96-22376. Medicare Program; Schedule of Prospectively Determined Payment Rates for Skilled Nursing Facility Inpatient Routine Service Costs  

  • [Federal Register Volume 61, Number 171 (Tuesday, September 3, 1996)]
    [Notices]
    [Pages 46466-46478]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 96-22376]
    
    
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    DEPARTMENT OF HEALTH AND HUMAN SERVICES
    Health Care Financing Administration
    [BPD-842-NC]
    RIN 0938-AH70
    
    
    Medicare Program; Schedule of Prospectively Determined Payment 
    Rates for Skilled Nursing Facility Inpatient Routine Service Costs
    
    AGENCY: Health Care Financing Administration (HCFA), HHS.
    
    ACTION: Final notice with comment period.
    
    -----------------------------------------------------------------------
    
    SUMMARY: This final notice with comment period sets forth the schedule 
    of payment rates for low Medicare volume skilled nursing facilities for 
    prospective payments for routine service costs for Federal fiscal year 
    1997 (cost reporting periods beginning on or after October 1, 1996 and 
    before October 1, 1997). Section 1888(d) of the Social Security Act 
    requires the Secretary to establish and publish the prospectively 
    determined payment rates 90 days prior to the beginning of the affected 
    Federal fiscal year.
    
    DATES: Effective date: The schedule of payment rates is effective for 
    cost reporting periods beginning on or after October 1, 1996.
        Comment date: Written comments will be considered if we receive 
    them at the appropriate address, as provided below, no later than 5:00 
    p.m. on November 4, 1996.
    
    ADDRESSES: Mail written comments (an original and three copies) to the 
    following address: Health Care Financing Administration, Department of 
    Health and Human Services, Attention: BPD-842-NC, P.O. Box 7517, 
    Baltimore, MD 21244-0517.
        If you prefer, you may deliver your written comments (an original 
    and three copies) to one of the following addresses: Room 309-G, Hubert 
    H. Humphrey Building, 200 Independence Avenue, SW, Washington, DC 
    20201, or C5-09-26, 7500 Security Boulevard, Baltimore, MD 21244-1850.
        Comments may also be submitted electronically to the following e-
    mail address: [email protected] E-mail comments must include the 
    full name and address of the sender and must be submitted to the 
    referenced address in order to be considered. All comments must be 
    incorporated in the e-mail message because we may not be able to access 
    attachments. Electronically submitted comments will be available for 
    public inspection at the Independence Avenue address, below.
        Because of staffing and resource limitations, we cannot accept 
    comments by facsimile (FAX) transmission. In
    
    [[Page 46467]]
    
    commenting, please refer to file code BPD-842-NC. 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) 512-1800 or by faxing to (202) 512-
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    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: Joseph Menning (410) 786-4594.
    
    SUPPLEMENTARY INFORMATION:
    
    I. Background
    
        Section 1888 of the Social Security Act (the Act) sets forth the 
    statutory requirements concerning Medicare payments to skilled nursing 
    facilities (SNFs) for their routine service costs for services 
    furnished to Medicare beneficiaries. Most SNFs are paid on a reasonable 
    cost basis up to a schedule of routine service per diem cost limits 
    established in accordance with the general reasonable cost provisions 
    of section 1861(v)(1) of the Act and the specific SNF payment 
    provisions of section 1888 of the Act. However, under the provision at 
    section 1888(d) of the Act, for cost reporting periods beginning on or 
    after October 1, 1986, a SNF with fewer than 1,500 Medicare covered 
    days in a given cost reporting period may choose to receive payment 
    based on a prospectively determined payment rate in the subsequent cost 
    reporting period. The prospectively determined payment rates for low 
    Medicare volume SNFs are established on a per diem basis and include 
    payment for the cost of furnishing general inpatient routine services 
    and capital-related costs associated with routine services.
        The per diem amounts may not exceed the limit on routine service 
    costs set forth in section 1888(a) of the Act with respect to the 
    facility, adjusted to take into account average capital-related costs 
    with respect to the type and location of the facility. The limit used 
    for this purpose is the applicable routine service cost limit in effect 
    when the provider elects to be paid under the prospectively determined 
    payment rates.
        For SNFs located in an urban area, the prospectively determined 
    payment amount is equal to 105 percent of the mean of the per diem 
    reasonable routine service and routine capital-related costs of 
    services for SNFs in urban areas within the same census region. The 
    mean per diem is determined without regard to the limitations of 
    section 1888(a) of the Act and is adjusted for different area wage 
    levels.
        For SNFs located in a rural area, the prospectively determined 
    payment amount is equal to 105 percent of the mean of the per diem 
    reasonable routine service and routine capital-related costs of covered 
    services for SNFs in rural areas within the same census region. The 
    mean per diem is determined without regard to the limitations of 
    section 1888(a) of the Act and is adjusted for different area wage 
    levels.
        Prior to the enactment of the Omnibus Budget Reconciliation Act of 
    1993 (OBRA 1993; Public Law 103-66), we published guidelines specifying 
    the methodology and data used and the actual prospectively determined 
    payment rates annually in the Medicare Provider Reimbursement Manual 
    (HCFA Pub. 15-1). The general requirements for the rates were included 
    under sections 2820 and 2821 of the manual and the actual rates, the 
    most recent effective for Federal fiscal year 1993, were in section 
    2828 of the manual.
        Section 13503(b) of OBRA 1993 prohibited changes to the Federal 
    fiscal year 1993 prospectively determined payment rates paid under 
    section 1888(d) of the Act for services furnished during cost reporting 
    periods beginning in Federal fiscal year 1994 and in Federal fiscal 
    year 1995, except as may be necessary to take into account the 
    amendments made by section 13503(c). Section 13503(c) of OBRA 1993 
    amended sections 1861(v)(1)(B) and 1878(f)(2) of the Act by eliminating 
    return on owner's equity for services furnished on or after October 1, 
    1993.
        On July 21, 1995, we published in the Federal Register a final rule 
    (60 FR 37590) that codified in the Code of Federal Regulations the 
    statutory requirements for the optional prospectively determined 
    payment system for low Medicare volume SNFs and the guidelines on the 
    methodology and data used that were in the Provider Reimbursement 
    Manual. These implementing regulations, effective on August 21, 1995, 
    appear at 42 CFR 413.1, 413.24 and 413.300 through 413.321.
        Under the provisions of Sec. 413.312(a)(1), to calculate the 
    prospectively determined payment rates, we use the SNF cost data that 
    were used to develop the applicable SNF inpatient routine service cost 
    limits, a wage index to adjust for area wage differences, and the most 
    recent projections of increases in the costs from the SNF market basket 
    (inflation factors). Section 413.312(a)(2) provides that we will 
    announce in the Federal Register the wage index and the annual 
    percentage increases in the market basket used in the calculation of 
    the rates. In addition, Sec. 413.320 provides that at least 90 days 
    before the beginning of a Federal fiscal year to which revised 
    prospectively determined payment rates are to be applied, HCFA will 
    publish a notice in the Federal Register establishing the rates for 
    routine services and explaining the basis on which the rates are 
    calculated.
        This notice announces the schedule of payment rates for prospective 
    payments for routine service costs in Federal fiscal year 1997 (cost 
    reporting periods beginning on or after October 1, 1996 and before 
    October 1, 1997) for low Medicare volume SNFs that elect this method of 
    payment. This notice represents the first schedule of prospectively 
    determined payment rates published in a Federal Register notice after 
    the effective date of the July 1995 implementing regulations. In 
    addition, this notice includes the inflation factors to update the 
    routine service cost limits applicable for Federal fiscal year 1997, 
    which are necessary to compute a SNF's prospectively determined payment 
    rate.
    
    II. Update of the Schedule of Prospectively Determined Payment Rates
    
        As mentioned earlier, the statute provided that both the SNF 
    routine service cost limits and the prospectively determined payment 
    rates be frozen at the Federal fiscal year 1993 amounts for cost 
    reporting periods beginning in Federal fiscal year 1994 and in Federal 
    fiscal year 1995. As a result of these rates and limits remaining at 
    the Federal fiscal year 1993 levels, the Medicare program experienced a 
    savings in Medicare trust funds. We had anticipated that, because of 
    these prior years' savings, we would have legislative support to 
    preserve these program savings for Federal fiscal year 1996 and later. 
    We expected to do this
    
    [[Page 46468]]
    
    by trending the Federal fiscal year 1993 limits and rates to cost 
    reporting periods beginning in Federal fiscal year 1996, except that 
    the inflation factors for Federal fiscal year 1994 and Federal fiscal 
    year 1995 would not be included. However, such legislation has not been 
    enacted. Therefore, in the interim for Federal fiscal year 1996, we 
    provided the Medicare intermediaries with updated Federal fiscal year 
    1996 limits and rates by trending the Federal fiscal 1993 data to 
    Federal fiscal 1996 by using the projected inflation factors and the 
    methodology described in the October 7, 1992 Federal Register notice 
    (57 FR 46177) that announced the Federal fiscal year 1993 limits 
    (including the inflation factors for Federal fiscal years 1994 and 
    1995).
        In addition, in May 1996, we provided all Medicare intermediaries 
    with revisions to the Federal fiscal year 1993 cost limits and 
    prospectively determined payment rates that reflected corrections to 
    the projected inflation factors used in the October 7, 1992 notice. (An 
    explanation of the circumstances under which HCFA corrects projected 
    inflation factors is in the October 7, 1992 notice (57 FR 46179 through 
    46180).) These revised Federal fiscal year 1993 limits and rates were 
    also used to compute updated limits and rates for cost reporting 
    periods beginning in Federal fiscal year 1996. However, these revisions 
    did not affect prospectively determined payment rates issued before the 
    May 1996 notification to the intermediaries.
        In developing the prospectively determined payment rates effective 
    with this notice, we are using the basic methodology and cost report 
    data specified in Sec. 413.312 of the regulations (and described in 
    section 2828 of the Provider Reimbursement Manual). We will continue to 
    use the same wage indexes and the same urban and rural designations 
    used to compute the Federal fiscal year 1993 cost limits and 
    prospectively determined rates, as specified in the October 7, 1992 
    Federal Register notice and described in section 2828 of the Provider 
    Reimbursement Manual, respectively. In addition, we will continue to 
    provide a per diem add-on to the prospectively determined payment rates 
    to account for costs incurred by SNFs in complying with the nursing 
    home reform provisions specified in section 1819 of the Act (enacted by 
    OBRA 1987), including the costs of conducting nurse aide training and 
    competency evaluations, and for costs associated with the Occupational 
    Safety and Health Administration (OSHA) universal precaution 
    requirements.
        Tables I and II under section IV. of this notice contain the 
    Federal fiscal year 1997 prospectively determined payment rates. Table 
    III under section IV. of this notice contains the Federal fiscal year 
    1997 routine service cost limits. Table IV under section IV. of this 
    notice contains the monthly inflation factors to be applied to full 12 
    month cost reporting periods beginning in Federal fiscal year 1997.
    
    III. Methodology for Determining Prospectively Determined Per Diem 
    Payment Rates
    
        The schedule of rates set forth in Tables I and II under section 
    IV. of this notice applies to all SNFs that qualify and request to 
    receive the optional prospective payment rate for routine services 
    under the provisions of subpart I of part 413. Under Sec. 413.314(d), a 
    SNF's prospective payment rate, excluding capital-related costs, cannot 
    exceed its actual routine service cost limit (without regard to 
    exceptions, exemptions, or retroactive adjustments) in effect at the 
    time of the election to be paid a prospectively determined payment 
    rate. The prospectively determined payment rate is in place of payment 
    that would otherwise be made for routine service costs and associated 
    capital-related costs under section 1861(v) of the Act. There are no 
    retroactive adjustments to these rates and under Sec. 413.308(c), an 
    SNF may not revoke its request to be paid under this provision after it 
    has received the initial determination of eligibility from the 
    intermediary and the cost reporting period has begun.
    
    A. Data
    
        The actual cost data used to develop the prospectively determined 
    payment rates for cost reporting periods beginning in FY 1993 were 
    obtained from settled freestanding SNF Medicare cost reports for 
    periods ending on or after June 30, 1989, and through May 31, 1990. 
    Comparable data for hospital-based SNFs were obtained from settled 
    Medicare cost reports for periods ending on or after October 31, 1988, 
    and through September 30, 1989. We are continuing to use the same cost 
    report data to develop the prospectively determined payment rates in 
    this notice.
    
    B. Use of the Most Recent Available Inflation Factors
    
        We are continuing to use the SNF input price market basket index 
    (inflation factor) to adjust the cost report data to the initial cost 
    reporting period to which the prospectively determined payment rates 
    apply. The inflation factors are comprised of a ``market basket'' of 
    the most commonly used categories of SNF routine service expenses. The 
    categories used are based primarily on those used in the National 
    Center for Health Statistics in its National Nursing Home Surveys. The 
    categories are weighted according to the estimated proportion of SNF 
    routine service cost attributable to each category. The Appendix to 
    this notice specifies the weights used in each category.
        We are adjusting the cost report data described above using the 
    most recent available inflation factors shown below. These inflation 
    factors are similar to those used in the May 1996 notification to the 
    intermediaries described in section II. of this notice. These inflation 
    factors, representing the annual percentage increases in the market 
    basket over the previous year, are:
    
    1988................................................................5.1
    1989................................................................6.6
    1990................................................................6.3
    1991................................................................4.4
    1992................................................................3.8
    1993................................................................3.7
    1994................................................................3.4
    1995................................................................2.9
    1996................................................................2.9
    1997................................................................3.2
    1998................................................................3.4
    
        If a facility has a cost reporting period beginning in a month 
    after October 1, 1996, the intermediary increases the adjusted routine 
    operating portion of the rate that otherwise apply to the SNF by the 
    factor from Table IV of this notice that corresponds to the month and 
    year in which the cost reporting period begins. Each factor represents 
    the compounded monthly increase derived from the annual increase in the 
    market basket index and is used to account for inflation in costs that 
    occur after the date on which the prospective payment rates are 
    effective.
        If a facility uses a cost reporting period that is not 12 months in 
    duration, a special adjustment factor will be calculated. This is 
    necessary because market basket increases are computed to the midpoint 
    of a cost reporting period and the adjustment factors in Table IV of 
    this notice are based on an assumed 12-month cost reporting period. For 
    cost reporting periods of other than 12 months, the calculation is done 
    for the midpoint of the specific cost reporting period. The SNF's 
    intermediary obtains this adjustment factor from HCFA central office.
    
    C. Use of Wage Index to Adjust Labor-Related Cost
    
        We are continuing to use the hospital industry wage index to 
    account for area
    
    [[Page 46469]]
    
    wage differences. We are continuing to apply the wage index to five 
    categories of labor-related costs: wages, employee benefits, health 
    service costs, business service costs, and other miscellaneous costs. 
    The portion of labor-related costs remains at the level of 83.1 
    percent. In addition, the same wage index values and urban/rural 
    designations, as shown in Tables V and VI of this notice, are to be 
    applied to the labor-related portion of the prospectively determined 
    payment rates in this notice. (These are the same wage index values and 
    urban/rural designations shown in the October 7, 1992 cost limit notice 
    and section 2828 of the Provider Reimbursement Manual.)
    
    D. Use of Classification System
    
        We will retain the classification system based on grouping SNFs by 
    census regions and by urban or rural area designation within the 
    region. As required by sections 1888(d)(3) and 1886(d)(2)(D) of the 
    Act, the term ``region'' means one of the nine census divisions, 
    comprising the fifty States and the District of Columbia, established 
    by the Bureau of Census for statistical and reporting purposes. The 
    term ``urban area'' means an area within a Metropolitan Statistical 
    Area (MSA) (as defined by the Office of Management and Budget (OMB), 
    with exceptions for certain New England County Metropolitan Areas 
    (NECMAs), as described in a notice published in the Federal Register on 
    April 1, 1991 (56 FR 13319)). The term ``rural area'' means an area 
    outside of an MSA.
    
    E. Use of OBRA 1987 and OSHA Per Diem Add-on
    
        Section 1861(v)(1)(E) of the Act provides for payment for costs 
    incurred by SNFs in complying with the nursing home reform provisions 
    specified in section 1819 of the Act, including the costs of conducting 
    nurse aide training and competency evaluations (referred to as the OBRA 
    1987 nursing home reform). Since the cost report data used in this 
    notice does not account for the costs of implementing the OBRA 1987 
    nursing home reform provisions, we will continue to provide a per diem 
    add-on for these costs. In addition, we will continue to provide a per 
    diem add-on for the costs associated with the Occupational Safety and 
    Health Administration (OSHA) universal precaution requirements. A 
    detailed description of the derivation of the per diem add-on is 
    contained in section 2828 of the Provider Reimbursement Manual. The 
    amount of the OBRA/OSHA per diem add-on to determine prospectively 
    determined payment rates for cost reporting periods beginning in 
    Federal fiscal year 1997 is $2.06. (For cost limit purposes, the per 
    diem add-on is $2.20 for Federal fiscal year 1997.)
    
    F. Comparison of Provider's Prospective Payment Rate with Provider's 
    Cost Limit
    
        Below is an example of the calculation of the prospectively 
    determined payment rate for a provider including the comparison of the 
    adjusted routine operating portion of the rate with the applicable 
    routine operating cost limit applicable to the specific provider. The 
    capital-related component of the rate is added to the lower of the 
    SNF's specific cost limit or its adjusted routine operating portion of 
    the rate to arrive at the provider's actual prospectively determined 
    payment rate.
        Example: In this case, the adjusted cost limit is less than the 
    adjusted routine operating portion of the rate for a freestanding SNF 
    located in Providence, Rhode Island (MSA Region 1), with a cost 
    reporting period beginning January 1, 1997. Therefore, the 
    prospectively determined payment rate for this SNF is the adjusted cost 
    limit plus the capital-related component of the rate ($126.12).
    
                                                                                                                    
    ----------------------------------------------------------------------------------------------------------------
                                                                                  Labor-     Non-labor     Capital- 
                                                                                 related      related      related  
                                                                                component    component    component 
    ----------------------------------------------------------------------------------------------------------------
    Limit (From Table III)...................................................       $88.45       $18.99  ...........
    Rate (From Table I)......................................................      $116.46       $22.21       $10.00
    ----------------------------------------------------------------------------------------------------------------
    
    
                                         Calculation of Prospective Payment Rate                                    
    ----------------------------------------------------------------------------------------------------------------
                                                             Limit         Rate                Rate source          
    ----------------------------------------------------------------------------------------------------------------
    Labor-Related Component.............................       $88.45      $116.46  (Table I).                      
    Wage Index..........................................     x 1.0630     x 1.0630  (Table V).                      
    Adjusted Labor Component............................       $94.02      $123.80  --                              
    Non-Labor Component.................................       $18.99        22.21  (Table I).                      
    OBRA/OSHA Per Diem Add-on...........................       +$2.20       +$2.06  (Sec III.E).                    
    Adjusted Limit/Rate.................................      $115.21      $148.07  --                              
    Cost Reporting Year Adjustment Factor...............    x 1.00796    x 1.00796  (Table IV).                     
    Applicable Limit and Operating Rate Portion.........      $116.12      $149.25  --                              
    Capital-Related Component...........................       +10.00           --  (Table I).                      
    Prospectively Determined Payment Rate...............      $126.12           --  --                              
    ----------------------------------------------------------------------------------------------------------------
    
    
          Table I.--Prospective Rates--MSA Locations, Effective for Cost Reporting Periods Beginning in FY 1997     
    ----------------------------------------------------------------------------------------------------------------
                                                                                  Labor-     Nonlabor-     Capital- 
                                    Region \1\                                   related      related      related  
    ----------------------------------------------------------------------------------------------------------------
    1. New England (CT, ME, MA, NH, RI, VT)..................................      $116.46       $22.21       $10.00
    2. Middle Atlantic (PA, NJ, NY)..........................................       112.33        20.30         9.79
    3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV)...................       100.69        16.19         9.81
    4. East North Central (IL, IN, MI, OH, WI)...............................        95.68        15.90         9.18
    5. East South Central (AL, KY, MS, TN)...................................        96.25        14.16         7.32
    6. West North Central (IA, KS, MN, MO, NB, ND, SD).......................       102.64        17.05        10.23
    7. West South Central (AR, LA, OK, TX)...................................        89.81        14.03        10.06
    
    [[Page 46470]]
    
                                                                                                                    
    8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY).............................       106.86        18.25        13.04
    9. Pacific (AK, CA, HI, OR, WA)..........................................        97.24        19.93        8.40 
    ----------------------------------------------------------------------------------------------------------------
    \1\ There are 16 MSAs that have counties in two or more regions. For each of these MSAs, the region in which a  
      majority of the SNFs are located determines the regional rate that is paid as shown below. This is the same   
      methodology as that used to implement the requirements of section 1886(d)(2)(D) of the Act as they apply to   
      the hospital prospective payment.                                                                             
    
        The MSAs are as follows:
    
    ------------------------------------------------------------------------
                                  MSA                                Region 
    ------------------------------------------------------------------------
    Chattanooga, TN-GA............................................         5
    Cincinnati, OH-KY-IN..........................................         4
    Columbus, GA-AL...............................................         3
    Davenport-Rock Island-Moline, IA-IL...........................         4
    Duluth-Superior, MN-WI........................................         6
    Evansville-Henderson, IN-KY...................................         4
    Huntington-Ashland, WV-KY-OH..................................         3
    Johnson City-Kingsport-Bristol, TN-VA.........................         5
    Louisville, KY-IN.............................................         5
    Memphis, TN-AR-MS.............................................         5
    Minneapolis-St. Paul, MN-WI...................................         6
    Parkersburg-Marietta, WV-OH...................................         3
    St. Louis, MO-IL..............................................         6
    Steubenville-Weirton, OH-WV...................................         4
    Wheeling, WV-OH...............................................         3
    Wilmington-Newark, DE-NJ-MD...................................         3
    ------------------------------------------------------------------------
    
    
        Table II.--Prospective Rates--Non-MSA Locations Effective for Cost Reporting Periods Beginning in FY 1997   
    ----------------------------------------------------------------------------------------------------------------
                                                                                  Labor-     Nonlabor-     Capital- 
                                      Region                                     related      related      related  
    ----------------------------------------------------------------------------------------------------------------
    1. New England (CT, ME, MA, NH, RI, VT)..................................      $125.72       $20.96       $10.58
    2. Middle Atlantic (PA, NJ, NY)..........................................       117.44        16.86         7.94
    3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV)...................       111.02        15.09         9.19
    4. East North Central (IL, IN, MI, OH, WI)...............................       104.72        14.62         8.28
    5. East South Central (AL, KY, MS, TN)...................................       105.49        13.28         6.77
    6. West North Central (IA, KS, MN, MO, NB, ND, SD).......................       108.01        14.37         6.66
    7. West South Central (AR, LA, OK, TX)...................................       102.51        13.03         9.22
    8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY).............................       107.03        15.69         8.36
    9. Pacific (AK, CA, HI, OR, WA)..........................................       119.77        20.11        10.16
    ----------------------------------------------------------------------------------------------------------------
    
    
      Table III.--Routine Service Cost Limits in Effect for Cost Reporting Periods Beginning in Federal Fiscal Year 
                                                          1997                                                      
    ----------------------------------------------------------------------------------------------------------------
                                                                                  Labor-     Non-labor-             
                              Provider type/location                             related      related     OBRA/OSHA 
                                                                                component    component     add-ons  
    ----------------------------------------------------------------------------------------------------------------
    Freestanding:                                                              ...........  ...........        $2.20
        MSA..................................................................       $88.45       $18.99             
        Non-MSA..............................................................        89.81        15.16             
    Hospital based:                                                            ...........  ...........         2.20
        MSA limit............................................................       124.76        26.45             
        Non-MSA limit........................................................       114.31        19.01             
    ----------------------------------------------------------------------------------------------------------------
    
    
    [[Page 46471]]
    
    
    
    Table IV.--Cost Reporting Year Adjustment Factors \1\ Effective for Cost
                     Reporting Periods Beginning in FY 1997                 
    ------------------------------------------------------------------------
                                                                      The   
               If an SNF cost reporting period begins:            adjustment
                                                                  factor is:
    ------------------------------------------------------------------------
    November 1, 1996............................................     1.00268
    December 1, 1996............................................     1.00528
    January 1, 1997.............................................     1.00796
    February 1, 1997............................................     1.01083
    March 1, 1997...............................................     1.01343
    April 1, 1997...............................................     1.01631
    May 1, 1997.................................................     1.01910
    June 1, 1997................................................     1.02200
    July 1, 1997................................................     1.02481
    August 1, 1997..............................................     1.02773
    September 1, 1997...........................................    1.03066 
    ------------------------------------------------------------------------
    \1\ Based on compounded actual market basket inflation rates of 3.70    
      percent for 1993, 3.40 percent for 1994 and projected rates of 2.90   
      percent for 1995, 2.90 percent for 1996, 3.20 percent for 1997, and   
      3.40 percent for 1998.                                                
    
    
                       Table V--Wage Index for Urban Areas                  
    ------------------------------------------------------------------------
                                                                      Wage  
       Urban area (constituent counties or county equivalents)       index  
    ------------------------------------------------------------------------
    Abilene TX...................................................     0.9220
        Taylor, TX                                                          
    Aguadilla, PR................................................     0.4568
        Aguada, PR                                                          
        Aguadilla, PR                                                       
        Isabella, PR                                                        
        Moca, PR                                                            
    Akron, OH....................................................     0.9493
        Portage, OH                                                         
        Summit, OH                                                          
    Albany, GA...................................................     0.8050
        Dougherty, GA                                                       
        Lee, GA                                                             
    Albany-Schenectady-Troy, NY..................................     0.8922
        Albany, NY                                                          
        Greene, NY                                                          
        Montgomery, NY                                                      
        Rensselaer, NY                                                      
        Saratoga, NY                                                        
        Schenectady, NY                                                     
    Albuquerque, NM..............................................     1.0123
        Bernalillo, NM                                                      
    Alexandria, LA...............................................     0.8275
        Rapides, LA                                                         
    Allentown-Bethlehem, PA-NJ...................................     0.9857
        Warren, NJ                                                          
        Carbon, PA                                                          
        Lehigh, PA                                                          
        Northampton, PA                                                     
    Altoona, PA..................................................     0.9238
        Blair, PA                                                           
    Amarillo, TX.................................................     0.8739
        Potter, TX                                                          
        Randall, TX                                                         
    Anaheim-Santa Ana, CA........................................     1.2130
        Orange, CA                                                          
    Anchorage, AK................................................     1.4176
        Anchorage, AK                                                       
    Anderson, IN.................................................     0.9583
        Madison, IN                                                         
    Anderson, SC.................................................     0.7258
        Anderson, SC                                                        
    Ann Arbor, MI................................................     1.1384
        Washtenaw, MI                                                       
    Anniston, AL.................................................     0.7931
        Calhoun, AL                                                         
    Appleton-Oshkosh-Neenah, WI..................................     0.9179
        Calumet, WI                                                         
        Outagamie, WI                                                       
        Winnebago, WI                                                       
    Arecibo, PR..................................................     0.3953
        Arecibo, PR                                                         
        Camuy, PR                                                           
        Hatillo, PR                                                         
        Quebradillas, PR                                                    
    Asheville, NC................................................     0.8739
        Buncombe, NC                                                        
    Athens, GA...................................................     0.8209
        Clarke, GA                                                          
        Jackson, GA                                                         
        Madison, GA                                                         
        Oconee, GA                                                          
    Atlanta, GA..................................................     0.9596
        Barrow, GA                                                          
        Butts, GA                                                           
        Cherokee, GA                                                        
        Clayton, GA                                                         
        Cobb, GA                                                            
        Coweta, GA                                                          
        De Kalb, GA                                                         
        Douglas, GA                                                         
        Fayette, GA                                                         
        Forsyth, GA                                                         
        Fulton, GA                                                          
        Gwinnett, GA                                                        
        Henry, GA                                                           
        Newton, GA                                                          
        Paulding, GA                                                        
        Rockdale, GA                                                        
        Spalding, GA                                                        
        Walton, GA                                                          
    Atlantic City, NJ............................................     1.0507
        Atlantic City , NJ                                                  
        Cape May, NJ                                                        
    Augusta, GA-SC...............................................     0.9401
        Columbia, GA                                                        
        McDuffie, GA                                                        
        Richmond, GA                                                        
        Aiken, SC                                                           
    Aurora-Elgin, IL.............................................     0.9665
        Kane, IL                                                            
        Kendall, IL                                                         
    Austin, TX...................................................     0.9599
        Hays, TX                                                            
        Travis, TX                                                          
        Williamson, TX                                                      
    Bakersfield, CA..............................................     1.0868
        Kern, CA                                                            
    Baltimore, MD................................................     1.0156
        Anne Arundel, MD                                                    
        Baltimore, MD                                                       
        Baltimore City, MD                                                  
        Carroll, MD                                                         
        Harford, MD                                                         
        Howard, MD                                                          
        Queen Annes, MD                                                     
    Bangor, ME...................................................     0.9064
        Penobscot, ME                                                       
    Baton Rouge, LA..............................................     0.9089
        Ascension, LA                                                       
        East Baton Rouge, LA                                                
        Livingston, LA                                                      
        West Baton Rouge, LA                                                
    Battle Creek, MI.............................................     0.9465
        Calhoun, MI                                                         
    Beaumont-Port Arthur, TX.....................................     0.9604
        Hardin, TX                                                          
        Jefferson, TX                                                       
        Orange, TX                                                          
    Beaver County, PA............................................     1.0165
        Beaver, PA                                                          
    Bellingham, WA...............................................     1.0497
        Whatcom, WA                                                         
    Benton Harbor, MI............................................     0.8406
        Berrien, MI                                                         
    Bergen-Passaic, NJ...........................................     1.0295
        Bergen, NJ                                                          
        Passaic, NJ                                                         
    Billings, MT.................................................     0.9325
        Yellowstone, MT                                                     
    Biloxi-Gulfport, MS..........................................     0.8062
        Hancock, MS                                                         
        Harrison, MS                                                        
    Binghamton, NY...............................................     0.9260
        Broome, NY                                                          
        Tioga, NY                                                           
    Birmingham, AL...............................................     0.8769
        Blount, AL                                                          
        Jefferson, AL                                                       
        Saint Clair, AL                                                     
        Shelby, AL                                                          
        Walker, AL                                                          
    Bismarck, ND.................................................     0.8812
        Burleigh, ND                                                        
        Morton, ND                                                          
    Bloomington, IN..............................................     0.8639
        Monroe, IN                                                          
    Bloomington-Normal, IL.......................................     0.8658
        McLean, IL                                                          
    Boise City, ID...............................................     0.9757
        Ada, ID                                                             
    Boston-Lawrence-Salem-Lowell-Brockton, MA....................     1.1809
        Essex, MA                                                           
        Middlesex, MA                                                       
        Norfolk, MA                                                         
        Plymouth, MA                                                        
        Suffolk, MA                                                         
    Boulder-Longmont, CO.........................................     1.0149
        Boulder, CO                                                         
    Bradenton, FL................................................     0.9262
        Manatee, FL                                                         
    Brazoria, TX.................................................     0.9314
        Brazoria, TX                                                        
    Bremerton, WA................................................     0.9535
        Kitsap, WA                                                          
    Bridgeport-Stamford-Norwalk-Danbury..........................     1.2032
        Fairfield, CT                                                       
    Brownsville-Harlingen, TX....................................     0.8601
        Cameron, TX                                                         
    Bryan-College Station, TX....................................     0.9489
        Brazos, TX                                                          
    Buffalo, NY..................................................     0.8908
        Erie, NY                                                            
    Burlington, NC...............................................     0.7986
        Alamance, NC                                                        
    Burlington, VT...............................................     0.9358
    
    [[Page 46472]]
    
                                                                            
        Chittenden, VT                                                      
        Grand Isle, VT                                                      
    Caguas, PR...................................................     0.4479
        Caguas, PR                                                          
        Gurabo, PR                                                          
        San Lorenz, PR                                                      
        Aguas Buenas, PR                                                    
        Cayey, PR                                                           
        Cidra, PR                                                           
    Canton, OH...................................................     0.8811
        Carroll, OH                                                         
        Stark, OH                                                           
    Casper, WY...................................................     0.8891
        Natrona, WY                                                         
    Cedar Rapids, IA.............................................     0.8907
        Linn, IA                                                            
    Champaign-Urbana-Rantoul, IL.................................     0.8745
        Champaign, IL                                                       
    Charleston, SC...............................................     0.8331
        Berkeley, SC                                                        
        Charleston, SC                                                      
        Dorchester, SC                                                      
    Charleston, WV...............................................     0.9692
        Kanawha, WV                                                         
        Putnam, WV                                                          
    Charlotte-Gastonia-Rock Hill, NC-SC..........................     0.9486
        Cabarrus, NC                                                        
        Gaston, NC                                                          
        Lincoln, NC                                                         
        Mecklenburg, NC                                                     
        Rowan, NC                                                           
        Union, NC                                                           
        York, SC                                                            
    Charlottesville, VA..........................................     0.9615
        Albermarle, VA                                                      
        Charlottesville City, VA                                            
        Fluvanna, VA                                                        
        Greene, VA                                                          
    Chattanooga, TN-GA...........................................     0.9198
        Catoosa, GA                                                         
        Dade, GA                                                            
        Walker, GA                                                          
        Hamilton, TN                                                        
        Marion, TN                                                          
        Sequatchie, TN                                                      
    Cheyenne, WY.................................................     0.7908
        Laramie, WY                                                         
    Chicago, IL..................................................     1.0518
        Cook, IL                                                            
        Du Page, IL                                                         
        McHenry, IL                                                         
    Chico, CA....................................................     1.0981
        Butte, CA                                                           
    Cincinnati, OH-KY-IN.........................................     0.9821
        Dearborn, IN                                                        
        Boone, KY                                                           
        Campbell, KY                                                        
        Kenton, KY                                                          
        Clermont, OH                                                        
        Hamilton, OH                                                        
        Warren, OH                                                          
    Clarksville-Hopkinsville, TN-KY..............................     0.7319
        Christian, KY                                                       
        Montgomery, TN                                                      
    Cleveland, OH................................................     1.0739
        Cuyahoga, OH                                                        
        Geauga, OH                                                          
        Lake, OH                                                            
        Medina, OH                                                          
    Colorado Springs, CO.........................................     0.9816
        El Paso, CO                                                         
    Columbia, MO.................................................     0.9506
        Boone, MO                                                           
    Columbia, SC.................................................     0.8940
        Lexington, SC                                                       
        Richland, SC                                                        
    Columbus, GA-AL..............................................     0.7482
        Russell, AL                                                         
        Chattanoochee, GA                                                   
        Muscogee, GA                                                        
    Columbus, OH.................................................     0.9673
        Delaware, OH                                                        
        Fairfield, OH                                                       
        Franklin, OH                                                        
        Licking, OH                                                         
        Madison, OH                                                         
        Pickaway, OH                                                        
        Union, OH                                                           
    Corpus Christi, TX...........................................     0.8594
        Nueces, TX                                                          
        San Patricio, TX                                                    
    Cumberland, MD-WV............................................     0.8188
        Allegany, MD                                                        
        Mineral, WV                                                         
    Dallas, TX...................................................     0.9638
        Collin, TX                                                          
        Dallas, TX                                                          
        Denton, TX                                                          
        Ellis, TX                                                           
        Kaufman, TX                                                         
        Rockwall, TX                                                        
    Danville, VA.................................................     0.7506
        Danville City, VA                                                   
        Pittsylvania, VA                                                    
    Davenport-Rock Island-Moline, IA-IL..........................     0.8471
        Scott, IA                                                           
        Henry, IL                                                           
        Rock Island, IL                                                     
    Dayton-Springfield, OH.......................................     0.9664
        Clark, OH                                                           
        Greene, OH                                                          
        Miami, OH                                                           
        Montgomery, OH                                                      
    Daytona Beach, FL............................................     0.8943
        Volusia, FL                                                         
    Decatur, AL..................................................     0.7487
        Lawrence, AL                                                        
        Morgan, AL                                                          
    Decatur, IL..................................................     0.8286
        Macon, IL                                                           
    Denver, CO...................................................     1.0758
        Adams, CO                                                           
        Arapahoe, CO                                                        
        Denver, CO                                                          
        Douglas, CO                                                         
        Jefferson, CO                                                       
    Des Moines, IA...............................................     0.9171
        Dallas, IA                                                          
        Polk, IA                                                            
        Warren, IA                                                          
    Detroit, MI..................................................     1.0824
        Lapeer, MI                                                          
        Livingston, MI                                                      
        Macomb, MI                                                          
        Monroe, MI                                                          
        Oakland, MI                                                         
        Saint Clair, MI                                                     
        Wayne, MI                                                           
    Dothan, AL...................................................     0.7555
        Dale, AL                                                            
        Houston, AL                                                         
    Dubuque, IA..................................................     0.8374
        Dubuque, IA                                                         
    Duluth, MN-WI................................................     0.9517
        St. Louis, MN                                                       
        Douglas, WI                                                         
    Eau Claire, WI...............................................     0.8478
        Chippewa, WI                                                        
        Eau Claire, WI                                                      
    El Paso, TX..................................................     0.8714
        El Paso, TX                                                         
    Elkhart-Goshen, IN...........................................     0.8949
        Elkhart, IN                                                         
    Elmira, NY...................................................     0.8810
        Chemung, NY                                                         
    Enid, OK.....................................................     0.8912
        Garfield, OK                                                        
    Erie, PA.....................................................     0.9155
        Erie, PA                                                            
    Eugene-Springfield, OR.......................................     1.0164
        Lane, OR                                                            
    Evansville, IN-KY............................................     0.9276
        Posey, IN                                                           
        Vanderburgh, IN                                                     
        Warrick, IN                                                         
        Henderson, KY                                                       
    Fargo-Moorhead, ND-MN........................................     0.9707
        Clay, MN                                                            
        Cass, ND                                                            
    Fayetteville, NC.............................................     0.8296
        Cumberland, NC                                                      
    Fayetteville-Springdale, AR..................................     0.7990
        Washington, AR                                                      
    Flint, MI....................................................     1.1544
        Genesee, MI                                                         
    Florence, AL.................................................     0.7679
        Colbert, AL                                                         
        Lauderdale, AL                                                      
    Florence, SC.................................................     0.8429
        Florence, SC                                                        
    Fort Collins-Loveland, CO....................................     1.0238
        Larimor, CO                                                         
    Ft Lauderdale-Hollywood-Pompano Beach, FL....................     1.0356
        Broward, FL                                                         
    Fort Myers-Cape Coral, FL....................................     0.9799
        Lee, FL                                                             
    Fort Pierce, FL..............................................     1.1041
        Martin, FL                                                          
        St. Lucie, FL                                                       
    Fort Smith, AR-OK............................................     0.7931
        Crawford, AR                                                        
        Sebastian, AR                                                       
        Sequoyah, OK                                                        
    Fort Walton Beach, FL........................................     0.8916
        Okaloosa, FL                                                        
    Fort Wayne, IN...............................................     0.8901
        Allen, IN                                                           
        De Kalb, IN                                                         
        Whitley, IN                                                         
    Forth Worth-Arlington, TX....................................     0.9747
    
    [[Page 46473]]
    
                                                                            
        Johnson, TX                                                         
        Parker, TX                                                          
        Tarrant, TX                                                         
    Fresno, CA...................................................     1.0737
        Fresno, CA                                                          
    Gadsden, AL..................................................     0.8199
        Etowah, AL                                                          
    Gainesville, FL..............................................     0.8798
        Alachua, FL                                                         
        Bradford, FL                                                        
    Galveston-Texas City, TX.....................................     0.9431
        Galveston, TX                                                       
    Gary-Hammond, IN.............................................     0.9866
        Lake, IN                                                            
        Porter, IN                                                          
    Glens Falls, NY..............................................     0.9231
        Warren, NY                                                          
        Washington, NY                                                      
    Grand Forks, ND..............................................     0.9577
        Grand Forks, ND                                                     
    Grand Rapids, MI.............................................     0.9883
        Kent, MI                                                            
        Ottawa, MI                                                          
    Great Falls, MT..............................................     0.9992
        Cascade, MT                                                         
    Greeley, CO..................................................     0.9358
        Weld, CO                                                            
    Green Bay, WI................................................     0.9585
        Brown, WI                                                           
    Greensboro-Winston-Salem-High Point, NC......................     0.9165
        Davidson, NC                                                        
        Davie, NC                                                           
        Forsyth, NC                                                         
        Guilford, NC                                                        
        Randolph, NC                                                        
        Stokes, NC                                                          
        Yadkin, NC                                                          
    Greenville-Spartanburg, SC...................................     0.8923
        Greenville, SC                                                      
        Pickens, SC                                                         
        Spartanburg, SC                                                     
    Hagerstown, MD...............................................     0.9157
        Washington, MD                                                      
    Hamilton-Middletown, OH......................................     0.9384
        Butler, OH                                                          
    Harrisburg-Lebanon-Carlisle, PA..............................     0.9919
        Cumberland, PA                                                      
        Dauphin, PA                                                         
        Lebanon, PA                                                         
        Perry, PA                                                           
    Hartford-Middletown-New Britain-Bristol, CT..................     1.1916
        Hartford, CT                                                        
        Litchfield, CT                                                      
        Middlesex, CT                                                       
        Tolland, CT                                                         
    Hickory, NC..................................................     0.8741
        Alexander, NC                                                       
        Burke, NC                                                           
        Catawba, NC                                                         
    Honolulu, HI.................................................     1.1580
        Honolulu, HI                                                        
    Houma-Thibodaux, LA..........................................     0.7344
        Lafourche, LA                                                       
        Terrebonne, LA                                                      
    Houston, TX..................................................     0.9935
        Fort Bend, TX                                                       
        Harris, TX                                                          
        Liberty, TX                                                         
        Montgomery, TX                                                      
        Waller, TX                                                          
    Huntington-Ashland, WV-KY-OH.................................     0.9438
        Boyd, KY                                                            
        Carter, KY                                                          
        Greenup, KY                                                         
        Lawrence, OH                                                        
        Cabell, WV                                                          
        Wayne, WV                                                           
    Huntsville, AL...............................................     0.8835
        Madison, AL                                                         
    Indianapolis, IN.............................................     0.9663
        Boone, IN                                                           
        Hamilton, IN                                                        
        Hancock, IN                                                         
        Hendricks, IN                                                       
        Johnson, IN                                                         
        Marion, IN                                                          
        Morgan, IN                                                          
        Shelby, IN                                                          
    Iowa City, IA................................................     0.9528
        Johnson, IA                                                         
    Jackson, MI..................................................     0.9664
        Jackson, MI                                                         
    Jackson, MS..................................................     0.7733
        Hinds, MS                                                           
        Madison, MS                                                         
        Rankin, MS                                                          
    Jackson, TN..................................................     0.7910
        Madison, TN                                                         
    Jacksonville, FL.............................................     0.9051
        Clay, FL                                                            
        Duval, FL                                                           
        Nassau, FL                                                          
        St. Johns, FL                                                       
    Jacksonville, NC.............................................     0.7154
        Onslow, NC                                                          
    Jamestown-Dunkirk, NY........................................     0.7735
        Chautaqua, NY                                                       
    Janesville-Beloit, WI........................................     0.8466
        Rock, WI                                                            
    Jersey City, NJ..............................................     1.0526
        Hudson, NJ                                                          
    Johnson City-Kingsport-Bristol, TN-VA........................     0.8668
        Carter, TN                                                          
        Hawkins, TN                                                         
        Sullivan, TN                                                        
        Unicoi, TN                                                          
        Washington, TN                                                      
        Bristol City, VA                                                    
        Scott, VA                                                           
        Washington, VA                                                      
    Johnstown, PA................................................     0.9067
        Cambria, PA                                                         
        Somerset, PA                                                        
    Joliet, IL...................................................     1.0278
        Grundy, IL                                                          
        Will, IL                                                            
    Joplin, MO...................................................     0.7957
        Jasper, MO                                                          
        Newton, MO                                                          
    Kalamazoo, MI................................................     1.1709
        Kalamazoo, MI                                                       
    Kankakee, IL.................................................     0.8489
        Kankakee, IL                                                        
    Kansas City, KS-MO...........................................     0.9588
        Johnson, KS                                                         
        Leavenworth, KS                                                     
        Miami, KS                                                           
        Wyandotte, KS                                                       
        Cass, MO                                                            
        Clay, MO                                                            
        Jackson, MO                                                         
        Lafayette, MO                                                       
        Platte, MO                                                          
        Ray, MO                                                             
    Kenosha, WI..................................................     0.8855
        Kenosha, WI                                                         
    Killeen-Temple, TX...........................................     1.1295
        Bell, TX                                                            
        Coryell, TX                                                         
    Knoxville, TN................................................     0.8693
        Anderson, TN                                                        
        Blount, TN                                                          
        Grainger, TN                                                        
        Jefferson, TN                                                       
        Knox, TN                                                            
        Sevier, TN                                                          
        Union, TN                                                           
    Kokomo, IN...................................................     0.9435
        Howard, IN                                                          
        Tipton, IN                                                          
    LaCrosse, WI.................................................     0.8956
        LaCrosse, WI                                                        
    Lafayette, LA................................................     0.8227
        Lafayette, LA                                                       
        St. Martin, LA                                                      
    Lafayette, IN................................................     0.8432
        Tippecanoe, IN                                                      
    Lake Charles, LA.............................................     0.8374
        Calcasieu, LA                                                       
    Lake County, IL..............................................     0.9994
        Lake, IL                                                            
    Lakeland-Winter Haven, FL....................................     0.8171
        Polk, FL                                                            
    Lancaster, PA................................................     0.9258
        Lancaster, PA                                                       
    Lansing-East Lansing, MI.....................................     1.0222
        Clinton, MI                                                         
        Eaton, MI                                                           
        Ingham, MI                                                          
    Laredo, TX...................................................     0.7278
        Webb, TX                                                            
    Las Cruces, NM...............................................     0.7909
        Dona Ana, NM                                                        
    Las Vegas, NV................................................     1.0631
        Clark, NV                                                           
    Lawrence, KS.................................................     0.8937
        Douglas, KS                                                         
    Lawton, OK...................................................     0.8388
        Comanche, OK                                                        
    Lewiston-Auburn, ME..........................................     0.9057
        Androscoggin, ME                                                    
    Lexington-Fayette, KY........................................     0.8446
        Bourbon, KY                                                         
        Clark, KY                                                           
        Fayette, KY                                                         
        Jessamine, KY                                                       
        Scott, KY                                                           
        Woodford, KY                                                        
    Lima, OH.....................................................     0.8062
        Allen, OH                                                           
        Auglaize, OH                                                        
    Lincoln, NE..................................................     0.8956
        Lancaster, NE                                                       
    Little Rock-North Little Rock, AR............................     0.8420
    
    [[Page 46474]]
    
                                                                            
        Faulkner, AR                                                        
        Lonoke, AR                                                          
        Pulaski, AR                                                         
        Saline, AR                                                          
    Longview-Marshall, TX........................................     0.8691
        Gregg, TX                                                           
        Harrison, TX                                                        
    Lorain-Elyria, OH............................................     0.8969
        Lorain, OH                                                          
    Los Angeles-Long Beach, CA...................................     1.2354
        Los Angeles, CA                                                     
    Louisville, KY-IN............................................     0.9092
        Clark, IN                                                           
        Floyd, IN                                                           
        Harrison, IN                                                        
        Bullitt, KY                                                         
        Jefferson, KY                                                       
        Oldham, KY                                                          
        Shelby, KY                                                          
    Lubbock, TX..................................................     0.8790
        Lubbock, TX                                                         
    Lynchburg, VA................................................     0.8544
        Amherst, VA                                                         
        Campbell, VA                                                        
        Lynchburg City, VA                                                  
    Macon-Warner Robins, GA......................................     0.8804
        Bibb, GA                                                            
        Huston, GA                                                          
        Jones, GA                                                           
        Peach, GA                                                           
    Madison, WI..................................................     1.0311
        Dane, WI                                                            
    Manchester-Nashua, NH........................................     1.0261
        Hillsborough, NH                                                    
        Merrimack, NH                                                       
    Mansfield, OH................................................     0.8392
        Richland, OH                                                        
    Mayaguez, PR.................................................     0.4771
        Anasco, PR                                                          
        Cabo Rojo, PR                                                       
        Hormigueros, PR                                                     
        Mayaguez, PR                                                        
        San German, PR                                                      
    McAllen-Edinburg-Mission, TX.................................     0.7715
        Hidalgo, TX                                                         
    Medford, OR..................................................     1.0045
        Jackson, OR                                                         
    Melbourne-Titusville Fl......................................     0.9199
        Brevard, Fl                                                         
    Memphis, TN-AR-MS............................................     0.9060
        Crittenden, AR                                                      
        De Soto, MS                                                         
        Shelby, TN                                                          
        Tipton, TN                                                          
    Merced, CA...................................................     1.0312
        Merced, CA                                                          
    Miami-Hialeah, FL............................................     1.0188
        Dade, FL                                                            
    Middlesex-Somerset-Hunterdon, NJ.............................     1.0401
        Hunterdon, NJ                                                       
        Middlesex, NJ                                                       
        Somerset, NJ                                                        
    Midland, TX..................................................     1.0377
        Midland, TX                                                         
    Milwaukee, WI................................................     0.9719
        Milwaukee, WI                                                       
        Ozaukee, WI                                                         
        Washington, WI                                                      
        Waukesha, WI                                                        
    Minneapolis-St Paul, MN-WI...................................     1.0818
        Anoka, MN                                                           
        Carver, MN                                                          
        Chisago, MN                                                         
        Dakota, MN                                                          
        Hennepin, MN                                                        
        Isanti, MN                                                          
        Ramsey, MN                                                          
        Scott, MN                                                           
        Washington, MN                                                      
        Wright, MN                                                          
        St. Croix, WI                                                       
    Mobile, AL...................................................     0.8319
        Baldwin, AL                                                         
        Mobile, AL                                                          
    Modesto, CA..................................................     1.1577
        Stanislaus, CA                                                      
    Monmouth-Ocean, NJ...........................................     0.9900
        Monmouth, NJ                                                        
        Ocean, NJ                                                           
    Monroe, LA...................................................     0.7864
        Ouachita, LA                                                        
    Montgomery, AL...............................................     0.7738
        Autauga, AL                                                         
        Elmore, AL                                                          
        Montgomery, AL                                                      
    Muncie, IN...................................................     0.8068
        Delaware, IN                                                        
    Muskegon, MI.................................................     0.9568
        Muskegon, MI                                                        
    Naples, FL...................................................     1.0324
        Collier, FL                                                         
    Nashville, TN................................................     0.9397
        Cheatham, TN                                                        
        Davidson, TN                                                        
        Dickson, TN                                                         
        Robertson, TN                                                       
        Rutherford TN                                                       
        Sumner, TN                                                          
        Williamson, TN                                                      
        Wilson, TN                                                          
    Nassau-Suffolk, NY...........................................     1.2938
        Nassau, NY                                                          
        Suffolk, NY                                                         
    New Bedford-Fall River-Attleboro, MA.........................     1.0002
        Bristol, MA                                                         
    New Haven Waterbury-Meriden, CT..............................     1.2095
        New Haven, CT                                                       
    New London, London-Norwich...................................     1.1571
        New London, CT                                                      
    New Orleans, LA..............................................     0.8908
        Jefferson, LA                                                       
        Orleans, LA                                                         
        St. Bernard, LA                                                     
        St. Charles, LA                                                     
        St. John The Baptist, LA                                            
        St. Tammany, LA                                                     
    New York, NY.................................................     1.3460
        Bronx, NY                                                           
        Kings, NY                                                           
        New York City, NY                                                   
        Putnam, NY                                                          
        Queens, NY                                                          
        Richmond, NY                                                        
        Rockland, NY                                                        
        Westchester, NY                                                     
    Newark, NJ...................................................     1.1232
        Essex, NJ                                                           
        Morris, NJ                                                          
        Sussex, NJ                                                          
        Union, NJ                                                           
    Niagara Falls, NY............................................     0.8382
        Niagara, NY                                                         
    Norfolk-Virginia Beach-Newport News, VA......................     0.8515
        Chesapeake City, VA                                                 
        Gloucester, VA                                                      
        Hampton City, VA                                                    
        James City Co., VA                                                  
        Newport News City, VA                                               
        Norfolk City, VA                                                    
        Poquoson, VA                                                        
        Portsmouth City, VA                                                 
        Suffolk City, VA                                                    
        Virginia Beach City, VA                                             
        Williamsburg City, VA                                               
        York, VA                                                            
    Oakland, CA..................................................     1.4283
        Alameda, CA                                                         
        Contra Costa, CA                                                    
    Ocala, FL....................................................     0.8614
        Marion, FL                                                          
    Odessa, TX...................................................     1.0817
        Ector, TX                                                           
    Oklahoma City, OK............................................     0.9145
        Canadian, OK                                                        
        Cleveland, OK                                                       
        Logan, OK                                                           
        McClain, OK                                                         
        Oklahoma, OK                                                        
        Pottawatomie, OK                                                    
    Olympia, WA..................................................     1.1002
        Thurston, WA                                                        
    Omaha, NE-IA.................................................     0.8989
        Pottawattamie, IA                                                   
        Douglas, NE                                                         
        Sarpy, NE                                                           
        Washington, NE                                                      
    Orange, County, NY...........................................     0.9653
        Orange, NY                                                          
    Orlando, FL..................................................     0.9621
        Orange, FL                                                          
        Osceola, FL                                                         
        Seminole, FL                                                        
    Owensboro, KY................................................     0.8114
        Daviess, KY                                                         
    Oxnard-Ventura, CA...........................................     1.2309
        Ventura, CA                                                         
    Panama City, FL..............................................     0.8632
        Bay, FL                                                             
    Parkersburg-Marietta, WV-OH..................................     0.8540
        Washington, OH                                                      
        Wood, WV                                                            
    Pascagoula, MS...............................................     0.8755
        Jackson, MS                                                         
    Pensacola, FL................................................     0.8623
    
    [[Page 46475]]
    
                                                                            
        Escambia, FL                                                        
        Santa Rosa, FL                                                      
    Peoria, IL...................................................     0.8710
        Peoria, IL                                                          
        Tazewell, IL                                                        
        Woodford, IL                                                        
    Philadelphia, PA-NJ..........................................     1.0952
        Burlington, NJ                                                      
        Camden, NJ                                                          
        Gloucester, NJ                                                      
        Bucks, PA                                                           
        Chester, PA                                                         
        Delaware, PA                                                        
        Montgomery, PA                                                      
        Philadelphia, PA                                                    
    Phoenix, AZ..................................................     1.0429
        Maricopa, AZ                                                        
    Pine Bluff, AR...............................................     0.7872
        Jefferson, AR                                                       
    Pittsburgh, PA...............................................     1.0127
        Allegheny, PA                                                       
        Fayette, PA                                                         
        Washington, PA                                                      
        Westmoreland, PA                                           .........
    Pittsfield, MA...............................................     1.0782
        Berkshire, MA                                                       
    Ponce, PR....................................................     0.4601
        Juana Diaz, PR                                                      
        Ponce, PR                                                           
    Portland, ME.................................................     0.9292
        Cumberland, ME                                                      
        Sagadahoc, ME                                                       
        York, ME                                                            
    Portland, OR.................................................     1.1576
        Clackamas, OR                                                       
        Multnomah, OR                                                       
        Washington, OR                                                      
        Yamhill, OR                                                         
    Portsmouth-Dover-Rochester, NH...............................     1.0080
        Rockingham, NH                                                      
        Strafford, NH                                                       
    Poughkeepsie, NY.............................................     1.0447
        Dutchess, NY                                                        
    Providence-Pawtucket-Woonsocket, RI..........................     1.0630
        Bristol, RI                                                         
        Kent, RI                                                            
        Newport, RI                                                         
        Providence, RI                                                      
        Washington, RI                                                      
    Provo-Orem, UT...............................................     1.0230
        Utah, UT                                                            
    Pueblo, CO...................................................     0.8722
        Pueblo, CO                                                          
    Racine, WI...................................................     0.8849
        Racine, WI                                                          
    Raleigh-Durham, NC...........................................     0.9465
        Durham, NC                                                          
        Franklin, NC                                                        
        Orange, NC                                                          
        Wake, NC                                                            
    Rapid City, SD...............................................     0.8400
        Pennington, SD                                                      
    Reading, PA..................................................     0.8814
        Berks, PA                                                           
    Redding, CA..................................................     1.0549
        Shasta, CA                                                          
    Reno, NV.....................................................     1.1618
        Washoe, NV                                                          
    Richland-Kennewick, WA.......................................     0.9402
        Benton, WA                                                          
        Franklin, WA                                                        
    Richmond-Petersburg, VA......................................     0.9417
        Charles City Co., VA                                                
        Chesterfield, VA                                                    
        Colonial Heights City, VA                                           
        Dinwiddie, VA                                                       
        Goochland, VA                                                       
        Hanover, VA                                                         
        Henrico, VA                                                         
        Hopewell City, VA                                                   
        New Kent, VA                                                        
        Petersburg City, VA                                                 
        Powhatan, VA                                                        
        Prince George, VA                                                   
        Richmond City, VA                                                   
    Riverside-San Bernardino, CA.................................     1.1160
        Riverside, CA                                                       
        San Bernardino, CA                                                  
    Roanoke, VA..................................................     0.8284
        Botetourt, VA                                                       
        Roanoke, VA                                                         
        Roanoke City, VA                                                    
        Salem City, VA                                                      
    Rochester, MN................................................     1.1030
        Olmsted, MN                                                         
    Rochester, NY................................................     0.9710
        Livingston, NY                                                      
        Monroe, NY                                                          
        Ontario, NY                                                         
        Orleans, NY                                                         
        Wayne, NY                                                           
    Rockford, IL.................................................     0.9283
        Boone, IL                                                           
        Winnebago, IL                                                       
    Sacramento, CA...............................................     1.2232
        Eldorado, CA                                                        
        Placer, CA                                                          
        Sacramento, CA                                                      
        Yolo, CA                                                            
    Saginaw-Bay City-Midland, MI.................................     1.0451
        Bay, MI                                                             
        Midland, MI                                                         
        Saginaw, MI                                                         
    St. Cloud, MN................................................     0.9420
        Benton, MN                                                          
        Sherburne, MN                                                       
        Stearns, MN                                                         
    St. Joseph, MO...............................................     0.9414
        Buchanan, MO                                                        
    St. Louis, MO-IL.............................................     0.9388
        Clinton, IL                                                         
        Jersey, IL                                                          
        Madison, IL                                                         
        Monroe, IL                                                          
        St. Clair, IL                                                       
        Franklin, MO                                                        
        Jefferson, MO                                                       
        St. Charles, MO                                                     
        St. Louis, MO                                                       
        St. Louis City, MO                                                  
        Sullivan City, MO                                                   
    Salem, OR....................................................     1.0445
        Marion, OR                                                          
        Polk, OR                                                            
    Salinas-Seaside-Monterey, CA.................................     1.3041
        Monterey, CA                                                        
    Salt Lake City-Ogden, UT.....................................     0.9932
        Davis, UT                                                           
        Salt Lake, UT                                                       
        Weber, UT                                                           
    San Angelo, TX...............................................     0.8139
        Tom Green, TX                                                       
    San Antonio, TX..............................................     0.8452
        Bexar, TX                                                           
        Comal, TX                                                           
        Guadalupe, TX                                                       
    San Diego, CA................................................     1.1934
        San Diego, CA                                                       
    San Francisco, CA............................................     1.4539
        Marin, CA                                                           
        San Francisco, CA                                                   
        San Mateo, CA                                                       
    San Jose, CA.................................................     1.4900
        Santa Clara, CA                                                     
    San Juan, PR.................................................     0.4987
        Barcelona, PR                                                       
        Bayoman, PR                                                         
        Canovanas, PR                                                       
        Carolina, PR                                                        
        Catano, PR                                                          
        Corozal, PR                                                         
        Dorado, PR                                                          
        Fajardo, PR                                                         
        Florida, PR                                                         
        Guaynabo, PR                                                        
        Humacao, PR                                                         
        Juncos, PR                                                          
        Los Piedras, PR                                                     
        Loiza, PR                                                           
        Luguillo, PR                                                        
        Manati, PR                                                          
        Naranjito, PR                                                       
        Rio Grande, PR                                                      
        San Juan, PR                                                        
        Toa Alta, PR                                                        
        Toa Baja, PR                                                        
        Trojillo Alto, PR                                                   
        Vega Alta, PR                                                       
        Vega Baja, PR                                                       
    Santa Barbara-Santa Maria-Lompoc, CA.........................     1.1768
        Santa Barbara, CA                                                   
    Santa Cruz, CA...............................................     1.2784
        Santa Cruz, CA                                                      
    Santa Fe, NM.................................................     0.9139
        Los Alamos, NM                                                      
        Santa Fe, NM                                                        
    Santa Rosa-Petaluma, CA......................................     1.2957
        Sonoma, CA                                                          
    Sarasota, FL.................................................     0.9781
        Sarasota, FL                                                        
    Savannah, GA.................................................     0.8327
        Chatham, GA                                                         
        Effingham, GA                                                       
    Scranton, Wilkes Barre, PA...................................     0.8952
        Columbia, PA                                                        
        Lackawanna, PA                                                      
        Luzerne, PA                                                         
        Monroe, PA                                                          
        Wyoming, PA                                                         
    Seattle, WA..................................................     1.0871
        King, WA                                                            
        Snohomish, WA                                                       
    Sharon, PA...................................................     0.9061
        Mercer, PA                                                          
    Sheboygan, WI................................................     0.8872
    
    [[Page 46476]]
    
                                                                            
        Sheboygan, WI                                                       
    Sherman-Denison, TX..........................................     0.9089
        Grayson, TX                                                         
    Shreveport, LA...............................................     0.9299
        Bossier, LA                                                         
        Caddo, LA                                                           
    Sioux City, IA-NE............................................     0.8504
        Woodbury, IA                                                        
        Dakota, NE                                                          
    Sioux Falls, SD..............................................     0.8833
        Minnehaha, SD                                                       
    South Bend-Mishawaka, IN.....................................     1.0067
        St. Joseph, IN                                                      
    Spokane, WA..................................................     1.0691
        Spokane, WA                                                         
    Springfield, IL..............................................     0.9295
        Menard, IL                                                          
        Sangamon, IL                                                        
    Springfield, MO..............................................     0.8082
        Christian, MO                                                       
        Greene, MO                                                          
    Springfield, MA..............................................     1.0316
        Hampden, MA                                                         
        Hampshire, MA                                                       
    State College, PA............................................     0.9901
        Centre, PA                                                          
    Steubenville-Weirton, OH-WV..................................     0.8712
        Jefferson, OH                                                       
        Brooke, WV                                                          
        Hancock, WV                                                         
    Stockton, CA.................................................     1.1612
        San Joaquin, CA                                                     
    Syracuse, NY.................................................     0.9917
        Madison, NY                                                         
        Onondaga, NY                                                        
        Oswego, NY                                                          
    Tacoma, WA...................................................     1.0317
        Pierce, WA                                                          
    Tallahassee, FL..............................................     0.9220
        Gadsden, FL                                                         
        Leon, FL                                                            
    Tampa-St. Petersburg-Clearwater, FL..........................     0.9188
        Hernando, FL                                                        
        Hillsborough, FL                                                    
        Pasco, FL                                                           
        Pinellas, FL                                                        
    Terre Haute, IN..............................................     0.8758
        Clay, IN                                                            
        Vigo, IN                                                            
    Texarkana, TX-AR.............................................     0.7892
        Miller, AR                                                          
        Bowie, TX                                                           
    Toledo, OH...................................................     1.0097
        Fulton, OH                                                          
        Lucas, OH                                                           
        Wood, OH                                                            
    Topeka, KS...................................................     0.9302
        Shawnee, KS                                                         
    Trenton, NJ..................................................     1.0038
        Mercer, NJ                                                          
    Tucson, AZ...................................................     0.9591
        Pima, AZ                                                            
    Tulsa, OK....................................................     0.8532
        Creeks, OK                                                          
        Osage, OK                                                           
        Rogers, OK                                                          
        Tulsa, OK                                                           
        Wagoner, OK                                                         
    Tuscaloosa, AL...............................................     0.8521
        Tuscaloosa, AL                                                      
    Tyler, TX....................................................     0.9838
        Smith, TX                                                           
    Utica-Rome, NY...............................................     0.8512
        Herkimer, NY                                                        
        Oneida, NY                                                          
    Vallejo-Fairfield-Napa, CA...................................     1.3203
        Napa, CA                                                            
        Solano, CA                                                          
    Vancouver, WA................................................     1.0798
        Clark, WA                                                           
    Victoria, TX.................................................     0.8994
        Victoria, TX                                                        
    Vineland-Millville-Bridgeton, NJ.............................     0.9760
        Cumberland, NJ                                                      
    Visalia-Tulare-Porterville, CA...............................     1.0392
        Tulare, CA                                                          
    Waco, TX.....................................................     0.7814
        McLennan, TX                                                        
    Washington, DC-MD-VA.........................................     1.0941
        District of Columbia, DC                                            
        Calvert, MD                                                         
        Charles, MD                                                         
        Frederick, MD                                                       
        Montgomery, MD                                                      
        Prince Georges, MD                                                  
        Alexandria City, VA                                                 
        Arlington, VA                                                       
        Fairfax, VA                                                         
        Fairfax City, VA                                                    
        Falls Church City, VA                                               
        Loudoun, VA                                                         
        Manassas City, VA                                                   
        Manassas Park City, VA                                              
        Prince William, VA                                                  
        Stafford, VA                                                        
    Waterloo-Cedar Falls, IA.....................................     0.8642
        Black Hawk, IA                                                      
        Bremer, IA                                                          
    Wausau, WI...................................................     0.9748
        Marathon, WI                                                        
    West Palm Beach-Boca Raton-Delray Beach, FL..................     1.0135
        Palm Beach, FL                                                      
    Wheeling, WV-OH..............................................     0.8067
        Belmont, OH                                                         
        Marshall, WV                                                        
        Ohio, WV                                                            
    Wichita, KS..................................................     0.9809
        Butler, KS                                                          
        Harvey, KS                                                          
        Sedgwick, KS                                                        
    Wichita Falls, TX............................................     0.8172
        Wichita, TX                                                         
    Williamsport, PA.............................................     0.8864
        Lycoming, PA                                                        
    Wilmington, DE-NJ-MD.........................................     1.0869
        New Castle, DE                                                      
        Cecil, MD                                                           
        Salem, NJ                                                           
    Wilmington, NC...............................................     0.8712
        New Hanover, NC                                                     
    Worcester-Fitchburg-Leominster, MA...........................     1.0826
        Worcester, MA                                                       
    Yakima, WA...................................................     1.0111
        Yakima, WA                                                          
    York, PA.....................................................     0.9021
        Adams, PA                                                           
        York, PA                                                            
    Youngstown-Warren, OH........................................     0.9866
        Mahoning, OH                                                        
        Trumbull, OH                                                        
    Yuba City, CA................................................     1.0167
        Sutter, CA                                                          
        Yuba, CA                                                            
    Yuma, AZ.....................................................     0.8885
        Yuma, AZ                                                            
    ------------------------------------------------------------------------
    
    
                      Table VI.--Wage Index for Rural Areas                 
    ------------------------------------------------------------------------
                                                                      Wage  
                           Non-urban areas                           index  
    ------------------------------------------------------------------------
    ALABAMA......................................................     0.7121
    ALASKA.......................................................     1.3426
    ARIZONA......................................................     0.8747
    ARKANSAS.....................................................     0.6966
    CALIFORNIA...................................................     1.0142
    COLORADO.....................................................     0.8415
    CONNECTICUT..................................................     1.1905
    DELAWARE.....................................................     0.8572
    FLORIDA......................................................     0.8730
    GEORGIA......................................................     0.7767
    HAWAII.......................................................     0.9618
    IDAHO........................................................     0.8953
    ILLINOIS.....................................................     0.7700
    INDIANA......................................................     0.7806
    IOWA.........................................................     0.7532
    KANSAS.......................................................     0.7446
    KENTUCKY.....................................................     0.7793
    LOUISIANA....................................................     0.7384
    MAINE........................................................     0.8328
    MARYLAND.....................................................     0.8061
    MASSACHUSETTS................................................     1.1654
    MICHIGAN.....................................................     0.8826
    MINNESOTA....................................................     0.8309
    MISSISSIPPI..................................................     0.6957
    MISSOURI.....................................................     0.7249
    MONTANA......................................................     0.8255
    NEBRASKA.....................................................     0.6995
    NEVADA.......................................................     0.9702
    NEW HAMPSHIRE................................................     0.9547
    NEW JERSEY...................................................      (\1\)
    NEW MEXICO...................................................     0.8318
    NEW YORK.....................................................     0.8402
    NORTH CAROLINA...............................................     0.7936
    NORTH DAKOTA.................................................     0.7719
    OHIO.........................................................     0.8453
    OKLAHOMA.....................................................     0.7400
    OREGON.......................................................     0.9607
    PENNSYLVANIA.................................................     0.8613
    PUERTO RICO..................................................  \2\ 0.433
                                                                           3
    RHODE ISLAND.................................................      (\1\)
    SOUTH CAROLINA...............................................     0.7650
    SOUTH DAKOTA.................................................     0.7168
    TENNESSEE....................................................     0.7340
    TEXAS........................................................     0.7591
    UTAH.........................................................     0.8983
    VERMONT......................................................     0.9035
    VIRGINIA.....................................................     0.7815
    VIRGIN ISLANDS...............................................  \2\ 0.573
                                                                           4
    WASHINGTON...................................................     0.9635
    WEST VIRGINIA................................................     0.8488
    WISCONSIN....................................................     0.8447
    
    [[Page 46477]]
    
                                                                            
    WYOMING......................................................    0.8457 
    ------------------------------------------------------------------------
    \1\ All counties within State are classified urban.                     
    \2\ Approximate value for area.                                         
    
    V. Impact Statement
    
        For notices such as this, we generally prepare a regulatory 
    flexibility analysis that is consistent with the Regulatory Flexibility 
    Act (RFA) (5 U.S.C. 601 through 612) unless we certify that a notice 
    will not have a significant economic impact on a substantial number of 
    small entities. For purposes of the RFA, all SNFs are considered to be 
    small entities. Individuals and States are not included in the 
    definition of a small entity.
        The purpose of the July 21, 1995 final rule was to allow SNFs that 
    provide fewer than 1,500 days of care to Medicare beneficiaries in a 
    cost reporting period to have the option of receiving prospectively 
    determined payment rates in the following cost reporting period. In our 
    analysis of the impact of the July 21 final rule (60 FR 37593), we 
    noted that Medicare payments to SNFs constitute only about 5.3 percent 
    of total SNF revenues and indicated that the rule would have only a 
    small impact on those revenues. We estimate that the prospectively 
    determined payment rates contained in this notice will result in a cost 
    to the Medicare program of $10 to $20 million for FY 1997. These costs 
    represent the difference between estimated aggregate payments to SNFs 
    that elect to be paid under the prospectively determined payment rates 
    and estimated aggregate payments to the same SNFs if paid on a 
    reasonable cost basis under the routine SNF cost limits. Thus, we 
    continue to believe that this optional payment system will have a 
    positive impact on small entities, while easing their cost reporting 
    burden.
        In addition, section 1102(b) of the Act requires us to prepare a 
    regulatory impact analysis if a final notice such as this may have a 
    significant impact on the operations of a substantial number of small 
    rural hospitals. Such an 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 are not preparing analyses for either the RFA or section 1102(b) 
    of the Act because we have determined, and we certify, that this final 
    notice will not have a significant economic impact on a substantial 
    number of small entities or a significant impact on the operations of a 
    substantial number of small rural hospitals.
        In accordance with the provisions of Executive Order 12866, this 
    final notice was reviewed by the Office of Management and Budget.
        Under the provisions of Public Law 104-121, we have determined that 
    this notice is not a major rule.
    
    VI. Other Required Information
    
    A. Collection of Information Requirements
    
        This final notice with comment period 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 1995 (44 U.S.C. 3501 et seq.).
    
    B. Waiver of Proposed Notice and 30-Day Delay in the Effective Date
    
        In adopting notices such as this, we ordinarily publish a proposed 
    notice in the Federal Register with a 60-day period for public comment 
    as required under section 1871(b)(1) of the Act. We also normally 
    provide a delay of 30 days in the effective date for documents such as 
    this. However, we may waive these procedures if we find good cause that 
    prior notice and comment or a delay in the effective date are 
    impracticable, unnecessary, or contrary to the public interest.
        As discussed in section II of this notice, we have used the same 
    basic methodology to develop this schedule of rates that was used in 
    setting the rates published in section 2828 of the Provider 
    Reimbursement Manual for cost reporting periods beginning in Federal 
    fiscal year 1993. As discussed above, section 13503(b) of OBRA 1993 
    delayed the update to the schedule of prospectively determined payment 
    rates until Federal fiscal year 1996. However, the delay in passing the 
    proposed Federal fiscal year 1996 budget legislation, which contained 
    provisions affecting the Federal fiscal year 1996 and Federal fiscal 
    year 1997 prospectively determined payment rates, resulted in a delay 
    in publishing updated Federal fiscal year 1996 rates. Regardless of 
    that delay and in conformance with the clear direction of section 
    1888(d) of the Act and Sec. 413.320, this notice announces the update 
    to the schedule of prospectively determined payment rates for SNF 
    inpatient service costs for cost reporting periods beginning in Federal 
    fiscal year 1997. However, given the publishing time constraints 
    mandated in Sec. 413.320, it would not have been possible to publish a 
    proposed notice and still implement the updated prospectively 
    determined payment rates set forth in this notice. To do so would have 
    been impractical, unnecessary, and contrary to the public interest. 
    Therefore, we find good cause to waive publication of a proposed notice 
    and the 30-day delay in the effective date of this notice with comment 
    period. However, we are providing a 60-day period for public comment, 
    as indicated at the beginning of this notice.
    
    C. Response to Comments
    
        Because of the large number of items of correspondence we normally 
    receive on Federal Register 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 notice, and, if we proceed with a subsequent document, 
    we will respond to the comments in that document.
    
                     Appendix.--Derivation of ``Market Basket'' Index for SNF Routine Service Costs                 
    ----------------------------------------------------------------------------------------------------------------
                                         Relative                                                                   
            Category of costs              \1\                           Price variable used \2\                    
                                        importance                                                                  
    ---------------------------------------1993---------------------------------------------------------------------
    Payroll Expense..................         64.0  Percentage changes in average hourly earnings of employees in   
                                                     nursing and personal care facility. (SIC 805) Source: U.S.     
                                                     Dept. of Labor, Bureau of Labor Statistics, Employment and     
                                                     Earnings (monthly). Table C-2.                                 
    
    [[Page 46478]]
    
                                                                                                                    
    Employee Benefits................          7.8  Supplements to wages and salaries per worker in nonagricultural 
                                                     establishments. For supplements to wages. Source: U.S. Dept. of
                                                     Commerce, Bureau of Economic Analysis, Survey of Current       
                                                     Business. Table 1.11.                                          
                                                    For total employment. Source: U.S. Dept. of Labor, Bureau of    
                                                     Labor Statistics, Employment and Earnings (monthly). Table B-4.
    Food.............................          7.6  Processed foods and feeds component of producer price index.    
                                                     Source: U.S. Dept. of Labor, Bureau of Labor Statistics,       
                                                     Monthly Labor Review, Table 23.                                
                                                    Food and beverage component of Consumer Price Index, all urban. 
                                                     Source: U.S. Dept. of Labor, Bureau of Labor Statistics,       
                                                     Monthly Labor Review, Table 22.                                
    Other business services..........          5.1  Services component of Consumer Price Index, all urban. Source:  
                                                     U.S. Dept. of Labor, Bureau of Labor Statistics, Monthly Labor 
                                                     Review, Table 23.                                              
    Fuel and other utilities.........          4.0  A. Implicit price deflator-consumption of fuel oil and coal     
                                                     (derived from fuel oil component of Consumer Price Index).     
                                                     Source: U.S. Dept. of Commerce, Bureau of Economic Analysis,   
                                                     Survey of Current Business (monthly), Table 7.11.              
                                                    B. Implicit price deflator-consumer of electricity (derived from
                                                     electricity component of Consumer Price Index). Source: U.S.   
                                                     Dept. of Commerce, Bureau of Economic Analysis.                
                                                    C. Implicit price deflator for natural gas (derived from utility
                                                     (piped) gas component of Consumer Price Index). Source: Same as
                                                     electricity above.                                             
                                                    D. Water and sewage maintenance component of the Consumer Price 
                                                     Index. Source: U.S. Dept. of Labor, Bureau of Labor Statistics,
                                                     Monthly Labor Review, Table 23.                                
    Supplies.........................          3.1  All Item Consumer Price Index, all urban. Source: U.S. Dept. of 
                                                     Labor, Bureau of Labor Statistics, Monthly Labor Review, Table 
                                                     23.                                                            
    Drugs............................          2.2  Pharmaceutical preparations, ethical component of producer price
                                                     index. Source: U.S. Dept. of Labor, Bureau of Labor Statistics,
                                                     Producer Prices and Price Indexes (monthly), Table 6.          
    Health services..................          1.6  Physician services component of Consumer Price Index for all    
                                                     urban consumers. Source: U.S. Dept. of Labor, Bureau of Labor  
                                                     Statistics, Monthly Labor Review, Table 23.                    
    Miscellaneous....................          4.6  All Item Consumer Price Index, all urban. Source: U.S. Dept. of 
                                                     Labor, Bureau of Labor Statistics, Monthly Labor Review, Table 
                                                     23.                                                            
    ----------------------------------------------------------------------------------------------------------------
    \1\ The basic weights for all major categories of skilled nursing home costs were obtained from the DHEW-       
      National Center for Health Statistics (NCHS) National Nursing Home Surveys (NNHS) for 1972 and 1976 for home  
      certified for participation in the Medicare program. See Nursing Home Costs 1972, United States: National     
      Nursing Home Survey, August 1973-April 1974, DHEW, NCHS: National Nursing Home Survey: 1977 Summary for the   
      United States, Vital and Health Statistics, Series 13, Number 43.                                             
    A Laspeyres price index was constructed using 1977 weights and price variables indicated in this table. In      
      calendar year 1977 each ``price'' variable has an index of 100.0. The relative routine service cost weights   
      change each period in accordance with price changes for each price variable. Cost categories with relatively  
      higher ``price'' increases get relatively higher cost weights and vice versa.                                 
    \2\ Forecasted by DRI/McGraw Hill, Health Care Costs, First Quarter, 1992, 1750 K St., NW, Washington D.C.      
      20006.                                                                                                        
    
        Authority: Secs. 1102, 1814(b), 1861(v)(1), 1866(a), 1871, and 
    1888 of the Social Security Act (42 U.S.C. 1302, 1395f(b), 
    1395x(v)(1), 1395cc(a), 1395hh, and 1395yy); sec. 13503(b) and (c) 
    of Pub. L. 103-66 (42 U.S.C. 1395x(v)(1)(B) and 1395yy (note)) and 
    42 CFR 413.1, 413.24, and 413.300 through 413.321).
    (Catalog of Federal Domestic Assistance Program No. 93.773, 
    Medicare--Hospital Insurance)
    
        Dated: July 1, 1996.
    Bruce C. Vladeck,
    Administrator, Health Care Financing Administration.
    
        Dated: August 2, 1996.
    Donna E. Shalala,
    Secretary.
    [FR Doc. 96-22376 Filed 8-30-96; 8:45 am]
    BILLING CODE 4120-01-P
    
    
    

Document Information

Published:
09/03/1996
Department:
Health Care Finance Administration
Entry Type:
Notice
Action:
Final notice with comment period.
Document Number:
96-22376
Pages:
46466-46478 (13 pages)
Docket Numbers:
BPD-842-NC
RINs:
0938-AH70
PDF File:
96-22376.pdf