[Federal Register Volume 61, Number 193 (Thursday, October 3, 1996)]
[Rules and Regulations]
[Pages 51611-51617]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-25282]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Part 413
[BPD-805-F]
RIN 0938-AG68
Medicare and Medicaid Programs; New Payment Methodology for
Routine Extended Care Services Provided in a Swing-Bed Hospital
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rule.
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SUMMARY: This final rule revises the regulations governing the
methodology for payment of routine extended care services furnished in
a swing-bed hospital. Medicare payment for these services is determined
based on the average rate per patient day paid by Medicare for these
same services provided in freestanding skilled nursing facilities
(SNFs) in the region in which the hospital is located. The reasonable
cost for these services is the higher of the reasonable cost rates in
effect for the current calendar year or for the previous calendar year.
In addition, this final rule revises the regulations concerning the
method used to allocate hospital general routine inpatient service
costs for purposes of determining payments to swing-bed hospitals.
These changes are necessary to conform the regulations to section 1883
of the Social Security Act (the Act), and section 4008(j) of the
Omnibus Budget Reconciliation Act of 1990.
EFFECTIVE DATE: These regulations are effective on November 4, 1996.
FOR FURTHER INFORMATION CONTACT: John Davis (410) 786-0008.
SUPPLEMENTARY INFORMATION:
I. Background
Before the enactment of the Omnibus Budget Reconciliation Act of
1980 (Public Law 96-499), small rural hospitals had difficulty in
establishing separately identifiable units for Medicare and Medicaid
long-term care because of limitations in their physical plant and
accounting capabilities. These hospitals often had an excess of
hospital beds, while their communities had a scarcity of long-term care
beds in Medicare and Medicaid participating facilities. To alleviate
this problem, Congress enacted section 904 of Public Law 96-499, known
as the ``swing-bed provision,'' which authorized a cost-efficient means
of providing nursing home care in rural communities. This provision
added sections 1883 and 1913 of the Social Security Act (the Act),
under which certain rural hospitals with fewer than 50 beds could use
their inpatient facilities to furnish long-term care services to
Medicare and Medicaid patients. These hospitals were paid at rates that
were deemed appropriate for those services and were generally lower
than hospital rates. Medicare payment for routine SNF services was made
at the average Statewide Medicaid rate for the previous calendar year.
Payment for ancillary services was made based on reasonable cost.
[[Page 51612]]
On December 22, 1987, the Omnibus Budget Reconciliation Act of 1987
(OBRA 1987) (Public Law 100-203) was enacted. Section 4005(b) of OBRA
1987 amended section 1883(b)(1) of the Act to provide for an expansion
of the existing Medicare swing-bed program to include rural hospitals
with more than 49 but fewer than 100 beds, effective for swing-bed
agreements entered into after March 31, 1988. Although rural hospitals
having more than 49 beds but fewer than 100 beds can be swing-bed
hospitals, they are subject to additional payment limitations that do
not apply to the smaller swing-bed hospitals.
Also, sections 4201(a)(3), 4204, 4211(h)(9), and 4214 of OBRA 1987
provide that effective with services furnished on or after October 1,
1990, the terms ``skilled nursing facilities'' (SNFs) and
``intermediate care facilities'' (ICFs) are no longer to be used for
the purpose of certifying a facility for the Medicaid program. Instead,
they are replaced by the term ``nursing facility'' (NF). Thus, for
purposes of the Medicaid program, facilities are no longer certified as
ICFs but instead are certified only as NFs, and can provide services as
defined in section 1919(a)(1) of the Act. Effective October 1, 1990,
these long-term care services furnished by swing-bed hospitals to
Medicaid and to other non-Medicare patients have been referred to as
NF-type services.
On November 5, 1990, the Omnibus Budget Reconciliation Act of 1990
(OBRA 1990) (Public Law 101-508) was enacted. Section 4008(j) of OBRA
1990 amended section 1883(a)(2)(B)(ii)(II) of the Act to provide for a
new methodology to pay for routine SNF services provided in a swing-bed
hospital. Effective for services furnished on or after October 1, 1990,
Medicare payment for routine SNF services in a swing-bed hospital is
based on the average rate per patient day paid by Medicare for routine
services provided in freestanding SNFs in the region in which the
hospital is located. The rates are calculated using the regions as
defined in section 1886(d)(2)(D) of the Act.
Section 4008(j)(2) of OBRA 1990 also provides for a ``hold-harmless
harmless'' provision. Under this provision, if the reasonable cost of
routine SNF services furnished by a hospital during a calendar year is
less than the reasonable cost of these services determined for the
prior calendar year, payment is to be based on the reasonable cost
determination for the prior calendar year.
II. Provisions of the Proposed Rule
On April 22, 1996, we published a proposed rule in the Federal
Register (61 FR 17677), in which we included the following provisions.
New Payment Rate Methodology
We proposed to implement in regulations a revised methodology for
Medicare payment of routine SNF services provided in a swing-bed
hospital. Under the proposed rule, Medicare payment to a swing-bed
hospital for routine SNF services would be based on the average rate
per patient day paid by Medicare for routine SNF services provided in a
freestanding SNF in the region in which the hospital is located. These
rates would be determined prospectively based on the most current SNF
settled cost reporting data available (increased in a compounded
manner, using the increase applicable to the SNF routine cost limits,
up to and including the calendar year for which the rates are in
effect). Rates would be calculated using the regions as defined in
section 1886(d)(2)(D) of the Act (that is, one of the nine census
divisions established by the Bureau of the Census). Payment for
ancillary services furnished as SNF services in swing-bed hospitals
would continue to be paid on a reasonable cost basis.
We published the rates applicable to calendar years 1990 through
1994 (see below), which had been published in section 2231 of the
Provider Reimbursement Manual (HCFA Pub. 15-1). We stated our intent to
continue to publish annual updates in that manual.
We described the methodology for calculating the Medicare swing-bed
rates, and provided the rates for services furnished on or after
October 1, 1990, and before December 31, 1990, as well as for services
furnished in calendar years 1991, 1992, 1993, 1994, and 1995.
In accordance with section 4008(j)(2) of OBRA 1990, we also
proposed a hold-harmless provision for Medicare swing-bed payments. As
noted above, this provision would allow for payment of the higher of
the payment rate in effect for the current calendar year or the payment
rate received by the swing-bed hospital for the prior calendar year.
Development of Medicare Swing Bed Rates Effective for Services
Furnished on or after October 1, 1990 and before January 1, 1995
--Data--In developing the Medicare payment rates for swing-bed care, we
used the actual freestanding SNF inpatient routine service payments
obtained from settled Medicare cost reports. For fiscal years 1990-
1993, cost reports used were for periods ending on or after June 30,
1989 and through May 31, 1990; for 1994, cost reports used were for
periods ending on or after September 30, 1990 through August 31, 1991;
and for 1995, cost reports used were for periods ending on or after
October 31, 1992 through September 30, 1993. The data consist of
routine service payments that were adjusted for utilization review,
primary payor amounts, and application of lower of cost or charges. For
proprietary providers, the return on equity portion of the swing-bed
rate was adjusted to include only the routine portion (that is, the
return on equity component related to ancillary services costs was
removed).
HCFA adjusts these data, using the SNF market basket index (the
annual percent increase in SNF expenditures, considering inflation plus
an allowance for new technology) to inflate costs from the cost
reporting periods in the data base to the midpoint of the applicable
year to which the rates apply.
--Group Means--HCFA calculated the means of adjusted routine service
payments and the routine portion of return on equity for each census
region as shown in Tables A through D.
(We noted that effective October 1, 1993, section 13503(c) of the
Omnibus Budget Reconciliation Act of 1993 amended sections
1861(v)(1)(B) and 1878(f)(2) of the Act to eliminate return on equity
capital for SNF services furnished in a proprietary hospital. The
return on equity capital component was not added to the routine payment
rate for the months of October, November, and December of 1993 (Table
D) nor for any subsequent years.)
[[Page 51613]]
Table A.--Medicare Swing Bed Rates--for Services Furnished on or After
October 1, 1990 and Before December 31, 1990
------------------------------------------------------------------------
Routine Return on
Region payment equity \1\
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT)....... $86.51 $1.42
2. Middle Atlantic (PA, NJ, NY)............... 86.39 1.27
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC,
VA, WV)...................................... 75.28 1.48
4. East North Central (IL, IN, MI, OH, WI).... 75.03 1.18
5. East South Central (AL, KY, MS, TN)........ 65.79 1.21
6. West North Central (IA, KS, MN, MO, NB, ND,
SD).......................................... 74.09 1.34
7. West South Central (AR, LA, OK, TX)........ 67.85 1.87
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY).. 81.32 1.47
9. Pacific (AK, CA, HI, OR, WA)............... 86.73 1.07
------------------------------------------------------------------------
\1\ The return of equity component is included only in the rate paid to
proprietary hospitals.
Table B.--Medicare Swing Bed Rates--for Services Furnished on or After
January 1, 1991 and Before December 31, 1991
------------------------------------------------------------------------
Routine Return on
Region payment equity \2\
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT)....... $90.92 $1.42
2. Middle Atlantic (PA, NJ, NY)............... 90.73 1.27
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC,
VA, WV)...................................... 79.03 1.28
4. East North Central (IL, IN, MI, OH, WI).... 78.78 1.18
5. East South Central (AL, KY, MS, TN)........ 69.14 1.21
6. West North Central (IA, KS, MN, MO, NB, ND,
SD).......................................... 77.83 1.34
7. West South Central (AR, LA, OK, TX)........ 71.22 1.87
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY).. 85.34 1.47
9. Pacific (AK, CA, HI, OR, WA)............... 91.10 1.07
------------------------------------------------------------------------
\2\ The reutrn on equity component is included in the rate paid to
propriety hospitals.
Table C.--Medicare Swing Bed Rates--for Services Furnished on or After
January 1, 1992 and Before December 31, 1992
------------------------------------------------------------------------
Routine Return on
Region payment equity \3\
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT)....... $95.10 $1.42
2. Middle Atlantic (PA, NJ, NY)............... 94.91 1.27
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC,
VA, WV)...................................... 82.67 1.48
4. East North Central (IL, IN, MI, OH, WI).... 82.40 1.18
5. East South Central (AL, KY, MS, TN)........ 72.32 1.21
6. West North Central (IA, KS, MN, MO, NB, ND,
SD).......................................... 81.41 1.34
7. West South Central (AR, LA, OK, TX)........ 74.50 1.87
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY).. 89.27 1.47
9. Pacific (AK, CA, HI, OR, WA)............... 95.29 1.07
------------------------------------------------------------------------
\3\ The return on equity component is included only in the rate paid to
proprietary hospitals.
Table D.--Medicare Swing Bed Rates--for Services Furnished on or After
January 1, 1993 and Before December 31, 1993
------------------------------------------------------------------------
Routine Return on
Region payment equity \4\
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT)....... $100.05 $1.42
2. Middle Atlantic (PA, NJ, NY)............... 99.84 1.27
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC,
VA, WV)...................................... 86.97 1.48
4. East North Central (IL, IN, MI, OH, WI).... 86.69 1.18
5. East South Central (AL, KY, MS, TN)........ 76.08 1.21
6. West North Central (IA, KS, MN, MO, NB, ND,
SD).......................................... 85.64 1.34
7. West South Central (AR, LA, OK, TX)........ 78.37 1.87
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY).. 93.91 1.47
9. Pacific (AK, CA, HI, OR, WA)............... 100.24 1.07
------------------------------------------------------------------------
\4\ The return on equity component should be included in the rate paid
to proprietary hospitals only for the months of January through
September of this calendar year.
[[Page 51614]]
Table E.--Medicare Swing Bed Rates--for Services Furnished on or After
January 1, 1994 and Before December 31, 1994
------------------------------------------------------------------------
Routine
Region payment
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT).................... $108.48
2. Middle Atlantic (PA, NJ, NY)............................ 104.33
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV)..... 89.47
4. East North Central (IL, IN, MI, OH, WI)................. 88.76
5. East South Central (AL, KY, MS, TN)..................... 79.44
6. West North Central (IA, KS, MN, MO, NB, ND, SD)......... 83.84
7. West South Central (AR, LA, OK, TX)..................... 84.97
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)............... 100.11
9. Pacific (AK, CA, HI, OR, WA)............................ 104.58
------------------------------------------------------------------------
Table F.--Medicare Swing Bed Rates--for Services Furnished on or After
January 1, 1995 and Before December 31, 1995
------------------------------------------------------------------------
Routine
Region payment
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT).................... $121.71
2. Middle Atlantic (PA, NJ, NY)............................ 117.28
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV)..... 105.22
4. East North Central (IL, IN, MI, OH, WI)................. 105.73
5. East South Central (AL, KY, MS, TN)..................... 94.61
6. West North Central (IA, KS, MN, MO, NB, ND, SD)......... 99.75
7. West South Central (AR, LA, OK, TX)..................... 99.63
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)............... 117.21
9. Pacific (AK, CA, HI, OR, WA)............................ 125.80
------------------------------------------------------------------------
Table G.--Medicare Swing Bed Rates--for Services Furnished on or After
January 1, 1996 and Before December 31, 1996
------------------------------------------------------------------------
Routine
Region payment
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT).................... $126.65
2. Middle Atlantic (PA, NJ, NY)............................ 121.74
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV)..... 109.04
4. East North Central (IL, IN, MI, OH, WI)................. 109.51
5. East South Central (AL, KY, MS, TN)..................... 99.11
6. West North Central (IA, KS, MN, MO, NB, ND, SD)......... 103.38
7. West South Central (AR, LA, OK, TX)..................... 102.89
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)............... 121.31
9. Pacific (AK, CA, HI, OR, WA)............................ 130.62
------------------------------------------------------------------------
The Carve-Out Method
In a swing-bed hospital, acute care services and long-term care
services are furnished interchangeably. To determine payment for
inpatient hospital services in a swing-bed hospital, section 1883(e) of
the Act provides that the costs attributable to routine long-term care
(SNF-type and ICF-type) services for all classes of patients are to be
subtracted (``carved out'') from the total allowable inpatient cost for
general inpatient routine services. The resulting amount represents the
general inpatient routine costs applicable to hospital routine care.
Once amounts attributable to SNF-type and ICF-type services have been
carved out, the average per diem cost of general routine hospital
services for swing-bed hospitals not subject to the prospective payment
system is then determined by dividing the remaining amount by the total
number of inpatient general routine hospital days (excluding SNF days
and ICF days). This method was chosen to avoid imposing a burdensome
cost finding process to allocate general routine service costs between
hospital and long-term care.
Swing-bed hospitals subject to the prospective payment system (PPS)
are paid for SNF-type services in the same manner as any other swing-
bed hospital. The carve-out method would be used primarily to determine
proper payment of pass-through costs. The prospective payment rates
based on diagnosis related groups (DRGs) for inpatient hospital
services under PPS are unaffected by the carve-out method.
As stated above, with the enactment of OBRA 1987, effective October
1, 1990, the distinction between SNFs and ICFs was eliminated under the
Medicaid program and the two types of facility were combined under the
term ``nursing facility'' (NF). This presented a problem in attempting
to determine the amount of the carve-out. Since Medicaid payment is now
determined based on a NF rate, the carve-out method could not be used
as previously defined.
The proposed rule revised Sec. 413.53(a)(2) to set forth our
current policy regarding the carve-out method (presently explained in
section 2230.5B of the Provider Reimbursement Manual) for SNF and NF
services furnished on or after October 1, 1990. Under the revised
carve-out method, the reasonable cost of hospital routine services is
determined
[[Page 51615]]
by subtracting the reasonable costs attributable to routine SNF-type
and NF-type services from total inpatient routine service costs. For
swing-bed SNF days covered by Medicare, the amount subtracted, or
carved out, is based on the regional Medicare swing-bed SNF rate. If,
under the hold-harmless provision explained above, a swing-bed hospital
is paid based on the swing-bed SNF rate that was in effect during the
prior calendar year, that higher rate would also be used for purposes
of calculating the reasonable cost of routine Medicare SNF days, to be
subtracted from total routine costs under the carve-out method. For all
non-Medicare swing-bed days, the amount subtracted is based on the
average statewide rate paid for routine services in NFs under the State
Medicaid plan during the prior calendar year, adjusted to approximate
the average NF rate for the current calendar year. (The NF rate is used
for non-Medicare covered swing-bed days because such services may
encompass services that were formerly known as ICF and SNF-type
services.)
Definitions
As discussed above, effective for services furnished on or after
October 1, 1990, the terms SNFs and ICFs were no longer to be used for
the purpose of certifying a facility for the Medicaid program, in
accordance with the provisions of OBRA 1987. Instead, they were
replaced by the term ``nursing facility'' (NF). Effective October 1,
1990, extended care services furnished by swing-bed hospitals to
Medicaid and to other non-Medicare patients have been referred to as
NF-type services.
To reflect the above provisions, we are making changes to the
definitions in Sec. 413.53(b) by (1) Revising the definition of
``average cost per diem for general routine services''; (2) removing
the definition of ``ICF-type services;'' (3) adding a definition of
``nursing facility (NF)-type services;'' and (4) revising the
definition of ``SNF-type services.''
III. Analysis of and Responses to Public Comments
In response to the April 22, 1996 proposed rule, we received one
item of correspondence from the American Health Care Association. The
Association essentially supports the proposed rule in that it modifies
the regulations to conform with policies that have been in existence
since 1990, and that are contained in the Provider Reimbursement
Manual. However, the commenter points out that rural hospitals with
more than 49 beds but less than 100 beds are subject to an additional
payment limitation. The Medicare payment for SNF services by the
hospital may not be made for more than five days (excluding weekends
and holidays), after a bed in a SNF becomes available in the geographic
region, unless the patient's physician certifies within the five-day
period that the transfer is not medically appropriate. The commenter is
concerned that hospitals are not strictly adhering to the five-day
rule.
Response: We are not currently aware of any hospital that is
violating the five-day rule. However, the hospital is subject to a
periodic certification survey. It is during this survey that a sampling
of the records for swing-bed patients is examined to ensure that the
five-day rule is being followed correctly. Violators would endanger
their continued certification as a swing-bed facility.
In addition to this periodic certification survey, if someone is
aware that a hospital is violating the five-day rule, he or she can
contact the State Department of Licensure and Certification and request
that a complaint survey be done. A complaint survey is done within a
matter of weeks or months, which is much faster than the three to six
years that a periodic one takes.
IV. Provisions of the Final Regulations
This final rule incorporates the provisions of the proposed rule.
The rates applicable to calendar year 1996 were not published in the
proposed rule, but have been published in the Provider Reimbursement
Manual. For the convenience of the reader, we are including them as
Table G above in this final rule. Subsequent updates will be provided
in the Provider Reimbursement Manual.
V. Impact Statement
For final rules such as this, we generally prepare a regulatory
flexibility analysis that is consistent with the Regulatory Flexibility
Act (RFA) (5 U.S.C. 601 through 612). For purposes of a RFA, States and
individuals are not considered small entities. However, providers are
considered to be small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory flexibility analysis for any final rule that may have a
significant impact on the operations of a substantial number of small
rural hospitals. Such an analysis must conform to the provisions of
section 604 of the RFA. With the exception of hospitals located in
certain rural counties adjacent to urban ares, for purposes of section
1102(b) of the Act, we define a small rural hospital as a hospital that
is located outside of a Metropolitan Statistical Area and has fewer
than 50 beds.
In accordance with the provisions of section 1883 of the Act, as
amended by section 4008(j) of OBRA 1990, this final rule revises the
regulations to incorporate a new methodology for payment of routine
extended care services provided in a swing-bed hospital. As the statute
specifies, Medicare payment for these services is determined based on
the average rate per patient day paid by Medicare for these same
services provided in freestanding skilled nursing facilities (SNFs) in
the region in which the hospital is located, during the most recent
year for which cost reporting data are available. This final rule also
provides that the reasonable cost for these services is the higher of
the reasonable cost rates in effect for the current calendar year or
for the previous calendar year.
In addition to the changes mandated by section 4008(j) of OBRA 1990
regarding payment for routine extended care services, we are changing
to the out method of determining routine inpatient hospital costs of
swing-bed hospitals. As discussed above, with the enactment of OBRA
1987, the distinction between SNFs and ICFs was eliminated under the
Medicaid program. Thus, the carve-out out method as described in
Sec. 413.53(a)(2) for computing costs associated with routine SNF and
ICF-type services cannot be used. This final rule codifies in
regulations existing policy concerning the carve-out out method as set
forth in section 2230.5B of the Provider Reimbursement Manual.
As noted above, the major provisions of this final rule are
required by section 1883 of the Act, as amended by section 4008(j) of
OBRA 1990. Thus, a majority of the costs associated with these final
rules are the result of legislation, and this rule, in and of itself,
has little or no independent effect or burden. Although we are unable
to provide a quantifiable estimate of impact, we note that the only
discretionary aspect of this rule is to set forth in regulations our
current policy concerning the carve-out out method. Codifying this
existing policy would have no economic impact.
Thus, we have determined, and we certify, that this final rule does
not have a significant impact on the operations of a substantial number
of small entities or on small rural hospitals. Therefore, we have not
prepared a regulatory flexibility analysis or an analysis of the
effects of this rule on small rural hospitals.
[[Page 51616]]
In accordance with the provisions of Executive Order 12866, this
final rule was not reviewed by the Office of Management and Budget.
This is not a major rule as defined by U.S.C. 804(2).
V. Collection of Information Requirements
This document does not impose information collection and
recordkeeping requirements. Consequently, it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
List of Subjects in 42 CFR Part 413
Health facilities, Kidney diseases, Medicare, Puerto Rico,
Reporting and recordkeeping requirements.
PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES
1. The authority citation for part 413 continues to read as
follows:
Authority: Secs. 1102, 1861(v)(1)(A), and 1871 of the Social
Security Act (42 U.S.C. 1302, 1395x(v)(1)(A), and 1395hh).
Subpart D--Apportionment
2. Section 413.53 is amended by revising paragraph (a)(1)(ii)(C)
and (a)(2); under paragraph (b), definition of ``average cost per diem
for general routine services'', paragraph (2) is revised; the
definition of ``ICF-type services'' is removed; a new definition of
``nursing facility (NF) type services'' is added; and the definition of
``SNF-type services'' is revised, to read as follows:
Sec. 413.53 Determination of cost of services to beneficiaries.
(a) Principle. * * *
(1) Departmental method
* * * * *
(ii) Exception: Indirect cost of private rooms. For cost reporting
periods starting on or after October 1, 1982, except with respect to a
hospital receiving payment under part 412 of this chapter (relating to
the prospective payment system), the additional cost of furnishing
services in private room accommodations is apportioned to Medicare only
if these accommodations are furnished to program beneficiaries, and are
medically necessary. To determine routine service cost applicable to
beneficiaries--
* * * * *
(C) Effective October 1, 1990, do not include private rooms
furnished for SNF-type and NF-type services under the swing-bed
provision in the number of days in paragraphs (a)(1)(ii)(A) and (B) of
this section.
(2) Carve-out out method--(i) The carve-out out method is used to
allocate hospital inpatient general routine service costs in a
participating swing-bed hospital, as defined in Sec. 413.114(b). Under
this method, effective for services furnished on or after October 1,
1990, the reasonable costs attributable to the inpatient routine SNF-
type and NF-type services furnished to all classes of patients are
subtracted from total inpatient routine service costs before computing
the average cost per diem for inpatient routine hospital care.
(ii) The cost per diem attributable to the routine SNF-type
services covered by Medicare is based on the regional Medicare swing-
bed SNF rate in effect for a given calendar year, as described in
Sec. 413.114(c). The Medicare SNF rate applies only to days covered and
paid as Medicare days. When Medicare coverage runs out, the Medicare
rate no longer applies.
(iii) The cost per diem attributable to all non-Medicare swing-bed
days is based on the average statewide Medicaid NF rate for the prior
calendar year, adjusted to approximate the average NF rate for the
current calendar year.
(iv) The sum of total Medicare SNF-type days multiplied by the cost
per diem attributable to Medicare SNF-type services and the total NF-
type days multiplied by the cost per diem attributable to all non-
Medicare days is subtracted from total inpatient general routine
service costs. The cost per diem for inpatient routine hospital care is
computed based on the remaining inpatient routine service costs.
* * * * *
(b) Definitions. As used in this section--
* * * * *
Average cost per diem for general routine services means the
following:
* * * * *
(2) For swing-bed hospitals, the amount computed by--(i)
Subtracting the routine costs associated with Medicare SNF-type days
and non-Medicare NF-type days from the total allowable inpatient cost
for routine services (excluding the cost of services provided in
intensive care units, coronary care units, and other intensive care
type inpatient hospital units and nursery costs); and
(ii) Dividing the remainder (excluding the total private room cost
differential) by the total number of inpatient hospital days of care
(excluding Medicare SNF-type days and non-Medicare NF-type days of
care, days of care in intensive care units, coronary care units, and
other intensive care type inpatient hospital units; and newborn days;
but including total private room days).
* * * * *
Nursing facility (NF)-type services, formerly known as ICF and SNF-
type services, are routine services furnished by a swing-bed hospital
to Medicaid and other non-Medicare patients. Under the Medicaid
program, effective October 1, 1990, facilities are no longer certified
as SNFs or ICFs but instead are certified only as NFs and can provide
services as defined in section 1919(a)(1) of the Act.
* * * * *
Skilled nursing facility (SNF)-type services are routine services
furnished by a swing-bed hospital that would constitute extended care
services if furnished by an SNF. SNF-type services include routine SNF
services furnished in the distinct part SNF of a hospital complex that
is combined with the hospital general routine service area cost center
under Sec. 413.24(d)(5). Effective October 1, 1990, only Medicare
covered services are included in the definition of SNF-type services.
* * * * *
Subpart F--Specific Categories of Costs
3. In Sec. 413.114, paragraphs (c)(1) and (2) are removed,
paragraph (c)(3) is redesignated as paragraph (c)(2), and a new
paragraph (c)(1) is added to read as follows:
Sec. 413.114 Payment for posthospital SNF care furnished by a swing-
bed hospital.
* * * * *
(c) Principle. The reasonable cost of posthospital SNF care
furnished by a swing-bed hospital is determined as follows:
(1) The reasonable cost of routine SNF services is based on the
average Medicare rate per patient day for routine services provided in
freestanding SNFs in the region where the swing-bed hospital is
located. The rates are calculated using the regions as defined in
section 1886(d)(2)(D) of the Social Security Act. The rates are based
on the most recent year for which settled cost reporting period data
are available, increased in a compounded manner, using the increase
applicable to the SNF routine cost limits, up to and including the
calendar year for which the rates are in effect. If the current
Medicare swing-bed rate for routine extended care services furnished by
a swing-bed
[[Page 51617]]
hospital during a calendar year is less than the rate for the prior
calendar year, payment is made based on the prior calendar year's rate.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance;) Catalog of Federal Domestic
Assistance Program No. 93.778, Medical Assistance Program)
Dated: September 3, 1996.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 96-25282 Filed 10-2-96; 8:45 am]
BILLING CODE 4120-01-P