[Federal Register Volume 73, Number 100 (Thursday, May 22, 2008)]
[Rules and Regulations]
[Pages 29699-29711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 08-1285]
[[Page 29699]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 412
[CMS-1493-IFC2]
RIN 0938-AP33
Medicare Program; Changes for Long-Term Care Hospitals Required
by Certain Provisions of the Medicare, Medicaid, SCHIP Extension Act of
2007: 3-Year Moratorium on the Establishment of New Long-Term Care
Hospitals and Long-Term Care Hospital Satellite Facilities and
Increases in Beds in Existing Long-Term Care Hospitals and Long-Term
Care Hospital Satellite Facilities; and 3-Year Delay in the Application
of Certain Payment Adjustments
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Interim final rule with comment period.
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SUMMARY: This interim final rule with comment period implements certain
provisions of section 114 of the Medicare, Medicaid, and SCHIP
Extension Act of 2007 relating to long-term care hospitals (LTCHs) and
LTCH satellite facilities. It implements a 3-year moratorium on the
establishment of new LTCHs and LTCH satellite facilities; and on
increases in beds in existing LTCHs and LTCH satellite facilities. This
interim final rule with comment period also implements a 3-year delay
in the application of certain payment policies which apply payment
adjustments for discharges from LTCHs and LTCH satellites that were
admitted from certain referring hospitals in excess of various
percentage thresholds.
DATES: Effective date: The provisions of this interim final rule with
comment period are effective on December 29, 2007. In accordance with
section 1871(e)(1)(A)(i) and (ii) of the Social Security Act (the Act),
the Secretary has determined that retroactive application of the
provisions of this interim final rule with comment period is necessary
to comply with the statute and that failure to apply the changes
retroactively would be contrary to public interest.
Comment date: To be assured consideration, comments must be
received at one of the addresses provided below, no later than 5 p.m.
on July 21, 2008.
ADDRESSES: In commenting, please refer to file code CMS-1493-IFC2.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the instructions for
``Comment or Submission'' and enter the filecode to find the document
accepting comments.
2. By regular mail. You may mail written comments (one original and
two copies) to the following address ONLY: Centers for Medicare &
Medicaid Services, Department of Health and Human Services, Attention:
CMS-1493-IFC2, P.O. Box 8013, Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments (one
original and two copies) to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1493-IFC2, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to either of the following addresses:
a. Room 445-G, Hubert H. Humphrey Building, 200 Independence
Avenue, SW., Washington, DC 20201.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop
slots located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of filing by
stamping in and retaining an extra copy of the comments being
filed.)
b. 7500 Security Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call telephone number (410) 786-7195 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
Submission of comments on paperwork requirements. You may submit
comments on this document's paperwork requirements by following
instructions at the end of the ``Collection of Information
Requirements'' section in this document.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Tzvi Hefter, (410) 786-4487, General
information Judy Richter, (410) 786-2590, Moratorium and 25 percent
patient threshold adjustment.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on the Web site to
view public comments.
Comments received timely will be also available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
I. Background
A. Legislative and Regulatory Authority
Section 123 of the Medicare, Medicaid, and SCHIP [State Children's
Health Insurance Program] Balanced Budget Refinement Act of 1999 (BBRA)
(Pub. L. 106-113), as amended by section 307(b) of the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA) (Pub. L. 106-554), provides for payment for both the operating
and capital-related costs of hospital inpatient stays in long-term care
hospitals (LTCHs) under Medicare Part A based on prospectively set
rates. The Medicare prospective payment system (PPS) for LTCHs applies
to hospitals described in section 1886(d)(1)(B)(iv) of the Social
Security Act (the Act), effective for cost reporting periods beginning
on or after October 1, 2002.
Section 1886(d)(1)(B)(iv)(I) of the Act defines a LTCH as ``a
hospital which has an average inpatient length of stay (as determined
by the Secretary) of greater than 25 days.'' Section
1886(d)(1)(B)(iv)(II) of the Act also provides an alternative
definition of LTCHs: Specifically, a hospital that first
[[Page 29700]]
received payment under section 1886(d) of the Act in 1986 and has an
average inpatient length of stay (LOS) (as determined by the Secretary
of Health and Human Services (the Secretary)) of greater than 20 days
and has 80 percent or more of its annual Medicare inpatient discharges
with a principal diagnosis that reflects a finding of neoplastic
disease in the 12-month cost reporting period ending in fiscal year
(FY) 1997.
Section 307(b)(1) of the BIPA, among other things, mandates that
the Secretary shall examine, and may provide for, adjustments to
payments under the LTCH PPS, including adjustments to diagnosis related
group (DRG) weights, area wage adjustments, geographic
reclassification, outliers, updates, and a disproportionate share
adjustment.
In the August 30, 2002 Federal Register, we issued a final rule
that implemented the LTCH PPS authorized under BBRA and BIPA (67 FR
55954). This system uses information from LTCH patient records to
classify patients into distinct long-term care diagnosis-related groups
(LTC-DRGs) based on clinical characteristics and expected resource
needs. Payments are calculated for each LTC-DRG and provisions are made
for appropriate payment adjustments. Payment rates under the LTCH PPS
are updated annually and published in the Federal Register.
In the August 30, 2002 final rule, we also presented an in-depth
discussion of the LTCH PPS, including the patient classification
system, relative weights, payment rates, additional payments (short-
stay outliers), and the budget neutrality requirements mandated by
section 123 of the BBRA. The same final rule that established
regulations for the LTCH PPS under 42 CFR part 412, subpart O, also
contained LTCH provisions related to covered inpatient services,
limitation on charges to beneficiaries, medical review requirements,
furnishing of inpatient hospital services directly or under
arrangement, and reporting and recordkeeping requirements. We refer
readers to the August 30, 2002 final rule for a comprehensive
discussion of the research and data that supported the establishment of
the LTCH PPS (67 FR 55954).
The most recent annual update to the LTCH PPS was presented in the
RY 2009 LTCH PPS final rule (73 FR 26788). In that final rule, among
other things, we established a 2.7 percent update to the Federal rate
for RY 2009, and presented other payment rate and policy changes,
including revising the rate year to a year beginning October 1 and
ending on September 30. (The 2009 rate year will begin on July 1, 2008
and end on September 30, 2009).
On December 29, 2007 the Medicare, Medicaid, and SCHIP Extension
Act (MMSEA) (Pub. L. 110-173) was enacted. Specifically, section 114 of
MMSEA, entitled ``Long-term care hospitals,'' made a number of changes
affecting payments to LTCHs for inpatient services. Two of the
provisions of section 114 of MMSEA are discussed in this interim final
rule with comment period.
B. Criteria for Classification as a LTCH
Under the existing regulations at Sec. 412.23(e)(1) and (e)(2)(i),
which implement section 1886(d)(1)(B)(iv)(I) of the Act, to qualify to
be paid as a LTCH, a hospital must have a provider agreement with
Medicare and must have an average Medicare inpatient LOS of greater
than 25 days. Alternatively, to be classified as a LTCH, a hospital
must have a provider agreement with Medicare and meet the average LOS
requirement in Sec. 412.23(e)(2)(ii). Section 412.23(e)(2)(ii) states
that for cost reporting periods beginning on or after August 5, 1997, a
hospital that was first excluded from the PPS in 1986 meets the LOS
criteria if it has an average inpatient LOS for all patients, including
both Medicare and non-Medicare inpatients, of greater than 20 days, and
can also demonstrate that at least 80 percent of its annual Medicare
inpatient discharges in the 12-month cost reporting period ending in FY
1997 have a principal diagnosis that reflects a finding of neoplastic
disease.
Section 412.23(e)(3) currently provides that, subject to the
provisions of paragraphs (e)(3)(ii) through (e)(3)(iv) of this section,
the average Medicare inpatient LOS, specified under Sec.
412.23(e)(2)(i) is calculated by dividing the total number of covered
and noncovered days of stay for Medicare inpatients (less leave or pass
days; that is, days where the inpatient is not occupying a bed but has
not been discharged) by the number of total Medicare discharges for the
hospital's most recent complete cost reporting period. The fiscal
intermediaries (FIs) or Medicare Administrative Contractors (MACs)
verify that LTCHs meet the average LOS requirements. (For a more
detailed explanation, see the June 6, 2003 final rule (68 FR 34123).)
II. Provisions of this Interim Final Rule with Comment Period
Section 114 of MMSEA made a number of changes affecting payments to
long-term care hospitals (LTCHs) for inpatient services. This interim
final rule with comment period implements the following provisions
affecting LTCH PPS payments:
Modification of payment adjustments to LTCHs and LTCH
satellite discharges that were admitted from specific referring
hospitals and that exceed various percentage thresholds. Sections
114(c)(1) and (2) of MMSEA mandates specific changes for 3 years,
beginning with cost reporting periods beginning on or after December
29, 2007, with respect to existing Sec. 412.534, which governs the
``25 percent threshold'' payment adjustment to LTCH hospitals-within-
hospitals (HwHs) and LTCH satellite facilities for discharges that were
admitted from their co-located hosts (established in the FY 2005 IPPS
final rule and amended in the RY 2008 LTCH PPS final rule), and
existing Sec. 412.536, which applies a payment adjustment policy (that
was in transition to 25 percent prior to the enactment of this law) to
LTCH and LTCH satellite facility discharges that were admitted from any
individual hospital not co-located with the LTCH or LTCH satellite
facility (established in the RY 2008 LTCH PPS final rule), as discussed
in section II.B. of this interim final rule with comment period.
Moratorium on new LTCHs, LTCH satellite facilities, and
increase in beds in existing LTCHs and LTCH satellite facilities.
Section 114(d) of MMSEA established a 3-year moratorium beginning on
December 29, 2007 on the establishment and classification of new LTCHs,
LTCH satellite facilities, and on any increase in beds in existing
LTCHs and LTCH satellite facilities, with certain exceptions.
Section 114 of MMSEA made other changes affecting LTCH PPS
payments. The following is a listing of the other rulemaking documents
published and respective provisions of section 114 of MMSEA that were
implemented:
In the May 1, 2008 interim final rule with comment period
(73 FR 24871)--
++ Modification of payment adjustments to certain SSO cases.
Section 114(c)(3) of MMSEA specifies that the refinement of the SSO
policy implemented in RY 2008 (see Sec. 412.529(c)(3)(i)) shall not
apply for a 3-year period beginning with discharges occurring on or
after December 29, 2007. Specifically, the fourth SSO payment option in
Sec. 412.529(c)(3)(i) as revised in the RY 2008 LTCH PPS final rule
shall not apply for a 3-year period.
++ Revision to the RY 2008 rate provision. Section 114(e)(1) of
MMSEA provides that the base rate for RY 2008 ``shall be the same as
the base rate for discharges for the hospital occurring
[[Page 29701]]
during the rate year ending in 2007.'' Furthermore, in accordance with
section 114(e)(2) of MMSEA, the revised rate will not be applicable to
discharges occurring on or after July 1, 2007 and before April 1, 2008.
In the January 29, 2008 proposed rule and May 9, 2008
final rule Section 114(c)(4) of MMSEA specifies that for a 3-year
period beginning on December 29, 2007, the Secretary shall not make the
one-time prospective adjustment to the LTCH PPS payment rates provided
for in existing Sec. 412.523(d)(3).
We also note that section 114 of MMSEA included additional
provisions focusing on LTCHs but are not directly related to payment
policy. The following is a list of those policies which are not
included in this interim final rule with comment period:
Section 1861 of the Act is amended by adding a new
paragraph (ccc) defining LTCHs.
The Secretary is directed to conduct a study and submit a
report to the Congress within 18 months after the date of enactment of
MMSEA. The Secretary will conduct a study on the establishment of
national LTCH facility and patient criteria.
The Secretary is directed to provide an expanded review of
medical necessity for LTCH admission and continued stay.
A. Payment Adjustment to LTCHs and LTCH Satellite Facilities
The enactment of section 114(c) of MMSEA requires several
modifications to payment provisions applicable to various types of
LTCHs under the regulations at Sec. 412.534 and Sec. 412.536.
(Throughout this section, ``LTCH'' or ``LTCH satellite facility''
refers exclusively to ``subclause (I)'' LTCHs and LTCH satellite
facilities, that is, LTCHs defined by section 1886(d)(1)(B)(iv)(I) of
the Act. This is the case because the policies established at Sec.
412.534 and Sec. 412.536 do not apply to a ``subclause (II)'' LTCH
defined under section 1886(d)(1)(B)(iv)(II) (69 FR 49205 and 72 FR
26924). Currently, Sec. 412.534 provides for a payment adjustment for
a co-located LTCH (HwH or satellite), based upon the percentage of the
HwH's or satellite's Medicare discharges that had been admitted from a
hospital with which it is co-located (typically, an acute care
hospital).
As specified in the RY 2008 LTCH PPS final rule (72 FR 26870),
Sec. 412.534 also applies to a ``grandfathered'' LTCH HwH or LTCH
satellite facility, that is not required to meet the ``separateness and
control'' policies at Sec. 412.22(e) or (h)(2)(iii), respectively,
regarding its relationship to the hospital with which it is co-located
(see 72 FR 26926 through 26928). In the RY 2008 LTCH PPS final rule, we
also established, at Sec. 412.536, an adjustment based on the
percentage of Medicare discharges that had been admitted to a LTCH or
LTCH satellite facility, from an individual referring hospital with
which the LTCH or LTCH satellite facility is not co-located. When we
extended the policy in Sec. 412.534 to grandfathered LTCH HwHs and
LTCH satellite facilities in the RY 2008 LTCH PPS final rule, we
provided for a parallel 3-year transition to the full percentage
threshold for cost reporting periods beginning on or after July 1, 2007
at Sec. 412.534(h) for ``grandfathered'' LTCHs and LTCH satellite
facilities discharging patients admitted from their host hospitals and
at Sec. 412.536(f) for discharges that were admitted to a LTCH or LTCH
satellite facility from any referring hospital with which they were not
co-located (72 FR 26944).
In this interim final rule with comment period, we are revising our
regulations at Sec. 412.534 and Sec. 412.536 to implement the
requirements of sections 114(c)(1) and 114(c)(2) of MMSEA.
Specifically, for cost reporting periods beginning on or after December
29, 2007 and before December 29, 2010, section 114(c)(1) of MMSEA
generally exempts ``freestanding'' LTCHs (that is, as newly defined in
Sec. 412.23(e)(5), a LTCH that meets the requirements at Sec.
412.23(e)(1) and (2), and does not occupy space in a building also used
by another hospital or does not occupy space in one or more separate or
entire buildings located on the same campus as buildings used by
another hospital, and is not part of a hospital that provides inpatient
services in a building also used by another hospital and
``grandfathered'' LTCH HwHs (that is, ``a long-term care hospital
identified by the amendment made by section 4417(a) of the Balanced
Budget Act of 1997 (Pub. L. 105-33)'') from the applicable percentage
threshold policy established at Sec. 412.536. The statutory provision
also exempts grandfathered HwHs from the applicable percentage
threshold at Sec. 412.534(h). Accordingly, for cost reporting periods
beginning on or after December 29, 2007, for a 3-year period, the
adjustments at Sec. 412.536 will not apply to ``freestanding'' LTCHs
and the adjustments at Sec. 412.534 and Sec. 412.536 will not apply
to ``grandfathered'' LTCH HwHs. Furthermore, the legislation prohibits
the application of ``any similar provisions'' to either
``freestanding'' LTCHs or to ``grandfathered'' LTCH HwHs for that same
3-year period. Section 114(c)(2) of MMSEA also revises the current
percentage thresholds at Sec. 412.534 for applicable LTCHs HwHs and
LTCH satellite facilities. We are providing two tables to illustrate
the statutory and regulatory changes for LTCHs and LTCHs satellite
facilities associated with the implementation of section 114(c)(1) and
(2) of MMSEA. Table 1 indicates the applicability of the specific
provisions of section 114(c)(1) and (2) of MMSEA by type of LTCH or
LTCH satellite facility. Table 2, indicates the applicability of Sec.
412.534 and Sec. 412.536 by type of LTCH or LTCH satellite facility.
Table 1.--Applicability of Section 114(c)(1) and (2) of MMSEA by LTCH Type
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Applicability of
----------------------------------------------------------------------------------
LTCH type Section Section Section Section
114(c)(1)(A) of 114(c)(1)(B) of 114(c)(2)(A) of 114(c)(2)(B) of
MMSEA MMSEA MMSEA MMSEA
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Freestanding LTCHs........... Yes................ N/A................ N/A................ N/A.
Grandfathered HwHs (under N/A................ Yes................ N/A................ N/A.
section 4417(a) of the BBA
Sec. 412.22(f)) \1\.
Nongrandfathered HwHs N/A................ N/A................ Yes................ Yes.
Subject to Transition at
Sec. 412.534(g) \2\.
Nongrandfathered HwHs not N/A................ N/A................ N/A................ N/A.
Subject to Transition at
Sec. 412.534(g) \3\.
Grandfathered LTCH Satellites N/A................ N/A................ N/A................ N/A.
(Sec. 412.22(h)(3)(i)) \4\.
Nongrandfathered LTCH N/A................ N/A................ Yes................ Yes.
Satellites Subject to
Transition at Sec.
412.534(g) \5\.
Nongrandfathered LTCH N/A................ N/A................ N/A................ N/A.
Satellites not Subject to
Transition at Sec.
412.534(g) \6\.
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\1\ These are LTCH HwHs that were not required to meet the ``separateness and control'' policies at Sec.
412.22(e) and were so classified by the Secretary on or before September 30, 1995.
[[Page 29702]]
\2\ These are LTCH HwHs subject to the separateness and control policies at Sec. 412.22(e) that were paid
under the LTCH PPS as of October 1, 2004 or an LTCH HwH paid under the LTCH PPS as of October 1, 2005 whose
qualifying period began on or before October 1, 2004.
\3\ These are LTCH HwHs subject to the separateness and control policies at Sec. 412.22(e) not paid under the
LTCH PPS as of October 1, 2004, or October 1, 2005 with a qualifying period that began on or before October 1,
2004.
\4\ These are LTCH satellites not subject to the separateness and control policies atSec. 412.22(h)(2)(iii)
and that were structured as satellite facilities on September 30, 1999 and excluded from the IPPS on that
date.
\5\ These are LTCH satellites subject to the separateness and control policies at Sec. 412.22(h)(2)(iii) that
were paid under the LTCH PPS as of October 1, 2004.
\6\ These are LTCH satellites subject to the separateness and control policies at Sec. 412.22(h)(2)(iii) that
were not paid under the LTCH PPS as of October 1, 2004.
Table 2.--Revisions to Sec. 412.534 and Sec. 412.536 of the
Regulations in Accordance With Section 114(c)(1) and (2) of MMSEA by
LTCH Type
------------------------------------------------------------------------
Applicability of
LTCH type* -------------------------------------------
Sec. 412.534 Sec. 412.536
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Freestanding (as described N/A................. 3-year delay for
Sec. 412.23(e)(5) of the cost reporting
regulations). periods beginning
on or after 12/29/
2007 and before 12/
29/2010. (Section
114(c)(1)(A) of
MMSEA).
Nongrandfathered HwH (as (1) If subject to No change.
described Sec. the transition at Applicable subject
412.23(e)(2)(i) that meet Sec. 412.534(g) to existing
the criteria in Sec. (including those transition at Sec.
412.22(e)). located in rural 412.536(f).
areas or co-located
with an MSA-
dominant hospital
or urban-single
hospital),
applicable but with
revised thresholds.
(2) If not subject
to the transition
at Sec.
412.534(g)
(including those
located in rural
areas or co-located
with an MSA-
dominant hospital
or urban-single
hospital), Sec.
412.534 is
applicable with no
change in
thresholds.
Grandfathered HwH (as 3-year delay for 3-year delay for
described in section cost reporting cost reporting
4417(a) of the BBA and periods beginning periods beginning
described in Sec. on or after 12/29/ on or after 12/29/
412.23(e)(2)(i) and meets 2007 and before 12/ 2007 and before 12/
the criteria of Sec. 29/2010 (as 29/2010 (as
412.22(f) of the specified in specified in
regulations). section section
114(c)(1)(B) of 114(c)(1)(B) of
MMSEA. MMSEA).
Nongrandfathered LTCH (1) If subject to No change--
Satellite Facility (as the transition in Applicable Subject
described in Sec. Sec. 412.534(g) to existing
412.23(e)(2)(i) and meets (including those transition at Sec.
the criteria of Sec. located in rural 412.536(f).
412.22(h) of the areas or co-located
regulations). with an MSA-
dominant hospital
or urban-single
hospital), is
applicable but with
revised thresholds.
(2) If not subject
to the transition
in Sec.
412.534(g)
(including those
located in rural
areas or co-located
with an MSA-
dominant hospital
or urban-single
hospital), is
applicable with no
change in
thresholds.
Grandfathered LTCH Satellite Applicable--subject No change.
Facility (as described in to transition at Applicable subject
Sec. 412.23(e)(2)(i) that Sec. 412.534(h). to existing
meets the criteria Sec. transition at Sec.
412.22(h)(3)(i)). 412.536(f).
------------------------------------------------------------------------
* Neither Sec. 412.534 or Sec. 412.536 apply to a section
1886(d)(1)(B)(iv)(II) of the Act ``subclause (II)'' LTCH or LTCH
satellite facility.
For purposes of the requirements of section 114(c) of MMSEA, the
distinction between a freestanding LTCH and a LTCH that is co-located
as either an HwH or a LTCH satellite facility is significant. A
``freestanding'' LTCH is a LTCH which is not co-located with another
hospital-level provider as either a HwH, defined at Sec. 412.22(e), or
as a satellite of a hospital as defined at Sec. 412.22(h)(1). A HwH is
defined at Sec. 412.22(e) as ``* * * a hospital that occupies space in
a building also used by another hospital, or in one or more separate
buildings located on the same campus as buildings used by another
hospital * * *'' At Sec. 412.22(f) we describe ``grandfathered'' HwHs
which meet the definition at Sec. 412.22(e) but are exempt from the
``separateness and control'' policies at Sec. 412.22(e)(1). The term
``satellite facilities'' defined at Sec. 412.22(h) which addresses
satellites of hospitals; is ``* * * a part of a hospital that provides
inpatient services in a building also used by another hospital, or in
one or more entire buildings located on the same campus as buildings
used by another hospital * * *'' For purposes of the HwH regulations at
Sec. 412.22(e) and the satellite regulations at Sec. 412.22(h), we
utilize the definition of ``campus'' in the provider-based regulations
at Sec. 413.65(a)(2). Section 413.65 defines a campus as ``the
physical area immediately adjacent to the provider's main buildings,
other areas and structures that are not strictly contiguous to the main
buildings but are located within 250 yards of the main buildings, and
any other areas determined on an individual basis, by the CMS regional
office, to be part of the provider's campus.''
Section 114(c) of MMSEA employs the term ``freestanding'' in
identifying one group of LTCHs which the provision exempted from the 25
percent patient threshold adjustment for 3 years. The statute did not
define the term freestanding LTCHs in section 114(c)(1)(A) of MMSEA
which pertains to the adjustment policy in Sec. 412.536 or any similar
provision. In order to minimize confusion and ensure the MMSEA is
implemented consistently, we are adding a definition for freestanding
LTCH to our regulations at Sec. 412.23(e)(5). The definition is
consistent with our application of the concept under Sec. 412.534 and
Sec. 412.536. For purposes of section 114(c) of
[[Page 29703]]
MMSEA, therefore, we are establishing a regulatory definition of a
``freestanding LTCH'' at Sec. 412.23(e)(5), as a hospital that meets
the requirements of Sec. 412.23(e)(1) and (2) that does not occupy
space in a building also used by another hospital, or in one or more
separate or entire buildings located on the same campus as buildings
used by another hospital or is not part of a hospital that provides
inpatient services in a building also used by another hospital.
As noted above, section 114(c)(1)(B) of MMSEA specifies a 3-year
delay, effective with cost reporting periods beginning on or after the
date of enactment of MMSEA (that is, December 29, 2007), in the
application of ``such section, or Sec. 412.534 of title 42, Code of
Federal Regulations, or any similar provisions to a long-term care
hospital identified by the amendment made by section 4417(a) of the
Balance Budget Act (BBA) of 1997 (Pub. L. 105-33).'' We believe that
the phrase ``such section'' refers to Sec. 412.536 because this
provision is the main topic of the preceding subparagraph (A). We
further believe that the inclusion of the phrase ``or any similar
provisions'' after specifying Sec. 412.534, in section 114(c)(1)(B) of
MMSEA exempts ``grandfathered'' LTCHs from any regulatory scheme which
would apply a percentage patient payment adjustment similar to that in
Sec. 412.534 or Sec. 412.536 for a 3-year period. As noted above, the
type of LTCH identified by section 4417(a) of the BBA is limited to a
``grandfathered'' LTCH HwH. Section 4417(a) of the BBA (which amended
section 1886(d)(1)(B) of the Act) specifies that ``[a] hospital that
was classified by the Secretary on or before September 30, 1995, as a
hospital described in clause (iv) shall continue to be so classified
notwithstanding that it is located in the same building as, or on the
same campus as, another hospital.'' (Section 1886(d)(1)(B)(iv) of the
Act sets forth the definition of LTCHs.) Section 4417(a) of BBA
effectively exempted this particular group of LTCH HwHs from the
``separateness and control'' policies at Sec. 412.22(e)(2) which
govern the relationship between a HwH and the hospital with which it is
co-located. These ``grandfathered'' LTCHs are allowed to maintain their
IPPS-exclusions so long as they continue to comply with applicable
Medicare requirements. As noted above, section 114(c)(1)(B) of MMSEA
provides that the Secretary shall not apply the percentage thresholds
established at Sec. 412.536 and Sec. 412.534 (or any similar
provisions) for a 3-year period, for cost reporting periods beginning
on or after the date of enactment, December 29, 2007, to
``grandfathered'' LTCH HwHs. Section 114(c)(1)(A) of MMSEA also
specifies that the Secretary shall not apply the provisions at Sec.
412.536 (or any similar provision) to ``freestanding'' LTCHs for the 3-
year period for cost-reporting periods beginning on or after December
29, 2007. However, it is important to note that both ``grandfathered''
LTCH HwHs and ``freestanding'' LTCHs for cost reporting periods
beginning before December 29, 2007, remain subject to the applicable
payment adjustments specified in Sec. 412.534(h) and Sec. 412.536,
for that particular cost reporting period. Section 412.534(h), with
respect to ``grandfathered'' LTCHs, and Sec. 412.536 with respect to
all LTCHs were implemented for cost-reporting period beginning on or
after July 1, 2007. The policy modifications mandated by section 114(c)
of MMSEA are effective'' * * * for cost reporting periods beginning on
or after the date of enactment of this Act for a 3-year period.''
Therefore, a ``grandfathered'' or a ``freestanding'' LTCH with a cost
reporting period that begins on or after July 1, 2007 but before
December 29, 2007, would be subject to the provisions of Sec. 412.534
and Sec. 412.536, as appropriate, until the start of its next cost
reporting period. For example, for a LTCH with a cost reporting period
beginning on July 1, 2007, the changes required by section 114(c) of
MMSEA would only apply beginning on or after July 1, 2008. The 3 years
of relief available to such a facility would continue until the end of
its cost reporting period that began before December 29, 2010 (that is,
the LTCH's last cost reporting period affected by this provision would
begin July 1, 2010 and end June 30, 2011). In another example, for a
LTCH that had a September 1 through August 31 cost reporting period,
the first cost reporting period for which it would be granted the
relief specified in section 114(c) of MMSEA, would be its cost
reporting period beginning on September 1, 2008 and the last cost
reporting period would be the period beginning on September 1, 2010 and
ending on August 31, 2011.
Although section 114(c)(1) of MMSEA exempts ``grandfathered'' LTCH
HwHs from the ``25 percent patient threshold payment adjustment'' at
Sec. 412.534 and Sec. 412.536, a ``grandfathered'' satellite of a
LTCH, under Sec. 412.22(h)(3) continues to be subject to the
applicable percentage thresholds outlined in Sec. 412.536 for patients
admitted from any individual hospital with which it is not co-located
because there are no exceptions under the MMSEA for such entities for
purposes of Sec. 412.536. Also, grandfathered LTCH satellites continue
to be subject to the applicable existing percentage thresholds in Sec.
412.534(h) for patients admitted from their co-located hospital because
there are no exceptions for these entities under the MMSEA for purposes
of Sec. 412.534. The existing transitions to the full payment
adjustments for ``grandfathered'' LTCH satellites at Sec.
412.534(h)(2) also continue to apply. The revision to the percentages
made by section 114(c)(2) of MMSEA were limited to a hospital a LTCH
satellite subject to the transition rules at Sec. 412.534(g).
Grandfathered LTCH satellites are subject to the transition at Sec.
412.534(h), not to those at Sec. 412.534(g). Specifically, in the case
of a satellite of a LTCH that is described under paragraph (h)(1), the
thresholds applied at (c), (d), and (e) will not be less than the
percentage specific below:
For cost reporting periods beginning on or after July 1,
2007 and before July 1, 2008 a threshold of the lesser of 75 percent of
the total number of Medicare discharges that were admitted to the LTCH
satellite facility from its co-located hospital during the cost
reporting period or the percentage of Medicare discharges that had been
admitted to the LTCH satellite facility from that co-located hospital
during the satellite's RY 2005 cost reporting period.
For cost reporting periods beginning on or after July 1,
2008 and before July 1, 2009, we use the formula in the paragraph above
except that we substitute 50 percent for 75 percent; and
For cost reporting periods beginning on or after July 1,
2009, the 25 percent adjustment is applied.
Similarly, the transition to the full 25 percent threshold or
applicable threshold provided at Sec. 412.536(f) continues to be
applicable for discharges that were admitted to a nongrandfathered HwH
or a nongrandfathered LTCH satellite facility or grandfathered
satellite facility from any hospital with which the HwH or LTCH
satellite facility is not co-located, because section 114(c)(1) of
MMSEA provides no exceptions for such entities. This transition at
Sec. 412.536 parallels the transition at Sec. 412.534(h)(2).
With respect to LTCH HwHs and LTCH satellite facilities that are
not grandfathered, the applicable percentage thresholds established at
Sec. 412.536, continue to apply because the MMSEA provides no
exceptions for such entities. In addition, nongrandfathered HwHs and
both grandfathered and nongrandfatered LTCH satellite facilities
continue to be subject to Sec. 412.534.
[[Page 29704]]
However, to the extent a nongrandfathered LTCH HwH or LTCH satellite
facility meets the definition of an ``applicable long-term care
hospital or satellite facility,'' the revised percentage thresholds in
section 114(c)(2)(A) and (B)(i) of MMSEA apply for cost reporting
periods beginning on or after December 29, 2007 and before December 29,
2010.
Specifically, section 114(c)(2)(B)(i) of MMSEA of 2007 modifies the
percentage thresholds specified in existing Sec. 412.534(c) from 25
percent to 50 percent for ``an applicable'' LTCH HwH or LTCH satellite
facility described below, for 3 years, for cost reporting periods
beginning on or after December 29, 2007. Therefore, payment to an
applicable LTCH or LTCH satellite facility which is co-located with
another hospital shall not be subject to any payment adjustment under
Sec. 412.534 if no more than 50 percent of the hospital's Medicare
discharges during the hospital's fiscal year (other than discharges
described in Sec. 412.534(c)(3)) are admitted from the co-located
hospital. (We note that Sec. 412.534(c)(3) expressly excludes patients
who had achieved high cost outlier status at the discharging co-located
hospital.) Section 114(c)(2)(B)(ii) of MMSEA defines ``an applicable
long-term care hospital or satellite facility'' as ``* * * a hospital
or satellite facility that is subject to the transition rules under
Sec. 412.534(g) * * *'' The transition rules in Sec. 412.534(g) apply
to LTCH HwH and satellites that had been paid under the LTCH PPS as of
October 1, 2004 or a LTCH HwH that is paid under the LTCH PPS on
October 1, 2005 whose qualifying period under Sec. 412.23(e) began on
or before October 1, 2004 (see 69 FR 49206). Accordingly, an applicable
LTCH HwH and LTCH satellite facility for purposes of section
114(c)(2)(ii) of the MMSEA is ``* * * a long-term care hospital or a
satellite facility that is paid under the provisions of subpart O on
October 1, 2004 or of a hospital that is paid under the provisions of
subpart O and whose qualifying period under Sec. 412.23(e) began on or
before October 1, 2004 * * *'' (Sec. 412.534(g)). (For a more detailed
explanation, see the FY 2005 IPPS final rule.)
Therefore, if a nongrandfathered LTCH or LTCH satellite facility
does not meet the definition of an ``applicable long-term care hospital
or satellite facility'', the thresholds established under existing
Sec. 412.534 are not modified by section 114(c)(2) of MMSEA.
The revised thresholds under section 114(c)(2)(A) of MMSEA for
``applicable'' LTCH HwHs and LTCH satellite facilities are as follows:
The provision raises the existing 50 percent ceiling on percentage
thresholds for ``applicable'' LTCH HwHs or LTCH satellite facilities
that are located either in rural areas or that are co-located with an
urban single or metropolitan statistical area (MSA-dominant) hospital
(under Sec. 412.534 (d)(1), (e)(1), and (e)(4) of the regulations) to
75 percent. (We note that Sec. 412.534(d)(2) and (e)(3), which
expressly excludes patients who had achieved high cost outlier status
at the discharging co-located hospital prior to admission to the LTCH
or LTCH satellite from being counted towards the threshold has not been
modified.) In other words, payment to an applicable LTCH or satellite
facility which is located in a rural area or which is co-located with
an urban single or MSA dominant hospital under Sec. 412.534(d)(1),
(e)(1), and (e)(4) is not subject to any payment adjustment under such
section if no more than 75 percent of the hospital's Medicare
discharges (other than discharges described in Sec. 412.534(d)(2) or
(e)(3)) are admitted from a co-located hospital. Section 114(c)(2) of
MMSEA also raises the existing 25 percent patient threshold payment
adjustment to ``applicable'' LTCH HwHs and LTCH satellites, defined
previously, from 25 percent to 50 percent. Furthermore, we would also
emphasize that since this modification only applies to ``applicable''
LTCHs and LTCH satellites, as defined in paragraph section
114(c)(2)(B)(ii) of MMSEA, those LTCH HwHs and LTCH satellites that
were not subject to the transition policy set forth at Sec.
412.534(g), will continue to have the existing patient percentage
threshold applied.
In accordance with the transition policy specified at Sec.
412.534(g), for cost reporting periods beginning on or after October 1,
2007, the percentage threshold even for ``applicable'' LTCH HwHs and
LTCH satellite facilities decreased from 50 percent to 25 percent for
LTCH HwHs and LTCH satellite facilities and the thresholds for rural,
MSA-dominant, and urban single LTCHs and LTCH satellite facilities were
held at 50 percent (see Sec. 412.534(d) and (e)). Since the percentage
threshold modifications established under section 114(c)(2) of MMSEA
are implemented for cost reporting periods beginning on or after
December 29, 2007, if an ``applicable'' LTCH HwH and LTCH satellite had
a cost reporting period beginning before that date (specifically, a
cost reporting period beginning on or after October 1, 2007 and before
December 29, 2007), the facility would be subject to the 25 percent
threshold that was in effect at the start of that cost reporting period
or a 50 percent threshold if the facility was located in a rural area
or is co-located with an MSA-dominant or urban single hospital.
However, for 3 years, beginning with the ``applicable'' HwH's or LTCH
satellite's first cost reporting period beginning on or after December
29, 2007 the percentage thresholds increase to 50 percent and for an
``applicable'' LTCH HwHs and satellites located in a rural area, or co-
located with an MSA-dominant, or urban single hospital for that 3-year
period, the 50 percent threshold increases to 75 percent.
In compliance with section 114(c) of MMSEA, we have revised Sec.
412.534 and Sec. 412.536 to implement the 3-year delay in the
application of the percentage patient threshold payment adjustment to
``freestanding and grandfathered LTCHs'' and the 3-year revision in the
percentage payment thresholds adjustments for ``applicable'' LTCHs and
satellite facilities. We have also made technical corrections to Sec.
412.534(b) in order to clarify the effective dates of the percentage
patient threshold policy for discharges from a LTCH HwH or from a LTCH
satellite that were admitted from the hospital with which it is co-
located.
B. Moratorium on the Establishment of Long-Term Care Hospitals, Long-
Term Care Hospital Satellite Facilities, and on the Increase in Number
of Beds in Existing Long-Term Care Hospitals or Long-Term Care Hospital
Satellite Facilities
1. Overview
Section 114(d) of MMSEA provides a 3-year moratorium with two
distinct aspects, one for the establishment of new LTCHs and LTCH
satellite facilities, and the other for the increase of hospital beds
in existing LTCHs and LTCH satellite facilities. Specifically, section
114(d)(1)(A) of MMSEA provides that the Secretary shall impose a
moratorium ``subject to paragraph (2), on the establishment and
classification of a long-term care hospital or satellite facility,
other than an existing long-term care hospital or facility.'' Section
114 (d)(1)(B) of MMSEA provides that, the Secretary shall impose a
moratorium ``subject to paragraph (3), on an increase of long-term care
hospital beds in existing long-term care hospitals or satellite
facilities.''
Sections 114(d)(2) and (d)(3) of MMSEA provide for exceptions to
the moratorium imposed by section 114(d)(1) of MMSEA. It is important
to
[[Page 29705]]
note that the two categories of exceptions are mutually exclusive. The
three exceptions specified in section 114(d)(2) of MMSEA, discussed
below, are only applicable to the moratorium provision at section
114(d)(1)(A) of MMSEA, which applies exclusively to the establishment
and classification of a LTCH or LTCH satellite facility. The three
exceptions in section 114(d)(2) do not apply to the moratorium on an
increase in beds at section 114(d)(1)(B) of MMSEA. Similarly, the
exception at section 114(d)(3)(A) of MMSEA only applies to the
moratorium on increases in beds at existing LTCHs or LTCH satellites
facilities, and not to the moratorium on the establishment of LTCHs and
LTCH satellite facilities.
2. Analysis of Exceptions to the Moratorium on the Establishment of New
LTCHs and LTCH Satellite Facilities
In section 114(d)(1)(A) of MMSEA, the statute specifically provides
for a 3-year moratorium effective on the date of enactment of the MMSEA
on the establishment and classification of a long-term care hospital or
satellite facility, other than an existing LTCH or facility. (The term
``existing,'' with respect to a hospital or satellite facility, is
defined in the legislation at section 114(d)(4) of MMSEA as ``a
hospital or satellite facility that received payment under the
provisions of subpart O of part 412 of title 42, Code of Federal
Regulations, as of the date of the enactment of this Act.'') The MMSEA
was enacted on December 29, 2007. Therefore, the moratorium will be
effective from December 29, 2007 through December 28, 2010. Section
114(d)(2) of MMSEA specifies that the moratorium on the establishment
and classification of a LTCH or LTCH satellite facility does not apply
to a LTCH that, as of December 29, 2007, met one of the following three
exceptions:
The LTCH began ``its qualifying period for payment as a
long-term care hospital under section 412.23(e) of title 42, Code of
Federal regulations, on or before the date of enactment of this Act''
(section 114(d)(2)(A)).
The LTCH has a binding written agreement with an outside,
unrelated party for the actual construction, renovation, lease, or
demolition for a LTCH and has expended before December 29, 2007 at
least 10 percent of the estimated cost of the project or, if less,
$2,500,000 (section 114(d)(2)(B)).
The LTCH has obtained an approved certificate of need in a
State where one is required on or before December 29, 2007 (section
114(d)(2)(C)).
In implementing the provisions of section 114(d) of MMSEA, we found
that, in light of the unique nature of LTCHs as a category of Medicare
provider, some of the terminology in the provision is internally
inconsistent. Therefore, we were required to interpret the provisions
in the way we believe reasonably reconciles seemingly inconsistent
provisions and that results in an application of the provisions that is
logical and workable. We discuss our interpretations below.
Specifically, section 114(d)(1)(A) of MMSEA indicates that the
moratorium on the establishment and classification of a LTCH or
satellite facility, other than an existing LTCH or satellite facility,
is ``subject to paragraph (2).'' In contrast paragraph (2) is titled,
``Exception for Certain Long-Term Care Hospitals'' and it begins with
``[t]he moratorium under paragraph (1)(A) shall not apply to a long-
term care hospital that as of the date of the enactment of this Act.''
We note that the term ``satellite'' is omitted in paragraph (2) even
though satellites are entities subject to the moratorium provision.
Because section 114(d)(1)(A) of MMSEA appears to contemplate an
exception to the moratorium for both qualifying LTCHs and qualifying
satellite facilities, we believe that it is appropriate to apply
paragraph (2) to new LTCH satellite facilities just as it applies to
LTCHs. Our interpretation of the statute is premised on this
presumption.
An additional problem with paragraph (2) of section 114(d) of MMSEA
is that a strictly literal reading of the statutory language in that
paragraph presents practical challenges for implementation in light of
the established LTCH classification criteria in section 412.23(e).
Below, we examine the exceptions to the moratorium on the
establishment and classification of a long-term care hospital or
satellite facility in light of the classification criteria for LTCHs at
Sec. 412.23(e) and the presumption that the provision allows, where
practicable in limited situations, a new LTCH satellite facility to
qualify for an exception under section 114(d)(2) of MMSEA. The first
exception in section 114(d)(2)(A) of MMSEA applies to ``a long-term
care hospital that as of the date of the enactment of this Act* * *
began its qualifying period for payment as a long-term care hospital
under section 412.23(e) of title 42, Code of Federal Regulations, on or
before the date of the enactment of this Act.'' We believe this
exception regarding the qualifying period refers to the period
established in our regulations at Sec. 412.23(e)(3) during which the
predecessor hospital is collecting LOS data to be used to demonstrate
that the hospital meets the LOS requirements (explained in more detail
below) to be classified as a LTCH. Specifically in order for a hospital
to be designated as a LTCH, the LTCH classification criteria
regulations at Sec. 412.23(e) stipulate the following:
(e) Long-term care hospitals. A long-term care hospital must
meet the requirements of paragraph (e)(1) and (e)(2) of this section
and, when applicable, the additional requirement of Sec. 412.22(e),
to be excluded from the prospective payment system specified in
Sec. 412.1(a)(1) and to be paid under the prospective payment
system specified in Sec. 412.1(a)(4) and in Subpart O of this part.
(1) Provider agreements. The hospital must have a provider
agreement under Part 489 of this chapter to participate as a
hospital; and
(2) Average length of stay. (i) The hospital must have an
average Medicare inpatient length of stay of greater than 25 days; *
* *
As provided by Sec. 412.23(e)(1), the qualifying period for a
``new'' or ``planned'' LTCH may not begin before the facility has
obtained a provider agreement, under 42 CFR part 489, to participate in
the Medicare program as a hospital. Typically, when a new hospital is
established, after operating as a hospital, such a facility could
present patient LOS data from a short (6 months) cost report using data
from at least 5 months of the 6-month period immediately preceding the
start of the cost reporting period for which the hospital is seeking
LTCH designation.
In light of how we view the qualifying period under section
412.23(e), we note that it is not possible for a LTCH, as of the date
of enactment of MMSEA, to begin its qualifying period as a LTCH.
Technically, under the LTCH classification criteria regulations at
412.23(e), it is an existing hospital, not a LTCH, that has a
qualifying period for LTCH status. Therefore, we believe that the
exception specified at section 114(c)(2)(A) of MMSEA applies to an
existing hospital that began its qualifying period on or before
December 29, 2007 for LTCH status. To qualify for the exception to the
moratorium, the LOS data used to demonstrate that the hospital has an
average LOS greater than 25 days must be from its cost reporting period
that began on or before December 29, 2007. In addition, we note that
the exception at section 114(d)(2)(A) of MMSEA would not be applicable
to satellite facilities since there is no ``qualifying period'' for the
establishment of a satellite facility for payment as a LTCH under Sec.
412.23(e).
Next, under section 114(d)(2)(B) of MMSEA, an exception to the
[[Page 29706]]
moratorium is made for a long-term care hospital that, as of the date
of the enactment of the MMSEA (December 29, 2007), satisfies the two
prongs of the exception: (1) it has a binding written agreement with an
outside, unrelated party for the actual construction, renovation,
lease, or demolition for a long-term care hospital; and (2) It has
expended, before the date of enactment of this Act, at least 10 percent
of the estimated cost of the project (or, if less, $2,500,000). As
drafted, this provision is problematic in light of Sec. 412.23(e). For
example, where a hospital has not even been built, but there is a
binding written agreement for the actual construction of a hospital
that intends to be classified as a LTCH, technically it is not a LTCH
that is party to the binding written agreement. In such a situation, no
LTCH would yet exist. Prior to the existence of a LTCH, a hospital must
first be established, certified, and complete the procedures specified
in Sec. 412.23(e) in order to qualify as a LTCH, at which point the
hospital would be classified as a LTCH.
In light of the LTCH classification criteria in Sec. 412.23(e),
and our presumption that new LTCH satellite facilities are included in
the exceptions in section 114(d)(2) of MMSEA, the exception in section
114(d)(2)(B) of MMSEA applies in the following three circumstances: (1)
As of the date of enactment of the MMSEA, an existing hospital (that
is, one that was certified as a hospital as of December 29, 2007) that
will become an LTCH has a binding written agreement with an outside
unrelated party for the actual construction, renovation, lease, or
demolition for converting the hospital to a LTCH and has expended,
before December 29, 2007, at least 10 percent of the estimated cost of
the project (or, if less, $2,500,000); (2) as of the date of enactment
of the MMSEA, an entity that will develop a hospital that will
ultimately become a LTCH has a binding written agreement with an
outside unrelated party for the actual construction, renovation, lease,
or demolition for a hospital and that entity has expended, before
December 29, 2007, at least 10 percent of the estimated cost of the
project (or, if less, $2,500,000); and (3) an existing LTCH, as of
December 29, 2007, has a binding written agreement with an outside
unrelated party for the actual construction, renovation, lease or
demolition for a new LTCH satellite facility and the LTCH has expended
before December 29, 2007 at least 10 percent of the estimated cost of
the project (or, if less, $2,500,000).
With regard to the first prong, we believe that the use of the term
``actual'' in the context of the ``actual construction, renovation,
lease, or demolition,'' indicates that the the provision focuses only
on the specific accomplishments cited in the statute and does not
include those that are contemplated or have not yet been executed.
Although we are aware that a hospital or entity may enter into binding
written agreements regarding services and items (for example,
feasibility studies or land purchase) and incur costs for those
services and items prior to actual construction, renovation, lease or
demolition, we believe those services or items are not included in the
statute as a basis for the exception.
With respect to the second prong, the statute specifies that the
hospital or entity must have expended before December 29, 2007, at
least 10 percent of the estimated cost of the project (or, if less,
$2.5 million). By ``cost of the project,'' we believe the statute
refers to the activities enumerated in the first prong: ``The actual
construction, renovation, lease, or demolition for a long-term care
hospital.'' The statute requires that the hospital or entity has spent
the amount specified in the statute on the actual construction,
renovation, lease, or demolition for the contemplated LTCH.
Furthermore, because the statute uses the phrase ``has expended'' we
believe that the statute requires that hospital or entity would have
actually transferred funds as payment for the project as opposed to
merely obligating capital and posting the cost of the project on its
books as of December 29, 2007. We believe that the provision addressed
the concept of ``obligate'' in the first prong of the test where the
statute specifies ``a binding written agreement * * * for the actual
construction, renovation, lease, or demolition of the long-term care
hospital. . .'' and there is no reason to believe that the second prong
of the test, which requires the ``expenditure'' of 10 percent of the
project or if less, $2,500,000, was intended as a redundancy. The
ability to post the expense on the hospital's or entity's books could
be satisfied by merely having a binding written agreement under the
first prong of section 114(d)(2)(B) of MMSEA. The fact that a second
requirement is included that involves an expenditure indicates that an
additional threshold must be met.
Finally, section 114(d)(2)(C) of MMSEA provides an exception for a
long-term care hospital that, as of the date of the enactment of the
Act, ``has obtained an approved certificate of need in a State where
one is required on or before the date of the enactment of this Act.''
We do not believe that the provision limits the exception to only an
existing long-term care hospital that has obtained an approved
certificate of need to create a new satellite of the LTCH. We note that
in many instances, prior to being classified as a LTCH, a hospital is
to be built by an entity with the express intention of making it into a
LTCH as soon as possible. In those instances, it is not uncommon for
the entity to obtain a certificate of need from the State prior to the
development of the hospital.
We believe that the certificate of need exception applies to a
hospital or entity that was actively engaged in developing a LTCH, as
evidenced by the fact that either an entity that wanted to create a
LTCH but did not exist as a hospital as of December 29, 2007, had
obtained a certificate of need for a hospital by the date of enactment,
or an existing hospital had obtained a certificate of need to convert
the hospital into a new LTCH by that date. However, this exception
would not apply to a hospital that was already in existence prior to
the date of enactment and that had previously obtained an approved
certificate of need for a hospital (other than a LTCH) on or before
December 29, 2007. The fact that a hospital may have had a certificate
of need issued to it years before December 29, 2007, to operate a
hospital (other than a LTCH) would not be a reason to grant it an
exception, unless that certificate of need was specifically for a LTCH.
Since the certificate of need process is controlled at the State level,
in determining whether the hospital or entity has obtained an approved
certificate of need on or before December 29, 2007, we will look to the
State for that determination.
2. Analysis of Exception to the Moratorium on the Increase in Number of
Long-Term Care Hospital Beds in Existing Long-Term Care Hospitals and
Satellite Facilities
In section 114(d)(1)(B) of MMSEA, a moratorium is also imposed on
existing LTCHs or LTCH satellite facilities for the 3-year period
beginning December 29, 2007 through December 28, 2010. The moratorium
is on an increase of LTCH beds in existing LTCHs or LTCH satellite
facilities. Therefore, during the 3-year moratorium, an existing LTCH
or LTCH satellite facility may not increase the number of beds in
excess of the number of Medicare-certified beds at the hospital on
December 29, 2007. We are using the number of beds certified by
Medicare, because this number can be verified by CMS and its
contractors and this is currently referenced in our
[[Page 29707]]
regulations at Sec. 412.22(h)(2)(i), and similarly referenced in Sec.
412.22(f)(1). The moratorium on an increase of beds is subject to the
exception at section 114(d)(3) of MMSEA. Specifically, section
114(d)(3) of the MMSEA states that the moratorium on an increase in
beds shall not apply if an existing LTCH or LTCH satellite facility is
``located in a State where there is only one other long-term care
hospital; and requests an increase in beds following the closure or the
decrease in the number of beds of another long-term care hospital in
the State.'' Section 114 (d)(3)(B) of the MMSEA also provides that the
exception to the moratorium on the increase in bed numbers for existing
LTCHs or LTCH satellite facilities does not apply to the limit on the
number of beds in ``grandfathered'' LTCH HwHs as specified at Sec.
412.22(f) and LTCH satellite facilities as specified at Sec.
412.22(h)(3). Under Sec. 412.22(f) and Sec. 412.22(h)(3),
respectively, ``grandfathered'' LTCH HwHs and LTCH satellite facilities
(that is, HwHs that were in existence on or before September 30, 1995
and LTCH satellite facilities that were in existence on or before
September 30, 1999 and that meet certain specified conditions) are
exempted from compliance with ``separateness and control'' policies as
long as they do not increase their bed numbers. (See the FY 2007 IPPS
final rule (71 FR 48106 through 48115).) Therefore, even if a
``grandfathered'' LTCH HwH or LTCH satellite facility is located in a
State where there is only one other LTCH and it requests an increase in
beds following the closure or the decrease in the number of beds of
another long-term care hospital in the State, it would not be able to
maintain its grandfathered status if it would increase the number of
beds at the LTCH under this exception.
Decisions regarding whether a specific situation will be considered
to meet the exceptions to the establishment and classification of new
LTCHs or new LTCH satellite facilities or the exceptions on increasing
the number of beds in existing LTCHs or LTCH satellite facilities will
be determined on a case-by-case basis by the applicant's FI/MAC and the
CMS Regional Office (RO).
In compliance with section 114(d) of MMSEA, we are revising our
regulations at Sec. 412.23 to include a description of the moratorium
on the establishment of new LTCHs and LTCH satellites and the
moratorium on increasing the number of beds in existing LTCHs and
existing LTCH satellites. Additionally, in Sec. 412.23(e)(5) we have
established a definition of a freestanding LTCH.
III. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, 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 preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
IV. Waiver of Proposed Rulemaking
We ordinarily publish a notice of proposed rulemaking and invite
public comment on a proposed rule in accordance with 5 U.S.C. 553(b) of
the Administrative Procedure Act (APA). In addition, section 1871(b)(1)
of the Act provides that the Secretary shall provide for notice of the
proposed regulation in the Federal Register and a period of not less
than 60 days for public comment thereon. Section 1871(b)(2) of the Act
provides for an exception to the requirement that the Secretary provide
for notice of a proposed rulemaking and a period of not less than 60
days for public comment. Specifically, section 1871(b)(2)(B) of the Act
provides an exception to these requirements when a law establishes a
specific deadline for the implementation of a provision and the
deadline is less than 150 days after the date of the enactment of the
statute in which the deadline is contained. Several provisions of the
MMSEA changed existing LTCH PPS policies (it affected the adjustment
policies in Sec. 412.534 and Sec. 412.536; and placed a moratorium on
new LTCHs and LTCH satellite facilities, as well as a moratorium on bed
increases in existing LTCHs and LTCH satellite facilities). These
changes were required to be implemented: (1) Beginning December 29,
2007 (section 114(d) of MMSEA); or (2) beginning with cost reporting
periods beginning on or after December 29, 2007 (section 114(c)(1) and
(2) of MMSEA). Thus, the statute's deadline for implementation of the
MMSEA-related policies contained in this interim final regulation was
less than 150 days after the date of the enactment of the statute in
which the deadline was contained. We also note that we established a
definition of ``freestanding LTCH'' at Sec. 412.23(e)(5) consistent
with our application of Sec. 412.534 and Sec. 412.536 in order to
ensure consistent implementation of section 114(c)(1) of the MMSEA.
Therefore, under the authority of section 1871(b)(2)(B) of the Act, we
are waiving notice and comment procedures for the MMSEA policy changes
pertaining to Sec. 412.534 and Sec. 412.536 (including the addition
of the definition of freestanding LTCH at Sec. 412.23(e)(5)) as well
as the moratorium on new LTCHs and LTCH satellite facilities, and the
moratorium on increasing beds at an existing LTCH and an existing
satellite facility of a LTCH.
Moreover, we also find good cause to waive the requirement for
publication of a notice of proposed rulemaking and comment on the
grounds that it is unnecessary, impracticable and contrary to the
public interest under the authority of 5 U.S.C. 553(b)(B). In general,
this interim final rule with comment period sets forth nondiscretionary
provisions of the MMSEA with respect to a moratorium on the
establishment of new long-term care hospitals and long-term care
satellite facilities and on the increase of long-term care hospital
beds in existing LTCHs or LTCH satellite facilities, and payment
policies pertaining to Sec. 412.534 and Sec. 412.536. Therefore, we
believe pursuing notice and comment is unnecessary. Moreover, because
that process would prevent timely implementation of congressionally
mandated policy changes that are to be effective, as described
previously in this section, we believe notice and comment procedures
are impracticable and contrary to the public interest. In addition,
notice and comment would delay significantly the issuance of essential
guidance to the public which is necessary to assist them in making
complex, time-sensitive business decisions of significant financial
consequence with respect to their efforts to comply with section 114 of
the MMSEA. Failure to provide this guidance would impede such business
decisions.
Section 1871(e)(1)(A) of the Act provides that a substantive change
in regulations, manual instructions, interpretative rules, statements
of policy, or guidelines of general applicability under this title
shall not be applied (by extrapolation or otherwise) retroactively to
items and services furnished before the effective date of the change
unless the Secretary determines that (i) such retroactive application
is necessary to comply with statutory requirements; or (ii) failure to
apply the change retroactively would be contrary to the public
interest. As explained in the paragraph above, the MMSEA requires the
Secretary to implement various policy changes either contemporaneously
with the enactment of the MMSEA on December 29, 2007 or beginning with
cost reporting periods beginning on or after December 29, 2007 as
applicable. Therefore, under the authority of section 1871(e)(1)(A)(i)
of
[[Page 29708]]
the Act, we are making the provisions of this interim final rule with
comment period that implement sections 114(d) of MMSEA retroactive to
December 29, 2007. The statute also requires that section 114(c)(1) and
(2) be implemented beginning with cost reporting periods beginning on
or after December 29, 2007. Therefore, under the authority of section
1871(e)(1)(A)(i) of the Act, we are making the provisions of this
interim final rule with comment period that implement section 114(c)(1)
and (2) effective for cost reporting periods beginning on or after
December 29, 2007. Additionally, as explained previously, the Secretary
also finds that it would be contrary to the public interest if these
provisions were not made effective on December 29, 2007 or for cost
reporting periods beginning on or after December 29, 2007, as indicated
above. Therefore, under the authority of section 1871(e)(1)(A)(ii) of
the Act, we are making these changes effective under the timeframe
noted above.
For the same reasons noted above, we find good cause under section
553(d)(3) of the APA to waive the 30-day delay in effective date.
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.
VI. Regulatory Impact Analysis
We have examined the impacts of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review), the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), Executive Order 13132 on
Federalism, and the Congressional Review Act (5 U.S.C. 804 (2)).
Executive Order 12866 (as amended by Executive Order 13258) directs
agencies to assess all costs and benefits of available regulatory
alternatives and, if regulation is necessary, to select regulatory
approaches that maximize net benefits (including potential economic,
environmental, public health and safety effects, distributive impacts,
and equity). A regulatory impact analysis (RIA) must be prepared for
major rules with economically significant effects ($100 million or more
in any 1 year).
The enactment of section 114(c) of MMSEA requires several
modifications to the regulations at Sec. 412.534 and Sec. 412.536,
which, as discussed in section II.A of this interim final rule with
comment period, address the percentage thresholds between referring
hospitals (typically acute care hospitals) and LTCHs and satellites of
LTCHs. We estimate that the implementation of MMSEA provisions
pertaining to Sec. 412.534 and Sec. 412.536 will result in a
projected increase of approximately $30 million in estimated aggregate
LTCH PPS payments for RY 2008. We note that at this time, we are unable
to quantify the impact of the provision at section 114(d) of MMSEA
which provides for a moratorium on the establishment of LTCHs, LTCH
satellite facilities, and on the increase of LTCH beds in existing
LTCHs or satellite facilities for a period of 3 years. We are unable to
provide an estimate of the impact of the moratorium provisions in
section II.B. of this interim final rule with comment period because we
have no way of determining how many LTCHs would have opened in the
absence of the moratorium, nor do we have sufficient information at
this time to determine how many new LTCHs will meet the exceptions
criteria provided for in the statute. Because the distributional
effects and estimated changes to the Medicare program payments would
not be greater than $100 million, this interim final rule with comment
period would not be considered a major economic rule, as defined in
this section.
The RFA requires agencies to analyze options for regulatory relief
of small businesses. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small governmental
jurisdictions. Most hospitals and most other providers and suppliers
are small entities, either by nonprofit status or by having revenues of
$6.5 million to $31.5 million in any 1 year. (For further information,
see the Small Business Administration's regulation at 70 FR 72577,
December 6, 2005.) Individuals and States are not included in the
definition of a small entity. Because we lack data on individual
hospital receipts, we cannot determine the number of small proprietary
LTCHs. Therefore, we assume that all LTCHs are considered small
entities for the purpose of this impact discussion. Medicare FIs and
MACs are not considered to be small entities. As we discuss in detail
throughout the preamble of this interim final rule with comment period,
we believe that the provisions specified by the MMSEA presented in this
rule would result in an increase in estimated aggregate LTCH PPS
payments. Accordingly, the Secretary certifies that this interim final
rule with comment period would not have a significant economic impact
on a substantial number of small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. 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 for Medicare payment regulations and has fewer than
100 beds. As stated above, implementing the provisions specified by the
MMSEA that are discussed in this interim final rule with comment period
will result in an increase in estimated aggregate LTCH PPS payments.
Therefore, we believe this rule will not have a significant impact on
small rural hospitals. Accordingly, the Secretary certifies that this
interim final rule with comment period would not have a significant
economic impact on the operations of a substantial number of small
rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2008, that
threshold level is currently approximately $130 million. This interim
final rule with comment period would not mandate any requirements for
State, local, or tribal governments, nor would it result in
expenditures by the private sector of $130 million or more in any 1
year.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. Since this regulation does not impose any costs on State
or local governments, the requirements of Executive Order 13132 are not
applicable.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects in 42 CFR Part 412
Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and recordkeeping requirements.
[[Page 29709]]
0
For the reasons stated in the preamble of this interim final rule with
comment period, the Centers for Medicare & Medicaid Services is
amending 42 CFR Chapter IV as follows:
PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
0
1. The authority citation for part 412 is revised to read as follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
0
2. Section 412.23 is amended by adding new paragraphs (e)(5) through
(e)(7) to read as follows:
Sec. 412.23 Excluded hospitals: Classifications.
* * * * *
(e) * * *
(5) Freestanding long-term care hospital. For purposes of this
paragraph, a freestanding long-term care hospital means a hospital that
meets the requirements of paragraph (e)(1) and (2) of this section and
all of the following:
(i) Does not occupy space in a building also used by another
hospital.
(ii) Does not occupy space in one or more separate or entire
buildings located on the same campus as buildings used by another
hospital.
(iii) Is not part of a hospital that provides inpatient services in
a building also used by another hospital.
(6) Moratorium on the establishment of new long-term care hospitals
and long-term care hospital satellite facilities.
(i) General rule. Except as specified in paragraph (e)(6)(ii) of
this paragraph, for the period beginning December 29, 2007 and ending
December 28, 2010, a moratorium applies to the establishment and
classification of a long-term care hospital or long-term care hospital
satellite facility as described in Sec. 412.23(e).
(ii) Exception. The moratorium specified in paragraph (e)(6)(i) of
this section is not applicable to the establishment and classification
of a long-term care hospital that meets the requirements in paragraph
(e) of this section or a long-term care hospital satellite facility
that meets the requirements in Sec. 412.22(h), if the long-term care
hospital met one of the following criteria on or before December 29,
2007:
(A) Began its qualifying period for payment in accordance with
paragraph (e) of this section.
(B)(1) Has a binding written agreement with an outside, unrelated
party for the actual construction, renovation, lease or demolition for
a long-term care hospital; and
(2) Has expended, before December 29, 2007, at least 10 percent
(or, if less, $2.5 million) of the estimated cost of the project
specified in paragraph (ii)(B)(1) of this paragraph.
(C) Had obtained an approved certificate of need from the State,
when required by State law.
(7) Moratorium on increasing the number of beds in existing long-
term care hospitals and existing long-term care hospital satellite
facilities.
(i) For purposes of this paragraph, an existing long-term care
hospital or long-term care hospital satellite facility means a long-
term care hospital that meets the requirements of paragraph (e) of this
section or long-term care hospital satellite facility that meets the
requirements of Sec. 412.22(h) of this part and received payment under
the provisions of subpart O of this part on or before December 29,
2007.
(ii) Effective for the period beginning December 29, 2007 and
ending December 28, 2010--
(A) Except as specified in paragraph (e)(7)(ii)(B) of this section,
the number of Medicare-certified beds in an existing long-term care
hospital or an existing long-term care hospital satellite facility as
defined in paragraph (e)(7)(i) of this section must not be increased
beyond the number of Medicare-certified beds on December 29, 2007.
(B) Except as specified in paragraph (e)(7)(ii)(C) of this section,
the moratorium specified in paragraph (e)(7)(ii)(A) of this section is
not applicable to an existing long-term care hospital or existing long-
term care hospital satellite facility as defined in paragraph (e)(7)(i)
of this section that meets both of the following requirements:
(1) Is located in a State where there is only one other long-term
care hospital that meets the criteria specified in Sec. 412.23(e) of
this subpart.
(2) Requests an increase in the number of Medicare-certified beds
after the closure or decrease in the number of Medicare-certified beds
of another long-term care hospital in the State.
(C) The exception specified in paragraph (e)(7)(ii)(B) of this
section does not effect the limitation on increasing beds under Sec.
412.22(f) and Sec. 412.22(h)(3) of subpart.
* * * * *
0
4. Section 412.534 is amended by revising paragraphs (b) through (e),
and (h) to read as follows.
Sec. 412.534 Special payment provisions for long-term care hospitals
within hospitals and satellites of long-term care hospitals.
* * * * *
(b) Patients admitted from hospitals not located in the same
building or on the same campus as the long-term care hospital or long-
term care hospital satellite.
(1) For cost reporting periods beginning on or after October 1,
2004 and before July 1, 2007. Payments to the long-term care hospital
as described in Sec. 412.23(e)(2)(i) meeting the criteria in Sec.
412.22(e)(2) for patients admitted to the long-term care hospital or to
a long-term care hospital satellite facility as described in Sec.
412.23(e)(2)(i) that meets the criteria of Sec. 412.22(h) from another
hospital that is not the co-located hospital are made under the rules
in this subpart with no adjustment under this section.
(2) For cost reporting periods beginning on or after July 1, 2007.
For cost reporting periods beginning on or after July 1, 2007, payments
to one of the following long-term care hospitals or long-term care
hospital satellites are subject to the provisions of Sec. 412.536 of
this subpart:
(i) A long-term care hospital as described in Sec. 412.23(e)(2)(i)
of this part that meets the criteria of Sec. 412.22(e) of this part.
(ii) Except as provided in paragraph (h) of this section, a long-
term care hospital as described in Sec. 412.23(e)(2)(i) of this part
that meets the criteria of Sec. 412.22(f) of this part.
(iii) A long-term care hospital satellite facility as described in
Sec. 412.23(e)(2)(i) of this part that meets the criteria in Sec.
412.22(h) or Sec. 412.22(h)(3)(i) of this part.
(c) Patients admitted from the hospital located in the same
building or on the same campus as the long-term care hospital or
satellite facility. Except for a long-term care hospital or a long-term
care hospital satellite facility that meets the requirements of
paragraphs (d) or (e) of this section, payments to the long-term care
hospital for patients admitted to it or to its long-term care hospital
satellite facility from the co-located hospital are made under either
of the following:
(1) For cost reporting periods beginning on or after October 1,
2004 and before December 29, 2007 and for cost reporting periods
beginning on or after December 29, 2010.
(i) Except as provided in paragraphs (g) and (h) of this section,
for any cost reporting period beginning on or after October 1, 2004 and
before December 29, 2007 and for cost reporting periods beginning on or
after December 29, 2010
[[Page 29710]]
in which the long-term care hospital or its satellite facility has a
discharged Medicare inpatient population of whom no more than 25
percent were admitted to the hospital or its satellite facility from
the co-located hospital, payments are made under the rules at
Sec. Sec. 412.500 through 412.541 in this subpart with no adjustment
under this section.
(ii) Except as provided in paragraph (g) or (h) of this section,
for any cost reporting period beginning on or after October 1, 2004 and
before December 29, 2007 and for cost reporting periods beginning on or
after December 29, 2010 in which the long-term care hospital or
satellite facility has a discharged Medicare inpatient population of
whom more than 25 percent were admitted to the hospital or satellite
facility from the co-located hospital, payments for the patients who
are admitted from the co-located hospital and who cause the long-term
care hospital or satellite facility to exceed the 25 percent threshold
for discharged patients who have been admitted from the co-located
hospital are the lesser of the amount otherwise payable under this
subpart or the amount payable under this subpart that is equivalent, as
set forth in paragraph (f) of this section, to the amount that would be
determined under the rules at Sec. 412.1(a). Payments for the
remainder of the long-term care hospital's or satellite facility's
patients are made under the rules in this subpart at Sec. Sec. 412.500
through 412.541 with no adjustment under this section.
(iii) In determining the percentage of patients admitted to the
long-term care hospital or its satellite from the co-located hospital
under paragraphs (c)(1)(i) and (c)(1)(ii) of this section, patients on
whose behalf an outlier payment was made to the co-located hospital are
not counted towards the 25 percent threshold.
(2) For cost reporting periods beginning on or after December 29,
2007 and before December 29, 2010.
(i) Except for a long-term care hospital and long-term care
hospital satellite facility subject to paragraphs (g) or (h) of this
section, payments are determined using the methodology specified in
paragraph (c)(1) of this section.
(ii) Payments for a long-term care hospital and long-term care
hospital satellite facility subject to paragraph (g) of this section
are determined using the methodology specified in paragraph (c)(1) of
this section except that 25 percent is substituted with 50 percent.
(d) Special treatment of rural hospitals.
(1) For cost reporting periods beginning on or after October 1,
2004 and before December 29, 2007 and for cost reporting periods
beginning on or after December 29, 2010.
(i) Subject to paragraphs (g) and (h) of this section, in the case
of a long-term care hospital or satellite facility that is located in a
rural area as defined in Sec. 412.503 and is co-located with another
hospital for any cost reporting period beginning on or after October 1,
2004 and before December 29, 2007 and for any cost reporting period
beginning on or after December 29, 2010 in which the long-term care
hospital or long-term care satellite facility has a discharged Medicare
inpatient population of whom more than 50 percent were admitted to the
long-term care hospital or satellite facility from the co-located
hospital, payments for the patients who are admitted from the co-
located hospital and who cause the long-term care hospital or satellite
facility to exceed the 50 percent threshold for discharged patients who
were admitted from the co-located hospital are the lesser of the amount
otherwise payable under this subpart or the amount payable under this
subpart that is equivalent, as set forth in paragraph (f) of this
section, to the amount that were otherwise payable under Sec.
412.1(a). Payments for the remainder of the long-term care hospital's
or long-term care hospital satellite facility's patients are made under
the rules in this subpart at Sec. Sec. 412.500 through 412.541 with no
adjustment under this section.
(ii) In determining the percentage of patients admitted from the
co-located hospital under paragraph (d)(1)(i) of this section, patients
on whose behalf outlier payment was made at the co-located hospital are
not counted toward the 50 percent threshold.
(2) For cost reporting periods beginning on or after December 29,
2007 and before December 29, 2010.
(i) Except for long-term care hospitals and long-term care hospital
satellite facilities subject to paragraphs (g) or (h) of this section,
payments are determined using the methodology specified in paragraph
(d)(1) of this paragraph.
(ii) Payments for long-term care hospitals and long-term care
hospital satellite facilities subject to paragraph (g) of this section
are determined using the methodology specified in paragraph (d)(1) of
this section except that 50 percent is substituted with 75 percent.
(e) Special treatment of urban single or MSA-dominant hospitals.
(1) For cost reporting periods beginning on or after October 1,
2004 and before December 29, 2007 and for cost reporting periods
beginning on or after December 29, 2010.
(i) Subject to paragraphs (g) and (h) of this section, in the case
of a long-term care hospital or a long-term care hospital satellite
facility that is co-located with the only other hospital in the MSA or
with a MSA-dominant hospital as defined in paragraph (e)(1)(iv) of this
paragraph, for any cost reporting period beginning on or after October
1, 2004 and before December 29, 2007 and for any cost reporting periods
beginning on or after December 29, 2010 in which the long-term care
hospital or long-term care hospital satellite facility has a discharged
Medicare inpatient population of whom more than the percentage
calculated under paragraph (e)(1)(ii) of this paragraph were admitted
to the hospital from the co-located hospital, payments for the patients
who are admitted from the co-located hospital and who cause the long-
term care hospital to exceed the applicable threshold for discharged
patients who have been admitted from the co-located hospital are the
lesser of the amount otherwise payable under this subpart or the amount
under this subpart that is equivalent, as set forth in paragraph (f) of
this section, to the amount that otherwise would be determined under
Sec. 412.1(a). Payments for the remainder of the long-term care
hospital's or satellite facility's patients are made under the rules in
this subpart with no adjustment under this section.
(ii) For purposes of paragraph (e)(1)(i) of this paragraph, the
percentage used is the percentage of total Medicare discharges in the
Metropolitan Statistical Area in which the hospital is located that are
from the co-located hospital for the cost reporting period for which
the adjustment was made, but in no case is less than 25 percent or more
than 50 percent.
(iii) In determining the percentage of patients admitted from the
co-located hospital under paragraph (e)(1)(i) of this section, patients
on whose behalf outlier payment was made at the co-located hospital are
not counted toward the applicable threshold.
(iv) For purposes of this paragraph, an ``MSA-dominant hospital''
is a hospital that has discharged more than 25 percent of the total
hospital Medicare discharges in the MSA in which the hospital is
located.
(2) For cost reporting periods beginning on or after December 29,
2007 and before December 29, 2010.
(i) Except for long-term care hospitals and long-term care hospital
satellite facilities subject to paragraphs (g) or (h) of this section,
payments are determined using the methodology specified in paragraph
(e)(1) of this section.
(ii) Payments for long-term care hospitals and long-term care
hospital satellite facilities subject to paragraph
[[Page 29711]]
(g) of this section are determined using the methodology specified in
paragraph (e)(1) of this section except that 75 percent is substituted
for 50 percent.
* * * * *
(h) Effective date of policies in this section for certain co-
located LTCH hospitals and satellites of LTCHs. The policies set forth
in this section apply to Medicare patient discharges that were admitted
from a hospital located in the same building or on the same campus as a
long-term care hospital described in Sec. 412.23(e)(2)(i) that meets
the criteria in Sec. 412.22(f) and a satellite facility of a long-term
care hospital as described at Sec. 412.22(h)(3)(i) for discharges
occurring in cost reporting periods beginning on or after July 1, 2007.
(1) Except as specified in paragraph (h)(4) of this section, in the
case of a long-term care hospital or long-term care hospital satellite
facility that is described under paragraph (h) of this section, the
thresholds applied at paragraphs (c), (d), and (e) of this section are
not less than the following percentages:
(i) For cost reporting periods beginning on or after July 1, 2007
and before July 1, 2008, the lesser of 75 percent of the total number
of Medicare discharges that were admitted to the long-term care
hospital or long-term care hospital satellite facility from its co-
located hospital during the cost reporting period or the percentage of
Medicare discharges that had been admitted to the long-term care
hospital or satellite from that co-located hospital during the long-
term care hospital's or satellite's RY 2005 cost reporting period.
(ii) For cost reporting periods beginning on or after July 1, 2008
and before July 1, 2009, the lesser of 50 percent of the total number
of Medicare discharges that were admitted to the long-term care
hospital or the long-term care hospital satellite facility from its co-
located hospital or the percentage of Medicare discharges that had been
admitted from that co-located hospital during the long-term care
hospital's or satellite's RY 2005 cost reporting period.
(iii) For cost reporting periods beginning on or after July 1,
2009, 25 percent of the total number of Medicare discharges that were
admitted to the long-term care hospital or satellite from its co-
located hospital during the cost reporting period.
(2) In determining the percentage of Medicare discharges admitted
from the co-located hospital under this paragraph, patients on whose
behalf a Medicare high cost outlier payment was made at the co-located
referring hospital are not counted toward this threshold.
(3) Except as specified in paragraph (h)(4) of this section, for
cost reporting periods beginning on or after July 1, 2007, payments to
long term care hospitals described in Sec. 412.23(e)(2)(i) that meet
the criteria in Sec. 412.22(f) and satellite facilities of long-term
care hospitals described at Sec. 412.22(h)(3)(i) are subject to the
provisions of Sec. 412.536 for discharges of Medicare patients who are
admitted from a hospital not located in the same building or on the
same campus as the LTCH or LTCH satellite facility.
(4) For a long-term care hospital described in Sec.
412.23(e)(2)(i) that meets the criteria in Sec. 412.22(f), the
policies set forth in this paragraph and in Sec. 412.536 of this part
do not apply for discharges occurring in cost reporting periods
beginning on or after December 29, 2007 and before December 29, 2010.
0
5. Section 412.536 is amended by revising paragraph (a) to read as
follows:
Sec. 412.536 Special payment provisions for long-term care hospitals
and satellites of long-term care hospitals that discharged Medicare
patients admitted from a hospital not located in the same building or
on the same campus as the long-term care hospital or satellite of the
long-term care hospital.
(a) Scope. (1) Except as specified in paragraph (a)(2) of this
section, for cost reporting periods beginning on or after July 1, 2007,
the policies set forth in this section apply to discharges from the
following:
(i) Long-term care hospitals as described in Sec. 412.23(e)(2)(i)
that meet the criteria in Sec. 412.22(e).
(ii) Long-term care hospitals as described in Sec. 412.23(e)(2)(i)
and that meet the criteria in Sec. 412.22(f).
(iii) Long-term care hospital satellite facilities as described in
Sec. 412.23(e)(2)(i) and that meet the criteria in Sec. 412.22(h).
(iv) Long-term care hospitals as described in Sec. 412.23(e)(5).
(2) For cost reporting periods beginning on or after December 29,
2007 and before December 29, 2010, the policies set forth in this
section are not applicable to discharges from a long-term care hospital
described in Sec. 412.23(e)(5) of this part or described in Sec.
412.23(e)(2)(i) of this part and that meet the criteria specified in
Sec. 412.22(f) of this part.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: May 8, 2008.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: May 15, 2008.
Michael O. Leavitt,
Secretary.
[FR Doc. 08-1285 Filed 5-16-08; 4:00 pm]
BILLING CODE 4120-01-P