01-1187. Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities-Update; Correction

AGENCY:

Health Care Financing Administration (HCFA), HHS.

ACTION:

Correction notice.

SUMMARY:

This document corrects technical errors that appeared in the final rule published in the Federal Register on July 31, 2000 entitled, “Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities—Update.”

EFFECTIVE DATE:

This correction is effective October 1, 2000, except for certain wage index corrections that are effective December 1, 2000.

FOR FURTHER INFORMATION CONTACT:

Bill Ullman [phone] or Susan Burris [phone].

SUPPLEMENTARY INFORMATION:

Background

In the July 31, 2000 final rule entitled, “Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities” (FR Doc. 00-19004, July 31, 2000), there were several technical errors in the preamble.

In the first column of Tables 3 through 6 of the preamble there was a typographical error. We are correcting the heading of the column from “RUG IV category” to “RUG III category.”

We are also correcting several SNF PPS wage index values as published in Tables 7 and 8. Specifically, effective October 1, 2000, in Table 7, the wage index value for the Allentown-Bethlehem-Easton, PA MSA (area 0240) is corrected from 1.0040 to 0.9925 and the wage index value for the Kansas City, KS-MO MSA (area 3760) is corrected from 0.9498 to 0.9509.

Effective December 1, 2000, in Table 7, the wage index value for the Alexandria, LA MSA (area 0220) is corrected from 0.8151 to 0.8123, the wage index value for the Kansas City, KS-MO MSA (area 3760) is corrected again from 0.9509 (as corrected in the previous paragraph) to 0.9527, and, in Table 8, the wage index value for rural LA (area 19) is corrected from 0.7668 to 0.7681.

In accordance with our longstanding policies, these technical and tabulation errors are being corrected prospectively, effective on the dates noted above. This correction notice conforms the published SNF PPS wage index values to the prospectively revised values.

We are also taking this opportunity to provide a correction regarding the applicable time period to which a special market basket inflation factor is to be applied for certain providers that participated in the Multistate Nursing Home Case-Mix and Quality Demonstration (NHCMQD), the demonstration project that served as the forerunner to the national skilled nursing facility (SNF) prospective payment system (PPS). In the May 12, 1998 SNF PPS interim final rule (63 FR 26288), we explained that for those providers that received payment under the NHCMQD during a cost reporting period that began in calendar year 1997, we derived a special market basket index inflation factor of 1.031532. We used this factor to adjust the 1997 costs to the midpoint of the rate setting period in calculating their facility-specific rate. The May 1998 interim final rule indicated that the initial rate setting period (which applied to those providers beginning their first cost reporting period under the SNF PPS) encompassed the 15-month period from July 1, 1998, to September 30, 1999.

Under the statute's phased transition from facility-specific to full Federal rates, this inflation factor was to be successively updated for the second and third cost reporting periods under the SNF PPS. However, for demonstration providers beginning their second cost reporting period under the SNF PPS, the July 30, 1999 SNF PPS update notice (64 FR 41697) inadvertently included the same inflation factor of 1.031532 that had been displayed for the first cost reporting period in the May 1998 interim final rule, along with the same time period of July 1, 1998, to September 30, 1999. Although a subsequent correction notice published in the Federal Register on October 5, 1999 (64 FR 54030) provided the correct inflation factor of 1.062244 for the second cost reporting period, it did not make a similar correction to the applicable time period.

Further, while the July 2000 final rule (65 FR 46787) did update both the inflation factor (1.105788) and the applicable time period (October 1, 2000, to September 30, 2001) for these demonstration providers, the latter change failed to reflect that it is possible for such a provider to begin its third cost reporting period under the SNF PPS as early as July 1, 2000. Accordingly, we are hereby correcting the start date for the demonstration providers for the applicable time period that was displayed in the 2000 final rule, from October 1, 2000, to July 1, 2000.

In addition, there was an error in the Regulatory Impact Analysis, section VI of the preamble, that resulted in two columns of incorrect figures displayed in the impact analysis table. Based on the correct percent changes in the two columns, some dollar figures and percentages mentioned throughout the preamble are also in error.

Specifically, on pages 46793 and 46794, column 3, we referenced $3.1 billion as the aggregate increase in payments associated with this final rule; however, we made a technical error in our calculation and the correct number is $2.6 billion. Additionally, in this section (page 46795, column 3), we made another technical error in our calculation that the payments will increase by 21.8 percent. The correct figure is 18.3 percent.

Accordingly, we are reprinting Table 11 of the preamble (64 FR 46795), entitled “Projected Impact of FY 2001 Update to the SNF PPS,” with the corrected figures displayed in the last two columns of the table and a corrected figure for the total number of facilities. Further, we note that Table 11 presents the projected effects of the policy changes in the SNF PPS from FY 2000 to FY 2001, as well as statutory changes effective for FY 2001 for SNFs. As such, these corrections do not represent any changes to the policies set forth in the final rule.

The corrections appear in this document under the heading “Correction of Errors.” The provisions in this correction notice are effective as if they had been included in the document published in the Federal Register on July 31, 2000, that is, as of October 1, 2000, except for those wage index value corrections that we specifically noted to be effective as of December 1, 2000.

Correction of Errors

In FR Doc. 00-19004 of July 31, 2000 (64 FR 46770), we are making the following corrections:

Corrections to Preamble

1. In the first column of Table 3 (on pages 46775-76), Table 4 (on pages 46776-77), Table 5 (on pages 46777-78), and Table 6 (on page 46778), the column heading is revised to read “RUG III category”.

2. On page 46779, in column 2, the entry of “0.8151” for Alexandria, LA, under “Wage Index for Urban Areas” is revised by adding “0.8123 (effective December 1, 2000)”.

3. On page 46779, in column 3, the entry of “1.0040” for Allentown-Bethlehem-Easton, PA, under “Wage Index for Urban Areas” is revised to read “0.9925”.

4. On page 46782, in column 2, the entry of “0.9498” for Kansas City, KS-MO, under “Wage Index for Urban Areas” is revised to read “0.9509”.

5. On page 46782, in column 2, the revised entry of “0.9509” for Kansas City KS-MO, under “Wage Index for Urban Areas” is further revised by adding “0.9527 (effective December 1, 2000)”.

6. On page 46785, in column 3, the entry of “0.7668” for Louisiana, under “Wage Index for Rural Areas” is revised by adding “0.7681 (effective December 1, 2000)”.

7. On page 46787, in column 2, first full paragraph, the last sentence is revised to read: “In addition, we derive a special market basket inflation factor, which is 1.105788, to adjust the 1997 costs to the midpoint of the rate setting period (July 1, 2000 to September 30, 2001.)'

8. On page 46793, in column 3, section VI, Regulatory Impact Analysis, paragraph 2, the third sentence is revised to read: “This final rule is a major rule as defined in Title 5, United States Code, section 804(2), because we estimate its impact will be to increase the payments to SNFs by approximately $2.6 billion in FY 2001.”

9. On page 46794, in column 3, first full paragraph, the first sentence is revised to read: “As stated previously in this rule, the aggregate increase in payments associated with this final rule is estimated to be $2.6 billion.”

10. On page 46795, in column 3, first full paragraph, the third sentence is revised to read: “It is assumed that payments will increase by 18.3 percent in total, assuming facilities do not change their care delivery and billing practices in response.”

11. Table 11 (Projected Impact of FY 2001 Update to the SNF PPS) is corrected as set forth below.

Table 11.—Projected Impact of FY 2001 Update to the SNF PPS

	Number of facilities	Transition to Federal rates (percent)	Add on to Federal rates (percent)	Update change (percent)	Wage index change (percent)	20 (percent) add on	Total FY 2001 change (percent)
Total	9037	4.2	3.5	2.3	0.0	7.2	18.3
Urban	6300	3.6	3.5	2.3	−0.1	7.1	17.4
Rural	2737	7.1	3.7	2.2	0.8	7.7	23.2
Hospital based urban	683	−4.5	3.0	2.4	0.0	6.8	7.6
Freestanding urban	5617	5.1	3.6	2.3	−0.1	7.2	19.3
Hospital based rural	533	2.0	3.4	2.3	0.9	8.7	18.3
Freestanding rural	2204	8.2	3.7	2.2	0.7	7.5	24.1
Urban by region:
New England	630	10.5	3.8	2.2	−0.8	7.8	25.4
Middle Atlantic	877	14.3	3.8	2.2	−0.3	9.0	31.8
South Atlantic	959	−0.4	3.3	2.3	−0.4	6.2	11.3
East North Central	1232	6.1	3.6	2.2	0.4	7.0	20.7
East South Central	212	1.9	3.5	2.3	−0.7	6.9	14.5
West North Central	469	3.6	3.5	2.3	0.4	6.7	17.5
West South Central	519	−5.2	3.0	2.4	1.0	6.3	7.3
Mountain	303	−4.0	3.1	2.4	0.0	4.8	6.2
Pacific	1070	−2.3	3.2	2.4	−0.5	6.9	9.8
Rural by region:
New England	88	14.4	3.9	2.2	−0.9	8.4	30.5
Middle Atlantic	144	13.1	3.9	2.2	0.0	9.0	30.9
South Atlantic	373	5.3	3.6	2.2	1.1	8.0	21.7
East North Central	561	9.2	3.7	2.2	1.0	7.4	25.5
East South Central	255	4.2	3.6	2.3	0.6	8.8	20.9
West North Central	581	11.1	3.7	2.2	0.8	8.3	28.5
West South Central	354	1.2	3.4	2.3	1.1	6.9	15.7
Mountain	204	3.3	3.5	2.3	0.7	6.4	17.2
Pacific	151	3.2	3.5	2.3	0.3	6.3	16.5

(Authority: Section 1888 of the Social Security Act (42 U.S.C. 1395yy))

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

Dated: January 2, 2001.

Brian P. Burns,

Deputy Assistant Secretary for Information Resources Management.