[Federal Register Volume 59, Number 8 (Wednesday, January 12, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-546]
[[Page Unknown]]
[Federal Register: January 12, 1994]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Parts 412 and 413
[BPD-731-IFC]
RIN 0938-AG00
Medicare Program; Payment for Preadmission Services
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Interim final rule with comment period.
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SUMMARY: This interim final rule specifies that inpatient hospital
operating costs include certain preadmission services furnished by the
hospital (or by an entity that is wholly owned or operated by the
hospital) to the patient up to 3 days before the date of the patient's
admission to that hospital. These provisions implement amendments made
to section 1886(a)(4) of the Social Security Act by section 4003 of the
Omnibus Budget Reconciliation Act of 1990.
DATES: Effective Date: This interim final rule with comment period is
effective on January 12, 1994. We refer the reader to section V.A. of
this preamble for a discussion of specific provisions that apply to
specific periods.
Comment Period: Comments will be considered if we receive them at
the appropriate address, as provided below, no later than 5 p.m. on
March 14, 1994.
ADDRESSES: Mail written comments (an original and 3 copies) to the
following address: Health Care Financing Administration, Department of
Health and Human Services, Attention: BPD-731-IFC, P.O. Box 7517,
Baltimore, MD 21207.
If you prefer, you may deliver your written comments (an original
and 3 copies) to one of the following addresses:
Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201, or
Room 132, East High Rise Building, 6325 Security Boulevard, Baltimore,
MD 21207.
Because of staffing and resource limitations, we cannot accept
comments by facsimile (FAX) transmission. In commenting, please refer
to file code BPD-731-IFC. Comments received timely will be available
for public inspection as they are received, generally beginning
approximately 3 weeks after publication of a document, in room 309-G of
the Department's offices at 200 Independence Avenue, SW., Washington,
DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m.
(phone: 202-690-7890).
Copies: To order copies of the Federal Register containing this
document, send your request to: New Orders, Superintendent of
Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date
of the issue requested and enclose a check or money order payable to
the Superintendent of Documents, or enclose your Visa or Master Card
number and expiration date. Credit card orders can also be placed by
calling the order desk at (202) 783-3238 or by faxing to (202) 275-
6802. The cost for each copy is $4.50. As an alternative, you can view
and photocopy the Federal Register document at most libraries
designated as Federal Depository Libraries and at many other public and
academic libraries throughout the country that receive the Federal
Register.
FOR FURTHER INFORMATION CONTACT: Thomas Hoyer, (410) 966-4607.
SUPPLEMENTARY INFORMATION:
I. Background
Section 1886(a) of the Social Security Act (the Act) establishes a
ceiling on the allowable rate of the increase for Medicare hospital
inpatient operating costs. Prior to the Omnibus Budget Reconciliation
Act of 1990 (Pub. L. 101-508), section 1886(a)(4) of the Act defined
the ``operating costs of inpatient hospital services'' to include ``all
routine operating costs, ancillary service operating costs, and special
care unit operating costs with respect to inpatient hospital services
as such costs are determined on an average per admission or per
discharge basis * * *.''
Section 3610.3 (formerly section 3608) of the Medicare Intermediary
Manual, Part 3 (HCFA Pub. 13-3) and section 415.6 of the Medicare
Hospital Manual (HCFA Pub. 10) provides that, if a beneficiary with
Part A coverage is furnished outpatient hospital services and is
thereafter admitted as an inpatient of the same hospital before
midnight of the next day, the outpatient hospital services furnished to
the beneficiary are treated as inpatient services and are included in
the hospital's Part A payment. This administrative policy has been in
effect since June 1966. It was adopted in response to a recommendation
by the Health Insurance Benefits Advisory Council (HIBAC), which
believed it would shorten inpatient stays by encouraging hospitals to
perform some services connected with the stay prior to the actual
inpatient admission.
On October 1, 1983, the prospective payment system (PPS) was
implemented. PPS is a system of payment for acute inpatient hospital
stays under Medicare Part A (Hospital Insurance) based on
prospectively-set rates. Under this system, Medicare payment is made at
a predetermined, specific rate for each hospital discharge. All
discharges are classified according to a list of diagnosis-related
groups (DRGs). When PPS was introduced, the costs related to the
longstanding policy concerning the payment for preadmission outpatient
services as inpatient services were included in the base year costs
used to calculate the PPS standardized payment amount and the DRG
weighting factors (see 49 FR 250, January 3, 1984). Those hospitals
excluded from payment under PPS continue to be paid for inpatient
hospital services they furnish, as well as for the preadmission
services described above, on the basis of reasonable cost up to the
ceiling specified in section 1886(a) of the Act. Therefore, for both
PPS and non-PPS hospitals, these preadmission services may not be
billed separately from the covered inpatient admission that follows,
since payment for them is included in the payment made under Part A for
the inpatient stay.
II. Statutory Provisions
Section 4003(a) of Public Law 101-508 amended the definition of
``operating costs of inpatient hospital services'' contained in section
1886(a)(4) of the Act to include the costs of certain services
furnished prior to admission. These preadmission services are to be
included in the Part A payment for the subsequent inpatient stay. For
purposes of this interim final rule with comment period, we will refer
to the provision as the ``3-Day Payment Window.''
As amended, section 1886(a)(4) of the Act defines the operating
costs of inpatient hospital services to include certain preadmission
services furnished by the hospital (or by an entity that is wholly
owned or operated by the hospital) to the patient up to 3 days prior to
the date of the patient's admission. The inpatient operating costs
definition contained in section 1886(a)(4) of the Act applies to both
PPS and non-PPS hospitals. As an amendment to that definition, the 3-
Day Payment Window provision applies to both types of hospitals as
well. Further, this provision's placement in section 1886(a)(4) of the
Act rather than in sections 1862(a)(14) or 1866(a)(1)(H) of the Act
(each of which deals with rebundling--the practice of covering as
hospital services those nonphysician services furnished to hospital
patients by an outside supplier) indicates that the 3-Day Payment
Window provision is separate and distinct from the rebundling
requirement and, as such, may not be subject to the civil monetary
penalties that apply to violations of the latter requirement.
Section 4003(b) of Public Law 101-508 provides for implementation
of the 3-Day Payment Window provision in the following three phases:
The first phase, effective from November 5, 1990 (the
enactment date of Pub. L. 101-508) through September 30, 1991, includes
any services furnished during the day before the date of admission
regardless of whether the services are related to the admission. The
Conference Report accompanying Public Law 101-508 indicates that this
phase simply represents a statutory reiteration of the existing
administrative policy. For this reason, the conferees did not expect
that there was a need for any further administrative action by HCFA to
implement this phase (H.R. Conf. Rep. No. 964, 101st Cong., 2d Sess.
701 (1990)).
The second phase, effective January 1, 1991, involves
diagnostic services (including clinical diagnostic laboratory tests)
that are furnished during the 3 days immediately preceding the date of
admission.
The third phase, effective October 1, 1991, includes other
services related to the admission that are furnished during the 3 days
immediately preceding the date of admission.
With respect to adjustments to the DRG relative weights, the
Conference Report states that, ``[n]othing in this provision requires
the Secretary to take special action to adjust the DRG relative weights
to reflect the additional services that would be covered by the DRG
payment under this provision. The conferees expect that no adjustment
will be made before [fiscal year] FY 1993 when Part a [A] billing data
that would include the additional services would become available to
recalibrate the relative weights.'' (H.R. Conf. Rep. No. 964, 101st
Cong., 2d Sess. 701 (1990).)
Section 4003(c) of Public Law 101-508 specifically authorizes the
Secretary to implement the 3-Day Payment Window provision through the
issuance of interim final regulations.
III. Provisions of the Rule
In this interim final rule with comment period, we are amending the
Medicare regulations by adding new material to incorporate the
provisions of section 4003(a) of Public Law 101-508 that amend section
1886(a)(4) of the Act and to apply the effective dates to these
provisions as required under section 4003(b) of Public Law 101-508.
As indicated in section II of this preamble, the 3-Day Payment
Window provision will be implemented in three phases. Phase one is
intended simply to serve as a statutory reiteration of our existing
policy as indicated by both section 4003(b)(1) of Public Law 101-508
and the Conference Report (H.R. Conf. Rep. No. 964, 101st Cong., 2d
Sess. 701 (1990)). Phase two, effective January 1, 1991, specifies that
payment for inpatient hospital operating costs includes diagnostic
services that are furnished during the 3 days immediately preceding the
date of admission. Phase three specifies that payment for inpatient
hospital operating costs includes other (that is, non-diagnostic)
services that are related to the admission and are furnished during the
3 days immediately preceding the date of admission. Under phase three
of the new law, we needed to choose between two possible approaches to
the treatment of non-diagnostic services furnished within 3 days before
admission. (Phase two deals only with diagnostic services and, thus, is
not relevant to this issue). Phase one of the 3-Day Payment Window
provision and our existing policy for services furnished on the day
before admission are both somewhat broader than phase three, in that
they bundle all preadmission services into the inpatient payment,
regardless of whether they are related to the admission. Thus, for the
phase one period, we believe it is appropriate to follow the broader
administrative policy, which is already in place. However, for the
implementation of phase three (section 4003(b)(3) of Pub. L. 101-508)
beginning October 1, 1991, we considered whether to apply this broader
policy or impose a policy that follows the narrower wording of the new
law, that is, include non-diagnostic preadmission services only to the
extent that they are related to the admission.
We considered that the Conference Report language (which
characterizes the first phase of implementation as embodying the
existing policy) could justify continuing the current, all-inclusive
policy for the day before admission, or even expanding it to apply to
the second and third day before admission as well. This approach would
not require identifying any services as being related to the admission
and would not require separating out from the inpatient payment any of
the services not related to the admission that are furnished on the day
before admission (all services--regardless of whether the services are
related to the admission--are currently included in the inpatient
payment under the existing policy). This approach would also enhance
the program savings to be realized from the 3-Day Payment Window
provision, since it folds into the inpatient payment a greater range of
preadmission services that, as a consequence, would not receive a
separate payment under Part B. Finally, by maximizing the services to
be included in the Part A payment for the subsequent admission, this
approach would clearly be advantageous to beneficiaries who are
eligible only for Part A; further, even beneficiaries who are eligible
for both Parts A and B would be able to avoid incurring the Part B
deductible and coinsurance charges to the maximum extent possible.
However, we note that adopting such an all-inclusive approach for
the second and third days before admission is contrary to the clear
language of the new law, which is worded specifically in terms of
``other services related to the admission.'' Furthermore, we have
determined that continuing this approach indefinitely even for the day
before admission only would appear to be inconsistent with the new
law's implementation provisions; unlike phases two and three, phase one
contains both a starting date and an ending date. We believe this
indicates that Congress intended for the existing, all-inclusive policy
to remain in effect, but only during the finite period between those
two dates.
After considering these various factors, we have determined that
services (other than diagnostic services) furnished on the second and
third days before admission must be related to the admission in order
to come under the 3-Day Payment Window provision. Further, we have
determined that effective with services furnished on or after October
1, 1991 (upon the expiration of the first phase of implementation),
this qualification will become applicable to non-diagnostic services
furnished on the day before admission as well. We believe that this
approach most accurately reflects the intent of the statutory language
of the new provision. We realize that, under this approach, the payment
made under Part A, which currently includes the cost of all non-
diagnostic services furnished on the day before admission, will no
longer include non-diagnostic services unless they are related to the
admission. However, consistent with the Conference Report language set
out above, we have to date made no DRG payment adjustments to reflect
the effects of the 3-Day Payment Window provision.
For purposes of this provision, we are defining ``other services
related to the admission'' as those non-diagnostic services furnished
in connection with the diagnosis (that is, the principal diagnosis)
that requires the beneficiary to be admitted as an inpatient. We
considered defining this term more broadly to include services
furnished in connection with secondary diagnoses as well; however,
secondary diagnoses can sometimes include complicating events that do
not occur until after admission. Since the law specifies that this
provision is to apply to services related to the inpatient
``admission'' (as opposed to the ensuing inpatient stay), we believe
that it is more accurate to use only the principal diagnosis, as
identifying those preadmission services that are related to the actual
cause of admission.
Further, the statutory language charges the Secretary with defining
those non-diagnostic services that are regarded as ``related to the
admission'' and, thus, are subject to the payment window. In effect,
this gives the Secretary the authority to determine the scope of the
payment window's applicability to non-diagnostic services. In this
context, we have determined that ambulance services are not subject to
the payment window, even when furnished during the preadmission period
by the admitting hospital or by an entity that it wholly owns or
operates. The House Budget Committee Report accompanying the payment
window legislation explained that the underlying objective of this
provision is ``* * * to curb further unbundling which has occurred
since the introduction of the DRG payment system * * *'' (H.R. Budget
Comm. Rep. No. 881, 101st Cong., 2d Sess. 250 (1990).) As a Part B
benefit, ambulance services (unlike patient transportation services
furnished to inpatients) are not bundled with inpatient services and,
thus, have not been subject to the actions taken to maximize payment
under PPS, which prompted Congress's concern. Thus, we believe that
ambulance services are distinct from the type of hospital services that
Congress designed the payment window provision to address. Many
hospitals that operate ambulance services do so at a loss. The
hospitals continue to furnish the ambulance services primarily as a
means of assuring access to hospital care for individuals who otherwise
would be unable to reach hospitals. Subjecting hospitals that operate
ambulance services to still greater fiscal constraints under the
payment window provision could have a major adverse impact on their
availability, particularly in remote rural areas. Therefore, in this
rule, we are defining the preadmission services that are subject to the
payment window provision as not including ambulance services.
Based on our interpretation of the law, we will implement phases
two and three of the 3-Day Payment Window provision set forth in
section 1886(a)(4) of the Act and section 4003(b) of Public Law 101-508
by revising regulations concerning payment to PPS hospitals
(Sec. 412.2) and non-PPS hospitals (Sec. 413.40) for inpatient hospital
services furnished to Medicare beneficiaries. (We are not amending the
regulations with respect to phase one since, as discussed previously,
the Conference Report language indicates that this phase simply
embodies our existing policy and requires no further administrative
action to implement.) Specifically, we are adding paragraph (c)(5) to
Sec. 412.2 and revising Sec. 413.40(c). We will specify that payment
for inpatient operating costs for both PPS and non-PPS hospitals will
include certain preadmission services furnished by the hospital or by
an entity wholly owned or operated by the hospital to the patient
during the 3 days immediately preceding the date of the patient's
admission. We are interpreting the phrase ``wholly'' owned or operated
to include any entity for which the hospital itself is the sole owner;
for purposes of consistency, we are also including in this term any
entity for which the hospital is the sole operator. We note that a
hospital need not exercise administrative control over a facility in
order to operate it. An operator implements facility policies, but does
not necessarily make the policies; operating a facility simply involves
conducting the facility's day-to-day activities, as opposed to
``control,'' which involves the power to direct the facility's
operations toward specific objectives.
Thus, Secs. 412.2 and 413.40 will specify that payment for
inpatient operating costs for both PPS and non-PPS hospitals will
include the following services (other than ambulance services):
Diagnostic services (including clinical diagnostic
laboratory tests) furnished on or after January 1, 1991.
Other services related to the admission furnished on or
after October 1, 1991.
We will define other services related to the admission to include
those non-diagnostic services furnished in connection with the
principal diagnosis that requires the beneficiary to be admitted as an
inpatient. We invite comments on our use of this definition to identify
admission-related services. We also invite comments on the feasibility
of prescribing more detailed operational procedures in the regulations.
For example, one possible approach might be simply to presume that
certain specific types of preadmission services (such as chronic
maintenance dialysis) are never related to the subsequent admission, or
to presume that all preadmission services (other than certain specified
exceptions) are admission-related. Another alternative might be to
develop an inclusive list of procedures which are medically related,
against which all claims could be electronically screened. Still
another approach could be to define as related to the principal
diagnosis any services that fall within the same major diagnostic
category (MDC) as used under PPS. In establishing a degree of medical
relatedness, the MDC approach would have the advantage of
administrative simplicity for hospitals, contractors, and the
government, as it would use a patient classification system that is
already in place for hospital services under PPS. We invite comments on
the feasibility of prescribing these or other implementation procedures
in the regulations, as well as the relative administrative burden that
each type of approach would impose on the program to develop and
implement and on the facilities to comply.
In response to the changes made by section 4003 of Public Law 101-
508, instructions were published in the Medicare Intermediary Manual,
Part 3 (HCFA Pub. 13-3), ``Claims Process'' in March 1992 (Transmittal
No. 1565) and in the Medicare Hospital Manual (HCFA Pub. 10), in March
1992 (Transmittal No. 633).
We note that we are making some conforming technical changes to
Secs. 412.2 (c)(3) and (c)(4), 412.73(c)(1), 412.98(b), and 413.40
(a)(3) and (i)(3).
IV. Other Required Information
A. Effective Dates
The effective date of this interim final rule with comment period
is January 12, 1994. As discussed previously, the Conference Report
language indicates that the changes made by section 4003(b)(1) of
Public Law 101-508 (which are effective from November 5, 1990, through
September 30, 1991) simply embody our existing policy and require no
further administrative action to implement; thus, we are not amending
the regulations with respect to this aspect of the provision. Changes
made by section 4003(b)(2) of Public Law 101-508 that include as
inpatient hospital services those diagnostic services that are
furnished during the 3 days immediately preceding the date of admission
are applicable for services furnished on or after January 1, 1991.
Changes made by section 4003(b)(3) of Public Law 101-508 that include
as inpatient hospital services any other services related to the
admission furnished during the 3 days immediately preceding the date of
admission are applicable for services furnished on or after October 1,
1991.
B. Waiver of Notice of Proposed Rulemaking and 30-Day Delay in the
Effective Date
We ordinarily publish a notice of proposed rulemaking for a
regulation to provide a period for public comment. However we may waive
that procedure if we find good cause that prior notice and comment are
impracticable, unnecessary, or contrary to public interest. In
addition, section 1871(b)(2)(A) of the Act provides that the notice of
proposed rulemaking is not required if a statute specifically permits a
regulation to be issued in interim final form. Section 4003(c) of
Public Law 101-508 permits the Secretary to publish the regulations,
which will implement the 3-Day Payment Window provision, on an interim
final basis. Therefore, we are implementing this interim final rule
with comment period without first issuing a notice of proposed
rulemaking. Nonetheless, we are providing a 60-day period for public
comment, as indicated at the beginning of this interim final rule.
In addition, we normally provide a delay of 30 days in the
effective date for documents such as this. However, we may waive the
delay in the effective date if we find good cause that adherence to
this procedure would be impracticable, unnecessary, or contrary to
public interest. We believe that it is unnecessary to provide a 30-day
delay in the effective date since the Conference Report language, as
discussed previously, indicates that no further administrative action
is necessary to effect the first phase of implementation, and section
4003(b) of Public Law 101-508 prescribes specific effective dates for
the remaining two phases. The regulations in this interim final rule
with comment period merely conform to the effective date requirements
set forth in section 4003(b) of Public Law 101-508. Therefore, we find
good cause to waive the usual 30-day delay.
C. Collection of Information Requirements
This document does not impose information collection and
recordkeeping requirements. Consequently, it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.).
D. Response to Comments
Because of the large number of items of correspondence we normally
receive on FR documents published for comment, 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, if we proceed with a subsequent document, we
will respond to the comments in the preamble to that document.
VI. Regulatory Impact Analysis
A. Executive Order 12291
Executive Order 12291 (E.O. 12291) requires us to prepare and
publish a regulatory impact analysis for any interim final rule with
comment period that meets one of the E.O. 12291 criteria for a ``major
rule''; that is, that will be likely to result in--
An annual effect on the economy of $100 million or more;
A major increase in costs or prices for consumers,
individual industries, Federal, State, or local government agencies, or
geographic regions; or
Significant adverse effects on competition, employment,
investment, productivity, innovation, or on the ability of United
States-based enterprises to compete with foreign-based enterprises in
domestic or export markets.
This interim final rule with comment period is considered a major
rule under E.O. 12291 criteria based on our cost projections for the
next 5 Federal fiscal years (FYs). The following discussion constitutes
a regulatory impact analysis.
This interim final rule with comment period implements section 4003
of Public Law 101-508, which contains a provision that expands the
timeframe for folding preadmission services into the Part A payment for
the subsequent inpatient stay. The first sentence of section 1886(a)(4)
of the Act is amended to include certain preadmission services,
furnished by the hospital, or by an entity that is wholly owned or
operated by the hospital, up to 3 days before the date of the patient's
admission. This provision becomes effective in three phases.
The first phase, effective November 5, 1990 through September 30,
1991, included services furnished the day before admission. This phase
merely represented a statutory reiteration of the existing policy. The
second phase, effective January 1, 1991, included diagnostic services
that are furnished during the 3 days immediately preceding the date of
admission. The third phase, effective October 1, 1991, includes other
services related to the admission that are furnished during the 3 days
immediately preceding the date of admission.
This regulation will result in program savings from discontinuing
separate payment under Part B for services performed up to 3 days
before the date of admission instead of 1 day, without an immediate,
corresponding increase in the DRG payments under Part A. The estimated
savings will be reduced if physicians elect to have preadmission
services performed at a non-hospital site or more than 3 days before
admission.
There will be some savings to beneficiaries as a result of shifting
payment for services from Part B outpatient to Part A inpatient rates.
Beneficiaries are responsible for 20 percent copayment for non-
diagnostic outpatient services. Beneficiaries will not be responsible
for copayment if the same services are performed up to 3 days before
the date of a hospital admission and are folded into the hospital's
inpatient payment. However, because we do not have a breakdown of the
cost or type of services that will be included in the inpatient
payment, we are not able to estimate the annual savings that will be
realized by beneficiaries.
The following table reflects estimated program savings solely as a
result of discontinuing separate Part B payment for services performed
up to 3 days before the date of admission instead of 1 day, without a
corresponding DRG relative weight adjustment for the inpatient stay.
Estimated Medicare Part B Savings
[In millions]\1\
------------------------------------------------------------------------
FY 1993 FY 1994 FY 1995 FY 1996 FY 1997
------------------------------------------------------------------------
$40.......... $70 $80 $90 $100
------------------------------------------------------------------------
\1\Rounded to the nearest $10 million.
As indicated above, we do not anticipate that this new provision
will cause a significant change in the timing of services that, until
now, have been furnished during the preadmission period.
We are limiting the inclusion of non-diagnostic services, even when
furnished on the day before admission, to those that are related to the
admission. We believe this interpretation more accurately implements
the provisions of the statute. This means that services furnished on
the day before admission which are neither diagnostic nor admission-
related will no longer be rebundled into the inpatient payment.
Further, since the law permits the Secretary to define the types of
admission-related services to be included in the payment window, we
have determined that it should not include ambulance services, to which
special conditions apply. As a Part B benefit, ambulance services
(unlike patient transportation services furnished to inpatients) are
not bundled with inpatient services, and thus, have not been subject to
the attempts to maximize PPS payment through unbundling which prompted
Congress to enact the payment window legislation. The unbundling
provision may generate a small amount of additional Part B costs;
however, as indicated above, we anticipate that the overall degree of
change that this provision will produce in existing patterns of service
delivery will be minimal.
B. Regulatory Flexibility Act
We generally prepare a regulatory flexibility analysis that is
consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
through 612) unless the Secretary certifies that an interim final rule
with comment period will not have a significant economic impact on a
substantial number of small entities. For purposes of the RFA, we
consider all hospitals to be small entities.
This interim final rule with comment period will affect all
hospitals that are paid under the prospective payment system, dependent
upon the number of additional services that will have to be included in
the DRG payment rate. Since the estimated savings represent less than
one-half of one percent of total Medicare funding to hospitals, we have
determined, and the Secretary certifies, that this interim final rule
with comment period will not have a substantial impact on a substantial
number of small entities, and we have, therefore, not prepared a
regulatory flexibility analysis.
C. Small Rural Hospitals
Section 1102(b) of the Act requires the Secretary to prepare a
regulatory impact analysis if an interim final rule with comment period
may have a significant impact on the operations of a substantial number
of small rural hospitals. This analysis must conform to the provisions
of section 604 of the RFA. For purposes of section 1102(b) of the Act,
we define a small rural hospital as a hospital that is located outside
of a Metropolitan Statistical Area and has fewer than 50 beds.
We believe the 3-Day Payment Window provision will affect small
rural hospitals to a lesser degree than larger facilities where complex
procedures are performed and specialized medical conditions are
treated, requiring additional preadmission testing. Therefore, we have
determined, and the Secretary certifies, that this interim final rule
with comment period will not have a significant economic impact on the
operations of a substantial number of small rural hospitals.
Consequently, we are not preparing an analysis for section 1102(b) of
the Act.
List of Subjects
42 CFR Part 412
Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and recordkeeping requirements.
42 CFR Part 413
Health facilities, Kidney diseases, Medicare, Puerto Rico,
Reporting and recordkeeping requirements.
42 CFR chapter IV is amended as set forth below:
A. Part 412 is amended as follows:
PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
1. The authority citation for part 412 continues to read as
follows:
Authority: Secs. 1102, 1815(e), 1871, and 1886 of the Social
Security Act (42 U.S.C. 1302, 1395g(e), 1395hh, and 1395ww).
Subpart A--General Provisions
2. In Sec. 412.2, the introductory language in paragraph (c) is
republished, paragraphs (c)(3) and (4) are revised, and paragraph
(c)(5) is added to read as follows:
Sec. 412.2 Basis of payment.
* * * * *
(c) Inpatient operating costs. The prospective payment system
provides a payment amount for inpatient operating costs, including--
* * * * *
(3) Special care unit operating costs (intensive care type unit
services, as described in Sec. 413.53(b) of this chapter);
(4) Malpractice insurance costs related to services furnished to
inpatients; and
(5) Certain preadmission services furnished by the hospital or by
an entity wholly owned or operated by the hospital (that is, any entity
for which the hospital itself is the sole owner or operator) to the
patient during the 3 days immediately preceding the date of the
patient's admission to the hospital. A hospital is considered the sole
operator of an entity if the hospital has exclusive responsibility for
conducting or overseeing the entity's routine operations, regardless of
whether the hospital also has policymaking authority over the entity.
The specific preadmission services (other than ambulance services)
included in the inpatient hospital operating costs are the following:
(i) Diagnostic services (including clinical diagnostic laboratory
tests) furnished on or after January 1, 1991.
(ii) Other services related to the admission furnished on or after
October 1, 1991. Other services related to the admission means services
(other than diagnostic services) that are furnished in connection with
the principal diagnosis that requires the beneficiary to be admitted as
an inpatient.
* * * * *
Subpart E--Determination of Transition Period Payment Rates for
Inpatient Operating Costs
Sec. 412.73 [Amended]
3. In Sec. 412.73(c)(1), the phrase ``the rate-of-increase
percentage determined under Sec. 413.40(c)(2) of this chapter,'' is
revised to read ``the rate-of-increase percentage determined under
Sec. 413.40(c)(3) of this chapter,''.
Subpart G--Special Treatment of Certain Facilities Under the
Prospective Payment System for Inpatient Operating Costs
Sec. 412.98 [Amended]
4. In Sec. 412.98(b), in the first sentence, the phrase ``under
Sec. 413.40(c)(3) of this chapter'' is revised to read ``under
Sec. 413.40(c)(4) of this chapter''.
B. Part 413 is amended as follows:
PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES
1. The authority citation for part 413 continues to read as
follows:
Authority: Secs. 1102, 1814(b), 1815, 1833 (a), (i), and (n),
1861(v), 1871, 1881, 1883, and 1886 of the Social Security Act (42
U.S.C. 1302, 1395f(b), 1395g, 1395l(a), (i), and (n), 1395x(v),
1395hh, 1395rr, 1395tt, and 1395ww); sec. 104(c) of Pub. L. 100-360
as amended by sec. 608(d)(3) of Pub. L. 100-485 (42 U.S.C. 1395ww
(note)); and sec. 101(c) of Pub. L. 101-234 (42 U.S.C. 1395ww
(note)).
Subpart C--Limits on Cost Reimbursement
Sec. 413.40 [Amended]
2. Section 413.40 is amended as follows:
a. In paragraph (a)(3), in the definition for ``net inpatient
operating costs'', the first sentence is revised.
b. Paragraphs (c)(2) through (c)(4) are redesignated as paragraphs
(c)(3) through (c)(5), and a new paragraph (c)(2) is added.
c. In redesignated paragraph (c)(4)(ii), the phrase ``unless the
provisions of paragraph (c)(4)(ii) of this section apply.'' is revised
to read ``unless the provisions of paragraph (c)(5)(ii) of this section
apply.''
d. In paragraph (i)(3), the phrase ``the applicable rate-of-
increase percentages (update factors) described in paragraph (c)(2) of
this section.'' is revised to read ``the applicable rate-of-increase
percentages (update factors) described in paragraph (c)(3) of this
section.''
The revision and addition are to read as follows:
Sec. 413.40 Ceiling on the rate of increase in hospital inpatient
costs.
(a) * * *
(3) * * *
Net inpatient operating costs include the costs of certain
preadmission services as specified in Sec. 413.40(c)(2), the costs of
routine services, ancillary services, and intensive care services (as
defined in Sec. 413.53(b)) incurred by a hospital in furnishing covered
inpatient services to Medicare beneficiaries. * * *
* * * * *
(c) * * *
(2) Preadmission services. Net inpatient operating costs include
certain preadmission services furnished by the hospital or by an entity
wholly owned or operated by the hospital (that is, any entity for which
the hospital itself is the sole owner or operator) to the patient
during the 3 days immediately preceding the date of the patient's
admission to the hospital. A hospital is considered the sole operator
of an entity if the hospital has exclusive responsibility for
conducting or overseeing the entity's routine operations, regardless of
whether the hospital also has policymaking authority over the entity.
The specific preadmission services (other than ambulance services)
included in the net inpatient hospital operating costs are the
following:
(i) Diagnostic services (including clinical diagnostic laboratory
tests) furnished on or after January 1, 1991.
(ii) Other services related to the admission furnished on or after
October 1, 1991. Other services related to the admission means services
(other than diagnostic services) that are furnished in connection with
the principal diagnosis that requires the beneficiary to be admitted as
an inpatient.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: July 20, 1993.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
Dated: August 30, 1993.
Donna E. Shalala,
Secretary.
[FR Doc. 94-546 Filed 1-11-94; 8:45 am]
BILLING CODE 4120-01-P
