[Federal Register Volume 62, Number 190 (Wednesday, October 1, 1997)] [Notices] [Pages 51536-51550] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 97-25983] [[Page 51535]] _______________________________________________________________________ Part VI Department of Health and Human Services _______________________________________________________________________ Health Care Financing Administration _______________________________________________________________________ Medicare Program; Adjustments to Cost Limits for Skilled Nursing Facility Inpatient Routine Service Costs; Notice Medicare Program; Schedules of Limits and Prospectively Determined Payment Rates for Skilled Nursing Facility Inpatient Routine Service Costs; Notice Federal Register / Vol. 62, No. 190 / Wednesday, October 1, 1997 / Notices [[Page 51536]] DEPARTMENT OF HEALTH AND HUMAN SERVICES Health Care Financing Administration [BPD-895-FNC] RIN 0938-AL15 Medicare Program; Schedules of Limits and Prospectively Determined Payment Rates for Skilled Nursing Facility Inpatient Routine Service Costs AGENCY: Health Care Financing Administration (HCFA), HHS. ACTION: Final notice with comment period. ----------------------------------------------------------------------- SUMMARY: This final notice with comment period sets forth an updated schedule of limits on skilled nursing facility (SNF) routine service costs for which payment may be made under the Medicare program and sets forth an updated schedule of payment rates for low Medicare volume SNFs that elect to receive prospectively determined payment rates for routine service costs. Section 1888(a) of the Social Security Act (the Act) requires that the Secretary update the per diem cost limits for SNF routine service costs for cost reporting periods beginning on or after October 1, 1995, and every 2 years thereafter. In addition, section 1888(d)(4) of the Act requires the Secretary to establish and publish prospectively determined payment rates at least 90 days prior to the beginning of the Federal fiscal year (FY) to which such rates are to be applied. DATES: Effective date: The schedule of cost limits and the schedule of prospectively determined payment rates are effective for cost reporting periods beginning on or after October 1, 1997. Comment date: Written comments will be considered if we receive them at the appropriate address, as provided below, no later than 5:00 p.m. on December 1, 1997. ADDRESSES: Mail written comments (an original and three copies) to the following address: Health Care Financing Administration, Department of Health and Human Services, Attention: BPD-895-NC, P.O. Box 7517, Baltimore, MD 21244-0517. If you prefer, you may deliver your written comments (one original and three copies) to one of the following addresses: Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW, Washington, DC 20201, or Room C5-09-26, 7500 Security Boulevard, Baltimore, MD 21244- 1850. Comments may also be submitted electronically to the following E- mail address: [email protected]. E-mail comments must include the full name and address of the sender and must be submitted to the referenced address in order to be considered. All comments must be incorporated in the E-mail message because we may not be able to access attachments. Electronically submitted comments will be available for public inspection at the Independence Avenue address, below. Because of staffing and resource limitations, we cannot accept comments by facsimile (FAX) transmission. In commenting, please refer to file code BPD-895-NC. Comments received timely will be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, in Room 309-G of the Department's offices at 200 Independence Avenue, SW, Washington, DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m. (phone: (202) 690-7890). Copies: To order copies of the Federal Register containing this document, send your request to: New Orders, Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date of the issue requested and enclose a check or money order payable to the Superintendent of Documents, or enclose your Visa or Master Card number and expiration date. Credit card orders can also be placed by calling the order desk at (202) 512-1800 or by faxing to (202) 512- 2250. The cost for each copy is $8.00. As an alternative, you can view and photocopy the Federal Register document at most libraries designated as Federal Depository Libraries and at many other public and academic libraries throughout the country that receive the Federal Register. FOR FURTHER INFORMATION CONTACT: Robert Kuhl, (410) 786-4597. SUPPLEMENTARY INFORMATION: I. Background A. Authority for Establishing Cost Limits and Prospectively Determined Payment Rates 1. Cost Limits Sections 1861(v)(1)(A) and 1888 of the Act authorize the Secretary to set limits on allowable costs incurred by a provider of services for which payment may be made under Medicare. These limits are based on estimates of the costs necessary for the efficient delivery of needed health services. Section 1888(a) of the Act directs the Secretary to set limits on per diem inpatient routine service costs for hospital- based and freestanding SNFs by urban or rural area. Implementing regulations appear at 42 CFR 413.30. 2. Prospectively Determined Payment Rates Most SNFs are paid on a reasonable cost basis up to the routine service per diem cost limits described in the previous paragraph. However, under section 1888(d) of the Act, for cost reporting periods beginning on or after October 1, 1986, a SNF with fewer than 1,500 Medicare covered days in a given cost reporting period may choose to receive payment based on a prospectively determined payment rate in the subsequent cost reporting period. Implementing regulations appear at 42 CFR Part 413, Subpart I. The rates for the low Medicare volume SNFs are established on a per diem basis and include payment for the cost of furnishing general inpatient routine services and capital-related costs associated with routine services. We are required to publish annual revisions to the rates at least 90 days before the beginning of the Federal FY to which the revised rates apply. In addition, under Sec. 413.312(a)(1)(i), we are required to base the revised rates on the same cost data used to develop the cost limits that are in effect for that Federal FY. B. Previously Published Schedules of and Updates to Cost Limits and Rates 1. Effective for FY 1993 We published a final notice with comment period on October 7, 1992 (57 FR 46177) announcing a schedule of limits for freestanding and hospital-based SNFs effective for cost reporting periods beginning in FY 1993. In December 1992, we published section 2828 of the Medicare Provider Reimbursement Manual (HCFA Pub. 15-1), Transmittal Number 370, establishing rates effective for cost reporting periods beginning in FY 1993. The same cost report, wage, and inflation data were used to develop these cost limits and rates. The cost reports used to develop the FY 1993 cost limits and rates covered cost reporting periods ending on or after June 30, 1989, through May 31, 1990, for freestanding SNFs and on or after October 31, 1988, through September 30, 1989, for hospital-based SNFs. The 1988 hospital wage data and Metropolitan Statistical Area (MSA) designations, based on pre-1990 census data as described in the April 1, 1991, notice (56 FR 13319), were used to develop the wage index that was applicable to the FY 1993 cost limits and rates. It has been our longstanding [[Page 51537]] policy not to make changes in the cost report data or recognize changes in the wage and MSA data until we publish a Federal Register notice announcing an update to the SNF cost limits. 2. Effective for FY 1994 and FY 1995 Sections 13503(a)(1) and 13503(b) of the Omnibus Budget Reconciliation Act of 1993 (OBRA `93) (Public Law 103-66) required that there be no changes in the FY 1993 SNF routine cost limits and rates (including adjustments for changes in the wage index or applicable MSAs) established under section 1888 of the Act for cost reporting periods beginning during Federal FY 1994 and FY 1995. This 2-year freeze on the cost limits and rates resulted in a savings to the Medicare program. These provisions of OBRA `93 were implemented, for cost limits, in a final notice with comment period on January 6, 1994 (59 FR 762) and, for rates, in section 2828 L of the Provider Reimbursement Manual (Transmittal 374, December 1993). 3. Effective for FY 1996 Section 13503(a)(2) of OBRA '93 amended section 1888(a) of the Act and required that an update to the cost limits be provided for cost reporting periods beginning on or after October 1, 1995 (FY 1996), and every 2 years thereafter. However, during the FY 1996 legislative period, reconciliation legislation contained a provision to preserve the savings from the 2-year freeze by inflating the FY 1993 cost limits and rates to cost reporting periods beginning in FY 1996, except that inflation for FY 1994 and FY 1995 would not have been recognized. We did not believe that it would be appropriate to issue the required update to the cost limits and rates for cost reporting periods beginning in FY 1996 until the prospect of this provision becoming law was known. We determined in April 1996 (7 months into FY 1996) that the FY 1996 legislative period would not produce a law that included this provision. On May 3, 1996, we expedited the issuance of the required update to the FY 1996 cost limits and rates through a memorandum to all Associate Regional Administrators (ARAs) for Medicare. We instructed the ARAs to notify the intermediaries to implement this update. (This memorandum also included corrections to erroneous projected rates of inflation used to develop the FY 1990 and FY 1993 cost limits.) This memorandum contained the monthly inflation factors that were needed to extend the FY 1993 cost limits and rates to cost reporting periods beginning in FY 1996. Our policy regarding the methodology used to provide the required update to the limits and rates for FY 1996 conformed with the update methodology described below Table IV of the October 7, 1992 notice, which extends the cost reporting periods affected by the FY 1993 limits by computing monthly inflation factors beyond those shown in Table IV. Intermediaries were using this methodology to compute limits and rates between October 1, 1995, and the issuance of the aforementioned memorandum. We explained that this update methodology would be used until a new schedule of limits or other provision is issued. 4. Effective for FY 1997 Section 1888(a) of the Act did not require us to provide an update to the cost limits for FY 1997. Therefore, we trended the FY 1996 cost limits and rates to cost reporting periods beginning in FY 1997 using the latest available rates of inflation. On August 22, 1996, we issued a memorandum to all ARAs for Medicare to notify the intermediaries of the cost limits and monthly inflation factors for cost reporting periods beginning in FY 1997. On September 3, 1996, we published a final notice with comment period (61 FR 46466) announcing the schedule of rates effective for cost reporting periods beginning in FY 1997. That notice represented the first schedule of rates published in the Federal Register after the regulations implementing section 1888(d) were issued on July 21, 1995 (60 FR 37590). C. Cost Limits and Rates Effective for FY 1998 This notice with comment period announces the schedule of cost limits and rates effective for cost reporting periods beginning in FY 1998, as required under section 1888(a) of the Act. To meet the update requirement under section 1888(a), we trended the FY 1997 cost limits and rates to cost reporting periods beginning in FY 1998 using the latest rates of inflation. There is, however, increasing concern that post-1990 census data have not been used in determining MSA designations and wage index values since our last Federal Register notice was published on October 7, 1992. We believe that the numerous changes to the MSA designations since we published the FY 1993 cost limits and rates should be recognized in determining the appropriate wage index values used in this notice. This notice presents the opportunity to implement these changes to the wage data and to the MSA designations and conforms with our longstanding policy to make such changes only in a Federal Register notice. This is the first time we have published a combined schedule of cost limits and rates. Combining the cost limits and rates in one notice is more economical in that they both utilize the same cost report data, wage index values, and rates of inflation. In addition, under section 1888(d) of the Act, an individual provider's prospectively determined rate may not exceed its applicable cost limit (see Section III.D. of this notice). This notice, containing cost limits and rates for cost reporting periods beginning in FY 1998, allows a provider to more conveniently determine its individual rate than in previous years. II. Update of the SNF Schedule of Limits and the Schedule of Prospectively Determined Rates Under the authority cited in section I. of this notice, this final notice with comment period sets forth for cost reporting periods beginning in FY 1998: (1) an updated schedule of limits on SNF routine service costs for which payment may be made under the Medicare program; and (2) an updated schedule of prospectively determined payment rates for low Medicare volume SNFs that have elected to receive prospective payments for routine service costs. The cost limits set forth in Table I and the rates set forth in Tables II and III of this notice are based on the FY 1997 cost limits and rates, respectively, trended to cost reporting periods beginning in FY 1998, using the most recent projections of the rates of inflation or increase in the costs included in the SNF market basket. We are continuing to use the HCFA hospital wage data to account for area wage differences. This is necessary because industry-specific data needed to calculate a wage index for SNFs are not available. Under section 106 of the Social Security Act Amendments of 1994 (Public Law 103-432), the Secretary was required to begin collecting data no later than October 31, 1995, on employee compensation and paid hours of employment in SNFs for the purpose of constructing a SNF wage index adjustment to the routine service cost limits. Until this data collection effort is completed and the data are analyzed, we believe that hospital wage data provide the best measure of comparable wages that would also be paid by SNFs, since hospitals and SNFs generally compete in the same labor [[Page 51538]] market for employees. We believe that the use of the hospital wage data results in an appropriate adjustment to the labor-portion of the costs based on an appropriate wage index as required under section 1888(a) of the Act. For the schedule of cost limits and rates effective with this notice, we are using wage index values that are based on hospital wage data from cost reporting periods beginning in FY 1993--the most recent hospital wage data in effect before the effective date of this notice and the most recent MSA designations. Accordingly, with the exception of those wage index values that may be affected by recent corrections to the 1993 wage data, the wage index values used in this notice are based on the same wage data as are used to compute the wage index values for the hospital prospective payment system for discharges occurring on or after October 1, 1996. (A detailed description of the methodology used to compute the hospital prospective payment wage index is set forth in the final rule published in the Federal Register on August 30, 1996 (61 FR 46166).) While these wage index values are based on the MSA designations in effect prior to the effective date of this notice, they do not, however, reflect changes in geographic classification for certain rural hospitals required under section 1886(d)(8)(B) of the Act or geographic reclassifications based on decisions of the Medicare Geographic Classification Review Board or the Secretary under section 1886(d)(10) of the Act. Section 1886 of the Act applies to hospitals only. Accordingly, as in the past, it would not be appropriate to recognize changes in the geographic classification of hospitals for purposes of computing the SNF cost limits even though an SNF may be part of a medical complex that includes a reclassified hospital. III. Provisions of the SNF Schedule of Cost Limits and Prospectively Determined Payment Rates The schedule of cost limits set forth below applies to all SNFs, including those low Medicare volume SNFs that are eligible to receive the optional prospectively determined payment rate for routine services. Under Sec. 413.314(d), the operational portion of an SNF's prospectively determined payment rate, excluding capital-related costs, cannot exceed its actual routine service cost limit (without regard to exceptions, exemptions, or retroactive adjustments) in effect at the time of the election to be paid a prospectively determined payment rate. The eligibility requirements for receiving prospectively determined payment rates are specified in subpart I of part 413. These schedules of cost limits and rates provide for the following: A. Separate Groupings for Labor-Related and Nonlabor-Related Components of Per Diem Routine Service Costs We are retaining the same groupings for the labor-related and nonlabor-related components of per diem routine service costs as follows: 1. As described in the October 7, 1992 notice for the FY 1993 cost limits, separate group means were computed for the labor-related and nonlabor-related components for hospital-based and freestanding SNFs in accordance with the MSA or non-MSA designation in effect with that notice. Each group mean was then multiplied by 112 percent. 2. As described in the September 3, 1996 notice for the FY 1997 rates, separate group means were computed for labor-related, nonlabor- related, and capital-related components in accordance with the SNF's census region and MSA or non-MSA designation in effect with that notice. Each group mean was then multiplied by 105 percent. B. Adjustment of SNF Labor-Related Data by the Wage Index We are using a wage index based on 1993 hospital wage data and post-1990 MSA designations, as discussed in section II of this notice, to adjust the labor-related portion of the cost limits and rates contained in this notice for area wage differences. C. Use of SNF Market Basket We are trending the FY 1997 cost limits and rates to FY 1998 using projected cost increases by applying the SNF market basket index. This market basket index is used to adjust the SNF cost data to reflect cost increases occurring between the cost reporting periods represented in the data collection and the midpoints of the cost reporting periods to which the cost limits and rates apply. The market basket index is comprised of the most commonly used categories of SNF routine service expenses. The categories are based primarily on those used by the National Center for Health Statistics in its National Nursing Home Surveys. The categories of expenses are weighted according to the estimated proportion of SNF routine service costs attributable to each category. A detailed description of the market basket index is described in the October 7, 1992 notice for cost limits and the September 3, 1996 notice for the rates. In developing the market basket index, we obtained historical and projected (estimated) rates of change in the price of goods and services in each category. For cost limit purposes only, estimated rates of change may be revised, retroactively, based on actual (final) rates of change. As described in all previous schedules of cost limits, if the final rate of change in the market basket index for a calendar year differs from the estimated rate of change by at least 0.3 percentage points, we will adjust the limits. Elsewhere in this issue of the Federal Register, we are proposing in a separate notice to eliminate this provision to adjust the limits. D. Application of the Adjusted Hospital Wage Index to the Labor-Related Costs In developing the FY 1997 cost limits and rates, we applied the wage index to five categories of labor-related costs: wages, employee benefits, health service costs, business service costs, and miscellaneous costs. We continue to use this methodology in computing the FY 1998 cost limits and rates. For purposes of applying the wage index, employee benefits include such items as FICA tax, health insurance, life insurance, facility contributions to employee retirement funds, and all other compensation that the SNF records in the ``employee health and welfare'' cost center on its Medicare cost report. Health service costs include the costs of physician services that are purchased under arrangement from outside sources. Business service costs include costs of banking, contract laundry, telephone, and other services that SNFs purchase at retail from outside suppliers. Miscellaneous costs include various types of routine operating costs not allocated to any other category of the market basket. E. Per Diem Add-On to the Cost Limits and Prospective Rates Effective for Cost Reporting Periods Beginning in FY 1998 In the October 7, 1992 notice and the September 3, 1996 notice, we described a per diem add-on to the limits and rates, respectively. This per diem add-on was developed to take into account the costs associated with the additional requirements placed on SNFs by the nursing home reform provisions in section 1819 of the Act, including conducting nurse aide training and competency evaluation programs, and to recognize the additional costs due to the universal precaution requirements of the Occupational Safety and Health Administration (OSHA). [[Page 51539]] The per diem add-on effective for FY 1997 will be trended to cost reporting periods beginning in FY 1998, using the latest market basket index. For cost limit purposes, the per diem add-on is $2.27 for cost reporting periods beginning on or after October 1, 1997. For rate purposes, the per diem add-on is $2.13 for cost reporting periods beginning on or after October 1, 1997. When HCFA updates the SNF cost limits and prospective rates using a later data base that includes the costs of complying with these additional requirements, a per diem add-on will no longer be needed because those updated limits and rates would include these costs. The following applies to the schedule of cost limits only: F. Setting of Freestanding SNF Limits The FY 1997 cost limits for freestanding SNFs were set at 112 percent of the average labor-related and average nonlabor-related costs of each group, as described in the October 7, 1992 notice. This methodology is prescribed by section 1888(a) of the Act. We continue to use this methodology to set the freestanding SNF cost limits contained in this notice. G. Setting of Hospital-Based SNF Limits The FY 1997 cost limits for hospital-based SNFs were set at the freestanding SNF limit plus 50 percent of the difference between the freestanding SNF limit and 112 percent of the mean per diem routine service costs of hospital-based SNFs. This methodology for setting hospital-based SNF cost limits was described in the October 7, 1992 notice and the January 6, 1994 notice. This methodology is prescribed by sections 1888(a) and (b) of the Act. We continue to use this methodology to set the hospital-based SNF cost limits contained in this notice. H. Cost-of-Living Adjustments to the Limits for Alaska, Hawaii, Puerto Rico, and the Virgin Islands To avoid disadvantaging SNFs located in Alaska, Hawaii, Puerto Rico, and the Virgin Islands, we will continue to provide a cost-of- living adjustment to the limits for these areas. This is an adjustment of the nonlabor-related component of the limit that applies to these areas, based on the amount of the most recently determined cost-of- living differentials developed by the Office of Personnel Management. Since we adjust the labor-related component by the applicable wage index as discussed in section III.D. of this notice, this cost-of- living adjustment will apply only to the nonlabor-related component. I. Exception to Cost Limits A SNF may request an exception to the cost limits under the provisions of Sec. 413.30(f). The SNF must make the request to the appropriate Medicare fiscal intermediary in accordance with section 2530 of the Provider Reimbursement Manual (HCFA Pub. 15-1). An adjustment may be granted if the costs in excess of the limit are reasonable, attributable to the circumstances specified in Sec. 413.30(f)(1) through (f)(8), separately identified by the SNF, and verified by the intermediary. J. Use of Classification System for the Limits The classification system we use is based on whether a SNF is located within a MSA or in a New England County Metropolitan Area (NECMA) based on standards published in the Federal Register on March 30, 1990 (55 FR 12154), using Bureau of the Census data or Bureau of Census estimates made after 1990. The latest standards for developing MSAs are the ones contained in the March 30, 1990 Federal Register. The following applies to the schedule of rates only: K. Use of Classification System for the Rates We will retain the classification system based on grouping SNFs by census regions and by urban or rural area designation within the region. As required by sections 1883(d)(3) and 1886(d)(2)(D) of the Act, the term ``region'' means one of the 9 census divisions, comprising the 50 States and the District of Columbus, established by the Bureau of Census for Statistical and reporting purposes. The term ``urban rate'' means an area within a MSA (as defined by the Office of Management and Budget (OMB), with exceptions for certain NECMAs, as described in a notice published in the Federal Register on April 1, 1991 (56 FR 13319)). The term ``rural area'' means an area outside such an area (MSA). IV. Methodology for Determining Per Diem Routine Service Cost Limits and Low Volume Prospective Payment Rates A. Development of Base Cost Limits and Rates As discussed in section I of this notice, we trended the FY 1997 cost limits and rates using the latest market basket index, as discussed in section III.C. of this notice. The annual percentage increases in the market basket over the previous year that we used for this projection in this notice are: 1993................................................................3.7 1994................................................................3.4 1995................................................................2.9 1996 ...........................................................1 2.7 1997 ...........................................................1 3.2 1998 ...........................................................1 3.4 1999 ...........................................................1 3.6 1 Forecasted increase. B. Calculation of SNF Limit 1. Components of Limit For each freestanding group, the freestanding limits for FY 1998 are shown in Table I of this notice. We used the computation below to determine the hospital-based cost limits shown in Table I. Cost Limit Data--Hospital-Based SNFs for Cost Reporting Periods Beginning on or After October 1, 1997 ------------------------------------------------------------------------ Rural (non- 112 percent of hospital-based mean cost Urban (MSA) MSA) ------------------------------------------------------------------------ Labor......................................... $166.13 $143.18 Nonlabor...................................... 34.97 23.58 ------------------------- Total..................................... 201.10 166.76 ------------------------------------------------------------------------ [[Page 51540]] Calculation of 50 Percent of Difference Between 112 Percent of Hospital- Based Mean Cost and Freestanding Limit ------------------------------------------------------------------------ Labor Nonlabor ------------------------------------------------------------------------ Urban (MSA) ------------------------------------------------------------------------ 112 Percent of Hospital-Based Mean Cost....... $166.13 $34.97 Freestanding Limit (Table I).................. -91.23 -19.59 Difference................................ 74.90 15.38 50 Percent of Difference.................. 37.45 7.69 Plus Freestanding Limit................... +91.23 +19.59 Hospital-Based Limit (MSA).................... 128.68 27.28 ------------------------------------------------------------------------ Rural (Non-MSA) ------------------------------------------------------------------------ 112 Percent of Hospital-Based Mean Cost....... $143.18 $23.58 Freestanding Limit (Table I).................. -92.64 -15.64 Difference................................ 50.54 7.94 50 Percent of Difference.................. 25.27 3.97 Plus Freestanding Limit................... +92.64 +15.64 Hospital-Based Limit (Non-MSA)................ 117.91 19.61 ------------------------------------------------------------------------ 2. Adjustment of Labor-Related Component by Wage Index To arrive at a labor-adjusted limit for each SNF, we multiply the labor-related component of the limit for the SNF's group by the wage index developed from wage levels for hospital workers in the area in which the SNF is located (see Tables IV and V of this notice). The adjusted limit that applies to a SNF is the sum of the nonlabor-related component, plus the adjusted labor-related component, plus the OBRA/ OSHA per diem add-on discussed in section III.E. of this notice. Example--Calculation of Adjusted Limit for a Freestanding SNF Located in Dallas, Texas: Labor-Related Component..................................... $ 91.23 (Table I). Wage Index.................................................. x 0.9729 (Table IV). ----------- Adjusted Labor Component.................................... 88.76 Nonlabor-Related Component.................................. +19.59 (Table I). OBRA/OSHA Per Diem Add-On................................... +2.27 (Sec. III.E.). ----------- Adjusted Limit.............................................. 110.62 3. Adjustment for Cost Reporting Period If a facility has a cost reporting period beginning in a month after October 1, 1997, the intermediary increases the limit that otherwise would apply to the SNF by the factor from Table VI of this notice that corresponds to the month and year in which the cost reporting period begins. Each factor represents the compounded monthly increase derived from the projected annual increase in the market basket index and is used to account for inflation in costs that occur after the date on which the limits are effective. Example: The following is a computation of a revised limit for the previously cited SNF that has a cost reporting period that begins January 1, 1998. The base adjusted limit for the SNF is $110.62. The revised limit applicable to its cost reporting period $111.56, is computed as follows: Individual SNF Adjusted Base Limit........................... $110.62 Adjustment Factor from Table V............................... x 1.0084 6 ---------- Revised Limit................................................ 111.56 If a facility uses a cost reporting period that is not 12 months in duration, a special adjustment factor will be calculated. This is necessary because projections are computed to the midpoint of a cost reporting period and the adjustment factors in Table VI of this notice are based on an assumed 12-month reporting period. For cost reporting periods of other than 12 months, the calculation is done for the midpoint of the specific cost reporting period. The SNF's intermediary will obtain this adjustment factor from HCFA Central Office. C. Calculation of the Routine Operating Portion of the Rates. 1. Adjustment of Labor-Related Component by Wage Index a. Urban SNFs. To arrive at a labor adjusted component for the rates, we multiply the labor-related component of the rate for the SNF's region (Table II of this notice) by the wage index developed from wage levels for hospital workers in the area in which the SNF is located (Table IV of this notice). b. Rural SNFs. To arrive at a labor adjusted component for the rates, we multiply the labor-related rate for the SNF's region (Table III of this notice) by the wage index developed from wage levels for hospital workers in the state in which the SNF is located (Table V of this notice). 2. Non-Labor-Related and OBRA/OSHA Per Diem Add-on The adjusted routine operating portion of the rate that applies to a SNF is the sum of the nonlabor-related component, plus the labor adjusted component, plus the OBRA/OSHA per diem add-on discussed in section III.E. of this notice. [[Page 51541]] 3. Adjustment for Cost Reporting Period If a facility has a cost reporting period beginning in a month after October 1, 1997, the intermediary increases the adjusted routine operating portion of the rate that otherwise apply to the SNF by the factor from Table VI of this notice that corresponds to the month and year in which the cost reporting period begins. Each factor represents the compounded monthly increase derived from the annual increase in the market basket index and is used to account for inflation in costs that occur after the date on which the prospective payment rates are effective. If a facility uses a cost reporting period that is not 12 months in duration, a special adjustment factor is calculated. This is necessary because market basket increases are computed to the midpoint of a cost reporting period and the adjustment factors in Table VI of this notice are based on an assumed 12-month cost reporting period. For cost reporting periods of other than 12 months, the calculation is done for the midpoint of the specific cost reporting period. The SNF's intermediary obtains this adjustment factor from the HCFA Central Office. D. Comparison of Provider's Prospective Payment Rate With Provider's Cost Limit Below is an example of the calculation of the prospectively determined payment rate for a provider, including a comparison of the adjusted routine operating portion of the rate with the applicable routine operating cost limit applicable to the specific provider. The capital-related component of the rate is added to the lower of the SNF's specific cost limit or its adjusted routine operating portion of the rate to arrive at the provider's actual prospectively determined payment rate. Example: In this case, the adjusted cost limit is less than the adjusted rate for a freestanding SNF located in Providence, Rhode Island (MSA Region 1), with a cost reporting period beginning January 1, 1998. Therefore, the prospectively determined payment rate for this SNF is the adjusted limit plus the capital-related component of the rate ($134.93). ------------------------------------------------------------------------ Labor- Non-labor Capital- related related related component component component ------------------------------------------------------------------------ Limit (Table I).................. $91.23 $19.59 ........... Rate (Table II).................. 120.13 22.91 $10.00 ------------------------------------------------------------------------ Calculation of Prospective Payment rate ---------------------------------------------------------------------------------------------------------------- Limit Rate Rate source ---------------------------------------------------------------------------------------------------------------- Labor-Related Component...................... $91.23 $120.13 (Chart above). Wage Index................................... x 1.1092 x 1.1092 (Table IV). ---------------------------- Adjusted Labor Component..................... 101.19 133.25 ..................................... Non-Labor Component.......................... 19.59 22.91 (Chart above). OBRA/OSHA Add-on............................. +2.27 +2.13 (Sec III.E.). ---------------------------- Adjusted Limit/Rate.......................... 123.05 $158.29 ..................................... Cost Reporting Year Adjustment Factor........ x 1.00846 x 1.00846 (Table VI). ---------------------------- Revised Limit/Rate........................... 124.09 159.63 ..................................... Capital-Related Component.................... +10.00 (Chart above). -------------- Prospectively Determined Payment Rate........ 134.09 ..................................... ---------------------------------------------------------------------------------------------------------------- V. Schedule of Limits Under the authority of sections 1861(v)(1)(A) and 1888 of the Act, the following group per diem limits will apply to the adjusted SNF inpatient routine service costs paid for under Medicare for cost reporting periods beginning on or after October 1, 1997. Medicare fiscal intermediaries will compute the adjusted limits for SNFs using the methodology set forth in this notice and will notify each SNF of its applicable limit. These limits, as adjusted by the applicable wage indexes, cost reporting year adjustments, and adjusted by the OBRA/OSHA per diem add-on, will remain in effect for cost reporting periods beginning on or after October 1, 1997, until a new schedule of cost limits or other provision is issued. Table I.--SNF Group Limits [Cost Reporting Periods Beginning On or After 10/1/97] ------------------------------------------------------------------------ Labor- Non-labor * Location related related component component ------------------------------------------------------------------------ Freestanding: MSA Limit................................. $91.23 $19.59 Non-MSA Limit............................. 92.64 15.64 Hospital-Based: MSA Limit................................. 128.68 27.28 Non-MSA Limit............................. 117.91 19.61 ------------------------------------------------------------------------ * The nonlabor portion of the limits for SNFs located in the States of Alaska and Hawaii, the Commonwealth of Puerto Rico, and the Virgin Islands will be increased by the following cost-of-living adjustments: [[Page 51542]] Adjustment Area factor Alaska..................................................... 1.250 Hawaii: Oahu................................................... 1.225 Kauai.................................................. 1.175 Maui, Lanai and Molokai................................ 1.200 Hawaii (island)........................................ 1.150 Puerto Rico................................................ 1.100 Virgin Islands............................................. 1.125 Table II.--Prospective Rates--MSA Locations Effective October 1, 1997 ------------------------------------------------------------------------ Labor- Nonlabor- Capital- Region \1\ related related related ------------------------------------------------------------------------ 1. New England (CT, ME, MA, NH, RI, VT)......................... $120.13 $22.91 $10.00 2. Middle Atlantic (PA, NJ, NY).. 115.86 20.94 9.79 3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV)......... 103.86 16.70 9.81 4. East North Central (IL, IN, MI, OH, WI)..................... 98.70 16.40 9.18 5. East South Central (AL, KY, MS, TN)......................... 99.28 14.61 7.32 6. West North Central (IA, KS, MN, MO, NE, ND, SD)............. 105.87 17.59 10.23 7. West South Central (AR, LA, OK, TX)......................... 92.64 14.47 10.06 8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)..................... 110.22 18.83 13.04 9. Pacific (AK, CA, HI, OR, WA).. 100.30 20.56 8.40 ------------------------------------------------------------------------ \1\ There are 17 MSAs that have counties in two or more regions. For each of these MSAs, the region in which a majority of the SNFs are located determines the regional rate that is paid as shown below. This is the same methodology as that used to implement the requirements of section 1886(d)(2)(D) of the Act as they apply to the hospital prospective payment system. The MSAs are as follows: ------------------------------------------------------------------------ MSA Region ------------------------------------------------------------------------ Chattanooga, TN-GA......................................... 5 Cincinnati, OH-KY-IN....................................... 4 Columbus, GA-AL............................................ 3 Davenport-Rock Island-Moline, IA-IL........................ 4 Duluth-Superior, MN-WI..................................... 6 Evansville-Henderson, IN-KY................................ 4 Huntington-Ashland, WV-KY-OH............................... 3 Johnson City-Kingsport-Bristol, TN-VA...................... 5 La Crosse, WI-MN........................................... 4 Louisville, KY-IN.......................................... 5 Memphis, TN-AR-MS.......................................... 5 Minneapolis-St. Paul, MN-WI................................ 6 Parkersburg-Marietta, WV-OH................................ 3 St. Louis, MO-IL........................................... 6 Steubenville-Weirton, OH-WV................................ 4 Wheeling, WV-OH............................................ 3 Wilmington-Newark, DE-NJ-MD................................ 3 ------------------------------------------------------------------------ Table III.--Prospective Rates--Non-MSA Locations Effective October 1, 1997 ------------------------------------------------------------------------ Labor- Nonlabor- Capital- Region related related related ------------------------------------------------------------------------ 1. New England (CT, ME, MA, NH, RI, VT)......................... $129.68 $21.62 $10.58 2. Middle Atlantic (PA, NJ, NY).. 121.14 17.40 7.94 3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV)......... 114.52 15.56 9.19 4. East North Central (IL, IN, MI, OH, WI)..................... 108.02 15.08 8.28 5. East South Central (AL, KY, MS, TN)......................... 108.81 13.70 6.77 6. West North Central (IA, KS, MN, MO, NE, ND, SD)............. 111.41 14.83 6.66 7. West South Central (AR, LA, OK, TX)......................... 105.74 13.44 9.22 8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)..................... 110.40 16.18 8.36 9. Pacific (AK, CA, HI, OR, WA).. 123.54 20.74 10.16 ------------------------------------------------------------------------ [[Page 51543]] Table IV.--Wage Index for Urban Areas ------------------------------------------------------------------------ Wage Urban area (constituent counties or county equivalents) index ------------------------------------------------------------------------ 0040 Abilene, TX............................................ 0.8048 Taylor, TX 0060 Aguadilla, PR.......................................... 0.4237 Aguada, PR Aguadilla, PR Moca, PR 0080 Akron, OH.............................................. 0.9853 Portage, OH Summit, OH 0120 Albany, GA............................................. 0.8597 Dougherty, GA Lee, GA 0160 Albany-Schenectady-Troy, NY............................ 0.8624 Albany, NY Montgomery, NY Rensselaer, NY Saratoga, NY Schenectady, NY Schoharie, NY 0200 Albuquerque, NM........................................ 0.9344 Bernalillo, NM Sandoval, NM Valencia, NM 0220 Alexandria, LA......................................... 0.8119 Rapides, LA 0240 Allentown-Bethlehem-Easton, PA......................... 0.9992 Carbon, PA Lehigh, PA Northampton, PA 0280 Altoona, PA............................................ 0.9510 Blair, PA 0320 Amarillo, TX........................................... 0.8730 Potter, TX Randall, TX 0380 AK Anchorage, AK....................................... 1.3224 Anchorage, 0440 Ann Arbor, MI........................................... 1.1662 Lenawee, MI Livingston, MI Washtenaw, MI 0450 Anniston, AL........................................... 0.8023 Calhoun, AL 0460 Appleton-Oshkosh-Neenah, WI............................ 0.8890 Calumet, WI Outagamie, WI Winnebago, WI 0470 Arecibo, PR............................................ 0.4397 Arecibo, PR Camuy, PR Hatillo, PR 0480 Asheville, NC.......................................... 0.9334 Buncombe, NC Madison, NC 0500 Athens, GA............................................. 0.9408 Clarke, GA Madison, GA Oconee, GA 0520 Atlanta, GA............................................ 1.0033 Barrow, GA Bartow, GA Carroll, GA Cherokee, GA Clayton, GA Cobb, GA Coweta, GA DeKalb, GA Douglas, GA Fayette, GA Forsyth, GA Fulton, GA Gwinnett, GA Henry, GA Newton, GA Paulding, GA Pickens, GA Rockdale, GA Spalding, GA Walton, GA 0560 Atlantic City-Cape May, NJ............................. 1.1077 Atlantic City, NJ Cape May, NJ 0600 Augusta-Aiken, GA-SC................................... 0.8836 Columbia, GA McDuffie, GA Richmond, GA Aiken, SC Edgefield, SC 0640 Austin-San Marcos, TX.................................. 0.9254 Bastrop, TX Caldwell, TX Hays, TX Travis, TX Williamson, TX 0680 Bakersfield, CA........................................ 1.0189 Kern, CA 0720 Baltimore, MD.......................................... 0.9798 Anne Arundel, MD Baltimore, MD Baltimore City, MD Carroll, MD Harford, MD Howard, MD Queen Annes, MD 0733 Bangor, ME............................................. 0.9391 Penobscot, ME 0743 Barnstable-Yarmouth, MA................................ 1.3651 Barnstable, MA 0760 Baton Rouge, LA........................................ 0.8433 Ascension, LA East Baton Rouge, LA Livingston, LA West Baton Rouge, LA 0840 Beaumont-Port Arthur, TX............................... 0.8576 Hardin, TX Jefferson, TX Orange, TX 0860 Bellingham, WA......................................... 1.1317 Whatcom, WA 0870 Benton Harbor, MI...................................... 0.8506 Berrien, MI 0875 Bergen-Passaic, NJ..................................... 1.1785 Bergen, NJ Passaic, NJ 0880 Billings, MT........................................... 0.9086 Yellowstone, MT 0920 Biloxi-Gulfport-Pascagoula, MS......................... 0.8554 Hancock, MS Harrison, MS Jackson, MS 0960 Binghamton, NY......................................... 0.8822 Broome, NY Tioga, NY 1000 Birmingham, AL......................................... 0.9036 Blount, AL Jefferson, AL St. Clair, AL Shelby, AL 1010 Bismarck, ND........................................... 0.7923 Burleigh, ND Morton, ND 1020 Bloomington, IN........................................ 0.8652 Monroe, IN 1040 Bloomington-Normal, IL................................. 0.8990 McLean, IL 1080 Boise City, ID......................................... 0.9383 Ada, ID Canyon, ID 1123 Boston-Worcester Lawrence-Lowell-...................... 1.1613 Brockton,MA-NH Bristol, MA Essex, MA Middlesex, MA Norfolk, MA Plymouth, MA Suffolk, MA Worcester, MA Hillsborough, NH Merrimack, NH Rockingham, NH Strafford, NH 1125 Boulder-Longmont, CO................................... 0.9522 Boulder, CO 1145 Brazoria, TX........................................... 0.9201 Brazoria, TX 1150 Bremerton, WA.......................................... 1.0901 Kitsap, WA 1240 Brownsville-Harlingen-San Benito, TX................... 0.8542 Cameron, TX 1260 Bryan-College Station, TX.............................. 0.8851 Brazos, TX 1280 Buffalo-Niagara Falls, NY.............................. 0.9107 Erie, NY Niagara, NY 1303 Burlington, VT......................................... 1.0068 Chittenden, VT Franklin, VT Grand Isle, VT 1310 Caguas, PR............................................. 0.4573 Caguas, PR Cayey, PR Cidra, PR Gurabo, PR San Lorenzo, PR 1320 Canton-Massillon, OH................................... 0.8648 Carroll, OH Stark, OH 1350 Casper, WY............................................. 0.8821 Natrona, WY 1360 Cedar Rapids, IA....................................... 0.8458 Linn, IA 1400 Champaign-Urbana, IL................................... 0.9391 Champaign, IL 1440 Charleston-North Charleston, SC........................ 0.8963 Berkeley, SC Charleston, SC Dorchester, SC 1480 Charleston, WV......................................... 0.9526 Kanawha, WV Putnam, WV 1520 Charlotte-Gastonia-Rock Hill, NC-SC.................... 0.9620 Cabarrus, NC Gaston, NC Lincoln, NC [[Page 51544]] Mecklenburg, NC Rowan, NC Union, NC York, SC 1540 Charlottesville, VA.................................... 0.9155 Albemarle, VA Charlottesville City, VA Fluvanna, VA Greene, VA 1560 Chattanooga, TN-GA..................................... 0.8847 Catoosa, GA Dade, GA Walker, GA Hamilton, TN Marion, TN 1580 Cheyenne, WY........................................... 0.7678 Laramie, WY 1600 Chicago, IL............................................ 1.0760 Cook, IL DeKalb, IL DuPage, IL Grundy, IL Kane, IL Kendall, IL Lake, IL McHenry, IL Will, IL 1620 Chico-Paradise, CA..................................... 1.0417 Butte, CA 1640 Cincinnati, OH-KY-IN................................... 0.9570 Dearborn, IN Ohio, IN Boone, KY Campbell, KY Gallatin, KY Grant, KY Kenton, KY Pendleton, KY Brown, OH Clermont, OH Hamilton, OH Warren, OH 1660 Clarksville-Hopkinsville, TN-KY........................ 0.7716 Christian, KY Montgomery, TN 1680 Cleveland-Lorain-Elyria, OH............................ 0.9886 Ashtabula, OH Cuyahoga, OH Geauga, OH Lake, OH Lorain, OH Medina, OH 1720 Colorado Springs, CO................................... 0.9341 El Paso, CO 1740 Columbia, MO........................................... 0.8899 Boone, MO 1760 Columbia, SC........................................... 0.9160 Lexington, SC Richland, SC 1800 Columbus, GA-AL Russell, AL............................ 0.7779 Chattanoochee, GA Harris, GA Muscogee, GA 1840 Columbus, OH........................................... 0.9681 Delaware, OH Fairfield, OH Franklin, OH Licking, OH Madison, OH Pickaway, OH 1880 Corpus Christi, TX..................................... 0.8881 Nueces, TX San Patricio, TX 1900 Cumberland, MD-WV...................................... 0.8671 Allegany, MD Mineral, WV 1920 Dallas, TX............................................. 0.9729 Collin, TX Dallas, TX Denton, TX Ellis, TX Henderson, TX Hunt, TX Kaufman, TX Rockwall, TX 1950 Danville, VA........................................... 0.8497 Danville City, VA Pittsylvania, VA 1960 Davenport-Rock Island-Moline, IA-IL.................... 0.8388 Scott, IA Henry, IL Rock Island, IL 2000 Dayton-Springfield, OH................................. 0.9559 Clark, OH Greene, OH Miami, OH Montgomery, OH 2020 Daytona Beach, FL...................................... 0.8871 Flagler, FL Volusia, FL 2030 Decatur, AL............................................ 0.8384 Lawrence, AL Morgan, AL 2040 Decatur, IL............................................ 0.7848 Macon, IL 2080 Denver, CO............................................. 1.0166 Adams, CO Arapahoe, CO Denver, CO Douglas, CO Jefferson, CO 2120 Des Moines, IA......................................... 0.8815 Dallas, IA Polk, IA Warren, IA 2160 Detroit, MI............................................ 1.0724 Lapeer, MI Macomb, MI Monroe, MI Oakland, MI St. Clair, MI Wayne, MI 2180 Dothan, AL............................................. 0.7740 Dale, AL Houston, AL 2190 Dover, DE.............................................. 0.8997 Kent, DE 2200 Dubuque, IA............................................ 0.8112 Dubuque, IA 2240 Duluth-Superior, MN-WI................................. 0.9416 St. Louis, MN Douglas, WI 2281 Dutchess County, NY.................................... 1.0589 Dutchess, NY 2290 Eau Claire, WI......................................... 0.8678 Chippewa, WI Eau Claire, WI 2320 El Paso, TX............................................ 0.9464 El Paso, TX 2330 Elkhart-Goshen, IN..................................... 0.8801 Elkhart, IN 2335 Elmira, NY............................................. 0.8417 Chemung, NY 2340 Enid, OK............................................... 0.7862 Garfield, OK 2360 Erie, PA............................................... 0.9159 Erie, PA 2400 Eugene-Springfield, OR................................. 1.1271 Lane, OR 2440 Evansville-Henderson, IN-KY............................ 0.8983 Posey, IN Vanderburgh, IN Warrick, IN Henderson, KY 2520 Fargo-Moorhead, ND-MN.................................. 0.9045 Clay, MN Cass, ND 2560 Fayetteville, NC....................................... 0.9007 Cumberland, NC 2580 Fayetteville-Springdale-Rogers, AR..................... 0.7220 Benton, AR Washington, AR 2620 Flagstaff, AZ-UT....................................... 0.9019 Coconino, AZ Kane, UT 2640 Flint, MI............................................... 1.1248 Genesee, MI 2650 Florence, AL........................................... 0.7938 Colbert, AL Lauderdale, AL 2655 Florence, SC........................................... 0.8594 Florence, SC 2670 Fort Collins-Loveland, CO.............................. 1.0562 Larimer, CO 2680 Ft. Lauderdale, FL..................................... 1.0548 Broward, FL 2700 Fort Myers-Cape Coral, FL.............................. 0.9032 Lee, FL 2710 Fort Pierce-Port St. Lucie, FL......................... 1.0169 Martin, FL St. Lucie, FL 2720 Fort Smith, AR-OK...................................... 0.7864 Crawford, AR Sebastian, AR Sequoyah, OK 2750 Fort Walton Beach, FL.................................. 0.9192 Okaloosa, FL 2760 Fort Wayne, IN......................................... 0.8800 Adams, IN Allen, IN DeKalb, IN Huntington, IN Wells, IN Whitley, IN 2800 Forth Worth-Arlington, TX.............................. 1.0153 Hood, TX Johnson, TX Parker, TX Tarrant, TX 2840 Fresno, CA............................................. 1.1183 Fresno, CA Madera, CA 2880 Gadsden, AL............................................ 0.8881 [[Page 51545]] Etowah, AL 2900 Gainesville, FL........................................ 0.9434 Alachua, FL 2920 Galveston-Texas City, TX............................... 1.0997 Galveston, TX 2960 Gary, IN............................................... 0.9641 Lake, IN Porter, IN 2975 Glens Falls, NY........................................ 0.8562 Warren, NY Washington, NY 2980 Goldsboro, NC.......................................... 0.8393 Wayne, NC 2985 Grand Forks, ND-MN..................................... 0.9011 Polk, MN Grand Forks, ND 2995 Grand Junction, CO..................................... 0.8336 Mesa, CO 3000 Grand Rapids-Muskegon-Holland, MI...................... 1.0119 Allegan, MI Kent, MI Muskegon, MI Ottawa, MI 3040 Great Falls, MT........................................ 0.8681 Cascade, MT 3060 Greeley, CO............................................ 0.9690 Weld, CO 3080 Green Bay, WI.......................................... 0.9038 Brown, WI 3120 Greensboro-Winston-Salem-High Point, NC................ 0.9332 Alamance, NC Davidson, NC Davie, NC Forsyth, NC Guilford, NC Randolph, NC Stokes, NC Yadkin, NC 3150 Greenville, NC......................................... 0.9078 Pitt, NC 3160 Greenville-Spartanburg-Anderson, SC.................... 0.8927 Anderson, SC Cherokee, SC Greenville, SC Pickens, SC Spartanburg, SC 3180 Hagerstown, MD.......................................... 0.9175 Washington, MD 3200 Hamilton-Middletown, OH................................ 0.9490 Butler, OH 3240 Harrisburg-Lebanon-Carlisle, PA........................ 1.0158 Cumberland, PA Dauphin, PA Lebanon, PA Perry, PA 3283 Hartford, CT........................................... 1.2367 Hartford, CT Litchfield, CT Middlesex, CT Tolland, CT 3285 Hattiesburg, MS........................................ 0.7252 Forrest, MS Lamar, MS 3290 Hickory-Morganton-Lenoir, NC........................... 0.8626 Alexander, NC Burke, NC Caldwell, NC Catawba, NC 3320 Honolulu, HI........................................... 1.1461 Honolulu, HI 3350 Houma, LA.............................................. 0.7853 Lafourche, LA Terrebonne, LA 3360 Houston, TX............................................ 1.0000 Chambers, TX Fort Bend, TX Harris, TX Liberty, TX Montgomery, TX Waller, TX 3400 Huntington-Ashland, WV-KY-OH........................... 0.9174 Boyd, KY Carter, KY Greenup, KY Lawrence, OH Cabell, WV Wayne, WV 3440 Huntsville, AL......................................... 0.8206 Limestone, AL Madison, AL 3480 Indianapolis, IN....................................... 0.9903 Boone, IN Hamilton, IN Hancock, IN Hendricks, IN Johnson, IN Madison, IN Marion, IN Morgan, IN Shelby, IN 3500 Iowa City, IA.......................................... 0.9361 Johnson, IA 3520 Jackson, MI............................................ 0.9045 Jackson, MI 3560 Jackson, MS............................................ 0.7884 Hinds, MS Madison, MS Rankin, MS 3580 Jackson, TN............................................ 0.8288 Chester, TN Madison, TN 3600 Jacksonville, FL....................................... 0.9086 Clay, FL Duval, FL Nassau, FL St. Johns, FL 3605 Jacksonville, NC....................................... 0.7055 Onslow, NC 3610 Jamestown, NY.......................................... 0.7670 Chautaqua, NY 3620 Janesville-Beloit, WI.................................. 0.8645 Rock, WI 3640 Jersey City, NJ........................................ 1.1382 Hudson, NJ 3660 Johnson City-Kingsport-Bristol, TN-VA.................. 0.8884 Carter, TN Hawkins, TN Sullivan, TN Unicoi, TN Washington, TN Bristol City, VA Scott, VA Washington, VA 3680 Johnstown, PA.......................................... 0.8398 Cambria, PA Somerset, PA 3700 Jonesboro, AR.......................................... 0.7220 Craighead, AR 3710 Joplin, MO............................................. 0.7638 Jasper, MO Newton, MO 3720 Kalamazoo-Battlecreek, MI.............................. 1.0542 Calhoun, MI Kalamazoo, MI Van Buren, MI 3740 Kankakee, IL........................................... 0.9115 Kankakee, IL 3760 Kansas City, KS-MO..................................... 0.9478 Johnson, KS Leavenworth, KS Miami, KS Wyandotte, KS Cass, MO Clay, MO Clinton, MO Jackson, MO Lafayette, MO Platte, MO Ray, MO 3800 Kenosha, WI............................................ 0.9145 Kenosha, WI 3810 Killeen-Temple, TX..................................... 1.0392 Bell, TX Coryell, TX 3840 Knoxville, TN.......................................... 0.8502 Anderson, TN Blount, TN Knox, TN Loudon, TN Sevier, TN Union, TN 3850 Kokomo, IN............................................. 0.8590 Howard, IN Tipton, IN 3870 La Crosse, WI-MN....................................... 0.8618 Houston, MN La Crosse, WI 3880 Lafayette, LA.......................................... 0.8163 Acadia, LA Lafayette, LA St. Landry, LA St. Martin, LA 3920 Lafayette, IN.......................................... 0.8781 Clinton, IN Tippecanoe, IN 3960 Lake Charles, LA....................................... 0.8034 Calcasieu, LA 3980 Lakeland-Winter Haven, FL.............................. 0.8774 Polk, FL 4000 Lancaster, PA.......................................... 0.9583 Lancaster, PA 4040 Lansing-East Lansing, MI............................... 1.0010 Clinton, MI Eaton, MI Ingham, MI 4080 Laredo, TX............................................. 0.7073 Webb, TX 4100 Las Cruces, NM......................................... 0.8497 Dona Ana, NM 4120 Las Vegas, NV-AZ....................................... 1.0870 Mohave, AZ Clark, NV [[Page 51546]] Nye, NV 4150 Lawrence, KS........................................... 0.8597 Douglas, KS 4200 Lawton, OK............................................. 0.8365 Comanche, OK 4243 Lewiston-Auburn, ME.................................... 0.9410 Androscoggin, ME 4280 Lexington, KY.......................................... 0.8293 Bourbon, KY Clark, KY Fayette, KY Jessamine, KY Madison, KY Scott, KY Woodford, KY 4320 Lima, OH............................................... 0.8732 Allen, OH Auglaize, OH 4360 Lincoln, NE............................................ 0.9161 Lancaster, NE 4400 Little Rock-North Little Rock, AR...................... 0.8597 Faulkner, AR Lonoke, AR Pulaski, AR Saline, AR 4420 Longview-Marshall, TX.................................. 0.8645 Gregg, TX Harrison, TX Upshur, TX 4480 Los Angeles-Long Beach, CA............................. 1.2343 Los Angeles, CA 4520 Louisville, KY-IN...................................... 0.9447 Clark, IN Floyd, IN Harrison, IN Scott, IN Bullitt, KY Jefferson, KY Oldham, KY 4600 Lubbock, TX............................................ 0.8510 Lubbock, TX 4640 Lynchburg, VA.......................................... 0.8052 Amherst, VA Bedford City, VA Bedford, VA Campbell, VA Lynchburg City, VA 4680 Macon, GA.............................................. 0.8824 Bibb, GA Houston, GA Jones, GA Peach, GA Twiggs, GA 4720 Madison, WI............................................ 1.0021 Dane, WI 4800 Mansfield, OH.......................................... 0.8524 Crawford, OH Richland, OH 4840 Mayaguez, PR........................................... 0.4215 Anasco, PR Cabo Rojo, PR Hormigueros, PR Mayaguez, PR Sabana Grande, PR San German, PR 4880 McAllen-Edinburg-Mission, TX........................... 0.8485 Hidalgo, TX 4890 Medford-Ashland, OR.................................... 1.0068 Jackson, OR 4900 Melbourne-Titusville-Palm Bay, FL...................... 0.9068 Brevard, Fl 4920 Memphis, TN-AR-MS...................................... 0.8166 Crittenden, AR DeSoto, MS Fayette, TN Shelby, TN Tipton, TN 4940 Merced, CA............................................. 1.0660 Merced, CA 5000 Miami, FL.............................................. 0.9938 Dade, FL 5015 Middlesex-Somerset-Hunterdon, NJ....................... 1.0883 Hunterdon, NJ Middlesex, NJ Somerset, NJ 5080 Milwaukee-Waukesha, WI................................. 0.9645 Milwaukee, WI Ozaukee, WI Washington, WI Waukesha, WI 5120 Minneapolis-St. Paul, MN-WI............................ 1.0777 Anoka, MN Carver, MN Chicago, MN Dakota, MN Hennepin, MN Isanti, MN Ramsey, MN Scott, MN Sherburne, MN Washington, MN Wright, MN Pierce, WI St. Croix, WI 5160 Mobile, AL............................................. 0.7981 Baldwin, AL Mobile, AL 5170 Modesto, CA............................................ 1.0600 Stanislaus, CA 5190 Monmouth-Ocean, NJ..................................... 1.0833 Monmouth, NJ Ocean, NJ 5200 Monroe, LA............................................. 0.8211 Ouachita, LA 5240 Montgomery, AL......................................... 0.7876 Autauga, AL Elmore, AL Montgomery, AL 5280 Muncie, IN............................................. 0.9714 Delaware, IN 5330 Myrtle Beach, SC....................................... 0.7790 Horry, SC 5345 Naples, FL............................................. 1.0199 Collier, FL 5360 Nashville, TN.......................................... 0.9081 Cheatham, TN Davidson, TN Dickson, TN Robertson, TN Rutherford, TN Sumner, TN Williamson, TN Wilson, TN 5380 Nassau-Suffolk, NY..................................... 1.3547 Nassau, NY Suffolk, NY 5483 New Haven-Bridgeport-Stamford-Danbury-................. 1.2704 Waterbury,CT Fairfield, CT New Haven, CT 5523 New London-Norwich, CT................................. 1.2262 New London, CT 5560 New Orleans, LA........................................ 0.9294 Jefferson, LA Orleans, LA Plaquemines, LA St. Bernard, LA St. Charles, LA St. James, LA St. John Baptist, LA St. Tammany, LA 5600 New York, NY........................................... 1.4154 Bronx, NY Kings, NY New York, NY Putnam, NY Queens, NY Richmond, NY Rockland, NY Westchester, NY 5640 Newark, NJ............................................. 1.1762 Essex, NJ Morris, NJ Sussex, NJ Union, NJ Warren, NJ 5660 Newburgh, NY-PA........................................ 1.0803 Orange, NY Pike, PA 5720 Norfolk-Virginia Beach-Newport News, VA-NC............. 0.8348 Currituck, NC Chesapeake City, VA Gloucester, VA Hampton City, VA Isle of Wight, VA James City, VA Mathews, VA Newport News City, VA Norfolk City, VA Poquoson City, VA Portsmouth City, VA Suffolk City, VA Virginia Beach City, VA Williamsburg City, VA York, VA 5775 Oakland, CA............................................ 1.4991 Alameda, CA Contra Costa, CA 5790 Ocala, FL.............................................. 0.9105 Marion, FL 5800 Odessa-Midland, TX..................................... 0.8482 Ector, TX Midland, TX 5880 Oklahoma City, OK...................................... 0.8371 Canadian, OK Cleveland, OK Logan, OK McClain, OK Oklahoma, OK Pottawatomie, OK 5910 Olympia, WA............................................ 1.0689 Thurston, WA [[Page 51547]] 5920 Omaha, NE-IA........................................... 0.9480 Pottawattamie, IA Cass, NE Douglas, NE Sarpy, NE Washington, NE 5945 Orange County, CA...................................... 1.1966 Orange, CA 5960 Orlando, FL............................................ 0.9470 Lake, FL Orange, FL Osceola, FL Seminole, FL 5990 Owensboro, KY.......................................... 0.7575 Daviess, KY 6015 Panama City, FL........................................ 0.8061 Bay, FL 6020 Parkersburg-Marietta, WV-OH............................ 0.7877 Washington, OH Wood, WV 6080 Pensacola, FL.......................................... 0.8202 Escambia, FL Santa Rosa, FL 6120 Peoria-Pekin, IL....................................... 0.8905 Peoria, IL Tazewell, IL Woodford, IL 6160 Philadelphia, PA-NJ.................................... 1.1237 Burlington, NJ Camden, NJ Gloucester, NJ Salem, NJ Bucks, PA Chester, PA Delaware, PA Montgomery, PA Philadelphia, PA 6200 Phoenix-Mesa, AZ....................................... 0.9810 Maricopa, AZ Pinal, AZ 6240 Pine Bluff, AR......................................... 0.7886 Jefferson, AR 6280 Pittsburgh, PA......................................... 0.9701 Allegheny, PA Beaver, PA Butler, PA Fayette, PA Washington, PA Westmoreland, PA 6323 Pittsfield, MA......................................... 1.0552 Berkshire, MA 6340 Pocatelo, ID........................................... 0.8784 Bannock ID 6360 Ponce, PR.............................................. 0.4685 Guayanilla, PR Juana Diaz, PR Penuelas, PR Ponce, PR Villalba, PR Yauco, PR 6403 Portland, ME........................................... 0.9619 Cumberland, ME Sagadahoc, ME York, ME 6440 Portland-Vancouver, OR-WA.............................. 1.1235 Clackamas, OR Columbia, OR Multnomah, OR Washington, OR Yamhill, OR Clark, WA 6483 Providence-Warwick-Pawtucket, RI....................... 1.1092 Bristol, RI Kent, RI Newport, RI Providence, RI Washington, RI 6520 Provo-Orem, UT......................................... 1.0116 Utah, UT 6560 Pueblo, CO............................................. 0.8284 Pueblo, CO 6580 Punta Gorda, FL........................................ 0.8999 Charlotte, FL 6600 Racine, WI............................................. 0.8835 Racine, WI 6640 Raleigh-Durham-Chapel Hill, NC......................... 0.9728 Chatham, NC Durham, NC Franklin, NC Johnston, NC Orange, NC Wake, NC 6660 Rapid City, SD......................................... 0.8455 Pennington, SD 6680 Reading, PA............................................ 0.9445 Berks, PA 6690 Redding, CA............................................ 1.1605 Shasta, CA 6720 Reno, NV............................................... 1.1018 Washoe, NV 6740 Richland-Kennewick-Pasco, WA........................... 0.9970 Benton, WA Franklin, WA 6760 Richmond-Petersburg, VA................................ 0.9194 Charles City County, VA Chesterfield, VA Colonial Heights City, VA Dinwiddie, VA Goochland, VA Hanover, VA Henrico, VA Hopewell City, VA New Kent, VA Petersburg City, VA Powhatan, VA Prince George, VA Richmond City, VA 6780 Riverside-San Bernardino, CA........................... 1.1379 Riverside, CA San Bernardino, CA 6800 Roanoke, VA............................................ 0.8702 Botetourt, VA Roanoke, VA Roanoke City, VA Salem City, VA 6820 Rochester, MN.......................................... 1.0428 Olmsted, MN 6840 Rochester, NY.......................................... 0.9649 Genesee, NY Livingston, NY Monroe, NY Ontario, NY Orleans, NY Wayne, NY 6880 Rockford, IL........................................... 0.8994 Boone, IL Ogle, IL Winnebago, IL 6895 Rocky Mount, NC........................................ 0.8955 Edgecombe, NC Nash, NC 6920 Sacramento, CA......................................... 1.2351 El Dorado, CA Placer, CA Sacramento, CA 6960 Saginaw-Bay City-Midland, MI........................... 0.9612 Bay, MI Midland, MI Saginaw, MI 6980 St. Cloud, MN.......................................... 0.9457 Benton, MN Stearns, MN 7000 St. Joseph, MO......................................... 0.8551 Andrews, MO Buchanan, MO 7040 St. Louis, MO-IL....................................... 0.9022 Clinton, IL Jersey, IL Madison, IL Monroe, IL St. Clair, IL Franklin, MO Jefferson, MO Lincoln, MO St. Charles, MO St. Louis, MO St. Louis City, MO Warren, MO 7080 Salem, OR.............................................. 0.9728 Marion, OR Polk, OR 7120 Salinas, CA............................................ 1.3803 Monterey, CA 7160 Salt Lake City-Ogden, UT............................... 0.9677 Davis, UT Salt Lake, UT Weber, UT 7200 San Angelo, TX......................................... 0.7577 Tom Green, TX 7240 San Antonio, TX........................................ 0.8390 Bexar, TX Comal, TX Guadalupe, TX Wilson, TX 7320 San Diego, CA.......................................... 1.2134 San Diego, CA 7360 San Francisco, CA...................................... 1.4260 Marin, CA San Francisco, CA San Mateo, CA 7400 San Jose, CA........................................... 1.4519 Santa Clara, CA 7440 San Juan-Bayamon, PR................................... 0.4506 Aguas Buenas, PR Barceloneta, PR Bayamon, PR Canovanas, PR Carolina, PR Catano, PR Ceiba, PR Comerio, PR Corozal, PR Dorado, PR [[Page 51548]] Fajardo, PR Florida, PR Guaynabo, PR Humacao, PR Juncos, PR Los Piedras, PR Loiza, PR Luguillo, PR Manati, PR Morovis, PR Naguabo, PR Naranjito, PR Rio Grande, PR San Juan, PR Toa Alta, PR Toa Baja, PR Trujillo Alto, PR Vega Alta, PR Vega Baja, PR Yabucoa, PR 7460 San Luis Obispo-Atascadero-Paso Robles, CA............. 1.1561 San Luis Obispo, CA 7480 Santa Barbara-Santa Maria-Lompoc, CA................... 1.1242 Santa Barbara, CA 7485 Santa Cruz-Watsonville, CA............................. 1.3520 Santa Cruz, CA 7490 Santa Fe, NM........................................... 1.0823 Los Alamos, NM Santa Fe, NM 7500 Santa Rosa, CA......................................... 1.2526 Sonoma, CA 7510 Sarasota-Bradenton, FL................................. 0.9789 Manatee, FL Sarasota, FL 7520 Savannah, GA........................................... 0.9649 Bryan, GA Chatham, GA Effingham, GA 7560 Scranton--Wilkes-Barre--Hazleton, PA................... 0.8752 Columbia, PA Lackawanna, PA Luzerne, PA Wyoming, PA 7600 Seattle-Bellevue-Everett, WA........................... 1.1384 Island, WA King, WA Snohomish, WA 7610 Sharon, PA............................................. 0.8885 Mercer, PA 7620 Sheboygan, WI.......................................... 0.7764 Sheboygan, WI 7640 Sherman-Denison, TX.................................... 0.8614 Grayson, TX 7680 Shreveport-Bossier City, LA............................ 0.9359 Bossier, LA Caddo, LA Webster, LA 7720 Sioux City, IA-NE...................................... 0.8313 Woodbury, IA Dakota, NE 7760 Sioux Falls, SD........................................ 0.8620 Lincoln, SD Minnehaha, SD 7800 South Bend, IN......................................... 0.9934 St. Joseph, IN 7840 Spokane, WA............................................ 1.0524 Spokane, WA 7880 Springfield, IL........................................ 0.8671 Menard, IL Sangamon, IL 7920 Springfield, MO........................................ 0.7823 Christian, MO Greene, MO Webster, MO 8003 Springfield, MA........................................ 1.0586 Hampden, MA Hampshire, MA 8050 State College, PA...................................... 0.9538 Centre, PA 8080 Steubenville-Weirton, OH-WV............................ 0.8266 Jefferson, OH Brooke, WV Hancock, WV 8120 Stockton-Lodi, CA...................................... 1.1330 San Joaquin, CA 8140 Sumter, SC............................................. 0.7699 Sumter, SC 8160 Syracuse, NY........................................... 0.9395 Cayuga, NY Madison, NY Onondaga, NY Oswego, NY 8200 Tacoma, WA............................................. 1.0860 Pierce, WA 8240 Tallahassee, FL........................................ 0.8313 Gadsden, FL Leon, FL 8280 Tampa-St. Petersburg-Clearwater, FL.................... 0.9250 Hernando, FL Hillsborough, FL Pasco, FL Pinellas, FL 8320 Terre Haute, IN........................................ 0.8591 Clay, IN Vermillion, IN Vigo, IN 8360 Texarkana, AR-Texarkana, TX............................ 0.8503 Miller, AR Bowie, TX 8400 Toledo, OH............................................. 1.0361 Fulton, OH Lucas, OH Wood, OH 8440 Topeka, KS............................................. 1.0086 Shawnee, KS 8480 Trenton, NJ............................................ 1.0549 Mercer, NJ 8520 Tucson, AZ............................................. 0.9068 Pima, AZ 8560 Tulsa, OK.............................................. 0.8095 Creek, OK Osage, OK Rogers, OK Tulsa, OK Wagoner, OK 8600 Tuscaloosa, AL......................................... 0.7784 Tuscaloosa, AL 8640 Tyler, TX.............................................. 0.9996 Smith, TX 8680 Utica-Rome, NY......................................... 0.8413 Herkimer, NY Oneida, NY 8720 Vallejo-Fairfield-Napa, CA............................. 1.3947 Napa, CA Solano, CA 8735 Ventura, CA............................................ 1.1454 Ventura, CA 8750 Victoria, TX........................................... 0.8393 Victoria, TX 8760 Vineland-Millville-Bridgeton, NJ....................... 0.9993 Cumberland, NJ 8780 Visalia-Tulare-Porterville, CA......................... 1.0151 Tulare, CA 8800 Waco, TX............................................... 0.7772 McLennan, TX 8840 Washington, DC-MD-VA-WV................................ 1.0823 District of Columbia, DC Calvert, MD Charles, MD Frederick, MD Montgomery, MD Prince Georges, MD Alexandria City, VA Arlington, VA Clarke, VA Culpepper, VA Fairfax, VA Fairfax City, VA Falls Church City, VA Fauquier, VA Fredericksburg City, VA King George, VA Loudoun, VA Manassas City, VA Manassas Park City, VA Prince William, VA Spotsylvania, VA Stafford, VA Warren, VA Berkeley, WV Jefferson, WV 8920 Waterloo-Cedar Falls, IA............................... 0.8705 Black Hawk, IA 8940 Wausau, WI............................................. 1.0323 Marathon, WI 8960 West Palm Beach-Boca Raton, FL......................... 1.0202 Palm Beach, FL 9000 Wheeling, OH-WV........................................ 0.7563 Belmont, OH Marshall, WV Ohio, WV 9040 Wichita, KS............................................ 0.9369 Butler, KS Harvey, KS Sedgwick, KS 9080 Wichita Falls, TX...................................... 0.8041 Archer, TX Wichita, TX 9140 Williamsport, PA....................................... 0.8467 Lycoming, PA 9160 Wilmington-Newark, DE-MD............................... 1.1315 New Castle, DE Cecil, MD 9200 Wilmington, NC......................................... 0.9046 New Hanover, NC Brunswick, NC [[Page 51549]] 9260 Yakima, WA............................................. 1.0026 Yakima, WA 9270 Yolo, CA............................................... 1.1444 Yolo, CA 9280 York, PA............................................... 0.9104 York, PA 9320 Youngstown-Warren, OH.................................. 0.9742 Columbiana, OH Mahoning, OH Trumbull, OH 9340 Yuba City, CA.......................................... 1.0414 Sutter, CA Yuba, CA 9360 Yuma, AZ............................................... 0.9497 Yuma, AZ ------------------------------------------------------------------------ Table V.--Wage Index for Rural Areas ------------------------------------------------------------------------ Wage Nonurban area index ------------------------------------------------------------------------ Alabama...................................................... 0.7122 Alaska....................................................... 1.2444 Arizona...................................................... 0.7928 Arkansas..................................................... 0.6954 California................................................... 1.0002 Colorado..................................................... 0.8092 Connecticut.................................................. 1.2759 Delaware..................................................... 0.9447 Florida...................................................... 0.8668 Georgia...................................................... 0.7653 Hawaii....................................................... 1.0245 Idaho........................................................ 0.8277 Illinois..................................................... 0.7553 Indiana...................................................... 0.8124 Iowa......................................................... 0.7373 Kansas....................................................... 0.7107 Kentucky..................................................... 0.7753 Louisiana.................................................... 0.7232 Maine........................................................ 0.8317 Maryland..................................................... 0.8427 Massachusetts................................................ 1.0070 Michigan..................................................... 0.8830 Minnesota.................................................... 0.8144 Mississippi.................................................. 0.6793 Missouri..................................................... 0.7261 Montana...................................................... 0.8128 Nebraska..................................................... 0.7214 Nevada....................................................... 0.8775 New Hampshire................................................ 0.9745 New Jersey 1................................................. ......... New Mexico................................................... 0.8000 New York..................................................... 0.8558 North Carolina............................................... 0.7950 North Dakota................................................. 0.7358 Ohio......................................................... 0.8332 Oklahoma..................................................... 0.6942 Oregon....................................................... 0.9664 Pennsylvania................................................. 0.8453 Puerto Rico.................................................. 0.4026 Rhode Island1................................................ ......... South Carolina............................................... 0.7668 South Dakota................................................. 0.7063 Tennessee.................................................... 0.7341 Texas........................................................ 0.7462 Utah......................................................... 0.8848 Vermont...................................................... 0.8921 Virginia..................................................... 0.7713 Virgin Islands............................................... 0.5660 Washington................................................... 0.9933 West Virginia................................................ 0.7904 Wisconsin.................................................... 0.8430 Wyoming...................................................... 0.8177 ------------------------------------------------------------------------ \1\ All counties within the State are classified urban. Table VI.--Cost Reporting Year Adjustment Factors \1\ [Effective October 1, 1997] ------------------------------------------------------------------------ The If a SNF cost reporting period begins: adjustment factor is: ------------------------------------------------------------------------ Nov. 1, 1997................................................ 1.00285 Dec. 1, 1997................................................ 1.00560 Jan. 1, 1998................................................ 1.00846 Feb. 1, 1998................................................ 1.01149 Mar. 1, 1998................................................ 1.01424 Apr. 1, 1998................................................ 1.01729 May 1, 1998................................................. 1.02025 June 1, 1998................................................ 1.02332 July 1, 1998................................................ 1.02630 Aug. 1, 1998................................................ 1.02939 Sept. 1, 1998............................................... 1.03249 ------------------------------------------------------------------------ \1\ Based on compounded projected market basket inflation rates of 3.4 percent for 1998 and 3.6 percent for 1999. VI. Impact Statement For notices such as this, we generally prepare a regulatory flexibility analysis that is consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 through 612) unless we certify that a notice will not have a significant economic impact on a substantial number of small entities. For purposes of the RFA, all SNFs are considered to be small entities. Individuals and States are not included in the definition of a small entity. This final notice with comment period sets forth an updated schedule of limits on SNF routine service costs for which payment may be made under the Medicare program and sets forth an updated schedule of payment rates for low Medicare volume skilled nursing facilities that elect to receive prospectively determined payment rates for routine service costs. Section 1888(a) of the Act requires that the Secretary update the per diem cost limits for SNF routine service costs for cost reporting periods beginning on or after October 1, 1995, and every 2 years thereafter. In addition, section 1888(d)(4) of the Act requires the Secretary to establish and publish prospectively determined payment rates at least 90 days prior to the beginning of the Federal fiscal year to which such rates are to be applied. This final notice with comment period is the first time we are publishing a combined schedule of cost limits and rates. Combining the cost limits and rates in one notice is more economical in that they both utilize the same cost report data, wage index values, and rates of inflation. In addition, under section 1888(d) of the Act, an individual provider's prospectively determined rate may not exceed its applicable cost limit (see Section III.D. of this notice). This final notice with comment period, by containing both cost limits and rates for cost reporting periods beginning FY 1998, allows a provider to more conveniently determine its individual rate than in previous years. As required under section 1888(a) and 1888(d) of the Act respectively, this final notice with comment period sets forth a revised schedule of SNF per diem cost limits and prospectively determined payment rates for freestanding and hospital-based SNFs for cost reporting periods beginning in FY 1998. As explained in this notice, we have retained the same basic methodology used to compute the limits and rates effective for cost reporting periods beginning in FY 1997, but we are revising the schedule of limits and rates to reflect more recent wage data, MSA designations, and inflation data. The estimated effects of this notice are that (1) the updated cost limits will result in a loss of savings to the Medicare program of $20 million in FY 1998, and (2) the updated rates will have a negligible effect. These estimates are the effect of the updating the cost limits and rates to reflect more recent wage data, MSA designations, and inflation data compared to just updating the previous (FY 1997) cost limits or rates only for inflation. The table below shows the effect of updating the cost limits contained in this notice in comparison with updating the cost limits effective for FY 1997 by inflation (the market basket). Specifically, column (A) of the table shows the estimated total number of SNFs to which the cost limits effective for FY 1998 will apply. Column (B) shows the number of SNFs that would exceed the cost limits effective for FY 1997 updated only for inflation. Column (C) shows the number of SNFs that would exceed the cost limits contained in this notice. Implementing the cost limits contained in this notice, as [[Page 51550]] compared with maintaining the FY 1997 cost limits updated for inflation, will result in a small decrease in the number of SNFs with costs in excess of the limits. ------------------------------------------------------------------------ Number of Total SNFs Number of SNFs over to which SNFs over FY 1998 limits FY 1997 limits effective limits contained for FY 1998 updated for in this will apply inflation notice (column A) (column B) (column C) ------------------------------------------------------------------------ Freestanding SNFs: Urban (MSA).................. 4873 2353 2331 Rural (non-MSA).............. 1638 900 878 Hospital-Based SNFs: ........... ........... ........... Urban (MSA).................. 367 301 283 Rural (non-MSA).............. 348 224 217 ------------------------------------------------------------------------ We are unable to identify the effects of these provisions on individual SNFs, but we expect that decreases in the number of SNFs exceeding the limits generally would result in increases in payments to those SNFs whose costs would previously have exceeded the limits but now fall under the limits. The effects of the increase in the limits on the total revenues of individual SNFs will depend on the SNF's ability to operate within the cost limits and on the proportion of its revenues that come from the Medicare program. For purposes of the RFA, it is our practice not to consider an economic impact to be significant unless the annual total costs or revenues of a substantial number of entities will be increased or decreased by at least 3 percent. Because Medicare payments generally do not account for a high proportion of SNF revenue, we believe that the updated SNF limits and rates will not result in a substantial number of SNFs experiencing significant increases in their total revenues. Therefore, we have determined, and we certify, that a regulatory flexibility analysis under the RFA is not required. Section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a notice such as this may have a significant impact on the operations of a substantial number of small rural hospitals. Such an analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 50 beds. We have not prepared a rural impact statement since we have determined that this final notice with comment period will not have a significant economic impact on the operations of a substantial number of small rural hospitals. In accordance with the provisions of Executive Order 12866, this notice was reviewed by the Office of Management and Budget. VII. Waiver of Proposed Notice In adopting notices such as this, we ordinarily publish a proposed notice in the Federal Register with a 60-day period for public comment as required under section 1871(b)(1) of the Act. However, we may waive these procedures if we find good cause that prior notice and comment is impractical, unnecessary, or contrary to the public interest. As discussed in section II. of this notice, we have used the same methodology to develop this schedule of limits that was used in setting the limits published for public comment on October 7, 1992. As discussed above, section 13503(a)(2) of OBRA' 93 delayed the update to the schedule of limits until October 1, 1995 and then every 2 years. We have also used the same methodology to develop this schedule of rates that was used in setting the rates published for public comment on September 3, 1996. Section 13503(b) of OBRA' 93 delayed the update to the schedule of prospectively determined payment rates until October 1, 1995. Thus, in conformance with the clear direction provided in sections 1861(v)(1) and 1888 of the Act and regulations at Secs. 413.30 and 413.320, this notice announces the update to the schedule of limits for SNF routine service costs and the update to the schedule of prospectively determined payment rates for SNF inpatient cost, for cost reporting periods beginning on or after October 1, 1997. Because the statute directs that this schedule of limits and this schedule of rates are effective for cost reporting periods beginning October 1, 1997, and given that we are making no changes in the methodology used to develop these limits, we believe it is unnecessary to publish a proposed notice. Therefore, we find good cause to waive publication of a proposed notice. However, we are providing a 60-day period for public comment, as indicated at the beginning of this notice. VIII. Response to Comments Because of the large number of items of correspondence we normally receive on Federal Register documents published for comment, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the DATES section of this notice, and, if we proceed with a subsequent document, we will respond to the comments in that document. Authority: (Secs. 1102, 1814(b), 1861(v)(1), 1866(a), 1871, and 1888 of the Social Security Act (42 U.S.C. 1302, 1395f(b), 1395x(v)(1), 1395cc(a), 1395hh, and 1395yy); section 13503 of Pub. L. 103-66 (42 U.S.C. 1395x(v)(1)(B) and 1395yy (note)) and 42 CFR 413.1, 413.24, 413.300 through 413.321). (Catalog of Federal Domestic Assistance Program No. 93.773, Medicare--Hospital Insurance) Dated: September 25, 1997. Nancy-Ann Min DeParle, Deputy Administrator, Health Care Financing Administration. Dated: September 25, 1997. Donna E. Shalala, Secretary. [FR Doc. 97-25983 Filed 9-30-97; 8:45 am] BILLING CODE 4120-01-P