[Federal Register Volume 78, Number 45 (Thursday, March 7, 2013)]
[Rules and Regulations]
[Pages 14689-14694]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-05263]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 412
[CMS-1588-N]
RIN 0938-AR12
Medicare Program; Extension of the Payment Adjustment for Low-
volume Hospitals and the Medicare-dependent Hospital (MDH) Program
Under the Hospital Inpatient Prospective Payment Systems (IPPS) for
Acute Care Hospitals for Fiscal Year 2013
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Notice of extension.
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SUMMARY: This notice announces changes to the payment adjustment for
low-volume hospitals and to the Medicare-dependent hospital (MDH)
program under the hospital inpatient prospective payment systems (IPPS)
for FY 2013 in accordance with sections 605 and 606, respectively, of
the American Taxpayer Relief Act of 2012.
DATES: Effective date: March 4, 2013. Applicability dates: The
provisions described in this notice are applicable for discharges on or
after October 1, 2012 and on or before September 30, 2013.
FOR FURTHER INFORMATION CONTACT:
Michele Hudson, (410) 786-5490.
Maria Navarro, (410) 786-4553.
Shevi Marciano, (410) 786-2874.
SUPPLEMENTARY INFORMATION:
I. Background
On January 2, 2013, the American Taxpayer Relief Act of 2012 (ATRA)
(Pub. L. 112-240) was enacted. Section 605 of the ATRA extends changes
to the payment adjustment for low-volume hospitals for an additional
year, through fiscal year (FY) 2013. Section 606 of the ATRA extends
the Medicare-dependent hospital (MDH) program for an additional year,
through FY 2013.
II. Provisions of the Notice
A. Extension of the Payment Adjustment for Low-Volume Hospitals
1. Background
Section 1886(d)(12) of the Social Security Act (the Act) provides
for an additional payment to each qualifying low-volume hospital under
the hospital inpatient prospective payment systems (IPPS) beginning in
FY 2005. Sections 3125 and 10314 of the Affordable Care Act provided
for a temporary change in the low-volume hospital payment policy for
FYs 2011 and 2012. Prior to the enactment of the ATRA, beginning with
FY 2013, the low-volume hospital qualifying criteria and payment
adjustment returned to the statutory requirements under section
1886(d)(12) of the Act that were in effect prior to the amendments made
by the Affordable Care Act. (For additional information on the
expiration of the provisions of the Affordable Care Act that amended
the low-volume hospital adjustment at section 1886(d)(12) of the Act,
we refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53406
through 53408).) The regulations describing the payment adjustment for
low-volume hospitals are at 42 CFR 412.101.
2. Low-Volume Hospital Payment Adjustment for FYs 2011 and 2012
For FYs 2011 and 2012, sections 3125 and 10314 of the Affordable
Care Act expanded the definition of low-volume hospital and modified
the methodology for determining the payment adjustment for hospitals
meeting that definition. Specifically, the provisions of the Affordable
Care Act amended the qualifying criteria for low-volume hospitals under
section 1886(d)(12)(C)(i) of the Act to specify that, for FYs 2011 and
2012, a hospital qualifies as a low-volume hospital if it is more than
15 road miles from another subsection (d) hospital and has less than
1,600 discharges of individuals entitled to, or enrolled for, benefits
under Part A during the fiscal year. In addition, section
1886(d)(12)(D) of the Act, as added by the Affordable Care Act,
provides that the low-volume hospital payment adjustment (that is, the
percentage increase) is to be determined ``using a continuous linear
sliding scale ranging from 25 percent for low-volume hospitals with 200
or fewer discharges of individuals entitled to, or enrolled for,
benefits under Part A in the fiscal year to zero percent for low-volume
hospitals with greater than 1,600 discharges of such individuals in the
fiscal year.''
We revised the regulations at 42 CFR 412.101 to reflect the changes
to the qualifying criteria and the payment adjustment for low-volume
hospitals according to the provisions of the Affordable Care Act in the
FY 2011 IPPS/LTCH PPS final rule (75 FR 50238 through 50275 and 50414).
In addition, we also defined, at Sec. 412.101(a), the term ``road
miles'' to mean ``miles'' as defined at Sec. 412.92(c)(1), and
clarified the existing regulations to indicate that a hospital must
continue to qualify as a low-volume hospital in order to receive the
payment adjustment in that year (that is, it is not based on a one-time
qualification). Furthermore, in that same final rule, we discussed the
process for requesting and obtaining the low-volume hospital payment
adjustment for FY 2011 (75 FR 50240). For the second year of the
changes to the low-volume hospital adjustment provided for by the
provisions of the Affordable Care Act (that is, FY 2012), consistent
with the regulations at Sec. 412.101(b)(2)(ii), we updated the
discharge data source used to identify qualifying low-volume hospitals
and calculate the payment adjustment (percentage increase) in the FY
2012 IPPS/LTCH PPS final rule (76 FR 51677 through 51680). Under Sec.
412.101(b)(2)(ii), for FYs 2011 and 2012, a hospital's Medicare
discharges from the most recently available MedPAR data, as determined
by CMS, are used to determine if the hospital meets the discharge
criteria to receive the low-volume payment adjustment in the current
year. In that same final rule, we established that, for FY 2012,
qualifying low-volume hospitals and their payment adjustment are
determined using Medicare discharge data from the March 2011 update of
the FY 2010 MedPAR file, as these data were the most recent data
available at that time. In addition, we noted that eligibility for the
low-volume payment adjustment for FY 2012 was also dependent upon
meeting (if the hospital was qualifying for the low-volume payment
adjustment for the first time in FY 2012), or continuing to meet (if
the hospital qualified in FY 2011) the mileage criteria specified at
Sec. 412.101(b)(2)(ii). Furthermore, we established a procedure for a
hospital to request low-volume hospital status for FY 2012 (which was
consistent with the process we employed for the low-volume hospital
payment adjustment for FY 2011).
[[Page 14690]]
3. Implementation of the Extension of the Low-Volume Hospital Payment
Adjustment for FY 2013
Section 605 of the ATRA extends, for FY 2013, the temporary changes
in the low-volume hospital payment policy provided for in FYs 2011 and
2012 by the Affordable Care Act. As noted previously, prior to the
enactment of section 605 of the ATRA, beginning with FY 2013, the low-
volume hospital definition and payment adjustment methodology returned
to the policy established under statutory requirements that were in
effect prior to the amendments made by the Affordable Care Act.
Specifically, section 605 of the ATRA extends the changes made by the
Affordable Care Act by amending section 1886(d)(12)(B) of the Act by
striking ``2013'' and inserting ``2014'' and by amending sections
1886(d)(12)(C)(i) and (D) of the Act by striking ``and 2012'' and
inserting ``, 2012, and 2013''.
Prior to the enactment of the ATRA, in the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53406 through 53409), we discussed the low-volume
hospital payment adjustment for FY 2013 and subsequent fiscal years.
Specifically, we discussed that in accordance with section 1886(d)(12)
of the Act, beginning with FY 2013, the low-volume hospital definition
and payment adjustment methodology reverted back to the statutory
requirements that were in effect prior to the amendments made by the
Affordable Care Act. Therefore, we explained, as specified under the
existing regulations at Sec. 412.101, effective for FY 2013 and
subsequent years, in order to qualify as a low-volume hospital, a
subsection (d) hospital must be more than 25 road miles from another
subsection (d) hospital and have less than 200 discharges (that is,
less than 200 total discharges, including both Medicare and non-
Medicare discharges) during the fiscal year. We also established a
procedure for hospitals to request low-volume hospital status for FY
2013 (which was consistent with our previously established procedures
for FYs 2011 and 2012).
To implement the extension of the temporary change in the low-
volume hospital payment policy for FY 2013 provided for by the ATRA, in
accordance with the existing regulations at Sec. 412.101(b)(2)(ii) and
consistent with our implementation of the changes in FYs 2011 and 2012,
we are updating the discharge data source used to identify qualifying
low-volume hospitals and calculate the payment adjustment (percentage
increase) for FY 2013. As noted previously, under Sec.
412.101(b)(2)(ii), for FYs 2011 and FY 2012, a hospital's Medicare
discharges from the most recently available MedPAR data, as determined
by us, are used to determine if the hospital meets the discharge
criteria to receive the low-volume payment adjustment in the current
year. The applicable low-volume percentage increase provided for by the
provisions of the Affordable Care Act is determined using a continuous
linear sliding scale equation that results in a low-volume adjustment
ranging from an additional 25 percent for hospitals with 200 or fewer
Medicare discharges to a zero percent additional payment adjustment for
hospitals with 1,600 or more Medicare discharges.
For FY 2013, consistent with our historical policy, qualifying low-
volume hospitals and their payment adjustment will be determined using
Medicare discharge data from the March 2012 update of the FY 2011
MedPAR file, as these data were the most recent data available at the
time of the development of the FY 2013 payment rates and factors
established in the FY 2013 IPPS/LTCH PPS final rule. Table 14 of this
notice (which is available only through the Internet on the CMS Web
site at http://www.cms.hhs.gov/AcuteInpatientPPS/01_overview.asp)
lists the ``subsection (d)'' hospitals with fewer than 1,600 Medicare
discharges based on the March 2012 update of the FY 2011 MedPAR files
and their FY 2013 low-volume payment adjustment (if eligible).
Eligibility for the low-volume hospital payment adjustment for FY 2013
is also dependent upon meeting (in the case of a hospital that did not
qualify for the low-volume hospital payment adjustment in FY 2012) or
continuing to meet (in the case of a hospital that did qualify for the
low-volume hospital payment adjustment in FY 2012) the mileage
criterion specified at Sec. 412.101(b)(2)(ii). We note that the list
of hospitals with fewer than 1,600 Medicare discharges in Table 14 does
not reflect whether or not the hospital meets the mileage criterion,
and a hospital also must be located more than 15 road miles from any
other IPPS hospital in order to qualify for a low-volume hospital
payment adjustment in FY 2013.
In order to receive a low-volume hospital payment adjustment under
Sec. 412.101, in accordance with our previously established procedure,
a hospital must notify and provide documentation to its fiscal
intermediary or Medicare Administrative Contractor (MAC) that it meets
the mileage criterion. The use of a Web-based mapping tool, such as
MapQuest, as part of documenting that the hospital meets the mileage
criterion for low-volume hospitals, is acceptable. The fiscal
intermediary or MAC will determine if the information submitted by the
hospital, such as the name and street address of the nearest hospitals,
location on a map, and distance (in road miles, as defined in the
regulations at Sec. 412.101(a)) from the hospital requesting low-
volume hospital status, is sufficient to document that it meets the
mileage criterion. The fiscal intermediary or MAC may follow up with
the hospital to obtain additional necessary information to determine
whether or not the hospital meets the low-volume mileage criterion. In
addition, the fiscal intermediary or MAC will refer to the hospital's
Medicare discharge data determined by CMS to determine whether or not
the hospital meets the discharge criterion, and the amount of the FY
2013 payment adjustment, once it is determined that the mileage
criterion has been met. The Medicare discharge data shown in Table 14,
as well as the Medicare discharge data for all ``subsection (d)''
hospitals with claims in the March 2012 update of the FY 2011 MedPAR
file, is also available on the CMS Web site for hospitals to view their
Medicare discharges to help hospitals to decide whether or not to apply
for low-volume hospital status.
Consistent with our previously established procedure, we are
implementing the following procedure for a hospital to request low-
volume hospital status for FY 2013. In order for the applicable low-
volume percentage increase to be applied to payments for its discharges
beginning on or after October 1, 2012 (that is, the beginning of FY
2013), a hospital must make its request for low-volume hospital status
in writing to its fiscal intermediary or MAC by March 22, 2013. A
hospital that qualified for the low-volume payment adjustment in FY
2012 may continue to receive a low-volume payment adjustment in FY 2013
without reapplying, if it continues to meet the Medicare discharge
criterion, based on the March 2012 update of the FY 2011 MedPAR data
(shown in Table 14) and the distance criterion; however, the hospital
must verify in writing to its fiscal intermediary or MAC no later than
March 22, 2013, that it continues to be more than 15 miles from any
other ``subsection (d)'' hospital. Furthermore, for requests for low-
volume hospital status for FY 2013 received after March 22, 2013, if
the hospital meets the criteria to qualify as a low-volume hospital,
the fiscal intermediary or MAC
[[Page 14691]]
will apply the applicable low-volume adjustment in determining payments
to the hospital's FY 2013 discharges prospectively effective within 30
days of the date of the fiscal intermediary's or MAC's low-volume
status determination. (As noted previously, this procedure is similar
to the policy we established for a hospital to request low-volume
hospital status for FYs 2011 and 2012 in the FY 2011 IPPS/LTCH PPS
final rule (75 FR 20574 through 20575) and FY 2012 IPPS/LTCH PPS final
rule (76 FR 51680), respectively.)
Program guidance on the systems implementation of these provisions,
including changes to PRICER software used to make payments, will be
announced in an upcoming transmittal. We intend to make conforming
changes to the regulations text at 42 CFR 412.101 to reflect the
changes to the qualifying criteria and the payment adjustment for low-
volume hospitals according to the amendments made by section 605 of the
ATRA in future rulemaking.
B. Extension of the Medicare-Dependent, Small Rural Hospital (MDH)
Program
Section 606 of the ATRA provides for a 1-year extension of the
Medicare-dependent, small rural hospital (MDH) program effective from
October 1, 2012 to September 30, 2013. Specifically, section 606 of the
ATRA of 2012 amended sections 1886(d)(5)(G)(i) and
1886(d)(5)(G)(ii)(II) of the Act by striking ``October 1, 2012'' and
inserting ``October 1, 2013''. Section 606 of the ATRA of 2012 also
made conforming amendments to sections 1886(b)(3)(D)(i) and
1886(b)(3)(D)(iv) of the Act. Generally, as a result of the section 606
extension, a provider that was classified as an MDH prior to the
September 30, 2012 expiration of the MDH program will be reinstated as
an MDH effective October 1, 2012, with no need to reapply for MDH
classification.
Prior to the enactment of section 606 of the ATRA, under section
3124 of the Affordable Care Act, the MDH program authorized by section
1886(d)(5)(G) of the Act was set to expire at the end of FY 2012. (For
additional information on the MDH program and the payment methodology,
we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51683
through 51684).
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50287 and 50414), we
amended the regulations at Sec. 412.108(a)(1) and (c)(2)(iii) to
reflect the Affordable Care Act extension of the MDH program through FY
2012. We intend to amend the regulations at Sec. 412.108(a)(1) and
(c)(2)(iii) to reflect the statutory extension of the MDH program
through FY 2013 provided for by the provisions of the ATRA in future
rulemaking.
Since MDH status is now extended by statute through the end of FY
2013, generally, hospitals that previously qualified for MDH status
will be reinstated as an MDH retroactively to October 1, 2012. However,
in the following two situations, the effective date of MDH status may
not be retroactive to October 1, 2012.
1. MDHs That Classified as Sole Community Hospitals (SCHs) on or After
October 1, 2012
In anticipation of the September 30, 2012 expiration of the MDH
provision, we allowed MDHs that applied for reclassification as sole
community hospitals (SCHs) by August 31, 2012, to have such status be
effective on October 1, 2012 under the regulations at Sec.
412.92(b)(2)(v). Hospitals that applied by the August 31, 2012 deadline
and were approved for SCH classification received SCH status effective
October 1, 2012. Additionally, some hospitals that had MDH status as of
the September 30, 2012 expiration of the MDH program may have missed
the August 31, 2012 application deadline. These hospitals applied for
SCH status in the usual manner instead and were approved for SCH status
effective 30 days from the date of approval, resulting in an effective
date later than October 1, 2012. These hospitals must reapply for MDH
status under Sec. 412.108(b).
2. MDHs That Requested a Cancellation of Their Rural Classification
Under Sec. 412.103(b)
One of the criteria to be classified as an MDH is that the hospital
must be located in a rural area. To qualify for MDH status, some MDHs
reclassified from an urban to a rural hospital designation, under the
regulations at Sec. 412.103(b). With the expiration of the MDH
provision, some of these providers may have requested a cancellation of
their rural classification. Therefore, in order to qualify for MDH
status, these hospitals must request to be reclassified as rural under
Sec. 412.103(b) and must reapply for MDH status under Sec.
412.108(b).
Any provider that falls within either of the two exceptions listed
previously may not have its MDH status automatically reinstated
effective October 1, 2012. That is, if a provider reclassified to SCH
status or cancelled its rural status effective October 1, 2012, its MDH
status will not be retroactive to October 1, 2012, but will instead be
applied prospectively based on the date the hospital is notified that
it again meets the requirements for MDH status in accordance with Sec.
412.108(b)(4) after reapplying for MDH status. Once granted, this
status will remain in effect through FY 2013, subject to the
requirements at Sec. 412.108. However, if a provider reclassified to
SCH status or cancelled its rural status effective on a date later than
October 1, 2012, MDH status will be reinstated effective from October
1, 2012 but will end on the date on which the provider changed its
status to an SCH or cancelled its rural status. Those hospitals may
also reapply for MDH status to be effective again 30 days from the date
the hospital is notified of the determination, in accordance with Sec.
412.108(b)(4). Once granted, this status will remain in effect through
FY 2013, subject to the requirements at Sec. 412.108. Providers that
fall within either of the two exceptions will have to reapply for MDH
status according to the classification procedures in 42 CFR 412.108(b).
Specifically, the regulations at Sec. 412.108(b) require the
following:
The hospital submit a written request along with
qualifying documentation to its contractor to be considered for MDH
status.
The contractor make its determination and notify the
hospital within 90 days from the date that it receives the request for
MDH classification and all required documentation.
The determination of MDH status be effective 30 days after
the date of the contractor's written notification to the hospital.
The following are examples of various scenarios that illustrate how
and when MDH status will be determined for hospitals that were MDHs as
of the September 30, 2012 expiration of the MDH program:
Example 1: Hospital A was classified as an MDH prior to the
September 30, 2012 expiration of the MDH program. Hospital A retained
its rural classification and did not reclassify as an SCH. Hospital A's
MDH status will be automatically reinstated to October 1, 2012.
Example 2: Hospital B was classified as an MDH prior to the
September 30, 2012 expiration of the MDH program. per the regulations
at Sec. 412.92(b)(2)(v) and in anticipation of the expiration of the
MDH program, Hospital B applied for reclassification as an SCH by
August 31, 2012, and was approved for SCH status effective on October
1, 2012. Hospital B's MDH status will not be automatically reinstated.
In order to reclassify as an MDH, Hospital B must cancel its SCH
status, in accordance with Sec. 412.92(b)(4), and reapply for
[[Page 14692]]
MDH status under the regulations at Sec. 412.108(b).
Example 3: Hospital C was classified as an MDH prior to the
September 30, 2012 expiration of the MDH program. Hospital C missed the
application deadline of August 31, 2012 for reclassification as an SCH
under the regulations at Sec. 412.92(b)(2)(v) and was not eligible for
its SCH status to be effective as of October 1, 2012. Hospitals C's
Medicare contractor approved its request for SCH status effective
November 16, 2012. Hospital C's MDH status will be reinstated effective
October 1, 2012 through November 15, 2012 and will subsequently be
cancelled effective November 16, 2012. In order to reclassify as an
MDH, Hospital C must cancel its SCH status, in accordance Sec.
412.92(b)(4), and reapply for MDH status under the regulations at Sec.
412.108(b).
Example 4: Hospital D was classified as an MDH prior to the
September 30, 2012 expiration of the MDH program. In anticipation of
the expiration of the MDH program, Hospital D requested that its rural
classification be cancelled per the regulations at Sec. 412.103(g).
Hospital D's rural classification was cancelled effective October 1,
2012. Hospital D's MDH status will not be automatically reinstated. In
order to reclassify as an MDH, Hospital D must request to be
reclassified as rural under Sec. 412.103(b) and must reapply for MDH
status under Sec. 412.108(b).
Example 5: Hospital E was classified as an MDH prior to the
September 30, 2012 expiration of the MDH program. In anticipation of
the expiration of the MDH program, Hospital E requested that its rural
classification be cancelled per the regulations at Sec. 412.103(g).
Hospital E's rural classification was cancelled effective January 1,
2013. Hospital E's MDH status will be reinstated but only for the
period of time during which it met the criteria for MDH status. Since
Hospital E cancelled its rural status and was classified as urban
effective January 1, 2013, MDH status will only be reinstated effective
October 1, 2012 through December 31, 2012 and will be cancelled
effective January 1, 2013. In order to reclassify as an MDH, Hospital E
must request to be reclassified as rural under Sec. 412.103(b) and
must reapply for MDH status under Sec. 412.108(b).
We note that hospitals that were MDHs as of the September 30, 2012
expiration of the MDH program that have returned to urban status will
first need to apply for rural status under Sec. 412.103(b), and
hospitals that became SCHs will first need to request cancellation of
SCH status under Sec. 412.92(b)(4).
Finally, we note that hospitals continue to be bound by Sec.
412.108(b)(4)(i) through (iii) to report a change in the circumstances
under which the status was approved. Thus, if a hospital's MDH status
has been extended and it no longer meets the requirements for MDH
status, it is required under Sec. 412.108(b)(4)(i) through (iii) to
make such a report to its fiscal intermediary or MAC. Additionally,
under the regulations at Sec. 412.108(b)(5), Medicare contractors are
required to evaluate on an ongoing basis whether or not a hospital
continues to qualify for MDH status.
A provider affected by the MDH program extension will receive a
notice from its Medicare contractor detailing its status in light of
the MDH program extension.
Program guidance on the systems implementation of these provisions,
including changes to PRICER software used to make payments, will be
announced in an upcoming transmittal. We intend to make the conforming
changes to the regulations text at 42 CFR 412.108 to reflect the
changes made by section 606 of the ATRA in future rulemaking.
III. Collection of Information Requirements
This document does not impose information collection and
recordkeeping requirements. Consequently, it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1995 (44 U.S.C. 35).
IV. Waiver of Proposed Rulemaking and Delay of Effective Date
We ordinarily publish a notice of proposed rulemaking in the
Federal Register and invite public comment prior to a rule taking
effect in accordance with section 553(b) of the Administrative
Procedure Act (APA) and section 1871 of the Act. In addition, in
accordance with section 553(d) of the APA and section 1871(e)(1)(B)(i)
of the Act, we ordinarily provide a 30-day delay to a substantive
rule's effective date. For substantive rules that constitute major
rules, in accordance with 5 U.S.C. 801, we ordinarily provide a 60-day
delay in the effective date.
None of the processes or effective date requirements apply,
however, when the rule in question is interpretive, a general statement
of policy, or a rule of agency organization, procedure or practice.
They also do not apply when the Congress itself has created the rules
that are to be applied, leaving no discretion or gaps for an agency to
fill in through rulemaking.
In addition, an agency may waive notice and comment rulemaking, as
well as any delay in effective date, when the agency for good cause
finds that notice and public comment on the rule as well the effective
date delay are impracticable, unnecessary, or contrary to the public
interest. In cases where an agency finds good cause, the agency must
incorporate a statement of this finding and its reasons in the rule
issued.
The policies being publicized in this notice do not constitute
agency rulemaking. Rather, the Congress, in the ATRA, has already
required that the agency make these changes, and we are simply
notifying the public of the extension of the changes to the payment
adjustment for low-volume hospitals and the MDH program for an
additional year effective October 1, 2012. As this notice merely
informs the public of these extensions, it is not a rule and does not
require any notice and comment rulemaking. To the extent any of the
policies articulated in this notice constitute interpretations of the
Congress's requirements or procedures that will be used to implement
the Congress's directive; they are interpretive rules, general
statements of policy, and rules of agency procedure or practice, which
are not subject to notice and comment rulemaking or a delayed effective
date.
However, to the extent that notice and comment rulemaking or a
delay in effective date or both would otherwise apply, we find good
cause to waive such requirements. Specifically, we find it unnecessary
to undertake notice and comment rulemaking in this instance as this
notice does not propose to make any substantive changes to the policies
or methodologies already in effect as a matter of law, but simply
applies rate adjustments under the ATRA to these existing policies and
methodologies. As the changes outlined in this notice have already
taken effect, it would also be impracticable to undertake notice and
comment rulemaking. For these reasons, we also find that a waiver of
any delay in effective date, if it were otherwise applicable, is
necessary to comply with the requirements of the ATRA. Therefore, we
find good cause to waive notice and comment procedures as well as any
delay in effective date, if such procedures or delays are required at
all.
V. Regulatory Impact Analysis
A. Introduction
We have examined the impacts of this notice as required by
Executive Order
[[Page 14693]]
12866 on Regulatory Planning and Review (September 30, 1993), Executive
Order 13563 on Improving Regulation and Regulatory Review (January 18,
2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub.
L. 96-354), section 1102(b) of the Social Security Act, section 202 of
the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), Executive
Order 13132 on Federalism (August 4, 1999), and the Congressional
Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. A regulatory impact analysis (RIA) must be prepared for
regulatory actions with economically significant effects ($100 million
or more in any 1 year). Although we do not consider this notice to
constitute a substantive rule or regulatory action, the changes
announced in this notice are ``economically'' significant, under
section 3(f)(1) of Executive Order 12866, and therefore we have
prepared a RIA, that to the best of our ability, presents the costs and
benefits of this notice. In accordance with Executive Order 12866, the
notice has been reviewed by the Office of Management and Budget.
The RFA requires agencies to analyze options for regulatory relief
of small businesses, if a rule has a significant impact on a
substantial number of small entities. For purposes of the RFA, small
entities include small businesses, nonprofit organizations, and small
government jurisdictions. We estimate that most hospitals and most
other providers and suppliers are small entities as that term is used
in the RFA. The great majority of hospitals and most other health care
providers and suppliers are small entities, either by being nonprofit
organizations or by meeting the SBA definition of a small business
(having revenues of less than $7.5 to $34.5 million in any 1 year).
(For details on the latest standard for health care providers, we refer
readers to page 33 of the Table of Small Business Size Standards at the
Small Business Administration's Web site at http://www.sba.gov/services/contractingopportunities/sizestandardstopics/tableofsize/index.html.) For purposes of the RFA, all hospitals and other providers
and suppliers are considered to be small entities. Individuals and
States are not included in the definition of a small entity. We believe
that this notice will have a significant impact on small entities.
Because we acknowledge that many of the affected entities are small
entities, the analysis discussed in this section would fulfill any
requirement for a final regulatory flexibility analysis.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. With
the exception of hospitals located in certain New England counties, for
purposes of section 1102(b) of the Act, we now define a small rural
hospital as a hospital that is located outside of an urban area and has
fewer than 100 beds.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
(Pub. L. 104-4) also requires that agencies assess anticipated costs
and benefits before issuing any rule whose mandates require spending in
any 1 year of $100 million in 1995 dollars, updated annually for
inflation. In 2012, that threshold is approximately $136 million. This
notice will not mandate any requirements for State, local, or tribal
governments, nor will it affect private sector costs.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. This notice will not have a substantial effect on State
and local governments.
Although this notice merely reflects the implementation of two
provisions of the ATRA and does not constitute a substantive rule, we
nevertheless prepared this impact analysis in the interest of ensuring
that the impacts of these changes are fully understood. The following
analysis, in conjunction with the remainder of this document,
demonstrates that this notice is consistent with the regulatory
philosophy and principles identified in Executive Order 12866 and
13563, the RFA, and section 1102(b) of the Act. The notice will
positively affect payments to a substantial number of small rural
hospitals and providers, as well as other classes of hospitals and
providers, and the effects on some hospitals and providers may be
significant. The impact analysis, which discusses the effect on total
payments to IPPS hospitals and providers, is presented in this section.
B. Statement of Need
This notice is necessary to update the IPPS final FY 2013 payment
policies to reflect changes required by the implementation of two
provisions of the ATRA. Section 605 of the ATRA extends the payment
adjustment for low-volume hospitals through FY 2013. Section 606 of the
ATRA extends the MDH program through FY 2013. As noted previously,
program guidance on the systems implementation of these provisions,
including changes to PRICER software used to make payments, will be
announced in an upcoming transmittal.
C. Overall Impact
The FY 2013 IPPS/LTCH PPS final rule included an impact analysis
for the changes to the IPPS included in that rule. This notice updates
those impacts to the IPPS to reflect the changes made by sections 605
and 606 of the ATRA. Since these sections were not budget neutral, the
overall estimates for hospitals have changed from our estimates that
were published in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53748).
We estimate that the changes in the FY 2013 IPPS/LTCH PPS final rule,
in conjunction with the changes included in this notice, will result in
an approximate $2.54 billion increase in total payments to IPPS
hospitals relative to FY 2012. In the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53748), we had projected that total payments to IPPS hospitals
would increase by $2.04 billion relative to FY 2012. However, since the
changes in this notice will increase payments by an estimated $509
million relative to what was projected in the FY 2013 IPPS/LTCH PPS
final rule, these changes will result in a net increase of $2.54
billion in total payments to IPPS hospitals relative to FY 2012, as
noted previously.
D. Anticipated Effects
The impact analysis reflects the change in estimated payments to
IPPS hospitals in FY 2013 due to sections 605 and 606 of the ATRA
relative to estimated FY 2013 payments to IPPS hospitals published in
the FY 2013 IPPS/LTCH PPS final rule (77 FR 53748). As described later
in the regulatory impact analysis, FY 2013 IPPS payments to hospitals
affected by sections 605 and 606 of the ATRA are projected to increase
by $509 million (relative to the FY 2013 payments estimated for these
hospitals for the FY
[[Page 14694]]
2013 IPPS/LTCH PPS final rule). Furthermore, we project that, on the
average, overall IPPS payments in FY 2013 for all hospitals will
increase by 0.5 percent due to these provisions in the ATRA compared to
the previous estimate of FY 2013 payments to all IPPS hospitals
published in the FY 2013 IPPS/LTCH PPS final rule.
1. Effects of the Extension of the Payment Adjustment for Low-Volume
Hospitals
The extension, for FY 2013, of the temporary changes to the payment
adjustment for low-volume hospitals (originally provided for by the
Affordable Care Act for FYs 2011 and 2012) as provided for under
section 605 of the ATRA is a non-budget neutral payment provision. The
provisions of the Affordable Care Act expanded the definition of low-
volume hospital and modified the methodology for determining the
payment adjustment for hospitals meeting that definition for FYs 2011
and 2012. Prior to the enactment of the ATRA, beginning with FY 2013,
the low-volume hospital definition and payment adjustment methodology
was to return to the statutory requirements that were in effect prior
to the amendments made by the Affordable Care Act. With the additional
year extension provided for by the ATRA, based on FY 2011 claims data
(March 2012 update of the MedPAR file), we estimate that approximately
600 hospitals will now qualify as a low-volume hospital for FY 2013. We
project that these hospitals will experience an increase in payments of
approximately $326 million compared to our previous estimates of
payments to these hospitals for FY 2013 published in the FY 2013 IPPS/
LTCH PPS final rule.
2. Effects of the Extension of the MDH Program
The extension of the MDH program in FY 2013 as provided for under
section 606 of the ATRA is a non-budget neutral payment provision.
Hospitals that qualify to be MDHs receive the higher of operating IPPS
payments made under the Federal standardized amount or the payments
made under the Federal standardized amount plus 75 percent of the
difference between the Federal standardized amount and the hospital-
specific rate (a hospital-specific cost-based rate). Because this
provision is not budget neutral, we estimate that the extension of this
payment provision will result in a 0.2 percent increase in payments
overall. Prior to the extension of the MDH program, there were 213
MDHs, of which 98 were estimated to be paid under the blended payment
of the Federal standardized amount and hospital-specific rate in FY
2013. Because those 98 MDHs will now receive the blended payment (that
is, the Federal standardized amount plus 75 percent of the difference
between the Federal standardized amount and the hospital-specific rate)
in FY 2013, we estimate that those hospitals will experience an overall
increase in payments of approximately $183 million compared to our
previous estimates of payments to these hospitals for FY 2013 published
in the FY 2013 IPPS/LTCH PPS final rule.
E. Alternatives Considered
This notice provides descriptions of the statutory provisions that
are addressed and identifies policies for implementing these
provisions. Due to the prescriptive nature of the statutory provisions,
no alternatives were considered.
F. Accounting Statement and Table
As required by OMB Circular A-4 (available at http://www.whitehousegov/omb/circulars/a004/a-4.pdf), in Table I below, we
have prepared an accounting statement showing the classification of
expenditures associated with the provisions of this notice as they
relate to acute care hospitals. This table provides our best estimate
of the change in Medicare payments to providers as a result of the
changes to the IPPS presented in this notice. All expenditures are
classified as transfers from the Federal government to Medicare
providers. As previously discussed, relative to what was projected in
the FY 2013 IPPS/LTCH PPS final rule, the changes in this notice for
implementing sections 605 and 606 of the ATRA are projected to increase
FY 2013 payments to IPPS hospitals by $509 million.
Table I--Accounting Statement: Classification of Estimated Expenditures
Under the IPPS From Published FY 2013 to Revised FY 2013
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers......... $509 million
From Whom to Whom...................... Federal Government to IPPS
Medicare Providers
Total.............................. $509 million
------------------------------------------------------------------------
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: January 30, 2013.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: March 1, 2013.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2013-05263 Filed 3-4-13; 11:15 am]
BILLING CODE 4120-01-P