Medicare Program; Modification of Limitations on Redesignation by the Medicare Geographic Classification Review Board (MGCRB), 24735-24739 [2021-08889]
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Federal Register / Vol. 86, No. 88 / Monday, May 10, 2021 / Rules and Regulations
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BILLING CODE 6560–50–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Part 412
[CMS–1762–IFC]
RIN 0938–AU56
Medicare Program; Modification of
Limitations on Redesignation by the
Medicare Geographic Classification
Review Board (MGCRB)
Centers for Medicare &
Medicaid Services (CMS), Health and
Human Services, (HHS).
ACTION: Interim final rule with comment
period.
AGENCY:
This interim final rule with
comment period (IFC) amends our
current regulations to allow hospitals
with a rural redesignation under the
Social Security Act (the Act) to
reclassify through the Medicare
Geographic Classification Review Board
(MGCRB) using the rural reclassified
area as the geographic area in which the
hospital is located. These regulatory
changes align our policy with the
decision in Bates County Memorial
Hospital v. Azar, effective with
reclassifications beginning with fiscal
year (FY) 2023. We would also apply
the policy in this IFC when deciding
timely appeals before the Administrator
of applications for reclassifications
beginning with FY 2022 that were
denied by the MGCRB due to the
current policy, which does not permit
hospitals with rural redesignations to
use the rural area’s wage data for
purposes of reclassifying under the
MGCRB.
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SUMMARY:
DATES:
Effective date: These regulations are
effective on May 10, 2021.
Comment date: To be assured
consideration, comments must be
received at one of the addresses
provided below by June 28, 2021.
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Not to exceed 20% by weight of pesticide
formulation.
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In commenting, please refer
to file code CMS–1762–IFC. Because of
staff and resource limitations, we cannot
accept comments by facsimile (FAX)
transmission.
Comments, including mass comment
submissions, must be submitted in one
of the following three ways (please
choose only one of the ways listed):
1. Electronically. You may (and we
encourage you to) submit electronic
comments on this regulation to https://
www.regulations.gov. Follow the
instructions under the ‘‘submit a
comment’’ tab.
2. By regular mail. You may mail
written comments to the following
address ONLY: Centers for Medicare &
Medicaid Services, Department of
Health and Human Services, Attention:
CMS–1762–IFC, P.O. Box 8013,
Baltimore, MD 21244–1850.
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 via express
or overnight mail to the following
address ONLY: Centers for Medicare &
Medicaid Services, Department of
Health and Human Services, Attention:
CMS–1762–IFC, Mail Stop C4–26–05,
7500 Security Boulevard, Baltimore, MD
21244–1850.
For information on viewing public
comments, we refer readers to the
beginning of the SUPPLEMENTARY
INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Tehila Lipschutz, (410) 786–1344 or
Dan Schroder, (410) 786–7452.
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
website as soon as possible after they
have been received: https://
regulations.gov. Follow the search
instructions on that website to view
public comments.
Comments received timely will be
also available for public inspection as
they are received, generally beginning
ADDRESSES:
[FR Doc. 2021–09911 Filed 5–7–21; 8:45 am]
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Colorant.
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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.
I. Background
A. Wage Index for Acute Care Hospitals
Paid Under the Hospital Inpatient
Prospective Payment System (IPPS)
Under section 1886(d) of the Social
Security Act (the Act), hospitals are
paid based on prospectively set rates. To
account for geographic area wage level
differences, section 1886(d)(3)(E) of the
Act requires that the Secretary of the
Department of Health and Human
Services (the Secretary) adjust the
standardized amounts by a factor
(established by the Secretary) reflecting
the relative hospital wage level in the
geographic area of the hospital, as
compared to the national average
hospital wage level. We currently define
hospital labor market areas based on the
delineations of statistical areas
established by the Office of Management
and Budget (OMB). The current
statistical areas (which were
implemented beginning with FY 2015)
are based on revised OMB delineations
issued on February 28, 2013, in OMB
Bulletin No. 13–01, with updates as
reflected in OMB Bulletins Nos. 15–01,
17–01, and 18–04. We refer readers to
the FY 2015 IPPS/LTCH PPS final rule
(79 FR 49951 through 49963) for a full
discussion of our implementation of the
new OMB labor market area
delineations beginning with the FY
2015 wage index, and to the FY 2021
IPPS/LTCH PPS final rule (85 FR 58743
through 58755) for a discussion of the
latest updates to these delineations.
Section 1886(d)(3)(E) of the Act
requires the Secretary to update the
wage index of hospitals annually, and to
base the update on a survey of wages
and wage-related costs of short-term,
acute care hospitals. Under section
1886(d)(8)(D) of the Act, the Secretary is
required to adjust the standardized
amounts so as to ensure that aggregate
payments under the IPPS, after
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implementation of the provisions of
sections 1886(d)(8)(B), 1886(d)(8)(C),
and 1886(d)(10) of the Act, regarding
geographic reclassification of hospitals,
are equal to the aggregate prospective
payments that would have been made
absent these provisions.
B. Hospital Reclassifications Under
Sections 1886(d)(8)(E) and 1886(d)(10)
of the Act
Hospitals may seek to have their
geographic designation reclassified.
Under section 1886(d)(8)(E) of the Act,
a qualifying prospective payment
hospital located in an urban area may
apply for rural status. Specifically,
section 1886(d)(8)(E) of the Act states
that ‘‘[f]or purposes of this subsection,
not later than 60 days after the receipt
of an application (in a form and manner
determined by the Secretary) from a
subsection (d) hospital described in
clause (ii), the Secretary shall treat the
hospital as being located in the rural
area (as defined in paragraph (2)(D)) of
the state in which the hospital is
located.’’ The regulations governing
these geographic redesignations are
codified in § 412.103, and such
hospitals are commonly referred to as
‘‘§ 412.103 hospitals’’.
In a separate process, hospitals may
also reclassify for purposes of the wage
index under the IPPS under section
1886(d)(10) of the Act by applying to the
Medicare Geographic Classification
Review Board (MGCRB). Hospitals must
apply to the MGCRB to reclassify not
later than 13 months prior to the start
of the fiscal year for which
reclassification is sought, generally by
September 1. (However, we note that
this deadline has been extended for
applications for FY 2022
reclassifications to 15 days after the
public display date of the FY 2021 IPPS/
LTCH final rule at the Office of the
Federal Register, using our authority
under section 1135(b)(5) the Act due to
the COVID–19 Public Health
Emergency.) Generally, hospitals must
be proximate to the labor market area to
which they are seeking reclassification
and must demonstrate characteristics
similar to hospitals located in that area.
The MGCRB issues its decisions by the
end of February for reclassifications that
become effective for the following fiscal
year (beginning October 1). The
regulations applicable to
reclassifications by the MGCRB are
located in §§ 412.230 through 412.280.
Prior to a court decision in Geisinger
Community Medical v. Secretary,
United States Department of Health and
Human Services, 794 F.3d 383 (3d Cir.
2015) (‘‘Geisinger’’), hospitals were only
able to hold one reclassification at a
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time: either under § 412.103 or through
the MGCRB under section 1886(d)(10) of
the Act. The Court of Appeals in
Geisinger ruled that CMS’s prohibition
of dual § 412.103 and MGCRB
reclassifications was unlawful, since
section 1886(d)(8)(E)(i) of the Act
requires that ‘‘the Secretary shall treat
the hospital as being located in the rural
area,’’ inclusive of MGCRB
reclassification purposes. Therefore, on
April 21, 2016, we published an interim
final rule with comment period (the
April 21, 2016 IFC) in the Federal
Register (81 FR 23428 through 23438)
that included provisions amending our
regulations to allow hospitals
nationwide to have simultaneous
§ 412.103 and MGCRB reclassifications.
II. Provisions of the Interim Final Rule
With Comment Period
Pursuant to our April 21, 2016 IFC,
for reclassifications effective beginning
FY 2018, a hospital may acquire rural
status under § 412.103 and subsequently
apply for a reclassification under the
MGCRB using the distance and average
hourly wage criteria designated for rural
hospitals. Hospitals with a § 412.103
redesignation seeking additional
reclassification under the MGCRB use
the rural distance and average hourly
wage criteria under § 412.230(b)(1),
(d)(1)(iii)(C), and (d)(1)(iv)(E). For
example, under our current policy, a
§ 412.103 hospital geographically
located in the urban CBSA of BuffaloCheektowaga, NY seeking to reclassify
under the MGCRB would demonstrate
that their wages are at least 106 percent
(and not 108 percent, as urban hospitals
must demonstrate) of the average hourly
wage of Buffalo-Cheektowaga, NY, to
meet the criteria at
§ 412.230(d)(1)(iii)(C).
However, our current policy compares
the average hourly wage of a § 412.103
hospital to its geographic urban
location, rather than the rural
reclassified area, for purposes of
satisfying certain wage comparison
criteria. In response to a comment on
our April 21, 2016 IFC (81 FR 56925),
we stated: ‘‘The commenter is correct
that the rural distance and average
hourly wage criteria will be used for
hospitals with a § 412.103
redesignation. However, the
commenter’s statement that the average
hourly wage of a hospital with a
§ 412.103 redesignation is compared to
the average hourly wage of hospitals in
the State’s rural area under
§ 412.230(d)(1)(iii)(C) is incorrect.
Instead, the hospital’s average hourly
wage would be compared to the average
hourly wage of all other hospitals in its
urban geographic location using the
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rural distance and average hourly wage
criteria.’’
On May 14, 2020, the United States
District Court for the District of
Columbia issued a decision in Bates
County Memorial Hospital v. Azar, 464
F. Supp. 3d 43 (D.D.C. 2020) (Bates).
Bates County Memorial Hospital and
five other geographically urban
hospitals were reclassified to rural
under § 412.103. They also applied for
reclassification under the MGCRB, but
were denied because their wages were
not at least 106 percent of the
geographic urban area in which the
hospitals were located. Each of the
hospitals’ average hourly wages were at
least 106 percent of the 3-year average
hourly wage of all other hospitals in the
rural area of the state in which the
hospitals are located.
The Court agreed with the Plaintiffs
that the statute at section
1886(d)(8)(E)(i) of Act requires that CMS
treat qualifying hospitals as being
located in the rural area for purposes of
section 1886(d) of the Act, including
MGCRB reclassification. The Bates
decision requires that CMS consider the
rural area to be the area in which the
hospital is located for the wage
comparisons required for MGCRB
reclassifications. For example, pursuant
to Bates, a § 412.103 hospital
geographically located in the urban
CBSA of Buffalo-Cheektowaga, NY
seeking to reclassify under the MGCRB
would demonstrate that their wages are
at least 106 percent of the average
hourly wage of rural NY, rather than
that of Buffalo-Cheektowaga.
As a result of the Bates court’s
decision, we are revising our policy so
that the redesignated rural area, and not
the hospital’s geographic urban area,
will be considered the area a § 412.103
hospital is located in for purposes of
meeting MGCRB reclassification criteria.
Similarly, we are revising the
regulations to consider the redesignated
rural area, and not the geographic urban
area, as the area a § 412.103 hospital is
located in for the prohibition at
§ 412.230(a)(5)(i) on reclassifying to an
area with a pre-reclassified average
hourly wage lower than the prereclassified average hourly wage for the
area in which the hospital is located.
Specifically, to align our policy with
the court’s decision in Bates, we are
amending the regulations at
§ 412.230(a)(1) by adding (a)(1)(iii) to
state that an urban hospital that has
been granted redesignation as rural
under § 412.103 is considered to be
located in the rural area of the state for
the purposes of this section. We are also
making conforming changes to the
regulation at § 412.230(a)(5)(i) because
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§ 412.230(a)(1) except paragraph (a)(5).
Because § 412.230(a)(1) excepts
paragraph (a)(5), we believe it is
necessary to make a specific conforming
revision to § 412.230(a)(5)(i), in addition
to the general rule at § 412.230(a)(1)(iii),
to clarify that the general rule at
§ 412.230(a)(1)(iii) applies to
§ 412.230(a)(5)(i) as well. That is, we are
amending the regulation at
§ 412.230(a)(5)(i) to add language stating
that an urban hospital that has been
granted redesignation as rural under
§ 412.103 is considered to be located in
the rural area of the state for the
purposes of paragraph (a)(5)(i).
These changes implement the Bates
court’s interpretation of the requirement
at section 1886(d)(8)(E)(i) of the Act that
‘‘the Secretary shall treat the hospital as
being located in the rural area.’’ That is,
a § 412.103 hospital would be
considered to be located in the rural
area of the state for all purposes of
MGCRB reclassification, including the
average hourly wage comparisons
required by § 412.230(a)(5)(i) and
(d)(1)(iii)(C). For example, for purposes
of § 412.230(d)(1)(iii)(C), the § 412.103
hospital would compare its average
hourly wage to the average hourly wage
of all other hospitals in the state’s rural
area. In addition, for purposes of
§ 412.230(a)(5)(i), a § 412.103 hospital
may not be redesignated to another area
if the pre-classified average hourly wage
for that area is lower than the prereclassified average hourly wage of the
rural area of the state in which the
hospital is located (thus, a § 412.103
hospital could potentially reclassify to
any area with a pre-reclassified average
hourly wage that is higher than the prereclassified average hourly wage for the
rural area of the state, if it meets all
other applicable reclassification
criteria).
Therefore, effective for reclassification
applications due to the MGCRB on
September 1, 2021, for reclassification
first effective for FY 2023, a § 412.103
hospital could apply for a
reclassification under the MGCRB using
the state’s rural area as the area in
which the hospital is located. We would
also apply the policy in this IFC when
deciding timely appeals before the
Administrator under § 412.278 for
reclassifications beginning in FY 2022
that were denied by the MGCRB due to
existing policy, which did not permit
§ 412.103 hospitals to be considered
located in the state’s rural area.
III. Waiver of Proposed Rulemaking
and Delay in Effective Date
We ordinarily publish a notice of
proposed rulemaking in the Federal
Register and invite public comment on
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the proposed rule before the provisions
of the rule are finalized, either as
proposed or as amended, in response to
public comments and take effect, in
accordance with the Administrative
Procedure Act (APA) (Pub. L. 79–404),
5 U.S.C. 553 and, where applicable,
section 1871 of the Act. Specifically, 5
U.S.C. 553 requires the agency to
publish a notice of proposed rulemaking
in the Federal Register that includes a
reference to the legal authority under
which the rule is proposed, and the
terms and substances of the proposed
rule or a description of the subjects and
issues involved. Section 553(c) of the
APA further requires the agency to give
interested parties the opportunity to
participate in the rulemaking through
public comment before the provisions of
the rule take effect. Similarly, section
1871(b)(1) of the Act requires the
Secretary to provide for notice of the
proposed rule in the Federal Register
and a period of not less than 60 days for
public comment for rulemaking carrying
out the administration of the insurance
programs under Title XVIII of the Act.
Section 553(b)(B) of the APA and
section 1871(b)(2)(C) of the Act
authorize the agency to waive these
procedures, however, if the agency finds
good cause that notice and comment
procedures are impracticable,
unnecessary, or contrary to the public
interest and incorporates a statement of
the finding and its reasons in the rule
issued.
Section 553(d) of the APA ordinarily
requires a 30-day delay in the effective
date of a final rule from the date of its
publication in the Federal Register.
This 30-day delay in effective date can
be waived, however, if an agency finds
good cause to support an earlier
effective date. Section 1871(e)(1)(B)(i) of
the Act also prohibits a substantive rule
from taking effect before the end of the
30-day period beginning on the date the
rule is issued or published. However,
section 1871(e)(1)(B)(ii) of the Act
permits a substantive rule to take effect
before 30 days if the Secretary finds that
a waiver of the 30-day period is
necessary to comply with statutory
requirements or that the 30-day delay
would be contrary to the public interest.
Finally, the Congressional Review Act
(CRA) (Pub. L. 104–121, Title II)
requires a 60-day delay in the effective
date for major rules unless an agency
finds good cause that notice and public
procedure are impracticable,
unnecessary, or contrary to the public
interest, in which case the rule shall
take effect at such time as the agency
determines 5 U.S.C. 801(a)(3) and
808(2).
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We find good cause for waiving
notice-and comment rulemaking and a
delay in effective date given the
decision of the district court and the
public interest in expeditious
implementation of the court’s
interpretation of the statute. Revising
the regulation text by adding
§ 412.230(a)(1)(iii) and revising the
regulation at § 412.230(a)(5)(i) through
an IFC rather than through the normal
notice-and comment rulemaking cycle
and waiving the delay of effective date
will ensure an expeditious
implementation of the court’s
interpretation by allowing this policy to
be applied to FY 2023 MGCRB
reclassification decisions and cases
before the Administrator for
reclassifications effective beginning FY
2022. Absent this IFC, the earliest
effective date of this revision to the
regulations would be October 1, 2021
(FY 2022) following the normal IPPS/
LTCH PPS notice-and comment
rulemaking cycle. An effective date of
FY 2022 would only allow the MGCRB
to approve hospitals’ applications
qualifying under this policy for
applications due September 1, 2022 for
reclassifications effective beginning FY
2024 (applications are due to the
MGCRB 13 months prior to the start of
the fiscal year). Additionally,
implementing the court’s interpretation
via an IFC allows this policy to be
applied to cases before the
Administrator for reclassifications
effective beginning in FY 2022, which
supports an expeditious implementation
of this policy. Therefore, we find good
cause to waive the notice of proposed
rulemaking as well as the delay of
effective date and to issue this final rule
on an interim basis. Even though we are
waiving notice of proposed rulemaking
requirements and are issuing these
provisions on an interim basis, we are
providing a 60-day public comment
period.
IV. Collection of Information
Requirements
This document does not impose
information collection requirements,
that is, reporting, recordkeeping or
third-party disclosure requirements.
Consequently, there is no need for
review by the Office of Management and
Budget under the authority of the
Paperwork Reduction Act of 1995 (44
U.S.C. 3501 et seq.).
V. Regulatory Impact Statement
We have examined the impact of this
rule as required by Executive Order
12866 on Regulatory Planning and
Review (September 30, 1993), Executive
Order 13563 on Improving Regulation
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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 (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). A Regulatory Impact Analysis
(RIA) must be prepared for major rules
with economically significant effects
($100 million or more in any 1 year).
This rule does not reach the economic
threshold and thus is not considered a
major rule.
The RFA requires agencies to analyze
options for regulatory relief of small
entities. For purposes of the RFA, small
entities include small businesses,
nonprofit organizations, and small
governmental jurisdictions. Most
hospitals and most other providers and
suppliers are small entities, either by
nonprofit status or by having revenues
of less than $8.0 million to $41.5
million in any 1 year. Individuals and
states are not included in the definition
of a small entity. We are not preparing
an analysis for the RFA because we have
determined, and the Secretary certifies,
that this IFC would not have a
significant economic impact on a
substantial number of small entities.
Also, our revision to the regulatory text
is a consequence of a court decision. We
are amending the regulations to align
our policy with the court’s decision in
Bates and implement the Bates court’s
interpretation of the requirement at
section 1886(d)(8)(E)(i) of the Act that
‘‘the Secretary shall treat the hospital as
being located in the rural area.’’
In addition, section 1102(b) of the Act
requires us to prepare an RIA if a rule
may have a significant impact on the
operations of a substantial number of
small rural hospitals. This analysis must
conform to the provisions of section 604
of the RFA. For purposes of section
1102(b) of the Act, we define a small
rural hospital for Medicare payment
regulations as a hospital that is located
outside of a Metropolitan Statistical
Area and has fewer than 100 beds. We
are not preparing an analysis for section
1102(b) of the Act because we have
determined, and the Secretary certifies,
that this IFC would not have a
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significant impact on the operations of
a substantial number of small rural
hospitals.
Section 202 of the Unfunded
Mandates Reform Act of 1995 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 2021, that threshold is approximately
$158 million. This rule will have no
consequential effect on state, local, or
tribal governments or on the private
sector.
Executive Order 13132 establishes
certain requirements that an agency
must meet when it promulgates a
proposed rule (and subsequent final
rule) that imposes substantial direct
requirement costs on state and local
governments, preempts state law, or
otherwise has Federalism implications.
Since this regulation does not impose
any costs on state or local governments,
the requirements of Executive Order
13132 are not applicable.
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). Section 3(f) of Executive Order
12866 defines a ‘‘significant regulatory
action’’ as an action that is likely to
result in a rule: (1) Having an annual
effect on the economy of $100 million
or more in any 1 year, or adversely and
materially affecting a sector of the
economy, productivity, competition,
jobs, the environment, public health or
safety, or state, local or tribal
governments or communities (also
referred to as ‘‘economically
significant’’); (2) creating a serious
inconsistency or otherwise interfering
with an action taken or planned by
another agency; (3) materially altering
the budgetary impacts of entitlement
grants, user fees, or loan programs or the
rights and obligations of recipients
thereof; or (4) raising novel legal or
policy issues arising out of legal
mandates, the President’s priorities, or
the principles set forth in the Executive
Order.
We estimate that this rule is
‘‘significant’’ but not ‘‘economically
significant,’’ as measured by the $100
million threshold. However, we have
prepared an impact analysis that
presents our best estimate of the costs
and benefits of this rule for FY 2022
since section 3(f) of Executive Order
12866 defines a ‘‘significant regulatory
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action’’ as a rule that raises novel legal
or policy issues arising out of legal
mandates.
With regard to our impact analysis, as
a result of this IFC, for FY 2022, there
are approximately 22 hospitals that may
qualify for a reclassification to a new or
different urban area with a higher wage
index than they might otherwise have
received based on the information
currently available to us (for example,
applications submitted to the MGCRB.)
For FY 2022, if these hospitals qualify
for and accept reclassification to a new
or different urban area with a higher
wage index than they might otherwise
have received, we estimate a total
increase in payments to these hospitals
of approximately $50 million in
aggregate. However, wage index
adjustments such as these are made in
a manner that ensures that aggregate
payments to hospitals are unaffected.
This is accomplished through the
application of a wage index budget
neutrality adjustment as described more
fully in the FY 2022 IPPS/LTCH
proposed rule. Therefore, as a
consequence of the court’s decision in
Bates, even though an urban hospital
may be able to qualify for a
reclassification to a new or different
urban area with a higher wage index,
this would not increase aggregate
hospital payments. We estimate that in
FY 2022 the wage index budget
neutrality adjustment could increase by
one-half of a percentage point as a result
of an increase in the wage index to these
22 hospitals.
We do not know as a result of this
IFC: (1) How many additional hospitals
will elect to apply to the MGCRB by
September 1, 2021 for reclassification
beginning FY 2023 that would not
otherwise have applied; (2) how many
hospitals that apply will qualify for a
wage index higher than they otherwise
would have received; (3) for those that
qualify for a higher wage index how
much higher that wage index will be;
and, (4) how many hospitals may elect
to retain or acquire § 412.103 urban-to
rural reclassification that would not
otherwise have done so. The MGCRB
makes determinations on
reclassification requests, and hospitals
make final decisions whether to accept
reclassifications approved by the
MGCRB.
We also note that OMB requested
public comment on the
recommendations it received from the
Metropolitan and Micropolitan
Statistical Area Standards Review
Committee for changes to OMB’s
metropolitan and micropolitan
statistical area standards (86 FR 5263).
These standards determine the
E:\FR\FM\10MYR1.SGM
10MYR1
Federal Register / Vol. 86, No. 88 / Monday, May 10, 2021 / Rules and Regulations
procedures for delineating and updating
the statistical areas as new data become
available. If changes to the standards are
adopted by OMB and if those changes
would affect the OMB delineations used
for the IPPS wage index, we would
address any such changes and impacts
in future rulemaking.
In accordance with the provisions of
Executive Order 12866, this IFC was
reviewed by the Office of Management
and Budget.
VI. 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.
I, Elizabeth Richter, Acting
Administrator of the Centers for
Medicare & Medicaid Services,
approved this document on April 16,
2021.
List of Subjects in 42 CFR Part 412
Administrative practice and
procedure, Health facilities, Medicare,
Puerto Rico, Reporting and
recordkeeping requirements.
For the reasons set forth in the
preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR
chapter IV, part 412, as follows:
1. The authority for part 412
continues to read as follows:
■
Authority: 42 U.S.C. 1302 and 1395hh.
2. Section 412.230 is amended by
adding paragraph (a)(1)(iii) and revising
paragraph (a)(5)(i) to read as follows:
■
khammond on DSKJM1Z7X2PROD with RULES
§ 412.230 Criteria for an individual hospital
seeking redesignation to another rural area
or an urban area.
(a) * * *
(1) * * *
(iii) An urban hospital that has been
granted redesignation as rural under
§ 412.103 is considered to be located in
the rural area of the state for the
purposes of this section.
*
*
*
*
*
(5) * * *
(i) An individual hospital may not be
redesignated to another area for
purposes of the wage index if the prereclassified average hourly wage for that
area is lower than the pre-reclassified
16:22 May 07, 2021
Jkt 253001
Dated: April 23, 2021.
Xavier Becerra,
Secretary, Department of Health and Human
Services.
[FR Doc. 2021–08889 Filed 4–27–21; 4:45 pm]
BILLING CODE 4120–01–P
DEPARTMENT OF HOMELAND
SECURITY
Federal Emergency Management
Agency
44 CFR Part 64
[Docket ID FEMA–2021–0003; Internal
Agency Docket No. FEMA–8679]
Suspension of Community Eligibility
Federal Emergency
Management Agency, DHS.
ACTION: Final rule.
AGENCY:
This rule identifies
communities where the sale of flood
insurance has been authorized under
the National Flood Insurance Program
(NFIP) that are scheduled for
suspension on the effective dates listed
within this rule because of
noncompliance with the floodplain
management requirements of the
program. If the Federal Emergency
Management Agency (FEMA) receives
documentation that the community has
adopted the required floodplain
management measures prior to the
effective suspension date given in this
rule, the suspension will not occur.
Information identifying the current
participation status of a community can
be obtained from FEMA’s CSB available
at www.fema.gov/flood-insurance/workwith-nfip/community-status-book.
Please note that per Revisions to
Publication Requirements for
Community Eligibility Status
Information Under the National Flood
Insurance Program, notices such as this
one for scheduled suspension will no
longer be published in the Federal
Register as of June 2021 but will be
available at National Flood Insurance
Community Status and Public
Notification | FEMA.gov. Individuals
without internet access will be able to
contact their local floodplain
management official and/or State NFIP
SUMMARY:
PART 412—PROSPECTIVE PAYMENT
SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
VerDate Sep<11>2014
average hourly wage for the area in
which the hospital is located. An urban
hospital that has been granted
redesignation as rural under § 412.103 is
considered to be located in the rural
area of the state for the purposes of this
paragraph (a)(5)(i).
*
*
*
*
*
PO 00000
Frm 00041
Fmt 4700
Sfmt 4700
24739
Coordinating Office directly for
assistance.
DATES: The effective date of each
community’s scheduled suspension is
the third date (‘‘Susp.’’) listed in the
third column of the following tables.
FOR FURTHER INFORMATION CONTACT: If
you want to determine whether a
particular community was suspended
on the suspension date or for further
information, contact Adrienne L.
Sheldon, PE, CFM, Federal Insurance
and Mitigation Administration, Federal
Emergency Management Agency, 400 C
Street SW, Washington, DC 20472, (202)
674–1087. Details regarding updated
publication requirements of community
eligibility status information under the
NFIP can be found on the CSB section
at www.fema.gov.
SUPPLEMENTARY INFORMATION: The NFIP
enables property owners to purchase
Federal flood insurance that is not
otherwise generally available from
private insurers. In return, communities
agree to adopt and administer local
floodplain management measures aimed
at protecting lives, new and
substantially improved construction,
and development in general from future
flooding. Section 1315 of the National
Flood Insurance Act of 1968, as
amended, 42 U.S.C. 4022, prohibits the
sale of NFIP flood insurance unless an
appropriate public body adopts
adequate floodplain management
measures with effective enforcement
measures. The communities listed in
this document no longer meet that
statutory requirement for compliance
with NFIP regulations, 44 CFR part 59.
Accordingly, the communities will be
suspended on the effective date listed in
the third column. As of that date, flood
insurance will no longer be available in
the community. FEMA recognizes
communities may adopt and submit the
required documentation after this rule is
published but prior to the actual
suspension date. These communities
will not be suspended and will continue
to be eligible for the sale of NFIP flood
insurance. Their current NFIP
participation status can be verified at
anytime on the CSB section at fema.gov.
In addition, FEMA publishes a Flood
Insurance Rate Map (FIRM) that
identifies the Special Flood Hazard
Areas (SFHAs) in these communities.
The date of the published FIRM is
indicated in the fourth column of the
table. No direct federal financial
assistance (except assistance pursuant to
the Robert T. Stafford Disaster Relief
and Emergency Assistance Act not in
connection with a flood) may be
provided for construction or acquisition
of buildings in identified SFHAs for
E:\FR\FM\10MYR1.SGM
10MYR1
]]>Agencies
[Federal Register Volume 86, Number 88 (Monday, May 10, 2021)]
[Rules and Regulations]
[Pages 24735-24739]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-08889]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 412
[CMS-1762-IFC]
RIN 0938-AU56
Medicare Program; Modification of Limitations on Redesignation by
the Medicare Geographic Classification Review Board (MGCRB)
AGENCY: Centers for Medicare & Medicaid Services (CMS), Health and
Human Services, (HHS).
ACTION: Interim final rule with comment period.
-----------------------------------------------------------------------
SUMMARY: This interim final rule with comment period (IFC) amends our
current regulations to allow hospitals with a rural redesignation under
the Social Security Act (the Act) to reclassify through the Medicare
Geographic Classification Review Board (MGCRB) using the rural
reclassified area as the geographic area in which the hospital is
located. These regulatory changes align our policy with the decision in
Bates County Memorial Hospital v. Azar, effective with
reclassifications beginning with fiscal year (FY) 2023. We would also
apply the policy in this IFC when deciding timely appeals before the
Administrator of applications for reclassifications beginning with FY
2022 that were denied by the MGCRB due to the current policy, which
does not permit hospitals with rural redesignations to use the rural
area's wage data for purposes of reclassifying under the MGCRB.
DATES:
Effective date: These regulations are effective on May 10, 2021.
Comment date: To be assured consideration, comments must be
received at one of the addresses provided below by June 28, 2021.
ADDRESSES: In commenting, please refer to file code CMS-1762-IFC.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may (and we encourage you to) submit
electronic comments on this regulation to https://www.regulations.gov.
Follow the instructions under the ``submit a comment'' tab.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1762-IFC, P.O. Box 8013,
Baltimore, MD 21244-1850.
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 via
express or overnight mail to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1762-IFC, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
For information on viewing public comments, we refer readers to the
beginning of the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Tehila Lipschutz, (410) 786-1344 or
Dan Schroder, (410) 786-7452.
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
website as soon as possible after they have been received: https://regulations.gov. Follow the search instructions on that website to view
public comments.
Comments received timely will be also 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.
I. Background
A. Wage Index for Acute Care Hospitals Paid Under the Hospital
Inpatient Prospective Payment System (IPPS)
Under section 1886(d) of the Social Security Act (the Act),
hospitals are paid based on prospectively set rates. To account for
geographic area wage level differences, section 1886(d)(3)(E) of the
Act requires that the Secretary of the Department of Health and Human
Services (the Secretary) adjust the standardized amounts by a factor
(established by the Secretary) reflecting the relative hospital wage
level in the geographic area of the hospital, as compared to the
national average hospital wage level. We currently define hospital
labor market areas based on the delineations of statistical areas
established by the Office of Management and Budget (OMB). The current
statistical areas (which were implemented beginning with FY 2015) are
based on revised OMB delineations issued on February 28, 2013, in OMB
Bulletin No. 13-01, with updates as reflected in OMB Bulletins Nos. 15-
01, 17-01, and 18-04. We refer readers to the FY 2015 IPPS/LTCH PPS
final rule (79 FR 49951 through 49963) for a full discussion of our
implementation of the new OMB labor market area delineations beginning
with the FY 2015 wage index, and to the FY 2021 IPPS/LTCH PPS final
rule (85 FR 58743 through 58755) for a discussion of the latest updates
to these delineations.
Section 1886(d)(3)(E) of the Act requires the Secretary to update
the wage index of hospitals annually, and to base the update on a
survey of wages and wage-related costs of short-term, acute care
hospitals. Under section 1886(d)(8)(D) of the Act, the Secretary is
required to adjust the standardized amounts so as to ensure that
aggregate payments under the IPPS, after
[[Page 24736]]
implementation of the provisions of sections 1886(d)(8)(B),
1886(d)(8)(C), and 1886(d)(10) of the Act, regarding geographic
reclassification of hospitals, are equal to the aggregate prospective
payments that would have been made absent these provisions.
B. Hospital Reclassifications Under Sections 1886(d)(8)(E) and
1886(d)(10) of the Act
Hospitals may seek to have their geographic designation
reclassified. Under section 1886(d)(8)(E) of the Act, a qualifying
prospective payment hospital located in an urban area may apply for
rural status. Specifically, section 1886(d)(8)(E) of the Act states
that ``[f]or purposes of this subsection, not later than 60 days after
the receipt of an application (in a form and manner determined by the
Secretary) from a subsection (d) hospital described in clause (ii), the
Secretary shall treat the hospital as being located in the rural area
(as defined in paragraph (2)(D)) of the state in which the hospital is
located.'' The regulations governing these geographic redesignations
are codified in Sec. 412.103, and such hospitals are commonly referred
to as ``Sec. 412.103 hospitals''.
In a separate process, hospitals may also reclassify for purposes
of the wage index under the IPPS under section 1886(d)(10) of the Act
by applying to the Medicare Geographic Classification Review Board
(MGCRB). Hospitals must apply to the MGCRB to reclassify not later than
13 months prior to the start of the fiscal year for which
reclassification is sought, generally by September 1. (However, we note
that this deadline has been extended for applications for FY 2022
reclassifications to 15 days after the public display date of the FY
2021 IPPS/LTCH final rule at the Office of the Federal Register, using
our authority under section 1135(b)(5) the Act due to the COVID-19
Public Health Emergency.) Generally, hospitals must be proximate to the
labor market area to which they are seeking reclassification and must
demonstrate characteristics similar to hospitals located in that area.
The MGCRB issues its decisions by the end of February for
reclassifications that become effective for the following fiscal year
(beginning October 1). The regulations applicable to reclassifications
by the MGCRB are located in Sec. Sec. 412.230 through 412.280.
Prior to a court decision in Geisinger Community Medical v.
Secretary, United States Department of Health and Human Services, 794
F.3d 383 (3d Cir. 2015) (``Geisinger''), hospitals were only able to
hold one reclassification at a time: either under Sec. 412.103 or
through the MGCRB under section 1886(d)(10) of the Act. The Court of
Appeals in Geisinger ruled that CMS's prohibition of dual Sec. 412.103
and MGCRB reclassifications was unlawful, since section
1886(d)(8)(E)(i) of the Act requires that ``the Secretary shall treat
the hospital as being located in the rural area,'' inclusive of MGCRB
reclassification purposes. Therefore, on April 21, 2016, we published
an interim final rule with comment period (the April 21, 2016 IFC) in
the Federal Register (81 FR 23428 through 23438) that included
provisions amending our regulations to allow hospitals nationwide to
have simultaneous Sec. 412.103 and MGCRB reclassifications.
II. Provisions of the Interim Final Rule With Comment Period
Pursuant to our April 21, 2016 IFC, for reclassifications effective
beginning FY 2018, a hospital may acquire rural status under Sec.
412.103 and subsequently apply for a reclassification under the MGCRB
using the distance and average hourly wage criteria designated for
rural hospitals. Hospitals with a Sec. 412.103 redesignation seeking
additional reclassification under the MGCRB use the rural distance and
average hourly wage criteria under Sec. 412.230(b)(1), (d)(1)(iii)(C),
and (d)(1)(iv)(E). For example, under our current policy, a Sec.
412.103 hospital geographically located in the urban CBSA of Buffalo-
Cheektowaga, NY seeking to reclassify under the MGCRB would demonstrate
that their wages are at least 106 percent (and not 108 percent, as
urban hospitals must demonstrate) of the average hourly wage of
Buffalo-Cheektowaga, NY, to meet the criteria at Sec.
412.230(d)(1)(iii)(C).
However, our current policy compares the average hourly wage of a
Sec. 412.103 hospital to its geographic urban location, rather than
the rural reclassified area, for purposes of satisfying certain wage
comparison criteria. In response to a comment on our April 21, 2016 IFC
(81 FR 56925), we stated: ``The commenter is correct that the rural
distance and average hourly wage criteria will be used for hospitals
with a Sec. 412.103 redesignation. However, the commenter's statement
that the average hourly wage of a hospital with a Sec. 412.103
redesignation is compared to the average hourly wage of hospitals in
the State's rural area under Sec. 412.230(d)(1)(iii)(C) is incorrect.
Instead, the hospital's average hourly wage would be compared to the
average hourly wage of all other hospitals in its urban geographic
location using the rural distance and average hourly wage criteria.''
On May 14, 2020, the United States District Court for the District
of Columbia issued a decision in Bates County Memorial Hospital v.
Azar, 464 F. Supp. 3d 43 (D.D.C. 2020) (Bates). Bates County Memorial
Hospital and five other geographically urban hospitals were
reclassified to rural under Sec. 412.103. They also applied for
reclassification under the MGCRB, but were denied because their wages
were not at least 106 percent of the geographic urban area in which the
hospitals were located. Each of the hospitals' average hourly wages
were at least 106 percent of the 3-year average hourly wage of all
other hospitals in the rural area of the state in which the hospitals
are located.
The Court agreed with the Plaintiffs that the statute at section
1886(d)(8)(E)(i) of Act requires that CMS treat qualifying hospitals as
being located in the rural area for purposes of section 1886(d) of the
Act, including MGCRB reclassification. The Bates decision requires that
CMS consider the rural area to be the area in which the hospital is
located for the wage comparisons required for MGCRB reclassifications.
For example, pursuant to Bates, a Sec. 412.103 hospital geographically
located in the urban CBSA of Buffalo-Cheektowaga, NY seeking to
reclassify under the MGCRB would demonstrate that their wages are at
least 106 percent of the average hourly wage of rural NY, rather than
that of Buffalo-Cheektowaga.
As a result of the Bates court's decision, we are revising our
policy so that the redesignated rural area, and not the hospital's
geographic urban area, will be considered the area a Sec. 412.103
hospital is located in for purposes of meeting MGCRB reclassification
criteria. Similarly, we are revising the regulations to consider the
redesignated rural area, and not the geographic urban area, as the area
a Sec. 412.103 hospital is located in for the prohibition at Sec.
412.230(a)(5)(i) on reclassifying to an area with a pre-reclassified
average hourly wage lower than the pre-reclassified average hourly wage
for the area in which the hospital is located.
Specifically, to align our policy with the court's decision in
Bates, we are amending the regulations at Sec. 412.230(a)(1) by adding
(a)(1)(iii) to state that an urban hospital that has been granted
redesignation as rural under Sec. 412.103 is considered to be located
in the rural area of the state for the purposes of this section. We are
also making conforming changes to the regulation at Sec.
412.230(a)(5)(i) because
[[Page 24737]]
Sec. 412.230(a)(1) except paragraph (a)(5). Because Sec.
412.230(a)(1) excepts paragraph (a)(5), we believe it is necessary to
make a specific conforming revision to Sec. 412.230(a)(5)(i), in
addition to the general rule at Sec. 412.230(a)(1)(iii), to clarify
that the general rule at Sec. 412.230(a)(1)(iii) applies to Sec.
412.230(a)(5)(i) as well. That is, we are amending the regulation at
Sec. 412.230(a)(5)(i) to add language stating that an urban hospital
that has been granted redesignation as rural under Sec. 412.103 is
considered to be located in the rural area of the state for the
purposes of paragraph (a)(5)(i).
These changes implement the Bates court's interpretation of the
requirement at section 1886(d)(8)(E)(i) of the Act that ``the Secretary
shall treat the hospital as being located in the rural area.'' That is,
a Sec. 412.103 hospital would be considered to be located in the rural
area of the state for all purposes of MGCRB reclassification, including
the average hourly wage comparisons required by Sec. 412.230(a)(5)(i)
and (d)(1)(iii)(C). For example, for purposes of Sec.
412.230(d)(1)(iii)(C), the Sec. 412.103 hospital would compare its
average hourly wage to the average hourly wage of all other hospitals
in the state's rural area. In addition, for purposes of Sec.
412.230(a)(5)(i), a Sec. 412.103 hospital may not be redesignated to
another area if the pre-classified average hourly wage for that area is
lower than the pre-reclassified average hourly wage of the rural area
of the state in which the hospital is located (thus, a Sec. 412.103
hospital could potentially reclassify to any area with a pre-
reclassified average hourly wage that is higher than the pre-
reclassified average hourly wage for the rural area of the state, if it
meets all other applicable reclassification criteria).
Therefore, effective for reclassification applications due to the
MGCRB on September 1, 2021, for reclassification first effective for FY
2023, a Sec. 412.103 hospital could apply for a reclassification under
the MGCRB using the state's rural area as the area in which the
hospital is located. We would also apply the policy in this IFC when
deciding timely appeals before the Administrator under Sec. 412.278
for reclassifications beginning in FY 2022 that were denied by the
MGCRB due to existing policy, which did not permit Sec. 412.103
hospitals to be considered located in the state's rural area.
III. Waiver of Proposed Rulemaking and Delay in Effective Date
We ordinarily publish a notice of proposed rulemaking in the
Federal Register and invite public comment on the proposed rule before
the provisions of the rule are finalized, either as proposed or as
amended, in response to public comments and take effect, in accordance
with the Administrative Procedure Act (APA) (Pub. L. 79-404), 5 U.S.C.
553 and, where applicable, section 1871 of the Act. Specifically, 5
U.S.C. 553 requires the agency to publish a notice of proposed
rulemaking in the Federal Register that includes a reference to the
legal authority under which the rule is proposed, and the terms and
substances of the proposed rule or a description of the subjects and
issues involved. Section 553(c) of the APA further requires the agency
to give interested parties the opportunity to participate in the
rulemaking through public comment before the provisions of the rule
take effect. Similarly, section 1871(b)(1) of the Act requires the
Secretary to provide for notice of the proposed rule in the Federal
Register and a period of not less than 60 days for public comment for
rulemaking carrying out the administration of the insurance programs
under Title XVIII of the Act. Section 553(b)(B) of the APA and section
1871(b)(2)(C) of the Act authorize the agency to waive these
procedures, however, if the agency finds good cause that notice and
comment procedures are impracticable, unnecessary, or contrary to the
public interest and incorporates a statement of the finding and its
reasons in the rule issued.
Section 553(d) of the APA ordinarily requires a 30-day delay in the
effective date of a final rule from the date of its publication in the
Federal Register. This 30-day delay in effective date can be waived,
however, if an agency finds good cause to support an earlier effective
date. Section 1871(e)(1)(B)(i) of the Act also prohibits a substantive
rule from taking effect before the end of the 30-day period beginning
on the date the rule is issued or published. However, section
1871(e)(1)(B)(ii) of the Act permits a substantive rule to take effect
before 30 days if the Secretary finds that a waiver of the 30-day
period is necessary to comply with statutory requirements or that the
30-day delay would be contrary to the public interest. Finally, the
Congressional Review Act (CRA) (Pub. L. 104-121, Title II) requires a
60-day delay in the effective date for major rules unless an agency
finds good cause that notice and public procedure are impracticable,
unnecessary, or contrary to the public interest, in which case the rule
shall take effect at such time as the agency determines 5 U.S.C.
801(a)(3) and 808(2).
We find good cause for waiving notice-and comment rulemaking and a
delay in effective date given the decision of the district court and
the public interest in expeditious implementation of the court's
interpretation of the statute. Revising the regulation text by adding
Sec. 412.230(a)(1)(iii) and revising the regulation at Sec.
412.230(a)(5)(i) through an IFC rather than through the normal notice-
and comment rulemaking cycle and waiving the delay of effective date
will ensure an expeditious implementation of the court's interpretation
by allowing this policy to be applied to FY 2023 MGCRB reclassification
decisions and cases before the Administrator for reclassifications
effective beginning FY 2022. Absent this IFC, the earliest effective
date of this revision to the regulations would be October 1, 2021 (FY
2022) following the normal IPPS/LTCH PPS notice-and comment rulemaking
cycle. An effective date of FY 2022 would only allow the MGCRB to
approve hospitals' applications qualifying under this policy for
applications due September 1, 2022 for reclassifications effective
beginning FY 2024 (applications are due to the MGCRB 13 months prior to
the start of the fiscal year). Additionally, implementing the court's
interpretation via an IFC allows this policy to be applied to cases
before the Administrator for reclassifications effective beginning in
FY 2022, which supports an expeditious implementation of this policy.
Therefore, we find good cause to waive the notice of proposed
rulemaking as well as the delay of effective date and to issue this
final rule on an interim basis. Even though we are waiving notice of
proposed rulemaking requirements and are issuing these provisions on an
interim basis, we are providing a 60-day public comment period.
IV. Collection of Information Requirements
This document does not impose information collection requirements,
that is, reporting, recordkeeping or third-party disclosure
requirements. Consequently, there is no need for review by the Office
of Management and Budget under the authority of the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.).
V. Regulatory Impact Statement
We have examined the impact of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation
[[Page 24738]]
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 (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). A
Regulatory Impact Analysis (RIA) must be prepared for major rules with
economically significant effects ($100 million or more in any 1 year).
This rule does not reach the economic threshold and thus is not
considered a major rule.
The RFA requires agencies to analyze options for regulatory relief
of small entities. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small governmental
jurisdictions. Most hospitals and most other providers and suppliers
are small entities, either by nonprofit status or by having revenues of
less than $8.0 million to $41.5 million in any 1 year. Individuals and
states are not included in the definition of a small entity. We are not
preparing an analysis for the RFA because we have determined, and the
Secretary certifies, that this IFC would not have a significant
economic impact on a substantial number of small entities. Also, our
revision to the regulatory text is a consequence of a court decision.
We are amending the regulations to align our policy with the court's
decision in Bates and implement the Bates court's interpretation of the
requirement at section 1886(d)(8)(E)(i) of the Act that ``the Secretary
shall treat the hospital as being located in the rural area.''
In addition, section 1102(b) of the Act requires us to prepare an
RIA if a rule may have a significant impact on the operations of a
substantial number of small rural hospitals. This analysis must conform
to the provisions of section 604 of the RFA. For purposes of section
1102(b) of the Act, we define a small rural hospital for Medicare
payment regulations as a hospital that is located outside of a
Metropolitan Statistical Area and has fewer than 100 beds. We are not
preparing an analysis for section 1102(b) of the Act because we have
determined, and the Secretary certifies, that this IFC would not have a
significant impact on the operations of a substantial number of small
rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 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 2021, that
threshold is approximately $158 million. This rule will have no
consequential effect on state, local, or tribal governments or on the
private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on state
and local governments, preempts state law, or otherwise has Federalism
implications. Since this regulation does not impose any costs on state
or local governments, the requirements of Executive Order 13132 are not
applicable.
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). Section
3(f) of Executive Order 12866 defines a ``significant regulatory
action'' as an action that is likely to result in a rule: (1) Having an
annual effect on the economy of $100 million or more in any 1 year, or
adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating a serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order.
We estimate that this rule is ``significant'' but not
``economically significant,'' as measured by the $100 million
threshold. However, we have prepared an impact analysis that presents
our best estimate of the costs and benefits of this rule for FY 2022
since section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as a rule that raises novel legal or policy issues
arising out of legal mandates.
With regard to our impact analysis, as a result of this IFC, for FY
2022, there are approximately 22 hospitals that may qualify for a
reclassification to a new or different urban area with a higher wage
index than they might otherwise have received based on the information
currently available to us (for example, applications submitted to the
MGCRB.) For FY 2022, if these hospitals qualify for and accept
reclassification to a new or different urban area with a higher wage
index than they might otherwise have received, we estimate a total
increase in payments to these hospitals of approximately $50 million in
aggregate. However, wage index adjustments such as these are made in a
manner that ensures that aggregate payments to hospitals are
unaffected. This is accomplished through the application of a wage
index budget neutrality adjustment as described more fully in the FY
2022 IPPS/LTCH proposed rule. Therefore, as a consequence of the
court's decision in Bates, even though an urban hospital may be able to
qualify for a reclassification to a new or different urban area with a
higher wage index, this would not increase aggregate hospital payments.
We estimate that in FY 2022 the wage index budget neutrality adjustment
could increase by one-half of a percentage point as a result of an
increase in the wage index to these 22 hospitals.
We do not know as a result of this IFC: (1) How many additional
hospitals will elect to apply to the MGCRB by September 1, 2021 for
reclassification beginning FY 2023 that would not otherwise have
applied; (2) how many hospitals that apply will qualify for a wage
index higher than they otherwise would have received; (3) for those
that qualify for a higher wage index how much higher that wage index
will be; and, (4) how many hospitals may elect to retain or acquire
Sec. 412.103 urban-to rural reclassification that would not otherwise
have done so. The MGCRB makes determinations on reclassification
requests, and hospitals make final decisions whether to accept
reclassifications approved by the MGCRB.
We also note that OMB requested public comment on the
recommendations it received from the Metropolitan and Micropolitan
Statistical Area Standards Review Committee for changes to OMB's
metropolitan and micropolitan statistical area standards (86 FR 5263).
These standards determine the
[[Page 24739]]
procedures for delineating and updating the statistical areas as new
data become available. If changes to the standards are adopted by OMB
and if those changes would affect the OMB delineations used for the
IPPS wage index, we would address any such changes and impacts in
future rulemaking.
In accordance with the provisions of Executive Order 12866, this
IFC was reviewed by the Office of Management and Budget.
VI. 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.
I, Elizabeth Richter, Acting Administrator of the Centers for
Medicare & Medicaid Services, approved this document on April 16, 2021.
List of Subjects in 42 CFR Part 412
Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR chapter IV, part 412, as follows:
PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
0
1. The authority for part 412 continues to read as follows:
Authority: 42 U.S.C. 1302 and 1395hh.
0
2. Section 412.230 is amended by adding paragraph (a)(1)(iii) and
revising paragraph (a)(5)(i) to read as follows:
Sec. 412.230 Criteria for an individual hospital seeking
redesignation to another rural area or an urban area.
(a) * * *
(1) * * *
(iii) An urban hospital that has been granted redesignation as
rural under Sec. 412.103 is considered to be located in the rural area
of the state for the purposes of this section.
* * * * *
(5) * * *
(i) An individual hospital may not be redesignated to another area
for purposes of the wage index if the pre-reclassified average hourly
wage for that area is lower than the pre-reclassified average hourly
wage for the area in which the hospital is located. An urban hospital
that has been granted redesignation as rural under Sec. 412.103 is
considered to be located in the rural area of the state for the
purposes of this paragraph (a)(5)(i).
* * * * *
Dated: April 23, 2021.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2021-08889 Filed 4-27-21; 4:45 pm]
BILLING CODE 4120-01-P
