups is itself based on the receipt of services that are subsequently determined to be not reasonable and necessary. Moreover, we want to stress the importance of careful monitoring for changes in each patient’s condition to determine the continuing need for Part A SNF benefits after the assessment reference date of the 5-day assessment. 2. Consolidated Billing Sections 1842(b)(6)(E) and 1862(a)(18) of the Act (as added by section 4432(b) of the BBA) require 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, section 1862(a)(18) places the responsibility with the SNF for billing Medicare for physical therapy, occupational therapy, and speech-language pathology services that the resident receives during a noncovered stay. Section 1888(e)(2)(A) of the Act excludes a certain limited number of services from the consolidated billing provision (primarily those services furnished by physicians and certain other types of practitioners), which remain separately E:\FR\FM\06AUR3.SGM 06AUR3 tkelley on DSK3SPTVN1PROD with RULES3 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations billable under Part B when furnished to a SNF’s Part A resident. 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). We note that section 103 of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA, Pub. L. 106–113, enacted on November 29, 1999) amended section 1888(e)(2)(A) of the Act by further excluding a number of individual ‘‘high-cost, low probability’’ services, identified by Healthcare Common Procedure Coding System (HCPCS) codes, within several broader categories (chemotherapy items, chemotherapy administration services, radioisotope services, and customized prosthetic devices) that otherwise remained subject to this provision. We discuss this BBRA amendment in greater detail in the FY 2001 SNF PPS proposed and final rules (65 FR 19231 through 19232, April 10, 2000, and 65 FR 46790 through 46795, July 31, 2000), as well as in Program Memorandum AB–00–18 (Change Request #1070), issued March 2000, which is available online at www.cms.gov/transmittals/ downloads/ab001860.pdf. As explained in the FY 2001 SNF PPS proposed rule (65 FR 19232), the amendments enacted in section 103 of the BBRA not only identified for exclusion from this provision a number of particular service codes within four specified categories (that is, chemotherapy items, chemotherapy administration services, radioisotope services, and customized prosthetic devices), but also gave the Secretary ‘‘. . . the authority to designate additional, individual services for exclusion within each of the specified service categories.’’ In the FY 2001 SNF PPS proposed rule, we also noted that the BBRA Conference report (H.R. Rep. No. 106–479 at 854 (1999) (Conf. Rep.)) characterizes the individual services that this legislation targets for exclusion as ‘‘. . . high-cost, low probability events that could have devastating financial impacts because their costs far exceed the payment [SNFs] receive under the prospective payment system . . . .’’ According to the conferees, section 103(a) of the BBRA ‘‘is an attempt to exclude from the PPS certain services and costly items that are provided infrequently in SNFs . . . .’’ By contrast, we noted that the Congress declined to designate for exclusion any of the remaining services within those four categories (thus, leaving all of those services subject to SNF consolidated billing), because they are relatively VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 inexpensive and are furnished routinely in SNFs. As we further explained in the FY 2001 SNF PPS final rule (65 FR 46790), and as our longstanding policy, any additional service codes that we might designate for exclusion under our discretionary authority must meet the same statutory criteria used in identifying the original codes excluded from consolidated billing under section 103(a) of the BBRA: The code must fall within one of the four service categories specified in the BBRA, and the code also must meet the same standards of high cost and low probability in the SNF setting, as discussed in the BBRA Conference report. Accordingly, we characterized this statutory authority to identify additional service codes for exclusion ‘‘. . . as essentially affording the flexibility to revise the list of excluded codes in response to changes of major significance that may occur over time (for example, the development of new medical technologies or other advances in the state of medical practice)’’ (65 FR 46791). In the FY 2014 SNF PPS proposed rule (78 FR 26449– 26450), we specifically invited public comments identifying HCPCS codes in any of these four service categories (chemotherapy items, chemotherapy administration services, radioisotope services, and customized prosthetic devices) representing recent medical advances that might meet our criteria for exclusion from SNF consolidated billing. A discussion of the public comments received on this topic, along with our responses, appears below. Comment: One commenter suggested that we should categorically exclude all chemotherapy and radiation therapy services from consolidated billing. Another commenter reiterated a recommendation that commenters had repeatedly urged us to adopt in previous years, to expand the existing exclusion for certain high-intensity outpatient hospital services (such as radiation therapy) to encompass services furnished in other, nonhospital settings. Response: With respect to chemotherapy services, we have noted repeatedly in prior rulemaking on the SNF PPS—including, most recently, the FY 2012 SNF PPS final rule (76 FR 48532 through 48533, August 8, 2011)— that in creating a statutory carve-out for chemotherapy and certain other designated types of services, the BBRA . . . did not categorically exclude all such services from SNF consolidated billing. Instead, the legislation specifically identified individual excluded services within designated categories, by Healthcare Common Procedure Coding System (HCPCS) code. The BBRA’s Conference Report PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 47957 explained that this legislation specifically targeted those ‘high-cost, low probability’ items and services that ‘. . . are not typically administered in a SNF, or are exceptionally expensive, or are given as infusions, thus requiring special staff expertise to administer’ (H.R. Conf. Rep. No. 106–479 at 854). By contrast, other types of services within those categories that ‘. . . are relatively inexpensive and are administered routinely in SNFs’ remain subject to SNF consolidated billing under this legislation. Radiation therapy, by contrast, is not one of the service categories designated for exclusion under the BBRA legislation, but instead is encompassed within the administrative exclusion for certain types of exceptionally intensive outpatient services under the regulations at § 411.15(p)(3)(iii). As such, all types of radiation therapy services are, in fact, already excluded from consolidated billing, but only when furnished in the hospital or CAH setting. In response to the recurring calls for expanding this exclusion to encompass services furnished in freestanding (nonhospital/CAH) settings, we have repeatedly noted— most recently, in the FY 2012 SNF PPS final rule (76 FR 48532, August 8, 2011)—that the existing law does not provide us with the authority to ‘‘. . . establish a categorical exclusion for these services that would apply irrespective of the setting in which they are furnished.’’ In addition, as we initially noted in the FY 2009 SNF PPS final rule (73 FR 46436, August 8, 2008) and then reiterated in a number of subsequent final rules, the repeated calls to expand the administrative exclusion for high-intensity outpatient services in this manner would appear to reflect . . . a continued misunderstanding of the underlying purpose of this provision. As we have consistently noted in response to comments on this issue in previous years . . . and as also explained in Medicare Learning Network (MLN) Matters article SE0432 . . . the rationale for establishing this exclusion was to address those types of services that are so far beyond the normal scope of SNF care that they require the intensity of the hospital setting in order to be furnished safely and effectively. Moreover, we note that when the Congress enacted the consolidated billing exclusion for certain RHC and FQHC services in section 410 of the MMA, the accompanying legislative history’s description of present law acknowledged that the existing exclusions for exceptionally intensive outpatient services are specifically limited to ‘. . . certain outpatient services from a Medicare-participating hospital or critical access hospital . . .’ (emphasis added). (See the House Ways E:\FR\FM\06AUR3.SGM 06AUR3 47958 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations and Means Committee Report (H. Rep. No. 108–178, Part 2 at 209), and the Conference Report (H. Conf. Rep. No. 108–391 at 641)). Therefore, these services are excluded from SNF consolidated billing only when furnished in the outpatient hospital or CAH setting, and not when furnished in other, freestanding (non-hospital or nonCAH) settings. Comment: One commenter cited the longstanding chemotherapy exclusion for Rituximab (Rituxan, HCPCS code J9310), which it characterized as a ‘‘noncancer chemotherapy . . . drug used to treat rheumatoid arthritis’’ (emphasis added), and presented this as a precedent for expanding this exclusion to encompass a number of other drugs that are not used in the treatment of cancer. The commenter asserted that in the absence of such an exclusion, suppliers of these drugs who do not have ‘‘an executed contract in place with the SNF prior to administration’’ would be ‘‘forced to absorb the significant cost of the drug or biologic.’’ Response: We note that the description of Rituximab as a ‘‘noncancer’’ chemotherapy drug is not entirely accurate, and requires a more detailed discussion. As explained on MedlinePlus, the Web site of the National Institutes of Health’s U.S. National Library of Medicine (https:// www.nlm.nih.gov/medlineplus/ druginfo/meds/a607038.html), tkelley on DSK3SPTVN1PROD with RULES3 Rituximab is used alone or with other medications to treat certain types of nonHodgkin’s lymphoma (NHL; a type of cancer that begins in a type of white blood cells that normally fights infection). Rituximab is also used with another medication to treat the symptoms of rheumatoid arthritis (RA; a condition in which the body attacks its own joints, causing pain, swelling, and loss of function) in people who have already been treated with a certain type of medication called a tumor necrosis factor (TNF) inhibitor. Thus, while it is true that this drug is approved for use in treating certain noncancer conditions such as rheumatoid arthritis, it is actually approved for use in treating cancer as well, and it is this latter application that represents the basis for its exclusion from consolidated billing as a chemotherapy drug. In this context, we note that when an otherwise excluded chemotherapy drug is prescribed for a use that does not involve treating cancer, the drug would not qualify as an excluded ‘‘chemotherapy’’ drug in that instance. This is consistent with the discussion of the chemotherapy exclusion in the FY 2010 SNF PPS final rule (74 FR 40354), which notes that this exclusion does not encompass drugs that ‘‘are not anti- VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 cancer drugs,’’ as well as in the FY 2012 SNF PPS final rule (76 FR 48531), which similarly notes that this exclusion does not extend to drugs that ‘‘are actually used to treat diseases other than cancer’’ (emphasis added). Moreover, the commenter appears to be concerned that the absence of an executed contract would serve to absolve the SNF of its liability to pay the supplier for a bundled service. We note that this is not the case. In MLN Matters article #MM3592 (available online at https://www.cms.gov/Outreachand-Education/Medicare-LearningNetwork-MLN/MLNMattersArticles/ downloads/MM3592.pdf), while emphasizing the importance of written agreements between SNFs and their suppliers, we clearly specify that an arrangement between a SNF and its supplier ‘‘is validated not by the presence of specific supporting written documentation but rather by their actual compliance with the requirements governing such ‘arrangements’,’’ and that ‘‘the absence of an agreement with its supplier (written or not) does not relieve the SNF of its responsibility to pay suppliers for services ‘bundled’ in the SNF PPS payment from Medicare.’’ Comment: Some commenters advocated the exclusion of other types of services that do not fall within the categories identified in the BBRA. We received a comment requesting that DIFICID® (fidaxomicin) be excluded from consolidated billing. DIFICID® is an orally administered tablet that is used specifically for treating severe cases of diarrhea associated with certain potentially life-threatening infections of the gastrointestinal tract. The commenter noted this drug’s potential to reduce the recurrence of such infections (along with associated hospitalizations and physician office visits), and to improve patient quality of life. The commenter cited as precedents the existing authority for excluding certain ‘‘high-cost, low probability’’ services under the BBRA, as well as the separate payment made for certain drugs under the heading of screening and preventive services, as discussed in MLN Matters Special Edition article #SE0436 (available online at https:// www.cms.gov/Outreach-and-Education/ Medicare-Learning-Network-MLN/ MLNMattersArticles/downloads/ SE0436.pdf). The commenter then urged the creation of a similar exclusion for DIFICID® on public policy grounds, expressing concern that the continued inclusion of DIFICID® within the SNF PPS bundle might prompt SNFs to opt for alternate treatments that are less expensive, but also less efficacious. PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 Response: As we have consistently stated (most recently, in the FY 2012 SNF PPS final rule (76 FR 48530, August 8, 2011)), the BBRA authorizes us to identify additional services for exclusion only within those particular service categories—chemotherapy items; chemotherapy administration services; radioisotope services; and, customized prosthetic devices—that it has designated for this purpose, and does not give us the authority simply to carve out additional categories of services beyond those specified in the law on ‘‘public policy grounds.’’ Accordingly, as DIFICID® does not fall within one of the specific service categories designated for this purpose in the statute itself, we are unable to exclude it from consolidated billing under this authority. Further, we note that while the cited MLN Matters article does indeed discuss certain drugs that are separately covered under Medicare Part B or Part D when furnished to Part A SNF residents, those particular drugs are vaccines that are preventive rather than therapeutic in nature and, as such, are by definition outside the scope of the Part A SNF benefit (see Pub. L. 100– 04, ch.6, § 20.4); by contrast, therapeutic drugs such as DIFICID® would fall within the scope of SNF coverage under Part A. Regarding the commenter’s concern that the continued inclusion of DIFICID® within the SNF PPS bundle could affect the extent to which SNFs may be inclined to consider its use, we note that while bundling provides incentives for SNFs to be efficient in the provision of care, SNFs are still required to provide ‘‘the necessary care and services to attain or maintain the highest practicable physical, mental, and psychosocial well-being’’ of each resident in accordance with the resident’s assessment and plan of care (§ 483.25). Comment: One commenter reiterated a number of recommendations that commenters had urged us to adopt in previous years. These included expanding the existing chemotherapy exclusion to encompass related drugs that are commonly administered in conjunction with chemotherapy to ameliorate the side effects of the chemotherapy drugs, and excluding additional categories of services beyond those specified in the BBRA, such as positron emission tomography (PET) scans. Response: Regarding the exclusion of chemotherapy-related drugs, we have noted repeatedly in this and previous final rules—most recently, the FY 2012 SNF PPS final rule (76 FR 48532, August 8, 2011)—that the BBRA authorizes us to identify additional E:\FR\FM\06AUR3.SGM 06AUR3 tkelley on DSK3SPTVN1PROD with RULES3 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations service codes for exclusion only within those particular service categories (chemotherapy items; chemotherapy administration services; radioisotope services; and, customized prosthetic devices) that it has designated for this purpose, and does not give us the authority to exclude other services which, though they may be related, fall outside of the specified service categories themselves. Thus, while antiemetics (anti-nausea drugs), for example, are commonly administered in conjunction with chemotherapy, they are not inherently chemotherapeutic in nature (that is, they do not actively destroy cancer cells) and, consequently, do not fall within the excluded chemotherapy category designated in the BBRA. Regarding the exclusion of PET scans, we noted in the FY 2012 SNF PPS final rule that ‘‘. . . we decline to add to the exclusion list those services submitted by commenters that have already been considered and not excluded in previous years based on their being outside the particular service categories that the statute authorizes for exclusion’’ (76 FR 48531, August 8, 2011). Such services would include PET scans, as discussed previously in the FY 2006 SNF PPS final rule (70 FR 45049, August 4, 2005). Comment: One commenter recommended that the surgical debridement procedures represented by HCPCS codes 11040 through 11044 be excluded from consolidated billing. Response: We note that debridement codes 11040 (skin, partial thickness) and 11041 (skin, full thickness) were discontinued as of December 2010. The remaining debridement codes that the commenter cited—11042 (skin, and subcutaneous tissue), 11043 (skin, subcutaneous tissue, and muscle), and 11044 (skin, subcutaneous tissue, muscle, and bone)—are listed correctly in Carrier/A/B MAC File 1 as physician services that are excluded from consolidated billing. However, these same three codes (along with the two discontinued ones) currently appear erroneously in Major Category I.F of the FI/A/B MAC Annual Update as included (that is, bundled) ambulatory surgery codes. Accordingly, we will make the appropriate corrections to the FI/A/B MAC Annual Update to ensure that it no longer lists these codes incorrectly as ambulatory surgery inclusions. Comment: One commenter suggested that, rather than relying solely on feedback through the public comment process on possible exclusions from consolidated billing, CMS should convene an official expert group to VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 review the codes and make formal recommendations. Response: In the FY 2010 SNF PPS final rule (74 FR 40354, August 11, 2009), we noted that the Congress gave specific direction regarding the review of consolidated billing codes that it envisioned: In the BBRA Conference Report (H.R. Rep. No. 106–479 at 854 (1999) (Conf. Rep.)), it specified that the GAO was to conduct a special, one-time comprehensive review of the existing code set, and it then conferred on the Secretary the authority ‘‘. . . to review periodically and modify, as needed, the list of excluded services.’’ However, as we explained in the FY 2002 SNF PPS final rule (66 FR 39588, July 31, 2001), this ongoing review function must be considered within the context of the overall process in which it takes place: . . . we do not view making additions to the list of excluded services as a part of a process of continual expansion to encompass an everbroadening array of excluded services. Further, . . . the fundamental purpose of the consolidated billing provision . . . is to make the SNF responsible for billing Medicare for essentially all of its residents’ services, other than those identified in a small number of narrow and specifically delimited statutory exclusions (emphasis added). Thus, the purpose of this ongoing review is not to devise new and increasingly expansive rationales for the unbundling of services, but rather, simply to ensure that services which meet the already-established criteria for exclusion are not overlooked. We believe that our longstanding practice of periodically inviting input through the public comment process (which is already open to any interested parties who may wish to provide the benefit of their expertise in this area) is both appropriate and sufficient to achieve this objective. 3. Payment for SNF-Level Swing-Bed Services 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 SNFlevel care, as needed. For critical access hospitals (CAHs), Medicare pays on a reasonable cost basis under Part A for SNF-level services furnished under a swing-bed agreement. However, in accordance with section 1888(e)(7) of the Act, these SNF-level services when furnished by non-CAH rural hospitals are paid under the SNF PPS, effective with cost reporting periods beginning on or after July 1, 2002. As explained in the FY 2002 SNF PPS final rule (66 FR 39562), this effective date is consistent with the statutory provision to integrate PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 47959 swing-bed rural hospitals into the SNF PPS by the end of the transition period, June 30, 2002. Accordingly, all non-CAH swing-bed rural hospitals are being paid under the SNF PPS. Therefore, all rates and wage indexes outlined in earlier sections of this final rule for the SNF PPS also apply to all non-CAH swing-bed rural hospitals. A complete discussion of assessment schedules, the MDS, and the transmission software (RAVEN–SB for Swing Beds) appears in the FY 2002 final rule (66 FR 39562) and in the FY 2010 final rule (74 FR 40288). As finalized in the FY 2010 SNF PPS final rule (74 FR 40356–57), effective October 1, 2010, non-CAH swing-bed rural hospitals are required to complete an MDS 3.0 swing-bed assessment, which is limited to the required demographic, payment, and quality items. The latest changes in the MDS for swing-bed rural hospitals appear on the SNF PPS Web site at https://www.cms.gov/Medicare/ Medicare-Fee-for-Service-Payment/ SNFPPS/. We received no comments on this aspect of the proposed rule. D. Other Issues 1. Monitoring Impact of FY 2012 Policy Changes In the FY 2014 SNF PPS proposed rule (78 FR 26463 through 26465), we discussed our monitoring efforts associated with impacts of certain policy changes finalized in the FY 2012 SNF PPS final rule (76 FR 48486). Specifically, we have been monitoring the impact of the following changes: • Recalibration of the FY 2011 SNF parity adjustment to align overall payments under RUG–IV with those under RUG–III. • Allocation of group therapy time to pay more appropriately for group therapy services based on resource utilization and cost. • Implementation of changes to the MDS 3.0 patient assessment instrument, most notably the introduction of the Change-of-Therapy (COT) Other Medicare Required Assessment (OMRA). We have posted quarterly memos to the SNF PPS Web site which highlight some of the trends we have observed over a given time period. These memos may be accessed through the SNF PPS Web site at https://www.cms.gov/ Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/Downloads/SNF_ Monitoring.zip. In the FY 2014 SNF PPS proposed rule (78 FR 26465), we stated that based on the data reviewed thus far, we have found no evidence of possible negative impacts on SNF providers cited E:\FR\FM\06AUR3.SGM 06AUR3 tkelley on DSK3SPTVN1PROD with RULES3 47960 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations in the comments in the FY 2012 SNF PPS final rule (see 76 FR 48497–98, 48537), particularly references to a ‘‘double hit’’ from the combined impact of the recalibration of the FY 2011 SNF parity adjustment and the FY 2012 policy changes. Therefore, we stated that while we will continue our SNF monitoring efforts, we will post information to the aforementioned Web site only as appropriate. A discussion of the comments we received on these efforts, with our responses, appears below. Comment: One commenter stated that they appreciate the transparency demonstrated by releasing the quarterly findings memos and urged us to continue this practice into the future. Response: We appreciate the support for our efforts to provide this data on the FY 2012 policy changes. As stated in the FY 2014 SNF PPS proposed rule (78 FR 26465), this level of analysis was being conducted to determine if any evidence existed of possible negative impacts on SNF providers cited in the comments in the FY 2012 SNF PPS final rule (76 FR 48497–48498, 48537), particularly references to a ‘‘double hit’’ from the combined impact of the recalibration of the FY 2011 SNF parity adjustment and the FY 2012 policy changes (for example, allocation of group therapy and introduction of the COT OMRA). Based on the data we have examined so far, there is no evidence of such negative impacts—overall case mix has not been affected significantly and providers appear to have adjusted their internal processes and care planning activities well to accommodate the FY 2012 policy changes. Given these findings, we do not regard the continued publishing of quarterly memos, in the absence of some marked finding, as still being necessary at this point. Therefore, as stated in the FY 2014 SNF PPS proposed rule (78 FR 26465), we will continue our SNF monitoring efforts but will henceforth only post information regarding our monitoring activities discussed above to the SNF PPS Web site as appropriate. Comment: One commenter asked that we reevaluate the potential negative impacts of implementing the COT OMRA; specifically, that the COT OMRA is unnecessarily burdensome and inflexible. This commenter requested that we consider ways to make the COT OMRA more flexible for providers. Response: As noted in the FY 2012 SNF PPS final rule (76 FR 48518), the COT OMRA was implemented because the then-existing range of PPS assessments did not give providers adequate opportunity to report changes VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 in the resident’s therapy services that occur outside the observation window which, as always, should be based on medical evidence. Since implementing the COT OMRA, we have continued to monitor its utilization and determine if any negative impacts have resulted for facilities and/or SNF residents. Our monitoring efforts have revealed, as demonstrated in Table 21 of the FY 2014 SNF PPS proposed rule (78 FR 26465), that the COT OMRA comprises just 11 percent of all assessments completed for SNF residents. As such, based on the limited number of COT OMRAs being completed, we do not believe that the COT OMRA represents a significant burden for providers. With respect to the flexibility of the assessment, the limited number of COT OMRAs might also be the result of the flexibility in completing the COT OMRA afforded in the MDS RAI Manual (for example, the flexibility discussed in Chapter 2 of the MDS RAI Manual, whereby the COT observation period for a resident is reset if a scheduled or unscheduled assessment is completed on or prior to day 7 of the COT observation period). Additionally, as the COT OMRA may be used to report either an increase or decrease in therapy services relative to the resident’s previous therapy RUG classification, the COT OMRA has helped ensure greater accuracy of SNF payments and ensure that providers are appropriately reimbursed for the level of care delivered to their residents. Therefore, while we will continue to monitor for potential negative impacts associated with the FY 2012 policy changes, as noted above, we have not yet found any evidence of such an adverse impact. 2. Ensuring Accuracy in Grouping to Rehabilitation RUG–IV Categories In the FY 2014 SNF PPS proposed rule (78 FR 26465–26466), we clarified that our classification criteria for the Rehabilitation RUG categories require that the resident receive the requisite number of distinct calendar days of therapy to be classified into the Rehabilitation RUG category, and focused particularly on issues related to classification into the Medium and Low Rehabilitation categories. We explained that in requiring distinct calendar days of therapy, our classification criteria are consistent with the SNF level of care requirement under § 409.31(b)(1), which provides that skilled services must be needed and received on a daily basis, and § 409.34(a)(2),which specifies that the ‘‘daily basis’’ criterion can be met by skilled rehabilitation services that are needed and provided at least 5 days per week. However, we explained in the FY PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 2014 SNF PPS proposed rule (78 FR 26465–66) that the MDS item set currently does not contain an item that permits SNFs to report the total number of distinct calendar days of therapy provided by all rehabilitation disciplines. Instead, the MDS item set requires the SNF to record, separately by each therapy discipline, the number of days therapy was received during the 7-day look-back period, without distinguishing between distinct calendar days. As we explained in the FY 2014 SNF PPS proposed rule, currently, the RUG grouper adds these days together which results in some residents being classified into the Medium and Low Rehabilitation RUG categories when they do not actually meet our classification criteria. Thus, we proposed to add an item to the MDS 3.0 item set (item O0420) which would permit SNF providers to code the total number of distinct calendar days that the resident received therapy services across all rehabilitation disciplines during the assessment look-back period to ensure that residents are classified into the correct Rehabilitation RUG in accordance with our existing classification criteria. We stated that effective October 1, 2013, facilities would be required to record under this item the number of distinct calendar days of therapy provided by all the rehabilitation disciplines over the 7-day look-back period for the current assessment, which would be used to classify the resident into the correct Rehabilitation RUG category. A discussion of the comments we received on this proposal, and our responses, appear below. Comment: Many commenters supported the proposal to add a new item to the MDS 3.0 to capture distinct therapy days and agreed that patients should be appropriately categorized into the applicable RUG category to ensure accurate payment. Several commenters appeared to be under the impression that this proposal will change the policy on how many days of therapy are required in order to group to specific rehabilitation RUG categories. Furthermore, some commenters stated that we did not provide any clinical basis for this addition to the MDS 3.0, and that therapist judgment should be the deciding factor for scheduling therapy services to best meet the residents’ needs. Response: We appreciate that many commenters supported the proposal to add item O0420 to the MDS 3.0 to capture distinct therapy days and to pay more accurately for therapy services. We emphasize that we did not propose to add item O0420 as a result of a change E:\FR\FM\06AUR3.SGM 06AUR3 tkelley on DSK3SPTVN1PROD with RULES3 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations in policy; instead, we proposed to add this item to enable us to implement our existing policy more accurately. As explained in the FY 2014 SNF PPS proposed rule (78 FR 26465 through 26466), throughout all iterations of the SNF PPS from 1998 until the present time, in order to qualify for the Medium Rehabilitation (Medium Rehab) RUG category, a resident must receive at least 150 minutes of therapy per week (a seven-day time period) and 5 days of any combination of the three rehabilitation disciplines (physical therapy, occupational therapy, or speech-language pathology). The policy has always been that the term ‘‘days’’ in this context denotes distinct calendar days of therapy. Similarly, for the Low, High, Very High, and Ultra High Rehabilitation RUG categories, the policy has always been that distinct calendar days of therapy are required to classify into these RUG categories (for example, for the Low Rehabilitation category, 3 distinct calendar days of therapy are required). Thus, in the proposed rule, we clarified that our classification criteria for the Rehabilitation RUG categories require that the resident receive the requisite number of distinct calendar days of therapy to be classified into the Rehabilitation RUG category. However, there has not been a way until now to record on the MDS 3.0 the number of distinct calendar days of therapy provided across all rehabilitation disciplines in order to ensure accurate calculation of these days in the RUG grouper software. It is true that our proposed change to the MDS 3.0 item set will require an additional item for reporting of therapy services; however, this change solely addresses the manner of reporting (and not the manner of providing) these services. We agree that licensed therapists are to use their clinical judgment to treat the patients in the most appropriate manner, and to maintain professional standards while providing all necessary services. Providers are not required to change clinical practice patterns based on this additional reporting requirement; rather, they could continue to provide therapy as they always have and would use the new item to report more accurately the days on which they provided therapy services, in order to ensure that the patient is assigned to the correct RUG. In addition, we note that under section 1814(a)(2)(B) of the Act, one of the basic elements of the SNF level of care (which constitutes a precondition for SNF coverage under Part A) is that a beneficiary must need and receive skilled care on a daily basis. Under an VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 exception in the regulations at § 409.34(a)(2), when skilled rehabilitation services are not available 7 days a week, they can still be considered furnished on a ‘‘daily basis’’ when needed and provided at least 5 days a week. However, it is important to note that merely scheduling therapy services on 5 distinct calendar days during the week would be insufficient to satisfy this requirement unless the beneficiary also has an actual clinical need for the services to be scheduled in this manner. As noted in § 30.6 of the Medicare Benefit Policy Manual, Chapter 8: It is not sufficient for the scheduling of therapy sessions to be arranged so that some therapy is furnished each day, unless the patient’s medical needs indicate that daily therapy is required. For example, if physical therapy is furnished on 3 days each week and occupational therapy is furnished on 2 other days each week, the ‘‘daily basis’’ requirement would be satisfied only if there is a valid medical reason why both cannot be furnished on the same day. The basic issue here is not whether the services are needed, but when they are needed. Unless there is a legitimate medical need for scheduling a therapy session each day, the ‘‘daily basis’’ requirement for SNF coverage would not be met. Accordingly, we do not expect that the addition of this MDS item, which is intended to facilitate more accurate reporting, will result in any changes in clinical practice patterns, as SNFs should already be appropriately providing skilled rehabilitation services on a daily basis only in those instances where the beneficiary has an actual need for therapy to be furnished on at least 5 distinct calendar days during the week. Comment: Some commenters stated that the proposal to add item O0420 to the MDS 3.0 would have a significant impact on the ability of residents to qualify for a rehabilitation RUG for the 5-day PPS assessment because the Assessment Reference Date (ARD) for the 5-day PPS assessment must be set for no later than Day 8 of the stay. They expressed concern that residents who miss therapy for clinical or scheduling reasons are not being appropriately classified into rehabilitation RUG categories. Additionally, these commenters explained that it is difficult to provide therapy to a resident for 5 distinct days over a 7-day period and this challenge correlates to residents being placed in non-rehabilitation RUGs. They suggested that CMS does not adequately reimburse for rehabilitation services that are delivered beyond the minimum number of minutes required for a specific RUG category and that this amounts to PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 47961 unpaid therapy services provided to residents. Additionally, these commenters stated that this proposal will result in greater burden for providers; for example, requiring scheduling changes for therapists, requiring therapists to work on weekends, evenings, and holidays, and requiring part-time therapists to work on full-time schedules. They explained that the need for two different therapy disciplines does not change, irrespective of whether these therapies are received on distinct days or on the same days. Some commenters requested that we implement an ‘‘exceptions’’ policy to account for missed or rescheduled therapy sessions beyond provider control which result in different therapies being provided on the same day. Finally, several commenters expressed concern related to a possible conflict between the proposal to add item O0420 to the MDS item set to capture more appropriately the distinct days of therapy provided and instructions from CMS in recent guidance which clarified the term ‘‘daily skilled services defined’’ (CMS Transmittal 161, October 26, 2012) which states, ‘‘A patient whose inpatient stay is based solely on the need for skilled rehabilitation services would meet the ‘‘daily basis’’ requirement when they need and receive those services on at least 5 days a week. (If therapy services are provided less than 5 days a week, the ‘‘daily’’ requirement would not be met.) This requirement should not be applied so strictly that it would not be met merely because there is an isolated break of a day or two during which no skilled rehabilitation services are furnished and discharge from the facility would not be practical.’’ For the above reasons, several commenters suggested we postpone the proposed addition to the MDS 3.0 of item O0420 requiring that facilities report the number of distinct calendar days of therapy and carefully review the impact of the change as discussed in these comments. Response: We do not agree with the commenters’ assertion that the proposal to add item O0420 to the MDS 3.0 item set will make it more difficult to classify residents into rehabilitation RUGs during the 5-day PPS assessment period because the ARD must be set for no later than Day 8 of the stay. As we discussed in the FY 2014 SNF PPS proposed rule (78 FR 26465–66) and in this final rule, the addition of this item was not proposed as a result of a change in policy. Our policy has always been that distinct calendar days of therapy are E:\FR\FM\06AUR3.SGM 06AUR3 47962 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations required to classify into a Rehabilitation RUG. The new MDS item was proposed to provide for more accurate reporting and calculation of these therapy days, and to ensure that patients are appropriately classified into Rehabilitation RUG categories in accordance with our existing classification policy. Furthermore, given that residents currently classify on the 5-day PPS assessment for Rehabilitation RUGs which require 5 calendar days of therapy (Medium, High, Very High, or Ultra High), it appears that providers are clearly able to provide the necessary therapy time within the first days of the SNF stay regardless of this new item. More generally, if facilities are having difficulty meeting the daily skilled needs of the residents in their care, then this might indicate a need for the facility to revisit its admissions policies and determine if the facility is accepting such patients only when it can appropriately meet their care needs. Furthermore, with regard to the comments that it is difficult to provide therapy to a resident for 5 distinct days over a 7-day period, we would note that, based on the monitoring reports we have published to the SNF PPS Web site (https://cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/ Spotlight.html), in FY 2012, 84.3 percent of the days billed to Medicare Part A were billed at one of the upper three rehabilitation RUG categories (Ultra-High, Very-High, and High) which require that 1 discipline provide at least 5 days of therapy. This is a longstanding requirement that appeared in the applicable instructions at least as far back as 2006, as noted on page 3–216 of the MDS RAI Manual, Version 2.0: tkelley on DSK3SPTVN1PROD with RULES3 If orders are received for more than one therapy discipline, enter the number of days at least one therapy service is performed. For example, if PT is provided on MWF, and OT is provided on MWF, the MDS should be coded as 3 days, not 6 days. Accordingly, since multiple therapy disciplines furnished on the same calendar day would still comprise only a single calendar day’s worth of therapy, this means that those residents being classified into one of these RUG categories must have received at least one therapy discipline on 5 distinct calendar days during the look-back period for the assessment. Therefore, given that 84.3 percent of patient days are billed at one of these upper three rehabilitation RUG categories, the vast majority of SNF residents should be currently receiving at least 5 distinct calendar days of therapy per week. If this is the standard of practice that exists within the SNF industry VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 currently, as evidenced by the current billing and care delivery patterns, we do not agree with the comment that it is difficult for SNFs to provide therapy to their residents for 5 distinct days over a 7-day period. Again, the new MDS item is not being added as a result of any change in policy, but simply to provide for more accurate reporting of therapy days so we can ensure that patients are appropriately classified into Rehabilitation RUGs in accordance with our current classification criteria. In addition, commenters suggested that CMS does not adequately reimburse for rehabilitation services that are delivered beyond the minimum number of minutes required for a specific RUG category. We recognize that residents who do not meet the minimum qualifying minutes/days of therapy services may not be placed into Rehabilitation RUGs. However, we do not consider this a flaw of the SNF PPS RUG–IV system, as some commenters have suggested. The RUG–IV system was designed so that RUG payment levels are based on an average amount of minutes of therapy provided, not the minimum threshold of minutes for each RUG category. The original RUG–III grouper logic was based on clinical data collected in 1990, 1995, and 1997. As discussed in the SNF PPS proposed rule for FY 2010 (74 FR 22208, May 12, 2009), we subsequently conducted a multi-year data collection and analysis under the Staff Time and Resource Intensity Verification (STRIVE) project to update the case-mix classification system for FY 2011. The resulting RUG– IV case-mix classification system reflected the data collected in 2006 and 2007 during the STRIVE project, and was finalized in the FY 2010 SNF PPS final rule (74 FR 40288, August 11, 2009) for implementation in FY 2011. In the FY 2010 SNF PPS proposed rule (74 FR 22208, 22223–25) and final rule (74 FR 40288, 40319–21, we explained the process of calculating therapy time to determine RUG payment levels. As part of this explanation, we discussed how we adjusted the therapy time for the calculations: ‘‘We give the maximum credit possible for any day that therapy time was recorded for 15 or more minutes to avoid underestimating the actual amounts of therapy furnished to patients’’ (74 FR 22225). Therapy reimbursement for each RUG is based on the average utilization between the thresholds, so those at the minimum thresholds are, in fact, being adequately paid relative to the average resource amount used to determine the reimbursement level. Moreover, the majority of MDS assessments submitted PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 to CMS show that the number of therapy minutes provided to beneficiaries cluster at the minimum threshold amount necessary to qualify for a given RUG group. This would suggest that, for the majority of billed therapy days, the resource intensity used to determine the reimbursement for that RUG group is greater than the resource intensity of the therapy provided to the resident. Therefore, we do not agree that the system allows for a significant amount of unpaid therapy provided to SNF residents. In addition, we do not agree with the assertion that adding item O0420 to the MDS 3.0 item set will result in greater burden to the providers. As discussed previously, this item is not being added as a result of a change in policy. Facilities should not change practice patterns merely because of the additional item for reporting therapy. Until now, facilities have been calculating the days of therapy that each discipline provided to a specific resident. The new item will require the providers to use the exact same clinical information found on daily notes or therapy logs to count the days that therapy was provided to a patient; however, instead of counting each discipline’s days separately they will now have to count each distinct calendar day that any therapy was provided. We agree that the need for different therapy disciplines does not change regardless of whether these therapies are provided on the same or distinct calendar days. However, as explained previously, the ‘‘daily basis’’ requirement for Part A SNF coverage can be met only when therapy is not merely scheduled but is actually needed and provided on each of 5 distinct calendar days during the week. In addition, the design of the SNF PPS RUG–IV system requires very specific calculation of therapy minutes and days in order to place patients most appropriately into the correct case-mix classification. Therefore, we do not believe it would be appropriate to establish an ‘‘exceptions’’ policy to allow for counting of different therapies on the same day when residents experience missed or rescheduled therapy sessions beyond provider control. Finally, with respect to the comments raising the issue of a potential conflict between the proposed MDS item and the daily basis discussion in Transmittal 161, we would note that the particular language being cited was not, in fact, introduced by this transmittal. Rather, it has long appeared in the manual instructions and was also discussed as E:\FR\FM\06AUR3.SGM 06AUR3 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations far back as the FY 2000 SNF PPS final rule (64 FR 41670, July 30, 1999): tkelley on DSK3SPTVN1PROD with RULES3 * * * Some comments reflected certain longstanding misconceptions regarding the SNF level of care definition, in terms of a beneficiary’s need for and receipt of skilled services on a daily basis which, as a practical matter, can be furnished only in an SNF on an inpatient basis. One recurring misconception with regard to the ‘‘daily basis’’ requirement (which some of the commenters expressed as well) is that Medicare coverage guidelines provide for specific breaks in skilled therapy services for the observance of a prescribed list of national holidays. Another longstanding misconception shared by some commenters is that the cessation of therapy for so much as a single day due, for example, to the beneficiary’s temporary illness or fatigue, would mandate an automatic discontinuance of coverage * * * As explained below, these interpretations of Medicare SNF coverage requirements are incorrect. [T]he requirement for daily skilled services should not be applied so strictly that it would not be met merely because there is a brief, isolated absence from the facility in a situation where discharge from the facility would not be practical * * * [W]ith regard to the ‘‘daily basis’’ requirement, the Medicare program does not specify in regulations or guidelines an official list of holidays or other specific occasions that a facility may observe as breaks in rehabilitation services, but recognizes that the resident’s own condition dictates the amount of service that is appropriate. Accordingly, the facility itself must judge whether a brief, temporary pause in the delivery of therapy services would adversely affect the resident’s condition (emphasis added). Similarly, section 409.34(b) states that a ‘‘. . . break of one or two days in the furnishing of rehabilitation services will not preclude coverage if discharge would not be practical for the one or two days during which, for instance, the physician has suspended the therapy sessions because the patient exhibited extreme fatigue.’’ We note that the references in the manual (see Pub. L. 100–02, ch. 8, § 30.6) and the regulations in this context to an isolated break in therapy denote a situation in which such a lapse represents a rare exception rather than a regular or frequent occurrence. Accordingly, the policy reflected in the above-cited manual, rule preamble, and regulation is intended to indicate that such a lapse would not necessarily result in discontinuing coverage that is already ongoing. While coverage may continue where there is a brief, isolated break in therapy as discussed above, the patient’s RUG classification and the level of payment are still based on the number of days and minutes of therapy provided to the patient as reported on the MDS 3.0, and VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 the new MDS item will ensure that these days are calculated correctly. Thus, we do not believe that the addition of the new MDS item presents a conflict with existing coverage policy as set forth in the manual, as they address separate issues. The manual and regulatory provisions cited above provide that in certain exceptional circumstances coverage of a SNF stay will not necessarily be discontinued because of a brief, isolated break in therapy; and the new MDS item provides the information necessary (total number of days that therapy was provided during the look-back period) to enable us to determine the appropriate RUG classification and payment for that SNF stay. We believe that this MDS item, by permitting more accurate reporting of therapy days, enables us to ensure that residents are appropriately classified into Rehabilitation RUG categories in accordance with our existing classification criteria. In addition, we note that if a resident’s stay is also based on receipt of non-rehabilitation related skilled services (for example, ventilator care) in combination with rehabilitation services (which we believe to characterize the majority of SNF stays), then such non-rehabilitation care would also constitute care provided toward meeting the daily basis requirement. Therefore, the new MDS item would not appear to present a conflict with the daily basis requirement discussed in Transmittal 161, but instead permits providers to report the precise number of distinct calendar days their residents receive therapy during the assessment observation period. Furthermore, because this new MDS item allows for more accurate reporting and thus more accurate RUG classification and payment, we do not see any reason to postpone the addition of the item to MDS 3.0 item set. Comment: Some commenters expressed concern over the practical implementation of adding item O0420 to the MDS 3.0 item set. They stated that October 1, 2013 is too soon for software vendors to incorporate the new reporting requirement into SNF and therapy software systems and to program, test, and implement the changes. Additionally, although the commenters appreciated that CMS released draft programming specifications, they criticized the accompanying warning which stated that this version of the specifications should be considered provisional and subject to change until the final specifications are published. They stated that the timeframe between CMS PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 47963 issuing the final rule and the effective date of October 1, 2013 does not give the software vendors and facilities that are already overburdened with the implementation of electronic health records sufficient time to make these changes. Response: We appreciate the concern that commenters expressed about implementing the additional reporting requirement for the MDS 3.0. We recognize the need for software vendors to program, test, and implement the changes that will need to be made. However, we remind commenters that CMS offers j-RAVEN, which is a free software option that allows facilities to collect and maintain facility, patient, and assessment information for subsequent submission to the appropriate data repository. This software will be available and ready for the implementation of the new MDS 3.0 reporting requirement and facilities that contract with alternative software vendors may choose to utilize the CMSprovided software until the vendorcreated software is ready for implementation. With regard to the draft specifications, CMS released these specifications at the same time as we released the proposed rule. Software vendors had the ability to begin planning for any potential programming requirements with the release of draft specifications. We believe that software vendors should be structuring projects in a manner that is responsive to potentially changing requirements. Accordingly, for the reasons specified in this final rule and in the FY 2014 SNF PPS proposed rule (78 FR 26465– 26466), we are finalizing our proposal to add an item to the MDS item set (Item O0420) effective October 1, 2013, which will capture the number of distinct calendar days that the resident received therapy services during the assessment look-back period across all rehabilitation disciplines. As proposed, effective October 1, 2013, facilities will be required to record under this item the number of distinct calendar days of therapy provided by all rehabilitation disciplines over the 7-day look-back period for the current assessment, which will be used to classify the resident into the correct Rehabilitation RUG category. 3. SNF Therapy Research Project In the FY 2014 SNF PPS proposed rule (78 FR 26466), we discussed our current research efforts associated with SNF payments for therapy services. As stated in the FY 2014 SNF PPS proposed rule (78 FR 26466), we contracted with Acumen, LLC and the Brookings Institution to identify E:\FR\FM\06AUR3.SGM 06AUR3 47964 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations tkelley on DSK3SPTVN1PROD with RULES3 potential alternatives to the existing methodology used to pay for therapy services received under the SNF PPS. A discussion of the comments on this topic, with our responses, appears below. Comment: All of the comments we received on this work supported CMS’s broad objective to develop a new methodology for paying for therapy services received in the SNF. These commenters urged CMS to expedite the research necessary to develop a new therapy payment model, with one commenter stating that CMS should be prepared to implement a new system by FY 2015. A few commenters stated that CMS should seek input from stakeholders on how best to revise the current therapy payment model. Response: We appreciate the broad support for this research initiative and understand well the importance and urgency of completing this work in both a timely and efficient manner. We also recognize the importance of seeking input from stakeholders on how best to revise the current therapy payment model, which is why we had created the therapy research email box at SNFTherapyPayments@cms.hhs.gov. Stakeholders can send input on a revised therapy payment model at any time. In terms of the timeframe for completing this work and implementing a new payment model, we believe it would be premature to speculate on when a new model will be ready to be implemented. As many of the comments on this issue indicate, it is very important to ensure that any change to the current therapy payment model addresses any concerns with the existing model and provides sufficient time for providers to understand and prepare for implementation of such a model. V. Provisions of the Final Rule; Regulations Text In this final rule, in addition to accomplishing the required annual update of the SNF PPS payment rates and finalizing the other policies discussed above, we are also finalizing certain revisions to the regulations text. One of these revisions relates to the regulations dealing with SNF level of care certifications and recertifications. In the calendar year (CY) 2011 Medicare Physician Fee Schedule (MPFS) final rule with comment period (75 FR 73387, 73602, 73626–73627), we revised the regulations at § 424.20(e)(2) to implement section 3108 of the Affordable Care Act, which amended section 1814(a)(2) of the Act by adding physician assistants to the provision VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 authorizing nurse practitioners and clinical nurse specialists to sign SNF level of care certifications and recertifications. However, as we stated in the FY 2014 SNF PPS proposed rule, we inadvertently neglected to make a conforming change in the regulations text at § 424.11(e)(4). Therefore, we proposed to make a minor technical correction in the regulations text at § 424.11(e)(4) regarding the types of practitioners (in addition to physicians) who can sign the required SNF level of care certification and recertifications. The correction consisted of a conforming change to reflect that physician assistants ‘‘as defined in section 1861(aa)(5) of the Act’’ are now authorized to perform this function, in accordance with section 1814(a)(2) of the Act (as amended by section 3108 of the Affordable Care Act) and the implementing regulations at § 424.20(e)(2). We received no comments on this proposal and, therefore, are finalizing this provision essentially as proposed. However, we are revising the statutory citation of the physician assistant definition to read ‘‘section 1861(aa)(5)(A) of the Act’’ in order to provide greater clarity and specificity as to the precise location of this definition in the statute. In addition, we inadvertently neglected to make a similar conforming technical change in the second paragraph of § 424.10(a), which describes the general purpose of this subpart of the regulations, and describes the types of practitioners (in addition to physicians) permitted under section 1814(a)(2) of the Act to certify and recertify the need for post-hospital extended care services. Thus, in this final rule, we also are making a similar minor technical correction to the regulations text at § 424.10(a) so that it accurately reflects that physician assistants are now permitted under section 1814(a)(2) of the Act to certify and recertify the need for post-hospital extended care services and so that it conforms with the regulations text at § 424.20(e)(2) and § 424.11(e)(4) (as revised in this rule). Additionally, in the FY 2014 SNF PPS proposed rule (78 FR 26438), we proposed to make the wage index tables available exclusively through the Internet on CMS’s SNF PPS Web site at https://www.cms.gov/Medicare/ Medicare-Fee-for-Service-Payment/ SNFPPS/WageIndex.html. In order to accommodate this approach, we also proposed to revise the phrase ‘‘wage index’’ that currently appears in the second sentence of § 413.345 to read ‘‘factors to be applied in making the area wage adjustment,’’ consistent with the PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 wording of the corresponding statutory authority at section 1888(e)(4)(H)(iii) of the Act. We received no comments on this proposal, and therefore, are finalizing this provision as proposed. VI. Collection of Information Requirements Under the Paperwork Reduction Act of 1995 (PRA), we are required to provide 30-day notice in the Federal Register and solicit public comment before a collection of information requirement is submitted to OMB for review and approval. In order to evaluate fairly whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the PRA requires that we solicit comment on the following issues: • The need for the information collection and its usefulness in carrying out the proper functions of our agency. • The accuracy of our estimate of the information collection burden. • The quality, utility, and clarity of the information to be collected. • Recommendations to minimize the information collection burden on the affected public, including automated collection techniques. In the May 6, 2013 proposed rule (78 FR 26437) we solicited public comment on each of the section 3506(c)(2)(A)required issues for the following information collection requirements (ICRs). We did not receive any comments. ICRs Regarding Nursing Home and Swing Bed PPS Item Sets Under sections 4204(b) and 4214(d) of the Omnibus Budget Reconciliation Act of 1987 (OBRA 1987, Pub. L. 100–203 enacted on December 22, 1987), the submission and retention of resident assessment data for purposes of carrying out OBRA 1987 are not subject to the PRA. While certain data items that are collected under the SNF resident assessment instrument (or MDS 3.0) fall under the OBRA 1987 exemption, MDS 3.0’s PPS-related item sets are outside the scope of OBRA 1987 and require PRA consideration. As discussed in section IV.D.2 of this rule, we are finalizing our proposal to add Item O0420 to the MDS 3.0 form to capture the number of distinct calendar days a SNF resident has received therapy across all rehabilitation disciplines in a seven-day look-back period. The item would not be added as a result of any change in statute or policy; rather, it would be added to ensure that our existing Rehabilitation RUG classification policies are properly implemented as intended. We do not believe this action will cause any E:\FR\FM\06AUR3.SGM 06AUR3 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations measureable adjustments to our burden estimates. While we are not revising the form’s burden estimates, we are revising OCN 0938–1140 (CMS–10387) by adding item O0420 to the Nursing Home and Swing Bed PPS Item Sets. If you comment on these information collection and recordkeeping requirements, please do either of the following: 1. Submit your comments electronically as specified in the ADDRESSES section of the proposed rule; or 2. Submit your comments to the Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: CMS Desk Officer, [CMS–1446–F] by fax: (202) 395–6974 or by email: OIRA_submission@omb.eop.gov. VII. Economic Analyses A. Regulatory Impact Analysis tkelley on DSK3SPTVN1PROD with RULES3 1. Introduction We have examined the impacts of this final rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96–354), section 1102(b) of the Act, section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA, March 22, 1995; Pub. L. 104–4), Executive Order 13132 on Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C. 804(2)). Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been designated an economically significant rule, under section 3(f)(1) of Executive Order 12866, and thus a major rule under the Congressional Review Act. Also, the rule has been reviewed by OMB. 2. Statement of Need This final rule updates the SNF prospective payment rates for FY 2014 as required under section 1888(e)(4)(E) of the Act. It also responds to section 1888(e)(4)(H) of the Act, which requires VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 the Secretary to ‘‘provide for publication in the Federal Register’’ before the August 1 that precedes the start of each fiscal year, of the unadjusted federal per diem rates, the case-mix classification system, and the factors to be applied in making the area wage adjustment. As these statutory provisions prescribe a detailed methodology for calculating and disseminating payment rates under the SNF PPS, we do not have the discretion to adopt an alternative approach. 3. Overall Impacts This final rule sets forth the updates of the SNF PPS rates contained in the update notice for FY 2013 (77 FR 46214). Based on the above, we estimate that the aggregate impact would be an increase of $470 million in payments to SNFs, resulting from the SNF market basket update to the payment rates, as adjusted by the forecast error correction and MFP adjustment. The impact analysis of this final rule represents the projected effects of the changes in the SNF PPS from FY 2013 to FY 2014. Although the best data available are utilized, there is no attempt to predict behavioral responses to these changes, or to make adjustments for future changes in such variables as days or case-mix. Certain events may occur to limit the scope or accuracy of our impact analysis, as this analysis is futureoriented and, thus, very susceptible to forecasting errors due to certain events that may occur within the assessed impact time period. Some examples of possible events may include legislated general Medicare program funding changes by the Congress, or changes specifically related to SNFs. In addition, changes to the Medicare program may continue to be made as a result of previously-enacted legislation, or new statutory provisions. Although these changes may not be specific to the SNF PPS, the nature of the Medicare program is such that the changes may interact and, thus, the complexity of the interaction of these changes could make it difficult to predict accurately the full scope of the impact upon SNFs. In accordance with sections 1888(e)(4)(E) and 1888(e)(5) of the Act, we update the FY 2013 payment rates by a factor equal to the market basket index percentage change adjusted by the forecast error for FY 2012, the latest FY for which final data are available, and the MFP adjustment to determine the payment rates for FY 2014. As discussed previously, for FY 2012 and each subsequent FY, as required by section 1888(e)(5)(B) of the Act as amended by section 3401(b) of the Affordable Care PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 47965 Act, the market basket percentage is reduced by the MFP adjustment. The special AIDS add-on established by section 511 of the MMA remains in effect until ‘‘. . . such date as the Secretary certifies that there is an appropriate adjustment in the case mix . . . .’’ We have not provided a separate impact analysis for the MMA provision. Our latest estimates indicate that there are fewer than 4,100 beneficiaries who qualify for the add-on payment for SNF residents with AIDS. The impact to Medicare is included in the ‘‘total’’ column of Table 10. In updating the SNF PPS rates for FY 2014, we made a number of standard annual revisions and clarifications mentioned elsewhere in this final rule (for example, the update to the wage and market basket indexes used for adjusting the federal rates). The annual update set forth in this final rule applies to SNF payments in FY 2014. Accordingly, the analysis that follows only describes the impact of this single year. In accordance with the requirements of the Act, we will publish a notice or rule in the Federal Register for each subsequent FY that will provide for an update to the SNF payment rates and include an associated impact analysis. 4. Detailed Economic Analysis The FY 2014 SNF PPS impacts appear in Table 10. Using the most recently available data, in this case FY 2012, we apply the current FY 2013 wage index and labor-related share value to the number of payment days to simulate FY 2013 payments. Then, using the same FY 2012 data, we apply the FY 2014 wage index and labor-related share value to simulate FY 2014 payments. We tabulate the resulting payments according to the classifications in Table 10, for example, facility type, geographic region, facility ownership, and compare the difference between current and FY 2014 payments to determine the overall impact. The breakdown of the various categories of data in the table follows. The first column shows the breakdown of all SNFs by urban or rural status, hospital-based or freestanding status, census region, and ownership. The first row of figures describes the estimated effects of the various changes on all facilities. The next six rows show the effects on facilities split by hospitalbased, freestanding, urban, and rural categories. The urban and rural designations are based on the location of the facility under the CBSA designation. The next nineteen rows show the effects on facilities by urban versus rural status by census region. The last three rows E:\FR\FM\06AUR3.SGM 06AUR3 47966 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations show the effects on facilities by ownership (that is, government, profit, and non-profit status). The second column in the table shows the number of facilities in the impact database. The third column of the table shows the effect of the annual update to the wage index. This represents the effect of using the most recent wage data available. The total impact of this change is zero percent; however, there are distributional effects of the change. The fourth column shows the effect of all of the changes on the FY 2014 SNF PPS payments. The FY 2014 update of 1.3 percent (consisting of the market basket increase of 2.3 percentage points, reduced by the 0.5 percentage point forecast error correction and further reduced by the 0.5 percentage point MFP adjustment) is constant for all providers and, though not shown individually, is included in the total column. It is projected that aggregate payments will increase by 1.3 percent, assuming facilities do not change their care delivery and billing practices in response. As illustrated in Table 10, the combined effects of all of the changes vary by specific types of providers and by location. Though all facilities would experience payment increases, the projected impact on providers for FY 2014 varies due to the impact of the wage index update. For example, due to changes from updating the wage index, providers in the rural Pacific region would experience a 2.8 percent increase in FY 2014 total payments and providers in the urban East South Central region would experience a 0.8 percent increase in FY 2014 total payments. TABLE 10—RUG–IV PROJECTED IMPACT TO THE SNF PPS FOR FY 2014 Number of facilities FY 2014 Group: Total ................................................................................................................................. Urban ........................................................................................................................ Rural ......................................................................................................................... Hospital based urban ............................................................................................... Freestanding urban .................................................................................................. Hospital based rural ................................................................................................. Freestanding rural .................................................................................................... Urban by region: New England ............................................................................................................ Middle Atlantic .......................................................................................................... South Atlantic ........................................................................................................... East North Central .................................................................................................... East South Central ................................................................................................... West North Central ................................................................................................... West South Central .................................................................................................. Mountain ................................................................................................................... Pacific ....................................................................................................................... Outlying ..................................................................................................................... Rural by region: New England ............................................................................................................ Middle Atlantic .......................................................................................................... South Atlantic ........................................................................................................... East North Central .................................................................................................... East South Central ................................................................................................... West North Central ................................................................................................... West South Central .................................................................................................. Mountain ................................................................................................................... Pacific ....................................................................................................................... Ownership: Government .............................................................................................................. Profit ......................................................................................................................... Non-profit .................................................................................................................. Update wage data (percent) Total FY 2014 change (percent) 15,380 10,582 4,798 758 9,824 402 4,396 0.0 0.1 ¥0.3 0.2 0.1 ¥0.3 ¥0.3 1.3 1.4 1.0 1.5 1.4 1.0 1.0 804 1,452 1,741 2,049 526 868 1,241 490 1,405 6 0.3 0.8 ¥0.6 ¥0.2 ¥0.5 ¥0.7 ¥0.4 ¥0.1 1.1 0.1 1.6 2.1 0.7 1.1 0.8 0.6 0.9 1.2 2.5 1.4 153 262 608 928 551 1,114 813 246 123 0.2 0.2 ¥0.6 ¥0.6 ¥0.6 0.5 ¥0.9 0.2 1.4 1.5 1.5 0.7 0.7 0.7 1.8 0.4 1.5 2.8 832 10,724 3,824 0.2 0.0 0.0 1.5 1.3 1.3 Note: The Total column includes the 2.3 percent market basket increase, reduced by the 0.5 percentage point forecast error correction and further reduced by the 0.5 percentage point MFP adjustment. Additionally, we found no SNFs in rural outlying areas. tkelley on DSK3SPTVN1PROD with RULES3 5. Alternatives Considered As described above, we estimate that the aggregate impact for FY 2014 would be an increase of $470 million in payments to SNFs, resulting from the SNF market basket update to the payment rates, as adjusted by the forecast error correction and the MFP adjustment. Section 1888(e) of the Act establishes the SNF PPS for payment of Medicare SNF services for cost reporting periods VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 beginning on or after July 1, 1998. This section of the statute prescribes a detailed formula for calculating payment rates under the SNF PPS, and does not provide for the use of any alternative methodology. This section of the statute specifies that the base year cost data to be used for computing the SNF PPS payment rates are from FY 1995 (October 1, 1994, through September 30, 1995). In accordance with the statute, we also incorporated a PO 00000 Frm 00032 Fmt 4701 Sfmt 4700 number of elements into the SNF PPS (for example, case-mix classification methodology, a market basket index, a wage index, and the urban and rural distinction used in the development or adjustment of the federal rates). Further, section 1888(e)(4)(H) of the Act specifically requires us to provide for publication of the payment rates for each new FY in the Federal Register, and to do so before the August 1 that precedes the start of the new FY. E:\FR\FM\06AUR3.SGM 06AUR3 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations tkelley on DSK3SPTVN1PROD with RULES3 Accordingly, we are not pursuing alternatives with respect to the payment methodology as discussed above. We received a number of comments on the potential impact of finalizing the proposals in the FY 2014 SNF PPS proposed rule. A discussion of those comments, and our responses, appear below. Comment: In their March 2013 report (available at: https://www.medpac.gov/ documents/Mar13_entirereport.pdf), and in their comment on this proposed rule, MedPAC recommended that CMS eliminate the market basket update for SNFs and rebase payments for the SNF PPS, beginning with a 4 percent reduction in FY 2014. Several commenters raised concerns with MedPAC’s recommendations, specifically that the cost and margin data used by MedPAC to justify their recommendations did not adequately represent the costs of providing SNF care. A few commenters also noted that any cuts in Medicare rates can have a cascading effect in combination with increased fiscal pressures deriving from reduced Medicaid funding. Response: With regard to MedPAC’s proposals to eliminate the market basket update for SNFs and to implement a 4 percent reduction to the SNF PPS rates, we would note that CMS does not have the statutory authority to act on either one of these proposals at the current time. In addition, as we have stated in previous years—most recently, in the FY 2012 SNF PPS final rule (76 FR 48496, August 8, 2011)—we believe that it is not the appropriate role of the Medicare SNF benefit to cross-subsidize nursing home payments made under the Medicaid program. As noted by several commenters, the primary purpose of the SNF PPS is to provide accurate payment for Medicare Part A services provided in a SNF setting. Further, we note that MedPAC has also indicated that it is inappropriate for the Medicare payments to SNFs to serve as a remedy for any Medicaid shortfalls. Specifically, on page 177 of its March 2013 Report to Congress on Medicare Payment Policy (which is available online at https:// www.medpac.gov/documents/ Mar13_EntireReport.pdf), MedPAC stated: The Commission believes such crosssubsidization is not advisable for several reasons. First, the strategy of using Medicare rates to supplement low payments from other payers results in poorly targeted subsidies. Facilities with high shares of Medicare payments—presumably the facilities that need revenues the least—would receive the most in subsidies from higher Medicare payments, while facilities with low Medicare VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 shares—presumably the facilities with the greatest need—would receive the smallest subsidies * * * In addition, Medicare’s subsidy does not discriminate among states with relatively high and low payments * * * Finally, Medicare’s current overpayments represent a subsidy of trust fund dollars (and its taxpayer support) to the low payments made by states and private payers. We agree with MedPAC, and therefore, do not agree with the commenters that cited cross-subsidizing Medicaid as a justification for maintaining Medicare SNF payments at any specific level. Comment: A few commenters requested that CMS consider a larger update to account for the forthcoming costs associated with the implementation of the Affordable Care Act employer responsibility requirements, which, at a general level, would require that employers with 50 or more full-time-equivalent employees provide health care coverage to their full-time employees (those working on average 30 or more hours per week) or face a penalty. Response: As discussed in section IV.B of this proposed rule, CMS is required by statute to follow a specific methodology for updating the payment rates each year. We are not permitted to increase the update to account for these types of additional costs under existing authority. 47967 TABLE 11—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES, FROM THE 2013 SNF PPS FISCAL YEAR TO THE 2014 SNF PPS FISCAL YEAR—Continued Category From Whom To Whom. Transfers Federal Government to SNF Medicare Providers * The net increase of $470 million in transfer payments is a result of the SNF market basket update to the payment rates, as adjusted by the forecast error correction and the MFP adjustment. 7. Conclusion This final rule sets forth updates of the SNF PPS rates contained in the update notice for FY 2013 (77 FR 46214). Based on the above, we estimate the overall estimated payments for SNFs in FY 2014 are projected to increase by $470 million, or 1.3 percent, compared with those in FY 2013. We estimate that in FY 2014, SNFs in urban and rural areas would experience, on average, a 1.4 and 1.0 percent increase, respectively, in estimated payments compared with FY 2013. Providers in the rural Pacific region would experience the largest estimated increase in payments of approximately 2.8 percent. Providers in the rural West South Central region would experience the smallest increase in payments of 0.4 percent. B. Regulatory Flexibility Act Analysis The RFA requires agencies to analyze options for regulatory relief of small As required by OMB Circular A–4 entities, if a rule has a significant impact (available online at www.whitehouse.gov/sites/default/files/ on a substantial number of small entities. For purposes of the RFA, small omb/assets/regulatory_matters_pdf/a4.pdf), in Table 11, we have prepared an entities include small businesses, nonprofit organizations, and small accounting statement showing the governmental jurisdictions. Most SNFs classification of the expenditures and most other providers and suppliers associated with the provisions of this are small entities, either by their nonfinal rule. Table 11 provides our best profit status or by having revenues of estimate of the possible changes in $25.5 million or less in any 1 year. For Medicare payments under the SNF PPS purposes of the RFA, approximately 91 as a result of the policies in this final percent of SNFs are considered small rule, based on the data for 15,380 SNFs businesses according to the Small in our database. All expenditures are Business Administration’s latest size classified as transfers to Medicare SNF standards (NAICS 623110), with total providers. revenues of $25.5 million or less in any 1 year. (For details, see the Small TABLE 11—ACCOUNTING STATEMENT: Business Administration’s Web site at CLASSIFICATION OF ESTIMATED EX- https://www.sba.gov/category/ PENDITURES, FROM THE 2013 SNF navigation-structure/contracting/ PPS FISCAL YEAR TO THE 2014 contracting-officials/eligibility-sizestandards). Individuals and States are SNF PPS FISCAL YEAR not included in the definition of a small entity. In addition, approximately 25 Category Transfers percent of SNFs classified as small entities are non-profit organizations. Annualized mone$470 million* tized transfers. Finally, the estimated number of small 6. Accounting Statement PO 00000 Frm 00033 Fmt 4701 Sfmt 4700 E:\FR\FM\06AUR3.SGM 06AUR3 tkelley on DSK3SPTVN1PROD with RULES3 47968 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations business entities does not distinguish provider establishments that are within a single firm and, therefore, the number of SNFs classified as small entities may be higher than the estimate above. This final rule sets forth updates of the SNF PPS rates contained in the update notice for FY 2013 (77 FR 46214). Based on the above, we estimate that the aggregate impact would be an increase of $470 million in payments to SNFs, resulting from the SNF market basket update to the payment rates, as adjusted by the forecast error correction and the MFP adjustment. While it is projected in Table 10 that all groups of providers would experience a net increase in payments, we note that some individual providers within the same group but different regions may experience different impacts on payments than others due to the distributional impact of the FY 2014 wage indexes and the degree of Medicare utilization. Guidance issued by the Department of Health and Human Services on the proper assessment of the impact on small entities in rulemakings, utilizes a cost or revenue impact of 3 to 5 percent as a significance threshold under the RFA. According to MedPAC, Medicare covers approximately 12 percent of total patient days in freestanding facilities and 23 percent of facility revenue. However, they note that the distribution of days and payments is highly variable. That is, the majority of SNFs have significantly lower Medicare utilization (Report to the Congress: Medicare Payment Policy, March 2013, available at https://www.medpac.gov/documents/ Mar13_EntireReport.pdf). As a result, for most facilities, when all payers are included in the revenue stream, the overall impact on total revenues should be substantially less than those impacts presented in Table 10. As indicated in Table 10, the effect on facilities is projected to be an aggregate positive impact of 1.3 percent. As the overall impact on the industry as a whole, and thus on small entities specifically, is less than the 3 to 5 percent threshold discussed above, the Secretary has determined that this final rule would not have a significant impact on a substantial number of small entities. In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 fewer than 100 beds. This final rule would affect small rural hospitals that (a) furnish SNF services under a swingbed agreement or (b) have a hospitalbased SNF. We anticipate that the impact on small rural hospitals would be similar to the impact on SNF providers overall. Moreover, as noted in the FY 2012 final rule (76 FR 48539), the category of small rural hospitals would be included within the analysis of the impact of this final rule on small entities in general. As indicated in Table 10, the effect on facilities is projected to be an aggregate positive impact of 1.3 percent. As the overall impact on the industry as a whole is less than the 3 to 5 percent threshold discussed above, the Secretary has determined that this final rule would not have a significant impact on a substantial number of small rural hospitals. C. Unfunded Mandates Reform Act Analysis Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2013, that threshold is approximately $141 million. This final rule would not impose spending costs on State, local, or tribal governments in the aggregate, or by the private sector, of $141 million. D. Federalism Analysis Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that impose substantial direct requirement costs on State and local governments, preempts State law, or otherwise has federalism implications. This final rule would have no substantial direct effect on State and local governments, preempt State law, or otherwise have federalism implications. List of Subjects 42 CFR Part 413 Health facilities, Kidney diseases, Medicare, Reporting and recordkeeping requirements. 42 CFR Part 424 Emergency medical services, Health facilities, Health professions, Medicare, Reporting and recordkeeping requirements. For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services amends 42 CFR chapter IV as set forth below: PO 00000 Frm 00034 Fmt 4701 Sfmt 4700 PART 413—PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED PAYMENT RATES FOR SKILLED NURSING FACILITIES 1. The authority citation for part 413 continues to read as follows: ■ Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i), and (n), 1861(v), 1871, 1881, 1883, and 1886 of the Social Security Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and (n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); sec. 124 of Pub. L. 106–133 (113 Stat. 1501A–332) and sec. 3201 of Pub. L. 112–96 (126 Stat. 156). 2. Section 413.345 is revised to read as follows: ■ § 413.345 Publication of Federal prospective payment rates. CMS publishes information pertaining to each update of the Federal payment rates in the Federal Register. This information includes the standardized Federal rates, the resident classification system that provides the basis for casemix adjustment (including the designation of those specific Resource Utilization Groups under the resident classification system that represent the required SNF level of care, as provided in § 409.30 of this chapter), and the factors to be applied in making the area wage adjustment. This information is published before May 1 for the fiscal year 1998 and before August 1 for the fiscal years 1999 and after. PART 424—CONDITIONS FOR MEDICARE PAYMENT 3. The authority citation for part 424 continues to read as follows: ■ Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh). 4. In § 424.10, paragraph (a) is amended by removing the phrase ‘‘nurse practitioners or clinical nurse specialists’’ and adding in its place ‘‘nurse practitioners, clinical nurse specialists, or physician assistants’’. ■ 5. Section 424.11 is amended by revising paragraph (e)(4) to read as follows: ■ § 424.11 General procedures. * * * * * (e) * * * (4) A nurse practitioner or clinical nurse specialist as defined in paragraph (e)(5) or (e)(6) of this section, or a physician assistant as defined in section E:\FR\FM\06AUR3.SGM 06AUR3 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 1861(aa)(5)(A) of the Act, in the circumstances specified in § 424.20(e). * * * * * Authority: (Catalog of Federal Domestic Assistance Program No. 93.773, Medicare— Hospital Insurance; and Program No. 93.774, Medicare—Supplementary Medical Insurance Program) Dated: July 19, 2013. Marilyn Tavenner, Administrator, Centers for Medicare & Medicaid Services. Approved: July 29, 2013. TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code 10740 ..... Kathleen Sebelius, Secretary. 10780 ..... Note: The following addendum will not appear in the Code of Federal Regulations. 10900 ..... Addendum—FY 2014 CBSA Wage Index Tables In this addendum, we provide the wage index tables referred to in the preamble to this final rule. Tables A and B display the CBSA-based wage index values for urban and rural providers. As noted previously in this final rule, we are adopting an approach already being followed by other Medicare payment systems, whereby for SNF PPS rules and notices published on or after October 1, 2013, these wage index tables will henceforth be made available exclusively through the Internet on the CMS Web site rather than being published in the Federal Register as part of the annual SNF PPS rulemaking. TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS 11020 ..... 11100 ..... 11180 ..... 11260 ..... 11300 ..... 11340 ..... 11460 ..... CBSA Code Urban area (constituent counties) Wage index 11500 ..... 10180 ..... Abilene, TX ................... Callahan County, TX. Jones County, TX. Taylor County, TX. Aguadilla-Isabela-San ´ Sebastian, PR. Aguada Municipio, PR. Aguadilla Municipio, PR. ˜ Anasco Municipio, PR. Isabela Municipio, PR. Lares Municipio, PR. Moca Municipio, PR. ´ Rincon Municipio, PR. ´ San Sebastian Municipio, PR. Akron, OH ..................... Portage County, OH. Summit County, OH. Albany, GA ................... Baker County, GA. Dougherty County, GA. Lee County, GA. Terrell County, GA. Worth County, GA. Albany-SchenectadyTroy, NY. Albany County, NY. Rensselaer County, NY. Saratoga County, NY. 0.8225 11540 ..... 10380 ..... 10420 ..... tkelley on DSK3SPTVN1PROD with RULES3 10500 ..... 10580 ..... VerDate Mar<15>2010 20:00 Aug 05, 2013 0.3647 11700 ..... 12020 ..... 12060 ..... 0.8521 0.8713 0.8600 Jkt 229001 PO 00000 Urban area (constituent counties) Schenectady County, NY. Schoharie County, NY. Albuquerque, NM ......... Bernalillo County, NM. Sandoval County, NM. Torrance County, NM. Valencia County, NM. Alexandria, LA .............. Grant Parish, LA. Rapides Parish, LA. Allentown-BethlehemEaston, PA–NJ. Warren County, NJ. Carbon County, PA. Lehigh County, PA. Northampton County, PA. Altoona, PA .................. Blair County, PA. Amarillo, TX .................. Armstrong County, TX. Carson County, TX. Potter County, TX. Randall County, TX. Ames, IA ....................... Story County, IA. Anchorage, AK ............. Anchorage Municipality, AK. Matanuska-Susitna Borough, AK. Anderson, IN ................ Madison County, IN. Anderson, SC ............... Anderson County, SC. Arbor, MI ....................... Washtenaw County, MI. Anniston-Oxford, AL ..... Calhoun County, AL. Appleton, WI ................. Calumet County, WI. Outagamie County, WI. Asheville, NC ................ Buncombe County, NC. Haywood County, NC. Henderson County, NC. Madison County, NC. Athens-Clarke County, GA. Clarke County, GA. Madison County, GA. Oconee County, GA. Oglethorpe County, GA. Atlanta-Sandy SpringsMarietta, GA. Barrow County, GA. Bartow County, GA. Butts County, GA. Carroll County, GA. Cherokee County, GA. Clayton County, GA. Cobb County, GA. Coweta County, GA. Dawson County, GA. DeKalb County, GA. Douglas County, GA. Fayette County, GA. Forsyth County, GA. Frm 00035 Fmt 4701 Sfmt 4700 Wage index TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code 0.9663 0.7788 0.9215 12100 ..... 0.9101 12220 ..... 0.8302 12260 ..... 0.9425 1.2221 12420 ..... 0.9654 0.8766 12540 ..... 1.0086 12580 ..... 0.7402 0.9445 0.8511 12620 ..... 0.9244 47969 12700 ..... 12940 ..... 0.9452 12980 ..... 13020 ..... E:\FR\FM\06AUR3.SGM Urban area (constituent counties) Fulton County, GA. Gwinnett County, GA. Haralson County, GA. Heard County, GA. Henry County, GA. Jasper County, GA. Lamar County, GA. Meriwether County, GA. Newton County, GA. Paulding County, GA. Pickens County, GA. Pike County, GA. Rockdale County, GA. Spalding County, GA. Walton County, GA. Atlantic CityHammonton, NJ. Atlantic County, NJ. Auburn-Opelika, AL ...... Lee County, AL. Augusta-Richmond County, GA–SC. Burke County, GA. Columbia County, GA. McDuffie County, GA. Richmond County, GA. Aiken County, SC. Edgefield County, SC. Austin-Round Rock, TX Bastrop County, TX. Caldwell County, TX. Hays County, TX. Travis County, TX. Williamson County, TX. Bakersfield, CA ............. Kern County, CA. Baltimore-Towson, MD Anne Arundel County, MD. Baltimore County, MD. Carroll County, MD. Harford County, MD. Howard County, MD. Queen Anne’s County, MD. Baltimore City, MD. Bangor, ME .................. Penobscot County, ME. Barnstable Town, MA ... Barnstable County, MA. Baton Rouge, LA .......... Ascension Parish, LA. East Baton Rouge Parish, LA. East Feliciana Parish, LA. Iberville Parish, LA. Livingston Parish, LA. Pointe Coupee Parish, LA. St. Helena Parish, LA. West Baton Rouge Parish, LA. West Feliciana Parish, LA. Battle Creek, MI ........... Calhoun County, MI. Bay City, MI .................. Bay County, MI. 06AUR3 Wage index 1.2258 0.7771 0.9150 0.9576 1.1579 0.9873 0.9710 1.3007 0.8078 0.9915 0.9486 47970 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code Urban area (constituent counties) Wage index 13140 ..... Beaumont-Port Arthur, TX. Hardin County, TX. Jefferson County, TX. Orange County, TX. Bellingham, WA ............ Whatcom County, WA. Bend, OR ...................... Deschutes County, OR. Bethesda-FrederickGaithersburg, MD. Frederick County, MD. Montgomery County, MD. Billings, MT ................... Carbon County, MT. Yellowstone County, MT. Binghamton, NY ........... Broome County, NY. Tioga County, NY. Birmingham-Hoover, AL Bibb County, AL. Blount County, AL. Chilton County, AL. Jefferson County, AL. St. Clair County, AL. Shelby County, AL. Walker County, AL. Bismarck, ND ............... Burleigh County, ND. Morton County, ND. BlacksburgChristiansburgRadford, VA. Giles County, VA. Montgomery County, VA. Pulaski County, VA. Radford City, VA. Bloomington, IN ............ Greene County, IN. Monroe County, IN. Owen County, IN. Bloomington-Normal, IL McLean County, IL. Boise City-Nampa, ID ... Ada County, ID. Boise County, ID. Canyon County, ID. Gem County, ID. Owyhee County, ID. Boston-Quincy, MA ...... Norfolk County, MA. Plymouth County, MA. Suffolk County, MA. Boulder, CO .................. Boulder County, CO. Bowling Green, KY ....... Edmonson County, KY. Warren County, KY. Bremerton-Silverdale, WA. Kitsap County, WA. Bridgeport-StamfordNorwalk, CT. Fairfield County, CT. Brownsville-Harlingen, TX. 0.8598 13380 ..... 13460 ..... 13644 ..... 13740 ..... 13780 ..... 13820 ..... 13900 ..... 13980 ..... 14020 ..... 14060 ..... 14260 ..... 14484 ..... 14500 ..... 14540 ..... tkelley on DSK3SPTVN1PROD with RULES3 TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued 14740 ..... 14860 ..... 15180 ..... VerDate Mar<15>2010 20:00 Aug 05, 2013 CBSA Code 15260 ..... 1.1890 15380 ..... 1.1807 1.0319 15500 ..... 15540 ..... 0.8691 15764 ..... 0.8602 15804 ..... 0.8367 15940 ..... 15980 ..... 0.7282 16020 ..... 0.8319 16180 ..... 16220 ..... 16300 ..... 0.9304 16580 ..... 0.9310 0.9259 16620 ..... 1.2453 16700 ..... 0.9850 0.8573 16740 ..... 1.0268 1.3252 0.8179 Jkt 229001 16820 ..... PO 00000 Urban area (constituent counties) Cameron County, TX. Brunswick, GA .............. Brantley County, GA. Glynn County, GA. McIntosh County, GA. Buffalo-Niagara Falls, NY. Erie County, NY. Niagara County, NY. Burlington, NC .............. Alamance County, NC. Burlington-South Burlington, VT. Chittenden County, VT. Franklin County, VT. Grand Isle County, VT. Cambridge-Newton-Framingham, MA. Middlesex County, MA. Camden, NJ ................. Burlington County, NJ. Camden County, NJ. Gloucester County, NJ. Canton-Massillon, OH .. Carroll County, OH. Stark County, OH. Cape Coral-Fort Myers, FL. Lee County, FL. Cape Girardeau-Jackson, MO–IL. Alexander County, IL. Bollinger County, MO. Cape Girardeau County, MO. Carson City, NV ........... Carson City, NV. Casper, WY .................. Natrona County, WY. Cedar Rapids, IA .......... Benton County, IA. Jones County, IA. Linn County, IA. Champaign-Urbana, IL Champaign County, IL. Ford County, IL. Piatt County, IL. Charleston, WV ............ Boone County, WV. Clay County, WV. Kanawha County, WV. Lincoln County, WV. Putnam County, WV. Charleston-North Charleston-Summerville, SC. Berkeley County, SC. Charleston County, SC. Dorchester County, SC. Charlotte-Gastonia-Concord, NC–SC. Anson County, NC. Cabarrus County, NC. Gaston County, NC. Mecklenburg County, NC. Union County, NC. York County, SC. Charlottesville, VA ........ Frm 00036 Fmt 4701 Sfmt 4700 Wage index TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code 0.8457 1.0045 16860 ..... 0.8529 1.0130 16940 ..... 16974 ..... 1.1146 1.0254 0.8730 17020 ..... 0.8683 17140 ..... 0.9174 1.0721 1.0111 0.8964 0.9416 17300 ..... 0.8119 17420 ..... 17460 ..... 0.8972 0.9447 17660 ..... 17780 ..... 17820 ..... 0.9209 E:\FR\FM\06AUR3.SGM Urban area (constituent counties) Albemarle County, VA. Fluvanna County, VA. Greene County, VA. Nelson County, VA. Charlottesville City, VA. Chattanooga, TN–GA ... Catoosa County, GA. Dade County, GA. Walker County, GA. Hamilton County, TN. Marion County, TN. Sequatchie County, TN. Cheyenne, WY ............. Laramie County, WY. Chicago-Naperville-Joliet, IL. Cook County, IL. DeKalb County, IL. DuPage County, IL. Grundy County, IL. Kane County, IL. Kendall County, IL. McHenry County, IL. Will County, IL. Chico, CA ..................... Butte County, CA. Cincinnati-Middletown, OH–KY–IN. Dearborn County, IN. Franklin County, IN. Ohio County, IN. Boone County, KY. Bracken County, KY. Campbell County, KY. Gallatin County, KY. Grant County, KY. Kenton County, KY. Pendleton County, KY. Brown County, OH. Butler County, OH. Clermont County, OH. Hamilton County, OH. Warren County, OH. Clarksville, TN–KY ....... Christian County, KY. Trigg County, KY. Montgomery County, TN. Stewart County, TN. Cleveland, TN ............... Bradley County, TN. Polk County, TN. Cleveland-Elyria-Mentor, OH. Cuyahoga County, OH. Geauga County, OH. Lake County, OH. Lorain County, OH. Medina County, OH. Coeur d’Alene, ID ......... Kootenai County, ID. College Station-Bryan, TX. Brazos County, TX. Burleson County, TX. Robertson County, TX. Colorado Springs, CO .. El Paso County, CO. Teller County, CO. 06AUR3 Wage index 0.8783 0.9494 1.0418 1.1616 0.9470 0.7802 0.7496 0.9303 0.9064 0.9497 0.9282 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code Urban area (constituent counties) Wage index 17860 ..... Columbia, MO .............. Boone County, MO. Howard County, MO. Columbia, SC ............... Calhoun County, SC. Fairfield County, SC. Kershaw County, SC. Lexington County, SC. Richland County, SC. Saluda County, SC. Columbus, GA–AL ........ Russell County, AL. Chattahoochee County, GA. Harris County, GA. Marion County, GA. Muscogee County, GA. Columbus, IN ................ Bartholomew County, IN. Columbus, OH .............. Delaware County, OH. Fairfield County, OH. Franklin County, OH. Licking County, OH. Madison County, OH. Morrow County, OH. Pickaway County, OH. Union County, OH. Corpus Christi, TX ........ Aransas County, TX. Nueces County, TX. San Patricio County, TX. Corvallis, OR ................ Benton County, OR. Crestview-Fort Walton Beach-Destin, FL. Okaloosa County, FL. Cumberland, MD–WV .. Allegany County, MD. Mineral County, WV. Dallas-Plano-Irving, TX Collin County, TX. Dallas County, TX. Delta County, TX. Denton County, TX. Ellis County, TX. Hunt County, TX. Kaufman County, TX. Rockwall County, TX. Dalton, GA .................... Murray County, GA. Whitfield County, GA. Danville, IL .................... Vermilion County, IL. Danville, VA .................. Pittsylvania County, VA. Danville City, VA. Davenport-Moline-Rock Island, IA–IL. Henry County, IL. Mercer County, IL. Rock Island County, IL. Scott County, IA. Dayton, OH ................... Greene County, OH. Miami County, OH. Montgomery County, OH. 0.8196 17900 ..... 17980 ..... 18020 ..... 18140 ..... 18580 ..... 18700 ..... 18880 ..... 19060 ..... 19124 ..... 19140 ..... 19180 ..... 19260 ..... 19340 ..... tkelley on DSK3SPTVN1PROD with RULES3 TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued 19380 ..... VerDate Mar<15>2010 20:00 Aug 05, 2013 CBSA Code 19460 ..... 0.8601 19500 ..... 19660 ..... 0.8170 19740 ..... 0.9818 0.9803 19780 ..... 0.8433 19804 ..... 1.0596 20020 ..... 0.8911 20100 ..... 0.8054 20220 ..... 0.9831 20260 ..... 20500 ..... 0.8625 0.9460 20740 ..... 20764 ..... 0.7888 0.9306 20940 ..... 21060 ..... 0.9034 Jkt 229001 21140 ..... 21300 ..... 21340 ..... PO 00000 Urban area (constituent counties) Preble County, OH. Decatur, AL .................. Lawrence County, AL. Morgan County, AL. Decatur, IL .................... Macon County, IL. Deltona-Daytona Beach-Ormond Beach, FL. Volusia County, FL. Denver-Aurora-Broomfield, CO. Adams County, CO. Arapahoe County, CO. Broomfield County, CO. Clear Creek County, CO. Denver County, CO. Douglas County, CO. Elbert County, CO. Gilpin County, CO. Jefferson County, CO. Park County, CO. Des Moines-West Des Moines, IA. Dallas County, IA. Guthrie County, IA. Madison County, IA. Polk County, IA. Warren County, IA. Detroit-Livonia-Dearborn, MI. Wayne County, MI. Dothan, AL ................... Geneva County, AL. Henry County, AL. Houston County, AL. Dover, DE ..................... Kent County, DE. Dubuque, IA ................. Dubuque County, IA. Duluth, MN–WI ............. Carlton County, MN. St. Louis County, MN. Douglas County, WI. Durham-Chapel Hill, NC Chatham County, NC. Durham County, NC. Orange County, NC. Person County, NC. Eau Claire, WI .............. Chippewa County, WI. Eau Claire County, WI. Edison-New Brunswick, NJ. Middlesex County, NJ. Monmouth County, NJ. Ocean County, NJ. Somerset County, NJ. El Centro, CA ............... Imperial County, CA. Elizabethtown, KY ........ Hardin County, KY. Larue County, KY. Elkhart-Goshen, IN ....... Elkhart County, IN. Elmira, NY .................... Chemung County, NY. El Paso, TX .................. Frm 00037 Fmt 4701 Sfmt 4700 TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued Wage index CBSA Code 0.7165 21500 ..... 21660 ..... 0.8151 21780 ..... 0.8560 1.0395 21820 ..... 21940 ..... 22020 ..... 22140 ..... 0.9393 22180 ..... 22220 ..... 0.9237 0.7108 22380 ..... 22420 ..... 0.9939 22500 ..... 0.8790 1.0123 22520 ..... 0.9669 22540 ..... 22660 ..... 1.0103 22744 ..... 1.0985 22900 ..... 0.8848 0.7894 47971 23060 ..... 0.9337 23104 ..... 0.8725 0.8404 E:\FR\FM\06AUR3.SGM Urban area (constituent counties) El Paso County, TX. Erie, PA ........................ Erie County, PA. Eugene-Springfield, OR Lane County, OR. Evansville, IN–KY ......... Gibson County, IN. Posey County, IN. Vanderburgh County, IN. Warrick County, IN. Henderson County, KY. Webster County, KY. Fairbanks, AK ............... Fairbanks North Star Borough, AK. Fajardo, PR .................. Ceiba Municipio, PR. Fajardo Municipio, PR. Luquillo Municipio, PR. Fargo, ND–MN ............. Cass County, ND. Clay County, MN. Farmington, NM ............ San Juan County, NM. Fayetteville, NC ............ Cumberland County, NC. Hoke County, NC. Fayetteville-SpringdaleRogers, AR–MO. Benton County, AR. Madison County, AR. Washington County, AR. McDonald County, MO. Flagstaff, AZ ................. Coconino County, AZ. Flint, MI ......................... Genesee County, MI. Florence, SC ................ Darlington County, SC. Florence County, SC. Florence-Muscle Shoals, AL. Colbert County, AL. Lauderdale County, AL. Fond du Lac, WI ........... Fond du Lac County, WI. Fort Collins-Loveland, CO. Larimer County, CO. Fort Lauderdale-Pompano Beach-Deerfield Beach, FL. Broward County, FL. Fort Smith, AR–OK ...... Crawford County, AR. Franklin County, AR. Sebastian County, AR. Le Flore County, OK. Sequoyah County, OK. Fort Wayne, IN ............. Allen County, IN. Wells County, IN. Whitley County, IN. Fort Worth-Arlington, TX. Johnson County, TX. Parker County, TX. 06AUR3 Wage index 0.7940 1.1723 0.8381 1.0997 0.3728 0.7802 0.9735 0.8601 0.8955 1.2786 1.1238 0.7999 0.7684 0.9477 0.9704 1.0378 0.7561 0.9010 0.9535 47972 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code 23420 ..... 23460 ..... 23540 ..... 23580 ..... 23844 ..... 24020 ..... 24140 ..... 24220 ..... 24300 ..... 24340 ..... 24500 ..... 24540 ..... 24580 ..... 24660 ..... 24780 ..... 24860 ..... 25020 ..... tkelley on DSK3SPTVN1PROD with RULES3 25060 ..... 25180 ..... Urban area (constituent counties) Tarrant County, TX. Wise County, TX. Fresno, CA ................... Fresno County, CA. Gadsden, AL ................ Etowah County, AL. Gainesville, FL .............. Alachua County, FL. Gilchrist County, FL. Gainesville, GA ............. Hall County, GA. Gary, IN ........................ Jasper County, IN. Lake County, IN. Newton County, IN. Porter County, IN. Glens Falls, NY ............ Warren County, NY. Washington County, NY. Goldsboro, NC .............. Wayne County, NC. Grand Forks, ND–MN .. Polk County, MN. Grand Forks County, ND. Grand Junction, CO ..... Mesa County, CO. Grand Rapids-Wyoming, MI. Barry County, MI. Ionia County, MI. Kent County, MI. Newaygo County, MI. Great Falls, MT ............ Cascade County, MT. Greeley, CO ................. Weld County, CO. Green Bay, WI .............. Brown County, WI. Kewaunee County, WI. Oconto County, WI. Greensboro-High Point, NC. Guilford County, NC. Randolph County, NC. Rockingham County, NC. Greenville, NC .............. Greene County, NC. Pitt County, NC. Greenville-MauldinEasley, SC. Greenville County, SC. Laurens County, SC. Pickens County, SC. Guayama, PR ............... Arroyo Municipio, PR. Guayama Municipio, PR. Patillas Municipio, PR. Gulfport-Biloxi, MS ....... Hancock County, MS. Harrison County, MS. Stone County, MS. Hagerstown-Martinsburg, MD–WV. Washington County, MD. Berkeley County, WV. Morgan County, WV. VerDate Mar<15>2010 20:00 Aug 05, 2013 Wage index TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued Urban area (constituent counties) Wage index 25260 ..... 1.1768 CBSA Code Hanford-Corcoran, CA .. Kings County, CA. Harrisburg-Carlisle, PA Cumberland County, PA. Dauphin County, PA. Perry County, PA. Harrisonburg, VA .......... Rockingham County, VA. Harrisonburg City, VA. Hartford-West HartfordEast Hartford, CT. Hartford County, CT. Middlesex County, CT. Tolland County, CT. Hattiesburg, MS ............ Forrest County, MS. Lamar County, MS. Perry County, MS. Hickory-Lenoir-Morganton, NC. Alexander County, NC. Burke County, NC. Caldwell County, NC. Catawba County, NC. Hinesville-Fort Stewart, GA 1. Liberty County, GA. Long County, GA. Holland-Grand Haven, MI. Ottawa County, MI. Honolulu, HI .................. Honolulu County, HI. Hot Springs, AR ........... Garland County, AR. Houma-Bayou CaneThibodaux, LA. Lafourche Parish, LA. Terrebonne Parish, LA. Houston-Sugar LandBaytown, TX. Austin County, TX. Brazoria County, TX. Chambers County, TX. Fort Bend County, TX. Galveston County, TX. Harris County, TX. Liberty County, TX. Montgomery County, TX. San Jacinto County, TX. Waller County, TX. Huntington-Ashland, WV–KY–OH. Boyd County, KY. Greenup County, KY. Lawrence County, OH. Cabell County, WV. Wayne County, WV. Huntsville, AL ............... Limestone County, AL. Madison County, AL. Idaho Falls, ID .............. Bonneville County, ID. Jefferson County, ID. Indianapolis-Carmel, IN Boone County, IN. Brown County, IN. 1.1124 25420 ..... 0.7983 0.9710 25500 ..... 0.9253 25540 ..... 0.9418 25620 ..... 0.8367 0.8550 25860 ..... 0.7290 0.9270 25980 ..... 0.9091 26100 ..... 26180 ..... 0.9235 26300 ..... 0.9653 26380 ..... 0.9587 26420 ..... 0.8320 0.9343 0.9604 26580 ..... 0.3707 0.8575 26620 ..... 0.9234 Jkt 229001 TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued 26820 ..... 26900 ..... PO 00000 Frm 00038 Fmt 4701 Sfmt 4700 CBSA Code 0.9533 0.9090 26980 ..... 1.1050 27060 ..... 27100 ..... 0.7938 27140 ..... 0.8492 27180 ..... 27260 ..... 0.8700 0.8016 27340 ..... 1.2321 27500 ..... 0.8474 27620 ..... 0.7525 27740 ..... 0.9915 27780 ..... 27860 ..... 27900 ..... 28020 ..... 0.8944 28100 ..... 28140 ..... 0.8455 0.9312 1.0108 E:\FR\FM\06AUR3.SGM Urban area (constituent counties) Hamilton County, IN. Hancock County, IN. Hendricks County, IN. Johnson County, IN. Marion County, IN. Morgan County, IN. Putnam County, IN. Shelby County, IN. Iowa City, IA ................. Johnson County, IA. Washington County, IA. Ithaca, NY ..................... Tompkins County, NY. Jackson, MI .................. Jackson County, MI. Jackson, MS ................. Copiah County, MS. Hinds County, MS. Madison County, MS. Rankin County, MS. Simpson County, MS. Jackson, TN ................. Chester County, TN. Madison County, TN. Jacksonville, FL ............ Baker County, FL. Clay County, FL. Duval County, FL. Nassau County, FL. St. Johns County, FL. Jacksonville, NC ........... Onslow County, NC. Janesville, WI ............... Rock County, WI. Jefferson City, MO ....... Callaway County, MO. Cole County, MO. Moniteau County, MO. Osage County, MO. Johnson City, TN .......... Carter County, TN. Unicoi County, TN. Washington County, TN. Johnstown, PA ............. Cambria County, PA. Jonesboro, AR .............. Craighead County, AR. Poinsett County, AR. Joplin, MO .................... Jasper County, MO. Newton County, MO. Kalamazoo-Portage, MI Kalamazoo County, MI. Van Buren County, MI. Kankakee-Bradley, IL ... Kankakee County, IL. Kansas City, MO–KS ... Franklin County, KS. Johnson County, KS. Leavenworth County, KS. Linn County, KS. Miami County, KS. Wyandotte County, KS. Bates County, MO. Caldwell County, MO. Cass County, MO. Clay County, MO. Clinton County, MO. 06AUR3 Wage index 0.9854 0.9326 0.8944 0.8162 0.7729 0.8956 0.7861 0.9071 0.8465 0.7226 0.8450 0.7983 0.7983 0.9959 0.9657 0.9447 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code 28420 ..... 28660 ..... 28700 ..... 28740 ..... 28940 ..... 29020 ..... 29100 ..... 29140 ..... 29180 ..... 29340 ..... 29404 ..... 29420 ..... 29460 ..... 29540 ..... tkelley on DSK3SPTVN1PROD with RULES3 29620 ..... 29700 ..... 29740 ..... 29820 ..... 29940 ..... Urban area (constituent counties) Jackson County, MO. Lafayette County, MO. Platte County, MO. Ray County, MO. Kennewick-Pasco-Richland, WA. Benton County, WA. Franklin County, WA. Killeen-Temple-Fort Hood, TX. Bell County, TX. Coryell County, TX. Lampasas County, TX. Kingsport-Bristol-Bristol, TN–VA. Hawkins County, TN. Sullivan County, TN. Bristol City, VA. Scott County, VA. Washington County, VA. Kingston, NY ................ Ulster County, NY. Knoxville, TN ................ Anderson County, TN. Blount County, TN. Knox County, TN. Loudon County, TN. Union County, TN. Kokomo, IN ................... Howard County, IN. Tipton County, IN. La Crosse, WI–MN ....... Houston County, MN. La Crosse County, WI. Lafayette, IN ................. Benton County, IN. Carroll County, IN. Tippecanoe County, IN. Lafayette, LA ................ Lafayette Parish, LA. St. Martin Parish, LA. Lake Charles, LA .......... Calcasieu Parish, LA. Cameron Parish, LA. Lake County-Kenosha County, IL–WI. Lake County, IL. Kenosha County, WI. Lake Havasu City-Kingman, AZ. Mohave County, AZ. Lakeland-Winter Haven, FL. Polk County, FL. Lancaster, PA ............... Lancaster County, PA. Lansing-East Lansing, MI. Clinton County, MI. Eaton County, MI. Ingham County, MI. Laredo, TX .................... Webb County, TX. Las Cruces, NM ........... Dona Ana County, NM. Las Vegas-Paradise, NV. Clark County, NV. Lawrence, KS ............... VerDate Mar<15>2010 20:00 Aug 05, 2013 Wage index TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code 30020 ..... 30140 ..... 0.9459 30300 ..... 0.8925 30340 ..... 30460 ..... 0.7192 30620 ..... 0.9066 30700 ..... 0.7432 30780 ..... 0.9061 1.0205 30860 ..... 0.9954 30980 ..... 0.8231 31020 ..... 31084 ..... 0.7765 1.0658 31140 ..... 0.9912 0.8283 0.9695 1.0618 31180 ..... 0.7586 31340 ..... 0.9265 1.1627 0.8664 Jkt 229001 31420 ..... PO 00000 Urban area (constituent counties) Douglas County, KS Lawton, OK ................... Comanche County, OK. Lebanon, PA ................. Lebanon County, PA. Lewiston, ID–WA .......... Nez Perce County, ID. Asotin County, WA. Lewiston-Auburn, ME ... Androscoggin County, ME. Lexington-Fayette, KY .. Bourbon County, KY. Clark County, KY. Fayette County, KY. Jessamine County, KY. Scott County, KY. Woodford County, KY. Lima, OH ...................... Allen County, OH. Lincoln, NE ................... Lancaster County, NE. Seward County, NE. Little Rock-North Little Rock-Conway, AR. Faulkner County, AR. Grant County, AR. Lonoke County, AR. Perry County, AR. Pulaski County, AR. Saline County, AR. Logan, UT–ID ............... Franklin County, ID. Cache County, UT. Longview, TX ................ Gregg County, TX. Rusk County, TX. Upshur County, TX. Longview, WA .............. Cowlitz County, WA. Los Angeles-Long Beach-Glendale, CA. Los Angeles County, CA. Louisville-Jefferson County, KY–IN. Clark County, IN. Floyd County, IN. Harrison County, IN. Washington County, IN. Bullitt County, KY. Henry County, KY. Meade County, KY. Nelson County, KY. Oldham County, KY. Shelby County, KY. Spencer County, KY. Trimble County, KY. Lubbock, TX ................. Crosby County, TX. Lubbock County, TX. Lynchburg, VA .............. Amherst County, VA. Appomattox County, VA. Bedford County, VA. Campbell County, VA. Bedford City, VA. Lynchburg City, VA. Macon, GA ................... Frm 00039 Fmt 4701 Sfmt 4700 Wage index TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code 0.7893 0.8157 0.9215 31460 ..... 31540 ..... 0.9048 0.8902 31700 ..... 31740 ..... 0.9158 0.9465 31860 ..... 0.8629 31900 ..... 32420 ..... 0.8754 32580 ..... 0.8933 32780 ..... 32820 ..... 1.0460 1.2417 0.8852 32900 ..... 33124 ..... 33140 ..... 33260 ..... 33340 ..... 0.8956 0.8771 47973 33460 ..... 0.9014 E:\FR\FM\06AUR3.SGM Urban area (constituent counties) Bibb County, GA. Crawford County, GA. Jones County, GA. Monroe County, GA. Twiggs County, GA. Madera-Chowchilla, CA Madera County, CA. Madison, WI ................. Columbia County, WI. Dane County, WI. Iowa County, WI. Manchester-Nashua, NH. Hillsborough County, NH. Manhattan, KS .............. Geary County, KS. Pottawatomie County, KS. Riley County, KS. Mankato-North Mankato, MN. Blue Earth County, MN. Nicollet County, MN. Mansfield, OH ............... Richland County, OH. ¨ Mayaguez, PR .............. Hormigueros Municipio, PR. ¨ Mayaguez Municipio, PR. McAllen-Edinburg-Mission, TX. Hidalgo County, TX. Medford, OR ................. Jackson County, OR. Memphis, TN–MS–AR .. Crittenden County, AR. DeSoto County, MS. Marshall County, MS. Tate County, MS. Tunica County, MS. Fayette County, TN. Shelby County, TN. Tipton County, TN. Merced, CA .................. Merced County, CA. Miami-Miami BeachKendall, FL. Miami-Dade County, FL. Michigan City-La Porte, IN. LaPorte County, IN. Midland, TX .................. Midland County, TX. Milwaukee-WaukeshaWest Allis, WI. Milwaukee County, WI. Ozaukee County, WI. Washington County, WI. Waukesha County, WI. Minneapolis-St. PaulBloomington, MN–WI. Anoka County, MN. Carver County, MN. Chisago County, MN. Dakota County, MN. Hennepin County, MN. Isanti County, MN. 06AUR3 Wage index 0.8317 1.1414 1.0057 0.7843 0.9277 0.8509 0.3762 0.8393 1.0690 0.9038 1.2734 0.9870 0.9216 1.0049 0.9856 1.1213 47974 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code 33540 ..... 33660 ..... 33700 ..... 33740 ..... 33780 ..... 33860 ..... 34060 ..... 34100 ..... 34580 ..... 34620 ..... 34740 ..... 34820 ..... 34900 ..... 34940 ..... tkelley on DSK3SPTVN1PROD with RULES3 34980 ..... 35004 ..... 35084 ..... Urban area (constituent counties) Ramsey County, MN. Scott County, MN. Sherburne County, MN. Washington County, MN. Wright County, MN. Pierce County, WI. St. Croix County, WI. Missoula, MT ................ Missoula County, MT. Mobile, AL .................... Mobile County, AL. Modesto, CA ................. Stanislaus County, CA. Monroe, LA ................... Ouachita Parish, LA. Union Parish, LA. Monroe, MI ................... Monroe County, MI. Montgomery, AL ........... Autauga County, AL. Elmore County, AL. Lowndes County, AL. Montgomery County, AL. Morgantown, WV .......... Monongalia County, WV. Preston County, WV. Morristown, TN ............. Grainger County, TN. Hamblen County, TN. Jefferson County, TN. Mount VernonAnacortes, WA. Skagit County, WA. Muncie, IN. Delaware County, IN .... Muskegon-Norton Shores, MI. Muskegon County, MI. Myrtle Beach-North Myrtle BeachConway, SC. Horry County, SC. Napa, CA ...................... Napa County, CA. Naples-Marco Island, FL. Collier County, FL. Nashville-Davidson— Murfreesboro-Franklin, TN. Cannon County, TN. Cheatham County, TN. Davidson County, TN. Dickson County, TN. Hickman County, TN. Macon County, TN. Robertson County, TN. Rutherford County, TN. Smith County, TN. Sumner County, TN. Trousdale County, TN. Williamson County, TN. Wilson County, TN. Nassau-Suffolk, NY ...... Nassau County, NY. Suffolk County, NY. Newark-Union, NJ–PA Essex County, NJ. VerDate Mar<15>2010 21:21 Aug 05, 2013 Wage index TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code 35300 ..... 35380 ..... 0.9142 0.7507 1.3629 0.7530 0.8718 35644 ..... 0.7475 0.8339 0.6861 1.0652 35660 ..... 35840 ..... 0.8743 1.1076 35980 ..... 0.8700 36084 ..... 1.5375 0.9108 36100 ..... 0.9141 36140 ..... 36220 ..... 36260 ..... 36420 ..... 1.2755 36500 ..... 1.1268 Jkt 229001 36540 ..... PO 00000 Urban area (constituent counties) Hunterdon County, NJ. Morris County, NJ. Sussex County, NJ. Union County, NJ. Pike County, PA. New Haven-Milford, CT New Haven County, CT. New Orleans-MetairieKenner, LA. Jefferson Parish, LA. Orleans Parish, LA. Plaquemines Parish, LA. St. Bernard Parish, LA. St. Charles Parish, LA. St. John the Baptist Parish, LA. St. Tammany Parish, LA. New York-White PlainsWayne, NY–NJ. Bergen County, NJ. Hudson County, NJ. Passaic County, NJ. Bronx County, NY. Kings County, NY. New York County, NY. Putnam County, NY. Queens County, NY. Richmond County, NY. Rockland County, NY. Westchester County, NY. Niles-Benton Harbor, MI Berrien County, MI. North Port-BradentonSarasota-Venice, FL. Manatee County, FL. Sarasota County, FL. Norwich-New London, CT. New London County, CT. Oakland-Fremont-Hayward, CA. Alameda County, CA. Contra Costa County, CA. Ocala, FL ...................... Marion County, FL. Ocean City, NJ ............. Cape May County, NJ. Odessa, TX .................. Ector County, TX. Ogden-Clearfield, UT ... Davis County, UT. Morgan County, UT. Weber County, UT. Oklahoma City, OK ...... Canadian County, OK. Cleveland County, OK. Grady County, OK. Lincoln County, OK. Logan County, OK. McClain County, OK. Oklahoma County, OK. Olympia, WA ................ Thurston County, WA. Omaha-Council Bluffs, NE–IA. Frm 00040 Fmt 4701 Sfmt 4700 Wage index TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code 1.1883 0.8752 36740 ..... 36780 ..... 36980 ..... 1.3089 37100 ..... 37340 ..... 37380 ..... 37460 ..... 0.8444 37620 ..... 0.9428 1.1821 37700 ..... 37764 ..... 1.7048 37860 ..... 0.8425 37900 ..... 1.0584 0.9661 0.9170 37964 ..... 0.8879 38060 ..... 38220 ..... 1.1601 0.9756 38300 ..... E:\FR\FM\06AUR3.SGM Urban area (constituent counties) Harrison County, IA. Mills County, IA. Pottawattamie County, IA. Cass County, NE. Douglas County, NE. Sarpy County, NE. Saunders County, NE. Washington County, NE. Orlando-Kissimmee, FL Lake County, FL. Orange County, FL. Osceola County, FL. Seminole County, FL. Oshkosh-Neenah, WI ... Winnebago County, WI. Owensboro, KY ............ Daviess County, KY. Hancock County, KY. McLean County, KY. Oxnard-Thousand Oaks-Ventura, CA. Ventura County, CA. Palm Bay-MelbourneTitusville, FL. Brevard County, FL. Palm Coast, FL ............ Flagler County, FL. Panama City-Lynn Haven-Panama City Beach, FL. Bay County, FL. Parkersburg-MariettaVienna, WV–OH. Washington County, OH. Pleasants County, WV. Wirt County, WV. Wood County, WV. Pascagoula, MS ........... George County, MS. Jackson County, MS. Peabody, MA ................ Essex County, MA. Pensacola-Ferry PassBrent, FL. Escambia County, FL. Santa Rosa County, FL. Peoria, IL ...................... Marshall County, IL. Peoria County, IL. Stark County, IL. Tazewell County, IL. Woodford County, IL. Philadelphia, PA ........... Bucks County, PA. Chester County, PA. Delaware County, PA. Montgomery County, PA. Philadelphia County, PA. Phoenix-Mesa-Scottsdale, AZ. Maricopa County, AZ. Pinal County, AZ. Pine Bluff, AR ............... Cleveland County, AR. Jefferson County, AR. Lincoln County, AR. Pittsburgh, PA .............. 06AUR3 Wage index 0.9063 0.9398 0.7790 1.3113 0.8790 0.8174 0.7876 0.7569 0.7542 1.0553 0.7767 0.8434 1.0849 1.0465 0.8069 0.8669 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code 38340 ..... 38540 ..... 38660 ..... 38860 ..... 38900 ..... 38940 ..... 39100 ..... 39140 ..... 39300 ..... 39340 ..... 39380 ..... 39460 ..... tkelley on DSK3SPTVN1PROD with RULES3 39540 ..... 39580 ..... 39660 ..... 39740 ..... Urban area (constituent counties) Allegheny County, PA. Armstrong County, PA. Beaver County, PA. Butler County, PA. Fayette County, PA. Washington County, PA. Westmoreland County, PA. Pittsfield, MA ................ Berkshire County, MA. Pocatello, ID ................. Bannock County, ID. Power County, ID. Ponce, PR .................... ´ Juana Dıaz Municipio, PR. Ponce Municipio, PR. Villalba Municipio, PR. Portland-South Portland-Biddeford, ME. Cumberland County, ME. Sagadahoc County, ME. York County, ME. Portland-VancouverBeaverton, OR–WA. Clackamas County, OR. Columbia County, OR. Multnomah County, OR. Washington County, OR. Yamhill County, OR. Clark County, WA. Skamania County, WA. Port St. Lucie, FL ......... Martin County, FL. St. Lucie County, FL. Poughkeepsie-Newburgh-Middletown, NY. Dutchess County, NY. Orange County, NY. Prescott, AZ .................. Yavapai County, AZ. Providence-New Bedford-Fall River, RI– MA. Bristol County, MA. Bristol County, RI. Kent County, RI. Newport County, RI. Providence County, RI. Washington County, RI. Provo-Orem, UT ........... Juab County, UT. Utah County, UT. Pueblo, CO ................... Pueblo County, CO. Punta Gorda, FL ........... Charlotte County, FL. Racine, WI .................... Racine County, WI. Raleigh-Cary, NC ......... Franklin County, NC. Johnston County, NC. Wake County, NC. Rapid City, SD .............. Meade County, SD. Pennington County, SD. Reading, PA ................. VerDate Mar<15>2010 20:00 Aug 05, 2013 Wage index TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code 39820 ..... 39900 ..... 40060 ..... 1.0920 0.9754 0.4594 0.9981 1.1766 0.9352 40140 ..... 1.1544 40220 ..... 1.0161 1.0539 40340 ..... 40380 ..... 0.9461 0.8215 40420 ..... 0.8734 0.8903 40484 ..... 0.9304 40580 ..... 0.9568 40660 ..... 0.9220 Jkt 229001 PO 00000 Urban area (constituent counties) Berks County, PA. Redding, CA ................. Shasta County, CA. Reno-Sparks, NV ......... Storey County, NV. Washoe County, NV. Richmond, VA .............. Amelia County, VA. Caroline County, VA. Charles City County, VA. Chesterfield County, VA. Cumberland County, VA. Dinwiddie County, VA. Goochland County, VA. Hanover County, VA. Henrico County, VA. King and Queen County, VA. King William County, VA. Louisa County, VA. New Kent County, VA. Powhatan County, VA. Prince George County, VA. Sussex County, VA. Colonial Heights City, VA. Hopewell City, VA. Petersburg City, VA. Richmond City, VA. Riverside-San Bernardino-Ontario, CA. Riverside County, CA. San Bernardino County, CA. Roanoke, VA ................ Botetourt County, VA. Craig County, VA. Franklin County, VA. Roanoke County, VA. Roanoke City, VA. Salem City, VA. Rochester, MN ............. Dodge County, MN. Olmsted County, MN. Wabasha County, MN. Rochester, NY .............. Livingston County, NY. Monroe County, NY. Ontario County, NY. Orleans County, NY. Wayne County, NY. Rockford, IL .................. Boone County, IL. Winnebago County, IL. Rockingham CountyStrafford County, NH. Rockingham County, NH. Strafford County, NH. Rocky Mount, NC ......... Edgecombe County, NC. Nash County, NC. Rome, GA ..................... Floyd County, GA. Frm 00041 Fmt 4701 Sfmt 4700 Wage index 47975 TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code Urban area (constituent counties) Wage index 40900 ..... Sacramento-Arden-Arcade-Roseville, CA. El Dorado County, CA. Placer County, CA. Sacramento County, CA. Yolo County, CA. Saginaw-Saginaw Township North, MI. Saginaw County, MI. St. Cloud, MN ............... Benton County, MN. Stearns County, MN. St. George, UT ............. Washington County, UT. St. Joseph, MO–KS ...... Doniphan County, KS. Andrew County, MO. Buchanan County, MO. DeKalb County, MO. St. Louis, MO–IL .......... Bond County, IL. Calhoun County, IL. Clinton County, IL. Jersey County, IL. Macoupin County, IL. Madison County, IL. Monroe County, IL. St. Clair County, IL. Crawford County, MO. Franklin County, MO. Jefferson County, MO. Lincoln County, MO. St. Charles County, MO. St. Louis County, MO. Warren County, MO. Washington County, MO. St. Louis City, MO. Salem, OR .................... Marion County, OR. Polk County, OR. Salinas, CA ................... Monterey County, CA. Salisbury, MD ............... Somerset County, MD. Wicomico County, MD. Salt Lake City, UT ........ Salt Lake County, UT. Summit County, UT. Tooele County, UT. San Angelo, TX ............ Irion County, TX. Tom Green County, TX. San Antonio, TX ........... Atascosa County, TX. Bandera County, TX. Bexar County, TX. Comal County, TX. Guadalupe County, TX. Kendall County, TX. Medina County, TX. Wilson County, TX. San Diego-CarlsbadSan Marcos, CA. San Diego County, CA. Sandusky, OH .............. Erie County, OH. 1.5498 1.4990 1.0326 0.9723 40980 ..... 41060 ..... 41100 ..... 41140 ..... 41180 ..... 1.1497 0.9195 41420 ..... 41500 ..... 41540 ..... 1.1662 41620 ..... 0.8749 41660 ..... 41700 ..... 0.9751 1.0172 0.8750 41740 ..... 0.8924 41780 ..... E:\FR\FM\06AUR3.SGM 06AUR3 0.8849 1.0658 0.9345 0.9834 0.9336 1.1148 1.5820 0.8948 0.9350 0.8169 0.8911 1.2213 0.7788 47976 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code Urban area (constituent counties) Wage index 41884 ..... San Francisco-San Mateo-Redwood City, CA. Marin County, CA. San Francisco County, CA. San Mateo County, CA. ´ San German-Cabo Rojo, PR. Cabo Rojo Municipio, PR. Lajas Municipio, PR. Sabana Grande Municipio, PR. ´ San German Municipio, PR. San Jose-SunnyvaleSanta Clara, CA. San Benito County, CA. Santa Clara County, CA. San Juan-CaguasGuaynabo, PR. Aguas Buenas Municipio, PR. Aibonito Municipio, PR. Arecibo Municipio, PR. Barceloneta Municipio, PR. Barranquitas Municipio, PR. ´ Bayamon Municipio, PR. Caguas Municipio, PR. Camuy Municipio, PR. ´ Canovanas Municipio, PR. Carolina Municipio, PR. ˜ Catano Municipio, PR. Cayey Municipio, PR. Ciales Municipio, PR. Cidra Municipio, PR. ´ Comerıo Municipio, PR. Corozal Municipio, PR. Dorado Municipio, PR. Florida Municipio, PR. Guaynabo Municipio, PR. Gurabo Municipio, PR. Hatillo Municipio, PR. Humacao Municipio, PR. Juncos Municipio, PR. Las Piedras Municipio, PR. ´ Loıza Municipio, PR. ´ Manatı Municipio, PR. Maunabo Municipio, PR. Morovis Municipio, PR. Naguabo Municipio, PR. Naranjito Municipio, PR. Orocovis Municipio, PR. Quebradillas Municipio, PR. ´ Rıo Grande Municipio, PR. San Juan Municipio, PR. San Lorenzo Municipio, PR. Toa Alta Municipio, PR. Toa Baja Municipio, PR. CBSA Code 1.6743 41900 ..... 41940 ..... 41980 ..... tkelley on DSK3SPTVN1PROD with RULES3 TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued VerDate Mar<15>2010 20:00 Aug 05, 2013 0.4550 42020 ..... 42044 ..... 42060 ..... 1.7086 42100 ..... 0.4356 Jkt 229001 42140 ..... 42220 ..... 42340 ..... 42540 ..... 42644 ..... 42680 ..... 43100 ..... 43300 ..... 43340 ..... 43580 ..... 43620 ..... 43780 ..... 43900 ..... PO 00000 Urban area (constituent counties) Trujillo Alto Municipio, PR. Vega Alta Municipio, PR. Vega Baja Municipio, PR. Yabucoa Municipio, PR. San Luis Obispo-Paso Robles, CA. San Luis Obispo County, CA. Santa Ana-AnaheimIrvine, CA. Orange County, CA. Santa Barbara-Santa Maria-Goleta, CA. Santa Barbara County, CA. Santa Cruz-Watsonville, CA. Santa Cruz County, CA. Santa Fe, NM ............... Santa Fe County, NM. Santa Rosa-Petaluma, CA. Sonoma County, CA. Savannah, GA .............. Bryan County, GA. Chatham County, GA. Effingham County, GA. Scranton-Wilkes-Barre, PA. Lackawanna County, PA. Luzerne County, PA. Wyoming County, PA. Seattle-Bellevue-Everett, WA. King County, WA. Snohomish County, WA. Sebastian-Vero Beach, FL. Indian River County, FL. Sheboygan, WI ............. Sheboygan County, WI. Sherman-Denison, TX .. Grayson County, TX ..... Shreveport-Bossier City, LA. Bossier Parish, LA. Caddo Parish, LA. De Soto Parish, LA. Sioux City, IA–NE–SD .. Woodbury County, IA. Dakota County, NE. Dixon County, NE. Union County, SD. Sioux Falls, SD ............. Lincoln County, SD. McCook County, SD. Minnehaha County, SD. Turner County, SD. South Bend-Mishawaka, IN–MI. St. Joseph County, IN. Cass County, MI. Spartanburg, SC ........... Spartanburg County, SC. Frm 00042 Fmt 4701 Sfmt 4700 Wage index TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code Urban area (constituent counties) Wage index 44060 ..... Spokane, WA ............... Spokane County, WA. Springfield, IL ............... Menard County, IL. Sangamon County, IL. Springfield, MA ............. Franklin County, MA. Hampden County, MA. Hampshire County, MA. Springfield, MO ............. Christian County, MO. Dallas County, MO. Greene County, MO. Polk County, MO. Webster County, MO. Springfield, OH ............. Clark County, OH State College, PA ......... Centre County, PA. Steubenville-Weirton, OH–WV. Jefferson County, OH. Brooke County, WV. Hancock County, WV. Stockton, CA ................ San Joaquin County, CA. Sumter, SC ................... Sumter County, SC. Syracuse, NY ............... Madison County, NY. Onondaga County, NY. Oswego County, NY. Tacoma, WA ................. Pierce County, WA. Tallahassee, FL ............ Gadsden County, FL. Jefferson County, FL. Leon County, FL. Wakulla County, FL. Tampa-St. PetersburgClearwater, FL. Hernando County, FL. Hillsborough County, FL. Pasco County, FL. Pinellas County, FL. Terre Haute, IN ............ Clay County, IN. Sullivan County, IN. Vermillion County, IN. Vigo County, IN. Texarkana, TX-Texarkana, AR. Miller County, AR. Bowie County, TX. Toledo, OH ................... Fulton County, OH. Lucas County, OH. Ottawa County, OH. Wood County, OH. Topeka, KS ................... Jackson County, KS. Jefferson County, KS. Osage County, KS. Shawnee County, KS. Wabaunsee County, KS. Trenton-Ewing, NJ ........ Mercer County, NJ. Tucson, AZ ................... 1.1174 44100 ..... 44140 ..... 1.3036 44180 ..... 1.2111 1.2825 44220 ..... 44300 ..... 1.7937 44600 ..... 1.0136 1.6679 44700 ..... 0.8757 44940 ..... 45060 ..... 0.8331 45104 ..... 45220 ..... 1.1733 0.8760 45300 ..... 0.9203 0.8723 0.8723 0.8262 45460 ..... 45500 ..... 0.9163 45780 ..... 0.8275 45820 ..... 0.9425 0.8782 45940 ..... 46060 ..... E:\FR\FM\06AUR3.SGM 06AUR3 0.9165 1.0378 0.8440 0.8447 0.9575 0.7598 1.3734 0.7594 0.9897 1.1574 0.8391 0.9075 0.9706 0.7428 0.9013 0.8974 1.0648 0.8953 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code 46140 ..... 46220 ..... 46340 ..... 46540 ..... 46660 ..... 46700 ..... 47020 ..... 47220 ..... 47260 ..... 47300 ..... 47380 ..... 47580 ..... tkelley on DSK3SPTVN1PROD with RULES3 47644 ..... 47894 ..... Urban area (constituent counties) Pima County, AZ. Tulsa, OK ..................... Creek County, OK. Okmulgee County, OK. Osage County, OK. Pawnee County, OK. Rogers County, OK. Tulsa County, OK. Wagoner County, OK. Tuscaloosa, AL ............. Greene County, AL. Hale County, AL. Tuscaloosa County, AL. Tyler, TX ....................... Smith County, TX. Utica-Rome, NY ........... Herkimer County, NY. Oneida County, NY. Valdosta, GA ................ Brooks County, GA. Echols County, GA. Lanier County, GA. Lowndes County, GA. Vallejo-Fairfield, CA ...... Solano County, CA. Victoria, TX ................... Calhoun County, TX. Goliad County, TX. Victoria County, TX. Vineland-MillvilleBridgeton, NJ. Cumberland County, NJ. Virginia Beach-NorfolkNewport News, VA– NC. Currituck County, NC. Gloucester County, VA. Isle of Wight County, VA. James City County, VA. Mathews County, VA. Surry County, VA. York County, VA. Chesapeake City, VA. Hampton City, VA. Newport News City, VA. Norfolk City, VA. Poquoson City, VA. Portsmouth City, VA. Suffolk City, VA. Virginia Beach City, VA. Williamsburg City, VA. Visalia-Porterville, CA ... Tulare County, CA. Waco, TX ...................... McLennan County, TX. Warner Robins, GA ...... Houston County, GA. Warren-Troy-Farmington Hills, MI. Lapeer County, MI. Livingston County, MI. Macomb County, MI. Oakland County, MI. St. Clair County, MI. Washington-ArlingtonAlexandria, DC–VA– MD–WV. District of Columbia, DC. VerDate Mar<15>2010 20:00 Aug 05, 2013 Wage index TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code 0.8145 0.8500 0.8526 0.8769 0.7527 1.6286 47940 ..... 0.8949 48140 ..... 1.0759 48300 ..... 0.9121 48424 ..... 48540 ..... 48620 ..... 48660 ..... 48700 ..... 0.9947 48864 ..... 0.8213 0.7732 48900 ..... 0.9432 49020 ..... 1.0533 Jkt 229001 49180 ..... PO 00000 Urban area (constituent counties) Calvert County, MD. Charles County, MD. Prince George’s County, MD. Arlington County, VA. Clarke County, VA. Fairfax County, VA. Fauquier County, VA. Loudoun County, VA. Prince William County, VA. Spotsylvania County, VA. Stafford County, VA. Warren County, VA. Alexandria City, VA. Fairfax City, VA. Falls Church City, VA. Fredericksburg City, VA. Manassas City, VA. Manassas Park City, VA. Jefferson County, WV. Waterloo-Cedar Falls, IA. Black Hawk County, IA. Bremer County, IA. Grundy County, IA. Wausau, WI .................. Marathon County, WI. Wenatchee-East Wenatchee, WA. Chelan County, WA. Douglas County, WA. West Palm Beach-Boca Raton-Boynton Beach, FL. Palm Beach County, FL. Wheeling, WV–OH ....... Belmont County, OH. Marshall County, WV. Ohio County, WV. Wichita, KS ................... Butler County, KS. Harvey County, KS. Sedgwick County, KS. Sumner County, KS. Wichita Falls, TX .......... Archer County, TX. Clay County, TX. Wichita County, TX. Williamsport, PA ........... Lycoming County, PA. Wilmington, DE–MD–NJ New Castle County, DE. Cecil County, MD. Salem County, NJ. Wilmington, NC. Brunswick County, NC New Hanover County, NC. Pender County, NC. Winchester, VA–WV ..... Frederick County, VA. Winchester City, VA. Hampshire County, WV. Winston-Salem, NC ...... Davie County, NC. Forsyth County, NC. Frm 00043 Fmt 4701 Sfmt 4700 Wage index 47977 TABLE A—FY 2014 WAGE INDEX FOR URBAN AREAS BASED ON CBSA LABOR MARKET AREAS—Continued CBSA Code 49340 ..... 49420 ..... 49500 ..... 49620 ..... 49660 ..... 49700 ..... 49740 ..... 0.8331 Urban area (constituent counties) Stokes County, NC. Yadkin County, NC. Worcester, MA .............. Worcester County, MA. Yakima, WA .................. Yakima County, WA. Yauco, PR .................... ´ Guanica Municipio, PR. Guayanilla Municipio, PR. ˜ Penuelas Municipio, PR. Yauco Municipio, PR. York-Hanover, PA ........ York County, PA. Youngstown-WarrenBoardman, OH–PA. Mahoning County, OH. Trumbull County, OH. Mercer County, PA. Yuba City, CA ............... Sutter County, CA. Yuba County, CA. Yuma, AZ ..................... Yuma County, AZ. Wage index 1.1584 1.0355 0.3782 0.9540 0.8262 1.1759 0.9674 1 At this time, there are no hospitals located in this urban area on which to base a wage index. 0.8802 1.0109 0.9597 0.6673 0.8674 0.9537 0.8268 1.0593 0.8862 0.9034 0.8560 State code Nonurban area Wage index 1 ........... 2 ........... 3 ........... 4 ........... 5 ........... 6 ........... 7 ........... 8 ........... 10 ......... 11 ......... 12 ......... 13 ......... 14 ......... 15 ......... 16 ......... 17 ......... 18 ......... 19 ......... 20 ......... 21 ......... 22 ......... 23 ......... 24 ......... 25 ......... 26 ......... 27 ......... 28 ......... 29 ......... 30 ......... 31 ......... 32 ......... 33 ......... 34 ......... 35 ......... 36 ......... 37 ......... 38 ......... Alabama ......................... Alaska ............................. Arizona ........................... Arkansas ......................... California ........................ Colorado ......................... Connecticut ..................... Delaware ........................ Florida ............................. Georgia ........................... Hawaii ............................. Idaho ............................... Illinois .............................. Indiana ............................ Iowa ................................ Kansas ............................ Kentucky ......................... Louisiana ........................ Maine .............................. Maryland ......................... Massachusetts ................ Michigan ......................... Minnesota ....................... Mississippi ...................... Missouri .......................... Montana .......................... Nebraska ........................ Nevada ........................... New Hampshire .............. New Jersey1 ................... New Mexico .................... New York ........................ North Carolina ................ North Dakota .................. Ohio ................................ Oklahoma ....................... Oregon ............................ 0.7147 1.3662 0.9166 0.7343 1.2788 0.9802 1.1311 1.0092 0.7985 0.7459 1.0739 0.7605 0.8434 0.8513 0.8434 0.7929 0.7784 0.7585 0.8238 0.8696 1.3614 0.8270 0.9133 0.7568 0.7775 0.9098 0.8855 0.9781 1.0339 — 0.8922 0.8220 0.8100 0.6785 0.8377 0.7704 0.9435 E:\FR\FM\06AUR3.SGM 06AUR3 47978 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations State code 39 40 41 42 43 44 45 46 ......... ......... ......... ......... ......... ......... ......... ......... Nonurban area Wage index Pennsylvania .................. Puerto Rico1 ................... Rhode Island1 ................. South Carolina ................ South Dakota .................. Tennessee ...................... Texas .............................. Utah ................................ 0.8430 0.4047 — 0.8329 0.8164 0.7444 0.7874 0.8732 State code 47 48 49 50 51 52 53 ......... ......... ......... ......... ......... ......... ......... Nonurban area Wage index State code Nonurban area Wage index Vermont .......................... Virgin Islands .................. Virginia ............................ Washington ..................... West Virginia .................. Wisconsin ....................... Wyoming ......................... 0.9740 0.7060 0.7758 1.0529 0.7407 0.8904 0.9243 65 ......... Guam .............................. 0.9611 1 All counties within the State are classified as urban, with the exception of Puerto Rico. Puerto Rico has areas designated as rural; however, no short-term, acute care hospitals are located in the area(s) for FY 2014. The Puerto Rico wage index is the same as FY 2013. [FR Doc. 2013–18776 Filed 7–31–13; 4:15 pm] tkelley on DSK3SPTVN1PROD with RULES3 BILLING CODE 4120–01–P VerDate Mar<15>2010 20:00 Aug 05, 2013 Jkt 229001 PO 00000 Frm 00044 Fmt 4701 Sfmt 9990 E:\FR\FM\06AUR3.SGM 06AUR3

Agencies

[Federal Register Volume 78, Number 151 (Tuesday, August 6, 2013)]
[Rules and Regulations]
[Pages 47935-47978]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-18776]

[[Page 47935]]

Vol. 78

Tuesday,

No. 151

August 6, 2013

Part IV

Department of Health and Human Services

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Centers for Medicare and Medicaid Services

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42 CFR Parts 413 and 424

Medicare Program; Prospective Payment System and Consolidated Billing
for Skilled Nursing Facilities for FY 2014; Rules

Federal Register / Vol. 78 , No. 151 / Tuesday, August 6, 2013 /
Rules and Regulations

[[Page 47936]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 413 and 424

[CMS-1446-F]
RIN 0938-AR65

Medicare Program; Prospective Payment System and Consolidated
Billing for Skilled Nursing Facilities for FY 2014

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

ACTION: Final rule.

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SUMMARY: This final rule updates the payment rates used under the
prospective payment system for skilled nursing facilities (SNFs) for
fiscal year (FY) 2014. In addition, it revises and rebases the SNF
market basket, revises and updates the labor related share, and makes
certain technical and conforming revisions in the regulations text.
This final rule also includes a policy for reporting the SNF market
basket forecast error in certain limited circumstances and adds a new
item to the Minimum Data Set (MDS), Version 3.0 for reporting the
number of distinct therapy days. Finally, this final rule adopts a
change to the diagnosis code used to determine which residents will
receive the AIDS add-on payment, effective for services provided on or
after the October 1, 2014 implementation date for conversion to ICD-10-
CM.

DATES: Effective Date: This final rule is effective on October 1, 2013.

FOR FURTHER INFORMATION CONTACT:
Penny Gershman, (410) 786-6643, for information related to clinical
issues.
John Kane, (410) 786-0557, for information related to the
development of the payment rates and case-mix indexes.
Kia Sidbury, (410) 786-7816, for information related to the wage
index.
Bill Ullman, (410) 786-5667, for information related to level of
care determinations, consolidated billing, and general information.

SUPPLEMENTARY INFORMATION:

Availability of Certain Information Exclusively Through the Internet on
the CMS Web site

The Wage Index for Urban Areas Based on CBSA Labor Market Areas
(Table A) and the Wage Index Based on CBSA Labor Market Areas for Rural
Areas (Table B) are published in the Federal Register as an Addendum to
the annual SNF PPS rulemaking (that is, the SNF PPS proposed and final
rules or, when applicable, the current update notice). However, as of
FY 2012, a number of other Medicare payment systems adopted an approach
in which such tables are no longer published in the Federal Register in
this manner, and instead are made available exclusively through the
Internet; see, for example, the FY 2012 Hospital Inpatient PPS (IPPS)
final rule (76 FR 51476). To be consistent with these other Medicare
payment systems and streamline the published content to focus on policy
discussion, we proposed to use a similar approach for the SNF PPS as
well. We also proposed to revise the applicable regulations text at
Sec. 413.345 to accommodate this approach, consistent with the wording
of the corresponding statutory authority at section 1888(e)(4)(H)(iii)
of the Social Security Act (the Act). We did not receive any comments
on this proposal. Therefore, as discussed in greater detail in section
V. of this final rule, we are finalizing this proposal and revising the
applicable regulations text at Sec. 413.345 to accommodate this
approach. Under this approach, effective October 1, 2013, the
individual wage index values displayed in Tables A and B of this rule
will no longer be published in the Federal Register as part of the
annual SNF PPS rulemaking, and instead will be made available
exclusively through the Internet on CMS's SNF PPS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html. Consistent with the provisions of section
1888(e)(4)(H)(iii) of the Act, we will continue to publish in the
Federal Register the specific ``factors to be applied in making the
area wage adjustment'' (for example, the SNF prospective payment
system's use of the hospital wage index exclusive of its occupational
mix adjustment) as part of our annual SNF PPS rulemaking process, but
that document will no longer include a listing of the individual wage
index values themselves, which will instead be made available
exclusively through the Internet on the CMS Web site.
In addition, we note that in previous years, each rule or update
notice issued under the annual SNF PPS rulemaking cycle has included a
detailed reiteration of the various individual legislative provisions
that have affected the SNF PPS over the years, a number of which
represented temporary measures that have long since expired. That
discussion, along with detailed background information on various other
aspects of the SNF PPS, will henceforth be made available exclusively
on the CMS Web site as well, at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/.
To assist readers in referencing sections contained in this
document, we are providing the following Table of Contents.

Table of Contents

I. Executive Summary
A. Purpose
B. Summary of Major Provisions
C. Summary of Cost, Transfers, and Benefits
II. Background
A. Statutory Basis and Scope
B. Initial Transition
C. Required Annual Rate Updates
III. Summary of the Provisions of the FY 2014 SNF PPS Proposed Rule
IV. Analysis of and Responses to Public Comments on the FY 2014 SNF
PPS Proposed Rule
A. General Comments on the FY 2014 SNF PPS Proposed Rule
B. SNF PPS Rate Setting Methodology and FY 2014 Update
1. Federal Base Rates
2. SNF Market Basket Update
a. Revising and Rebasing the SNF Market Basket Index
i. Effect on the Labor-Related Share of Revising and Rebasing
the SNF Market Basket Index
3. Forecast Error Adjustment
4. Multifactor Productivity Adjustment
a. Incorporating the Multifactor Productivity Adjustment in the
Market Basket Update
5. Market Basket Update Factor for FY 2014
6. Case-Mix Adjustment
7. Wage Index Adjustment
8. Adjusted Rate Computation Example
C. Additional Aspects of the SNF PPS
1. SNF Level of Care--Administrative Presumption
2. Consolidated Billing
3. Payment for SNF-Level Swing-Bed Services
D. Other Issues
1. Monitoring Impact of FY 2012 Policy Changes
2. Ensuring Accuracy in Grouping to Rehabilitation RUG-IV
Categories
3. SNF Therapy Research Project
V. Provisions of the Final Rule; Regulations Text
VI. Collection of Information Requirements
VII. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
2. Statement of Need
3. Overall Impacts
4. Detailed Economic Analysis
5. Alternatives Considered
6. Accounting Statement
7. Conclusion
B. Regulatory Flexibility Act Analysis
C. Unfunded Mandates Reform Act Analysis
D. Federalism Analysis

[[Page 47937]]

Regulations Text

Acronyms

In addition, because of the many terms to which we refer by
acronym in this final rule, we are listing these abbreviations and
their corresponding terms in alphabetical order below:
AIDS Acquired Immune Deficiency Syndrome
ARD Assessment reference date
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
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, Pub. L. 106-554
CAH Critical access hospital
CBSA Core-based statistical area
CFR Code of Federal Regulations
CMI Case-mix index
CMS Centers for Medicare & Medicaid Services
COT Change of therapy
ECI Employment Cost Index
EOT End of therapy
EOT-R End of therapy-resumption
FQHC Federally qualified health center
FR Federal Register
FY Fiscal year
GAO Government Accountability Office
HCPCS Healthcare Common Procedure Coding System
HOMER Home office Medicare records
IGI IHS (Information Handling Services) Global Insight, Inc.
MDS Minimum data set
MFP Multifactor productivity
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, Pub. L. 108-173
MSA Metropolitan statistical area
NAICS North American Industrial Classification System
NTA Non-Therapy Ancillary
OMB Office of Management and Budget
OMRA Other Medicare Required Assessment
PPS Prospective Payment System
RAI Resident assessment instrument
RAVEN Resident assessment validation entry
RFA Regulatory Flexibility Act, Pub. L. 96-354
RHC Rural health clinic
RIA Regulatory impact analysis
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
STM Staff time measurement
STRIVE Staff time and resource intensity verification
UMRA Unfunded Mandates Reform Act, Pub. L. 104-4

I. Executive Summary

A. Purpose

This final rule updates the SNF prospective payment rates for FY
2014 as required under section 1888(e)(4)(E) of the Act. It also
responds to section 1888(e)(4)(H) of the Act, which requires the
Secretary to ``provide for publication in the Federal Register'' before
the August 1 that precedes the start of each fiscal year, the
unadjusted federal per diem rates, the case-mix classification system,
and the factors to be applied in making the area wage adjustment used
in computing the prospective payment rates for that fiscal year.

B. Summary of Major Provisions

In accordance with sections 1888(e)(4)(E)(ii)(IV) and 1888(e)(5) of
the Act, the federal rates in this final rule reflect an update to the
rates that we published in the SNF PPS update notice for FY 2013 (77 FR
46214) which reflects the SNF market basket index, adjusted by the
forecast error correction, if applicable, and the multifactor
productivity adjustment for FY 2014.

C. Summary of Cost, Transfers, and Benefits

------------------------------------------------------------------------
Provision description Total transfers
------------------------------------------------------------------------
FY 2014 SNF PPS payment rate The economic impact of this final rule is
update. an estimated increase of $470 million in
aggregate payments to SNFs during FY
2014.
------------------------------------------------------------------------

II. Background

A. Statutory Basis and Scope

As amended by section 4432 of the Balanced Budget Act of 1997 (BBA,
Pub. L. 105-33, enacted on August 5, 1997), section 1888(e) of the Act
provides for the implementation of a PPS for Medicare payment for
covered SNF services. This methodology uses prospective, case-mix
adjusted per diem payment rates applicable to all covered SNF services
defined in section 1888(e)(2)(A) of the Act. The SNF PPS is effective
for cost reporting periods beginning on or after July 1, 1998, and
covers all costs of furnishing covered SNF services (routine,
ancillary, and capital-related costs) other than costs associated with
approved educational activities and bad debts. Under section
1888(e)(2)(A)(i) of the Act, covered SNF services include post-hospital
extended care services for which benefits are provided under Part A, as
well as those items and services (other than a certain limited number
of excluded services described in clauses (ii), (iii), and (iv) of
section 1888(e)(2)(A), such as physician services) for which payment
may otherwise be made under Part B and which are furnished to Medicare
beneficiaries who are residents 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).

B. Initial Transition

Under sections 1888(e)(1)(A) and 1888(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. Currently, we base
payments for SNFs entirely on the adjusted federal per diem rates, and
we no longer include adjustment factors under the transition related to
facility-specific rates for the upcoming FY.

C. Required Annual Rate Updates

Section 1888(e)(4)(E) of the Act requires the SNF PPS payment rates
to be updated annually. The most recent annual update occurred in an
update notice that set forth updates to the SNF PPS payment rates for
FY 2013 (77 FR 46214).
Under this requirement, section 1888(e)(4)(H) of the Act specifies
that we provide for publication annually in the Federal Register of the
following:
The unadjusted federal per diem rates to be applied to
days of covered SNF services furnished during the upcoming FY.
The case-mix classification system to be applied with
respect to these services during the upcoming FY.
The factors to be applied in making the area wage
adjustment with respect to these services.
Along with other revisions discussed later in this preamble, this
final rule also provides the required annual

[[Page 47938]]

updates to the per diem payment rates for SNFs for FY 2014.

III. Summary of the Provisions of the FY 2014 SNF PPS Proposed Rule

In the FY 2014 SNF PPS proposed rule (78 FR 26438), we proposed an
update to the payment rates used under the PPS for SNFs for FY 2014.
Additionally, we proposed to revise and rebase the SNF market basket,
to use this revised and rebased SNF market basket to determine the SNF
PPS update for FY 2014; to update and revise the labor related share;
and to make certain technical and conforming revisions in the
regulations text. The proposed rule also included a proposed policy for
revising how we report the SNF market basket forecast error in certain
limited circumstances. In addition, we proposed a new item to be
included on the Minimum Data Set (MDS), Version 3.0. Finally, we
proposed to transition to the ICD-10-CM diagnosis code B20 in order to
identify those residents for whom it is appropriate to apply the AIDS
add-on payment under section 511 of the MMA, effective upon the October
1, 2014 implementation date for conversion to ICD-10-CM.

IV. Analysis of and Responses to Public Comments on the FY 2014 SNF PPS
Proposed Rule

In response to the publication of the FY 2014 SNF PPS proposed
rule, we received 20 timely public comments from individual providers,
corporations, government agencies, private citizens, trade
associations, and major organizations. The following are brief
summaries of each proposed provision, a summary of the public comments
that we received related to that proposal, and our responses to the
comments.

A. General Comments on the FY 2014 SNF PPS Proposed Rule

In addition to the comments we received on the proposed rule's
discussion of specific aspects of the SNF PPS (which we address later
in this final rule), commenters also submitted the following, more
general observations on the payment system. A discussion of these
comments, along with our responses, appears below.
Comment: We received a number of comments about the MDS. Commenters
noted the complexity of the MDS 3.0, particularly with regard to
several of the newer assessment types, the need to clarify the Resident
Assessment Instrument (RAI) Manual, the manual update process, and the
time required to become trained on the new MDS 3.0 requirements.
Response: We appreciate these concerns and we recognize that the
MDS 3.0 is a complex assessment tool. We provided extensive training
and opportunities to assist with questions about the MDS 3.0 both prior
to and after its October 1, 2010 implementation on audio conferences,
at national training conferences, in the form of the RAI Manual and
subsequent clarification updates, and postings to the MDS 3.0 and SNF
PPS Web sites.
We have also provided support in response to oral and written
inquiries, and issued clarification during Open Door Forums, RAI Manual
updates, and through online and telephone technical assistance. We are
committed to continuing training on both the MDS 3.0 and RUG-IV
systems. Additionally, as we receive provider input through these
efforts, we will continue to update and clarify the RAI Manual to
ensure that it continues to provide accurate information and guidance
on CMS policies in a timely fashion.
Comment: A few commenters raised the issue of Non-Therapy
Ancillaries (NTAs). All of the comments we received on this issue
supported CMS's broad objective to develop a new method for paying for
NTAs received in the SNF. These commenters urged CMS to expedite the
research necessary to develop a new model for NTA payment and to
implement such a model shortly thereafter.
Response: We appreciate all of the comments on this topic and the
broad support for our objective to address this issue. Furthermore, the
comments we received provided a number of interesting and creative
ideas for consideration during the research process. We look forward to
working with providers and stakeholders in the future as we continue to
research this possible refinement to the SNF PPS.

B. SNF PPS Rate Setting Methodology and FY 2014 Update

In the FY 2014 SNF PPS proposed rule (78 FR 26441 through 26463),
we outlined the basic methodology used to set the rates for the SNF
PPS. We also discussed several proposals associated with our rate
setting methodology, including proposals associated with revising and
rebasing the SNF market basket for FY 2014, using the revised and
rebased SNF market basket to update the SNF payment rates, and updating
and revising the labor-related share, as well as a proposal associated
with how CMS reports the SNF forecast error correction for a given
year. Our discussion of the rate setting methodology, our proposed
changes associated with this methodology, and the comments, along with
our responses, on these proposals appear below.
1. Federal Base Rates
Under section 1888(e)(4) of the Act, the SNF 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 a ``Part B add-on,'' which is an estimate of the
amounts that, prior to the SNF PPS, would have been payable under Part
B for covered SNF services furnished to individuals during the course
of a covered Part A stay in a SNF.
In developing the rates for the initial period, we updated costs
from FY 1995 to the first effective year of the PPS (which was the 15-
month period beginning July 1, 1998) using a SNF market basket index,
and then standardized for geographic variations in wages and for the
costs of facility differences in case mix. 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, and adjusted the portion of the
federal rate attributable to wage-related costs by a wage index to
reflect geographic variations in wages.
2. SNF Market Basket Update
Section 1888(e)(5)(A) 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.
Accordingly, we have developed a SNF market basket index that
encompasses the most commonly used cost categories for SNF routine
services, ancillary services, and capital-related expenses. Section
1888(e)(5)(B) of the Act defines the SNF market basket percentage as
the percentage change in the SNF market basket index from the midpoint
of the

[[Page 47939]]

previous FY to the midpoint of the current FY. For the federal rates
set forth in this final rule, we use the percentage change in the SNF
market basket index to compute the update factor for FY 2014, based on
the IGI second quarter 2013 forecast (with historical data through
first quarter of 2013) of the FY 2014 percentage increase in the FY
2010-based SNF market basket for routine, ancillary, and capital
related expenses. In the FY 2014 SNF PPS proposed rule, the FY 2014 SNF
market basket percentage was based on the IGI first quarter 2013
forecast (with historical data through the fourth quarter 2012) of the
FY 2014 percentage increase in the FY 2010-based SNF market basket
index for routine, ancillary, and capital-related expenses. The final
SNF market basket update is discussed in section IV.B.5 of this final
rule. As discussed in sections IV.B of this final rule, this market
basket percentage change is reduced by the forecast error correction
(Sec. 413.337(d)(2)), and by the MFP adjustment as required by section
1888(e)(5)(B)(ii) of the Act.
a. Revising and Rebasing the SNF Market Basket Index
In the FY 2008 SNF PPS final rule (72 FR 43425 through 43430), we
revised and rebased the SNF market basket, which included updating the
base year from FY 1997 to FY 2004. For FY 2014, we proposed to rebase
the market basket to reflect FY 2010 Medicare allowable total cost data
(routine, ancillary, and capital-related) and to revise the cost
categories, cost weights, and price proxies used to determine the
market basket (78 FR 26451 through 26461).
Specifically, we proposed to develop cost category weights for the
FY 2010-based SNF market basket in two stages. First, we proposed to
derive base weights for seven major categories (wages and salaries,
employee benefits, contract labor, pharmaceuticals, professional
liability insurance, capital-related, and a residual ``all other'')
from the FY 2010 Medicare cost report (MCR) data for freestanding SNFs.
Second, we proposed to divide the residual ``all other'' cost category
into subcategories, using U.S. Department of Commerce Bureau of
Economic Analysis' (BEA) 2002 Benchmark Input-Output (I-O) tables for
the nursing home industry aged forward using price changes.
Furthermore, we proposed to continue to use the same overall
methodology as was used for the FY 2004-based SNF market basket to
develop the capital related cost weights of the FY 2010-based SNF
market basket.
We proposed to include five new cost categories in the FY 2010-
based SNF market basket: (1) Medical Instruments and Supplies; (2)
Apparel; (3) Machinery and Equipment; (4) Administrative and Facilities
Support Services; and (5) Financial Services. We also proposed to
divide the Nonmedical Professional Fees cost category into Nonmedical
Professional Fees: Labor-Related and Nonmedical Professional Fees:
Nonlabor-Related; and to revise our labels for the Labor-Intensive
Services and Nonlabor-Intensive Services cost categories to All Other:
Labor-Related Services and All Other: Nonlabor-Related Services,
respectively.
In addition, we proposed to revise several price proxies, including
using the ECI for Wages and Salaries for Nursing Care Facilities (NAICS
6231) to measure price growth of the Wages and Salaries cost category,
and using the ECI for Benefits for Nursing Care Facilities (NAICS 6231)
to measure price growth of the Benefits cost category.
We refer readers to the FY 2014 SNF PPS proposed rule (78 FR 26450-
26461) for a complete discussion of our proposals and associated
rationale related to revising and rebasing the SNF market basket. We
received a number of public comments on the proposed revising and
rebasing of the SNF market basket. A discussion of these comments, with
our responses, appears below.
Comment: Several commenters were in agreement with our efforts to
revise and rebase the SNF Market Basket. One commenter recommended that
we forgo rebasing the SNF market basket index until cost data that
adequately reflects recent and upcoming changes to the SNF cost
structure are available. Furthermore, the commenter stated that the
expenses reflected in the proposed FY 2010 base year do not account for
system-wide and industry-wide changes that have occurred since FY 2010,
which impose additional costs on SNFs. Specifically, they stated the
following changes have occurred since 2010 or are about to occur: (1)
Effective beginning FY 2011, CMS implemented changes to the reporting
of therapy minutes on the MDS; (2) effective beginning FY 2012, CMS
implemented a new therapy-related assessment and reporting changes; and
(3) significant new requirements and costs on SNFs as employers due to
the implementation of the Affordable Care Act.
Response: We last rebased and revised the SNF market basket in the
FY 2008 SNF PPS final rule (72 FR 43412, 43425-29), reflecting a FY
2004 base year. In the FY 2014 SNF PPS proposed rule, we proposed to
rebase and revise the SNF market basket to reflect FY 2010 data as
these were the most recent Medicare cost report data available; a
decision that was supported by numerous commenters. We do not agree
with the commenter's suggestion to postpone the rebasing of the SNF
market basket and continue to use a FY 2004-based SNF market basket,
which is less relevant with regard to the costs faced by SNFs and,
thus, is not as technically appropriate as the FY 2010-based index. We
will actively monitor the MCR data to determine if the cost structure
changes in a meaningful way as future years of data become available
and will propose any appropriate revisions or rebasing of the SNF
market basket in future rulemaking.
Comment: One commenter supported our efforts to improve payment
accuracy by rebasing and revising the market basket. However, they
expressed concern about the accuracy of the Medicare SNF cost reports
on which we rely. They stated that since payments are now based on the
SNF PPS, and have for an increasing time been divorced from an
individual facility's costs, less attention has been given to assuring
their accuracy.
The commenter also expressed concern that there has not been a
recent federal study on the accuracy of the SNF Medicare Cost Reports.
They recommended that we commission a study of the accuracy of SNF
Medicare cost reports and commit to revising applicable parts of the
new market basket index, if the study shows that such changes are
warranted.
The commenter also stated that there may be accuracy issues with
the SNF cost reports, as evidenced by MedPAC's use of unpublished
screens to select SNF cost reports for its analyses. Therefore, they
recommended that we explain what, if any, screens, exclusions, or other
mechanisms were used in the selection of the FY 2010 SNF cost reports
on which the new market basket weights are computed.
Response: We appreciate the commenter's concern over the accuracy
of the Medicare cost report data. Similar to MedPAC, we do apply edits
to the MCR data to remove reporting errors and outliers. Specifically,
MCR data are excluded if total facility costs, total operating costs,
Medicare general inpatient routine service costs, and Medicare payments
are less than or equal to zero. Additionally, for each of the major
cost weights (wages and salaries, employee benefits, contract labor,
pharmaceuticals, professional liability insurance, capital-related
expenses) the data are trimmed by: (1) Requiring that major expenses
(such as salary costs) and total Medicare

[[Page 47940]]

allowable costs are greater than zero; and (2) excluding the top and
bottom 5 percent of the major cost weight (for example, salary costs as
a percent of total Medicare allowable costs). These are the same types
of edits utilized for the FY 2004-based SNF market basket, as well as
other PPS market baskets (including but not limited to IPPS and HHA).
We believe this trimming process considerably improves the accuracy of
the data used to compute the major cost weights.
In response to the commenters' recommendation that we commission a
study of the accuracy of Medicare SNF cost reports, we note that
implementing such a recommendation would require significant resources
and approval through OMB's standard survey and auditing process (see
``Standards and Guidelines for Statistical Surveys'' https://www.whitehouse.gov/sites/default/files/omb/assets/omb/inforeg/statpolicy/standards_stat_surveys.pdf and ``Guidance on Agency Survey
and Statistical Information Collections'' https://www.whitehouse.gov/sites/default/files/omb/assets/omb/inforeg/pmc_survey_guidance_2006.pdf). In the past, cost report audits have been conducted but were
limited to specific fields and a small sample of providers. At this
time, we believe this approach is the most efficient and appropriate
way to identify and address cost report errors and to improve the
accuracy of the MCR data used to develop the SNF market basket cost
weights. We would appreciate industry representatives communicating to
their members the importance of completing the cost reports as
accurately as possible, the implications of misreported data, and the
possible impacts on their future payments.
Comment: One commenter was supportive of periodic rebasing and
revisions to the SNF market basket, but recommended that we hold off on
updating the weights and price proxies this year pending refinements to
the underlying Medicare cost reports to correct data issues that they
believe may bias the major cost categories weights. Their concerns
included:
(1) The effect of excluding cost reports where the Medicare General
Inpatient Routine. Service Costs are less than or equal to zero. They
expressed concern about the effect of the exclusion of providers whose
Medicare general inpatient routine service costs (as reported on
Worksheet D1 of the SNF MCR) are less than or equal to zero, noting
that this edit alone is responsible for excluding over 4,000 Medicare
cost reports (approximately 30 percent of all SNFs filing a Medicare
cost report) from the analytic database and the subsequent weight
calculations. They acknowledged that the exclusion makes sense on its
face and that clearly facilities with zero or negative inpatient
routine service costs should be excluded. Upon reviewing the cost
reports, however, they asserted that the issue is not that inpatient
routine service costs are zero or negative, but rather that the
Worksheet D1 is an optional worksheet. They also encouraged CMS to
examine, develop, and evaluate other exclusion criteria that target the
same issue that CMS seeks to address with the Medicare inpatient
routine services cost exclusion.
(2) Some of the cost category methodology descriptions in the
proposed rule were unclear and requested that CMS in both this year's
final rule and future proposed rules provide more specificity in the
precise methodology for estimating the market basket cost weights using
the Medicare cost reports. The commenter requested that CMS make
available a detailed item-by-item description of the formulas used in
the calculation of the major cost category weights in the final rule
and that CMS provide the analytic databases used to support the major
cost category weight calculations on the CMS Web site.
(3) The commenter claims that the CMS methodology for wages and
salaries (specifically the numerator for wages and salaries), benefits,
contract labor, and pharmaceuticals is inaccurate. The commenter based
this conclusion on their own estimates, which were an attempt to re-
create the CMS methodology and were provided in their comments.
Additionally, the commenter requested more information be provided in
the final rule to ensure that the results and analysis are valid and
accurate.
Response: We disagree with the commenter's recommendation to hold
off on updating the weights and price proxies this year. We believe our
methodology is technically sound and does not have any of the data
issues that the commenter suggests may bias the major cost category
weights. We are using the same general methodology used to develop the
FY 2004-based SNF market basket, as finalized in the FY 2008 SNF PPS
final rule (72 FR 43412, 43425-43429) . In our response below, we
address the three main concerns identified by the commenter.
The commenter suggested that we explore alternative edits and
examine, develop, and evaluate other exclusion criteria that target the
same issue that we seek to address with the Medicare inpatient services
routine cost exclusion. However, we continue to believe that this edit
(exclusion of providers whose Medicare general inpatient routine
service costs are less than or equal to zero) is appropriate as our
goal is to create a market basket that is representative of
freestanding SNF providers serving Medicare patients.
Worksheet D1 is ``optional'' to those provider's filing a low
Medicare utilization cost report (See Provider Reimbursement Manual,
part II, Section 110 https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021935.html). The cost
structure of these providers would reflect the expenses required to
serve predominately non-Medicare patients. Therefore, we believe
excluding these providers is appropriate.
Our market basket sample, which included approximately 10,000
providers, represents 70 percent of all freestanding SNF providers that
submitted a Medicare cost report for FY 2010. In addition, we note that
a sensitivity analysis that removed the Medicare general inpatient
routine service cost edit had a minor impact on the salary cost weight
of -0.2 percentage point. Therefore, we believe the resulting cost
weights are representative of the average across all SNFs serving
Medicare patients, even though we exclude some reports. The final
sample of SNF Medicare Cost Reports used to calculate the market basket
cost weights excluded any providers that reported costs less than or
equal to zero for the following categories: total facility costs, total
operating costs, Medicare general inpatient routine service costs, and
Medicare payments. Therefore, the final sample used included roughly
10,000 of the 14,000 providers that submitted a Medicare cost report
for FY 2010.
After we apply these edits, we calculate the cost weights as
specified in the FY 2014 SNF PPS proposed rule (78 FR 26451 through
26461); this method is further clarified below. For each of the major
cost weights (wages and salaries, employee benefits, contract labor,
pharmaceuticals, professional liability insurance, and capital-related
expenses), the data are trimmed by: (1) Requiring that major expenses
(such as wages and salary costs) and total Medicare allowable costs are
greater than zero; and (2) excluding the top and bottom 5 percent of
the major cost weight (for example, salary costs as a percent of total
Medicare allowable costs). We would note that this trimming process is
done for each cost weight individually. For example,

[[Page 47941]]

providers excluded from the drug cost weight calculation are not
automatically excluded from the other cost weight calculations and
trimming process. These are the same types of edits utilized for the FY
2004-based SNF market basket as well as other PPS market baskets
(including but not limited to IPPS and HHA). We believe this trimming
process considerably improves the accuracy of the data used to compute
the major cost weights.
For all of the cost weights, Medicare allowable total costs were
equal to total expenses from Worksheet B, lines 16, 21 through 30, 32,
33, and 48 plus Medicaid drug costs as defined below.
We included estimated Medicaid drug costs in the pharmacy cost
weight as well as the denominator for total Medicare allowable costs.
This is the same methodology used for the FY 2004-based SNF market
basket revision and rebasing. During that revision and rebasing,
commenters expressed concern over the exclusion of these Medicaid drug
expenses. In response, we revised the market basket drug cost weight
methodology to include these costs in the Medicare allowable
methodology. We finalized this methodology in the FY 2008 SNF PPS final
rule (72 FR 43425 through 43430), and for the same reasons set forth in
that final rule, we believe it is appropriate to continue to use this
methodology in the proposed FY 2010-based SNF market basket. The
methodology used in the FY 2010-based SNF market basket includes
Medicaid drug costs in the Medicare allowable MCR total costs (as
calculated using Worksheet B, lines 16, 21 through 30, 32, 33, 48) for
each of the cost weights prior to trimming them as specified above. An
alternative methodology would be to calculate and trim the nondrug cost
weights using only Medicare allowable total costs from Worksheet B and
then adjust the resulting cost weights for the inclusion of Medicaid
drug costs. We believe our approach is technically appropriate as it
allows for this adjustment to be applied at the individual (that is,
provider) level, which is preferable.
Finally, we would clarify that the final weights of the proposed FY
2010-based SNF market basket are based on weighted means. For example,
the final salary cost weight after trimming is equal to the sum of
total Medicare allowable wages and salaries divided by the sum of total
Medicare allowable costs (including Medicaid drug costs) where
providers with larger wages and salary costs have a larger weight in
the final wages and salaries cost weight. This methodology is
consistent with the methodology used to calculate the FY 2004-based SNF
market basket cost weights and other PPS market basket cost weights.
We believe the proposed rule included sufficient information
regarding CMS's methodology and the underlying data used for revising
and rebasing the SNF market basket. As stated in the FY 2014 SNF PPS
proposed rule, the cost category weights for the proposed rebased and
revised market basket were derived using freestanding Skilled Nursing
Facility Medicare Cost Reports and Bureau of Economic Analysis 2002
Input-Output data. Both databases are publicly available on the CMS and
BEA Web sites, respectively. We would note that the databases used for
the other market basket rebasings (such as, the hospital Medicare cost
report data for the IPPS market basket) are also publicly available on
the CMS and BEA Web sites, as well.
However, in order to respond to the commenter's suggestion for more
information on the detailed methodology for calculating the proposed FY
2010-based SNF market basket major cost weights, we have provided a
detailed discussion of the methodology, as requested. These
clarifications should allow the commenter to adequately re-create the
market basket weights so that discrepancies between their results and
the proposed FY 2010-based SNF market basket cost weights (that they
believed produced inaccurate results) can be reconciled. We believe
that the commenter's estimates and conclusions were based on a
misunderstanding of the formulas used to calculate the major cost
weights for the FY 2010-based SNF market basket, and thus we believe
the additional clarification provided below should address commenter's
concerns.
Specifically, we provide additional clarification on the specific
Medicare cost report fields used to calculate the major cost weights:
(1) The wages and salaries; (2) employee benefits; (3) contract labor;
(4) pharmaceutical; (5) professional liability insurance; (6) capital;
and (7) All Other ``residual'':
(1) Wages and Salaries (before the allocation of contract labor):
We derived the wages and salaries cost category using the FY 2010 SNF
MCRs. We determined Medicare allowable wages and salaries mostly from
Worksheet S-3, part II data. Medicare allowable wages and salaries are
equal to total wages and salaries (Worksheet S3, part II, line 1,
column 3) minus: (1) Excluded salaries from Worksheet S-3, part II; and
(2) nursing facility and non-reimbursable salaries from Worksheet A,
lines 18, 34 through 36. Specifically, we determined excluded salaries
in three steps: (1) Sum of data from Worksheet S3, part II, lines 3-5,
and 8-14; Worksheet A, lines 18, 31, 34-36, 51, and 56; (2) estimated
overhead salaries attributable to the non-Medicare allowable cost
centers defined as (total overhead salaries (Worksheet S3, Part III,
line 14) as a percent of total salaries Worksheet S3, Part II, line 1,
column 3) * excluded salaries as defined in step (1); (3) total
excluded salaries is equal to the sum of (1) and (2).
(2) Employee Benefits (before the allocation of contract labor): We
determined the weight for employee benefits using FY 2010 SNF MCR data.
We derived Medicare allowable benefit costs from Worksheet S-3, part
II. Medicare allowable benefits are equal to total benefits from
Worksheet S-3, part II, (lines 19-21) minus excluded (non-Medicare
allowable) benefits. Non-Medicare allowable benefits are derived by
multiplying non-Medicare allowable salaries (otherwise referred to as
excluded salaries above) times the ratio of total benefit costs for the
SNF to the total wage costs for the SNF.
(3) Contract Labor: We determined the weight for contract labor
using 2010 SNF MCR data. We derived Medicare allowable contract labor
costs from Worksheet S-3, part II line 17 minus Nursing Facility (NF)
contract labor costs, and Medicare allowable total costs from Worksheet
B. (Worksheet S-3, part II line 17 includes only those costs
attributable to services rendered in the SNF and/or NF for contracted
direct patient care services, that is, nursing, therapeutic,
rehabilitative, or diagnostic services furnished under contract rather
than by employees, and management contract services costs, defined as
those individuals who are working at the facility in the capacity of
chief executive, chief operating officer, chief financial officer, or
nursing administrator.) NF contract labor costs, which are not
reimbursable under Medicare, are derived by multiplying total contract
labor costs by the ratio of NF wages and salaries (Worksheet A, column
1, line 18), to the sum of NF and SNF wages and salaries (Worksheet A,
column 1, line 16).
(4) Pharmaceuticals: First, we calculated pharmaceutical costs
using the non-salary costs from the Pharmacy cost center (Worksheet B,
column 0, line 11 less Worksheet A, column 1, line 11) and the Drugs
Charged to Patients' cost center (Worksheet B, column 0, line 30 less
Worksheet A, column 1, line 30), both found on Worksheet B of the SNF
MCRs. Since these drug costs were attributable to the entire SNF and
not limited to Medicare allowable services,

[[Page 47942]]

we adjusted the drug costs by the ratio of Medicare allowable pharmacy
total costs to total pharmacy costs from Worksheet B, part I, column
11. Worksheet B, part I allocates the general service cost centers,
which are often referred to as ``overhead costs'' (in which pharmacy
costs are included) to the Medicare allowable and non-Medicare
allowable cost centers.
Second, for the FY 2010-based SNF market basket, we proposed to
continue to adjust the drug expenses reported on the MCR to include an
estimate of total Medicaid drug costs, which are not represented in the
Medicare-allowable drug cost weight. Similar to the last rebasing, we
are estimating Medicaid drug costs based on data representing dual-
eligible Medicaid beneficiaries. Medicaid drug costs are estimated by
multiplying Medicaid dual-eligible drug costs per day times the number
of Medicaid days as reported in the Medicare allowable skilled nursing
cost center in the SNF MCR. Medicaid dual-eligible drug costs per day
(where the day represents an unduplicated drug supply day) were
estimated using a sample of 2010 Part D claims for those dual-eligible
beneficiaries who had a Medicare SNF stay during the year. Medicaid
dual-eligible beneficiaries would receive their drugs through the
Medicare Part D benefit, which would work directly with the pharmacy,
and therefore, these costs would not be represented in the Medicare SNF
MCRs. A random 20 percent sample of Medicare Part D claims data yielded
a Medicaid drug cost per day of $17.39. We note that the FY 2004-based
SNF market basket relied on data from the Medicaid Statistical
Information System, which yielded a dual-eligible Medicaid drug cost
per day of $13.65 for 2004. For the revised and rebased FY 2010-based
SNF market basket, we used Part D claims to estimate total Medicaid
drug costs as this provides drug expenditure data for dual-eligible
beneficiaries for 2010. The Medicaid Statistical Information system is
no longer a comprehensive database for dual-eligible beneficiaries'
drug costs.
(5) Professional Liability Insurance: We calculated the
professional liability insurance costs from Worksheet S-2 of the MCRs
as the sum of premiums, paid losses, and self-insurance (Worksheet S-2,
column 1, line 45 plus Worksheet S-2, column 2, line 45 plus Worksheet
S-2, column 3, line 45).
(6) Capital-Related: We derived the capital-related costs using the
FY 2010 SNF MCRs. We calculated the Medicare allowable capital-related
cost weight from Worksheet B, part II (Worksheet B, part II, column 18,
line 16 plus Worksheet B, part II, column 18, lines 21 to 30 plus
Worksheet B, part II, column 18, line 32 plus Worksheet B, part II,
column 18, line 33 plus Worksheet B, part II, column 18, line 48 plus
Worksheet B, part II, column 18, lines 52 to 54).
(7) All Other Expenses: The ``all other'' cost weight is a
residual, calculated by subtracting the major cost weights (wages and
salaries, employee benefits, contract labor, pharmaceuticals,
professional liability insurance, and capital-related expenses) from
100. As stated in the FY 2014 SNF proposed rule (78 FR 26451), we then
proposed to divide the residual ``all other'' cost category (21.534
percent) into subcategories, using U.S. Department of Commerce Bureau
of Economic Analysis' (BEA) 2002 Benchmark Input-Output (I-O) tables
for the nursing home industry aged forward to FY 2014 using price
changes. We also proposed that if more recent BEA Benchmark I-O data
for 2007 were released between the proposed and final rule with
sufficient time to incorporate such data into the final rule that we
would incorporate these data, as appropriate, into the FY 2010-based
SNF PPS market basket for the final rule, so that the SNF market basket
reflects the most recent BEA data available.
Comment: One commenter had questions on our methodology for the
proposed FY 2010-based SNF market basket contract labor cost weight.
They stated that the contract labor in a nursing facility is primarily
comprised of agency nursing (commonly called nursing pool) and
contracted therapy. They further stated that we calculate Allowable
Contract Labor by multiplying total contract labor cost by the ratio of
SNF salaries and wages to SNF and NF salaries and wages, which they
indicated is reasonable to assume because agency nursing would provide
services to patients in skilled units and in NF units. However, they
asserted that while this allocation approach is reasonable for agency
nursing, it is not appropriate for contracted therapy. They further
stated that contract therapy costs relate almost exclusively to skilled
patients and are reported as ancillary costs (Worksheet B Part I, lines
25-27), which are Medicare allowable expenses. They indicated that
allocating these costs on the ratio of SNF and NF salaries results in a
percentage of these costs being considered as non-allowable, which is
inaccurate. Therefore, they proposed that prior to determining the
Allowable Contract Labor using the ratio methodology described above,
that contract therapy costs (which they calculate as Worksheet A, lines
25-27, column 2) be removed. Total Medicare allowable contract labor
would be equal to the Allowable Contract Labor plus the contract
therapy costs.
Response: We appreciate the commenter bringing to our attention a
potential issue with contracted therapy costs weight methodology. While
the commenter has raised an issue that would require further analysis,
our preliminary analysis indicates that the impact to the cost weight
for a change like this would be negligible (0.001 percentage points to
the cost weight). Therefore, we will continue to use our current
methodology but will conduct further analysis and communicate any
findings in future rulemaking.
Comment: One commenter suggested that we should provide the public
with a meaningful opportunity to comment on the incorporation of more
recent BEA Benchmark Input-Output (I-O) data into the FY 2014 market
basket update before using this data as proposed.
Response: The 2007 Benchmark I-O data has not been published by the
BEA and, therefore, we will not be incorporating this data into the FY
2010-based SNF market basket. The 2007 Benchmark I-O data is expected
to be published in December 2013. Any future use of this 2007 data in
the SNF market basket will be proposed in rulemaking, which will
provide the public with a meaningful opportunity to comment.
Comment: Several commenters disagreed with our proposal in the FY
2014 SNF PPS proposed rule (78 FR 26458) to use the ECI for Nursing
Care Facilities (Private Industry) (NAICS 6231; BLS series code
CIU2026231000000I) to measure price growth of the wages and salaries
and employee benefit cost category. They stated that the proposed wages
and salaries price proxy index may be too heavily weighted with a
lower-skilled labor mix to be adequately representative of the mix of
labor skills necessary to deliver care to Medicare SNF patients. In
addition, they stated that according to the Census Bureau, there were
16,320 establishments classified in NAICS 6231 in 2007. For that year,
13,841 SNFs submitted cost reports, suggesting that approximately 15
percent of establishments in this industry classification are
facilities providing care to residents who are less complex and
resource-intensive than SNF residents, especially SNF post-acute care
patients. These commenters stated that if these facilities have a less-
skilled workforce whose wages and salaries increase at a slower rate
than higher-skilled occupations, using the

[[Page 47943]]

ECI for NAICS 6231 as the price proxy for wages and salaries in the SNF
market basket index could bias the SNF market basket update downward.
Furthermore, one commenter proposed that we use a blended price proxy
based on 25 percent of the ECI for wages and salaries for nursing and
residential care facilities (NAICS 623) and 75 percent of the ECI for
wages and salaries for hospital workers (NAICS 622). The commenter
suggested that we collect data for a sample of Medicare SNFs to
determine the appropriate weighting.
Response: We do not agree with the commenter's suggestion to
continue to use a blended price proxy similar to that used for the FY
2004-based SNF market basket to measure the price growth of wages and
salaries and employee benefit cost category. The FY 2004-based SNF
market basket used a blended index of a more general nursing home ECI
for Nursing and Residential Facilities (NAICS 623, representing
facilities that provide a mix of health and social services) and the
ECI for wages and salaries of hospital workers (NAICS 622) as a result
of the discontinuation of an ECI for Nursing and Personal Care
Facilities based on the Standard Industrial Classification (SIC) 805.
The blended index was proposed and finalized in the FY 2008 SNF PPS
rulemaking (72 FR 25550-51 and 72 FR 43425-29, respectively) to address
the industry's and CMS's concern about the lack of an ECI that best
represented Medicare-certified SNFs. After requests from CMS and the
SNF industry, BLS began publishing the ECI for Nursing Care Facilities
(6231) in 2006. Because BLS had just begun publishing ECI data for
Nursing Care Facilities (NAICS 6231) at the time of the last SNF market
revision and rebasing, IGI, the economic forecasting firm, was unable
to forecast this price proxy at that time.
As stated by the commenter, according to the 2007 Economic Census
there were 16,320 establishments classified in NAICS 6231 in 2007;
however, 15,335 establishments operated for the entire year (as also
reported in the 2007 Economic Census). Of the 13,841 SNF providers
submitting a Medicare cost report, 13,830 were open for an entire year.
Therefore, 85-90 percent of the 2007 NAICS 6231 establishments are
likely Medicare-certified SNFs. The commenter proposes that we continue
to use NAICS 623 (Nursing and Residential Facilities), which is less
representative of Medicare-certified SNFs since it also includes other
types of facilities such as Residential care facilities, in the blended
price proxy.
Because we believe the ECI for Nursing Care Facilities (NAICS 6231)
is representative of the SNF industry as discussed above, we continue
to believe it is the most technically appropriate proxy for the
compensation price inflation faced by Medicare-certified SNFs. As such,
we believe that a blended price proxy is no longer necessary.
After considering the comments we received, for the reasons
discussed above and in the FY 2014 SNF PPS proposed rule, we are
finalizing without modification our proposals as presented in the FY
2014 SNF PPS proposed rule (78 FR 26451 through 26461) to revise the FY
2004-based SNF market basket and to rebase it to reflect a base year of
FY 2010, effective October 1, 2013. Table 1 presents the final revised
and rebased FY 2010-based SNF market basket index.

Table 1--FY 2010-Based SNF Market Basket
------------------------------------------------------------------------
Cost category Weight Proposed price proxy
------------------------------------------------------------------------
Compensation................... 62.093
Wages and Salaries......... 50.573 ECI for Wages and
Salaries for Nursing
Care Facilities.
Employee Benefits.......... 11.520 ECI for Benefits for
Nursing Care
Facilities.
Utilities...................... 2.223
Electricity................ 1.411 PPI for Commercial
Electric Power.
Fuels, Nonhighway.......... 0.667 PPI for Commercial
Natural Gas.
Water and Sewerage......... 0.145 CPI-U for Water and
Sewerage Maintenance.
Professional Liability 1.141 CMS Hospital
Insurance. Professional Liability
Insurance Index.
All Other...................... 27.183
Other Products............. 16.148
Pharmaceuticals........ 7.872 PPI for Pharmaceuticals
for Human Use,
Prescription.
Food, Wholesale 3.661 PPI for Processed Foods
Purchase. and Feeds.
Food, Retail Purchases. 1.190 CPI-U for Food Away
From Home.
Chemicals.............. 0.166 Blend of Chemical PPIs.
Medical Instruments and 0.764 PPI for Medical,
Supplies. Surgical, and Personal
Aid Devices.
Rubber and Plastics.... 0.981 PPI for Rubber and
Plastic Products.
Paper and Printing 0.838 PPI for Converted Paper
Products. and Paperboard
Products.
Apparel................ 0.195 PPI for Apparel.
Machinery and Equipment 0.190 PPI for Machinery and
Equipment.
Miscellaneous Products. 0.291 PPI for Finished Goods
Less Food and Energy.
All Other Services......... 11.035
Labor-Related Services. 6.227
Nonmedical 3.427 ECI for Total
Professional Fees: Compensation for
Labor-related. Professional and
Related Occupations.
Administrative and 0.497 ECI for Total
Facilities Support. Compensation for
Office and
Administrative
Support.
All Other: Labor- 2.303 ECI for Total
Related Services. Compensation for
Service Occupations.
Non Labor-Related 4.808
Services.
Nonmedical 2.042 ECI for Total
Professional Fees: Compensation for
Non Labor-Related. Professional and
Related Occupations.
Financial Services..... 0.899 ECI for Total
Compensation for
Financial Activities.
Telephone Services..... 0.572 CPI-U for Telephone
Services.
Postage................ 0.240 CPI-U for Postage and
Delivery Services.
All Other: Nonlabor- 1.055 CPI-U for All Items
Related Services. Less Food and Energy.
Capital-Related Expenses....... 7.360
Total Depreciation......... 3.180

[[Page 47944]]

Building and Fixed 2.701 BEA chained price index
Equipment. for nonresidential
construction for
hospitals and special
care facilities--
vintage weighted (25
years).
Movable Equipment...... 0.479 PPI for Machinery and
Equipment--vintage
weighted (6 years).
Total Interest............. 2.096
For-Profit SNFs........ 0.869 Average yield on
municipal bonds (Bond
Buyer Index 20 bonds)--
vintage weighted (22
years).
Government and 1.227 Average yield on
Nonprofit SNFs. Moody's AAA corporate
bonds--vintage
weighted (22 years).
Other Capital-Related 2.084 CPI-U for Rent of
Expenses. Primary Residence.
----------------
Total.......................... 100.000
------------------------------------------------------------------------

i. Effect of Revising and Rebasing the SNF Market Basket Index on the
Labor-Related Share
We define the labor-related share (LRS) as those expenses that are
labor-intensive and vary with, or are influenced by, the local labor
market. Each year, we calculate a revised labor-related share based on
the relative importance of labor-related cost categories in the input
price index. In the FY 2014 SNF PPS proposed rule (78 FR 26462-63), we
proposed to revise and update the labor-related share to reflect the
relative importance of the following FY 2010-based SNF market basket
cost weights that we believe are labor-intensive and vary with, or are
influenced by, the local labor market: (1) Wages and salaries; (2)
employee benefits; (3) contract labor; (4) the labor-related portion of
nonmedical professional fees; (5) administrative and facilities support
services; (6) all other: Labor-related services (previously referred to
in the FY 2004-based SNF market basket as labor-intensive); and (7) a
proportion of capital-related expenses. We proposed to continue to
include a proportion of capital-related expenses because a portion of
these expenses are deemed to be labor-intensive and vary with, or are
influenced by, the local labor market. For example, a proportion of
construction costs for a medical building would be attributable to
local construction workers' compensation expenses.
Consistent with previous SNF market basket revisions and rebasings,
the ``all other: labor-related services'' cost category is mostly
comprised of building maintenance and security services (including, but
not limited to, commercial and industrial machinery and equipment
repair, nonresidential maintenance and repair, and investigation and
security services). Because these services tend to be labor-intensive
and are mostly performed at the SNF facility (and therefore, unlikely
to be purchased in the national market), we believe that they meet our
definition of labor-related services.
The inclusion of the administrative and facilities support services
cost category into the labor-related share remains consistent with the
current labor-related share, since this cost category was previously
included in the FY 2004-based SNF market basket labor-intensive cost
category. As stated in the FY 2014 SNF PPS proposed rule (78 FR 26462),
we proposed to establish a separate administrative and facilities
support services cost category so that we can use the ECI for Total
Compensation for Office and Administrative Support Services to reflect
the specific price changes associated with these services.
For the FY 2004-based SNF market basket, we assumed that all
nonmedical professional services (including accounting and auditing
services, engineering services, legal services, and management and
consulting services) were purchased in the local labor market and,
thus, all of their associated fees varied with the local labor market.
As a result, we previously included 100 percent of these costs in the
labor-related share. As we discussed in the FY 2014 SNF PPS proposed
rule (78 FR 26462), in an effort to determine more accurately the share
of nonmedical professional fees that should be included in the labor-
related share, we surveyed SNFs regarding the proportion of those fees
that are attributable to local firms and the proportion that are
purchased from national firms. Based on these weighted results, we
determined that SNFs purchase, on average, the following portions of
contracted professional services inside their local labor market:
86 percent of accounting and auditing services.
89 percent of architectural, engineering services.
78 percent of legal services.
87 percent of management consulting services.
Together, these four categories represent 2.672 percentage points
of the total costs for the proposed FY 2010-based SNF market basket. We
applied the percentages from this special survey to their respective
SNF market basket weights to separate them into labor-related and
nonlabor-related costs. As a result, we are designating 2.285 of the
2.672 total to the labor-related share, with the remaining 0.387
categorized as nonlabor-related.
In addition to the professional services listed above, we also
classified expenses under NAICS 55, Management of Companies and
Enterprises, into the nonmedical professional fees cost category. The
NAICS 55 data are mostly comprised of corporate, subsidiary, and
regional managing offices, or otherwise referred to as home offices.
Formerly, all of the expenses within this category were considered to
vary with, or be influenced by, the local labor market, and thus, were
included in the labor-related share. Because many SNFs are not located
in the same geographic area as their home office, we analyzed data from
a variety of sources to determine what proportion of these costs should
be appropriately included in the labor-related share. As discussed in
the FY 2014 SNF PPS proposed rule (78 FR 26462), we proposed a
methodology to determine the proportion of NAICS 55 costs that should
be allocated to the labor-related share based on the percent of SNF
home office compensation attributable to those SNFs that had home
offices located in their respective labor markets. Our proposed
methodology was based on data from MCRs, as well as a CMS database of
Home Office Medicare Records (HOMER). Using this proposed methodology,
we determined that 32 percent of SNF home office compensation costs
were for SNFs that

[[Page 47945]]

had home offices located in their respective local labor markets;
therefore, we proposed to allocate 32 percent of NAICS 55 expenses to
the labor-related share. We believe that this methodology provides a
reasonable estimate of the NAICS 55 expenses that are appropriately
allocated to the labor-related share, because we primarily rely on data
on home office compensation costs as provided by SNFs on Medicare cost
reports. By combining these data with the specific MSAs for the SNF and
their associated home office, we believe we have a reasonable estimate
of the proportion of SNF's home office costs that would be incurred in
the local labor market.
In the proposed FY 2010-based SNF market basket, NAICS 55 expenses
that were subject to allocation based on the home office allocation
methodology represent 1.833 percent of the total costs. Based on the
home office results, we are apportioning 0.587 percentage point of the
1.833 percentage points figure into the labor-related share and
designating the remaining 1.247 percentage points as nonlabor-related.
The Benchmark I-O data contains other smaller cost categories that
we allocate fully to either nonmedical professional fees: labor-related
or nonmedical professional fees: nonlabor-related. Together, the sum of
these smaller cost categories, the four nonmedical professional fees
cost categories where survey results were available, and the NAICS 55
expenses represent all nonmedical professional fees, or 5.469 percent
of total costs in the SNF market basket. Of the 5.469 percentage
points, 3.427 percentage points represent professional fees: labor-
related while 2.042 percentage points represent nonmedical professional
fees: nonlabor-related.
For a complete discussion of our proposals related to the labor-
related share and associated rationale, we refer readers to the FY 2014
SNF PPS proposed rule (78 FR 26462-63). A discussion of the comments we
received related to these proposals, with our responses, appears below.
Comment: One commenter disagreed with our use of the professional
fees survey to determine the labor-related portion of Nonmedical
Professional Fees costs associated with accounting and auditing
services; architectural, engineering services; legal services; and
management and consulting services. They stated that the survey of 141
providers only represents 0.94 percent of the approximately 15,000 SNFs
nationwide. Furthermore, they contended that even when the services are
purchased from ``national firms,'' those services are priced by
national firms according to local market costs.
Response: We believe a method that distributes these professional
fees based on empirical research and data, and not on assumption,
represents a technical improvement to the construction of the market
basket and the estimate of the labor-related share. In an effort to
draw a nationally representative sample of skilled nursing facilities,
we used data on full-time equivalents (FTE's) to represent the sizes of
each SNF and then selected institutions for participation in the
survey, across various strata (to be representative across Census
Region and Urban/Rural status), based on their relative FTE size. That
is, the greater the number of one's FTEs, the greater the chance of
being selected to participate in the sample from one's specific
stratum.
The survey itself prompted sample institutions to select from
multiple choice answers the proportions of their professional fees that
are purchased from firms located outside of their respective local
labor market. The multiple choice answers for each type of professional
service included the following options: 0 percent of fees; 1-20 percent
of fees; 21-40 percent of fees; 41-60 percent of fees; 61-80 percent of
fees; 81-99 percent of fees; and 100 percent of fees. We chose this
type of approach, as opposed to asking firms for more detailed
approximations of their spending, in an attempt to reduce variability
within the data.
Responses were gathered with each participating institution being
assigned a sample weight equal to the inverse of their selection
probability (with adjustments for non-response bias to ensure the
representativeness of the data). This type of application represents a
very common survey approach and is based on valid and widely-accepted
statistical techniques. We believe that this methodology of weighting
responses allows for an adequate sample size to draw inferences for
this purpose.
We noted generally that, depending on the exact professional
service, between 25 percent and 50 percent of the institutions
indicated that they purchased at least some percentage of those
services from firms beyond their local labor market. Given these
findings, we developed a weighted average of the results to determine
the final proportion to be excluded from the labor-related share for
each of the four types of professional services surveyed.
The following represents a description of the steps we used in
developing the weighted averages to designate these fees as labor-
related or nonlabor-related:
First, for those institutions that spent between 1 percent and 20
percent of the professional services fees on firms located beyond their
local labor markets, we multiplied their weighted count by the mid-
point of that range (or 10 percent) as those estimates tended to have
very low variability around their respective point estimates. As an
example, for Accounting and Auditing services, if a weighted count of
500 SNFs responded that they paid ``1 to 20 percent'' of their
professional fees for these services to firms located outside of their
local labor market, we would multiply 500 times 10 percent. This would
represent our first subtotal.
Second, for those firms that spent more than 20 percent of their
fees on firms located outside of their local labor markets, the
variance around the point estimates tended to be higher. As a result we
multiplied the weighted number of firms by the low point within each
multiple choice answer's range in order to develop our overall weighted
estimates. Using a similar example as above, if a weighted count of 300
SNFs responded that they paid ``21 to 40 percent'' of their
professional fees to firms located outside of their local labor market,
we would multiply 300 times 21 percent. This would be repeated for the
other categories, as well and represent our next set of subtotals.
For the last step in the calculations, we added the subtotals
together and then divided by the total number of weighted SNFs in order
to determine what proportion of their professional fees went to firms
inside and outside of their local labor markets.
Additionally, we disagree with the commenter that services
purchased from national firms are always priced at local labor market
cost rates. We believe, for example, that an accounting firm that
employs accountants located at their headquarters would have a standard
pricing structure that is developed to ensure that their costs of
operation are covered, regardless of the location of their clients.
Finally, in the absence of a creditable data source from the commenter,
we do not believe it would be appropriate to include costs associated
with professional services purchased from nationally based firms
located beyond the SNF's local labor market in the labor-related share.
After considering the comments we received, for the reasons
discussed above and in the FY 2014 SNF PPS proposed rule, we are
finalizing our proposal, as presented in the FY 2014 SNF PPS proposed
rule (78 FR 26462 through 26463), to update and revise the

[[Page 47946]]

labor-related share effective October 1, 2013, to reflect the relative
importance of the following FY 2010-based SNF market basket cost
weights that we believe are labor-intensive and vary with, or are
influenced by, the local labor market: (1) Wages and salaries; (2)
employee benefits; (3) contract labor; (4) the labor-related portion of
nonmedical professional fees; (5) administrative and facilities support
services; (6) all other: labor-related services (previously referred to
in the FY 2004-based SNF market basket as labor-intensive); and (7) a
proportion of capital-related expenses. Furthermore, in the FY 2014 SNF
PPS proposed rule (78 FR 26443), we also proposed if more recent data
became available (for example, a more recent estimate of the FY 2010-
based SNF market basket, MFP adjustment, and/or FY 2004-based SNF
market basket used for the forecast error calculation), we would use
such data, if appropriate, to determine the FY 2014 SNF market basket
update, FY 2014 labor-related share relative importance, and MFP
adjustment in the FY 2014 SNF PPS final rule. Accordingly, Table 2
below summarizes the revised and updated labor-related share for FY
2014, which is based on IGI's most recent forecast (second quarter 2013
forecast with historical data through first quarter 2013) of the
rebased and revised FY 2010-based SNF market basket, compared to the
labor-related share that was used for the FY 2013 SNF PPS update.

Table 2--FY 2013 and FY 2014 SNF Labor-Related Share
------------------------------------------------------------------------
Relative Relative
importance, importance,
labor-related, labor-related,
FY 2013 (FY FY 2014 (FY
2004-based 2010-based
index) 12:2 index) 13:2
forecast forecast
------------------------------------------------------------------------
Wages and salaries \1\.................. 49.847 49.118
Employee benefits....................... 11.532 11.423
Nonmedical Professional fees: labor- 1.307 3.446
related................................
Administrative and facilities support N/A 0.499
services...............................
All Other: Labor-related services \2\... 3.364 2.287
Capital-related (.391).................. 2.333 2.772
-------------------------------
Total............................... 68.383 69.545
------------------------------------------------------------------------
\1\ The wages and salaries and employee benefits cost weight reflect
contract labor costs.
\2\ Previously referred to as labor-intensive services cost category in
the FY 2004-based SNF market basket.

2. Market Basket Estimate for the FY 2014 SNF PPS Update
We also proposed to determine the FY 2014 SNF market basket
percentage under section 1888(e)(5)(B)(i) of the Act based on the
percentage increase in the revised and rebased FY 2010-based SNF market
basket (78 FR 26441). As discussed above, we are finalizing our
proposal to revise and rebase the SNF market basket to reflect a base
year of FY 2010. Thus, we are finalizing our proposal to use the FY
2010-based SNF market basket to determine the SNF market basket
percentage increase for FY 2014. Section IV.B.5 of this final rule
includes further discussion of the SNF market basket percentage
increase for FY 2014.
3. Forecast Error Adjustment
As discussed in the June 10, 2003 supplemental proposed rule (68 FR
34768) and finalized in the August 4, 2003, final rule (68 FR 46057
through 46059), the regulations at Sec. 413.337(d)(2) provide for an
adjustment to account for market basket forecast error. The initial
adjustment for market basket forecast error applied to the update of
the FY 2003 rate for FY 2004, and took into account the cumulative
forecast error for the period from FY 2000 through FY 2002, resulting
in an increase of 3.26 percent to the FY 2004 update. Subsequent
adjustments in succeeding FYs take into account the forecast error from
the most recently available FY for which there is final data, and apply
the difference between the forecasted and actual change in the market
basket when the difference exceeds a specified threshold. We originally
used a 0.25 percentage point threshold for this purpose; however, for
the reasons specified in the FY 2008 SNF PPS final rule (72 FR 43425,
August 3, 2007), we adopted a 0.5 percentage point threshold effective
for FY 2008 and subsequent fiscal years. As we stated in the FY 2004
SNF PPS final rule that first issued the market basket forecast error
adjustment (68 FR 46058, August 4, 2003), the adjustment will ``. . .
reflect both upward and downward adjustments, as appropriate.''
In the FY 2014 SNF PPS proposed rule (78 FR 26441 through 26442),
we discussed the forecast error for FY 2012 (the most recently
available FY for which there is final data), and proposed a new method
for reporting the forecast error in situations where the forecast error
calculation is equal to 0.5 percentage point when rounded to one
significant digit (otherwise referred to as a tenth of a percentage
point). For FY 2012, the estimated increase in the market basket index
was 2.7 percentage points, while the actual increase was 2.2 percentage
points, resulting in the actual increase being 0.5 percentage point
lower than the estimated increase. As the forecast error calculation in
this instance does not permit one to determine definitively if the
forecast error adjustment threshold has been exceeded, we proposed to
report the forecast error to two significant digits so that we may
determine whether the forecast error correction threshold has been
exceeded and whether the forecast error adjustment should be applied
under Sec. 413.337(d)(2). This policy would apply only in those
instances where the forecast error, when rounded to one significant
digit, is 0.5 percentage point. Furthermore, we stated that we would
apply the proposed policy where the difference between the actual and
projected market basket is either positive or negative 0.5 percentage
point. We believe this approach is necessary and appropriate to ensure
that the necessity for a forecast error adjustment is accurately
determined in accordance with Sec. 413.337(d)(2). Therefore, we
proposed that, following the policy outlined above, we would determine
the forecast error for FY 2012 to the second significant digit, or the
hundredth of a percentage point. The forecasted FY 2012 SNF market
basket

[[Page 47947]]

percentage change was 2.7 percent. When rounded to the second
significant digit, it was 2.69 percent. This would be subtracted from
the actual FY 2012 SNF market basket percentage change, rounded to the
second significant digit, of 2.18 percent to yield a negative forecast
error correction of 0.51 percentage point. As the forecast error
correction, when rounded to two significant digits, exceeds 0.5
percentage point, a forecast error adjustment would be warranted under
the policy outlined in the FY 2008 SNF PPS final rule (72 FR 43425)
(see Sec. 413.337(d)(2)).
We stated in the proposed rule that, consistent with prior
applications of the forecast error adjustment since establishing the
0.5 percentage point threshold, and consistent with our applications of
both the market basket adjustment and productivity adjustment described
below, once we have determined that a forecast error adjustment is
warranted, we will continue to apply the adjustment itself at one
significant digit (otherwise referred to as a tenth of a percentage
point). Therefore, the FY 2014 SNF market basket percentage change of
2.3 percent would be adjusted downward by the forecast error correction
of 0.5 percentage point, resulting in a net SNF market basket increase
factor of 1.8 percent.
We received a number of comments on the proposed change to how the
forecast error is reported in these limited circumstances, as well as
more general comments on the SNF forecast error adjustment. A
discussion of these comments, with our responses, appears below.
Comment: The comments received on this topic supported the approach
proposed in the FY 2014 SNF PPS proposed rule for reporting the
forecast error in situations where the forecast error calculation is
equal to 0.5 percentage point when rounded to one significant digit.
Some commenters did, however, state that we should consider using a
0.45 percentage point threshold instead of the 0.5 percentage point
threshold, where we would apply a forecast error adjustment when the
forecast error exceeded 0.45 percentage point. According to the
commenters, this would permit us to continue applying an adjustment at
the one significant digit level without requiring different methods for
reporting the forecast error in a given year. Finally, it was requested
that we confirm that in cases where the threshold rounds to 0.50
percentage point, at the two significant digit level, that a forecast
error adjustment would not be applied.
Response: We appreciate the support for our proposal from
commenters. With respect to the commenters' suggestion that we adopt a
0.45 percentage point threshold rather than the current 0.5 percentage
point threshold, we note that we did not propose to change the forecast
error threshold in the FY 2014 SNF PPS proposed rule, and thus we are
not adopting such a change at this time. We proposed only to change how
the forecast error is reported to create greater transparency, in those
limited cases where the forecast error rounds to 0.5 percentage point
at the one significant digit level, as to whether and why the forecast
error adjustment is or is not being applied in a given year. We
continue to believe that a 0.5 percentage point threshold is
appropriate and enables us to identify those instances where the
difference between the actual and projected market basket becomes
sufficiently significant to indicate that the historical price changes
are not being adequately reflected.
In response to the comment concerning whether, under our proposed
policy, the forecast error adjustment would be applied in cases where
the forecast error rounds to 0.50 percentage point at the two
significant digit level, we would not apply the forecast error
adjustment in such a case as the forecast error would not exceed the
0.5 percentage point threshold.
Comment: Several commenters suggested that we apply a cumulative
forecast error adjustment to account for all of the variations in the
market basket forecasts since FY 2003. These commenters stated that
while the industry has tolerated the adjustment process, the lack of
any cumulative adjustment in recent years violates the precedent set by
CMS in 2003 when the last cumulative adjustment was made and that the
cumulative adjustment in 2003 demonstrated recognition by us of the
cumulatively erosive effect of multi-year forecasting errors. The
commenters recommended that we adopt a policy which recognizes the
cumulative effect of multi-year market basket forecast errors and that
an adjustment be made to account for the cumulative errors since FY
2003.
Response: In the FY 2004 SNF PPS final rule, we applied a one-time,
cumulative forecast error adjustment resulting in an increase of 3.26
percent (68 FR 46036, 46058). Since that time, the forecast errors have
been relatively small and clustered near zero. As stated in prior
rulemaking on the SNF PPS--including, most recently, the FY 2012 SNF
PPS final rule (76 FR 48527, August 8, 2011)--we believe the forecast
error correction should be applied only when the degree of forecast
error in any given year is such that the SNF base payment rate does not
adequately reflect the historical price changes faced by SNFs.
Accordingly, we continue to believe that the forecast error adjustment
mechanism should appropriately be reserved for the type of major,
unexpected change that initially gave rise to this policy, rather than
the minor year-to-year variances that are a routine and inherent aspect
of this type of statistical measurement.
Accordingly, for the reasons discussed in this final rule and in
the FY 2014 SNF PPS proposed rule (78 FR 26441 through 26442), we are
finalizing our proposal to report the forecast error to the second
significant digit in only those instances where the forecast error
rounds to 0.5 percentage point at one significant digit. Effective
October 1, 2013, we will report the forecast error to the second
significant digit in those instances where the forecast error rounds to
0.5 percentage point at one significant digit, so that we may determine
whether the forecast error adjustment threshold has been exceeded. As
discussed above, once we have determined that a forecast error
adjustment is warranted, we will continue to apply the adjustment
itself at one significant digit (otherwise referred to as a tenth of a
percentage point).
4. Multifactor Productivity Adjustment
Section 3401(b) of the Affordable Care Act (consisting of the
Patient Protection and Affordable Care Act, Pub. L. 111-148, enacted on
March 23, 2010, and the Health Care and Education Reconciliation Act of
2010, Pub. L. 111-152, enacted on March 30, 2010) requires that, in FY
2012 (and in subsequent FYs), the market basket percentage under the
SNF payment system as described in section 1888(e)(5)(B)(i) of the Act
is to be reduced annually by the productivity adjustment described in
section 1886(b)(3)(B)(xi)(II) of the Act. Section 1886(b)(3)(B)(xi)(II)
of the Act, added by section 3401(a) of the Affordable Care Act, sets
forth the definition of this productivity adjustment. The statute
defines the productivity adjustment to be equal to ``the 10-year moving
average of changes in annual economy-wide private nonfarm business
multi-factor productivity (as projected by the Secretary for the 10-
year period ending with the applicable fiscal year, year, cost-
reporting period, or other annual period)'' (the MFP adjustment). The
Bureau of Labor Statistics (BLS) is the agency that publishes the
official measure of private nonfarm business

[[Page 47948]]

multifactor productivity (MFP). Please see https://www.bls.gov/mfp to
obtain the BLS historical published MFP data.
The projection of MFP is currently produced by IGI, an economic
forecasting firm. To generate a forecast of MFP, IGI replicated the MFP
measure calculated by the BLS, using a series of proxy variables
derived from IGI's U.S. macroeconomic models. This process is described
in greater detail in section III.F.3 of the FY 2012 SNF PPS final rule
(76 FR 48527 through 48529).
a. Incorporating the Multifactor Productivity Adjustment Into the
Market Basket Update
Section 1888(e)(5)(A) of the Act requires the Secretary to
``establish a skilled nursing facility market basket index that
reflects changes over time in the prices of an appropriate mix of goods
and services included in covered skilled nursing facility services.''
Section 1888(e)(5)(B)(ii) of the Act, added by section 3401(b) of the
Affordable Care Act, requires that for FY 2012 and each subsequent FY,
after determining the market basket percentage described in section
1888(e)(5)(B)(i) of the Act, ``the Secretary shall reduce such
percentage by the productivity adjustment described in section
1886(b)(3)(B)(xi)(II)'' (which we refer to as the multifactor
productivity (MFP) adjustment). Section 1888(e)(5)(B)(ii) of the Act
further states that the reduction of the market basket percentage by
the MFP adjustment may result in the market basket percentage being
less than zero for a FY, and may result in payment rates under section
1888(e) of the Act for a FY being less than such payment rates for the
preceding FY. Thus, if the application of the MFP adjustment to the
market basket percentage calculated under section 1888(e)(5)(B)(i) of
the Act results in an MFP-adjusted market basket percentage that is
less than zero, then the annual update to the unadjusted federal per
diem rates under section 1888(e)(4)(E)(ii) of the Act would be
negative, and such rates would decrease relative to the prior FY.
For the FY 2014 SNF PPS update, the MFP adjustment is calculated as
the 10-year moving average of changes in MFP for the period ending
September 30, 2014. In accordance with section 1888(e)(5)(B)(i) of the
Act and Sec. 413.337(d)(2) of the regulations, the SNF PPS market
basket percentage for FY 2014 is based on IGI's second quarter 2013
forecast of the FY 2010-based SNF market basket update (which is 2.3
percent), as adjusted by the forecast error adjustment (which is 0.5
percent), and is estimated to be 1.8 percent. In accordance with
section 1888(e)(5)(B)(ii) of the Act (as added by section 3401(b) of
the Affordable Care Act) and Sec. 413.337(d)(3), this market basket
percentage is then reduced by the MFP adjustment (which is the 10-year
moving average of changes in MFP for the period ending September 30,
2014) of 0.5 percent. In the FY 2014 SNF PPS proposed rule (78 FR
26443), we proposed that if more recent data became available, we would
use that data, if appropriate, to determine the FY 2014 MFP adjustment.
The MFP adjustment of 0.4 percent set forth in the proposed rule was
based on IGI's first quarter 2013 forecast. The 0.5 percent MFP
adjustment set forth in this final rule is based on updated IGI data
(that is, IGI second quarter 2013 forecast). The resulting MFP-adjusted
SNF market basket update is equal to 1.3 percent, or 1.8 percent less
the 0.5 percentage point MFP adjustment.
5. Market Basket Update Factor for FY 2014
Sections 1888(e)(4)(E)(ii)(IV) and 1888(e)(5)(i) of the Act require
that SNF PPS unadjusted federal per diem rates for the previous fiscal
year be adjusted by the market basket index percentage change for the
fiscal year involved, in order to compute the unadjusted federal per
diem rates for the current year. Accordingly, we determined the total
growth from the average market basket index for the period of October
1, 2012 through September 30, 2013 to the average market basket index
for the period of October 1, 2013 through September 30, 2014. This
process yields a market basket update factor of 2.3 percent. As further
explained in section IV.B.3 of this final rule, as applicable, we
adjust the market basket update factor to reflect the forecast error
from the most recently available FY for which there is final data and
apply this adjustment whenever the difference between the forecasted
and actual percentage change in the market basket exceeds a 0.5
percentage point threshold. Since the forecasted FY 2012 SNF market
basket percentage change exceeded the actual FY 2012 SNF market basket
percentage change (FY 2012 is the most recently available FY for which
there is final data) by more than 0.5 percentage point, the FY 2014
market basket update factor of 2.3 percent would be adjusted downward
by the applicable difference, in this case 0.5 percentage points, which
reduces the FY 2014 market basket update factor to 1.8 percent. In
addition, for FY 2014, section 1888(e)(5)(B) of the Act requires us to
reduce the market basket percentage by the MFP adjustment (the 10-year
moving average of changes in MFP for the period ending September 30,
2014) of 0.5 percent, as described in section IV.B.4. of this final
rule. The resulting MFP-adjusted SNF market basket update would be
equal to 1.3 percent, or 1.8 percent less 0.5 percentage point. We used
the FY 2010-based SNF market basket percentage, adjusted as described
above, to adjust each per diem component of the federal rates forward
to reflect the change in the average prices for FY 2014 from average
prices for FY 2013. We further adjust the rates by a wage index budget
neutrality factor, described later in this section. Tables 3 and 4
reflect the updated components of the unadjusted federal rates for FY
2014, prior to adjustment for case-mix.

Table 3--FY 2014 Unadjusted Federal Rate per Diem--Urban
----------------------------------------------------------------------------------------------------------------
Nursing-- case- Therapy-- case- Therapy-- non-
Rate component mix mix case-mix Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount............................. $165.81 $124.90 $16.45 $84.62
----------------------------------------------------------------------------------------------------------------

Table 4--FY 2014 Unadjusted Federal Rate per Diem--Rural
----------------------------------------------------------------------------------------------------------------
Nursing-- case- Therapy-- case- Therapy-- non-
Rate component mix mix case-mix Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount............................. $158.41 $144.01 $17.57 $86.19
----------------------------------------------------------------------------------------------------------------

[[Page 47949]]

6. Case-Mix Adjustment
Under section 1888(e)(4)(G)(i) of the Act, the federal rate also
incorporates an adjustment to account for case-mix, using a
classification system that accounts for the relative resource
utilization of different patient types. The statute specifies that the
adjustment is to reflect both a resident classification system
established by the Secretary to account for the relative resource use
of different patient types, as well as resident assessment data and
other data that the Secretary considers appropriate. In the May 12,
1998 interim final rule with comment period that initially implemented
the SNF PPS (63 FR 26252), we developed the 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 (CMIs). The
original RUG-III grouper logic was based on clinical data collected in
1990, 1995, and 1997. As discussed in the FY 2010 SNF PPS proposed rule
(74 FR 22208), we subsequently conducted a multi-year data collection
and analysis under the Staff Time and Resource Intensity Verification
(STRIVE) project to update the case-mix classification system for FY
2011. The resulting Resource Utilization Groups, Version 4 (RUG-IV)
case-mix classification system reflected the data collected in 2006
through 2007 during the STRIVE project, and the RUG-IV model was
finalized in the FY 2010 SNF PPS final rule (74 FR 40288) to take
effect in FY 2011 concurrently with an updated new resident assessment
instrument, version 3.0 of the Minimum Data Set (MDS 3.0), which
collects the clinical data used for case-mix classification under RUG-
IV.
We note that case-mix classification is based, in part, on the
beneficiary's need for skilled nursing care and therapy services. The
case-mix classification system uses clinical data from the MDS to
assign a case-mix group to each patient that is then used to calculate
a per diem payment under the SNF PPS. Further, because the MDS is used
as a basis for payment as well as a clinical assessment, we have
provided extensive training on proper coding and the time frames for
MDS completion in the RAI Manual. For an MDS to be considered valid for
use in determining payment, the MDS assessment must be completed in
compliance with the instructions in the RAI Manual in effect at the
time the assessment is completed. For payment and quality monitoring
purposes, the RAI Manual consists of both the Manual instructions and
the interpretive guidance and policy clarifications posted on the
appropriate MDS Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/MDS30RAIManual.html.
Under section 1888(e)(4)(H), each update of the payment rates must
include the case-mix classification methodology applicable for the
upcoming FY. The payment rates set forth in this final rule reflect the
use of the RUG-IV case-mix classification system from October 1, 2013,
through September 30, 2014. We list the case-mix adjusted RUG-IV
payment rates, provided separately for urban and rural SNFs, in Tables
5 and 6 with corresponding case-mix values. These tables do not reflect
the add-on for SNF residents with AIDS enacted by section 511 of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(MMA, Pub. L. 108-173) discussed below, which we apply only after
making all other adjustments (including the wage index and case-mix
adjustments).

Table 5--RUG-IV Case-Mix Adjusted Federal Rates and Associated Indexes--Urban
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nursing Therapy Non-case mix Non-case mix
RUG-IV Category Nursing index Therapy index component component therapy comp component Total rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUX..................................... 2.67 1.87 $442.71 $233.56 .............. $84.62 $760.89
RUL..................................... 2.57 1.87 426.13 233.56 .............. 84.62 744.31
RVX..................................... 2.61 1.28 432.76 159.87 .............. 84.62 677.25
RVL..................................... 2.19 1.28 363.12 159.87 .............. 84.62 607.61
RHX..................................... 2.55 0.85 422.82 106.17 .............. 84.62 613.61
RHL..................................... 2.15 0.85 356.49 106.17 .............. 84.62 547.28
RMX..................................... 2.47 0.55 409.55 68.70 .............. 84.62 562.87
RML..................................... 2.19 0.55 363.12 68.70 .............. 84.62 516.44
RLX..................................... 2.26 0.28 374.73 34.97 .............. 84.62 494.32
RUC..................................... 1.56 1.87 258.66 233.56 .............. 84.62 576.84
RUB..................................... 1.56 1.87 258.66 233.56 .............. 84.62 576.84
RUA..................................... 0.99 1.87 164.15 233.56 .............. 84.62 482.33
RVC..................................... 1.51 1.28 250.37 159.87 .............. 84.62 494.86
RVB..................................... 1.11 1.28 184.05 159.87 .............. 84.62 428.54
RVA..................................... 1.10 1.28 182.39 159.87 .............. 84.62 426.88
RHC..................................... 1.45 0.85 240.42 106.17 .............. 84.62 431.21
RHB..................................... 1.19 0.85 197.31 106.17 .............. 84.62 388.10
RHA..................................... 0.91 0.85 150.89 106.17 .............. 84.62 341.68
RMC..................................... 1.36 0.55 225.50 68.70 .............. 84.62 378.82
RMB..................................... 1.22 0.55 202.29 68.70 .............. 84.62 355.61
RMA..................................... 0.84 0.55 139.28 68.70 .............. 84.62 292.60
RLB..................................... 1.50 0.28 248.72 34.97 .............. 84.62 368.31
RLA..................................... 0.71 0.28 117.73 34.97 .............. 84.62 237.32
ES3..................................... 3.58 .............. 593.60 .............. 16.45 84.62 694.67
ES2..................................... 2.67 .............. 442.71 .............. 16.45 84.62 543.78
ES1..................................... 2.32 .............. 384.68 .............. 16.45 84.62 485.75
HE2..................................... 2.22 .............. 368.10 .............. 16.45 84.62 469.17
HE1..................................... 1.74 .............. 288.51 .............. 16.45 84.62 389.58
HD2..................................... 2.04 .............. 338.25 .............. 16.45 84.62 439.32
HD1..................................... 1.60 .............. 265.30 .............. 16.45 84.62 366.37
HC2..................................... 1.89 .............. 313.38 .............. 16.45 84.62 414.45
HC1..................................... 1.48 .............. 245.40 .............. 16.45 84.62 346.47

[[Page 47950]]

HB2..................................... 1.86 .............. 308.41 .............. 16.45 84.62 409.48
HB1..................................... 1.46 .............. 242.08 .............. 16.45 84.62 343.15
LE2..................................... 1.96 .............. 324.99 .............. 16.45 84.62 426.06
LE1..................................... 1.54 .............. 255.35 .............. 16.45 84.62 356.42
LD2..................................... 1.86 .............. 308.41 .............. 16.45 84.62 409.48
LD1..................................... 1.46 .............. 242.08 .............. 16.45 84.62 343.15
LC2..................................... 1.56 .............. 258.66 .............. 16.45 84.62 359.73
LC1..................................... 1.22 .............. 202.29 .............. 16.45 84.62 303.36
LB2..................................... 1.45 .............. 240.42 .............. 16.45 84.62 341.49
LB1..................................... 1.14 .............. 189.02 .............. 16.45 84.62 290.09
CE2..................................... 1.68 .............. 278.56 .............. 16.45 84.62 379.63
CE1..................................... 1.50 .............. 248.72 .............. 16.45 84.62 349.79
CD2..................................... 1.56 .............. 258.66 .............. 16.45 84.62 359.73
CD1..................................... 1.38 .............. 228.82 .............. 16.45 84.62 329.89
CC2..................................... 1.29 .............. 213.89 .............. 16.45 84.62 314.96
CC1..................................... 1.15 .............. 190.68 .............. 16.45 84.62 291.75
CB2..................................... 1.15 .............. 190.68 .............. 16.45 84.62 291.75
CB1..................................... 1.02 .............. 169.13 .............. 16.45 84.62 270.20
CA2..................................... 0.88 .............. 145.91 .............. 16.45 84.62 246.98
CA1..................................... 0.78 .............. 129.33 .............. 16.45 84.62 230.40
BB2..................................... 0.97 .............. 160.84 .............. 16.45 84.62 261.91
BB1..................................... 0.90 .............. 149.23 .............. 16.45 84.62 250.30
BA2..................................... 0.70 .............. 116.07 .............. 16.45 84.62 217.14
BA1..................................... 0.64 .............. 106.12 .............. 16.45 84.62 207.19
PE2..................................... 1.50 .............. 248.72 .............. 16.45 84.62 349.79
PE1..................................... 1.40 .............. 232.13 .............. 16.45 84.62 333.20
PD2..................................... 1.38 .............. 228.82 .............. 16.45 84.62 329.89
PD1..................................... 1.28 .............. 212.24 .............. 16.45 84.62 313.31
PC2..................................... 1.10 .............. 182.39 .............. 16.45 84.62 283.46
PC1..................................... 1.02 .............. 169.13 .............. 16.45 84.62 270.20
PB2..................................... 0.84 .............. 139.28 .............. 16.45 84.62 240.35
PB1..................................... 0.78 .............. 129.33 .............. 16.45 84.62 230.40
PA2..................................... 0.59 .............. 97.83 .............. 16.45 84.62 198.90
PA1..................................... 0.54 .............. 89.54 .............. 16.45 84.62 190.61
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table 6--RUG-IV Case-Mix Adjusted Federal Rates and Associated Indexes--Rural
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nursing Therapy Non-case mix Non-case mix
RUG-IV Category Nursing index Therapy index component component therapy comp component Total rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUX..................................... 2.67 1.87 $422.95 $269.30 .............. $86.19 $778.44
RUL..................................... 2.57 1.87 407.11 269.30 .............. 86.19 762.60
RVX..................................... 2.61 1.28 413.45 184.33 .............. 86.19 683.97
RVL..................................... 2.19 1.28 346.92 184.33 .............. 86.19 617.44
RHX..................................... 2.55 0.85 403.95 122.41 .............. 86.19 612.55
RHL..................................... 2.15 0.85 340.58 122.41 .............. 86.19 549.18
RMX..................................... 2.47 0.55 391.27 79.21 .............. 86.19 556.67
RML..................................... 2.19 0.55 346.92 79.21 .............. 86.19 512.32
RLX..................................... 2.26 0.28 358.01 40.32 .............. 86.19 484.52
RUC..................................... 1.56 1.87 247.12 269.30 .............. 86.19 602.61
RUB..................................... 1.56 1.87 247.12 269.30 .............. 86.19 602.61
RUA..................................... 0.99 1.87 156.83 269.30 .............. 86.19 512.32
RVC..................................... 1.51 1.28 239.20 184.33 .............. 86.19 509.72
RVB..................................... 1.11 1.28 175.84 184.33 .............. 86.19 446.36
RVA..................................... 1.10 1.28 174.25 184.33 .............. 86.19 444.77
RHC..................................... 1.45 0.85 229.69 122.41 .............. 86.19 438.29
RHB..................................... 1.19 0.85 188.51 122.41 .............. 86.19 397.11
RHA..................................... 0.91 0.85 144.15 122.41 .............. 86.19 352.75
RMC..................................... 1.36 0.55 215.44 79.21 .............. 86.19 380.84
RMB..................................... 1.22 0.55 193.26 79.21 .............. 86.19 358.66
RMA..................................... 0.84 0.55 133.06 79.21 .............. 86.19 298.46
RLB..................................... 1.50 0.28 237.62 40.32 .............. 86.19 364.13
RLA..................................... 0.71 0.28 112.47 40.32 .............. 86.19 238.98
ES3..................................... 3.58 .............. 567.11 .............. 17.57 86.19 670.87
ES2..................................... 2.67 .............. 422.95 .............. 17.57 86.19 526.71
ES1..................................... 2.32 .............. 367.51 .............. 17.57 86.19 471.27
HE2..................................... 2.22 .............. 351.67 .............. 17.57 86.19 455.43
HE1..................................... 1.74 .............. 275.63 .............. 17.57 86.19 379.39
HD2..................................... 2.04 .............. 323.16 .............. 17.57 86.19 426.92
HD1..................................... 1.60 .............. 253.46 .............. 17.57 86.19 357.22

[[Page 47951]]

HC2..................................... 1.89 .............. 299.39 .............. 17.57 86.19 403.15
HC1..................................... 1.48 .............. 234.45 .............. 17.57 86.19 338.21
HB2..................................... 1.86 .............. 294.64 .............. 17.57 86.19 398.40
HB1..................................... 1.46 .............. 231.28 .............. 17.57 86.19 335.04
LE2..................................... 1.96 .............. 310.48 .............. 17.57 86.19 414.24
LE1..................................... 1.54 .............. 243.95 .............. 17.57 86.19 347.71
LD2..................................... 1.86 .............. 294.64 .............. 17.57 86.19 398.40
LD1..................................... 1.46 .............. 231.28 .............. 17.57 86.19 335.04
LC2..................................... 1.56 .............. 247.12 .............. 17.57 86.19 350.88
LC1..................................... 1.22 .............. 193.26 .............. 17.57 86.19 297.02
LB2..................................... 1.45 .............. 229.69 .............. 17.57 86.19 333.45
LB1..................................... 1.14 .............. 180.59 .............. 17.57 86.19 284.35
CE2..................................... 1.68 .............. 266.13 .............. 17.57 86.19 369.89
CE1..................................... 1.50 .............. 237.62 .............. 17.57 86.19 341.38
CD2..................................... 1.56 .............. 247.12 .............. 17.57 86.19 350.88
CD1..................................... 1.38 .............. 218.61 .............. 17.57 86.19 322.37
CC2..................................... 1.29 .............. 204.35 .............. 17.57 86.19 308.11
CC1..................................... 1.15 .............. 182.17 .............. 17.57 86.19 285.93
CB2..................................... 1.15 .............. 182.17 .............. 17.57 86.19 285.93
CB1..................................... 1.02 .............. 161.58 .............. 17.57 86.19 265.34
CA2..................................... 0.88 .............. 139.40 .............. 17.57 86.19 243.16
CA1..................................... 0.78 .............. 123.56 .............. 17.57 86.19 227.32
BB2..................................... 0.97 .............. 153.66 .............. 17.57 86.19 257.42
BB1..................................... 0.90 .............. 142.57 .............. 17.57 86.19 246.33
BA2..................................... 0.70 .............. 110.89 .............. 17.57 86.19 214.65
BA1..................................... 0.64 .............. 101.38 .............. 17.57 86.19 205.14
PE2..................................... 1.50 .............. 237.62 .............. 17.57 86.19 341.38
PE1..................................... 1.40 .............. 221.77 .............. 17.57 86.19 325.53
PD2..................................... 1.38 .............. 218.61 .............. 17.57 86.19 322.37
PD1..................................... 1.28 .............. 202.76 .............. 17.57 86.19 306.52
PC2..................................... 1.10 .............. 174.25 .............. 17.57 86.19 278.01
PC1..................................... 1.02 .............. 161.58 .............. 17.57 86.19 265.34
PB2..................................... 0.84 .............. 133.06 .............. 17.57 86.19 236.82
PB1..................................... 0.78 .............. 123.56 .............. 17.57 86.19 227.32
PA2..................................... 0.59 .............. 93.46 .............. 17.57 86.19 197.22
PA1..................................... 0.54 .............. 85.54 .............. 17.57 86.19 189.30
--------------------------------------------------------------------------------------------------------------------------------------------------------

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 SNF residents with Acquired Immune Deficiency Syndrome
(AIDS) to reflect increased costs associated with these residents,
effective for services furnished on or after October 1, 2004. This
special add-on for SNF residents with AIDS is required 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 add-on
for SNF residents with AIDS is also discussed in Program Transmittal
160 (Change Request 3291), issued on April 30, 2004,
which is available online at www.cms.gov/transmittals/downloads/r160cp.pdf. In the FY 2010 SNF PPS final rule (74 FR 40288) (in which
we finalized the RUG-IV case-mix classification system), we did not
address the certification of a case mix adjustment alternative to the
add-on for SNF residents with AIDS, thus allowing the add-on payment
required by section 511 of the MMA to remain in effect. For the limited
number of SNF residents that qualify for this add-on, there is a
significant increase in payments. Using FY 2011 data, we identified
fewer than 4,100 SNF residents with a diagnosis code of 042 (Human
Immunodeficiency Virus (HIV) Infection) who qualify for this add-on.
For FY 2014, an urban facility with a resident with AIDS in RUG-IV
group ``HC2'' would have a case-mix adjusted payment of $414.45 (see
Table 4) before the application of the add-on required by the MMA.
After application of the add-on, an increase of 128 percent, this urban
facility would receive a case-mix adjusted payment of approximately
$944.95 for this resident.
Currently, we use the International Classification of Diseases, 9th
revision, Clinical Modification (ICD-9-CM) code 042 to identify those
residents for whom it is appropriate to apply the AIDS add-on
established by section 511 of the MMA. In this context, we note that,
in accordance with the requirements of the final rule published in the
Federal Register on September 5, 2012 (77 FR 54664), we will be
discontinuing our current use of the ICD-9-CM, effective with the
compliance date for using the International Classification of Diseases,
10th revision, Clinical Modification (ICD-10-CM) of October 1, 2014. In
the FY 2014 SNF PPS proposed rule (78 FR 26444), with regard to the
above-referenced ICD-9-CM diagnosis code of 042, we proposed to
transition to the equivalent ICD-10-CM diagnosis code of B20 upon the
October 1, 2014 implementation date for conversion to ICD-10-CM in
order to identify those residents for whom it is appropriate to apply
the AIDS add-on. We invited public comment on this proposal. We
received only one comment that included a reference to this proposal,
and this comment simply acknowledged the proposal without offering any
specific observations about it. Accordingly, in this final rule, we are
finalizing this proposal without any modification. Therefore, effective
with services furnished on or after October 1, 2014, for the reasons
set forth above and in the FY 2014 SNF PPS proposed rule (78 FR 26444),
the AIDS add-on established by section 511 of the MMA

[[Page 47952]]

will apply to beneficiaries with an ICD-10-CM diagnosis code of B20.
7. Wage Index Adjustment
Section 1888(e)(4)(G)(ii) of the Act requires that we adjust the
portion of the federal rates attributable to wages and wage-related
costs for the area in which the facility is located compared to the
national average of such costs using a wage index that we find
appropriate. Since the implementation of the SNF PPS, we have used
hospital wage data in developing a wage index to be applied to SNFs. In
the FY 2014 SNF PPS proposed rule (78 FR 26446 through 26447), we
proposed to continue that practice, as we continue to believe that in
the absence of SNF-specific wage data, using the hospital inpatient
wage index is appropriate and reasonable for the SNF PPS. As explained
in the update notice for FY 2005 (69 FR 45786, July 30, 2004), the SNF
PPS does not use the hospital area wage index's occupational mix
adjustment, as this adjustment serves specifically to define the
occupational categories more clearly in a hospital setting; moreover,
the collection of the occupational wage data also excludes any wage
data related to SNFs. Therefore, we believe that using the updated wage
data exclusive of the occupational mix adjustment continues to be
appropriate for the SNF PPS.
In the FY 2014 SNF PPS proposed rule (78 FR 26447), we also
proposed to continue using the same methodology discussed in the FY
2008 SNF PPS final rule (72 FR 43423) to address those geographic areas
in which there are no hospitals and, thus, no hospital wage index data
on which to base the calculation of the FY 2014 SNF PPS wage index. For
rural geographic areas that do not have hospitals and, therefore, lack
hospital wage data on which to base an area wage adjustment, we
proposed to use the average wage index from all contiguous CBSAs as a
reasonable proxy. For FY 2014, there are no rural geographic areas that
do not have hospitals, and thus this methodology will not be applied.
Furthermore, we indicated that we would not apply this methodology to
rural Puerto Rico, but instead would continue using the most recent
wage index previously available for that area due to the distinct
economic circumstances that exist there (for example, due to the close
proximity to one another of almost all of Puerto Rico's various urban
and non-urban areas, using the methodology discussed in the FY 2008
final rule would produce a wage index for rural Puerto Rico that is
inappropriately higher than that in half of its urban areas). For urban
areas without specific hospital wage index data, we proposed to use the
average wage indexes of all of the urban areas within the state to
serve as a reasonable proxy for the wage index of that urban CBSA. For
FY 2014, the only urban area without wage index data available is CBSA
25980, Hinesville-Fort Stewart, GA.
In the SNF PPS final rule for FY 2006 (70 FR 45026, August 4,
2005), we adopted the changes discussed in the OMB Bulletin No. 03-04
(June 6, 2003), available online at https://www.whitehouse.gov/omb/bulletins/b03-04.html, which announced revised definitions for
metropolitan statistical areas (MSAs), and the creation of micropolitan
statistical areas and combined statistical areas. In addition, OMB
published subsequent bulletins regarding CBSA changes, including
changes in CBSA numbers and titles. We indicated in the FY 2008 SNF PPS
final rule (72 FR 43423), that all subsequent SNF PPS rules and notices
are considered to incorporate the CBSA changes published in the most
recent OMB bulletin that applies to the hospital wage data used to
determine the current SNF PPS wage index. The OMB bulletins are
available online at https://www.whitehouse.gov/omb/bulletins/.
On February 28, 2013, OMB issued OMB Bulletin No. 13-01, announcing
revisions to the delineation of Metropolitan Statistical Areas,
Micropolitian Statistical Areas, and Combined Statistical Areas, and
guidance on uses of the delineation of these areas. A copy of this
bulletin may be obtained at https://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf. This bulletin states that it
provides the delineations of all Metropolitan Statistical Areas,
Metropolitan Divisions, Micropolitan Statistical Areas, Combined
Statistical Areas, and New England City and Town Areas in the United
States and Puerto Rico based on the standards published in the June 28,
2010 Federal Register (75 FR 37246-37252) and Census Bureau data.
While the revisions OMB published on February 28, 2013 are not as
sweeping as the changes made when we adopted the CBSA geographic
designations for FY 2006, the February 28, 2013 bulletin does contain a
number of significant changes. For example, there are new CBSAs, urban
counties that become rural, rural counties that become urban, and
existing CBSAs that are being split apart.
The changes made by the bulletin and their ramifications must be
extensively reviewed and assessed by CMS before using them for the SNF
PPS wage index. Because the bulletin was not issued until February 28,
2013, we were unable to undertake such a lengthy process before
publication of the FY 2014 proposed rule. By the time the bulletin was
issued, the FY 2014 SNF PPS proposed rule was in the advanced stages of
development. We had already developed the FY 2014 proposed wage index
based on the previous OMB definitions. As we stated in the FY 2014 SNF
PPS proposed rule (78 FR 26448), to allow for sufficient time to assess
the new changes and their ramifications, we intend to propose changes
to the wage index based on the newest CBSA changes in the FY 2015 SNF
PPS proposed rule, and thus we would continue to use the previous OMB
definitions (that is, those used for the FY 2013 SNF PPS update notice)
for the FY 2014 SNF PPS wage index.
A discussion of the comments that we received on the wage index
adjustment to the federal rates, and our responses to those comments,
appears below.
Comment: Commenters recommend that we reconsider developing a SNF-
specific wage index suggesting that ``hospital cost data may not be the
most reliable resource when determining geographical differences in
salary structure for skilled nursing facilities.'' Additionally, one
commenter recommends that this rule reflect any changes needed to
ensure that adjustments more accurately reflect salary experiences of
facilities. Commenters request that we provide an update in the final
rule on its efforts and plans for wage index reform for the SNF PPS
that aims to minimize fluctuations, match the costs of labor in the
market, and provides for a single wage index policy.
Response: Tables A and B in the Addendum of this final rule reflect
updated hospital wage data used to develop the SNF PPS wage index
published in the FY 2014 SNF PPS proposed rule (78 FR 26471 through
26480). Consistent with our previous responses to these recurring
comments (most recently published in the FY 2010 SNF PPS final rule (74
FR 40301)), developing a wage index that utilizes data specific to SNFs
would require us to engage in a resource-intensive audit process. Also,
we note that section 315 of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554, enacted
on December 21, 2000) authorized us to establish a geographic
reclassification procedure that is specific to SNFs, but only after
collecting the data necessary to establish

[[Page 47953]]

a SNF wage index that is based on wage data from nursing homes.
However, to date, this has proven to be unfeasible 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.
As discussed above, we continue to believe that in the absence of SNF-
specific wage data, using the hospital inpatient wage index (without
the occupational mix adjustment) is appropriate and reasonable for the
SNF PPS.
In addition, we note that we have engaged in research efforts
relating to the development of an alternative hospital wage index for
the IPPS, which examined the issues the commenters mentioned about
ensuring that the wage index minimizes fluctuations, matches the costs
of labor in the market, and provides for a single wage index policy.
Section 3137(b) of the Affordable Care Act required the Secretary of
Health and Human Services to submit to Congress a report that includes
a plan to reform the hospital wage index under section 1886 of the Act.
In developing the plan, the Secretary was directed to take into account
the goals for reforming such system set forth in the June 2007 MedPAC
report entitled ``Report to Congress: Promoting Greater Efficiency in
Medicare'' (available at https://www.medpac.gov/documents/jun07_entirereport.pdf.), including establishing a new hospital compensation
index system that:
Uses Bureau of Labor Statistics data, or other data or
methodologies, to calculate relative wages for each geographic area
involved;
Minimizes wage index adjustments between and within MSAs
and Statewide rural areas;
Includes methods to minimize the volatility of wage index
adjustments that result from implementation of policy, while
maintaining budget neutrality in applying such adjustments;
Takes into account the effect that implementation of the
system would have on health care providers and on each region of the
country.
Addresses issues related to occupational mix, such as
staffing practices and ratios, and any evidence on the effect on
quality of care or patient safety as a result of the implementation of
the system; and
Provides for a transition.
As delegated by the Secretary, CMS contracted with Acumen, L.L.C.
(Acumen) to review the June 2007 MedPAC report and recommend a
methodology for an improved Medicare wage index system. After
consultation with relevant parties during the development of the plan,
the Secretary submitted the report to Congress, which is available via
the Internet at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Reform.html. We will continue to
monitor closely research efforts surrounding the development of an
alternative hospital wage index for the IPPS and the potential impact
or influence of that research on the SNF PPS.
Once calculated, we apply the wage index adjustment to the labor-
related portion of the federal rate, which is 69.545 percent of the
total rate. This percentage reflects the labor-related relative
importance for FY 2014, using the FY 2010-based SNF market basket. Each
year, we calculate a revised labor-related share, based on the relative
importance of labor-related cost categories (that is, those cost
categories that are sensitive to local area wage costs) in the input
price index. As discussed in section IV.B.2 of this final rule, for the
FY 2014 SNF PPS update, we revised the labor-related share to reflect
the relative importance of the revised FY 2010-based SNF market basket
cost weights for the following cost categories: wages and salaries;
employee benefits; contract labor; the labor-related portion of
nonmedical professional fees; administrative and facilities support
services; all other: labor-related services (previously referred to in
the FY 2004-based SNF market basket as labor-intensive); and a
proportion of capital-related expenses.
We calculate the labor-related relative importance from the SNF
market basket, and it approximates the labor-related portion of the
total costs after taking into account historical and projected price
changes between the base year, FY 2010, and FY 2014. The price proxies
that move the different cost categories in the market basket do not
necessarily change at the same rate, and the relative importance
captures these changes. Accordingly, the relative importance figure
more closely reflects the cost-share weights for FY 2014 than the base-
year weights from the SNF market basket.
We calculate the labor-related relative importance for FY 2014 in
four steps. First, we compute the FY 2014 price index level for the
total market basket and each cost category of the market basket.
Second, we calculate a ratio for each cost category by dividing the FY
2014 price index level for that cost category by the total market
basket price index level. Third, we determine the FY 2014 relative
importance for each cost category by multiplying this ratio by the base
year (FY 2010) weight. Finally, we add the FY 2014 relative importance
for each of the labor-related cost categories to produce the FY 2014
labor-related relative importance. Tables 7 and 8 show the case-mix
adjusted RUG-IV federal rates by labor-related and non-labor-related
components. Table 2 in section IV.B.4 provides the FY 2014 labor-
related share components based on the revised and rebased FY 2010-based
SNF market basket.

Table 7--RUG-IV Case-Mix Adjusted Federal Rates for Urban SNFs by Labor
and Non-Labor Component
------------------------------------------------------------------------
Labor Non-labor
RUG-IV category Total rate portion portion
------------------------------------------------------------------------
RUX.............................. $760.89 $529.16 $231.73
RUL.............................. 744.31 517.63 226.68
RVX.............................. 677.25 470.99 206.26
RVL.............................. 607.61 422.56 185.05
RHX.............................. 613.61 426.74 186.87
RHL.............................. 547.28 380.61 166.67
RMX.............................. 562.87 391.45 171.42
RML.............................. 516.44 359.16 157.28
RLX.............................. 494.32 343.77 150.55
RUC.............................. 576.84 401.16 175.68
RUB.............................. 576.84 401.16 175.68
RUA.............................. 482.33 335.44 146.89
RVC.............................. 494.86 344.15 150.71
RVB.............................. 428.54 298.03 130.51
RVA.............................. 426.88 296.87 130.01

[[Page 47954]]

RHC.............................. 431.21 299.88 131.33
RHB.............................. 388.10 269.90 118.20
RHA.............................. 341.68 237.62 104.06
RMC.............................. 378.82 263.45 115.37
RMB.............................. 355.61 247.31 108.30
RMA.............................. 292.60 203.49 89.11
RLB.............................. 368.31 256.14 112.17
RLA.............................. 237.32 165.04 72.28
ES3.............................. 694.67 483.11 211.56
ES2.............................. 543.78 378.17 165.61
ES1.............................. 485.75 337.81 147.94
HE2.............................. 469.17 326.28 142.89
HE1.............................. 389.58 270.93 118.65
HD2.............................. 439.32 305.53 133.79
HD1.............................. 366.37 254.79 111.58
HC2.............................. 414.45 288.23 126.22
HC1.............................. 346.47 240.95 105.52
HB2.............................. 409.48 284.77 124.71
HB1.............................. 343.15 238.64 104.51
LE2.............................. 426.06 296.30 129.76
LE1.............................. 356.42 247.87 108.55
LD2.............................. 409.48 284.77 124.71
LD1.............................. 343.15 238.64 104.51
LC2.............................. 359.73 250.17 109.56
LC1.............................. 303.36 210.97 92.39
LB2.............................. 341.49 237.49 104.00
LB1.............................. 290.09 201.74 88.35
CE2.............................. 379.63 264.01 115.62
CE1.............................. 349.79 243.26 106.53
CD2.............................. 359.73 250.17 109.56
CD1.............................. 329.89 229.42 100.47
CC2.............................. 314.96 219.04 95.92
CC1.............................. 291.75 202.90 88.85
CB2.............................. 291.75 202.90 88.85
CB1.............................. 270.20 187.91 82.29
CA2.............................. 246.98 171.76 75.22
CA1.............................. 230.40 160.23 70.17
BB2.............................. 261.91 182.15 79.76
BB1.............................. 250.30 174.07 76.23
BA2.............................. 217.14 151.01 66.13
BA1.............................. 207.19 144.09 63.10
PE2.............................. 349.79 243.26 106.53
PE1.............................. 333.20 231.72 101.48
PD2.............................. 329.89 229.42 100.47
PD1.............................. 313.31 217.89 95.42
PC2.............................. 283.46 197.13 86.33
PC1.............................. 270.20 187.91 82.29
PB2.............................. 240.35 167.15 73.20
PB1.............................. 230.40 160.23 70.17
PA2.............................. 198.90 138.33 60.57
PA1.............................. 190.61 132.56 58.05
------------------------------------------------------------------------

Table 8--RUG-IV Case-Mix Adjusted Federal Rates for Rural SNFs by Labor
and Non-Labor Component
------------------------------------------------------------------------
Labor Non-labor
RUG-IV category Total rate portion portion
------------------------------------------------------------------------
RUX.............................. $778.44 $541.37 $237.07
RUL.............................. 762.60 530.35 232.25
RVX.............................. 683.97 475.67 208.30
RVL.............................. 617.44 429.40 188.04
RHX.............................. 612.55 426.00 186.55
RHL.............................. 549.18 381.93 167.25
RMX.............................. 556.67 387.14 169.53
RML.............................. 512.32 356.29 156.03
RLX.............................. 484.52 336.96 147.56
RUC.............................. 602.61 419.09 183.52
RUB.............................. 602.61 419.09 183.52
RUA.............................. 512.32 356.29 156.03

[[Page 47955]]

RVC.............................. 509.72 354.48 155.24
RVB.............................. 446.36 310.42 135.94
RVA.............................. 444.77 309.32 135.45
RHC.............................. 438.29 304.81 133.48
RHB.............................. 397.11 276.17 120.94
RHA.............................. 352.75 245.32 107.43
RMC.............................. 380.84 264.86 115.98
RMB.............................. 358.66 249.43 109.23
RMA.............................. 298.46 207.56 90.90
RLB.............................. 364.13 253.23 110.90
RLA.............................. 238.98 166.20 72.78
ES3.............................. 670.87 466.56 204.31
ES2.............................. 526.71 366.30 160.41
ES1.............................. 471.27 327.74 143.53
HE2.............................. 455.43 316.73 138.70
HE1.............................. 379.39 263.85 115.54
HD2.............................. 426.92 296.90 130.02
HD1.............................. 357.22 248.43 108.79
HC2.............................. 403.15 280.37 122.78
HC1.............................. 338.21 235.21 103.00
HB2.............................. 398.40 277.07 121.33
HB1.............................. 335.04 233.00 102.04
LE2.............................. 414.24 288.08 126.16
LE1.............................. 347.71 241.81 105.90
LD2.............................. 398.40 277.07 121.33
LD1.............................. 335.04 233.00 102.04
LC2.............................. 350.88 244.02 106.86
LC1.............................. 297.02 206.56 90.46
LB2.............................. 333.45 231.90 101.55
LB1.............................. 284.35 197.75 86.60
CE2.............................. 369.89 257.24 112.65
CE1.............................. 341.38 237.41 103.97
CD2.............................. 350.88 244.02 106.86
CD1.............................. 322.37 224.19 98.18
CC2.............................. 308.11 214.28 93.83
CC1.............................. 285.93 198.85 87.08
CB2.............................. 285.93 198.85 87.08
CB1.............................. 265.34 184.53 80.81
CA2.............................. 243.16 169.11 74.05
CA1.............................. 227.32 158.09 69.23
BB2.............................. 257.42 179.02 78.40
BB1.............................. 246.33 171.31 75.02
BA2.............................. 214.65 149.28 65.37
BA1.............................. 205.14 142.66 62.48
PE2.............................. 341.38 237.41 103.97
PE1.............................. 325.53 226.39 99.14
PD2.............................. 322.37 224.19 98.18
PD1.............................. 306.52 213.17 93.35
PC2.............................. 278.01 193.34 84.67
PC1.............................. 265.34 184.53 80.81
PB2.............................. 236.82 164.70 72.12
PB1.............................. 227.32 158.09 69.23
PA2.............................. 197.22 137.16 60.06
PA1.............................. 189.30 131.65 57.65
------------------------------------------------------------------------

Section 1888(e)(4)(G)(ii) of the Act also requires that we apply
this wage index adjustment in a manner that does not result in
aggregate payments under the SNF PPS that are greater or less than
would otherwise be made in the absence of the wage adjustment. For FY
2014 (federal rates effective October 1, 2013), we apply an adjustment
to fulfill the budget neutrality requirement. We meet this requirement
by multiplying each of the components of the unadjusted federal rates
by a budget neutrality factor equal to the ratio of the weighted
average wage adjustment factor for FY 2013 to the weighted average wage
adjustment factor for FY 2014. For this calculation, we use the same
2012 claims utilization data for both the numerator and denominator of
this ratio. We define the wage adjustment factor used in this
calculation as the labor share of the rate component multiplied by the
wage index plus the non-labor share of the rate component. The budget
neutrality factor for FY 2014 is 1.0006. The wage index applicable to
FY 2014 is set forth in Tables A and B, which appear in the Addendum of
this final rule, and is also available on the CMS Web site at https://cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.

[[Page 47956]]

After consideration of the comments we received, for the reasons
discussed in this final rule and in the FY 2014 SNF PPS proposed rule,
we are finalizing the wage index adjustment and related policies as
proposed in the FY 2014 SNF PPS proposed rule (78 FR 24446 through
26449) without modification.
8. Adjusted Rate Computation Example
Using the hypothetical SNF XYZ described below, Table 9 shows the
adjustments made to the federal per diem rates to compute the
provider's actual per diem PPS payment under the described scenario. We
derive the Labor and Non-labor columns from Table 7. As illustrated in
Table 9, SNF XYZ's total PPS payment would equal $41,718.20.

Table 9--Adjusted Rate Computation Example SNF XYZ: Located in Cedar Rapids, IA (Urban CBSA 16300), Wage Index: 0.8964
--------------------------------------------------------------------------------------------------------------------------------------------------------
Adjusted Adjusted Percent Medicare
RUG-IV group Labor Wage index labor Non-labor rate adjustment days Payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
RVX............................................. $470.99 0.8964 $422.20 $206.26 $628.46 $628.46 14 $8,798.44
ES2............................................. 378.17 0.8964 338.99 165.61 504.60 504.60 30 15,138.00
RHA............................................. 237.62 0.8964 213.00 104.06 317.06 317.06 16 5,072.96
CC2 *........................................... 219.04 0.8964 196.35 95.92 292.27 666.38 10 6,663.80
BA2............................................. 151.01 0.8964 135.37 66.13 201.50 201.50 30 6,045.00
-------------------------------------------------------------------------------------------------------
........... ........... ........... ........... ........... ........... 100 41,718.20
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Reflects a 128 percent adjustment from section 511 of the MMA.

C. Additional Aspects of the SNF PPS

1. SNF Level of Care--Administrative Presumption
The establishment of the SNF PPS did not change the fundamental
requirements for SNF coverage under Medicare. However, because the
case-mix classification reflects 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 discussed in
section IV.B of this final rule. This approach includes an
administrative presumption that utilizes a beneficiary's initial
classification in one of the upper 52 RUGs of the 66-group RUG-IV case-
mix classification system to assist in making certain SNF level of care
determinations.
In accordance with section 1888(e)(4)(H)(ii) of the Act and the
regulations at Sec. 413.345, we include in each update of the federal
payment rates in the Federal Register the designation of those specific
RUGs under the classification system that represent the required SNF
level of care for Medicare coverage, as provided in Sec. 409.30. As
set forth in the FY 2011 SNF PPS update notice (75 FR 42910), this
designation reflects an administrative presumption under the 66-group
RUG-IV system that beneficiaries who are correctly assigned to one of
the upper 52 RUG-IV groups on the initial 5-day, Medicare-required
assessment are automatically classified as meeting the SNF level of
care definition up to and including the assessment reference date on
the 5-day Medicare-required assessment.
A beneficiary assigned to any of the lower 14 RUG-IV groups is not
automatically classified as either meeting or not meeting the SNF level
of care definition, but instead receives an individual level of care
determination using the existing administrative criteria. This
presumption recognizes the strong likelihood that beneficiaries
assigned to one of the upper 52 RUG-IV groups during the immediate
post-hospital period require a covered level of care, which would be
less likely for those beneficiaries assigned to one of the lower 14
RUG-IV groups.
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 case-mix classification
structure. In this final rule, we continue to designate the upper 52
RUG-IV groups for purposes of this administrative presumption,
consisting of all groups encompassed by the following RUG-IV
categories:
Rehabilitation plus Extensive Services;
Ultra High Rehabilitation;
Very High Rehabilitation;
High Rehabilitation;
Medium Rehabilitation;
Low Rehabilitation;
Extensive Services;
Special Care High;
Special Care Low; and,
Clinically Complex.
However, we note that this administrative presumption policy does
not supersede the SNF's responsibility to ensure that its decisions
relating to level of care are appropriate and timely, including a
review to confirm that the services prompting the beneficiary's
assignment to one of the upper 52 RUG-IV groups (which, in turn, serves
to trigger the administrative presumption) are themselves medically
necessary. As we explained in the FY 2000 SNF PPS final rule (64 FR
41667), the administrative presumption:

. . . is itself rebuttable in those individual cases in which the
services actually received by the resident do not meet the basic
statutory criterion of being reasonable and necessary to diagnose or
treat a beneficiary's condition (according to section 1862(a)(1) of
the Act). Accordingly, the presumption would not apply, for example,
in those situations in which a resident's assignment to one of the
upper . . . groups is itself based on the receipt of services that
are subsequently determined to be not reasonable and necessary.

Moreover, we want to stress the importance of careful monitoring
for changes in each patient's condition to determine the continuing
need for Part A SNF benefits after the assessment reference date of the
5-day assessment.
2. Consolidated Billing
Sections 1842(b)(6)(E) and 1862(a)(18) of the Act (as added by
section 4432(b) of the BBA) require 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, section
1862(a)(18) places the responsibility with the SNF for billing Medicare
for physical therapy, occupational therapy, and speech-language
pathology services that the resident receives during a noncovered stay.
Section 1888(e)(2)(A) of the Act excludes a certain limited number of
services from the consolidated billing provision (primarily those
services furnished by physicians and certain other types of
practitioners), which remain separately

[[Page 47957]]

billable under Part B when furnished to a SNF's Part A resident. 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).
We note that section 103 of the Medicare, Medicaid, and SCHIP
Balanced Budget Refinement Act of 1999 (BBRA, Pub. L. 106-113, enacted
on November 29, 1999) amended section 1888(e)(2)(A) of the Act by
further excluding a number of individual ``high-cost, low probability''
services, identified by Healthcare Common Procedure Coding System
(HCPCS) codes, within several broader categories (chemotherapy items,
chemotherapy administration services, radioisotope services, and
customized prosthetic devices) that otherwise remained subject to this
provision. We discuss this BBRA amendment in greater detail in the FY
2001 SNF PPS proposed and final rules (65 FR 19231 through 19232, April
10, 2000, and 65 FR 46790 through 46795, July 31, 2000), as well as in
Program Memorandum AB-00-18 (Change Request 1070), issued
March 2000, which is available online at www.cms.gov/transmittals/downloads/ab001860.pdf.
As explained in the FY 2001 SNF PPS proposed rule (65 FR 19232),
the amendments enacted in section 103 of the BBRA not only identified
for exclusion from this provision a number of particular service codes
within four specified categories (that is, chemotherapy items,
chemotherapy administration services, radioisotope services, and
customized prosthetic devices), but also gave the Secretary ``. . . the
authority to designate additional, individual services for exclusion
within each of the specified service categories.'' In the FY 2001 SNF
PPS proposed rule, we also noted that the BBRA Conference report (H.R.
Rep. No. 106-479 at 854 (1999) (Conf. Rep.)) characterizes the
individual services that this legislation targets for exclusion as ``.
. . high-cost, low probability events that could have devastating
financial impacts because their costs far exceed the payment [SNFs]
receive under the prospective payment system . . . .'' According to the
conferees, section 103(a) of the BBRA ``is an attempt to exclude from
the PPS certain services and costly items that are provided
infrequently in SNFs . . . .'' By contrast, we noted that the Congress
declined to designate for exclusion any of the remaining services
within those four categories (thus, leaving all of those services
subject to SNF consolidated billing), because they are relatively
inexpensive and are furnished routinely in SNFs.
As we further explained in the FY 2001 SNF PPS final rule (65 FR
46790), and as our longstanding policy, any additional service codes
that we might designate for exclusion under our discretionary authority
must meet the same statutory criteria used in identifying the original
codes excluded from consolidated billing under section 103(a) of the
BBRA: The code must fall within one of the four service categories
specified in the BBRA, and the code also must meet the same standards
of high cost and low probability in the SNF setting, as discussed in
the BBRA Conference report. Accordingly, we characterized this
statutory authority to identify additional service codes for exclusion
``. . . as essentially affording the flexibility to revise the list of
excluded codes in response to changes of major significance that may
occur over time (for example, the development of new medical
technologies or other advances in the state of medical practice)'' (65
FR 46791). In the FY 2014 SNF PPS proposed rule (78 FR 26449-26450), we
specifically invited public comments identifying HCPCS codes in any of
these four service categories (chemotherapy items, chemotherapy
administration services, radioisotope services, and customized
prosthetic devices) representing recent medical advances that might
meet our criteria for exclusion from SNF consolidated billing. A
discussion of the public comments received on this topic, along with
our responses, appears below.
Comment: One commenter suggested that we should categorically
exclude all chemotherapy and radiation therapy services from
consolidated billing. Another commenter reiterated a recommendation
that commenters had repeatedly urged us to adopt in previous years, to
expand the existing exclusion for certain high-intensity outpatient
hospital services (such as radiation therapy) to encompass services
furnished in other, nonhospital settings.
Response: With respect to chemotherapy services, we have noted
repeatedly in prior rulemaking on the SNF PPS--including, most
recently, the FY 2012 SNF PPS final rule (76 FR 48532 through 48533,
August 8, 2011)--that in creating a statutory carve-out for
chemotherapy and certain other designated types of services, the BBRA

. . . did not categorically exclude all such services from SNF
consolidated billing. Instead, the legislation specifically
identified individual excluded services within designated
categories, by Healthcare Common Procedure Coding System (HCPCS)
code. The BBRA's Conference Report explained that this legislation
specifically targeted those `high-cost, low probability' items and
services that `. . . are not typically administered in a SNF, or are
exceptionally expensive, or are given as infusions, thus requiring
special staff expertise to administer' (H.R. Conf. Rep. No. 106-479
at 854). By contrast, other types of services within those
categories that `. . . are relatively inexpensive and are
administered routinely in SNFs' remain subject to SNF consolidated
billing under this legislation.

Radiation therapy, by contrast, is not one of the service
categories designated for exclusion under the BBRA legislation, but
instead is encompassed within the administrative exclusion for certain
types of exceptionally intensive outpatient services under the
regulations at Sec. 411.15(p)(3)(iii). As such, all types of radiation
therapy services are, in fact, already excluded from consolidated
billing, but only when furnished in the hospital or CAH setting. In
response to the recurring calls for expanding this exclusion to
encompass services furnished in freestanding (nonhospital/CAH)
settings, we have repeatedly noted--most recently, in the FY 2012 SNF
PPS final rule (76 FR 48532, August 8, 2011)--that the existing law
does not provide us with the authority to ``. . . establish a
categorical exclusion for these services that would apply irrespective
of the setting in which they are furnished.'' In addition, as we
initially noted in the FY 2009 SNF PPS final rule (73 FR 46436, August
8, 2008) and then reiterated in a number of subsequent final rules, the
repeated calls to expand the administrative exclusion for high-
intensity outpatient services in this manner would appear to reflect

. . . a continued misunderstanding of the underlying purpose of this
provision. As we have consistently noted in response to comments on
this issue in previous years . . . and as also explained in Medicare
Learning Network (MLN) Matters article SE0432 . . . the rationale
for establishing this exclusion was to address those types of
services that are so far beyond the normal scope of SNF care that
they require the intensity of the hospital setting in order to be
furnished safely and effectively.

Moreover, we note that when the Congress enacted the consolidated
billing exclusion for certain RHC and FQHC services in section 410 of
the MMA, the accompanying legislative history's description of present
law acknowledged that the existing exclusions for exceptionally
intensive outpatient services are specifically limited to `. . .
certain outpatient services from a Medicare-participating hospital or
critical access hospital . . .' (emphasis added). (See the House Ways

[[Page 47958]]

and Means Committee Report (H. Rep. No. 108-178, Part 2 at 209), and
the Conference Report (H. Conf. Rep. No. 108-391 at 641)). Therefore,
these services are excluded from SNF consolidated billing only when
furnished in the outpatient hospital or CAH setting, and not when
furnished in other, freestanding (non-hospital or non-CAH) settings.
Comment: One commenter cited the longstanding chemotherapy
exclusion for Rituximab (Rituxan, HCPCS code J9310), which it
characterized as a ``non-cancer chemotherapy . . . drug used to treat
rheumatoid arthritis'' (emphasis added), and presented this as a
precedent for expanding this exclusion to encompass a number of other
drugs that are not used in the treatment of cancer. The commenter
asserted that in the absence of such an exclusion, suppliers of these
drugs who do not have ``an executed contract in place with the SNF
prior to administration'' would be ``forced to absorb the significant
cost of the drug or biologic.''
Response: We note that the description of Rituximab as a ``non-
cancer'' chemotherapy drug is not entirely accurate, and requires a
more detailed discussion. As explained on MedlinePlus, the Web site of
the National Institutes of Health's U.S. National Library of Medicine
(https://www.nlm.nih.gov/medlineplus/druginfo/meds/a607038.html),

Rituximab is used alone or with other medications to treat
certain types of non-Hodgkin's lymphoma (NHL; a type of cancer that
begins in a type of white blood cells that normally fights
infection). Rituximab is also used with another medication to treat
the symptoms of rheumatoid arthritis (RA; a condition in which the
body attacks its own joints, causing pain, swelling, and loss of
function) in people who have already been treated with a certain
type of medication called a tumor necrosis factor (TNF) inhibitor.

Thus, while it is true that this drug is approved for use in
treating certain non-cancer conditions such as rheumatoid arthritis, it
is actually approved for use in treating cancer as well, and it is this
latter application that represents the basis for its exclusion from
consolidated billing as a chemotherapy drug. In this context, we note
that when an otherwise excluded chemotherapy drug is prescribed for a
use that does not involve treating cancer, the drug would not qualify
as an excluded ``chemotherapy'' drug in that instance. This is
consistent with the discussion of the chemotherapy exclusion in the FY
2010 SNF PPS final rule (74 FR 40354), which notes that this exclusion
does not encompass drugs that ``are not anti-cancer drugs,'' as well as
in the FY 2012 SNF PPS final rule (76 FR 48531), which similarly notes
that this exclusion does not extend to drugs that ``are actually used
to treat diseases other than cancer'' (emphasis added). Moreover, the
commenter appears to be concerned that the absence of an executed
contract would serve to absolve the SNF of its liability to pay the
supplier for a bundled service. We note that this is not the case. In
MLN Matters article MM3592 (available online at https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM3592.pdf), while emphasizing the
importance of written agreements between SNFs and their suppliers, we
clearly specify that an arrangement between a SNF and its supplier ``is
validated not by the presence of specific supporting written
documentation but rather by their actual compliance with the
requirements governing such `arrangements','' and that ``the absence of
an agreement with its supplier (written or not) does not relieve the
SNF of its responsibility to pay suppliers for services `bundled' in
the SNF PPS payment from Medicare.''
Comment: Some commenters advocated the exclusion of other types of
services that do not fall within the categories identified in the BBRA.
We received a comment requesting that DIFICID[supreg] (fidaxomicin) be
excluded from consolidated billing. DIFICID[supreg] is an orally
administered tablet that is used specifically for treating severe cases
of diarrhea associated with certain potentially life-threatening
infections of the gastrointestinal tract. The commenter noted this
drug's potential to reduce the recurrence of such infections (along
with associated hospitalizations and physician office visits), and to
improve patient quality of life. The commenter cited as precedents the
existing authority for excluding certain ``high-cost, low probability''
services under the BBRA, as well as the separate payment made for
certain drugs under the heading of screening and preventive services,
as discussed in MLN Matters Special Edition article SE0436
(available online at https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/SE0436.pdf).
The commenter then urged the creation of a similar exclusion for
DIFICID[supreg] on public policy grounds, expressing concern that the
continued inclusion of DIFICID[supreg] within the SNF PPS bundle might
prompt SNFs to opt for alternate treatments that are less expensive,
but also less efficacious.
Response: As we have consistently stated (most recently, in the FY
2012 SNF PPS final rule (76 FR 48530, August 8, 2011)), the BBRA
authorizes us to identify additional services for exclusion only within
those particular service categories--chemotherapy items; chemotherapy
administration services; radioisotope services; and, customized
prosthetic devices--that it has designated for this purpose, and does
not give us the authority simply to carve out additional categories of
services beyond those specified in the law on ``public policy
grounds.'' Accordingly, as DIFICID[supreg] does not fall within one of
the specific service categories designated for this purpose in the
statute itself, we are unable to exclude it from consolidated billing
under this authority. Further, we note that while the cited MLN Matters
article does indeed discuss certain drugs that are separately covered
under Medicare Part B or Part D when furnished to Part A SNF residents,
those particular drugs are vaccines that are preventive rather than
therapeutic in nature and, as such, are by definition outside the scope
of the Part A SNF benefit (see Pub. L. 100-04, ch.6, Sec. 20.4); by
contrast, therapeutic drugs such as DIFICID[supreg] would fall within
the scope of SNF coverage under Part A. Regarding the commenter's
concern that the continued inclusion of DIFICID[supreg] within the SNF
PPS bundle could affect the extent to which SNFs may be inclined to
consider its use, we note that while bundling provides incentives for
SNFs to be efficient in the provision of care, SNFs are still required
to provide ``the necessary care and services to attain or maintain the
highest practicable physical, mental, and psychosocial well-being'' of
each resident in accordance with the resident's assessment and plan of
care (Sec. 483.25).
Comment: One commenter reiterated a number of recommendations that
commenters had urged us to adopt in previous years. These included
expanding the existing chemotherapy exclusion to encompass related
drugs that are commonly administered in conjunction with chemotherapy
to ameliorate the side effects of the chemotherapy drugs, and excluding
additional categories of services beyond those specified in the BBRA,
such as positron emission tomography (PET) scans.
Response: Regarding the exclusion of chemotherapy-related drugs, we
have noted repeatedly in this and previous final rules--most recently,
the FY 2012 SNF PPS final rule (76 FR 48532, August 8, 2011)--that the
BBRA authorizes us to identify additional

[[Page 47959]]

service codes for exclusion only within those particular service
categories (chemotherapy items; chemotherapy administration services;
radioisotope services; and, customized prosthetic devices) that it has
designated for this purpose, and does not give us the authority to
exclude other services which, though they may be related, fall outside
of the specified service categories themselves. Thus, while anti-
emetics (anti-nausea drugs), for example, are commonly administered in
conjunction with chemotherapy, they are not inherently chemotherapeutic
in nature (that is, they do not actively destroy cancer cells) and,
consequently, do not fall within the excluded chemotherapy category
designated in the BBRA. Regarding the exclusion of PET scans, we noted
in the FY 2012 SNF PPS final rule that ``. . . we decline to add to the
exclusion list those services submitted by commenters that have already
been considered and not excluded in previous years based on their being
outside the particular service categories that the statute authorizes
for exclusion'' (76 FR 48531, August 8, 2011). Such services would
include PET scans, as discussed previously in the FY 2006 SNF PPS final
rule (70 FR 45049, August 4, 2005).
Comment: One commenter recommended that the surgical debridement
procedures represented by HCPCS codes 11040 through 11044 be excluded
from consolidated billing.
Response: We note that debridement codes 11040 (skin, partial
thickness) and 11041 (skin, full thickness) were discontinued as of
December 2010. The remaining debridement codes that the commenter
cited--11042 (skin, and subcutaneous tissue), 11043 (skin, subcutaneous
tissue, and muscle), and 11044 (skin, subcutaneous tissue, muscle, and
bone)--are listed correctly in Carrier/A/B MAC File 1 as physician
services that are excluded from consolidated billing. However, these
same three codes (along with the two discontinued ones) currently
appear erroneously in Major Category I.F of the FI/A/B MAC Annual
Update as included (that is, bundled) ambulatory surgery codes.
Accordingly, we will make the appropriate corrections to the FI/A/B MAC
Annual Update to ensure that it no longer lists these codes incorrectly
as ambulatory surgery inclusions.
Comment: One commenter suggested that, rather than relying solely
on feedback through the public comment process on possible exclusions
from consolidated billing, CMS should convene an official expert group
to review the codes and make formal recommendations.
Response: In the FY 2010 SNF PPS final rule (74 FR 40354, August
11, 2009), we noted that the Congress gave specific direction regarding
the review of consolidated billing codes that it envisioned: In the
BBRA Conference Report (H.R. Rep. No. 106-479 at 854 (1999) (Conf.
Rep.)), it specified that the GAO was to conduct a special, one-time
comprehensive review of the existing code set, and it then conferred on
the Secretary the authority ``. . . to review periodically and modify,
as needed, the list of excluded services.'' However, as we explained in
the FY 2002 SNF PPS final rule (66 FR 39588, July 31, 2001), this
ongoing review function must be considered within the context of the
overall process in which it takes place:

. . . we do not view making additions to the list of excluded
services as a part of a process of continual expansion to encompass
an ever-broadening array of excluded services. Further, . . . the
fundamental purpose of the consolidated billing provision . . . is
to make the SNF responsible for billing Medicare for essentially all
of its residents' services, other than those identified in a small
number of narrow and specifically delimited statutory exclusions
(emphasis added).

Thus, the purpose of this ongoing review is not to devise new and
increasingly expansive rationales for the unbundling of services, but
rather, simply to ensure that services which meet the already-
established criteria for exclusion are not overlooked. We believe that
our longstanding practice of periodically inviting input through the
public comment process (which is already open to any interested parties
who may wish to provide the benefit of their expertise in this area) is
both appropriate and sufficient to achieve this objective.
3. Payment for SNF-Level Swing-Bed Services
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-level care, as needed. For
critical access hospitals (CAHs), Medicare pays on a reasonable cost
basis under Part A for SNF-level services furnished under a swing-bed
agreement. However, in accordance with section 1888(e)(7) of the Act,
these SNF-level services when furnished by non-CAH rural hospitals are
paid under the SNF PPS, effective with cost reporting periods beginning
on or after July 1, 2002. As explained in the FY 2002 SNF PPS final
rule (66 FR 39562), this effective date is consistent with the
statutory provision to integrate swing-bed rural hospitals into the SNF
PPS by the end of the transition period, June 30, 2002.
Accordingly, all non-CAH swing-bed rural hospitals are being paid
under the SNF PPS. Therefore, all rates and wage indexes outlined in
earlier sections of this final rule for the SNF PPS also apply to all
non-CAH swing-bed rural hospitals. A complete discussion of assessment
schedules, the MDS, and the transmission software (RAVEN-SB for Swing
Beds) appears in the FY 2002 final rule (66 FR 39562) and in the FY
2010 final rule (74 FR 40288). As finalized in the FY 2010 SNF PPS
final rule (74 FR 40356-57), effective October 1, 2010, non-CAH swing-
bed rural hospitals are required to complete an MDS 3.0 swing-bed
assessment, which is limited to the required demographic, payment, and
quality items. The latest changes in the MDS for swing-bed rural
hospitals appear on the SNF PPS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/. We
received no comments on this aspect of the proposed rule.

D. Other Issues

1. Monitoring Impact of FY 2012 Policy Changes
In the FY 2014 SNF PPS proposed rule (78 FR 26463 through 26465),
we discussed our monitoring efforts associated with impacts of certain
policy changes finalized in the FY 2012 SNF PPS final rule (76 FR
48486). Specifically, we have been monitoring the impact of the
following changes:
Recalibration of the FY 2011 SNF parity adjustment to
align overall payments under RUG-IV with those under RUG-III.
Allocation of group therapy time to pay more appropriately
for group therapy services based on resource utilization and cost.
Implementation of changes to the MDS 3.0 patient
assessment instrument, most notably the introduction of the Change-of-
Therapy (COT) Other Medicare Required Assessment (OMRA).
We have posted quarterly memos to the SNF PPS Web site which
highlight some of the trends we have observed over a given time period.
These memos may be accessed through the SNF PPS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/SNF_Monitoring.zip. In the FY 2014 SNF PPS proposed rule (78 FR
26465), we stated that based on the data reviewed thus far, we have
found no evidence of possible negative impacts on SNF providers cited

[[Page 47960]]

in the comments in the FY 2012 SNF PPS final rule (see 76 FR 48497-98,
48537), particularly references to a ``double hit'' from the combined
impact of the recalibration of the FY 2011 SNF parity adjustment and
the FY 2012 policy changes. Therefore, we stated that while we will
continue our SNF monitoring efforts, we will post information to the
aforementioned Web site only as appropriate.
A discussion of the comments we received on these efforts, with our
responses, appears below.
Comment: One commenter stated that they appreciate the transparency
demonstrated by releasing the quarterly findings memos and urged us to
continue this practice into the future.
Response: We appreciate the support for our efforts to provide this
data on the FY 2012 policy changes. As stated in the FY 2014 SNF PPS
proposed rule (78 FR 26465), this level of analysis was being conducted
to determine if any evidence existed of possible negative impacts on
SNF providers cited in the comments in the FY 2012 SNF PPS final rule
(76 FR 48497-48498, 48537), particularly references to a ``double hit''
from the combined impact of the recalibration of the FY 2011 SNF parity
adjustment and the FY 2012 policy changes (for example, allocation of
group therapy and introduction of the COT OMRA). Based on the data we
have examined so far, there is no evidence of such negative impacts--
overall case mix has not been affected significantly and providers
appear to have adjusted their internal processes and care planning
activities well to accommodate the FY 2012 policy changes. Given these
findings, we do not regard the continued publishing of quarterly memos,
in the absence of some marked finding, as still being necessary at this
point. Therefore, as stated in the FY 2014 SNF PPS proposed rule (78 FR
26465), we will continue our SNF monitoring efforts but will henceforth
only post information regarding our monitoring activities discussed
above to the SNF PPS Web site as appropriate.
Comment: One commenter asked that we reevaluate the potential
negative impacts of implementing the COT OMRA; specifically, that the
COT OMRA is unnecessarily burdensome and inflexible. This commenter
requested that we consider ways to make the COT OMRA more flexible for
providers.
Response: As noted in the FY 2012 SNF PPS final rule (76 FR 48518),
the COT OMRA was implemented because the then-existing range of PPS
assessments did not give providers adequate opportunity to report
changes in the resident's therapy services that occur outside the
observation window which, as always, should be based on medical
evidence. Since implementing the COT OMRA, we have continued to monitor
its utilization and determine if any negative impacts have resulted for
facilities and/or SNF residents. Our monitoring efforts have revealed,
as demonstrated in Table 21 of the FY 2014 SNF PPS proposed rule (78 FR
26465), that the COT OMRA comprises just 11 percent of all assessments
completed for SNF residents. As such, based on the limited number of
COT OMRAs being completed, we do not believe that the COT OMRA
represents a significant burden for providers.
With respect to the flexibility of the assessment, the limited
number of COT OMRAs might also be the result of the flexibility in
completing the COT OMRA afforded in the MDS RAI Manual (for example,
the flexibility discussed in Chapter 2 of the MDS RAI Manual, whereby
the COT observation period for a resident is reset if a scheduled or
unscheduled assessment is completed on or prior to day 7 of the COT
observation period). Additionally, as the COT OMRA may be used to
report either an increase or decrease in therapy services relative to
the resident's previous therapy RUG classification, the COT OMRA has
helped ensure greater accuracy of SNF payments and ensure that
providers are appropriately reimbursed for the level of care delivered
to their residents. Therefore, while we will continue to monitor for
potential negative impacts associated with the FY 2012 policy changes,
as noted above, we have not yet found any evidence of such an adverse
impact.
2. Ensuring Accuracy in Grouping to Rehabilitation RUG-IV Categories
In the FY 2014 SNF PPS proposed rule (78 FR 26465-26466), we
clarified that our classification criteria for the Rehabilitation RUG
categories require that the resident receive the requisite number of
distinct calendar days of therapy to be classified into the
Rehabilitation RUG category, and focused particularly on issues related
to classification into the Medium and Low Rehabilitation categories. We
explained that in requiring distinct calendar days of therapy, our
classification criteria are consistent with the SNF level of care
requirement under Sec. 409.31(b)(1), which provides that skilled
services must be needed and received on a daily basis, and Sec.
409.34(a)(2),which specifies that the ``daily basis'' criterion can be
met by skilled rehabilitation services that are needed and provided at
least 5 days per week. However, we explained in the FY 2014 SNF PPS
proposed rule (78 FR 26465-66) that the MDS item set currently does not
contain an item that permits SNFs to report the total number of
distinct calendar days of therapy provided by all rehabilitation
disciplines. Instead, the MDS item set requires the SNF to record,
separately by each therapy discipline, the number of days therapy was
received during the 7-day look-back period, without distinguishing
between distinct calendar days. As we explained in the FY 2014 SNF PPS
proposed rule, currently, the RUG grouper adds these days together
which results in some residents being classified into the Medium and
Low Rehabilitation RUG categories when they do not actually meet our
classification criteria. Thus, we proposed to add an item to the MDS
3.0 item set (item O0420) which would permit SNF providers to code the
total number of distinct calendar days that the resident received
therapy services across all rehabilitation disciplines during the
assessment look-back period to ensure that residents are classified
into the correct Rehabilitation RUG in accordance with our existing
classification criteria. We stated that effective October 1, 2013,
facilities would be required to record under this item the number of
distinct calendar days of therapy provided by all the rehabilitation
disciplines over the 7-day look-back period for the current assessment,
which would be used to classify the resident into the correct
Rehabilitation RUG category. A discussion of the comments we received
on this proposal, and our responses, appear below.
Comment: Many commenters supported the proposal to add a new item
to the MDS 3.0 to capture distinct therapy days and agreed that
patients should be appropriately categorized into the applicable RUG
category to ensure accurate payment. Several commenters appeared to be
under the impression that this proposal will change the policy on how
many days of therapy are required in order to group to specific
rehabilitation RUG categories. Furthermore, some commenters stated that
we did not provide any clinical basis for this addition to the MDS 3.0,
and that therapist judgment should be the deciding factor for
scheduling therapy services to best meet the residents' needs.
Response: We appreciate that many commenters supported the proposal
to add item O0420 to the MDS 3.0 to capture distinct therapy days and
to pay more accurately for therapy services. We emphasize that we did
not propose to add item O0420 as a result of a change

[[Page 47961]]

in policy; instead, we proposed to add this item to enable us to
implement our existing policy more accurately. As explained in the FY
2014 SNF PPS proposed rule (78 FR 26465 through 26466), throughout all
iterations of the SNF PPS from 1998 until the present time, in order to
qualify for the Medium Rehabilitation (Medium Rehab) RUG category, a
resident must receive at least 150 minutes of therapy per week (a
seven-day time period) and 5 days of any combination of the three
rehabilitation disciplines (physical therapy, occupational therapy, or
speech-language pathology). The policy has always been that the term
``days'' in this context denotes distinct calendar days of therapy.
Similarly, for the Low, High, Very High, and Ultra High Rehabilitation
RUG categories, the policy has always been that distinct calendar days
of therapy are required to classify into these RUG categories (for
example, for the Low Rehabilitation category, 3 distinct calendar days
of therapy are required). Thus, in the proposed rule, we clarified that
our classification criteria for the Rehabilitation RUG categories
require that the resident receive the requisite number of distinct
calendar days of therapy to be classified into the Rehabilitation RUG
category. However, there has not been a way until now to record on the
MDS 3.0 the number of distinct calendar days of therapy provided across
all rehabilitation disciplines in order to ensure accurate calculation
of these days in the RUG grouper software. It is true that our proposed
change to the MDS 3.0 item set will require an additional item for
reporting of therapy services; however, this change solely addresses
the manner of reporting (and not the manner of providing) these
services. We agree that licensed therapists are to use their clinical
judgment to treat the patients in the most appropriate manner, and to
maintain professional standards while providing all necessary services.
Providers are not required to change clinical practice patterns based
on this additional reporting requirement; rather, they could continue
to provide therapy as they always have and would use the new item to
report more accurately the days on which they provided therapy
services, in order to ensure that the patient is assigned to the
correct RUG.
In addition, we note that under section 1814(a)(2)(B) of the Act,
one of the basic elements of the SNF level of care (which constitutes a
precondition for SNF coverage under Part A) is that a beneficiary must
need and receive skilled care on a daily basis. Under an exception in
the regulations at Sec. 409.34(a)(2), when skilled rehabilitation
services are not available 7 days a week, they can still be considered
furnished on a ``daily basis'' when needed and provided at least 5 days
a week. However, it is important to note that merely scheduling therapy
services on 5 distinct calendar days during the week would be
insufficient to satisfy this requirement unless the beneficiary also
has an actual clinical need for the services to be scheduled in this
manner. As noted in Sec. 30.6 of the Medicare Benefit Policy Manual,
Chapter 8:

It is not sufficient for the scheduling of therapy sessions to
be arranged so that some therapy is furnished each day, unless the
patient's medical needs indicate that daily therapy is required. For
example, if physical therapy is furnished on 3 days each week and
occupational therapy is furnished on 2 other days each week, the
``daily basis'' requirement would be satisfied only if there is a
valid medical reason why both cannot be furnished on the same day.
The basic issue here is not whether the services are needed, but
when they are needed. Unless there is a legitimate medical need for
scheduling a therapy session each day, the ``daily basis''
requirement for SNF coverage would not be met.

Accordingly, we do not expect that the addition of this MDS item,
which is intended to facilitate more accurate reporting, will result in
any changes in clinical practice patterns, as SNFs should already be
appropriately providing skilled rehabilitation services on a daily
basis only in those instances where the beneficiary has an actual need
for therapy to be furnished on at least 5 distinct calendar days during
the week.
Comment: Some commenters stated that the proposal to add item O0420
to the MDS 3.0 would have a significant impact on the ability of
residents to qualify for a rehabilitation RUG for the 5-day PPS
assessment because the Assessment Reference Date (ARD) for the 5-day
PPS assessment must be set for no later than Day 8 of the stay. They
expressed concern that residents who miss therapy for clinical or
scheduling reasons are not being appropriately classified into
rehabilitation RUG categories. Additionally, these commenters explained
that it is difficult to provide therapy to a resident for 5 distinct
days over a 7-day period and this challenge correlates to residents
being placed in non-rehabilitation RUGs. They suggested that CMS does
not adequately reimburse for rehabilitation services that are delivered
beyond the minimum number of minutes required for a specific RUG
category and that this amounts to unpaid therapy services provided to
residents.
Additionally, these commenters stated that this proposal will
result in greater burden for providers; for example, requiring
scheduling changes for therapists, requiring therapists to work on
weekends, evenings, and holidays, and requiring part-time therapists to
work on full-time schedules. They explained that the need for two
different therapy disciplines does not change, irrespective of whether
these therapies are received on distinct days or on the same days. Some
commenters requested that we implement an ``exceptions'' policy to
account for missed or rescheduled therapy sessions beyond provider
control which result in different therapies being provided on the same
day.
Finally, several commenters expressed concern related to a possible
conflict between the proposal to add item O0420 to the MDS item set to
capture more appropriately the distinct days of therapy provided and
instructions from CMS in recent guidance which clarified the term
``daily skilled services defined'' (CMS Transmittal 161, October 26,
2012) which states, ``A patient whose inpatient stay is based solely on
the need for skilled rehabilitation services would meet the ``daily
basis'' requirement when they need and receive those services on at
least 5 days a week. (If therapy services are provided less than 5 days
a week, the ``daily'' requirement would not be met.) This requirement
should not be applied so strictly that it would not be met merely
because there is an isolated break of a day or two during which no
skilled rehabilitation services are furnished and discharge from the
facility would not be practical.'' For the above reasons, several
commenters suggested we postpone the proposed addition to the MDS 3.0
of item O0420 requiring that facilities report the number of distinct
calendar days of therapy and carefully review the impact of the change
as discussed in these comments.
Response: We do not agree with the commenters' assertion that the
proposal to add item O0420 to the MDS 3.0 item set will make it more
difficult to classify residents into rehabilitation RUGs during the 5-
day PPS assessment period because the ARD must be set for no later than
Day 8 of the stay. As we discussed in the FY 2014 SNF PPS proposed rule
(78 FR 26465-66) and in this final rule, the addition of this item was
not proposed as a result of a change in policy. Our policy has always
been that distinct calendar days of therapy are

[[Page 47962]]

required to classify into a Rehabilitation RUG. The new MDS item was
proposed to provide for more accurate reporting and calculation of
these therapy days, and to ensure that patients are appropriately
classified into Rehabilitation RUG categories in accordance with our
existing classification policy. Furthermore, given that residents
currently classify on the 5-day PPS assessment for Rehabilitation RUGs
which require 5 calendar days of therapy (Medium, High, Very High, or
Ultra High), it appears that providers are clearly able to provide the
necessary therapy time within the first days of the SNF stay regardless
of this new item. More generally, if facilities are having difficulty
meeting the daily skilled needs of the residents in their care, then
this might indicate a need for the facility to revisit its admissions
policies and determine if the facility is accepting such patients only
when it can appropriately meet their care needs.
Furthermore, with regard to the comments that it is difficult to
provide therapy to a resident for 5 distinct days over a 7-day period,
we would note that, based on the monitoring reports we have published
to the SNF PPS Web site (https://cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Spotlight.html), in FY 2012, 84.3 percent of the
days billed to Medicare Part A were billed at one of the upper three
rehabilitation RUG categories (Ultra-High, Very-High, and High) which
require that 1 discipline provide at least 5 days of therapy. This is a
longstanding requirement that appeared in the applicable instructions
at least as far back as 2006, as noted on page 3-216 of the MDS RAI
Manual, Version 2.0:

If orders are received for more than one therapy discipline,
enter the number of days at least one therapy service is performed.
For example, if PT is provided on MWF, and OT is provided on MWF,
the MDS should be coded as 3 days, not 6 days.

Accordingly, since multiple therapy disciplines furnished on the
same calendar day would still comprise only a single calendar day's
worth of therapy, this means that those residents being classified into
one of these RUG categories must have received at least one therapy
discipline on 5 distinct calendar days during the look-back period for
the assessment. Therefore, given that 84.3 percent of patient days are
billed at one of these upper three rehabilitation RUG categories, the
vast majority of SNF residents should be currently receiving at least 5
distinct calendar days of therapy per week. If this is the standard of
practice that exists within the SNF industry currently, as evidenced by
the current billing and care delivery patterns, we do not agree with
the comment that it is difficult for SNFs to provide therapy to their
residents for 5 distinct days over a 7-day period. Again, the new MDS
item is not being added as a result of any change in policy, but simply
to provide for more accurate reporting of therapy days so we can ensure
that patients are appropriately classified into Rehabilitation RUGs in
accordance with our current classification criteria.
In addition, commenters suggested that CMS does not adequately
reimburse for rehabilitation services that are delivered beyond the
minimum number of minutes required for a specific RUG category. We
recognize that residents who do not meet the minimum qualifying
minutes/days of therapy services may not be placed into Rehabilitation
RUGs. However, we do not consider this a flaw of the SNF PPS RUG-IV
system, as some commenters have suggested. The RUG-IV system was
designed so that RUG payment levels are based on an average amount of
minutes of therapy provided, not the minimum threshold of minutes for
each RUG category. The original RUG-III grouper logic was based on
clinical data collected in 1990, 1995, and 1997. As discussed in the
SNF PPS proposed rule for FY 2010 (74 FR 22208, May 12, 2009), we
subsequently conducted a multi-year data collection and analysis under
the Staff Time and Resource Intensity Verification (STRIVE) project to
update the case-mix classification system for FY 2011. The resulting
RUG-IV case-mix classification system reflected the data collected in
2006 and 2007 during the STRIVE project, and was finalized in the FY
2010 SNF PPS final rule (74 FR 40288, August 11, 2009) for
implementation in FY 2011. In the FY 2010 SNF PPS proposed rule (74 FR
22208, 22223-25) and final rule (74 FR 40288, 40319-21, we explained
the process of calculating therapy time to determine RUG payment
levels. As part of this explanation, we discussed how we adjusted the
therapy time for the calculations: ``We give the maximum credit
possible for any day that therapy time was recorded for 15 or more
minutes to avoid underestimating the actual amounts of therapy
furnished to patients'' (74 FR 22225). Therapy reimbursement for each
RUG is based on the average utilization between the thresholds, so
those at the minimum thresholds are, in fact, being adequately paid
relative to the average resource amount used to determine the
reimbursement level. Moreover, the majority of MDS assessments
submitted to CMS show that the number of therapy minutes provided to
beneficiaries cluster at the minimum threshold amount necessary to
qualify for a given RUG group. This would suggest that, for the
majority of billed therapy days, the resource intensity used to
determine the reimbursement for that RUG group is greater than the
resource intensity of the therapy provided to the resident. Therefore,
we do not agree that the system allows for a significant amount of
unpaid therapy provided to SNF residents.
In addition, we do not agree with the assertion that adding item
O0420 to the MDS 3.0 item set will result in greater burden to the
providers. As discussed previously, this item is not being added as a
result of a change in policy. Facilities should not change practice
patterns merely because of the additional item for reporting therapy.
Until now, facilities have been calculating the days of therapy that
each discipline provided to a specific resident. The new item will
require the providers to use the exact same clinical information found
on daily notes or therapy logs to count the days that therapy was
provided to a patient; however, instead of counting each discipline's
days separately they will now have to count each distinct calendar day
that any therapy was provided. We agree that the need for different
therapy disciplines does not change regardless of whether these
therapies are provided on the same or distinct calendar days. However,
as explained previously, the ``daily basis'' requirement for Part A SNF
coverage can be met only when therapy is not merely scheduled but is
actually needed and provided on each of 5 distinct calendar days during
the week. In addition, the design of the SNF PPS RUG-IV system requires
very specific calculation of therapy minutes and days in order to place
patients most appropriately into the correct case-mix classification.
Therefore, we do not believe it would be appropriate to establish an
``exceptions'' policy to allow for counting of different therapies on
the same day when residents experience missed or rescheduled therapy
sessions beyond provider control.
Finally, with respect to the comments raising the issue of a
potential conflict between the proposed MDS item and the daily basis
discussion in Transmittal 161, we would note that the particular
language being cited was not, in fact, introduced by this transmittal.
Rather, it has long appeared in the manual instructions and was also
discussed as

[[Page 47963]]

far back as the FY 2000 SNF PPS final rule (64 FR 41670, July 30,
1999):

* * * Some comments reflected certain longstanding
misconceptions regarding the SNF level of care definition, in terms
of a beneficiary's need for and receipt of skilled services on a
daily basis which, as a practical matter, can be furnished only in
an SNF on an inpatient basis. One recurring misconception with
regard to the ``daily basis'' requirement (which some of the
commenters expressed as well) is that Medicare coverage guidelines
provide for specific breaks in skilled therapy services for the
observance of a prescribed list of national holidays. Another
longstanding misconception shared by some commenters is that the
cessation of therapy for so much as a single day due, for example,
to the beneficiary's temporary illness or fatigue, would mandate an
automatic discontinuance of coverage * * * As explained below, these
interpretations of Medicare SNF coverage requirements are incorrect.
[T]he requirement for daily skilled services should not be
applied so strictly that it would not be met merely because there is
a brief, isolated absence from the facility in a situation where
discharge from the facility would not be practical * * * [W]ith
regard to the ``daily basis'' requirement, the Medicare program does
not specify in regulations or guidelines an official list of
holidays or other specific occasions that a facility may observe as
breaks in rehabilitation services, but recognizes that the
resident's own condition dictates the amount of service that is
appropriate. Accordingly, the facility itself must judge whether a
brief, temporary pause in the delivery of therapy services would
adversely affect the resident's condition (emphasis added).

Similarly, section 409.34(b) states that a ``. . . break of one or
two days in the furnishing of rehabilitation services will not preclude
coverage if discharge would not be practical for the one or two days
during which, for instance, the physician has suspended the therapy
sessions because the patient exhibited extreme fatigue.'' We note that
the references in the manual (see Pub. L. 100-02, ch. 8, Sec. 30.6)
and the regulations in this context to an isolated break in therapy
denote a situation in which such a lapse represents a rare exception
rather than a regular or frequent occurrence. Accordingly, the policy
reflected in the above-cited manual, rule preamble, and regulation is
intended to indicate that such a lapse would not necessarily result in
discontinuing coverage that is already ongoing.
While coverage may continue where there is a brief, isolated break
in therapy as discussed above, the patient's RUG classification and the
level of payment are still based on the number of days and minutes of
therapy provided to the patient as reported on the MDS 3.0, and the new
MDS item will ensure that these days are calculated correctly. Thus, we
do not believe that the addition of the new MDS item presents a
conflict with existing coverage policy as set forth in the manual, as
they address separate issues. The manual and regulatory provisions
cited above provide that in certain exceptional circumstances coverage
of a SNF stay will not necessarily be discontinued because of a brief,
isolated break in therapy; and the new MDS item provides the
information necessary (total number of days that therapy was provided
during the look-back period) to enable us to determine the appropriate
RUG classification and payment for that SNF stay. We believe that this
MDS item, by permitting more accurate reporting of therapy days,
enables us to ensure that residents are appropriately classified into
Rehabilitation RUG categories in accordance with our existing
classification criteria. In addition, we note that if a resident's stay
is also based on receipt of non-rehabilitation related skilled services
(for example, ventilator care) in combination with rehabilitation
services (which we believe to characterize the majority of SNF stays),
then such non-rehabilitation care would also constitute care provided
toward meeting the daily basis requirement. Therefore, the new MDS item
would not appear to present a conflict with the daily basis requirement
discussed in Transmittal 161, but instead permits providers to report
the precise number of distinct calendar days their residents receive
therapy during the assessment observation period. Furthermore, because
this new MDS item allows for more accurate reporting and thus more
accurate RUG classification and payment, we do not see any reason to
postpone the addition of the item to MDS 3.0 item set.
Comment: Some commenters expressed concern over the practical
implementation of adding item O0420 to the MDS 3.0 item set. They
stated that October 1, 2013 is too soon for software vendors to
incorporate the new reporting requirement into SNF and therapy software
systems and to program, test, and implement the changes. Additionally,
although the commenters appreciated that CMS released draft programming
specifications, they criticized the accompanying warning which stated
that this version of the specifications should be considered
provisional and subject to change until the final specifications are
published. They stated that the timeframe between CMS issuing the final
rule and the effective date of October 1, 2013 does not give the
software vendors and facilities that are already overburdened with the
implementation of electronic health records sufficient time to make
these changes.
Response: We appreciate the concern that commenters expressed about
implementing the additional reporting requirement for the MDS 3.0. We
recognize the need for software vendors to program, test, and implement
the changes that will need to be made. However, we remind commenters
that CMS offers j-RAVEN, which is a free software option that allows
facilities to collect and maintain facility, patient, and assessment
information for subsequent submission to the appropriate data
repository. This software will be available and ready for the
implementation of the new MDS 3.0 reporting requirement and facilities
that contract with alternative software vendors may choose to utilize
the CMS-provided software until the vendor-created software is ready
for implementation. With regard to the draft specifications, CMS
released these specifications at the same time as we released the
proposed rule. Software vendors had the ability to begin planning for
any potential programming requirements with the release of draft
specifications. We believe that software vendors should be structuring
projects in a manner that is responsive to potentially changing
requirements.
Accordingly, for the reasons specified in this final rule and in
the FY 2014 SNF PPS proposed rule (78 FR 26465-26466), we are
finalizing our proposal to add an item to the MDS item set (Item O0420)
effective October 1, 2013, which will capture the number of distinct
calendar days that the resident received therapy services during the
assessment look-back period across all rehabilitation disciplines. As
proposed, effective October 1, 2013, facilities will be required to
record under this item the number of distinct calendar days of therapy
provided by all rehabilitation disciplines over the 7-day look-back
period for the current assessment, which will be used to classify the
resident into the correct Rehabilitation RUG category.
3. SNF Therapy Research Project
In the FY 2014 SNF PPS proposed rule (78 FR 26466), we discussed
our current research efforts associated with SNF payments for therapy
services. As stated in the FY 2014 SNF PPS proposed rule (78 FR 26466),
we contracted with Acumen, LLC and the Brookings Institution to
identify

[[Page 47964]]

potential alternatives to the existing methodology used to pay for
therapy services received under the SNF PPS. A discussion of the
comments on this topic, with our responses, appears below.
Comment: All of the comments we received on this work supported
CMS's broad objective to develop a new methodology for paying for
therapy services received in the SNF. These commenters urged CMS to
expedite the research necessary to develop a new therapy payment model,
with one commenter stating that CMS should be prepared to implement a
new system by FY 2015. A few commenters stated that CMS should seek
input from stakeholders on how best to revise the current therapy
payment model.
Response: We appreciate the broad support for this research
initiative and understand well the importance and urgency of completing
this work in both a timely and efficient manner. We also recognize the
importance of seeking input from stakeholders on how best to revise the
current therapy payment model, which is why we had created the therapy
research email box at SNFTherapyPayments@cms.hhs.gov. Stakeholders can
send input on a revised therapy payment model at any time.
In terms of the timeframe for completing this work and implementing
a new payment model, we believe it would be premature to speculate on
when a new model will be ready to be implemented. As many of the
comments on this issue indicate, it is very important to ensure that
any change to the current therapy payment model addresses any concerns
with the existing model and provides sufficient time for providers to
understand and prepare for implementation of such a model.

V. Provisions of the Final Rule; Regulations Text

In this final rule, in addition to accomplishing the required
annual update of the SNF PPS payment rates and finalizing the other
policies discussed above, we are also finalizing certain revisions to
the regulations text. One of these revisions relates to the regulations
dealing with SNF level of care certifications and recertifications. In
the calendar year (CY) 2011 Medicare Physician Fee Schedule (MPFS)
final rule with comment period (75 FR 73387, 73602, 73626-73627), we
revised the regulations at Sec. 424.20(e)(2) to implement section 3108
of the Affordable Care Act, which amended section 1814(a)(2) of the Act
by adding physician assistants to the provision authorizing nurse
practitioners and clinical nurse specialists to sign SNF level of care
certifications and recertifications. However, as we stated in the FY
2014 SNF PPS proposed rule, we inadvertently neglected to make a
conforming change in the regulations text at Sec. 424.11(e)(4).
Therefore, we proposed to make a minor technical correction in the
regulations text at Sec. 424.11(e)(4) regarding the types of
practitioners (in addition to physicians) who can sign the required SNF
level of care certification and recertifications. The correction
consisted of a conforming change to reflect that physician assistants
``as defined in section 1861(aa)(5) of the Act'' are now authorized to
perform this function, in accordance with section 1814(a)(2) of the Act
(as amended by section 3108 of the Affordable Care Act) and the
implementing regulations at Sec. 424.20(e)(2). We received no comments
on this proposal and, therefore, are finalizing this provision
essentially as proposed. However, we are revising the statutory
citation of the physician assistant definition to read ``section
1861(aa)(5)(A) of the Act'' in order to provide greater clarity and
specificity as to the precise location of this definition in the
statute. In addition, we inadvertently neglected to make a similar
conforming technical change in the second paragraph of Sec. 424.10(a),
which describes the general purpose of this subpart of the regulations,
and describes the types of practitioners (in addition to physicians)
permitted under section 1814(a)(2) of the Act to certify and recertify
the need for post-hospital extended care services. Thus, in this final
rule, we also are making a similar minor technical correction to the
regulations text at Sec. 424.10(a) so that it accurately reflects that
physician assistants are now permitted under section 1814(a)(2) of the
Act to certify and recertify the need for post-hospital extended care
services and so that it conforms with the regulations text at Sec.
424.20(e)(2) and Sec. 424.11(e)(4) (as revised in this rule).
Additionally, in the FY 2014 SNF PPS proposed rule (78 FR 26438),
we proposed to make the wage index tables available exclusively through
the Internet on CMS's SNF PPS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html. In order to
accommodate this approach, we also proposed to revise the phrase ``wage
index'' that currently appears in the second sentence of Sec. 413.345
to read ``factors to be applied in making the area wage adjustment,''
consistent with the wording of the corresponding statutory authority at
section 1888(e)(4)(H)(iii) of the Act. We received no comments on this
proposal, and therefore, are finalizing this provision as proposed.

VI. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995 (PRA), we are required to
provide 30-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
OMB for review and approval. In order to evaluate fairly whether an
information collection should be approved by OMB, section 3506(c)(2)(A)
of the PRA requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
In the May 6, 2013 proposed rule (78 FR 26437) we solicited public
comment on each of the section 3506(c)(2)(A)-required issues for the
following information collection requirements (ICRs). We did not
receive any comments.

ICRs Regarding Nursing Home and Swing Bed PPS Item Sets

Under sections 4204(b) and 4214(d) of the Omnibus Budget
Reconciliation Act of 1987 (OBRA 1987, Pub. L. 100-203 enacted on
December 22, 1987), the submission and retention of resident assessment
data for purposes of carrying out OBRA 1987 are not subject to the PRA.
While certain data items that are collected under the SNF resident
assessment instrument (or MDS 3.0) fall under the OBRA 1987 exemption,
MDS 3.0's PPS-related item sets are outside the scope of OBRA 1987 and
require PRA consideration.
As discussed in section IV.D.2 of this rule, we are finalizing our
proposal to add Item O0420 to the MDS 3.0 form to capture the number of
distinct calendar days a SNF resident has received therapy across all
rehabilitation disciplines in a seven-day look-back period. The item
would not be added as a result of any change in statute or policy;
rather, it would be added to ensure that our existing Rehabilitation
RUG classification policies are properly implemented as intended. We do
not believe this action will cause any

[[Page 47965]]

measureable adjustments to our burden estimates.
While we are not revising the form's burden estimates, we are
revising OCN 0938-1140 (CMS-10387) by adding item O0420 to the Nursing
Home and Swing Bed PPS Item Sets.
If you comment on these information collection and recordkeeping
requirements, please do either of the following:
1. Submit your comments electronically as specified in the
ADDRESSES section of the proposed rule; or
2. Submit your comments to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Attention: CMS Desk Officer,
[CMS-1446-F] by fax: (202) 395-6974 or by email: OIRA_submission@omb.eop.gov.

VII. Economic Analyses

A. Regulatory Impact Analysis

1. Introduction
We have examined the impacts of this final rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011), the Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA, March
22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August
4, 1999), and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been designated an economically significant
rule, under section 3(f)(1) of Executive Order 12866, and thus a major
rule under the Congressional Review Act. Also, the rule has been
reviewed by OMB.
2. Statement of Need
This final rule updates the SNF prospective payment rates for FY
2014 as required under section 1888(e)(4)(E) of the Act. It also
responds to section 1888(e)(4)(H) of the Act, which requires the
Secretary to ``provide for publication in the Federal Register'' before
the August 1 that precedes the start of each fiscal year, of the
unadjusted federal per diem rates, the case-mix classification system,
and the factors to be applied in making the area wage adjustment. As
these statutory provisions prescribe a detailed methodology for
calculating and disseminating payment rates under the SNF PPS, we do
not have the discretion to adopt an alternative approach.
3. Overall Impacts
This final rule sets forth the updates of the SNF PPS rates
contained in the update notice for FY 2013 (77 FR 46214). Based on the
above, we estimate that the aggregate impact would be an increase of
$470 million in payments to SNFs, resulting from the SNF market basket
update to the payment rates, as adjusted by the forecast error
correction and MFP adjustment. The impact analysis of this final rule
represents the projected effects of the changes in the SNF PPS from FY
2013 to FY 2014. Although the best data available are utilized, there
is no attempt to predict behavioral responses to these changes, or to
make adjustments for future changes in such variables as days or case-
mix.
Certain events may occur to limit the scope or accuracy of our
impact analysis, as this analysis is future-oriented and, thus, very
susceptible to forecasting errors due to certain events that may occur
within the assessed impact time period. Some examples of possible
events may include legislated general Medicare program funding changes
by the Congress, or changes specifically related to SNFs. In addition,
changes to the Medicare program may continue to be made as a result of
previously-enacted legislation, or new statutory provisions. Although
these changes may not be specific to the SNF PPS, the nature of the
Medicare program is such that the changes may interact and, thus, the
complexity of the interaction of these changes could make it difficult
to predict accurately the full scope of the impact upon SNFs.
In accordance with sections 1888(e)(4)(E) and 1888(e)(5) of the
Act, we update the FY 2013 payment rates by a factor equal to the
market basket index percentage change adjusted by the forecast error
for FY 2012, the latest FY for which final data are available, and the
MFP adjustment to determine the payment rates for FY 2014. As discussed
previously, for FY 2012 and each subsequent FY, as required by section
1888(e)(5)(B) of the Act as amended by section 3401(b) of the
Affordable Care Act, the market basket percentage is reduced by the MFP
adjustment. The special AIDS add-on established by section 511 of the
MMA remains in effect until ``. . . such date as the Secretary
certifies that there is an appropriate adjustment in the case mix . . .
.'' We have not provided a separate impact analysis for the MMA
provision. Our latest estimates indicate that there are fewer than
4,100 beneficiaries who qualify for the add-on payment for SNF
residents with AIDS. The impact to Medicare is included in the
``total'' column of Table 10. In updating the SNF PPS rates for FY
2014, we made a number of standard annual revisions and clarifications
mentioned elsewhere in this final rule (for example, the update to the
wage and market basket indexes used for adjusting the federal rates).
The annual update set forth in this final rule applies to SNF
payments in FY 2014. Accordingly, the analysis that follows only
describes the impact of this single year. In accordance with the
requirements of the Act, we will publish a notice or rule in the
Federal Register for each subsequent FY that will provide for an update
to the SNF payment rates and include an associated impact analysis.
4. Detailed Economic Analysis
The FY 2014 SNF PPS impacts appear in Table 10. Using the most
recently available data, in this case FY 2012, we apply the current FY
2013 wage index and labor-related share value to the number of payment
days to simulate FY 2013 payments. Then, using the same FY 2012 data,
we apply the FY 2014 wage index and labor-related share value to
simulate FY 2014 payments. We tabulate the resulting payments according
to the classifications in Table 10, for example, facility type,
geographic region, facility ownership, and compare the difference
between current and FY 2014 payments to determine the overall impact.
The breakdown of the various categories of data in the table follows.
The first column shows the breakdown of all SNFs by urban or rural
status, hospital-based or freestanding status, census region, and
ownership.
The first row of figures describes the estimated effects of the
various changes on all facilities. The next six rows show the effects
on facilities split by hospital-based, freestanding, urban, and rural
categories. The urban and rural designations are based on the location
of the facility under the CBSA designation. The next nineteen rows show
the effects on facilities by urban versus rural status by census
region. The last three rows

[[Page 47966]]

show the effects on facilities by ownership (that is, government,
profit, and non-profit status).
The second column in the table shows the number of facilities in
the impact database.
The third column of the table shows the effect of the annual update
to the wage index. This represents the effect of using the most recent
wage data available. The total impact of this change is zero percent;
however, there are distributional effects of the change.
The fourth column shows the effect of all of the changes on the FY
2014 SNF PPS payments. The FY 2014 update of 1.3 percent (consisting of
the market basket increase of 2.3 percentage points, reduced by the 0.5
percentage point forecast error correction and further reduced by the
0.5 percentage point MFP adjustment) is constant for all providers and,
though not shown individually, is included in the total column. It is
projected that aggregate payments will increase by 1.3 percent,
assuming facilities do not change their care delivery and billing
practices in response.
As illustrated in Table 10, the combined effects of all of the
changes vary by specific types of providers and by location. Though all
facilities would experience payment increases, the projected impact on
providers for FY 2014 varies due to the impact of the wage index
update. For example, due to changes from updating the wage index,
providers in the rural Pacific region would experience a 2.8 percent
increase in FY 2014 total payments and providers in the urban East
South Central region would experience a 0.8 percent increase in FY 2014
total payments.

Table 10--RUG-IV Projected Impact to the SNF PPS for FY 2014
----------------------------------------------------------------------------------------------------------------
Number of
facilities FY Update wage data Total FY 2014
2014 (percent) change (percent)
----------------------------------------------------------------------------------------------------------------
Group:
Total..................................................... 15,380 0.0 1.3
Urban................................................. 10,582 0.1 1.4
Rural................................................. 4,798 -0.3 1.0
Hospital based urban.................................. 758 0.2 1.5
Freestanding urban.................................... 9,824 0.1 1.4
Hospital based rural.................................. 402 -0.3 1.0
Freestanding rural.................................... 4,396 -0.3 1.0
Urban by region:
New England........................................... 804 0.3 1.6
Middle Atlantic....................................... 1,452 0.8 2.1
South Atlantic........................................ 1,741 -0.6 0.7
East North Central.................................... 2,049 -0.2 1.1
East South Central.................................... 526 -0.5 0.8
West North Central.................................... 868 -0.7 0.6
West South Central.................................... 1,241 -0.4 0.9
Mountain.............................................. 490 -0.1 1.2
Pacific............................................... 1,405 1.1 2.5
Outlying.............................................. 6 0.1 1.4
Rural by region:
New England........................................... 153 0.2 1.5
Middle Atlantic....................................... 262 0.2 1.5
South Atlantic........................................ 608 -0.6 0.7
East North Central.................................... 928 -0.6 0.7
East South Central.................................... 551 -0.6 0.7
West North Central.................................... 1,114 0.5 1.8
West South Central.................................... 813 -0.9 0.4
Mountain.............................................. 246 0.2 1.5
Pacific............................................... 123 1.4 2.8
Ownership:
Government............................................ 832 0.2 1.5
Profit................................................ 10,724 0.0 1.3
Non-profit............................................ 3,824 0.0 1.3
----------------------------------------------------------------------------------------------------------------
Note: The Total column includes the 2.3 percent market basket increase, reduced by the 0.5 percentage point
forecast error correction and further reduced by the 0.5 percentage point MFP adjustment. Additionally, we
found no SNFs in rural outlying areas.

5. Alternatives Considered
As described above, we estimate that the aggregate impact for FY
2014 would be an increase of $470 million in payments to SNFs,
resulting from the SNF market basket update to the payment rates, as
adjusted by the forecast error correction and the MFP adjustment.
Section 1888(e) of the Act establishes the SNF PPS for payment of
Medicare SNF services for cost reporting periods beginning on or after
July 1, 1998. This section of the statute prescribes a detailed formula
for calculating payment rates under the SNF PPS, and does not provide
for the use of any alternative methodology. This section of the statute
specifies that the base year cost data to be used for computing the SNF
PPS payment rates are from FY 1995 (October 1, 1994, through September
30, 1995). In accordance with the statute, we also incorporated a
number of elements into the SNF PPS (for example, case-mix
classification methodology, a market basket index, a wage index, and
the urban and rural distinction used in the development or adjustment
of the federal rates). Further, section 1888(e)(4)(H) of the Act
specifically requires us to provide for publication of the payment
rates for each new FY in the Federal Register, and to do so before the
August 1 that precedes the start of the new FY.

[[Page 47967]]

Accordingly, we are not pursuing alternatives with respect to the
payment methodology as discussed above.
We received a number of comments on the potential impact of
finalizing the proposals in the FY 2014 SNF PPS proposed rule. A
discussion of those comments, and our responses, appear below.
Comment: In their March 2013 report (available at: https://www.medpac.gov/documents/Mar13_entirereport.pdf), and in their comment
on this proposed rule, MedPAC recommended that CMS eliminate the market
basket update for SNFs and rebase payments for the SNF PPS, beginning
with a 4 percent reduction in FY 2014. Several commenters raised
concerns with MedPAC's recommendations, specifically that the cost and
margin data used by MedPAC to justify their recommendations did not
adequately represent the costs of providing SNF care. A few commenters
also noted that any cuts in Medicare rates can have a cascading effect
in combination with increased fiscal pressures deriving from reduced
Medicaid funding.
Response: With regard to MedPAC's proposals to eliminate the market
basket update for SNFs and to implement a 4 percent reduction to the
SNF PPS rates, we would note that CMS does not have the statutory
authority to act on either one of these proposals at the current time.
In addition, as we have stated in previous years--most recently, in
the FY 2012 SNF PPS final rule (76 FR 48496, August 8, 2011)--we
believe that it is not the appropriate role of the Medicare SNF benefit
to cross-subsidize nursing home payments made under the Medicaid
program. As noted by several commenters, the primary purpose of the SNF
PPS is to provide accurate payment for Medicare Part A services
provided in a SNF setting. Further, we note that MedPAC has also
indicated that it is inappropriate for the Medicare payments to SNFs to
serve as a remedy for any Medicaid shortfalls. Specifically, on page
177 of its March 2013 Report to Congress on Medicare Payment Policy
(which is available online at https://www.medpac.gov/documents/Mar13_
EntireReport.pdf), MedPAC stated:

The Commission believes such cross-subsidization is not
advisable for several reasons. First, the strategy of using Medicare
rates to supplement low payments from other payers results in poorly
targeted subsidies. Facilities with high shares of Medicare
payments--presumably the facilities that need revenues the least--
would receive the most in subsidies from higher Medicare payments,
while facilities with low Medicare shares--presumably the facilities
with the greatest need--would receive the smallest subsidies * * *
In addition, Medicare's subsidy does not discriminate among states
with relatively high and low payments * * * Finally, Medicare's
current overpayments represent a subsidy of trust fund dollars (and
its taxpayer support) to the low payments made by states and private
payers.

We agree with MedPAC, and therefore, do not agree with the
commenters that cited cross-subsidizing Medicaid as a justification for
maintaining Medicare SNF payments at any specific level.
Comment: A few commenters requested that CMS consider a larger
update to account for the forthcoming costs associated with the
implementation of the Affordable Care Act employer responsibility
requirements, which, at a general level, would require that employers
with 50 or more full-time-equivalent employees provide health care
coverage to their full-time employees (those working on average 30 or
more hours per week) or face a penalty.
Response: As discussed in section IV.B of this proposed rule, CMS
is required by statute to follow a specific methodology for updating
the payment rates each year. We are not permitted to increase the
update to account for these types of additional costs under existing
authority.
6. Accounting Statement
As required by OMB Circular A-4 (available online at
www.whitehouse.gov/sites/default/files/omb/assets/regulatory_matters_pdf/a-4.pdf), in Table 11, we have prepared an accounting statement
showing the classification of the expenditures associated with the
provisions of this final rule. Table 11 provides our best estimate of
the possible changes in Medicare payments under the SNF PPS as a result
of the policies in this final rule, based on the data for 15,380 SNFs
in our database. All expenditures are classified as transfers to
Medicare SNF providers.

Table 11--Accounting Statement: Classification of Estimated
Expenditures, From the 2013 SNF PPS Fiscal Year to the 2014 SNF PPS
Fiscal Year
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized monetized transfers...... $470 million*
From Whom To Whom................... Federal Government to SNF Medicare
Providers
------------------------------------------------------------------------
* The net increase of $470 million in transfer payments is a result of
the SNF market basket update to the payment rates, as adjusted by the
forecast error correction and the MFP adjustment.

7. Conclusion
This final rule sets forth updates of the SNF PPS rates contained
in the update notice for FY 2013 (77 FR 46214). Based on the above, we
estimate the overall estimated payments for SNFs in FY 2014 are
projected to increase by $470 million, or 1.3 percent, compared with
those in FY 2013. We estimate that in FY 2014, SNFs in urban and rural
areas would experience, on average, a 1.4 and 1.0 percent increase,
respectively, in estimated payments compared with FY 2013. Providers in
the rural Pacific region would experience the largest estimated
increase in payments of approximately 2.8 percent. Providers in the
rural West South Central region would experience the smallest increase
in payments of 0.4 percent.

B. Regulatory Flexibility Act Analysis

The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, non-profit organizations, and small
governmental jurisdictions. Most SNFs and most other providers and
suppliers are small entities, either by their non-profit status or by
having revenues of $25.5 million or less in any 1 year. For purposes of
the RFA, approximately 91 percent of SNFs are considered small
businesses according to the Small Business Administration's latest size
standards (NAICS 623110), with total revenues of $25.5 million or less
in any 1 year. (For details, see the Small Business Administration's
Web site at https://www.sba.gov/category/navigation-structure/contracting/contracting-officials/eligibility-size-standards).
Individuals and States are not included in the definition of a small
entity. In addition, approximately 25 percent of SNFs classified as
small entities are non-profit organizations. Finally, the estimated
number of small

[[Page 47968]]

business entities does not distinguish provider establishments that are
within a single firm and, therefore, the number of SNFs classified as
small entities may be higher than the estimate above.
This final rule sets forth updates of the SNF PPS rates contained
in the update notice for FY 2013 (77 FR 46214). Based on the above, we
estimate that the aggregate impact would be an increase of $470 million
in payments to SNFs, resulting from the SNF market basket update to the
payment rates, as adjusted by the forecast error correction and the MFP
adjustment. While it is projected in Table 10 that all groups of
providers would experience a net increase in payments, we note that
some individual providers within the same group but different regions
may experience different impacts on payments than others due to the
distributional impact of the FY 2014 wage indexes and the degree of
Medicare utilization.
Guidance issued by the Department of Health and Human Services on
the proper assessment of the impact on small entities in rulemakings,
utilizes a cost or revenue impact of 3 to 5 percent as a significance
threshold under the RFA. According to MedPAC, Medicare covers
approximately 12 percent of total patient days in freestanding
facilities and 23 percent of facility revenue. However, they note that
the distribution of days and payments is highly variable. That is, the
majority of SNFs have significantly lower Medicare utilization (Report
to the Congress: Medicare Payment Policy, March 2013, available at
https://www.medpac.gov/documents/Mar13_EntireReport.pdf). As a result,
for most facilities, when all payers are included in the revenue
stream, the overall impact on total revenues should be substantially
less than those impacts presented in Table 10. As indicated in Table
10, the effect on facilities is projected to be an aggregate positive
impact of 1.3 percent. As the overall impact on the industry as a
whole, and thus on small entities specifically, is less than the 3 to 5
percent threshold discussed above, the Secretary has determined that
this final rule would not have a significant impact on a substantial
number of small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area and has fewer than 100 beds. This final rule would
affect small rural hospitals that (a) furnish SNF services under a
swing-bed agreement or (b) have a hospital-based SNF. We anticipate
that the impact on small rural hospitals would be similar to the impact
on SNF providers overall. Moreover, as noted in the FY 2012 final rule
(76 FR 48539), the category of small rural hospitals would be included
within the analysis of the impact of this final rule on small entities
in general. As indicated in Table 10, the effect on facilities is
projected to be an aggregate positive impact of 1.3 percent. As the
overall impact on the industry as a whole is less than the 3 to 5
percent threshold discussed above, the Secretary has determined that
this final rule would not have a significant impact on a substantial
number of small rural hospitals.

C. Unfunded Mandates Reform Act Analysis

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2013, that
threshold is approximately $141 million. This final rule would not
impose spending costs on State, local, or tribal governments in the
aggregate, or by the private sector, of $141 million.

D. Federalism Analysis

Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that impose substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has federalism
implications. This final rule would have no substantial direct effect
on State and local governments, preempt State law, or otherwise have
federalism implications.

List of Subjects

42 CFR Part 413

Health facilities, Kidney diseases, Medicare, Reporting and
recordkeeping requirements.

42 CFR Part 424

Emergency medical services, Health facilities, Health professions,
Medicare, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR chapter IV as set forth below:

PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED
PAYMENT RATES FOR SKILLED NURSING FACILITIES

0
1. The authority citation for part 413 continues to read as follows:

Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i), and
(n), 1861(v), 1871, 1881, 1883, and 1886 of the Social Security Act
(42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and (n),
1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); sec. 124 of Pub. L.
106-133 (113 Stat. 1501A-332) and sec. 3201 of Pub. L. 112-96 (126
Stat. 156).

0
2. Section 413.345 is revised to read as follows:

Sec. 413.345 Publication of Federal prospective payment rates.

CMS publishes information pertaining to each update of the Federal
payment rates in the Federal Register. This information includes the
standardized Federal rates, the resident classification system that
provides the basis for case-mix adjustment (including the designation
of those specific Resource Utilization Groups under the resident
classification system that represent the required SNF level of care, as
provided in Sec. 409.30 of this chapter), and the factors to be
applied in making the area wage adjustment. This information is
published before May 1 for the fiscal year 1998 and before August 1 for
the fiscal years 1999 and after.

PART 424--CONDITIONS FOR MEDICARE PAYMENT

0
3. The authority citation for part 424 continues to read as follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).

0
4. In Sec. 424.10, paragraph (a) is amended by removing the phrase
``nurse practitioners or clinical nurse specialists'' and adding in its
place ``nurse practitioners, clinical nurse specialists, or physician
assistants''.
0
5. Section 424.11 is amended by revising paragraph (e)(4) to read as
follows:

Sec. 424.11 General procedures.

* * * * *
(e) * * *
(4) A nurse practitioner or clinical nurse specialist as defined in
paragraph (e)(5) or (e)(6) of this section, or a physician assistant as
defined in section

[[Page 47969]]

1861(aa)(5)(A) of the Act, in the circumstances specified in Sec.
424.20(e).
* * * * *

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

Dated: July 19, 2013.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
Approved: July 29, 2013.

Kathleen Sebelius,
Secretary.

Note: The following addendum will not appear in the Code of
Federal Regulations.

Addendum--FY 2014 CBSA Wage Index Tables

In this addendum, we provide the wage index tables referred to
in the preamble to this final rule. Tables A and B display the CBSA-
based wage index values for urban and rural providers. As noted
previously in this final rule, we are adopting an approach already
being followed by other Medicare payment systems, whereby for SNF
PPS rules and notices published on or after October 1, 2013, these
wage index tables will henceforth be made available exclusively
through the Internet on the CMS Web site rather than being published
in the Federal Register as part of the annual SNF PPS rulemaking.

Table A--FY 2014 Wage Index for Urban Areas Based on CBSA Labor Market
Areas
------------------------------------------------------------------------
Urban area (constituent Wage
CBSA Code counties) index
------------------------------------------------------------------------
10180........................ Abilene, TX..................... 0.8225
Callahan County, TX.............
Jones County, TX................
Taylor County, TX...............
10380........................ Aguadilla-Isabela-San 0.3647
Sebasti[aacute]n, PR.
Aguada Municipio, PR............
Aguadilla Municipio, PR.........
A[ntilde]asco Municipio, PR.....
Isabela Municipio, PR...........
Lares Municipio, PR.............
Moca Municipio, PR..............
Rinc[oacute]n Municipio, PR.....
San Sebasti[aacute]n Municipio,
PR.
10420........................ Akron, OH....................... 0.8521
Portage County, OH..............
Summit County, OH...............
10500........................ Albany, GA...................... 0.8713
Baker County, GA................
Dougherty County, GA............
Lee County, GA..................
Terrell County, GA..............
Worth County, GA................
10580........................ Albany-Schenectady-Troy, NY..... 0.8600
Albany County, NY...............
Rensselaer County, NY...........
Saratoga County, NY.............
Schenectady County, NY..........
Schoharie County, NY............
10740........................ Albuquerque, NM................. 0.9663
Bernalillo County, NM...........
Sandoval County, NM.............
Torrance County, NM.............
Valencia County, NM.............
10780........................ Alexandria, LA.................. 0.7788
Grant Parish, LA................
Rapides Parish, LA..............
10900........................ Allentown-Bethlehem-Easton, PA- 0.9215
NJ.
Warren County, NJ...............
Carbon County, PA...............
Lehigh County, PA...............
Northampton County, PA..........
11020........................ Altoona, PA..................... 0.9101
Blair County, PA................
11100........................ Amarillo, TX.................... 0.8302
Armstrong County, TX............
Carson County, TX...............
Potter County, TX...............
Randall County, TX..............
11180........................ Ames, IA........................ 0.9425
Story County, IA................
11260........................ Anchorage, AK................... 1.2221
Anchorage Municipality, AK......
Matanuska-Susitna Borough, AK...
11300........................ Anderson, IN.................... 0.9654
Madison County, IN..............
11340........................ Anderson, SC.................... 0.8766
Anderson County, SC.............
11460........................ Arbor, MI....................... 1.0086
Washtenaw County, MI............
11500........................ Anniston-Oxford, AL............. 0.7402
Calhoun County, AL..............
11540........................ Appleton, WI.................... 0.9445
Calumet County, WI..............
Outagamie County, WI............
11700........................ Asheville, NC................... 0.8511
Buncombe County, NC.............
Haywood County, NC..............
Henderson County, NC............
Madison County, NC..............
12020........................ Athens-Clarke County, GA........ 0.9244
Clarke County, GA...............
Madison County, GA..............
Oconee County, GA...............
Oglethorpe County, GA...........
12060........................ Atlanta-Sandy Springs-Marietta, 0.9452
GA.
Barrow County, GA...............
Bartow County, GA...............
Butts County, GA................
Carroll County, GA..............
Cherokee County, GA.............
Clayton County, GA..............
Cobb County, GA.................
Coweta County, GA...............
Dawson County, GA...............
DeKalb County, GA...............
Douglas County, GA..............
Fayette County, GA..............
Forsyth County, GA..............
Fulton County, GA...............
Gwinnett County, GA.............
Haralson County, GA.............
Heard County, GA................
Henry County, GA................
Jasper County, GA...............
Lamar County, GA................
Meriwether County, GA...........
Newton County, GA...............
Paulding County, GA.............
Pickens County, GA..............
Pike County, GA.................
Rockdale County, GA.............
Spalding County, GA.............
Walton County, GA...............
12100........................ Atlantic City-Hammonton, NJ..... 1.2258
Atlantic County, NJ.............
12220........................ Auburn-Opelika, AL.............. 0.7771
Lee County, AL..................
12260........................ Augusta-Richmond County, GA-SC.. 0.9150
Burke County, GA................
Columbia County, GA.............
McDuffie County, GA.............
Richmond County, GA.............
Aiken County, SC................
Edgefield County, SC............
12420........................ Austin-Round Rock, TX........... 0.9576
Bastrop County, TX..............
Caldwell County, TX.............
Hays County, TX.................
Travis County, TX...............
Williamson County, TX...........
12540........................ Bakersfield, CA................. 1.1579
Kern County, CA.................
12580........................ Baltimore-Towson, MD............ 0.9873
Anne Arundel County, MD.........
Baltimore County, MD............
Carroll County, MD..............
Harford County, MD..............
Howard County, MD...............
Queen Anne's County, MD.........
Baltimore City, MD..............
12620........................ Bangor, ME...................... 0.9710
Penobscot County, ME............
12700........................ Barnstable Town, MA............. 1.3007
Barnstable County, MA...........
12940........................ Baton Rouge, LA................. 0.8078
Ascension Parish, LA............
East Baton Rouge Parish, LA.....
East Feliciana Parish, LA.......
Iberville Parish, LA............
Livingston Parish, LA...........
Pointe Coupee Parish, LA........
St. Helena Parish, LA...........
West Baton Rouge Parish, LA.....
West Feliciana Parish, LA.......
12980........................ Battle Creek, MI................ 0.9915
Calhoun County, MI..............
13020........................ Bay City, MI.................... 0.9486
Bay County, MI..................

[[Page 47970]]

13140........................ Beaumont-Port Arthur, TX........ 0.8598
Hardin County, TX...............
Jefferson County, TX............
Orange County, TX...............
13380........................ Bellingham, WA.................. 1.1890
Whatcom County, WA..............
13460........................ Bend, OR........................ 1.1807
Deschutes County, OR............
13644........................ Bethesda-Frederick-Gaithersburg, 1.0319
MD.
Frederick County, MD............
Montgomery County, MD...........
13740........................ Billings, MT.................... 0.8691
Carbon County, MT...............
Yellowstone County, MT..........
13780........................ Binghamton, NY.................. 0.8602
Broome County, NY...............
Tioga County, NY................
13820........................ Birmingham-Hoover, AL........... 0.8367
Bibb County, AL.................
Blount County, AL...............
Chilton County, AL..............
Jefferson County, AL............
St. Clair County, AL............
Shelby County, AL...............
Walker County, AL...............
13900........................ Bismarck, ND.................... 0.7282
Burleigh County, ND.............
Morton County, ND...............
13980........................ Blacksburg-Christiansburg- 0.8319
Radford, VA.
Giles County, VA................
Montgomery County, VA...........
Pulaski County, VA..............
Radford City, VA................
14020........................ Bloomington, IN................. 0.9304
Greene County, IN...............
Monroe County, IN...............
Owen County, IN.................
14060........................ Bloomington-Normal, IL.......... 0.9310
McLean County, IL...............
14260........................ Boise City-Nampa, ID............ 0.9259
Ada County, ID..................
Boise County, ID................
Canyon County, ID...............
Gem County, ID..................
Owyhee County, ID...............
14484........................ Boston-Quincy, MA............... 1.2453
Norfolk County, MA..............
Plymouth County, MA.............
Suffolk County, MA..............
14500........................ Boulder, CO..................... 0.9850
Boulder County, CO..............
14540........................ Bowling Green, KY............... 0.8573
Edmonson County, KY.............
Warren County, KY...............
14740........................ Bremerton-Silverdale, WA........ 1.0268
Kitsap County, WA...............
14860........................ Bridgeport-Stamford-Norwalk, CT. 1.3252
Fairfield County, CT............
15180........................ Brownsville-Harlingen, TX....... 0.8179
Cameron County, TX..............
15260........................ Brunswick, GA................... 0.8457
Brantley County, GA.............
Glynn County, GA................
McIntosh County, GA.............
15380........................ Buffalo-Niagara Falls, NY....... 1.0045
Erie County, NY.................
Niagara County, NY..............
15500........................ Burlington, NC.................. 0.8529
Alamance County, NC.............
15540........................ Burlington-South Burlington, VT. 1.0130
Chittenden County, VT...........
Franklin County, VT.............
Grand Isle County, VT...........
15764........................ Cambridge-Newton-Framingham, MA. 1.1146
Middlesex County, MA............
15804........................ Camden, NJ...................... 1.0254
Burlington County, NJ...........
Camden County, NJ...............
Gloucester County, NJ...........
15940........................ Canton-Massillon, OH............ 0.8730
Carroll County, OH..............
Stark County, OH................
15980........................ Cape Coral-Fort Myers, FL....... 0.8683
Lee County, FL..................
16020........................ Cape Girardeau-Jackson, MO-IL... 0.9174
Alexander County, IL............
Bollinger County, MO............
Cape Girardeau County, MO.......
16180........................ Carson City, NV................. 1.0721
Carson City, NV.................
16220........................ Casper, WY...................... 1.0111
Natrona County, WY..............
16300........................ Cedar Rapids, IA................ 0.8964
Benton County, IA...............
Jones County, IA................
Linn County, IA.................
16580........................ Champaign-Urbana, IL............ 0.9416
Champaign County, IL............
Ford County, IL.................
Piatt County, IL................
16620........................ Charleston, WV.................. 0.8119
Boone County, WV................
Clay County, WV.................
Kanawha County, WV..............
Lincoln County, WV..............
Putnam County, WV...............
16700........................ Charleston-North Charleston- 0.8972
Summerville, SC.
Berkeley County, SC.............
Charleston County, SC...........
Dorchester County, SC...........
16740........................ Charlotte-Gastonia-Concord, NC- 0.9447
SC.
Anson County, NC................
Cabarrus County, NC.............
Gaston County, NC...............
Mecklenburg County, NC..........
Union County, NC................
York County, SC.................
16820........................ Charlottesville, VA............. 0.9209
Albemarle County, VA............
Fluvanna County, VA.............
Greene County, VA...............
Nelson County, VA...............
Charlottesville City, VA........
16860........................ Chattanooga, TN-GA.............. 0.8783
Catoosa County, GA..............
Dade County, GA.................
Walker County, GA...............
Hamilton County, TN.............
Marion County, TN...............
Sequatchie County, TN...........
16940........................ Cheyenne, WY.................... 0.9494
Laramie County, WY..............
16974........................ Chicago-Naperville-Joliet, IL... 1.0418
Cook County, IL.................
DeKalb County, IL...............
DuPage County, IL...............
Grundy County, IL...............
Kane County, IL.................
Kendall County, IL..............
McHenry County, IL..............
Will County, IL.................
17020........................ Chico, CA....................... 1.1616
Butte County, CA................
17140........................ Cincinnati-Middletown, OH-KY-IN. 0.9470
Dearborn County, IN.............
Franklin County, IN.............
Ohio County, IN.................
Boone County, KY................
Bracken County, KY..............
Campbell County, KY.............
Gallatin County, KY.............
Grant County, KY................
Kenton County, KY...............
Pendleton County, KY............
Brown County, OH................
Butler County, OH...............
Clermont County, OH.............
Hamilton County, OH.............
Warren County, OH...............
17300........................ Clarksville, TN-KY.............. 0.7802
Christian County, KY............
Trigg County, KY................
Montgomery County, TN...........
Stewart County, TN..............
17420........................ Cleveland, TN................... 0.7496
Bradley County, TN..............
Polk County, TN.................
17460........................ Cleveland-Elyria-Mentor, OH..... 0.9303
Cuyahoga County, OH.............
Geauga County, OH...............
Lake County, OH.................
Lorain County, OH...............
Medina County, OH...............
17660........................ Coeur d'Alene, ID............... 0.9064
Kootenai County, ID.............
17780........................ College Station-Bryan, TX....... 0.9497
Brazos County, TX...............
Burleson County, TX.............
Robertson County, TX............
17820........................ Colorado Springs, CO............ 0.9282
El Paso County, CO..............
Teller County, CO...............

[[Page 47971]]

17860........................ Columbia, MO.................... 0.8196
Boone County, MO................
Howard County, MO...............
17900........................ Columbia, SC.................... 0.8601
Calhoun County, SC..............
Fairfield County, SC............
Kershaw County, SC..............
Lexington County, SC............
Richland County, SC.............
Saluda County, SC...............
17980........................ Columbus, GA-AL................. 0.8170
Russell County, AL..............
Chattahoochee County, GA........
Harris County, GA...............
Marion County, GA...............
Muscogee County, GA.............
18020........................ Columbus, IN.................... 0.9818
Bartholomew County, IN..........
18140........................ Columbus, OH.................... 0.9803
Delaware County, OH.............
Fairfield County, OH............
Franklin County, OH.............
Licking County, OH..............
Madison County, OH..............
Morrow County, OH...............
Pickaway County, OH.............
Union County, OH................
18580........................ Corpus Christi, TX.............. 0.8433
Aransas County, TX..............
Nueces County, TX...............
San Patricio County, TX.........
18700........................ Corvallis, OR................... 1.0596
Benton County, OR...............
18880........................ Crestview-Fort Walton Beach- 0.8911
Destin, FL.
Okaloosa County, FL.............
19060........................ Cumberland, MD-WV............... 0.8054
Allegany County, MD.............
Mineral County, WV..............
19124........................ Dallas-Plano-Irving, TX......... 0.9831
Collin County, TX...............
Dallas County, TX...............
Delta County, TX................
Denton County, TX...............
Ellis County, TX................
Hunt County, TX.................
Kaufman County, TX..............
Rockwall County, TX.............
19140........................ Dalton, GA...................... 0.8625
Murray County, GA...............
Whitfield County, GA............
19180........................ Danville, IL.................... 0.9460
Vermilion County, IL............
19260........................ Danville, VA.................... 0.7888
Pittsylvania County, VA.........
Danville City, VA...............
19340........................ Davenport-Moline-Rock Island, IA- 0.9306
IL.
Henry County, IL................
Mercer County, IL...............
Rock Island County, IL..........
Scott County, IA................
19380........................ Dayton, OH...................... 0.9034
Greene County, OH...............
Miami County, OH................
Montgomery County, OH...........
Preble County, OH...............
19460........................ Decatur, AL..................... 0.7165
Lawrence County, AL.............
Morgan County, AL...............
19500........................ Decatur, IL..................... 0.8151
Macon County, IL................
19660........................ Deltona-Daytona Beach-Ormond 0.8560
Beach, FL.
Volusia County, FL..............
19740........................ Denver-Aurora-Broomfield, CO.... 1.0395
Adams County, CO................
Arapahoe County, CO.............
Broomfield County, CO...........
Clear Creek County, CO..........
Denver County, CO...............
Douglas County, CO..............
Elbert County, CO...............
Gilpin County, CO...............
Jefferson County, CO............
Park County, CO.................
19780........................ Des Moines-West Des Moines, IA.. 0.9393
Dallas County, IA...............
Guthrie County, IA..............
Madison County, IA..............
Polk County, IA.................
Warren County, IA...............
19804........................ Detroit-Livonia-Dearborn, MI.... 0.9237
Wayne County, MI................
20020........................ Dothan, AL...................... 0.7108
Geneva County, AL...............
Henry County, AL................
Houston County, AL..............
20100........................ Dover, DE....................... 0.9939
Kent County, DE.................
20220........................ Dubuque, IA..................... 0.8790
Dubuque County, IA..............
20260........................ Duluth, MN-WI................... 1.0123
Carlton County, MN..............
St. Louis County, MN............
Douglas County, WI..............
20500........................ Durham-Chapel Hill, NC.......... 0.9669
Chatham County, NC..............
Durham County, NC...............
Orange County, NC...............
Person County, NC...............
20740........................ Eau Claire, WI.................. 1.0103
Chippewa County, WI.............
Eau Claire County, WI...........
20764........................ Edison-New Brunswick, NJ........ 1.0985
Middlesex County, NJ............
Monmouth County, NJ.............
Ocean County, NJ................
Somerset County, NJ.............
20940........................ El Centro, CA................... 0.8848
Imperial County, CA.............
21060........................ Elizabethtown, KY............... 0.7894
Hardin County, KY...............
Larue County, KY................
21140........................ Elkhart-Goshen, IN.............. 0.9337
Elkhart County, IN..............
21300........................ Elmira, NY...................... 0.8725
Chemung County, NY..............
21340........................ El Paso, TX..................... 0.8404
El Paso County, TX..............
21500........................ Erie, PA........................ 0.7940
Erie County, PA.................
21660........................ Eugene-Springfield, OR.......... 1.1723
Lane County, OR.................
21780........................ Evansville, IN-KY............... 0.8381
Gibson County, IN...............
Posey County, IN................
Vanderburgh County, IN..........
Warrick County, IN..............
Henderson County, KY............
Webster County, KY..............
21820........................ Fairbanks, AK................... 1.0997
Fairbanks North Star Borough, AK
21940........................ Fajardo, PR..................... 0.3728
Ceiba Municipio, PR.............
Fajardo Municipio, PR...........
Luquillo Municipio, PR..........
22020........................ Fargo, ND-MN.................... 0.7802
Cass County, ND.................
Clay County, MN.................
22140........................ Farmington, NM.................. 0.9735
San Juan County, NM.............
22180........................ Fayetteville, NC................ 0.8601
Cumberland County, NC...........
Hoke County, NC.................
22220........................ Fayetteville-Springdale-Rogers, 0.8955
AR-MO.
Benton County, AR...............
Madison County, AR..............
Washington County, AR...........
McDonald County, MO.............
22380........................ Flagstaff, AZ................... 1.2786
Coconino County, AZ.............
22420........................ Flint, MI....................... 1.1238
Genesee County, MI..............
22500........................ Florence, SC.................... 0.7999
Darlington County, SC...........
Florence County, SC.............
22520........................ Florence-Muscle Shoals, AL...... 0.7684
Colbert County, AL..............
Lauderdale County, AL...........
22540........................ Fond du Lac, WI................. 0.9477
Fond du Lac County, WI..........
22660........................ Fort Collins-Loveland, CO....... 0.9704
Larimer County, CO..............
22744........................ Fort Lauderdale-Pompano Beach- 1.0378
Deerfield Beach, FL.
Broward County, FL..............
22900........................ Fort Smith, AR-OK............... 0.7561
Crawford County, AR.............
Franklin County, AR.............
Sebastian County, AR............
Le Flore County, OK.............
Sequoyah County, OK.............
23060........................ Fort Wayne, IN.................. 0.9010
Allen County, IN................
Wells County, IN................
Whitley County, IN..............
23104........................ Fort Worth-Arlington, TX........ 0.9535
Johnson County, TX..............
Parker County, TX...............

[[Page 47972]]

Tarrant County, TX..............
Wise County, TX.................
23420........................ Fresno, CA...................... 1.1768
Fresno County, CA...............
23460........................ Gadsden, AL..................... 0.7983
Etowah County, AL...............
23540........................ Gainesville, FL................. 0.9710
Alachua County, FL..............
Gilchrist County, FL............
23580........................ Gainesville, GA................. 0.9253
Hall County, GA.................
23844........................ Gary, IN........................ 0.9418
Jasper County, IN...............
Lake County, IN.................
Newton County, IN...............
Porter County, IN...............
24020........................ Glens Falls, NY................. 0.8367
Warren County, NY...............
Washington County, NY...........
24140........................ Goldsboro, NC................... 0.8550
Wayne County, NC................
24220........................ Grand Forks, ND-MN.............. 0.7290
Polk County, MN.................
Grand Forks County, ND..........
24300........................ Grand Junction, CO.............. 0.9270
Mesa County, CO.................
24340........................ Grand Rapids-Wyoming, MI........ 0.9091
Barry County, MI................
Ionia County, MI................
Kent County, MI.................
Newaygo County, MI..............
24500........................ Great Falls, MT................. 0.9235
Cascade County, MT..............
24540........................ Greeley, CO..................... 0.9653
Weld County, CO.................
24580........................ Green Bay, WI................... 0.9587
Brown County, WI................
Kewaunee County, WI.............
Oconto County, WI...............
24660........................ Greensboro-High Point, NC....... 0.8320
Guilford County, NC.............
Randolph County, NC.............
Rockingham County, NC...........
24780........................ Greenville, NC.................. 0.9343
Greene County, NC...............
Pitt County, NC.................
24860........................ Greenville-Mauldin-Easley, SC... 0.9604
Greenville County, SC...........
Laurens County, SC..............
Pickens County, SC..............
25020........................ Guayama, PR..................... 0.3707
Arroyo Municipio, PR............
Guayama Municipio, PR...........
Patillas Municipio, PR..........
25060........................ Gulfport-Biloxi, MS............. 0.8575
Hancock County, MS..............
Harrison County, MS.............
Stone County, MS................
25180........................ Hagerstown-Martinsburg, MD-WV... 0.9234
Washington County, MD...........
Berkeley County, WV.............
Morgan County, WV...............
25260........................ Hanford-Corcoran, CA............ 1.1124
Kings County, CA................
25420........................ Harrisburg-Carlisle, PA......... 0.9533
Cumberland County, PA...........
Dauphin County, PA..............
Perry County, PA................
25500........................ Harrisonburg, VA................ 0.9090
Rockingham County, VA...........
Harrisonburg City, VA...........
25540........................ Hartford-West Hartford-East 1.1050
Hartford, CT.
Hartford County, CT.............
Middlesex County, CT............
Tolland County, CT..............
25620........................ Hattiesburg, MS................. 0.7938
Forrest County, MS..............
Lamar County, MS................
Perry County, MS................
25860........................ Hickory-Lenoir-Morganton, NC.... 0.8492
Alexander County, NC............
Burke County, NC................
Caldwell County, NC.............
Catawba County, NC..............
25980........................ Hinesville-Fort Stewart, GA \1\. 0.8700
Liberty County, GA..............
Long County, GA.................
26100........................ Holland-Grand Haven, MI......... 0.8016
Ottawa County, MI...............
26180........................ Honolulu, HI.................... 1.2321
Honolulu County, HI.............
26300........................ Hot Springs, AR................. 0.8474
Garland County, AR..............
26380........................ Houma-Bayou Cane-Thibodaux, LA.. 0.7525
Lafourche Parish, LA............
Terrebonne Parish, LA...........
26420........................ Houston-Sugar Land-Baytown, TX.. 0.9915
Austin County, TX...............
Brazoria County, TX.............
Chambers County, TX.............
Fort Bend County, TX............
Galveston County, TX............
Harris County, TX...............
Liberty County, TX..............
Montgomery County, TX...........
San Jacinto County, TX..........
Waller County, TX...............
26580........................ Huntington-Ashland, WV-KY-OH.... 0.8944
Boyd County, KY.................
Greenup County, KY..............
Lawrence County, OH.............
Cabell County, WV...............
Wayne County, WV................
26620........................ Huntsville, AL.................. 0.8455
Limestone County, AL............
Madison County, AL..............
26820........................ Idaho Falls, ID................. 0.9312
Bonneville County, ID...........
Jefferson County, ID............
26900........................ Indianapolis-Carmel, IN......... 1.0108
Boone County, IN................
Brown County, IN................
Hamilton County, IN.............
Hancock County, IN..............
Hendricks County, IN............
Johnson County, IN..............
Marion County, IN...............
Morgan County, IN...............
Putnam County, IN...............
Shelby County, IN...............
26980........................ Iowa City, IA................... 0.9854
Johnson County, IA..............
Washington County, IA...........
27060........................ Ithaca, NY...................... 0.9326
Tompkins County, NY.............
27100........................ Jackson, MI..................... 0.8944
Jackson County, MI..............
27140........................ Jackson, MS..................... 0.8162
Copiah County, MS...............
Hinds County, MS................
Madison County, MS..............
Rankin County, MS...............
Simpson County, MS..............
27180........................ Jackson, TN..................... 0.7729
Chester County, TN..............
Madison County, TN..............
27260........................ Jacksonville, FL................ 0.8956
Baker County, FL................
Clay County, FL.................
Duval County, FL................
Nassau County, FL...............
St. Johns County, FL............
27340........................ Jacksonville, NC................ 0.7861
Onslow County, NC...............
27500........................ Janesville, WI.................. 0.9071
Rock County, WI.................
27620........................ Jefferson City, MO.............. 0.8465
Callaway County, MO.............
Cole County, MO.................
Moniteau County, MO.............
Osage County, MO................
27740........................ Johnson City, TN................ 0.7226
Carter County, TN...............
Unicoi County, TN...............
Washington County, TN...........
27780........................ Johnstown, PA................... 0.8450
Cambria County, PA..............
27860........................ Jonesboro, AR................... 0.7983
Craighead County, AR............
Poinsett County, AR.............
27900........................ Joplin, MO...................... 0.7983
Jasper County, MO...............
Newton County, MO...............
28020........................ Kalamazoo-Portage, MI........... 0.9959
Kalamazoo County, MI............
Van Buren County, MI............
28100........................ Kankakee-Bradley, IL............ 0.9657
Kankakee County, IL.............
28140........................ Kansas City, MO-KS.............. 0.9447
Franklin County, KS.............
Johnson County, KS..............
Leavenworth County, KS..........
Linn County, KS.................
Miami County, KS................
Wyandotte County, KS............
Bates County, MO................
Caldwell County, MO.............
Cass County, MO.................
Clay County, MO.................
Clinton County, MO..............

[[Page 47973]]

Jackson County, MO..............
Lafayette County, MO............
Platte County, MO...............
Ray County, MO..................
28420........................ Kennewick-Pasco-Richland, WA.... 0.9459
Benton County, WA...............
Franklin County, WA.............
28660........................ Killeen-Temple-Fort Hood, TX.... 0.8925
Bell County, TX.................
Coryell County, TX..............
Lampasas County, TX.............
28700........................ Kingsport-Bristol-Bristol, TN-VA 0.7192
Hawkins County, TN..............
Sullivan County, TN.............
Bristol City, VA................
Scott County, VA................
Washington County, VA...........
28740........................ Kingston, NY.................... 0.9066
Ulster County, NY...............
28940........................ Knoxville, TN................... 0.7432
Anderson County, TN.............
Blount County, TN...............
Knox County, TN.................
Loudon County, TN...............
Union County, TN................
29020........................ Kokomo, IN...................... 0.9061
Howard County, IN...............
Tipton County, IN...............
29100........................ La Crosse, WI-MN................ 1.0205
Houston County, MN..............
La Crosse County, WI............
29140........................ Lafayette, IN................... 0.9954
Benton County, IN...............
Carroll County, IN..............
Tippecanoe County, IN...........
29180........................ Lafayette, LA................... 0.8231
Lafayette Parish, LA............
St. Martin Parish, LA...........
29340........................ Lake Charles, LA................ 0.7765
Calcasieu Parish, LA............
Cameron Parish, LA..............
29404........................ Lake County-Kenosha County, IL- 1.0658
WI.
Lake County, IL.................
Kenosha County, WI..............
29420........................ Lake Havasu City-Kingman, AZ.... 0.9912
Mohave County, AZ...............
29460........................ Lakeland-Winter Haven, FL....... 0.8283
Polk County, FL.................
29540........................ Lancaster, PA................... 0.9695
Lancaster County, PA............
29620........................ Lansing-East Lansing, MI........ 1.0618
Clinton County, MI..............
Eaton County, MI................
Ingham County, MI...............
29700........................ Laredo, TX...................... 0.7586
Webb County, TX.................
29740........................ Las Cruces, NM.................. 0.9265
Dona Ana County, NM.............
29820........................ Las Vegas-Paradise, NV.......... 1.1627
Clark County, NV................
29940........................ Lawrence, KS.................... 0.8664
Douglas County, KS .......
30020........................ Lawton, OK...................... 0.7893
Comanche County, OK.............
30140........................ Lebanon, PA..................... 0.8157
Lebanon County, PA..............
30300........................ Lewiston, ID-WA................. 0.9215
Nez Perce County, ID............
Asotin County, WA...............
30340........................ Lewiston-Auburn, ME............. 0.9048
Androscoggin County, ME.........
30460........................ Lexington-Fayette, KY........... 0.8902
Bourbon County, KY..............
Clark County, KY................
Fayette County, KY..............
Jessamine County, KY............
Scott County, KY................
Woodford County, KY.............
30620........................ Lima, OH........................ 0.9158
Allen County, OH................
30700........................ Lincoln, NE..................... 0.9465
Lancaster County, NE............
Seward County, NE...............
30780........................ Little Rock-North Little Rock- 0.8629
Conway, AR.
Faulkner County, AR.............
Grant County, AR................
Lonoke County, AR...............
Perry County, AR................
Pulaski County, AR..............
Saline County, AR...............
30860........................ Logan, UT-ID.................... 0.8754
Franklin County, ID.............
Cache County, UT................
30980........................ Longview, TX.................... 0.8933
Gregg County, TX................
Rusk County, TX.................
Upshur County, TX...............
31020........................ Longview, WA.................... 1.0460
Cowlitz County, WA..............
31084........................ Los Angeles-Long Beach-Glendale, 1.2417
CA.
Los Angeles County, CA..........
31140........................ Louisville-Jefferson County, KY- 0.8852
IN.
Clark County, IN................
Floyd County, IN................
Harrison County, IN.............
Washington County, IN...........
Bullitt County, KY..............
Henry County, KY................
Meade County, KY................
Nelson County, KY...............
Oldham County, KY...............
Shelby County, KY...............
Spencer County, KY..............
Trimble County, KY..............
31180........................ Lubbock, TX..................... 0.8956
Crosby County, TX...............
Lubbock County, TX..............
31340........................ Lynchburg, VA................... 0.8771
Amherst County, VA..............
Appomattox County, VA...........
Bedford County, VA..............
Campbell County, VA.............
Bedford City, VA................
Lynchburg City, VA..............
31420........................ Macon, GA....................... 0.9014
Bibb County, GA.................
Crawford County, GA.............
Jones County, GA................
Monroe County, GA...............
Twiggs County, GA...............
31460........................ Madera-Chowchilla, CA........... 0.8317
Madera County, CA...............
31540........................ Madison, WI..................... 1.1414
Columbia County, WI.............
Dane County, WI.................
Iowa County, WI.................
31700........................ Manchester-Nashua, NH........... 1.0057
Hillsborough County, NH.........
31740........................ Manhattan, KS................... 0.7843
Geary County, KS................
Pottawatomie County, KS.........
Riley County, KS................
31860........................ Mankato-North Mankato, MN....... 0.9277
Blue Earth County, MN...........
Nicollet County, MN.............
31900........................ Mansfield, OH................... 0.8509
Richland County, OH.............
32420........................ Mayag[uuml]ez, PR............... 0.3762
Hormigueros Municipio, PR.......
Mayag[uuml]ez Municipio, PR.....
32580........................ McAllen-Edinburg-Mission, TX.... 0.8393
Hidalgo County, TX..............
32780........................ Medford, OR..................... 1.0690
Jackson County, OR..............
32820........................ Memphis, TN-MS-AR............... 0.9038
Crittenden County, AR...........
DeSoto County, MS...............
Marshall County, MS.............
Tate County, MS.................
Tunica County, MS...............
Fayette County, TN..............
Shelby County, TN...............
Tipton County, TN...............
32900........................ Merced, CA...................... 1.2734
Merced County, CA...............
33124........................ Miami-Miami Beach-Kendall, FL... 0.9870
Miami-Dade County, FL...........
33140........................ Michigan City-La Porte, IN...... 0.9216
LaPorte County, IN..............
33260........................ Midland, TX..................... 1.0049
Midland County, TX..............
33340........................ Milwaukee-Waukesha-West Allis, 0.9856
WI.
Milwaukee County, WI............
Ozaukee County, WI..............
Washington County, WI...........
Waukesha County, WI.............
33460........................ Minneapolis-St. Paul- 1.1213
Bloomington, MN-WI.
Anoka County, MN................
Carver County, MN...............
Chisago County, MN..............
Dakota County, MN...............
Hennepin County, MN.............
Isanti County, MN...............

[[Page 47974]]

Ramsey County, MN...............
Scott County, MN................
Sherburne County, MN............
Washington County, MN...........
Wright County, MN...............
Pierce County, WI...............
St. Croix County, WI............
33540........................ Missoula, MT.................... 0.9142
Missoula County, MT.............
33660........................ Mobile, AL...................... 0.7507
Mobile County, AL...............
33700........................ Modesto, CA..................... 1.3629
Stanislaus County, CA...........
33740........................ Monroe, LA...................... 0.7530
Ouachita Parish, LA.............
Union Parish, LA................
33780........................ Monroe, MI...................... 0.8718
Monroe County, MI...............
33860........................ Montgomery, AL.................. 0.7475
Autauga County, AL..............
Elmore County, AL...............
Lowndes County, AL..............
Montgomery County, AL...........
34060........................ Morgantown, WV.................. 0.8339
Monongalia County, WV...........
Preston County, WV..............
34100........................ Morristown, TN.................. 0.6861
Grainger County, TN.............
Hamblen County, TN..............
Jefferson County, TN. .......
34580........................ Mount Vernon-Anacortes, WA...... 1.0652
Skagit County, WA...............
34620........................ Muncie, IN......................
Delaware County, IN............. 0.8743
34740........................ Muskegon-Norton Shores, MI...... 1.1076
Muskegon County, MI.............
34820........................ Myrtle Beach-North Myrtle Beach- 0.8700
Conway, SC.
Horry County, SC................
34900........................ Napa, CA........................ 1.5375
Napa County, CA.................
34940........................ Naples-Marco Island, FL......... 0.9108
Collier County, FL..............
34980........................ Nashville-Davidson--Murfreesboro- 0.9141
Franklin, TN.
Cannon County, TN...............
Cheatham County, TN.............
Davidson County, TN.............
Dickson County, TN..............
Hickman County, TN..............
Macon County, TN................
Robertson County, TN............
Rutherford County, TN...........
Smith County, TN................
Sumner County, TN...............
Trousdale County, TN............
Williamson County, TN...........
Wilson County, TN...............
35004........................ Nassau-Suffolk, NY.............. 1.2755
Nassau County, NY...............
Suffolk County, NY..............
35084........................ Newark-Union, NJ-PA............. 1.1268
Essex County, NJ................
Hunterdon County, NJ............
Morris County, NJ...............
Sussex County, NJ...............
Union County, NJ................
Pike County, PA.................
35300........................ New Haven-Milford, CT........... 1.1883
New Haven County, CT............
35380........................ New Orleans-Metairie-Kenner, LA. 0.8752
Jefferson Parish, LA............
Orleans Parish, LA..............
Plaquemines Parish, LA..........
St. Bernard Parish, LA..........
St. Charles Parish, LA..........
St. John the Baptist Parish, LA.
St. Tammany Parish, LA..........
35644........................ New York-White Plains-Wayne, NY- 1.3089
NJ.
Bergen County, NJ...............
Hudson County, NJ...............
Passaic County, NJ..............
Bronx County, NY................
Kings County, NY................
New York County, NY.............
Putnam County, NY...............
Queens County, NY...............
Richmond County, NY.............
Rockland County, NY.............
Westchester County, NY..........
35660........................ Niles-Benton Harbor, MI......... 0.8444
Berrien County, MI..............
35840........................ North Port-Bradenton-Sarasota- 0.9428
Venice, FL.
Manatee County, FL..............
Sarasota County, FL.............
35980........................ Norwich-New London, CT.......... 1.1821
New London County, CT...........
36084........................ Oakland-Fremont-Hayward, CA..... 1.7048
Alameda County, CA..............
Contra Costa County, CA.........
36100........................ Ocala, FL....................... 0.8425
Marion County, FL...............
36140........................ Ocean City, NJ.................. 1.0584
Cape May County, NJ.............
36220........................ Odessa, TX...................... 0.9661
Ector County, TX................
36260........................ Ogden-Clearfield, UT............ 0.9170
Davis County, UT................
Morgan County, UT...............
Weber County, UT................
36420........................ Oklahoma City, OK............... 0.8879
Canadian County, OK.............
Cleveland County, OK............
Grady County, OK................
Lincoln County, OK..............
Logan County, OK................
McClain County, OK..............
Oklahoma County, OK.............
36500........................ Olympia, WA..................... 1.1601
Thurston County, WA.............
36540........................ Omaha-Council Bluffs, NE-IA..... 0.9756
Harrison County, IA.............
Mills County, IA................
Pottawattamie County, IA........
Cass County, NE.................
Douglas County, NE..............
Sarpy County, NE................
Saunders County, NE.............
Washington County, NE...........
36740........................ Orlando-Kissimmee, FL........... 0.9063
Lake County, FL.................
Orange County, FL...............
Osceola County, FL..............
Seminole County, FL.............
36780........................ Oshkosh-Neenah, WI.............. 0.9398
Winnebago County, WI............
36980........................ Owensboro, KY................... 0.7790
Daviess County, KY..............
Hancock County, KY..............
McLean County, KY...............
37100........................ Oxnard-Thousand Oaks-Ventura, CA 1.3113
Ventura County, CA..............
37340........................ Palm Bay-Melbourne-Titusville, 0.8790
FL.
Brevard County, FL..............
37380........................ Palm Coast, FL.................. 0.8174
Flagler County, FL..............
37460........................ Panama City-Lynn Haven-Panama 0.7876
City Beach, FL.
Bay County, FL..................
37620........................ Parkersburg-Marietta-Vienna, WV- 0.7569
OH.
Washington County, OH...........
Pleasants County, WV............
Wirt County, WV.................
Wood County, WV.................
37700........................ Pascagoula, MS.................. 0.7542
George County, MS...............
Jackson County, MS..............
37764........................ Peabody, MA..................... 1.0553
Essex County, MA................
37860........................ Pensacola-Ferry Pass-Brent, FL.. 0.7767
Escambia County, FL.............
Santa Rosa County, FL...........
37900........................ Peoria, IL...................... 0.8434
Marshall County, IL.............
Peoria County, IL...............
Stark County, IL................
Tazewell County, IL.............
Woodford County, IL.............
37964........................ Philadelphia, PA................ 1.0849
Bucks County, PA................
Chester County, PA..............
Delaware County, PA.............
Montgomery County, PA...........
Philadelphia County, PA.........
38060........................ Phoenix-Mesa-Scottsdale, AZ..... 1.0465
Maricopa County, AZ.............
Pinal County, AZ................
38220........................ Pine Bluff, AR.................. 0.8069
Cleveland County, AR............
Jefferson County, AR............
Lincoln County, AR..............
38300........................ Pittsburgh, PA.................. 0.8669

[[Page 47975]]

Allegheny County, PA............
Armstrong County, PA............
Beaver County, PA...............
Butler County, PA...............
Fayette County, PA..............
Washington County, PA...........
Westmoreland County, PA.........
38340........................ Pittsfield, MA.................. 1.0920
Berkshire County, MA............
38540........................ Pocatello, ID................... 0.9754
Bannock County, ID..............
Power County, ID................
38660........................ Ponce, PR....................... 0.4594
Juana D[iacute]az Municipio, PR.
Ponce Municipio, PR.............
Villalba Municipio, PR..........
38860........................ Portland-South Portland- 0.9981
Biddeford, ME.
Cumberland County, ME...........
Sagadahoc County, ME............
York County, ME.................
38900........................ Portland-Vancouver-Beaverton, OR- 1.1766
WA.
Clackamas County, OR............
Columbia County, OR.............
Multnomah County, OR............
Washington County, OR...........
Yamhill County, OR..............
Clark County, WA................
Skamania County, WA.............
38940........................ Port St. Lucie, FL.............. 0.9352
Martin County, FL...............
St. Lucie County, FL............
39100........................ Poughkeepsie-Newburgh- 1.1544
Middletown, NY.
Dutchess County, NY.............
Orange County, NY...............
39140........................ Prescott, AZ.................... 1.0161
Yavapai County, AZ..............
39300........................ Providence-New Bedford-Fall 1.0539
River, RI-MA.
Bristol County, MA..............
Bristol County, RI..............
Kent County, RI.................
Newport County, RI..............
Providence County, RI...........
Washington County, RI...........
39340........................ Provo-Orem, UT.................. 0.9461
Juab County, UT.................
Utah County, UT.................
39380........................ Pueblo, CO...................... 0.8215
Pueblo County, CO...............
39460........................ Punta Gorda, FL................. 0.8734
Charlotte County, FL............
39540........................ Racine, WI...................... 0.8903
Racine County, WI...............
39580........................ Raleigh-Cary, NC................ 0.9304
Franklin County, NC.............
Johnston County, NC.............
Wake County, NC.................
39660........................ Rapid City, SD.................. 0.9568
Meade County, SD................
Pennington County, SD...........
39740........................ Reading, PA..................... 0.9220
Berks County, PA................
39820........................ Redding, CA..................... 1.4990
Shasta County, CA...............
39900........................ Reno-Sparks, NV................. 1.0326
Storey County, NV...............
Washoe County, NV...............
40060........................ Richmond, VA.................... 0.9723
Amelia County, VA...............
Caroline County, VA.............
Charles City County, VA.........
Chesterfield County, VA.........
Cumberland County, VA...........
Dinwiddie County, VA............
Goochland County, VA............
Hanover County, VA..............
Henrico County, VA..............
King and Queen County, VA.......
King William County, VA.........
Louisa County, VA...............
New Kent County, VA.............
Powhatan County, VA.............
Prince George County, VA........
Sussex County, VA...............
Colonial Heights City, VA.......
Hopewell City, VA...............
Petersburg City, VA.............
Richmond City, VA...............
40140........................ Riverside-San Bernardino- 1.1497
Ontario, CA.
Riverside County, CA............
San Bernardino County, CA.......
40220........................ Roanoke, VA..................... 0.9195
Botetourt County, VA............
Craig County, VA................
Franklin County, VA.............
Roanoke County, VA..............
Roanoke City, VA................
Salem City, VA..................
40340........................ Rochester, MN................... 1.1662
Dodge County, MN................
Olmsted County, MN..............
Wabasha County, MN..............
40380........................ Rochester, NY................... 0.8749
Livingston County, NY...........
Monroe County, NY...............
Ontario County, NY..............
Orleans County, NY..............
Wayne County, NY................
40420........................ Rockford, IL.................... 0.9751
Boone County, IL................
Winnebago County, IL............
40484........................ Rockingham County-Strafford 1.0172
County, NH.
Rockingham County, NH...........
Strafford County, NH............
40580........................ Rocky Mount, NC................. 0.8750
Edgecombe County, NC............
Nash County, NC.................
40660........................ Rome, GA........................ 0.8924
Floyd County, GA................
40900........................ Sacramento-Arden-Arcade- 1.5498
Roseville, CA.
El Dorado County, CA............
Placer County, CA...............
Sacramento County, CA...........
Yolo County, CA.................
40980........................ Saginaw-Saginaw Township North, 0.8849
MI.
Saginaw County, MI..............
41060........................ St. Cloud, MN................... 1.0658
Benton County, MN...............
Stearns County, MN..............
41100........................ St. George, UT.................. 0.9345
Washington County, UT...........
41140........................ St. Joseph, MO-KS............... 0.9834
Doniphan County, KS.............
Andrew County, MO...............
Buchanan County, MO.............
DeKalb County, MO...............
41180........................ St. Louis, MO-IL................ 0.9336
Bond County, IL.................
Calhoun County, IL..............
Clinton County, IL..............
Jersey County, IL...............
Macoupin County, IL.............
Madison County, IL..............
Monroe County, IL...............
St. Clair County, IL............
Crawford County, MO.............
Franklin County, MO.............
Jefferson County, MO............
Lincoln County, MO..............
St. Charles County, MO..........
St. Louis County, MO............
Warren County, MO...............
Washington County, MO...........
St. Louis City, MO..............
41420........................ Salem, OR....................... 1.1148
Marion County, OR...............
Polk County, OR.................
41500........................ Salinas, CA..................... 1.5820
Monterey County, CA.............
41540........................ Salisbury, MD................... 0.8948
Somerset County, MD.............
Wicomico County, MD.............
41620........................ Salt Lake City, UT.............. 0.9350
Salt Lake County, UT............
Summit County, UT...............
Tooele County, UT...............
41660........................ San Angelo, TX.................. 0.8169
Irion County, TX................
Tom Green County, TX............
41700........................ San Antonio, TX................. 0.8911
Atascosa County, TX.............
Bandera County, TX..............
Bexar County, TX................
Comal County, TX................
Guadalupe County, TX............
Kendall County, TX..............
Medina County, TX...............
Wilson County, TX...............
41740........................ San Diego-Carlsbad-San Marcos, 1.2213
CA.
San Diego County, CA............
41780........................ Sandusky, OH.................... 0.7788
Erie County, OH.................

[[Page 47976]]

41884........................ San Francisco-San Mateo-Redwood 1.6743
City, CA.
Marin County, CA................
San Francisco County, CA........
San Mateo County, CA............
41900........................ San Germ[aacute]n-Cabo Rojo, PR. 0.4550
Cabo Rojo Municipio, PR.........
Lajas Municipio, PR.............
Sabana Grande Municipio, PR.....
San Germ[aacute]n Municipio, PR.
41940........................ San Jose-Sunnyvale-Santa Clara, 1.7086
CA.
San Benito County, CA...........
Santa Clara County, CA..........
41980........................ San Juan-Caguas-Guaynabo, PR.... 0.4356
Aguas Buenas Municipio, PR......
Aibonito Municipio, PR..........
Arecibo Municipio, PR...........
Barceloneta Municipio, PR.......
Barranquitas Municipio, PR......
Bayam[oacute]n Municipio, PR....
Caguas Municipio, PR............
Camuy Municipio, PR.............
Can[oacute]vanas Municipio, PR..
Carolina Municipio, PR..........
Cata[ntilde]o Municipio, PR.....
Cayey Municipio, PR.............
Ciales Municipio, PR............
Cidra Municipio, PR.............
Comer[iacute]o Municipio, PR....
Corozal Municipio, PR...........
Dorado Municipio, PR............
Florida Municipio, PR...........
Guaynabo Municipio, PR..........
Gurabo Municipio, PR............
Hatillo Municipio, PR...........
Humacao Municipio, PR...........
Juncos Municipio, PR............
Las Piedras Municipio, PR.......
Lo[iacute]za Municipio, PR......
Manat[iacute] Municipio, PR.....
Maunabo Municipio, PR...........
Morovis Municipio, PR...........
Naguabo Municipio, PR...........
Naranjito Municipio, PR.........
Orocovis Municipio, PR..........
Quebradillas Municipio, PR......
R[iacute]o Grande Municipio, PR.
San Juan Municipio, PR..........
San Lorenzo Municipio, PR.......
Toa Alta Municipio, PR..........
Toa Baja Municipio, PR..........
Trujillo Alto Municipio, PR.....
Vega Alta Municipio, PR.........
Vega Baja Municipio, PR.........
Yabucoa Municipio, PR...........
42020........................ San Luis Obispo-Paso Robles, CA. 1.3036
San Luis Obispo County, CA......
42044........................ Santa Ana-Anaheim-Irvine, CA.... 1.2111
Orange County, CA...............
42060........................ Santa Barbara-Santa Maria- 1.2825
Goleta, CA.
Santa Barbara County, CA........
42100........................ Santa Cruz-Watsonville, CA...... 1.7937
Santa Cruz County, CA...........
42140........................ Santa Fe, NM.................... 1.0136
Santa Fe County, NM.............
42220........................ Santa Rosa-Petaluma, CA......... 1.6679
Sonoma County, CA...............
42340........................ Savannah, GA.................... 0.8757
Bryan County, GA................
Chatham County, GA..............
Effingham County, GA............
42540........................ Scranton-Wilkes-Barre, PA....... 0.8331
Lackawanna County, PA...........
Luzerne County, PA..............
Wyoming County, PA..............
42644........................ Seattle-Bellevue-Everett, WA.... 1.1733
King County, WA.................
Snohomish County, WA............
42680........................ Sebastian-Vero Beach, FL........ 0.8760
Indian River County, FL.........
43100........................ Sheboygan, WI................... 0.9203
Sheboygan County, WI............
43300........................ Sherman-Denison, TX............. 0.8723
Grayson County, TX.............. 0.8723
43340........................ Shreveport-Bossier City, LA..... 0.8262
Bossier Parish, LA..............
Caddo Parish, LA................
De Soto Parish, LA..............
43580........................ Sioux City, IA-NE-SD............ 0.9163
Woodbury County, IA.............
Dakota County, NE...............
Dixon County, NE................
Union County, SD................
43620........................ Sioux Falls, SD................. 0.8275
Lincoln County, SD..............
McCook County, SD...............
Minnehaha County, SD............
Turner County, SD...............
43780........................ South Bend-Mishawaka, IN-MI..... 0.9425
St. Joseph County, IN...........
Cass County, MI.................
43900........................ Spartanburg, SC................. 0.8782
Spartanburg County, SC..........
44060........................ Spokane, WA..................... 1.1174
Spokane County, WA..............
44100........................ Springfield, IL................. 0.9165
Menard County, IL...............
Sangamon County, IL.............
44140........................ Springfield, MA................. 1.0378
Franklin County, MA.............
Hampden County, MA..............
Hampshire County, MA............
44180........................ Springfield, MO................. 0.8440
Christian County, MO............
Dallas County, MO...............
Greene County, MO...............
Polk County, MO.................
Webster County, MO..............
44220........................ Springfield, OH................. 0.8447
Clark County, OH .......
44300........................ State College, PA............... 0.9575
Centre County, PA...............
44600........................ Steubenville-Weirton, OH-WV..... 0.7598
Jefferson County, OH............
Brooke County, WV...............
Hancock County, WV..............
44700........................ Stockton, CA.................... 1.3734
San Joaquin County, CA..........
44940........................ Sumter, SC...................... 0.7594
Sumter County, SC...............
45060........................ Syracuse, NY.................... 0.9897
Madison County, NY..............
Onondaga County, NY.............
Oswego County, NY...............
45104........................ Tacoma, WA...................... 1.1574
Pierce County, WA...............
45220........................ Tallahassee, FL................. 0.8391
Gadsden County, FL..............
Jefferson County, FL............
Leon County, FL.................
Wakulla County, FL..............
45300........................ Tampa-St. Petersburg-Clearwater, 0.9075
FL.
Hernando County, FL.............
Hillsborough County, FL.........
Pasco County, FL................
Pinellas County, FL.............
45460........................ Terre Haute, IN................. 0.9706
Clay County, IN.................
Sullivan County, IN.............
Vermillion County, IN...........
Vigo County, IN.................
45500........................ Texarkana, TX-Texarkana, AR..... 0.7428
Miller County, AR...............
Bowie County, TX................
45780........................ Toledo, OH...................... 0.9013
Fulton County, OH...............
Lucas County, OH................
Ottawa County, OH...............
Wood County, OH.................
45820........................ Topeka, KS...................... 0.8974
Jackson County, KS..............
Jefferson County, KS............
Osage County, KS................
Shawnee County, KS..............
Wabaunsee County, KS............
45940........................ Trenton-Ewing, NJ............... 1.0648
Mercer County, NJ...............
46060........................ Tucson, AZ...................... 0.8953

[[Page 47977]]

Pima County, AZ.................
46140........................ Tulsa, OK....................... 0.8145
Creek County, OK................
Okmulgee County, OK.............
Osage County, OK................
Pawnee County, OK...............
Rogers County, OK...............
Tulsa County, OK................
Wagoner County, OK..............
46220........................ Tuscaloosa, AL.................. 0.8500
Greene County, AL...............
Hale County, AL.................
Tuscaloosa County, AL...........
46340........................ Tyler, TX....................... 0.8526
Smith County, TX................
46540........................ Utica-Rome, NY.................. 0.8769
Herkimer County, NY.............
Oneida County, NY...............
46660........................ Valdosta, GA.................... 0.7527
Brooks County, GA...............
Echols County, GA...............
Lanier County, GA...............
Lowndes County, GA..............
46700........................ Vallejo-Fairfield, CA........... 1.6286
Solano County, CA...............
47020........................ Victoria, TX.................... 0.8949
Calhoun County, TX..............
Goliad County, TX...............
Victoria County, TX.............
47220........................ Vineland-Millville-Bridgeton, NJ 1.0759
Cumberland County, NJ...........
47260........................ Virginia Beach-Norfolk-Newport 0.9121
News, VA-NC.
Currituck County, NC............
Gloucester County, VA...........
Isle of Wight County, VA........
James City County, VA...........
Mathews County, VA..............
Surry County, VA................
York County, VA.................
Chesapeake City, VA.............
Hampton City, VA................
Newport News City, VA...........
Norfolk City, VA................
Poquoson City, VA...............
Portsmouth City, VA.............
Suffolk City, VA................
Virginia Beach City, VA.........
Williamsburg City, VA...........
47300........................ Visalia-Porterville, CA......... 0.9947
Tulare County, CA...............
47380........................ Waco, TX........................ 0.8213
McLennan County, TX.............
47580........................ Warner Robins, GA............... 0.7732
Houston County, GA..............
47644........................ Warren-Troy-Farmington Hills, MI 0.9432
Lapeer County, MI...............
Livingston County, MI...........
Macomb County, MI...............
Oakland County, MI..............
St. Clair County, MI............
47894........................ Washington-Arlington-Alexandria, 1.0533
DC-VA-MD-WV.
District of Columbia, DC........
Calvert County, MD..............
Charles County, MD..............
Prince George's County, MD......
Arlington County, VA............
Clarke County, VA...............
Fairfax County, VA..............
Fauquier County, VA.............
Loudoun County, VA..............
Prince William County, VA.......
Spotsylvania County, VA.........
Stafford County, VA.............
Warren County, VA...............
Alexandria City, VA.............
Fairfax City, VA................
Falls Church City, VA...........
Fredericksburg City, VA.........
Manassas City, VA...............
Manassas Park City, VA..........
Jefferson County, WV............
47940........................ Waterloo-Cedar Falls, IA........ 0.8331
Black Hawk County, IA...........
Bremer County, IA...............
Grundy County, IA...............
48140........................ Wausau, WI...................... 0.8802
Marathon County, WI.............
48300........................ Wenatchee-East Wenatchee, WA.... 1.0109
Chelan County, WA...............
Douglas County, WA..............
48424........................ West Palm Beach-Boca Raton- 0.9597
Boynton Beach, FL.
Palm Beach County, FL...........
48540........................ Wheeling, WV-OH................. 0.6673
Belmont County, OH..............
Marshall County, WV.............
Ohio County, WV.................
48620........................ Wichita, KS..................... 0.8674
Butler County, KS...............
Harvey County, KS...............
Sedgwick County, KS.............
Sumner County, KS...............
48660........................ Wichita Falls, TX............... 0.9537
Archer County, TX...............
Clay County, TX.................
Wichita County, TX..............
48700........................ Williamsport, PA................ 0.8268
Lycoming County, PA.............
48864........................ Wilmington, DE-MD-NJ............ 1.0593
New Castle County, DE...........
Cecil County, MD................
Salem County, NJ................
48900........................ Wilmington, NC..................
Brunswick County, NC............ 0.8862
New Hanover County, NC..........
Pender County, NC...............
49020........................ Winchester, VA-WV............... 0.9034
Frederick County, VA............
Winchester City, VA.............
Hampshire County, WV............
49180........................ Winston-Salem, NC............... 0.8560
Davie County, NC................
Forsyth County, NC..............
Stokes County, NC...............
Yadkin County, NC...............
49340........................ Worcester, MA................... 1.1584
Worcester County, MA............
49420........................ Yakima, WA...................... 1.0355
Yakima County, WA...............
49500........................ Yauco, PR....................... 0.3782
Gu[aacute]nica Municipio, PR....
Guayanilla Municipio, PR........
Pe[ntilde]uelas Municipio, PR...
Yauco Municipio, PR.............
49620........................ York-Hanover, PA................ 0.9540
York County, PA.................
49660........................ Youngstown-Warren-Boardman, OH- 0.8262
PA.
Mahoning County, OH.............
Trumbull County, OH.............
Mercer County, PA...............
49700........................ Yuba City, CA................... 1.1759
Sutter County, CA...............
Yuba County, CA.................
49740........................ Yuma, AZ........................ 0.9674
Yuma County, AZ.................
------------------------------------------------------------------------
\1\ At this time, there are no hospitals located in this urban area on
which to base a wage index.

Table B--FY 2014 Wage Index Based on CBSA Labor Market Areas for Rural
Areas
------------------------------------------------------------------------
Wage
State code Nonurban area index
------------------------------------------------------------------------
1.................................... Alabama................. 0.7147
2.................................... Alaska.................. 1.3662
3.................................... Arizona................. 0.9166
4.................................... Arkansas................ 0.7343
5.................................... California.............. 1.2788
6.................................... Colorado................ 0.9802
7.................................... Connecticut............. 1.1311
8.................................... Delaware................ 1.0092
10................................... Florida................. 0.7985
11................................... Georgia................. 0.7459
12................................... Hawaii.................. 1.0739
13................................... Idaho................... 0.7605
14................................... Illinois................ 0.8434
15................................... Indiana................. 0.8513
16................................... Iowa.................... 0.8434
17................................... Kansas.................. 0.7929
18................................... Kentucky................ 0.7784
19................................... Louisiana............... 0.7585
20................................... Maine................... 0.8238
21................................... Maryland................ 0.8696
22................................... Massachusetts........... 1.3614
23................................... Michigan................ 0.8270
24................................... Minnesota............... 0.9133
25................................... Mississippi............. 0.7568
26................................... Missouri................ 0.7775
27................................... Montana................. 0.9098
28................................... Nebraska................ 0.8855
29................................... Nevada.................. 0.9781
30................................... New Hampshire........... 1.0339
31................................... New Jersey\1\........... --
32................................... New Mexico.............. 0.8922
33................................... New York................ 0.8220
34................................... North Carolina.......... 0.8100
35................................... North Dakota............ 0.6785
36................................... Ohio.................... 0.8377
37................................... Oklahoma................ 0.7704
38................................... Oregon.................. 0.9435

[[Page 47978]]

39................................... Pennsylvania............ 0.8430
40................................... Puerto Rico\1\.......... 0.4047
41................................... Rhode Island\1\......... --
42................................... South Carolina.......... 0.8329
43................................... South Dakota............ 0.8164
44................................... Tennessee............... 0.7444
45................................... Texas................... 0.7874
46................................... Utah.................... 0.8732
47................................... Vermont................. 0.9740
48................................... Virgin Islands.......... 0.7060
49................................... Virginia................ 0.7758
50................................... Washington.............. 1.0529
51................................... West Virginia........... 0.7407
52................................... Wisconsin............... 0.8904
53................................... Wyoming................. 0.9243
65................................... Guam.................... 0.9611
------------------------------------------------------------------------
\1\ All counties within the State are classified as urban, with the
exception of Puerto Rico. Puerto Rico has areas designated as rural;
however, no short-term, acute care hospitals are located in the
area(s) for FY 2014. The Puerto Rico wage index is the same as FY
2013.

[FR Doc. 2013-18776 Filed 7-31-13; 4:15 pm]
BILLING CODE 4120-01-P

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