Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2015, 25767-25797 [2014-10319]
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Federal Register / Vol. 79, No. 87 / Tuesday, May 6, 2014 / Proposed Rules
in the Journal of the American Heart
Association on October 24, 2013.3
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C. Administrator’s Determination on
Petition 004
The Administrator has established a
methodology for evaluating whether to
add non-cancer health conditions to the
List of WTC-Related Health Conditions.4
A health condition may be added to the
List if published, peer-reviewed
epidemiologic evidence provides
substantial support for a causal
relationship between 9/11 exposures
and the health condition in 9/11exposed populations.5 If the
epidemiologic evidence provides
modest support for a causal relationship
between 9/11 exposures and the health
condition, the Administrator may then
evaluate studies of associations between
the health condition and 9/11 agents in
similarly-exposed populations.6 If that
additional assessment establishes
substantial support for a causal
relationship between a 9/11 agent or
agents and the health condition, the
health condition may be added to the
List.
In accordance with section
3312(a)(6)(B) of the PHS Act, 42 CFR
88.17, and the methodology for the
addition of non-cancer health
conditions, the Administrator reviewed
the evidence presented in Petition 004.
Although the petitioner requested the
addition of ‘‘heart attack,’’ the
Administrator determined that the more
appropriate health condition is
‘‘cardiovascular disease,’’ which
includes heart attack, acute or chronic
coronary artery disease, cardiac
arrhythmia, angina, and any other heart
condition. The Administrator then
selected a team under the direction of
the WTC Health Program Associate
Director for Science (ADS) to perform a
systematic literature search and provide
3 Jordan HT, Stellman SD, Morabia A, MillerArchie SA, Alper H, Laskaris Z, Brackbill RM, and
Cone JE [2013] Cardiovascular disease
hospitalizations in relation to exposure to the
September 11, 2001 World Trade Center disaster
and posttraumatic stress disorder. Journal of the
American Heart Association 2(5).
4 This methodology, ‘‘Policy and Procedures for
Adding Non-Cancer Conditions to the List of WTCRelated Health Conditions,’’ is available on the
WTC Health Program Web site, at https://
www.cdc.gov/wtc/policies.html.
5 The substantial evidence standard is met when
the Program assesses all of the available, relevant
information and determines with high confidence
that the evidence supports its findings regarding a
causal association between the 9/11 exposure(s) and
the health condition.
6 The modest evidence standard is met when the
Program assesses all of the available, relevant
information and determines with moderate
confidence that the evidence supports its findings
regarding a causal association between the 9/11
exposure(s) and the health condition.
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input on whether the available scientific
and medical information has the
potential to provide a basis for a
decision on whether to add the health
condition to the List. The ADS
conducted a search of the existing
scientific/medical literature for
epidemiologic evidence of a causal
relationship between 9/11 exposures
and cardiovascular disease. Among the
studies identified by the literature
search, four were found to be published,
peer-reviewed epidemiologic studies of
9/11-exposed populations.7 However,
when reviewed by the ADS for
relevance, quantity, and quality, each of
the four published, peer-reviewed
epidemiologic studies of 9/11-exposed
populations were found to have
significant limitations, both
individually and in combination.
Limitations of the four studies included
selection, recall, and confounding bias 8;
poor generalizability among all exposed
groups; and lack of consistency among
the associations reported between 9/11
exposures and cardiovascular disease
between studies. Thus, the ADS
concluded that the available
information did not have the potential
to form the basis for a decision on
whether to propose adding
cardiovascular disease to the List.
The findings described above led the
Administrator to determine that
insufficient evidence exists to take
further action, including either
proposing the addition of cardiovascular
disease to the List (pursuant to PHS Act,
section 3312(a)(6)(B)(ii) and 42 CFR
88.17(a)(2)(ii)) or publishing a
7 Jordan
HT, Brackbill RM, Cone JE,
Debchoudhury I, Farfel MR, Greene CM, Hadler JL,
Kennedy J, Li J, Liff J, Stayner L, Stellman SD
[2011]. Mortality among survivors of the Sept 11,
2001, World Trade Center disaster: results from the
World Trade Center Health Registry cohort. The
Lancet 378: 879–87; Jordan HT, Miller-Archie SA,
Cone JE, Morabia A, Stellman SD [2011]. Heart
disease among adults exposed to the September 11,
2001 World Trade Center disaster: Results from the
World Trade Center Health Registry. Preventive
Medicine 53:370–376; Jordan HT, Stellman SD,
Morabia A, Miller-Archie SA, Alper H, Laskaris Z,
Brackbill RM, Cone JE [2013]. Cardiovascular
Disease Hospitalizations in Relation to Exposure to
the September 11, 2001 World Trade Center
Disaster and Posttraumatic Stress Disorder. J Am
Heart Assoc; Brackbill RM, Cone JE, Farfel MR,
Stellman SD [2014]. Chronic Physical Health
Consequences of Being Injured During the Terrorist
Attacks on World Trade Center on September 11,
2001. American Journal of Epidemiology. Advance
Access published February 20, 2014.
8 In this case, ‘‘selection bias’’ refers to study
populations that include individuals who were selfidentified as heart patients but whose reported
illness was not independently verified; ‘‘recall bias’’
refers to the inaccuracies or incompleteness
inherent in the self-reporting of 9/11-related health
conditions years after the event; and ‘‘confounding
bias’’ refers to the existence of risk factors for
cardiovascular disease that have not been
accounted for by study authors.
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25767
determination not to publish a proposed
rule in the Federal Register (pursuant to
PHS Act, section 3312(a)(6)(B)(iii) and
42 CFR 88.17(a)(2)(iii)). The
Administrator has also determined that
requesting a recommendation from the
STAC (pursuant to PHS Act, section
3312(a)(6)(B)(i) and 42 CFR
88.17(a)(2)(i)) is unwarranted.
For the reasons discussed above, the
request made in Petition 004 to add
cardiovascular disease to the List of
WTC-Related Health Conditions is
denied.
Dated: May 1, 2014.
John Howard,
Administrator, World Trade Center Health
Program and Director, National Institute for
Occupational Safety and Health, Centers for
Disease Control and Prevention, Department
of Health and Human Services.
[FR Doc. 2014–10434 Filed 5–5–14; 8:45 am]
BILLING CODE 4163–18–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Part 488
[CMS–1605–P]
RIN 0938–AS07
Medicare Program; Prospective
Payment System and Consolidated
Billing for Skilled Nursing Facilities for
FY 2015
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
AGENCY:
This proposed rule would
update the payment rates used under
the prospective payment system (PPS)
for skilled nursing facilities (SNFs) for
fiscal year (FY) 2015. In addition, it
includes a proposal to adopt the most
recent Office of Management and
Budget (OMB) statistical area
delineations to identify a facility’s urban
or rural status for the purpose of
determining which set of rate tables
would apply to the facility and to
determine the SNF PPS wage index
including a proposed one-year
transition with a blended wage index for
all providers for FY 2015. It also
includes a discussion of the SNF
therapy payment research currently
underway within CMS. This proposed
rule also proposes a revision to policies
related to the Change of Therapy (COT)
Other Medicare Required Assessment
(OMRA). This proposed rule includes a
discussion of a provision related to the
SUMMARY:
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Affordable Care Act involving Civil
Money Penalties. Finally, this proposed
rule includes a discussion of observed
trends related to therapy utilization
among SNF providers and a discussion
of accelerating health information
exchange in SNFs.
DATES: To be assured consideration,
comments must be received at one of
the addresses provided below, no later
than 5 p.m. on June 30, 2014.
ADDRESSES: In commenting, please refer
to file code CMS–1605–P. Because of
staff and resource limitations, we cannot
accept comments by facsimile (FAX)
transmission.
You may submit comments in one of
four ways (please choose only one of the
ways listed):
1. Electronically. You may submit
electronic comments on this regulation
to https://www.regulations.gov. Within
the search bar, enter the Regulation
Identifier Number associated with this
regulation, 0938–AS07, and then click
on the ‘‘Comment Now’’ box.
2. By regular mail. You may mail
written comments to the following
address ONLY: Centers for Medicare &
Medicaid Services, Department of
Health and Human Services, Attention:
CMS–1605–P, P.O. Box 8016, Baltimore,
MD 21244–8016.
Please allow sufficient time for mailed
comments to be received before the
close of the comment period.
3. By express or overnight mail. You
may send written comments to the
following address ONLY: Centers for
Medicare & Medicaid Services,
Department of Health and Human
Services, Attention: CMS–1605–P, Mail
Stop C4–26–05, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
4. By hand or courier. If you prefer,
you may deliver (by hand or courier)
your written comments before the close
of the comment period to either of the
following addresses:
a. Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, Room 445–G, Hubert
H. Humphrey Building, 200
Independence Avenue SW.,
Washington, DC 20201.
(Because access to the interior of the
Hubert H. Humphrey Building is not
readily available to persons without
Federal Government identification,
commenters are encouraged to leave
their comments in the CMS drop slots
located in the main lobby of the
building. A stamp-in clock is available
for persons wishing to retain a proof of
filing by stamping in and retaining an
extra copy of the comments being filed.)
b. Centers for Medicare & Medicaid
Services, Department of Health and
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Human Services, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
If you intend to deliver your
comments to the Baltimore address,
please call telephone number (410) 786–
7195 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses
indicated as appropriate for hand or
courier delivery may be delayed and
received after the comment period.
For information on viewing public
comments, see the beginning of the
SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
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.
Karen Tritz, (410) 786–8021, for
information related to Civil Money
Penalties.
Bill Ullman, (410) 786–5667, for
information related to level of care
determinations, consolidated billing,
and general information.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All
comments received before the close of
the comment period are available for
viewing by the public, including any
personally identifiable or confidential
business information that is included in
a comment. We post all comments
received before the close of the
comment period on the following Web
site as soon as possible after they have
been received: https://
www.regulations.gov. Follow the search
instructions on that Web site to view
public comments.
Comments received timely will also
be available for public inspection as
they are received, generally beginning
approximately 3 weeks after publication
of a document, at the headquarters of
the Centers for Medicare & Medicaid
Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday
through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an
appointment to view public comments,
phone 1–800–743–3951.
Availability of Certain Tables
Exclusively Through the Internet on the
CMS Web Site
In the past, tables setting forth the
Wage Index for Urban Areas Based on
CBSA Labor Market Areas and the Wage
Index Based on CBSA Labor Market
Areas for Rural Areas were published in
the Federal Register as an Addendum to
the annual SNF PPS rulemaking (that is,
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the SNF PPS proposed and final rules
or, when applicable, the current update
notice). However, as finalized in the FY
2014 SNF PPS final rule (78 FR 47936,
47964), beginning in FY 2015, these
wage index tables are no longer
published in the Federal Register.
Instead, these tables will be available
exclusively through the Internet. The
wage index tables for this proposed rule
are available exclusively through the
Internet on the CMS Web site at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/Wage
Index.html.
Readers who experience any problems
accessing any of the tables that are
posted on the CMS Web sites identified
above should contact Kia Sidbury at
(410) 786–7816.
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 and Benefits
II. Background
A. Statutory Basis and Scope
B. Initial Transition
C. Required Annual Rate Updates
III. SNF PPS Rate Setting Methodology and
FY 2015 Update
A. Federal Base Rates
B. SNF Market Basket Update
1. SNF Market Basket Index
2. Use of the SNF Market Basket Percentage
3. Forecast Error Adjustment
4. Multifactor Productivity Adjustment
a. Incorporating the Multifactor
Productivity Adjustment Into the Market
Basket Update
5. Market Basket Update Factor for FY
2015
C. Case-Mix Adjustment
D. Wage Index Adjustment
E. Adjusted Rate Computation Example
IV. Additional Aspects of the SNF PPS
A. SNF Level of Care—Administrative
Presumption
B. Consolidated Billing
C. Payment for SNF-Level Swing-Bed
Services
V. Other Issues
A. Proposed Changes to SNF PPS Wage
Index
1. Background
2. Proposed Implementation of New Labor
Market Definitions
a. Micropolitan Areas
b. Urban Counties Becoming Rural
c. Rural Counties Becoming Urban
d. Urban Counties Moving to a Different
Urban CBSA
e. Transition Period
3. Labor-Related Share
B. SNF Therapy Research Project
C. Proposed Revisions to Policies Related
to the Change of Therapy (COT) Other
Medicare Required Assessment (OMRA)
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D. Civil Money Penalties (Section 6111 of
the Affordable Care Act)
E. Observations on Therapy Utilization
Trends
F. Accelerating Health Information
Exchange in the SNF PPS
VI. Provisions of the Proposed Rule
VII. Collection of Information Requirements
VIII. Response to Comments
IX. Economic Analyses
Regulation Text
Acronyms
In addition, because of the many
terms to which we refer by acronym in
this proposed 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
CMP Civil money penalties
CMS Centers for Medicare & Medicaid
Services
COT Change of therapy
ECI Employment Cost Index
eCQM Electronically specified clinical
quality measures
EHR Electronic health record
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
HIE Health information exchange
HIT Health information technology
HOMER Home office Medicare records
ICR Information Collection Requirements
IGI IHS (Information Handling Services)
Global Insight, Inc.
IPPS Inpatient Prospective Payment System
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
NF Nursing facility
OMB Office of Management and Budget
OMRA Other Medicare Required
Assessment
PAMA Protecting Access to Medicare Act of
2014, Pub. L 113–93
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
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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 proposed rule would update the
SNF prospective payment rates for FY
2015 as required under section
1888(e)(4)(E) of the Act. It would also
respond 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,
certain specified information relating to
the payment update (see section II.C.).
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
proposed rule would reflect an update
to the rates that we published in the
SNF PPS final rule for FY 2014 (78 FR
47936) which reflects the SNF market
basket index, adjusted by the forecast
error correction, if applicable, and the
multifactor productivity adjustment for
FY 2015.
C. Summary of Cost and Benefits
Provision description
Total transfers
Proposed FY 2015 SNF PPS payment rate update.
The overall economic impact of this proposed rule would be an estimated increase of $750
million in aggregate payments to SNFs during FY 2015.
II. Background
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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 SNFs.
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
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A, as well as those items and services
(other than a small number of excluded
services, 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). In
addition, a detailed discussion of the
legislative history of the SNF PPS is
available online at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/Downloads/
Legislative_History_07302013.pdf.
As noted in section I.F. of that
legislative history, on March 23, 2010,
the Patient Protection and Affordable
Care Act (Pub. L. 111–148) was enacted.
Then, the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111–
152, enacted on March 30, 2010)
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amended certain provisions of Pub. L.
111–148 and certain sections of the
Social Security Act and, in certain
instances, included ‘‘freestanding’’
provisions. In this proposed rule, Public
Law 111–148 and Public Law 111–152
are collectively referred to as the
‘‘Affordable Care Act.’’ In section V. of
this proposed rule, we include
discussions of one specific provision
related to the Affordable Care Act
involving Civil Money Penalties (as
discussed in section V.D.).
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
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facility’s first three cost reporting
periods under the PPS, up to and
including the one that began in FY
2001. Thus, the SNF PPS is no longer
operating under the transition, as all
facilities have been paid at the full
federal rate effective with cost reporting
periods beginning in FY 2002. As we
now base payments for SNFs entirely on
the adjusted federal per diem rates, we
no longer include adjustment factors
under the transition related to facilityspecific 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 a final rule
that set forth updates to the SNF PPS
payment rates for FY 2014 (78 FR
47936, August 6, 2013). We
subsequently published two correction
notices (78 FR 61202, October 3, 2013,
and 79 FR 63, January 2, 2014) with
respect to that final rule, as well as a
notice that made corrections to the
January 2, 2014 correction notice (79 FR
1742, January 10, 2014).
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 for these services during
the upcoming FY.
• The factors to be applied in making
the area wage adjustment for these
services.
Along with other revisions discussed
later in this preamble, this proposed
rule would provide the required annual
updates to the per diem payment rates
for SNFs for FY 2015.
III. SNF PPS Rate Setting Methodology
and FY 2015 Update
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A. 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
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the course of a covered Part A stay in
a SNF.
In developing the rates for the initial
period, we updated costs to the first
effective year of the PPS (the 15-month
period beginning July 1, 1998) using a
SNF market basket index, and then
standardized for 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.
B. SNF Market Basket Update
1. SNF Market Basket Index
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. We use the
SNF market basket index, adjusted in
the manner described below, to update
the federal rates on an annual basis. In
the SNF PPS final rule for FY 2014 (78
FR 47939 through 47946), we revised
and rebased the market basket, which
included updating the base year from
FY 2004 to FY 2010.
For the FY 2015 proposed rule, the FY
2010-based SNF market basket growth
rate is estimated to be 2.4 percent,
which is based on the IHS Global
Insight, Inc. (IGI) first quarter 2014
forecast with historical data through
fourth quarter 2013. In section III.B.5. of
this proposed rule, we discuss the
specific application of this adjustment
to the forthcoming annual update of the
SNF PPS payment rates.
2. Use of the SNF Market Basket
Percentage
Section 1888(e)(5)(B) of the Act
defines the SNF market basket
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percentage as the percentage change in
the SNF market basket index from the
midpoint of the previous FY to the
midpoint of the current FY. For the
federal rates set forth in this proposed
rule, we use the percentage change in
the SNF market basket index to compute
the update factor for FY 2015. This is
based on the IGI first quarter 2014
forecast (with historical data through
the fourth quarter 2013) of the FY 2015
percentage increase in the FY 2010based SNF market basket index for
routine, ancillary, and capital-related
expenses, which is used to compute the
update factor in this proposed rule. As
discussed in sections III.B.3. and III.B.4.
of this proposed rule, this market basket
percentage change would be reduced by
the forecast error correction (as
described in § 413.337(d)(2)) if
applicable, and by the multifactor
productivity adjustment as required by
section 1888(e)(5)(B)(ii) of the Act.
Finally, as discussed in section II.B. of
this proposed rule, we no longer
compute update factors to adjust a
facility-specific portion of the SNF PPS
rates, because the initial three-phase
transition period from facility-specific
to full federal rates that started with cost
reporting periods beginning in July 1998
has expired.
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,
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 final rule for FY
2004 that first issued the market basket
forecast error adjustment (68 FR 46058,
August 4, 2003), the adjustment will
‘‘. . . reflect both upward and
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downward adjustments, as
appropriate.’’
For FY 2013 (the most recently
available FY for which there is final
data), the estimated increase in the
market basket index was 2.5 percentage
points, while the actual increase for FY
2013 was 2.2 percentage points,
resulting in the actual increase being 0.3
percentage point lower than the
estimated increase. Accordingly, as the
difference between the estimated and
actual amount of change in the market
basket index does not exceed the 0.5
percentage point threshold, the payment
rates for FY 2015 do not include a
forecast error adjustment. Table 1 shows
the forecasted and actual market basket
amounts for FY 2013.
TABLE 1—DIFFERENCE BETWEEN THE FORECASTED AND ACTUAL MARKET BASKET INCREASES FOR FY 2013
Index
Forecasted
FY 2013
increase *
Actual
FY 2013
increase **
FY 2013
difference
SNF ..............................................................................................................................................
2.5
2.2
¥0.3
* Published in Federal Register; based on second quarter 2012 IGI forecast (2004-based index).
** Based on the first quarter 2014 IHS Global Insight forecast, with historical data through the fourth quarter 2013 (2004-based index).
4. Multifactor Productivity Adjustment
sroberts on DSK5SPTVN1PROD with PROPOSALS
Section 3401(b) of the Affordable Care
Act 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
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
According to section 1888(e)(5)(A) of
the Act, the Secretary ‘‘shall 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.’’
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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 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 2015 update, the MFP
adjustment is calculated as the 10-year
moving average of changes in MFP for
the period ending September 30, 2015,
which is 0.4 percent. Consistent with
section 1888(e)(5)(B)(i) of the Act and
§ 413.337(d)(2) of the regulations, the
market basket percentage for FY 2015
for the SNF PPS is based on IGI’s first
quarter 2014 forecast of the SNF market
basket update, and is estimated to be 2.4
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 (the 10-year moving
average of changes in MFP for the
period ending September 30, 2015) of
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Frm 00062
Fmt 4702
Sfmt 4702
0.4 percent, which is calculated as
described above and based on IGI’s first
quarter 2014 forecast. The resulting
MFP-adjusted SNF market basket
update is equal to 2.0 percent, or 2.4
percent less 0.4 percentage point.
5. Market Basket Update Factor for FY
2015
Sections 1888(e)(4)(E)(ii)(IV) and
1888(e)(5)(i) of the Act require that the
update factor used to establish the FY
2015 unadjusted federal rates be at a
level equal to the market basket index
percentage change. Accordingly, we
determined the total growth from the
average market basket level for the
period of October 1, 2013 through
September 30, 2014 to the average
market basket level for the period of
October 1, 2014 through September 30,
2015. This process yields an update
factor of 2.4 percent. As further
explained in section III.B.3. of this
proposed rule, as applicable, we adjust
the market basket update factor by 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
difference between the forecasted FY
2013 SNF market basket percentage
change and the actual FY 2013 SNF
market basket percentage change (FY
2013 is the most recently available FY
for which there is final data) does not
exceed 0.5 percentage point, the FY
2015 market basket of 2.4 percent would
not be adjusted by the applicable
difference. In addition, for FY 2015,
section 1888(e)(5)(B)(ii) 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, 2015) of 0.4 percent, as described in
section III.B.4. of this proposed rule.
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The resulting MFP-adjusted SNF market
basket update would be equal to 2.0
percent, or 2.4 percent less 0.4
percentage point. We note that if more
recent data become available (for
example, a more recent estimate of the
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 2015
SNF market basket update, FY 2015
labor-related share relative importance,
and MFP adjustment in the FY 2015
SNF PPS final rule. We used the SNF
market basket, 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 2015 from average prices
for FY 2014. We would further adjust
the rates by a wage index budget
neutrality factor, described later in this
section. Tables 2 and 3 reflect the
updated components of the unadjusted
federal rates for FY 2015, prior to
adjustment for case-mix.
While we would continue to compute
and apply separate federal per diem
rates for SNFs located in urban and
rural areas as we have in the past, we
propose to use the revised OMB
statistical area delineations discussed in
Section V.A below to identify a facility’s
urban or rural status for the purpose of
determining which set of rate tables
would apply to a facility beginning on
October 1, 2014. We believe that the
most current OMB delineations more
accurately reflect the contemporary
urban and rural nature of areas across
the country, and that use of such
delineations would allow us to more
accurately determine the appropriate
rate tables to apply under the SNF PPS.
Thus, we believe it is appropriate to use
the most current OMB delineations for
this purpose, in order to enhance the
accuracy of payments under the SNF
PPS. We invite comments on this
proposal.
TABLE 2—FY 2015 UNADJUSTED FEDERAL RATE PER DIEM URBAN
Rate component
Nursing—
case-mix
Therapy—
case-mix
Therapy—noncase-mix
Non-case-mix
Per Diem Amount ............................................................................................
$169.14
$127.41
$16.78
$86.32
TABLE 3—FY 2015 UNADJUSTED FEDERAL RATE PER DIEM RURAL
Rate component
Nursing—
case-mix
Therapy—
case-mix
Therapy—noncase-mix
Non-case-mix
Per Diem Amount ............................................................................................
$161.59
$146.90
$17.92
$87.92
sroberts on DSK5SPTVN1PROD with PROPOSALS
C. Case-Mix Adjustment
Under section 1888(e)(4)(G)(i) of the
Act, the federal rate also incorporates an
adjustment to account for facility casemix, 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 that the Secretary establishes 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 interim final rule with comment
period that initially implemented the
SNF PPS (63 FR 26252, May 12, 1998),
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
SNF PPS proposed rule for FY 2010 (74
FR 22208), we subsequently conducted
a multi-year data collection and analysis
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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–
2007 during the STRIVE project, and
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.
As discussed in section IV.A. of this
proposed rule, the clinical orientation of
the case-mix classification system
supports the SNF PPS’s use of an
administrative presumption that
considers a beneficiary’s initial case-mix
classification to assist in making certain
SNF level of care determinations.
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
PO 00000
Frm 00063
Fmt 4702
Sfmt 4702
frames for MDS completion in our
Resident Assessment Instrument (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-AssessmentInstruments/NursingHomeQualityInits/
MDS30RAIManual.html.
In addition, we note that section 511
of the Medicare Prescription Drug,
Improvement, and Modernization Act of
2003 (MMA, Pub. L. 108–173) amended
section 1888(e)(12) of the Act to provide
for a temporary increase of 128 percent
in the PPS per diem payment for any
SNF residents with Acquired Immune
Deficiency Syndrome (AIDS), effective
with services furnished on or after
October 1, 2004. This special add-on for
SNF residents with AIDS was to remain
in effect until ‘‘. . . the Secretary
certifies that there is an appropriate
adjustment in the case mix . . . to
compensate for the increased costs
associated with [such] residents . . . .’’
The add-on for SNF residents with AIDS
is also discussed in Program Transmittal
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#160 (Change Request #3291), issued on
April 30, 2004, which is available
online at www.cms.gov/transmittals/
downloads/r160cp.pdf. In the SNF PPS
final rule for FY 2010 (74 FR 40288), we
did not address the certification of the
add-on for SNF residents with AIDS in
that final rule’s implementation of the
case-mix refinements for RUG–IV, 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. For example, using FY 2012
data, we identified fewer than 4,355
SNF residents with a diagnosis code of
042 (Human Immunodeficiency Virus
(HIV) Infection). For FY 2015, an urban
facility with a resident with AIDS in
RUG–IV group ‘‘HC2’’ would have a
case-mix adjusted per diem payment of
$422.77 (see Table 4) before the
application of the MMA adjustment.
After an increase of 128 percent, this
urban facility would receive a case-mix
adjusted per diem payment of
approximately $963.92.
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 the
Department published a final rule in the
September 5, 2012 Federal Register (77
FR 54664) which requires us to stop
using ICD–9–CM on September 30,
2014, and begin using the International
Classification of Diseases, 10th revision,
Clinical Modification (ICD–10–CM), on
October 1, 2014. Regarding the abovereferenced ICD–9–CM diagnosis code of
042, in the FY 2014 SNF PPS proposed
rule (78 FR 26444, May 6, 2013), we
proposed to transition to the equivalent
ICD–10–CM diagnosis code of B20 upon
the overall conversion to ICD–10–CM on
October 1, 2014, and we subsequently
finalized that proposal in the FY 2014
SNF PPS final rule (78 FR 47951
through 47952).
However, on April 1, 2014, the
Protecting Access to Medicare Act of
2014 (PAMA) (Pub. L. No. 113–93) was
enacted. Section 212 of PAMA, titled
‘‘Delay in Transition from ICD–9 to
ICD–10 Code Sets,’’ provides that ‘‘[t]he
Secretary of Health and Human Services
may not, prior to October 1, 2015, adopt
ICD–10 code sets as the standard for
code sets under section 1173(c) of the
Social Security Act (42 U.S.C. 1320d–
2(c)) and section 162.1002 of title 45,
Code of Federal Regulations.’’ As of
now, the Secretary has not implemented
this provision under HIPAA. In light of
PAMA, the effective date of the change
from ICD–9–CM code 042 to ICD–10–
CM code B20 for purposes of applying
the AIDS add-on would be the date
when ICD–10 becomes the required
medical data code set for use on
Medicare SNF claims. Until that time,
we would continue to use ICD–9–CM
code 042 for this purpose.
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 proposed rule reflect the
use of the RUG–IV case-mix
classification system from October 1,
2014, through September 30, 2015. We
list the proposed case-mix adjusted
RUG–IV payment rates, provided
separately for urban and rural SNFs, in
Tables 4 and 5 with corresponding casemix values. As discussed above,
facilities would use the proposed
revised OMB delineations in order to
identify their urban or rural status for
the purpose of determining which set of
rate tables would apply to them
beginning on October 1, 2014. These
tables do not reflect the add-on for SNF
residents with AIDS enacted by section
511 of the MMA, which we apply only
after making all other adjustments (such
as wage index and case-mix).
TABLE 4— RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES URBAN
sroberts on DSK5SPTVN1PROD with PROPOSALS
RUG–IV Category
Nursing index
Therapy index
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
........................
........................
........................
........................
........................
........................
........................
........................
........................
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 ..............................
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PO 00000
Frm 00064
Nursing
component
Therapy
component
$451.60
434.69
441.46
370.42
431.31
363.65
417.78
370.42
382.26
263.86
263.86
167.45
255.40
187.75
186.05
245.25
201.28
153.92
230.03
206.35
142.08
253.71
120.09
605.52
451.60
392.40
375.49
294.30
345.05
270.62
319.67
250.33
Fmt 4702
Non-case mix
therapy comp
Non-case mix
component
$238.26
238.26
163.08
163.08
108.30
108.30
70.08
70.08
35.67
238.26
238.26
238.26
163.08
163.08
163.08
108.30
108.30
108.30
70.08
70.08
70.08
35.67
35.67
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
$86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
Sfmt 4702
E:\FR\FM\06MYP1.SGM
06MYP1
Total rate
$776.18
759.27
690.86
619.82
625.93
558.27
574.18
526.82
504.25
588.44
588.44
492.03
504.80
437.15
435.45
439.87
395.90
348.54
386.43
362.75
298.48
375.70
242.08
708.62
554.70
495.50
478.59
397.40
448.15
373.72
422.77
353.43
25774
Federal Register / Vol. 79, No. 87 / Tuesday, May 6, 2014 / Proposed Rules
TABLE 4— RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES URBAN—Continued
RUG–IV Category
Nursing index
Therapy index
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
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
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 ..............................
Nursing
component
Therapy
component
314.60
246.94
331.51
260.48
314.60
246.94
263.86
206.35
245.25
192.82
284.16
253.71
263.86
233.41
218.19
194.51
194.51
172.52
148.84
131.93
164.07
152.23
118.40
108.25
253.71
236.80
233.41
216.50
186.05
172.52
142.08
131.93
99.79
91.34
Non-case mix
therapy comp
Non-case mix
component
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
16.78
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
86.32
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
Total rate
417.70
350.04
434.61
363.58
417.70
350.04
366.96
309.45
348.35
295.92
387.26
356.81
366.96
336.51
321.29
297.61
297.61
275.62
251.94
235.03
267.17
255.33
221.50
211.35
356.81
339.90
336.51
319.60
289.15
275.62
245.18
235.03
202.89
194.44
TABLE 5—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES RURAL
sroberts on DSK5SPTVN1PROD with PROPOSALS
RUG–IV
Category
Nursing
index
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
18:56 May 05, 2014
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
Jkt 232001
Therapy
index
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
........................
........................
........................
........................
........................
........................
........................
PO 00000
Frm 00065
Nursing
component
Therapy
component
$431.45
415.29
421.75
353.88
412.05
347.42
399.13
353.88
365.19
252.08
252.08
159.97
244.00
179.36
177.75
234.31
192.29
147.05
219.76
197.14
135.74
242.39
114.73
578.49
431.45
374.89
358.73
281.17
329.64
258.54
Fmt 4702
Non-case mix
therapy comp
Non-case mix
component
$274.70
274.70
188.03
188.03
124.87
124.87
80.80
80.80
41.13
274.70
274.70
274.70
188.03
188.03
188.03
124.87
124.87
124.87
80.80
80.80
80.80
41.13
41.13
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
17.92
17.92
17.92
17.92
17.92
17.92
17.92
$87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
Sfmt 4702
E:\FR\FM\06MYP1.SGM
06MYP1
Total
rate
$794.07
777.91
697.70
629.83
624.84
560.21
567.85
522.60
494.24
614.70
614.70
522.59
519.95
455.31
453.70
447.10
405.08
359.84
388.48
365.86
304.46
371.44
243.78
684.33
537.29
480.73
464.57
387.01
435.48
364.38
25775
Federal Register / Vol. 79, No. 87 / Tuesday, May 6, 2014 / Proposed Rules
TABLE 5—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES RURAL—Continued
RUG–IV
Category
Nursing
index
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 ..............................
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
Therapy
index
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
sroberts on DSK5SPTVN1PROD with PROPOSALS
D. Wage Index Adjustment
Section 1888(e)(4)(G)(ii) of the Act
requires that we adjust the federal rates
to account for differences in area wage
levels, using a wage index that the
Secretary determines appropriate. Since
the inception of the SNF PPS, we have
used hospital inpatient wage data in
developing a wage index to be applied
to SNFs. We propose to continue this
practice for FY 2015, as we continue to
believe that in the absence of SNFspecific wage data, using the hospital
inpatient wage index data is appropriate
and reasonable for the SNF PPS. As
explained in the update notice for FY
2005 (69 FR 45786), 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 SNF payments. For
VerDate Mar<15>2010
18:56 May 05, 2014
Jkt 232001
Nursing
component
Therapy
component
305.41
239.15
300.56
235.92
316.72
248.85
300.56
235.92
252.08
197.14
234.31
184.21
271.47
242.39
252.08
222.99
208.45
185.83
185.83
164.82
142.20
126.04
156.74
145.43
113.11
103.42
242.39
226.23
222.99
206.84
177.75
164.82
135.74
126.04
95.34
87.26
Frm 00066
Fmt 4702
Non-case mix
component
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
17.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
87.92
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
FY 2015, the updated wage data are for
hospital cost reporting periods
beginning on or after October 1, 2010
and before October 1, 2011 (FY 2011
cost report data).
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
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.
In addition, we propose to continue to
use the same methodology discussed in
the SNF PPS final rule for FY 2008 (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 2015 SNF PPS wage index. For rural
PO 00000
Non-case mix
therapy comp
Sfmt 4702
Total
rate
411.25
344.99
406.40
341.76
422.56
354.69
406.40
341.76
357.92
302.98
340.15
290.05
377.31
348.23
357.92
328.83
314.29
291.67
291.67
270.66
248.04
231.88
262.58
251.27
218.95
209.26
348.23
332.07
328.83
312.68
283.59
270.66
241.58
231.88
201.18
193.10
geographic areas that do not have
hospitals, and therefore, lack hospital
wage data on which to base an area
wage adjustment, we would use the
average wage index from all contiguous
Core-Based Statistical Areas (CBSAs) as
a reasonable proxy. For FY 2015, there
are no rural geographic areas that do not
have hospitals, and thus, this
methodology would not be applied. For
rural Puerto Rico, we would not apply
this methodology 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, this methodology would produce
a wage index for rural Puerto Rico that
is higher than that in half of its urban
areas); instead, we would continue to
use the most recent wage index
previously available for that area. For
urban areas without specific hospital
wage index data, we would 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 2015, the only
urban area without wage index data
E:\FR\FM\06MYP1.SGM
06MYP1
sroberts on DSK5SPTVN1PROD with PROPOSALS
25776
Federal Register / Vol. 79, No. 87 / Tuesday, May 6, 2014 / Proposed Rules
available is CBSA 25980, HinesvilleFort Stewart, GA.
Once calculated, we would apply the
wage index adjustment to the laborrelated portion of the federal rate. 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. In the
SNF PPS final rule for FY 2014 (78 FR
47944 through 47946), we finalized a
proposal to revise 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; the laborrelated portion of nonmedical
professional fees; administrative and
facilities support services; all other—
labor-related services; 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 and
FY 2015. 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 2015 than the base
year weights from the SNF market
basket.
We calculate the labor-related relative
importance for FY 2015 in four steps.
First, we compute the FY 2015 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
2015 price index level for that cost
category by the total market basket price
index level. Third, we determine the FY
2015 relative importance for each cost
category by multiplying this ratio by the
base year (FY 2010) weight. Finally, we
add the FY 2015 relative importance for
each of the labor-related cost categories
(wages and salaries, employee benefits,
the labor-related portion of non-medical
professional fees, administrative and
facilities support services, all other:
labor-related services, and a portion of
capital-related expenses) to produce the
FY 2015 labor-related relative
importance. Tables 6 and 7 show the
RUG–IV case-mix adjusted federal rates
by labor-related and non-labor-related
components. As discussed above, the
proposed new OMB delineations would
be used to identify a facility’s urban or
rural status for the purpose of
VerDate Mar<15>2010
18:56 May 05, 2014
Jkt 232001
determining which set of rate tables
would apply to them beginning on
October 1, 2014. Table 12 in section
V.A.3. provides the FY 2015 laborrelated share components based on the
SNF market basket.
TABLE 6—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES FOR URBAN
SNFS BY LABOR AND NON-LABOR
COMPONENT
RUG–IV
Category
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 .........
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 .........
PO 00000
Frm 00067
Total
rate
Labor
portion
776.18
759.27
690.86
619.82
625.93
558.27
574.18
526.82
504.25
588.44
588.44
492.03
504.80
437.15
435.45
439.87
395.90
348.54
386.43
362.75
298.48
375.70
242.08
708.62
554.70
495.50
478.59
397.40
448.15
373.72
422.77
353.43
417.70
350.04
434.61
363.58
417.70
350.04
366.96
309.45
348.35
295.92
387.26
356.81
366.96
336.51
321.29
297.61
297.61
275.62
251.94
235.03
267.17
255.33
221.50
211.35
356.81
339.90
336.51
319.60
$539.55
527.79
480.24
430.86
435.10
388.07
399.13
366.21
350.52
409.04
409.04
342.02
350.90
303.88
302.69
305.77
275.20
242.28
268.62
252.16
207.48
261.16
168.28
492.58
385.59
344.44
332.68
276.24
311.52
259.78
293.88
245.68
290.36
243.32
302.11
252.74
290.36
243.32
255.08
215.11
242.15
205.70
269.20
248.03
255.08
233.92
223.34
206.88
206.88
191.59
175.13
163.38
185.72
177.49
153.97
146.92
248.03
236.27
233.92
222.16
Fmt 4702
Sfmt 4702
Non-labor
portion
$236.63
231.48
210.62
188.96
190.83
170.20
175.05
160.61
153.73
179.40
179.40
150.01
153.90
133.27
132.76
134.10
120.70
106.26
117.81
110.59
91.00
114.54
73.80
216.04
169.11
151.06
145.91
121.16
136.63
113.94
128.89
107.75
127.34
106.72
132.50
110.84
127.34
106.72
111.88
94.34
106.20
90.22
118.06
108.78
111.88
102.59
97.95
90.73
90.73
84.03
76.81
71.65
81.45
77.84
67.53
64.43
108.78
103.63
102.59
97.44
TABLE 6—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES FOR URBAN
SNFS BY LABOR AND NON-LABOR
COMPONENT—Continued
RUG–IV
Category
PC2
PC1
PB2
PB1
PA2
PA1
.........
.........
.........
.........
.........
.........
Total
rate
289.15
275.62
245.18
235.03
202.89
194.44
Labor
portion
201.00
191.59
170.43
163.38
141.03
135.16
Non-labor
portion
88.15
84.03
74.75
71.65
61.86
59.28
TABLE 7—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES FOR RURAL
SNFS BY LABOR AND NON-LABOR
COMPONENT
RUG–IV
Category
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 .........
HB2 .........
HB1 .........
LE2 .........
LE1 .........
LD2 .........
LD1 .........
LC2 .........
LC1 .........
LB2 .........
LB1 .........
CE2 .........
CE1 .........
CD2 .........
CD1 .........
CC2 .........
CC1 .........
CB2 .........
CB1 .........
CA2 .........
E:\FR\FM\06MYP1.SGM
06MYP1
Total
rate
Labor
portion
794.07
777.91
697.70
629.83
624.84
560.21
567.85
522.60
494.24
614.70
614.70
522.59
519.95
455.31
453.70
447.10
405.08
359.84
388.48
365.86
304.46
371.44
243.78
684.33
537.29
480.73
464.57
387.01
435.48
364.38
411.25
344.99
406.40
341.76
422.56
354.69
406.40
341.76
357.92
302.98
340.15
290.05
377.31
348.23
357.92
328.83
314.29
291.67
291.67
270.66
248.04
$551.98
540.75
484.99
437.81
434.35
389.42
394.73
363.27
343.56
427.30
427.30
363.27
361.43
316.50
315.38
310.79
281.58
250.14
270.04
254.32
211.64
258.20
169.46
475.70
373.49
334.17
322.94
269.02
302.72
253.29
285.87
239.81
282.50
237.57
293.73
246.56
282.50
237.57
248.80
210.61
236.45
201.62
262.28
242.07
248.80
228.58
218.47
202.75
202.75
188.14
172.42
Non-labor
portion
$242.09
237.16
212.71
192.02
190.49
170.79
173.12
159.33
150.68
187.40
187.40
159.32
158.52
138.81
138.32
136.31
123.50
109.70
118.44
111.54
92.82
113.24
74.32
208.63
163.80
146.56
141.63
117.99
132.76
111.09
125.38
105.18
123.90
104.19
128.83
108.13
123.90
104.19
109.12
92.37
103.70
88.43
115.03
106.16
109.12
100.25
95.82
88.92
88.92
82.52
75.62
25777
Federal Register / Vol. 79, No. 87 / Tuesday, May 6, 2014 / Proposed Rules
TABLE 7—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES FOR RURAL
SNFS BY LABOR AND NON-LABOR
COMPONENT—Continued
RUG–IV
Category
CA1
BB2
BB1
BA2
BA1
PE2
PE1
PD2
PD1
PC2
PC1
PB2
PB1
PA2
PA1
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
Total
rate
231.88
262.58
251.27
218.95
209.26
348.23
332.07
328.83
312.68
283.59
270.66
241.58
231.88
201.18
193.10
Labor
portion
Non-labor
portion
161.19
182.53
174.67
152.20
145.46
242.07
230.83
228.58
217.35
197.13
188.14
167.93
161.19
139.85
134.23
70.69
80.05
76.60
66.75
63.80
106.16
101.24
100.25
95.33
86.46
82.52
73.65
70.69
61.33
58.87
Section 1888(e)(4)(G)(ii) of the Act
also requires that we apply this wage
index in a manner that does not result
in aggregate payments under the SNF
PPS that are greater or less than would
otherwise be made if the wage
adjustment had not been made. For FY
2015 (federal rates effective October 1,
2014), we would apply an adjustment to
fulfill the budget neutrality requirement.
We would 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 2014 to the weighted
average wage adjustment factor for FY
2015, based on the blended wage index
for FY 2015 as proposed later in this
proposed rule. For this calculation, we
use the same FY 2013 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 2015 would be 1.0001.
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
www.whitehouse.gov/omb/bulletins/
b03-04.html, which announced revised
definitions for MSAs, and the creation
of micropolitan statistical areas and
combined statistical areas.
In adopting the CBSA geographic
designations, we provided for a one-year
transition in FY 2006 with a blended
wage index for all providers. For FY
2006, the wage index for each provider
consisted of a blend of 50 percent of the
FY 2006 MSA-based wage index and 50
percent of the FY 2006 CBSA-based
wage index (both using FY 2002
hospital data). We referred to the
blended wage index as the FY 2006 SNF
PPS transition wage index. As discussed
in the SNF PPS final rule for FY 2006
(70 FR 45041), since the expiration of
this one-year transition on September
30, 2006, we have used the full CBSAbased wage index values.
On February 28, 2013, OMB issued
OMB Bulletin No. 13–01, announcing
revisions to the delineation of MSAs,
Micropolitan Statistical Areas, and
Combined Statistical Areas, and
guidance on uses of the delineation of
these areas. A copy of this bulletin is
available online 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 on June 28,
2010, in the 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.
As discussed in the SNF PPS
proposed rule for FY 2014 (78 FR
26448), the changes made by the
bulletin and their ramifications required
extensive review by CMS before using
them for the SNF PPS wage index.
Having completed our assessment, we
are proposing changes to the SNF PPS
wage index based on the newest OMB
delineations, as described in OMB
Bulletin No. 13–01, beginning in FY
2015, including a proposed one-year
transition with a blended wage index for
FY 2015. These proposed changes are
discussed further in section V.A. of this
proposed rule. The proposed wage
index applicable to FY 2015 is set forth
in Table A available on the CMS Web
site at https://cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/WageIndex.html. Table A
provides a crosswalk between the FY
2015 wage index for a provider using
the current OMB delineations in effect
in FY 2014 and the FY 2015 wage index
using the proposed revised OMB
delineations, as well as the proposed
transition wage index values that would
be in effect in FY 2015 if these proposed
changes are finalized.
E. Adjusted Rate Computation Example
Using the hypothetical SNF XYZ
described below, Table 8 shows the
adjustments made to the federal per
diem rates to compute the provider’s
actual per diem PPS payment. We
derive the Labor and Non-labor columns
from Table 6. The wage index used in
this example is based on the proposed
transition wage index, which may be
found in Table A as referenced above.
As illustrated in Table 8, SNF XYZ’s
total PPS payment would equal
$42,299.26.
TABLE 8—ADJUSTED RATE COMPUTATION EXAMPLE
SNF XYZ: LOCATED IN CEDAR RAPIDS, IA (URBAN CBSA 16300) WAGE INDEX: 0.8883
[See Proposed Transition Wage Index in Table A] 1
sroberts on DSK5SPTVN1PROD with PROPOSALS
RUG–IV Group
Labor
Wage index
Adjusted
labor
Non-labor
Adjusted
rate
Percent
adjustment
RVX ..................................
ES2 ..................................
RHA ..................................
CC2 * ................................
BA2 ..................................
$480.24
385.59
242.28
223.34
153.97
....................
0.8883
0.8883
0.8883
0.8883
0.8883
....................
$426.60
342.52
215.22
198.39
136.77
....................
$210.62
169.11
106.26
97.95
67.53
....................
$637.22
511.63
321.48
296.34
204.30
....................
$637.22
511.63
321.48
675.66
204.30
....................
Medicare
days
14
30
16
10
30
100
* Reflects a 128 percent adjustment from section 511 of the MMA.
1 Available on the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.
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$8,921.08
15,348.90
5,143.68
6,756.60
6,129.00
42,299.26
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IV. Additional Aspects of the SNF PPS
A. SNF Level of Care—Administrative
Presumption
The establishment of the SNF PPS did
not change Medicare’s fundamental
requirements for SNF coverage.
However, because the case-mix
classification is based, in part, on the
beneficiary’s need for skilled nursing
care and therapy, we have attempted,
where possible, to coordinate claims
review procedures with the existing
resident assessment process and casemix classification system discussed in
section III.C. of this proposed 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, 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 five-day, Medicarerequired assessment are automatically
classified as meeting the SNF level of
care definition up to and including the
assessment reference date on the fiveday 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 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 proposed rule, we would
continue to designate the upper 52
RUG-IV groups for purposes of this
administrative presumption, consisting
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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.
B. 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
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 small list of
services from the consolidated billing
provision (primarily those services
furnished by physicians and certain
other types of practitioners), which
remain separately billable under Part B
when furnished to a SNF’s Part A
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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).
A detailed discussion of the
legislative history of the consolidated
billing provision is available on the SNF
PPS Web site at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/Downloads/
Legislative_History_07302013.pdf. In
particular, 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 the provision. We
discuss this BBRA amendment in
greater detail in the SNF PPS proposed
and final rules for FY 2001 (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 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
proposed rule for FY 2001, 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
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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 final
rule for FY 2001 (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: they must fall within one of the
four service categories specified in the
BBRA; and they 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 this proposed rule, we
specifically invite 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. We may consider excluding a
particular service if it meets our criteria
for exclusion as specified above.
Commenters should identify in their
comments the specific HCPCS code that
is associated with the service in
question, as well as their rationale for
requesting that the identified HCPCS
code(s) be excluded.
We note that the original BBRA
amendment (as well as the
implementing regulations) identified a
set of excluded services by means of
specifying HCPCS codes that were in
effect as of a particular date (in that
case, as of July 1, 1999). Identifying the
excluded services in this manner made
it possible for us to utilize program
issuances as the vehicle for
accomplishing routine updates of the
excluded codes, to reflect any minor
revisions that might subsequently occur
in the coding system itself (for example,
the assignment of a different code
number to the same service).
Accordingly, in the event that we
identify through the current rulemaking
cycle any new services that would
actually represent a substantive change
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in the scope of the exclusions from SNF
consolidated billing, we would identify
these additional excluded services by
means of the HCPCS codes that are in
effect as of a specific date (in this case,
as of October 1, 2014). By making any
new exclusions in this manner, we
could similarly accomplish routine
future updates of these additional codes
through the issuance of program
instructions.
C. 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), Part A pays on a
reasonable cost basis for SNF-level
services furnished under a swing-bed
agreement. However, in accordance
with section 1888(e)(7) of the Act, these
services furnished by non-CAH rural
hospitals are paid under the SNF PPS,
effective with cost reporting periods
beginning on or after July 1, 2002. As
explained in the FY 2002 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 have now come under
the SNF PPS. Therefore, all rates and
wage indexes outlined in earlier
sections of this proposed 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/.
V. Other Issues
A. Proposed Changes to SNF PPS Wage
Index
1. Background
Section 1888(e)(4)(G)(ii) of the Act
requires that we adjust the federal rates
to account for differences in area wage
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25779
levels, using a wage index that the
Secretary determines appropriate. Since
the inception of the SNF PPS, we have
used hospital inpatient wage data,
exclusive of the occupational mix
adjustment, in developing a wage index
to be applied to SNFs. As noted
previously in section III.D of this
proposed rule, we are proposing to
continue that practice for FY 2015. The
wage index used for the SNF PPS is
calculated using the Inpatient
Prospective Payment System (IPPS)
wage index data on the basis of the labor
market area in which the acute care
hospital is located, but without taking
into account geographic reclassifications
under section 1886(d)(8) and (d)(10) of
the Act, and without applying the IPPS
rural floor under section 4410 of the
BBA, the IPPS imputed rural floor under
42 CFR 412.64(h), and the outmigration
adjustment under section 1886(d)(13)
(see the FY 2006 SNF PPS proposed rule
(70 FR 29090 through 29092)). The
applicable SNF wage index value is
assigned to a SNF on the basis of the
labor market area in which the SNF is
geographically located. Under section
1888(e)(4)(G)(ii) of the Act, beginning
with FY 2006, we delineate labor market
areas based on the Core-Based Statistical
Areas (CBSAs) established by the Office
of Management and Budget (OMB). The
current statistical areas used in FY 2014
are based on OMB standards published
on December 27, 2000 (65 FR 82228)
and Census 2000 data and Census
Bureau population estimates for 2007
and 2008 (OMB Bulletin No. 10–02). For
a discussion of OMB’s delineations of
CBSAs and our implementation of the
CBSA definitions, we refer readers to
the preamble of the FY 2006 SNF PPS
proposed rule (70 FR 29090 through
29096) and final rule (70 FR 45040
through 45041). As stated in the FY
2014 SNF PPS proposed rule (78 FR
26448) and final rule (78 FR 47952), on
February 28, 2013, OMB issued OMB
Bulletin No. 13–01, which established
revised delineations for Metropolitan
Statistical Areas, Micropolitan
Statistical Areas, and Combined
Statistical Areas, and provided guidance
on the use of the delineations of these
statistical areas. A copy of this bulletin
may be obtained at https://
www.whitehouse.gov/sites/default/files/
omb/bulletins/2013/b-13-01.pdf.
According to OMB, ‘‘[t]his bulletin
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
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on June 28, 2010, in the 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 OMB bulletin does contain a
number of significant changes. For
example, there are new CBSAs, urban
counties that have become rural, rural
counties that have become urban, and
existing CBSAs that have been split
apart. However, because the bulletin
was not issued until February 28, 2013,
with supporting data not available until
later, and because the changes made by
the bulletin and their ramifications
needed to be extensively reviewed and
verified, we were unable to undertake
such a lengthy process before
publication of the FY 2014 SNF PPS
proposed rule and, thus, did not
implement changes to the wage index
for FY 2014 based on these new OMB
delineations. In the FY 2014 SNF PPS
final rule (78 FR 47952), we stated that
we intended to propose changes to the
wage index based on the most current
OMB delineations in this FY 2015 SNF
PPS proposed rule. As discussed below,
in this proposed rule, we are proposing
to implement the new OMB
delineations as described in the
February 28, 2013 OMB Bulletin No.
13–01, for SNF PPS wage index
beginning in FY 2015.
2. Proposed Implementation of New
Labor Market Delineations
As discussed in the FY 2014 SNF PPS
proposed rule (78 FR 26448) and final
rule (78 FR 47952), CMS delayed
implementing the new OMB statistical
area delineations to allow for sufficient
time to assess the new changes. We
believe it is important for the SNF PPS
to use the latest OMB delineations
available in order to maintain a more
accurate and up-to-date payment system
that reflects the reality of population
shifts and labor market conditions.
While CMS and other stakeholders have
explored potential alternatives to the
current CBSA-based labor market
system (we refer readers to the CMS
Web site at www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/Wage-IndexReform.html), no consensus has been
achieved regarding how best to
implement a replacement system. As
discussed in the FY 2005 IPPS final rule
(69 FR 49027), ‘‘While we recognize that
MSAs are not designed specifically to
define labor market areas, we believe
they do represent a useful proxy for this
purpose.’’ We further believe that using
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the most current OMB delineations
would increase the integrity of the SNF
PPS wage index by creating a more
accurate representation of geographic
variation in wage levels. We have
reviewed our findings and impacts
relating to the new OMB delineations,
and have concluded that there is no
compelling reason to further delay
implementation. Because we believe
that we have broad authority under
section 1888(e)(4)(G)(ii) to determine
the labor market areas used for the SNF
PPS wage index, and because we also
believe that the most current OMB
delineations accurately reflect the local
economies and wage levels of the areas
in which hospitals are currently located,
we are proposing to implement the new
OMB delineations as described in the
February 28, 2013 OMB Bulletin No.
13–01, for the SNF PPS wage index
effective beginning in FY 2015. As
discussed further below, we are
proposing to implement a one-year
transition with a blended wage index for
all providers in FY 2015 to assist
providers in adapting to the new OMB
delineations (if we finalize
implementation of such delineations for
the SNF PPS wage index beginning in
FY 2015). We invite comments on this
proposal. This proposed transition is
discussed in more detail below.
a. Micropolitan Statistical Areas
As discussed in the FY 2006 SNF PPS
proposed rule (70 FR 29093 through
29094) and final rule (70 FR 45041),
CMS considered how to use the
Micropolitan Statistical Area definitions
in the calculation of the wage index.
OMB defines a ‘‘Micropolitan Statistical
Area’’ as a CBSA ‘‘associated with at
least one urban cluster that has a
population of at least 10,000, but less
than 50,000’’ (75 FR 37252). We refer to
these as Micropolitan Areas. After
extensive impact analysis, consistent
with the treatment of these areas under
the IPPS as discussed in the FY 2005
IPPS final rule (69 FR 49029 through
49032), CMS determined the best course
of action would be to treat Micropolitan
Areas as ‘‘rural’’ and include them in
the calculation of each state’s SNF PPS
rural wage index (see 70 FR 29094 and
70 FR 45040 through 45041)). Thus, the
SNF PPS statewide rural wage index is
determined using IPPS hospital data
from hospitals located in non-MSA
areas, and the statewide rural wage
index is assigned to SNFs located in
those areas. Because Micropolitan Areas
tend to encompass smaller population
centers and contain fewer hospitals than
MSAs, we determined that if
Micropolitan Areas were to be treated as
separate labor market areas, the SNF
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PPS wage index would have included
significantly more single-provider labor
market areas. As we explained in the FY
2006 SNF PPS proposed rule (70 FR
29094), recognizing Micropolitan Areas
as independent labor markets would
generally increase the potential for
dramatic shifts in year-to-year wage
index values because a single hospital
(or group of hospitals) could have a
disproportionate effect on the wage
index of an area. Dramatic shifts in an
area’s wage index from year to year are
problematic and create instability in the
payment levels from year to year, which
could make fiscal planning for SNFs
difficult if we adopted this approach.
For these reasons, we adopted a policy
to include Micropolitan Areas in the
state’s rural wage area for purposes of
the SNF PPS wage index, and have
continued this policy through the
present.
Based upon the new 2010 Decennial
Census data, a number of urban counties
have switched status and have joined or
became Micropolitan Areas, and some
counties that once were part of a
Micropolitan Area, have become urban.
Overall, there are fewer Micropolitan
Areas (541) under the new OMB
delineations based on the 2010 Census
than existed under the latest data from
the 2000 Census (581). We believe that
the best course of action would be to
continue the policy established in the
FY 2006 SNF PPS final rule and include
Micropolitan Areas in each state’s rural
wage index. These areas continue to be
defined as having relatively small urban
cores (populations of 10,000 to 49,999).
We do not believe it would be
appropriate to calculate a separate wage
index for areas that typically may
include only a few hospitals for the
reasons discussed in the FY 2006 SNF
PPS proposed rule, and as discussed
above. Therefore, in conjunction with
our proposal to implement the new
OMB labor market delineations
beginning in FY 2015 and consistent
with the treatment of Micropolitan
Areas under the IPPS, we are proposing
to continue to treat Micropolitan Areas
as ‘‘rural’’ and to include Micropolitan
Areas in the calculation of the state’s
rural wage index.
b. Urban Counties Becoming Rural
As previously discussed, we are
proposing to implement the new OMB
statistical area delineations (based upon
the 2010 decennial Census data)
beginning in FY 2015 for the SNF PPS
wage index. Our analysis shows that a
total of 37 counties (and county
equivalents) that are currently
considered part of an urban CBSA
would be considered located in a rural
E:\FR\FM\06MYP1.SGM
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Federal Register / Vol. 79, No. 87 / Tuesday, May 6, 2014 / Proposed Rules
area, beginning in FY 2015, if we adopt
the new OMB delineations. Table 9
below lists the 37 urban counties that
would be rural if we finalize our
25781
proposal to implement the new OMB
delineations.
TABLE 9—COUNTIES THAT WOULD LOSE URBAN STATUS
County
State
Greene County ............................................................................
Anson County ..............................................................................
Franklin County ............................................................................
Stewart County ............................................................................
Howard County ............................................................................
Delta County ................................................................................
Pittsylvania County ......................................................................
Danville City .................................................................................
Preble County ..............................................................................
Gibson County .............................................................................
Webster County ...........................................................................
Franklin County ............................................................................
Ionia County .................................................................................
Newaygo County .........................................................................
Greene County ............................................................................
Stone County ...............................................................................
Morgan County ............................................................................
San Jacinto County .....................................................................
Franklin County ............................................................................
Tipton County ..............................................................................
Nelson County .............................................................................
Geary County ...............................................................................
Washington County .....................................................................
Pleasants County .........................................................................
George County ............................................................................
Power County ..............................................................................
Cumberland County .....................................................................
King and Queen County ..............................................................
Louisa County ..............................................................................
Washington County .....................................................................
Summit County ............................................................................
Erie County ..................................................................................
Franklin County ............................................................................
Ottawa County .............................................................................
Greene County ............................................................................
Calhoun County ...........................................................................
Surry County ................................................................................
We are proposing that the wage data
for all hospitals located in the counties
listed above would now be considered
rural when calculating their respective
state’s rural wage index value, which
rural wage index value would be used
under the SNF PPS. Furthermore, for
SNF providers currently located in an
urban county that would be considered
Previous urban area
(constituent counties)
Previous CBSA
IN
NC
IN
TN
MO
TX
VA
VA
OH
IN
KY
AR
MI
MI
NC
MS
WV
TX
KS
IN
KY
KS
OH
WV
MS
ID
VA
VA
VA
MO
UT
OH
MA
OH
AL
TX
VA
14020
16740
17140
17300
17860
19124
19260
19260
19380
21780
21780
22900
24340
24340
24780
25060
25180
26420
28140
29020
31140
31740
37620
37620
37700
38540
40060
40060
40060
41180
41620
41780
44140
45780
46220
47020
47260
rural, should this proposal be finalized,
CMS would utilize the rural unadjusted
per-diem rates, found in Table 3 above,
as the basis for determining this
facility’s payment rates beginning on
October 1, 2014.
c. Rural Counties Becoming Urban
Analysis of the new OMB
delineations (based upon the 2010
Bloomington, IN.
Charlotte-Gastonia-Rock Hill, NC-SC.
Cincinnati-Middletown, OH-KY-IN.
Clarksville, TN-KY.
Columbia, MO.
Dallas-Fort Worth-Arlington, TX.
Danville, VA.
Danville, VA.
Dayton, OH.
Evansville, IN-KY.
Evansville, IN-KY.
Fort Smith, AR-OK.
Grand Rapids-Wyoming, MI.
Grand Rapids-Wyoming, MI.
Greenville, NC.
Gulfport-Biloxi, MS.
Hagerstown-Martinsburg, MD-WV.
Houston-Sugar Land-Baytown, TX.
Kansas City, MO-KS.
Kokomo, IN.
Louisville/Jefferson County, KY-IN.
Manhattan, KS.
Parkersburg-Marietta-Vienna, WV-OH.
Parkersburg-Marietta-Vienna, WV-OH.
Pascagoula, MS.
Pocatello, ID.
Richmond, VA.
Richmond, VA.
Richmond, VA.
St. Louis, MO-IL.
Salt Lake City, UT.
Sandusky, OH.
Springfield, MA.
Toledo, OH.
Tuscaloosa, AL.
Victoria, TX.
Virginia Beach-Norfolk-Newport News,
VA-NC.
decennial Census data) shows that a
total of 105 counties (and county
equivalents) that are currently located in
rural areas would be located in urban
areas, if we finalize our proposal to
implement the new OMB delineations.
Table 10 below lists the 105 rural
counties that would be urban if we
finalize this proposal.
TABLE 10—COUNTIES THAT WOULD GAIN URBAN STATUS
sroberts on DSK5SPTVN1PROD with PROPOSALS
County
State
Utuado Municipio .........................................................................
Linn County ..................................................................................
Oldham County ............................................................................
Morgan County ............................................................................
Lincoln County .............................................................................
Newton County ............................................................................
Fayette County ............................................................................
Raleigh County ............................................................................
Golden Valley County ..................................................................
Oliver County ...............................................................................
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PR
OR
TX
GA
GA
TX
WV
WV
MT
ND
Fmt 4702
10380
10540
11100
12060
12260
13140
13220
13220
13740
13900
Sfmt 4702
Urban area
(constituent counties)
New CBSA
Aguadilla-Isabela, PR.
Albany, OR.
Amarillo, TX.
Atlanta-Sandy Springs-Roswell, GA.
Augusta-Richmond County, GA-SC.
Beaumont-Port Arthur, TX.
Beckley, WV.
Beckley, WV.
Billings, MT.
Bismarck, ND.
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Federal Register / Vol. 79, No. 87 / Tuesday, May 6, 2014 / Proposed Rules
TABLE 10—COUNTIES THAT WOULD GAIN URBAN STATUS—Continued
County
State
ND
VI
IL
PA
PA
KY
KY
MD
IL
IL
PA
NC
NC
NC
SC
SC
VA
IN
OH
OH
FL
TX
TX
AL
PA
TX
PA
NE
NE
NE
NE
MI
OR
LA
SC
SC
FL
ID
MS
TN
HI
HI
TN
TN
TN
LA
LA
LA
OK
IN
TX
WI
MS
MI
TX
MN
13900
13980
14010
14100
14100
14540
14540
15680
16060
16060
16540
16740
16740
16740
16740
16740
16820
17140
18140
18140
18880
23104
23104
19300
20700
21340
23900
24260
24260
24260
24260
24340
24420
25220
25940
25940
26140
26820
27140
27180
27980
27980
28940
28940
28940
29180
29180
29180
30020
31140
31180
31540
32820
33220
33260
33460
Mille Lacs County ........................................................................
MN
33460
Sibley County ...............................................................................
sroberts on DSK5SPTVN1PROD with PROPOSALS
Sioux County ...............................................................................
Floyd County ................................................................................
De Witt County ............................................................................
Columbia County .........................................................................
Montour County ...........................................................................
Allen County ................................................................................
Butler County ...............................................................................
St. Mary’s County ........................................................................
Jackson County ...........................................................................
Williamson County .......................................................................
Franklin County ............................................................................
Iredell County ...............................................................................
Lincoln County .............................................................................
Rowan County .............................................................................
Chester County ............................................................................
Lancaster County .........................................................................
Buckingham County .....................................................................
Union County ...............................................................................
Hocking County ...........................................................................
Perry County ................................................................................
Walton County .............................................................................
Hood County ................................................................................
Somervell County ........................................................................
Baldwin County ............................................................................
Monroe County ............................................................................
Hudspeth County .........................................................................
Adams County .............................................................................
Hall County ..................................................................................
Hamilton County ..........................................................................
Howard County ............................................................................
Merrick County .............................................................................
Montcalm County .........................................................................
Josephine County ........................................................................
Tangipahoa Parish .......................................................................
Beaufort County ...........................................................................
Jasper County ..............................................................................
Citrus County ...............................................................................
Butte County ................................................................................
Yazoo County ..............................................................................
Crockett County ...........................................................................
Kalawao County ...........................................................................
Maui County .................................................................................
Campbell County .........................................................................
Morgan County ............................................................................
Roane County ..............................................................................
Acadia Parish ...............................................................................
Iberia Parish .................................................................................
Vermilion Parish ...........................................................................
Cotton County ..............................................................................
Scott County ................................................................................
Lynn County .................................................................................
Green County ..............................................................................
Benton County .............................................................................
Midland County ............................................................................
Martin County ..............................................................................
Le Sueur County ..........................................................................
MN
33460
Maury County ..............................................................................
TN
34980
Craven County .............................................................................
Jones County ...............................................................................
Pamlico County ............................................................................
St. James Parish .........................................................................
Box Elder County .........................................................................
Gulf County ..................................................................................
Custer County ..............................................................................
Fillmore County ............................................................................
NC
NC
NC
LA
UT
FL
SD
MN
35100
35100
35100
35380
36260
37460
39660
40340
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Sfmt 4702
Urban area
(constituent counties)
New CBSA
Bismarck, ND.
Blacksburg-Christiansburg-Radford, VA.
Bloomington, IL.
Bloomsburg-Berwick, PA.
Bloomsburg-Berwick, PA.
Bowling Green, KY.
Bowling Green, KY.
California-Lexington Park, MD.
Carbondale-Marion, IL.
Carbondale-Marion, IL.
Chambersburg-Waynesboro, PA.
Charlotte-Concord-Gastonia, NC-SC.
Charlotte-Concord-Gastonia, NC-SC.
Charlotte-Concord-Gastonia, NC-SC.
Charlotte-Concord-Gastonia, NC-SC.
Charlotte-Concord-Gastonia, NC-SC.
Charlottesville, VA.
Cincinnati, OH-KY-IN.
Columbus, OH.
Columbus, OH.
Crestview-Fort Walton Beach-Destin, FL.
Dallas-Fort Worth-Arlington, TX.
Dallas-Fort Worth-Arlington, TX.
Daphne-Fairhope-Foley, AL.
East Stroudsburg, PA.
El Paso, TX.
Gettysburg, PA.
Grand Island, NE.
Grand Island, NE.
Grand Island, NE.
Grand Island, NE.
Grand Rapids-Wyoming, MI.
Grants Pass, OR.
Hammond, LA.
Hilton Head Island-Bluffton-Beaufort, SC.
Hilton Head Island-Bluffton-Beaufort, SC.
Homosassa Springs, FL.
Idaho Falls, ID.
Jackson, MS.
Jackson, TN.
Kahului-Wailuku-Lahaina, HI.
Kahului-Wailuku-Lahaina, HI.
Knoxville, TN.
Knoxville, TN.
Knoxville, TN.
Lafayette, LA.
Lafayette, LA.
Lafayette, LA.
Lawton, OK.
Louisville/Jefferson County, KY-IN.
Lubbock, TX.
Madison, WI.
Memphis, TN-MS-AR.
Midland, MI.
Midland, TX.
Minneapolis-St. Paul-Bloomington, MNWI.
Minneapolis-St. Paul-Bloomington, MNWI.
Minneapolis-St. Paul-Bloomington, MNWI.
Nashville-Davidson-Murfreesboro-Franklin, TN.
New Bern, NC.
New Bern, NC.
New Bern, NC.
New Orleans-Metairie, LA.
Ogden-Clearfield, UT.
Panama City, FL.
Rapid City, SD.
Rochester, MN.
E:\FR\FM\06MYP1.SGM
06MYP1
25783
Federal Register / Vol. 79, No. 87 / Tuesday, May 6, 2014 / Proposed Rules
TABLE 10—COUNTIES THAT WOULD GAIN URBAN STATUS—Continued
County
State
Urban area
(constituent counties)
New CBSA
Yates County ...............................................................................
Sussex County .............................................................................
Worcester County ........................................................................
Highlands County ........................................................................
Webster Parish ............................................................................
Cochise County ...........................................................................
Plymouth County .........................................................................
Union County ...............................................................................
Pend Oreille County ....................................................................
Stevens County ...........................................................................
Augusta County ...........................................................................
Staunton City ...............................................................................
Waynesboro City .........................................................................
Little River County .......................................................................
Sumter County .............................................................................
Pickens County ............................................................................
Gates County ...............................................................................
NY
DE
MA
FL
LA
AZ
IA
SC
WA
WA
VA
VA
VA
AR
FL
AL
NC
40380
41540
41540
42700
43340
43420
43580
43900
44060
44060
44420
44420
44420
45500
45540
46220
47260
Falls County .................................................................................
Columbia County .........................................................................
Walla Walla County .....................................................................
Peach County ..............................................................................
Pulaski County .............................................................................
Culpeper County ..........................................................................
TX
WA
WA
GA
GA
VA
47380
47460
47460
47580
47580
47894
Rappahannock County ................................................................
VA
47894
Jefferson County ..........................................................................
Kingman County ..........................................................................
Davidson County .........................................................................
Windham County .........................................................................
NY
KS
NC
CT
48060
48620
49180
49340
sroberts on DSK5SPTVN1PROD with PROPOSALS
We are proposing that when
calculating the area wage index, the
wage data for hospitals located in these
counties would be included in their
new respective urban CBSAs.
Furthermore, for SNF providers
currently located in a rural county that
would be considered urban, should this
proposal be finalized, CMS would
utilize the urban unadjusted per-diem
rates, found in Table 2 above, as the
basis for determining this facility’s
payment rates beginning on October 1,
2014
d. Urban Counties Moving to a Different
Urban CBSA
In addition to rural counties becoming
urban and urban counties becoming
rural, several urban counties would shift
from one urban CBSA to another urban
CBSA under our proposal to adopt the
new OMB delineations. In other cases,
applying the new OMB delineations
would involve a change only in CBSA
name or number, while the CBSA
continues to encompass the same
constituent counties. For example,
CBSA 29140 (Lafayette, IN), would
experience both a change to its number
and its name, and would become CBSA
29200 (Lafayette-West Lafayette, IN),
while all of its three constituent
counties would remain the same. We are
not discussing these proposed changes
in this section because they are
inconsequential changes with respect to
the SNF PPS wage index. However, in
other cases, if we adopt the new OMB
delineations, counties would shift
between existing and new CBSAs,
changing the constituent makeup of the
CBSAs.
In one type of change, an entire CBSA
would be subsumed by another CBSA.
For example, CBSA 37380 (Palm Coast,
FL) currently is a single county (Flagler,
FL) CBSA. Flagler County would be a
part of CBSA 19660 (Deltona-Daytona
Beach-Ormond Beach, FL) under the
new OMB delineations.
In another type of change, some
CBSAs have counties that would split
off to become part of or to form entirely
new labor market areas. For example,
CBSA 37964 (Philadelphia Metropolitan
Rochester, NY.
Salisbury, MD-DE.
Salisbury, MD-DE.
Sebring, FL.
Shreveport-Bossier City, LA.
Sierra Vista-Douglas, AZ.
Sioux City, IA-NE-SD.
Spartanburg, SC.
Spokane-Spokane Valley, WA.
Spokane-Spokane Valley, WA.
Staunton-Waynesboro, VA.
Staunton-Waynesboro, VA.
Staunton-Waynesboro, VA.
Texarkana, TX-AR.
The Villages, FL.
Tuscaloosa, AL.
Virginia Beach-Norfolk-Newport News,
VA-NC.
Waco, TX.
Walla Walla, WA.
Walla Walla, WA.
Warner Robins, GA.
Warner Robins, GA.
Washington-Arlington-Alexandria, DC-VAMD-WV.
Washington-Arlington-Alexandria, DC-VAMD-WV.
Watertown-Fort Drum, NY.
Wichita, KS.
Winston-Salem, NC.
Worcester, MA-CT.
Division of MSA 37980) currently is
comprised of five Pennsylvania counties
(Bucks, Chester, Delaware, Montgomery,
and Philadelphia). If we adopt the new
OMB delineations, Montgomery, Bucks,
and Chester counties would split off and
form the new CBSA 33874 (Montgomery
County-Bucks County-Chester County,
PA Metropolitan Division of MSA
37980), while Delaware and
Philadelphia counties would remain in
CBSA 37964.
Finally, in some cases, a CBSA would
lose counties to another existing CBSA
if we adopt the new OMB delineations.
For example, Lincoln County and
Putnam County, WV would move from
CBSA 16620 (Charleston, WV) to CBSA
26580 (Huntington-Ashland, WV–KY–
OH). CBSA 16620 would still exist in
the new labor market delineations with
fewer constituent counties. Table 11
lists the urban counties that would
move from one urban CBSA to another
urban CBSA if we adopt the new OMB
delineations.
TABLE 11—COUNTIES THAT WOULD CHANGE TO A DIFFERENT CBSA
Prior CBSA
New CBSA
11300 ................
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26900
County
State
Madison County .......................................................................................................................
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IN.
25784
Federal Register / Vol. 79, No. 87 / Tuesday, May 6, 2014 / Proposed Rules
TABLE 11—COUNTIES THAT WOULD CHANGE TO A DIFFERENT CBSA—Continued
Prior CBSA
11340
14060
37764
16620
16620
16974
16974
21940
21940
21940
26100
31140
34100
35644
35644
20764
20764
20764
35644
20764
35644
35644
35644
35644
35644
35644
35644
35644
37380
37700
37964
37964
37964
39100
39100
41884
41980
41980
41980
41980
48900
49500
49500
49500
49500
New CBSA
................
................
................
................
................
................
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................
................
................
................
................
24860
14010
15764
26580
26580
20994
20994
41980
41980
41980
24340
21060
28940
35614
35614
35614
35614
35614
35614
35084
35614
35614
35614
20524
35614
35614
35614
35614
19660
25060
33874
33874
33874
20524
35614
42034
11640
11640
11640
11640
34820
38660
38660
38660
38660
County
Anderson County ......................................................................................................................
McLean County ........................................................................................................................
Essex County ...........................................................................................................................
Lincoln County ..........................................................................................................................
Putnam County .........................................................................................................................
DeKalb County .........................................................................................................................
Kane County .............................................................................................................................
Ceiba Municipio ........................................................................................................................
Fajardo Municipio .....................................................................................................................
Luquillo Municipio .....................................................................................................................
Ottawa County ..........................................................................................................................
Meade County ..........................................................................................................................
Grainger County .......................................................................................................................
Bergen County .........................................................................................................................
Hudson County .........................................................................................................................
Middlesex County .....................................................................................................................
Monmouth County ....................................................................................................................
Ocean County ..........................................................................................................................
Passaic County ........................................................................................................................
Somerset County ......................................................................................................................
Bronx County ............................................................................................................................
Kings County ............................................................................................................................
New York County .....................................................................................................................
Putnam County .........................................................................................................................
Queens County ........................................................................................................................
Richmond County .....................................................................................................................
Rockland County ......................................................................................................................
Westchester County .................................................................................................................
Flagler County ..........................................................................................................................
Jackson County ........................................................................................................................
Bucks County ...........................................................................................................................
Chester County ........................................................................................................................
Montgomery County .................................................................................................................
Dutchess County ......................................................................................................................
Orange County .........................................................................................................................
Marin County ............................................................................................................................
Arecibo Municipio .....................................................................................................................
Camuy Municipio ......................................................................................................................
Hatillo Municipio .......................................................................................................................
Quebradillas Municipio .............................................................................................................
Brunswick County .....................................................................................................................
´
Guanica Municipio ....................................................................................................................
Guayanilla Municipio ................................................................................................................
˜
Penuelas Municipio ..................................................................................................................
Yauco Municipio .......................................................................................................................
If providers located in these counties
move from one CBSA to another under
the new OMB delineations, there may
be impacts, both negative and positive,
upon their specific wage index values.
As discussed below, we propose to
implement a transition wage index to
adjust for these possible impacts.
sroberts on DSK5SPTVN1PROD with PROPOSALS
e. Transition Period
Overall, we believe implementing the
new OMB delineations would result in
wage index values being more
representative of the actual costs of
labor in a given area. Further, we
recognize that some providers (15
percent) would have a higher wage
index due to our proposed
implementation of the new labor market
area delineations. However, we also
recognize that more providers (22
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State
Jkt 232001
percent) would experience decreases in
wage index values as a result of our
proposed implementation of the new
labor market area delineations.
Therefore, we believe it would be
appropriate to consider, as we did in FY
2006, whether or not a transition period
should be used in order to implement
these proposed changes to the wage
index.
We considered having no transition
period and fully implementing the
proposed new OMB delineations
beginning in FY 2015. This would mean
that we would adopt the revised OMB
delineations for all providers on October
1, 2014. However, this would not
provide any time for providers to adapt
to the new OMB delineations. As
discussed above, more providers would
experience a decrease in wage index
PO 00000
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SC.
IL.
MA.
WV.
WV.
IL.
IL.
PR.
PR.
PR.
MI.
KY.
TN.
NJ.
NJ.
NJ.
NJ.
NJ.
NJ.
NJ.
NY.
NY.
NY.
NY.
NY.
NY.
NY.
NY.
FL.
MS.
PA.
PA.
PA.
NY.
NY.
CA.
PR.
PR.
PR.
PR.
NC.
PR.
PR.
PR.
PR.
due to implementation of the proposed
new OMB delineations than would
experience an increase. Thus, we
believe that it would be appropriate to
provide for a transition period to
mitigate the resulting short-term
instability and negative impacts on
these providers, and to provide time for
providers to adjust to their new labor
market area delineations. Furthermore,
in light of the comments received
during the FY 2006 rulemaking cycle on
our proposal in the FY 2006 SNF PPS
proposed rule (70 FR 29094–29095) to
adopt the new CBSA definitions
without a transition period, we
anticipate that providers would have
similar concerns with not having a
transition period for the proposed new
OMB delineations. Therefore, as further
discussed below, similar to the policy
E:\FR\FM\06MYP1.SGM
06MYP1
sroberts on DSK5SPTVN1PROD with PROPOSALS
Federal Register / Vol. 79, No. 87 / Tuesday, May 6, 2014 / Proposed Rules
adopted in the FY 2006 SNF PPS final
rule (70 FR 45041) when we first
adopted OMB’s CBSA definitions for
purposes of the SNF PPS wage index,
we are proposing a one-year transition
blended wage index for all SNFs to
assist providers in adapting to the new
OMB delineations (should we finalize
implementation of such delineations for
the SNF PPS wage index beginning in
FY 2015). In determining an appropriate
transition methodology, consistent with
the objectives set forth in the FY 2006
SNF PPS final rule (70 FR 45041), we
looked for approaches that would
provide relief to the largest percentage
of adversely-affected SNFs with the
least impact to the rest of the facilities.
First, we considered transitioning the
wage index to the revised OMB
delineations over a number of years in
order minimize the impact of the
proposed wage index changes in a given
year. However, we also believe this
must be balanced against the need to
ensure the most accurate payments
possible, which argues for a faster
transition to the revised OMB
delineations. As discussed above in
section V.A.2 of this proposed rule, we
believe that using the most current OMB
delineations would increase the
integrity of the SNF PPS wage index by
creating a more accurate representation
of geographic variation in wage levels.
As such, we believe that utilizing a oneyear (rather than a multiple year)
transition with a blended wage index in
FY 2015 would strike the best balance.
Second, we considered what type of
blend would be appropriate for
purposes of the transition wage index.
We are proposing that providers would
receive a one-year blended wage index
using 50 percent of their FY 2015 wage
index based on the proposed new OMB
delineations and 50 percent of their FY
2015 wage index based on the OMB
delineations used in FY 2014. We
believe that a 50/50 blend would best
mitigate the negative payment impacts
associated with the implementation of
the proposed new OMB delineations.
While we considered alternatives to the
50/50 blend, we believe this type of
split balances the increases and
decreases in wage index values
associated with this proposal, as well as
provides a readily understandable
calculation for providers.
Next, we considered whether or not
the blended wage index should be used
for all providers or for only a subset of
providers, such as those providers that
would experience a decrease in their
respective wage index values due to
implementation of the revised OMB
delineations. If we were to apply the
transition policy only to those providers
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that would experience a decrease in
their respective wage index values due
to the implementation of the revised
OMB delineations, then providers that
would experience either no change in
wage index or an increase in wage index
due to the revised OMB delineations
would be immediately transitioned to
the FY 2015 wage index under the
revised OMB delineations. As required
in Section 1888(e)(4)(G)(ii) of the Act,
the wage index adjustment must be
implemented in a budget-neutral
manner. As such, if we were to apply
the transition policy only to those
providers that would experience a
decrease in their respective wage index
values due to implementation of the
revised OMB delineations, the budget
neutrality factor, discussed in section
III.D, calculated based on this this
approach would be 0.9986, which
would result in reduced base rates for
all providers as compared to the budget
neutrality factor of 1.0001 which would
result from applying the blended wage
index to all providers. Furthermore,
based on our analysis of the wage index
changes associated with fully
implementing the revised OMB
delineations, we determined that the
new OMB delineations would only
affect the wage index values of
approximately 37 percent of facilities.
Given that our goal is to provide relief
to the largest percentage of adverselyaffected SNFs with the least impact to
the rest of the facilities (whose wage
index values either would remain the
same or would increase), we believe that
using a blended wage index for all
providers would be the best option. This
option would assist the 22 percent of
providers that would be adversely
affected by the proposed
implementation of the new OMB
delineations without reducing the base
rates for all providers, 63 percent of
which would otherwise be unaffected
by the proposed implementation of the
new OMB delineations. In other words,
this option is based on a balance
between the interests of all SNF
providers, including the 15 percent of
providers that would experience an
increase in their wage index value due
to the proposed implementation of the
new OMB delineations, the 22 percent
of providers that would experience a
decrease in their wage index value due
to the proposed implementation of the
new OMB delineations, and the 63
percent of providers that would be
unaffected by the proposed
implementation of the new OMB
delineations. As discussed above, if we
were to apply the blended wage index
only to the 22 percent of providers that
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25785
would experience a decrease in their
respective wage index values due to the
proposed implementation of the new
OMB delineations in an effort to
preserve the full increase in wage index
value for the 15 percent of providers
that would experience such an increase
due to the proposed implementation of
the new OMB delineations, the budget
neutrality factor of 1.0001 referenced in
section III.D, which is based on
applying the blended wage index to all
providers, would be revised to 0.9986.
As such, this would mean a reduction
in the base rate for all providers, most
notably the 63 percent of providers that
would be unaffected by the proposed
implementation of the new OMB
delineations, but also for that 15 percent
of providers that would experience an
increase in their wage index value.
Moreover, while providers experience
wage index changes from year to year
based on updating the wage data, full
implementation of the proposed new
OMB delineations would dramatically
increase the magnitude of those changes
for some providers. Year-to-year wage
index changes usually vary from
decreases as high as 10 percent to
increases as high as 10 percent. Using
FY 2011 wage data (the data used for the
FY 2015 wage index), the range of
changes in the wage index values due
solely to full implementation of the
proposed OMB delineations would span
from decreases of over 20 percent to
increases of over 30 percent. Therefore,
in addition to mitigating the impact of
the proposed OMB delineations on the
facilities that are adversely affected by
them and providing a period to adjust,
we believe a transition wage index
could also mitigate the volatility of the
SNF PPS wage index caused by these
proposed changes.
Therefore, for the reasons discussed
above, if we finalize implementation of
the new OMB delineations, we are
proposing to apply a one-year transition
with a 50/50 blended wage index for all
providers in FY 2015. We propose to
calculate the FY 2015 wage indexes
using both the current FY 2014 and
proposed new labor market
delineations. Specifically, providers
would receive 50 percent of their FY
2015 wage index based on the new OMB
delineations, and 50 percent of their FY
2015 wage index based on the labor
market area delineations for FY 2014
(both using FY 2011 hospital wage
data). This ultimately results in an
average of the two values. As we stated
in the FY 2006 SNF PPS final rule (70
FR 45041), we believe that our proposed
transition approach would best achieve
our objective of providing relief to the
largest percentage of adversely-affected
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SNFs with the least impact to the rest
of the facilities, because it reduces the
impact of the transition on the base rates
for all providers. For the reasons
discussed above, and based on provider
reaction during the FY 2006 rulemaking
cycle to the proposed adoption of the
new CBSA definitions, we are proposing
to provide a one-year blended wage
index for all SNFs to assist providers in
adapting to these proposed changes. We
refer to this blended wage index as the
FY 2015 SNF PPS transition wage
index. This transition policy would be
for a one-year period, going into effect
October 1, 2014, and continuing through
September 30, 2015. Thus, beginning
October 1, 2015, the wage index for all
SNFs would be fully based on the new
OMB delineations. We invite comments
on our proposed transition
methodology, as well as on the other
transition options discussed above.
The proposed wage index applicable
to FY 2015 is set forth in Table A
available on the CMS Web site at https://
cms.gov/Medicare/Medicare-Fee-forService-Payment/SNFPPS/
WageIndex.html. Table A provides a
crosswalk between the FY 2015 wage
index for a provider using the current
OMB delineations in effect in FY 2014
and the FY 2015 wage index using the
proposed revised OMB delineations, as
well as the proposed transition wage
index values that would be in effect in
FY 2015 if these proposed changes are
finalized.
3. Labor-Related Share
Each year, we calculate a revised
labor-related share based on the relative
importance of labor-related cost
categories in the SNF market basket as
discussed in Section III.D of this
proposed rule. Table 12 summarizes the
proposed updated labor-related share
for FY 2015, compared to the laborrelated share that was used for the FY
2014 SNF PPS final rule.
TABLE 12—LABOR-RELATED RELATIVE IMPORTANCE, FY 2014 AND FY 2015
Relative importance,
labor-related, FY 2014
13:2 forecast 1
Relative importance,
labor-related, FY 2015
14:1 forecast 2
Wages and salaries .................................................................................................................
Employee benefits ...................................................................................................................
Nonmedical Professional fees: labor-related ...........................................................................
Administrative and facilities support services ..........................................................................
All Other: Labor-related services .............................................................................................
Capital-related (.391) ...............................................................................................................
49.118
11.423
3.446
0.499
2.287
2.772
49.116
11.373
3.460
0.503
2.285
2.776
Total ..................................................................................................................................
69.545
69.513
1 Published
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2 Based
in the Federal Register; based on second quarter 2013 IGI forecast.
on first quarter 2014 IGI forecast, with historical data through fourth quarter 2013.
B. SNF Therapy Research Project
As discussed in the FY 2014 SNF PPS
proposed rule (78 FR 26466, May 6,
2013), CMS contracted with Acumen,
LLC and the Brookings Institution to
identify potential alternatives to the
existing methodology used to pay for
therapy services received under the SNF
PPS. Under the current payment model,
the therapy payment rate component of
the SNF PPS is based solely on the
amount of therapy provided to a patient
during the 7-day look-back period,
regardless of the specific patient
characteristics. The amount of therapy a
patient receives is used to classify the
resident into a RUG category, which
then determines the per diem payment
for that resident. In the FY 2014 SNF
PPS proposed rule (78 FR 26466, May
6, 2013), we invited public comment on
this project. In the FY 2014 SNF PPS
final rule (78 FR 47963, August 6, 2013),
we discussed the comments we received
on this project, all of which supported
the overall goals and objective of the
project, and a few highlighted the
importance of maintaining contact with
the stakeholder community.
In this proposed rule, we are taking
the opportunity to update the public on
the current state of this project. In
September 2013, we completed the first
phase of the research project, which
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included a literature review, stakeholder
outreach, supplementary analyses, and a
comprehensive review of options for a
viable alternative to the current therapy
payment model. CMS produced a report
outlining the most promising and viable
options that we plan to pursue in the
second phase of the project. The report
is available on the CMS Web site at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html.
During the second phase of the
project, which began in September
2013, our team will further develop the
options outlined in the aforementioned
report and perform more comprehensive
data analysis to determine which of
these options would work best as a
potential replacement for the existing
therapy payment model. In keeping
with the public comments we received
on this project previously, we also plan
to engage the stakeholder community by
convening a Technical Expert Panel
during this second phase of the project
to discuss the available alternatives, as
well as present some of the initial data
analysis that is currently being
conducted. We hope that by convening
this Technical Expert Panel, we can best
ensure that we utilize the expertise of
the stakeholder community in
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identifying the most viable alternative to
the current therapy payment model.
As before, comments may be included
as part of comments on this proposed
rule. We are also soliciting comments
outside the rulemaking process and
these comments should be sent via
email to SNFTherapyPayments@
cms.hhs.gov. Information regarding this
project can be found on the project Web
site at https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html.
C. Proposed Revisions to Policies
Related to the Change of Therapy (COT)
Other Medicare Required Assessment
(OMRA)
On October 1, 2011, CMS introduced
the Change of Therapy (COT) Other
Medicare Required Assessment
(OMRA), which is an assessment
designed to capture changes in the
therapy services provided to a given
SNF resident during the past 7 days. As
discussed in the FY 2012 SNF PPS final
rule, this assessment was implemented
because we had found that in certain
cases, ‘‘the therapy recorded on a given
PPS assessment did not provide an
accurate account of the therapy
provided to a given resident outside the
observation window used for the most
recent assessment’’ (76 FR 48518).
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To address this situation, effective for
services provided on or after October 1,
2011, we required facilities to complete
a COT OMRA for patients classified into
a RUG–IV therapy category, whenever
the intensity of therapy (that is, the total
reimbursable therapy minutes delivered
or other therapy category qualifiers,
such as the number of days the patient
received therapy during the week or the
number of therapy disciplines) changes
to such a degree that it would no longer
reflect the RUG–IV classification and
payment assigned for a given SNF
resident based on the most recent
assessment used for Medicare payment
(see 76 FR 48525). In addition, as
discussed in the FY 2012 SNF PPS final
rule (76 FR 48523 through 48524,
48526), the COT OMRA policy also
applies to patients who are receiving a
level of therapy sufficient for
classification into a therapy RUG, but
are classified into a nursing RUG
because of index maximization. An
evaluation of the necessity for a COT
OMRA must be completed every 7
calendar days starting from the day
following the Assessment Reference
Date (ARD) set for the most recent
scheduled or unscheduled PPS
assessment (or in the case of an End of
Therapy–Resumption-OMRA, starting
the day that therapy resumes). This
rolling 7-day window is called the COT
observation period. As discussed in the
FY 2012 SNF PPS final rule (76 FR
48523), the purpose of the COT OMRA
is to track changes in a patient’s
condition and in the provision of
therapy services more accurately to
ensure that the patient is placed in the
appropriate RUG category, thereby
improving the accuracy of
reimbursement.
As discussed above, the resident must
be classified into a RUG–IV therapy
category or into a nursing RUG because
of index maximization (while receiving
a level of therapy sufficient for
classification into a RUG–IV therapy
category) in order for the COT OMRA
requirements to apply. However, since
implementation of this assessment, we
have learned that, in rare cases where a
resident has been classified into a RUG–
IV therapy category, therapy services
provided to the resident during a COT
observation period may not be sufficient
to continue to qualify the resident for
any therapy RUG, resulting in
classification of the resident into a nontherapy RUG. During a subsequent week
when the therapy services are sufficient
to again qualify the resident for a
therapy RUG, providers have indicated
that they cannot complete a subsequent
COT OMRA to reclassify the resident
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into a therapy RUG because the resident
is no longer in a therapy RUG or in a
nursing RUG because of index
maximization as discussed above
(pursuant to the conditions set forth in
the FY 2012 SNF PPS final rule and in
Section 2.9 of the MDS 3.0 RAI manual).
As a result, providers are unable to use
the COT OMRA to capture the increased
therapy services provided to the
resident to ensure accurate payment for
the services provided, which is the
express purpose of the COT OMRA.
Accordingly, we propose to revise the
existing COT OMRA policy to permit
providers to complete a COT OMRA for
a resident who is not currently
classified into a RUG–IV therapy group,
or receiving a level of therapy sufficient
for classification into a RUG–IV therapy
group as discussed above, but only in
those rare cases where the resident had
qualified for a RUG–IV therapy group on
a prior assessment during the resident’s
current Medicare Part A stay and had no
discontinuation of therapy services
between Day 1 of the COT observation
period for the COT OMRA that
classified the resident into his/her
current non-therapy RUG–IV group and
the ARD of the COT OMRA that
reclassified the patient into a RUG–IV
therapy group. Under the proposed
policy, while a COT OMRA may be used
to reclassify a resident into a therapy
RUG in the circumstances described
above, it may not be used to initially
classify a resident into a therapy RUG.
We believe it is appropriate to revise the
COT OMRA policy in this manner to
provide for more accurate payment for
services provided to those residents
who have qualified for a RUG–IV
therapy group during their Medicare
Part A stay and continue to receive
skilled therapy services during their
Medicare Part A stay (even though they
may have been classified into a nontherapy RUG as discussed above).
Consider, for example, if Mr. A. was
classified into the RUG group RUA on
his 30-day assessment with an ARD set
for Day 30 of his stay. On Day 37, the
facility checks how much therapy was
provided to Mr. A. and finds that while
Mr. A. did receive the requisite number
of therapy minutes to qualify for this
RUG category, he only received therapy
on 4 distinct calendar days, which
would make it impossible for him to
qualify for an Ultra-High Rehabilitation
RUG group. Moreover, due to the lack
of 5 distinct calendar days of therapy
and the lack of any restorative nursing
services, Mr. A. does not qualify for any
therapy RUG group. As a result, the
facility must complete a COT OMRA for
Mr. A., on which he may only classify
to a non-therapy RUG group. Let us
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further assume that the facility
continues to provide Mr. A. with skilled
therapy and that, when looking back on
Mr. A.’s services from Day 44 (7 days
after the ARD of the COT OMRA), Mr.
A. again qualifies for classification in
the RUG group RUA.
Under the existing COT OMRA
policy, it would not be possible for this
provider to reclassify Mr. A. back into
RUA from the non-therapy group by
using a COT OMRA. Instead, Mr. A.
could only be classified into a therapy
RUG either by discontinuing his therapy
using an End of Therapy (EOT) OMRA
and beginning a new therapy program
and completing a Start of Therapy (SOT)
OMRA, or by waiting until the next
scheduled assessment. Under our
proposed revised policy, this provider
would be permitted to complete a COT
OMRA with an ARD of Day 44 in order
to reclassify Mr. A. back into the RUA
group. The facility would then continue
to review the therapy services provided
to Mr. A. in order to ensure that these
services continue to reflect Mr. A.’s
current RUG–IV therapy classification.
To further clarify the scope of this
proposal, consider a slightly different
example in which Mr. A. is classified
into the RUG group RUA on his 30-day
assessment with an ARD set for Day 30
of his stay. On Day 37, the facility
checks the amount of therapy that was
provided to Mr. A. and finds that while
Mr. A. did receive the requisite number
of therapy minutes to qualify for this
RUG category, he only received therapy
on 4 distinct calendar days, which
would make it impossible for him to
qualify for an Ultra-High Rehabilitation
RUG group. Moreover, due to the lack
of 5 distinct calendar days of therapy
and the lack of any restorative nursing
services, Mr. A. does not qualify for any
therapy RUG group. As a result, the
facility must complete a COT OMRA for
Mr. A., on which he may only classify
for a non-therapy RUG group. However,
as opposed to the previous situation
where the resident’s therapy continued
during the week following the COT
OMRA, let us assume that the facility
decides to discontinue his therapy
services by completing an End of
Therapy OMRA with an ARD set for Day
39, resulting in a non-therapy RUG
classification for Mr. A. The facility
subsequently decides to restart Mr. A.’s
therapy services, beginning on Day 41 of
his stay. The facility looks back from
Day 47 (7 days following the day
therapy began on Day 41, including Day
41) to review the therapy services
provided to Mr. A. during the prior
week and finds that Mr. A. would
qualify for the RUG group RVA.
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As in the prior example, under the
existing COT OMRA policy, it would
not be possible for this provider to
classify Mr. A. into RVA from the nontherapy group by using a COT OMRA.
However, as opposed to the prior
example, under the revised COT OMRA
policy proposed in this proposed rule,
the facility would still not be permitted
to complete the COT OMRA in this
instance, as a discontinuation of therapy
services had occurred between Day 1 of
the COT observation period for the COT
OMRA that classified the resident into
his/her current non-therapy RUG–IV
group and the ARD of the COT OMRA
that would have been used to reclassify
the patient into a RUG–IV therapy group
if it had been permitted. Based on this
example, in order to reclassify the
resident into a RUG–IV therapy group,
the provider would need to either
complete a Start of Therapy OMRA or
wait until the next regularly scheduled
assessment.
We believe this proposal would
address the concern of those providers
who have experienced the rare
occurrence of a COT OMRA classifying
a resident into a non-therapy RUG group
from a therapy RUG group, where the
patient continues to receive therapy and
later qualifies again for a therapy RUG.
We believe this proposed revision to the
COT OMRA policy would ensure the
most accurate payment for therapy
services furnished to such residents by
allowing providers to capture variations
in therapy services on a weekly basis.
As with other similar policy changes, if
this revision is finalized, then we intend
to monitor the impact of this revision to
ensure that is has the intended effect.
We invite comments on this proposed
change to the existing COT OMRA
policy.
D. Civil Money Penalties (Section 6111
of the Affordable Care Act)
Sections 6111 of the Patient
Protection and Affordable Care Act
(Affordable Care Act), amended sections
1819(h) and 1919(h) of the Act to
incorporate specific provisions
pertaining to the imposition and
collection of civil money penalties
(CMPs). Sections 1819(h)(2)(B)(ii)(IV)(ff)
and 1919(h)(3)(C)(ii)(IV)(ff) of the Act
specifies that some portion of such
amounts collected may be used to
support activities that benefit residents,
including assistance to support and
protect residents of a facility that closes
(voluntarily or involuntarily) or is
decertified (including offsetting costs of
relocating residents to home and
community-based settings or another
facility), projects that support resident
and family councils and other consumer
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involvement in assuring quality care in
facilities, and facility improvement
initiatives approved by the Secretary
(including joint training of facility staff
and surveyors, technical assistance for
facilities implementing quality
assurance programs, the appointment of
temporary management firms, and other
activities approved by the Secretary).
These changes were implemented in a
final rule published on March 18, 2011
entitled ‘‘Medicare and Medicaid
Programs; Civil Money Penalties for
Nursing Homes.’’ At § 488.433, we
specify that these funds may not be used
for survey and certification operations
but must be used entirely for activities
that protect or improve the quality of
care for residents and that these
activities must be approved by CMS.
This proposed rule would clarify
statutory requirements as specified in
section 6111 of the Affordable Care Act
regarding the approval and use of CMPs
imposed by CMS. It is important to note
that these clarifications not only apply
to the Federal share of collected CMP
funds granted for approved projects that
benefit residents under § 488.433, but
they also apply to the portion of the
CMPs collected by CMS that is
disbursed to the states based on the
proportion of Medicaid eligible nursing
home residents under § 488.442(e)(2)
and (f). The amendments made by
section 6111 of the Affordable Care Act
makes it clear that the specified use of
CMP funds collected from SNFs, SNF/
NFs, and NF-only facilities as a result of
CMPs imposed by CMS, must be
approved by CMS by specifying that the
activities that CMP funds are used for
must be approved by the Secretary.
Sections 1819(h)(2)(B)(ii)(IV)(ff) and
1919(h)(3)(C)(ii)(IV)(ff) of the Act also
provide for flexibility on how CMP
funds imposed by CMS may be used
within the bounds established by law.
The regulations at § 488.433 specify that
collected CMP funds must be used
entirely for activities that protect or
improve the quality of care for residents,
and may not be used for survey and
certification operations. However, we
are aware of instances in which states
have used federal CMP funds without
obtaining prior approval from CMS,
have used these funds even though CMS
had disapproved their intended use,
have not used these funds at all, or have
used these funds for purposes other
than to support activities that benefit
residents as specified in statute and
regulation. For example, information
reported by the CMS Regional Offices
for CY 2012 indicates that 24 states had
not approved any projects using CMP
funds. While some states have only
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small amounts of CMP funds available
and seek to maintain a core reserve in
the event of emergencies or involuntary
termination that necessitates timely
relocation for resident safety and wellbeing, other states maintain significant
amounts of funds. One state, for
example, maintained more than $15
million in FY 2012. While it is very
prudent to maintain a reserve fund for
emergencies, we believe that
maintenance of large amounts of unused
CMP funds is not desirable or consistent
with ensuring that collected CMP funds
be used to benefit nursing home
residents. In addition, large amounts of
unused CMP funds may create the
appearance that CMPs are being levied
for purposes other than to benefit
nursing home residents.
A key function of the CMP remedy is
to prompt quick compliance with the
federal health and safety requirements.
These monies must be used to support
projects or activities that will benefit
nursing home residents. Entities
applying for approval of projects
utilizing CMP funds must demonstrate
that the planned use will benefit
nursing home residents and promote
compliance with the regulations.
We propose changes to the CMS
enforcement regulations at § 488.433 to
clarify and strengthen these provisions
to provide more specific instructions to
states regarding the use of CMPs and the
approval process, and to permit an
opportunity for greater transparency and
accountability of CMP monies utilized
by States.
We invite public comment on our
proposed changes. This proposed rule
would explicitly clarify the intended
use and statutory requirements of
collected CMP funds. Specifically, we
propose to: (1) Specify that CMP funds
may not be used for state management
operations except for the reasonable
costs that are consistent with managing
projects utilizing CMP funds; (the
rationale for this clarification is
explained further in section VI.); (2)
clarify CMS’s expectations that States
must obtain prior approval for use of
these CMP funds; (3) outline specific
requirements that must be included in
proposals submitted for CMS approval;
(4) specify that CMPs funds may not be
used for projects that have been
disapproved by CMS; (5) specify that
states are responsible for having an
acceptable plan to solicit, accept,
monitor and track projects utilizing
CMP funds and make the results of all
approved projects publicly available on
at least an annual basis; (6) specify that
state plans must ensure that a core
amount of civil money penalty funds
will be held in reserve for emergencies,
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such as relocation of residents in the
event of involuntary termination from
Medicare and Medicaid, and (7) specify
that if a state is not spending collected
CMPs in accordance with the law or not
at all, that CMS has authority to take
appropriate steps to ensure that these
funds are used for their intended
purpose, such as withholding future
disbursements of CMP amounts. We do
not believe this has significant cost
implications and it will benefit nursing
home residents to ensure that CMP
funds will be used for their intended
purpose. We further invite public
comment on CMS’s proposed methods
to ensure compliance with these
requirements.
E. Observations on Therapy Utilization
Trends
In the FY 2014 SNF PPS final rule (78
FR 47959 through 47960), we discussed
our monitoring efforts associated with
the impact of certain policy changes
finalized in the FY 2012 SNF PPS final
rule (76 FR 48486). We noted that we
would continue these monitoring efforts
and report any new information as
appropriate. We are not proposing new
Medicare policy in this discussion of
observed trends but merely highlighting
that we will continue to monitor these
observed trends which may serve as the
basis for future policy development.
In the FY 2014 SNF PPS proposed
rule (78 FR 26464), we presented data
which compared various utilization
metrics including, in particular, the
case-mix distribution for the RUG–IV
therapy categories (Ultra-High
Rehabilitation or RU, Very-High
Rehabilitation or RV, High
Rehabilitation or RH, Medium
Rehabilitation or RM, and Low
Rehabilitation or RL), for FY 2011 and
FY 2012. It was observed based on those
data that the percentage of billed days
of service being classified into the RU
RUG groups had increased from 44.8
percent in FY 2011 to 48.6 percent in
FY 2012, while utilization in all other
therapy RUG categories either remained
stable or declined. We have since
updated this data set using data from FY
2013 and have posted a memo to the
SNF PPS Web site (available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
Spotlight.html) which demonstrates that
the percentage of billed service days in
the RU RUG groups has increased to
over 50 percent. These revised data in
the aforementioned memo are presented
in a slightly different format than they
have been presented in the past, which
is to show how, over the course of the
past 3 years since October of 2010, the
percentage of residents classified into
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one of these Ultra-High Rehabilitation
groups has not only increased, but done
so rather steadily.
The second identified trend that we
would highlight here and is discussed
in the memo referenced above is that,
most notably in the cases of RU and RV
RUG groups, the amount of therapy
reported on the MDS is just enough to
surpass the relevant therapy minute
threshold for a given therapy RUG
category. For example, as demonstrated
in Figure 2 in the aforementioned
memo, the percentage of claimsmatched MDS assessments in the range
of 720 minutes to 739 minutes, which
is just enough to surpass the therapy
minute threshold for RU RUG groups of
720 minutes, has increased from 21
percent in FY 2011 to 33 percent in FY
2013. As stated above, this trend also
holds for residents classified into a RV
RUG group, where the largest
percentage of service days were
provided in the 500 to 520 minutes
range, which just surpasses the therapy
minute threshold for the RV RUG
groups of 500 minutes.
We invite comment on the data
presented here and the discussion of
observed trends.
F. Accelerating Health Information
Exchange in SNFs
As we have stated in the past, we
believe all patients, and others involved
in the patient’s care, and their
healthcare providers should have
consistent and timely access to their
health information in a standardized
format that can be securely exchanged
between the patient, providers, and
others involved in the patient’s care.
(HHS August 2013 Statement,
‘‘Principles and Strategies for
Accelerating Health Information
Exchange.’’) The Department is
committed to accelerating health
information exchange (HIE) through the
use of electronic health records (EHRs)
and other types of health information
technology (HIT) across the broader care
continuum through a number of
initiatives including: (1) Alignment of
incentives and payment adjustments to
encourage provider adoption and
optimization of HIT and HIE services
through Medicare and Medicaid
payment policies; (2) adoption of
common standards and certification
requirements for interoperable HIT; (3)
support for privacy and security of
patient information across all HIEfocused initiatives; and (4) governance
of health information networks. These
initiatives are designed to improve care
delivery and coordination across the
entire care continuum and encourage
HIE among all health care providers,
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including professionals and hospitals
eligible for the Medicare and Medicaid
EHR Incentive Programs and those who
are not eligible for the EHR Incentive
Programs. To increase flexibility in
ONC’s HIT Certification Program and
expand HIT certification, ONC has
issued a proposed rule concerning a
voluntary 2015 Edition of EHR
certification criteria which would more
easily accommodate certification of HIT
used in other types of health care
settings where individual or
institutional health care providers are
not typically eligible for incentive
payments under the Medicare and
Medicaid EHR Incentive Programs, such
as long-term and post-acute care and
behavioral health settings.
We believe that HIE and the use of
certified EHRs by SNFs and other types
of providers that are ineligible for the
Medicare and Medicaid EHR Incentive
Programs can effectively and efficiently
help providers improve internal care
delivery practices, support management
of patient care across the continuum,
and enable the reporting of
electronically specified clinical quality
measures (eCQMs). More information on
the identification of EHR certification
criteria and development of standards
applicable to SNFs can be found at:
• https://healthit.gov/policyresearchers-implementers/standardsand-certification-regulations.
• https://www.healthit.gov/facas/
FACAS/health-it-policy-committee/
hitpc-workgroups/certificationadoption.
• https://wiki.siframework.org/
LCC+LTPAC+Care+Transition+SWG.
• https://wiki.siframework.org/
Longitudinal+Coordination+of+Care.
VI. Provisions of the Proposed Rule
As discussed in section III. of this
proposed rule, this proposed rule would
update the payment rates under the SNF
PPS for FY 2015 as required by section
1888(e)(4)(E)(ii) of the Act. In addition,
we propose to use the most current
OMB delineations (discussed in section
V.A) to identify a facility’s urban or
rural status for the purpose of
determining which set of rate tables
would apply to the facility (section
III.B.). Furthermore, as discussed in
section V. of this proposed rule, we
propose changes to the wage index
based on the most current OMB
delineations, including a one-year
transition with a blended wage index for
FY 2015 (section V.A.); propose to
revise the policy governing use of the
COT OMRA (section V.C.); and finally,
propose changes to the enforcement
regulations related to civil money
penalties utilized by states (section
V.D.).
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With reference to the civil money
penalty provisions discussed in section
V.D. of this proposed rule, we propose
to modify current CMS regulations to
provide further clarification to states
and the public regarding prior approval
and appropriate use of these federalimposed civil money penalty funds.
At § 488.433, civil money penalties:
Uses and approval of civil money
penalties imposed by CMS, we propose
to amend this regulation to specify that
civil money penalties may not be used
for state management operations except
for the costs that are consistent with
managing the civil money penalty
funds, specify that all activities utilizing
civil money penalty funds must be
approved in advance by CMS, outline
specific requirements that must be
included in proposals submitted for
CMS approval, specify that states are
responsible for monitoring and tracking
the results of all approved activities
utilizing civil money penalties and
making this information publicly
available, specify that state plans must
ensure that a core amount of civil
money penalty funds will be held in
reserve for emergencies, such as
relocation of residents in the event of
involuntary termination from Medicare
and Medicaid, and specify steps CMS
will take if civil money penalty funds
are being used for disapproved purposes
or not being used at all.
The proposed CMS regulation would
explicitly clarify the intended use of
these civil money penalty funds
including the processes for prior
approval of all activities using civil
money penalty funds by CMS and how
CMS will address a state’s use of civil
money penalty funds for activities that
have been disapproved by CMS or used
by states for activities other than those
explicitly specified in statute or
regulations.
At proposed § 488.433(a), we would
clarify that approved projects may work
to improve residents’ quality of life and
not just quality of care. We would also
clarify that states while states may not
use funds for survey and certification
operations or state expenses, they may
use a reasonable amount of civil money
penalty funds for the actual
administration of grant awards,
including the tracking, monitoring, and
evaluating of approved projects. Some
states have maintained that effective use
and management of the civil money
penalty funds requires more state
oversight and planning than they are
able to provide currently, and that an
allowance for such management would
remove a barrier to the effective use of
these funds. We have not proposed a
monetary or numeric limit on what
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might be considered reasonable,
although one to 3 percent of available
funds might be considered reasonable
for an established fund. We invite
comment on the question of appropriate
limits.
At proposed § 488.433(b)(5), we
would clarify in a new paragraph that in
extraordinary situations involving
closure of a facility, civil monetary
penalty funds may be used to pay the
salary of a temporary manager when
CMS concludes that it is infeasible to
ensure timely payment for such a
manager by the facility. We have
encountered situations, for example, in
which a facility is in bankruptcy and the
court has frozen all funds at the very
time that residents are being relocated
and closure is proceeding. In another
situation involving involuntary
termination from Medicare and
impending closure of the facility, the
facility was not making payments for
staff or for its utilities, and residents
were at risk due to the imminent
departure of staff and the absence of a
manager. While § 489.55 permits
Medicare and Medicaid payments to a
facility to continue for up to 30 days
after the effective date of a facility’s
termination or possibly longer (or
shorter) if a facility has submitted a
notification of closure under § 483.75(r)
in order to promote the orderly and safe
relocation of residents, if the continued
Medicare and Medicaid payments are
being used to pay for facility operations
during the relocation period but are
being diverted elsewhere by the facility,
then residents may be placed at
increased risk. The proposed change at
§ 488.433(b)(5) would clarify not only
that CMS places a priority on resident
protection and protection of the Trust
Fund and allows such emergency use of
civil money funds, but that CMS also
intends to stop or suspend the payments
to the facility under § 489.55 when such
a situation occurs.
At new § 488.433(c), we specify the
requirements for all CMP fund
proposals being submitted to CMS for
approval.
At new § 488.433 (d), we state that
CMP funds may not be used for
activities that have been disapproved by
CMS.
At new § 488.433(e), we propose that
states must maintain an acceptable plan
for the effective use of civil monetary
penalty funds, including a description
of methods by which the state will
solicit, accept, monitor, and track
approved projects funded by CMP
amounts and make key information
publicly available. Examples of
information that must be publically
available would include information on
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the projects that have been approved by
CMS, the grantee and project recipients,
the dollar amounts of projects approved,
and the results of the projects. We also
propose that these plans provide for a
minimum amount of funds that will
generally be held in reserve for
emergencies, unless the state’s plan
demonstrates the availability of other
funds to cover emergency situations,
and a reasonable aggregate amount of
civil money penalty funds, beyond the
emergency reserve amount, that the
state expects to disburse each year for
grants or contracts of projects that
benefit residents and are consistent with
the statute and CMS regulations. We
appreciate that states may wish to
develop a multi-year plan and provide
an approximate range of total amount
that the state plans to disburse. The
intent is to ensure there is an acceptable
plan, and that a state is prepared to
respond to emergencies while at the
same time is not maintaining a large
unused amount of civil monetary
penalty funds.
In § 488.433(f), we propose that CMS
may withhold future disbursement of
collected civil money penalty funds to
a state if CMS finds that the state has not
spent such funds in accordance with the
statute and regulations, fails to make use
of funds to benefit the quality of care or
life of residents, or fails to maintain an
acceptable plan approved by CMS.
VII. Collection of Information
Requirements
Under the Paperwork Reduction Act
of 1995 (PRA), we are required to
publish a 60-day notice in the Federal
Register and solicit public comments
before a collection of information
requirement is submitted to the Office of
Management and Budget (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 comments 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.
A. Information Collection Requirements
(ICRs)
While this proposed rule does not
have any PRA implications, we are
soliciting comment on the following:
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1. ICRs Regarding the SNF PPS Rate
Setting Methodology (preamble sections
III and V)
While sections III and V propose to
revise certain policies related to the
current rate setting methodology (such
as the use of updated OMB delineations
to assign a facility the urban or rural per
diem rate and to calculate wage index
adjustments), the provisions would not
impose any new or revised reporting,
recordkeeping, or third-party disclosure
requirements. Nor would they require
the development, acquisition,
installation, and utilization of any new
or revised technology or information
systems. Consequently, they do not
require review under the authority of
the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.).
The information collection
requirements discussed in section III.C.
concerning the resident assessment
instrument (MDS 3.0) are currently
approved by OMB under OCN 0938–
1140 (CMS–10387).
2. ICRs Regarding the COT OMRA
(Preamble Section V.C.)
While section V.C. proposes to revise
current COT OMRA policy by
permitting providers to complete a COT
OMRA for a resident who is not
currently classified into a RUG–IV
therapy group in certain circumstances,
this provision does not impose any new
or revised reporting, recordkeeping, or
third-party disclosure requirements.
Consequently, it does not require review
under the authority of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501
et seq.).
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3. ICRs Regarding the Use of Civil
Money Penalties (§ 488.433(c))
In § 488.433(c), states proposing to
use civil money penalties for certain
activities are required to submit
descriptions of the intended outcomes,
deliverables, sustainability, and
methods by which the results will be
assessed, including specific measures.
Prior to using these funds, the activities
must be approved by CMS under
existing regulations. The proposed
language in this rule provides methods
to ensure that these requirements are
followed and to promote additional
transparency.
The provision does not require
additional OMB review under the
authority of the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.). In
addition, as stated in the Civil Money
Penalties for Nursing Homes final rule
published on March 18, 2011 (76 FR
15125), sections 4204(b) and 4214(d) of
the Omnibus Budget Reconciliation Act
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of 1987 (OBRA ’87), Public Law 100–
203, enacted on December 21, 1987,
provide waivers of Office of
Management and Budget review of
information collection requirements for
the purpose of implementing the
nursing home reform amendments. The
provisions of OBRA ’87 that exempt
agency actions to collect information
from states or facilities relevant to
survey and enforcement activities from
the Paperwork Reduction Act are not
time-limited.
4. ICRs Regarding Civil Money Penalty
Plans (§ 488.433(e))
In § 488.433(e), states would be
required to maintain an acceptable plan
(approved by CMS) for the effective use
of civil money funds. The plan must
include a description of methods by
which the state will: (1) Solicit, accept,
monitor, and track projects utilizing
civil money penalty funds; (2) make
information about the use of civil
money penalty funds publicly available,
including key information about
approved projects, the grantee or
contract recipients, and the results of
projects; (3) ensure that a core amount
of civil money penalty funds will be
held in reserve for emergencies, such as
unplanned relocation of residents
pursuant to an involuntary termination
from Medicare and Medicaid; and (4)
ensure that a reasonable amount of
funds, beyond those held in reserve,
will be awarded or contracted each year.
Since current statute, regulations and/
or CMS policy guidance released to the
states already specifies that all proposed
activities using civil money penalty
funds must be submitted to CMS for
approval and must contain information
on the expected final outcomes of the
activity and how the results of the
activity will be assessed, states must
already have plans in place to monitor
and track the outcomes of all approved
activities using these funds.
Consequently, the proposed provision
would not require any substantive
revision to any state plans and would
not impose any additional burden to
states.
Since the provisions in § 488.433(e)
would not impose any new or revised
reporting, recordkeeping, or third-party
disclosure requirements, they do not
require additional OMB review under
the authority of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501
et seq.). In addition, as stated in the
Civil Money Penalties for Nursing
Homes final rule published on March
18, 2011 (76 FR 15125), sections 4204(b)
and 4214(d) of the Omnibus Budget
Reconciliation Act of 1987 (OBRA ’87),
Public Law 100–203, enacted on
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25791
December 21, 1987, provides waivers of
OMB review of information collection
requirements for the purpose of
implementing the nursing home reform
amendments. The provisions of OBRA
’87 that exempt agency actions to collect
information from states or facilities
relevant to survey and enforcement
activities from the Paperwork Reduction
Act are not time-limited.
B. Submission of PRA-Related
Comments
If you comment on any of these
information collection requirements,
please submit your comments
electronically as specified in the
ADDRESSES section of this proposed rule.
Comments must be received on/by
June 30, 2014.
VIII. Response to Comments
Because of the large number of public
comments we normally receive on
Federal Register documents, we are not
able to acknowledge or respond to them
individually. We will consider all
comments we receive by the date and
time specified in the DATES section of
this preamble, and when we proceed
with a subsequent document, we will
respond to the comments in the
preamble to that document.
IX. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
We have examined the impacts of this
proposed 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
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Executive Order 12866. Accordingly, we
have prepared a regulatory impact
analysis (RIA) as further discussed
below. Also, the rule has been reviewed
by OMB.
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2. Statement of Need
This proposed rule would update the
SNF prospective payment rates for FY
2015 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. 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. In
addition, this proposed rule would
clarify statutory requirements and intent
as specified in section 6111 of the
Affordable Care Act regarding the
approval and use of civil money
penalties imposed by CMS.
3. Overall Impacts
This proposed rule sets forth
proposed updates of the SNF PPS rates
contained in the SNF PPS final rule for
FY 2014 (78 FR 47936). Based on the
above, we estimate that the aggregate
impact would be an increase of $750
million in payments to SNFs, resulting
from the SNF market basket update to
the payment rates, as adjusted by the
MFP adjustment. The impact analysis of
this proposed rule represents the
projected effects of the changes in the
SNF PPS from FY 2014 to FY 2015.
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 newlylegislated 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
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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 2014 payment rates
by a factor equal to the market basket
index percentage change adjusted by the
FY 2013 forecast error adjustment (if
applicable) and the MFP adjustment to
determine the payment rates for FY
2015. 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 addon 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 4,355
beneficiaries who qualify for the add-on
payment for residents with AIDS. The
impact to Medicare is included in the
‘‘total’’ column of Table 13. In updating
the SNF PPS rates for FY 2015, we made
a number of standard annual revisions
and clarifications mentioned elsewhere
in this proposed 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
proposed rule applies to SNF PPS
payments in FY 2015. 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 for each
subsequent FY that will provide for an
update to the SNF PPS payment rates
and include an associated impact
analysis.
As discussed in Section V.D. of this
proposed rule, we would also clarify
statutory requirements and intent as
specified in section 6111 of the
Affordable Care Act regarding the
approval and use of civil money
penalties imposed by CMS. There
would be no impact to States unless
they failed to follow the new regulations
regarding the approval and use of civil
money penalty funds. In FY 2011, the
approximate total amount of civil
money penalties returned to the states
was $28 million. In FY 2012, the
approximate total amount of civil
money penalties returned to the states
was $32 million. In FY 2013, the
approximate total amount of civil
money penalties returned to the states
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was $35 million. The estimated amount
that we expect to be returned to the
states in FY2015, based on data from
previous years, is approximately $33
million. These payments to the states
would only be withheld in the event
that states did not spend civil money
penalty funds in accordance with the
statute and this regulation, or failed to
make use of funds to benefit the quality
of care or life of residents, or failed to
maintain an acceptable plan for the use
of these funds. Even if CMP funds are
withheld from a state, we expect that
the state would eventually come into
compliance and that the state would
later gain access to the withheld funds.
4. Detailed Economic Analysis
The FY 2015 impacts appear in Table
13. Using the most recently available
data, in this case FY 2013, we apply the
current FY 2014 wage index and laborrelated share value to the number of
payment days to simulate FY 2014
payments. Then, using the same FY
2013 data, we apply the FY 2015 wage
index, as proposed in Section V.A
above, and labor-related share value to
simulate FY 2015 payments. We
tabulate the resulting payments
according to the classifications in Table
13 (for example, facility type,
geographic region, facility ownership),
and compare the difference between
current and proposed 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 new OMB
delineations that we are proposing to
implement beginning in FY 2015.
Facilities should use these proposed
OMB delineations to identify their
urban or rural status for purposes of
identifying what areas of the impact
table would apply to them beginning on
October 1, 2014. The next nineteen rows
show the effects on facilities by urban
versus rural status by census region. The
last three rows show the effects on
facilities by ownership (that is,
government, profit, and non-profit
status).
The second column shows the
number of facilities in the impact
database.
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The third column shows the effect of
the annual update to the wage index.
This represents the effect of using the
most recent wage data available,
without taking into account the
proposed revised OMB delineations.
That is, the impact represented in this
column is solely that of updating from
the FY 2014 wage index to the FY 2015
wage index without any changes to the
OMB delineations. The total impact of
this change is zero percent; however,
there are distributional effects of the
change.
The fourth column shows the effect of
adopting the updated OMB delineations
(as set forth in OMB Bulletin No. 13–01)
for wage index purposes for FY 2015,
independent of the effect of using the
most recent wage data available,
captured in Column 3. That is, the
impact represented in this column is
that of the proposed use of the revised
OMB delineations, utilizing the
proposed blended wage index. The total
impact of this change is zero percent;
however, there are distributional effects
of the change.
The fifth column shows the effect of
all of the changes on the FY 2015
payments. The update of 2.0 percent
(consisting of the market basket increase
of 2.4 percentage points, reduced by the
0.4 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 2.0
percent, assuming facilities do not
change their care delivery and billing
practices in response.
As illustrated in Table 13, the
combined effects of all of the changes
vary by specific types of providers and
by location. For example, due to
changes proposed in this rule, providers
in the rural Pacific region would
experience a 4.5 percent increase in FY
2015 total payments.
TABLE 13—RUG–IV PROJECTED IMPACT TO THE SNF PPS FOR FY 2015
Number of
facilities
FY 2015
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 .......................................................................................................
Outlying .....................................................................................................
Ownership:
Government ..............................................................................................
Profit .........................................................................................................
Non-profit ..................................................................................................
Update wage
data
(%)
Update OMB
delineations
(%)
Total change
(%)
15,397
10,860
4,537
572
10,288
640
3,897
0.0
0.0
0.1
0.1
0.0
0.1
0.1
0.0
0.0
¥0.2
0.0
0.0
¥0.3
¥0.2
2.0
2.0
1.9
2.0
2.0
1.7
1.9
803
1,490
1,853
2,054
544
889
1,293
501
1,427
6
0.9
0.3
¥0.3
¥0.3
¥1.0
0.0
¥0.4
0.1
0.3
0.6
0.0
0.1
0.0
0.0
0.0
0.0
0.0
¥0.1
0.0
¥0.2
2.9
2.5
1.7
1.6
1.0
2.0
1.6
2.0
2.3
2.4
144
228
504
925
533
1,093
770
235
105
0
0.7
1.5
¥0.4
¥0.1
¥0.3
0.3
0.3
¥0.7
2.6
0.0
0.1
¥1.6
¥0.2
0.0
¥0.2
¥0.2
¥0.4
0.0
¥0.1
0.0
2.8
1.8
1.4
1.9
1.4
2.2
1.9
1.3
4.5
2.0
852
10,783
3,762
0.1
0.0
0.1
0.1
0.0
0.0
2.2
2.0
2.0
Note: The Total column includes the 2.4 percent market basket increase, reduced by the 0.4 percentage point MFP adjustment. Additionally,
we found no SNFs in rural outlying areas.
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5. Alternatives Considered
As described above, we estimate that
the aggregate impact for FY 2015 would
be an increase of $750 million in
payments to SNFs, resulting from the
SNF market basket update to the
payment rates, as adjusted by the MFP
adjustment.
Section 1888(e) of the Act establishes
the SNF PPS for the payment of
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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. It
specifies that the base year cost data to
be used for computing the SNF PPS
payment rates must be from FY 1995
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(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
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requires us to disseminate the payment
rates for each new FY through the
Federal Register, and to do so before the
August 1 that precedes the start of the
new FY. Accordingly, we are not
pursuing alternatives with respect to the
payment methodology as discussed
above.
With regard to the proposal discussed
in section V.A of this rule related to our
proposed adoption of the revised OMB
delineations for purposes of calculating
the wage index, we believe
implementing the new OMB
delineations would result in wage index
values being more representative of the
actual costs of labor in a given area.
Further, we recognize that some
providers (15 percent) would have a
higher wage index due to our proposed
implementation of the new labor market
delineations. However, we also
recognize that more providers (22
percent) would experience decreases in
wage index values as a result of our
proposed implementation of the new
labor market area delineations.
Therefore, we believe it would be
appropriate to consider, as we did in FY
2006, whether or not a transition period
should be used in order to implement
these proposed changes to the wage
index.
We considered having no transition
period and fully implementing the
proposed new OMB delineations
beginning in FY 2015. This would mean
that we would adopt the revised OMB
delineations for all providers on October
1, 2014. However, this would not
provide any time for providers to adapt
to the new OMB delineations. As
discussed above, more providers would
experience a decrease in wage index
due to implementation of the proposed
new OMB delineations than would
experience an increase. Thus, we
believe that it would be appropriate to
provide for a transition period to
mitigate the resulting short-term
instability and negative impact on these
providers, and to provide time for
providers to adjust to their new labor
market area delineations. Furthermore,
in light of the comments received
during the FY 2006 rulemaking cycle on
our proposal in the FY 2006 SNF PPS
proposed rule (70 FR 29094–29095) to
adopt the new CBSA definitions
without a transition period, we
anticipate that providers would have
similar concerns with not having a
transition period for the proposed new
OMB delineations. Therefore, as further
discussed below, similar to the policy
adopted in the FY 2006 SNF PPS final
rule (70 FR 45041) when we first
adopted OMB’s CBSA definitions for
purposes of the SNF PPS wage index,
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we are proposing a one-year transition
blended wage index for all SNFs to
assist providers in adapting to the new
OMB delineations (should we finalize
implementation of such delineations for
the SNF PPS wage index beginning in
FY 2015). In determining an appropriate
transition methodology, consistent with
the objectives set forth in the FY 2006
SNF PPS final rule (70 FR 45041), we
looked for approaches that would
provide relief to the largest percentage
of adversely-affected SNFs with the
least impact to the rest of the facilities
First, we considered transitioning the
wage index to the revised OMB
delineations over a number of years in
order minimize the impact of the
proposed wage index changes in a given
year. However, we also believe this
must be balanced against the need to
ensure the most accurate payments
possible, which argues for a faster
transition to the revised OMB
delineations. As discussed above in
section V.A.2 of this proposed rule, we
believe that using the most current OMB
delineations would increase the
integrity of the SNF PPS wage index by
creating a more accurate representation
of geographic variation in wage levels.
As such, we believe that utilizing a oneyear (rather than a multiple year)
transition with a blended wage index in
FY 2015 would strike the best balance.
Second, we considered what type of
blend would be appropriate for
purposes of the transition wage index.
We are proposing that providers would
receive a one-year blended wage index
using 50 percent of their FY 2015 wage
index based on the proposed new OMB
delineations and 50 percent of their FY
2015 wage index based on the FY 2014
OMB delineations. We believe that a 50/
50 blend would best mitigate the
negative payment impacts associated
with the implementation of the
proposed new OMB delineations. While
we considered alternatives to the 50/50
blend, we believe this type of split
balances the increases and decreases in
wage index values associated with this
proposal, as well as provides a readily
understandable calculation for
providers.
Next, we considered whether or not
the blended wage index should be used
for all providers or for only a subset of
providers, such as those providers that
would experience a decrease in their
respective wage index values due to
implementation of the revised OMB
delineations. If we were to apply the
transition policy only to those providers
that would experience a decrease in
their respective wage index values due
to the implementation of the revised
OMB delineations, then providers that
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would experience either no change in
wage index or an increase in wage due
to the revised OMB delineations would
be immediately transitioned to the FY
2015 wage index under the revised
OMB delineations. As required in
section 1888(e)(4)(G)(ii) of the Act, the
wage index adjustment must be
implemented in a budget-neutral
manner. As such, if we were to apply
the transition policy only to those
providers that would experience a
decrease in their respective wage index
values due to implementation of the
revised OMB delineations, the budget
neutrality factor, discussed in section
III.D, calculated based on this this
approach would be 0.9986, which
would result in reduced base rates for
all providers as compared to the budget
neutrality factor of 1.0001 which would
result from applying the blended wage
index to all providers. Furthermore,
based on our analysis of the wage index
changes associated with fully
implementing the revised OMB
delineations, we determined that the
new OMB delineations would only
affect the wage index values of
approximately 37 percent of facilities.
Given that our goal is to provide relief
to the largest percentage of adverselyaffected SNFs with the least impact to
the rest of the facilities (whose wage
index values either would remain the
same or increase), we believe that using
a blended wage index for all providers
would be the best option. This option
would assist the 22 percent of providers
that would be adversely affected by the
proposed implementation of the new
OMB delineations without reducing the
base rates for all providers, 63 percent
of which would otherwise be unaffected
by the proposed implementation of the
new OMB delineations. In other words,
this option is based on a balance
between the interests of all SNF
providers, including the 15 percent of
providers that would experience an
increase in their wage index value due
to the proposed implementation of the
new OMB delineations, the 22 percent
of providers that would experience a
decrease in their wage index value due
to the proposed implementation of the
new OMB delineations, and the 63
percent of providers that would be
unaffected by the proposed
implementation of the new OMB
delineations. As discussed above, if we
were to apply the blended wage index
only to the 22 percent of providers that
would experience a decrease in their
respective wage index values due to the
proposed implementation of the new
OMB delineations in an effort to
preserve the full increase in wage index
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Federal Register / Vol. 79, No. 87 / Tuesday, May 6, 2014 / Proposed Rules
value for the 15 percent of providers
that would experience such an increase
due to the proposed implementation of
the new OMB delineations, the budget
neutrality factor of 1.0001 referenced in
section III.D, which is based on
applying the blended wage index to all
providers, would be revised to 0.9986.
As such, this would mean a reduction
in the base rate for all providers, most
notably the 63 percent of providers that
would be unaffected by the proposed
implementation of the new OMB
delineations, but also for that 15 percent
of providers that would experience an
increase in their wage index value.
Moreover, while providers experience
wage index changes from year to year
based on updating the wage data, full
implementation of the proposed new
OMB delineations would dramatically
increase the magnitude of those changes
for some providers. Year-to-year wage
index changes usually vary from
decreases as high as 10 percent to
increases as high as 10 percent. Using
FY 2011 wage data (the data used for the
FY 2015 wage index), the range of
changes in the wage index values due
solely to full implementation of the
proposed OMB delineations would span
from decreases of over 20 percent to
increases of over 30 percent. Therefore,
in addition to mitigating the impact of
the proposed OMB delineations on the
facilities that are adversely affected by
them and providing a period to adjust,
we believe a transition wage index
could also mitigate the volatility of the
SNF PPS wage index for certain
providers caused by these proposed
changes.
Therefore, if we finalize
implementation of the new OMB
delineations for the SNF PPS wage
index, we are proposing to use a oneyear transition with a blended wage
index for all providers in FY 2015, as
outlined in Section V.A.2.e. For the
reasons discussed above, we believe that
this proposed transition approach
appropriately balances the interests of
all SNFs, and would best achieve our
objective of providing relief to the
largest percentage of adversely affected
SNFs with the least impact to the rest
of the facilities. We believe this
approach would mitigate negative
impacts on providers as well as the
volatility of the SNF PPS wage index for
certain providers resulting from
implementation of the proposed new
OMB delineations. We invite comments
on the alternatives discussed in this
analysis.
6. Accounting Statement
As required by OMB Circular A–4
(available online at
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25795
Reports) to classify a small business,
and not the revenue of a larger firm they
may be affiliated with. As a result, we
estimate 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/navigationstructure/contracting/contractingofficials/eligibility-size-standards). In
addition, approximately 25 percent of
TABLE 14—ACCOUNTING STATEMENT: SNFs classified as small entities are
CLASSIFICATION OF ESTIMATED EX- non-profit organizations. Finally,
PENDITURES, FROM THE 2014 SNF individuals and states are not included
the
entity.
PPS FISCAL YEAR TO THE 2015 in Thisdefinition of a smallforth updates
proposed rule sets
SNF PPS FISCAL YEAR
of the SNF PPS rates contained in the
SNF PPS final rule for FY 2014 (78 FR
Category
Transfers
47936). Based on the above, we estimate
that the aggregate impact would be an
Annualized Monetized $750 million*.
increase of $750 million in payments to
Transfers.
SNFs, resulting from the SNF market
From Whom To
Federal Government
Whom?.
to SNF Medicare
basket update to the payment rates, as
Providers.
adjusted by the MFP adjustment. While
* The net increase of $750 million in transfer it is projected in Table 13 that all
payments is a result of the MFP-adjusted mar- providers would experience a net
ket basket increase of $750 million.
increase in payments, we note that some
individual providers within the same
7. Conclusion
region or group may experience
This proposed rule sets forth updates
different impacts on payments than
of the SNF PPS rates contained in the
others due to the distributional impact
SNF PPS final rule for FY 2014 (78 FR
of the FY 2015 wage indexes and the
47936). Based on the above, we estimate degree of Medicare utilization.
the overall estimated payments for SNFs
Guidance issued by the Department of
in FY 2015 are projected to increase by
Health and Human Services on the
$750 million, or 2.0 percent, compared
proper assessment of the impact on
with those in FY 2014. We estimate that small entities in rulemakings, utilizes a
in FY 2015 under RUG–IV, SNFs in
cost or revenue impact of 3 to 5 percent
urban and rural areas would experience, as a significance threshold under the
on average, a 2.0 and 1.9 percent
RFA. According to MedPAC, Medicare
increase, respectively, in estimated
covers approximately 11 percent of total
payments compared with FY 2014.
patient days in freestanding facilities
Providers in the rural Pacific region
and 22 percent of facility revenue
would experience the largest estimated
(Report to the Congress: Medicare
increase in payments of approximately
Payment Policy, March 2014, available
4.5 percent. Providers in the urban East
at https://www.medpac.gov/documents/
Mar14_EntireReport.pdf). However, it is
South Central region would experience
the smallest increase in payments of 1.0 worth noting that the distribution of
days and payments is highly variable.
percent.
That is, the majority of SNFs have
B. Regulatory Flexibility Act Analysis
significantly lower Medicare utilization
The RFA requires agencies to analyze (Report to the Congress: Medicare
options for regulatory relief of small
Payment Policy, March 2014, available
entities, if a rule has a significant impact at https://www.medpac.gov/documents/
on a substantial number of small
Mar14_EntireReport.pdf). As a result,
entities. For purposes of the RFA, small for most facilities, when all payers are
entities include small businesses, non
included in the revenue stream, the
profit organizations, and small
overall impact on total revenues should
governmental jurisdictions. Most SNFs
be substantially less than those impacts
and most other providers and suppliers
presented in Table 13. As indicated in
are small entities, either by their nonTable 13, the effect on facilities is
profit status or by having revenues of
projected to be an aggregate positive
$25.5 million or less in any 1 year. We
impact of 2.0 percent. As the overall
utilized the revenues of individual SNF impact on the industry as a whole, and
providers (from recent Medicare Cost
thus on small entities specifically, is
www.whitehouse.gov/sites/default/files/
omb/assets/regulatory_matters_pdf/a4.pdf), in Table 14, we have prepared an
accounting statement showing the
classification of the expenditures
associated with the provisions of this
proposed rule. Table 14 provides our
best estimate of the possible changes in
Medicare payments under the SNF PPS
as a result of the policies in this
proposed rule, based on the data for
15,397 SNFs in our database. All
expenditures are classified as transfers
to Medicare providers (that is, SNFs).
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Federal Register / Vol. 79, No. 87 / Tuesday, May 6, 2014 / Proposed Rules
less than the 3 to 5 percent threshold
discussed above, the Secretary has
determined that this proposed 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 603 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 proposed rule
would affect small rural hospitals that
(1) furnish SNF services under a swingbed agreement or (2) 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
previous SNF PPS final rules (most
recently the one for FY 2014 (78 FR
47968)), the category of small rural
hospitals would be included within the
analysis of the impact of this proposed
rule on small entities in general. As
indicated in Table 13, the effect on
facilities is projected to be an aggregate
positive impact of 2.0 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 proposed 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 2014, that
threshold is approximately $141
million. This proposed rule would not
impose spending costs on state, local, or
tribal governments in the aggregate, or
by the private sector, of $141 million.
sroberts on DSK5SPTVN1PROD with PROPOSALS
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 proposed rule would have no
substantial direct effect on state and
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local governments, preempt state law, or
otherwise have federalism implications.
List of Subjects in 42 CFR Part 488
Administrative practice and
procedure, Health facilities, Medicare,
Reporting and recordkeeping
requirements.
For the reasons set forth in the
preamble, the Centers for Medicare &
Medicaid Services proposes to amend
42 CFR chapter IV as set forth below:
PART 488—SURVEY, CERTIFICATION
AND ENFORCEMENT PROCEDURES
1. The authority citation for part 488
continues to read as follows:
■
Authority: Secs. 1102, 1128I and 1871 of
the Social Security Act, unless otherwise
noted (42 U.S.C. 1302, 1320a–7j, and
1395hh); Pub. L. 110–149, 121 Stat. 1819.
2. Section 488.433 is revised to read
as follows:
■
§ 488.433 Civil money penalties: Uses and
approval of civil money penalties imposed
by CMS.
(a) Ten percent of the collected civil
money penalty funds that are required
to be held in escrow pursuant to
§ 488.431 and that remain after a final
administrative decision will be
deposited with the Department of the
Treasury in accordance with
§ 488.442(f). The remaining ninety
percent of the collected civil money
penalty funds that are required to be
held in escrow pursuant to § 488.431
and that remain after a final
administrative decision must be used
entirely for activities that protect or
improve the quality of care or quality of
life for residents consistent with
paragraph (b) of this section and may
not be used for survey and certification
operations or State expenses, except that
reasonable expenses necessary to
administer, monitor, or evaluate the
effectiveness of projects utilizing civil
money penalty funds may be permitted.
(b) All activities and plans for
utilizing civil money penalty funds,
including any expense used to
administer grants utilizing CMP funds,
must be approved in advance by CMS
and may include, but are not limited to:
(1) Support and protection of
residents of a facility that closes
(voluntarily or involuntarily).
(2) Time-limited expenses incurred in
the process of relocating residents to
home and community-based settings or
another facility when a facility is closed
(voluntarily or involuntarily) or
downsized pursuant to an agreement
with the State Medicaid agency.
(3) Projects that support resident and
family councils and other consumer
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involvement in assuring quality care in
facilities.
(4) Facility improvement initiatives,
such as joint training of facility staff and
surveyors or technical assistance for
facilities implementing quality
assurance and performance
improvement programs.
(5) Development and maintenance of
temporary management or receivership
capability such as but not limited to,
recruitment, training, retention or other
system infrastructure expenses.
However, as specified in § 488.415(c), a
temporary manager’s salary must be
paid by the facility. In rare situations, if
the facility is closing, CMS plans to stop
or suspend continued payments to the
facility under § 489.55 of this chapter
during the temporary manager’s duty
period, and CMS determines that
extraordinary action is necessary to
protect the residents until relocation
efforts are successful, civil money
penalty funds may be used to pay the
manager’s salary.
(c) At a minimum, proposed activities
submitted to CMS for prior approval
must include a description of the
intended outcomes, deliverables, and
sustainability; and a description of the
methods by which the activity results
will be assessed, including specific
measures.
(d) Civil money penalty funds may
not be used for activities that have been
disapproved by CMS.
(e) The State must maintain an
acceptable plan for the effective use of
civil money funds, including a
description of methods by which the
State will:
(1) Solicit, accept, monitor, and track
projects utilizing civil money penalty
funds including any funds used for state
administration.
(2) Make information about the use of
civil money penalty funds publicly
available, including about the dollar
amount awarded for approved projects,
the grantee or contract recipients, the
results of projects, and other key
information.
(3) Ensure that:
(i) A core amount of civil money
penalty funds will be held in reserve for
emergencies, such as relocation of
residents pursuant to an involuntary
termination from Medicare and
Medicaid.
(ii) A reasonable amount of funds,
beyond those held in reserve under
paragraph (i) of this section, will be
awarded or contracted each year for the
purposes specified in this section.
(f) If CMS finds that a State has not
spent civil money penalty funds in
accordance with this section, or fails to
make use of funds to benefit the quality
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Federal Register / Vol. 79, No. 87 / Tuesday, May 6, 2014 / Proposed Rules
of care or life of residents, or fails to
maintain an acceptable plan for the use
of funds that is approved by CMS, then
CMS may withhold future
disbursements of civil money penalty
funds to the State until the State has
submitted an acceptable plan to comply
with this section.
Dated: April 16, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare &
Medicaid Services.
Approved: April 22, 2014.
Kathleen Sebelius,
Secretary.
[FR Doc. 2014–10319 Filed 5–1–14; 4:15 pm]
BILLING CODE 4120–01–P
DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
50 CFR Part 17
[Docket No. FWS–R8–ES–2013–0049;
4500030113]
RIN 1018–AZ33
Endangered and Threatened Wildlife
and Plants; Designation of Critical
Habitat for Diplacus vandenbergensis
(Vandenberg Monkeyflower)
Fish and Wildlife Service,
Interior.
ACTION: Proposed rule; revision and
reopening of the comment period.
AGENCY:
We, the U.S. Fish and
Wildlife Service (Service), announce the
reopening of the public comment period
on the proposed rule to designate
critical habitat for Diplacus
vandenbergensis (Vandenberg
monkeyflower). We also announce the
availability of a draft economic analysis
(DEA) of the proposed designation of
critical habitat for D. vandenbergensis
and an amended required
determinations section of the proposal.
In addition, in this document, we are
proposing revised unit names for the
four previously described subunits, and
a revised acreage for one subunit based
on information we received on the
proposal. These revisions result in an
increase of approximately 24 acres (10
hectares) in the proposed designation of
critical habitat. We are reopening the
comment period to allow all interested
parties an opportunity to comment
simultaneously on the proposed rule,
the associated DEA, the amended
required determinations section, and the
unit revisions described in this
document. Comments previously
submitted need not be resubmitted, as
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SUMMARY:
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they will be fully considered in
preparation of the final rule.
DATES: The comment period for the
proposed rule published October 29,
2013 (at 78 FR 64446), is reopened. We
will consider comments on that
proposed rule or the changes to it
proposed in this document that we
receive or that are postmarked on or
before June 5, 2014. Comments
submitted electronically using the
Federal eRulemaking Portal (see
ADDRESSES section, below) must be
received by 11:59 p.m. Eastern Time on
the closing date.
ADDRESSES:
Document availability: You may
obtain copies of the proposed rule and
the associated DEA (Industrial
Economics, Incorporated (IEc) 2014;
Service 2014) on the internet at https://
www.regulations.gov at Docket No.
FWS–R8–ES–2013–0049 or by mail
from the Ventura Fish and Wildlife
Office (see FOR FURTHER INFORMATION
CONTACT).
Written comments: You may submit
written comments by one of the
following methods:
(1) Electronically: Go to the Federal
eRulemaking Portal: https://
www.regulations.gov. Search for Docket
No. FWS–R8–ES–2013–0049 (the docket
number for the proposed critical habitat
rule).
(2) By hard copy: Submit by U.S. mail
or hand-delivery to: Public Comments
Processing, Attn: FWS–R8–ES–2013–
0049; Division of Policy and Directives
Management; U.S. Fish and Wildlife
Service; 4401 N. Fairfax Drive, MS
2042–PDM; Arlington, VA 22203.
We request that you send comments
only by the methods described above.
We will post all comments on https://
www.regulations.gov. This generally
means that we will post any personal
information you provide us (see the
Public Comments section below for
more information).
FOR FURTHER INFORMATION CONTACT:
Stephen P. Henry, Acting Field
Supervisor, Ventura Fish and Wildlife
Office, U.S. Fish and Wildlife Service,
2493 Portola Road, Suite B, Ventura, CA
93003; telephone 805–644–1766;
facsimile 805–644–3958. Persons who
use a telecommunications device for the
deaf (TDD) may call the Federal
Information Relay Service (FIRS) at
800–877–8339.
SUPPLEMENTARY INFORMATION:
Public Comments
We will accept written comments and
information during this reopened
comment period on our proposed
designation of critical habitat for
PO 00000
Frm 00088
Fmt 4702
Sfmt 4702
25797
Diplacus vandenbergensis (hereafter
referred to as Vandenberg
monkeyflower) that was published in
the Federal Register on October 29,
2013 (78 FR 64446), our DEA (which
comprises an economics screening
memorandum (IEc 2014) and the
Service’s Incremental Effects
Memorandum (Service 2014)) of the
proposed designation, the amended
required determinations provided in
this document, and the revisions to the
names and one unit as described in this
document. We will consider
information and recommendations from
all interested parties. We are
particularly interested in comments
concerning:
(1) The reasons why we should or
should not designate habitat as ‘‘critical
habitat’’ under section 4 of the
Endangered Species Act (16 U.S.C. 1531
et seq.) (Act), including whether there
are threats to the species from human
activity, the degree those threats can be
expected to increase due to the
designation, and whether that increase
in threat outweighs the benefit of
designation such that the designation of
critical habitat is not prudent.
(2) Specific information on:
(a) The amount and distribution of
Vandenberg monkeyflower and its
habitat;
(b) What may constitute ‘‘physical or
biological features essential to the
conservation of the species,’’ within the
geographical range currently occupied
by the species;
(c) Where these features are currently
found;
(d) Whether any of these features may
require special management
considerations or protection;
(e) What areas currently occupied by
the species and that contain features
essential to the conservation of the
species should be included in the
designation and why; and
(f) What areas not occupied at the
time of listing are essential for the
conservation of the species and why.
(3) Land use designations and current
or planned activities in the areas
occupied by the species or proposed to
be designated as critical habitat, and
possible impacts of these activities on
this species and proposed critical
habitat.
(4) Comments or information that may
assist us in identifying or clarifying the
primary constituent elements (PCEs).
(5) Information on the projected and
reasonably likely impacts of climate
change on Vandenberg monkeyflower
and proposed critical habitat.
(6) Any probable economic, national
security, or other relevant impacts of
designating any area that may be
E:\FR\FM\06MYP1.SGM
06MYP1
]]>Agencies
[Federal Register Volume 79, Number 87 (Tuesday, May 6, 2014)]
[Proposed Rules]
[Pages 25767-25797]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-10319]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 488
[CMS-1605-P]
RIN 0938-AS07
Medicare Program; Prospective Payment System and Consolidated
Billing for Skilled Nursing Facilities for FY 2015
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would update the payment rates used under
the prospective payment system (PPS) for skilled nursing facilities
(SNFs) for fiscal year (FY) 2015. In addition, it includes a proposal
to adopt the most recent Office of Management and Budget (OMB)
statistical area delineations to identify a facility's urban or rural
status for the purpose of determining which set of rate tables would
apply to the facility and to determine the SNF PPS wage index including
a proposed one-year transition with a blended wage index for all
providers for FY 2015. It also includes a discussion of the SNF therapy
payment research currently underway within CMS. This proposed rule also
proposes a revision to policies related to the Change of Therapy (COT)
Other Medicare Required Assessment (OMRA). This proposed rule includes
a discussion of a provision related to the
[[Page 25768]]
Affordable Care Act involving Civil Money Penalties. Finally, this
proposed rule includes a discussion of observed trends related to
therapy utilization among SNF providers and a discussion of
accelerating health information exchange in SNFs.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on June 30, 2014.
ADDRESSES: In commenting, please refer to file code CMS-1605-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to https://www.regulations.gov. Within the search bar, enter
the Regulation Identifier Number associated with this regulation, 0938-
AS07, and then click on the ``Comment Now'' box.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1605-P, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1605-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments before the close of the comment period
to either of the following addresses:
a. Centers for Medicare & Medicaid Services, Department of Health
and Human Services, Room 445-G, Hubert H. Humphrey Building, 200
Independence Avenue SW., Washington, DC 20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal Government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. Centers for Medicare & Medicaid Services, Department of Health
and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call telephone number (410) 786-7195 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
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.
Karen Tritz, (410) 786-8021, for information related to Civil Money
Penalties.
Bill Ullman, (410) 786-5667, for information related to level of care
determinations, consolidated billing, and general information.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
Availability of Certain Tables Exclusively Through the Internet on the
CMS Web Site
In the past, tables setting forth the Wage Index for Urban Areas
Based on CBSA Labor Market Areas and the Wage Index Based on CBSA Labor
Market Areas for Rural Areas were 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 finalized in the FY 2014 SNF PPS final rule (78 FR
47936, 47964), beginning in FY 2015, these wage index tables are no
longer published in the Federal Register. Instead, these tables will be
available exclusively through the Internet. The wage index tables for
this proposed rule are available exclusively through the Internet on
the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.
Readers who experience any problems accessing any of the tables
that are posted on the CMS Web sites identified above should contact
Kia Sidbury at (410) 786-7816.
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 and Benefits
II. Background
A. Statutory Basis and Scope
B. Initial Transition
C. Required Annual Rate Updates
III. SNF PPS Rate Setting Methodology and FY 2015 Update
A. Federal Base Rates
B. SNF Market Basket Update
1. SNF Market Basket Index
2. Use of the SNF Market Basket Percentage
3. Forecast Error Adjustment
4. Multifactor Productivity Adjustment
a. Incorporating the Multifactor Productivity Adjustment Into
the Market Basket Update
5. Market Basket Update Factor for FY 2015
C. Case-Mix Adjustment
D. Wage Index Adjustment
E. Adjusted Rate Computation Example
IV. Additional Aspects of the SNF PPS
A. SNF Level of Care--Administrative Presumption
B. Consolidated Billing
C. Payment for SNF-Level Swing-Bed Services
V. Other Issues
A. Proposed Changes to SNF PPS Wage Index
1. Background
2. Proposed Implementation of New Labor Market Definitions
a. Micropolitan Areas
b. Urban Counties Becoming Rural
c. Rural Counties Becoming Urban
d. Urban Counties Moving to a Different Urban CBSA
e. Transition Period
3. Labor-Related Share
B. SNF Therapy Research Project
C. Proposed Revisions to Policies Related to the Change of
Therapy (COT) Other Medicare Required Assessment (OMRA)
[[Page 25769]]
D. Civil Money Penalties (Section 6111 of the Affordable Care
Act)
E. Observations on Therapy Utilization Trends
F. Accelerating Health Information Exchange in the SNF PPS
VI. Provisions of the Proposed Rule
VII. Collection of Information Requirements
VIII. Response to Comments
IX. Economic Analyses
Regulation Text
Acronyms
In addition, because of the many terms to which we refer by acronym
in this proposed 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
CMP Civil money penalties
CMS Centers for Medicare & Medicaid Services
COT Change of therapy
ECI Employment Cost Index
eCQM Electronically specified clinical quality measures
EHR Electronic health record
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
HIE Health information exchange
HIT Health information technology
HOMER Home office Medicare records
ICR Information Collection Requirements
IGI IHS (Information Handling Services) Global Insight, Inc.
IPPS Inpatient Prospective Payment System
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
NF Nursing facility
OMB Office of Management and Budget
OMRA Other Medicare Required Assessment
PAMA Protecting Access to Medicare Act of 2014, Pub. L 113-93
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 proposed rule would update the SNF prospective payment rates
for FY 2015 as required under section 1888(e)(4)(E) of the Act. It
would also respond 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,
certain specified information relating to the payment update (see
section II.C.).
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 proposed rule would reflect an
update to the rates that we published in the SNF PPS final rule for FY
2014 (78 FR 47936) which reflects the SNF market basket index, adjusted
by the forecast error correction, if applicable, and the multifactor
productivity adjustment for FY 2015.
C. Summary of Cost and Benefits
------------------------------------------------------------------------
Provision description Total transfers
------------------------------------------------------------------------
Proposed FY 2015 SNF PPS payment The overall economic impact of this
rate update. proposed rule would be an estimated
increase of $750 million in
aggregate payments to SNFs during
FY 2015.
------------------------------------------------------------------------
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 SNFs. 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 small
number of excluded services, 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). In addition, a detailed
discussion of the legislative history of the SNF PPS is available
online at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_07302013.pdf.
As noted in section I.F. of that legislative history, on March 23,
2010, the Patient Protection and Affordable Care Act (Pub. L. 111-148)
was enacted. Then, the Health Care and Education Reconciliation Act of
2010 (Pub. L. 111-152, enacted on March 30, 2010) amended certain
provisions of Pub. L. 111-148 and certain sections of the Social
Security Act and, in certain instances, included ``freestanding''
provisions. In this proposed rule, Public Law 111-148 and Public Law
111-152 are collectively referred to as the ``Affordable Care Act.'' In
section V. of this proposed rule, we include discussions of one
specific provision related to the Affordable Care Act involving Civil
Money Penalties (as discussed in section V.D.).
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
[[Page 25770]]
facility's first three cost reporting periods under the PPS, up to and
including the one that began in FY 2001. Thus, the SNF PPS is no longer
operating under the transition, as all facilities have been paid at the
full federal rate effective with cost reporting periods beginning in FY
2002. As we now base payments for SNFs entirely on the adjusted federal
per diem rates, 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 a
final rule that set forth updates to the SNF PPS payment rates for FY
2014 (78 FR 47936, August 6, 2013). We subsequently published two
correction notices (78 FR 61202, October 3, 2013, and 79 FR 63, January
2, 2014) with respect to that final rule, as well as a notice that made
corrections to the January 2, 2014 correction notice (79 FR 1742,
January 10, 2014).
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 for these
services during the upcoming FY.
The factors to be applied in making the area wage
adjustment for these services.
Along with other revisions discussed later in this preamble, this
proposed rule would provide the required annual updates to the per diem
payment rates for SNFs for FY 2015.
III. SNF PPS Rate Setting Methodology and FY 2015 Update
A. 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 to
the first effective year of the PPS (the 15-month period beginning July
1, 1998) using a SNF market basket index, and then standardized for
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.
B. SNF Market Basket Update
1. SNF Market Basket Index
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. We use the
SNF market basket index, adjusted in the manner described below, to
update the federal rates on an annual basis. In the SNF PPS final rule
for FY 2014 (78 FR 47939 through 47946), we revised and rebased the
market basket, which included updating the base year from FY 2004 to FY
2010.
For the FY 2015 proposed rule, the FY 2010-based SNF market basket
growth rate is estimated to be 2.4 percent, which is based on the IHS
Global Insight, Inc. (IGI) first quarter 2014 forecast with historical
data through fourth quarter 2013. In section III.B.5. of this proposed
rule, we discuss the specific application of this adjustment to the
forthcoming annual update of the SNF PPS payment rates.
2. Use of the SNF Market Basket Percentage
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 previous FY to the midpoint of the current FY. For
the federal rates set forth in this proposed rule, we use the
percentage change in the SNF market basket index to compute the update
factor for FY 2015. This is based on the IGI first quarter 2014
forecast (with historical data through the fourth quarter 2013) of the
FY 2015 percentage increase in the FY 2010-based SNF market basket
index for routine, ancillary, and capital-related expenses, which is
used to compute the update factor in this proposed rule. As discussed
in sections III.B.3. and III.B.4. of this proposed rule, this market
basket percentage change would be reduced by the forecast error
correction (as described in Sec. 413.337(d)(2)) if applicable, and by
the multifactor productivity adjustment as required by section
1888(e)(5)(B)(ii) of the Act. Finally, as discussed in section II.B. of
this proposed rule, we no longer compute update factors to adjust a
facility-specific portion of the SNF PPS rates, because the initial
three-phase transition period from facility-specific to full federal
rates that started with cost reporting periods beginning in July 1998
has expired.
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 final rule
for FY 2004 that first issued the market basket forecast error
adjustment (68 FR 46058, August 4, 2003), the adjustment will ``. . .
reflect both upward and
[[Page 25771]]
downward adjustments, as appropriate.''
For FY 2013 (the most recently available FY for which there is
final data), the estimated increase in the market basket index was 2.5
percentage points, while the actual increase for FY 2013 was 2.2
percentage points, resulting in the actual increase being 0.3
percentage point lower than the estimated increase. Accordingly, as the
difference between the estimated and actual amount of change in the
market basket index does not exceed the 0.5 percentage point threshold,
the payment rates for FY 2015 do not include a forecast error
adjustment. Table 1 shows the forecasted and actual market basket
amounts for FY 2013.
Table 1--Difference Between the Forecasted and Actual Market Basket Increases for FY 2013
----------------------------------------------------------------------------------------------------------------
Forecasted FY Actual FY 2013 FY 2013
Index 2013 increase * increase ** difference
----------------------------------------------------------------------------------------------------------------
SNF.......................................................... 2.5 2.2 -0.3
----------------------------------------------------------------------------------------------------------------
* Published in Federal Register; based on second quarter 2012 IGI forecast (2004-based index).
** Based on the first quarter 2014 IHS Global Insight forecast, with historical data through the fourth quarter
2013 (2004-based index).
4. Multifactor Productivity Adjustment
Section 3401(b) of the Affordable Care Act 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 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
According to section 1888(e)(5)(A) of the Act, the Secretary
``shall 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 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 2015 update, the MFP adjustment is calculated as the 10-
year moving average of changes in MFP for the period ending September
30, 2015, which is 0.4 percent. Consistent with section
1888(e)(5)(B)(i) of the Act and Sec. 413.337(d)(2) of the regulations,
the market basket percentage for FY 2015 for the SNF PPS is based on
IGI's first quarter 2014 forecast of the SNF market basket update, and
is estimated to be 2.4 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 (the 10-year moving
average of changes in MFP for the period ending September 30, 2015) of
0.4 percent, which is calculated as described above and based on IGI's
first quarter 2014 forecast. The resulting MFP-adjusted SNF market
basket update is equal to 2.0 percent, or 2.4 percent less 0.4
percentage point.
5. Market Basket Update Factor for FY 2015
Sections 1888(e)(4)(E)(ii)(IV) and 1888(e)(5)(i) of the Act require
that the update factor used to establish the FY 2015 unadjusted federal
rates be at a level equal to the market basket index percentage change.
Accordingly, we determined the total growth from the average market
basket level for the period of October 1, 2013 through September 30,
2014 to the average market basket level for the period of October 1,
2014 through September 30, 2015. This process yields an update factor
of 2.4 percent. As further explained in section III.B.3. of this
proposed rule, as applicable, we adjust the market basket update factor
by 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 difference
between the forecasted FY 2013 SNF market basket percentage change and
the actual FY 2013 SNF market basket percentage change (FY 2013 is the
most recently available FY for which there is final data) does not
exceed 0.5 percentage point, the FY 2015 market basket of 2.4 percent
would not be adjusted by the applicable difference. In addition, for FY
2015, section 1888(e)(5)(B)(ii) 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, 2015) of
0.4 percent, as described in section III.B.4. of this proposed rule.
[[Page 25772]]
The resulting MFP-adjusted SNF market basket update would be equal to
2.0 percent, or 2.4 percent less 0.4 percentage point. We note that if
more recent data become available (for example, a more recent estimate
of the 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 2015 SNF market basket
update, FY 2015 labor-related share relative importance, and MFP
adjustment in the FY 2015 SNF PPS final rule. We used the SNF market
basket, 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 2015 from average prices for FY 2014. We would further
adjust the rates by a wage index budget neutrality factor, described
later in this section. Tables 2 and 3 reflect the updated components of
the unadjusted federal rates for FY 2015, prior to adjustment for case-
mix.
While we would continue to compute and apply separate federal per
diem rates for SNFs located in urban and rural areas as we have in the
past, we propose to use the revised OMB statistical area delineations
discussed in Section V.A below to identify a facility's urban or rural
status for the purpose of determining which set of rate tables would
apply to a facility beginning on October 1, 2014. We believe that the
most current OMB delineations more accurately reflect the contemporary
urban and rural nature of areas across the country, and that use of
such delineations would allow us to more accurately determine the
appropriate rate tables to apply under the SNF PPS. Thus, we believe it
is appropriate to use the most current OMB delineations for this
purpose, in order to enhance the accuracy of payments under the SNF
PPS. We invite comments on this proposal.
Table 2--FY 2015 Unadjusted Federal Rate Per Diem Urban
----------------------------------------------------------------------------------------------------------------
Nursing--case- Therapy--case- Therapy--non-
Rate component mix mix case-mix Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount............................. $169.14 $127.41 $16.78 $86.32
----------------------------------------------------------------------------------------------------------------
Table 3--FY 2015 Unadjusted Federal Rate Per Diem Rural
----------------------------------------------------------------------------------------------------------------
Nursing--case- Therapy--case- Therapy--non-
Rate component mix mix case-mix Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount............................. $161.59 $146.90 $17.92 $87.92
----------------------------------------------------------------------------------------------------------------
C. Case-Mix Adjustment
Under section 1888(e)(4)(G)(i) of the Act, the federal rate also
incorporates an adjustment to account for facility 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 that the
Secretary establishes 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 interim final
rule with comment period that initially implemented the SNF PPS (63 FR
26252, May 12, 1998), 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 SNF PPS proposed rule for FY 2010 (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-
2007 during the STRIVE project, and 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. As discussed in section IV.A. of
this proposed rule, the clinical orientation of the case-mix
classification system supports the SNF PPS's use of an administrative
presumption that considers a beneficiary's initial case-mix
classification to assist in making certain SNF level of care
determinations. 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 our
Resident Assessment Instrument (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.
In addition, we note that section 511 of the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003 (MMA, Pub. L. 108-173)
amended section 1888(e)(12) of the Act to provide for a temporary
increase of 128 percent in the PPS per diem payment for any SNF
residents with Acquired Immune Deficiency Syndrome (AIDS), effective
with services furnished on or after October 1, 2004. This special add-
on for SNF residents with AIDS was to remain in effect until ``. . .
the Secretary certifies that there is an appropriate adjustment in the
case mix . . . to compensate for the increased costs associated with
[such] residents . . . .'' The add-on for SNF residents with AIDS is
also discussed in Program Transmittal
[[Page 25773]]
160 (Change Request 3291), issued on April 30, 2004,
which is available online at www.cms.gov/transmittals/downloads/r160cp.pdf. In the SNF PPS final rule for FY 2010 (74 FR 40288), we did
not address the certification of the add-on for SNF residents with AIDS
in that final rule's implementation of the case-mix refinements for
RUG-IV, 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.
For example, using FY 2012 data, we identified fewer than 4,355 SNF
residents with a diagnosis code of 042 (Human Immunodeficiency Virus
(HIV) Infection). For FY 2015, an urban facility with a resident with
AIDS in RUG-IV group ``HC2'' would have a case-mix adjusted per diem
payment of $422.77 (see Table 4) before the application of the MMA
adjustment. After an increase of 128 percent, this urban facility would
receive a case-mix adjusted per diem payment of approximately $963.92.
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
the Department published a final rule in the September 5, 2012 Federal
Register (77 FR 54664) which requires us to stop using ICD-9-CM on
September 30, 2014, and begin using the International Classification of
Diseases, 10th revision, Clinical Modification (ICD-10-CM), on October
1, 2014. Regarding the above-referenced ICD-9-CM diagnosis code of 042,
in the FY 2014 SNF PPS proposed rule (78 FR 26444, May 6, 2013), we
proposed to transition to the equivalent ICD-10-CM diagnosis code of
B20 upon the overall conversion to ICD-10-CM on October 1, 2014, and we
subsequently finalized that proposal in the FY 2014 SNF PPS final rule
(78 FR 47951 through 47952).
However, on April 1, 2014, the Protecting Access to Medicare Act of
2014 (PAMA) (Pub. L. No. 113-93) was enacted. Section 212 of PAMA,
titled ``Delay in Transition from ICD-9 to ICD-10 Code Sets,'' provides
that ``[t]he Secretary of Health and Human Services may not, prior to
October 1, 2015, adopt ICD-10 code sets as the standard for code sets
under section 1173(c) of the Social Security Act (42 U.S.C. 1320d-2(c))
and section 162.1002 of title 45, Code of Federal Regulations.'' As of
now, the Secretary has not implemented this provision under HIPAA. In
light of PAMA, the effective date of the change from ICD-9-CM code 042
to ICD-10-CM code B20 for purposes of applying the AIDS add-on would be
the date when ICD-10 becomes the required medical data code set for use
on Medicare SNF claims. Until that time, we would continue to use ICD-
9-CM code 042 for this purpose.
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 proposed rule reflect
the use of the RUG-IV case-mix classification system from October 1,
2014, through September 30, 2015. We list the proposed case-mix
adjusted RUG-IV payment rates, provided separately for urban and rural
SNFs, in Tables 4 and 5 with corresponding case-mix values. As
discussed above, facilities would use the proposed revised OMB
delineations in order to identify their urban or rural status for the
purpose of determining which set of rate tables would apply to them
beginning on October 1, 2014. These tables do not reflect the add-on
for SNF residents with AIDS enacted by section 511 of the MMA, which we
apply only after making all other adjustments (such as wage index and
case-mix).
Table 4-- 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 $451.60 $238.26 .............. $86.32 $776.18
RUL..................................... 2.57 1.87 434.69 238.26 .............. 86.32 759.27
RVX..................................... 2.61 1.28 441.46 163.08 .............. 86.32 690.86
RVL..................................... 2.19 1.28 370.42 163.08 .............. 86.32 619.82
RHX..................................... 2.55 0.85 431.31 108.30 .............. 86.32 625.93
RHL..................................... 2.15 0.85 363.65 108.30 .............. 86.32 558.27
RMX..................................... 2.47 0.55 417.78 70.08 .............. 86.32 574.18
RML..................................... 2.19 0.55 370.42 70.08 .............. 86.32 526.82
RLX..................................... 2.26 0.28 382.26 35.67 .............. 86.32 504.25
RUC..................................... 1.56 1.87 263.86 238.26 .............. 86.32 588.44
RUB..................................... 1.56 1.87 263.86 238.26 .............. 86.32 588.44
RUA..................................... 0.99 1.87 167.45 238.26 .............. 86.32 492.03
RVC..................................... 1.51 1.28 255.40 163.08 .............. 86.32 504.80
RVB..................................... 1.11 1.28 187.75 163.08 .............. 86.32 437.15
RVA..................................... 1.10 1.28 186.05 163.08 .............. 86.32 435.45
RHC..................................... 1.45 0.85 245.25 108.30 .............. 86.32 439.87
RHB..................................... 1.19 0.85 201.28 108.30 .............. 86.32 395.90
RHA..................................... 0.91 0.85 153.92 108.30 .............. 86.32 348.54
RMC..................................... 1.36 0.55 230.03 70.08 .............. 86.32 386.43
RMB..................................... 1.22 0.55 206.35 70.08 .............. 86.32 362.75
RMA..................................... 0.84 0.55 142.08 70.08 .............. 86.32 298.48
RLB..................................... 1.50 0.28 253.71 35.67 .............. 86.32 375.70
RLA..................................... 0.71 0.28 120.09 35.67 .............. 86.32 242.08
ES3..................................... 3.58 .............. 605.52 .............. 16.78 86.32 708.62
ES2..................................... 2.67 .............. 451.60 .............. 16.78 86.32 554.70
ES1..................................... 2.32 .............. 392.40 .............. 16.78 86.32 495.50
HE2..................................... 2.22 .............. 375.49 .............. 16.78 86.32 478.59
HE1..................................... 1.74 .............. 294.30 .............. 16.78 86.32 397.40
HD2..................................... 2.04 .............. 345.05 .............. 16.78 86.32 448.15
HD1..................................... 1.60 .............. 270.62 .............. 16.78 86.32 373.72
HC2..................................... 1.89 .............. 319.67 .............. 16.78 86.32 422.77
HC1..................................... 1.48 .............. 250.33 .............. 16.78 86.32 353.43
[[Page 25774]]
HB2..................................... 1.86 .............. 314.60 .............. 16.78 86.32 417.70
HB1..................................... 1.46 .............. 246.94 .............. 16.78 86.32 350.04
LE2..................................... 1.96 .............. 331.51 .............. 16.78 86.32 434.61
LE1..................................... 1.54 .............. 260.48 .............. 16.78 86.32 363.58
LD2..................................... 1.86 .............. 314.60 .............. 16.78 86.32 417.70
LD1..................................... 1.46 .............. 246.94 .............. 16.78 86.32 350.04
LC2..................................... 1.56 .............. 263.86 .............. 16.78 86.32 366.96
LC1..................................... 1.22 .............. 206.35 .............. 16.78 86.32 309.45
LB2..................................... 1.45 .............. 245.25 .............. 16.78 86.32 348.35
LB1..................................... 1.14 .............. 192.82 .............. 16.78 86.32 295.92
CE2..................................... 1.68 .............. 284.16 .............. 16.78 86.32 387.26
CE1..................................... 1.50 .............. 253.71 .............. 16.78 86.32 356.81
CD2..................................... 1.56 .............. 263.86 .............. 16.78 86.32 366.96
CD1..................................... 1.38 .............. 233.41 .............. 16.78 86.32 336.51
CC2..................................... 1.29 .............. 218.19 .............. 16.78 86.32 321.29
CC1..................................... 1.15 .............. 194.51 .............. 16.78 86.32 297.61
CB2..................................... 1.15 .............. 194.51 .............. 16.78 86.32 297.61
CB1..................................... 1.02 .............. 172.52 .............. 16.78 86.32 275.62
CA2..................................... 0.88 .............. 148.84 .............. 16.78 86.32 251.94
CA1..................................... 0.78 .............. 131.93 .............. 16.78 86.32 235.03
BB2..................................... 0.97 .............. 164.07 .............. 16.78 86.32 267.17
BB1..................................... 0.90 .............. 152.23 .............. 16.78 86.32 255.33
BA2..................................... 0.70 .............. 118.40 .............. 16.78 86.32 221.50
BA1..................................... 0.64 .............. 108.25 .............. 16.78 86.32 211.35
PE2..................................... 1.50 .............. 253.71 .............. 16.78 86.32 356.81
PE1..................................... 1.40 .............. 236.80 .............. 16.78 86.32 339.90
PD2..................................... 1.38 .............. 233.41 .............. 16.78 86.32 336.51
PD1..................................... 1.28 .............. 216.50 .............. 16.78 86.32 319.60
PC2..................................... 1.10 .............. 186.05 .............. 16.78 86.32 289.15
PC1..................................... 1.02 .............. 172.52 .............. 16.78 86.32 275.62
PB2..................................... 0.84 .............. 142.08 .............. 16.78 86.32 245.18
PB1..................................... 0.78 .............. 131.93 .............. 16.78 86.32 235.03
PA2..................................... 0.59 .............. 99.79 .............. 16.78 86.32 202.89
PA1..................................... 0.54 .............. 91.34 .............. 16.78 86.32 194.44
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 5--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 $431.45 $274.70 .............. $87.92 $794.07
RUL..................................... 2.57 1.87 415.29 274.70 .............. 87.92 777.91
RVX..................................... 2.61 1.28 421.75 188.03 .............. 87.92 697.70
RVL..................................... 2.19 1.28 353.88 188.03 .............. 87.92 629.83
RHX..................................... 2.55 0.85 412.05 124.87 .............. 87.92 624.84
RHL..................................... 2.15 0.85 347.42 124.87 .............. 87.92 560.21
RMX..................................... 2.47 0.55 399.13 80.80 .............. 87.92 567.85
RML..................................... 2.19 0.55 353.88 80.80 .............. 87.92 522.60
RLX..................................... 2.26 0.28 365.19 41.13 .............. 87.92 494.24
RUC..................................... 1.56 1.87 252.08 274.70 .............. 87.92 614.70
RUB..................................... 1.56 1.87 252.08 274.70 .............. 87.92 614.70
RUA..................................... 0.99 1.87 159.97 274.70 .............. 87.92 522.59
RVC..................................... 1.51 1.28 244.00 188.03 .............. 87.92 519.95
RVB..................................... 1.11 1.28 179.36 188.03 .............. 87.92 455.31
RVA..................................... 1.10 1.28 177.75 188.03 .............. 87.92 453.70
RHC..................................... 1.45 0.85 234.31 124.87 .............. 87.92 447.10
RHB..................................... 1.19 0.85 192.29 124.87 .............. 87.92 405.08
RHA..................................... 0.91 0.85 147.05 124.87 .............. 87.92 359.84
RMC..................................... 1.36 0.55 219.76 80.80 .............. 87.92 388.48
RMB..................................... 1.22 0.55 197.14 80.80 .............. 87.92 365.86
RMA..................................... 0.84 0.55 135.74 80.80 .............. 87.92 304.46
RLB..................................... 1.50 0.28 242.39 41.13 .............. 87.92 371.44
RLA..................................... 0.71 0.28 114.73 41.13 .............. 87.92 243.78
ES3..................................... 3.58 .............. 578.49 .............. 17.92 87.92 684.33
ES2..................................... 2.67 .............. 431.45 .............. 17.92 87.92 537.29
ES1..................................... 2.32 .............. 374.89 .............. 17.92 87.92 480.73
HE2..................................... 2.22 .............. 358.73 .............. 17.92 87.92 464.57
HE1..................................... 1.74 .............. 281.17 .............. 17.92 87.92 387.01
HD2..................................... 2.04 .............. 329.64 .............. 17.92 87.92 435.48
HD1..................................... 1.60 .............. 258.54 .............. 17.92 87.92 364.38
[[Page 25775]]
HC2..................................... 1.89 .............. 305.41 .............. 17.92 87.92 411.25
HC1..................................... 1.48 .............. 239.15 .............. 17.92 87.92 344.99
HB2..................................... 1.86 .............. 300.56 .............. 17.92 87.92 406.40
HB1..................................... 1.46 .............. 235.92 .............. 17.92 87.92 341.76
LE2..................................... 1.96 .............. 316.72 .............. 17.92 87.92 422.56
LE1..................................... 1.54 .............. 248.85 .............. 17.92 87.92 354.69
LD2..................................... 1.86 .............. 300.56 .............. 17.92 87.92 406.40
LD1..................................... 1.46 .............. 235.92 .............. 17.92 87.92 341.76
LC2..................................... 1.56 .............. 252.08 .............. 17.92 87.92 357.92
LC1..................................... 1.22 .............. 197.14 .............. 17.92 87.92 302.98
LB2..................................... 1.45 .............. 234.31 .............. 17.92 87.92 340.15
LB1..................................... 1.14 .............. 184.21 .............. 17.92 87.92 290.05
CE2..................................... 1.68 .............. 271.47 .............. 17.92 87.92 377.31
CE1..................................... 1.50 .............. 242.39 .............. 17.92 87.92 348.23
CD2..................................... 1.56 .............. 252.08 .............. 17.92 87.92 357.92
CD1..................................... 1.38 .............. 222.99 .............. 17.92 87.92 328.83
CC2..................................... 1.29 .............. 208.45 .............. 17.92 87.92 314.29
CC1..................................... 1.15 .............. 185.83 .............. 17.92 87.92 291.67
CB2..................................... 1.15 .............. 185.83 .............. 17.92 87.92 291.67
CB1..................................... 1.02 .............. 164.82 .............. 17.92 87.92 270.66
CA2..................................... 0.88 .............. 142.20 .............. 17.92 87.92 248.04
CA1..................................... 0.78 .............. 126.04 .............. 17.92 87.92 231.88
BB2..................................... 0.97 .............. 156.74 .............. 17.92 87.92 262.58
BB1..................................... 0.90 .............. 145.43 .............. 17.92 87.92 251.27
BA2..................................... 0.70 .............. 113.11 .............. 17.92 87.92 218.95
BA1..................................... 0.64 .............. 103.42 .............. 17.92 87.92 209.26
PE2..................................... 1.50 .............. 242.39 .............. 17.92 87.92 348.23
PE1..................................... 1.40 .............. 226.23 .............. 17.92 87.92 332.07
PD2..................................... 1.38 .............. 222.99 .............. 17.92 87.92 328.83
PD1..................................... 1.28 .............. 206.84 .............. 17.92 87.92 312.68
PC2..................................... 1.10 .............. 177.75 .............. 17.92 87.92 283.59
PC1..................................... 1.02 .............. 164.82 .............. 17.92 87.92 270.66
PB2..................................... 0.84 .............. 135.74 .............. 17.92 87.92 241.58
PB1..................................... 0.78 .............. 126.04 .............. 17.92 87.92 231.88
PA2..................................... 0.59 .............. 95.34 .............. 17.92 87.92 201.18
PA1..................................... 0.54 .............. 87.26 .............. 17.92 87.92 193.10
--------------------------------------------------------------------------------------------------------------------------------------------------------
D. Wage Index Adjustment
Section 1888(e)(4)(G)(ii) of the Act requires that we adjust the
federal rates to account for differences in area wage levels, using a
wage index that the Secretary determines appropriate. Since the
inception of the SNF PPS, we have used hospital inpatient wage data in
developing a wage index to be applied to SNFs. We propose to continue
this practice for FY 2015, as we continue to believe that in the
absence of SNF-specific wage data, using the hospital inpatient wage
index data is appropriate and reasonable for the SNF PPS. As explained
in the update notice for FY 2005 (69 FR 45786), 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 SNF
payments. For FY 2015, the updated wage data are for hospital cost
reporting periods beginning on or after October 1, 2010 and before
October 1, 2011 (FY 2011 cost report data).
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 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.
In addition, we propose to continue to use the same methodology
discussed in the SNF PPS final rule for FY 2008 (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 2015 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 would use the average wage index from all
contiguous Core-Based Statistical Areas (CBSAs) as a reasonable proxy.
For FY 2015, there are no rural geographic areas that do not have
hospitals, and thus, this methodology would not be applied. For rural
Puerto Rico, we would not apply this methodology 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, this methodology would produce a wage index for
rural Puerto Rico that is higher than that in half of its urban areas);
instead, we would continue to use the most recent wage index previously
available for that area. For urban areas without specific hospital wage
index data, we would 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 2015, the only urban area without wage
index data
[[Page 25776]]
available is CBSA 25980, Hinesville-Fort Stewart, GA.
Once calculated, we would apply the wage index adjustment to the
labor-related portion of the federal rate. 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. In the
SNF PPS final rule for FY 2014 (78 FR 47944 through 47946), we
finalized a proposal to revise 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; the labor-related portion of nonmedical professional fees;
administrative and facilities support services; all other--labor-
related services; 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 and FY 2015. 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 2015 than the base year weights
from the SNF market basket.
We calculate the labor-related relative importance for FY 2015 in
four steps. First, we compute the FY 2015 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
2015 price index level for that cost category by the total market
basket price index level. Third, we determine the FY 2015 relative
importance for each cost category by multiplying this ratio by the base
year (FY 2010) weight. Finally, we add the FY 2015 relative importance
for each of the labor-related cost categories (wages and salaries,
employee benefits, the labor-related portion of non-medical
professional fees, administrative and facilities support services, all
other: labor-related services, and a portion of capital-related
expenses) to produce the FY 2015 labor-related relative importance.
Tables 6 and 7 show the RUG-IV case-mix adjusted federal rates by
labor-related and non-labor-related components. As discussed above, the
proposed new OMB delineations would be used to identify a facility's
urban or rural status for the purpose of determining which set of rate
tables would apply to them beginning on October 1, 2014. Table 12 in
section V.A.3. provides the FY 2015 labor-related share components
based on the SNF market basket.
Table 6--RUG-IV Case-Mix Adjusted Federal Rates for Urban SNFs by Labor
and Non-Labor Component
------------------------------------------------------------------------
Total Labor Non-labor
RUG-IV Category rate portion portion
------------------------------------------------------------------------
RUX..................................... 776.18 $539.55 $236.63
RUL..................................... 759.27 527.79 231.48
RVX..................................... 690.86 480.24 210.62
RVL..................................... 619.82 430.86 188.96
RHX..................................... 625.93 435.10 190.83
RHL..................................... 558.27 388.07 170.20
RMX..................................... 574.18 399.13 175.05
RML..................................... 526.82 366.21 160.61
RLX..................................... 504.25 350.52 153.73
RUC..................................... 588.44 409.04 179.40
RUB..................................... 588.44 409.04 179.40
RUA..................................... 492.03 342.02 150.01
RVC..................................... 504.80 350.90 153.90
RVB..................................... 437.15 303.88 133.27
RVA..................................... 435.45 302.69 132.76
RHC..................................... 439.87 305.77 134.10
RHB..................................... 395.90 275.20 120.70
RHA..................................... 348.54 242.28 106.26
RMC..................................... 386.43 268.62 117.81
RMB..................................... 362.75 252.16 110.59
RMA..................................... 298.48 207.48 91.00
RLB..................................... 375.70 261.16 114.54
RLA..................................... 242.08 168.28 73.80
ES3..................................... 708.62 492.58 216.04
ES2..................................... 554.70 385.59 169.11
ES1..................................... 495.50 344.44 151.06
HE2..................................... 478.59 332.68 145.91
HE1..................................... 397.40 276.24 121.16
HD2..................................... 448.15 311.52 136.63
HD1..................................... 373.72 259.78 113.94
HC2..................................... 422.77 293.88 128.89
HC1..................................... 353.43 245.68 107.75
HB2..................................... 417.70 290.36 127.34
HB1..................................... 350.04 243.32 106.72
LE2..................................... 434.61 302.11 132.50
LE1..................................... 363.58 252.74 110.84
LD2..................................... 417.70 290.36 127.34
LD1..................................... 350.04 243.32 106.72
LC2..................................... 366.96 255.08 111.88
LC1..................................... 309.45 215.11 94.34
LB2..................................... 348.35 242.15 106.20
LB1..................................... 295.92 205.70 90.22
CE2..................................... 387.26 269.20 118.06
CE1..................................... 356.81 248.03 108.78
CD2..................................... 366.96 255.08 111.88
CD1..................................... 336.51 233.92 102.59
CC2..................................... 321.29 223.34 97.95
CC1..................................... 297.61 206.88 90.73
CB2..................................... 297.61 206.88 90.73
CB1..................................... 275.62 191.59 84.03
CA2..................................... 251.94 175.13 76.81
CA1..................................... 235.03 163.38 71.65
BB2..................................... 267.17 185.72 81.45
BB1..................................... 255.33 177.49 77.84
BA2..................................... 221.50 153.97 67.53
BA1..................................... 211.35 146.92 64.43
PE2..................................... 356.81 248.03 108.78
PE1..................................... 339.90 236.27 103.63
PD2..................................... 336.51 233.92 102.59
PD1..................................... 319.60 222.16 97.44
PC2..................................... 289.15 201.00 88.15
PC1..................................... 275.62 191.59 84.03
PB2..................................... 245.18 170.43 74.75
PB1..................................... 235.03 163.38 71.65
PA2..................................... 202.89 141.03 61.86
PA1..................................... 194.44 135.16 59.28
------------------------------------------------------------------------
Table 7--RUG-IV Case-Mix Adjusted Federal Rates for Rural SNFs by Labor
and Non-Labor Component
------------------------------------------------------------------------
Total Labor Non-labor
RUG-IV Category rate portion portion
------------------------------------------------------------------------
RUX..................................... 794.07 $551.98 $242.09
RUL..................................... 777.91 540.75 237.16
RVX..................................... 697.70 484.99 212.71
RVL..................................... 629.83 437.81 192.02
RHX..................................... 624.84 434.35 190.49
RHL..................................... 560.21 389.42 170.79
RMX..................................... 567.85 394.73 173.12
RML..................................... 522.60 363.27 159.33
RLX..................................... 494.24 343.56 150.68
RUC..................................... 614.70 427.30 187.40
RUB..................................... 614.70 427.30 187.40
RUA..................................... 522.59 363.27 159.32
RVC..................................... 519.95 361.43 158.52
RVB..................................... 455.31 316.50 138.81
RVA..................................... 453.70 315.38 138.32
RHC..................................... 447.10 310.79 136.31
RHB..................................... 405.08 281.58 123.50
RHA..................................... 359.84 250.14 109.70
RMC..................................... 388.48 270.04 118.44
RMB..................................... 365.86 254.32 111.54
RMA..................................... 304.46 211.64 92.82
RLB..................................... 371.44 258.20 113.24
RLA..................................... 243.78 169.46 74.32
ES3..................................... 684.33 475.70 208.63
ES2..................................... 537.29 373.49 163.80
ES1..................................... 480.73 334.17 146.56
HE2..................................... 464.57 322.94 141.63
HE1..................................... 387.01 269.02 117.99
HD2..................................... 435.48 302.72 132.76
HD1..................................... 364.38 253.29 111.09
HC2..................................... 411.25 285.87 125.38
HC1..................................... 344.99 239.81 105.18
HB2..................................... 406.40 282.50 123.90
HB1..................................... 341.76 237.57 104.19
LE2..................................... 422.56 293.73 128.83
LE1..................................... 354.69 246.56 108.13
LD2..................................... 406.40 282.50 123.90
LD1..................................... 341.76 237.57 104.19
LC2..................................... 357.92 248.80 109.12
LC1..................................... 302.98 210.61 92.37
LB2..................................... 340.15 236.45 103.70
LB1..................................... 290.05 201.62 88.43
CE2..................................... 377.31 262.28 115.03
CE1..................................... 348.23 242.07 106.16
CD2..................................... 357.92 248.80 109.12
CD1..................................... 328.83 228.58 100.25
CC2..................................... 314.29 218.47 95.82
CC1..................................... 291.67 202.75 88.92
CB2..................................... 291.67 202.75 88.92
CB1..................................... 270.66 188.14 82.52
CA2..................................... 248.04 172.42 75.62
[[Page 25777]]
CA1..................................... 231.88 161.19 70.69
BB2..................................... 262.58 182.53 80.05
BB1..................................... 251.27 174.67 76.60
BA2..................................... 218.95 152.20 66.75
BA1..................................... 209.26 145.46 63.80
PE2..................................... 348.23 242.07 106.16
PE1..................................... 332.07 230.83 101.24
PD2..................................... 328.83 228.58 100.25
PD1..................................... 312.68 217.35 95.33
PC2..................................... 283.59 197.13 86.46
PC1..................................... 270.66 188.14 82.52
PB2..................................... 241.58 167.93 73.65
PB1..................................... 231.88 161.19 70.69
PA2..................................... 201.18 139.85 61.33
PA1..................................... 193.10 134.23 58.87
------------------------------------------------------------------------
Section 1888(e)(4)(G)(ii) of the Act also requires that we apply
this wage index in a manner that does not result in aggregate payments
under the SNF PPS that are greater or less than would otherwise be made
if the wage adjustment had not been made. For FY 2015 (federal rates
effective October 1, 2014), we would apply an adjustment to fulfill the
budget neutrality requirement. We would 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 2014 to the weighted average wage
adjustment factor for FY 2015, based on the blended wage index for FY
2015 as proposed later in this proposed rule. For this calculation, we
use the same FY 2013 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 2015 would be 1.0001.
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 www.whitehouse.gov/omb/bulletins/b03-04.html, which announced revised definitions for MSAs, and the
creation of micropolitan statistical areas and combined statistical
areas.
In adopting the CBSA geographic designations, we provided for a
one-year transition in FY 2006 with a blended wage index for all
providers. For FY 2006, the wage index for each provider consisted of a
blend of 50 percent of the FY 2006 MSA-based wage index and 50 percent
of the FY 2006 CBSA-based wage index (both using FY 2002 hospital
data). We referred to the blended wage index as the FY 2006 SNF PPS
transition wage index. As discussed in the SNF PPS final rule for FY
2006 (70 FR 45041), since the expiration of this one-year transition on
September 30, 2006, we have used the full CBSA-based wage index values.
On February 28, 2013, OMB issued OMB Bulletin No. 13-01, announcing
revisions to the delineation of MSAs, Micropolitan Statistical Areas,
and Combined Statistical Areas, and guidance on uses of the delineation
of these areas. A copy of this bulletin is available online 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 on June 28, 2010, in the 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.
As discussed in the SNF PPS proposed rule for FY 2014 (78 FR
26448), the changes made by the bulletin and their ramifications
required extensive review by CMS before using them for the SNF PPS wage
index. Having completed our assessment, we are proposing changes to the
SNF PPS wage index based on the newest OMB delineations, as described
in OMB Bulletin No. 13-01, beginning in FY 2015, including a proposed
one-year transition with a blended wage index for FY 2015. These
proposed changes are discussed further in section V.A. of this proposed
rule. The proposed wage index applicable to FY 2015 is set forth in
Table A available on the CMS Web site at https://cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html. Table A
provides a crosswalk between the FY 2015 wage index for a provider
using the current OMB delineations in effect in FY 2014 and the FY 2015
wage index using the proposed revised OMB delineations, as well as the
proposed transition wage index values that would be in effect in FY
2015 if these proposed changes are finalized.
E. Adjusted Rate Computation Example
Using the hypothetical SNF XYZ described below, Table 8 shows the
adjustments made to the federal per diem rates to compute the
provider's actual per diem PPS payment. We derive the Labor and Non-
labor columns from Table 6. The wage index used in this example is
based on the proposed transition wage index, which may be found in
Table A as referenced above. As illustrated in Table 8, SNF XYZ's total
PPS payment would equal $42,299.26.
Table 8--Adjusted Rate Computation Example
SNF XYZ: Located in Cedar Rapids, IA (Urban CBSA 16300) Wage Index: 0.8883
[See Proposed Transition Wage Index in Table A] \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Adjusted Adjusted Percent Medicare
RUG-IV Group Labor Wage index labor Non-labor rate adjustment days Payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
RVX............................................. $480.24 0.8883 $426.60 $210.62 $637.22 $637.22 14 $8,921.08
ES2............................................. 385.59 0.8883 342.52 169.11 511.63 511.63 30 15,348.90
RHA............................................. 242.28 0.8883 215.22 106.26 321.48 321.48 16 5,143.68
CC2 *........................................... 223.34 0.8883 198.39 97.95 296.34 675.66 10 6,756.60
BA2............................................. 153.97 0.8883 136.77 67.53 204.30 204.30 30 6,129.00
........... ........... ........... ........... ........... ........... 100 42,299.26
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Reflects a 128 percent adjustment from section 511 of the MMA.
\1\ Available on the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.
[[Page 25778]]
IV. Additional Aspects of the SNF PPS
A. SNF Level of Care--Administrative Presumption
The establishment of the SNF PPS did not change Medicare's
fundamental requirements for SNF coverage. However, because the case-
mix classification is based, in part, on the beneficiary's need for
skilled nursing care and therapy, we have attempted, where possible, to
coordinate claims review procedures with the existing resident
assessment process and case-mix classification system discussed in
section III.C. of this proposed 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, 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 five-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 five-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
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 proposed rule, we would 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.
B. 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 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 small list of services from the consolidated billing
provision (primarily those services furnished by physicians and certain
other types of practitioners), which remain separately 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).
A detailed discussion of the legislative history of the
consolidated billing provision is available on the SNF PPS Web site at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_07302013.pdf. In particular, 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 the provision. We discuss this BBRA
amendment in greater detail in the SNF PPS proposed and final rules for
FY 2001 (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 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 proposed rule
for FY 2001, 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
[[Page 25779]]
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 final rule for FY 2001 (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: they must fall within one of the four service categories
specified in the BBRA; and they 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 this
proposed rule, we specifically invite 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. We may consider excluding a particular service if it meets our
criteria for exclusion as specified above. Commenters should identify
in their comments the specific HCPCS code that is associated with the
service in question, as well as their rationale for requesting that the
identified HCPCS code(s) be excluded.
We note that the original BBRA amendment (as well as the
implementing regulations) identified a set of excluded services by
means of specifying HCPCS codes that were in effect as of a particular
date (in that case, as of July 1, 1999). Identifying the excluded
services in this manner made it possible for us to utilize program
issuances as the vehicle for accomplishing routine updates of the
excluded codes, to reflect any minor revisions that might subsequently
occur in the coding system itself (for example, the assignment of a
different code number to the same service). Accordingly, in the event
that we identify through the current rulemaking cycle any new services
that would actually represent a substantive change in the scope of the
exclusions from SNF consolidated billing, we would identify these
additional excluded services by means of the HCPCS codes that are in
effect as of a specific date (in this case, as of October 1, 2014). By
making any new exclusions in this manner, we could similarly accomplish
routine future updates of these additional codes through the issuance
of program instructions.
C. 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), Part A pays on a reasonable cost
basis for SNF-level services furnished under a swing-bed agreement.
However, in accordance with section 1888(e)(7) of the Act, these
services furnished by non-CAH rural hospitals are paid under the SNF
PPS, effective with cost reporting periods beginning on or after July
1, 2002. As explained in the FY 2002 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 have now come
under the SNF PPS. Therefore, all rates and wage indexes outlined in
earlier sections of this proposed 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/.
V. Other Issues
A. Proposed Changes to SNF PPS Wage Index
1. Background
Section 1888(e)(4)(G)(ii) of the Act requires that we adjust the
federal rates to account for differences in area wage levels, using a
wage index that the Secretary determines appropriate. Since the
inception of the SNF PPS, we have used hospital inpatient wage data,
exclusive of the occupational mix adjustment, in developing a wage
index to be applied to SNFs. As noted previously in section III.D of
this proposed rule, we are proposing to continue that practice for FY
2015. The wage index used for the SNF PPS is calculated using the
Inpatient Prospective Payment System (IPPS) wage index data on the
basis of the labor market area in which the acute care hospital is
located, but without taking into account geographic reclassifications
under section 1886(d)(8) and (d)(10) of the Act, and without applying
the IPPS rural floor under section 4410 of the BBA, the IPPS imputed
rural floor under 42 CFR 412.64(h), and the outmigration adjustment
under section 1886(d)(13) (see the FY 2006 SNF PPS proposed rule (70 FR
29090 through 29092)). The applicable SNF wage index value is assigned
to a SNF on the basis of the labor market area in which the SNF is
geographically located. Under section 1888(e)(4)(G)(ii) of the Act,
beginning with FY 2006, we delineate labor market areas based on the
Core-Based Statistical Areas (CBSAs) established by the Office of
Management and Budget (OMB). The current statistical areas used in FY
2014 are based on OMB standards published on December 27, 2000 (65 FR
82228) and Census 2000 data and Census Bureau population estimates for
2007 and 2008 (OMB Bulletin No. 10-02). For a discussion of OMB's
delineations of CBSAs and our implementation of the CBSA definitions,
we refer readers to the preamble of the FY 2006 SNF PPS proposed rule
(70 FR 29090 through 29096) and final rule (70 FR 45040 through 45041).
As stated in the FY 2014 SNF PPS proposed rule (78 FR 26448) and final
rule (78 FR 47952), on February 28, 2013, OMB issued OMB Bulletin No.
13-01, which established revised delineations for Metropolitan
Statistical Areas, Micropolitan Statistical Areas, and Combined
Statistical Areas, and provided guidance on the use of the delineations
of these statistical areas. A copy of this bulletin may be obtained at
https://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf. According to OMB, ``[t]his bulletin 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
[[Page 25780]]
on June 28, 2010, in the 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 OMB bulletin does
contain a number of significant changes. For example, there are new
CBSAs, urban counties that have become rural, rural counties that have
become urban, and existing CBSAs that have been split apart. However,
because the bulletin was not issued until February 28, 2013, with
supporting data not available until later, and because the changes made
by the bulletin and their ramifications needed to be extensively
reviewed and verified, we were unable to undertake such a lengthy
process before publication of the FY 2014 SNF PPS proposed rule and,
thus, did not implement changes to the wage index for FY 2014 based on
these new OMB delineations. In the FY 2014 SNF PPS final rule (78 FR
47952), we stated that we intended to propose changes to the wage index
based on the most current OMB delineations in this FY 2015 SNF PPS
proposed rule. As discussed below, in this proposed rule, we are
proposing to implement the new OMB delineations as described in the
February 28, 2013 OMB Bulletin No. 13-01, for SNF PPS wage index
beginning in FY 2015.
2. Proposed Implementation of New Labor Market Delineations
As discussed in the FY 2014 SNF PPS proposed rule (78 FR 26448) and
final rule (78 FR 47952), CMS delayed implementing the new OMB
statistical area delineations to allow for sufficient time to assess
the new changes. We believe it is important for the SNF PPS to use the
latest OMB delineations available in order to maintain a more accurate
and up-to-date payment system that reflects the reality of population
shifts and labor market conditions. While CMS and other stakeholders
have explored potential alternatives to the current CBSA-based labor
market system (we refer readers to the CMS Web site at www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Reform.html), no consensus has been achieved regarding how best to
implement a replacement system. As discussed in the FY 2005 IPPS final
rule (69 FR 49027), ``While we recognize that MSAs are not designed
specifically to define labor market areas, we believe they do represent
a useful proxy for this purpose.'' We further believe that using the
most current OMB delineations would increase the integrity of the SNF
PPS wage index by creating a more accurate representation of geographic
variation in wage levels. We have reviewed our findings and impacts
relating to the new OMB delineations, and have concluded that there is
no compelling reason to further delay implementation. Because we
believe that we have broad authority under section 1888(e)(4)(G)(ii) to
determine the labor market areas used for the SNF PPS wage index, and
because we also believe that the most current OMB delineations
accurately reflect the local economies and wage levels of the areas in
which hospitals are currently located, we are proposing to implement
the new OMB delineations as described in the February 28, 2013 OMB
Bulletin No. 13-01, for the SNF PPS wage index effective beginning in
FY 2015. As discussed further below, we are proposing to implement a
one-year transition with a blended wage index for all providers in FY
2015 to assist providers in adapting to the new OMB delineations (if we
finalize implementation of such delineations for the SNF PPS wage index
beginning in FY 2015). We invite comments on this proposal. This
proposed transition is discussed in more detail below.
a. Micropolitan Statistical Areas
As discussed in the FY 2006 SNF PPS proposed rule (70 FR 29093
through 29094) and final rule (70 FR 45041), CMS considered how to use
the Micropolitan Statistical Area definitions in the calculation of the
wage index. OMB defines a ``Micropolitan Statistical Area'' as a CBSA
``associated with at least one urban cluster that has a population of
at least 10,000, but less than 50,000'' (75 FR 37252). We refer to
these as Micropolitan Areas. After extensive impact analysis,
consistent with the treatment of these areas under the IPPS as
discussed in the FY 2005 IPPS final rule (69 FR 49029 through 49032),
CMS determined the best course of action would be to treat Micropolitan
Areas as ``rural'' and include them in the calculation of each state's
SNF PPS rural wage index (see 70 FR 29094 and 70 FR 45040 through
45041)). Thus, the SNF PPS statewide rural wage index is determined
using IPPS hospital data from hospitals located in non-MSA areas, and
the statewide rural wage index is assigned to SNFs located in those
areas. Because Micropolitan Areas tend to encompass smaller population
centers and contain fewer hospitals than MSAs, we determined that if
Micropolitan Areas were to be treated as separate labor market areas,
the SNF PPS wage index would have included significantly more single-
provider labor market areas. As we explained in the FY 2006 SNF PPS
proposed rule (70 FR 29094), recognizing Micropolitan Areas as
independent labor markets would generally increase the potential for
dramatic shifts in year-to-year wage index values because a single
hospital (or group of hospitals) could have a disproportionate effect
on the wage index of an area. Dramatic shifts in an area's wage index
from year to year are problematic and create instability in the payment
levels from year to year, which could make fiscal planning for SNFs
difficult if we adopted this approach. For these reasons, we adopted a
policy to include Micropolitan Areas in the state's rural wage area for
purposes of the SNF PPS wage index, and have continued this policy
through the present.
Based upon the new 2010 Decennial Census data, a number of urban
counties have switched status and have joined or became Micropolitan
Areas, and some counties that once were part of a Micropolitan Area,
have become urban. Overall, there are fewer Micropolitan Areas (541)
under the new OMB delineations based on the 2010 Census than existed
under the latest data from the 2000 Census (581). We believe that the
best course of action would be to continue the policy established in
the FY 2006 SNF PPS final rule and include Micropolitan Areas in each
state's rural wage index. These areas continue to be defined as having
relatively small urban cores (populations of 10,000 to 49,999). We do
not believe it would be appropriate to calculate a separate wage index
for areas that typically may include only a few hospitals for the
reasons discussed in the FY 2006 SNF PPS proposed rule, and as
discussed above. Therefore, in conjunction with our proposal to
implement the new OMB labor market delineations beginning in FY 2015
and consistent with the treatment of Micropolitan Areas under the IPPS,
we are proposing to continue to treat Micropolitan Areas as ``rural''
and to include Micropolitan Areas in the calculation of the state's
rural wage index.
b. Urban Counties Becoming Rural
As previously discussed, we are proposing to implement the new OMB
statistical area delineations (based upon the 2010 decennial Census
data) beginning in FY 2015 for the SNF PPS wage index. Our analysis
shows that a total of 37 counties (and county equivalents) that are
currently considered part of an urban CBSA would be considered located
in a rural
[[Page 25781]]
area, beginning in FY 2015, if we adopt the new OMB delineations. Table
9 below lists the 37 urban counties that would be rural if we finalize
our proposal to implement the new OMB delineations.
Table 9--Counties That Would Lose Urban Status
--------------------------------------------------------------------------------------------------------------------------------------------------------
County State Previous CBSA Previous urban area (constituent counties)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Greene County........................... IN 14020 Bloomington, IN.
Anson County............................ NC 16740 Charlotte-Gastonia-Rock Hill, NC-SC.
Franklin County......................... IN 17140 Cincinnati-Middletown, OH-KY-IN.
Stewart County.......................... TN 17300 Clarksville, TN-KY.
Howard County........................... MO 17860 Columbia, MO.
Delta County............................ TX 19124 Dallas-Fort Worth-Arlington, TX.
Pittsylvania County..................... VA 19260 Danville, VA.
Danville City........................... VA 19260 Danville, VA.
Preble County........................... OH 19380 Dayton, OH.
Gibson County........................... IN 21780 Evansville, IN-KY.
Webster County.......................... KY 21780 Evansville, IN-KY.
Franklin County......................... AR 22900 Fort Smith, AR-OK.
Ionia County............................ MI 24340 Grand Rapids-Wyoming, MI.
Newaygo County.......................... MI 24340 Grand Rapids-Wyoming, MI.
Greene County........................... NC 24780 Greenville, NC.
Stone County............................ MS 25060 Gulfport-Biloxi, MS.
Morgan County........................... WV 25180 Hagerstown-Martinsburg, MD-WV.
San Jacinto County...................... TX 26420 Houston-Sugar Land-Baytown, TX.
Franklin County......................... KS 28140 Kansas City, MO-KS.
Tipton County........................... IN 29020 Kokomo, IN.
Nelson County........................... KY 31140 Louisville/Jefferson County, KY-IN.
Geary County............................ KS 31740 Manhattan, KS.
Washington County....................... OH 37620 Parkersburg-Marietta-Vienna, WV-OH.
Pleasants County........................ WV 37620 Parkersburg-Marietta-Vienna, WV-OH.
George County........................... MS 37700 Pascagoula, MS.
Power County............................ ID 38540 Pocatello, ID.
Cumberland County....................... VA 40060 Richmond, VA.
King and Queen County................... VA 40060 Richmond, VA.
Louisa County........................... VA 40060 Richmond, VA.
Washington County....................... MO 41180 St. Louis, MO-IL.
Summit County........................... UT 41620 Salt Lake City, UT.
Erie County............................. OH 41780 Sandusky, OH.
Franklin County......................... MA 44140 Springfield, MA.
Ottawa County........................... OH 45780 Toledo, OH.
Greene County........................... AL 46220 Tuscaloosa, AL.
Calhoun County.......................... TX 47020 Victoria, TX.
Surry County............................ VA 47260 Virginia Beach-Norfolk-Newport News, VA-NC.
--------------------------------------------------------------------------------------------------------------------------------------------------------
We are proposing that the wage data for all hospitals located in
the counties listed above would now be considered rural when
calculating their respective state's rural wage index value, which
rural wage index value would be used under the SNF PPS. Furthermore,
for SNF providers currently located in an urban county that would be
considered rural, should this proposal be finalized, CMS would utilize
the rural unadjusted per-diem rates, found in Table 3 above, as the
basis for determining this facility's payment rates beginning on
October 1, 2014.
c. Rural Counties Becoming Urban
Analysis of the new OMB delineations (based upon the 2010 decennial
Census data) shows that a total of 105 counties (and county
equivalents) that are currently located in rural areas would be located
in urban areas, if we finalize our proposal to implement the new OMB
delineations. Table 10 below lists the 105 rural counties that would be
urban if we finalize this proposal.
Table 10--Counties That Would Gain Urban Status
--------------------------------------------------------------------------------------------------------------------------------------------------------
County State New CBSA Urban area (constituent counties)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Utuado Municipio........................ PR 10380 Aguadilla-Isabela, PR.
Linn County............................. OR 10540 Albany, OR.
Oldham County........................... TX 11100 Amarillo, TX.
Morgan County........................... GA 12060 Atlanta-Sandy Springs-Roswell, GA.
Lincoln County.......................... GA 12260 Augusta-Richmond County, GA-SC.
Newton County........................... TX 13140 Beaumont-Port Arthur, TX.
Fayette County.......................... WV 13220 Beckley, WV.
Raleigh County.......................... WV 13220 Beckley, WV.
Golden Valley County.................... MT 13740 Billings, MT.
Oliver County........................... ND 13900 Bismarck, ND.
[[Page 25782]]
Sioux County............................ ND 13900 Bismarck, ND.
Floyd County............................ VI 13980 Blacksburg-Christiansburg-Radford, VA.
De Witt County.......................... IL 14010 Bloomington, IL.
Columbia County......................... PA 14100 Bloomsburg-Berwick, PA.
Montour County.......................... PA 14100 Bloomsburg-Berwick, PA.
Allen County............................ KY 14540 Bowling Green, KY.
Butler County........................... KY 14540 Bowling Green, KY.
St. Mary's County....................... MD 15680 California-Lexington Park, MD.
Jackson County.......................... IL 16060 Carbondale-Marion, IL.
Williamson County....................... IL 16060 Carbondale-Marion, IL.
Franklin County......................... PA 16540 Chambersburg-Waynesboro, PA.
Iredell County.......................... NC 16740 Charlotte-Concord-Gastonia, NC-SC.
Lincoln County.......................... NC 16740 Charlotte-Concord-Gastonia, NC-SC.
Rowan County............................ NC 16740 Charlotte-Concord-Gastonia, NC-SC.
Chester County.......................... SC 16740 Charlotte-Concord-Gastonia, NC-SC.
Lancaster County........................ SC 16740 Charlotte-Concord-Gastonia, NC-SC.
Buckingham County....................... VA 16820 Charlottesville, VA.
Union County............................ IN 17140 Cincinnati, OH-KY-IN.
Hocking County.......................... OH 18140 Columbus, OH.
Perry County............................ OH 18140 Columbus, OH.
Walton County........................... FL 18880 Crestview-Fort Walton Beach-Destin, FL.
Hood County............................. TX 23104 Dallas-Fort Worth-Arlington, TX.
Somervell County........................ TX 23104 Dallas-Fort Worth-Arlington, TX.
Baldwin County.......................... AL 19300 Daphne-Fairhope-Foley, AL.
Monroe County........................... PA 20700 East Stroudsburg, PA.
Hudspeth County......................... TX 21340 El Paso, TX.
Adams County............................ PA 23900 Gettysburg, PA.
Hall County............................. NE 24260 Grand Island, NE.
Hamilton County......................... NE 24260 Grand Island, NE.
Howard County........................... NE 24260 Grand Island, NE.
Merrick County.......................... NE 24260 Grand Island, NE.
Montcalm County......................... MI 24340 Grand Rapids-Wyoming, MI.
Josephine County........................ OR 24420 Grants Pass, OR.
Tangipahoa Parish....................... LA 25220 Hammond, LA.
Beaufort County......................... SC 25940 Hilton Head Island-Bluffton-Beaufort, SC.
Jasper County........................... SC 25940 Hilton Head Island-Bluffton-Beaufort, SC.
Citrus County........................... FL 26140 Homosassa Springs, FL.
Butte County............................ ID 26820 Idaho Falls, ID.
Yazoo County............................ MS 27140 Jackson, MS.
Crockett County......................... TN 27180 Jackson, TN.
Kalawao County.......................... HI 27980 Kahului-Wailuku-Lahaina, HI.
Maui County............................. HI 27980 Kahului-Wailuku-Lahaina, HI.
Campbell County......................... TN 28940 Knoxville, TN.
Morgan County........................... TN 28940 Knoxville, TN.
Roane County............................ TN 28940 Knoxville, TN.
Acadia Parish........................... LA 29180 Lafayette, LA.
Iberia Parish........................... LA 29180 Lafayette, LA.
Vermilion Parish........................ LA 29180 Lafayette, LA.
Cotton County........................... OK 30020 Lawton, OK.
Scott County............................ IN 31140 Louisville/Jefferson County, KY-IN.
Lynn County............................. TX 31180 Lubbock, TX.
Green County............................ WI 31540 Madison, WI.
Benton County........................... MS 32820 Memphis, TN-MS-AR.
Midland County.......................... MI 33220 Midland, MI.
Martin County........................... TX 33260 Midland, TX.
Le Sueur County......................... MN 33460 Minneapolis-St. Paul-Bloomington, MN-WI.
Mille Lacs County....................... MN 33460 Minneapolis-St. Paul-Bloomington, MN-WI.
Sibley County........................... MN 33460 Minneapolis-St. Paul-Bloomington, MN-WI.
Maury County............................ TN 34980 Nashville-Davidson-Murfreesboro-Franklin, TN.
Craven County........................... NC 35100 New Bern, NC.
Jones County............................ NC 35100 New Bern, NC.
Pamlico County.......................... NC 35100 New Bern, NC.
St. James Parish........................ LA 35380 New Orleans-Metairie, LA.
Box Elder County........................ UT 36260 Ogden-Clearfield, UT.
Gulf County............................. FL 37460 Panama City, FL.
Custer County........................... SD 39660 Rapid City, SD.
Fillmore County......................... MN 40340 Rochester, MN.
[[Page 25783]]
Yates County............................ NY 40380 Rochester, NY.
Sussex County........................... DE 41540 Salisbury, MD-DE.
Worcester County........................ MA 41540 Salisbury, MD-DE.
Highlands County........................ FL 42700 Sebring, FL.
Webster Parish.......................... LA 43340 Shreveport-Bossier City, LA.
Cochise County.......................... AZ 43420 Sierra Vista-Douglas, AZ.
Plymouth County......................... IA 43580 Sioux City, IA-NE-SD.
Union County............................ SC 43900 Spartanburg, SC.
Pend Oreille County..................... WA 44060 Spokane-Spokane Valley, WA.
Stevens County.......................... WA 44060 Spokane-Spokane Valley, WA.
Augusta County.......................... VA 44420 Staunton-Waynesboro, VA.
Staunton City........................... VA 44420 Staunton-Waynesboro, VA.
Waynesboro City......................... VA 44420 Staunton-Waynesboro, VA.
Little River County..................... AR 45500 Texarkana, TX-AR.
Sumter County........................... FL 45540 The Villages, FL.
Pickens County.......................... AL 46220 Tuscaloosa, AL.
Gates County............................ NC 47260 Virginia Beach-Norfolk-Newport News, VA-NC.
Falls County............................ TX 47380 Waco, TX.
Columbia County......................... WA 47460 Walla Walla, WA.
Walla Walla County...................... WA 47460 Walla Walla, WA.
Peach County............................ GA 47580 Warner Robins, GA.
Pulaski County.......................... GA 47580 Warner Robins, GA.
Culpeper County......................... VA 47894 Washington-Arlington-Alexandria, DC-VA-MD-WV.
Rappahannock County..................... VA 47894 Washington-Arlington-Alexandria, DC-VA-MD-WV.
Jefferson County........................ NY 48060 Watertown-Fort Drum, NY.
Kingman County.......................... KS 48620 Wichita, KS.
Davidson County......................... NC 49180 Winston-Salem, NC.
Windham County.......................... CT 49340 Worcester, MA-CT.
--------------------------------------------------------------------------------------------------------------------------------------------------------
We are proposing that when calculating the area wage index, the
wage data for hospitals located in these counties would be included in
their new respective urban CBSAs. Furthermore, for SNF providers
currently located in a rural county that would be considered urban,
should this proposal be finalized, CMS would utilize the urban
unadjusted per-diem rates, found in Table 2 above, as the basis for
determining this facility's payment rates beginning on October 1, 2014
d. Urban Counties Moving to a Different Urban CBSA
In addition to rural counties becoming urban and urban counties
becoming rural, several urban counties would shift from one urban CBSA
to another urban CBSA under our proposal to adopt the new OMB
delineations. In other cases, applying the new OMB delineations would
involve a change only in CBSA name or number, while the CBSA continues
to encompass the same constituent counties. For example, CBSA 29140
(Lafayette, IN), would experience both a change to its number and its
name, and would become CBSA 29200 (Lafayette-West Lafayette, IN), while
all of its three constituent counties would remain the same. We are not
discussing these proposed changes in this section because they are
inconsequential changes with respect to the SNF PPS wage index.
However, in other cases, if we adopt the new OMB delineations, counties
would shift between existing and new CBSAs, changing the constituent
makeup of the CBSAs.
In one type of change, an entire CBSA would be subsumed by another
CBSA. For example, CBSA 37380 (Palm Coast, FL) currently is a single
county (Flagler, FL) CBSA. Flagler County would be a part of CBSA 19660
(Deltona-Daytona Beach-Ormond Beach, FL) under the new OMB
delineations.
In another type of change, some CBSAs have counties that would
split off to become part of or to form entirely new labor market areas.
For example, CBSA 37964 (Philadelphia Metropolitan Division of MSA
37980) currently is comprised of five Pennsylvania counties (Bucks,
Chester, Delaware, Montgomery, and Philadelphia). If we adopt the new
OMB delineations, Montgomery, Bucks, and Chester counties would split
off and form the new CBSA 33874 (Montgomery County-Bucks County-Chester
County, PA Metropolitan Division of MSA 37980), while Delaware and
Philadelphia counties would remain in CBSA 37964.
Finally, in some cases, a CBSA would lose counties to another
existing CBSA if we adopt the new OMB delineations. For example,
Lincoln County and Putnam County, WV would move from CBSA 16620
(Charleston, WV) to CBSA 26580 (Huntington-Ashland, WV-KY-OH). CBSA
16620 would still exist in the new labor market delineations with fewer
constituent counties. Table 11 lists the urban counties that would move
from one urban CBSA to another urban CBSA if we adopt the new OMB
delineations.
Table 11--Counties That Would Change to a Different CBSA
------------------------------------------------------------------------
Prior CBSA New CBSA County State
------------------------------------------------------------------------
11300................ 26900 Madison County. IN.
[[Page 25784]]
11340................ 24860 Anderson County SC.
14060................ 14010 McLean County.. IL.
37764................ 15764 Essex County... MA.
16620................ 26580 Lincoln County. WV.
16620................ 26580 Putnam County.. WV.
16974................ 20994 DeKalb County.. IL.
16974................ 20994 Kane County.... IL.
21940................ 41980 Ceiba Municipio PR.
21940................ 41980 Fajardo PR.
Municipio.
21940................ 41980 Luquillo PR.
Municipio.
26100................ 24340 Ottawa County.. MI.
31140................ 21060 Meade County... KY.
34100................ 28940 Grainger County TN.
35644................ 35614 Bergen County.. NJ.
35644................ 35614 Hudson County.. NJ.
20764................ 35614 Middlesex NJ.
County.
20764................ 35614 Monmouth County NJ.
20764................ 35614 Ocean County... NJ.
35644................ 35614 Passaic County. NJ.
20764................ 35084 Somerset County NJ.
35644................ 35614 Bronx County... NY.
35644................ 35614 Kings County... NY.
35644................ 35614 New York County NY.
35644................ 20524 Putnam County.. NY.
35644................ 35614 Queens County.. NY.
35644................ 35614 Richmond County NY.
35644................ 35614 Rockland County NY.
35644................ 35614 Westchester NY.
County.
37380................ 19660 Flagler County. FL.
37700................ 25060 Jackson County. MS.
37964................ 33874 Bucks County... PA.
37964................ 33874 Chester County. PA.
37964................ 33874 Montgomery PA.
County.
39100................ 20524 Dutchess County NY.
39100................ 35614 Orange County.. NY.
41884................ 42034 Marin County... CA.
41980................ 11640 Arecibo PR.
Municipio.
41980................ 11640 Camuy Municipio PR.
41980................ 11640 Hatillo PR.
Municipio.
41980................ 11640 Quebradillas PR.
Municipio.
48900................ 34820 Brunswick NC.
County.
49500................ 38660 Gu[aacute]nica PR.
Municipio.
49500................ 38660 Guayanilla PR.
Municipio.
49500................ 38660 Pe[ntilde]uelas PR.
Municipio.
49500................ 38660 Yauco Municipio PR.
------------------------------------------------------------------------
If providers located in these counties move from one CBSA to
another under the new OMB delineations, there may be impacts, both
negative and positive, upon their specific wage index values. As
discussed below, we propose to implement a transition wage index to
adjust for these possible impacts.
e. Transition Period
Overall, we believe implementing the new OMB delineations would
result in wage index values being more representative of the actual
costs of labor in a given area. Further, we recognize that some
providers (15 percent) would have a higher wage index due to our
proposed implementation of the new labor market area delineations.
However, we also recognize that more providers (22 percent) would
experience decreases in wage index values as a result of our proposed
implementation of the new labor market area delineations. Therefore, we
believe it would be appropriate to consider, as we did in FY 2006,
whether or not a transition period should be used in order to implement
these proposed changes to the wage index.
We considered having no transition period and fully implementing
the proposed new OMB delineations beginning in FY 2015. This would mean
that we would adopt the revised OMB delineations for all providers on
October 1, 2014. However, this would not provide any time for providers
to adapt to the new OMB delineations. As discussed above, more
providers would experience a decrease in wage index due to
implementation of the proposed new OMB delineations than would
experience an increase. Thus, we believe that it would be appropriate
to provide for a transition period to mitigate the resulting short-term
instability and negative impacts on these providers, and to provide
time for providers to adjust to their new labor market area
delineations. Furthermore, in light of the comments received during the
FY 2006 rulemaking cycle on our proposal in the FY 2006 SNF PPS
proposed rule (70 FR 29094-29095) to adopt the new CBSA definitions
without a transition period, we anticipate that providers would have
similar concerns with not having a transition period for the proposed
new OMB delineations. Therefore, as further discussed below, similar to
the policy
[[Page 25785]]
adopted in the FY 2006 SNF PPS final rule (70 FR 45041) when we first
adopted OMB's CBSA definitions for purposes of the SNF PPS wage index,
we are proposing a one-year transition blended wage index for all SNFs
to assist providers in adapting to the new OMB delineations (should we
finalize implementation of such delineations for the SNF PPS wage index
beginning in FY 2015). In determining an appropriate transition
methodology, consistent with the objectives set forth in the FY 2006
SNF PPS final rule (70 FR 45041), we looked for approaches that would
provide relief to the largest percentage of adversely-affected SNFs
with the least impact to the rest of the facilities.
First, we considered transitioning the wage index to the revised
OMB delineations over a number of years in order minimize the impact of
the proposed wage index changes in a given year. However, we also
believe this must be balanced against the need to ensure the most
accurate payments possible, which argues for a faster transition to the
revised OMB delineations. As discussed above in section V.A.2 of this
proposed rule, we believe that using the most current OMB delineations
would increase the integrity of the SNF PPS wage index by creating a
more accurate representation of geographic variation in wage levels. As
such, we believe that utilizing a one-year (rather than a multiple
year) transition with a blended wage index in FY 2015 would strike the
best balance.
Second, we considered what type of blend would be appropriate for
purposes of the transition wage index. We are proposing that providers
would receive a one-year blended wage index using 50 percent of their
FY 2015 wage index based on the proposed new OMB delineations and 50
percent of their FY 2015 wage index based on the OMB delineations used
in FY 2014. We believe that a 50/50 blend would best mitigate the
negative payment impacts associated with the implementation of the
proposed new OMB delineations. While we considered alternatives to the
50/50 blend, we believe this type of split balances the increases and
decreases in wage index values associated with this proposal, as well
as provides a readily understandable calculation for providers.
Next, we considered whether or not the blended wage index should be
used for all providers or for only a subset of providers, such as those
providers that would experience a decrease in their respective wage
index values due to implementation of the revised OMB delineations. If
we were to apply the transition policy only to those providers that
would experience a decrease in their respective wage index values due
to the implementation of the revised OMB delineations, then providers
that would experience either no change in wage index or an increase in
wage index due to the revised OMB delineations would be immediately
transitioned to the FY 2015 wage index under the revised OMB
delineations. As required in Section 1888(e)(4)(G)(ii) of the Act, the
wage index adjustment must be implemented in a budget-neutral manner.
As such, if we were to apply the transition policy only to those
providers that would experience a decrease in their respective wage
index values due to implementation of the revised OMB delineations, the
budget neutrality factor, discussed in section III.D, calculated based
on this this approach would be 0.9986, which would result in reduced
base rates for all providers as compared to the budget neutrality
factor of 1.0001 which would result from applying the blended wage
index to all providers. Furthermore, based on our analysis of the wage
index changes associated with fully implementing the revised OMB
delineations, we determined that the new OMB delineations would only
affect the wage index values of approximately 37 percent of facilities.
Given that our goal is to provide relief to the largest percentage of
adversely-affected SNFs with the least impact to the rest of the
facilities (whose wage index values either would remain the same or
would increase), we believe that using a blended wage index for all
providers would be the best option. This option would assist the 22
percent of providers that would be adversely affected by the proposed
implementation of the new OMB delineations without reducing the base
rates for all providers, 63 percent of which would otherwise be
unaffected by the proposed implementation of the new OMB delineations.
In other words, this option is based on a balance between the interests
of all SNF providers, including the 15 percent of providers that would
experience an increase in their wage index value due to the proposed
implementation of the new OMB delineations, the 22 percent of providers
that would experience a decrease in their wage index value due to the
proposed implementation of the new OMB delineations, and the 63 percent
of providers that would be unaffected by the proposed implementation of
the new OMB delineations. As discussed above, if we were to apply the
blended wage index only to the 22 percent of providers that would
experience a decrease in their respective wage index values due to the
proposed implementation of the new OMB delineations in an effort to
preserve the full increase in wage index value for the 15 percent of
providers that would experience such an increase due to the proposed
implementation of the new OMB delineations, the budget neutrality
factor of 1.0001 referenced in section III.D, which is based on
applying the blended wage index to all providers, would be revised to
0.9986. As such, this would mean a reduction in the base rate for all
providers, most notably the 63 percent of providers that would be
unaffected by the proposed implementation of the new OMB delineations,
but also for that 15 percent of providers that would experience an
increase in their wage index value.
Moreover, while providers experience wage index changes from year
to year based on updating the wage data, full implementation of the
proposed new OMB delineations would dramatically increase the magnitude
of those changes for some providers. Year-to-year wage index changes
usually vary from decreases as high as 10 percent to increases as high
as 10 percent. Using FY 2011 wage data (the data used for the FY 2015
wage index), the range of changes in the wage index values due solely
to full implementation of the proposed OMB delineations would span from
decreases of over 20 percent to increases of over 30 percent.
Therefore, in addition to mitigating the impact of the proposed OMB
delineations on the facilities that are adversely affected by them and
providing a period to adjust, we believe a transition wage index could
also mitigate the volatility of the SNF PPS wage index caused by these
proposed changes.
Therefore, for the reasons discussed above, if we finalize
implementation of the new OMB delineations, we are proposing to apply a
one-year transition with a 50/50 blended wage index for all providers
in FY 2015. We propose to calculate the FY 2015 wage indexes using both
the current FY 2014 and proposed new labor market delineations.
Specifically, providers would receive 50 percent of their FY 2015 wage
index based on the new OMB delineations, and 50 percent of their FY
2015 wage index based on the labor market area delineations for FY 2014
(both using FY 2011 hospital wage data). This ultimately results in an
average of the two values. As we stated in the FY 2006 SNF PPS final
rule (70 FR 45041), we believe that our proposed transition approach
would best achieve our objective of providing relief to the largest
percentage of adversely-affected
[[Page 25786]]
SNFs with the least impact to the rest of the facilities, because it
reduces the impact of the transition on the base rates for all
providers. For the reasons discussed above, and based on provider
reaction during the FY 2006 rulemaking cycle to the proposed adoption
of the new CBSA definitions, we are proposing to provide a one-year
blended wage index for all SNFs to assist providers in adapting to
these proposed changes. We refer to this blended wage index as the FY
2015 SNF PPS transition wage index. This transition policy would be for
a one-year period, going into effect October 1, 2014, and continuing
through September 30, 2015. Thus, beginning October 1, 2015, the wage
index for all SNFs would be fully based on the new OMB delineations. We
invite comments on our proposed transition methodology, as well as on
the other transition options discussed above.
The proposed wage index applicable to FY 2015 is set forth in Table
A available on the CMS Web site at https://cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html. Table A provides a
crosswalk between the FY 2015 wage index for a provider using the
current OMB delineations in effect in FY 2014 and the FY 2015 wage
index using the proposed revised OMB delineations, as well as the
proposed transition wage index values that would be in effect in FY
2015 if these proposed changes are finalized.
3. Labor-Related Share
Each year, we calculate a revised labor-related share based on the
relative importance of labor-related cost categories in the SNF market
basket as discussed in Section III.D of this proposed rule. Table 12
summarizes the proposed updated labor-related share for FY 2015,
compared to the labor-related share that was used for the FY 2014 SNF
PPS final rule.
Table 12--Labor-Related Relative Importance, FY 2014 and FY 2015
----------------------------------------------------------------------------------------------------------------
Relative importance, Relative importance,
labor-related, FY 2014 labor-related, FY 2015
13:2 forecast \1\ 14:1 forecast \2\
----------------------------------------------------------------------------------------------------------------
Wages and salaries............................................ 49.118 49.116
Employee benefits............................................. 11.423 11.373
Nonmedical Professional fees: labor-related................... 3.446 3.460
Administrative and facilities support services................ 0.499 0.503
All Other: Labor-related services............................. 2.287 2.285
Capital-related (.391)........................................ 2.772 2.776
-------------------------------------------------
Total..................................................... 69.545 69.513
----------------------------------------------------------------------------------------------------------------
\1\ Published in the Federal Register; based on second quarter 2013 IGI forecast.
\2\ Based on first quarter 2014 IGI forecast, with historical data through fourth quarter 2013.
B. SNF Therapy Research Project
As discussed in the FY 2014 SNF PPS proposed rule (78 FR 26466, May
6, 2013), CMS contracted with Acumen, LLC and the Brookings Institution
to identify potential alternatives to the existing methodology used to
pay for therapy services received under the SNF PPS. Under the current
payment model, the therapy payment rate component of the SNF PPS is
based solely on the amount of therapy provided to a patient during the
7-day look-back period, regardless of the specific patient
characteristics. The amount of therapy a patient receives is used to
classify the resident into a RUG category, which then determines the
per diem payment for that resident. In the FY 2014 SNF PPS proposed
rule (78 FR 26466, May 6, 2013), we invited public comment on this
project. In the FY 2014 SNF PPS final rule (78 FR 47963, August 6,
2013), we discussed the comments we received on this project, all of
which supported the overall goals and objective of the project, and a
few highlighted the importance of maintaining contact with the
stakeholder community.
In this proposed rule, we are taking the opportunity to update the
public on the current state of this project. In September 2013, we
completed the first phase of the research project, which included a
literature review, stakeholder outreach, supplementary analyses, and a
comprehensive review of options for a viable alternative to the current
therapy payment model. CMS produced a report outlining the most
promising and viable options that we plan to pursue in the second phase
of the project. The report is available on the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
During the second phase of the project, which began in September
2013, our team will further develop the options outlined in the
aforementioned report and perform more comprehensive data analysis to
determine which of these options would work best as a potential
replacement for the existing therapy payment model. In keeping with the
public comments we received on this project previously, we also plan to
engage the stakeholder community by convening a Technical Expert Panel
during this second phase of the project to discuss the available
alternatives, as well as present some of the initial data analysis that
is currently being conducted. We hope that by convening this Technical
Expert Panel, we can best ensure that we utilize the expertise of the
stakeholder community in identifying the most viable alternative to the
current therapy payment model.
As before, comments may be included as part of comments on this
proposed rule. We are also soliciting comments outside the rulemaking
process and these comments should be sent via email to
SNFTherapyPayments@cms.hhs.gov. Information regarding this project can
be found on the project Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
C. Proposed Revisions to Policies Related to the Change of Therapy
(COT) Other Medicare Required Assessment (OMRA)
On October 1, 2011, CMS introduced the Change of Therapy (COT)
Other Medicare Required Assessment (OMRA), which is an assessment
designed to capture changes in the therapy services provided to a given
SNF resident during the past 7 days. As discussed in the FY 2012 SNF
PPS final rule, this assessment was implemented because we had found
that in certain cases, ``the therapy recorded on a given PPS assessment
did not provide an accurate account of the therapy provided to a given
resident outside the observation window used for the most recent
assessment'' (76 FR 48518).
[[Page 25787]]
To address this situation, effective for services provided on or
after October 1, 2011, we required facilities to complete a COT OMRA
for patients classified into a RUG-IV therapy category, whenever the
intensity of therapy (that is, the total reimbursable therapy minutes
delivered or other therapy category qualifiers, such as the number of
days the patient received therapy during the week or the number of
therapy disciplines) changes to such a degree that it would no longer
reflect the RUG-IV classification and payment assigned for a given SNF
resident based on the most recent assessment used for Medicare payment
(see 76 FR 48525). In addition, as discussed in the FY 2012 SNF PPS
final rule (76 FR 48523 through 48524, 48526), the COT OMRA policy also
applies to patients who are receiving a level of therapy sufficient for
classification into a therapy RUG, but are classified into a nursing
RUG because of index maximization. An evaluation of the necessity for a
COT OMRA must be completed every 7 calendar days starting from the day
following the Assessment Reference Date (ARD) set for the most recent
scheduled or unscheduled PPS assessment (or in the case of an End of
Therapy-Resumption-OMRA, starting the day that therapy resumes). This
rolling 7-day window is called the COT observation period. As discussed
in the FY 2012 SNF PPS final rule (76 FR 48523), the purpose of the COT
OMRA is to track changes in a patient's condition and in the provision
of therapy services more accurately to ensure that the patient is
placed in the appropriate RUG category, thereby improving the accuracy
of reimbursement.
As discussed above, the resident must be classified into a RUG-IV
therapy category or into a nursing RUG because of index maximization
(while receiving a level of therapy sufficient for classification into
a RUG-IV therapy category) in order for the COT OMRA requirements to
apply. However, since implementation of this assessment, we have
learned that, in rare cases where a resident has been classified into a
RUG-IV therapy category, therapy services provided to the resident
during a COT observation period may not be sufficient to continue to
qualify the resident for any therapy RUG, resulting in classification
of the resident into a non-therapy RUG. During a subsequent week when
the therapy services are sufficient to again qualify the resident for a
therapy RUG, providers have indicated that they cannot complete a
subsequent COT OMRA to reclassify the resident into a therapy RUG
because the resident is no longer in a therapy RUG or in a nursing RUG
because of index maximization as discussed above (pursuant to the
conditions set forth in the FY 2012 SNF PPS final rule and in Section
2.9 of the MDS 3.0 RAI manual). As a result, providers are unable to
use the COT OMRA to capture the increased therapy services provided to
the resident to ensure accurate payment for the services provided,
which is the express purpose of the COT OMRA.
Accordingly, we propose to revise the existing COT OMRA policy to
permit providers to complete a COT OMRA for a resident who is not
currently classified into a RUG-IV therapy group, or receiving a level
of therapy sufficient for classification into a RUG-IV therapy group as
discussed above, but only in those rare cases where the resident had
qualified for a RUG-IV therapy group on a prior assessment during the
resident's current Medicare Part A stay and had no discontinuation of
therapy services between Day 1 of the COT observation period for the
COT OMRA that classified the resident into his/her current non-therapy
RUG-IV group and the ARD of the COT OMRA that reclassified the patient
into a RUG-IV therapy group. Under the proposed policy, while a COT
OMRA may be used to reclassify a resident into a therapy RUG in the
circumstances described above, it may not be used to initially classify
a resident into a therapy RUG. We believe it is appropriate to revise
the COT OMRA policy in this manner to provide for more accurate payment
for services provided to those residents who have qualified for a RUG-
IV therapy group during their Medicare Part A stay and continue to
receive skilled therapy services during their Medicare Part A stay
(even though they may have been classified into a non-therapy RUG as
discussed above).
Consider, for example, if Mr. A. was classified into the RUG group
RUA on his 30-day assessment with an ARD set for Day 30 of his stay. On
Day 37, the facility checks how much therapy was provided to Mr. A. and
finds that while Mr. A. did receive the requisite number of therapy
minutes to qualify for this RUG category, he only received therapy on 4
distinct calendar days, which would make it impossible for him to
qualify for an Ultra-High Rehabilitation RUG group. Moreover, due to
the lack of 5 distinct calendar days of therapy and the lack of any
restorative nursing services, Mr. A. does not qualify for any therapy
RUG group. As a result, the facility must complete a COT OMRA for Mr.
A., on which he may only classify to a non-therapy RUG group. Let us
further assume that the facility continues to provide Mr. A. with
skilled therapy and that, when looking back on Mr. A.'s services from
Day 44 (7 days after the ARD of the COT OMRA), Mr. A. again qualifies
for classification in the RUG group RUA.
Under the existing COT OMRA policy, it would not be possible for
this provider to reclassify Mr. A. back into RUA from the non-therapy
group by using a COT OMRA. Instead, Mr. A. could only be classified
into a therapy RUG either by discontinuing his therapy using an End of
Therapy (EOT) OMRA and beginning a new therapy program and completing a
Start of Therapy (SOT) OMRA, or by waiting until the next scheduled
assessment. Under our proposed revised policy, this provider would be
permitted to complete a COT OMRA with an ARD of Day 44 in order to
reclassify Mr. A. back into the RUA group. The facility would then
continue to review the therapy services provided to Mr. A. in order to
ensure that these services continue to reflect Mr. A.'s current RUG-IV
therapy classification.
To further clarify the scope of this proposal, consider a slightly
different example in which Mr. A. is classified into the RUG group RUA
on his 30-day assessment with an ARD set for Day 30 of his stay. On Day
37, the facility checks the amount of therapy that was provided to Mr.
A. and finds that while Mr. A. did receive the requisite number of
therapy minutes to qualify for this RUG category, he only received
therapy on 4 distinct calendar days, which would make it impossible for
him to qualify for an Ultra-High Rehabilitation RUG group. Moreover,
due to the lack of 5 distinct calendar days of therapy and the lack of
any restorative nursing services, Mr. A. does not qualify for any
therapy RUG group. As a result, the facility must complete a COT OMRA
for Mr. A., on which he may only classify for a non-therapy RUG group.
However, as opposed to the previous situation where the resident's
therapy continued during the week following the COT OMRA, let us assume
that the facility decides to discontinue his therapy services by
completing an End of Therapy OMRA with an ARD set for Day 39, resulting
in a non-therapy RUG classification for Mr. A. The facility
subsequently decides to restart Mr. A.'s therapy services, beginning on
Day 41 of his stay. The facility looks back from Day 47 (7 days
following the day therapy began on Day 41, including Day 41) to review
the therapy services provided to Mr. A. during the prior week and finds
that Mr. A. would qualify for the RUG group RVA.
[[Page 25788]]
As in the prior example, under the existing COT OMRA policy, it
would not be possible for this provider to classify Mr. A. into RVA
from the non-therapy group by using a COT OMRA. However, as opposed to
the prior example, under the revised COT OMRA policy proposed in this
proposed rule, the facility would still not be permitted to complete
the COT OMRA in this instance, as a discontinuation of therapy services
had occurred between Day 1 of the COT observation period for the COT
OMRA that classified the resident into his/her current non-therapy RUG-
IV group and the ARD of the COT OMRA that would have been used to
reclassify the patient into a RUG-IV therapy group if it had been
permitted. Based on this example, in order to reclassify the resident
into a RUG-IV therapy group, the provider would need to either complete
a Start of Therapy OMRA or wait until the next regularly scheduled
assessment.
We believe this proposal would address the concern of those
providers who have experienced the rare occurrence of a COT OMRA
classifying a resident into a non-therapy RUG group from a therapy RUG
group, where the patient continues to receive therapy and later
qualifies again for a therapy RUG. We believe this proposed revision to
the COT OMRA policy would ensure the most accurate payment for therapy
services furnished to such residents by allowing providers to capture
variations in therapy services on a weekly basis. As with other similar
policy changes, if this revision is finalized, then we intend to
monitor the impact of this revision to ensure that is has the intended
effect. We invite comments on this proposed change to the existing COT
OMRA policy.
D. Civil Money Penalties (Section 6111 of the Affordable Care Act)
Sections 6111 of the Patient Protection and Affordable Care Act
(Affordable Care Act), amended sections 1819(h) and 1919(h) of the Act
to incorporate specific provisions pertaining to the imposition and
collection of civil money penalties (CMPs). Sections
1819(h)(2)(B)(ii)(IV)(ff) and 1919(h)(3)(C)(ii)(IV)(ff) of the Act
specifies that some portion of such amounts collected may be used to
support activities that benefit residents, including assistance to
support and protect residents of a facility that closes (voluntarily or
involuntarily) or is decertified (including offsetting costs of
relocating residents to home and community-based settings or another
facility), projects that support resident and family councils and other
consumer involvement in assuring quality care in facilities, and
facility improvement initiatives approved by the Secretary (including
joint training of facility staff and surveyors, technical assistance
for facilities implementing quality assurance programs, the appointment
of temporary management firms, and other activities approved by the
Secretary). These changes were implemented in a final rule published on
March 18, 2011 entitled ``Medicare and Medicaid Programs; Civil Money
Penalties for Nursing Homes.'' At Sec. 488.433, we specify that these
funds may not be used for survey and certification operations but must
be used entirely for activities that protect or improve the quality of
care for residents and that these activities must be approved by CMS.
This proposed rule would clarify statutory requirements as
specified in section 6111 of the Affordable Care Act regarding the
approval and use of CMPs imposed by CMS. It is important to note that
these clarifications not only apply to the Federal share of collected
CMP funds granted for approved projects that benefit residents under
Sec. 488.433, but they also apply to the portion of the CMPs collected
by CMS that is disbursed to the states based on the proportion of
Medicaid eligible nursing home residents under Sec. 488.442(e)(2) and
(f). The amendments made by section 6111 of the Affordable Care Act
makes it clear that the specified use of CMP funds collected from SNFs,
SNF/NFs, and NF-only facilities as a result of CMPs imposed by CMS,
must be approved by CMS by specifying that the activities that CMP
funds are used for must be approved by the Secretary. Sections
1819(h)(2)(B)(ii)(IV)(ff) and 1919(h)(3)(C)(ii)(IV)(ff) of the Act also
provide for flexibility on how CMP funds imposed by CMS may be used
within the bounds established by law. The regulations at Sec. 488.433
specify that collected CMP funds must be used entirely for activities
that protect or improve the quality of care for residents, and may not
be used for survey and certification operations. However, we are aware
of instances in which states have used federal CMP funds without
obtaining prior approval from CMS, have used these funds even though
CMS had disapproved their intended use, have not used these funds at
all, or have used these funds for purposes other than to support
activities that benefit residents as specified in statute and
regulation. For example, information reported by the CMS Regional
Offices for CY 2012 indicates that 24 states had not approved any
projects using CMP funds. While some states have only small amounts of
CMP funds available and seek to maintain a core reserve in the event of
emergencies or involuntary termination that necessitates timely
relocation for resident safety and well-being, other states maintain
significant amounts of funds. One state, for example, maintained more
than $15 million in FY 2012. While it is very prudent to maintain a
reserve fund for emergencies, we believe that maintenance of large
amounts of unused CMP funds is not desirable or consistent with
ensuring that collected CMP funds be used to benefit nursing home
residents. In addition, large amounts of unused CMP funds may create
the appearance that CMPs are being levied for purposes other than to
benefit nursing home residents.
A key function of the CMP remedy is to prompt quick compliance with
the federal health and safety requirements. These monies must be used
to support projects or activities that will benefit nursing home
residents. Entities applying for approval of projects utilizing CMP
funds must demonstrate that the planned use will benefit nursing home
residents and promote compliance with the regulations.
We propose changes to the CMS enforcement regulations at Sec.
488.433 to clarify and strengthen these provisions to provide more
specific instructions to states regarding the use of CMPs and the
approval process, and to permit an opportunity for greater transparency
and accountability of CMP monies utilized by States.
We invite public comment on our proposed changes. This proposed
rule would explicitly clarify the intended use and statutory
requirements of collected CMP funds. Specifically, we propose to: (1)
Specify that CMP funds may not be used for state management operations
except for the reasonable costs that are consistent with managing
projects utilizing CMP funds; (the rationale for this clarification is
explained further in section VI.); (2) clarify CMS's expectations that
States must obtain prior approval for use of these CMP funds; (3)
outline specific requirements that must be included in proposals
submitted for CMS approval; (4) specify that CMPs funds may not be used
for projects that have been disapproved by CMS; (5) specify that states
are responsible for having an acceptable plan to solicit, accept,
monitor and track projects utilizing CMP funds and make the results of
all approved projects publicly available on at least an annual basis;
(6) specify that state plans must ensure that a core amount of civil
money penalty funds will be held in reserve for emergencies,
[[Page 25789]]
such as relocation of residents in the event of involuntary termination
from Medicare and Medicaid, and (7) specify that if a state is not
spending collected CMPs in accordance with the law or not at all, that
CMS has authority to take appropriate steps to ensure that these funds
are used for their intended purpose, such as withholding future
disbursements of CMP amounts. We do not believe this has significant
cost implications and it will benefit nursing home residents to ensure
that CMP funds will be used for their intended purpose. We further
invite public comment on CMS's proposed methods to ensure compliance
with these requirements.
E. Observations on Therapy Utilization Trends
In the FY 2014 SNF PPS final rule (78 FR 47959 through 47960), we
discussed our monitoring efforts associated with the impact of certain
policy changes finalized in the FY 2012 SNF PPS final rule (76 FR
48486). We noted that we would continue these monitoring efforts and
report any new information as appropriate. We are not proposing new
Medicare policy in this discussion of observed trends but merely
highlighting that we will continue to monitor these observed trends
which may serve as the basis for future policy development.
In the FY 2014 SNF PPS proposed rule (78 FR 26464), we presented
data which compared various utilization metrics including, in
particular, the case-mix distribution for the RUG-IV therapy categories
(Ultra-High Rehabilitation or RU, Very-High Rehabilitation or RV, High
Rehabilitation or RH, Medium Rehabilitation or RM, and Low
Rehabilitation or RL), for FY 2011 and FY 2012. It was observed based
on those data that the percentage of billed days of service being
classified into the RU RUG groups had increased from 44.8 percent in FY
2011 to 48.6 percent in FY 2012, while utilization in all other therapy
RUG categories either remained stable or declined. We have since
updated this data set using data from FY 2013 and have posted a memo to
the SNF PPS Web site (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Spotlight.html) which
demonstrates that the percentage of billed service days in the RU RUG
groups has increased to over 50 percent. These revised data in the
aforementioned memo are presented in a slightly different format than
they have been presented in the past, which is to show how, over the
course of the past 3 years since October of 2010, the percentage of
residents classified into one of these Ultra-High Rehabilitation groups
has not only increased, but done so rather steadily.
The second identified trend that we would highlight here and is
discussed in the memo referenced above is that, most notably in the
cases of RU and RV RUG groups, the amount of therapy reported on the
MDS is just enough to surpass the relevant therapy minute threshold for
a given therapy RUG category. For example, as demonstrated in Figure 2
in the aforementioned memo, the percentage of claims-matched MDS
assessments in the range of 720 minutes to 739 minutes, which is just
enough to surpass the therapy minute threshold for RU RUG groups of 720
minutes, has increased from 21 percent in FY 2011 to 33 percent in FY
2013. As stated above, this trend also holds for residents classified
into a RV RUG group, where the largest percentage of service days were
provided in the 500 to 520 minutes range, which just surpasses the
therapy minute threshold for the RV RUG groups of 500 minutes.
We invite comment on the data presented here and the discussion of
observed trends.
F. Accelerating Health Information Exchange in SNFs
As we have stated in the past, we believe all patients, and others
involved in the patient's care, and their healthcare providers should
have consistent and timely access to their health information in a
standardized format that can be securely exchanged between the patient,
providers, and others involved in the patient's care. (HHS August 2013
Statement, ``Principles and Strategies for Accelerating Health
Information Exchange.'') The Department is committed to accelerating
health information exchange (HIE) through the use of electronic health
records (EHRs) and other types of health information technology (HIT)
across the broader care continuum through a number of initiatives
including: (1) Alignment of incentives and payment adjustments to
encourage provider adoption and optimization of HIT and HIE services
through Medicare and Medicaid payment policies; (2) adoption of common
standards and certification requirements for interoperable HIT; (3)
support for privacy and security of patient information across all HIE-
focused initiatives; and (4) governance of health information networks.
These initiatives are designed to improve care delivery and
coordination across the entire care continuum and encourage HIE among
all health care providers, including professionals and hospitals
eligible for the Medicare and Medicaid EHR Incentive Programs and those
who are not eligible for the EHR Incentive Programs. To increase
flexibility in ONC's HIT Certification Program and expand HIT
certification, ONC has issued a proposed rule concerning a voluntary
2015 Edition of EHR certification criteria which would more easily
accommodate certification of HIT used in other types of health care
settings where individual or institutional health care providers are
not typically eligible for incentive payments under the Medicare and
Medicaid EHR Incentive Programs, such as long-term and post-acute care
and behavioral health settings.
We believe that HIE and the use of certified EHRs by SNFs and other
types of providers that are ineligible for the Medicare and Medicaid
EHR Incentive Programs can effectively and efficiently help providers
improve internal care delivery practices, support management of patient
care across the continuum, and enable the reporting of electronically
specified clinical quality measures (eCQMs). More information on the
identification of EHR certification criteria and development of
standards applicable to SNFs can be found at:
https://healthit.gov/policy-researchers-implementers/standards-and-certification-regulations.
https://www.healthit.gov/facas/FACAS/health-it-policy-committee/hitpc-workgroups/certificationadoption.
https://wiki.siframework.org/LCC+LTPAC+Care+Transition+SWG.
https://wiki.siframework.org/Longitudinal+Coordination+of+Care.
VI. Provisions of the Proposed Rule
As discussed in section III. of this proposed rule, this proposed
rule would update the payment rates under the SNF PPS for FY 2015 as
required by section 1888(e)(4)(E)(ii) of the Act. In addition, we
propose to use the most current OMB delineations (discussed in section
V.A) to identify a facility's urban or rural status for the purpose of
determining which set of rate tables would apply to the facility
(section III.B.). Furthermore, as discussed in section V. of this
proposed rule, we propose changes to the wage index based on the most
current OMB delineations, including a one-year transition with a
blended wage index for FY 2015 (section V.A.); propose to revise the
policy governing use of the COT OMRA (section V.C.); and finally,
propose changes to the enforcement regulations related to civil money
penalties utilized by states (section V.D.).
[[Page 25790]]
With reference to the civil money penalty provisions discussed in
section V.D. of this proposed rule, we propose to modify current CMS
regulations to provide further clarification to states and the public
regarding prior approval and appropriate use of these federal-imposed
civil money penalty funds.
At Sec. 488.433, civil money penalties: Uses and approval of civil
money penalties imposed by CMS, we propose to amend this regulation to
specify that civil money penalties may not be used for state management
operations except for the costs that are consistent with managing the
civil money penalty funds, specify that all activities utilizing civil
money penalty funds must be approved in advance by CMS, outline
specific requirements that must be included in proposals submitted for
CMS approval, specify that states are responsible for monitoring and
tracking the results of all approved activities utilizing civil money
penalties and making this information publicly available, specify that
state plans must ensure that a core amount of civil money penalty funds
will be held in reserve for emergencies, such as relocation of
residents in the event of involuntary termination from Medicare and
Medicaid, and specify steps CMS will take if civil money penalty funds
are being used for disapproved purposes or not being used at all.
The proposed CMS regulation would explicitly clarify the intended
use of these civil money penalty funds including the processes for
prior approval of all activities using civil money penalty funds by CMS
and how CMS will address a state's use of civil money penalty funds for
activities that have been disapproved by CMS or used by states for
activities other than those explicitly specified in statute or
regulations.
At proposed Sec. 488.433(a), we would clarify that approved
projects may work to improve residents' quality of life and not just
quality of care. We would also clarify that states while states may not
use funds for survey and certification operations or state expenses,
they may use a reasonable amount of civil money penalty funds for the
actual administration of grant awards, including the tracking,
monitoring, and evaluating of approved projects. Some states have
maintained that effective use and management of the civil money penalty
funds requires more state oversight and planning than they are able to
provide currently, and that an allowance for such management would
remove a barrier to the effective use of these funds. We have not
proposed a monetary or numeric limit on what might be considered
reasonable, although one to 3 percent of available funds might be
considered reasonable for an established fund. We invite comment on the
question of appropriate limits.
At proposed Sec. 488.433(b)(5), we would clarify in a new
paragraph that in extraordinary situations involving closure of a
facility, civil monetary penalty funds may be used to pay the salary of
a temporary manager when CMS concludes that it is infeasible to ensure
timely payment for such a manager by the facility. We have encountered
situations, for example, in which a facility is in bankruptcy and the
court has frozen all funds at the very time that residents are being
relocated and closure is proceeding. In another situation involving
involuntary termination from Medicare and impending closure of the
facility, the facility was not making payments for staff or for its
utilities, and residents were at risk due to the imminent departure of
staff and the absence of a manager. While Sec. 489.55 permits Medicare
and Medicaid payments to a facility to continue for up to 30 days after
the effective date of a facility's termination or possibly longer (or
shorter) if a facility has submitted a notification of closure under
Sec. 483.75(r) in order to promote the orderly and safe relocation of
residents, if the continued Medicare and Medicaid payments are being
used to pay for facility operations during the relocation period but
are being diverted elsewhere by the facility, then residents may be
placed at increased risk. The proposed change at Sec. 488.433(b)(5)
would clarify not only that CMS places a priority on resident
protection and protection of the Trust Fund and allows such emergency
use of civil money funds, but that CMS also intends to stop or suspend
the payments to the facility under Sec. 489.55 when such a situation
occurs.
At new Sec. 488.433(c), we specify the requirements for all CMP
fund proposals being submitted to CMS for approval.
At new Sec. 488.433 (d), we state that CMP funds may not be used
for activities that have been disapproved by CMS.
At new Sec. 488.433(e), we propose that states must maintain an
acceptable plan for the effective use of civil monetary penalty funds,
including a description of methods by which the state will solicit,
accept, monitor, and track approved projects funded by CMP amounts and
make key information publicly available. Examples of information that
must be publically available would include information on the projects
that have been approved by CMS, the grantee and project recipients, the
dollar amounts of projects approved, and the results of the projects.
We also propose that these plans provide for a minimum amount of funds
that will generally be held in reserve for emergencies, unless the
state's plan demonstrates the availability of other funds to cover
emergency situations, and a reasonable aggregate amount of civil money
penalty funds, beyond the emergency reserve amount, that the state
expects to disburse each year for grants or contracts of projects that
benefit residents and are consistent with the statute and CMS
regulations. We appreciate that states may wish to develop a multi-year
plan and provide an approximate range of total amount that the state
plans to disburse. The intent is to ensure there is an acceptable plan,
and that a state is prepared to respond to emergencies while at the
same time is not maintaining a large unused amount of civil monetary
penalty funds.
In Sec. 488.433(f), we propose that CMS may withhold future
disbursement of collected civil money penalty funds to a state if CMS
finds that the state has not spent such funds in accordance with the
statute and regulations, fails to make use of funds to benefit the
quality of care or life of residents, or fails to maintain an
acceptable plan approved by CMS.
VII. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA), we are required to
publish a 60-day notice in the Federal Register and solicit public
comments before a collection of information requirement is submitted to
the Office of Management and Budget (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 comments 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.
A. Information Collection Requirements (ICRs)
While this proposed rule does not have any PRA implications, we are
soliciting comment on the following:
[[Page 25791]]
1. ICRs Regarding the SNF PPS Rate Setting Methodology (preamble
sections III and V)
While sections III and V propose to revise certain policies related
to the current rate setting methodology (such as the use of updated OMB
delineations to assign a facility the urban or rural per diem rate and
to calculate wage index adjustments), the provisions would not impose
any new or revised reporting, recordkeeping, or third-party disclosure
requirements. Nor would they require the development, acquisition,
installation, and utilization of any new or revised technology or
information systems. Consequently, they do not require review under the
authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et
seq.).
The information collection requirements discussed in section III.C.
concerning the resident assessment instrument (MDS 3.0) are currently
approved by OMB under OCN 0938-1140 (CMS-10387).
2. ICRs Regarding the COT OMRA (Preamble Section V.C.)
While section V.C. proposes to revise current COT OMRA policy by
permitting providers to complete a COT OMRA for a resident who is not
currently classified into a RUG-IV therapy group in certain
circumstances, this provision does not impose any new or revised
reporting, recordkeeping, or third-party disclosure requirements.
Consequently, it does not require review under the authority of the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
3. ICRs Regarding the Use of Civil Money Penalties (Sec. 488.433(c))
In Sec. 488.433(c), states proposing to use civil money penalties
for certain activities are required to submit descriptions of the
intended outcomes, deliverables, sustainability, and methods by which
the results will be assessed, including specific measures. Prior to
using these funds, the activities must be approved by CMS under
existing regulations. The proposed language in this rule provides
methods to ensure that these requirements are followed and to promote
additional transparency.
The provision does not require additional OMB review under the
authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et
seq.). In addition, as stated in the Civil Money Penalties for Nursing
Homes final rule published on March 18, 2011 (76 FR 15125), sections
4204(b) and 4214(d) of the Omnibus Budget Reconciliation Act of 1987
(OBRA '87), Public Law 100-203, enacted on December 21, 1987, provide
waivers of Office of Management and Budget review of information
collection requirements for the purpose of implementing the nursing
home reform amendments. The provisions of OBRA '87 that exempt agency
actions to collect information from states or facilities relevant to
survey and enforcement activities from the Paperwork Reduction Act are
not time-limited.
4. ICRs Regarding Civil Money Penalty Plans (Sec. 488.433(e))
In Sec. 488.433(e), states would be required to maintain an
acceptable plan (approved by CMS) for the effective use of civil money
funds. The plan must include a description of methods by which the
state will: (1) Solicit, accept, monitor, and track projects utilizing
civil money penalty funds; (2) make information about the use of civil
money penalty funds publicly available, including key information about
approved projects, the grantee or contract recipients, and the results
of projects; (3) ensure that a core amount of civil money penalty funds
will be held in reserve for emergencies, such as unplanned relocation
of residents pursuant to an involuntary termination from Medicare and
Medicaid; and (4) ensure that a reasonable amount of funds, beyond
those held in reserve, will be awarded or contracted each year.
Since current statute, regulations and/or CMS policy guidance
released to the states already specifies that all proposed activities
using civil money penalty funds must be submitted to CMS for approval
and must contain information on the expected final outcomes of the
activity and how the results of the activity will be assessed, states
must already have plans in place to monitor and track the outcomes of
all approved activities using these funds. Consequently, the proposed
provision would not require any substantive revision to any state plans
and would not impose any additional burden to states.
Since the provisions in Sec. 488.433(e) would not impose any new
or revised reporting, recordkeeping, or third-party disclosure
requirements, they do not require additional OMB review under the
authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et
seq.). In addition, as stated in the Civil Money Penalties for Nursing
Homes final rule published on March 18, 2011 (76 FR 15125), sections
4204(b) and 4214(d) of the Omnibus Budget Reconciliation Act of 1987
(OBRA '87), Public Law 100-203, enacted on December 21, 1987, provides
waivers of OMB review of information collection requirements for the
purpose of implementing the nursing home reform amendments. The
provisions of OBRA '87 that exempt agency actions to collect
information from states or facilities relevant to survey and
enforcement activities from the Paperwork Reduction Act are not time-
limited.
B. Submission of PRA-Related Comments
If you comment on any of these information collection requirements,
please submit your comments electronically as specified in the
ADDRESSES section of this proposed rule.
Comments must be received on/by June 30, 2014.
VIII. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
IX. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
We have examined the impacts of this proposed 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
[[Page 25792]]
Executive Order 12866. Accordingly, we have prepared a regulatory
impact analysis (RIA) as further discussed below. Also, the rule has
been reviewed by OMB.
2. Statement of Need
This proposed rule would update the SNF prospective payment rates
for FY 2015 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. 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. In addition,
this proposed rule would clarify statutory requirements and intent as
specified in section 6111 of the Affordable Care Act regarding the
approval and use of civil money penalties imposed by CMS.
3. Overall Impacts
This proposed rule sets forth proposed updates of the SNF PPS rates
contained in the SNF PPS final rule for FY 2014 (78 FR 47936). Based on
the above, we estimate that the aggregate impact would be an increase
of $750 million in payments to SNFs, resulting from the SNF market
basket update to the payment rates, as adjusted by the MFP adjustment.
The impact analysis of this proposed rule represents the projected
effects of the changes in the SNF PPS from FY 2014 to FY 2015. 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 newly-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 2014 payment rates by a factor equal to the
market basket index percentage change adjusted by the FY 2013 forecast
error adjustment (if applicable) and the MFP adjustment to determine
the payment rates for FY 2015. 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 4,355 beneficiaries who qualify for
the add-on payment for residents with AIDS. The impact to Medicare is
included in the ``total'' column of Table 13. In updating the SNF PPS
rates for FY 2015, we made a number of standard annual revisions and
clarifications mentioned elsewhere in this proposed 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 proposed rule applies to SNF
PPS payments in FY 2015. 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 for each
subsequent FY that will provide for an update to the SNF PPS payment
rates and include an associated impact analysis.
As discussed in Section V.D. of this proposed rule, we would also
clarify statutory requirements and intent as specified in section 6111
of the Affordable Care Act regarding the approval and use of civil
money penalties imposed by CMS. There would be no impact to States
unless they failed to follow the new regulations regarding the approval
and use of civil money penalty funds. In FY 2011, the approximate total
amount of civil money penalties returned to the states was $28 million.
In FY 2012, the approximate total amount of civil money penalties
returned to the states was $32 million. In FY 2013, the approximate
total amount of civil money penalties returned to the states was $35
million. The estimated amount that we expect to be returned to the
states in FY2015, based on data from previous years, is approximately
$33 million. These payments to the states would only be withheld in the
event that states did not spend civil money penalty funds in accordance
with the statute and this regulation, or failed to make use of funds to
benefit the quality of care or life of residents, or failed to maintain
an acceptable plan for the use of these funds. Even if CMP funds are
withheld from a state, we expect that the state would eventually come
into compliance and that the state would later gain access to the
withheld funds.
4. Detailed Economic Analysis
The FY 2015 impacts appear in Table 13. Using the most recently
available data, in this case FY 2013, we apply the current FY 2014 wage
index and labor-related share value to the number of payment days to
simulate FY 2014 payments. Then, using the same FY 2013 data, we apply
the FY 2015 wage index, as proposed in Section V.A above, and labor-
related share value to simulate FY 2015 payments. We tabulate the
resulting payments according to the classifications in Table 13 (for
example, facility type, geographic region, facility ownership), and
compare the difference between current and proposed 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 new OMB delineations that we are proposing to
implement beginning in FY 2015. Facilities should use these proposed
OMB delineations to identify their urban or rural status for purposes
of identifying what areas of the impact table would apply to them
beginning on October 1, 2014. The next nineteen rows show the effects
on facilities by urban versus rural status by census region. The last
three rows show the effects on facilities by ownership (that is,
government, profit, and non-profit status).
The second column shows the number of facilities in the impact
database.
[[Page 25793]]
The third column shows the effect of the annual update to the wage
index. This represents the effect of using the most recent wage data
available, without taking into account the proposed revised OMB
delineations. That is, the impact represented in this column is solely
that of updating from the FY 2014 wage index to the FY 2015 wage index
without any changes to the OMB delineations. The total impact of this
change is zero percent; however, there are distributional effects of
the change.
The fourth column shows the effect of adopting the updated OMB
delineations (as set forth in OMB Bulletin No. 13-01) for wage index
purposes for FY 2015, independent of the effect of using the most
recent wage data available, captured in Column 3. That is, the impact
represented in this column is that of the proposed use of the revised
OMB delineations, utilizing the proposed blended wage index. The total
impact of this change is zero percent; however, there are
distributional effects of the change.
The fifth column shows the effect of all of the changes on the FY
2015 payments. The update of 2.0 percent (consisting of the market
basket increase of 2.4 percentage points, reduced by the 0.4 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 2.0 percent, assuming
facilities do not change their care delivery and billing practices in
response.
As illustrated in Table 13, the combined effects of all of the
changes vary by specific types of providers and by location. For
example, due to changes proposed in this rule, providers in the rural
Pacific region would experience a 4.5 percent increase in FY 2015 total
payments.
Table 13--RUG-IV Projected Impact to the SNF PPS for FY 2015
----------------------------------------------------------------------------------------------------------------
Number of Update OMB
facilities FY Update wage delineations Total change
2015 data (%) (%) (%)
----------------------------------------------------------------------------------------------------------------
Group:
Total....................................... 15,397 0.0 0.0 2.0
Urban....................................... 10,860 0.0 0.0 2.0
Rural....................................... 4,537 0.1 -0.2 1.9
Hospital based urban........................ 572 0.1 0.0 2.0
Freestanding urban.......................... 10,288 0.0 0.0 2.0
Hospital based rural........................ 640 0.1 -0.3 1.7
Freestanding rural.......................... 3,897 0.1 -0.2 1.9
Urban by region:
New England................................. 803 0.9 0.0 2.9
Middle Atlantic............................. 1,490 0.3 0.1 2.5
South Atlantic.............................. 1,853 -0.3 0.0 1.7
East North Central.......................... 2,054 -0.3 0.0 1.6
East South Central.......................... 544 -1.0 0.0 1.0
West North Central.......................... 889 0.0 0.0 2.0
West South Central.......................... 1,293 -0.4 0.0 1.6
Mountain.................................... 501 0.1 -0.1 2.0
Pacific..................................... 1,427 0.3 0.0 2.3
Outlying.................................... 6 0.6 -0.2 2.4
Rural by region:
New England................................. 144 0.7 0.1 2.8
Middle Atlantic............................. 228 1.5 -1.6 1.8
South Atlantic.............................. 504 -0.4 -0.2 1.4
East North Central.......................... 925 -0.1 0.0 1.9
East South Central.......................... 533 -0.3 -0.2 1.4
West North Central.......................... 1,093 0.3 -0.2 2.2
West South Central.......................... 770 0.3 -0.4 1.9
Mountain.................................... 235 -0.7 0.0 1.3
Pacific..................................... 105 2.6 -0.1 4.5
Outlying.................................... 0 0.0 0.0 2.0
Ownership:
Government.................................. 852 0.1 0.1 2.2
Profit...................................... 10,783 0.0 0.0 2.0
Non-profit.................................. 3,762 0.1 0.0 2.0
----------------------------------------------------------------------------------------------------------------
Note: The Total column includes the 2.4 percent market basket increase, reduced by the 0.4 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
2015 would be an increase of $750 million in payments to SNFs,
resulting from the SNF market basket update to the payment rates, as
adjusted by the MFP adjustment.
Section 1888(e) of the Act establishes the SNF PPS for the 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. It specifies that
the base year cost data to be used for computing the SNF PPS payment
rates must be 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
[[Page 25794]]
requires us to disseminate the payment rates for each new FY through
the Federal Register, and to do so before the August 1 that precedes
the start of the new FY. Accordingly, we are not pursuing alternatives
with respect to the payment methodology as discussed above.
With regard to the proposal discussed in section V.A of this rule
related to our proposed adoption of the revised OMB delineations for
purposes of calculating the wage index, we believe implementing the new
OMB delineations would result in wage index values being more
representative of the actual costs of labor in a given area. Further,
we recognize that some providers (15 percent) would have a higher wage
index due to our proposed implementation of the new labor market
delineations. However, we also recognize that more providers (22
percent) would experience decreases in wage index values as a result of
our proposed implementation of the new labor market area delineations.
Therefore, we believe it would be appropriate to consider, as we did in
FY 2006, whether or not a transition period should be used in order to
implement these proposed changes to the wage index.
We considered having no transition period and fully implementing
the proposed new OMB delineations beginning in FY 2015. This would mean
that we would adopt the revised OMB delineations for all providers on
October 1, 2014. However, this would not provide any time for providers
to adapt to the new OMB delineations. As discussed above, more
providers would experience a decrease in wage index due to
implementation of the proposed new OMB delineations than would
experience an increase. Thus, we believe that it would be appropriate
to provide for a transition period to mitigate the resulting short-term
instability and negative impact on these providers, and to provide time
for providers to adjust to their new labor market area delineations.
Furthermore, in light of the comments received during the FY 2006
rulemaking cycle on our proposal in the FY 2006 SNF PPS proposed rule
(70 FR 29094-29095) to adopt the new CBSA definitions without a
transition period, we anticipate that providers would have similar
concerns with not having a transition period for the proposed new OMB
delineations. Therefore, as further discussed below, similar to the
policy adopted in the FY 2006 SNF PPS final rule (70 FR 45041) when we
first adopted OMB's CBSA definitions for purposes of the SNF PPS wage
index, we are proposing a one-year transition blended wage index for
all SNFs to assist providers in adapting to the new OMB delineations
(should we finalize implementation of such delineations for the SNF PPS
wage index beginning in FY 2015). In determining an appropriate
transition methodology, consistent with the objectives set forth in the
FY 2006 SNF PPS final rule (70 FR 45041), we looked for approaches that
would provide relief to the largest percentage of adversely-affected
SNFs with the least impact to the rest of the facilities
First, we considered transitioning the wage index to the revised
OMB delineations over a number of years in order minimize the impact of
the proposed wage index changes in a given year. However, we also
believe this must be balanced against the need to ensure the most
accurate payments possible, which argues for a faster transition to the
revised OMB delineations. As discussed above in section V.A.2 of this
proposed rule, we believe that using the most current OMB delineations
would increase the integrity of the SNF PPS wage index by creating a
more accurate representation of geographic variation in wage levels. As
such, we believe that utilizing a one-year (rather than a multiple
year) transition with a blended wage index in FY 2015 would strike the
best balance.
Second, we considered what type of blend would be appropriate for
purposes of the transition wage index. We are proposing that providers
would receive a one-year blended wage index using 50 percent of their
FY 2015 wage index based on the proposed new OMB delineations and 50
percent of their FY 2015 wage index based on the FY 2014 OMB
delineations. We believe that a 50/50 blend would best mitigate the
negative payment impacts associated with the implementation of the
proposed new OMB delineations. While we considered alternatives to the
50/50 blend, we believe this type of split balances the increases and
decreases in wage index values associated with this proposal, as well
as provides a readily understandable calculation for providers.
Next, we considered whether or not the blended wage index should be
used for all providers or for only a subset of providers, such as those
providers that would experience a decrease in their respective wage
index values due to implementation of the revised OMB delineations. If
we were to apply the transition policy only to those providers that
would experience a decrease in their respective wage index values due
to the implementation of the revised OMB delineations, then providers
that would experience either no change in wage index or an increase in
wage due to the revised OMB delineations would be immediately
transitioned to the FY 2015 wage index under the revised OMB
delineations. As required in section 1888(e)(4)(G)(ii) of the Act, the
wage index adjustment must be implemented in a budget-neutral manner.
As such, if we were to apply the transition policy only to those
providers that would experience a decrease in their respective wage
index values due to implementation of the revised OMB delineations, the
budget neutrality factor, discussed in section III.D, calculated based
on this this approach would be 0.9986, which would result in reduced
base rates for all providers as compared to the budget neutrality
factor of 1.0001 which would result from applying the blended wage
index to all providers. Furthermore, based on our analysis of the wage
index changes associated with fully implementing the revised OMB
delineations, we determined that the new OMB delineations would only
affect the wage index values of approximately 37 percent of facilities.
Given that our goal is to provide relief to the largest percentage of
adversely-affected SNFs with the least impact to the rest of the
facilities (whose wage index values either would remain the same or
increase), we believe that using a blended wage index for all providers
would be the best option. This option would assist the 22 percent of
providers that would be adversely affected by the proposed
implementation of the new OMB delineations without reducing the base
rates for all providers, 63 percent of which would otherwise be
unaffected by the proposed implementation of the new OMB delineations.
In other words, this option is based on a balance between the interests
of all SNF providers, including the 15 percent of providers that would
experience an increase in their wage index value due to the proposed
implementation of the new OMB delineations, the 22 percent of providers
that would experience a decrease in their wage index value due to the
proposed implementation of the new OMB delineations, and the 63 percent
of providers that would be unaffected by the proposed implementation of
the new OMB delineations. As discussed above, if we were to apply the
blended wage index only to the 22 percent of providers that would
experience a decrease in their respective wage index values due to the
proposed implementation of the new OMB delineations in an effort to
preserve the full increase in wage index
[[Page 25795]]
value for the 15 percent of providers that would experience such an
increase due to the proposed implementation of the new OMB
delineations, the budget neutrality factor of 1.0001 referenced in
section III.D, which is based on applying the blended wage index to all
providers, would be revised to 0.9986. As such, this would mean a
reduction in the base rate for all providers, most notably the 63
percent of providers that would be unaffected by the proposed
implementation of the new OMB delineations, but also for that 15
percent of providers that would experience an increase in their wage
index value.
Moreover, while providers experience wage index changes from year
to year based on updating the wage data, full implementation of the
proposed new OMB delineations would dramatically increase the magnitude
of those changes for some providers. Year-to-year wage index changes
usually vary from decreases as high as 10 percent to increases as high
as 10 percent. Using FY 2011 wage data (the data used for the FY 2015
wage index), the range of changes in the wage index values due solely
to full implementation of the proposed OMB delineations would span from
decreases of over 20 percent to increases of over 30 percent.
Therefore, in addition to mitigating the impact of the proposed OMB
delineations on the facilities that are adversely affected by them and
providing a period to adjust, we believe a transition wage index could
also mitigate the volatility of the SNF PPS wage index for certain
providers caused by these proposed changes.
Therefore, if we finalize implementation of the new OMB
delineations for the SNF PPS wage index, we are proposing to use a one-
year transition with a blended wage index for all providers in FY 2015,
as outlined in Section V.A.2.e. For the reasons discussed above, we
believe that this proposed transition approach appropriately balances
the interests of all SNFs, and would best achieve our objective of
providing relief to the largest percentage of adversely affected SNFs
with the least impact to the rest of the facilities. We believe this
approach would mitigate negative impacts on providers as well as the
volatility of the SNF PPS wage index for certain providers resulting
from implementation of the proposed new OMB delineations. We invite
comments on the alternatives discussed in this analysis.
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 14, we have prepared an accounting statement
showing the classification of the expenditures associated with the
provisions of this proposed rule. Table 14 provides our best estimate
of the possible changes in Medicare payments under the SNF PPS as a
result of the policies in this proposed rule, based on the data for
15,397 SNFs in our database. All expenditures are classified as
transfers to Medicare providers (that is, SNFs).
Table 14--Accounting Statement: Classification of Estimated
Expenditures, From the 2014 SNF PPS Fiscal Year to the 2015 SNF PPS
Fiscal Year
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............ $750 million*.
From Whom To Whom?........................ Federal Government to SNF
Medicare Providers.
------------------------------------------------------------------------
* The net increase of $750 million in transfer payments is a result of
the MFP-adjusted market basket increase of $750 million.
7. Conclusion
This proposed rule sets forth updates of the SNF PPS rates
contained in the SNF PPS final rule for FY 2014 (78 FR 47936). Based on
the above, we estimate the overall estimated payments for SNFs in FY
2015 are projected to increase by $750 million, or 2.0 percent,
compared with those in FY 2014. We estimate that in FY 2015 under RUG-
IV, SNFs in urban and rural areas would experience, on average, a 2.0
and 1.9 percent increase, respectively, in estimated payments compared
with FY 2014. Providers in the rural Pacific region would experience
the largest estimated increase in payments of approximately 4.5
percent. Providers in the urban East South Central region would
experience the smallest increase in payments of 1.0 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. We utilized the
revenues of individual SNF providers (from recent Medicare Cost
Reports) to classify a small business, and not the revenue of a larger
firm they may be affiliated with. As a result, we estimate
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). In addition,
approximately 25 percent of SNFs classified as small entities are non-
profit organizations. Finally, individuals and states are not included
in the definition of a small entity.
This proposed rule sets forth updates of the SNF PPS rates
contained in the SNF PPS final rule for FY 2014 (78 FR 47936). Based on
the above, we estimate that the aggregate impact would be an increase
of $750 million in payments to SNFs, resulting from the SNF market
basket update to the payment rates, as adjusted by the MFP adjustment.
While it is projected in Table 13 that all providers would experience a
net increase in payments, we note that some individual providers within
the same region or group may experience different impacts on payments
than others due to the distributional impact of the FY 2015 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 11 percent of total patient days in freestanding
facilities and 22 percent of facility revenue (Report to the Congress:
Medicare Payment Policy, March 2014, available at https://www.medpac.gov/documents/Mar14_EntireReport.pdf). However, it is worth
noting 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
2014, available at https://www.medpac.gov/documents/Mar14_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 13. As indicated in Table 13, the effect on facilities is
projected to be an aggregate positive impact of 2.0 percent. As the
overall impact on the industry as a whole, and thus on small entities
specifically, is
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less than the 3 to 5 percent threshold discussed above, the Secretary
has determined that this proposed 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 603 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 proposed rule would
affect small rural hospitals that (1) furnish SNF services under a
swing-bed agreement or (2) 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 previous SNF PPS final
rules (most recently the one for FY 2014 (78 FR 47968)), the category
of small rural hospitals would be included within the analysis of the
impact of this proposed rule on small entities in general. As indicated
in Table 13, the effect on facilities is projected to be an aggregate
positive impact of 2.0 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 proposed 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 2014, that
threshold is approximately $141 million. This proposed 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 proposed rule would have no substantial direct
effect on state and local governments, preempt state law, or otherwise
have federalism implications.
List of Subjects in 42 CFR Part 488
Administrative practice and procedure, Health facilities, Medicare,
Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR chapter IV as set forth
below:
PART 488--SURVEY, CERTIFICATION AND ENFORCEMENT PROCEDURES
0
1. The authority citation for part 488 continues to read as follows:
Authority: Secs. 1102, 1128I and 1871 of the Social Security
Act, unless otherwise noted (42 U.S.C. 1302, 1320a-7j, and 1395hh);
Pub. L. 110-149, 121 Stat. 1819.
0
2. Section 488.433 is revised to read as follows:
Sec. 488.433 Civil money penalties: Uses and approval of civil money
penalties imposed by CMS.
(a) Ten percent of the collected civil money penalty funds that are
required to be held in escrow pursuant to Sec. 488.431 and that remain
after a final administrative decision will be deposited with the
Department of the Treasury in accordance with Sec. 488.442(f). The
remaining ninety percent of the collected civil money penalty funds
that are required to be held in escrow pursuant to Sec. 488.431 and
that remain after a final administrative decision must be used entirely
for activities that protect or improve the quality of care or quality
of life for residents consistent with paragraph (b) of this section and
may not be used for survey and certification operations or State
expenses, except that reasonable expenses necessary to administer,
monitor, or evaluate the effectiveness of projects utilizing civil
money penalty funds may be permitted.
(b) All activities and plans for utilizing civil money penalty
funds, including any expense used to administer grants utilizing CMP
funds, must be approved in advance by CMS and may include, but are not
limited to:
(1) Support and protection of residents of a facility that closes
(voluntarily or involuntarily).
(2) Time-limited expenses incurred in the process of relocating
residents to home and community-based settings or another facility when
a facility is closed (voluntarily or involuntarily) or downsized
pursuant to an agreement with the State Medicaid agency.
(3) Projects that support resident and family councils and other
consumer involvement in assuring quality care in facilities.
(4) Facility improvement initiatives, such as joint training of
facility staff and surveyors or technical assistance for facilities
implementing quality assurance and performance improvement programs.
(5) Development and maintenance of temporary management or
receivership capability such as but not limited to, recruitment,
training, retention or other system infrastructure expenses. However,
as specified in Sec. 488.415(c), a temporary manager's salary must be
paid by the facility. In rare situations, if the facility is closing,
CMS plans to stop or suspend continued payments to the facility under
Sec. 489.55 of this chapter during the temporary manager's duty
period, and CMS determines that extraordinary action is necessary to
protect the residents until relocation efforts are successful, civil
money penalty funds may be used to pay the manager's salary.
(c) At a minimum, proposed activities submitted to CMS for prior
approval must include a description of the intended outcomes,
deliverables, and sustainability; and a description of the methods by
which the activity results will be assessed, including specific
measures.
(d) Civil money penalty funds may not be used for activities that
have been disapproved by CMS.
(e) The State must maintain an acceptable plan for the effective
use of civil money funds, including a description of methods by which
the State will:
(1) Solicit, accept, monitor, and track projects utilizing civil
money penalty funds including any funds used for state administration.
(2) Make information about the use of civil money penalty funds
publicly available, including about the dollar amount awarded for
approved projects, the grantee or contract recipients, the results of
projects, and other key information.
(3) Ensure that:
(i) A core amount of civil money penalty funds will be held in
reserve for emergencies, such as relocation of residents pursuant to an
involuntary termination from Medicare and Medicaid.
(ii) A reasonable amount of funds, beyond those held in reserve
under paragraph (i) of this section, will be awarded or contracted each
year for the purposes specified in this section.
(f) If CMS finds that a State has not spent civil money penalty
funds in accordance with this section, or fails to make use of funds to
benefit the quality
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of care or life of residents, or fails to maintain an acceptable plan
for the use of funds that is approved by CMS, then CMS may withhold
future disbursements of civil money penalty funds to the State until
the State has submitted an acceptable plan to comply with this section.
Dated: April 16, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
Approved: April 22, 2014.
Kathleen Sebelius,
Secretary.
[FR Doc. 2014-10319 Filed 5-1-14; 4:15 pm]
BILLING CODE 4120-01-P
