Federal Register, Volume 80 Issue 150 (Wednesday, August 5, 2015)

[Federal Register Volume 80, Number 150 (Wednesday, August 5, 2015)]
[Rules and Regulations]
[Pages 46652-46728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-18903]

[[Page 46651]]

Vol. 80

Wednesday,

No. 150

August 5, 2015

Part II

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Part 412

Medicare Program; Inpatient Psychiatric Facilities Prospective Payment
System--Update for Fiscal Year Beginning October 1, 2015 (FY 2016);
Final Rule

Federal Register / Vol. 80 , No. 150 / Wednesday, August 5, 2015 /
Rules and Regulations

[[Page 46652]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1627-F]
RIN 0938-AS47

Medicare Program; Inpatient Psychiatric Facilities Prospective
Payment System--Update for Fiscal Year Beginning October 1, 2015 (FY
2016)

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule updates the prospective payment rates for
Medicare inpatient hospital services provided by inpatient psychiatric
facilities (IPFs) (which are freestanding IPFs and psychiatric units of
an acute care hospital or critical access hospital). These changes are
applicable to IPF discharges occurring during fiscal year (FY) 2016
(October 1, 2015 through September 30, 2016). This final rule also
implements: a new 2012-based IPF market basket; an updated IPF labor-
related share; a transition to new Core Based Statistical Area (CBSA)
designations in the FY 2016 IPF Prospective Payment System (PPS) wage
index; a phase-out of the rural adjustment for IPF providers whose
status changes from rural to urban as a result of the wage index CBSA
changes; and new quality measures and reporting requirements under the
IPF quality reporting program. This final rule also reminds IPFs of the
October 1, 2015 implementation of the International Classification of
Diseases, 10th Revision, Clinical Modification (ICD-10-CM), and updates
providers on the status of IPF PPS refinements.

DATES: These regulations are effective October 1, 2015.

FOR FURTHER INFORMATION CONTACT: Katherine Lucas or Jana Lindquist,
(410) 786-7723, for general information. Hudson Osgood, (410) 786-7897
or Bridget Dickensheets, (410) 786-8670, for information regarding the
market basket and labor-related share.
Theresa Bean, (410) 786-2287, for information regarding the
regulatory impact analysis. Rebecca Kliman, (410) 786-9723, or Jeffrey
Buck, (410) 786-0407, for information regarding the inpatient
psychiatric facility quality reporting program.

SUPPLEMENTARY INFORMATION:

Availability of Certain Tables Exclusively Through the Internet on the
CMS Web site

In the past, tables setting forth the Wage Index for Urban Areas
Based on CBSA Labor Market Areas and the Wage Index Based on CBSA Labor
Market Areas for Rural Areas were published in the Federal Register as
an Addendum to the annual PPS rulemaking (that is, the PPS proposed and
final rules or, when applicable, the current update notice). However,
beginning in FY 2015, these wage index tables are no longer published
in the Federal Register. Instead, these tables are available
exclusively through the Internet. The wage index tables for this final
rule are available exclusively through the Internet on the CMS Web site
at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/WageIndex.html.
To assist readers in referencing sections contained in this
document, we are providing the following table of contents.

Table of Contents

I. Executive Summary
A. Purpose
B. Summary of the Major Provisions
C. Summary of Impacts
II. Background
A. Overview of the Legislative Requirements for the IPF PPS
B. Overview of the IPF PPS
C. Annual Requirements for Updating the IPF PPS
III. Provisions of the Final Rule and Responses to Comments
A. Market Basket for the IPF PPS
1. Background
2. Overview of the 2012-Based IPF Market Basket
3. Creating an IPF-Specific Market Basket
a. Development of Cost Categories and Weights
i. Medicare Cost Reports
ii. Final Major Cost Category Computation
iii. Derivation of the Detailed Operating Cost Weights
iv. Derivation of the Detailed Capital Cost Weights
v. 2012-Based IPF Market Basket Cost Categories and Weights
b. Selection of Price Proxies
i. Price Proxies for the Operating Portion of the 2012-Based IPF
Market Basket
ii. Price Proxies for the Capital Portion of the 2012-Based IPF
Market Basket
iii. Summary of Price Proxies of the 2012-Based IPF Market
Basket
4. FY 2016 Market Basket Update
5. Productivity Adjustment
6. Labor-Related Share
B. Updates to the IPF PPS Rates for FY 2016 (Beginning October
1, 2015)
1. Determining the Standardized Budget-Neutral Federal Per Diem
Base Rate
2. FY 2016 Update of the Federal Per Diem Base Rate and
Electroconvulsive
Therapy (ECT) Payment per Treatment
C. Updates to the IPF PPS Patient-Level Adjustment Factors
1. Overview of the IPF PPS Adjustment Factors
2. IPF-PPS Patient-Level Adjustments
a. MS-DRG Assignment
b. Payment for Comorbid Conditions
3. Patient Age Adjustments
4. Variable Per Diem Adjustments
D. Updates to the IPF PPS Facility-Level Adjustments
1. Wage Index Adjustment
a. Background
b. Wage Index for FY 2016
c. OMB Bulletins and Transitional Wage Index
d. Adjustment for Rural Location and The Phase Out the Rural
Adjustment for IPFs Losing Their Rural Adjustment Due to CBSA
Changes
e. Budget Neutrality Adjustment
2. Teaching Adjustment
3. Cost of Living Adjustment for IPFs Located in Alaska and
Hawaii
4. Adjustment for IPFs With a Qualifying Emergency Department
(ED)
E. Other Payment Adjustments and Policies
1. Outlier Payment Overview
2. Update to the Outlier Fixed Dollar Loss Threshold Amount
3. Update to IPF Cost-to-Charge Ratio Ceilings
IV. Other Payment Policy Issues
A. ICD-10-CM and ICD-10-PCS Implementation
B. Status of Future IPF PPS Refinements
V. Inpatient Psychiatric Facilities Quality Reporting (IPFQR)
Program
A. Background
1. Statutory Authority
2. Covered Entities
3. Considerations in Selecting Quality Measures
B. Retention of IPFQR Program Measures Adopted in Previous
Payment Determinations
C. Removal of HBIPS-4 From the IPFQR Program Measure Set for the
FY 2017 Payment Determination and Subsequent Years
D. New Quality Measures for the FY 2018 Payment Determination
and Subsequent Years
1. TOB-3 Tobacco Use Treatment Provided or Offered at Discharge
and the Subset Measure TOB-3a Tobacco Use Treatment at Discharge
(NQF # 1656)
2. SUB-2 Alcohol Use Brief Intervention Provided or Offered and
SUB-2a Alcohol Use Brief Intervention (NQF # 1663)
3. Transition Record With Specified Elements Received by
Discharged Patients (Discharges From an Inpatient Facility to Home/
Self Care or Any Other Site of Care) (NQF #0647) and Removal of
HBIPS-6
4. Timely Transmission of Transition Record (Discharges From an
Inpatient Facility to Home/Self Care or Any Other Site of Care) (NQF
# 0648) and Removal of HBIPS-7
5. Screening for Metabolic Disorders
6. Summary of Measures for the FY 2018 Payment Determination and
Subsequent Years

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E. Possible IPFQR Program Measures and Topics for Future
Consideration
F. Changes to Reporting Requirements
1. Changes to Reporting by Age and Quarter for the FY 2017
Payment Determination and Subsequent Years
2. Changes to Aggregate Population Count Reporting for the FY
2017 Payment Determination and Subsequent Years
3. Changes to Sampling Requirements for FY 2018 Payment
Determination and Subsequent Years
G. Public Display and Review Requirements
H. Form, Manner, and Timing of Quality Data Submission
1. Procedural and Submission Requirements
2. Change to the Reporting Periods and Submission Timeframes
3. Population and Sampling
4. Data Accuracy and Completeness Acknowledgement (DACA)
Requirements
I. Reconsideration and Appeals Procedures
J. Exceptions to Quality Reporting Requirements
VI. Provisions of the Final Regulations
VII. Collection of Information Requirements
A. Wage Estimates
B. ICRs Regarding the Inpatient Psychiatric Quality Reporting
(IPFQR) Program
1. Changes in Time Required To Chart-Abstract Data Based on
Reporting Requirements
2. Estimated Burden of IPFQR Program
C. Summary of Annual Burden Estimates
D. ICRs Regarding the Hospital and Health Care Complex Cost
Report (CMS-2552-10)
E. Submission of PRA-Related Comments
VIII. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Anticipated Effects
1. Budgetary Impact
2. Impact on Providers
3. Results
4. Effects of Updates to the IPFQR Program
5. Effect on Beneficiaries
D. Alternatives Considered
E. Accounting Statement
Regulations Text
Addendum--FY 2016 Rates and Adjustment Factors

Acronyms

Because of the many terms to which we refer by acronym in this
final rule, we are listing the acronyms used and their corresponding
meanings in alphabetical order below:

ADC Average Daily Census
AHA American Hospital Association
AHE Average Hourly Earning
BBRA Medicare, Medicaid and SCHIP [State Children's Health Insurance
Program] Balanced Budget Refinement Act of 1999 (Pub. L. 106-113)
BEA Bureau of Economic Analysis
BLS Bureau of Labor Statistics
CAH Critical Access Hospital
CBSA Core-Based Statistical Area
CCR Cost-to-Charge Ratio
CPI Consumer Price Index
CPI-U Consumer Price Index for all Urban Consumers
DRGs Diagnosis-Related Groups
ECI Employment Cost Index
ESRD End State Renal Disease
FR Federal Register
FTE Full-time equivalent
FY Federal Fiscal Year (October 1 through September 30)
GDP Gross Domestic Product
GME Graduate Medical Education
HHA Home Health Agency
HBIPS Hospital Based Inpatient Psychiatric Services
ICD-9-CM International Classification of Diseases, 9th Revision,
Clinical Modification
ICD-10-CM International Classification of Diseases, 10th Revision,
Clinical Modification
ICD-10-PCS International Classification of Diseases, 10th Revision,
Procedure Coding System
IGI IHS Global Insight, Inc.
I-O Input--Output
IPFs Inpatient Psychiatric Facilities
IPFQR Inpatient Psychiatric Facilities Quality Reporting
IPPS Inpatient Prospective Payment System
IRFs Inpatient Rehabilitation Facilities
LOS Length of Stay
LTCHs Long-Term Care Hospitals
MAC Medicare Administrative Contractor
MedPAR Medicare Provider Analysis and Review File
MFP Multifactor Productivity
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003
MSA Metropolitan Statistical Area
NAICS North American Industry Classification System
NQF National Quality Forum
OES Occupational Employment Statistics
OMB Office of Management and Budget
OPPS Outpatient Prospective Payment System
PLI Professional Liability Insurance
PPI Producer Price Index
PPS Prospective Payment System
RPL Rehabilitation, Psychiatric, and Long-Term Care
RY Rate Year (July 1 through June 30)
SCHIP State Children's Health Insurance Program
SNF Skilled Nursing Facility
SOC Standard Occupational Classification
TEFRA Tax Equity and Fiscal Responsibility Act of 1982 (Pub. L. 97-
248)

I. Executive Summary

A. Purpose

This final rule updates the prospective payment rates for Medicare
inpatient hospital services provided by inpatient psychiatric
facilities (IPFs) for discharges occurring during the FY 2016 (October
1, 2015 through September 30, 2016). For the Inpatient Psychiatric
Facility Quality Reporting (IPFQR) Program, it also changes certain
measures collected under the program and modifies reporting
requirements for certain program measures.

B. Summary of the Major Provisions

In this final rule, we updated the IPF Prospective Payment System
(PPS), as specified in 42 CFR 412.428. The updates include the
following:
Effective for the FY 2016 IPF PPS update, we adopted a
2012-based IPF market basket. However, we revised the proposed 2012-
based IPF market basket based on public comments. Specifically, we
revised the methodology for calculating the Wages and Salaries and the
Employee Benefits cost weights. The final 2012-based IPF market basket
resulted in a labor-related share of 75.2 percent for FY 2016.
We adjusted the 2012-based IPF market basket update
(currently estimated to be 2.4 percent) by a reduction for economy-wide
productivity (currently estimated to be 0.5 percent) as required by
section 1886(s)(2)(A)(i) of the Social Security Act (the Act), and
further reduced by 0.2 percentage point as required by section
1886(s)(2)(A)(ii) of the Act, resulting in an estimated market basket
update of 1.7 percent.
We updated the IPF PPS per diem rate from $728.31 to
$743.73. Providers that failed to report quality data for FY 2016
payment will receive a final FY 2016 per diem rate of $729.10.
We updated the electroconvulsive therapy (ECT) payment per
treatment from $313.55 to $320.19. Providers that failed to report
quality data for FY 2016 payment will receive a FY 2016 ECT payment per
treatment of $313.89.
We adopted new Office of Management and Budget (OMB) Core-
Based Statistical Area (CBSA) delineations for the FY 2016 IPF PPS wage
index and future IPF PPS wage indices. We implemented these CBSA
changes using a 1-year transition with a blended wage index for all
providers, consisting of a blend of fifty percent of the FY 2016 IPF
wage index using the current OMB delineations and fifty percent of the
FY 2016 IPF wage index using the revised OMB delineations.
We phased out the rural adjustment for the 37 rural IPFs
that will be re-designated as urban IPFs due to the OMB CBSA changes.
Specifically, we phased out the 17 percent rural adjustment for these
37 providers over 3 years (two-thirds of the adjustment given in FY
2016, one-third of the adjustment given in FY 2017, and no rural
adjustment thereafter).
We used the updated labor-related share of 75.2 percent
(based on the final 2012-based IPF market basket) and CBSA rural and
urban wage indices for FY 2016, and established a wage index budget-
neutrality adjustment of 1.0041.

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We updated the fixed dollar loss threshold amount from
$8,755 to $9,580 in order to maintain estimated outlier payments at 2
percent of total estimated aggregate IPF PPS payments.
We finalized that the national urban and rural cost-to-
charge ratio (CCR) ceilings for FY 2016 will be 1.7339 and 1.9041,
respectively, and the national median CCR will be 0.4650 for urban IPFs
and 0.6220 for rural IPFs. The national median CCR is applied to new
IPFs that have not yet submitted their first Medicare cost report, to
IPFs for which the CCR calculation data are inaccurate or incomplete,
and to IPFs whose overall CCR exceeds 3 standard deviations above the
national geometric mean.
We note that IPF PPS patient-level and facility-level
adjustments, other than those mentioned above, remain the same as in FY
2015.
In addition:
We remind providers that International Classification of
Diseases, 10th Revision, Clinical Modification/Procedure Coding System
(ICD-10-CM/PCS) will be implemented on October 1, 2015.
As we continue our analysis for future IPF PPS
refinements, we find, from preliminary analysis of 2012 to 2013 data,
that over 20 percent of IPF stays reported no ancillary costs, such as
laboratory and drug costs, in their cost reports, or laboratory or drug
charges on their claims. Because we expect that most patients requiring
hospitalization for active psychiatric treatment will need drugs and
laboratory services, we remind providers that the IPF PPS per diem
payment rate includes the cost of all ancillary services, including
drugs and laboratory services. We pay only the IPF for services
furnished to a Medicare beneficiary who is an inpatient of that IPF,
except for certain professional services, and payments are considered
to be payments in full for all inpatient hospital services provided
directly or under arrangement (see 42 CFR 412.404(d)), as specified in
42 CFR 409.10.
For the IPFQR Program, we are adopting several new measures and
data submission requirements for the IPFQR Program. First, we adopted
five new measures beginning with the FY 2018 payment determination:
TOB-3--Tobacco Use Treatment Provided or Offered at
Discharge and the subset measure TOB-3a Tobacco Use Treatment at
Discharge (National Quality Forum (NQF) #1656);
SUB-2--Alcohol Use Brief Intervention Provided or Offered
and the subset measure SUB-2a Alcohol Use Brief Intervention (NQF
#1663);
Transition Record with Specified Elements Received by
Discharged Patients (Discharges from an Inpatient Facility to Home/Self
Care or Any Other Site of Care) (NQF) #0647);
Timely Transmission of Transition Record (Discharges from
an Inpatient Facility to Home/Self Care or Any Other Site of Care) (NQF
#0648); and
Screening for Metabolic Disorders.
We removed HBIPS-4 Patients Discharged on Multiple Antipsychotic
Medications, beginning with the FY 2017 payment determination. We also
removed the Hospital Based Inpatient Psychiatric Services (HBIPS)-6
Post-Discharge Continuing Care Plan (NQF #0557) and HBIPS-7 Post-
Discharge Continuing Care Plan Transmitted to the Next Level of Care
Provider Upon Discharge (NQF #0558) measures, beginning with the FY
2018 payment determination.
Second, we made several changes regarding how facilities report
data for IPFQR Program measures:
Beginning with the FY 2017 payment determination, we are
requiring that measures be reported as a single yearly count rather
than by quarter and age.
Beginning with the FY 2017 payment determination, we are
requiring that aggregate population counts be reported as a single
yearly number rather than by quarter.
Beginning with the FY 2018 payment determination, we will
allow uniform sampling for certain measures.

C. Summary of Impacts

------------------------------------------------------------------------
Provision description Total transfers
------------------------------------------------------------------------
FY 2016 IPF PPS payment rate update.... The overall economic impact of
this final rule is an
estimated $75 million in
increased payments to IPFs
during FY 2016.
------------------------------------------------------------------------

------------------------------------------------------------------------
Provision description Costs
------------------------------------------------------------------------
New quality reporting program The total costs beginning in FY
requirements. 2016 for IPFs as a result of
the final new quality
reporting requirements are
estimated to be $6.31 million.
------------------------------------------------------------------------

II. Background

A. Overview of the Legislative Requirements for the IPF PPS

Section 124 of the Medicare, Medicaid, and SCHIP (State Children's
Health Insurance Program) Balanced Budget Refinement Act of 1999 (BBRA)
(Pub. L. 106-113) required the establishment and implementation of an
IPF PPS. Specifically, section 124 of the BBRA mandated that the
Secretary of the Department Health and Human Services (the Secretary)
develop a per diem PPS for inpatient hospital services furnished in
psychiatric hospitals and psychiatric units including an adequate
patient classification system that reflects the differences in patient
resource use and costs among psychiatric hospitals and psychiatric
units.
Section 405(g)(2) of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA) (Pub. L. 108-173) extended the IPF
PPS to distinct part psychiatric units of critical access hospitals
(CAHs).
Section 3401(f) of the Patient Protection and Affordable Care Act
(Pub. L. 111-148) as amended by section 10319(e) of that Act and by
section 1105(d) of the Health Care and Education Reconciliation Act of
2010 (Pub. L. 111-152) (hereafter referred to as ``the Affordable Care
Act'') added subsection (s) to section 1886 of the Act.
Section 1886(s)(1) of the Act titled ``Reference to Establishment
and Implementation of System'' refers to section 124 of the BBRA, which
relates to the establishment of the IPF PPS.
Section 1886(s)(2)(A)(i) of the Act requires the application of the
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of
the Act to the IPF PPS for the Rate Year (RY) beginning in 2012 (that
is, a RY that coincides with a FY) and each subsequent RY. For the RY
beginning in 2015 (that is, FY 2016), the current estimate of the
productivity adjustment is equal to 0.5 percent, which we are
implementing in this FY 2016 final rule.
Section 1886(s)(2)(A)(ii) of the Act requires the application of an
``other adjustment'' that reduces any update to an IPF PPS base rate by
percentages

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specified in section 1886(s)(3) of the Act for the RY beginning in 2010
through the RY beginning in 2019. For the RY beginning in 2015 (that
is, FY 2016), section 1886(s)(3)(D) of the Act requires the reduction
to be 0.2 percentage point. We are implementing that reduction in this
FY 2016 IPF PPS final rule.
Section 1886(s)(4) of the Act requires the establishment of a
quality data reporting program for the IPF PPS beginning in RY 2014.
To implement and periodically update these provisions, we have
published various proposed and final rules in the Federal Register. For
more information regarding these rules, see the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/index.html?redirect=/InpatientPsychFacilPPS/.

B. Overview of the IPF PPS

The November 2004 IPF PPS final rule (69 FR 66922) established the
IPF PPS, as required by section 124 of the BBRA and codified at subpart
N of part 412 of the Medicare regulations. The November 2004 IPF PPS
final rule set forth the per diem federal rates for the implementation
year (the 18-month period from January 1, 2005 through June 30, 2006),
and provided payment for the inpatient operating and capital costs to
IPFs for covered psychiatric services they furnish (that is, routine,
ancillary, and capital costs, but not costs of approved educational
activities, bad debts, and other services or items that are outside the
scope of the IPF PPS). Covered psychiatric services include services
for which benefits are provided under the fee-for-service Part A
(Hospital Insurance Program) of the Medicare program.
The IPF PPS established the federal per diem base rate for each
patient day in an IPF derived from the national average daily routine
operating, ancillary, and capital costs in IPFs in FY 2002. The average
per diem cost was updated to the midpoint of the first year under the
IPF PPS, standardized to account for the overall positive effects of
the IPF PPS payment adjustments, and adjusted for budget-neutrality.
The federal per diem payment under the IPF PPS is comprised of the
federal per diem base rate described above and certain patient- and
facility-level payment adjustments that were found in the regression
analysis to be associated with statistically significant per diem cost
differences.
The patient-level adjustments include age, Diagnosis-Related Group
(DRG) assignment, comorbidities, and variable per diem adjustments to
reflect higher per diem costs in the early days of an IPF stay.
Facility-level adjustments include adjustments for the IPF's wage
index, rural location, teaching status, a cost-of-living adjustment for
IPFs located in Alaska and Hawaii, and the presence of a qualifying
emergency department (ED).
The IPF PPS provides additional payment policies for: Outlier
cases; interrupted stays; and a per treatment adjustment for patients
who undergo electroconvulsive therapy (ECT). During the IPF PPS
mandatory 3-year transition period, stop-loss payments were also
provided; however, since the transition ended in 2008, these payments
are no longer available.
A complete discussion of the regression analysis that established
the IPF PPS adjustment factors appears in the November 2004 IPF PPS
final rule (69 FR 66933 through 66936).
Section 124 of the BBRA did not specify an annual rate update
strategy for the IPF PPS and was broadly written to give the Secretary
discretion in establishing an update methodology. Therefore, in the
November 2004 IPF PPS final rule, we implemented the IPF PPS using the
following update strategy:
Calculate the final federal per diem base rate to be
budget-neutral for the 18-month period of January 1, 2005 through June
30, 2006.
Use a July 1 through June 30 annual update cycle.
Allow the IPF PPS first update to be effective for
discharges on or after July 1, 2006 through June 30, 2007.
In RY 2012, we proposed and finalized switching the IPF PPS payment
rate update from a rate year that begins on July 1 and ends on June 30
to one that coincides with the federal fiscal year that begins October
1 and ends on September 30. In order to transition from one timeframe
to another, the RY 2012 IPF PPS covered a 15-month period from July 1,
2011 through September 30, 2012. Therefore, the update cycle for FY
2016 will be October 1, 2015 through September 30, 2016. For further
discussion of the 15-month market basket update for RY 2012 and
changing the payment rate update period to coincide with a FY period,
we refer readers to the RY 2012 IPF PPS proposed rule (76 FR 4998) and
the RY 2012 IPF PPS final rule (76 FR 26432).

C. Annual Requirements for Updating the IPF PPS

In November 2004, we implemented the IPF PPS in a final rule that
appeared in the November 15, 2004 Federal Register (69 FR 66922). In
developing the IPF PPS, to ensure that the IPF PPS is able to account
adequately for each IPF's case-mix, we performed an extensive
regression analysis of the relationship between the per diem costs and
certain patient and facility characteristics to determine those
characteristics associated with statistically significant cost
differences on a per diem basis. For characteristics with statistically
significant cost differences, we used the regression coefficients of
those variables to determine the size of the corresponding payment
adjustments.
In that final rule, we explained that we believe it is important to
delay updating the adjustment factors derived from the regression
analysis until we have IPF PPS data that include as much information as
possible regarding the patient-level characteristics of the population
that each IPF serves. Therefore, we indicated that we did not intend to
update the regression analysis and the patient- and facility-level
adjustments until we complete that analysis. Until that analysis is
complete, we stated our intention to publish a notice in the Federal
Register each spring to update the IPF PPS (71 FR 27041). We have begun
the necessary analysis to make refinements to the IPF PPS using more
current data to set the adjustment factors; however, we did not make
any refinements in this final rule. Rather, as explained in section
V.B. of this final rule, we expect that in future rulemaking we will be
ready to propose potential refinements.
In the May 6, 2011 IPF PPS final rule (76 FR 26432), we changed the
payment rate update period to a RY that coincides with a FY update.
Therefore, update notices are now published in the Federal Register in
the summer to be effective on October 1. When proposing changes in IPF
payment policy, a proposed rule would be issued in the spring and the
final rule in the summer in order to be effective on October 1. For
further discussion on changing the IPF PPS payment rate update period
to a RY that coincides with a FY, see the IPF PPS final rule published
in the Federal Register on May 6, 2011 (76 FR 26434 through 26435). For
a detailed list of updates to the IPF PPS, see 42 CFR 412.428.
Our most recent IPF PPS annual update occurred in an August 6,
2014, Federal Register final rule (79 FR 45938) (hereinafter referred
to as the August 2014 IPF PPS final rule) updated the IPF PPS payment
rates for FY 2015. That rule updated the IPF PPS per diem payment rates
that were published in the August 2013 IPF PPS notice (78 FR

[[Page 46656]]

46734) in accordance with our established policies.

III. Provisions of the Final Rule and Responses to Comments

On May 1, 2015 we published a proposed rule in the Federal Register
(80 FR 25012) entitled Medicare Program; Inpatient Psychiatric
Facilities Prospective Payment System--Update for Fiscal Year Beginning
October 1, 2015 (FY 2016). The May 1, 2015 proposed rule (herein
referred to as the FY 2016 IPF PPS proposed rule) proposed updates to
the prospective payment rates for Medicare inpatient hospital services
provided by inpatient psychiatric facilities. In addition to the
updates, we proposed to: Adopt a 2012-based IPF market basket and
update the labor-related share; adopt new OMB CBSA delineations for the
FY 2016 IPF Wage Index; and phase out the rural adjustment for 37 rural
providers that would become urban providers as a result of the new CBSA
delineations. Additionally, the proposed rule reminded providers of the
October 1, 2015 implementation of the International Classification of
Diseases, 10th Revision, Clinical Modification (ICD-10-CM/PCS) for the
IPF PPS, updated providers on the status of IPF PPS refinements, and
proposed new quality reporting requirements for the IPFQR Program.
We received a total of 76 comments on these proposals from 51
providers, 12 industry groups or associations, 6 industry consultants,
4 advocacy groups, 1 independent congressional agency, and 2 anonymous
sources. Of the 76 comments, 12 focused on payment policies, and 73
focused on the quality reporting proposals. A summary of the proposals,
the comments, and our responses follows.

A. Market Basket for the IPF PPS

1. Background
The input price index that was used to develop the IPF PPS was the
Excluded Hospital with Capital market basket. This market basket was
based on 1997 Medicare cost reports for Medicare participating
inpatient rehabilitation facilities (IRFs), IPFs, long-term care
hospitals (LTCHs), cancer hospitals, and children's hospitals. Although
``market basket'' technically describes the mix of goods and services
used in providing health care at a given point in time, this term is
also commonly used to denote the input price index (that is, cost
category weights and price proxies) derived from that market basket.
Accordingly, the term ``market basket,'' as used in this document,
refers to an input price index.
Beginning with the May 2006 IPF PPS final rule (71 FR 27046 through
27054), IPF PPS payments were updated using a 2002-based
rehabilitation, psychiatric, and long-term care (RPL) market basket
reflecting the operating and capital cost structures for freestanding
IRFs, freestanding IPFs, and LTCHs. Cancer and children's hospitals
were excluded from the RPL market basket because their payments are
based entirely on reasonable costs subject to rate-of-increase limits
established under the authority of section 1886(b) of the Act and not
through a PPS. Also, the 2002 cost structures for cancer and children's
hospitals are noticeably different than the cost structures of
freestanding IRFs, freestanding IPFs, and LTCHs. See the May 2006 IPF
PPS final rule (71 FR 27046 through 27054) for a complete discussion of
the 2002-based RPL market basket.
In the May 1, 2009 IPF PPS notice (74 FR 20376), we expressed our
interest in exploring the possibility of creating a stand-alone IPF
market basket that reflects the cost structures of only IPF providers.
One available option was to combine the Medicare cost report data from
freestanding IPF providers with Medicare cost report data from
hospital-based IPF providers. We indicated that an examination of the
Medicare cost report data comparing freestanding IPFs and hospital-
based IPFs showed differences between cost levels and cost structures.
At that time, we were unable to fully understand these differences even
after reviewing explanatory variables such as geographic variation,
case mix (including DRG, comorbidity, and age), urban or rural status,
teaching status, and presence of a qualifying emergency department. As
a result, we continued to research ways to reconcile the differences
and solicited public comment for additional information that might help
us to better understand the reasons for the variations in costs and
cost structures, as indicated by the Medicare cost report data (74 FR
20376). We summarized the public comments we received and our responses
in the April 2010 IPF PPS notice (75 FR 23111 through 23113). Despite
receiving comments from the public on this issue, we were still unable
to sufficiently reconcile the observed differences in costs and cost
structures between hospital-based and freestanding IPFs, and,
therefore, we did not believe it to be appropriate at that time to
incorporate data from hospital-based IPFs with those of freestanding
IPFs to create a stand-alone IPF market basket.
Beginning with the RY 2012 IPF PPS final rule (76 FR 26432), IPF
PPS payments were updated using a 2008-based RPL market basket
reflecting the operating and capital cost structures for freestanding
IRFs, freestanding IPFs, and LTCHs. The major changes for RY 2012
included: Updating the base year from FY 2002 to FY 2008; using a more
specific composite chemical price proxy; breaking the professional fees
cost category into two separate categories (Labor-related and Nonlabor-
related); and adding two additional cost categories (Administrative and
Facilities Support Services and Financial Services), which were
previously included in the residual All Other Services cost categories.
The RY 2012 IPF PPS proposed rule (76 FR 4998) and RY 2012 final rule
(76 FR 26432) contain a complete discussion of the development of the
2008-based RPL market basket.
In the FY 2016 IPF PPS proposed rule, we proposed to create a 2012-
based IPF market basket, using Medicare cost report data for both
freestanding and hospital-based IPFs.
We received several general comments on the creation of an IPF
market basket.
Comment: One commenter supported CMS' use of an IPF-specific market
basket, but recommended that CMS develop separate update percentages
for freestanding units and hospital-based units. They stated patients
treated in hospital-based units have more complex medical conditions
and require more resources compared to freestanding facilities. They
believe combining these two facilities for the purpose of establishing
one market basket rate update could result in underpayments for
Medicare patients treated in hospital-based facilities.
Response: We appreciate the commenter's support of an IPF-specific
market basket. However, we respectfully disagree with their
recommendation to develop two specific market basket update percentages
for hospital-based and freestanding units. The regression analysis from
which the IPF PPS base rate payment (and related adjustments) was
derived reflects data from both freestanding and hospital-based
providers. As a result, we believe it is appropriate to update those
rates with a market basket based on data from both types of providers.
Moreover, we do not believe we have a large enough sample size to
create a freestanding-specific IPF market basket. Finally, the IPF PPS
already provides patient-level adjustments, including certain principal
diagnoses and comorbidities that reflect the higher costs and resources

[[Page 46657]]

associated with more medically complex patients.
Comment: One commenter stated their appreciation of the discussion
in the proposed rule regarding the progress that CMS has made in the
development of an IPF-specific market basket. They support CMS' efforts
to ensure that the IPF payment system is updated to reflect current
costs and resource use.
Response: We appreciate the commenter's support for the proposed
2012-based IPF market basket.
Comment: One commenter did not support the adoption of the stand-
alone IPF market basket. They stated they still have major reservations
about its accuracy. They urged CMS to publicly release the detailed
data files that support the proposed IPF-specific market basket and to
distinguish cost factors in order to ``evaluate the materiality of the
consolidation effect on the market basket'' and to allow time for the
industry to gain a clearer understanding of the proposal, and the
consolidation of the IPF provider types in order to enable commenters'
informed response to the proposal.
Response: We appreciate the commenter's concern for the adoption of
the 2012-based IPF market basket. However, we disagree with delaying
the IPF-specific market basket. We believe we provided a clear
description of the proposal and a sufficiently detailed data file to
enable informed comment.
All of the data used to develop the proposed IPF-market basket are
publically available. The Medicare cost reports used to develop the
major cost weights are publically available on the CMS Web site (http://www.cms.gov/Research-Statistics-Data-and-Systems/Downloadable-Public-Use-Files/Cost-Reports/Cost-Reports-by-Fiscal-Year.html under facility
type ``Hospital-2010''). The Bureau of Labor Statistics (BLS)
Occupational Employment Statistics (http://www.bls.gov/oes/#data) and
BLS price indices (http://www.bls.gov/cpi/#data, http://www.bls.gov/ppi/#data, and http://www.bls.gov/ncs/ect/#data) are publically
available. The last data source used was the Bureau of Economic
Analysis 2007 Benchmark Input-Output (I-O) data which is also
publically available (http://www.bea.gov/industry/io_annual.htm under
`` `Use Tables/Before Redefinitions/Purchaser Value' for North American
Industry Classification System (NAICS) 622000 Hospitals'').
In addition, we also provided in the proposed rule a detailed
description of the methodologies (including items such as Medicare Cost
Report line items or BLS series codes) used to produce the proposed
2012-based IPF market basket using the aforementioned data. We believe
these methodology descriptions allowed for informed public comments and
evaluation of the materiality of the ``consolidation effect'' (which we
interpret to be the inclusion of freestanding and hospital-based IPF
Medicare cost report data). We did receive several comments on our
detailed methodology, which we used to further evaluate our
methodology. In fact, in this final rule, we are adopting changes to
the Wages and Salaries and Employee Benefits costs methodologies based
on these detailed public comments. A more thorough description of the
methodological changes is provided below.
After consideration of the public comments, we are finalizing the
creation and adoption of a 2012-based IPF market basket with a
modification to the Wages and Salaries and Employee Benefits cost
methodologies based on public comments. We believe that the use of the
2012-based IPF market basket to update IPF PPS payments is a technical
improvement as it is based on Medicare Cost Report data from both
freestanding and hospital-based IPFs. Furthermore, the 2012-based IPF
market basket does not include costs from either IRF or LTCH providers,
which are included in the current 2008-based RPL market basket.
In the following discussion, we provide an overview of the market
basket and describe the methodologies used to determine the operating
and capital portions of the 2012-based IPF market basket. For each
proposed methodology, we indicate whether we received any public
comments. We include responses for each comment. We then provide the
methodology we are finalizing for the 2012-based IPF market basket.
2. Overview of the 2012-Based IPF Market Basket
The 2012-based IPF market basket is a fixed-weight, Laspeyres-type
price index. A Laspeyres price index measures the change in price, over
time, of the same mix of goods and services purchased in the base
period. Any changes in the quantity or mix of goods and services (that
is, intensity) purchased over time relative to a base period are not
measured.
The index itself is constructed in 3 steps. First, a base period is
selected (in this final rule, the base period is FY 2012) and total
base period expenditures are estimated for a set of mutually exclusive
and exhaustive spending categories with the proportion of total costs
that each category represents being calculated. These proportions are
called cost or expenditure weights. Second, each expenditure category
is matched to an appropriate price or wage variable, referred to as a
price proxy. In nearly every instance, these price proxies are derived
from publicly available statistical series that are published on a
consistent schedule (preferably at least on a quarterly basis).
Finally, the expenditure weight for each cost category is multiplied by
the level of its respective price proxy. The sum of these products
(that is, the expenditure weights multiplied by their price levels) for
all cost categories yields the composite index level of the market
basket in a given period. Repeating this step for other periods
produces a series of market basket levels over time. Dividing an index
level for a given period by an index level for an earlier period
produces a rate of growth in the input price index over that timeframe.
As noted above, the market basket is described as a fixed-weight
index because it represents the change in price over time of a constant
mix (quantity and intensity) of goods and services needed to furnish
IPF services. The effects on total expenditures resulting from changes
in the mix of goods and services purchased subsequent to the base
period are not measured. For example, an IPF hiring more nurses to
accommodate the needs of patients will increase the volume of goods and
services purchased by the IPF, but would not be factored into the price
change measured by a fixed-weight IPF market basket. Only when the
index is rebased will changes in the quantity and intensity be
captured, with those changes being reflected in the cost weights.
Therefore, we rebase the market basket periodically so that the cost
weights reflect recent changes in the mix of goods and services that
IPFs purchase (facility inputs) to furnish inpatient care between base
periods.
3. Creating an IPF-Specific Market Basket
As discussed in section III.A.1. of this final rule, over the last
several years we have been exploring the possibility of creating a
stand-alone, or IPF-specific, market basket that reflects the cost
structures of only IPF providers. The major cost weights for the 2008-
based RPL market basket were calculated using Medicare cost report data
for freestanding facilities only. We used freestanding facilities due
to concerns regarding our ability to incorporate Medicare cost report
data for hospital-based providers. In the FY 2015 IPF PPS final rule
(79 FR 45941), we presented

[[Page 46658]]

several of these concerns (as stated below) but explained that we would
continue to research the possibility of creating an IPF-specific market
basket to update IPF PPS payments.
Since the FY 2015 IPF PPS final rule, we have performed additional
research on the Medicare cost report data available for hospital-based
IPFs and evaluated these concerns. We subsequently concluded from this
research that Medicare cost report data for both hospital-based IPFs
and freestanding IPFs can be used to calculate the major market basket
cost weights for a stand-alone IPF market basket. We developed a
detailed methodology to derive market basket cost weights that are
representative of the universe of IPF providers. We believe the use of
this final IPF market basket is a technical improvement over the RPL
market basket that is currently used to update IPF PPS payments. As a
result, in this FY 2016 IPF PPS final rule, we are finalizing a 2012-
based IPF market basket that reflects data for both freestanding and
hospital-based IPFs. Below we discuss our prior concerns and provide
reasons for why we now feel it is appropriate to create a stand-alone
IPF market basket using Medicare cost report data for both hospital-
based and freestanding IPFs.
One concern we discussed in the FY 2015 IPF PPS final rule (79 FR
45941) about using the hospital-based IPF Medicare cost report data was
the cost level differences for hospital-based IPFs relative to
freestanding IPFs were not readily explained by the specific
characteristics of the individual providers and the patients that they
serve (for example, characteristics related to case mix, urban/rural
status, teaching status, or presence of a qualified emergency
department). To address this concern, we used regression analysis to
evaluate the effect of including hospital-based IPF Medicare cost
report data in the calculation of cost distributions. A more detailed
description of these regression models can be found in the FY 2015 IPF
final rule (79 FR 45941). Based on this analysis, we concluded that the
inclusion of those IPF providers with unexplained variability in costs
did not significantly impact the cost weights and, therefore, should
not be a major cause of concern.
Another concern regarding the incorporation of hospital-based IPF
data into the calculation of the market basket cost weights was the
complexity of the Medicare cost report data for these providers. The
freestanding IPFs independently submit a Medicare cost report for their
facilities, making it relatively straightforward to obtain the cost
categories necessary to determine the major market basket cost weights.
However, Medicare cost report data submitted for a hospital-based IPF
are embedded in the Medicare cost report submitted for the entire
hospital facility in which the IPF is located. In order to use Medicare
cost report data from these providers, we needed to determine the
appropriate adjustments to apply to the data to ensure that the cost
weights we obtained would represent only the hospital-based IPF (not
the hospital as a whole). Over the past year, we worked to develop
detailed methodologies to calculate the major cost weights for both
freestanding and hospital-based IPFs. We also evaluated the differences
in cost weights for hospital-based and freestanding IPFs and found the
most significant differences occurred for wages and salaries and
pharmaceutical costs. Specifically, the hospital-based IPF wages and
salaries cost weights tend to be lower than those of freestanding IPFs
while hospital-based IPF pharmaceutical cost weights tend to be higher
than those of freestanding IPFs. Our methodology for deriving costs for
each of these categories can be found in section III.A.3.a.i. of this
final rule. We will continue to monitor these cost shares during our
on-going research to ensure that the differences are explainable.
In summary, our research over the past year allowed us to evaluate
the appropriateness of including hospital-based IPF data in the
calculation of the major cost weights for an IPF market basket. In the
proposed rule, we proposed methodologies to create a stand-alone IPF
market basket that reflects the cost structure of the universe of IPF
providers. We described our methodologies and the resulting cost
weights in section III.A.3.a.i. of the FY 2016 IPF proposed rule (80 FR
25017) and solicited public comments on these proposals. In the
sections below, we summarize and respond to comments we received on
these proposed methodologies.
a. Development of Cost Categories and Weights
i. Medicare Cost Reports
We proposed a 2012-based IPF market basket that consisted of seven
major cost categories derived from the FY 2012 Medicare cost reports
(CMS Form 2552-10) for freestanding and hospital-based IPFs. These
categories were Wages and Salaries, Employee Benefits, Contract Labor,
Pharmaceuticals, Professional Liability Insurance (PLI), Capital, and a
residual. The residual reflects all remaining costs that are not
captured in the other six cost categories. The FY 2012 cost reports
include providers whose cost report begin date is on or between October
1, 2011, and September 30, 2012. We choose to use FY 2012 as the base
year because we believe that the Medicare cost reports for this year
represent the most recent, complete set of Medicare cost report data
available for IPFs at the time of rulemaking.
Prior Medicare cost report data used to develop the RPL market
basket showed large differences between some providers' Medicare length
of stay (LOS) and total facility LOS. Since our goal is to measure cost
weights that are reflective of case mix and practice patterns
associated with providing services to Medicare beneficiaries, we
proposed to limit our selection of Medicare cost reports used in the
2012-based IPF market basket to those facilities that had a Medicare
LOS that was within a comparable range of their total facility average
LOS. For freestanding IPFs, we proposed to use the Medicare days and
discharges from line 14, columns 6 and 13, Worksheet S-3, Part I to
determine the Medicare LOS and the total facility days and discharges
from line 14, columns 8 and 15, to determine the facility LOS
(consistent with the RPL market basket method). For hospital-based
IPFs, we proposed to use the Medicare days and discharges from line 16,
columns 6 and 13, of Worksheet S-3, Part I to determine the Medicare
LOS and the total facility days and discharges from line 16, columns 8
and 15, to determine the facility LOS. To derive the 2012-based IPF
market basket, for those IPFs with an average facility LOS of greater
than or equal to 15 days, we proposed to include IPFs where the
Medicare LOS is within 50 percent (higher or lower) of the average
facility LOS. For those IPFs whose average facility LOS is less than 15
days, we proposed to include IPFs where the Medicare LOS is within 95
percent (higher or lower) of the facility LOS.
Applying these trims resulted in IPF Medicare cost reports with an
average Medicare LOS of 12 days, average facility LOS of 10 days, and
Medicare utilization (as measured by Medicare inpatient IPF days as a
percentage of total facility days) of 30 percent. Those providers that
were excluded from the 2012-based IPF market basket have an average
Medicare LOS of 22 days, average facility LOS of 49 days, and a
Medicare utilization of 5 percent. Of those Medicare cost reports
excluded from the proposed 2012-based IPF market basket, about 70
percent were

[[Page 46659]]

freestanding providers whereas freestanding providers represent about
30 percent of all IPFs.
We did not receive any specific comments on our proposed LOS edit
methodology.
Final Decision: We are finalizing the LOS edit methodology as
proposed.
We applied this LOS trim to first obtain a set of cost reports for
facilities that have a Medicare LOS within a comparable range of their
total facility LOS. Using the resulting set of FY 2012 Medicare cost
reports for freestanding IPFs and hospital-based IPFs, we calculated
costs for the six major cost categories (Wages and Salaries, Employee
Benefits, Contract Labor, Professional Liability Insurance,
Pharmaceuticals, and Capital).
Similar to the 2008-based RPL market basket major cost weights, the
2012-based IPF market basket cost weights reflect Medicare allowable
costs (routine, ancillary and capital costs) that are eligible for
inclusion under the IPF PPS payments. We proposed to define Medicare
allowable costs for freestanding facilities as cost centers (CMS Form
2552-10): 30 through 35, 50 through 76 (excluding 52 and 75), 90
through 91, and 93. We proposed to define Medicare allowable costs for
hospital-based facilities as cost centers (CMS Form 2552-10): 40, 50
through 76 (excluding 52 and 75), 90 through 91, and 93. For
freestanding IPFs, we proposed that total Medicare allowable costs
would be equal to the total costs as reported on Worksheet B, part I,
column 26. For hospital-based IPFs, we proposed that total Medicare
allowable costs would be equal to total costs for the IPF inpatient
unit after the allocation of overhead costs (Worksheet B, part I,
column 26, line 40) and a portion of total ancillary costs. We also
proposed to calculate the portion of ancillary costs attributable to
the hospital-based IPF for a given ancillary cost center by multiplying
total facility ancillary costs for the specific cost center (as
reported on Worksheet B, Part I, column 26) by the ratio of IPF
Medicare ancillary costs for the cost center (as reported on Worksheet
D-3, column 3 for IPF subproviders) to total Medicare ancillary costs
for the cost center (equal to the sum of Worksheet D-3, column 3 for
all relevant PPS (that is, Inpatient Prospective Payment System (IPPS),
IRF, IPF and Skilled Nursing Facility (SNF))).
We did not receive any specific comments on our methodology for
calculating total costs.
Final Decision: We are finalizing our methodology for calculating
total costs as proposed.
Below we provide a description of the methodologies used to derive
costs for the six major cost categories.
Wages and Salaries Costs
For freestanding IPFs, we proposed to derive Wages and Salaries
costs as the sum of routine inpatient salaries, ancillary salaries, and
a proportion of overhead (or general service cost center) salaries as
reported on Worksheet A, column 1. Since overhead salary costs are
attributable to the entire IPF, we proposed to only include the
proportion attributable to the Medicare allowable cost centers. We
estimated the proportion of overhead salaries that are attributed to
Medicare allowable costs centers by multiplying the ratio of Medicare
allowable salaries to total salaries (Worksheet A, column 1, line 200)
times total overhead salaries. A similar methodology was used to derive
Wages and Salaries costs in the 2008-based RPL market basket.
For hospital-based IPFs, we proposed to derive Wages and Salaries
costs as the sum of routine inpatient wages and salaries (Worksheet A,
column 1, line 40) and a portion of salary costs attributable to total
facility ancillary and overhead cost centers as these cost centers are
shared with the entire facility. We proposed to calculate the portion
of ancillary salaries attributable to the hospital-based IPF for a
given ancillary cost center by multiplying total facility ancillary
salary costs for the specific cost center (as reported on Worksheet A,
column 1) by the ratio of IPF Medicare ancillary costs for the cost
center (as reported on Worksheet D-3, column 3 for IPF subproviders) to
total Medicare ancillary costs for the cost center (equal to the sum of
Worksheet D-3, column 3 for all relevant PPS units (that is, IPPS, IRF,
IPF and SNF)). For example, if hospital-based IPF Medicare laboratory
costs represent 10 percent of the total Medicare laboratory costs for
the entire facility, then 10 percent of total facility laboratory
salaries (as reported in Worksheet A, column 1, line 60) would be
attributable to the hospital-based IPF. We believe it is appropriate to
use only a portion of the ancillary costs in the market basket cost
weight calculations since the hospital-based IPF only utilizes a
portion of the facility's ancillary services. We believe the ratio of
reported IPF Medicare costs to reported total Medicare costs provides a
reasonable estimate of the ancillary services utilized, and costs
incurred, by the hospital-based IPF.
We proposed to calculate the portion of overhead salary costs
attributable to hospital-based IPFs by multiplying the total overhead
costs attributable to the hospital-based IPF (sum of columns 4
through18 on Worksheet B, part I, line 40) by the ratio of total
facility overhead salaries (as reported on Worksheet A, column 1, lines
4 through 18) to total facility overhead costs (as reported on
Worksheet A, column 7, lines 4 through 18). This methodology assumes
the proportion of total costs related to salaries for the overhead cost
center is similar for all inpatient units (that is, acute inpatient or
inpatient psychiatric). Since the 2008-based RPL market basket did not
include hospital-based providers, this proposed methodology cannot be
compared to the derivation of Wages and Salaries costs in the 2008-
based RPL market basket.
We received several comments on our methodology for deriving Wages
and Salaries costs. These comments led to changes to our proposed
methodology. We discuss these changes below.
Comment: Several commenters questioned the methodology we used to
calculate the Wages and Salaries cost weight stating there was a risk
of overstating the labor-related share. They encouraged CMS to utilize
a more accurate calculation for the ancillary cost centers in order to
mitigate the risk of overstating labor-related share costs.
One commenter stated that our methodology for deriving hospital-
based IPF ancillary salary costs for a specific cost center using
salary costs from Worksheet A, column 1 multiplied by the ratio of IPF
Medicare ancillary costs for the cost center (as reported on Worksheet
D-3, column 3 for IPF subproviders) to total Medicare ancillary costs
for the cost center (equal to the sum of Worksheet D-3, column 3 for
all relevant PPS units (that is, IPPS, IRF, IPF and SNF)) results in an
overstatement of ancillary salary costs. Specifically, the commenter
stated that the most accurate calculation would be to divide costs on
Worksheet D-3, column 3 for the IPF subprovider by total costs on
Worksheet C, column 5 for the hospital, and to apply this percentage to
salary costs from Worksheet A, column 1. The commenter requested that
we clarify how this ancillary salary calculation is used in determining
the 74.9 percent labor-related share of the payment, and correct it as
needed.
Response: The proposed labor-related share of 74.9 percent is equal
to the sum of the relative importance of moving averages of the Wages
and Salaries, Employee Benefits, Contract Labor, Labor-Related Services
cost categories, and a portion of the relative importance moving
average of the Capital-Related cost category. For a detailed
description of how these cost categories were

[[Page 46660]]

derived, please see the IPF proposed rule (80 FR 25017).
Based on the commenter's request, we reviewed our proposed
methodology for calculating Wages and Salaries costs for hospital-based
IPFs (including the ancillary wages and salaries costs mentioned by the
commenter). As stated in the proposed rule, the Wages and Salaries
costs for hospital-based IPFs are derived by summing routine inpatient
salary costs for the hospital-based IPF (from Worksheet A, column 1,
line 40), ancillary salaries, and overhead salaries. The methodology
for calculating ancillary salaries (as the commenter noted) is
calculated as ancillary salary costs for a specific cost center using
salary costs from Worksheet A, column 1 multiplied by the ratio of IPF
Medicare ancillary costs for the cost center (as reported on Worksheet
D-3, column 3 for IPF subproviders) to total Medicare ancillary costs
for the cost center (equal to the sum of Worksheet D-3, column 3 for
all relevant PPS units (that is, IPPS, IRF, IPF and SNF)).
We respectfully disagree with the commenter's suggestion to use
total costs on Worksheet C, column 5 as the denominator in the ratio
above. We note that Worksheet D-3 represents Medicare IPF costs for
ancillary services while Worksheet C, column 5 represents total
ancillary costs for all payers. Our methodology for deriving all cost
weights (for both freestanding and hospital-based providers) is based
on Medicare-allowable costs (that is total costs for all patients for
those cost centers that are Medicare-allowable under the IPF PPS). For
example, the Contract Labor cost weight is based on contract labor
costs reported on Worksheet S3, part V, for all hospital-based IPF
patients; it is not specific to Medicare patients as that data is not
reported on the Medicare cost report. The commenter's suggestion to use
Worksheet C, column 5, would be inappropriate as the numerator would be
based on Medicare patients (Worksheet D-3) and the denominator would be
for all patients (Worksheet C), which would understate the proportion
of ancillary salary costs that are attributable to all hospital-based
IPF patients. Since the ancillary salary cost weight, in aggregate, is
lower than the hospital-based IPF routine inpatient salary cost weight,
this would lead to a higher Wages and Salaries cost weight relative to
the proposed rule, and it would be calculated inconsistently with the
other market basket cost weights (such as the Contract Labor cost
weight). We believe using Medicare costs (Worksheet D-3) to determine
the proportion of ancillary wages and salaries (and also total
ancillary costs) that are attributable to the hospital-based IPF is a
reasonable approach.
Comment: Several commenters stated that they had not conducted
their own analysis of the CMS proposed 2012-based IPF market basket,
but they were aware of an analysis of the proposed IRF market basket.
That analysis, prepared by Dobson DaVanzo,\1\ was submitted to CMS as
part of the FY 2016 IRF PPS rulemaking record. These commenters
encouraged CMS to review Dobson DaVanzo findings to determine if CMS
needs to take corrective measures before finalizing the IPF-specific
market basket, as the same methodologies in the IRF market basket
methodology could exist in the IPF methodology.
---------------------------------------------------------------------------

\1\ ``Analysis of CMS Proposed Inpatient Rehabilitation Facility
Specific Market Basket'', submitted to HealthSouth Corporation by
Dobson DaVanzo, May 22, 2015. The public reference for this comment
letter is: CMS-2015-0053-0004, and can be retrieved from the
following link: http://www.regulations.gov/#!documentDetail;D=CMS-
2015-0053-0004.
---------------------------------------------------------------------------

Response: We appreciate the commenters' request to review the
consultants' report on the methodology used to develop the IRF-specific
market basket. As the commenter stated, the methodology used to develop
the IPF major cost weights using the Medicare cost report data for the
2012-based IPF market basket is similar to the methodology used in the
proposed 2012-based IRF market basket. The only difference is the use
of IPF-specific Medicare cost report data to calculate the major cost
weights.
Based on these comments, we reviewed the Dobson DaVanzo IRF report
submitted by commenters on the IRF proposed rule. This report stated on
page four that our proposed methodology for calculating hospital-based
IRF wages and salaries was flawed as it disregards overhead wages and
salaries associated with the ancillary departments. Our proposed
methodology for the 2012-based IRF market basket was identical to our
proposed methodology for the 2012-based IPF market basket. Our proposed
methodology for the 2012-based IPF market basket included overhead
wages and salaries attributable to the hospital-based IPF routine
inpatient unit only. Therefore, we are revising our methodology for
calculating the Wages and Salaries costs for hospital-based IPFs to
account for the omission of the overhead wages and salaries
attributable to the ancillary departments.
For this final rule, we calculated the overhead salaries
attributable to each ancillary department by first calculating total
noncapital overhead costs attributable to the specific ancillary
department (Worksheet B, part I, columns 4-18 less Worksheet B, part
II, columns 4-18). We then identified the portion of the total
noncapital overhead costs for each ancillary cost center that is
attributable to the hospital-based IPF by multiplying by the ratio of
IPF Medicare ancillary costs for the cost center (as reported on
Worksheet D-3, column 3 for hospital-based IPFs) to total Medicare
ancillary costs for the cost center (equal to the sum of Worksheet D-3,
column 3 for all relevant PPS units (that is, IPPS, IRF, IPF and SNF)).
Finally, we identified the portion of these noncapital overhead costs
attributable to Wages and Salaries by multiplying these costs by an
``overhead ratio'', which is defined as the ratio of total facility
overhead salaries (as reported on Worksheet A, column 1, lines 4-18) to
total noncapital overhead costs (as reported on Worksheet A, column 1 &
2, lines 4-18) for all ancillary departments. This methodology is
almost identical to the methodology suggested in the Dobson DaVanzo
report with slight modifications, which are further discussed below.
Therefore, based on public comment, we are finalizing our
methodology for calculating Wages and Salaries costs for hospital-based
IPFs as the sum of routine inpatient salary costs for the hospital-
based IPF (from Worksheet A, column 1, line 40), ancillary salaries,
and overhead salaries attributable to the routine inpatient unit for
the hospital-based IPF and ancillary departments.
During our review of the methodology to derive Wages and Salaries
costs and the inclusion of overhead wages and salaries attributable to
the ancillary department, we also found that the overhead ratios (used
in the calculation of overhead wages and salaries attributable to the
routine inpatient unit for the hospital-based IPF) (Worksheet A, column
1 divided by Worksheet A, column 7) by cost center showed that many
providers reported data for these columns that resulted in a ratio that
exceeded 100 percent. One possible explanation for the overhead ratio
exceeding 100 percent is that Worksheet A, column 7 reflects
reclassifications and adjustments while column 1 does not. However,
when we calculated an alternative overhead ratio by defining overhead
salaries using Worksheet S-3, part II column 4, which reflects
reclassifications, and total facility noncapital overhead costs using
Worksheet A, column 7, we also found that many providers still had
overhead ratios that exceeded 100 percent. An overhead ratio exceeding
100 percent

[[Page 46661]]

would suggest that wages and salaries costs are greater than total
costs, which shows that the data we originally proposed to use results
in an indisputable error to the allocation of overhead costs to wages
and salaries. When we instead used an overhead ratio equal to the ratio
of total facility overhead salaries (as reported on Worksheet A, column
1, lines 4-18) to total facility noncapital overhead costs (as reported
on Worksheet A, column 1 and 2, lines 4-18), the impacts of any
potential misreporting is minimized.
Therefore, based on the comment, and in order to address the error,
we are revising the overhead ratio used to determine the proportion of
overhead salaries attributable to the hospital-based IPF routine
inpatient department. The revised overhead ratio is equal to the ratio
of total facility overhead salaries (as reported on Worksheet A, column
1, lines 4-18) to total facility noncapital overhead costs (as reported
on Worksheet A, column 1 and 2, lines 4-18). This is now consistent
with the overhead ratio we are using to determine overhead wages and
salaries attributable to ancillary departments as described above.
In addition, our review of the methodology for Wages and Salaries
costs also found that our proposed methodology for calculating overhead
wages and salaries attributable to the hospital-based IPF routine
inpatient department were calculated using total (operating and
capital) overhead costs attributable to the hospital-based IPF (sum of
columns 4-18 on Worksheet B, part I, line 40). The proposed methodology
resulted in a portion of overhead capital costs to be allocated to
wages and salaries costs which is incorrect and inconsistent with the
Medicare cost report instructions.
The Medicare cost report instructions define capital-related costs
as ``depreciation, leases and rentals for the use of facilities and/or
equipment, and interest incurred in acquiring land or depreciable
assets used for patient care, insurance on depreciable assets used for
patient care and taxes on land or depreciable assets used for patient
care.'' \2\ The instructions also state that providers should exclude
the following from capital-related costs: ``costs incurred for the
repair or maintenance of equipment or facilities, amounts included in
rentals or lease payments for repair and/or maintenance agreements. * *
*'' Based on this definition of capital costs as reported on the
Medicare cost report, we concluded that capital costs do not include
direct wages and salaries costs and that it would be erroneous to
allocate a portion of capital costs to overhead wages and salaries.
---------------------------------------------------------------------------

\2\ See the Medicare cost report instructions at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021935.html, Chapter, 40, Page 40-259 to 40-260..
---------------------------------------------------------------------------

Therefore, we are revising the methodology to reflect operating
costs (that is the sum of Worksheet B, part I, line 40, columns 4-18
less Worksheet B, part II, line 40, columns 4-18).
We are finalizing our methodology for calculating hospital-based
IPF Wages and Salaries costs as described above. We discuss the effect
of the changes to the proposed methodology on the market basket cost
weight in section III.A.3.i. of this final rule.
We did not receive any comments on our proposed methodology for
calculating the freestanding IPF Wages and Salaries costs and
therefore, we are finalizing the methodology for calculating the
freestanding IPF Wages and Salaries costs as proposed.
Employee Benefits Costs
Effective with our implementation of CMS Form 2552-10, we began
collecting Employee Benefits and Contract Labor data on Worksheet S-3,
Part V. Previously, with CMS Form 2540-96, Employee Benefits and
Contract Labor data were reported on Worksheet S-3, part II, which was
applicable to only IPPS providers and, therefore, these data were not
available for the derivation of the RPL market basket. Due to the lack
of such data, the Employee Benefits cost weight for the 2008-based RPL
market basket was derived by multiplying the 2008-based RPL market
basket Wages and Salaries cost weight by the ratio of the IPPS hospital
market basket Employee Benefits cost weight to the IPPS hospital market
basket Wages and Salaries cost weight. Similarly, the Contract Labor
cost weight for the 2008-based RPL market basket was derived by
multiplying the 2008-based RPL market basket Wages and Salaries cost
weight by the ratio of the IPPS hospital market basket Contract Labor
cost weight to the IPPS hospital market basket Wages and Salaries cost
weight.
For FY 2012 Medicare cost report data, while there were providers
that did report data on Worksheet S-3, part V, many providers did not
complete this worksheet. However, we believe we had a large enough
sample to enable us to produce reasonable Employee Benefits cost
weights. We continue to encourage all providers to report these data on
the Medicare cost report.
For freestanding IPFs, Employee Benefits costs are equal to the
data reported on Worksheet S-3, Part V, line 2, column 2.
For hospital-based IPFs, we calculate total benefits as the sum of
benefit costs reported on Worksheet S-3 Part V, line 3, column 2, and a
portion of ancillary benefits and overhead benefits for the total
facility. We proposed that ancillary benefits attributable to the
hospital-based IPF would be calculated by multiplying ancillary wages
and salaries for the hospital-based IPF as determined in the derivation
of Wages and Salaries for the hospital-based IPF by the ratio of total
facility benefits to total facility wages and salaries. Similarly, we
proposed that overhead benefits attributable to the hospital-based IPF
would be calculated by multiplying overhead wages and salaries for the
hospital-based IPF as determined in the derivation of Wages and
Salaries for the hospital-based IPF by the ratio of total facility
benefits to total facility wages and salaries.
Based on the comment above regarding the omission of overhead Wages
and Salaries attributable to the ancillary departments, we are revising
our methodology for calculating Employee Benefits costs for hospital-
based IPFs to include overhead employee benefits attributable to the
ancillary departments. Our proposed methodology included Employee
Benefits attributable to hospital-based IPF routine inpatient unit
only. We are estimating overhead employee benefits attributable to the
ancillary departments using the same general methodology used to
calculate routine inpatient overhead benefits and ancillary employee
benefits attributable to the hospital-based IPF unit.
Overhead employee benefits attributable to the ancillary
departments are calculated by multiplying overhead wages and salaries
attributable to the ancillary departments by the ratio of total
facility benefits to total facility wages and salaries. Therefore,
based on public comments, total employee benefits for hospital-based
IPFs are now equal to the sum of benefit costs reported on Worksheet S-
3 Part V, line 3, column 2; a portion of ancillary benefits; and a
portion of overhead benefits attributable to the routine inpatient unit
and ancillary departments.
In addition, our methodology to calculate overhead benefits
attributable to the hospital-based IPF is to multiply overhead wages
and salaries for the hospital-based IPF routine inpatient unit (as
determined in the derivation of Wages and Salaries for the hospital-
based IPF) by the ratio of total facility benefits to total facility
wages and

[[Page 46662]]

salaries. Therefore, our changes to the overhead wages and salaries for
the hospital-based IPF routine inpatient unit discussed above would
result in changes to the overhead employee benefits attributable to the
hospital-based IPF routine inpatient unit. The effect of these
methodology changes on the Employee Benefits cost weight are discussed
in more detail in section III.A.3.a.ii below.
We received one comment specific to our proposed methodology for
calculating Employee Benefits costs.
Comment: Two commenters encouraged CMS to review the Dobson/DaVanzo
report (referenced above), which noted our proposal to change the
methodology for determining Employee Benefits costs from the
methodology used to determine the Employee Benefits cost weight for the
2008-based RPL market basket. As discussed in the proposed rule, under
the RPL methodology, we used data from IPPS hospitals as a proxy for
determining these costs for RPL facilities. The Dobson DaVanzo report
noted the low reporting of data on Worksheet S3, part V, used in the
Employee Benefit and Contract Labor cost weight calculations. They
stated that CMS should consider using IPPS data as a proxy for these
specific data elements as is done for the RPL market basket.
Response: In the proposed rule (80 FR 25019), we noted that many
providers did not report Worksheet S-3, part V data but that we
believed we had a large enough sample to produce a reasonable Employee
Benefits cost weight. Specifically, we found that when we recalculated
the cost weight, after weighting to reflect the characteristics of the
universe of IPF providers (freestanding and hospital-based), it did not
have a material effect on the resulting cost weight. We understand the
commenters' concern for the methodology change. However, we believe
that the use of employee benefit costs reported by IPFs is a technical
improvement from the methodology used for the 2008-based RPL market
basket. Specifically, this methodology calculated the Employee Benefit
cost weight by multiplying the RPL market basket Wages and Salaries
cost weight by the IPPS employee benefit ratio. The IPPS employee
benefit ratio was equal to the 2006-based IPPS market basket Employee
Benefit cost weight divided by the 2006-based IPPS market basket Wages
and Salaries cost weight. Using the rebased and revised 2010- based
IPPS market basket, we calculate an employee benefit ratio of 28
percent compared to the 2012-based IPF market basket with 26 percent.
Much of this two-percentage-point difference is attributable to the
characteristics of the IPF facilities as compared to the IPPS
hospitals. Approximately 20 percent of total costs for IPFs are
attributable to for-profit facilities (80 percent are attributable to
nonprofit and government facilities) while approximately 10 percent of
total costs for IPPS hospitals are attributable to for-profit
facilities (90 percent are attributable to nonprofit and government
facilities). Both the IPF and IPPS hospital data show that the employee
benefit ratio for for-profit facilities is lower than the employee
benefit ratio for nonprofit/government facilities (in the range of 6-7
percentage points lower), thus IPFs' higher proportion of for-profit
facilities compared to IPPS hospitals leads to a lower employee benefit
ratio.
Final Decision: In conclusion, we believe the use of Worksheet S-3,
part V data for IPFs is a technical improvement from the methodology
used for the 2008-based RPL market basket as we believe it better
reflects the cost structures of IPFs. We encourage IPF providers to
continue to report Worksheet S-3, part V data and we will continue to
monitor the data as the reporting improves. Therefore, after
consideration of public comments, we are finalizing our proposed
methodology for calculating the freestanding Employee benefit costs for
the 2012-based IPF market basket using the Worksheet S-3, part V data
as proposed.
Also, as discussed above, we are now capturing the proportion of
overhead employee benefits attributable to ancillary departments in the
hospital-based IPF employee benefit costs, based on public comments.
Therefore, total employee benefits for hospital-based IPFs is equal to
the sum of benefit costs reported on Worksheet S-3 Part V, line 3,
column 2; a portion of ancillary benefits; and a portion of overhead
benefits attributable to both the routine inpatient unit and ancillary
departments.
Contract Labor Costs
Similar to the RPL and IPPS market baskets, Contract Labor costs
are primarily associated with direct patient care services. Contract
Labor costs for other services such as accounting, billing, and legal
are calculated separately using other government data sources as
described in section III.A.3.a.i. of this final rule. As discussed in
this final rule in the Employee Benefits section, we now have data
reported on Worksheet S-3, Part V that we can use to derive the
Contract Labor cost weight for the 2012-based IPF market basket. For
freestanding IPFs, we proposed Contract Labor costs would be based on
data reported on Worksheet S-3, part V, column 1, line 2, and for
hospital-based IPFs Contract Labor costs are based on line 3 of this
same worksheet. As previously noted, for FY 2012 Medicare cost report
data, while there were providers that did report data on Worksheet S-3,
part V, many providers did not complete this worksheet. However, we
believe we had a large enough sample to enable us to produce a
reasonable Contract Labor cost weight. We continue to encourage all
providers to report these data on the Medicare cost report.
We received one comment on our methodology for calculating Contract
Labor costs that was similar to the comments we received regarding
Employee Benefits.
Comment: Two commenters encouraged CMS to review the Dobson/DaVanzo
report (noted above), which noted CMS' proposal to change the
methodology for determining Contract Labor cost weight from the
methodology used to derive the 2008-based RPL market basket. Under the
RPL methodology, CMS used data from IPPS hospitals as a proxy for
determining these costs for RPL facilities. The report expressed
concern for the low response rate and its potential impact on the
contract labor cost weight.
Response: We appreciate and understand the commenters' concern for
the methodology change from the RPL market basket. The RPL market
basket contract labor costs were calculated by multiplying the RPL
market basket Wages and Salaries cost weight by the IPPS contract labor
ratio. The IPPS contract labor ratio was equal to the 2006-based IPPS
market basket Contract Labor cost weight divided by the 2006-based IPPS
market basket Wages and Salaries cost weight. We implemented this
methodology as the Medicare cost report available at that time did not
capture contract labor costs for IPFs while CMS Form 2552-10, used for
the 2012-based IPF market basket, collects contract labor costs data
for freestanding and hospital-based IPFs. As stated in the proposed
rule (80 FR 25019), we believed we had a large enough sample to produce
a reasonable Contract Labor cost weight as we found that when we
recalculated the cost weight after weighting to reflect the
characteristics (by urban/rural and ownership type) of the universe of
IPF providers (freestanding and hospital-based), it did not have a
material effect on the resulting cost weight (less than 0.2

[[Page 46663]]

percentage point). In addition, we would note that the 2012-based IPF
cost report data produces a contract labor ratio that is similar to the
contract labor ratio using the 2010-based IPPS market basket with a
contract labor ratio of 4 percent.
Final Decision: We are finalizing our methodology for calculating
Contract Labor costs as proposed.
Pharmaceuticals Costs
For freestanding IPFs, we proposed to calculate pharmaceuticals
costs using non-salary costs reported on Worksheet A, column 7 less
Worksheet A, column 1 for the pharmacy cost center (line 15) and drugs
charged to patients cost center (line 73).
For hospital-based IPFs, we proposed to calculate pharmaceuticals
costs causing a portion of the non-salary pharmacy costs and a portion
of the non-salary drugs charged to patient costs reported for the total
facility. Non-salary pharmacy costs attributable to the hospital-based
IPF are calculated by multiplying total pharmacy costs attributable to
the hospital-based IPF (as reported on Worksheet B, column 15, line 40)
by the ratio of total non-salary pharmacy costs (Worksheet A, column 2,
line 15) to total pharmacy costs (sum of Worksheet A, column 1 and 2
for line 15) for the total facility. Non-salary drugs charged to
patient costs attributable to the hospital-based IPF are calculated by
multiplying total non-salary drugs charged to patient costs (Worksheet
B, part I, column 0, line 73 plus Worksheet B, part I, column 15, line
73 less Worksheet A, column 1, line 73) for the total facility by the
ratio of Medicare drugs charged to patient ancillary costs for the IPF
unit (as reported on Worksheet D-3 for IPF subproviders, line 73,
column 3) to total Medicare drugs charged to patients ancillary costs
for the total facility (equal to the sum of Worksheet D-3, line 73,
column 3, for all relevant PPS (that is, IPPS, IRF, IPF and SNF)). We
did not receive any specific comments on our proposed methodology for
calculating Pharmaceuticals costs for freestanding and hospital-based
IPFs.
Final Decision: We are finalizing our methodology for calculating
Pharmaceuticals costs as proposed.
Professional Liability Insurance (PLI) Costs
For freestanding IPFs, we proposed that PLI costs (often referred
to as malpractice costs) are equal to premiums, paid losses and self-
insurance costs reported on Worksheet S-2, line 118, columns 1 through
3.
For hospital-based IPFs, we proposed to assume that the PLI weight
for the total facility is similar to the hospital-based IPF unit since
the only data reported on this worksheet is for the entire facility.
Therefore, hospital-based IPF PLI costs are equal to total facility PLI
(as reported on Worksheet S-2, line 118, columns 1 through 3) divided
by total facility costs (as reported on Worksheet A, line 200) times
hospital-based IPF Medicare allowable total costs. We did not receive
any specific comments on our proposed methodology for calculating PLI
costs for freestanding and hospital-based IPFs.
Final Decision: We are finalizing our methodology for calculating
PLI costs as proposed.
Capital Costs
For freestanding IPFs, capital costs are equal to Medicare
allowable capital costs as reported on Worksheet B, Part II, column 26.
For hospital-based IPFs, capital costs are equal to IPF routine
inpatient capital costs (as reported on Worksheet B, part II, column
26, line 40) and a portion of IPF ancillary capital costs. We calculate
the portion of ancillary capital costs attributable to the hospital-
based IPF for a given cost center by multiplying total facility
ancillary capital costs for the specific ancillary cost center (as
reported on Worksheet B, Part II, column 26) by the ratio of IPF
Medicare ancillary costs for the cost center (as reported on Worksheet
D-3, column 3 for IPF subproviders) to total Medicare ancillary costs
for the cost center (equal to the sum of Worksheet D-3, column 3 for
all relevant PPS (that is, IPPS, IRF, IPF and SNF)). We did not receive
any specific comments on our proposed methodology for calculating
Capital-related costs for freestanding and hospital-based IPFs.
Final Decision: We are finalizing our methodology for calculating
Capital-related costs as proposed.
ii. Final Major Cost Category Computation
After we derive costs for the six major cost categories for each
provider using the Medicare cost report data as described above, we
proposed to trim the data for outliers based on the following steps.
First, we divide the costs for each of the six categories by total
Medicare allowable costs calculated for the provider to obtain cost
weights for the universe of IPF providers. Next, we apply a mutually
exclusive top and bottom 5 percent trim for each cost weight to remove
outliers. After the outliers have been removed, we sum the costs for
each category across all remaining providers. We then divide this by
the sum of total Medicare allowable costs across all remaining
providers to obtain a cost weight for the proposed 2012-based IPF
market basket for the given category. Finally, we calculate the
residual ``All Other'' cost weight that reflects all remaining costs
that are not captured in the six cost categories listed above. See
Table 1 for the resulting cost weights for these major cost categories
that we obtain from the Medicare cost reports. In Table 1, we provide
the proposed cost weights, as well as the final major cost weights
after implementing the methodological changes to the calculation of the
Wages and Salaries and Employee Benefits costs as described above.

Table 1--Major Cost Categories as Derived From Medicare Cost Reports
----------------------------------------------------------------------------------------------------------------
Proposed 2012-
Major cost categories based IPF Final 2012- based 2008-Based RPL
(percent) IPF (percent) (percent)
----------------------------------------------------------------------------------------------------------------
Wages and Salaries..................................... 50.8 51.0 47.4
Employee Benefits \1\.................................. 13.0 13.1 12.3
Contract Labor \1\..................................... 1.4 1.4 2.6
Professional Liability Insurance (Malpractice)......... 1.1 1.1 0.8
Pharmaceuticals........................................ 4.8 4.8 6.5
Capital................................................ 7.0 7.0 8.4
All Other.............................................. 22.0 21.6 22.0
----------------------------------------------------------------------------------------------------------------
Note: Total may not sum to 100 due to rounding.
\1\ Due to the lack of Medicare cost report data, the Employee Benefits and Contract Labor cost weights in the
2008-based RPL market basket were based on the IPPS market basket.

[[Page 46664]]

As discussed in section III.A.3.i of this final rule, we made
revisions to our proposed methodology for calculating Wages and
Salaries costs for the IPF market basket based on public comments. The
total effect of this methodology change on the 2012-based IPF market
basket Wages and Salaries aggregate cost weight (which reflects
freestanding and hospital-based IPFs) is an increase of 0.2 percentage
point from the proposed 2012-based IPF market basket Wages and Salaries
cost weight of 51.0 percent. This net overall effect can be broken down
into two components including: (1) The inclusion of overhead wages and
salaries attributable to the ancillary departments for hospital-based
IPFs (resulting in an increase of 2.2 percentage points to the
aggregate Wages and Salaries cost weight) and (2) our change in
methodology for deriving the overhead wages and salaries attributable
to the hospital-based IPF routine inpatient unit (resulting in a
decrease of 1.9 percentage points to the Wages and Salaries cost
weight). The Wages and Salaries cost weight obtained directly from the
Medicare cost reports for the final 2012-based IPF market basket is
approximately 3 percentage points higher than the Wages and Salaries
cost weight for the 2008-based RPL market basket. This is the result of
freestanding IPFs having a larger percentage of costs attributable to
labor than freestanding IRF and long-term care hospitals. These latter
facilities were included in the 2008-based RPL market basket.
Also as discussed in section III.A.3.a.i. of this final rule, we
made revisions to our calculation of Employee Benefits costs based on
public comment. The total effect of this methodology change on the
2012-based IPF market basket Employee Benefits aggregate cost weight
(which reflects freestanding and hospital-based IPFs) is an increase of
about 0.1 percentage point from the proposed 2012-based IPF market
basket Employee Benefits cost weight of 13.1 percent. This net overall
effect can be broken down into two components including: (1) The
inclusion of overhead employee benefits attributable to the ancillary
departments (resulting in an increase of 0.8 percentage point to the
aggregate Employee Benefits cost weight) and (2) changes to the
overhead employee benefits attributable to the hospital-based IPF
routine inpatient unit as a result of changes to the routine overhead
wages and salaries for the hospital-based IPF (resulting in a decrease
of 0.7 percentage point to the Employee Benefits cost weight).
As we did for the 2008-based RPL market basket, we proposed to
allocate the Contract Labor cost weight to the Wages and Salaries and
Employee Benefits cost weights based on their relative proportions
under the assumption that contract labor costs are comprised of both
wages and salaries and employee benefits. The Contract Labor allocation
proportion for Wages and Salaries is equal to the Wages and Salaries
cost weight as a percent of the sum of the Wages and Salaries cost
weight and the Employee Benefits cost weight. For the proposed rule,
this rounded percentage was 80 percent; therefore, we proposed to
allocate 80 percent of the Contract Labor cost weight to the Wages and
Salaries cost weight and 20 percent to the Employee Benefits cost
weight. Table 2 shows the Wages and Salaries and Employee Benefit cost
weights after Contract Labor cost weight allocation for both the
proposed 2012-based IPF market basket and 2008-based RPL market basket.
We did not receive any public comments on our methodology for
allocating Contract Labor to the Wages and Salaries and Employee
Benefits cost weights.
Final Decision: We are finalizing our methodology for allocating
Contract Labor as proposed. For the final rule, after making changes to
the Wages and Salaries and Employee Benefits cost weights, the rounded
percentage remains 80 percent. Therefore, we are finalizing our
methodology as proposed and allocating 80 percent of the Contract Labor
cost weight to the Wages and Salaries cost weight and 20 percent to the
Employee Benefits cost weight.

Table 2--Wages and Salaries and Employee Benefits Cost Weights After Contract Labor Allocation
----------------------------------------------------------------------------------------------------------------
Proposed 2012- Final 2012-based
Major cost categories based IPF IPF 2008-Based RPL
----------------------------------------------------------------------------------------------------------------
Wages and Salaries..................................... 51.9 52.1 49.4
Employee Benefits...................................... 13.3 13.4 12.8
----------------------------------------------------------------------------------------------------------------

iii. Derivation of the Detailed Operating Cost Weights
To further divide the ``All Other'' residual cost weight estimated
from the FY 2012 Medicare Cost Report data into more detailed cost
categories, we proposed to use the 2007 Benchmark Input-Output (I-O)
``Use Tables/Before Redefinitions/Purchaser Value'' for North American
Industry Classification System (NAICS) 622000 Hospitals, published by
the Bureau of Economic Analysis (BEA). These data are publicly
available at http://www.bea.gov/industry/io_annual.htm.
The BEA Benchmark I-O data are scheduled for publication every 5
years with the most recent data available for 2007. The 2007 Benchmark
I-O data are derived from the 2007 Economic Census and are the building
blocks for BEA's economic accounts. Thus, they represent the most
comprehensive and complete set of data on the economic processes or
mechanisms by which output is produced and distributed.\3\ BEA also
produces Annual I-O estimates; however, while based on a similar
methodology, these estimates reflect less comprehensive and less
detailed data sources and are subject to revision when benchmark data
becomes available. Instead of using the less detailed Annual I-O data,
we proposed to inflate the 2007 Benchmark I-O data forward to 2012 by
applying the annual price changes from the respective price proxies to
the appropriate market basket cost categories that are obtained from
the 2007 Benchmark I-O data. We repeat this practice for each year. We
then calculated the cost shares that each cost category represents of
the inflated 2012 data. These resulting 2012 cost shares are applied to
the All Other residual cost weight to obtain the detailed cost weights
for the 2012-based IPF market basket. For example, the cost for Food:
Direct Purchases represents 6.5 percent of the sum of the ``All Other''
2007 Benchmark I-O Hospital Expenditures inflated to 2012; therefore,
the Food: Direct Purchases cost weight represents 6.5 percent of the
2012-based IPF market basket's ``All Other'' cost category (21.6
percent), yielding a ``final'' Food: Direct Purchases cost weight of
1.4 percent in the proposed 2012-based IPF market basket (0.065 * 21.6
percent = 1.4 percent).
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\3\ http://www.bea.gov/papers/pdf/IOmanual_092906.pdf
---------------------------------------------------------------------------

Using this methodology, we proposed to derive eighteen detailed IPF
market basket cost category weights from the

[[Page 46665]]

2012-based IPF market basket residual cost weight (21.6 percent). These
categories are: (1) Electricity, (2) Fuel, Oil, and Gasoline (3) Water
& Sewerage (4) Food: Direct Purchases, (5) Food: Contract Services, (6)
Chemicals, (7) Medical Instruments, (8) Rubber & Plastics, (9) Paper
and Printing Products, (10) Miscellaneous Products, (11) Professional
Fees: Labor-related, (12) Administrative and Facilities Support
Services, (13) Installation, Maintenance, and Repair, (14) All Other
Labor-related Services, (15) Professional Fees: Nonlabor-related, (16)
Financial Services, (17) Telephone Services, and (18) All Other
Nonlabor-related Services. We did not receive any specific comments on
our proposed methodology of deriving detailed market basket cost
category weights using the BEA Benchmark I-O data.
Final Decision: We are finalizing our methodology for deriving the
detailed market basket cost weights as proposed. However, since the
methodological change to the derivation of Wages and Salaries and
Employee Benefits results in a compensation cost weight that is
slightly higher than proposed, the residual cost share weight is
slightly lower than proposed. Therefore, we are finalizing the residual
cost share weight of 21.6 percent rather than the proposed 22.0
percent. We would note that the residual All-Other cost weight was
calculated using three decimal places and then rounded to a tenth of a
percentage point for presentation purposes. Since this residual is used
to calculate the detailed cost category weights using the BEA I-O data,
these detailed cost category weights would also have slight revisions.
These revisions round to no more than 0.1 percentage point.
iv. Derivation of the Detailed Capital Cost Weights
As described in section III.A.3.a.i. of the proposed rule, we
proposed a Capital-Related cost weight of 7.0 percent as obtained from
the FY 2012 Medicare cost reports for freestanding and hospital-based
IPF providers. We proposed to separate this total Capital-Related cost
weight into more detailed cost categories.
Using FY 2012 Medicare cost reports, we are able to group Capital-
Related costs into the following categories: Depreciation, Interest,
Lease, and Other Capital-Related costs. For each of these categories,
we proposed to determine separately for hospital-based IPFs and
freestanding IPFs what proportion of total capital-related costs the
category represent.
For freestanding IPFs, we proposed to derive the proportions for
Depreciation, Interest, Lease, and Other Capital-related costs using
the data reported by the IPF on Worksheet A-7, which is similar to the
methodology used for the 2008-based RPL market basket.
For hospital-based IPFs, data for these four categories are not
reported separately for the subprovider; therefore, we proposed to
derive these proportions using data reported on Worksheet A-7 for the
total facility. We are assuming the cost shares for the overall
hospital are representative for the hospital-based subprovider IPF
unit. For example, if depreciation costs make up 60 percent of total
capital costs for the entire facility, we believe it is reasonable to
assume that the hospital-based IPF will also have a 60 percent
proportion because it is a subprovider unit contained within the total
facility.
In order to combine each detailed capital cost weight for
freestanding and hospital-based IPFs into a single capital cost weight
for the 2012-based IPF market basket, we proposed to weight together
the shares for each of the categories (Depreciation, Interest, Lease,
and Other Capital-related costs) based on the share of total capital
costs each provider type represents of the total capital costs for all
IPFs for 2012. Applying this methodology results in proportions of
total capital-related costs for Depreciation, Interest, Lease and Other
Capital-related costs that are representative of the universe of IPF
providers.
Next, we proposed to allocate lease costs across each of the
remaining detailed capital-related cost categories as was done in the
2008-based RPL market basket. This will result in 3 primary capital-
related cost categories in the 2012-based IPF market basket:
Depreciation, Interest, and Other Capital-Related costs. Lease costs
are unique in that they are not broken out as a separate cost category
in the 2012-based IPF market basket, but rather we proposed to
proportionally distribute these costs among the cost categories of
Depreciation, Interest, and Other Capital-Related, reflecting the
assumption that the underlying cost structure of leases is similar to
that of capital-related costs in general. As was done under the 2008-
based RPL market basket, we proposed to assume that 10 percent of the
lease costs as a proportion of total capital-related costs represents
overhead and assign those costs to the Other Capital-Related cost
category accordingly. We distributed the remaining lease costs
proportionally across the 3 cost categories (Depreciation, Interest,
and Other Capital-Related) based on the proportion that these
categories comprise of the sum of the Depreciation, Interest, and Other
Capital-related cost categories (excluding lease expenses). This is the
same methodology used for the 2008-based RPL market basket. The
allocation of these lease expenses are shown in Table 3 below.
Finally, we proposed to further divide the Depreciation and
Interest cost categories. We proposed to separate Depreciation into the
following two categories: (1) Building and Fixed Equipment; and (2)
Movable Equipment; and proposing to separate Interest into the
following two categories: (1) Government/Nonprofit; and (2) For-profit.
To disaggregate the Depreciation cost weight, we need to determine
the percent of total Depreciation costs for IPFs that is attributable
to Building and Fixed Equipment, which we hereafter refer to as the
``fixed percentage.'' For the 2012-based IPF market basket, we proposed
to use slightly different methods to obtain the fixed percentages for
hospital-based IPFs compared to freestanding IPFs.
For freestanding IPFs, we proposed to use depreciation data from
Worksheet A-7 of the FY 2012 Medicare cost reports, similar to the
methodology used for the 2008-based RPL market basket. However, for
hospital-based IPFs, we determined that the fixed percentage for the
entire facility may not be representative of the IPF subprovider unit
due to the entire facility likely employing more sophisticated movable
assets that are not utilized by the hospital-based IPF. Therefore, for
hospital-based IPFs, we proposed to calculate a fixed percentage using:
(1) Building and fixture capital costs allocated to the subprovider
unit as reported on Worksheet B, part I line 40; and (2) building and
fixture capital costs for the top five ancillary cost centers utilized
by hospital-based IPFs. We proposed to then weight these two fixed
percentages (routine inpatient and ancillary) using the proportion that
each capital cost type represents of total capital costs in the
proposed 2012-based IPF market basket. We then proposed to weight the
fixed percentages for hospital-based and freestanding IPFs together
using the proportion of total capital costs each provider type
represents.
To disaggregate the Interest cost weight, we need to determine the
percent of total interest costs for IPFs that are attributable to
government and nonprofit facilities, which we hereafter refer to as the
``nonprofit percentage.'' For the IPF market basket, we proposed

[[Page 46666]]

to use interest costs data from Worksheet A-7 of the FY 2012 Medicare
cost reports for both freestanding and hospital-based IPFs, similar to
the methodology used for the 2008-based RPL market basket. We
determined the percent of total interest costs that are attributed to
government and nonprofit IPFs separately for hospital-based and
freestanding IPFs. We then proposed to weight the nonprofit percentages
for hospital-based and freestanding IPFs together using the proportion
of total capital costs each provider type represents.
Table 3 provides the detailed capital cost shares obtained from the
Medicare cost reports. Ultimately, these detailed capital cost shares
were applied to the total Capital-Related cost weight determined in
section III.A.3.a.i. of the proposed rule to split out the total weight
of 7.0 percent into more detailed cost categories and weights. We did
not receive any specific comments on our proposed methodology for
calculating the detailed capital cost weights for the 2012-based IPF
market basket.
Final Decision: We are finalizing our methodology for deriving the
detailed capital cost weights as proposed.
Therefore, the detailed capital cost weights for the final 2012-
based IPF market basket contained in Table 3 are unchanged from the
proposed rule.

Table 3--Detailed Capital Cost Weights for the Proposed 2012-Based IPF Market Basket
----------------------------------------------------------------------------------------------------------------
Proposed detailed
Cost shares obtained capital cost shares
from Medicare cost after allocation of
reports (percent) lease expenses
(percent)
----------------------------------------------------------------------------------------------------------------
Depreciation.................................................. 64 75
Building and Fixed Equipment.................................. 46 53
Movable Equipment............................................. 19 22
Interest...................................................... 15 17
Government/Nonprofit.......................................... 12 14
For Profit.................................................... 2 3
Lease......................................................... 15 n/a
Other......................................................... 6 8
----------------------------------------------------------------------------------------------------------------

v. 2012-Based IPF Market Basket Cost Categories and Weights
As stated in section III.A.3.i of this final rule, we are revising
our methodology for deriving Wages and Salaries and Employee Benefit
cost weights based on public comments. The methodological changes
results in an increase of the Wages and Salaries and Employee Benefit
cost weights of 0.2 percentage point and 0.1 percentage point,
respectively. As a result of these methodology changes, the residual
All-Other cost category was revised down 0.3 percentage point. Since
this residual is used to calculate the detailed cost category weights
using the BEA I-O data, these cost category weights would also have
slight revisions. These revisions round to no more than 0.1 percentage
point.
Table 4 shows the cost categories and weights for the proposed
2012-based IPF market basket, final 2012-based IPF market based on
public comments, and the 2008-based RPL market basket.

Table 4--2012-Based IPF Cost Weights Compared to 2008-Based RPL Cost Weights
----------------------------------------------------------------------------------------------------------------
Proposed 2012-
Cost category based IPF cost Final 2012-based 2008-Based RPL
weight IPF cost weight cost weight
----------------------------------------------------------------------------------------------------------------
Total.................................................. 100.0 100.0 100.0
Compensation....................................... 65.2 65.5 62.3
Wages and Salaries............................. 51.9 52.1 49.4
Employee Benefits.............................. 13.3 13.4 12.8
Utilities.......................................... 1.8 1.7 1.6
Electricity.................................... 0.8 0.8 1.1
Fuel, Oil, and Gasoline........................ 0.9 0.9 0.4
Water & Sewerage............................... 0.1 0.1 0.1
Professional Liability Insurance................... 1.1 1.1 0.8
Malpractice.................................... 1.1 1.1 0.8
All Other Products and Services.................... 25.0 24.6 27.0
All Other Products................................. 11.7 11.5 15.6
Pharmaceuticals................................ 4.8 4.8 6.5
Food: Direct Purchases......................... 1.4 1.4 3.0
Food: Contract Services........................ 0.9 0.9 0.4
Chemicals...................................... 0.6 0.6 1.1
Medical Instruments............................ 1.9 1.9 1.8
Rubber & Plastics.............................. 0.5 0.5 1.1
Paper and Printing Products.................... 1.0 0.9 1.0
Apparel........................................ n/a n/a 0.2
Machinery and Equipment........................ n/a n/a 0.1
Miscellaneous Products......................... 0.7 0.6 0.3
All Other Services................................. 13.3 13.1 11.4
Labor-Related Services............................. 6.7 6.6 4.7
Professional Fees: Labor-related............... 2.9 2.9 2.1
Administrative and Facilities Support Services. 0.7 0.7 0.4
Installation, Maintenance, and Repair.......... 1.6 1.6 -

[[Page 46667]]

All Other: Labor-related Services.............. 1.5 1.5 2.1
Nonlabor-Related Services.......................... 6.6 6.5 6.7
Professional Fees: Nonlabor-related............ 2.6 2.6 4.2
Financial services..................................... 2.3 2.3 0.9
Telephone Services..................................... 0.6 0.6 0.4
Postage................................................ n/a n/a 0.6
All Other: Nonlabor-related Services................... 1.1 1.1 0.6
Capital-Related Costs.............................. 7.0 7.0 8.4
Depreciation....................................... 5.2 5.2 5.5
Fixed Assets................................... 3.7 3.7 3.3
Movable Equipment.............................. 1.5 1.5 2.2
Interest Costs..................................... 1.2 1.2 2.0
Government/Nonprofit........................... 1.0 1.0 0.7
For Profit..................................... 0.2 0.2 1.3
Other Capital-Related Costs........................ 0.6 0.6 0.9
Other Capital-Related Costs.................... 0.6 0.6 0.9
----------------------------------------------------------------------------------------------------------------
Note: Totals may not sum due to rounding.

We proposed that the 2012-based IPF market basket does not include
separate cost categories for Apparel, Machinery & Equipment, and
Postage. Due to the small weights associated with these detailed
categories and relatively stable price growth in the applicable price
proxy, we proposed to include Apparel and Machinery & Equipment in the
Miscellaneous Products cost category and Postage in the All-Other
Nonlabor-related Services. We note that these Machinery & Equipment
expenses are for equipment that is paid for in a given year and not
depreciated over the assets' useful life. Depreciation expenses for
movable equipment are reflected in the Capital-related costs of the
2012-based IPF market basket. For the 2012-based IPF market basket, we
also proposed to include a separate cost category for Installation,
Maintenance, and Repair. We did not receive any public comments on our
proposed list of detailed cost categories for the 2012-based IPF market
basket.
Final Decision: We are finalizing our list of detailed cost
categories as proposed.
b. Selection of Price Proxies
After developing the cost weights for the 2012-based IPF market
basket, we proposed to select the most appropriate wage and price
proxies currently available to represent the rate of price change for
each expenditure category. For the majority of the cost weights, we
base the price proxies on Bureau of Labor Statistics (BLS) data and
grouped them into one of the following BLS categories:
Employment Cost Indexes. Employment Cost Indexes (ECIs)
measure the rate of change in employment wage rates and employer costs
for employee benefits per hour worked. These indexes are fixed-weight
indexes and strictly measure the change in wage rates and employee
benefits per hour. ECIs are superior to Average Hourly Earnings (AHE)
as price proxies for input price indexes because they are not affected
by shifts in occupation or industry mix, and because they measure pure
price change and are available by both occupational group and by
industry. The industry ECIs are based on the North American
Classification System (NAICS) and the occupational ECIs are based on
the Standard Occupational Classification System (SOC).
Producer Price Indexes. Producer Price Indexes (PPIs)
measure price changes for goods sold in other than retail markets. PPIs
are used when the purchases of goods or services are made at the
wholesale level.
Consumer Price Indexes. Consumer Price Indexes (CPIs)
measure change in the prices of final goods and services bought by
consumers. CPIs are only used when the purchases are similar to those
of retail consumers rather than purchases at the wholesale level, or if
no appropriate PPIs are available.
We evaluated the price proxies using the criteria of reliability,
timeliness, availability, and relevance:
Reliability. Reliability indicates that the index is based
on valid statistical methods and has low sampling variability. Widely
accepted statistical methods ensure that the data were collected and
aggregated in a way that can be replicated. Low sampling variability is
desirable because it indicates that the sample reflects the typical
members of the population. (Sampling variability is variation that
occurs by chance because only a sample was surveyed rather than the
entire population.)
Timeliness. Timeliness implies that the proxy is published
regularly, preferably at least once a quarter. The market baskets are
updated quarterly and, therefore, it is important for the underlying
price proxies to be up-to-date, reflecting the most recent data
available. We believe that using proxies that are published regularly
(at least quarterly, whenever possible) helps to ensure that we are
using the most recent data available to update the market basket. We
strive to use publications that are disseminated frequently, because we
believe that this is an optimal way to stay abreast of the most current
data available.
Availability. Availability means that the proxy is
publicly available. We prefer that our proxies are publicly available
because this will help ensure that our market basket updates are as
transparent to the public as possible. In addition, this enables the
public to be able to obtain the price proxy data on a regular basis.
Relevance. Relevance means that the proxy is applicable
and representative of the cost category weight to which it is applied.
The CPIs, PPIs, and ECIs that we selected meet these criteria.
Therefore, we believe that they continue to be the best measure of
price changes for the cost categories to which they would be applied.
Table 6 lists all price proxies that we proposed to use for the
2012-based IPF market basket. Below is a detailed explanation of the
price proxies we are finalizing for each cost category weight.

[[Page 46668]]

i. Price Proxies for the Operating Portion of the 2012-Based IPF Market
Basket
Wages and Salaries
To measure wage price growth in the proposed 2012-based IPF market
basket, we proposed to apply a proxy blend based on six occupational
subcategories within the Wages and Salaries category, which would
reflect the IPF occupational mix. There is not a published wage proxy
for IPF workers. The 2008-based RPL market basket uses the ECI for
Wages and Salaries for All Civilian workers in Hospitals (BLS series
code #CIU1026220000000I) to proxy these expenses.
We proposed to use the National Industry-Specific Occupational
Employment and Wage estimates for North American Industrial
Classification System (NAICS) 622200, Psychiatric & Substance Abuse
Hospitals, published by the BLS Office of Occupational Employment
Statistics (OES), as the data source for the wage cost shares in the
wage proxy blend. We used OES' May 2012 data. Detailed information on
the methodology for the national industry-specific occupational
employment and wage estimates survey can be found athttp://www.bls.gov/oes/current/oes_tec.htm.
Based on the OES data, there are six wage subcategories:
Management; NonHealth Professional and Technical; Health Professional
and Technical; Health Service; NonHealth Service; and Clerical. Table 5
lists the 2012 occupational assignments for the six wage subcategories.

Table 5--2012 Occupational Assignments for IPF Wage Blend
----------------------------------------------------------------------------------------------------------------
2012 Occupational groupings
----------------------------------------------------------------------------------------------------------------
Group 1...................... Management.
11-0000...................... Management Occupations.
Group 2...................... NonHealth Professional & Technical.
13-0000...................... Business and Financial Operations Occupations.
15-0000...................... Computer and Mathematical Science Occupations.
17-0000...................... Architecture and Engineering Occupations.
19-0000...................... Life, Physical, and Social Science Occupations.
23-0000...................... Legal Occupations.
25-0000...................... Education, Training, and Library Occupations.
27-0000...................... Arts, Design, Entertainment, Sports, and Media Occupations.
Group 3...................... Health Professional & Technical.
29-1021...................... Dentists, General.
29-1031...................... Dietitians and Nutritionists.
29-1051...................... Pharmacists.
29-1062...................... Family and General Practitioners.
29-1063...................... Internists, General.
29-1069...................... Physicians and Surgeons, All Other.
29-1071...................... Physician Assistants.
29-1111...................... Registered Nurses.
29-1122...................... Occupational Therapists.
29-1123...................... Physical Therapists.
29-1125...................... Recreational Therapists.
29-1126...................... Respiratory Therapists.
29-1127...................... Speech-Language Pathologists.
29-1129...................... Therapists, All Other.
29-1199...................... Health Diagnosing and Treating Practitioners, All Other.
Group 4...................... Health Service.
21-0000...................... Community and Social Services Occupations.
29-2011...................... Medical and Clinical Laboratory Technologists.
29-2012...................... Medical and Clinical Laboratory Technicians.
29-2021...................... Dental Hygienists.
29-2032...................... Diagnostic Medical Sonographers.
29-2034...................... Radiologic Technologists and Technicians.
29-2041...................... Emergency Medical Technicians and Paramedics.
29-2051...................... Dietetic Technicians.
29-2052...................... Pharmacy Technicians.
29-2054...................... Respiratory Therapy Technicians.
29-2061...................... Licensed Practical and Licensed Vocational Nurses.
29-2071...................... Medical Records and Health Information Technicians.
29-2099...................... Health Technologists and Technicians, All Other.
29-9012...................... Occupational Health and Safety Technicians.
29-9099...................... Healthcare Practitioner and Technical Workers, All Other.
31-0000...................... Healthcare Support Occupations.
Group 5...................... NonHealth Service.
33-0000...................... Protective Service Occupations.
35-0000...................... Food Preparation and Serving Related Occupations.
37-0000...................... Building and Grounds Cleaning and Maintenance Occupations.
39-0000...................... Personal Care and Service Occupations.
41-0000...................... Sales and Related Occupations.
47-0000...................... Construction and Extraction Occupations.
49-0000...................... Installation, Maintenance, and Repair Occupations.
51-0000...................... Production Occupations.
53-0000...................... Transportation and Material Moving Occupations.
Group 6...................... Clerical.
43-0000...................... Office and Administrative Support Occupations.
----------------------------------------------------------------------------------------------------------------

[[Page 46669]]

Total expenditures by occupation (that is, occupational assignment)
were calculated by taking the OES number of employees multiplied by the
OES annual average salary. These expenditures were aggregated based on
the six groups in Table 6. We next calculated the proportion of each
group's expenditures relative to the total expenditures of all six
groups. These proportions, listed in Table 5, represent the weights
used in the wage proxy blend. We then proposed to use the published
wage proxies in Table 6 for each of the six groups (that is, wage
subcategories) as we believe these six price proxies are the most
technically appropriate indices available to measure the price growth
of the Wages and Salaries cost category in the proposed 2012-based IPF
market basket.

Table 6--2012-Based IPF Market Basket Wage Proxy Blend
----------------------------------------------------------------------------------------------------------------
Wage blend
Wage subcategory weight Price proxy BLS Series ID
----------------------------------------------------------------------------------------------------------------
Health Service.................... 36.2 ECI for Wages and Salaries for All CIU1026200000000I
Civilian workers in Healthcare and
Social Assistance.
Health Professional and Technical. 33.5 ECI for Wages and Salaries for All CIU1026220000000I
Civilian workers in Hospitals.
NonHealth Service................. 9.2 ECI for Wages and Salaries for CIU2020000300000I
Private Industry workers in
Service Occupations.
NonHealth Professional and 7.3 ECI for Wages and Salaries for CIU2025400000000I
Technical. Private Industry workers in
Professional, Scientific, and
Technical Services.
Management........................ 7.1 ECI for Wages and Salaries for CIU2020000110000I
Private Industry workers in
Management, Business, and
Financial.
Clerical.......................... 6.7 ECI for Wages and Salaries for CIU2020000220000I
Private Industry workers in Office
and Administrative Support.
----------------
Total......................... 100.0
----------------------------------------------------------------------------------------------------------------

A comparison of the yearly changes from FY 2012 to FY 2015 for the
2012-based IPF wage blend and the 2008-based RPL wage proxy is shown in
Table 7. The average annual increase in the two price proxies is
similar, and in no year is the difference greater than 0.4 percentage
point.

Table 7--Fiscal Year Growth in the 2012-Based IPF Wage Proxy Blend and 2008-Based RPL Wage Proxy
----------------------------------------------------------------------------------------------------------------
Average
2012 2013 2014 2015 2012-2015
----------------------------------------------------------------------------------------------------------------
2012-based IPF Proposed Wage Proxy Blend....................... 1.6 1.6 1.6 2.1 1.7
2008-based RPL Wage Proxy...................................... 1.5 1.5 1.5 1.7 1.6
----------------------------------------------------------------------------------------------------------------
Source: IHS Global Insight, Inc., 2nd Quarter 2015 forecast with historical data through 4th Quarter 2014.

We did not receive any comments on our proposed Wages and Salaries
price proxy methodology.
Final Decision: We are finalizing the use a blended Wages and
Salaries price proxy as proposed.
Benefits
For measuring benefits price growth in the 2012-based IPF market
basket, we proposed to apply a benefits proxy blend based on the same
six subcategories and the same six blend weights used in the wage proxy
blend. These subcategories and blend weights are listed in Table 8.
We proposed that the applicable benefit ECIs be identical in
industry definition to the wage blend ECIs selected for each of the six
subcategories. These benefit ECIs, listed in Table 8, are not
publically available. Therefore, we calculated ``ECIs for Total
Benefits'' using publically available ``ECIs for Total Compensation''
for each subcategory and the relative importance of wages within that
subcategory's total compensation. This is the same benefits ECI
methodology we implemented in our IPPS, SNF, HHA, RPL, LTCH, and ESRD
market baskets. We believe the six price proxies listed in Table 8 are
the most technically appropriate indices to measure the price growth of
the Benefits cost category in the 2012-based IPF market basket.
The current 2008-based RPL market basket uses the ECI for Benefits
for All Civilian Workers in Hospitals to proxy Benefit expenses.

Table 8--2012-Based IPF Market Basket Benefits Proxy Blend
------------------------------------------------------------------------
Wage blend
Wage subcategory weight Price proxy
------------------------------------------------------------------------
Health Service................. 36.2 ECI for Total Benefits
for All Civilian
workers in Healthcare
and Social Assistance.
Health Professional and 33.5 ECI for Total Benefits
Technical. for All Civilian
workers in Hospitals.
NonHealth Service.............. 9.2 ECI for Total Benefits
for Private Industry
workers in Service
Occupations.
NonHealth Professional and 7.3 ECI for Total Benefits
Technical. for Private Industry
workers in
Professional,
Scientific, and
Technical Services.
Management..................... 7.1 ECI for Total Benefits
for Private Industry
workers in Management,
Business, and
Financial.

[[Page 46670]]

Clerical....................... 6.7 ECI for Total Benefits
for Private Industry
workers in Office and
Administrative
Support.
----------------
Total...................... 100.0
------------------------------------------------------------------------

A comparison of the yearly changes from FY 2012 to FY 2015 for the
2012-based IPF benefit proxy blend and the 2008-based RPL benefit proxy
is shown in Table 9. The average annual increase in the two price
proxies is similar, and in no year is the difference greater than 0.4
percentage point.

Table 9--Fiscal Year Growth in the 2012-Based IPF Benefit Proxy Blend and 2008-Based RPL Benefit Proxy
----------------------------------------------------------------------------------------------------------------
Average
2012 2013 2014 2015 2012-2015
----------------------------------------------------------------------------------------------------------------
2012-based IPF Proposed Benefit Proxy Blend.................... 2.5 1.9 2.0 2.0 2.1
2008-based RPL Benefit Proxy................................... 2.1 1.8 2.1 2.0 2.0
----------------------------------------------------------------------------------------------------------------
Source: IHS Global Insight, Inc., 2nd Quarter 2015 forecast with historical data through 1st Quarter 2015

We did not receive any comments on our proposed methodology and use
of a blended wage proxy index.
Final Decision: We are finalizing our proposal to use a blended
wage proxy.
Electricity
We proposed to use the PPI for Commercial Electric Power (BLS
series code #WPU0542) to measure the price growth of this cost
category. This is the same price proxy used in the 2008-based RPL
market basket.
Fuel, Oil, and Gasoline
We proposed to change the proxy used for the Fuel, Oil, and
Gasoline cost category. The 2008-based RPL market basket uses the PPI
for Petroleum Refineries (BLS series code #PCU32411-32411) to proxy
these expenses.
For the 2012-based IPF market basket, we proposed to use a blend of
the PPI for Petroleum Refineries and the PPI Commodity for Natural Gas
(BLS series code #WPU0531). Our analysis of the Bureau of Economic
Analysis' 2007 Benchmark Input-Output data (use table before
redefinitions, purchaser's value for NAICS 622000 [Hospitals]), shows
that Petroleum Refineries expenses accounts for approximately 70
percent and Natural Gas accounts for approximately 30 percent of the
Fuel, Oil, and Gasoline expenses. Therefore, we proposed to blend using
70 percent of the PPI for Petroleum Refineries (BLS series code
#PCU32411-32411) and 30 percent of the PPI Commodity for Natural Gas
(BLS series code #WPU0531). We believe that these 2 price proxies are
the most technically appropriate indices available to measure the price
growth of the Fuel, Oil, and Gasoline cost category in the 2012-based
IPF market basket.
Water and Sewerage
We proposed to use the CPI for Water and Sewerage Maintenance (BLS
series code #CUUR0000SEHG01) to measure the price growth of this cost
category. This is the same proxy used in the 2008-based RPL market
basket.
Professional Liability Insurance
We proposed to use the CMS Hospital Professional Liability Index to
measure changes in professional liability insurance (PLI) premiums. To
generate this index, we collect commercial insurance premiums for a
fixed level of coverage while holding non-price factors constant (such
as a change in the level of coverage). This is the same proxy used in
the 2008-based RPL market basket.
Pharmaceuticals
We proposed to use the PPI for Pharmaceuticals for Human Use,
Prescription (BLS series code #WPUSI07003) to measure the price growth
of this cost category. This is the same proxy used in the 2008-based
RPL market basket.
Food: Direct Purchases
We proposed to use the PPI for Processed Foods and Feeds (BLS
series code #WPU02) to measure the price growth of this cost category.
This is the same proxy used in the 2008-based RPL market basket.
Food: Contract Purchases
We proposed to use the CPI for Food Away From Home (BLS series code
#CUUR0000SEFV) to measure the price growth of this cost category. This
is the same proxy used in the 2008-based RPL market basket.
Chemicals
We proposed to use a four part blended PPI composed of the PPI for
Industrial Gas Manufacturing (BLS series code PCU325120325120P), the
PPI for Other Basic Inorganic Chemical Manufacturing (BLS series code
#PCU32518-32518), the PPI for Other Basic Organic Chemical
Manufacturing (BLS series code #PCU32519-32519), and the PPI for Soap
and Cleaning Compound Manufacturing (BLS series code #PCU32561-32561).
We updated the blend weights using 2007 Benchmark I-O data which,
compared to 2002 Benchmark I-O data, is weighted more toward organic
chemical products and weighted less toward inorganic chemical products.
Table 10 shows the weights for each of the four PPIs used to create
the blended PPI. These are the same four proxies used in the 2008-based
RPL market basket; however, the blended PPI weights in the 2008-based
RPL market baskets were based on 2002 Benchmark I-O data.

[[Page 46671]]

Table 10--Blended Chemical PPI Weights
------------------------------------------------------------------------
Proposed 2012-
based IPF 2008-Based RPL
Name weights weights NAICS
(percent) (percent)
------------------------------------------------------------------------
PPI for Industrial Gas 32 35 325120
Manufacturing...............
PPI for Other Basic Inorganic 17 25 325180
Chemical Manufacturing......
PPI for Other Basic Organic 45 30 325190
Chemical Manufacturing......
PPI for Soap and Cleaning 6 10 325610
Compound Manufacturing......
------------------------------------------------------------------------

Medical Instruments
We proposed to use a blend for the Medical Instruments cost
category. The 2007 Benchmark Input-Output data shows an approximate 50/
50 split between Surgical and Medical Instruments and Medical and
Surgical Appliances and Supplies for this cost category. Therefore, we
blended composed of 50 percent of the commodity-based PPI for Surgical
and Medical Instruments (BLS code #WPU1562) and 50 percent of the
commodity-based PPI for Medical and Surgical Appliances and Supplies
(BLS code #WPU1563). The 2008-based RPL market basket uses the single,
higher level PPI for Medical, Surgical, and Personal Aid Devices (BLS
series code #WPU156).
Rubber and Plastics
We proposed to use the PPI for Rubber and Plastic Products (BLS
series code #WPU07) to measure price growth of this cost category. This
is the same proxy used in the 2008-based RPL market basket.
Paper and Printing Products
We proposed to use the PPI for Converted Paper and Paperboard
Products (BLS series code #WPU0915) to measure the price growth of this
cost category. This is the same proxy used in the 2008-based RPL market
basket.
Miscellaneous Products
We proposed to use the PPI for Finished Goods Less Food and Energy
(BLS series code #WPUSOP3500) to measure the price growth of this cost
category. This is the same proxy used in the 2008-based RPL market
basket.
Professional Fees: Labor-Related
We proposed to use the ECI for Total Compensation for Private
Industry workers in Professional and Related (BLS series code
#CIU2010000120000I) to measure the price growth of this category. This
is the same proxy used in the 2008-based RPL market basket.
Administrative and Facilities Support Services
We proposed to use the ECI for Total Compensation for Private
Industry workers in Office and Administrative Support (BLS series code
#CIU2010000220000I) to measure the price growth of this category. This
is the same proxy used in the 2008-based RPL market basket.
Installation, Maintenance, and Repair
We proposed to use the ECI for Total Compensation for Civilian
workers in Installation, Maintenance, and Repair (BLS series code
#CIU1010000430000I) to measure the price growth of this new cost
category. Previously these costs were included in the All Other: Labor-
related Services category and were proxied by the ECI for Total
Compensation for Private Industry workers in Service Occupations (BLS
series code #CIU2010000300000I). We believe that this index better
reflects the price changes of labor associated with maintenance-related
services and its incorporation represents a technical improvement to
the market basket.
All Other: Labor-Related Services
We proposed to use the ECI for Total Compensation for Private
Industry workers in Service Occupations (BLS series code
#CIU2010000300000I) to measure the price growth of this cost category.
This is the same proxy used in the 2008-based RPL market basket.
Professional Fees: Nonlabor-Related
We proposed to use the ECI for Total Compensation for Private
Industry workers in Professional and Related (BLS series code
#CIU2010000120000I) to measure the price growth of this category. This
is the same proxy used in the 2008-based RPL market basket.
Financial Services
We proposed to use the ECI for Total Compensation for Private
Industry workers in Financial Activities (BLS series code
#CIU201520A000000I) to measure the price growth of this cost category.
This is the same proxy used in the 2008-based RPL market basket.
Telephone Services
We proposed to use the CPI for Telephone Services (BLS series code
#CUUR0000SEED) to measure the price growth of this cost category. This
is the same proxy used in the 2008-based RPL market basket.
All Other: Nonlabor-Related Services
We proposed to use the CPI for All Items Less Food and Energy (BLS
series code #CUUR0000SA0L1E) to measure the price growth of this cost
category. This is the same proxy used in the 2008-based RPL market
basket.
We did not receive any public comments on our proposed selection of
price proxies.
Final Decision: We are finalizing our selection of price proxies as
proposed.
ii. Price Proxies for the Capital Portion of the 2012-Based IPF Market
Basket
Capital Price Proxies Prior to Vintage Weighting
We proposed to apply the same price proxies to the detailed
capital-related cost categories as were applied in the 2008-based RPL
market basket, which are provided in Table 12 and described below. We
also proposed to continue to vintage weight the capital price proxies
for Depreciation and Interest in order to capture the long-term
consumption of capital. This vintage weighting method is similar to the
method used for the 2008-based RPL market basket and is described
below.
We proposed to proxy the Depreciation: Building and Fixed Equipment
cost category by BEA's Chained Price Index for Nonresidential
Construction for Hospitals and Special Care Facilities (BEA Table
5.4.4. Price Indexes for Private Fixed Investment in Structures by
Type). We proposed to proxy the Depreciation: Movable Equipment cost
category by the PPI for Machinery and Equipment (BLS series code
#WPU11). We proposed to proxy the Nonprofit Interest cost category by
the average yield on domestic municipal bonds (Bond Buyer 20-bond
index). We proposed to proxy for the For-profit Interest cost category
by the average yield on Moody's Aaa bonds (Federal

[[Page 46672]]

Reserve). We proposed to proxy the Other Capital-Related cost category
by the CPI-U for Rent of Primary Residence (BLS series code
#CUUS0000SEHA). We believe these are the most appropriate proxies for
IPF capital-related costs that meet our selection criteria of
relevance, timeliness, availability, and reliability.
We did not receive any public comments on our proposed selection of
price proxies for the capital-related portion of the market basket.
Final Decision: We are finalizing our selection of price proxies
for the capital-related portion of the market basket as proposed.
Vintage Weights for Price Proxies
Because capital is acquired and paid for over time, capital-related
expenses in any given year are determined by both past and present
purchases of physical and financial capital. The vintage-weighted
capital-related portion of the 2012-based IPF market basket is intended
to capture the long-term consumption of capital, using vintage weights
for depreciation (physical capital) and interest (financial capital).
These vintage weights reflect the proportion of capital-related
purchases attributable to each year of the expected life of building
and fixed equipment, movable equipment, and interest. We proposed to
use vintage weights to compute vintage-weighted price changes
associated with depreciation and interest expenses.
Capital-related costs are inherently complicated and are determined
by complex capital-related purchasing decisions, over time, based on
such factors as interest rates and debt financing. In addition, capital
is depreciated over time instead of being consumed in the same period
it is purchased. By accounting for the vintage nature of capital, we
are able to provide an accurate and stable annual measure of price
changes. Annual non-vintage price changes for capital are unstable due
to the volatility of interest rate changes and, therefore, do not
reflect the actual annual price changes for IPF capital-related costs.
The capital-related component of the 2012-based IPF market basket
reflects the underlying stability of the capital-related acquisition
process.
To calculate the vintage weights for depreciation and interest
expenses, we first need a time series of capital-related purchases for
building and fixed equipment and movable equipment. We found no single
source that provides an appropriate time series of capital-related
purchases by hospitals for all of the above components of capital
purchases. The early Medicare cost reports did not have sufficient
capital-related data to meet this need. Data we obtained from the
American Hospital Association (AHA) do not include annual capital-
related purchases. However, the AHA does provide a consistent database
of total expenses back to 1963. Consequently, we proposed to use data
from the AHA Panel Survey and the AHA Annual Survey to obtain a time
series of total expenses for hospitals. We then proposed to use data
from the AHA Panel Survey supplemented with the ratio of depreciation
to total hospital expenses obtained from the Medicare cost reports to
derive a trend of annual depreciation expenses for 1963 through 2012.
We proposed to separate these depreciation expenses into annual amounts
of building and fixed equipment depreciation and movable equipment
depreciation as determined above. From these annual depreciation
amounts we derive annual end-of-year book values for building and fixed
equipment and movable equipment using the expected life for each type
of asset category. While data are not available that are specific to
IPFs, we believe this information for all hospitals serves as a
reasonable alternative for the pattern of depreciation for IPFs.
To continue to calculate the vintage weights for depreciation and
interest expenses, we also need the expected lives for Building and
Fixed Equipment, Movable Equipment, and Interest for the 2012-based IPF
market basket. We proposed to calculate the expected lives using
Medicare cost report data from freestanding and hospital-based IPFs.
The expected life of any asset can be determined by dividing the value
of the asset (excluding fully depreciated assets) by its current year
depreciation amount. This calculation yields the estimated expected
life of an asset if the rates of depreciation were to continue at
current year levels, assuming straight-line depreciation. We proposed
to determine the expected life of building and fixed equipment
separately for hospital-based IPFs and freestanding IPFs and weight
these expected lives using the percent of total capital costs each
provider type represents. We proposed to apply a similar method for
movable equipment. Using these methods, we determined the average
expected life of building and fixed equipment to be equal to 23 years,
and the average expected life of movable equipment to be equal to 11
years. For the expected life of interest, we believe vintage weights
for interest should represent the average expected life of building and
fixed equipment because, based on previous research described in the FY
1997 IPPS final rule (61 FR 46198), the expected life of hospital debt
instruments and the expected life of buildings and fixed equipment are
similar. We note that for the 2008-based RPL market basket, we used FY
2008 Medicare cost reports for IPPS hospitals to determine the expected
life of building and fixed equipment and movable equipment (76 FR
51763). The 2008-based RPL market basket was based on an expected
average life of building and fixed equipment of 26 years and an
expected average life of movable equipment of 11 years, which were both
calculated using data for IPPS hospitals.
Multiplying these expected lives by the annual depreciation amounts
results in annual year-end asset costs for building and fixed equipment
and movable equipment. We then calculate a time series, beginning in
1964, of annual capital purchases by subtracting the previous year's
asset costs from the current year's asset costs.
For the building and fixed equipment and movable equipment vintage
weights, we proposed to use the real annual capital-related purchase
amounts for each asset type to capture the actual amount of the
physical acquisition, net of the effect of price inflation. These real
annual capital-related purchase amounts are produced by deflating the
nominal annual purchase amount by the associated price proxy as
provided above. For the interest vintage weights, we proposed to use
the total nominal annual capital-related purchase amounts to capture
the value of the debt instrument (including, but not limited to,
mortgages and bonds). Using these capital-related purchase time series
specific to each asset type, we proposed to calculate the vintage
weights for building and fixed equipment, for movable equipment, and
for interest.
The vintage weights for each asset type are deemed to represent the
average purchase pattern of the asset over its expected life (in the
case of building and fixed equipment and interest, 23 years, and in the
case of movable equipment, 11 years). For each asset type, we used the
time series of annual capital-related purchase amounts available from
2012 back to 1964. These data allow us to derive twenty-seven 23-year
periods of capital-related purchases for building and fixed equipment
and interest, and thirty-nine 11-year periods of capital-related
purchases for movable equipment. For each 23-year period for building
and fixed equipment and interest, or 11-year period for movable
equipment, we calculate annual vintage weights by

[[Page 46673]]

dividing the capital-related purchase amount in any given year by the
total amount of purchases over the entire 23-year or 11-year period.
This calculation is done for each year in the 23-year or 11-year period
and for each of the periods for which we have data. We then calculate
the average vintage weight for a given year of the expected life by
taking the average of these vintage weights across the multiple periods
of data.
We did not receive any public comments on the proposed methodology
for calculating the vintage weights for the 2012-based IPF market
basket.
Final Decision: We are finalizing the vintage weights as proposed.
The vintage weights for the capital-related portion of the 2008-
based RPL market basket and the 2012-based IPF market basket are
presented in Table 11 below.

Table 11--2008-Based RPL Market Basket and 2012-Based IPF Market Basket Vintage Weights for Capital-Related Price Proxies
--------------------------------------------------------------------------------------------------------------------------------------------------------
Building and fixed equipment Movable equipment Interest
-----------------------------------------------------------------------------------------------------------------
Year 2012-Based 23 2008-Based 26 2012-Based 11 2008-Based 11 2012-Based 23 2008-Based 26
years years years years years years
--------------------------------------------------------------------------------------------------------------------------------------------------------
1..................................... 0.029 0.021 0.069 0.071 0.017 0.010
2..................................... 0.031 0.023 0.073 0.075 0.019 0.012
3..................................... 0.034 0.025 0.077 0.080 0.022 0.014
4..................................... 0.036 0.027 0.083 0.083 0.024 0.016
5..................................... 0.037 0.028 0.087 0.085 0.026 0.018
6..................................... 0.039 0.030 0.091 0.089 0.028 0.020
7..................................... 0.040 0.031 0.096 0.092 0.030 0.021
8..................................... 0.041 0.033 0.100 0.098 0.032 0.024
9..................................... 0.042 0.035 0.103 0.103 0.035 0.026
10.................................... 0.044 0.037 0.107 0.109 0.038 0.029
11.................................... 0.045 0.039 0.114 0.116 0.040 0.033
12.................................... 0.045 0.041 ................. ................. 0.042 0.035
13.................................... 0.045 0.042 ................. ................. 0.044 0.038
14.................................... 0.046 0.043 ................. ................. 0.046 0.041
15.................................... 0.046 0.044 ................. ................. 0.048 0.043
16.................................... 0.048 0.045 ................. ................. 0.053 0.046
17.................................... 0.049 0.046 ................. ................. 0.057 0.049
18.................................... 0.050 0.047 ................. ................. 0.060 0.052
19.................................... 0.051 0.047 ................. ................. 0.063 0.053
20.................................... 0.051 0.045 ................. ................. 0.066 0.053
21.................................... 0.051 0.045 ................. ................. 0.067 0.055
22.................................... 0.050 0.045 ................. ................. 0.069 0.056
23.................................... 0.052 0.046 ................. ................. 0.073 0.060
24.................................... ................. 0.046 ................. ................. ................. 0.063
25.................................... ................. 0.045 ................. ................. ................. 0.064
26.................................... ................. 0.046 ................. ................. ................. 0.068
-----------------------------------------------------------------------------------------------------------------
Total............................. 1.000 1.000 1.000 1.000 1.000 1.000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Numbers may not add to total due to rounding.

The process of creating vintage-weighted price proxies requires
applying the vintage weights to the price proxy index where the last
applied vintage weight in Table 11 is applied to the most recent data
point. We have provided on the CMS Web site an example of how the
vintage weighting price proxies are calculated, using example vintage
weights and example price indices. The example can be found at the
following link: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html in the zip file titled ``Weight Calculations
as described in the IPPS FY 2010 Proposed Rule.''
iii. Summary of Price Proxies of the 2012-Based IPF Market Basket
As stated above, we did not receive any public comments on our
proposed list of operating or capital price proxies.
Final Decision: We are finalizing the list of operating and capital
price proxies as proposed.
Table 12 shows both the operating and capital price proxies for the
2012-based IPF Market Basket.

Table 12--Price Proxies for the 2012-Based IPF Market Basket
----------------------------------------------------------------------------------------------------------------
Weight
Cost description Price proxies (percent)
----------------------------------------------------------------------------------------------------------------
Total.................................... ..................................................... 100.0
Compensation......................... ..................................................... 65.5
Wages and Salaries............... Blended Wages and Salaries Price Proxy............... 52.1
Employee Benefits................ Blended Benefits Price Proxy......................... 13.4
Utilities............................ ..................................................... 1.7
Electricity...................... PPI for Commercial Electric Power.................... 0.8
Fuel, Oil, and Gasoline.......... Blend of the PPI for Petroleum Refineries and PPI for 0.9
Natural Gas.

[[Page 46674]]

Water & Sewerage................. CPI-U for Water and Sewerage Maintenance............. 0.1
Professional Liability Insurance..... ..................................................... 1.1
Malpractice...................... CMS Hospital Professional Liability Insurance Premium 1.1
Index.
All Other Products and Services...... ..................................................... 24.6
All Other Products................... ..................................................... 11.5
Pharmaceuticals.................. PPI for Pharmaceuticals for human use, prescription.. 4.8
Food: Direct Purchases........... PPI for Processed Foods and Feeds.................... 1.4
Food: Contract Services.......... CPI-U for Food Away From Home........................ 0.9
Chemicals........................ Blend of Chemical PPIs............................... 0.6
Medical Instruments.............. Blend of the PPI for Surgical and medical instruments 1.9
and PPI for Medical and surgical appliances and
supplies.
Rubber & Plastics................ PPI for Rubber and Plastic Products.................. 0.5
Paper and Printing Products...... PPI for Converted Paper and Paperboard Products...... 0.9
Miscellaneous Products........... PPI for Finished Goods Less Food and Energy.......... 0.6
All Other Services................... ..................................................... 13.1
Labor-Related Services............... ..................................................... 6.6
Professional Fees: Labor-related. ECI for Total compensation for Private industry 2.9
workers in Professional and related.
Administrative and Facilities ECI for Total compensation for Private industry 0.7
Support Services. workers in Office and administrative support.
Installation, Maintenance, and ECI for Total compensation for Civilian workers in 1.6
Repair. Installation, maintenance, and repair.
All Other: Labor-related Services ECI for Total compensation for Private industry 1.5
workers in Service occupations.
Nonlabor-Related Services............ ..................................................... 6.5
Professional Fees: Nonlabor- ECI for Total compensation for Private industry 2.6
related. workers in Professional and related.
Financial services............... ECI for Total compensation for Private industry 2.3
workers in Financial activities.
Telephone Services............... CPI-U for Telephone Services......................... 0.6
All Other: Nonlabor-related CPI-U for All Items Less Food and Energy............. 1.1
Services.
Capital-Related Costs................ ..................................................... 7.0
Depreciation......................... ..................................................... 5.2
Fixed Assets..................... BEA chained price index for nonresidential 3.7
construction for hospitals and special care
facilities--vintage weighted (23 years).
Movable Equipment................ PPI for machinery and equipment--vintage weighted (11 1.5
years).
Interest Costs....................... ..................................................... 1.2
Government/Nonprofit............. Average yield on domestic municipal bonds (Bond Buyer 1.0
20 bonds)--vintage weighted (23 years).
For Profit....................... Average yield on Moody's Aaa bonds--vintage weighted 0.2
(23 years).
Other Capital-Related Costs.......... CPI-U for Rent of primary residence.................. 0.6
----------------------------------------------------------------------------------------------------------------
Note: Totals may not sum to 100.0 percent due to rounding.

4. FY 2016 Market Basket Update
For FY 2016 (that is, beginning October 1, 2015 and ending
September 30, 2016), we proposed to use an estimate of the 2012-based
IPF market basket increase factor to update the IPF PPS base payment
rate. Consistent with historical practice, we estimate the market
basket update for the IPF PPS based on IHS Global Insight's forecast.
IHS Global Insight (IGI), Inc. is a nationally recognized economic and
financial forecasting firm that contracts with CMS to forecast the
components of the market baskets and multifactor productivity (MFP).
In the FY 2016 proposed rule, using IGI's first quarter 2015
forecast with historical data through the fourth quarter of 2014, the
projected proposed 2012-based IPF market basket increase factor for FY
2016 was 2.7 percent. We also proposed that if more recent data are
subsequently available (for example, a more recent estimate of the
market basket) we would use such data, to determine the FY 2016 update
in the final rule.
For this final rule, we are estimating the market basket update for
the IPF PPS using the most recent available data. Based on IGI's second
quarter 2015 forecast with historical data through the first quarter of
2015, the final 2012-based IPF market basket increase factor for FY
2016 is 2.4 percent. For comparison, the current 2008-based RPL market
basket is projected to increase by 2.4 percent in FY 2016 based on
IGI's second quarter 2015 forecast and the proposed 2012-based IPF
market basket is projected to increase 2.4 percent in FY 2016 based on
IGI's second quarter 2015 forecast.
Final Decision: We are finalizing our methodology for determining
the market basket increase as proposed. Therefore, consistent with our
historical practice of estimating market basket increases based on the
best available data, we are finalizing a market basket increase factor
of 2.4 percent for FY 2016. Table 13 compares the final 2012-based IPF
market basket and the 2008-based RPL market basket percent changes.

[[Page 46675]]

Table 13--2012-Based IPF Market Basket and 2008-Based RPL Market Basket
Percent Changes, FY 2010 Through FY 2018
------------------------------------------------------------------------
Final 2012-based 2008-Based RPL
IPF market basket market basket
Fiscal Year (FY) index percent index percent
change change
------------------------------------------------------------------------
Historical data:
FY 2010....................... 2.0 2.2
FY 2011....................... 2.2 2.5
FY 2012....................... 1.9 2.2
FY 2013....................... 2.0 2.1
FY 2014....................... 1.9 1.8
Average 2010-2014............. 2.0 2.2
Forecast:
FY 2015....................... 1.9 2.0
FY 2016....................... 2.4 2.4
FY 2017....................... 2.9 2.9
FY 2018....................... 3.0 3.1
Average 2015-2018............. 2.6 2.6
------------------------------------------------------------------------
Note: These market basket percent changes do not include any further
adjustments as may be statutorily required.
Source: IHS Global Insight, Inc. 2nd quarter 2015 forecast.

For FY 2016, the 2012-based IPF market basket update (2.4 percent)
is the same as the 2008-based RPL market basket (2.4 percent).
5. Productivity Adjustment
Section 1886(s)(2)(A)(i) of the Act requires the application of the
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of
the Act to the IPF PPS for the RY beginning in 2012 (that is, a RY that
coincides with a FY) and each subsequent RY. The statute defines the
productivity adjustment to be equal to the 10-year moving average of
changes in annual economy-wide private nonfarm business multifactor
productivity (MFP) (as projected by the Secretary for the 10-year
period ending with the applicable FY, year, cost reporting period, or
other annual period) (the ``MFP adjustment''). The Bureau of Labor
Statistics (BLS) publishes the official measure of private non-farm
business MFP. We refer readers to the BLS Web site at http://www.bls.gov/mfp for the BLS historical published MFP data.
MFP is derived by subtracting the contribution of labor and capital
inputs growth from output growth. The projections of the components of
MFP are currently produced by IGI, a nationally recognized economic
forecasting firm with which CMS contracts to forecast the components of
the market baskets and MFP. As described in the FY 2012 IPPS/LTCH final
rule (76 FR 51690 through 51692), in order to generate a forecast of
MFP, IGI replicated the MFP measure calculated by the BLS using a
series of proxy variables derived from IGI's U.S. macroeconomic models.
In the FY 2012 rule, we identified each of the major MFP component
series employed by the BLS to measure MFP as well as provided the
corresponding concepts determined to be the best available proxies for
the BLS series.
Beginning with the FY 2016 rulemaking cycle, the MFP adjustment is
calculated using a revised series developed by IGI to proxy the
aggregate capital inputs. Specifically, IGI has replaced the Real
Effective Capital Stock used for Full Employment GDP with a forecast of
BLS aggregate capital inputs recently developed by IGI using a
regression model. This series provides a better fit to the BLS capital
inputs, as measured by the differences between the actual BLS capital
input growth rates and the estimated model growth rates over the
historical time period. Therefore, we are using IGI's most recent
forecast of the BLS capital inputs series in the MFP calculations
beginning with the FY 2016 rulemaking cycle. A complete description of
the MFP projection methodology is available on our Web site at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html. Although
we discuss the IGI changes to the MFP proxy series in this final rule,
in the future, when IGI makes changes to the MFP methodology, we will
announce them on our Web site rather than in the annual rulemaking.
In the FY 2016 proposed rule, using IGI's first quarter 2015
forecast, the MFP adjustment for FY 2016 (the 10-year moving average of
MFP for the period ending FY 2016) was projected to be 0.6 percent.
Furthermore, we also proposed that if more recent data are subsequently
available (for example, a more recent estimate of the market basket and
MFP adjustment), we would use such data to determine the FY 2016 market
basket update and MFP adjustment in the final rule. For this final
rule, based on IGI's second quarter 2015 forecast with historical data
through the first quarter of 2015, the MFP adjustment for FY 2016 (the
10-year moving average of MFP for the period ending FY 2016) is
projected to be 0.5 percent.
Thus, in accordance with section 1886(s)(2)(A)(i) of the Act, we
are finalizing our proposal to base the FY 2016 market basket update,
which is used to determine the applicable percentage increase for the
IPF payments, on the most recent estimate of the final 2012-based IPF
market basket (estimated to be 2.4 percent based on IGI's second
quarter 2015 forecast). We then reduced this percentage increase by the
current estimate of the MFP adjustment for FY 2016 of 0.5 percentage
point (the 10-year moving average of MFP for the period ending FY 2016
based on IGI's second quarter 2015 forecast).
Section 1886(s)(2)(A)(ii) of the Act requires the application of an
``other adjustment'' that reduces any update to an IPF PPS base rate by
percentages specified in section 1886(s)(3) of the Act for the RY
beginning in 2010 through the RY beginning in 2019. For the RY
beginning in 2015 (that is, FY 2016), section 1886(s)(3)(D) of the Act
requires the reduction to be 0.2 percentage point. We are implementing
the productivity adjustment and ``other adjustment'' in this final
rule.
6. Labor-Related Share
Due to variations in geographic wage levels and other labor-related
costs, we

[[Page 46676]]

believe that payment rates under the IPF PPS should continue to be
adjusted by a geographic wage index, which would apply to the labor-
related portion of the Federal per diem base rate (hereafter referred
to as the labor-related share). The labor-related share is determined
by identifying the national average proportion of total costs that are
related to, influenced by, or vary with the local labor market. We
continue to classify a cost category as labor-related if the costs are
labor-intensive and vary with the local labor market. As stated in the
FY 2015 IPF PPS final rule (79 FR 45943), the labor-related share was
defined as the sum of the relative importance of Wages and Salaries,
Employee Benefits, Professional Fees: Labor- Related Services,
Administrative and Facilities Support Services, All Other: Labor-
related Services, and a portion of the Capital Costs from the 2008-
based RPL market basket.
Based on our definition of the labor-related share and the cost
categories in the 2012-based IPF market basket, we proposed to include
in the labor-related share the sum of the relative importance of Wages
and Salaries, Employee Benefits, Professional Fees: Labor- Related,
Administrative and Facilities Support Services, Installation,
Maintenance, and Repair, All Other: Labor-related Services, and a
portion of the Capital-Related cost weight from the proposed 2012-based
IPF market basket.
Comment: Several commenters expressed concerns over the accuracy of
the labor-related share using the proposed 2012-based IPF market
basket, particularly given the proposed increase in the labor-related
share of six percentage points over the FY 2015 labor-related share
using the 2008-based RPL market basket. One commenter stated that they
anticipated that the IPF labor costs would be higher than possibly
rehabilitation or long-term care hospitals; however, a labor share of
this magnitude was not anticipated. They further stated that CMS
acknowledged in the proposed rule that approximately 69 percent of the
IPFs have a wage index value less than 1.00 and would face permanent
payment reductions, while the remaining IPFs in high-cost areas will
receive payment increases due to the budget neutrality and cost-
shifting that will occur if the proposed labor-related share and
proposed wage indices are adopted.
Several other commenters stated there is a potential to overstate
the labor-related share by multiplying the ancillary salary cost
reported on worksheet A ``by the ratio of IPF Medicare ancillary costs
for the cost center.'' They urged CMS to utilize a more accurate
calculation for the ancillary cost centers in order to mitigate the
risk of overstating labor- related share costs.
Response: We appreciate the commenters' concern over the increase
in the FY 2016 labor-related share using the proposed 2012-based IPF
market basket compared to the FY 2015 labor-related share using the
2008-based RPL market basket. As stated in the FY 2016 proposed rule
(80 FR 25032), of the six percentage-point difference in the labor-
related shares, three percentage points are attributable to the higher
Wages and Salaries and Employee Benefits cost weights in the 2012-based
IPF market basket compared to the 2008-based RPL market basket, while
two percentage points are attributable to the higher weight associated
with the labor-related services cost categories. Further, we stated
that the higher Wages and Salaries cost weight in the 2012-based IPF
market basket relative to the 2008-based RPL market basket is the
result of freestanding IPFs having a larger percentage of costs
attributable to labor than freestanding IRFs and long-term care
hospitals. These latter facilities were included in the 2008-based RPL
market basket.
The freestanding IPF Wages and Salaries cost weight is
approximately 10 percentage points higher than the hospital-based IPF
Wages and Salaries cost weight. It is also about six percentage points
higher than the freestanding IRF Wages and Salaries cost weight, and 13
percentage points higher than the LTCH Wages and Salaries cost weight,
all of which were included in the 2008-based RPL market basket. The
methodology used to develop the freestanding IPF Wages and Salaries
cost weight is similar to that used in the 2008-based RPL market
basket, and we did not receive any comments on our proposed methodology
outlined in the FY 2016 IPF PPS rule.
As stated in section III.A.3.a.i of this final rule, we evaluated
our methodology for Wages and Salaries cost weight, including that of
ancillary wages and salaries. Based on the comments received, we are
revising our methodology for calculating the Wages and Salaries cost
weight and Employee Benefits cost weight, resulting in an increase in
the cost weights of 0.2 and 0.1 percentage point, respectively.
Comment: One commenter stated they had major reservations about the
new inclusion of the Installation, Maintenance and Repair cost category
in the labor-related share, stating that it adds an additional 1.6
percentage points in non-health related labor costs to the IPF labor-
related share. They further stated that it is unclear why CMS considers
this additional category a technical improvement to the IPF market
basket since CMS has never recognized this cost category in its RPL
market basket computations in prior years nor has CMS shown how this
additional cost category improves the labor-related share computation.
They urged CMS not to adopt this change to the labor-related share.
Response: We disagree with the commenter's claim that the
Installation, Maintenance and Repair category is a new cost category in
the labor-related share. As stated in the proposed rule (80 FR 25027
and 25032), Installation, Maintenance and Repair services costs were
previously included in the ``All Other'' Labor-related Services cost
category in the 2008-based RPL market basket, along with other
services, including but not limited to janitorial, waste management,
security, and dry cleaning/laundry services. Also, as stated in the
proposed rule (80 FR 20527), we chose to create a separate cost
category for Installation, Maintenance and Repair services in order to
proxy these costs by the ECI for Total Compensation for Civilian
workers in Installation, Maintenance, and Repair services. We believe
this price proxy better reflects the price changes of labor associated
with maintenance-related services. In the 2008-based RPL market basket,
these services are proxied by the ECI for total Compensation for
Private Industry in Service Occupations, which reflects price growth
associated with general service occupations.
During our development of the 2012-based IPF market basket using
2007 Benchmark I-O data, we decided to aggregate detailed I-O NAICS
data to create a cost category specific to Installation, Maintenance
and Repair services and to proxy these costs by a more specific price
index. A comparison of the average historical growth rate over the last
10 years showed that the ECI for Total Compensation for Civilian
workers in Installation, Maintenance, and Repair outpaced the ECI for
total Compensation for Private Industry in Service Occupations by
approximately 0.4 percentage point. We continue to believe that the
inclusion of this cost category is a technical improvement to the 2012-
based IPF market basket as we are able to proxy Installation,
Maintenance, and Repair services with a price proxy that better
reflects the price changes of labor associated with maintenance-related
services. Because Installation, Maintenance and Repair services tend to
be labor-intensive and

[[Page 46677]]

are mostly performed at the facility (and, therefore, unlikely to be
purchased in the national market), we continue to believe that they
meet our definition of labor-related services and thus, should be
included in the labor-related share.
Similar to the 2008-based RPL market basket, the 2012-based IPF
market basket includes two cost categories for non-medical professional
fees (including but not limited to expenses for legal, accounting, and
engineering services). These are Professional Fees: Labor-related and
Professional Fees: Nonlabor-related. For the proposed 2012-based IPF
market basket, we estimated the labor-related percentage of non-medical
professional fees (and assign these expenses to the Professional Fees:
Labor-related services cost category) based on the same method that was
used to determine the labor-related percentage of professional fees in
the 2008-based RPL market basket.
To summarize, the professional services survey found that hospitals
purchase the following proportion of these four services outside of
their local labor market:
34 percent of accounting and auditing services.
30 percent of engineering services.
33 percent of legal services.
42 percent of management consulting services.
We proposed to apply each of these percentages to the respective
Benchmark I-O cost category underlying the professional fees cost
category to determine the Professional Fees: Nonlabor-related costs.
The Professional Fees: Labor-related costs were determined to be the
difference between the total costs for each Benchmark I-O category and
the Professional Fees: Nonlabor-related costs. This is the same
methodology that we used to separate the 2008-based RPL market basket
professional fees category into Professional Fees: Labor-related and
Professional Fees: Nonlabor-related cost categories. For more detail
regarding this methodology see the FY 2012 IPF final rule (76 FR
26445).
In addition to the professional services listed above, we also
proposed to classify expenses under NAICS 55, Management of Companies
and Enterprises, into the Professional Fees cost category as was done
in the 2008-based RPL market basket. The NAICS 55 data are mostly
comprised of corporate, subsidiary, and regional managing offices, or
otherwise referred to as home offices. Since many facilities are not
located in the same geographic area as their home office, we analyzed
data from a variety of sources in order to determine what proportion of
these costs should be appropriately included in the labor-related
share. For the 2012-based IPF market basket, we derived the home office
percentages using data for both freestanding IPF providers and
hospital-based IPF providers. In the 2008-based RPL market basket, we
used the home office percentages based on the data reported by
freestanding IRFs, IPFs, and LTCHs.
Using data primarily from the Medicare cost reports and the Home
Office Medicare Records (HOMER) database that provides the address
(including city and state) for home offices, we were able to determine
that 36 percent of the total number of freestanding and hospital-based
IPFs that had home offices had those home offices located in their
respective local labor markets--defined as being in the same
Metropolitan Statistical Area (MSA).
The Medicare cost report requires hospitals to report their home
office provider numbers. Using the HOMER database to determine the home
office location for each home office provider number, we compared the
location of the provider with the location of the hospital's home
office. We then placed providers into one of the following 2 groups:
Group 1--Provider and home office are located in different
MSAs.
Group 2--Provider and home office are located in the same
MSA.
We found that 64 percent of the providers with home offices were
classified into Group 1 (that is, different MSA) and, thus, these
providers were determined to not be located in the same local labor
market as their home office. We found that 36 percent of all providers
with home offices were classified into Group 2 (that is, the same MSA).
Given these results, we proposed to classify 36 percent of these
Professional Fees costs into the Professional Fees: Labor-related cost
category and the remaining 64 percent into the Professional Fees:
Nonlabor-related Services cost category. This methodology for
apportioning the Professional Fee expenses between labor-related and
nonlabor-related categories is similar to the method used in the 2008-
based RPL market basket (see 76 FR 26445).
We received one comment on our methodology for determining the
Professional Fees: Labor-related and Professional Fees: Nonlabor-
related cost weights.
Comment: One commenter pointed out that CMS's proposed FY 2016
labor-related share of 74.9 percent is an 8.1 percent increase compared
to the FY 2015 labor-related share of 69.294 percent, and disagreed
with the logic used to support this increase, stating that CMS
disproportionately emphasizes professional fees and home office costs
in the calculations of the labor-related share. The commenter stated
that of the 1,617 psychiatric hospitals/units, 69.4 percent are IPF
units. The commenter then stated that the majority of IPF unit salaries
relate to direct patient care (RNs, LPNs, Aides, etc.) and are
consistent with salaries in the hospital acute care areas. The
commenter noted that the FY 2016 IPPS proposed rule for acute care
hospitals indicates no changes to the labor-related share for wage
indexes less than 1.000 or wage indexes greater than 1.000 (the labor-
related share for IPPS hospitals is 69.6 percent). The commenter stated
that yet, in the FY 2016 IPF proposed rule, CMS believes an 8.1 percent
increase is justified and indicative of salary changes to almost 70
percent of psychiatric providers. The commenter stated that this change
also negatively impacts 64.4 percent of psychiatric providers, all
located in CMS' Central/South Atlantic Regions. The commenter disagreed
that East and West coast provider costs have increased significantly
compared to the Midwest and thus should bear the brunt of this change.
The commenter further proposed that CMS consider calculating labor-
related share percentages similar to those calculated for IPPS, where
CMS uses a percentage for providers with a wage index less than 1.00
and a percentage for providers with a wage index greater than 1.00.
Response: We respectfully disagree with the commenter's statement
that we are disproportionately emphasizing professional fees and home
office costs in the calculations of the labor-related share. The
components of the labor-related share are identical to those used in
the IPPS labor-related share, including the inclusion of professional
fees and home office costs in the IPPS labor-related share. (As stated
above, we note that the Installation, Maintenance, and Repair services
costs are included in the All Other: Labor-related Services in both the
FY 2016 IPPS labor-related share and FY 2015 IPF labor-related share
using the 2008-based RPL market basket).
The differences in the IPF labor-related share and IPPS labor-
related share are primarily attributable to the Wages and Salaries,
Employee Benefits, and Contract Labor cost weights (the sum of which is
the Compensation cost weight) which are based on IPF PPS and IPPS
Medicare cost report data,

[[Page 46678]]

respectively. We note that the 2010-based IPPS market basket cost
weights are based on costs as a percent of total operating costs while
the 2012-based IPF market basket cost weights are based on a percent of
total costs (the sum of operating costs and capital costs). The 2012-
based IPF Compensation cost weight as a percent of total operating
costs (after removing the capital cost weight) is about 10 percentage
points higher than the 2010-based IPPS Compensation cost weight whereas
the 2012-based IPF market basket Professional Fees: Labor-related share
cost weight as a percent of total operating costs (after removing the
capital cost weight) is about two percentage points lower than the
2010-based IPPS market basket Professional Fees: Labor-related share
cost weight. In addition, the 2012-based IPF Professional Fees: Labor-
related share cost weight is about four percent of the 2012-based IPF
Compensation cost weight whereas the 2010-based IPPS Professional Fees:
Labor-related share cost weight is about nine percent of the 2012-based
IPPS Compensation cost weight.
As the commenter stated, the Professional Fees: Labor-related share
includes home office costs. As described above, we determine the
proportion of the home office costs that are labor-related by comparing
the IPF provider's location (that is, MSA) to the location of its home
office (also, MSA). This is the same methodology used in the 2008-based
RPL market basket and 2010-based IPPS market basket. The 2012 IPF
Medicare cost report and Medicare HOMER data found that 36 percent were
located in the same MSA (and thus were allocated to the Professional
Fees: Labor-related share cost weight) whereas the same analysis using
2010 IPPS Medicare cost report data and Medicare HOMER data found this
percentage to be much higher with 62 percent.
We would further note that the approximately three percentage point
difference between the IPF labor-related share of 74.9 percent and the
IPPS labor-related share of 69.6 percent is attributable to the IPF
labor-related share including a portion of capital-related costs. The
IPPS labor-related share applies to the operating base payment rate and
therefore, does not include a portion of capital-related costs. IPPS
has a separate capital base payment rate and geographic adjustment
factor. The IPF PPS base payment rate reflects both operating and
capital costs (similar to the IRF and SNF PPS); therefore, the labor-
related share also reflects both costs.
We acknowledge the commenter's concern regarding an IPPS labor-
related share of 62 percent for wage indexes less than 1.000 but there
is no such provision for IPFs. The 62 percent rule is mandated by
Section 403 of Public Law 108-173, which amended section 1886(d)(3)(E)
of the Act and is applicable to IPPS hospitals operating base payment
rate only.
We would also note that the FY 2016 IPPS proposed rule did not
include a revision to the IPPS labor-related share. The IPPS labor-
related share was last revised effective for FY 2014 when CMS finalized
their proposal to rebase and revise the IPPS market basket as is now
being done for the FY 2016 IPF PPS proposed rule.
Therefore, we disagree with the commenters' claim that we are
overemphasizing professional fees and home office costs in the IPF
labor-related share and we continue to believe a labor-related share
based on the 2012-based IPF market basket is appropriate.
Final Decision: We are finalizing our methodology for determining
the IPF labor-related share based on the final 2012-based IPF market
basket (reflecting methodological revisions to the Wages and Salaries
and Employee Benefit cost weights based on public comments as described
in section III.A.3.a.i in this final rule).
Using this method and the IHS Global Insight, Inc. 2nd quarter 2015
forecast for the final 2012-based IPF market basket, the IPF labor-
related share for FY 2016 is the sum of the FY 2016 relative importance
of each labor-related cost category. The relative importance reflects
the different rates of price change for these cost categories between
the base year (FY 2012) and FY 2016. Table 14 shows the FY 2016 labor-
related share using the final 2012-based IPF market basket relative
importance and the FY 2015 labor-related share using the 2008-based RPL
market basket.
The sum of the relative importance for FY 2016 operating costs
(Wages and Salaries, Employee Benefits, Professional Fees: Labor-
related, Administrative and Facilities Support Services, Installation
Maintenance & Repair Services, and All Other: Labor-related Services)
is 72.1 percent, as shown in Table 14. We specified the labor-related
share to one decimal place, which is consistent with the IPPS labor-
related share (currently the Labor-related share from the RPL market
basket is specified to 3 decimal places).
The portion of Capital that is influenced by the local labor market
is estimated to be 46 percent, which is the same percentage applied to
the 2008-based RPL market basket. Since the relative importance for
Capital-Related Costs is 6.8 percent of the 2012-based IPF market
basket in FY 2016, we took 46 percent of 6.8 percent to determine the
labor-related share of Capital for 2016. The result will be 3.1
percent, which we added to 72.1 percent for the operating cost amount
to determine the total labor-related share for FY 2016.
The FY 2016 labor-related share using the 2012-based IPF market
basket is about five percentage points higher than the FY 2015 labor-
related share using the 2008-based RPL market basket. Of the 5
percentage point difference in the labor-related shares, three
percentage points are attributable to the higher Wages and Salaries and
Employee Benefits cost weights in the 2012-based IPF market basket
compared to the 2008-based RPL market basket, while two percentage
points are attributable to the higher weight associated with the labor-
related services cost categories. Further, we stated that the higher
Wages and Salaries cost weight in the 2012-based IPF market basket
relative to the 2008-based RPL market basket is the result of
freestanding IPFs having a larger percentage of costs attributable to
labor than freestanding IRFs and long-term care hospitals both of which
were included in the 2008-based RPL market basket.

Table 14--2016 IPF Labor-Related Share
------------------------------------------------------------------------
FY 2016 Labor-
related share
based on 2012- FY 2015 Final
based IPF labor-related
market basket share \2\
\1\
------------------------------------------------------------------------
Wages and Salaries...................... 51.9 48.271
Employee Benefits....................... 13.5 12.936

[[Page 46679]]

Professional Fees: Labor-related........ 2.9 2.058
Administrative and Facilities Support 0.7 0.415
Services...............................
Installation, Maintenance and Repair.... 1.6
All Other: Labor-related Services....... 1.5 2.061
-------------------------------
Subtotal............................ 72.1 65.741
Labor-related portion of capital (46%).. 3.1 3.553
-------------------------------
Total LRS....................... 75.2 69.294
------------------------------------------------------------------------
\1\ IHS Global Insight, Inc. 2nd quarter 2015 forecast.
\2\ Federal Register 79 FR 45943.

In weighing the effects of the change in the LRS, we considered
whether to recommend a 2-year transitional implementation of the
increase in the LRS. We recognize that IPFs with wage index values of
less than one would be adversely affected by an increased LRS, as a
larger share of the base rate will be adjusted by the wage index value.
About 69 percent of IPFs will have wage index values of less than one
using FY2015 CBSA data, and 30 percent of these providers are rural.
While the LRS will be updated in a budget neutral manner so that the
overall impact on payments is zero, there will still be distributional
effects on specific categories of IPFs. We considered the
distributional effects of the multiple updates made in this final rule,
including the update to the full LRS in FY 2016, and we found that the
negative impact of updating the LRS in a single year, without a
transition, was relatively small, as shown in Table 28 in section VIII.
of this final rule. Additionally, we made two other adjustments to
benefit providers: A transitional wage index and a phase-out of the 17
percent rural adjustment for the 37 IPFs that will change from rural to
urban status due to the new CBSA delineations. As presented in section
III.A.6. of this final rule, we used the 2012-based IPF market basket
relative importance's to determine the FY 2016 IPF LRS. We believe this
is appropriate as it is based on more recent, provider-specific data
for IPFs. For all of these reasons, we implemented the full LRS in FY
2016.
Comment: We received three comments, which asked that we phase in
the updated LRS over 2 years rather than implementing it in a single
year. Commenters were concerned about the effect of the increase in the
LRS on providers.
Response: We thank the commenters for their suggestion, but we are
not providing a transition to the updated LRS. The 2012-based IPF
market basket improves the accuracy of the IPF PPS, and the updated LRS
is a more accurate reflection of the IPF labor-related share. Although
in two other instances we are providing a transition that will benefit
providers--a 1-year transitional wage index and the 3-year transition
of the rural adjustment--in this case, we believe the impact on those
providers that will be negatively affected by the updated LRS is
relatively small. Furthermore, we have not typically provided a
transition in the IPF PPS when the LRS has changed. For example, in the
May 6, 2011 IPF PPS final rule, we rebased the RPL market basket, and
the LRS changed from 75.400 to 70.317. Although this decrease in the
LRS would have benefitted IPFs with wage index values less than one,
but would have had a negative payment effect on IPFs with wage index
values greater than one, we did not provide a transition to this lower
LRS. For all of these reasons, we are implementing the updated IPF-
specific LRS of 75.2 in full in FY 2016.

B. Updates to the IPF PPS for FY 2016 (Beginning October 1, 2015)

The IPF PPS is based on a standardized Federal per diem base rate
calculated from the IPF average per diem costs and adjusted for budget-
neutrality in the implementation year. The Federal per diem base rate
is used as the standard payment per day under the IPF PPS and is
adjusted by the patient-level and facility-level adjustments that are
applicable to the IPF stay. A detailed explanation of how we calculated
the average per diem cost appears in the November 2004 IPF PPS final
rule (69 FR 66926).
1. Determining the Standardized Budget-Neutral Federal Per Diem Base
Rate
Section 124(a)(1) of the BBRA required that we implement the IPF
PPS in a budget-neutral manner. In other words, the amount of total
payments under the IPF PPS, including any payment adjustments, must be
projected to be equal to the amount of total payments that would have
been made if the IPF PPS were not implemented. Therefore, we calculated
the budget-neutrality factor by setting the total estimated IPF PPS
payments to be equal to the total estimated payments that would have
been made under the Tax Equity and Fiscal Responsibility Act of 1982
(TEFRA) (Pub. L. 97-248) methodology had the IPF PPS not been
implemented. A step-by-step description of the methodology used to
estimate payments under the TEFRA payment system appears in the
November 2004 IPF PPS final rule (69 FR 66926).
Under the IPF PPS methodology, we calculated the final Federal per
diem base rate to be budget-neutral during the IPF PPS implementation
period (that is, the 18-month period from January 1, 2005 through June
30, 2006) using a July 1 update cycle. We updated the average cost per
day to the midpoint of the IPF PPS implementation period (that is,
October 1, 2005), and this amount was used in the payment model to
establish the budget-neutrality adjustment.
Next, we standardized the IPF PPS Federal per diem base rate to
account for the overall positive effects of the IPF PPS payment
adjustment factors by dividing total estimated payments under the TEFRA
payment system by estimated payments under the IPF PPS. Additional
information concerning this standardization can be found in the
November 2004 IPF PPS final rule (69

[[Page 46680]]

FR 66932) and the RY 2006 IPF PPS final rule (71 FR 27045). We then
reduced the standardized Federal per diem base rate to account for the
outlier policy, the stop loss provision, and anticipated behavioral
changes. A complete discussion of how we calculated each component of
the budget-neutrality adjustment appears in the November 2004 IPF PPS
final rule (69 FR 66932 through 66933) and in the May 2006 IPF PPS
final rule (71 FR 27044 through 27046). The final standardized budget-
neutral Federal per diem base rate established for cost reporting
periods beginning on or after January 1, 2005 was calculated to be
$575.95.
The Federal per diem base rate has been updated in accordance with
applicable statutory requirements and Sec. 412.428 through publication
of annual notices or proposed and final rules. A detailed discussion on
the standardized budget-neutral Federal per diem base rate and the
electroconvulsive therapy (ECT) payment per treatment appears in the
August 2013 IPF PPS update notice (78 FR 46738 through 46739). These
documents are available on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/index.html.
2. FY 2016 Update of the Federal Per Diem Base Rate and
Electroconvulsive Therapy (ECT) Payment Per Treatment
The current (that is, FY 2015) Federal per diem base rate is
$728.31 and the ECT payment per treatment is $313.55. For FY 2016, we
applied an update of 1.7 percent (that is, the 2012-based IPF market
basket increase for FY 2016 of 2.4 percent less the productivity
adjustment of 0.5 percentage point, and further reduced by the 0.2
percentage point required under section1886(s)(3)(D) of the Act), and
the wage index budget-neutrality factor of 1.0041 (as discussed in
section III.D.1.e. of this final rule) to the FY 2015 Federal per diem
base rate of $728.31, yielding a Federal per diem base rate of $743.73
for FY 2016. Similarly, we applied the 1.7 percent payment update and
the 1.0041 wage index budget-neutrality factor to the FY 2015 ECT
payment per treatment, yielding an ECT payment per treatment of $320.19
for FY 2016.
As noted above, section 1886(s)(4) of the Act requires the
establishment of a quality data reporting program for the IPF PPS
beginning in RY 2015. We refer readers to section V. of this final rule
for a discussion of the IPF Quality Reporting Program. Section
1886(s)(4)(A)(i) of the Act requires that, for RY 2014 and each
subsequent rate year, the Secretary shall reduce any annual update to a
standard Federal rate for discharges occurring during the rate year by
2.0 percentage points for any IPF that does not comply with the quality
data submission requirements with respect to an applicable year.
Therefore, we will apply a 2.0 percentage point reduction to the
Federal per diem base rate and the ECT payment per treatment as
follows:
For IPFs that failed to submit quality reporting data under the
IPFQR program, we will apply a -0.3 percent annual update (that is, 1.7
percent reduced by 2 percentage points, in accordance with section
1886(s)(4)(A)(ii) of the Act) and the wage index budget-neutrality
factor of 1.0041 to the FY 2015 Federal per diem base rate of $728.31,
yielding a Federal per diem base rate of $729.10 for FY 2016.
Similarly, we will apply the -0.3 percent annual update and the
1.0041 wage index budget-neutrality factor to the FY 2015 ECT payment
per treatment of $313.55, yielding an ECT payment per treatment of
$313.89 for FY 2016.

C. Updates to the IPF PPS Patient-Level Adjustment Factors

1. Overview of the IPF PPS Adjustment Factors
The IPF PPS payment adjustments were derived from a regression
analysis of 100 percent of the FY 2002 MedPAR data file, which
contained 483,038 cases. For a more detailed description of the data
file used for the regression analysis, see the November 2004 IPF PPS
final rule (69 FR 66935 through 66936). While we have since used more
recent claims data to simulate payments to set the fixed dollar loss
threshold amount for the outlier policy and to assess the impact of the
IPF PPS updates, we continue to use the regression-derived adjustment
factors established in 2005 for FY 2016.
2. IPF PPS Patient-Level Adjustments
The IPF PPS includes payment adjustments for the following patient-
level characteristics: Medicare Severity Diagnosis Related Groups (MS-
DRGs) assignment of the patient's principal diagnosis, selected
comorbidities, patient age, and the variable per diem adjustments. We
did not propose any changes to the IPF PPS Patient-level Adjustments.
a. MS-DRG Assignment
We believe it is important to maintain the same diagnostic coding
and DRG classification for IPFs that are used under the IPPS for
providing psychiatric care. For this reason, when the IPF PPS was
implemented for cost reporting periods beginning on or after January 1,
2005, we adopted the same diagnostic code set (ICD-9-CM) and DRG
patient classification system (that is, the CMS DRGs) that were
utilized at the time under the IPPS. In the May 2008 IPF PPS notice (73
FR 25709), we discussed CMS' effort to better recognize resource use
and the severity of illness among patients. CMS adopted the new MS-DRGs
for the IPPS in the FY 2008 IPPS final rule with comment period (72 FR
47130). In the 2008 IPF PPS notice (73 FR 25716), we provided a
crosswalk to reflect changes that were made under the IPF PPS to adopt
the new MS-DRGs. For a detailed description of the mapping changes from
the original DRG adjustment categories to the current MS-DRG adjustment
categories, we refer readers to the May 2008 IPF PPS notice (73 FR
25714).
The IPF PPS includes payment adjustments for designated psychiatric
DRGs assigned to the claim based on the patient's principal diagnosis.
The DRG adjustment factors were expressed relative to the most
frequently reported psychiatric DRG in FY 2002, that is, DRG 430
(psychoses). The coefficient values and adjustment factors were derived
from the regression analysis. Mapping the DRGs to the MS-DRGs resulted
in the current 17 IPF-MS-DRGs, instead of the original 15 DRGs, for
which the IPF PPS provides an adjustment.
For the FY 2016 update, we are not making any changes to the IPF
MS-DRG adjustment factors. In FY 2015 rulemaking (79 FR 45945 through
45947), we proposed and finalized conversions of the ICD-9-CM-based MS-
DRGs to ICD-10-CM/PCS-based MS-DRGs, which will be implemented on
October 1, 2015. Further information for the ICD-10-CM/PCS MS-DRG
conversion project can be found on the CMS ICD-10-CM Web site at http://www.cms.hhs.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html.
For FY 2016, we will continue to make a payment adjustment for
psychiatric diagnoses that group to one of the existing 17 IPF-MS-DRGs
listed in the Addendum. Psychiatric principal diagnoses that do not
group to one of the 17 designated DRGs will still receive the Federal
per diem base rate and all other applicable adjustments, but the
payment would not include a DRG adjustment.
As noted above, the diagnoses for each IPF-MS-DRG will be updated
on October 1, 2015, using the ICD-10-CM/PCS code sets.

[[Page 46681]]

b. Payment for Comorbid Conditions
The intent of the comorbidity adjustments is to recognize the
increased costs associated with comorbid conditions by providing
additional payments for certain concurrent medical or psychiatric
conditions that are expensive to treat. In the May 2011 IPF PPS final
rule (76 FR 26451 through 26452), we explained that the IPF PPS
includes 17 comorbidity categories and identified the new, revised, and
deleted ICD-9-CM diagnosis codes that generate a comorbid condition
payment adjustment under the IPF PPS for RY 2012 (76 FR 26451).
Comorbidities are specific patient conditions that are secondary to
the patient's principal diagnosis and that require treatment during the
stay. Diagnoses that relate to an earlier episode of care and have no
bearing on the current hospital stay are excluded and must not be
reported on IPF claims. Comorbid conditions must exist at the time of
admission or develop subsequently, and affect the treatment received,
length of stay (LOS), or both treatment and LOS.
For each claim, an IPF may receive only one comorbidity adjustment
within a comorbidity category, but it may receive an adjustment for
more than one comorbidity category. Current billing instructions for
claims for discharges on or after October 1, 2015 require IPFs to enter
the complete ICD-10-CM codes for up to 24 additional diagnoses if they
co-exist at the time of admission, or develop subsequently and impact
the treatment provided.
The comorbidity adjustments were determined based on the regression
analysis using the diagnoses reported by IPFs in FY 2002. The principal
diagnoses were used to establish the DRG adjustments and were not
accounted for in establishing the comorbidity category adjustments,
except where ICD-9-CM ``code first'' instructions apply. As we
explained in the May 2011 IPF PPS final rule (76 FR 265451), the ``code
first'' rule applies when a condition has both an underlying etiology
and a manifestation due to the underlying etiology. For these
conditions, ICD-9-CM has a coding convention that requires the
underlying conditions to be sequenced first followed by the
manifestation. Whenever a combination exists, there is a ``use
additional code'' note at the etiology code and a ``code first'' note
at the manifestation code.
The same principle holds for ICD-10-CM as for ICD-9-CM. Whenever a
combination exists, there is a ``use additional code'' note in the ICD-
10-CM codebook pertaining to the etiology code, and a ``code first''
code pertaining to the manifestation code. In the FY 2015 IPF PPS final
rule, we provided a ``code first'' table for reference that highlights
the same or similar manifestation codes where the ``code first''
instructions apply in ICD-10-CM that were present in ICD-9-CM (79 FR
46009).
As noted previously, it is our policy to maintain the same
diagnostic coding set for IPFs that is used under the IPPS for
providing the same psychiatric care. The 17 comorbidity categories
formerly defined using ICD-9-CM codes were converted to ICD-10-CM/PCS
in the FY 2015 IPF PPS final rule (79 FR 45947 to 45955). The goal for
converting the comorbidity categories is referred to as replication,
meaning that the payment adjustment for a given patient encounter is
the same after ICD-10-CM implementation as it would be if the same
record had been coded in ICD-9-CM and submitted prior to ICD-10-CM/PCS
implementation on October 1, 2015. All conversion efforts were made
with the intent of achieving this goal.
We did not propose any refinements to the comorbidity adjustments,
and will continue to use the existing adjustments in effect in FY 2015.
The FY 2016 comorbidity adjustments are found in the Addendum to this
final rule.
Comment: We received one comment suggesting that we change the
comorbidity adjustment to add a number of infectious diseases which the
commenters felt increased IPF costs. The commenter provided a listing
of ICD-10-CM codes for these conditions.
Response: Changes to the comorbidity adjustment would occur as part
of a larger IPF PPS refinement, as the comorbidity adjustment factors
are derived through a regression analysis, which also includes other
IPF PPS adjustments (for example, the age adjustment). We did not
propose to refine the IPF PPS in the FY 2016 IPF PPS proposed rule, and
therefore, this comment is outside the scope of this rule. However, we
will consider the comment when we undertake future refinements.
3. Patient Age Adjustments
As explained in the November 2004 IPF PPS final rule (69 FR 66922),
we analyzed the impact of age on per diem cost by examining the age
variable (that is, the range of ages) for payment adjustments. In
general, we found that the cost per day increases with age. The older
age groups are more costly than the under 45 age group, the differences
in per diem cost increase for each successive age group, and the
differences are statistically significant.
We did not propose any changes to the patient age adjustments; for
FY 2016, we will continue to use the patient age adjustments currently
in effect in FY 2015, as shown in the Addendum to this final rule.
4. Variable Per Diem Adjustments
We explained in the November 2004 IPF PPS final rule (69 FR 66946)
that the regression analysis indicated that per diem cost declines as
the LOS increases. The variable per diem adjustments to the Federal per
diem base rate account for ancillary and administrative costs that
occur disproportionately in the first days after admission to an IPF.
We used a regression analysis to estimate the average differences
in per diem cost among stays of different lengths. As a result of this
analysis, we established variable per diem adjustments that begin on
day 1 and decline gradually until day 21 of a patient's stay. For day
22 and thereafter, the variable per diem adjustment remains the same
each day for the remainder of the stay. However, the adjustment applied
to day 1 depends upon whether the IPF has a qualifying emergency
department (ED). If an IPF has a qualifying ED, it receives a 1.31
adjustment factor for day 1 of each stay. If an IPF does not have a
qualifying ED, it receives a 1.19 adjustment factor for day 1 of the
stay. The ED adjustment is explained in more detail in section III.D.4.
of this final rule.
We did not propose any changes to the variable per diem adjustment
factors; for FY 2016, we will continue to use the variable per diem
adjustment factors currently in effect as shown in the Addendum to this
final rule. A complete discussion of the variable per diem adjustments
appears in the November 2004 IPF PPS final rule (69 FR 66946).

D. Updates to the IPF PPS Facility-Level Adjustments

The IPF PPS includes facility-level adjustments for the wage index,
IPFs located in rural areas, teaching IPFs, cost of living adjustments
for IPFs located in Alaska and Hawaii, and IPFs with a qualifying ED.
1. Wage Index Adjustment
a. Background
As discussed in the May 2006 IPF PPS final rule (71 FR 27061) and
in the May 2008 (73 FR 25719) and May 2009 IPF PPS notices (74 FR
20373), in order to provide an adjustment for geographic wage levels,
the labor-related portion of

[[Page 46682]]

an IPF's payment is adjusted using an appropriate wage index.
Currently, an IPF's geographic wage index value is determined based on
the actual location of the IPF in an urban or rural area as defined in
Sec. 412.64(b)(1)(ii)(A) and (C).
b. Wage Index for FY 2016
Since the inception of the IPF PPS, we have used the pre-floor,
pre-reclassified acute care hospital wage index in developing a wage
index to be applied to IPFs because there is not an IPF-specific wage
index available. We believe that IPFs generally compete in the same
labor markets as acute care hospitals, so the pre-floor, pre-
reclassified hospital wage index should reflect IPF labor costs. As
discussed in the May 2006 IPF PPS final rule for FY 2007 (71 FR 27061
through 27067), under the IPF PPS, the wage index is calculated using
the IPPS wage index for the labor market area in which the IPF is
located, without taking into account geographic reclassifications,
floors, and other adjustments made to the wage index under the IPPS.
For a complete description of these IPPS wage index adjustments, please
see the CY 2013 IPPS/LTCH PPS final rule (77 FR 53365 through 53374).
For FY 2016, we will continue to apply the most recent hospital wage
index (that is, the FY 2015 pre-floor, pre-reclassified hospital wage
index, which is the most appropriate index as it best reflects the
variation in local labor costs of IPFs in the various geographic areas)
using the most recent hospital wage data (that is, data from hospital
cost reports for the cost reporting period beginning during FY 2011)
without any geographic reclassifications, floors, or other adjustments.
We apply the FY 2016 IPF PPS wage index to payments beginning October
1, 2015.
We apply the wage index adjustment to the labor-related portion of
the federal rate, which we changed from 69.294 percent to 75.2 percent
in FY 2016. This percentage reflects the labor-related share of the
2012-based IPF market basket for FY 2016 (see section III.A.6. of this
final rule).
c. OMB Bulletins and Transitional Wage Index
OMB publishes bulletins regarding CBSA changes, including changes
to CBSA numbers and titles. In the May 2006 IPF PPS final rule for RY
2007 (71 FR 27061 through 27067), we adopted the changes discussed in
the Office of Management and Budget (OMB) Bulletin No. 03-04 (June 6,
2003), which announced revised definitions for Metropolitan Statistical
Areas (MSAs), and the creation of Micropolitan Statistical Areas and
Combined Statistical Areas. In adopting the OMB CBSA geographic
designations in RY 2007, we did not provide a separate transition for
the CBSA-based wage index since the IPF PPS was already in a transition
period from TEFRA payments to PPS payments.
In the May 2008 IPF PPS notice, we incorporated the CBSA
nomenclature changes published in the most recent OMB bulletin that
applies to the hospital wage index used to determine the current IPF
PPS wage index and stated that we expect to continue to do the same for
all the OMB CBSA nomenclature changes in future IPF PPS rules and
notices, as necessary (73 FR 25721). The OMB bulletins may be accessed
online at http://www.whitehouse.gov/omb/bulletins_default/.
In accordance with our established methodology, we have
historically adopted any CBSA changes that are published in the OMB
bulletin that corresponds with the hospital wage index used to
determine the IPF PPS wage index. For the FY 2015 IPF wage index, we
used the FY 2014 pre-floor, pre-reclassified hospital wage index to
adjust the IPF PPS payments. On February 28, 2013, OMB issued OMB
Bulletin No. 13-01, which established revised delineations for
Metropolitan Statistical Areas, Micropolitan Statistical Areas, and
Combined Statistical Areas, and provided guidance on the use of the
delineations of these statistical areas. A copy of this bulletin may be
obtained at http://www.whitehouse.gov/omb/bulletins_default/. Because
the FY 2014 pre-floor, pre-reclassified hospital wage index was
finalized prior to the issuance of this Bulletin, the FY 2015 IPF PPS
wage index, which was based on the FY 2014 pre-floor, pre-reclassified
hospital wage index, did not reflect OMB's new area delineations based
on the 2010 Census. According to OMB, ``[t]his bulletin provides the
delineations of all Metropolitan Statistical Areas, Metropolitan
Divisions, Micropolitan Statistical Areas, Combined Statistical Areas,
and New England City and Town Areas in the United States and Puerto
Rico based on the standards published on June 28, 2010, in the Federal
Register (75 FR 37246 through 37252) and Census Bureau data.'' These
OMB Bulletin changes are reflected in the FY 2015 pre-floor, pre-
reclassified hospital wage index, upon which the FY 2016 IPPS PPS wage
index is based. We have adopted these new OMB CBSA delineations in the
FY 2016 IPF PPS wage index.
We believe that the most current CBSA delineations accurately
reflect the local economies and wage levels of the areas where IPFs are
located, and we believe that it is important for the IPF PPS to use the
latest CBSA delineations available in order to maintain an up-to-date
payment system that accurately reflects the reality of population
shifts and labor market conditions.
In adopting these changes for the IPF PPS, it was necessary to
identify the new labor market area delineation for each county and
facility in the country. For example, there will be new CBSAs, urban
counties that would become rural, rural counties that would become
urban, and existing CBSAs that would be split apart. Because the wage
index of urban areas is typically higher than that of rural areas, IPF
facilities currently located in rural counties that will become urban,
beginning October 1, 2015, will generally experience an increase in
their wage index values. We identified 105 counties and 37 IPFs that
will move from rural to urban status due to the new CBSA delineations
beginning in FY 2016, shown in Table 15.

Table 15--FY 2016 Rural to Urban CBSA Crosswalk
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2014 CBSA Delineations/FY 2015 data FY 2015 CBSA Delineations/FY 2015 data Change in
County name ---------------------------------------------------------------------------------------------------------- value
CBSA Urban/Rural Wage index CBSA Urban/Rural Wage index (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baldwin County, Alabama....... 1 RURAL.............. 0.6963 19300 URBAN.............. 0.7248 4.09
Pickens County, Alabama....... 1 RURAL.............. 0.6963 46220 URBAN.............. 0.8337 19.73
Cochise County, Arizona....... 3 RURAL.............. 0.9125 43420 URBAN.............. 0.8937 -2.06

[[Page 46683]]

Little River County, Arkansas. 4 RURAL.............. 0.7311 45500 URBAN.............. 0.7362 0.70
Windham County, Connecticut... 7 RURAL.............. 1.1251 49340 URBAN.............. 1.1493 2.15
Sussex County, Delaware....... 8 RURAL.............. 1.0261 41540 URBAN.............. 0.9289 -9.47
Citrus County, Florida........ 10 RURAL.............. 0.8006 26140 URBAN.............. 0.7625 -4.76
Gulf County, Florida.......... 10 RURAL.............. 0.8006 37460 URBAN.............. 0.7906 -1.25
Highlands County, Florida..... 10 RURAL.............. 0.8006 42700 URBAN.............. 0.7982 -0.30
Sumter County, Florida........ 10 RURAL.............. 0.8006 45540 URBAN.............. 0.8095 1.11
Walton County, Florida........ 10 RURAL.............. 0.8006 18880 URBAN.............. 0.8156 1.87
Lincoln County, Georgia....... 11 RURAL.............. 0.7425 12260 URBAN.............. 0.9225 24.24
Morgan County, Georgia........ 11 RURAL.............. 0.7425 12060 URBAN.............. 0.9369 26.18
Peach County, Georgia......... 11 RURAL.............. 0.7425 47580 URBAN.............. 0.7542 1.58
Pulaski County, Georgia....... 11 RURAL.............. 0.7425 47580 URBAN.............. 0.7542 1.58
Kalawao County, Hawaii........ 12 RURAL.............. 1.0741 27980 URBAN.............. 1.0561 -1.68
Maui County, Hawaii........... 12 RURAL.............. 1.0741 27980 URBAN.............. 1.0561 -1.68
Butte County, Idaho........... 13 RURAL.............. 0.7398 26820 URBAN.............. 0.8933 20.75
De Witt County, Illinois...... 14 RURAL.............. 0.8362 14010 URBAN.............. 0.9165 9.60
Jackson County, Illinois...... 14 RURAL.............. 0.8362 16060 URBAN.............. 0.8324 -0.45
Williamson County, Illinois... 14 RURAL.............. 0.8362 16060 URBAN.............. 0.8324 -0.45
Scott County, Indiana......... 15 RURAL.............. 0.8416 31140 URBAN.............. 0.8605 2.25
Union County, Indiana......... 15 RURAL.............. 0.8416 17140 URBAN.............. 0.9473 12.56
Plymouth County, Iowa......... 16 RURAL.............. 0.8451 43580 URBAN.............. 0.8915 5.49
Kingman County, Kansas........ 17 RURAL.............. 0.7806 48620 URBAN.............. 0.8472 8.53
Allen County, Kentucky........ 18 RURAL.............. 0.7744 14540 URBAN.............. 0.8410 8.60
Butler County, Kentucky....... 18 RURAL.............. 0.7744 14540 URBAN.............. 0.8410 8.60
Acadia Parish, Louisiana...... 19 RURAL.............. 0.7580 29180 URBAN.............. 0.7869 3.81
Iberia Parish, Louisiana...... 19 RURAL.............. 0.7580 29180 URBAN.............. 0.7869 3.81
St. James Parish, Louisiana... 19 RURAL.............. 0.7580 35380 URBAN.............. 0.8821 16.37
Tangipahoa Parish, Louisiana.. 19 RURAL.............. 0.7580 25220 URBAN.............. 0.9452 24.70
Vermilion Parish, Louisiana... 19 RURAL.............. 0.7580 29180 URBAN.............. 0.7869 3.81
Webster Parish, Louisiana..... 19 RURAL.............. 0.7580 43340 URBAN.............. 0.8325 9.83
St. Marys County, Maryland.... 21 RURAL.............. 0.8554 15680 URBAN.............. 0.8593 0.46
Worcester County, Maryland.... 21 RURAL.............. 0.8554 41540 URBAN.............. 0.9289 8.59
Midland County, Michigan...... 23 RURAL.............. 0.8207 33220 URBAN.............. 0.7935 -3.31
Montcalm County, Michigan..... 23 RURAL.............. 0.8207 24340 URBAN.............. 0.8799 7.21
Fillmore County, Minnesota.... 24 RURAL.............. 0.9124 40340 URBAN.............. 1.1398 24.92
Le Sueur County, Minnesota.... 24 RURAL.............. 0.9124 33460 URBAN.............. 1.1196 22.71
Mille Lacs County, Minnesota.. 24 RURAL.............. 0.9124 33460 URBAN.............. 1.1196 22.71
Sibley County, Minnesota...... 24 RURAL.............. 0.9124 33460 URBAN.............. 1.1196 22.71
Benton County, Mississippi.... 25 RURAL.............. 0.7589 32820 URBAN.............. 0.8991 18.47
Yazoo County, Mississippi..... 25 RURAL.............. 0.7589 27140 URBAN.............. 0.7891 3.98
Golden Valley County, Montana. 27 RURAL.............. 0.9024 13740 URBAN.............. 0.8686 -3.75
Hall County, Nebraska......... 28 RURAL.............. 0.8924 24260 URBAN.............. 0.9219 3.31

[[Page 46684]]

Hamilton County, Nebraska..... 28 RURAL.............. 0.8924 24260 URBAN.............. 0.9219 3.31
Howard County, Nebraska....... 28 RURAL.............. 0.8924 24260 URBAN.............. 0.9219 3.31
Merrick County, Nebraska...... 28 RURAL.............. 0.8924 24260 URBAN.............. 0.9219 3.31
Jefferson County, New York.... 33 RURAL.............. 0.8208 48060 URBAN.............. 0.8386 2.17
Yates County, New York........ 33 RURAL.............. 0.8208 40380 URBAN.............. 0.8750 6.60
Craven County, North Carolina. 34 RURAL.............. 0.7995 35100 URBAN.............. 0.8994 12.50
Davidson County, North 34 RURAL.............. 0.7995 49180 URBAN.............. 0.8679 8.56
Carolina.
Gates County, North Carolina.. 34 RURAL.............. 0.7995 47260 URBAN.............. 0.9223 15.36
Iredell County, North Carolina 34 RURAL.............. 0.7995 16740 URBAN.............. 0.9073 13.48
Jones County, North Carolina.. 34 RURAL.............. 0.7995 35100 URBAN.............. 0.8994 12.50
Lincoln County, North Carolina 34 RURAL.............. 0.7995 16740 URBAN.............. 0.9073 13.48
Pamlico County, North Carolina 34 RURAL.............. 0.7995 35100 URBAN.............. 0.8994 12.50
Rowan County, North Carolina.. 34 RURAL.............. 0.7995 16740 URBAN.............. 0.9073 13.48
Oliver County, North Dakota... 35 RURAL.............. 0.7099 13900 URBAN.............. 0.7216 1.65
Sioux County, North Dakota.... 35 RURAL.............. 0.7099 13900 URBAN.............. 0.7216 1.65
Hocking County, Ohio.......... 36 RURAL.............. 0.8329 18140 URBAN.............. 0.9539 14.53
Perry County, Ohio............ 36 RURAL.............. 0.8329 18140 URBAN.............. 0.9539 14.53
Cotton County, Oklahoma....... 37 RURAL.............. 0.7799 30020 URBAN.............. 0.7918 1.53
Josephine County, Oregon...... 38 RURAL.............. 1.0083 24420 URBAN.............. 1.0086 0.03
Linn County, Oregon........... 38 RURAL.............. 1.0083 10540 URBAN.............. 1.0879 7.89
Adams County, Pennsylvania.... 39 RURAL.............. 0.8719 23900 URBAN.............. 1.0104 15.88
Columbia County, Pennsylvania. 39 RURAL.............. 0.8719 14100 URBAN.............. 0.9347 7.20
Franklin County, Pennsylvania. 39 RURAL.............. 0.8719 16540 URBAN.............. 1.0957 25.67
Monroe County, Pennsylvania... 39 RURAL.............. 0.8719 20700 URBAN.............. 0.9372 7.49
Montour County, Pennsylvania.. 39 RURAL.............. 0.8719 14100 URBAN.............. 0.9347 7.20
Utuado Municipio, Puerto Rico. 40 RURAL.............. 0.4047 10380 URBAN.............. 0.3586 -11.39
Beaufort County, South 42 RURAL.............. 0.8374 25940 URBAN.............. 0.8708 3.99
Carolina.
Chester County, South Carolina 42 RURAL.............. 0.8374 16740 URBAN.............. 0.9073 8.35
Jasper County, South Carolina. 42 RURAL.............. 0.8374 25940 URBAN.............. 0.8708 3.99
Lancaster County, South 42 RURAL.............. 0.8374 16740 URBAN.............. 0.9073 8.35
Carolina.
Union County, South Carolina.. 42 RURAL.............. 0.8374 43900 URBAN.............. 0.8277 -1.16
Custer County, South Dakota... 43 RURAL.............. 0.8312 39660 URBAN.............. 0.8989 8.14
Campbell County, Tennessee.... 44 RURAL.............. 0.7365 28940 URBAN.............. 0.7015 -4.75
Crockett County, Tennessee.... 44 RURAL.............. 0.7365 27180 URBAN.............. 0.7747 5.19
Maury County, Tennessee....... 44 RURAL.............. 0.7365 34980 URBAN.............. 0.8969 21.78
Morgan County, Tennessee...... 44 RURAL.............. 0.7365 28940 URBAN.............. 0.7015 -4.75

[[Page 46685]]

Roane County, Tennessee....... 44 RURAL.............. 0.7365 28940 URBAN.............. 0.7015 -4.75
Falls County, Texas........... 45 RURAL.............. 0.7855 47380 URBAN.............. 0.8137 3.59
Hood County, Texas............ 45 RURAL.............. 0.7855 23104 URBAN.............. 0.9386 19.49
Hudspeth County, Texas........ 45 RURAL.............. 0.7855 21340 URBAN.............. 0.8139 3.62
Lynn County, Texas............ 45 RURAL.............. 0.7855 31180 URBAN.............. 0.8830 12.41
Martin County, Texas.......... 45 RURAL.............. 0.7855 33260 URBAN.............. 0.8940 13.81
Newton County, Texas.......... 45 RURAL.............. 0.7855 13140 URBAN.............. 0.8508 8.31
Oldham County, Texas.......... 45 RURAL.............. 0.7855 11100 URBAN.............. 0.8277 5.37
Somervell County, Texas....... 45 RURAL.............. 0.7855 23104 URBAN.............. 0.9386 19.49
Box Elder County, Utah........ 46 RURAL.............. 0.8891 36260 URBAN.............. 0.9225 3.76
Augusta County, Virginia...... 49 RURAL.............. 0.7674 44420 URBAN.............. 0.8326 8.50
Buckingham County, Virginia... 49 RURAL.............. 0.7674 16820 URBAN.............. 0.9053 17.97
Culpeper County, Virginia..... 49 RURAL.............. 0.7674 47894 URBAN.............. 1.0403 35.56
Floyd County, Virginia........ 49 RURAL.............. 0.7674 13980 URBAN.............. 0.8473 10.41
Rappahannock County, Virginia. 49 RURAL.............. 0.7674 47894 URBAN.............. 1.0403 35.56
Staunton City County, Virginia 49 RURAL.............. 0.7674 44420 URBAN.............. 0.8326 8.50
Waynesboro City County, 49 RURAL.............. 0.7674 44420 URBAN.............. 0.8326 8.50
Virginia.
Columbia County, Washington... 50 RURAL.............. 1.0892 47460 URBAN.............. 1.0934 0.39
Pend Oreille County, 50 RURAL.............. 1.0892 44060 URBAN.............. 1.1425 4.89
Washington.
Stevens County, Washington.... 50 RURAL.............. 1.0892 44060 URBAN.............. 1.1425 4.89
Walla Walla County, Washington 50 RURAL.............. 1.0892 47460 URBAN.............. 1.0934 0.39
Fayette County, West Virginia. 51 RURAL.............. 0.7410 13220 URBAN.............. 0.8024 8.29
Raleigh County, West Virginia. 51 RURAL.............. 0.7410 13220 URBAN.............. 0.8024 8.29
Green County, Wisconsin....... 52 RURAL.............. 0.9041 31540 URBAN.............. 1.1130 23.11
--------------------------------------------------------------------------------------------------------------------------------------------------------

The wage index values of rural areas are typically lower than that
of urban areas. Therefore, IPFs located in a county that is currently
designated as urban under the IPF PPS wage index that will become rural
when we adopt the new CBSA delineations may experience a decrease in
their wage index values. We identified 38 counties and four IPFs that
will move from urban to rural status due to the new CBSA delineations
beginning in FY 2016. Our use of updated data for this final rule
increased the number of counties and the number of IPFs that changed
status from urban to rural from 37 to 38, and three to four,
respectively. Table 16 shows the CBSA delineations and the urban wage
index values for FY 2015 based on existing CBSA delineations, compared
with the proposed CBSA delineations and wage index values for FY 2016
based on the new OMB CBSA delineations. Table 16 also shows the
percentage change in these values for those counties that will change
from urban to rural, beginning in FY 2016, when we adopt the new CBSA
delineations.

Table 16--FY 2016 Urban to Rural CBSA Crosswalk
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2014 CBSA Delineations/FY 2015 data FY 2015 CBSA Delineations/FY 2015 data Change in
County name ---------------------------------------------------------------------------------------------------------- value
CBSA Urban/Rural Wage index CBSA Urban/Rural Wage index (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Greene County, Alabama........ 46220 URBAN.............. 0.8387 1 RURAL.............. 0.6914 -17.56
Franklin County, Arkansas..... 22900 URBAN.............. 0.7593 4 RURAL.............. 0.7311 -3.71
Power County, Idaho........... 38540 URBAN.............. 0.9672 13 RURAL.............. 0.7398 -23.51
Franklin County, Indiana...... 17140 URBAN.............. 0.9473 15 RURAL.............. 0.8416 -11.16
Gibson County, Indiana........ 21780 URBAN.............. 0.8537 15 RURAL.............. 0.8416 -1.42

[[Page 46686]]

Greene County, Indiana........ 14020 URBAN.............. 0.9062 15 RURAL.............. 0.8416 -7.13
Tipton County, Indiana........ 29020 URBAN.............. 0.8990 15 RURAL.............. 0.8416 -6.38
Franklin County, Kansas....... 28140 URBAN.............. 0.9419 17 RURAL.............. 0.7779 -17.41
Geary County, Kansas.......... 31740 URBAN.............. 0.8406 17 RURAL.............. 0.7779 -7.46
Nelson County, Kentucky....... 31140 URBAN.............. 0.8593 18 RURAL.............. 0.7748 -9.83
Webster County, Kentucky...... 21780 URBAN.............. 0.8537 18 RURAL.............. 0.7748 -9.24
Franklin County, Massachusetts 44140 URBAN.............. 1.0271 22 RURAL.............. 1.1553 12.48
Ionia County, Michigan........ 24340 URBAN.............. 0.8965 23 RURAL.............. 0.8288 -7.55
Newaygo County, Michigan...... 24340 URBAN.............. 0.8965 23 RURAL.............. 0.8288 -7.55
George County, Mississippi.... 37700 URBAN.............. 0.7396 25 RURAL.............. 0.7570 2.35
Stone County, Mississippi..... 25060 URBAN.............. 0.8179 25 RURAL.............. 0.7570 -7.45
Crawford County, Missouri..... 41180 URBAN.............. 0.9366 26 RURAL.............. 0.7725 -17.52
Howard County, Missouri....... 17860 URBAN.............. 0.8319 26 RURAL.............. 0.7725 -7.14
Washington County, Missouri... 41180 URBAN.............. 0.9366 26 RURAL.............. 0.7725 -17.52
Anson County, North Carolina.. 16740 URBAN.............. 0.9230 34 RURAL.............. 0.7899 -14.42
Greene County, North Carolina. 24780 URBAN.............. 0.9371 34 RURAL.............. 0.7899 -15.71
Erie County, Ohio............. 41780 URBAN.............. 0.7784 36 RURAL.............. 0.8348 7.25
Ottawa County, Ohio........... 45780 URBAN.............. 0.9129 36 RURAL.............. 0.8348 -8.56
Preble County, Ohio........... 19380 URBAN.............. 0.8938 36 RURAL.............. 0.8348 -6.60
Washington County, Ohio....... 37620 URBAN.............. 0.8186 36 RURAL.............. 0.8348 1.98
Stewart County, Tennessee..... 17300 URBAN.............. 0.7526 44 RURAL.............. 0.7277 -3.31
Calhoun County, Texas......... 47020 URBAN.............. 0.8473 45 RURAL.............. 0.7847 -7.39
Delta County, Texas........... 19124 URBAN.............. 0.9703 45 RURAL.............. 0.7847 -19.13
San Jacinto County, Texas..... 26420 URBAN.............. 0.9734 45 RURAL.............. 0.7847 -19.39
Summit County, Utah........... 41620 URBAN.............. 0.9512 46 RURAL.............. 0.9005 -5.33
Cumberland County, Virginia... 40060 URBAN.............. 0.9625 49 RURAL.............. 0.7554 -21.52
Danville City County, Virginia 19260 URBAN.............. 0.7963 49 RURAL.............. 0.7554 -5.14
King And Queen County, 40060 URBAN.............. 0.9625 49 RURAL.............. 0.7554 -21.52
Virginia.
Louisa County, Virginia....... 40060 URBAN.............. 0.9625 49 RURAL.............. 0.7554 -21.52
Pittsylvania County, Virginia. 19260 URBAN.............. 0.7963 49 RURAL.............. 0.7554 -5.14
Surry County, Virginia........ 47260 URBAN.............. 0.9223 49 RURAL.............. 0.7554 -18.10
Morgan County, West Virginia.. 25180 URBAN.............. 0.9080 51 RURAL.............. 0.7274 -19.89
Pleasants County, West 37620 URBAN.............. 0.8186 51 RURAL.............. 0.7274 -11.14
Virginia.
--------------------------------------------------------------------------------------------------------------------------------------------------------

We note that IPFs in some urban CBSAs will experience a change in
their wage index values even though they remain urban because an urban
CBSA's boundaries and/or the counties included in that CBSA can change.
Table 17 shows those counties that would experience a change in their
wage index value in FY 2016 due to the new OMB CBSAs. Table 17 shows
the urban CBSA delineations and wage index values for FY 2015 based on
existing CBSA delineations, compared with the urban CBSA delineations
and wage index values for FY 2016 based on the new OMB delineations,
and the percentage change in these values, for counties that will
remain urban even though the CBSA boundaries and/or counties included
in that CBSA will change.

[[Page 46687]]

Table 17--FY 2015 Urban to a Different FY 2016 Urban CBSA Crosswalk
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2014 CBSA Delineations/FY 2015 data FY 2015 CBSA Delineations/FY 2015 data Change in
County name ---------------------------------------------------------------------------------------------------------- value
CBSA Urban/Rural Wage index CBSA Urban/Rural Wage index (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Flagler County, Florida....... 37380 URBAN.............. 0.8462 19660 URBAN.............. 0.8376 -1.02
De Kalb County, Illinois...... 16974 URBAN.............. 1.0412 20994 URBAN.............. 1.0299 -1.09
Kane County, Illinois......... 16974 URBAN.............. 1.0412 20994 URBAN.............. 1.0299 -1.09
Madison County, Indiana....... 11300 URBAN.............. 1.0078 26900 URBAN.............. 1.0133 0.55
Meade County, Kentucky........ 31140 URBAN.............. 0.8593 21060 URBAN.............. 0.7701 -10.38
Essex County, Massachusetts... 37764 URBAN.............. 1.0769 15764 URBAN.............. 1.1159 3.62
Ottawa County, Michigan....... 26100 URBAN.............. 0.8136 24340 URBAN.............. 0.8799 8.15
Jackson County, Mississippi... 37700 URBAN.............. 0.7396 25060 URBAN.............. 0.7896 6.76
Bergen County, New Jersey..... 35644 URBAN.............. 1.3110 35614 URBAN.............. 1.2837 -2.08
Hudson County, New Jersey..... 35644 URBAN.............. 1.3110 35614 URBAN.............. 1.2837 -2.08
Middlesex County, New Jersey.. 20764 URBAN.............. 1.0989 35614 URBAN.............. 1.2837 16.82
Monmouth County, New Jersey... 20764 URBAN.............. 1.0989 35614 URBAN.............. 1.2837 16.82
Ocean County, New Jersey...... 20764 URBAN.............. 1.0989 35614 URBAN.............. 1.2837 16.82
Passaic County, New Jersey.... 35644 URBAN.............. 1.3110 35614 URBAN.............. 1.2837 -2.08
Somerset County, New Jersey... 20764 URBAN.............. 1.0989 35084 URBAN.............. 1.1233 2.22
Bronx County, New York........ 35644 URBAN.............. 1.3110 35614 URBAN.............. 1.2837 -2.08
Dutchess County, New York..... 39100 URBAN.............. 1.1533 20524 URBAN.............. 1.1345 -1.63
Kings County, New York........ 35644 URBAN.............. 1.3110 35614 URBAN.............. 1.2837 -2.08
New York County, New York..... 35644 URBAN.............. 1.3110 35614 URBAN.............. 1.2837 -2.08
Orange County, New York....... 39100 URBAN.............. 1.1533 35614 URBAN.............. 1.2837 11.31
Putnam County, New York....... 35644 URBAN.............. 1.3110 20524 URBAN.............. 1.1345 -13.46
Queens County, New York....... 35644 URBAN.............. 1.3110 35614 URBAN.............. 1.2837 -2.08
Richmond County, New York..... 35644 URBAN.............. 1.3110 35614 URBAN.............. 1.2837 -2.08
Rockland County, New York..... 35644 URBAN.............. 1.3110 35614 URBAN.............. 1.2837 -2.08
Westchester County, New York.. 35644 URBAN.............. 1.3110 35614 URBAN.............. 1.2837 -2.08
Brunswick County, North 48900 URBAN.............. 0.8867 34820 URBAN.............. 0.8620 -2.79
Carolina.
Bucks County, Pennsylvania.... 37964 URBAN.............. 1.0837 33874 URBAN.............. 1.0157 -6.27
Chester County, Pennsylvania.. 37964 URBAN.............. 1.0837 33874 URBAN.............. 1.0157 -6.27
Montgomery County, 37964 URBAN.............. 1.0837 33874 URBAN.............. 1.0157 -6.27
Pennsylvania.
Arecibo Municipio, Puerto Rico 41980 URBAN.............. 0.4449 11640 URBAN.............. 0.4213 -5.30
Camuy Municipio, Puerto Rico.. 41980 URBAN.............. 0.4449 11640 URBAN.............. 0.4213 -5.30
Ceiba Municipio, Puerto Rico.. 21940 URBAN.............. 0.3669 41980 URBAN.............. 0.4438 20.96
Fajardo Municipio, Puerto Rico 21940 URBAN.............. 0.3669 41980 URBAN.............. 0.4438 20.96
Guanica Municipio, Puerto Rico 49500 URBAN.............. 0.3375 38660 URBAN.............. 0.4154 23.08
Guayanilla Municipio, Puerto 49500 URBAN.............. 0.3375 38660 URBAN.............. 0.4154 23.08
Rico.
Hatillo Municipio, Puerto Rico 41980 URBAN.............. 0.4449 11640 URBAN.............. 0.4213 -5.30

[[Page 46688]]

Luquillo Municipio, Puerto 21940 URBAN.............. 0.3669 41980 URBAN.............. 0.4438 20.96
Rico.
Penuelas Municipio, Puerto 49500 URBAN.............. 0.3375 38660 URBAN.............. 0.4154 23.08
Rico.
Quebradillas Municipio, Puerto 41980 URBAN.............. 0.4449 11640 URBAN.............. 0.4213 -5.30
Rico.
Yauco Municipio, Puerto Rico.. 49500 URBAN.............. 0.3375 38660 URBAN.............. 0.4154 23.08
Anderson County, South 11340 URBAN.............. 0.8744 24860 URBAN.............. 0.9161 4.77
Carolina.
Grainger County, Tennessee.... 34100 URBAN.............. 0.6983 28940 URBAN.............. 0.7015 0.46
Lincoln County, West Virginia. 16620 URBAN.............. 0.7988 26580 URBAN.............. 0.8846 10.74
Putnam County, West Virginia.. 16620 URBAN.............. 0.7988 26580 URBAN.............. 0.8846 10.74
--------------------------------------------------------------------------------------------------------------------------------------------------------

Likewise, IPFs currently located in a rural area may remain rural
under the new CBSA delineations but experience a change in their rural
wage index value due to implementation of the new CBSA delineations.
Table 18 shows the FY 2015 CBSA delineations and rural statewide wage
index values, compared with the FY 2016 CBSA delineations and rural
statewide wage index values, and the percentage change in these values,
for those rural areas that will change.

Table 18--FY 2016 Changes to the Statewide Rural Wage Index Crosswalk
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2014 CBSA Delineations/FY 2015 data FY 2015 CBSA Delineations/FY 2015 data Change in
County name ---------------------------------------------------------------------------------------------------------- value
CBSA Urban/Rural Wage index CBSA Urban/Rural Wage index (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
ALABAMA....................... 1 RURAL.............. 0.6963 1 RURAL.............. 0.6914 -0.70
ARIZONA....................... 3 RURAL.............. 0.9125 3 RURAL.............. 0.9219 1.03
CONNECTICUT................... 7 RURAL.............. 1.1251 7 RURAL.............. 1.1295 0.39
FLORIDA....................... 10 RURAL.............. 0.8006 10 RURAL.............. 0.8371 4.56
GEORGIA....................... 11 RURAL.............. 0.7425 11 RURAL.............. 0.7439 0.19
HAWAII........................ 12 RURAL.............. 1.0741 12 RURAL.............. 1.0872 1.22
ILLINOIS...................... 14 RURAL.............. 0.8362 14 RURAL.............. 0.8369 0.08
KANSAS........................ 17 RURAL.............. 0.7806 17 RURAL.............. 0.7779 -0.35
KENTUCKY...................... 18 RURAL.............. 0.7744 18 RURAL.............. 0.7748 0.05
LOUISIANA..................... 19 RURAL.............. 0.7580 19 RURAL.............. 0.7108 -6.23
MARYLAND...................... 21 RURAL.............. 0.8554 21 RURAL.............. 0.8746 2.24
MASSACHUSETTS................. 22 RURAL.............. 1.3920 22 RURAL.............. 1.1553 -17.00
MICHIGAN...................... 23 RURAL.............. 0.8207 23 RURAL.............. 0.8288 0.99
MISSISSIPPI................... 25 RURAL.............. 0.7589 25 RURAL.............. 0.7570 -0.25
NEBRASKA...................... 28 RURAL.............. 0.8924 28 RURAL.............. 0.8877 -0.53
NEW YORK...................... 33 RURAL.............. 0.8208 33 RURAL.............. 0.8192 -0.19
NORTH CAROLINA................ 34 RURAL.............. 0.7995 34 RURAL.............. 0.7899 -1.20
OHIO.......................... 36 RURAL.............. 0.8329 36 RURAL.............. 0.8348 0.23
OREGON........................ 38 RURAL.............. 1.0083 38 RURAL.............. 0.9949 -1.33
PENNSYLVANIA.................. 39 RURAL.............. 0.8719 39 RURAL.............. 0.8083 -7.29
SOUTH CAROLINA................ 42 RURAL.............. 0.8374 42 RURAL.............. 0.8370 -0.05
TENNESSEE..................... 44 RURAL.............. 0.7365 44 RURAL.............. 0.7277 -1.19
TEXAS......................... 45 RURAL.............. 0.7855 45 RURAL.............. 0.7847 -0.10
UTAH.......................... 46 RURAL.............. 0.8891 46 RURAL.............. 0.9005 1.28
VIRGINIA...................... 49 RURAL.............. 0.7674 49 RURAL.............. 0.7554 -1.56
WASHINGTON.................... 50 RURAL.............. 1.0892 50 RURAL.............. 1.0877 -0.14
WEST VIRGINIA................. 51 RURAL.............. 0.7410 51 RURAL.............. 0.7274 -1.84
WISCONSIN..................... 52 RURAL.............. 0.9041 52 RURAL.............. 0.9087 0.51
--------------------------------------------------------------------------------------------------------------------------------------------------------

While we believe that the new CBSA delineations will result in wage
index values that are more representative of the actual costs of labor
in a given area, we also recognize that use of the new CBSA
delineations will result in reduced payments to some IPFs and increased
payments to other IPFs, due to changes in wage index values.
Approximately 23.3 percent of IPFs will experience a decrease in wage
index values due to CBSA changes, while 12.3 percent of IPFs will
experience an increase in wage index values due to CBSA changes. The
remaining 64.4 percent of IPFs will experience no change in their wage
index values. While the wage index CBSA changes will be implemented in
a budget-neutral fashion, the distributional effects of these CBSA
changes appear to affect

[[Page 46689]]

rural IPFs in particular; column 5 in Table 29 in section VIII. of this
final rule shows that rural providers overall are anticipated to
experience payment reductions of 0.2 percent, with for-profit rural
psychiatric hospitals anticipated to experience the greatest reduction
of 0.5 percent.
We believe that it will be appropriate to provide for a transition
period to mitigate any negative impacts on facilities that experience
reduced payments as a result of our adopting the new OMB CBSA
delineations. Therefore, we are implementing these CBSA changes using a
1-year transition with a blended wage index for all providers. For FY
2016, the wage index for each provider will consist of a blend of 50
percent of the FY 2016 IPF wage index using the current OMB
delineations and 50 percent of the FY 2016 IPF wage index using the new
OMB delineations. This results in an average of the two values. The FY
2017 IPF PPS wage index and subsequent IPF PPS wage indices will be
based solely on the new OMB CBSA delineations. We believe a 1-year
transition strikes an appropriate balance between ensuring that IPF PPS
payments are as accurate and stable as possible while giving IPFs time
to adjust to the new CBSA delineations. The final FY 2016 IPF PPS
transitional wage index is located on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/WageIndex.html.
Comment: We received one comment on the proposed transitional wage
index, supporting the new OMB delineations, but stating that a 2-year
transition was too short given the impact on providers. This commenter
asked for 3-year transition instead of a 2-year transition.
Response: We appreciate the commenter's support for the new OMB
delineations, but note that we proposed a 1-year transition, not a 2-
year transition. We believe that our proposed 1-year transition is
sufficient to allow providers to adjust to changes resulting from the
new OMB delineations. A 1-year transition is also consistent with how
the new OMB delineations have been handled in other Medicare benefits.
Therefore, we are implementing the FY 2016 IPF PPS Wage Index as
proposed, with a 1-year transition.
d. Adjustment for Rural Location and Phase Out the Rural Adjustment for
IPFs Losing Their Rural Adjustment Due to CBSA Changes
In the November 2004 IPF PPS final rule, we provided a 17 percent
payment adjustment for IPFs located in a rural area. This adjustment
was based on the regression analysis, which indicated that the per diem
cost of rural facilities was 17 percent higher than that of urban
facilities after accounting for the influence of the other variables
included in the regression. For FY 2016, we will continue to apply a 17
percent payment adjustment for IPFs located in a rural area as defined
at Sec. 412.64(b)(1)(ii)(C). A complete discussion of the adjustment
for rural locations appears in the November 2004 IPF PPS final rule (69
FR 66954).
As noted in section III.D.1.c. of this final rule, we are adopting
OMB updates to CBSA delineations. Adoption of the updated CBSAs will
change the status of 37 IPF providers currently designated as ``rural''
to ``urban'' for FY 2016 and subsequent fiscal years. As such, these 37
newly urban providers will no longer receive the 17 percent rural
adjustment.
While 34 of these 37 rural IPFs that will be designated as urban
under the new CBSA delineations will experience an increase in their
wage index value, all 37 of these IPFs will lose the 17 percent rural
adjustment. Consistent with the transition policy adopted for Inpatient
Rehabilitation Facilities (IRFs) in FY 2006 (70 FR 47923 through
47927), we considered the appropriateness of applying a 3-year phase-
out of the rural adjustment for IPFs located in rural counties that
will become urban under the new OMB delineations, given the potentially
significant payment impacts for these IPFs. We believe that a phase-out
of the rural adjustment transition period for these 37 IPFs
specifically is appropriate because we expect these IPFs will
experience a steeper and more abrupt reduction in their payments
compared to other IPFs.
Therefore, in addition to the 1-year wage index transition policy
noted above, we are finalizing a budget-neutral 3-year phase-out of the
rural adjustment for existing FY 2015 rural IPFs that will become urban
in FY 2016 and that experience a loss in payments due to changes from
the new CBSA delineations. Accordingly, the incremental steps needed to
reduce the impact of the loss of the FY 2015 rural adjustment of 17
percent will be taken over FYs 2016, 2017 and 2018. This policy will
allow rural IPFs that will be classified as urban in FY 2016 to receive
two-thirds of the 2015 rural adjustment for FY 2016, as well as the
blended wage index. For FY 2017, these IPFs will receive the full FY
2017 wage index and one-third of the FY 2015 rural adjustment. For FY
2018, these IPFs will receive the full FY 2018 wage index without a
rural adjustment. We believe a 3-year budget-neutral phase-out of the
rural adjustment for IPFs that transition from rural to urban status
under the new CBSA delineations will best accomplish the goals of
mitigating the loss of the rural adjustment for existing FY 2015 rural
IPFs. The purpose of the gradual phase-out of the rural adjustment for
these providers is to alleviate the significant payment implications
for existing rural IPFs that may need time to adjust to the loss of
their FY 2015 rural payment adjustment or that experience a reduction
in payments solely because of this re-designation. As stated, this
policy is specifically for rural IPFs that become urban in FY 2016. We
are not implementing a transition policy for urban IPFs that become
rural in FY 2016 because these IPFs will receive the full rural
adjustment of 17 percent beginning October 1, 2015.
For the reasons discussed, we are implementing a 3-year budget-
neutral phase-out of the rural adjustment for the IPFs that during FY
2015 were designated as rural and for FY 2016 are designated as urban
under the new CBSA system. This is in addition to our implementation of
a 1-year blended wage index for all IPFs. We believe that the
incremental reduction of the FY 2015 rural adjustment will be
appropriate to mitigate a significant reduction in payment. We
considered alternative timeframes for phasing out the rural adjustment
for IPFs which will transition from rural to urban status in FY 2016,
but believe that a 3-year budget-neutral phase-out of the rural
adjustment will appropriately mitigate the adverse payment impacts for
existing FY 2015 rural IPFs that will be designated as urban IPFs in FY
2016, while also ensuring that payment rates for these providers are
set accurately and appropriately.
Comment: We received one comment asking that we phase out the rural
adjustment for the 37 affected providers over 4 years rather than 3
years. This commenter was concerned that affected providers would be
significantly impacted by the loss of the rural adjustment.
Response: We appreciate the commenter's request, but as noted
above, we considered alternate timeframes for phasing out the rural
adjustment. We believe that a 3-year phase-out balances the need for us
to pay accurately and appropriately with sufficient time for providers
to adjust to, and to mitigate the adverse payment effect. A 3-year
phase-out is also consistent with the policy we followed in FY 2006 for
Inpatient Rehabilitation

[[Page 46690]]

Facilities. As such, we are finalizing the rural adjustment phase-out
for these 37 IPFs as proposed, with a 3-year phase out.
e. Budget Neutrality Adjustment
Changes to the wage index are made in a budget-neutral manner so
that updates do not increase expenditures. Therefore, for FY 2016, we
will continue to apply a budget-neutrality adjustment in accordance
with our existing budget-neutrality policy. This policy requires us to
estimate the total amount of IPF PPS payments for FY 2016 using the
labor-related share and the wage indices from FY 2015 divided by the
total estimated IPF PPS payments for FY 2016 using the labor-related
share and wage indices from FY 2016. The estimated payments are based
on FY 2014 IPF claims, inflated to the appropriate FY. This quotient is
the wage index budget-neutrality factor, and it is applied in the
update of the Federal per diem base rate for FY 2016 in addition to the
market basket described in section III.A. of this final rule. The final
wage index budget-neutrality factor for FY 2016 is 1.0041. We received
no comments on the wage index budget-neutrality factor for FY 2016.
2. Teaching Adjustment
In the November 2004 IPF PPS final rule, we implemented regulations
at Sec. 412.424(d)(1)(iii) to establish a facility-level adjustment
for IPFs that are, or are part of, teaching hospitals. The teaching
adjustment accounts for the higher indirect operating costs experienced
by hospitals that participate in graduate medical education (GME)
programs. The payment adjustments are made based on the ratio of the
number of full-time equivalent (FTE) interns and residents training in
the IPF and the IPF's average daily census (ADC).
Medicare makes direct GME payments (for direct costs such as
resident and teaching physician salaries, and other direct teaching
costs) to all teaching hospitals including those paid under a PPS, and
those paid under the TEFRA rate-of-increase limits. These direct GME
payments are made separately from payments for hospital operating costs
and are not part of the IPF PPS. The direct GME payments do not address
the estimated higher indirect operating costs teaching hospitals may
face.
The results of the regression analysis of FY 2002 IPF data
established the basis for the payment adjustments included in the
November 2004 IPF PPS final rule. The results showed that the indirect
teaching cost variable is significant in explaining the higher costs of
IPFs that have teaching programs. We calculated the teaching adjustment
based on the IPF's ``teaching variable,'' which is one plus the ratio
of the number of FTE residents training in the IPF (subject to
limitations described below) to the IPF's ADC.
We established the teaching adjustment in a manner that limited the
incentives for IPFs to add FTE residents for the purpose of increasing
their teaching adjustment. We imposed a cap on the number of FTE
residents that may be counted for purposes of calculating the teaching
adjustment. The cap limits the number of FTE residents that teaching
IPFs may count for the purpose of calculating the IPF PPS teaching
adjustment, not the number of residents teaching institutions can hire
or train. We calculated the number of FTE residents that trained in the
IPF during a ``base year'' and used that FTE resident number as the
cap. An IPF's FTE resident cap is ultimately determined based on the
final settlement of the IPF's most recent cost report filed before
November 15, 2004 (that is, the publication date of the IPF PPS final
rule). A complete discussion on the temporary adjustment to the FTE cap
to reflect residents added due to hospital closure and by residency
program appears in the January 27, 2011 IPF PPS proposed rule (76 FR
5018 through 5020) and the May 6, 2011 IPF PPS final rule (76 FR 26453
through 26456).
In the regression analysis, the logarithm of the teaching variable
had a coefficient value of 0.5150. We converted this cost effect to a
teaching payment adjustment by treating the regression coefficient as
an exponent and raising the teaching variable to a power equal to the
coefficient value. We note that the coefficient value of 0.5150 was
based on the regression analysis holding all other components of the
payment system constant. A complete discussion of how the teaching
adjustment was calculated appears in the November 2004 IPF PPS final
rule (69 FR 66954 through 66957) and the May 2008 IPF PPS notice (73 FR
25721). As with other adjustment factors derived through the regression
analysis, we do not plan to rerun the teaching adjustment factors in
the regression analysis until we more fully analyze IPF PPS data.
Therefore, in this final rule, for FY 2016, we will continue to retain
the coefficient value of 0.5150 for the teaching adjustment to the
Federal per diem base rate.
3. Cost of Living Adjustment for IPFs Located in Alaska and Hawaii
The IPF PPS includes a payment adjustment for IPFs located in
Alaska and Hawaii based upon the county in which the IPF is located. As
we explained in the November 2004 IPF PPS final rule, the FY 2002 data
demonstrated that IPFs in Alaska and Hawaii had per diem costs that
were disproportionately higher than other IPFs. Other Medicare PPSs
(for example, the IPPS and LTCH PPS) adopted a cost of living
adjustment (COLA) to account for the cost differential of care
furnished in Alaska and Hawaii.
We analyzed the effect of applying a COLA to payments for IPFs
located in Alaska and Hawaii. The results of our analysis demonstrated
that a COLA for IPFs located in Alaska and Hawaii would improve payment
equity for these facilities. As a result of this analysis, we provided
a COLA in the November 2004 IPF PPS final rule.
A COLA for IPFs located in Alaska and Hawaii is made by multiplying
the nonlabor-related portion of the Federal per diem base rate by the
applicable COLA factor based on the COLA area in which the IPF is
located.
The COLA factors are published on the Office of Personnel
Management (OPM) Web site (http://www.opm.gov/oca/cola/rates.asp).
We note that the COLA areas for Alaska are not defined by county as
are the COLA areas for Hawaii. In 5 CFR 591.207, the OPM established
the following COLA areas:
City of Anchorage, and 80-kilometer (50-mile) radius by
road, as measured from the Federal courthouse;
City of Fairbanks, and 80-kilometer (50-mile) radius by
road, as measured from the Federal courthouse;
City of Juneau, and 80-kilometer (50-mile) radius by road,
as measured from the Federal courthouse;
Rest of the State of Alaska.
As stated in the November 2004 IPF PPS final rule, we update the
COLA factors according to updates established by the OPM. However,
sections 1911 through 1919 of the Nonforeign Area Retirement Equity
Assurance Act, as contained in subtitle B of title XIX of the National
Defense Authorization Act (NDAA) for Fiscal Year 2010 (Pub. L. 111-84,
October 28, 2009), transitions the Alaska and Hawaii COLAs to locality
pay. Under section 1914 of NDAA, locality pay is being phased in over a
3-year period beginning in January 2010, with COLA rates frozen as of
the date of enactment, October 28, 2009, and then proportionately
reduced to reflect the phase-in of locality pay.

[[Page 46691]]

When we published the proposed COLA factors in the January 2011 IPF
PPS proposed rule (76 FR 4998), we inadvertently selected the FY 2010
COLA rates which had been reduced to account for the phase-in of
locality pay. We did not intend to propose the reduced COLA rates
because that would have understated the adjustment. Since the 2009 COLA
rates did not reflect the phase-in of locality pay, we finalized the FY
2009 COLA rates for RY 2010 through RY 2014.
In the FY 2013 IPPS/LTCH final rule (77 FR 53700 through 53701), we
established a methodology for FY 2014 to update the COLA factors for
Alaska and Hawaii. Under that methodology, we use a comparison of the
growth in the Consumer Price Indices (CPIs) in Anchorage, Alaska and
Honolulu, Hawaii relative to the growth in the overall CPI as published
by the Bureau of Labor Statistics (BLS) to update the COLA factors for
all areas in Alaska and Hawaii, respectively. As discussed in the FY
2013 IPPS/LTCH proposed rule (77 FR 28145), because BLS publishes CPI
data for only Anchorage, Alaska and Honolulu, Hawaii, our methodology
for updating the COLA factors uses a comparison of the growth in the
CPIs for those cities relative to the growth in the overall CPI to
update the COLA factors for all areas in Alaska and Hawaii,
respectively. We believe that the relative price differences between
these cities and the United States (as measured by the CPIs mentioned
above) are generally appropriate proxies for the relative price
differences between the ``other areas'' of Alaska and Hawaii and the
United States.
The CPIs for ``All Items'' that BLS publishes for Anchorage,
Alaska, Honolulu, Hawaii, and for the average U.S. city are based on a
different mix of commodities and services than is reflected in the
nonlabor-related share of the IPPS market basket. As such, under the
methodology we established to update the COLA factors, we calculated a
``reweighted CPI'' using the CPI for commodities and the CPI for
services for each of the geographic areas to mirror the composition of
the IPPS market basket nonlabor-related share. The current composition
of BLS' CPI for ``All Items'' for all of the respective areas is
approximately 40 percent commodities and 60 percent services. However,
the nonlabor-related share of the IPPS market basket is comprised of 60
percent commodities and 40 percent services. Therefore, under the
methodology established for FY 2014 in the FY 2013 IPPS/LTCH PPS final
rule, we created reweighted indexes for Anchorage, Alaska, Honolulu,
Hawaii, and the average U.S. city using the respective CPI commodities
index and CPI services index and applying the approximate 60/40 weights
from the IPPS market basket. This approach is appropriate because we
would continue to make a COLA for hospitals located in Alaska and
Hawaii by multiplying the nonlabor-related portion of the standardized
amount by a COLA factor.
Under the COLA factor update methodology established in the FY 2014
IPPS/LTCH final rule, we adjust payments made to hospitals located in
Alaska and Hawaii by incorporating a 25-percent cap on the CPI-updated
COLA factors. We note that OPM's COLA factors were calculated with a
statutorily mandated cap of 25 percent, and since at least 1984, we
have exercised our discretionary authority to adjust Alaska and Hawaii
payments by incorporating this cap. In keeping with this historical
policy, we continue to use such a cap because our CPI-updated COLA
factors use the 2009 OPM COLA factors as a basis.
In FY 2015 IPF PPS rulemaking, we adopted the same methodology for
the COLA factors applied under the IPPS because IPFs are hospitals with
a similar mix of commodities and services. We think it is appropriate
to have a consistent policy approach with that of other hospitals in
Alaska and Hawaii. Therefore, in the FY 2015 IPF PPS final rule, we
adopted the cost of living adjustment factors shown in the Addendum for
IPFs located in Alaska and Hawaii. Under IPPS COLA policy, the COLA
updates are determined every four years, when the IPPS market basket is
rebased. Since the IPPS COLA factors were last updated in FY 2014, they
are not scheduled to be updated again until FY 2018. As such, we will
continue using the existing IPF PPS COLA factors in effect in FY 2015
for FY 2016. The IPF PPS COLA factors for FY 2016 are shown in the
Addendum of this final rule.
4. Adjustment for IPFs With a Qualifying Emergency Department (ED)
The IPF PPS includes a facility-level adjustment for IPFs with
qualifying EDs. We provide an adjustment to the Federal per diem base
rate to account for the costs associated with maintaining a full-
service ED. The adjustment is intended to account for ED costs incurred
by a freestanding psychiatric hospital with a qualifying ED or a
distinct part psychiatric unit of an acute care hospital or a CAH, for
preadmission services otherwise payable under the Medicare Outpatient
Prospective Payment System (OPPS), furnished to a beneficiary on the
date of the beneficiary's admission to the hospital and during the day
immediately preceding the date of admission to the IPF (see Sec.
413.40(c)(2)), and the overhead cost of maintaining the ED. This
payment is a facility-level adjustment that applies to all IPF
admissions (with one exception described below), regardless of whether
a particular patient receives preadmission services in the hospital's
ED.
The ED adjustment is incorporated into the variable per diem
adjustment for the first day of each stay for IPFs with a qualifying
ED. That is, IPFs with a qualifying ED receive an adjustment factor of
1.31 as the variable per diem adjustment for day 1 of each stay. If an
IPF does not have a qualifying ED, it receives an adjustment factor of
1.19 as the variable per diem adjustment for day 1 of each patient
stay.
The ED adjustment is made on every qualifying claim except as
described below. As specified in Sec. 412.424(d)(1)(v)(B), the ED
adjustment is not made when a patient is discharged from an acute care
hospital or CAH and admitted to the same hospital's or CAH's
psychiatric unit. We clarified in the November 2004 IPF PPS final rule
(69 FR 66960) that an ED adjustment is not made in this case because
the costs associated with ED services are reflected in the DRG payment
to the acute care hospital or through the reasonable cost payment made
to the CAH.
Therefore, when patients are discharged from an acute care hospital
or CAH and admitted to the same hospital or CAH's psychiatric unit, the
IPF receives the 1.19 adjustment factor as the variable per diem
adjustment for the first day of the patient's stay in the IPF.
We did not propose any changes to the ED adjustment. For FY 2016,
we will continue to retain the 1.31 adjustment factor for IPFs with
qualifying EDs. A complete discussion of the steps involved in the
calculation of the ED adjustment factor appears in the November 2004
IPF PPS final rule (69 FR 66959 through 66960) and the May 2006 IPF PPS
final rule (71 FR 27070 through 27072).

E. Other Payment Adjustments and Policies

1. Outlier Payment Overview
The IPF PPS includes an outlier adjustment to promote access to IPF
care for those patients who require expensive care and to limit the
financial risk of IPFs treating unusually costly patients. In the
November 2004 IPF PPS

[[Page 46692]]

final rule, we implemented regulations at Sec. 412.424(d)(3)(i) to
provide a per-case payment for IPF stays that are extraordinarily
costly. Providing additional payments to IPFs for extremely costly
cases strongly improves the accuracy of the IPF PPS in determining
resource costs at the patient and facility level. These additional
payments reduce the financial losses that would otherwise be incurred
in treating patients who require more costly care and, therefore,
reduce the incentives for IPFs to under-serve these patients.
We make outlier payments for discharges in which an IPF's estimated
total cost for a case exceeds a fixed dollar loss threshold amount
(multiplied by the IPF's facility-level adjustments) plus the Federal
per diem payment amount for the case.
In instances when the case qualifies for an outlier payment, we pay
80 percent of the difference between the estimated cost for the case
and the adjusted threshold amount for days 1 through 9 of the stay
(consistent with the median LOS for IPFs in FY 2002), and 60 percent of
the difference for day 10 and thereafter. We established the 80 percent
and 60 percent loss sharing ratios because we were concerned that a
single ratio established at 80 percent (like other Medicare PPSs) might
provide an incentive under the IPF per diem payment system to increase
LOS in order to receive additional payments.
After establishing the loss sharing ratios, we determined the
current FY 2015 fixed dollar loss threshold amount through payment
simulations designed to compute a dollar loss beyond which payments are
estimated to meet the 2 percent outlier spending target. Each year when
we update the IPF PPS, we simulate payments using the latest available
data to compute the fixed dollar loss threshold so that outlier
payments represent 2 percent of total projected IPF PPS payments.
2. Update to the Outlier Fixed Dollar Loss Threshold Amount
In accordance with the update methodology described in Sec.
412.428(d), we are updating the fixed dollar loss threshold amount used
under the IPF PPS outlier policy. Based on the regression analysis and
payment simulations used to develop the IPF PPS, we established a 2
percent outlier policy which strikes an appropriate balance between
protecting IPFs from extraordinarily costly cases while ensuring the
adequacy of the Federal per diem base rate for all other cases that are
not outlier cases.
Based on an analysis of the latest available data (that is, the
March 2015 update of FY 2014 IPF claims) and rate increases, we believe
it is necessary to update the fixed dollar loss threshold amount in
order to maintain an outlier percentage that equals 2 percent of total
estimated IPF PPS payments. To update the IPF outlier threshold amount
for FY 2016, we used FY 2014 claims data and the same methodology that
we used to set the initial outlier threshold amount in the May 2006 IPF
PPS final rule (71 FR 27072 and 27073), which is also the same
methodology that we used to update the outlier threshold amounts for
years 2008 through 2015. Based on an analysis of these updated data, we
estimate that IPF outlier payments as a percentage of total estimated
payments are approximately 2.2 percent in FY 2015. Therefore, we will
update the outlier threshold amount to $9,580 to maintain estimated
outlier payments at 2 percent of total estimated aggregate IPF payments
for FY 2016.
Comment: One commenter wrote that the increase in the outlier
threshold would result in significant losses for hospitals with a high
percentage of outlier cases, and suggested that CMS transition to the
higher threshold over 2 years.
Response: Our longstanding policy is to maintain a 2 percent
outlier threshold, which would not be possible if we transitioned to
the FY 2016 outlier threshold. We note that when we reanalyzed the
outlier data for this final rule using the March 2015 update of the
2014 MedPAR claims, the final outlier threshold was lower than the
proposed outlier threshold ($9,825).
3. Update to IPF Cost-to-Charge Ratio Ceilings
Under the IPF PPS, an outlier payment is made if an IPF's cost for
a stay exceeds a fixed dollar loss threshold amount plus the IPF PPS
amount. In order to establish an IPF's cost for a particular case, we
multiply the IPF's reported charges on the discharge bill by its
overall cost-to-charge ratio (CCR). This approach to determining an
IPF's cost is consistent with the approach used under the IPPS and
other PPSs. In the June 2003 IPPS final rule (68 FR 34494), we
implemented changes to the IPPS policy used to determine CCRs for acute
care hospitals because we became aware that payment vulnerabilities
resulted in inappropriate outlier payments. Under the IPPS, we
established a statistical measure of accuracy for CCRs in order to
ensure that aberrant CCR data did not result in inappropriate outlier
payments.
As we indicated in the November 2004 IPF PPS final rule (69 FR
66961), because we believe that the IPF outlier policy is susceptible
to the same payment vulnerabilities as the IPPS, we adopted a method to
ensure the statistical accuracy of CCRs under the IPF PPS.
Specifically, we adopted the following procedure in the November 2004
IPF PPS final rule: We calculated 2 national ceilings, one for IPFs
located in rural areas and one for IPFs located in urban areas. We
computed the ceilings by first calculating the national average and the
standard deviation of the CCR for both urban and rural IPFs using the
most recent CCRs entered in the CY 2015 Provider Specific File.
To determine the rural and urban ceilings, we multiplied each of
the standard deviations by 3 and added the result to the appropriate
national CCR average (either rural or urban). The upper threshold CCR
for IPFs in FY 2016 is 1.9041 for rural IPFs, and 1.7339 for urban
IPFs, based on CBSA-based geographic designations. If an IPF's CCR is
above the applicable ceiling, the ratio is considered statistically
inaccurate, and we assign the appropriate national (either rural or
urban) median CCR to the IPF.
We apply the national CCRs to the following situations:
New IPFs that have not yet submitted their first Medicare
cost report. We continue to use these national CCRs until the
facility's actual CCR can be computed using the first tentatively or
final settled cost report.
IPFs whose overall CCR is in excess of 3 standard
deviations above the corresponding national geometric mean (that is,
above the ceiling).
Other IPFs for which the MAC obtains inaccurate or
incomplete data with which to calculate a CCR.
We did not propose any changes to the application of the national
CCRs or to the procedures for updating the CCR ceilings in FY 2016.
However, we are updating the FY 2016 national median and ceiling CCRs
for urban and rural IPFs based on the CCRs entered in the latest
available IPF PPS Provider Specific File. Specifically, for FY 2016,
and to be used in each of the 3 situations listed above, using the most
recent CCRs entered in the CY 2015 Provider Specific File we estimate
the national median CCR of 0.6220 for rural IPFs and the national
median CCR of 0.4650 for urban IPFs. These calculations are based on
the IPF's location (either urban or rural) using the CBSA-based
geographic designations.
A complete discussion regarding the national median CCRs appears in
the

[[Page 46693]]

November 2004 IPF PPS final rule (69 FR 66961 through 66964).

IV. Other Payment Policy Issues

A. ICD-10-CM and ICD-10-PCS Implementation

We remind IPF providers that we are implementing the International
Classification of Diseases, 10th Revision, Clinical Modification (ICD-
10-CM) as the HIPAA designated code set for reporting diseases,
injuries, impairments, other health related problems, their
manifestations, and causes of injury as of October 1, 2015. Below is a
brief history of key activities leading to the October 1, 2015
implementation date.
In the Standards for Electronic Transactions final rule, published
in the Federal Register on August 17, 2000 (65 FR 50312), the
Department adopted the International Classification of Diseases, 9th
Revision, Clinical Modification (ICD-9-CM) as the HIPAA designated code
set for reporting diseases, injuries, impairments, other health related
problems, their manifestations, and causes of injury. Therefore, on
January 1, 2005 when the IPF PPS began, we used ICD-9-CM as the
designated code set for the IPF PPS. IPF claims with a principal
diagnosis included in Chapter Five of the ICD-9-CM are paid the Federal
per diem base rate and all other applicable adjustments, including any
applicable DRG adjustment.
Together with the rest of the healthcare industry, we were
scheduled to implement the 10th revision of the ICD coding scheme, that
is, ICD-10-CM, on October 1, 2014. Hence, in the FY 2014 IPF PPS final
rule (78 FR 46741-46742), we finalized a policy that ICD-10-CM codes
will be used in IPF PPS.
On April 1, 2014, the Protecting Access to Medicare Act of 2014
(PAMA) (Pub. L. 113-93) was enacted. Section 212 of PAMA, titled
``Delay in Transition from ICD-9 to ICD-10 Code Sets,'' provided that
``[t]he Secretary of Health and Human Services may not, prior to
October 1, 2015, adopt ICD-10 code sets as the standard for code sets
under section 1173(c) of the Social Security Act (42 U.S.C. 1320d-2(c))
and section 162.1002 of title 45, Code of Federal Regulations.'' On May
1, 2014, the Secretary announced that HHS expected to issue an interim
final rule that would require use of ICD-10-CM beginning October 1,
2015 and would continue to require use of ICD-9-CM through September
30, 2015. This announcement is available on the CMS Web site at http://cms.gov/Medicare/Coding/ICD10/index.html. HHS finalized the new
compliance date of October 1, 2015 for ICD-10-CM and ICD-10-PCS in an
August 4, 2014 final rule titled ``Administrative Simplification:
Change to the Compliance Date for the International Classification of
Diseases, 10th Revision (ICD-10-CM and ICD-10-PCS)'' (79 FR 45128).
This rule also requires HIPAA covered entities to continue to use the
ICD-9-CM code set through September 30, 2015. Therefore, beginning
October 1, 2015, we require use of the ICD-10-CM and ICD-10-PCS codes
for reporting the MS-DRG and comorbidity adjustment factors for IPF
services.
Every year, changes to the ICD-10-CM and the ICD-10-PCS coding
system will be addressed in the IPPS proposed and final rules. The
changes to the codes are effective October 1 of each year and must be
used by acute care hospitals as well as other providers to report
diagnostic and procedure information. The IPF PPS has always
incorporated ICD-9-CM coding changes made in the annual IPPS update and
will continue to do so for the ICD-10-CM and ICD-10-PCS coding changes.
We will continue to publish coding changes in a Transmittal/Change
Request, similar to how coding changes are announced by the IPPS and
LTCH PPS. The coding changes relevant to the IPF PPS are also published
in the IPF PPS proposed and final rules, or in IPF PPS update notices.
In Sec. 412.428(e), we indicate that we will publish information
pertaining to the annual update for the IPF PPS, which includes
describing the ICD-9-CM coding changes and DRG classification changes
discussed in the annual update to the hospital IPPS regulations.
Because ICD-10-CM will be implemented on October 1, 2015, we need to
update the regulation language at Sec. 412.428(e) to refer to ICD-10-
CM, rather than ICD-9-CM. Therefore, we are revising Sec. 412.428(e)
to state that the information we will publish annually in the Federal
Register to describe IPF PPS updates would describe the ICD-10-CM
coding changes and DRG classification changes discussed in the annual
update to the hospital inpatient prospective payment system
regulations.
In the FY 2015 IPF PPS final rule (79 FR 45945 through 46946), the
MS-DRGs were converted so that the MS-DRG assignment logic uses ICD-10-
CM/PCS codes directly. When an IPF submits a claim for discharges, the
ICD-10-CM/PCS diagnosis and procedure codes will be assigned to the
correct MS-DRG. In the FY 2015 IPF PPS final rule, we also identified
the ICD-10-CM/PCS codes that are eligible for comorbidity payment
adjustments under the IPF PPS (79 FR 45947 through 45955).
The ICD-10-CM guidelines are updated each year along with the ICD-
10-CM code set. To find the annual coding guidelines, go to CDC's Web
site at http://www.cdc.gov/nchs/icd/icd10cm.htm or the annual ICD-10-CM
updates posted on the CMS ICD-10 Web site at http://www.cms.gov/Medicare/Coding/ICD10/index.html.
We received no comments on the proposed revision to the regulation
text at Sec. 412.428(e), and are implementing it as proposed. We
received 2 comments on ICD-10-CM/PCS issues.
Comment: One commenter asked that CMS remain receptive to comments
related to ICD-10-CM/PCS and conversion issues as health care staff
become more familiar with the new coding. The other commenter was
pleased that CMS had provided end-to-end testing, but noted that while
claims submission was fairly seamless, receiving a remittance was less
consistent. This commenter suggested that CMS allow IPFs to submit a
larger number of varied claims and that we complete additional testing
on the Medicare Administrative Contractor's ability to issue
remittances timely.
Response: We thank the commenters for their thoughts and
suggestions. While these comments are outside the scope of this rule,
we have shared them with the areas within CMS that handle ICD-10-CM/PCS
conversion and end-to-end testing.

B. Status of Future IPF PPS Refinements

For RY 2012, we identified several areas of concern for future
refinement, and we invited comments on these issues in our RY 2012
proposed and final rules. For further discussion of these issues and to
review the public comments, we refer readers to the RY 2012 IPF PPS
proposed rule (76 FR 4998) and final rule (76 FR 26432).
We have delayed making refinements to the IPF PPS until we have
completed a thorough analysis of IPF PPS data on which to base those
refinements. Specifically, we will delay updating the adjustment
factors derived from the regression analysis until we have IPF PPS data
that include as much information as possible regarding the patient-
level characteristics of the population that each IPF serves. We have
begun the necessary analysis to better understand IPF industry
practices so that we may refine the IPF PPS in the future, as
appropriate.
IPF Covered Services
The IPF PPS established the Federal per diem base rate for each
patient day in an IPF from the national average routine operating,
ancillary, and capital

[[Page 46694]]

costs. Preliminary analysis reveals that in 2012 to 2013, over 20
percent of IPF stays show no reported ancillary costs, such as
laboratory and drug costs, in cost reports or charges on claims. The
majority of these stays with zero ancillary costs or charges were in
for-profit, free-standing IPF hospitals. We would expect that patients
admitted to an IPF would undergo laboratory testing as part of the
admission history and physical. We would also expect that most patients
requiring hospitalization for active psychiatric treatment would need
drugs. Therefore, we were surprised when the analysis showed such a
large number of stays reporting no laboratory services and no drugs
were provided throughout the hospitalization. Until further analysis is
completed, we can only surmise that the stays did not require
ancillaries and therefore, were not provided, or that the ancillary
services were separately billed.
We remind the industry that we pay only the inpatient psychiatric
facility for services furnished to a Medicare beneficiary who is an
inpatient of that inpatient psychiatric facility, except for certain
professional services, and that payments made under this subpart are
payments in full for all inpatient hospital services, provided directly
or under arrangement (see 42 CFR 412.404(d)), as specified in 42 CFR
409.10.
The covered services specified in Sec. 409.10(a), which apply to
IPFs, include the following: bed and board; nursing services and other
related services; use of hospital or CAH facilities; medical social
services; drugs, biologicals, supplies, appliances, and equipment;
certain other diagnostic or therapeutic services; medical or surgical
services provided by certain interns or residents-in-training; and
transportation services, including transport by ambulance.
Only the professional services listed in Sec. 409.10(b) can be
separately billed for a Medicare beneficiary who is an inpatient at an
IPF, including services of physicians, physician assistants, nurse
practitioners, clinical nurse specialists, certified nurse mid-wives,
anesthetists, and qualified psychologists. (See Sec. 409.10(b) for
specifics on how these professions and services are defined. These
regulations are available online at the electronic Code of Federal
Regulations, at http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&tpl=%2Findex.tpl.)
Ancillary costs such as laboratory costs and drugs are already
included in the Medicare IPF PPS per diem payment and should not be
unbundled and billed separately to Medicare. We expect that the IPF
would be recording the cost of all drugs provided to its Medicare
patients on its Medicare cost reports, and reporting charges for those
drugs on its Medicare claims. We expect that when an IPF contracts with
an outside laboratory to provide services to its Medicare inpatients,
the IPF would instruct the laboratory to bill the IPF and not to bill
Medicare.
Similarly, drugs provided to IPF Medicare inpatients where Medicare
is the primary payer should not be billed to Part D or to other
insurers.
We are continuing to analyze claims and cost report data that do
not include ancillary charges or costs, and will be sharing our
findings with the Center for Program Integrity and the Office of
Financial Management for further investigation, as the results warrant.
Our refinement analysis is dependent on recent precise data for costs,
including ancillary costs. We will continue to collect these data until
an accurate refinement analysis can be performed. Therefore, we are not
making refinements in this final rule. Once we have gathered timely and
accurate data, we will analyze that data with the expectation of a
refinement update in future rulemaking. We invite comments on this
issue of zero ancillary costs to better understand industry practices.
Comment: We received two comments on this section, with one
commenter asking that CMS engage stakeholders in the policy development
process for refinements, and that CMS consider any changes carefully,
to preserve access to IPF services for vulnerable beneficiaries. A
second commenter was concerned that CMS lacks accurate cost data for
refinements, particularly if unbundling is occurring with ancillary
costs. This commenter also cited findings by the Medicare Payment
Advisory Commission which also noted concerns about limited IPF data,
and which suggested CMS consider using an assessment tool with IPF
patients for future refinements. This commenter suggested that CMS
examine the tools already in use in IPFs to gauge their effectiveness
in explaining differences in patient needs and their ability to add
data collection at minimal cost to providers.
Response: We thank the commenters for their comments, and will
consider them as we undertake IPF refinements in future rulemaking.

V. Inpatient Psychiatric Facilities Quality Reporting (IPFQR) Program

A. Background

1. Statutory Authority
Section 1886(s)(4) of the Act, as added and amended by sections
3401(f) and 10322(a) of the Affordable Care Act, requires the Secretary
to implement a quality reporting program for inpatient psychiatric
hospitals and psychiatric units. Section 1886(s)(4)(A)(i) of the Act
requires that, for FY 2014 \4\ and each subsequent fiscal year, the
Secretary must reduce any annual update to a standard federal rate for
discharges occurring during the fiscal year by 2.0 percentage points
for any inpatient psychiatric hospital or psychiatric unit that does
not comply with quality data submission requirements with respect to an
applicable fiscal year.
---------------------------------------------------------------------------

\4\ The statute uses the term ``rate year'' (RY). However,
beginning with the annual update of the inpatient psychiatric
facility prospective payment system (IPF PPS) that took effect on
July 1, 2011 (RY 2012), we aligned the IPF PPS update with the
annual update of the ICD-9-CM codes, effective on October 1 of each
year. This change allowed for annual payment updates and the ICD-9-
CM coding update to occur on the same schedule and appear in the
same Federal Register document, promoting administrative efficiency.
To reflect the change to the annual payment rate update cycle, we
revised the regulations at 42 CFR 412.402 to specify that, beginning
October 1, 2012, the RY update period would be the 12-month period
from October 1 through September 30, which we refer to as a ``fiscal
year'' (FY) (76 FR 26435). Therefore, with respect to the IPFQR
Program, the terms ``rate year'', as used in the statute, and
``fiscal year'' as used in the regulation, both refer to the period
from October 1 through September 30. For more information regarding
this terminology change, we refer readers to section III. of the RY
2012 IPF PPS final rule (76 FR 26434 through 26435).
---------------------------------------------------------------------------

As provided in section 1886(s)(4)(A)(ii) of the Act, the
application of the reduction for failure to report under section
1886(s)(4)(A)(i) of the Act may result in an annual update of less than
0.0 percent for a fiscal year, and may result in payment rates under
section 1886(s)(1) of the Act being less than the payment rates for the
preceding year. In addition, section 1886(s)(4)(B) of the Act requires
that the application of the reduction to a standard Federal rate update
be noncumulative across fiscal years. Thus, any reduction applied under
section 1886(s)(4)(A) of the Act will apply only with respect to the
fiscal year rate involved and the Secretary may not take into account
the reduction in computing the payment amount under the system
described in section 1886(s)(1) of the Act for subsequent years.
Section 1886(s)(4)(C) of the Act requires that, for FY 2014
(October 1, 2013, through September 30, 2014) and each subsequent year,
each psychiatric hospital and psychiatric unit must submit to the
Secretary data on quality measures as specified by the Secretary. The
data must be submitted in a form and manner and at a time specified by
the Secretary. Under section 1886(s)(4)(D)(i) of the Act, unless the

[[Page 46695]]

exception of subclause (ii) applies, measures selected for the quality
reporting program must have been endorsed by the entity with a contract
under section 1890(a) of the Act. The National Quality Forum (NQF)
currently holds this contract.
Section 1886(s)(4)(D)(ii) of the Act provides an exception to the
requirement for NQF endorsement of measures: In the case of a specified
area or medical topic determined appropriate by the Secretary for which
a feasible and practical measure has not been endorsed by the entity
with a contract under section 1890(a) of the Act, the Secretary may
specify a measure that is not so endorsed as long as due consideration
is given to measures that have been endorsed or adopted by a consensus
organization identified by the Secretary. Pursuant to section
1886(s)(4)(D)(iii) of the Act, the Secretary must publish the measures
applicable to the FY 2014 IPFQR Program no later than October 1, 2012.
Section 1886(s)(4)(E) of the Act requires the Secretary to
establish procedures for making public the data submitted by inpatient
psychiatric hospitals and psychiatric units under the IPFQR Program.
These procedures must ensure that a facility has the opportunity to
review its data prior to the data being made public. The Secretary must
report quality measures that relate to services furnished by the
psychiatric hospitals and units on the CMS Web site.
2. Covered Entities
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53645), we
established that the IPFQR Program's quality reporting requirements
cover those psychiatric hospitals and psychiatric units paid under
Medicare's IPF PPS (42 CFR 412.404(b)). Generally, psychiatric
hospitals and psychiatric units within acute care and critical access
hospitals that treat Medicare patients are paid under the IPF PPS.
Consistent with prior rules, we continue to use the term ``inpatient
psychiatric facility'' (IPF) to refer to both inpatient psychiatric
hospitals and psychiatric units. This usage follows the terminology in
our IPF PPS regulations at Sec. 412.402. For more information on
covered entities, we refer readers to the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53645).
3. Considerations in Selecting Quality Measures
Our objective in selecting quality measures is to balance the need
for information on the full spectrum of care delivery and the need to
minimize the burden of data collection and reporting. We have focused
on measures that evaluate critical processes of care that have
significant impact on patient outcomes and support CMS and HHS
priorities for improved quality and efficiency of care provided by
IPFs. We refer readers to section 4.a. of the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53645 through 53646) for a detailed discussion of the
considerations taken into account in selecting quality measures.
Before being proposed for inclusion in the IPFQR Program, measures
are placed on a list of measures under consideration, which is
published annually by December 1 on behalf of CMS by the NQF. In
compliance with section 1890A(a)(2) of the Act, measures proposed for
the IPFQR Program were included in 2 publicly available documents:
``List of Measures under Consideration for December 1, 2013,'' and
``List of Measures under Consideration for December 1, 2014'' (http://www.qualityforum.org/Setting_Priorities/Partnership/Measure_Applications_Partnership.aspx). The Measure Applications
Partnership (MAP), a multi-stakeholder group convened by the NQF,
reviews the measures under consideration for the IPFQR Program, among
other Federal programs, and provides input on those measures to the
Secretary. The MAP's 2014 and 2015 recommendations for quality measures
under consideration are captured in the following documents: ``MAP Pre-
Rulemaking Report: 2014 Recommendations on Measures for More than 20
Federal Programs'' (http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.aspx) and ``Process and Approach for MAP Pre-Rulemaking
Deliberations 2015'' (http://www.qualityforum.org/Publications/2015/01/Process_and_Approach_for_MAP_Pre-Rulemaking_Deliberations_2015.aspx.)
We considered the input and recommendations provided by the MAP in
selecting all measures for the IPFQR Program, including those discussed
below.

B. Retention of IPFQR Program Measures Adopted in Previous Payment
Determinations

Since the inception of the IPFQR Program in FY 2013, we have
adopted a total of 14 mandatory measures. In the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53646 through 53652), we adopted six chart-abstracted
IPF quality measures for the FY 2014 payment determination and
subsequent years. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50889
through 50895), we added 2 measures for the FY 2016 payment
determination and subsequent years. In the FY 2015 IPF PPS final rule
(79 FR 45963 through 45974), we finalized the addition of 2 new
measures to the IPFQR Program to those already adopted for the FY 2016
payment determination and subsequent years, and finalized four quality
measures for the FY 2017 payment determination and subsequent years.

C. Removal of HBIPS-4 From the IPFQR Program Measure Set for the FY
2017 Payment Determination and Subsequent Years

We first adopted HBIPS-4 Patients Discharged on Multiple
Antipsychotic Medications in the FY 2013 IPPS/LTCH PPS final rule (77
FR 53649 through 53650). We refer readers to that rule for a detailed
discussion of the measure. At the time we adopted the measure, it was
NQF-endorsed and intended for use in conjunction with HBIPS-5 Patients
Discharged on Multiple Antipsychotic Medications with Appropriate
Justification. However, the NQF removed its endorsement of HBIPS-4 in
January 2014. The NQF's Behavioral Health Steering Committee, in its
May 2014 Technical Expert Panel Report, found that current evidence
indicated that HBIPS-4 ``does not allow for the distinction of
differences in providers . . . .'' \5\ Moreover, the Steering Committee
noted that HBIPS-4 ``is not a measure of quality of patient care . . .
and there is insufficient evidence to warrant the endorsement of this
measure given the use of HBIPS-5, which addresses patients discharged
on multiple antipsychotic medications with appropriate justification.''
\6\ For these reasons, the Steering Committee did not re-endorse HBIPS-
4.
---------------------------------------------------------------------------

\5\ Behavioral Health Endorsement Maintenance 2014, Phase 2,
Technical Report, 67, (May 9, 2014). Available at http://www.qualityforum.org/Publications/2014/05/Behavioral_Health_Endorsement_Maintenance_2014_-_Phase_II.aspx.
\6\ Ibid.
---------------------------------------------------------------------------

As we stated in the FY 2013 IPPS/LTCH PPS final rule, we originally
proposed HBIPS-4, in part, because HBIPS-4 and HBIPS-5 were intended to
be reported as a set (77 FR 53649). However, as discussed above, the
NQF no longer believes HBIPS-4 is necessary in that set, and we agree.
As we stated in the proposed rule, we have the authority to maintain
measures that are not NQF-endorsed under section 1886(s)(4)(D)(ii) of
the Act. However, based on the loss of NQF endorsement and because
providers must still submit data for HBIPS-5, which we believe

[[Page 46696]]

sufficiently includes the information HBIPS-4 was intended to collect,
we stated our belief that removal of HBIPS-4 from the IPFQR Program is
warranted. We noted that the data collection period for FY 2016 has
ended and providers are required to submit this data. Therefore, we
stated that FY 2017 is the first year that we will be able to remove
this measure from the program, and we proposed to remove HBIPS-4
beginning with the FY 2017 payment determination.
We welcomed public comments on this proposal. The comments received
and our responses are outlined below.
Comment: Many commenters supported the removal of HBIPS-4, noting
that it is no longer NQF-endorsed and is not risk-adjusted, the use of
a measure for the sake of documentation does not lead to improved care
or provide actionable information and only increases burden, and HBIPS-
5 details the quality of care for those receiving multiple
antipsychotic medications. A few commenters, however, did not support
CMS' removal of HBIPS-4, stating that the practice of prescribing more
than one antipsychotic medication is a major contributor to high-dose
prescribing, which increases the potential of adverse side effects and
healthcare costs, and HBIPS-4 and HBIPS-5 are paired and, therefore,
HBIPS-5 is less meaningful without HBIPS-4.
Response: As stated above, although HBIPS-4 and HBIPS-5 were
originally paired, the NQF no longer believes that HBIPS-4 is necessary
to that set and has removed endorsement of HBIPS-4, stating that HBIPS-
4 ``does not allow for the distinction of differences in providers . .
. .'' \7\ Moreover, the Steering Committee noted that HBIPS-4 ``is not
a measure of quality of patient care . . . and there is insufficient
evidence to warrant the endorsement of this measure given the use of
HBIPS-5. . . .'' \8\ We agree and believe that HBIPS-5 is sufficient
without HBIPS-4 and that HBIPS-4 should be removed from the IPFQR
Program measure set as it increases burden without concomitant benefit.
---------------------------------------------------------------------------

\7\ Behavioral Health Endorsement Maintenance 2014, Phase 2,
Technical Report, 67, (May 9, 2014). Available at http://www.qualityforum.org/Publications/2014/05/Behavioral_Health_Endorsement_Maintenance_2014_-_Phase_II.aspx.
\8\ Ibid.
---------------------------------------------------------------------------

Comment: Some commenters supported CMS' removal of HBIPS-4 but
contended that problems remain with HBIPS-5 because IPFs are not always
able to obtain a thorough history about patients and do not know,
therefore, whether there is adequate justification for patients to be
on more than one antipsychotic. Commenters recommended that CMS work
with the measure developer and other stakeholders to determine if
HBIPS-5 should include additional exclusions, such as patients for whom
an IPF was unable to obtain records due to an inability to contact
previous or current providers or patients for whom a caregiver wishes
to be on multiple antipsychotics.
Response: We have not proposed to change HBIPS-5, and, therefore,
will not be altering it in the final rule (77 FR 53650). We will,
however, continue to monitor these issues in future years of the IPFQR
Program.
For the reasons stated above, and as displayed in Table 19, we are
finalizing our proposal to remove HBIPS-4: Patients Discharged on
Multiple Antipsychotic Medications beginning with the FY 2017 payment
determination.

Table 19--IPFQR Program Measure To Be Removed for the FY 2017 Payment
Determination and Subsequent Years
------------------------------------------------------------------------
NQF # Measure ID Measure
------------------------------------------------------------------------
N/A........................... HBIPS-4.......... Patients Discharged
on Multiple
Antipsychotic
Medications.
------------------------------------------------------------------------

D. New Quality Measures for the FY 2018 Payment Determination and
Subsequent Years

In the FY 2016 IPF PPS proposed rule, we proposed to add five new
measures to the IPFQR Program for the FY 2018 payment determination and
subsequent years (80 FR 25047). The sections below outline our
rationale for proposing these measures.
1. TOB-3 Tobacco Use Treatment Provided or Offered at Discharge and the
Subset Measure TOB-3a Tobacco Use Treatment at Discharge (NQF #1656)
Tobacco use is one of the greatest contributors of morbidity and
mortality in the United States, accounting for more than 435,000 deaths
annually.\9\ Smoking is a known cause of multiple cancers, heart
disease, stroke, complications of pregnancy, chronic obstructive
pulmonary disease, other respiratory problems, poorer wound healing,
and many other diseases.\10\ This health issue has significant
implications for persons with mental illness and substance use
disorders. Tobacco use is much higher among people with co-existing
mental health conditions than for the general population.\11\ One study
has estimated that these individuals are twice as likely to smoke as
the rest of the population.\12\ Tobacco use also creates a heavy
financial cost to both individuals and society. Smoking-attributable
health care expenditures are estimated at $96 billion per year in
direct medical expenses and $97 billion in lost productivity.\13\
---------------------------------------------------------------------------

\9\ Centers for Disease Control and Prevention. Annual Smoking-
Attributable Mortality, Years of Potential Life Lost, and
Productivity Losses--United States, 2000-2004.'' Morb Mortal Wkly
Rep. 2008. 57(45): 1226-1228. Available at: http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5745a3.htm.
\10\ U.S. Department of Health and Human Services. ``The health
consequences of smoking: A report of the Surgeon General.'' Atlanta,
GA, U.S. Department of Health and Human Services, Centers for
Disease Control and Prevention, National Center for Chronic Disease
Prevention and Health Promotion, Office on Smoking and Health, 2004.
\11\ Fiore, Michael C., Goplerud, Eric, Shroeder, Steven A.
(2010). The Joint Commission's New Tobacco Cessation Measures--Will
Hospitals Do the Right Thing? N Engl J Med 2012; 366:1172-1174.
Available at http://www.nejm.org/doi/full/10.1056/nejmp1115176.
\12\ Lasser K., Boyd J.W., Woolhandler S., Himmelstein, D.U.,
McCormick D., Bor D.H.. Smoking and mental illness: A population-
based prevalence study. JAMA. 2000; 284(20):2606-2610.
\13\ Centers for Disease Control and Prevention. ``Best
Practices for Comprehensive Tobacco Control Programs--2007.''
Atlanta, GA, Department of Health and Human Services, Centers for
Disease Control and Prevention, National Center for Chronic Disease
Prevention and Health Promotion, Office on Smoking and Health, 2007.
---------------------------------------------------------------------------

Strong and consistent evidence demonstrates that timely tobacco
dependence interventions for patients using tobacco can significantly
reduce the risk of developing a tobacco-related disease, as well as
provide improved health outcomes for those already suffering from a
tobacco-related

[[Page 46697]]

disease.\14\ Even a minimal intervention has been shown to result in
cessation.\15\ Research discloses that tobacco users hospitalized with
psychiatric illnesses who enter into smoking-cessation treatment can
successfully overcome their tobacco dependence; \16\ however, ``studies
show that many hospitals do not consistently provide cessation services
to their patients.'' \17\ Evidence also suggests that tobacco cessation
treatment does not increase, and may even decrease, the risk of re-
hospitalization for tobacco users hospitalized with psychiatric
illnesses.\18\ Research further demonstrates that effective tobacco
cessation support across the care continuum can be provided with only
minimal additional provider effort and without harm to the mental
health recovery process.\19\
---------------------------------------------------------------------------

\14\ U.S. Department of Health and Human Services. ``The health
consequences of smoking: a report of the Surgeon General.'' Atlanta,
GA, U.S. Department of Health and Human Services, Centers for
Disease Control and Prevention, National Center for Chronic Disease
Prevention and Health Promotion, Office on Smoking and Health, 2004.
\15\ Fiore M.C., Ja[eacute]n C.R., Baker T.B., et al. Treating
Tobacco Use and Dependence: 2008 Update. Clinical Practice
Guideline. Rockville, MD: U.S. Department of Health and Human
Services. Public Health Service. May 2008, available at http://www.ncbi.nlm.nih.gov/books/NBK63952.
\16\ Prochaska, J.J., et al. ``Efficacy of Initiating Tobacco
Dependence Treatment in Inpatient Psychiatry: A Randomized
Controlled Trial.'' Am. J. Pub. Health. 2013 August 15; e1-e9.
\17\ Fiore, Michael C., Goplerud, Eric, Shroeder, Steven A.
(2010). The Joint Commission's New Tobacco Cessation Measures--Will
Hospitals Do the Right Thing? N Engl J Med 2012; 366:1172-1174,
available at http://www.nejm.org/doi/full/10.1056/nejmp1115176.
\18\ Prochaska, JJ, et al. ``Efficacy of Initiating Tobacco
Dependence Treatment in Inpatient Psychiatry: A Randomized
Controlled Trial.'' Am. J. Pub. Health. 2013 August 15; e1-e9.
\19\ Ibid.
---------------------------------------------------------------------------

TOB-3 (NQF #1656) is a chart-abstracted measure that identifies
those patients 18 years of age and older who have used tobacco products
within 30 days of admission and who ``were referred to or refused
evidence-based outpatient counseling AND received or refused a
prescription for FDA-approved cessation medication upon discharge.''
\20\ TOB-3a is a subset of TOB-3 and identifies those IPF ``patients
who were referred to evidence-based outpatient counseling AND received
a prescription for FDA-approved cessation medication upon discharge as
well as those who were referred to outpatient counseling and had reason
for not receiving a prescription for medication.'' \21\ Providers must
report this measure set as ``an overall rate which includes all
patients to whom tobacco treatment was provided, or offered and
refused, at the time of hospital discharge (TOB-3), and a second rate,
a subset of the first, which includes only those patients who received
tobacco use treatment at discharge. (TOB-3a).'' \22\ For more
information on the measure specifications, we refer readers to the
Specifications Manual for National Hospital Inpatient Quality Measures
at https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1228773989482.Providing counseling and recommending cessation medication are
core strategies of the Treating Tobacco Use and Dependence
Guidelines.\23\ For the reasons stated above, we stated that we believe
that adoption of the TOB-3/TOB-3a measure set, which assesses IPFs'
offering of these tobacco use cessation treatments to IPF patients,
will result in better overall health outcomes for IPF patients.
---------------------------------------------------------------------------

\20\ TOB-3 and TOB-3a Measure Specifications, available at
http://www.jointcommission.org/assets/1/6/HIQR_Jan2015_v4_4a_1_EXE.zip.
\21\ Ibid.
\22\ TOB-3 and TOB-3a Measure Specifications, available at
https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1228773989482.
\23\ See Fiore MC, Ja[eacute]n CR, Baker TB, et al. Treating
Tobacco Use and Dependence: 2008 Update. Clinical Practice
Guideline. Rockville, MD: U.S. Department of Health and Human
Services. Public Health Service. May 2008. Available at http://www.ncbi.nlm.nih.gov/books/NBK63952. The specific strategy is
further specified in Strategy 4A.
---------------------------------------------------------------------------

Furthermore, we noted that the adoption of this measure set will
strengthen related measures already in place in the IPFQR Program.
Currently, the IPFQR Program includes 2 other tobacco cessation
measures: (1) Tobacco Use Screening (TOB-1), a chart-abstracted measure
that assesses hospitalized patients who are screened within the first 3
days of admission for tobacco use (cigarettes, smokeless tobacco, pipe,
and cigar) within the previous 30 days; and (2) Tobacco Use Treatment
Provided or Offered (TOB-2), which includes the subset, Tobacco Use
Treatment (TOB-2a). TOB-2/TOB-2a is a chart-abstracted measure set
reported as an overall rate that includes all patients to whom tobacco
use treatment was provided, or offered and refused, and a second rate,
a subset of the first, which includes only those patients who received
tobacco use treatment. TOB-1 and TOB-2/TOB-2a provide a picture of care
given during the hospital stay. In contrast, TOB-3/TOB-3a present the
care given at discharge. Together, these 3 measures/measure sets
present a broader picture of the entire episode of care. We noted that
if the TOB-3/TOB-3a measure set is adopted, the IPFQR Program's measure
set will showcase both the facility's practice of screening patients
for tobacco use and the outcomes of a facility's practice of offering
opportunities to stop during the course of the stay and upon discharge.
Further, we stated that the adoption of TOB-3/TOB-3a could alert IPFs
to gaps in treatment for smoking cessation intervention at discharge if
rates for these measures are low. We noted our belief that this
knowledge will support the development of quality improvement plans and
better engage patients in treatment.
We also stated our belief that public reporting of this information
will provide consumers and other stakeholders with useful information
in choosing among different facilities for patients who use tobacco
products. In addition, we observed that this measure set promotes the
National Quality Strategy priority of Effective Prevention and
Treatment, particularly with respect to the leading causes of
mortality, starting with cardiovascular disease. As noted above,
tobacco use is one of the greatest contributors of morbidity and
mortality in the United States, \24\ contributing to various forms of
cardiovascular disease, among many other conditions. \25\ ``Tobacco use
remains the chief preventable cause of illness and death in our
society.'' \26\ Cessation interventions can significantly reduce the
risk of developing tobacco-related disease, \27\ leading to decreases
in cardiovascular disease, among other diseases, and, ultimately,
mortality. We noted our belief that encouraging intervention would
promote effective treatment of tobacco use, and may contribute to
prevention of the many

[[Page 46698]]

diseases that are associated with tobacco use.
---------------------------------------------------------------------------

\24\ Centers for Disease Control and Prevention. Annual Smoking-
Attributable Mortality, Years of Potential Life Lost, and
Productivity Losses--United States, 2000-2004.'' Morb Mortal Wkly
Rep. 2008. 57(45): 1226-1228. Available at: http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5745a3.htm.
\25\ U.S. Department of Health and Human Services. ``The health
consequences of smoking: A report of the Surgeon General.'' Atlanta,
GA, U.S. Department of Health and Human Services, Centers for
Disease Control and Prevention, National Center for Chronic Disease
Prevention and Health Promotion, Office on Smoking and Health, 2004.
\26\ Fiore, Michael C., Goplerud, Eric, Shroeder, Steven A.
(2010). The Joint Commission's New Tobacco Cessation Measures--Will
Hospitals Do the Right Thing? N Engl J Med 2012; 366:1172-1174.
Available at: http://www.nejm.org/doi/full/10.1056/nejmp1115176.
\27\ U.S. Department of Health and Human Services. ``The health
consequences of smoking: A report of the Surgeon General.'' Atlanta,
GA, U.S. Department of Health and Human Services, Centers for
Disease Control and Prevention, National Center for Chronic Disease
Prevention and Health Promotion, Office on Smoking and Health, 2004.
---------------------------------------------------------------------------

For these reasons, we included TOB-3/TOB-3a in our ``List of
Measures under Consideration for December 1, 2014.'' The MAP provided
input on the measure set and supported its inclusion in the IPFQR
Program in its report ``Process and Approach for MAP Pre-Rulemaking
Deliberations 2015'' available at http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=78711. Moreover, this measure set
is NQF-endorsed for the IPF setting in conformity with the statutory
criteria for measure selection under section 1886(s)(4)(D)(i) of the
Act.
For these reasons, we proposed to adopt TOB-3/3a for the FY 2018
payment determination and subsequent years. We welcomed public comments
on this proposal. The comments we received and our responses are set
forth below.
Comment: Comments submitted from a consumer perspective strongly
recommended adopting TOB-3/3a given the prevalence of tobacco use among
those with mental illness, noting that rates are 2 to 4 times higher
than the overall adult population in the United States. These
commenters noted that tobacco use is the leading cause of premature
disease and death in the United States, is a primary driver of
hospitalizations for cancers, stroke, cardiovascular and respiratory
disease, causes complications in pregnancy and newborns, and interferes
with recovery and healing. These commenters also noted that
hospitalizations are an ideal time to initiate cessation because most
hospitals are smoke-free or tobacco-free environments, patients may be
more likely to quit if the reason for hospitalization is caused or made
worse by smoking, and patients may be more likely to continue cessation
medications if they are given them during hospitalizations with a
positive effect. They also pointed out that HHS has stated that
hospitalizations present an unequaled opportunity to promote tobacco
cessation, urging evidence-based interventions. Despite these facts,
commenters noted that most hospitals have not placed a high priority on
cessation efforts, specifically at discharge, thus presenting an
opportunity for incorporation of cessation strategies into discharge
planning and sustained participation in cessation treatment after
patients reenter communities. Supporters of the measure also noted
that, together with TOB-1 and TOB-2/2a, TOB-3/3a provides a
comprehensive picture of tobacco use treatment around all episodes of
inpatient psychiatric care. Finally, these commenters stated that,
although the measure is chart-abstracted, the abstraction can be done
at the same time the facility is abstracting data for TOB-1 and TOB-2/
2a, thereby not substantively increasing burden.
Response: We thank commenters for their support.
Comment: Many commenters recommended that CMS not adopt TOB-3/3a
because, they said the measure is a population health measure not
created for IPFs and, therefore, does not address quality of
psychiatric care. In addition, commenters stated that tobacco cessation
is not a primary treatment goal for the majority of patients and may
even be contraindicated if a practitioner believes the patient should
focus on modifying a different behavior. These commenters also asserted
that, when needed, IPFs already use appropriate screening tools.
Commenters underscored that measures should be directly related to the
reasons that patients seek or require IPF services. One commenter
stated that this measure should not be adopted because 5 measures in
the area of tobacco cessation are excessive. Other commenters stated
that the measure is redundant given TOB-1 and TOB-2/2a. One commenter
contended that the measure will show no differentiation in providers,
rendering it meaningless to consumers. Finally, one commenter suggested
that it may be operationally difficult for IPFs to comply with TOB-3/3a
because IPFs may have to modify discharge procedures in order to manage
offering and providing medications or counseling for heavy smokers, and
suggested, therefore, that the measure be delayed until the FY 2019
payment determination.
Response: As we stated in the FY 2014 IPPS/LTCH PPS final rule (79
FR 45972), we disagree with commenters that maintain that tobacco
cessation measures do not provide meaningful information regarding
quality of care at IPFs. We continue to believe that reporting this
information will provide meaningful distinctions between IPFs and that
tobacco cessation treatment is an essential step for IPF patients,
specifically because of the prevalence of tobacco use in this
community. Tobacco use is the leading preventable cause of premature
morbidity and mortality in the United States,\28\ affects people with
co-existing mental health conditions at a much higher rate than for the
general population,\29\ and is associated with estimated costs of $96
billion per year in direct medical expenses and $97 billion in lost
productivity. \30\ These figures are supported by recent studies,
including those provided by the U.S. Surgeon General.\31\ Furthermore,
we disagree that measures must be created for IPFs or specifically for
the IPF population to be indicative of quality care. We believe that
limiting the program to only measures or conditions that specifically
apply to the psychiatric population creates a false demarcation between
nonpsychiatric and psychiatric care. In our opinion, IPFs should be
considering the overall health of the patient throughout the length of
his/her episode of care, in addition to the patient's psychiatric
condition. Finally, although some IPFs may currently use appropriate
screening tools, as asserted by commenters, these rates may not be
publicly reported; a major goal of the IPFQR Program is to provide the
public with information upon which to choose providers. Since, as
discussed above, tobacco use is high among the IPF-population, we
believe that publicly reporting this data will facilitate patient
choice.
---------------------------------------------------------------------------

\28\ Centers for Disease Control and Prevention. Annual Smoking-
Attributable Mortality, Years of Potential Life Lost, and
Productivity Losses--United States, 2000-2004.'' Morb Mortal Wkly
Rep. 2008. 57(45): 1226-1228. Available at: http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5745a3.htm.
\29\ Fiore, Michael C., Goplerud, Eric, Shroeder, Steven A.
(2010). The Joint Commission's New Tobacco Cessation Measures--Will
Hospitals Do the Right Thing? N Engl J Med 2012; 366:1172-1174.
Available at http://www.nejm.org/doi/full/10.1056/nejmp1115176.
\30\ Centers for Disease Control and Prevention. ``Best
Practices for Comprehensive Tobacco Control Programs--2007.''
Atlanta, GA, Department of Health and Human Services, Centers for
Disease Control and Prevention, National Center for Chronic Disease
Prevention and Health Promotion, Office on Smoking and Health, 2007.
\31\ U.S. Department of Health and Human Services. The Health
Consequences of Smoking--50 Years of Progress: A Report of the
Surgeon General. Atlanta, GA: U.S. Department of Health and Human
Services, Centers for Disease Control and Prevention, National
Center for Chronic Disease Prevention and Health Promotion, Office
on Smoking and Health, 2014. Available at http://www.cdc.gov/tobacco/data_statistics/sgr/50th-anniversary/index.htm. CDC. Vital
Signs: Current cigarette smoking among adults aged >=18 years with
mental illness--United States, 2009-2011. MMWR 2013;62(05):81-87.
Available at http://www.cdc.gov/mmwr/preview/mmwrhtml/mm6205a2.htm?s_cid=mm6205a2_w. Xu X, Bishop EE, Kennedy SM, Simpson
SA, Pechacek TF. Annual healthcare spending attributable to
cigarette smoking: an update. Am J Prev Med 2015;48(3):326-333.
---------------------------------------------------------------------------

Additionally, we do not believe that TOB-3/3a is redundant,
excessive or unnecessary. TOB-3/3a rounds out the tobacco measures we
have previously adopted by showcasing the facility's practice of
screening patients for tobacco use and the outcomes of a facility's
practice of offering opportunities to stop during the course

[[Page 46699]]

of the stay (TOB -1/2/2a) and upon discharge (TOB-3/3a), thus
encompassing the entire episode of care. Furthermore, we are unaware of
a situation in which tobacco cessation measures, which could lead to a
decrease in disease and even premature death, would be contraindicated.
As we state above, we believe the provider should be considering the
overall health of the patient.
Finally, we understand that the measure may require some facilities
to change their existing discharge procedures for the purpose of
improving their performance on the measure, and that such changes may
take longer to accomplish than the time available before measure data
is collected. However, because we already require TOB-1/2/2a, we
believe these changes will be minimal. In addition, if facilities have
low measure rates, these low measure rates help signal important
quality improvement and operational gaps and encourage IPFs to close
these gaps, with the goal of higher measure rates in the future.
Comment: Several commenters recommended changes to this measure.
One commenter recommended that CMS change the measure specifications to
include minors since these individuals would also benefit from smoking
cessation. Another commenter noted that the current specification
require an appointment made by the healthcare provider for ongoing
evidence-based counseling with clinicians, and IPFs may not be able to
arrange a specific date for outpatient appointments. This commenter
asked CMS to modify the measure to allow hospitals to arrange a
referral without a specific appointment date. Other commenters stated
that the measure should exclude patients who were screened but later
decided they did not wish to receive treatment, asserting that informed
consent is a hallmark of medical delivery, and, as specified, the
measure is a measure of patient cooperation rather than provider
quality; one commenter suggested, instead, capturing a rate of
``patient refusal after treatment was offered.''
Response: When feasible and practicable, we believe it is important
to implement measures as they are specified, especially once such
measures are NQF-endorsed. As such, we do not believe we should make
the suggested modifications to the measure. We encourage commenters to
suggest these changes to the measure's steward, The Joint Commission,
so that the measure can be properly specified, tested, and endorsed for
these changes. Furthermore, we believe that patient compliance is
indicative of quality care. That is, we maintain that it is important
that providers understand gaps in patient compliance so that they can
modify their actions and policy to systematically encourage such
compliance.
Comment: One commenter requested that the measure be refined so
that ``referral to evidence-based outpatient counseling'' specifies
that ``referral to evidence-based tobacco cessation interventions'' may
include outpatient counseling, community resources, or telephonic
counseling services. Another commenter maintained that the measure
should be inclusive of behavioral healthcare treatment approaches that
meet the intent of ``outpatient counseling.'' Another commenter
expressed concern with the availability of outpatient counseling
services, particularly in rural areas, noting that many patients may
not feel comfortable having a referral made from a psychiatric
facility.
Response: As specified, the measure does not state examples of what
``referral to evidence-based outpatient counseling'' should include. We
believe it is important to give providers flexibility in prescribing
interventions to best fit the needs of the patient; telephonic
counseling services or other types of community resources may meet the
requirements for the measure and provide additional opportunities for
outpatient counseling in rural areas if they provide evidence-based
tobacco cessation counseling on an outpatient basis. Finally, upon
discharge, many patients are referred to outpatient providers; we do
not believe this measure presents unique issues to discharge referrals
and believe that providers should adhere to confidentiality laws and
requirements in all of these situations.
Comment: One commenter stated that because of its limited resources
as a community mental health center, it would likely face reduced
payment as a result of this measure, and, therefore, urged us not to
adopt it.
Response: As we stated above, the IPFQR Program does not penalize
facilities for low measure rates; facilities are only penalized if they
fail to report these data.
Comment: Many commenters recommended that CMS review the TOB
measures to see if they are effective and appropriate in the IPF
setting and should continue to be required for the IPFQR Program.
Response: We continuously evaluate whether our measures are
effective and appropriate for the IPFQR Program. Furthermore, as stated
above, this measure is endorsed for all inpatient settings, which is
inclusive of the IPF-setting. We will continue to do so for the TOB
measure set.
Comment: One commenter noted that several states do not provide
financial support for prescription medication for tobacco use
treatment, which may translate to high costs for the patient, and
recommended that the measure track patients who are unable to accept
treatment due to costs.
Response: We thank the commenter for this suggestion, and we will
consider it for future years of the IPFQR Program.
For the reasons stated above, we are finalizing our proposal to
adopt TOB-3 Tobacco Use Treatment Provided or Offered at Discharge and
the subset measure TOB-3a Tobacco Use Treatment at Discharge (NQF
#1656) for the FY 2018 payment determination and subsequent years.
2. SUB-2 Alcohol Use Brief Intervention Provided or Offered and SUB-2a
Alcohol Use Brief Intervention (NQF #1663)
Individuals with mental health conditions experience substance use
disorders (SUDs) at a much higher rate than the general population.
Individuals with the most serious mental illnesses have the highest
rates of SUDs. Co-occurring SUDs often go undiagnosed and, without
treatment, contribute to a longer persistence of disorders, poorer
treatment outcomes, lower rates of medication adherence, and greater
impairments to functioning.
Substance abuse, particularly alcohol abuse, is a significant
problem in the elderly. Alcohol use disorders are the most prevalent
type of addictive disorder in individuals ages 65 and over.\32\ Roughly
6 percent of the elderly are considered to be heavy users of
alcohol.\33\ Alcohol abuse is often associated with depression and
contributes to the etiology of many serious medical conditions,
including liver disease and cardiovascular disease. For these reasons,
it is important to assess IPFs' efforts to offer alcohol abuse
treatment to those patients who screen positive for alcohol abuse.
---------------------------------------------------------------------------

\32\ Ross, S. (2005). Alcohol Use Disorders in the Elderly.
Primary Psychiatry, 12(1):32-40.
\33\ AL Mirand and JW Welte. Alcohol consumption among the
elderly in a general population, Erie County, New York. Am J Public
Health. 1996 July; 86(7): 978-984.
---------------------------------------------------------------------------

SUB-2 includes ``[p]atients 18 years of age and older who screened
positive for unhealthy alcohol use who received or refused a brief
intervention during

[[Page 46700]]

the hospital \34\ stay.'' \35\ SUB-2a includes ``[p]atients who
received the brief intervention during the hospital stay.'' \36\ The
measure set is chart-abstracted and ``is reported as an overall rate
which includes all patients to whom a brief intervention was provided,
or offered and refused, and a second rate, a subset of the first, which
includes only those patients who received a brief intervention.'' \37\
For more information on the measure specifications, we refer readers to
the Specifications Manual for National Hospital Inpatient Quality
Measures at https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1228773989482.
---------------------------------------------------------------------------

\34\ Although the measure refers to ``hospitals,'' the measure
is specified for all in-patient settings. https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1228773989482.
\35\ SUB-2 and SUB-2a Measure Specifications, available at
https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1228773989482.
\36\ Ibid.
\37\ SUB-2 and SUB-2a Measure Specifications, available at
https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1228773989482.
---------------------------------------------------------------------------

We stated our belief that the addition of the SUB-2/SUB-2a measure
set to the related existing substance abuse measure in the IPFQR
Program will improve the overall quality of care that patients receive
in IPF settings, as well as overall patient health outcomes. We
previously adopted the SUB-1 measure (Alcohol Use Screening (SUB-1)
(NQF #1661)) (78 FR 50890 through 50892). SUB-1 assesses ``hospitalized
patients 18 years of age and older who are screened during the hospital
stay using a validated screening questionnaire for unhealthy alcohol
use.'' SUB-1 alone does not provide a full picture of an IPF's response
to this screening. However, when linked to SUB-2/SUB-2a, the IPF
measure set depicts the rate at which patients are screened for
potential alcohol abuse and the rate at which those who screen positive
accept the offered interventions. Further, the adoption of SUB-2/SUB 2a
could alert IPFs to gaps in treatment for interventions if rates are
low, which supports the development of quality improvement plans and
better patient engagement in treatment. In addition, data for the SUB-
2/SUB-2a measure set, in combination with the SUB-1 measure, would
afford consumers useful information in choosing among different
facilities, particularly for patients who may require assistance with
unhealthy alcohol use.
Additionally, we stated our belief that this measure set promotes
the National Quality Strategy priority of Effective Prevention and
Treatment for the leading causes of mortality, starting with
cardiovascular disease. As noted above, alcohol use disorders are the
most prevalent type of addictive disorder in individuals ages 65 and
over \38\ and contribute to serious medical conditions, including
cardiovascular disease and liver disease. We noted that encouraging
interventions would promote treatment of unhealthy alcohol use and may
contribute to prevention of the many diseases that are associated with
alcohol abuse, including cardiovascular disease.
---------------------------------------------------------------------------

\38\ Stephen Ross. Alcohol Use Disorders in the Elderly.
Psychiatry Weekly (no date). Available at: http://www.psychweekly.com/aspx/article/ArticleDetail.aspx?articleid=19.
---------------------------------------------------------------------------

For these reasons, we included the SUB-2/SUB-2a measure set in our
``List of Measures under Consideration for December 1, 2014.'' The MAP
provided input on the measure set and supported its inclusion in the
IPFQR Program in its report ``Process and Approach for MAP Pre-
Rulemaking Deliberations 2015'' available at http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=78711. Moreover, this measure set
is NQF-endorsed for the IPF setting, in conformity with the statutory
criteria for measure selection under section 1886(s)(4)(D)(i) of the
Act.
Therefore, we proposed to adopt SUB-2/2a for the FY 2018 payment
determination and subsequent years. We welcomed public comments on this
proposal. The comments we received and our responses are set forth
below.
Comment: Comments submitted from a consumer perspective supported
the measure since alcohol use may be a contributing factor to the
mental health of patients. Commenters noted that mental health and
substance abuse treatment have historically been provided separately
and not in a coordinated fashion and the measure could serve as a
catalyst for coordinated, integrated responses. Furthermore, these
commenters stated that the addition of these measures will complement
SUB-1.
Response: We thank commenters for their support.
Comment: Many commenters recommended that CMS not adopt SUB-2/2a
because, they submitted, the measure is a population screening measure
neither created for IPFs nor systematically tested in the IPF setting,
and, therefore, does not address quality of psychiatric care.
Specifically, commenters stated that this measure penalizes providers
for a patient's refusal to receive treatment, and is therefore a
measure of patient cooperation rather than provider quality. In
addition, commenters asserted that measures should be directly related
to reasons that patients seek or require IPF services to focus
providers on optimal care and recommended measures specific to
evidence-based practices. Finally, commenters noted that IPFs already
perform an in-depth assessment of patients' alcohol and substance abuse
history, and current use and patients with such disorders are treated
through a multi-disciplinary and multi-model plan, so the measure is
not necessary, and the measure will show no differentiation in
providers, rendering it meaningless to consumers.
Response: As we stated in the FY 2014 IPPS/LTCH PPS final rule (78
FR 50891), although the SUB measures were developed using all
hospitalizations in general acute care, we believe that SUB-2 is
equally applicable to freestanding IPFs and psychiatric units within
acute care facilities because risky alcohol use is an area of high
comorbidity for populations hospitalized in all of these settings.
Furthermore, we disagree that measures must be created for IPFs or
specifically for the IPF population to be indicative of quality care.
We believe that limiting the program to only measures or conditions
that specifically apply to the psychiatric population creates a false
demarcation between nonpsychiatric and psychiatric care. In our
opinion, IPFs should be considering the overall health of the patient
throughout the length of his/her episode of care, in addition to the
patient's psychiatric condition. Furthermore, we believe that patient
compliance is indicative of quality care. That is, we maintain that it
is important that providers understand gaps in patient compliance so
that they can modify their actions and policy to systematically
encourage such compliance. Additionally, although we believe that the
measure will differentiate between providers, we will monitor measure
rates to assure the measure provides meaningful information to
consumers by differentiating care among IPFs. Finally, although some
IPFs may currently use appropriate screening tools and provide
cessation treatment, as asserted by commenters, these rates may not be
publicly reported; a major goal of the IPFQR Program is to provide the
public with information upon which to choose providers. Since, as
discussed above,

[[Page 46701]]

alcohol use is high among the IPF-population, we believe that publicly
reporting this data will facilitate patient choice.
Comment: Several commenters stated that the measure should not be
adopted because it does not go far enough, stating the measure
separates alcohol use from other substances when psychiatric patients
are routinely screened for all substance use issues.
Response: As we stated in the FY 2014 IPPS/LTCH PPS final rule (78
FR 58092), we recognize that this measure only assesses alcohol use and
that screening for risky use/abuse of other substances would also be
desirable. We believe the SUB measure set to be an important first step
in this area, and we intend to consider the incorporation of other
substance use measures into the program in the future.
Comment: Many commenters urged CMS to modify this measure to
include more than a ``brief'' intervention since patients who
demonstrate behaviors sufficient to warrant involuntary inpatient
commitment and are dually diagnosed with substance abuse or dependence
require more intensive than ``brief'' substance use treatments. One
commenter stated that ``brief intervention'' needs further definition
and clarification to suggest or require brief intervention structures
supported by evidence, such as the FRAMES (feedback, responsibility,
advice, menu of options, empathy, and self-efficacy) structure. Other
commenters submitted that there is no evidence supporting the efficacy
of brief interventions for individuals that have alcohol or other
substance use.
Response: We disagree with the commenters regarding the efficacy of
brief interventions, specifically as they are defined by the measure.
In 2014, during the measures maintenance process, the NQF's Behavioral
Health Steering Committee stated that ``in order to receive credit for
the brief intervention there must be a bedside discussion with the
patient focusing on increasing the patient's understanding of the
impact of substance use on his or her health and motivating the patient
to change risky behaviors. The intervention should include feedback
concerning the quantity and frequency of alcohol consumed by the
patient in comparison with national norms, a discussion of negative
physical, emotional, and occupational consequences, and a discussion of
the overall severity of the problem. The brief intervention may be
given by a variety of healthcare professionals such as physician,
nurse, certified addictions counselor, psychologist, social worker, or
health educator with training in brief intervention.'' \39\ We
understand that for heavy users of alcohol, brief intervention may not
be enough, but these brief interventions, we believe, are an important
first-step to cessation. Furthermore, if providers believe that
additional cessation strategies are warranted, we highly encourage
using them. In addition, as described, the FRAMES structure would
satisfy the requirements for ``brief intervention,'' and we believe
that the provider community could use this framework. We note, however,
that such structure is not required as long as the provider meets the
elements discussed above.
---------------------------------------------------------------------------

\39\ http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=76540.
---------------------------------------------------------------------------

Comment: One commenter expressed concern that the measure set does
not exclude cases when treatment was offered but refused. This
commenter requested that CMS report the measure as the percentage of
patients who were offered treatment and refused, or retitle the measure
to ``patients who were offered alcohol use intervention and accepted.''
This commenter also requested that CMS allow clinicians to determine
whether a patient's cognitive impairment in the first three days of
admission prevented screening because some patients are alert and
oriented but impaired cognitively so as to not allow screening for
substance abuse.
Response: When feasible and practicable, we believe it is important
to implement measures as they are specified, especially where, as here,
the measure set is NQF-endorsed. As such, we do not believe we should
make the suggested modifications to the measure. We encourage the
commenter to suggest these changes to the measure's steward, The Joint
Commission, so that the measure can be properly specified, tested, and
endorsed for these changes. In addition, the measure set is bifurcated
specifically to delineate patients that refuse or do not otherwise
receive treatment. SUB-2 measures ``[p]atients 18 years of age and
older who screened positive for unhealthy alcohol use who received or
refused a brief intervention during the hospital \40\ stay,'' \41\ but
SUB-2a only includes ``[p]atients who received the brief intervention
during the hospital stay.'' \42\ Thus, the measure rates that will be
published on Hospital Compare will allow the public to derive rates of
patient refusal. As stated above, however, we believe that patient
compliance is indicative of quality care. That is, we maintain that it
is important that providers understand gaps in patient compliance so
that they can modify their actions and policy to systematically
encourage such compliance.
---------------------------------------------------------------------------

\40\ Although the measure refers to ``hospitals,'' the measure
is specified for all in-patient settings. https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1228773989482.
\41\ SUB-2 and SUB-2a Measure Specifications, available at
https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1228773989482.
\42\ Ibid.
---------------------------------------------------------------------------

Comment: One commenter stated that because of its limited resources
as a community mental health center, it would likely face reduced
payment as a result of this measure, and, therefore, urged us not to
adopt it.
Response: As we stated above, the IPFQR Program does not penalize
facilities for low measure rates; facilities are only penalized if they
fail to report these data.
Comment: One commenter noted that individuals screening positive
for alcohol dependency may need both brief interventions and further
assessment or referral to specialty treatment and, therefore, suggested
an additional quality measure that assesses patients who were defined
as alcohol dependent and referred to a substance use disorder
specialist for assessment. Another commenter urged CMS to adopt SUB-3/
3a to complement SUB-1/2/2a, noting that co-occurring substance use
disorders are prevalent in many patients with psychiatric diagnoses and
SUB-3/3a will ensure that patients continue to receive treatment after
discharge. Another commenter encouraged CMS to consider additional non-
alcohol substance abuse disorder measures, specifically the use of
opioids.
Response: We thank the commenters for these suggestions and will
consider them for future years of the program.
For the reasons stated above, we are finalizing our proposal to
adopt SUB-2 Alcohol Use Brief Intervention Provided or Offered and SUB-
2a Alcohol Use Brief Intervention (NQF #1663) for the FY 2018 payment
determination and subsequent years.
3. Transition Record With Specified Elements Received by Discharged
Patients (Discharges From an Inpatient Facility to Home/Self Care or
Any Other Site of Care) (NQF #0647) and Removal of HBIPS-6
Effective and timely communication of a patient's clinical status
and other relevant information at the time of discharge from an
inpatient facility is essential for supporting appropriate continuity
of care. Establishment of an

[[Page 46702]]

effective transition from one treatment setting to another is enhanced
by providing patients and their caregivers with sufficient information
regarding treatment during hospitalization. Receiving discharge
instructions can assist the patient in understanding how to maintain
and enhance his/her care when discharged to home or any other site, and
studies have shown that readmissions can be prevented by providing
detailed, personalized information to patients pre-discharge.\43\
---------------------------------------------------------------------------

\43\ Jack BW, Chetty VK, Anthony D, et al. A reengineered
hospital discharge program to decrease rehospitalization. Ann Intern
Med 2009; 150:178-187.
---------------------------------------------------------------------------

The Transition Record with Specified Elements Received by
Discharged Patients (Discharges from an Inpatient Facility to Home/Self
Care or Any other Site of Care) measure is a chart-abstracted measure
that captures the ``[p]ercentage of patients, regardless of age,
discharged from an inpatient facility to home or other site of care, or
their caregiver(s), who received a transition record (and with whom a
review of all included information was documented) at the time of
discharge.'' \44\ At a minimum, the transition record should include:
---------------------------------------------------------------------------

\44\ Transition Record with Specified Elements Received by
Discharged Patients (Discharges from an Inpatient Facility to Home/
Self Care or Any Other Site of Care) Measure Specifications.
Available at http://www.qualityforum.org/Qps/0647.
---------------------------------------------------------------------------

Reason for inpatient admission;
Major procedures and tests performed during inpatient stay
and summary of results;
Principal diagnosis at discharge;
Current medication list;
Studies pending at discharge;
Patient instructions;
Advance directive or surrogate decision maker documented
or reason for not providing advance care plan;
24-hour/7-day contact information, including physician for
emergencies related to inpatient stay;
Contact information for obtaining results of studies
pending at discharge;
Plan for follow-up care; and
Primary physician, other health care professional, or site
designated for follow-up care.\45\
---------------------------------------------------------------------------

\45\ Ibid.
---------------------------------------------------------------------------

The measure was developed by the American Medical Association-
convened Physician Consortium for Performance Improvement (AMA-convened
PCPI), ``a national, physician-led initiative dedicated to improving
patient health and safety.'' \46\ For more information on this measure,
including its specifications, we refer the readers to the AMA-convened
PCPI list of measures at http://www.qualityforum.org/Qps/0647.
---------------------------------------------------------------------------

\46\ See http://www.ama-assn.org/ama/pub/physician-resources/physician-consortium-performance-improvement/about-pcpi.page? The
AMA-PCPI ``is nationally recognized for measure development,
specification and testing of measures, and enabling use of measures
in electronic health records (EHRs) . . . [the organization]
develops, tests, implements and disseminates evidence-based measures
that reflect the best practices and best interest of medicine . .
.''
---------------------------------------------------------------------------

The Transition Record with Specified Elements Received by
Discharged Patients (Discharges from an Inpatient Facility to Home/Self
Care or Any other Site of Care) measure seeks to prevent gaps in care
transitions caused by the patient receiving inadequate or insufficient
information that lead to avoidable adverse events and cost CMS
approximately $15 billion due to avoidable patient readmissions.\47\
---------------------------------------------------------------------------

\47\ Medicare Payment Advisory Commission. Promoting Greater
Efficiency in Medicare. June 2007. Available at: http://www.medpac.gov/documents/reports/Jun07_EntireReport.pdf.
---------------------------------------------------------------------------

We stated our belief that public reporting of this measure will
afford patients and their families or caregivers useful information in
choosing among different facilities and will promote the National
Quality Strategy priority of Communication and Care Coordination. As
articulated by HHS, ``Care coordination is a conscious effort to ensure
that all key information needed to make clinical decisions is available
to patients and providers. It is defined as the deliberate organization
of patient care activities between 2 or more participants involved in a
patient's care to facilitate appropriate delivery of health care
services.'' \48\ This measure will promote appropriate care
coordination by specifying that patients discharged from an inpatient
facility receive relevant and meaningful transition information. This
measure also promotes Person and Family Engagement, ``a set of
behaviors by patients, family members, and health professionals and a
set of organizational policies and procedures that foster both the
inclusion of patients and family members as active members of the
health care team and collaborative partnerships with providers and
provider organizations.'' \49\ This measure will inform patients of
their status at discharge, empowering them to become active members in
their care. Additionally, the inclusion in this measure of an advance
care plan will support open communication of the patient's, and his/her
caregiver's/surrogate's, wishes, resulting in improved patient-provider
communication.
---------------------------------------------------------------------------

\48\ US DHHS. ``National Healthcare Disparities Report 2013.''
Available at: http://www.ahrq.gov/research/findings/nhqrdr/nhdr13/chap7.html.
\49\ Guide to Patient and Family Engagement: Environmental Scan
Report. May 2012. Agency for Healthcare Research and Quality.
Rockville, MD. Available at: http://www.ahrq.gov/research/findings/final-reports/ptfamilyscan/ptfamily1.html.
---------------------------------------------------------------------------

For these reasons, we included this measure in our ``List of
Measures under Consideration for December 1, 2014.'' The MAP provided
input on the measure and supported its inclusion in the IPFQR Program
in its report ``Process and Approach for MAP Pre-Rulemaking
Deliberations 2015'' available at http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=78711. In addition, the MAP had
previously suggested this measure as one that could fill a gap in
communication between the provider and patient at discharge \50\ and
recommended that the measure be used for dual eligible patients (that
is, patients with both Medicare and Medicaid coverage), who comprise a
significant beneficiary population served within IPFs.\51\ Moreover,
this measure set is NQF-endorsed for the IPF setting, in conformity
with the statutory criteria for measure selection under section
1886(s)(4)(D)(i) of the Act.
---------------------------------------------------------------------------

\50\ http://www.qualityforum.org/Publications/2012/10/MAP_Families_of_Measures.aspx.
\51\ http://www.qualityforum.org/Publications/2014/08/2014_Input_on_Quality_Measures_for_Dual_Eligible_Beneficiaries.aspx.
---------------------------------------------------------------------------

We proposed that, if this measure is finalized, it would replace
the existing HBIPS-6 Post-Discharge Continuing Care Plan measure.\52\
We stated our belief that the Transition Record with Specified Elements
Received by Discharged Patients (Discharges from an Inpatient Facility
to Home/Self Care or Any Other Site of Care) measure is a more
effective and robust measure than HBIPS-6 for use in the IPF setting.
Specifically, HBIPS-6 requires discharge plans to only have 4
components:
---------------------------------------------------------------------------

\52\ In the FY 2013 IPPS/LTCH PPS final rule, we adopted HBIPS-
6, beginning with the FY 2014 payment determination (77 FR 53650-
53651). We refer readers to that rule for a detailed discussion of
this measure.
---------------------------------------------------------------------------

Reason for hospitalization;
Principal diagnosis;
Discharge medications; and
Next level of care recommendations.\53\
---------------------------------------------------------------------------

\53\ See https://manual.jointcommission.org/releases/TJC2014A1/.

In contrast, the Transition Record with Specified Elements Received by
Discharged Patients (Discharges from an Inpatient Facility to Home/Self
Care or Any Other Site of Care) measure requires additional elements,
including those described below, which are intended to improve quality
of care,

[[Page 46703]]

decrease costs, and increase beneficiary engagement.
First, this measure requires the provider to communicate both
studies pending at discharge as well as contact information so that
patients or their families can obtain the results of those studies.
Approximately 40 percent of discharged patients have test results that
are pending and about a quarter of such test results require further
action that, if not taken in a timely manner, could result in
potentially avoidable negative outcomes.\54\ HBIPS-6 does not require
providers to specify studies pending at discharge.
---------------------------------------------------------------------------

\54\ Kripalani S, LeFevre F, Phillips CO, et al. Deficits in
communication and information transfer between hospital based and
primary care physicians: implications for patient safety and
continuity of care. JAMA 2007;297(8):831-841.
---------------------------------------------------------------------------

Second, the transition record is also required to contain a list of
major procedures and tests that were performed during the
hospitalization and summary results. HBIPS-6 does not include this
requirement. We believe it is important for a patient to understand
which tests were performed on him/her and for what purpose,
understanding the outcome and consequences of these tests. This
knowledge may serve to empower patients to seek additional care or
follow-up when necessary, reducing the risk of avoidable consequences
and readmissions.
Third, the transition record in this measure is required to include
patient instructions while HBIPS-6 has no such requirement. Without
instructions, the patient may not take the necessary steps for
recovery, leading to complications and/or readmissions.
Fourth, this measure requires both of the following: (1) 24-hour/7-
day contact information including physicians for emergencies related to
inpatient stay; and (2) the primary physician, other health care
professional, or sites designated for follow-up care. HBIPS-6 does not
have these requirements. Again, this information can lead to reduced
complications and an increased likelihood of appropriate follow-up
care, resulting in reduced readmissions.
Finally, the elements required for the transition record measure
are far better aligned than HBIPS-6 with the elements required in the
Summary of Care record required by the Electronic Health Record (EHR)
Incentive Program for eligible hospitals and critical access hospitals
and with the guidance on discharge planning provided by the Medicare
Learning Network available at https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/Discharge-Planning-Booklet-ICN908184.pdf.
In summary, we stated our belief that the Transition Record with
Specified Elements Received by Discharged Patients (Discharges from an
Inpatient Facility to Home/Self Care or Any Other Site of Care) measure
is more robust than HBIPS-6 because it includes these and other
elements that are currently absent from HBIPS-6. Therefore, we proposed
to adopt the Transition Record with Specified Elements Received by
Discharged Patients (Discharges from an Inpatient Facility to Home/Self
Care or Any Other Site of Care) measure for the FY 2018 payment
determination and subsequent years, and to remove HBIPS-6. We welcomed
public comments on these proposals. The comments we received and our
responses are set forth below.
Comment: Many comments submitted from a consumer perspective
supported the adoption of this measure, stating that the transition
from inpatient to home/self-care or any other site is extremely
critical; the measure supports patient engagement, and patient
activation, and provides patients with necessary documentation for
follow-up care. Commenters also stated that, unlike HBIPS-6, because
this measure is not limited to the inpatient psychiatric setting, it
decreases the separation between psychiatric and nonpsychiatric care.
Response: We thank the commenters for their support.
Comment: Many commenters recommended that CMS not replace HBIPS-6
with the Transition Record with Specified Elements Received by
Discharged Patients (Discharges from an Inpatient Facility to Home/Self
Care or Any Other Site of Care) measure for several reasons. First,
commenters asserted that HBIPS-6 is widely-used and fully operational,
was developed with the input of IPFs, and fully tested in the IPF-
setting, whereas the proposed measure does not appear to be widely used
or have benchmarking data available. One commenter specifically
submitted that the measure was developed for use at the individual-
clinician level rather than at the facility-level. Commenters stated
that most IPFs have been reporting HBIPS data for over eight years,
allowing them to understand trends and performance gaps, and believed
that removing HBIPS-6 could upset quality improvement efforts currently
in place. Commenters also stated that continually revising the measures
does not provide reliable data on which to base decisions about patient
care and evaluate care improvement over time.
Second, commenters contended that HBIPS-6 better addresses the core
elements of the proposed measure and requires more stringent
documentation of medications, noting that, although the proposed
measure requires more information, it is the practice of IPFs to
include all relevant information in the continuing care plan, and, if
needed, hospitals communicate additional elements to the next level
care provider. Commenters further stated that the new elements required
by this measure are not germane to the vast majority of psychiatric
patients, commenting that the rule mainly cites articles that did not
necessarily study psychiatric patients, and that the new elements are
primarily based on medical models rather than psychiatric care.
Third, commenters contended that retiring HBIPS-6 will increase
burden on IPFs because of the 7 additional elements required by the
proposed measure and because IPFs will still be required to abstract
data for HBIPS-6 for The Joint Commission.
Finally, some commenters stated that the measure is duplicative of,
and sometimes misaligned with, the requirements of Medicare's
Conditions of Participation. Commenters believed that the Conditions of
Participation meet the goals of promoting care coordination by
specifying that patients discharged from an inpatient facility receive
relevant and meaningful transition information and the results are
publicly reported.
Commenters suggested that, if CMS wishes to require transition
elements in addition to HBIPS-6, CMS either allow hospitals more time
to operationalize the measure, implementing the measure beginning with
the FY 2019 payment determination, or that CMS work with The Joint
Commission to revise HBIPS-6 to include additional elements.
Response: We agree with commenters that there may be some increase
in burden due to the removal of HBIPS-6 and the adoption of the
Transition Record with Specified Elements Received by Discharged
Patients (Discharges from an Inpatient Facility to Home/Self Care or
Any Other Site of Care) measure, since HBIPS-6 requires 4 elements
while the Transition Record with Specified Elements Received by
Discharged Patients (Discharges from an Inpatient Facility to Home/Self
Care or Any Other Site of Care) measure requires 11 elements. However,
we believe that this burden will be significantly mitigated by the
overlap in the two measures; the 4 elements required by HBIPS-6 satisfy
4 of the 11 elements for the new measure. We clarify in this final rule
that, if the IPF

[[Page 46704]]

meets the documentation requirements of HBIPS-6, it also meets the
documentation requirements for the following elements for the
Transition Record with Specified Elements Received by Discharged
Patients (Discharges from an Inpatient Facility to Home/Self Care or
Any Other Site of Care) measure: (1) Reason for hospitalization; (2)
principal diagnosis; (3) discharge medications; and (4) next level of
care recommendations. Therefore a hospital could abstract data for and
comply with HBIPS-6 by also complying with and abstracting data for the
Transition Record with Specified Elements Received by Discharged
Patients (Discharges from an Inpatient Facility to Home/Self Care or
Any Other Site of Care) measure. Furthermore, if it is currently the
practice of IPFs to include all relevant information in the continuing
care plan, as some commenters assert, we do not understand how the
measure would substantially increase burden. In addition, for the
reasons stated above, we believe the additional elements in the new
transition measure are indicative of quality care, leading to a
decrease in re-hospitalizations and an increase in patient safety. We
also do not agree that replacing this measure will upset quality
improvement efforts begun by HBIPS-6. If IPFs have already begun
quality improvement in this area, we believe it will continue and even
surpass the current state because the proposed measure is even more
robust, requiring 7 additional elements. Therefore, we believe that the
benefit of the removal of HBIPS-6 and the adoption of the Transition
Record with Specified Elements Received by Discharged Patients
(Discharges from an Inpatient Facility to Home/Self Care or Any Other
Site of Care) measure outweighs any associated burden and furthers the
goals of the IPFQR Program. In addition, the measure is endorsed at the
facility-level, not the clinical-level, and was developed with a broad
range of inpatient settings in mind that did not specifically exclude
IPFs; the measure developer is considering explicitly including the
IPF-setting in the next round of measure maintenance so that the
measure is endorsed not only for all inpatient settings, but explicitly
states that it is endorsed for the IPF-setting.
Furthermore, we disagree that the Conditions of Participation are
duplicative of or misaligned with this measure. To the extent that the
measure and Conditions of Participation overlap, they are aligned in
their requirements. Furthermore, this measure requires elements in
addition to those of the Conditions of Participation, increasing the
quality of care delivered to patients.
To clarify, although HBIPS-6 requires documentation in the medical
record of discharge medications, dosage, and indication for use or that
no medications were prescribed at discharge, the new measure requires
documentation of all medications to be taken by patient after
discharge, including all continued and new medications. We believe that
it is important that patients understand all medications that they
should be taking, even those not specifically prescribed at discharge.
Thus, we believe that this new measure is actually more robust than
HBIPS-6.
Additionally, as we have stated previously, we disagree that
measures must be created for IPFs or specifically for the IPF
population to be indicative of quality care. Many issues concerning
service quality are not specific to a particular setting. We believe
that the content of transition records is one such issue. Further, we
believe that limiting the program to only measures or conditions that
specifically apply to the psychiatric population creates a false
demarcation between nonpsychiatric and psychiatric care.
Finally, although we believe this measure to be a critical
indicator of quality care, we understand that with the additional
elements required it may take providers time to change their operations
to begin collecting this data. Therefore, we will only require IPFs to
report the last two quarters of data for this measure for the FY 2018
payment determination; that is, providers will only be required to
report data for July 1, 2016-December 31, 2016. Beginning with the FY
2019 payment determination, IPFs will be required to report all four
quarters of data or will face a payment reduction.
Comment: Some commenters asserted that patients have expressed
frustration with the length of discharge instructions, and the number
of elements required by this measure may overwhelm the patient, causing
the patient or caregiver to lose interest and disregard the important
information. Commenters also stated that some of this information could
be misinterpreted if the patient reviews the information after
discharge and not in the presence of a clinician. One commenter
specifically contended that ``patient instructions'' should not be
included in the record because they will become lost in the packet of
information and many patients are discharged to places, such as a group
home, residential care, or jail, where they are not able to keep such a
large amount of information, putting their confidentiality at risk.
Another commenter stated its belief that the requirements in the
measure for patients to receive and understand their transition records
is burdensome because the timeframe for collection does not allow
enough time for hospitals to modify the language in their current
systems to account for health literacy. Therefore, some commenters
requested that the measure be limited to items necessary for the
transition period to the next follow-up care visit and be tailored to
psychiatric patient's ability to comprehend. Other commenters, however,
specifically noted that the measure will enhance the likelihood that
patients will have the information they need to effectively manage
their own care (or for their caregiver to understand and assist with
managing the patient's care).
Response: We agree that the measure will help, rather than harm,
patients. We are committed to patient engagement and believe that the
more that patients know about their condition and treatment, the more
empowered they become in their care and their follow-up treatment. If
facilities believe that certain items in the record need to be
explained, we believe it is incumbent upon them to become partners in
care with patients and sufficiently explain these details. Although
such changes may present additional burden to facilities, we believe
that this burden is far outweighed by the benefit of fostering an
involved and empowered patient population. Additionally, we do not
believe that this measure presents confidentiality issues for patients.
Once a patient receives his or her record, the disposition of the
information is up to the patient. Thus, as with all discharge records,
a patients may choose to do with the information as they so choose
without raising confidentiality concerns.
Comment: Some commenters supported the measure because it more
closely aligns with existing summary of care document requirements for
EHRs, but some commenters stated that, psychiatric hospitals are not
eligible for the EHR Incentive Program and the majority of
organizations to which IPFs discharge patients do not have electronic
records. Other commenters stated their belief that this measure would
require providers to modify their EHRs.
Response: Nothing in this measure requires a facility to use an
EHR. While we recognize that psychiatric hospitals are not eligible for
the EHR Incentive Program, we believe that, whenever

[[Page 46705]]

possible, the goals of the agency should be aligned to foster
streamlined processes and procedures across providers and care
settings. Furthermore, we are not aware of any specific EHR changes
that would need to be made to accommodate this measure, and, when the
record is transmitted to a next-level provider per the measure
discussed below, the ``transition record may be transmitted to the
facility or physician or other health care professional designated for
follow-up care via fax, secure email, or mutual access to an electronic
health record (EHR).'' \55\
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\55\ Timely Transmission of Transition Record (Discharged from
Inpatient Facility to Home/Self Care or Any Other Site of Care),
available at http://www.ama-assn.sorg/apps/listserv/x-check/qmeasure.cgi?submit=PCPI.
---------------------------------------------------------------------------

Comment: Some commenters maintained that CMS inappropriately
compared HBIPS-6 with the proposed measure when the HBIPS-6 transition
plan is not required to go to the patient.
Response: We believe comparing these measures was appropriate
because both concern practices around documentation of the care
provided during the inpatient stay. In fact, the requirements for
patient communication in the measure is an important reason for
choosing it to replace HBIPS-6, which does not require the
documentation to go to the patient. As we discuss above, we believe it
is vital to provide this information to enhance patient engagement.
Comment: Commenters expressed concern that the Transition Record
with Specified Elements Received by Discharged Patients (Discharges
from an Inpatient Facility to Home/Self Care or Any Other Site of Care)
measure is not stratified by age, which limits the usefulness of the
data, given the variation across populations.
Response: As stated above, when feasible and practicable, we
believe it is important to implement measures as they are specified
especially where, as here, the measure is NQF-endorsed. As such, this
measure is not specified to be reported by age. Furthermore, we believe
that presenting the measure as an aggregate number rather than
stratified by age will allow greater rather than less insight into
these data because, as further explained in section V.F.1. of this
final rule, the resultant number of cases is often too small to allow
public reporting when data are stratified by age.
Comment: Comments submitted from a consumer perspective recommended
that CMS consider adding the following additional elements to the
existing transition measure: (1) Information on locations and contacts
for community services and support group meetings; (2) recommendations
for additional, non-medication mental health treatments; (3)
recommendations for relevant physical health suggested appointments and
clinical references; (4) patient surveys evaluating the quality of
mental health care received; (5) information about side effects from
medications and potential warning signs of adverse medication
interactions; (6) information about follow-up care for alcohol or
substance use treatment; and (7) documented coordination between
inpatient and outpatient providers. Another commenter stated that the
measure should exclude patients discharged in less than 24 hours
because collecting the required information takes at least this amount
of time. The same commenter also submitted that patients discharged to
another acute facility should be excluded from the measure since such a
discharge is always accompanied by an appropriate transition record.
Another commenter stated that additional exclusions should be added,
including patient refusal and unplanned discharges, noting that more
than 6 percent of discharges fall in these categories. One commenter
noted that ``medication indications'' is missing from the proposed
measure, but appears in HBIPS-6, and questions why CMS believes this is
no longer a necessary element, noting that such an omission is welcome
because of the burden in documenting this information. Other
commenters, however, stated that this more stringent documentation of
medications is necessary.
Response: As stated above, when feasible and practicable, we
believe it is important to implement measures as they are specified,
especially once such measures are NQF-endorsed. As such, we do not
believe we should make the suggested modifications to the measure. We
encourage the commenters to suggest these changes to the measure's
steward, the AMA-convened PCPI, so that the measure can be properly
specified, tested, and endorsed for these changes.
Comment: Some commenters stated that this measure was either the
same as or similar to a measure previously adopted by the Hospital OQR
Program that was subsequently removed because hospitals raised concerns
about potential privacy issues related to releasing certain elements of
the record to family members or caregivers. Commenters asked if the
measure had been revised to address these issues and if IPFs will be
constrained by state laws, and, if so, since state laws differ from
state-to-state, how the measure can be implemented nationwide.
Response: We believe the commenters stating that the measure is the
same as a measure adopted by the Hospital OQR Program are incorrect.
The Hospital OQR Program adopted and finalized NQF #0649 Transition
Record with Specified Elements Received by Discharged Patients
(Emergency Department Discharges to Ambulatory Care [Home/Self Care] or
Home Health Care). Although this measure is also stewarded by the AMA-
PCPI and requires a transition record, it is not the same as NQF #0647,
which we proposed. The measures differ in regards to the location from
which the patient is discharged; specifically, NQF #0649 measures
discharges from the emergency department, while NQF #0647 measures
discharges from an inpatient facility. We believe that this difference
is critical because the circumstances surrounding discharge from an
emergency department are typically not planned; that is, a patient is
discharged the same day he/she arrives with the individual that brought
him/her to the emergency room, whom a patient may or may not feel
comfortable sharing information. Those discharged from an inpatient
setting usually have advanced notice and can plan accordingly. Thus, we
do not believe, and neither does the AMA-PCPI, that NQF #0647 raises
any of the privacy concerns articulated by the Hospital OQR Program for
#0649.
Comment: Commenters requested clarification on several elements of
the discharge plan: (1) What needs to be transmitted to satisfy the
advanced directive requirement and who is a ``surrogate decision
maker''; (2) what is defined as a ``major procedure''; (3) which tests
should be included in the transition record; and (4) what is ``24 hour,
7-day a week contact information.'' Another commenter requested that
CMS clarify whether psychiatric patients undergo major procedures and
tests during their stay, and, if so, the most common procedures and
tests. Another commenter requested CMS to opine if Indiana's Physician
Order for Scope Treatment document would satisfy the advance directive
element. Another commenter stated that psychiatric patients are often
not in the best position to formulate an advanced care plan.
Response: According to the measure steward, the AMA-convened PCPI,
to satisfy the ``advance directive or surrogate decision maker
documented or reason for not providing advance care plan'' element, the
IPF need only document whether the patient has an

[[Page 46706]]

advance directive or surrogate decision maker or a reason he/she does
not have one. No additional documentation need be transmitted and a
patient need not create an advance directive to satisfy the measure. A
``surrogate decision maker'' is an individual that the patient has
designated to make decisions for him/her. Again, per the measure
specifications, the patient need not necessarily have a surrogate
decision maker, but the IPF should document why he or she does not in
the absence of one.
The AMA-PCPI has also clarified that ``major procedure'' and
``tests'' are intentionally not defined to allow flexibility for
providers; therefore, we cannot quantify which procedures or tests are
major. If a provider believes a procedure to be ``major'' or a test
important enough to be included, it should be included in the
transition record.
Regarding the ``24 hour, 7-day a week contact information,'' IPFs
need only provide a number where a patient can contact the facility
with questions. This number need not connect the patient to his/her
specific doctor, although it may do so.
For the reasons stated above, we are finalizing our proposal to
adopt Transition Record with Specified Elements Received by Discharged
Patients (Discharges from an Inpatient Facility to Home/Self Care or
Any Other Site of Care) and remove HPIBS-6: Post-Discharge Continuing
Care Plan for the FY 2018 payment determination and subsequent years
with one modification. For the FY 2018 payment determination, we will
only require IPFs to report data on this measure for the last two
quarters of the reporting period (July 1, 2016-December 1, 2016).
Beginning with the FY 2019 payment determination, IPFs will be required
to report all four quarters of data.
4. Timely Transmission of Transition Record (Discharges From an
Inpatient Facility to Home/Self Care or Any Other Site of Care) (NQF
#0648) and Removal of HBIPS-7
The literature shows infrequent communication between hospital
physicians and primary care practitioners and that the availability of
discharge summaries at the patient's first post-discharge visit with
the primary care practitioner is low, which affects the quality of care
provided to patients.\56\ The Timely Transmission of Transition Record
(Discharges from an Inpatient Facility to Home/Self Care or Any Other
Site of Care) measure (NQF #0648) is a chart-abstracted measure
developed by AMA-convened PCPI to narrow gaps in care transition that
result in adverse health outcomes for patients and cost CMS about $15
billion due to readmissions,\57\ as discussed above. This measure
captures the ``[p]ercentage of patients, regardless of age, discharged
from an inpatient facility to home or any other site of care for whom a
transition record was transmitted to the facility or primary physician
or other health care professional designated for follow-up care within
24 hours of discharge.'' \58\ For more information on this measure,
including its specifications, we refer the readers to http://www.qualityforum.org/Qps/0648.
---------------------------------------------------------------------------

\56\ Kripalani S, LeFevre F, Phillips CO, et al. Deficits in
communication and information transfer between hospital based and
primary care physicians: Implications for patient safety and
continuity of care. JAMA 2007;297(8):831-841.
\57\ Medicare Payment Advisory Commission. Promoting Greater
Efficiency in Medicare. June 2007. Available at: http://www.medpac.gov/documents/reports/Jun07_EntireReport.pdf.
\58\ Timely Transmission of Transition Record (Discharged from
Inpatient Facility to Home/Self Care or Any Other Site of Care),
available at http://www.ama-assn.sorg/apps/listserv/x-check/qmeasure.cgi?submit=PCPI.
---------------------------------------------------------------------------

We stated our belief that public reporting of this measure will
afford consumers, and their families or caregivers, useful information
in choosing among different facilities because it communicates how
quickly a summary of the patient's record will be transmitted to his or
her other treating facilities and physicians, improving care, as
outlined above. We further believe that this measure will promote the
National Quality Strategy priority of Communication and Care
Coordination. As discussed above, according to HHS, ``Care coordination
is a conscious effort to ensure that all key information needed to make
clinical decisions is available to patients and providers. It is
defined as the deliberate organization of patient care activities
between 2 or more participants involved in a patient's care to
facilitate appropriate delivery of health care services.'' \59\ This
measure enables a patient's primary care physician or other healthcare
practitioner to timely receive a transition record of the inpatient
hospitalization.
---------------------------------------------------------------------------

\59\ US DHHS. ``National Healthcare Disparities Report 2013.''
Available at: http://www.ahrq.gov/research/findings/nhqrdr/nhdr13/chap7.html.
---------------------------------------------------------------------------

For these reasons, we included this measure in our ``List of
Measures under Consideration for December 1, 2014.'' The MAP provided
input on the measure and supported its inclusion in the IPFQR Program
(http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=78711). In addition, the MAP had
previously suggested this measure as one that could fill a gap in
communication \60\ and recommended that the measure be used for dual
eligible patients (that is, patients with both Medicare and Medicaid
coverage), who comprise a significant beneficiary population served
within IPFs.\61\ Moreover, this measure set is NQF-endorsed for the IPF
setting, in conformity with the statutory criteria for measure
selection under section 1886(s)(4)(D)(i) of the Act.
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\60\ http://www.qualityforum.org/Publications/2012/10/MAP_Families_of_Measures.aspx.
\61\ http://www.qualityforum.org/Publications/2014/08/2014_Input_on_Quality_Measures_for_Dual_Eligible_Beneficiaries.aspx.
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We proposed that if we finalized this measure, it would replace the
existing HBIPS-7: Post Discharge Continuing Care Plan Transmitted to
the Next Level of Care Provider Upon Discharge measure.\62\ HBIPS-7
requires that the continuing care plan be transmitted to the next care
provider no later than the fifth day post discharge.\63\ The Timely
Transmission of Transition Record (Discharges from an Inpatient
Facility to Home/Self Care or Any Other Site of Care) measure requires
transmission to the next level of care within 24 hours of discharge.
More timely communication of vital information regarding the inpatient
hospitalization results in better care, reduction of systemic medical
errors, and improved patient outcomes. Studies show that the risks of
re-hospitalization are lower when primary care providers have access to
patients' post-discharge records at the first post-discharge
visit,^{64 65} which may be within a day (or days) of
discharge. Critically, the availability of the discharge record to the
next level provider within 24 hours after discharge supports more
effective care coordination and patient safety, since a delay in
communication can result in medication or treatment errors. Thus, we
stated our belief that replacing HBIPS-7 with the Timely Transmission
of Transition Record (Discharges from an Inpatient Facility to Home/
Self Care

[[Page 46707]]

or Any Other Site of Care) measure would increase the quality of care
provided to patients, reduce avoidable readmissions, and increase
patient safety.
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\62\ In the FY 2013 IPPS/LTCH PPS final rule, we adopted HBIPS-7
Post Discharge Continuing Care Plan Transmitted to the Next Level of
Care Provider Upon Discharge, beginning with the FY 2014 payment
determination (77 FR 53651-53652). We refer readers to that rule for
a detailed discussion of this measure.
\63\ https://manual.jointcommission.org/releases/TJC2014A1/.
\64\ van Walraven C, Seth R, Austin PC, Laupacis A. (2002).
Effect of discharge summary availability during postdischarge visits
on hospital readmission. Journal of General Internal Medicine
17:186-192.
\65\ Jack BW, Chetty VK, Anthony D, et al. (2009). A
reengineered hospital discharge program to decrease
rehospitalization. Ann Intern Med.150(3),178-187.
---------------------------------------------------------------------------

Therefore we proposed to replace HBIPS-7 with the Timely
Transmission of Transition Record (Discharges from an Inpatient
Facility to Home/Self Care or Any Other Site of Care) measure beginning
with the FY 2018 payment determination. We welcomed public comments on
these proposals. The comments we received and our responses are set
forth below.
Comment: Comments submitted from a consumer perspective strongly
supported the adoption of this measure, specifically the 24-hour
requirement, since lack of coordinated care has led to high rates of
re-hospitalization, arrests, homelessness, and other negative
consequences, and the measure will ensure that there is only a
potential 24-hour gap between discharge and the next level of care.
Commenters maintained that the measure would promote safe and effective
care and communication and care coordination efforts of the National
Quality Strategy. Commenters also stated that the measure more closely
aligns with existing summary of care document requirements for EHRs,
and is applicable to more settings than HBIPS-7, decreasing the
separation between psychiatric and nonpsychiatric care.
Response: We thank the commenters for their support, and agree that
psychiatric and nonpsychiatric care should be considered as a whole in
treating a patient.
Comment: Many commenters recommended that CMS not replace HBIPS-7
with the Timely Transmission of Transition Record (Discharges from an
Inpatient Facility to Home/Self Care or Any Other Site of Care) measure
for several reasons. First, commenters submitted that HBIPS-7 is
widely-used and fully operational, was developed with the input of
IPFs, and fully tested in the IPF setting, whereas the proposed measure
does not appear to be widely used or have benchmarking data available.
One commenter specifically maintained that the measure was developed
for use at the individual clinician level rather than at the facility
level. Other commenters stated that most IPFs have been reporting HBIPS
data for over 8 years, allowing them to understand trends and
performance gaps, and believed that removing HBIPS-7 could upset
quality improvement efforts currently in place. Commenters also stated
that any comparative data may not be meaningful since national
comparative rates would include settings other than IPFs. Many
commenters specifically noted that room for improvement in HBIPS-7
remains, with a compliance rate of only 44 percent for the two-thirds
of psychiatric facilities that began using this measure as a result of
the IPFQR Program. Commenters recommended that CMS refrain from
changing measures in the same domain to allow time for providers to
change and stabilize their procedures.
Second, commenters expressed concern that the 24-hour window for
transmission does not improve the quality of data submitted to the next
level of care provider, is in conflict with other documentation
requirements, such as the allowable time for the discharge summary to
be completed, focuses on how quickly the documentation is completed
rather than the quality of data transmitted, and is nearly impossible
for providers to meet. Some commenters noted that the 24-hour timeframe
is not necessary because most patients are not seen by an outpatient
provider within 24 hours of discharge and most communication is done
through fax, necessitating a longer timeframe to ensure control over
who receives the data and compliance with confidentiality requirements.
Third, commenters contended that HBIPS-7 better addresses the core
elements of the proposed measure and requires more stringent
documentation of medications, noting that, although the proposed
measure requires more information, it is the practice of IPFs to
include all relevant information in the continuing care plan. In
addition, commenters stated that the new elements are primarily based
on medical models rather than psychiatric care and focus on areas not
important in the psychiatric population.
Finally, commenters asserted that removing HBIPS-7 will increase
burden on IPFs because IPFs will still be required to abstract data for
this measure for The Joint Commission.
Commenters suggested that, if we wish to require transition
elements in addition to HBIPS-7, we either allow hospitals more time to
operationalize the measure, implementing it beginning with the FY 2019
payment determination, or that CMS work with The Joint Commission to
revise HBIPS-7 to include additional elements.
Response: Although we agree that there may be some increase in
burden due to the removal of HBIPS-7 and the adoption of the Timely
Transmission of Transition Record (Discharges from an Inpatient
Facility to Home/Self Care or Any Other Site of Care) measure, we note
that the primary difference between the two measures is in the timing
of transmission; HBIPS-7 requires transmission to the next-level care
provider within 5 days of discharge, while the Timely Transmission of
Transition Record (Discharges from an Inpatient Facility to Home/Self
Care or Any Other Site of Care) measure requires the same within 24-
hours of discharge. Thus, by transmitting the transition record within
24 hours, the provider satisfies both the Timely Transmission of
Transition Record (Discharges from an Inpatient Facility to Home/Self
Care or Any Other Site of Care) measure and HBIPS-7. Therefore a
hospital could abstract data for and comply with HBIPS-7 by also
complying with and abstracting data for the Timely Transmission of
Transition Record (Discharges from an Inpatient Facility to Home/Self
Care or Any Other Site of Care) measure. Furthermore, although we
believe that high-quality data is important, we note that the point of
this measure is timeliness. As we explain above, studies show that the
risks of re-hospitalization are lower when primary care providers have
access to patients' post-discharge records at the first post-discharge
visit,^{66 67} which may be within a day (or days) of
discharge. Additionally, the AMA-PCPI maintains, and we agree, that
studies have documented the prevalence of communication gaps and
discontinuities in care for patients after discharge and the
significant effect of these lapses on hospital readmissions and other
indicators of the quality of transitional care.\68\ Therefore, we
believe that the 24-hour window is critical to quality improvement and
that the benefit of the removal of HBIPS-7 and the adoption of the
Timely Transmission of Transition Record (Discharges from an Inpatient
Facility to Home/Self Care or Any Other Site of Care) measure outweighs
any associated burden and further the goals of the IPFQR Program.
Furthermore, we do not agree with commenters that it is ``impossible''
for providers to meet the 24-hour transmission requirement; the NQF
specifically reviews a measure for feasibility and has endorsed this
measure. Thus, we believe this measure

[[Page 46708]]

can be implemented. In addition, although some patients are not seen in
24-hours, some are, and we believe that their records should be
available to the next-level provider. Finally, as explained below, we
do not believe this measure presents any confidentiality issues.
---------------------------------------------------------------------------

\66\ van Walraven C, Seth R, Austin PC, Laupacis A. (2002).
Effect of discharge summary availability during postdischarge visits
on hospital readmission. Journal of General Internal Medicine
17:186-192.
\67\ Jack BW, Chetty VK, Anthony D, et al. (2009). A
reengineered hospital discharge program to decrease
rehospitalization. Ann Intern Med. 150(3),178-187.
\68\ Kripalani S, LeFevre F, Phillips CO, et al. Deficits in
communication and information transfer between hospital based and
primary care physicians: implications for patient safety and
continuity of care. JAMA 2007;297(8):831-841.
---------------------------------------------------------------------------

Additionally, we note that the additional elements that commenters
state are required by this measure are actually required by the measure
we are adopting above, NQF #0647. In addition, the need for ``more
stringent documentation of medications,'' is found in the measure we
are removing above, HBIPS-6. We discuss any issues associated with the
measures in that section. We believe the only additional burden when
comparing this measure to HBIPS-7 is the decreased timeline. In
addition, the measure was developed with a broad range of inpatient
settings in mind and did not specifically exclude IPFs; the measure
developer is considering explicitly including the IPF-setting in the
next round of measure maintenance so that the measure is endorsed not
only for all inpatient settings, but explicitly states that it is
endorsed for the IPF-setting.
We do not agree that replacing this measure will upset quality
improvement efforts begun by HBIPS-7. If IPFs have already begun
quality improvement in this area, we believe it will continue and even
surpass the current state because the proposed measure is even more
robust. We also disagree that the data may not be meaningful because,
when posted on Hospital Compare, the data will include all IPFs
participating in the IPFQR Program, thus allowing consumers to
meaningfully compare the quality of care provided by each IPF
participating in the program.
Finally, although we believe this measure to be a critical
indicator of quality care, we understand that the change from requiring
the document within 5 days of discharge to within 24 hours may
initially prove operationally difficult for providers. Therefore, we
will only require IPFs to report the last two quarters of data for this
measure for the FY 2018 payment determination; that is, providers will
only be required to report data for July 1, 2016-December 31, 2016.
Beginning with the FY 2019 payment determination, IPFs will be required
to report all four quarters of data or will face a payment reduction.
Comment: Some commenters noted that it could be problematic to
implement this measure if a patient is discharged on a weekend.
Commenters noted that some of the discharge planning resources such as
social workers and case managers are not present to support the
inpatient discharge process and many offices are closed on Saturday and
Sunday. One commenter noted that some providers turn off their fax
machines on weekends. Other commenters stated that 24 hours is not
realistic even on weekdays because EHRs across systems are not yet a
reality, and the measure may require providers to modify their EHRs.
One commenter also noted that some community mental health clinics may
not be able to receive the transition document, noting that quality
care may not be improved if the next-level care provider is overloaded
or unable to provide the necessary care. Commenters requested that CMS
amend the measure to allow more time for transmission, with one
commenter urging that 3 days is a more reasonable timeline.
Response: As stated above, we believe that the 24-hour window is
critical to this measure. Furthermore, we note that the measure only
requires transmission of the record, not receipt of the record. The
``transition record may be transmitted to the facility or physician or
other health care professional designated for follow-up care via fax,
secure email, or mutual access to an electronic health record (EHR).''
\69\ Thus, the measure can be satisfied even if an office is closed.
Finally, we are not aware of any specific EHR changes that would need
to be made to accommodate this measure, because the measure need not be
transmitted as an EHR.
---------------------------------------------------------------------------

\69\ Timely Transmission of Transition Record (Discharged from
Inpatient Facility to Home/Self Care or Any Other Site of Care),
available at http://www.ama-assn.sorg/apps/listserv/x-check/qmeasure.cgi?submit=PCPI.
---------------------------------------------------------------------------

Comment: Commenters expressed concern that the Timely Transmission
of Transition Record (Discharges from an Inpatient Facility to Home/
Self Care or Any Other Site of Care) measure is not stratified by age,
which limits the usefulness of the data, given the variation across
populations.
Response: As stated above, when feasible and practicable, we
believe it is important to implement measures as they are specified,
especially where, as here, such measures are NQF-endorsed. This measure
is not specified to be reported by age. Furthermore, we believe that
presenting the measure as an aggregate number rather than stratified by
age will allow greater rather than less insight into these data
because, as further explained in section V.F.1. of this final rule, the
resultant number of cases is often too small to allow public reporting
when data are stratified by age.
Comment: One commenter stated that this measure violates HIPAA
because patients have no control over how the next-level provider will
use the discharge record and noted that the same measure was suspended
from the Hospital OQR Program for privacy concerns.
Response: Neither we nor the measure developer are aware of any
provision of HIPAA that this measure would violate. Furthermore, we
believe the commenter is incorrect. The Hospital OQR Program adopted
and finalized NQF #0649 Transition Record with Specified Elements
Received by Discharged Patients (Emergency Department Discharges to
Ambulatory Care [Home/Self Care] or Home Health Care). Although this
measure, NQF #0648, is also stewarded by the AMA-PCPI and requires a
transition record, it is not the same as NQF #0649. The measures differ
in regards to the location from which the patient is discharged;
specifically, NQF #0649 measures discharges from the emergency
department, while NQF #0648 measures discharges from an inpatient
facility. We believe that this difference is critical because the
circumstances surrounding discharge from an emergency department are
typically not planned; that is, a patient is discharged the same day
he/she arrives with the individual that brought him/her to the
emergency room, whom a patient may or may not feel comfortable sharing
information. Those discharged from an inpatient setting usually have
advanced notice and can plan accordingly. Thus, we do not believe, and
neither does the AMA-PCPI, that NQF #0648 raises any of the privacy
concerns articulated by the Hospital OQR Program for #0649.
Comment: One commenter stated that many patients do not have
follow-up care, and, therefore, suggested that the measure should
specify that the record be provided to family members or other
caregivers when appropriate.
Response: We note that we are adopting the Transition Record with
Specified Elements Received by Discharged Patients (Discharges from an
Inpatient Facility to Home/Self Care or Any Other Site of Care) measure
above, which requires transmission of the transition record to the
patient. We believe this measure will allow family members and
caregivers the opportunity to understand the discharge information if
the patient wishes to share such information.
For the reasons stated above, we are finalizing our proposal to
adopt the Timely Transmission of Transition Record (Discharges from an
Inpatient Facility to Home/Self Care or Any Other Site of Care) measure
and remove HBIPS-7: Post Discharge Continuing

[[Page 46709]]

Care Plan Transmitted to the Next Level of Care Provider Upon Discharge
for the FY 2018 payment determination and subsequent years with one
modification. For the FY 2018 payment determination, we will only
require IPFs to report data for this measure for the last two quarters
of the reporting period (July 1, 2016-December 1, 2016). Beginning with
the FY 2019 payment determination, IPFs will be required to report all
four quarters of data.
5. Screening for Metabolic Disorders
Studies show that both second generation antipsychotics (SGAs) and
antipsychotics increase the risk of metabolic syndrome.\70\ Metabolic
syndrome involves a cluster of conditions that occur together,
including excess body fat around the waist, high blood sugar, high
cholesterol, and high blood pressure, and increases the risk of
coronary artery disease, stroke, and type 2 diabetes. Recognizing this
problem, in February 2004, the American Diabetes Association (ADA), the
American Psychiatric Association (APA), the American Association of
Clinical Endocrinologists, and the North American Association for the
Study of Obesity released a consensus statement finding that the use of
SGAs ``have been associated with reports of dramatic weight gain,
diabetes (even acute metabolic decompensation, for example, diabetic
ketoacidosis [DKA]), and an atherogenic lipid profile (increased LDL
cholesterol and triglyceride levels and decreased HDL cholesterol) . .
. [and] [s]ubsequent drug surveillance and retrospective database
analyses suggest that there is an association between specific SGAs and
both diabetes and obesity.'' \71\ SGAs also have an effect on serum
lipids and could result in dyslipidemia.\72\ Given these concerns, the
group recommended that ``baseline screening measures be obtained
before, or as soon as clinically feasible after, the initiation of any
antipsychotic medication,'' including body mass index (BMI), blood
pressure, fasting plasma glucose, and fasting lipid profile.\73\
Although the consensus statement specifically discussed the issues with
SGAs, the ADA also emphasized that ``all patients receiving
antipsychotic medications [should] be screened'' \74\ and subsequent
studies have found that ``[i]n schizophrenic patients, the level of
lipid profile had been increased in both atypical and conventional
antipsychotic users'' \75\
---------------------------------------------------------------------------

\70\ The American Diabetes Association, APA, the American
Association of Clinical Endocrinologists, and the North American
Association for the Study of Obesity (2004). Consensus development
conference on antipsychotic drugs and obesity and diabetes. Diabetes
Care, 27, 596-601. Marder, Stephen R., M.D., et al. Physical Health
Monitoring of Patients with Schizophrenia. Am J Psychiatry. 2004
Aug;161(8):1334-49.
\71\ The American Diabetes Association, APA, the American
Association of Clinical Endocrinologists, and the North American
Association for the Study of Obesity (2004). Consensus development
conference on antipsychotic drugs and obesity and diabetes. Diabetes
Care, 27, 596-601.
\72\ Ibid.
\73\ Ibid.
\74\ The American Diabetes Association (2006). Antipsychotic
Medications and the Risk of Diabetes and Cardiovascular Disease.
Available at: http://professional.diabetes.org/admin/UserFiles/file/CE/AntiPsych%20Meds/Professional%20Tool%20%231(1).pdf (emphasis
added).
\75\ Roohafsza, H, Khani, A, Afshar, H, Garakyaraghi, A, Ghodsi,
B. Lipid profile in antipsychotic drug users: A comparative study.
ARYA Atheroscler. May 2013; 9(3): 198-202 (emphasis added).
---------------------------------------------------------------------------

Numerous other organizations have also made similar
recommendations.\76\ For example, the National Association of State
Mental Health Program Directors Medical Directors Council notes, ``the
second generation antipsychotic medications have become more highly
associated with weight gain, diabetes, dyslipidemia, insulin
resistance, and the metabolic syndrome.'' They recommend the same
screening as the consensus statement (BMI, blood pressure, fasting
plasma glucose, and fasting lipid profile) and emphasize that this
screening is ``the standard of care for the general population.'' \77\
Likewise, the Mount Sinai Conference,\78\ convened in 2002, recommended
that, for every patient with schizophrenia, ``regardless of the
antipsychotic prescribed,'' mental health providers should, among other
things: (1) Monitor and chart BMI; (2) measure plasma glucose levels
(fasting or HbA1c); and (3) obtain a lipid profile.\79\
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\76\ De Hert, M., Dekker, J.M. & Wood, D. (2009). Cardiovascular
disease and diabetes in people with severe mental illness. Position
statement from the European Psychiatric Association (EPA), supported
by the European Association for the Study of Diabetes (EASD) and the
European Society of Cardiology (ESC). Eur Psychiatry, 24, 412-424;
Zolnierek, C.D. (2009). Non-psychiatric hospitalization of people
with mental illnesses: A systematic review. Journal of Advanced
Nursing, 65(8), 1570-1583.
\77\ National Association of State Mental Health Program
Directors Medical Directors Council (2006). Morbidity and mortality
in people with serious mental illness. Available at: http://www.nasmhpd.org/docs/publications/MDCdocs/Mortality%20and%20Morbidity%20Final%20Report%208.18.08.pdf.
\78\ The Mount Sinai Conference was conferred to ``focus on
specific questions regarding the pharmacotherapy of schizophrenia .
. . Participants in the conference were selected based on their
knowledge of and contributions to the literature in this area . . .
Also in attendance [were] various groups concerned with improving
psychopharmacology in routine practice settings.'' Marder, Stephen
R., M.D., et al. Physical Health Monitoring of Patients with
Schizophrenia. Am J Psychiatry. 2004 Aug;161(8):1334-49.
\79\ Marder, Stephen R., M.D., et al. Physical Health Monitoring
of Patients with Schizophrenia. Am J Psychiatry. 2004
Aug;161(8):1334-49.
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Despite these consensus statements and guidelines, many of which
are over a decade old, screening for metabolic syndrome remains low and
there appears to be disagreement regarding where the responsibility for
this screening lies.\80\ Studies show a systematic lack of metabolic
risk monitoring of patients who have been prescribed
antipsychotics.\81\ Screening for metabolic syndrome may reduce the
risk of preventable adverse events and improve the physical health
status of the patient. Therefore, we stated our belief that it is
necessary to include a measure of metabolic syndrome screening in the
IPFQR Program.
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\80\ See e.g., Brooks, Megan. ``Metabolic Screening in
Antipsychotic Users: Whose Job Is It?'' Medscape Medical News. 8 May
2012. Available at http://www.medscape.com/viewarticle/763468.
Mittal D, Li C, Viverito K, Williams JS, Landes RD, Thapa PB, Owen
R. Monitoring for metabolic side effects among outpatients with
dementia receiving antipsychotics. Psychiatr Serv. 2014 Sep
1;65(9):1147-53.
\81\ Nasrallah, H. A, MD (2012). There is no excuse for failing
to provide metabolic monitoring for patients receiving
antipsychotics. Current Psychiatry, 4 (citing Mitchell AJ, Delaffon
V, Vancampfort D, et al. Guideline concordant monitoring of
metabolic risk in people treated with antipsychotic medication:
Systematic review and meta-analysis of screening practices. Psychol
Med. 2012;42(1):125-147.)
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The Screening for Metabolic Disorders measure is a chart-abstracted
measure developed by CMS and defined as a percentage of discharges from
an IPF for which a structured metabolic screening for 4 elements was
completed in the past year. The denominator includes IPF patients
discharged with one or more routinely scheduled antipsychotic
medications during the measurement period. The numerator is the total
number of patients who received a metabolic screening either prior to,
or during, the index IPF stay. The screening must contain four tests:
(1) BMI; (2) blood pressure; (3) glucose or HbA1c; and (4) a lipid
panel--which includes total cholesterol (TC), triglycerides (TG), high
density lipoprotein (HDL), and low density lipoprotein (LDL-C) levels.
The screening must have been completed at least once in the 12 months
prior to the patient's date of discharge. Screenings can be conducted
either at the reporting facility or another facility for which records
are available to the reporting facility. The following patients are
excluded from the measure: (1) Patients for whom a screening could not
be completed within the stay due to the patient's enduring unstable
medical or

[[Page 46710]]

psychological condition; and (2) patients with a length of stay equal
to or greater than 365 days, or less than 3 days. In section V.F.3. of
this final rule, we finalize a sampling methodology for this and
certain other measures.
Testing of this measure demonstrated that performance on the
metabolic screening measure was low, on average, across the tested
IPFs. The measure's average performance rate of 42 percent signals a
strong opportunity for improvement. During testing, the metabolic
screening measure also demonstrated nontrivial variation in performance
among IPFs (6.2-98.6 percent). In addition, it demonstrated near-
perfect agreement between chart abstractors (kappa of 0.93 for the
measure numerator).\82\
---------------------------------------------------------------------------

\82\ Development of Quality Measures for Inpatient Psychiatric
Facilities. February 2015. U.S. Department of Health and Human
Services, Assistant Secretary for Planning and Evaluation, Office of
Disability, Aging, and Long-term Care Policy. Page xi, at http://aspe.hhs.gov/daltcp/reports/2015/ipf.cfm.
---------------------------------------------------------------------------

We included the Screening for Metabolic Disorders measure (then
titled ``IPF Metabolic Screening'') in our ``Measures Under
Consideration List'' in December 2013. The MAP did not recommend this
measure, noting, ``a different NQF-endorsed measure better addresses
the needs of the program.'' \83\ However, the different NQF-endorsed
measure was not identified by the MAP, and we stated that we are
unaware of any screening measures for metabolic syndrome that are NQF-
endorsed. We noted that, when presented to the MAP, the denominator for
this measure was the ``total number of psychiatric inpatients admitted
during the measurement period.'' Based on testing and further feedback
on the measure, we revised the measure by reducing its application to
only those patients on antipsychotic medication; the denominator for
the measure is now ``IPF patients discharged with one or more routinely
scheduled antipsychotic medications during the measurement period.'' We
stated our belief that this change was appropriate because, as
discussed above, the patients most at risk for metabolic syndrome are
those receiving antipsychotics, and the APA and other consensus
organizations recommend this screening for patients on antipsychotics.
Furthermore, we stated our belief that we, by limiting the application
of the measure only to those receiving antipsychotics, have reduced
provider burden, both in terms of possible changes in practice that
might result from the measure, as well as the direct burden resulting
from its collection and reporting.
---------------------------------------------------------------------------

\83\ MAP 2014 Recommendations on Measures for More than 20
Federal Programs, 179, at http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.aspx.
---------------------------------------------------------------------------

We also stated our belief that this measure promotes the National
Quality Strategy priority of Making Care Safer, which seeks to reduce
risk that is caused by the delivery of healthcare. As discussed above,
antipsychotics have been shown to be related to metabolic syndrome. The
Screening for Metabolic Disorders measure is aimed at the prevention
and treatment of serious side effects of these drugs.
Section 1886(s)(4)(D)(ii) of the Act authorizes the Secretary to
specify a measure that is not endorsed by NQF as long as due
consideration is given to measures that have been endorsed or adopted
by a consensus organization identified by the Secretary. We have been
unable to identify any measures addressing screening for metabolic
syndrome for the IPF setting that have been endorsed by the NQF or
adopted by any other consensus organization. We stated our belief that
the proposed measure for the Screening for Metabolic Disorders meets
the measure selection exception requirement under section
1886(s)(4)(D)(ii) of the Act.
For the reasons stated above, we proposed to adopt the Screening
for Metabolic Disorders measure beginning with the FY 2018 payment
determination. We welcomed public comments on this proposal. The
comments we received and our responses are set forth below.
Comment: Comments submitted from a consumer perspective supported
this measure, noting that it is imperative to treat co-occurring
conditions. Furthermore, these commenters noted that this measure has
some potential to connect the ``physical health care provider to the
psychiatric services provider'', and metabolic screening is an
important area of follow-up that will improve patient outcomes. These
commenters also made the following recommendations: (1) The measure
should also include reviewing the results of the screening with the
patient; (2) the measure should require further cardiovascular disease
testing be performed if the screening indicates that it is warranted;
(3) the measure should refer patients to the appropriate cardiovascular
specialist, if needed; (4) the measure should include all patients
receiving mental health treatment; (5) individuals for whom a screening
cannot be completed within the stay ``due to the patient's enduring
unstable medical or psychological condition'' should not be discharged
until such a screening can occur since these individuals are arguably
at greatest risk and their conditions should be stabilized before
discharged; (6) for individuals excluded because of a length of stay of
less than 3 days, the need for screening should be clearly identified
as part of the discharge planning record so that this takes place on an
outpatient basis; and (7) the rationale for excluding individuals who
are hospitalized for 365 days or more be explained or removed.
Response: We thank commenters for their support and will address
each of these recommendations in turn. First, we agree with the
importance of the processes of care described by the commenters (that
is, recommendations 1-4). However, the current measure, as specified
and tested, addresses only the screening for metabolic abnormalities.
We believe that this measure is an important first step in metabolic
screening, and we will consider additional measures that address any
necessary follow-up care in future years. Furthermore, we believe that
other measures we are adopting, Transition Record with Specified
Elements Received by Discharged Patients (Discharges from an Inpatient
Facility to Home/Self Care or Any Other Site of Care) and Timely
Transmission of Transition Record (Discharges from an Inpatient
Facility to Home/Self Care or Any Other Site of Care), address the
communication of specific information to the next care provider, such
as major procedures and tests performed during inpatient stay and
summary of results.
The exclusion ``due to the patient's enduring unstable medical or
psychological condition'' is harmonized with other screening measures
developed by the Joint Commission for the IPF setting. This exclusion
was reviewed and supported by a Technical Expert Panel and an Expert
Workgroup.\84\ Additionally, during the testing of this measure, the
exclusion applied to only one patient (0.2% of sample) indicating that
the exclusion would be rare and only applied in the most severe cases
where screening could not be conducted. Therefore, we will retain the
exclusion and further evaluate the frequency of the exclusion with data
from implementation.
---------------------------------------------------------------------------

\84\ Health Services Advisory Group. Inpatient Psychiatric
Facility Outcome and Process Measure Development and Maintenance:
Screening of Metabolic Disorders Measure Workgroup. Tampa, FL; 2015.
Available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/Downloads/Inpatient-Psychiatric-Facility-IPF-Outcome-and-Process-Measure-Development-and-Maintenance.zip.

---------------------------------------------------------------------------

[[Page 46711]]

Patients with stays of fewer than 3 days were excluded from the
metabolic screening measure based on the rationale that IPFs could not
be expected to complete all metabolic screening tests (or verify that
they were completed elsewhere within the previous 12 months) within
that short time period. Therefore, we believe that we should retain
this exclusion as specified.
Finally, as noted above, the screening must have been completed at
least once in the 12 months prior to the patient's date of discharge.
Thus, an IPF need only consider the past 12 months of records for a
patient after that patient is discharged. Since this lookback is one
year, we do not believe we should include patients who have been at the
facility for more than one year. Furthermore, based on our testing of
this measure, we believe this exclusion will be negligible, applying to
less than 1.5 percent of the population. Therefore, we will retain the
exclusion and further evaluate the frequency of the exclusion with data
from implementation.
Comment: One commenter suggested that the ADA Consensus guidelines
recommended a lipid profile every 5 years while the Screening for
Metabolic Disorders measure requires a lipid profile every year,
creating unnecessary costs. This commenter recommended that the measure
be changed to require lipid panels every 5 years.
Response: The ADA Consensus guidelines from 2004 recommended that
``in those with normal lipid profile, repeat testing should be
performed at 5-year intervals or more frequently if clinically
indicated.\85\ More recent recommendations, however, indicate yearly
monitoring is preferred throughout treatment.^{86 87 88}
Therefore, to ensure appropriate screening and monitoring for patients
on routinely scheduled antipsychotic medication(s), we believe that
IPFs need to obtain either documentation of metabolic screening
performed in the past 12 months or conduct the lipid panel testing
prior to a patient's discharge from the facility.
---------------------------------------------------------------------------

\85\ American Diabetes Association, American Psychological
Association, American Association of Clinical Endocrinologists,
North American Association for the Study of Obesity. Consensus
development conference on antipsychotic drugs and obesity and
diabetes. Diabetes Care. 2004;27(596-601).
\86\ American Diabetes Association, American Psychological
Association, American Association of Clinical Endocrinologists,
North American Association for the Study of Obesity. Consensus
development conference on antipsychotic drugs and obesity and
diabetes. Diabetes Care. 2004;27(596-601).
\87\ National Institute for Health and Care Excellence (NICE).
Bipolar disorder: The assessment and management of bipolar disorder
in adults, children and young people in primary and secondary care.
London, UK 2014.
\88\ National Institute for Health and Care Excellence (NICE).
Psychosis and schizophrenia in adults: Treatment and management.
London, UK 2014.
---------------------------------------------------------------------------

Comment: Some commenters stated that the purpose of the ADA
Consensus guidelines is to ensure long-term monitoring rather than
annual screening and suggested that, as such, monitoring should be done
in an outpatient rather than inpatient setting. One commenter suggested
that the measure should be modified so that IPFs are required to
communicate any baseline or ongoing screening tests with the outpatient
provider who is assuming the management of medications at discharge.
Response: Although we agree that long-term metabolic monitoring of
psychiatric patients is important, studies indicate that 40 percent to
80 percent of patients fail to find outpatient treatment after
discharge from the inpatient setting.\89\ In addition, studies find
consistently low adherence rates to metabolic screening
guidelines.^{90 91} These studies are confirmed by empirical
analysis of calendar year 2012 and 2013 Medicare claims data, which
indicated that only 53.8 percent of patients discharged from an IPF
with at least two prescription claims for antipsychotic medications had
at least one lipid panel annually in the outpatient setting.\92\
Therefore, although we agree that the long-term monitoring for
individuals is appropriate in the outpatient setting, we believe that
the inpatient setting represents a clear opportunity to screen
patients. We do believe it is important to convey test results to the
next-level care provider, and we believe that the additional measures
that we are adopting, Transition Record with Specified Elements
Received by Discharged Patients (Discharges from an Inpatient Facility
to Home/Self Care or Any Other Site of Care) and Timely Transmission of
Transition Record (Discharges from an Inpatient Facility to Home/Self
Care or Any Other Site of Care), should facilitate the communication of
such information.
---------------------------------------------------------------------------

\89\ Cuffel B, Held M, Goldman W. Predictive Models and the
Effectiveness of Strategies for Improving Outpatient Follow-up Under
Managed Care. Psychiatric Services. 2002 November; 53 (11): 1438-
1443.
\90\ Cohn T. Metabolic Monitoring for Patients on Antipsychotic
Medications. Psychiatric Times. December 2013.
\91\ Rodday AM, Parsons SK, Mankiw C, et al. Child and
Adolescent Psychiatrists' Reported Monitoring Behaviors for Second-
Generation Antipsychotics. J. Child Adolesc. Psychopharmacol. 2015.
\92\ Health Services Advisory Group. Inpatient Psychiatric
Facility Outcome and Process Measure Development and Maintenance:
Screening of Metabolic Disorders Measure Workgroup. Tampa, FL; 2015.
Available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/Downloads/Inpatient-Psychiatric-Facility-IPF-Outcome-and-Process-Measure-Development-and-Maintenance.zip.
---------------------------------------------------------------------------

Comment: Many commenters recommended that CMS not adopt the
Screening for Metabolic Disorders measure at the present time, but,
instead suggested that CMS propose the measure after it has been tested
and NQF-endorsed with full specifications available. Some commenters
questioned why CMS did not take the measure through the NQF-endorsement
process, arguing that premature adoption may cause discrepancies
between what the IPFQR Program implements and what NQF ultimately
endorses. One commenter urged us to share the measure with the IPF TEP
and other stakeholders. One commenter stated that the TEP convened to
evaluate the measure made several important recommendations to amend
the measure and recommended that, if the measure is adopted, it should
include these recommendations. Another commenter noted that the measure
was only tested among six facilities.
Response: The measure has been finalized for NQF submission and
will be submitted during the next call for behavioral health measures,
which is expected in calendar year 2016. The measure specifications
were evaluated by two separate Technical Expert Panels and an Expert
Workgroup. The recommendations from these experts have been
incorporated into the measure definitions. Although we agree that NQF
endorsement of a measure is preferred, we are permitted to include a
measure that has not been NQF-endorsed under section 1886(s)(4)(D)(ii)
of the Act. Under that section, the Secretary is authorized to specify
a measure that is not endorsed by the NQF as long as due consideration
is given to measures that have been endorsed or adopted by a consensus
organization identified by the Secretary. We attempted to find
available measures that had been endorsed or adopted by a consensus
organization and found no other feasible and practical measures on the
topic of metabolic screening for patients taking antipsychotics in the
IPF setting. We believe that this area is important, specifically
because of the gaps in treatment, and we believe it is important to
implement a measure of metabolic screening as soon as possible.
We acknowledge that testing for this measure occurred in six
facilities; however the facilities selected represent a variety of
facility types from across the

[[Page 46712]]

country. These facilities are diverse in both structure and size. Three
of the IPFs selected are private psychiatric units with fewer than 50
patient beds, two are public freestanding facilities with over 100
beds, and one is a private freestanding facility with 400 beds. In
addition, the six IPFs were geographically distributed by region
including Mid-Atlantic, Northeast, Midwest, South, and West.\93\
Therefore, we believe this testing was adequate to evaluate the
measure.
---------------------------------------------------------------------------

\93\ Blair R, Liu J, Rosenau M, et al. Development of Quality
Measures for Inpatient Psychiatric Facilities: Final Report. 2015;
Washington, DC: Office of the Assistant Secretary for Planning and
Evaluation, U.S. Department of Health & Human Services 2015.
Available at: http://aspe.hhs.gov/daltcp/reports/2015/ipf.cfm.
Accessed April 21, 2015.
---------------------------------------------------------------------------

Comment: Many commenters expressed concern that the measure adds
significant burden for providers. Specifically, they suggested that
IPFs involved in measure testing verified that chart-abstraction of
this measure was more intensive than the other screening measures; they
also expressed concern that the additional lab tests required by this
measure may not be fully reimbursed by CMS, stating that most lab tests
cost between $30 and $50. One commenter noted that, because the measure
allows screenings at another facility, the measures may increase burden
not only to the immediate facility, but potentially to other
facilities.
Response: In testing the measure, the abstraction time for this
measure did not exceed 20 minutes for any given discharge, which is
only slightly more time (5 minutes more) than the measures previously
adopted by this program (79 FR 45979). Furthermore, the CMS-convened
Screening of Metabolic Disorders Measure Workgroup reviewed this
measure and the majority of members indicated that the costs of any
duplicate testing would have minimal unintended consequences.\94\
Finally, we believe that transmitting records between providers for the
purpose of improving patient care is an essential component of
effective care coordination and communication of previously delivered
care, and, therefore, the benefits of such communication outweigh any
associated burden.
---------------------------------------------------------------------------

\94\ Health Services Advisory Group. Inpatient Psychiatric
Facility Outcome and Process Measure Development and Maintenance:
Screening of Metabolic Disorders Measure Workgroup. Tampa, FL; 2015.
Available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/Downloads/Inpatient-Psychiatric-Facility-IPF-Outcome-and-Process-Measure-Development-and-Maintenance.zip.
---------------------------------------------------------------------------

Comment: Many commenters stated that they could not comment on the
measure without full specifications, noting that many issues remained
unclear, including: (1) If the measure allows for patient refusal of a
screening; (2) how the measure addresses ``fasting'' bloodwork
protocols; (3) how the measure addresses patients with changes in
antipsychotic medication; (4) how the measure avoids unnecessary
testing requirements for patients previously screened but whose records
are unobtainable within a reasonable period of time; (5) how screening
records ``available to the reporting facility'' from another facility
is defined; (6) if the measure identified all appropriate patient
exclusions; (7) if there are potential medical necessity issues that
need to be addressed; (8) the actionability of the measure during a
short-term hospitalization; (9) if the public reporting of a screening
measure rate a measure of quality that will help the public
differentiate among facilities; and (10) if the measure reflects an
appropriate application of various practice guidelines from the
perspective of the guideline developers.
Response: We agree with commenters that elements in the measure
need to be clarified. We will take each of these issues in turn.
First, as stated above, we believe that patient compliance is
indicative of quality care. That is, we maintain that it is important
that providers understand gaps in patient compliance so that they can
modify their actions and policy to systematically encourage patients to
receive appropriate tests. We encourage providers to educate patients
about the importance of these screenings, and we, therefore, will not
exclude patients who refuse the screening.
Second, the emphasis in this measure is on the screening itself
rather than the associated measure values. Clinical judgments about the
best methods for conducting and interpreting the testing, including
whether to use fasting glucose or an HbA1c test, are left to the
facility.
Third, since all antipsychotic medication regimens require regular
monitoring,^{95 96} we will not distinguish between patients
whose antipsychotic regimens have changed during the inpatient stay.
---------------------------------------------------------------------------

\95\ National Institute for Health and Care Excellence (NICE).
Bipolar disorder: The assessment and management of bipolar disorder
in adults, children and young people in primary and secondary care.
London, UK 2014.
\96\ National Institute for Health and Care Excellence (NICE).
Psychosis and schizophrenia in adults: Treatment and management.
London, UK 2014.
---------------------------------------------------------------------------

Fourth, we agree that avoiding unnecessary testing requirements is
an important consideration. But, as stated above, 40 percent to 80
percent of psychiatric patients fail to receive outpatient
treatment,\97\ and an analysis conducted of calendar year 2012 and 2013
claims data indicated that a little over half of patients taking
antipsychotics had a lipid panel conducted annually in the outpatient
setting.\98\ Therefore, we believe it is important to conduct this
testing in the inpatient setting, even if some duplication may result
because the testing conducted in another setting was not obtainable.
---------------------------------------------------------------------------

\97\ Cuffel B, Held M, Goldman W. Predictive Models and the
Effectiveness of Strategies for Improving Outpatient Follow-up Under
Managed Care. Psychiatric Services. 2002 November; 53 (11): 1438-
1443.
\98\ Health Services Advisory Group. Inpatient Psychiatric
Facility Outcome and Process Measure Development and Maintenance:
Screening of Metabolic Disorders Measure Workgroup. Tampa, FL; 2015.
Available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/Downloads/Inpatient-Psychiatric-Facility-IPF-Outcome-and-Process-Measure-Development-and-Maintenance.zip.
---------------------------------------------------------------------------

Fifth, we believe that there are potentially multiple sources
available to facilities to obtain testing results conducted by other
providers and the phrase ``available to the reporting facility'' is not
meant to limit the method of obtaining numerical lab results within the
previous 12 months of the index discharge for evidence of screening. To
fulfill the measure requirements, evidence of screening includes
presence/absence of each screening element, based on the chart review
and documentation of lab results (numeric values) in the medical
record.
Sixth, we believe the measure incorporates all appropriate patient
exclusions taking into consideration the comments provided by the TEPs
and Screening of Metabolic Disorders Measure Workgroup.
Seventh, we believe it is important to treat the whole patient by
addressing both the mental and the physical needs of patients in the
IPF and guideline recommendations indicate yearly monitoring is
preferred throughout treatment for patients taking antipsychotic
medications.^{99 100 101}
---------------------------------------------------------------------------

\99\ American Diabetes Association, American Psychological
Association, American Association of Clinical Endocrinologists,
North American Association for the Study of Obesity. Consensus
development conference on antipsychotic drugs and obesity and
diabetes. Diabetes Care. 2004;27(596-601).
\100\ National Institute for Health and Care Excellence (NICE).
Bipolar disorder: The assessment and management of bipolar disorder
in adults, children and young people in primary and secondary care.
London, UK2014.
\101\ National Institute for Health and Care Excellence (NICE).
Psychosis and schizophrenia in adults: Treatment and management.
London, UK2014.

---------------------------------------------------------------------------

[[Page 46713]]

Eighth, we believe that even short-term hospitalizations provide an
opportunity for providing the best quality care for patients. As we
state above, the inpatient setting represents a clear opportunity to
screen patients and may be the only opportunity some patients have for
this screening. We recognize, however, that obtaining the records or
conducting the screening of very short-stay patients might be too
difficult for the IPF, and therefore, patients with lengths of stay of
less than 3 days is an exclusion in the measure.
Ninth, we believe a vital component of the CMS quality reporting
programs is the public reporting of the information to inform patients
and caregivers of differences in quality across providers. We believe
that this measure will inform patients and caregivers of the quality of
care in IPFs in terms of the screening for metabolic disorders among
patients taking antipsychotic medications. Among the six test
facilities, there was an average performance score of 41.5 percent,
with a wide range of performance from 6.2 percent to 98.6 percent.\102\
---------------------------------------------------------------------------

\102\ Blair R, Liu J, Rosenau M, et al. Development of Quality
Measures for Inpatient Psychiatric Facilities: Final Report. 2015;
Washington, DC: Office of the Assistant Secretary for Planning and
Evaluation, U.S. Department of Health & Human Services 2015.
Available at: http://aspe.hhs.gov/daltcp/reports/2015/ipf.cfm.
Accessed April 21, 2015.
---------------------------------------------------------------------------

Tenth, the measure is aligned with clinical practice guidelines for
patients taking antipsychotic medications.^{103 104 105}.
---------------------------------------------------------------------------

\103\ American Diabetes Association, American Psychological
Association, American Association of Clinical Endocrinologists,
North American Association for the Study of Obesity. Consensus
development conference on antipsychotic drugs and obesity and
diabetes. Diabetes Care. 2004;27(596-601).
\104\ National Institute for Health and Care Excellence (NICE).
Bipolar disorder: The assessment and management of bipolar disorder
in adults, children and young people in primary and secondary care.
London, UK2014.
\105\ National Institute for Health and Care Excellence (NICE).
Psychosis and schizophrenia in adults: Treatment and management.
London, UK 2014.
---------------------------------------------------------------------------

We recognize it may take time for providers to review and
understand these clarifications and changes to the measure. Therefore,
we will only require IPFs to report the last two quarters of data for
this measure for the FY 2018 payment determination; that is, providers
will only be required to report data for this measure for July 1, 2016-
December 31, 2016. Beginning with the FY 2019 payment determination,
IPFs will be required to report all four quarters of data or will face
a payment reduction.
Comment: Many commenters noted that, although the measure allows
IPFs to obtain data from outside sources, because of the cost of doing
so, most would complete the testing themselves, unnecessarily
increasing costs and leading to an overutilization of tests. One
commenter stated its belief that it will be difficult to determine the
patients that were on one antipsychotic medication in the past year and
suggested, instead, that the measure be limited to the four
antipsychotic medications that contribute to metabolic disorders,
Clozaril, Seroquel, Zyprexa, and Risperdal, indicating that these
medications should have a metabolic screening every 3 months, which
would be easier to monitor.
Response: The Screening of Metabolic Disorders Measure Workgroup
reviewed this measure and the majority of members indicated that the
costs of any duplicate testing would have minimal unintended
consequences based on data that only about half of the patients
discharged from an IPF had at least one annual screening.\106\
Furthermore, studies suggest that antipsychotic-induced weight gain
occurs in all diagnostic groups and is common in both first and second
generation antipsychotics.^{107 108 109 110} Generally,
guidelines recommending monitoring do not distinguish their
recommendations based on first or second generation
antipsychotics.^{111 112 113} Therefore, although it may be
less burdensome to monitor the four antipsychotics the commenter
suggested above, based on the heightened risk of metabolic disorders in
this population, we believe this measure should apply to all patients
on any antipsychotic regimen.
---------------------------------------------------------------------------

\106\ Health Services Advisory Group. Inpatient Psychiatric
Facility Outcome and Process Measure Development and Maintenance:
Screening of Metabolic Disorders Measure Workgroup. Tampa, FL:
Health Services Advisory Group; 2015. Available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/Downloads/Inpatient-Psychiatric-Facility-IPF-Outcome-and-Process-Measure-Development-and-Maintenance.zip.
\107\ Musil R, Obermeier M, Russ P, Hamerle M. Weight gain and
antipsychotics: A drug safety review. Expert Opin Drug Saf.
2015;14(1):73-96.
\108\ Chiliza B, Asmal L, Oosthuizen P, et al. Changes in body
mass and metabolic profiles in patients with first-episode
schizophrenia treated for 12 months with a first-generation
antipsychotic. Eur. Psychiatry. 2015;30(2):277-283.
\109\ Alvarez-Jimenez M, Gonzalez-Blanch C, Crespo-Facorro B, et
al. Antipsychotic-induced weight gain in chronic and first-episode
psychotic disorders: A systematic critical reappraisal. CNS Drugs.
2008;22(7):547-562.
\110\ Strassnig M, Miewald J, Keshavan M, Ganguli R. Weight gain
in newly diagnosed first-episode psychosis patients and healthy
comparisons: One-year analysis. Schizophr. Res. 2007;93(1-3):90-98.
\111\ National Institute for Health and Care Excellence (NICE).
Psychosis and schizophrenia in adults: Treatment and management.
2014; http://www.nice.org.uk/guidance/cg178. Accessed CG 178.
\112\ National Institute for Health and Care Excellence (NICE).
Bipolar disorder: the assessment and management of bipolar disorder
in adults, children and young people in primary and secondary care.
2014; http://www.nice.org.uk/guidance/cg185. Accessed CG 185.
\113\ Marder SR, Essock SM, Miller AL, et al. Physical health
monitoring of patients with schizophrenia. Am. J. Psychiatry.
2004;161(8):1334-1349.
---------------------------------------------------------------------------

For the reasons stated above, we are finalizing our proposal to
adopt the Screening for Metabolic Disorders measure for the FY 2018
payment determination and subsequent years with one modification. For
the FY 2018 payment determination, we will only require IPFs to report
data for this measure for the last two quarters of the reporting period
(July 1, 2016-December 1, 2016). Beginning with the FY 2019 payment
determination, IPFs will be required to report all four quarters of
data.
6. Summary of Measures for the FY 2018 Payment Determination and
Subsequent Years
The measures that we are adopting for the IPFQR Program for the FY
2018 payment determination and subsequent years are set forth in Table
20.

Table 20--New IPFQR Program Measures for the FY 2018 Payment Determination and Subsequent Years
----------------------------------------------------------------------------------------------------------------
National Quality Strategy Priority NQF # Measure ID Measure
----------------------------------------------------------------------------------------------------------------
Effective Prevention and Treatment.... 1656 TOB-3 and TOB-3a......... Tobacco Use Treatment
Provided or Offered at
Discharge and the subset
measure Tobacco Use
Treatment at Discharge.

[[Page 46714]]

Effective Prevention and Treatment.... 1663 SUB-2 and SUB-2a......... Alcohol Use Brief
Intervention Provided or
Offered and SUB-2a Alcohol
Use Brief Intervention.
Communication and Care Coordination; 0647 N/A...................... Transition Record with
Person and Family Engagement. Specified Elements Received
by Discharged Patients
(Discharges from an
Inpatient Facility to Home/
Self Care or Any Other Site
of Care).
Communication and Care Coordination... 0648 N/A...................... Timely Transmission of
Transition Record
(Discharges from an
Inpatient Facility to Home/
Self Care or Any Other Site
of Care).
Making Care Safer..................... N/A N/A...................... Screening for Metabolic
Disorders.
----------------------------------------------------------------------------------------------------------------

The measures that we are removing beginning with the FY 2018
payment determination are set forth in Table 21.

Table 21--IPFQR Program Measures To Be Removed for the FY 2018 Payment
Determination and Subsequent Years
------------------------------------------------------------------------
NQF # Measure ID Measure
------------------------------------------------------------------------
0557................. HBIPS-6......... Post-Discharge Continuing Care
Plan.
0558................. HBIPS-7......... Post Discharge Continuing Care
Plan Transmitted to the Next
Level of Care Provider Upon
Discharge.
------------------------------------------------------------------------

Therefore, the number of measures for the FY 2018 IPFQR Program and
subsequent years will total 16, as set forth in Table 22.

Table 22--Measures for FY 2018 Payment Determination and Subsequent
Years
------------------------------------------------------------------------
NQF # Measure ID Measure
------------------------------------------------------------------------
0640..................... HBIPS-2............ Hours of Physical
Restraint Use.
0641..................... HBIPS-3............ Hours of Seclusion Use.
0560..................... HBIPS-5............ Patients Discharged on
Multiple Antipsychotic
Medications with
Appropriate
Justification.
0576..................... FUH................ Follow-up After
Hospitalization for
Mental Illness.
1661..................... SUB-1.............. Alcohol Use Screening.
1663..................... SUB-2 and SUB-2a... Alcohol Use Brief
Intervention Provided
or Offered and SUB-2a
Alcohol Use Brief
Intervention.*
1651..................... TOB-1.............. Tobacco Use Screening.
1654..................... TOB-2.............. Tobacco Use Treatment
TOB-2a............. Provided or Offered and
Tobacco Use Treatment.
1656..................... TOB-3 and TOB-3a... Tobacco Use Treatment
Provided or Offered at
Discharge and the
subset measure Tobacco
Use Treatment at
Discharge.*
1659..................... IMM-2.............. Influenza Immunization.
0647..................... N/A................ Transition Record with
Specified Elements
Received by Discharged
Patients (Discharges
from an Inpatient
Facility to Home/Self
Care or Any Other Site
of Care).*
0648..................... N/A................ Timely Transmission of
Transition Record
(Discharges from an
Inpatient Facility to
Home/Self Care or Any
Other Site of Care).*
N/A...................... N/A................ Screening for Metabolic
Disorders.*
N/A...................... N/A................ Influenza Vaccination
Coverage Among
Healthcare Personnel.
N/A...................... N/A................ Assessment of Patient
Experience of Care.
N/A...................... N/A................ Use of an Electronic
Health Record.
------------------------------------------------------------------------
* New measures finalized for the FY 2018 payment determination and
future years.

E. Possible IPFQR Program Measures and Topics for Future Consideration

As we have previously indicated (79 FR 45974 through 45975), we
seek to develop a comprehensive set of quality measures to be available
for widespread use for informed decision-making and quality improvement
in the IPF setting. Therefore, through future rulemaking, we intend to
propose new measures for development or adoption that will help further
our goals of achieving better health care and improved health for
Medicare beneficiaries who obtain inpatient psychiatric services
through the widespread dissemination and use of quality information.
We are developing a 30-day psychiatric readmission measure that is
similar to the readmission measures

[[Page 46715]]

currently in use in other CMS quality reporting programs, such as the
Hospital Inpatient Quality Reporting Program. In the future, we intend
to develop a measure set that effectively assesses IPF quality across
the range of services and diagnoses, encompasses all of the goals of
the CMS quality strategy, addresses measure gaps identified by the MAP
and others, and minimizes collection and reporting burden. We may also
propose the removal of some measures in the future.
We welcomed public comments on possible new measures. The comments
we received and our responses are set forth below.
Comment: One commenter expressed concern that CMS proposed time-
intensive, chart-abstracted measures without discussing a future goal
of working toward electronic submission of these measures.
Response: We agree that moving to electronic clinical quality
measures is important and will ultimately reduce burden. At this time,
we are not operationally able to implement electronic clinical quality
measure reporting and not all of our measures are electronically
specified. However, we continue to work toward transitioning to
electronic clinical quality measures in the future.
Comment: Commenters urged the program not to burden providers with
too many process measures and to move toward the use of outcome
measures since these measures are more meaningful to patients and can
have a greater impact on provider behavior. Some commenters
specifically supported a readmissions measure, noting that such measure
should focus on readmissions that are clinically related to the index
admission and potentially preventable by the IPF. Commenters expressed
concern that the IPF population is complex, with patients often having
multiple comorbid mental health, substance abuse, and other medical
conditions, and outpatient compliance is challenging. Therefore,
commenters suggested that CMS adjust the measure for sociodemographic
variables and work to ensure that the readmissions measure is
adequately adjusted for case mix and provider type in order to more
accurately capture and report readmission rates in an unbiased way,
particularly for those hospitals that treat the most vulnerable
patients. One commenter cautioned that a readmission measure can be
gamed if it does not include all readmissions to the acute care system
within a specified window. Another commenter noted that to accurately
risk adjust a readmissions measure, the program may need to collect
patient assessment data. Commenters also encouraged us to adopt a
readmission measure only if it is NQF-endorsed for the IPF setting and
has broad stakeholder support that considers important components of
measures, including reliability, validity, feasibility of
implementation, and stakeholders' and clinicians' input. Several
commenters questioned whether the measure could be adequately risk-
adjusted using claims and suggested a thorough NQF review to determine
if claims-based measures can be accurately risk-adjusted for mental
health patients. Another commenter encouraged us to ensure the measure
does not incentivize facilities to deny admissions to meet the quality
measurement.
Response: When appropriate, we strive to move toward measures of
outcome and will consider these measures for future years of the
program. Specifically, we believe a measure of readmissions to be
important and will consider these important issues raised by commenters
as we move forward with developing such a measure.
Comment: One commenter recommended including psychiatric patients
in the HCAHPS survey rather than creating a survey just for the IPF
population, noting that the HCAHPS survey is applicable to IPF
patients, these patients can answer the questions in the HCAHPS survey,
and creating a new survey would be overly burdensome. Other commenters,
however, recommended developing a patient experience of care measure
specified for psychiatric patients.
Response: We thank the commenters for their recommendations. We
believe that patient and family engagement measures are important, and
we will consider this suggestion in the future.
Comment: Commenters recommended the following measures for future
consideration: (1) Number of hours before the individual was seen by a
psychiatrist; (2) number of hours before the individual was transferred
to a facility where he/she would receive appropriate treatment; (3)
readmission to the same IPF within 30 days of discharge; (4) improved
functioning or stabilization of functioning as measures through
clinical assessment, patient self-assessment, or discharge to lower
level of care; (5) receiving best practices specific to the conditions
noted in the treatment plan as well as acuity of illness; (6) scheduled
appointment for aftercare within 7 days of discharge, controlling for
urban/rural area and type of provider, at minimum; (7) documentation of
follow-up mental health services in the community within 14 days of
discharge; (8) reduced payment rates for readmissions to psychiatric
hospitals after discharge; (9) a change score on a standardized measure
of psychiatric functioning to demonstrate the impact of hospitalization
on a patient admitted to the IPF; and (10) length of stay.
Response: We thank the commenters for their recommendations and
will consider them in the future.
Comment: One commenter encouraged CMS to consider adding staff-
level related measures, specifically NQF #0205: Nursing Hours per
Patient Day, since nursing and staff time contribute to a large amount
of IPF costs and freestanding locations have a larger percentage of
labor costs than IRFs or LTCHs.
Response: We thank the commenter for its recommendation and will
consider such measures in the future.
Comment: Some commenters recommended CMS include HBIPS-1 in future
years of the program since the measure will increase compliance with
admission screening and will not increase burden to providers that
report data to The Joint Commission.
Response: We thank the commenters for their recommendation and will
consider it in the future.

F. Changes to Reporting Requirements

We are making the following changes to our reporting requirements
for FY 2017 and subsequent years:
Requiring that measures be reported as a single yearly
count rather than by quarter and age; and
Requiring that aggregate population counts be reported as
a single yearly number rather than by quarter.
For FY 2018 and subsequent years we are also making one change,
allowing uniform sampling requirements for certain measures.
1. Changes to Reporting by Age and Quarter for the FY 2017 Payment
Determination and Subsequent Years
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53655 through
53656), we finalized our policy that IPFs must submit data for chart-
abstracted measures to the Web-Based Measures Tool on an annual basis
aggregated by quarter. We also finalized our policy that IPFs must
submit data as required by The Joint Commission, which calls for IPFs
to submit data for measures by age group. Since then, we have learned
that obtaining data for each quarter and by age is burdensome to
providers and the resultant number of cases is often too small to allow
public reporting. That

[[Page 46716]]

is, we do not report data on Hospital Compare for measures with fewer
than 11 cases; reporting by age and quarter often causes the number of
cases to fall below 11. For example, for HBIPS-5, in Quarter 2 of 2013,
only 5.75 percent of the data were reportable. Likewise, in Quarter 3
and Quarter 4 of 2013, for HBIPS-5, only 5.5 percent of the data were
reportable.
Therefore, beginning with the FY 2017 payment determination, we
proposed to require facilities to report data for chart-abstracted
measures to the Web-Based Measures Tool on an aggregate basis by year,
rather than by quarter, and to discontinue the requirement for
reporting by age group. We proposed to require IPFs to report a single
aggregate measure rate for each measure annually for each payment
determination.
We stated our belief that this change will reduce provider burden
because IPFs would report a single rate for each measure. In addition,
we stated that we do not believe that quarterly data or data stratified
by age are necessary for quality improvement activities. We are able to
differentiate, and the public is able to view on Hospital Compare,
those IPFs that perform well on measures from those for which quality
improvement activities may be necessary based on an annual aggregate
rate submission. We noted, however, that in the future, if our evolving
measures set, quality improvement goals, and experience with the
program indicate a change is needed, we may reevaluate and reinstate
the requirement for quarterly reporting.
We welcomed public comments on this proposal. The comments we
received and our responses are set forth below.
Comment: Many commenters supported this proposal, noting that IPFs
will more easily be able to comply with reporting aggregate population
as a single yearly count rather than by quarter and by age, and the
proposal will improve the usability of the public display data.
Response: We thank commenters for their support.
Comment: Many commenters did not support the proposal, stating that
submitting data by year rather than quarter will not decrease burden
since it requires the same number of abstractions, is contrary to the
national desire to have more current data, would reduce the ability of
consumers to know if there are lower measure rates for certain age
groups, and would decrease the ability to monitor trends over the year
and by age. Other commenters suggested that we continue to work to
improve the report format for consumers and consider allowing providers
to report on a quarterly basis without segregating the measure by age
so that we can publicly report data closer to real time. Many
commenters requested that we convene TEPs to identify the best ways to
reduce reporting burden.
Response: We believe that reporting data yearly and no longer
reporting by age will be easier for IPFs because it will decrease the
number of values reported from 16 numbers (that is, four age groups
multiplied by four quarters) to 1 number for every measure, leading to
an aggregate decrease of 210 values per year. Furthermore, although the
public will no longer be able to view data by age, we believe that
submitting and reporting data as an aggregate number will increase
rather than decrease the ability to monitor trends, since, as we
explain above, doing so will increase the number of cases that are
reported and that we are, therefore, able to report on Hospital
Compare. Finally, although we are not operationally able to implement
them at this time, we will continue to consider commenters' suggestions
to modify our reporting structures to allow more consumer-friendly
interfaces and real-time data entry and viewing. We will also consider
the suggestion that we convene TEPs to identify ways to reduce provider
burden.
Comment: Some commenters contended that this change in methodology
will only affect HBIPS-5, and stated that changing a methodology to
improve reporting on one measure is ineffective, specifically because
the change will not reduce provider burden since providers will still
be required to submit this data to The Joint Commission by age and
quarter. These commenters stated that it may be more effective and
efficient to report HBIPS-5 by year rather than changing the data
collection methodology.
Response: We do not agree that the reporting change is limited to
HBIPS-5. Although the example provided in the proposed rule only
includes HBIPS-5, we believe that, as we collect more data,
specifically data on measures that we adopted last year and for which
we will be collecting data this summer, values that do not meet minimum
reporting thresholds as a result of age and quarter stratification will
exist across measures. Additionally, although we acknowledge that many
IPFs may report data to The Joint Commission by age and quarter, we
believe the burden required to aggregate these numbers is minimal.
For the reasons stated above, we are finalizing our proposal to
require facilities to report data for chart-abstracted measures to the
Web-Based Measures Tool on an aggregate basis by year, rather than by
quarter, and to discontinue the requirement for reporting by age group
beginning with the FY 2017 payment determination. In Table 23, we set
forth the quality reporting and submission timelines for the FY 2017
payment determination and subsequent years for all the measures except
FUH and the Influenza Vaccination Coverage among Healthcare Personnel
measures.

Table 23--Quality Reporting Periods and Timeframes for the FY 2017
Payment Determination and Subsequent Years
------------------------------------------------------------------------
Reporting period for Data submission
Payment determination (FY) services provided timeframe
------------------------------------------------------------------------
2017........................ January 1, 2015- July 1, 2016-August
December 31, 2015. 15, 2016.
------------------------------------------------------------------------

In Table 24, we set forth the quality reporting and submission
timelines for the FY 2018 payment determination and subsequent years
for all the measures except FUH and the Influenza Vaccination Coverage
among Healthcare Personnel measures. We note that FUH is claims-based,
and therefore does not require additional data submission. The
Influenza Vaccination Coverage among Healthcare Personnel measure is
reported to the Centers for Disease Control and Prevention's National
Healthcare Safety Network, and we refer readers to the FY 2015 IPF PPS
final rule for more information on the reporting timeline for this
measure (79 FR 45969). In addition, we note that, as finalized above,
for the Transition Record with Specified Elements Received by
Discharged Patients (Discharges from an Inpatient Facility to Home/Self
Care or Any Other Site of Care), Timely Transmission of

[[Page 46717]]

Transition Record (Discharges from an Inpatient Facility to Home/Self
Care or Any Other Site of Care), and Screening for Metabolic Disorders
measures, we are only requiring facilities to report data for July 1,
2016-December 31, 2016 for the FY 2018 payment determination.

Table 24--Quality Reporting Periods and Timeframes for the FY 2018 Payment Determination and Subsequent Years
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
Payment determination Reporting period for services provided Data submission
(FY) timeframe
----------------------------------------------------------------------------------------------------------------
2018............................... For All Measures Except NQF January 1, 2016- July 1, 2017-August
#0647, NQF #0648, and December 31, 2016. 15, 2017.
Screening for Metabolic
Disorders.
For NQF #0647, NQF #0648, July 1, 2016-December
and Screening for 31, 2016.
Metabolic Disorders.
----------------------------------------------------------------------------------------------------------------

2. Changes to Aggregate Population Count Reporting for the FY 2017
Payment Determination and Subsequent Years
In the FY 2015 IPF PPS final rule (79 FR 45973), we finalized our
policy that IPFs must submit aggregate population counts for Medicare
and non-Medicare discharges by age group, diagnostic group, and
quarter, and sample size counts for measures for which sampling is
performed. In section V.F.1. of this final rule, we finalized our
proposal to only require measure reporting as an annual aggregate rate,
rather than by quarter. Likewise, beginning with the FY 2017 payment
determination, we proposed to require non-measure data to be reported
as an aggregate, yearly count rather than by quarter. We welcomed
public comments on this proposal. The comments we received and our
responses are set forth below.
Comment: Some commenters supported this proposal.
Response: We thank commenters for their support.
Comment: Some commenters stated that aggregating data increases the
possibility of human error and suggested that we allow patient-level
reporting in the same way it is submitted to The Joint Commission.
Commenter suggested that CMS convene TEPs to identify the best ways to
reduce reporting burden in the future.
Response: To our knowledge, The Joint Commission does not require
reporting non-measure data as required by the IPFQR Program. Thus, it
is unclear to us what commenters mean in suggesting that we allow
patient-level reporting in the same way as The Joint Commission.
Additionally, we do not agree that adding together 4 numbers rather
than reporting these numbers separately will increase human error by
any noticeable margin, specifically since facilities were already
required to manually submit these data. Furthermore, as stated above,
we are finalizing our proposal to require facilities to report data for
chart-abstracted measures to the Web-Based Measures Tool on an
aggregate basis by year, rather than by quarter, and to discontinue the
requirement for reporting by age group beginning with the FY 2017
payment determination. We believe it is important to collect non-
measure data similarly to how measure data is collected. Finally, we
will consider convening TEPs to identify ways to reduce provider burden
in the future.
For the reasons stated above, we are finalizing our proposal to
require facilities to report non-measure data as an aggregate, yearly
count rather than by quarter beginning with the FY 2017 payment
determination.
3. Changes to Sampling Requirements for the FY 2018 Payment
Determination and Subsequent Years
Measure specifications for the measures that we have adopted allow
sampling for some measures; however, for other measures, IPFs must
report data for all discharges/patients. In addition, the sampling
requirements sometimes vary by measure. In response to these policies,
in the FY 2014 IPPS/LTCH PPS final rule, some commenters noted that
different sampling requirements in the measures could increase burden
on facilities because these differences will require IPFs to have
varying policies and procedures in place for each measure (78 FR
50901). Although we stated our belief that the importance of these
measures and of gathering information for all discharges/patients
outweighs the burden of various sampling requirements, we now believe
that the additional measures in this final rule tip the balance of
benefit and burden. Therefore, and for the reasons provided below, we
proposed to allow a uniform sampling methodology both for measures that
require sampling and for certain other measures. Specifically, we
proposed to allow The Joint Commission/CMS Global Initial Patient
Population sampling in Section 2.9_Global Initial Patient Population
found at https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1228773989482. We stated our belief that this will allow IPFs to take one,
global sample for all measures specified in Table 25, thereby
decreasing burden on these facilities and streamlining policies and
procedures.
In our current measure set, the measures for which we proposed to
allow The Joint Commission/CMS Global sampling included those outlined
in Table 25.

Table 25--Measures to Which Sampling Applies
------------------------------------------------------------------------
NQF # Measure ID Measure
------------------------------------------------------------------------
0560................ HBIPS-5.......... Patients Discharged on Multiple
Antipsychotic Medications with
Appropriate Justification.
1661................ SUB-1............ Alcohol Use Screening.
1663................ SUB-2 and SUB-2a. Alcohol Use Brief Intervention
Provided or Offered and SUB-2a
Alcohol Use Brief
Intervention.
1651................ TOB-1............ Tobacco Use Screening.
1654................ TOB-2............ Tobacco Use Treatment Provided
TOB-2a........... or Offered and Tobacco Use
Treatment.

[[Page 46718]]

1656................ TOB-3 and TOB-3a. Tobacco Use Treatment Provided
or Offered at Discharge and
the subset measure Tobacco Use
Treatment at Discharge.
1659................ IMM-2............ Influenza Immunization.
0647................ N/A.............. Transition Record with
Specified Elements Received by
Discharged Patients
(Discharges from an Inpatient
Facility to Home/Self Care or
Any Other Site of Care).
0648................ N/A.............. Timely Transmission of
Transition Record (Discharges
from an Inpatient Facility to
Home/Self Care or Any Other
Site of Care).
N/A................. N/A.............. Screening for Metabolic
Disorders.
------------------------------------------------------------------------

In section V.F.1. of this final rule, we are finalizing our
proposal to require reporting on measures as a yearly count rather than
by quarter. Because The Joint Commission/CMS Global sampling guidelines
specify sampling by quarter, we proposed to modify their sampling
guidelines by multiplying the ``number of cases in the initial patient
population'' and the ``number of cases to be sampled'' by 4. In
addition, since we require all IPFs to report data on all chart-
abstracted measures even when the population size for a given measure
is small or zero (78 FR 50901), we have modified the table to require
reporting regardless of the number of cases. Thus, we proposed the
following sampling guidelines for the measures above:

Table 26--Number of Records Required To Be Sampled
------------------------------------------------------------------------
Number of cases in initial patient
population Number of records to be sampled
------------------------------------------------------------------------
>=6,117.............................. 1,224.
3,057-6,116.......................... 20% of initial patient
population.
609-3,056............................ 609.
0-608................................ All cases.
------------------------------------------------------------------------

We stated our belief that this will simplify processes and
procedures for IPFs because uniform requirements will promote
streamlined procedures and reporting. We also stated our belief that
the proposal will decrease burden by allowing IPFs to identify a
single, initial patient population for all of the measures specified in
Table 25 from which to calculate the sample size. Furthermore, we
stated that we do not believe this approach will reduce quality
improvement. Sampling calculations ensure that enough data are
represented in the sample to determine accurate measure rates.
Therefore, even with sampling, we stated that we believe that CMS,
IPFs, and the public would be able to differentiate those IPFs who
perform well on measures from those who do not.
Therefore, we proposed to allow The Joint Commission/CMS Global
Initial Patient Population sampling, with limited methodology changes
as described above, for the measures in Table 25 beginning with the FY
2018 payment determination. We welcomed public comments on this
proposal. The comments we received and our responses are set forth
below.
Comment: Many commenters supported this proposal, stating that it
would make the abstraction process less burdensome for providers.
Response: We thank commenters for their support.
Comment: Some commenters suggested that changing the sampling
requirements for HBIPS measures increases burden for providers since
IPFs are required to submit HBIPS data to The Joint Commission using
the HBIPS sampling methodology and suggested aligning the sampling
methodology with the HBIPS methodology. These commenters also noted
that misalignment between CMS and The Joint Commission may result in
consumer confusion since both publicly report data.
Response: We do not agree that this proposal increases burden. Most
of our measures (IMM-2, TOB-1, TOB-2/2a, and SUB-1) currently require
sampling per The Joint Commission/CMS Global Initial Patient Population
guidelines. Only HBIPS-5 is required to be reported to The Joint
Commission using a different sampling methodology. Therefore, we
believe that, overall, allowing uniform sampling for the measures
discussed in Table 25 will greatly decrease burden, specifically
because some of these measures (the transition and metabolic screening
measures) currently do not allow sampling at all. In addition, we note
that, if providers believe using this optional sampling is too
burdensome, we are not requiring them to do so.
We appreciate the comment that the public may be confused if
numbers are reported differently in different programs. We note,
however, that this confusion would be limited to HBIPS-5, the only
measure that uses a different sampling methodology from The Joint
Commission/CMS Global Initial Patient Population sampling, and we
believe, even in this case, the public can understand that reporting
requirements, and their results, vary by program and organization.
Comment: Commenters stated that the sampling tables were developed
by The Joint Commission to ensure that most healthcare organizations
would be able to obtain a sample size large enough to distinguish
meaningful differences from the national average, and adopting a
uniform methodology could cause over-sampling for measures with large
populations and under-sampling for those with small populations,
affecting the ability of providers to monitor measures where their
patient populations are heterogeneous.
Response: We will monitor the results of this proposal to see if it
causes the inability to distinguish meaningful differences between
providers and will make appropriate adjustments if we believe this is
the case.
Comment: One commenter noted that the HBIPS measure set and the SUB
and TOB measure sets use different population criteria for sampling and
asked CMS to clarify its proposal.
Response: As we explained in the proposed rule (80 FR 25056), we
proposed to allow IPFs to use The Joint Commission/CMS Global Initial
Patient Population guidelines for the measures in Table 25, which
includes these measures. Thus, for both sampling and population
purposes, IPFs may use The Joint Commission/CMS Global Initial Patient
Population guidelines found at https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1228773989482.
Comment: Many commenters suggested that CMS convene TEPs to
identify the best ways to reduce reporting burden.
Response: We will also consider convening a TEP to discuss ways to
diminish provider burden in the future.

[[Page 46719]]

For the reasons stated above, we are finalizing our proposal to
allow The Joint Commission/CMS Global Initial Patient Population
sampling for the measures in Table 25 beginning with the FY 2018
payment determination.

G. Public Display and Review Requirements

We did not propose any changes to the public display and review
requirements for the FY 2018 payment determination and subsequent years
and refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50897
through 50898) for more information.

H. Form, Manner, and Timing of Quality Data Submission

1. Procedural and Submission Requirements
We did not propose any changes to the procedural and submission
requirements for the FY 2018 payment determination and subsequent years
and refer readers to the FY 2014 IPPS/LTCH PPS final rule (77 FR 50898
through 50899) for more information on these previously finalized
requirements.
2. Change to the Reporting Periods and Submission Timeframes
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50901), we finalized
requirements for reporting periods and submission timeframes for the
IPFQR Program measures. We are making one change to these requirements,
as discussed above in section V.F.1. of this final rule. Specifically,
we are no longer requiring that measure rates be reported quarterly and
by age; we will only require an aggregate, yearly number beginning with
the FY 2017 payment determination.
3. Population and Sampling
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53657 through 53658)
and FY 2014 IPPS/LTCH PPS final rule (78 FR 58901 through 58902), we
finalized policies for population, sampling, and minimum case
thresholds. We are making one change to these policies, as discussed
above in section V.F.3. of this final rule. Specifically, we will allow
uniform sampling on certain measures beginning with the FY 2018 payment
determination.
4. Data Accuracy and Completeness Acknowledgement (DACA) Requirements
We did not propose any changes to the DACA requirements and refer
readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53658) for more
information on these requirements.

I. Reconsideration and Appeals Procedures

In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53658 through
53660), we adopted a reconsideration process, later codified at Sec.
412.434, by which IPFs can request a reconsideration of their payment
update reduction if an IPF believes that its annual payment update has
been incorrectly reduced for failure to meet all IPFQR Program
requirements. We did not propose any changes to the Reconsideration and
Appeals Procedure and refer readers to the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53658 through 53660) and the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50953) for further details on the reconsideration process.

J. Exceptions to Quality Reporting Requirements

We did not propose any changes to the exceptions to quality
reporting requirements and refer readers to the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53659 through 53660), where we initially finalized
the policy as ``Waivers from Quality Reporting,'' and the FY 2015 IPF
PPS final rule (79 FR 45978), where we re-named the policy as
``Exceptions to Quality Reporting Requirements'' for more information.

VI. Provisions of the Final Regulations

For the most part, this final rule incorporates the provisions of
the proposed rule. Those provisions of this final rule that differ from
the proposed rule are as follows:
Effective for FY 2016 IPF PPS update, we adopted a 2012-
based IPF-market basket. However, we revised the proposed 2012-based
IPF market basket based on public comments. Specifically, we revised
the methodology for calculating the Wages and Salaries and the Employee
Benefits cost weights.
We adopted an updated FY 2016 LRS of 75.2 percent, which
increased from the proposed LRS of 74.9 percent largely due to the
methodological changes made to the 2012-based IPF market basket based
on public comments. We are implementing the LRS as proposed, in full in
FY 2016.
Effective for FY 2016 IPF PPS update, we adopted a 2012-
based IPF market basket. We adjusted the 2012-based IPF market basket
update for FY 2016 (currently estimated to be 2.4 percent) by a
reduction for economy-wide productivity (currently estimated to be 0.5
percentage point) as required by section 1886(s)(2)(A)(i) of the Social
Security Act (the Act), and further reduced by 0.2 percentage point as
required by section 1886(s)(2)(A)(ii) of the Act, resulting in a final
estimated market basket update of 1.7 percent.
We updated the IPF per diem rate from $728.31 to $743.73.
Providers that failed to report quality data for FY 2016 payment will
receive a final FY 2016 per diem rate of $729.10.
We updated the electroconvulsive therapy (ECT) payment per
treatment from $313.55 to $320.19. Providers that failed to report
quality data for FY 2016 payment would receive a FY 2016 ECT payment
per treatment of $313.89.
We updated the fixed dollar loss threshold amount from
$8,755 to $9,580 in order to maintain outlier payments that are 2
percent of total estimated IPF PPS payments.
We finalized that the national urban and rural cost-to-
charge ratio (CCR) ceilings for FY 2016 will be 1.7339 and 1.9041,
respectively, and the national median CCR will be 0.4650 for urban IPFs
and 0.6220 for rural IPFs.
All other payment policy proposals are being implemented as
proposed. We are implementing the IPF Quality Reporting Program
proposals as proposed, except for the following changes: Due to
concerns with the timeline required to operationalize the Transition
Record with Specified Elements Received by Discharged Patients, Timely
Transmission of Transition Record, and Screening for Metabolic
Disorders measures, we are only requiring that facilities report the
last two quarters of data for the first year of public reporting. That
is, for the FY 2018 payment determination, facilities must only report
data from July 1, 2016-December 1, 2016 for these measures. Beginning
with the FY 2019 payment determination, IPFs must report all four
quarters of data or face a payment reduction.

VII. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995 (PRA), we are required to
publish a 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval.
To fairly evaluate whether an information collection should be
approved by OMB, PRA section 3506(c)(2)(A) requires that we solicit
comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our burden estimates.
The quality, utility, and clarity of the information to be
collected.

[[Page 46720]]

Our effort to minimize the information collection burden
on the affected public, including the use of automated collection
techniques.
In our May 1, 2015, proposed rule, we solicited public comment on
each of the section 3506(c)(2)(A)-required issues for the following
information collection requirements (ICRs). While comments were
received on the proposed rule, none of those comments were related to
the PRA or to the ICRs. All of this final rule's information collection
requirements and burden estimates are unchanged from what was set out
in the proposed rule.

A. Wage Estimates

We estimate that reporting data for the IPFQR Program measures can
be accomplished by staff with a mean hourly wage of $16.42 per
hour.\114\ Under OMB Circular A-76, in calculating direct labor,
agencies should not only include salaries and wages, but also ``other
entitlements'' such as fringe benefits.\115\ This Circular provides
that the civilian position full fringe benefit cost factor is 36.25
percent. Therefore, using these assumptions, we estimate an hourly
labor cost of $22.37 ($16.42 base salary + $5.95 fringe). The following
table presents the mean hourly wage, the cost of fringe benefits
(calculated at 36.25 percent of salary), and the adjusted hourly wage.
---------------------------------------------------------------------------

\114\ http://www.bls.gov/ooh/healthcare/medical-records-and-health-information-technicians.html.
\115\ http://www.whitehouse.gov/omb/circulars_a076_a76_incl_tech_correction.

Table 27--Occupational Employment and Wage Estimates
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mean hourly wage Fringe benefit (at Adjusted hourly wage ($/
Occupation title Occupation code ($/hour) 36.25% in $/hour) hour)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medical Records and Health Information Technician......... 29-2071 16.42 5.95 22.37
--------------------------------------------------------------------------------------------------------------------------------------------------------

The BLS is ``the principal Federal agency responsible for measuring
labor market activity, working conditions, and price changes in the
economy.'' \116\ Acting as an independent agency, the Bureau provides
objective information for not only the government, but also for the
public. The Bureau's National Occupational Employment and Wage
Estimates describes Medical Records and Health Information Technicians
as those responsible for organizing and managing health information
data. Therefore, we believe it is reasonable to assume that these
individuals would be tasked with abstracting clinical data for these
measures. In addition, the Hospital IQR Program uses this wage to
calculate its burden estimates.
---------------------------------------------------------------------------

\116\ http://www.bls.gov/bls/infohome.htm.
---------------------------------------------------------------------------

B. ICRs Regarding the Inpatient Psychiatric Facility Quality Reporting
(IPFQR) Program

We refer readers to the FY 2015 IPF PPS final rule (79 FR 45978
through 45980) for a detailed discussion of the burden for the program
requirements that we have previously adopted. Below, we discuss only
the changes in burden resulting from the provisions in this final rule.
Although we are finalizing provisions that impact both the FY 2017 and
FY 2018 payment determinations, all of these new elements begin to
apply to facilities in FY 2016. For example, data collection for the
measures begins in FY 2016, and the changes to the reporting
requirements take effect beginning with reporting that is required in
the summer of FY 2016. For purposes of calculating burden, we will
attribute the costs to the year in which these costs begin; for the
purposes of all of the provisions in this final rule, that year is FY
2016.
1. Changes in Time Required To Chart-Abstract Data Based on Reporting
Requirements
As discussed in section V.F. of this final rule, we are finalizing
the following 3 changes regarding how facilities should report data for
IPFQR Program measures: (1) Beginning with the FY 2017 payment
determination, measures must be reported as a single yearly count
rather than by quarter and age; (2) beginning with the FY 2017 payment
determination, aggregate population counts must be reported as a single
yearly number rather than by quarter; and (3) beginning with the FY
2018 payment determination, uniform sampling is allowed for certain
measures.
We believe that these changes will lead to a decrease in burden
since facilities are required to enter one aggregate number for both
the numerator and denominator for each measure and will be allowed to
pull one sample used to calculate the measures specified in Table 25 of
this final rule. Consequently, we believe that the time required to
chart-abstract data for these measures would be reduced by 20 percent.
Previously, we estimated 15 minutes to chart-abstract data for each
case (79 FR 45979). Because of our proposed changes to sampling and
reporting data, we are revising the figure and now estimate 12 minutes
(0.20 x 15 minutes), a change of -3 minutes or -0.05 hour.
2. Estimated Burden of IPFQR Program
In section V. of this final rule, we are finalizing our proposal to
adopt the following 5 measures:
TOB-3--Tobacco Use Treatment Provided or Offered at
Discharge and the subset measure TOB-3a Tobacco Use Treatment at
Discharge (National Quality Forum (NQF) #1656);
SUB-2--Alcohol Use Brief Intervention Provided or Offered
and the subset measure SUB-2a Alcohol Use Brief Intervention (NQF
#1663);
Transition Record with Specified Elements Received by
Discharged Patients (Discharges from an Inpatient Facility to Home/Self
Care or Any Other Site of Care) (NQF #0647);
Timely Transmission of Transition Record (Discharges from
an Inpatient Facility to Home/Self Care or Any Other Site of Care) (NQF
#0648); and
Screening for Metabolic Disorders.
In the same section, we are also finalizing our proposal to remove
the following 3 measures:
HBIPS-4: Patients Discharged on Multiple Antipsychotic
Medications;
HBIPS-6: Post-Discharge Continuing Care Plan (NQF #0557);
and
HBIPS-7: Post-Discharge Continuing Care Plan Transmitted
to the Next Level of Care Provider Upon Discharge (NQF #0558).
We believe that approximately 1,617 \117\ IPFs will participate in
the IPFQR Program for requirements occurring in FY 2016 and subsequent
years. Based on data from CY 2013, we believe that each facility will
submit measure data on approximately 431 \118\ cases per year. Although
we note that,

[[Page 46721]]

as finalized in section V. of this final rule, for the Transition
Record with Specified Elements Received by Discharged Patients
(Discharges from an Inpatient Facility to Home/Self Care or Any Other
Site of Care), Timely Transmission of Transition Record (Discharges
from an Inpatient Facility to Home/Self Care or Any Other Site of
Care), and the Screening for Metabolic Disorders measures, we are only
requiring facilities to report data for two quarters for the FY 2018
payment determination, we believe it is best to estimate the burden for
the full year of reporting as this will be the requirement going
forward. Therefore, we estimate that adopting 5 measures and removing 3
measures (for a net result of 2 measures) will result in an increase in
burden of 172.4 hours per facility (2 measures x (431 cases/measure x
0.20 hours/case)) or 278,770.80 hours across all IPFs (172.4 hours/
facility x 1,617 facilities). The increase in costs is approximately
$3,856.59 per IPF ($22.37/hour x 172.4 hours) or $6,236,102.80 across
all IPFs (278,770.80 hours x $22.37/hour).
---------------------------------------------------------------------------

\117\ In the FY 2015 IPF PPS final rule we estimated 1,626 IPFs
and are adjusting that estimate by -9 to account for more recent
data.
\118\ In the FY 2015 IPF PPS final rule we estimated 556 cases
per year and are adjusting that estimate by -125 to account for more
recent data.
---------------------------------------------------------------------------

Consistent with our estimates in the FY 2015 IPF PPS final rule (79
FR 45979), we believe the estimated burden for training personnel on
this final rule's revised data collection and submission requirements
is 2 hours per facility or 3,234 hours (2 hours/facility x 1,617
facilities) across all IPFs. Therefore, the cost for this training is
$44.74 ($22.37/hour x 2 hours) for each IPF or $72,344.58 ($22.37/hour
x 3,234 hours) for all facilities.
Finally, IPFs must submit to CMS aggregate population counts for
Medicare and non-Medicare discharges by age group, and diagnostic
group, and sample size counts for measures for which sampling is
performed. As noted above, we are adopting 5 new measures beginning
with the FY 2018 payment determination. However, because, as further
described above, we are eliminating reporting this non-measure data by
quarter for all measures, we believe that the addition of 5 measures
leads to a net negligible change in burden associated with non-measure
data collection.

C. Summary of Annual Burden Estimates

Table 28--Annual Recordkeeping and Reporting Requirements Under OMB Control Number 0938-1171
[CMS-10432]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Burden per Total annual Labor cost of
Preamble section(s) Proposed action Respondents Responses (per response burden reporting ($/ Total cost
respondent) (hours)* (hours) hour) ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
V.C....................... Remove HBIPS-4....... 1,617 862 (431 cases/yr x 2 0.20 278,770.80 22.37 6,236,102.80
measures).
V......................... Remove HBIPS-6 and
HBIPS-7.
V......................... Add NQF #1656, #1663,
#0647, #0648, and
Screening for
Metabolic Disorders.
Training............. .............. 1.................... 2 3,234 .............. 72,344.58
------------------------------------------------------------------------------------------------------
Total................. ..................... 1,617 863.................. 2.2 282,004.8 22.37 6,308,447.38
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. ICRs Regarding the Hospital and Health Care Complex Cost Report
(CMS-2552-10)

This rule would not impose any new or revised collection of
information requirements associated with CMS-2552-10 (as discussed
under preamble section III.A.3.a.i.). Consequently, the cost report
does not require additional OMB review under the authority of the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). The report's
information collection requirements and burden estimates are approved
by OMB under control number 0938-0052.

E. Submission of PRA-Related Comments

We submitted a copy of this final rule to OMB for its review of the
rule's information collection and recordkeeping requirements. The
requirements are not effective until they have been approved by the
OMB.
To obtain copies of the supporting statement and any related forms
for the proposed collections discussed above, please visit CMS' Web
site at www.cms.hhs.gov/[email protected]">www.cms.hhs.gov/[email protected], or call the Reports
Clearance Office at 410-786-1326.
We invite public comments on these potential information collection
requirements. If you wish to comment, please identify the rule (CMS-
1627-F) and submit your comments to the OMB desk officer via one of the
following transmissions:
Mail: OMB, Office of Information and Regulatory Affairs, Attention:
CMS Desk Officer, Fax Number: 202-395-5806 or, Email:
[email protected], ICR-related comments are due August 31,
2015.

VIII. Regulatory Impact Analysis

A. Statement of Need

This final rule updates the prospective payment rates for Medicare
inpatient hospital services provided by IPFs for discharges occurring
during FY 2016 (October 1, 2015, through September 30, 2016). We are
applying the final 2012-based IPF market basket increase of 2.4
percent, less the productivity adjustment of 0.5 percentage point as
required by 1886(s)(2)(A)(i) of the Act, and further reduced by 0.2
percentage point as required by sections 1886(s)(2)(A)(ii) and
1886(s)(3)(D) of the Act. In this final rule, we are adopting a 2012-
based IPF market basket and updating the IPF labor-related share;
adopting new OMB CBSA delineations for the FY 2016 IPF Wage Index; and
phasing out the rural adjustment for 37 rural providers which will
become urban providers as a result of the new CBSA delineations.
Additionally, this rule reminds providers of the October 1, 2015
implementation of the International Classification of Diseases, 10th
Revision, Clinical Modification (ICD-10-CM/PCS) for the IPF prospective
payment system, updates providers on the status of IPF PPS refinements,
and

[[Page 46722]]

finalizes new quality reporting requirements for the IPFQR Program.

B. Overall Impact

We have examined the impact of this final rule as required by
Executive Order 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
(March 22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism
(August 4, 1999) and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). A
regulatory impact analysis (RIA) must be prepared for a major rules
with economically significant effects ($100 million or more in any 1
year). This final rule is not designated as economically
``significant'' under section 3(f)(1) of Executive Order 12866.
We estimate that the total impact of these changes for FY 2016
payments compared to FY 2015 payments will be a net increase of
approximately $75 million. This reflects an $85 million increase from
the update to the payment rates, as well as a $10 million decrease as a
result of the update to the outlier threshold amount. Outlier payments
are estimated to decrease from 2.2 percent in FY 2015 to 2.0 percent of
total estimated IPF payments in FY 2016.
The RFA requires agencies to analyze options for regulatory relief
of small entities 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
governmental jurisdictions. Most IPFs and most other providers and
suppliers are small entities, either by nonprofit status or having
revenues of $7.5 million to $38.5 million or less in any 1 year,
depending on industry classification (for details, refer to the SBA
Small Business Size Standards found at http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf), or being nonprofit
organizations that are not dominant in their markets.
Because we lack data on individual hospital receipts, we cannot
determine the number of small proprietary IPFs or the proportion of
IPFs' revenue derived from Medicare payments. Therefore, we assume that
all IPFs are considered small entities. The Department of Health and
Human Services generally uses a revenue impact of 3 to 5 percent as a
significance threshold under the RFA.
As shown in Table 29, we estimate that the overall revenue impact
of this final rule on all IPFs is to increase Medicare payments by
approximately 1.5 percent. As a result, since the estimated impact of
this final rule is a net increase in revenue across almost all
categories of IPFs, the Secretary has determined that this final rule
will have a positive revenue impact on a substantial number of small
entities. MACs are not considered to be small entities. Individuals and
States are not included in the definition of a small entity.
In addition, section 1102(b) of the Social Security 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. 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 100 beds. As
discussed in detail below, the rates and policies set forth in this
final rule would not have an adverse impact on the rural hospitals
based on the data of the 277 rural units and 65 rural hospitals in our
database of 1,617 IPFs for which data were available. Therefore, the
Secretary has determined that this final rule would not have a
significant impact on the operations of a substantial number of small
rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 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 2015, that
threshold is approximately $144 million. This final rule will not
impose spending costs on state, local, or tribal governments in the
aggregate, or by the private sector, of $144 million or more.
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. As stated above, this final rule would not have a
substantial effect on state and local governments.

C. Anticipated Effects

We discuss the historical background of the IPF PPS and the impact
of this final rule on the Federal Medicare budget and on IPFs.
1. Budgetary Impact
As discussed in the November 2004 and May 2006 IPF PPS final rules,
we applied a budget neutrality factor to the Federal per diem base rate
and ECT payment per treatment to ensure that total estimated payments
under the IPF PPS in the implementation period would equal the amount
that would have been paid if the IPF PPS had not been implemented. The
budget neutrality factor includes the following components: Outlier
adjustment, stop-loss adjustment, and the behavioral offset. As
discussed in the May 2008 IPF PPS notice (73 FR 25711), the stop-loss
adjustment is no longer applicable under the IPF PPS.
As discussed in section III.D.1.e. of this final rule, we are using
the wage index and labor-related share in a budget neutral manner by
applying a wage index budget neutrality factor to the Federal per diem
base rate and ECT payment per treatment. Therefore, the budgetary
impact to the Medicare program of this final rule will be due to the
final market basket update for FY 2016 of 2.4 percent (see section
III.A.4. of this final rule) less the productivity adjustment of 0.5
percentage point required by section 1886(s)(2)(A)(i) of the Act;
further reduced by the ``other adjustment'' of 0.2 percentage point
under sections 1886(s)(2)(A)(ii) and 1886(s)(3)(D) of the Act; and the
update to the outlier fixed dollar loss threshold amount.
We estimate that the FY 2016 impact will be a net increase of $75
million in payments to IPF providers. This reflects an estimated $85
million increase from the update to the payment rates and a $10 million
decrease due to the update to the outlier threshold amount to set total
estimated outlier payments at 2.0 percent of total estimated payments
in FY 2016. This estimate does not include the implementation of the
required 2 percentage point reduction of the market basket increase
factor for any IPF that fails to meet the IPF quality reporting
requirements (as discussed in section VIII.C.4. below).
2. Impact on Providers
To understand the impact of the changes to the IPF PPS on
providers, discussed in this final rule, it is necessary to compare
estimated

[[Page 46723]]

payments under the IPF PPS rates and factors for FY 2016 versus those
under FY 2015. We determined the percent change of estimated FY 2016
IPF PPS payments to FY 2015 IPF PPS payments for each category of IPFs.
In addition, for each category of IPFs, we have included the estimated
percent change in payments resulting from the update to the outlier
fixed dollar loss threshold amount; the updated wage index data; the
changes to wage index CBSAs; the changes to rural adjustment payments
resulting from changes in rural or urban status, due to CBSA changes;
the final labor-related share; and the final market basket update for
FY 2016, as adjusted by the productivity adjustment according to
section 1886(s)(2)(A)(i), and the ``other adjustment'' according to
sections 1886(s)(2)(A)(ii) and 1886(s)(3)(D) of the Act.
To illustrate the impacts of the FY 2016 changes in this final
rule, our analysis begins with a FY 2015 baseline simulation model
based on FY 2014 IPF payments inflated to the midpoint of FY 2015 using
IHS Global Insight Inc.'s most recent forecast of the market basket
update (see section III.A.4. of this final rule); the estimated outlier
payments in FY 2015; the CBSA delineations for IPFs based on OMB's MSA
definitions after June 2003; the FY 2014 pre-floor, pre-reclassified
hospital wage index; the FY 2015 labor-related share; and the FY 2015
percentage amount of the rural adjustment. During the simulation, total
outlier payments are maintained at 2 percent of total estimated IPF PPS
payments.
Each of the following changes is added incrementally to this
baseline model in order for us to isolate the effects of each change:
The update to the outlier fixed dollar loss threshold
amount;
The FY 2015 pre-floor, pre-reclassified hospital wage
index without the revised OMB delineations;
The FY 2015 updated CBSA delineations, based on OMB's
February 28, 2013 Bulletin No. 13-01, as described in section
III.D.1.c. of this final rule, with the final blended FY 2016 IPF wage
index;
The FY 2016 rural adjustment, accounting for changes to
rural or urban status due to the updated CBSA delineations, including
the phase-out of the rural adjustment for the IPFs changing from rural
to urban status, as described in section III.D.1.d;
The final FY 2016 labor-related share;
The final market basket update for FY 2016 of 2.4 percent
less the productivity adjustment of 0.5 percentage point reduction in
accordance with section 1886(s)(2)(A)(i) of the Act and further reduced
by the ``other adjustment'' of 0.2 percentage point in accordance with
sections 1886(s)(2)(A)(ii) and 1886(s)(3)(D) of the Act.
Our final comparison illustrates the percent change in payments
from FY 2015 (that is, October 1, 2014, to September 30, 2015) to FY
2016 (that is, October 1, 2015, to September 30, 2016) including all
the changes in this final rule.

Table 29--IPF Impact for FY 2016
[Percent change in columns 3-9]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in Labor-
Number of Wage rural related IPF market Total
Facility by type IPFs Outlier index \1\ CBSA \2\ adjustment share basket percent
\3\ (75.2) \4\ update \5\ change \6\
(1) (2) (3) (4) (5) (6) (7) (8) (9)
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Facilities........................................ 1,617 -0.2 0.0 0.0 0.0 0.0 1.7 1.5
Total Urban....................................... 1,275 -0.2 0.0 0.0 0.0 0.2 1.7 1.7
Total Rural....................................... 342 -0.2 0.1 -0.2 0.2 -1.1 1.7 0.4
Urban unit........................................ 845 -0.3 0.0 0.0 0.0 0.2 1.7 1.6
Urban hospital.................................... 430 -0.1 0.0 0.1 0.0 0.1 1.7 1.8
Rural unit........................................ 277 -0.2 0.1 -0.2 0.2 -1.1 1.7 0.3
Rural hospital.................................... 65 -0.1 0.1 -0.3 0.2 -1.0 1.7 0.5
CBSA Change:
Urban to Urban.................................... 1,238 -0.2 0.0 0.0 0.1 0.2 1.7 1.7
Rural to Rural.................................... 338 -0.2 0.0 -0.2 0.1 -1.1 1.7 0.2
Urban to Rural.................................... 4 -0.7 2.4 -0.2 13.2 -0.9 1.7 15.7
Rural to Urban.................................... 37 -0.1 0.1 2.8 -4.1 -0.9 1.7 -0.7
By Type of Ownership:
Freestanding IPFs:
Urban Psychiatric Hospitals:
Government.................................... 125 -0.2 0.1 0.0 0.0 0.1 1.7 1.7
Non-Profit.................................... 102 -0.1 0.4 0.1 0.0 0.4 1.7 2.5
For-Profit.................................... 203 0.0 -0.3 0.1 0.0 0.0 1.7 1.4
Rural Psychiatric Hospitals:
Government.................................... 35 -0.1 0.2 -0.1 0.4 -0.8 1.7 1.2
Non-Profit.................................... 11 -0.4 -0.6 0.0 0.1 -0.3 1.7 0.4
For-Profit.................................... 19 0.0 0.1 -0.5 0.1 -1.3 1.7 -0.1
IPF Units:
Urban:
Government.................................... 128 -0.5 -0.2 -0.1 0.0 0.3 1.7 1.3
Non-Profit.................................... 547 -0.3 0.2 0.0 -0.1 0.3 1.7 1.8
For-Profit.................................... 170 -0.2 -0.3 0.0 0.0 0.0 1.7 1.3
Rural:
Government.................................... 70 -0.2 -0.1 -0.3 0.0 -1.4 1.7 -0.3
Non-Profit.................................... 143 -0.2 0.2 -0.2 0.3 -1.0 1.7 0.7
For-Profit.................................... 64 -0.3 0.0 -0.2 0.2 -1.3 1.7 0.2
By Teaching Status:
Non-teaching...................................... 1,427 -0.2 0.0 0.0 0.0 -0.1 1.7 1.4
Less than 10% interns and residents to beds....... 103 -0.3 0.2 -0.1 0.0 0.5 1.7 2.0

[[Page 46724]]

10% to 30% interns and residents to beds.......... 61 -0.5 0.4 -0.1 0.1 0.5 1.7 2.1
More than 30% interns and residents to beds....... 26 -0.5 0.5 0.0 0.1 0.9 1.7 2.7
By Region:
New England....................................... 108 -0.3 0.8 0.0 0.0 0.8 1.7 3.1
Mid-Atlantic...................................... 242 -0.2 0.2 -0.1 0.0 0.6 1.7 2.2
South Atlantic.................................... 240 -0.1 -0.3 0.0 -0.1 -0.4 1.7 0.7
East North Central................................ 259 -0.2 0.0 0.0 0.1 -0.2 1.7 1.4
East South Central................................ 160 -0.2 -0.6 0.0 -0.1 -1.1 1.7 -0.2
West North Central................................ 140 -0.3 0.0 0.0 0.0 -0.4 1.7 1.2
West South Central................................ 243 -0.2 -0.5 0.0 -0.1 -0.8 1.7 0.2
Mountain.......................................... 102 -0.2 0.4 0.0 0.1 0.2 1.7 2.2
Pacific........................................... 123 -0.3 0.5 0.0 0.1 1.4 1.7 3.4
By Bed Size:
Psychiatric Hospitals:
Beds: 0-24........................................ 81 -0.1 0.0 0.2 -0.3 -0.7 1.7 0.7
Beds: 25-49....................................... 74 -0.1 -0.3 0.3 -0.1 -0.1 1.7 1.4
Beds: 50-75....................................... 87 -0.1 0.0 0.0 0.1 0.0 1.7 1.6
Beds: 76+......................................... 253 0.0 0.0 0.0 0.0 0.1 1.7 1.8
Psychiatric Units:
Beds: 0-24........................................ 667 -0.3 0.0 0.0 0.0 -0.3 1.7 1.0
Beds: 25-49....................................... 294 -0.3 0.0 0.1 0.0 0.0 1.7 1.5
Beds: 50-75....................................... 105 -0.2 0.1 0.0 0.0 0.2 1.7 1.8
Beds: 76+......................................... 56 -0.3 -0.1 -0.2 0.1 0.5 1.7 1.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Includes a FY 2016 IPF wage index, current CBSA delineations, and a labor-related share of 0.69294.
\2\ Includes a 50/50 FY 2016 blended IPF wage index, new CBSA delineations, and a labor-related share of 0.69294.
\3\ Includes a 50/50 FY 2016 blended IPF wage index, new CBSA delineations, a labor-related share of 0.69294, and a rural adjustment. Providers changing
from urban to rural status will receive a 17 percent rural adjustment, and providers changing from rural to urban status will receive 2/3 of the 17
percent rural adjustment in FY 2016. For those changing from urban to rural status, the total impact shown is affected by outlier threshold
increasing, which results in smaller outlier payments as part of total payments. For those changing from rural to urban status, the outlier threshold
is being lowered by 2/3 of 17 percent, which results in more providers being eligible for outlier payments, increasing the outlier portion of their
total payments.
\4\ Includes a 50/50 FY 2016 blended IPF wage index, new CBSA delineations, a labor-related share of 0.752, and a rural adjustment.
\5\ This column reflects the payment update impact of the 2012-based IPF market basket update of 2.4 percent, a 0.5 percentage point reduction for the
productivity adjustment as required by section 1886(s)(2)(A)(i) of the Act, and a 0.2 percentage point reduction in accordance with sections
1886(s)(2)(A)(ii) and 1886(s)(3)(D) of the Act.
\6\ Percent changes in estimated payments from FY 2015 to FY 2016 include all of the changes presented in this final rule. The products of these impacts
may be different from the percentage changes shown due to rounding effects.

3. Results
Table 29 displays the results of our analysis. The table groups
IPFs into the categories listed below based on characteristics provided
in the Provider of Services (POS) file, the IPF provider specific file,
and cost report data from HCRIS:

Facility Type
Location
Teaching Status Adjustment
Census Region
Size

The top row of the table shows the overall impact on the 1,617 IPFs
included in this analysis.
In column 3, we present the effects of the update to the outlier
fixed dollar loss threshold amount. We estimate that IPF outlier
payments as a percentage of total IPF payments are 2.2 percent in FY
2015. Thus, we are adjusting the outlier threshold amount in this final
rule to set total estimated outlier payments equal to 2 percent of
total payments in FY 2016. The estimated change in total IPF payments
for FY 2016, therefore, includes an approximate 0.2 percent decrease in
payments because the outlier portion of total payments is expected to
decrease from approximately 2.2 percent to 2.0 percent.
The overall impact of this outlier adjustment update (as shown in
column 3 of Table 26), across all hospital groups, is to decrease total
estimated payments to IPFs by 0.2 percent. The largest decrease in
payments is estimated to reflect a 0.7 percent decrease in payments for
IPFs that change from urban to rural status under the new CBSA
delineations.
In column 4, we present the effects of the budget-neutral final
update to the IPF wage index. This represents the effect of using the
most recent wage data available without taking into account the revised
OMB delineations, which are presented separately in the next column.
That is, the impact represented in this column is solely that of
updating from the FY 2015 IPF wage index to the FY 2016 IPF wage index
without any changes to the OMB delineations. We note that there is no
projected change in aggregate payments to IPFs, as indicated in the
first row of column 4. However, there will be distributional effects
among different categories of IPFs. For example, we estimate the
largest increase in payments to be 2.4 percent for IPFs changing from
urban to rural status, and the largest decrease in payments to be 0.6
percent for rural non-profit freestanding IPFs and IPFs in the East
South Central region.

[[Page 46725]]

In column 5, we present the effects of the new OMB delineations and
the finalized transition to the new delineations using the transitional
IPF wage index. The FY 2016 IPF final transitional wage index is a
blended wage index using 50 percent of the IPF's FY 2016 wage index
based on the new OMB delineations and 50 percent of the IPF's FY 2016
wage index based on the OMB delineations used in FY 2015. In the
aggregate, since these final updates to the wage index are applied in a
budget-neutral manner, we do not estimate that these final updates
would affect overall estimated payments to IPFs. However, we estimate
that these final updates would have distributional effects. We estimate
the largest increase in payments would be 2.8 percent for IPFs changing
from rural to urban status and the largest decrease in payments would
be 0.5 percent for rural for-profit freestanding IPFs.
In column 6, we present the effects of the changes to the rural
adjustment under the new CBSA delineations. Four urban IPFs would be
newly designated as rural IPFs and would now receive a full 17 percent
rural adjustment. We estimate that the largest increase in payments
would be to these four newly rural IPFs. Note that each column's
simulations include both regular and outlier payments; as regular
payments increase, outlier payments decrease to maintain outlier
payments at 2 percent of total payments. As such, the increase to total
IPF payments is estimated to be 13.2 percent. There are also 37 rural
IPFs which would be newly designated as urban IPFs, where we finalized
a phase-out of their rural adjustment over 3 years. These 37 newly
urban providers will receive \2/3\ of the 17 percent rural adjustment
in FY 2016, \1/3\ of the 17 percent rural adjustment in FY 2017, and no
rural adjustment for FY 2018 and subsequent years. As the regular
payments for these 37 providers decrease, their outlier payments
increase to maintain outlier payments at 2 percent of total payments.
We estimate that the largest decrease in payments would be 4.1 percent
for these 37 newly urban providers.
In column 7, we present the estimated effects of the final labor-
related share. The final update to the IPF labor-related share is made
in a budget-neutral manner and therefore will not affect total
estimated IPF PPS payments. However, it will affect the estimated
distribution of payments among providers. For example, we estimate the
largest increase in payments will be 1.4 percent to IPFs in the Pacific
region. We estimate the largest decrease in payments will be 1.4
percent to rural IPF governmental units.
In column 8, we present the estimated effects of the update to the
IPF PPS payment rates of 1.7 percent, which are based on the 2012-based
IPF market basket update of 2.4 percent, less the productivity
adjustment of 0.5 percentage point in accordance with section
1886(s)(2)(A)(i), and further reduced by 0.2 percentage point in
accordance with section 1886(s)(2)(A)(ii) and 1886(s)(3)(D).
Finally, column 9 compares our estimates of the total changes
reflected in this final rule for FY 2016 to the payments for FY 2015
(without these changes). This column reflects all finalized FY 2016
changes relative to FY 2015. The average estimated increase for all
IPFs is approximately 1.5 percent. This estimated net increase includes
the effects of the final 2.4 percent market basket update reduced by
the productivity adjustment of 0.5 percentage point, as required by
section 1886(s)(2)(A)(i)of the Act and further reduced by the ``other
adjustment'' of 0.2 percentage point, as required by sections
1886(s)(2)(A)(ii) and 1886(s)(3)(D) of the Act. It also includes the
overall estimated 0.2 percent decrease in estimated IPF outlier
payments as a percent of total payments from the update to the outlier
fixed dollar loss threshold amount. Since we are making the updates
noted in columns 4 through 7 in a budget-neutral manner, they will not
affect total estimated IPF payments in the aggregate. However, they
will affect the estimated distribution of payments among providers.
Overall, urban IPFs are estimated to experience a 1.7 percent
increase in payments in FY 2016 and rural IPFs are estimated to
experience a 0.4 percent increase in payments in FY 2016. The largest
estimated decrease in payments is 0.7 percent for rural IPFs that
transition to urban status as a result of the new OMB delineations. As
noted previously, we are finalizing our proposal to mitigate the
effects of the loss of the rural adjustment to these 37 providers by
phasing the adjustment out over 3 years. The largest payment increase
is estimated at 15.7 percent for IPFs that transition from urban to
rural status (thereby gaining the 17 percent rural adjustment),
followed by a 3.4 percent increase for IPFs in the Pacific region.
4. Effects of Updates to the IPFQR Program
As discussed in section V. of this final rule and in accordance
with section 1886(s)(4)(A)(i) of the Act, we will implement a 2
percentage point reduction in the FY 2018 market basket update for IPFs
that have failed to comply with the IPFQR Program requirements for FY
2018, including reporting on the required measures. In section V. of
this final rule, we discuss how the 2 percentage point reduction will
be applied. For FY 2015, of the 1,725 IPFs eligible for the IPFQR
Program, 31 IPFs (1.8 percent) did not receive the full market basket
update because of the IPFQR Program; 10 of these IPFs chose not to
participate and 21 did not meet the requirements of the program. We
anticipate that even fewer IPFs would receive the reduction for FY 2016
as IPFs become more familiar with the requirements. Thus, we estimate
that this policy will have a negligible impact on overall IPF payments
for FY 2016.
Based on the proposals we finalized in this rule, we estimate a
total increase in burden of 174.4 hours per IPF or 282,004.80 hours
across all IPFs, resulting in a total increase in financial burden of
$3,901.33 per IPF or $6,308,447.38 across all IPFs. As discussed in
section VII. of this final rule, we will attribute the costs associated
with the finalized proposals to the year in which these costs begin;
for the purposes of all the changes made in this final rule, that year
is FY 2016. Further information on these estimates can be found in
section VII. of this final rule.
We intend to closely monitor the effects of this quality reporting
program on IPFs and help facilitate successful reporting outcomes
through ongoing stakeholder education, national trainings, and a
technical help desk.
5. Effect on Beneficiaries
Under the IPF PPS, IPFs will receive payment based on the average
resources consumed by patients for each day. We do not expect changes
in the quality of care or access to services for Medicare beneficiaries
under the FY 2016 IPF PPS, but we continue to expect that paying
prospectively for IPF services would enhance the efficiency of the
Medicare program.

D. Alternatives Considered

The statute does not specify an update strategy for the IPF PPS and
is broadly written to give the Secretary discretion in establishing an
update methodology. Therefore, we are updating the IPF PPS using the
methodology published in the November 2004 IPF PPS final rule, but
implementing a 2012-based IPF market basket with some methodological
changes to the calculations of Wages and Salaries and Employee Benefit

[[Page 46726]]

costs, based on public comments; finalizing the updated labor-related
share as proposed; finalizing a transitional wage index to implement
new OMB CBSA designations as proposed; and implementing a phase-out of
the rural adjustment as proposed for the 37 providers changing from
rural to urban status as a result of the updated OMB CBSA delineations
used in the FY 2016 IPF PPS transitional wage index. We considered
implementing the new OMB designations for the FY 2016 IPF PPS wage
index without a blend, but wanted to mitigate any negative effects of
CBSA changes on IPFs. Additionally, we considered abruptly ending the
rural adjustment for the 37 IPF providers which changed from rural to
urban status as a result of the OMB CBSA changes. However, we wanted to
provide relief from the effects of OMB's new CBSA delineations to the
37 providers which changed from rural to urban status. We also
considered whether to allow a phase-in of the updated LRS, but decided
that the impact of full implementation did not warrant a phase-in,
especially given that we are also implementing a transitional wage
index and a phase-out of the rural adjustment for those IPFs which
changed status from rural to urban under the new CBSAs. Additionally,
for the IPFQR program, alternatives were not considered because the
program, as designed, best achieves quality reporting goals for the
inpatient psychiatric care setting, while minimizing associated
reporting burdens on IPFs. Section V. of this final rule discusses
other benefits and objectives of the program.

E. Accounting Statement

As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars_a004_a-4), in Table 30 below, we have
prepared an accounting statement showing the classification of the
expenditures associated with the provisions implemented in this final
rule. The costs for data submission presented in Table 30 are
calculated in section VI, which also discusses the benefits of data
collection. This table provides our best estimate of the increase in
Medicare payments under the IPF PPS as a result of the changes
presented in this final rule and based on the data for 1,617 IPFs in
our database. Furthermore, we present the estimated costs associated
with updating the IPFQR program. The increases in Medicare payments are
classified as Federal transfers to IPF Medicare providers.

Table 30--Accounting Statement: Classification of Estimated Expenditures
------------------------------------------------------------------------
Change in Estimated Transfers from FY 2015 IPF PPS to FY 2016 IPF PPS:
-------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers......... $75 million.
From Whom to Whom?..................... Federal Government to IPF
Medicare Providers.
------------------------------------------------------------------------
FY 2016 Costs to Updating the Quality Reporting Program for IPFs:
------------------------------------------------------------------------
Category Costs
------------------------------------------------------------------------
Annualized Monetized Costs for IPFs to $6.31 million.
Submit Data (Quality Reporting
Program).
------------------------------------------------------------------------

In accordance with the provisions of Executive Order 12866, this
final rule was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 412

Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and recordkeeping requirements.

For the reasons set forth in the preamble, the Centers for Medicare
and Medicaid Services amends 42 CFR chapter IV as set forth below:

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES

0
1. The authority citation for part 412 continues to read as follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh), sec. 124 of Pub. L. 106-113 (113 Stat.
1501A-332), sec. 1206 of Pub. L. 113-67, and sec. 112 of Pub. L.
113-93.

0
2. Section 412.428 is amended by revising paragraph (e) to read as
follows:

Sec. 412.428 Publication of Updates to the inpatient psychiatric
facility prospective payment system.

* * * * *
(e) Describe the ICD-10-CM coding changes and DRG classification
changes discussed in the annual update to the hospital inpatient
prospective payment system regulations.
* * * * *

Dated: July 27, 2015.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
Dated: July 27, 2015.
Sylvia M. Burwell,
Secretary, Department of Health & Human Services.
Note: The following addendum will not publish in the Code of
Federal Regulations.

Addendum--FY 2016 Final Rates and Adjustment Factors

Per Diem Rate
------------------------------------------------------------------------

------------------------------------------------------------------------
Federal Per Diem Base Rate................................... $743.73
Labor Share (0.752).......................................... 559.28
Non-Labor Share (0.248)...................................... 184.45
------------------------------------------------------------------------

Per Diem Rate Applying the 2 Percentage Point Reduction
------------------------------------------------------------------------

------------------------------------------------------------------------
Federal Per Diem Base Rate................................... $729.10
Labor Share (0.752).......................................... 548.28
Non-Labor Share (0.248)...................................... 180.82
------------------------------------------------------------------------

Fixed Dollar Loss Threshold Amount: $9,580.
Wage Index Budget-Neutrality Factor: 1.0041.

[[Page 46727]]

Facility Adjustments
------------------------------------------------------------------------

------------------------------------------------------------------------
Rural Adjustment Factor.................... 1.17.
Teaching Adjustment Factor................. 0.5150.
Wage Index................................. Pre-reclass Hospital Wage
Index (FY2015).
------------------------------------------------------------------------

Cost of Living Adjustments (COLAs)
------------------------------------------------------------------------
Cost of
living
Area adjustment
factor
------------------------------------------------------------------------
Alaska: ...........
City of Anchorage and 80-kilometer (50-mile) radius by 1.23
road..................................................
City of Fairbanks and 80-kilometer (50-mile) radius by 1.23
road..................................................
City of Juneau and 80-kilometer (50-mile) radius by 1.23
road..................................................
Rest of Alaska......................................... 1.25
Hawaii:
City and County of Honolulu............................ 1.25
County of Hawaii....................................... 1.19
County of Kauai........................................ 1.25
County of Maui and County of Kalawao................... 1.25
------------------------------------------------------------------------

Patient Adjustments
------------------------------------------------------------------------

------------------------------------------------------------------------
ECT--Per Treatment......................................... $320.19
ECT--Per Treatment Applying the 2 Percentage Point 313.89
Reduction.................................................
------------------------------------------------------------------------

Variable Per Diem Adjustments
------------------------------------------------------------------------
Adjustment
factor
------------------------------------------------------------------------
Day 1--Facility Without a Qualifying Emergency Department.. 1.19
Day 1--Facility With a Qualifying Emergency Department..... 1.31
Day 2...................................................... 1.12
Day 3...................................................... 1.08
Day 4...................................................... 1.05
Day 5...................................................... 1.04
Day 6...................................................... 1.02
Day 7...................................................... 1.01
Day 8...................................................... 1.01
Day 9...................................................... 1.00
Day 10..................................................... 1.00
Day 11..................................................... 0.99
Day 12..................................................... 0.99
Day 13..................................................... 0.99
Day 14..................................................... 0.99
Day 15..................................................... 0.98
Day 16..................................................... 0.97
Day 17..................................................... 0.97
Day 18..................................................... 0.96
Day 19..................................................... 0.95
Day 20..................................................... 0.95
Day 21..................................................... 0.95
After Day 21............................................... 0.92
------------------------------------------------------------------------

Age Adjustments
------------------------------------------------------------------------
Adjustment
Age (in years) factor
------------------------------------------------------------------------
Under 45................................................... 1.00
45 and under 50............................................ 1.01
50 and under 55............................................ 1.02
55 and under 60............................................ 1.04
60 and under 65............................................ 1.07
65 and under 70............................................ 1.10
70 and under 75............................................ 1.13
75 and under 80............................................ 1.15
80 and over................................................ 1.17
------------------------------------------------------------------------

DRG Adjustments
------------------------------------------------------------------------
Adjustment
MS-DRG MS-DRG Descriptions factor
------------------------------------------------------------------------
056......................... Degenerative nervous system 1.05
057......................... disorders w MCC.
Degenerative nervous system
disorders w/o MCC.
080......................... Nontraumatic stupor & coma w 1.07
081......................... MCC.
Nontraumatic stupor & coma w/
o MCC.
876......................... O.R. procedure w principal 1.22
diagnoses of mental illness.
880......................... Acute adjustment reaction & 1.05
psychosocial dysfunction.
881......................... Depressive neuroses.......... 0.99
882......................... Neuroses except depressive... 1.02
883......................... Disorders of personality & 1.02
impulse control.
884......................... Organic disturbances & mental 1.03
retardation.
885......................... Psychoses.................... 1.00
886......................... Behavioral & developmental 0.99
disorders.
887......................... Other mental disorder 0.92
diagnoses.
894......................... Alcohol/drug abuse or 0.97
dependence, left AMA.
895......................... Alcohol/drug abuse or 1.02
dependence w rehabilitation
therapy.
896......................... Alcohol/drug abuse or 0.88
897......................... dependence w/o
rehabilitation therapy w MCC.
Alcohol/drug abuse or
dependence w/o
rehabilitation therapy w/o
MCC.
------------------------------------------------------------------------

Comorbidity Adjustments
------------------------------------------------------------------------
Adjustment
Comorbidity factor
------------------------------------------------------------------------
Developmental Disabilities................................. 1.04
Coagulation Factor Deficit................................. 1.13
Tracheostomy............................................... 1.06
Eating and Conduct Disorders............................... 1.12
Infectious Diseases........................................ 1.07
Renal Failure, Acute....................................... 1.11
Renal Failure, Chronic..................................... 1.11
Oncology Treatment......................................... 1.07
Uncontrolled Diabetes Mellitus............................. 1.05
Severe Protein Malnutrition................................ 1.13
Drug/Alcohol Induced Mental Disorders...................... 1.03
Cardiac Conditions......................................... 1.11
Gangrene................................................... 1.10
Chronic Obstructive Pulmonary Disease...................... 1.12
Artificial Openings--Digestive & Urinary................... 1.08
Severe Musculoskeletal & Connective Tissue Diseases........ 1.09

[[Page 46728]]

Poisoning.................................................. 1.11
------------------------------------------------------------------------

[FR Doc. 2015-18903 Filed 7-31-15; 4:15 pm]
BILLING CODE 4120-01-P