[Federal Register Volume 85, Number 72 (Tuesday, April 14, 2020)]
[Proposed Rules]
[Pages 20625-20648]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07870]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 412 and 482
[CMS-1731-P]
RIN 0938-AU07
Medicare Program; FY 2021 Inpatient Psychiatric Facilities
Prospective Payment System (IPF PPS)
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would update the prospective payment rates,
the outlier threshold, and the wage index for Medicare inpatient
hospital services provided by Inpatient Psychiatric Facilities (IPF),
which include psychiatric hospitals and excluded psychiatric units of
an Inpatient Prospective Payment System hospital or critical access
hospital. In addition, this proposed rule would adopt the most recent
Office of Management and Budget (OMB) statistical area delineations,
and apply a 2-year transition for all providers negatively impacted by
wage index changes. These changes would be effective for IPF discharges
beginning during the FY from October 1, 2020 through September 30, 2021
(FY 2021).
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on June 9, 2020.
ADDRESSES: In commenting, please refer to file code CMS-1731-P.
Comments, including mass comment submissions, must be submitted in
one of the following three 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 ``Submit a
comment'' instructions.
[[Page 20626]]
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1731-P, P.O. Box 8010,
Baltimore, MD 21244-8016.
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 to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1731-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: The IPF Payment Policy mailbox at
[email protected] for general information.
Mollie Knight, (410) 786-7948 or Hudson Osgood, (410) 786-7897, for
information regarding the market basket update, or the labor-related
share.
Theresa Bean, (410) 786-2287 or James Hardesty, (410) 786-2629, for
information regarding the regulatory impact analysis.
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
website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to
view public comments.
Availability of Certain Tables Exclusively Through the Internet on the
CMS Website
Addendum A to this proposed rule summarizes the FY 2021 IPF PPS
payment rates, outlier threshold, cost of living adjustment factors for
Alaska and Hawaii, national and upper limit cost-to-charge ratios, and
adjustment factors. In addition, the B Addenda to this proposed rule
shows the complete listing of ICD-10 Clinical Modification (CM) and
Procedure Coding System codes underlying the Code First table, the FY
2021 IPF PPS comorbidity adjustment, and electroconvulsive therapy
(ECT) procedure codes. The A and B Addenda are available online at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/tools.html.
Tables setting forth the FY 2021 Wage Index for Urban Areas Based
on Core-Based Statistical Area (CBSA) Labor Market Areas and the FY
2021 Wage Index Based on CBSA Labor Market Areas for Rural Areas are
available exclusively through the internet, on the CMS website at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/IPFPPS/WageIndex.html. In addition, Addendum C to this proposed rule is a
provider-level file of the effects of the change to the wage index
methodology, and is available at the same CMS website address.
I. Executive Summary
A. Purpose
This proposed rule would update the prospective payment rates, the
outlier threshold, and the wage index for Medicare inpatient hospital
services provided by Inpatient Psychiatric Facilities (IPFs) for
discharges occurring during the Fiscal Year (FY) beginning October 1,
2020 through September 30, 2021. In addition, this proposed rule would
update the IPF wage index, adopt the most recent Office of Management
and Budget (OMB) statistical area delineations, and apply a 2-year
transition for all providers negatively impacted by wage index changes.
B. Summary of the Major Provisions
1. Inpatient Psychiatric Facilities Prospective Payment System (IPF
PPS)
For the IPF PPS, we are proposing to--
Adjust the 2016-based IPF market basket proposed update
(3.0 percent) by a reduction for economy-wide productivity (0.4
percentage point) as required by section 1886(s)(2)(A)(i) of the Social
Security Act (the Act), resulting in a proposed IPF payment rate update
of 2.6 percent for FY 2021.
Make technical rate setting changes: The IPF PPS payment
rates would be adjusted annually for inflation, as well as statutory
and other policy factors. We are proposing to update:
++ The IPF PPS federal per diem base rate from $798.55 to $817.59.
++ The IPF PPS federal per diem base rate for providers who failed
to report quality data to $801.65.
++ The Electroconvulsive therapy (ECT) payment per treatment from
$343.79 to $351.99.
++ The ECT payment per treatment for providers who failed to report
quality data to $345.13.
++ The labor-related share from 76.9 percent to 77.2 percent (based
on the 2016-based IPF market basket).
++ The wage index budget-neutrality factor to 0.9979.
++ The fixed dollar loss threshold amount from $14,960 to $16,520
to maintain estimated outlier payments at 2 percent of total estimated
aggregate IPF PPS payments.
Adopt the most recent OMB core-based statistical area
(CBSA) delineations and apply a 2-year transition for all providers
negatively impacted by wage index changes.
2. Inpatient Psychiatric Facilities Quality Reporting (IPFQR) Program
We are not proposing any changes to the IPFQR Program.
C. Summary of Impacts
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Total transfers & cost
Provision description reductions
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FY 2021 IPF PPS payment update......... The overall economic impact of
this proposed rule is an
estimated $100 million in
increased payments to IPFs
during FY 2021.
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II. Background
A. Overview of the Legislative Requirements of the IPF PPS
Section 124 of the Medicare, Medicaid, and State Children's Health
Insurance Program Balanced Budget Refinement Act of 1999 (BBRA) (Pub.
L. 106-113) required the establishment and implementation of an IPF
PPS. Specifically, section 124 of the BBRA mandated that the Secretary
of the Department of Health and Human Services (the Secretary) develop
a per diem Prospective Payment System (PPS) for inpatient hospital
services furnished in psychiatric hospitals and excluded psychiatric
units including an adequate patient classification system that reflects
the differences in patient resource use and costs among psychiatric
hospitals and excluded psychiatric units. ``Excluded psychiatric unit''
means a psychiatric unit in an inpatient prospective payment system
(IPPS) hospital that is excluded from the IPPS, or a psychiatric unit
in a Critical Access Hospital (CAH) that is excluded from the CAH
payment system. These excluded psychiatric units would be paid under
the IPF PPS.
Section 405(g)(2) of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA) (Pub. L. 108-173) extended the IPF
PPS to psychiatric distinct part units of CAHs.
Sections 3401(f) and 10322 of the Patient Protection and Affordable
Care Act (Pub. L. 111-148) as amended by section 10319(e) of that Act
and by section 1105(d) of the Health Care and
[[Page 20627]]
Education Reconciliation Act of 2010 (Pub. L. 111-152) (hereafter
referred to jointly as ``the Affordable Care Act'') added subsection
(s) to section 1886 of the Act.
Section 1886(s)(1) of the Act titled ``Reference to Establishment
and Implementation of System,'' refers to section 124 of the BBRA,
which relates to the establishment of the IPF PPS.
Section 1886(s)(2)(A)(i) of the Act requires the application of the
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of
the Act to the IPF PPS for the rate year (RY) beginning in 2012 (that
is, a RY that coincides with a FY) and each subsequent RY. As noted in
our FY 2020 IPF PPS final rule with comment period, published in the
Federal Register on August 6, 2019 (84 FR 38424 through 38482), for the
RY beginning in 2019, the productivity adjustment currently in place
was equal to 0.4 percentage point.
Section 1886(s)(2)(A)(ii) of the Act required the application of an
``other adjustment'' that reduced any update to an IPF PPS base rate by
a percentage point amount specified in section 1886(s)(3) of the Act
for the RY beginning in 2010 through the RY beginning in 2019. As noted
in the FY 2020 IPF PPS final rule, for the RY beginning in 2019,
section 1886(s)(3)(E) of the Act required that the other adjustment
reduction be equal to 0.75 percentage point. Because FY 2021, is a RY
beginning in 2020, FY 2021 would be the first year section
1886(s)(2)(A)(ii) does not apply since its enactment.
Sections 1886(s)(4)(A) through (D) of the Act require that for RY
2014 and each subsequent RY, IPFs that fail to report required quality
data with respect to such a RY will have their annual update to a
standard federal rate for discharges reduced by 2.0 percentage points.
This may result in an annual update being less than 0.0 for a RY, and
may result in payment rates for the upcoming RY being less than such
payment rates for the preceding RY. Any reduction for failure to report
required quality data will apply only to the RY involved, and the
Secretary will not take into account such reduction in computing the
payment amount for a subsequent RY. More information about the
specifics of the current Inpatient Psychiatric Facilities Quality
Reporting (IPFQR) Program is available in the FY 2020 IPF PPS and
Quality Reporting Updates for Fiscal Year Beginning October 1, 2019
final rule (84 FR 38459 through 38468).
To implement and periodically update these provisions, we have
published various proposed and final rules and notices in the Federal
Register. For more information regarding these documents, see the
Center for Medicare & Medicaid (CMS) website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/index.html?redirect=/InpatientPsychFacilPPS/.
B. Overview of the IPF PPS
The November 2004 IPF PPS final rule (69 FR 66922) established the
IPF PPS, as required by section 124 of the BBRA and codified at 42 CFR
part 412, subpart N. The November 2004 IPF PPS final rule set forth the
federal per diem base rate for the implementation year (the 18-month
period from January 1, 2005 through June 30, 2006), and provided
payment for the inpatient operating and capital costs to IPFs for
covered psychiatric services they furnish (that is, routine, ancillary,
and capital costs, but not costs of approved educational activities,
bad debts, and other services or items that are outside the scope of
the IPF PPS). Covered psychiatric services include services for which
benefits are provided under the fee-for-service Part A (Hospital
Insurance Program) of the Medicare program.
The IPF PPS established the federal per diem base rate for each
patient day in an IPF derived from the national average daily routine
operating, ancillary, and capital costs in IPFs in FY 2002. The average
per diem cost was updated to the midpoint of the first year under the
IPF PPS, standardized to account for the overall positive effects of
the IPF PPS payment adjustments, and adjusted for budget-neutrality.
The federal per diem payment under the IPF PPS is comprised of the
federal per diem base rate described previously and certain patient-
and facility-level payment adjustments for characteristics that were
found in the regression analysis to be associated with statistically
significant per diem cost differences with statistical significance
defined as p less than 0.05. A complete discussion of the regression
analysis that established the IPF PPS adjustment factors can be found
in the November 2004 IPF PPS final rule (69 FR 66933 through 66936).
The patient-level adjustments include age, Diagnosis-Related Group
(DRG) assignment, and comorbidities; additionally, there are
adjustments to reflect higher per diem costs at the beginning of a
patient's IPF stay and lower costs for later days of the stay.
Facility-level adjustments include adjustments for the IPF's wage
index, rural location, teaching status, a cost-of-living adjustment for
IPFs located in Alaska and Hawaii, and an adjustment for the presence
of a qualifying emergency department (ED).
The IPF PPS provides additional payment policies for outlier cases,
interrupted stays, and a per treatment payment for patients who undergo
electroconvulsive therapy (ECT). During the IPF PPS mandatory 3-year
transition period, stop-loss payments were also provided; however,
since the transition ended as of January 1, 2008, these payments are no
longer available.
C. Annual Requirements for Updating the IPF PPS
Section 124 of the BBRA did not specify an annual rate update
strategy for the IPF PPS and was broadly written to give the Secretary
discretion in establishing an update methodology. Therefore, in the
November 2004 IPF PPS final rule, we implemented the IPF PPS using the
following update strategy:
Calculate the final federal per diem base rate to be
budget-neutral for the 18-month period of January 1, 2005 through June
30, 2006.
Use a July 1 through June 30 annual update cycle.
Allow the IPF PPS first update to be effective for
discharges on or after July 1, 2006 through June 30, 2007.
In RY 2012, we proposed and finalized switching the IPF PPS payment
rate update from a RY that begins on July 1 and ends on June 30, to one
that coincides with the federal FY that begins October 1 and ends on
September 30. In order to transition from one timeframe to another, the
RY 2012 IPF PPS covered a 15-month period from July 1, 2011 through
September 30, 2012. Therefore, the IPF RY has been equivalent to the
October 1 through September 30 federal FY since RY 2013. For further
discussion of the 15-month market basket update for RY 2012 and
changing the payment rate update period to coincide with a FY period,
we refer readers to the RY 2012 IPF PPS proposed rule (76 FR 4998) and
the RY 2012 IPF PPS final rule (76 FR 26432).
In November 2004, we implemented the IPF PPS in a final rule that
published on November 15, 2004 in the Federal Register (69 FR 66922).
In developing the IPF PPS, and to ensure that the IPF PPS is able to
account adequately for each IPF's case-mix, we performed an extensive
regression analysis of the relationship between the per diem costs and
certain patient and facility characteristics to determine those
characteristics associated with statistically significant cost
differences on a per diem basis. That regression analysis is described
in detail in our
[[Page 20628]]
November 28, 2003 IPF proposed rule (68 FR 66923; 66928 through 66933)
and our November 15, 2004 IPF final rule (69 FR 66933 through 66960).
For characteristics with statistically significant cost differences, we
used the regression coefficients of those variables to determine the
size of the corresponding payment adjustments.
In the November 15, 2004 final rule, we explained the reasons for
delaying an update to the adjustment factors, derived from the
regression analysis, including waiting until we have IPF PPS data that
yields as much information as possible regarding the patient-level
characteristics of the population that each IPF serves. We indicated
that we did not intend to update the regression analysis and the
patient-level and facility-level adjustments until we complete that
analysis. Until that analysis is complete, we stated our intention to
publish a notice in the Federal Register each spring to update the IPF
PPS (69 FR 66966).
On May 6, 2011, we published a final rule in the Federal Register
titled, ``Inpatient Psychiatric Facilities Prospective Payment System--
Update for Rate Year Beginning July 1, 2011 (RY 2012)'' (76 FR 26432),
which changed the payment rate update period to a RY that coincides
with a FY update. Therefore, final rules are now published in the
Federal Register in the summer to be effective on October 1. When
proposing changes in IPF payment policy, a proposed rule would be
issued in the spring, and the final rule in the summer to be effective
on October 1. For a detailed list of updates to the IPF PPS, we refer
readers to our regulations at 42 CFR 412.428.
The most recent IPF PPS annual update was published in a final rule
on August 6, 2019 in the Federal Register titled, ``Medicare Program;
FY 2020 Inpatient Psychiatric Facilities Prospective Payment System and
Quality Reporting Updates for Fiscal Year Beginning October 1, 2019 (FY
2020)'' (84 FR 38424), which updated the IPF PPS payment rates for FY
2020. That final rule updated the IPF PPS federal per diem base rates
that were published in the FY 2019 IPF PPS Rate Update final rule (83
FR 38576) in accordance with our established policies.
III. Provisions of the FY 2021 IPF PPS Proposed Rule
A. Proposed Update to the FY 2021 Market Basket for the IPF PPS
1. Background
Originally, the input price index that was used to develop the IPF
PPS was the ``Excluded Hospital with Capital'' market basket. This
market basket was based on 1997 Medicare cost reports for Medicare
participating inpatient rehabilitation facilities (IRFs), IPFs, long-
term care hospitals (LTCHs), cancer hospitals, and children's
hospitals. Although ``market basket'' technically describes the mix of
goods and services used in providing health care at a given point in
time, this term is also commonly used to denote the input price index
(that is, cost category weights and price proxies) derived from that
market basket. Accordingly, the term market basket as used in this
document, refers to an input price index.
Since the IPF PPS inception, the market basket used to update IPF
PPS payments has been rebased and revised to reflect more recent data
on IPF cost structures. We last rebased and revised the IPF market
basket in the FY 2020 IPF PPS rule, where we adopted a 2016-based IPF
market basket, using Medicare cost report data for both Medicare
participating freestanding psychiatric hospitals and psychiatric units.
We refer readers to the FY 2020 IPF PPS final rule for a detailed
discussion of the 2016-based IPF PPS market basket and its development
(84 FR 38426 through 38447). References to the historical market
baskets used to update IPF PPS payments are listed in the FY 2016 IPF
PPS final rule (80 FR 46656).
2. Proposed FY 2021 IPF Market Basket Update
For FY 2021 (beginning October 1, 2020 and ending September 30,
2021), we are proposing to use an estimate of the 2016-based IPF market
basket increase factor to update the IPF PPS base payment rate.
Consistent with historical practice, we are proposing to estimate the
market basket update for the IPF PPS based on IHS Global Inc.'s (IGI)
forecast. IGI is a nationally recognized economic and financial
forecasting firm that contracts with the CMS to forecast the components
of the market baskets and multifactor productivity (MFP). For the
proposed rule, based on IGI's fourth quarter 2019 forecast with
historical data through the third quarter of 2019, the 2016-based IPF
market basket increase factor for FY 2021 is 3.0 percent. Therefore, we
are proposing that the 2016-based IPF market basket update for FY 2021
would be 3.0 percent.
Section 1886(s)(2)(A)(i) of the Act requires the application of the
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of
the Act to the IPF PPS for the RY beginning in 2012 (a RY that
coincides with a FY) and each subsequent RY. For this FY 2021 IPF PPS
proposed rule, based on IGI's fourth quarter 2019 forecast, the
proposed MFP adjustment for FY 2021 (the 10-year moving average of MFP
for the period ending FY 2021) is projected to be 0.4 percent. We are
proposing to reduce the proposed 3.0 percent IPF market basket update
by this 0.4 percentage point productivity adjustment, as mandated by
the Act. This results in a proposed estimated FY 2021 IPF PPS payment
rate update of 2.6 percent (3.0 - 0.4 = 2.6). We are also proposing
that if more recent data become available, we would use such data, if
appropriate, to determine the FY 2021 IPF market basket update and MFP
adjustment for the final rule. For more information on the productivity
adjustment, we refer readers to the discussion in the FY 2016 IPF PPS
final rule (80 FR 46675).
3. Proposed FY 2021 IPF Labor-Related Share
Due to variations in geographic wage levels and other labor-related
costs, we believe that payment rates under the IPF PPS should continue
to be adjusted by a geographic wage index, which would apply to the
labor-related portion of the federal per diem base rate (hereafter
referred to as the labor-related share).
The labor-related share is determined by identifying the national
average proportion of total costs that are related to, influenced by,
or vary with the local labor market. We are proposing to continue to
classify a cost category as labor-related if the costs are labor-
intensive and vary with the local labor market.
Based on our definition of the labor-related share and the cost
categories in the 2016-based IPF market basket, we are proposing to
continue to include in the labor-related share the sum of the relative
importance of Wages and Salaries; Employee Benefits; Professional Fees:
Labor-Related; Administrative and Facilities Support Services;
Installation, Maintenance, and Repair; All Other: Labor-related
Services; and a portion of the Capital-Related cost weight (46 percent)
from the 2016-based IPF market basket. The relative importance reflects
the different rates of price change for these cost categories between
the base year (FY 2016) and FY 2021. Using IGI's fourth quarter 2019
forecast for the 2016-based IPF market basket, the proposed IPF labor-
related share for FY 2021 is the sum of the FY 2021 relative importance
of each labor-related cost category. For more information on the labor-
related share and its calculation, we refer readers to the FY 2020 IPF
PPS final
[[Page 20629]]
rule (84 FR 38445 through 38447). For FY 2021, the proposed labor-
related share based on IGI's fourth quarter 2019 forecast of the 2016-
based IPF PPS market basket is 77.2 percent. We are also proposing that
if more recent data become available, we would use such data, if
appropriate, to determine the FY 2021 labor-related share for the final
rule.
B. Proposed Updates to the IPF PPS Rates for FY Beginning October 1,
2020
The IPF PPS is based on a standardized federal per diem base rate
calculated from the IPF average per diem costs and adjusted for budget-
neutrality in the implementation year. The federal per diem base rate
is used as the standard payment per day under the IPF PPS and is
adjusted by the patient-level and facility-level adjustments that are
applicable to the IPF stay. A detailed explanation of how we calculated
the average per diem cost appears in the November 2004 IPF PPS final
rule (69 FR 66926).
1. Determining the Standardized Budget-Neutral Federal Per Diem Base
Rate
Section 124(a)(1) of the BBRA required that we implement the IPF
PPS in a budget-neutral manner. In other words, the amount of total
payments under the IPF PPS, including any payment adjustments, must be
projected to be equal to the amount of total payments that would have
been made if the IPF PPS were not implemented. Therefore, we calculated
the budget-neutrality factor by setting the total estimated IPF PPS
payments to be equal to the total estimated payments that would have
been made under the Tax Equity and Fiscal Responsibility Act of 1982
(TEFRA) (Pub. L. 97-248) methodology had the IPF PPS not been
implemented. A step-by-step description of the methodology used to
estimate payments under the TEFRA payment system appears in the
November 2004 IPF PPS final rule (69 FR 66926).
Under the IPF PPS methodology, we calculated the final federal per
diem base rate to be budget-neutral during the IPF PPS implementation
period (that is, the 18-month period from January 1, 2005 through June
30, 2006) using a July 1 update cycle. We updated the average cost per
day to the midpoint of the IPF PPS implementation period (October 1,
2005), and this amount was used in the payment model to establish the
budget-neutrality adjustment.
Next, we standardized the IPF PPS federal per diem base rate to
account for the overall positive effects of the IPF PPS payment
adjustment factors by dividing total estimated payments under the TEFRA
payment system by estimated payments under the IPF PPS. Additional
information concerning this standardization can be found in the
November 2004 IPF PPS final rule (69 FR 66932) and the RY 2006 IPF PPS
final rule (71 FR 27045). We then reduced the standardized federal per
diem base rate to account for the outlier policy, the stop loss
provision, and anticipated behavioral changes. A complete discussion of
how we calculated each component of the budget-neutrality adjustment
appears in the November 2004 IPF PPS final rule (69 FR 66932 through
66933) and in the RY 2007 IPF PPS final rule (71 FR 27044 through
27046). The final standardized budget-neutral federal per diem base
rate established for cost reporting periods beginning on or after
January 1, 2005 was calculated to be $575.95.
The federal per diem base rate has been updated in accordance with
applicable statutory requirements and Sec. 412.428 through publication
of annual notices or proposed and final rules. A detailed discussion on
the standardized budget-neutral federal per diem base rate and the
electroconvulsive therapy (ECT) payment per treatment appears in the FY
2014 IPF PPS update notice (78 FR 46738 through 46740). These documents
are available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/index.html.
IPFs must include a valid procedure code for ECT services provided
to IPF beneficiaries in order to bill for ECT services, as described in
our Medicare Claims Processing Manual, Chapter 3, Section 190.7.3
(available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c03.pdf.) There were no changes to the ECT
procedure codes used on IPF claims as a result of the proposed update
to the ICD-10-PCS code set for FY 2021. Addendum B to this proposed
rule shows the ECT procedure codes for FY 2021 and is available on our
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/tools.html.
2. Proposed Update of the Federal Per Diem Base Rate and
Electroconvulsive Therapy Payment Per Treatment
The current (FY 2020) federal per diem base rate is $798.55 and the
ECT payment per treatment is $343.79. For the proposed FY 2021 federal
per diem base rate, we applied the payment rate update of 2.6 percent
that is, the 2016-based IPF market basket increase for FY 2021 of 3.0
percent less the productivity adjustment of 0.4 percentage point and
the wage index budget-neutrality factor of 0.9979 (as discussed in
section III.D.1 of this proposed rule) to the FY 2020 federal per diem
base rate of $798.55, yielding a proposed federal per diem base rate of
$817.59 for FY 2021. Similarly, we applied the 2.6 percent payment rate
update and the 0.9979 wage index budget-neutrality factor to the FY
2020 ECT payment per treatment of $343.79, yielding a proposed ECT
payment per treatment of $351.99 for FY 2021.
Section 1886(s)(4)(A)(i) of the Act requires that for RY 2014 and
each subsequent RY, in the case of an IPF that fails to report required
quality data with respect to such RY, the Secretary will reduce any
annual update to a standard federal rate for discharges during the RY
by 2.0 percentage points. Therefore, we are applying a 2.0 percentage
point reduction to the federal per diem base rate and the ECT payment
per treatment as follows:
For IPFs that fail requirements under the Inpatient
Psychiatric Facilities Quality Reporting (IPFQR) Program, we applied a
0.6 percent payment rate update (that is, the IPF market basket
increase for FY 2021 of 3.0 percent less the productivity adjustment of
0.4 percentage point for an update of 2.6 percent, and further reduced
by 2 percentage points in accordance with section 1886(s)(4)(A)(i) of
the Act, and the wage index budget-neutrality factor of 0.9979 to the
FY 2020 federal per diem base rate of $798.55, yielding a federal per
diem base rate of $801.65 for FY 2021.
For IPFs that fail to meet requirements under the IPFQR
Program, we applied the 0.6 percent annual payment rate update and the
0.9979 wage index budget-neutrality factor to the FY 2020 ECT payment
per treatment of $343.79, yielding an ECT payment per treatment of
$345.13 for FY 2021.
C. Proposed Updates to the IPF PPS Patient-Level Adjustment Factors
1. Overview of the IPF PPS Adjustment Factors
The IPF PPS payment adjustments were derived from a regression
analysis of 100 percent of the FY 2002 Medicare Provider and Analysis
Review (MedPAR) data file, which contained 483,038 cases. For a more
detailed description of the data file used for the regression analysis,
see the November 2004 IPF PPS final rule (69 FR 66935 through 66936).
We continue to use the existing regression-derived adjustment
[[Page 20630]]
factors established in 2005 for FY 2021. However, we have used more
recent claims data to simulate payments to finalize the outlier fixed
dollar loss threshold amount and to assess the impact of the IPF PPS
updates.
2. IPF PPS Patient-Level Adjustments
The IPF PPS includes payment adjustments for the following patient-
level characteristics: Medicare Severity Diagnosis Related Groups (MS-
DRGs) assignment of the patient's principal diagnosis, selected
comorbidities, patient age, and the variable per diem adjustments.
a. Proposed Update to MS-DRG Assignment
We believe it is important to maintain for IPFs the same diagnostic
coding and Diagnosis Related Group (DRG) classification used under the
(IPPS) for providing psychiatric care. For this reason, when the IPF
PPS was implemented for cost reporting periods beginning on or after
January 1, 2005, we adopted the same diagnostic code set (ICD-9-CM) and
DRG patient classification system (MS-DRGs) that were utilized at the
time under the IPPS. In the RY 2009 IPF PPS notice (73 FR 25709), we
discussed CMS' effort to better recognize resource use and the severity
of illness among patients. CMS adopted the new MS-DRGs for the IPPS in
the FY 2008 IPPS final rule with comment period (72 FR 47130). In the
RY 2009 IPF PPS notice (73 FR 25716), we provided a crosswalk to
reflect changes that were made under the IPF PPS to adopt the new MS-
DRGs. For a detailed description of the mapping changes from the
original DRG adjustment categories to the current MS-DRG adjustment
categories, we refer readers to the RY 2009 IPF PPS notice (73 FR
25714).
The IPF PPS includes payment adjustments for designated psychiatric
DRGs assigned to the claim based on the patient's principal diagnosis.
The DRG adjustment factors were expressed relative to the most
frequently reported psychiatric DRG in FY 2002, that is, DRG 430
(psychoses). The coefficient values and adjustment factors were derived
from the regression analysis discussed in detail in the November 28,
2003 IPF proposed rule (68 FR 66923; 66928 through 66933) and the
November 15, 2004 IPF final rule (69 FR 66933 through 66960). Mapping
the DRGs to the MS-DRGs resulted in the current 17 IPF MS-DRGs, instead
of the original 15 DRGs, for which the IPF PPS provides an adjustment.
For FY 2021, we are not proposing any changes to the IPF MS-DRG
adjustment factors.
In the FY 2015 IPF PPS final rule published August 6, 2014 in the
Federal Register titled, ``Inpatient Psychiatric Facilities Prospective
Payment System--Update for FY Beginning October 1, 2014 (FY 2015)'' (79
FR 45945 through 45947), we finalized conversions of the ICD-9-CM-based
MS-DRGs to ICD-10-CM/PCS-based MS-DRGs, which were implemented on
October 1, 2015. Further information on the ICD-10-CM/PCS MS-DRG
conversion project can be found on the CMS ICD-10-CM website at https://www.cms.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html.
For FY 2021, we are proposing to continue to make the existing
payment adjustment for psychiatric diagnoses that group to one of the
existing 17 IPF MS-DRGs listed in Addendum A. Addendum A is available
on our website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/tools.html. Psychiatric
principal diagnoses that do not group to one of the 17 designated MS-
DRGs would still receive the federal per diem base rate and all other
applicable adjustments, but the payment would not include an MS-DRG
adjustment.
The diagnoses for each IPF MS-DRG would be updated as of October 1,
2020, using the final IPPS FY 2021 ICD-10-CM/PCS code sets. The FY 2021
IPPS proposed rule includes tables of the proposed changes to the ICD-
10-CM/PCS code sets, which underlie the FY 2021 IPF MS-DRGs. Both the
FY 2021 IPPS proposed rule and the tables of proposed changes to the
ICD-10-CM/PCS code sets, which underlie the FY 2021 MS-DRGs are
available on the IPPS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
Code First
As discussed in the ICD-10-CM Official Guidelines for Coding and
Reporting, certain conditions have both an underlying etiology and
multiple body system manifestations due to the underlying etiology. For
such conditions, the ICD-10-CM has a coding convention that requires
the underlying condition be sequenced first followed by the
manifestation. Wherever such a combination exists, there is a ``use
additional code'' note at the etiology code, and a ``code first'' note
at the manifestation code. These instructional notes indicate the
proper sequencing order of the codes (etiology followed by
manifestation). In accordance with the ICD-10-CM Official Guidelines
for Coding and Reporting, when a primary (psychiatric) diagnosis code
has a ``code first'' note, the provider would follow the instructions
in the ICD-10-CM text. The submitted claim goes through the CMS
processing system, which will identify the primary diagnosis code as
non-psychiatric and search the secondary codes for a psychiatric code
to assign a DRG code for adjustment. The system will continue to search
the secondary codes for those that are appropriate for comorbidity
adjustment.
For more information on the code first policy, we refer our readers
to the November 2004 IPF PPS final rule (69 FR 66945) and see sections
I.A.13 and I.B.7 of the FY 2020 ICD-10-CM Coding Guidelines, available
at https://www.cdc.gov/nchs/icd/data/10cmguidelines-FY2019-final.pdf.
In the FY 2015 IPF PPS final rule, we provided a code first table for
reference that highlights the same or similar manifestation codes where
the code first instructions apply in ICD-10-CM that were present in
ICD-9-CM (79 FR 46009). In FY 2018, FY 2019 and FY 2020, there were no
changes to the final ICD-10-CM/PCS codes in the IPF Code First table.
For FY 2021, there were 18 ICD-10-PCS codes deleted from the proposed
IPF Code First table. The proposed FY 2021 Code First table is shown in
Addendum B on our website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/tools.html.
b. Proposed Payment for Comorbid Conditions
The intent of the comorbidity adjustments is to recognize the
increased costs associated with comorbid conditions by providing
additional payments for certain existing medical or psychiatric
conditions that are expensive to treat. In our RY 2012 IPF PPS final
rule (76 FR 26451 through 26452), we explained that the IPF PPS
includes 17 comorbidity categories and identified the new, revised, and
deleted ICD-9-CM diagnosis codes that generate a comorbid condition
payment adjustment under the IPF PPS for RY 2012 (76 FR 26451).
Comorbidities are specific patient conditions that are secondary to
the patient's principal diagnosis and that require treatment during the
stay. Diagnoses that relate to an earlier episode of care and have no
bearing on the current hospital stay are excluded and must not be
reported on IPF claims. Comorbid conditions must exist at the time of
admission or develop subsequently, and affect the treatment
[[Page 20631]]
received, length of stay (LOS), or both treatment and LOS.
For each claim, an IPF may receive only one comorbidity adjustment
within a comorbidity category, but it may receive an adjustment for
more than one comorbidity category. Current billing instructions for
discharge claims, on or after October 1, 2015, require IPFs to enter
the complete ICD-10-CM codes for up to 24 additional diagnoses if they
co-exist at the time of admission, or develop subsequently and impact
the treatment provided.
The comorbidity adjustments were determined based on the regression
analysis using the diagnoses reported by IPFs in FY 2002. The principal
diagnoses were used to establish the DRG adjustments and were not
accounted for in establishing the comorbidity category adjustments,
except where ICD-9-CM code first instructions applied. In a code first
situation, the submitted claim goes through the CMS processing system,
which will identify the principal diagnosis code as non-psychiatric and
search the secondary codes for a psychiatric code to assign an MS-DRG
code for adjustment. The system will continue to search the secondary
codes for those that are appropriate for comorbidity adjustment.
As noted previously, it is our policy to maintain the same
diagnostic coding set for IPFs that is used under the IPPS for
providing the same psychiatric care. The 17 comorbidity categories
formerly defined using ICD-9-CM codes were converted to ICD-10-CM/PCS
in our FY 2015 IPF PPS final rule (79 FR 45947 through 45955). The goal
for converting the comorbidity categories is referred to as
replication, meaning that the payment adjustment for a given patient
encounter is the same after ICD-10-CM implementation as it would be if
the same record had been coded in ICD-9-CM and submitted prior to ICD-
10-CM/PCS implementation on October 1, 2015. All conversion efforts
were made with the intent of achieving this goal. For FY 2021, we are
proposing to continue to use the same comorbidity adjustment factors in
effect in FY 2020, which are found in Addendum A, available on our
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/tools.html.
We have updated the ICD-10-CM/PCS codes, which are associated with
the existing IPF PPS comorbidity categories, based upon the proposed FY
2021 update to the ICD-10-CM/PCS code set. The proposed FY 2021 ICD-10-
CM/PCS updates include ICD-10 updates: 21 ICD-10-CM diagnosis codes
added to the Drug and/or Alcohol Induced Mental Disorders comorbidity
category, 8 ICD-10-CM diagnosis codes added to the Infectious Disease
comorbidity category and 1 deleted, 12 ICD-10-CM diagnosis codes added
to the Poisoning comorbidity category and 4 deleted, 3 ICD-10-CM
diagnosis codes added to the Renal Failure comorbidity category and 1
deleted and 64 ICD-10-PCS codes added to the Oncology Procedures
comorbidity category. In addition, 18 ICD-10-PCS codes were deleted
from the Code First Table. These updates are detailed in Addenda B of
this proposed rule, which are available on our website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/tools.html.
In accordance with the policy established in the FY 2015 IPF PPS
final rule (79 FR 45949 through 45952), we reviewed all new FY 2021
ICD-10-CM codes to remove codes that were site ``unspecified'' in terms
of laterality from the FY 2020 ICD-10-CM/PCS codes in instances where
more specific codes are available. As we stated in the FY 2015 IPF PPS
final rule, we believe that specific diagnosis codes that narrowly
identify anatomical sites where disease, injury, or a condition exists
should be used when coding patients' diagnoses whenever these codes are
available. We finalized in the FY 2015 IPF PPS rule, that we would
remove site ``unspecified'' codes from the IPF PPS ICD-10-CM/PCS codes
in instances when laterality codes (site specified codes) are
available, as the clinician should be able to identify a more specific
diagnosis based on clinical assessment at the medical encounter. None
of the proposed additions to the FY 2021 ICD-10-CM/PCS codes were site
``unspecified'' by laterality, therefore we are not removing any of the
new codes.
c. Proposed Patient Age Adjustments
As explained in the November 2004 IPF PPS final rule (69 FR 66922),
we analyzed the impact of age on per diem cost by examining the age
variable (range of ages) for payment adjustments. In general, we found
that the cost per day increases with age. The older age groups are
costlier than the under 45 age group, the differences in per diem cost
increase for each successive age group, and the differences are
statistically significant. For FY 2021, we are proposing to continue to
use the patient age adjustments currently in effect in FY 2020, as
shown in Addendum A of this rule (see https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/tools.html).
d. Proposed Variable Per Diem Adjustments
We explained in the November 2004 IPF PPS final rule (69 FR 66946)
that the regression analysis indicated that per diem cost declines as
the LOS increases. The variable per diem adjustments to the federal per
diem base rate account for ancillary and administrative costs that
occur disproportionately in the first days after admission to an IPF.
As discussed in the November 2004 IPF PPS final rule, we used a
regression analysis to estimate the average differences in per diem
cost among stays of different lengths (69 FR 66947 through 66950). As a
result of this analysis, we established variable per diem adjustments
that begin on day 1 and decline gradually until day 21 of a patient's
stay. For day 22 and thereafter, the variable per diem adjustment
remains the same each day for the remainder of the stay. However, the
adjustment applied to day 1 depends upon whether the IPF has a
qualifying ED. If an IPF has a qualifying ED, it receives a 1.31
adjustment factor for day 1 of each stay. If an IPF does not have a
qualifying ED, it receives a 1.19 adjustment factor for day 1 of the
stay. The ED adjustment is explained in more detail in section III.D.4
of this rule.
For FY 2021, we are proposing to continue to use the variable per
diem adjustment factors currently in effect, as shown in Addendum A of
this rule (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/tools.html). A complete
discussion of the variable per diem adjustments appears in the November
2004 IPF PPS final rule (69 FR 66946).
D. Proposed Updates to the IPF PPS Facility-Level Adjustments
The IPF PPS includes facility-level adjustments for the wage index,
IPFs located in rural areas, teaching IPFs, cost of living adjustments
for IPFs located in Alaska and Hawaii, and IPFs with a qualifying ED.
1. Wage Index Adjustment
a. Background
As discussed in the RY 2007 IPF PPS final rule (71 FR 27061), RY
2009 IPF PPS (73 FR 25719) and the RY 2010 IPF PPS notices (74 FR
20373), in order to provide an adjustment for geographic wage levels,
the labor-related portion of an IPF's payment is adjusted using an
appropriate wage index. Currently, an IPF's geographic wage index value
is determined based on the actual location
[[Page 20632]]
of the IPF in an urban or rural area, as defined in Sec.
412.64(b)(1)(ii)(A) and (C).
Due to the variation in costs and because of the differences in
geographic wage levels, in the November 15, 2004 IPF PPS final rule, we
required that payment rates under the IPF PPS be adjusted by a
geographic wage index. We proposed and finalized a policy to use the
unadjusted, pre-floor, pre-reclassified IPPS hospital wage index to
account for geographic differences in IPF labor costs. We implemented
use of the pre-floor, pre-reclassified IPPS hospital wage data to
compute the IPF wage index since there was not an IPF-specific wage
index available. We believe that IPFs generally compete in the same
labor market as IPPS hospitals so the pre-floor, pre-reclassified IPPS
hospital wage data should be reflective of labor costs of IPFs. We
believe this pre-floor, pre-reclassified IPPS hospital wage index to be
the best available data to use as proxy for an IPF specific wage index.
As discussed in the RY 2007 IPF PPS final rule (71 FR 27061 through
27067), under the IPF PPS, the wage index is calculated using the IPPS
wage index for the labor market area in which the IPF is located,
without taking into account geographic reclassifications, floors, and
other adjustments made to the wage index under the IPPS. For a complete
description of these IPPS wage index adjustments, we refer readers to
the FY 2019 IPPS/LTCH PPS final rule (83 FR 41362 through 41390). Our
wage index policy at Sec. 412.424(a)(2), requires us to use the best
Medicare data available to estimate costs per day, including an
appropriate wage index to adjust for wage differences.
When the IPF PPS was implemented in the November 15, 2004 IPF PPS
final rule, with an effective date of January 1, 2005, the pre-floor,
pre-reclassified IPPS hospital wage index that was available at the
time was the FY 2005 pre-floor, pre-reclassified IPPS hospital wage
index. Historically, the IPF wage index for a given RY has used the
pre-floor, pre-reclassified IPPS hospital wage index from the prior FY
as its basis. This has been due in part to the pre-floor, pre-
reclassified IPPS hospital wage index data that were available during
the IPF rulemaking cycle, where an annual IPF notice or IPF final rule
was usually published in early May. This publication timeframe was
relatively early compared to other Medicare payment rules because the
IPF PPS follows a RY, which was defined in the implementation of the
IPF PPS as the 12-month period from July 1 to June 30 (69 FR 66927).
Therefore, the best available data at the time the IPF PPS was
implemented was the pre-floor, pre-reclassified IPPS hospital wage
index from the prior FY (for example, the RY 2006 IPF wage index was
based on the FY 2005 pre-floor, pre-reclassified IPPS hospital wage
index).
In the RY 2012 IPF PPS final rule, we changed the reporting year
timeframe for IPFs from a RY to the FY, which begins October 1 and ends
September 30 (76 FR 26434 through 26435). In that FY 2012 IPF PPS final
rule, we continued our established policy of using the pre-floor, pre-
reclassified IPPS hospital wage index from the prior year (that is,
from FY 2011) as the basis for the FY 2012 IPF wage index. This policy
of basing a wage index on the prior year's pre-floor, pre-reclassified
IPPS hospital wage index has been followed by other Medicare payment
systems, such as hospice and inpatient rehabilitation facilities. By
continuing with our established policy, we remained consistent with
other Medicare payment systems.
In FY 2020 we finalized the IPF wage index methodology to align the
IPF PPS wage index with the same wage data timeframe used by the IPPS
for FY 2020 and subsequent years. Specifically, we finalized to use the
pre-floor, pre-reclassified IPPS hospital wage index from the FY
concurrent with the IPF FY as the basis for the IPF wage index. For
example, the FY 2020 IPF wage index would be based on the FY 2020 pre-
floor, pre-reclassified IPPS hospital wage index rather than on the FY
2019 pre-floor, pre-reclassified IPPS hospital wage index.
We explained in the FY 2020 proposed rule (84 FR 16973), that using
the concurrent pre-floor, pre-reclassified IPPS hospital wage index
would result in the most up-to-date wage data being the basis for the
IPF wage index. It would also result in more consistency and parity in
the wage index methodology used by other Medicare payment systems. The
Medicare SNF PPS already used the concurrent IPPS hospital wage index
data as the basis for the SNF PPS wage index. Thus, the wage adjusted
Medicare payments of various provider types would be based upon wage
index data from the same timeframe. CMS proposed similar policies to
use the concurrent pre-floor, pre-reclassified IPPS hospital wage index
data in other Medicare payment systems, such as hospice and inpatient
rehabilitation facilities. For FY 2021, we are proposing to continue to
use the concurrent pre-floor, pre-reclassified IPPS hospital wage index
as the basis for the IPF wage index.
We would apply the IPF wage index adjustment to the labor-related
share of the national base rate and ECT payment per treatment. The
labor-related share of the national rate and ECT payment per treatment
would change from 76.9 percent in FY 2020 to 77.2 percent in FY 2021.
This percentage reflects the labor-related share of the 2016-based IPF
market basket for FY 2021 (see section III.A of this rule).
b. Office of Management and Budget (OMB) Bulletins
(i.) Background
The wage index used for the IPF PPS is calculated using the
unadjusted, pre-reclassified and pre-floor inpatient PPS (IPPS) wage
index data and is assigned to the IPF on the basis of the labor market
area in which the IPF is geographically located. IPF labor market areas
are delineated based on the CBSAs established by the OMB.
Generally, OMB issues major revisions to statistical areas every 10
years, based on the results of the decennial census. However, OMB
occasionally issues minor updates and revisions to statistical areas in
the years between the decennial censuses through OMB Bulletins. These
bulletins contain information regarding CBSA changes, including changes
to CBSA numbers and titles. OMB bulletins may be accessed online at
https://www.whitehouse.gov/omb/information-for-agencies/bulletins/. In
accordance with our established methodology, the IPF PPS has
historically adopted any CBSA changes that are published in the OMB
bulletin that corresponds with the IPPS hospital wage index used to
determine the IPF wage index.
In the RY 2007 IPF PPS final rule (71 FR 27061 through 27067), we
adopted the changes discussed in the OMB Bulletin No. 03-04 (June 6,
2003), which announced revised definitions for MSAs, and the creation
of Micropolitan Statistical Areas and Combined Statistical Areas. In
adopting the OMB CBSA geographic designations in RY 2007, we did not
provide a separate transition for the CBSA-based wage index since the
IPF PPS was already in a transition period from TEFRA payments to PPS
payments.
In the RY 2009 IPF PPS notice, we incorporated the CBSA
nomenclature changes published in the most recent OMB bulletin that
applied to the IPPS hospital wage index used to determine the current
IPF wage index and stated that we expected to continue to do the same
for all the OMB CBSA nomenclature changes in future IPF PPS rules and
notices, as necessary (73 FR 25721).
On February 28, 2013, OMB issued OMB Bulletin No. 13-01 which
[[Page 20633]]
established revised delineations for Metropolitan Statistical Areas,
Micropolitan Statistical Areas, and Combined Statistical Areas in the
United States and Puerto Rico based on the 2010 Census, and provided
guidance on the use of the delineations of these statistical areas
using standards published in the June 28, 2010 Federal Register (75 FR
37246 through 37252). These OMB Bulletin changes were reflected in the
FY 2015 pre-floor, pre-reclassified IPPS hospital wage index, upon
which the FY 2016 IPF wage index was based. We adopted these new OMB
CBSA delineations in the FY 2016 IPF wage index and subsequent IPF wage
indexes. We refer readers to the FY 2016 IPF PPS final rule (80 FR
46682 through 46689) for a full discussion of our implementation of the
OMB labor market area delineations beginning with the FY 2016 wage
index.
On July 15, 2015, OMB issued OMB Bulletin No. 15-01, which provided
updates to and superseded OMB Bulletin No. 13-01 that was issued on
February 28, 2013. The attachment to OMB Bulletin No. 15-01 provided
detailed information on the update to statistical areas since February
28, 2013. The updates provided in OMB Bulletin No. 15-01 were based on
the application of the 2010 Standards for Delineating Metropolitan and
Micropolitan Statistical Areas to Census Bureau population estimates
for July 1, 2012 and July 1, 2013. The complete list of statistical
areas incorporating these changes is provided in OMB Bulletin No. 15-
01. A copy of this bulletin may be obtained at https://www.whitehouse.gov/omb/information-for-agencies/bulletins/.
OMB Bulletin No. 15-01 established revised delineations for the
Nation's Metropolitan Statistical Areas, Micropolitan Statistical
Areas, and Combined Statistical Areas. The bulletin also provided
delineations of Metropolitan Divisions as well as delineations of New
England City and Town Areas. As discussed in the FY 2017 IPPS/LTCH PPS
final rule (81 FR 56913), the updated labor market area definitions
from OMB Bulletin 15-01 were implemented under the IPPS beginning on
October 1, 2016 (FY 2017). Therefore, we implemented these revisions
for the IPF PPS beginning October 1, 2017 (FY 2018), consistent with
our historical practice of modeling IPF PPS adoption of the labor
market area delineations after IPPS adoption of these delineations
(historically the IPF wage index has been based upon the pre-floor,
pre-reclassified IPPS hospital wage index from the prior year).
On August 15, 2017, OMB issued OMB Bulletin No. 17-01, which
provided updates to and superseded OMB Bulletin No. 15-01 that was
issued on July 15, 2015. The attachments to OMB Bulletin No. 17-01
provide detailed information on the update to statistical areas since
July 15, 2015, and are based on the application of the 2010 Standards
for Delineating Metropolitan and Micropolitan Statistical Areas to
Census Bureau population estimates for July 1, 2014 and July 1, 2015.
In the FY 2020 IPF PPS final rule (84 FR 38453 through 38454), we
adopted the updates set forth in OMB Bulletin No. 17-01 effective
October 1, 2019, beginning with the FY 2020 IPF wage index. Given that
the loss of the rural adjustment was mitigated in part by the increase
in wage index value, and that only a single IPF was affected by this
change, we did not believe it was necessary to transition this provider
from its rural to newly urban status. We refer readers to the FY 2020
IPF PPS final rule (84 FR 38453 through 38454) for a more detailed
discussion about the decision to forego a transition plan in FY 2020.
On April 10, 2018, OMB issued OMB Bulletin No. 18-03, which
superseded the August 15, 2017 OMB Bulletin No. 17-01, and on September
14, 2018, OMB issued, OMB Bulletin No. 18-04, which superseded the
April 10, 2018 OMB Bulletin No. 18-03. These bulletins established
revised delineations for Metropolitan Statistical Areas, Micropolitan
Statistical Areas, and Combined Statistical Areas, and provided
guidance on the use of the delineations of these statistical areas. A
copy of the most recent bulletin may be obtained at https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf.
According to OMB, ``[t]his bulletin provides the delineations of all
Metropolitan Statistical Areas, Metropolitan Divisions, Micropolitan
Statistical Areas, Combined Statistical Areas, and New England City and
Town Areas in the United States and Puerto Rico based on the standards
published on June 28, 2010, in the Federal Register [75 FR 37246], and
Census Bureau data.'' (We note, on March 6, 2020 OMB issued OMB
Bulletin 20-01 (available on the web at https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf), and as discussed below was
not issued in time for development of this proposed rule.)
While OMB Bulletin No. 18-04 is not based on new census data, it
includes some material changes to the OMB statistical area delineations
that we believe are necessary to incorporate into the IPF PPS. These
changes include new some CBSAs, urban counties that would become rural,
rural counties that would become urban, and existing CBSAs that would
be split apart. We discuss these changes in more detail in the sections
below.
(ii.) Proposed Implementation of New Labor Market Area Delineations
We believe it is important for the IPF PPS to use, as soon as is
reasonably possible, the latest available labor market area
delineations in order to maintain a more accurate and up-to-date
payment system that reflects the reality of population shifts and labor
market conditions. We believe that using the most current delineations
will increase the integrity of the IPF PPS wage index system by
creating a more accurate representation of geographic variations in
wage levels. We have carefully analyzed the impacts of adopting the new
OMB delineations, and find no compelling reason to further delay
implementation. Therefore, we are proposing to implement the new OMB
delineations as described in the September 14, 2018 OMB Bulletin No.
18-04, effective beginning with the FY 2021 IPF PPS wage index. We are
proposing to adopt the updates to the OMB delineations announced in OMB
Bulletin No. 18-04 effective for FY 2021 under the IPF PPS. As noted
above, the March 6, 2020 OMB Bulletin 20-01 was not issued in time for
development of this proposed rule. While we do not believe that the
minor updates included in OMB Bulletin 20-01 would impact our proposed
updates to the CBSA-based labor market area delineations, if needed we
would include any updates from this bulletin in any changes that would
be adopted in the FY 2021 IPF PPS final rule. We also are proposing to
implement a wage index transition policy that would be applicable to
all IPFs that may experience negative impacts due to the proposed
implementation of the revised OMB delineations. This proposed
transition is discussed in more detail below.
(a.) Micropolitan Statistical Areas
OMB defines a ``Micropolitan Statistical Area'' as a CBSA
associated with at least one urban cluster that has a population of at
least 10,000, but less than 50,000 (75 FR 37252). We refer to these as
Micropolitan Areas. After extensive impact analysis, consistent with
the treatment of these areas under the IPPS as discussed in the FY 2005
IPPS final rule (69 FR 49029 through 49032), we determined the best
course of action would be to treat Micropolitan Areas as ``rural'' and
include them in
[[Page 20634]]
the calculation of each state's IPF PPS rural wage index. We refer the
reader to the FY 2007 IPF PPS final rule (71 FR 27064 through 27065)
for a complete discussion regarding treating Micropolitan Areas as
rural.
(b.) Urban Counties That Would Become Rural Under the Revised OMB
Delineations
As previously discussed, we are proposing to implement the new OMB
labor market area delineations (based upon OMB Bulletin No. 18-04)
beginning in FY 2021. Our analysis shows that a total of 34 counties
(and county equivalents) and 5 providers are located in areas that were
previously considered part of an urban CBSA but would be considered
rural beginning in FY 2021 under these revised OMB delineations. Table
1 lists the 34 urban counties that would be rural if we finalize our
proposal to implement the revised OMB delineations.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP14AP20.004
We are proposing that the wage data for all providers located in
the counties listed above would now be considered rural, beginning in
FY 2021, when calculating their respective state's rural wage index.
This rural wage index value would also be used under the IPF PPS. We
recognize that rural areas typically have lower area wage index values
than urban areas, and providers located in these counties may
experience a negative impact in their IPF payment due to the proposed
adoption of the revised OMB delineations. We refer readers to section
iii of this proposed rule for a discussion of the proposed wage index
transition policy, particularly, the discussion of the
[[Page 20635]]
proposed wage index transition policy regarding the 5 percent cap for
providers that may experience a decrease in their wage index from the
prior FY.
(c.) Rural Counties That Would Become Urban Under the Revised OMB
Delineations
As previously discussed, we are proposing to implement the new OMB
labor market area delineations (based upon OMB Bulletin No. 18-04)
beginning in FY 2021. Analysis of these OMB labor market area
delineations shows that a total of 47 counties (and county equivalents)
and 4 providers are located in areas that were previously considered
rural but would now be considered urban under the revised OMB
delineations. Table 2 lists the 47 rural counties that would be urban
if we finalize our proposal to implement the revised OMB delineations.
[GRAPHIC] [TIFF OMITTED] TP14AP20.005
[[Page 20636]]
[GRAPHIC] [TIFF OMITTED] TP14AP20.006
We are proposing that when calculating the area wage index,
beginning with FY 2021, the wage data for providers located in these
counties would be included in their new respective urban CBSAs.
Typically, providers located in an urban area receive a wage index
value higher than or equal to providers located in their state's rural
area. We refer readers to section iii of this proposed rule for a
discussion of the proposed wage index transition policy.
(d.) Urban Counties That Would Move to a Different Urban CBSA Under the
New OMB Delineations
In certain cases, adopting the new OMB delineations would involve a
change only in CBSA name and/or number, while the CBSA continues to
encompass the same constituent counties. For example, CBSA 19380
(Dayton, OH) would experience both a change to its number and its name,
and become CBSA 19430 (Dayton-Kettering, OH), while all of its three
constituent counties would remain the same. In other cases, only the
name of the CBSA would be modified, and none of the currently assigned
counties would be reassigned to a different urban CBSA. Table 3 shows
the current CBSA code and our proposed CBSA code where we are proposing
to change either the name or CBSA number only. We are not discussing
further in this section these proposed changes because they are
inconsequential changes with respect to the IPF PPS wage index.
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In some cases, if we adopt the new OMB delineations, counties would
shift between existing and new CBSAs, changing the constituent makeup
of the CBSAs. We consider this type of change, where CBSAs are split
into multiple new CBSAs, or a CBSA loses one or more counties to
another urban CBSA to be significant modifications.
Table 4 lists the urban counties that would move from one urban
CBSA to another newly proposed or modified CBSA if we adopted the new
OMB delineations.
[[Page 20638]]
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BILLING CODE 4120-01-C
We have identified 49 IPF providers located in the affected
counties listed in Table 4. If providers located in these counties move
from one CBSA to another under the revised OMB delineations, there may
be impacts, both negative and positive, upon their specific wage index
values.
(iii.) Proposed Transition Policy for Providers Negatively Impacted by
Wage Index Changes
Overall, we believe implementing updated wage index values along
with the revised OMB delineations would result in wage index values
being more representative of the actual costs of labor in a given area.
However, we recognize that implementing these wage index changes will
have distributional effects among IPF providers, and that some
providers would experience decreases in wage index values as a result
of our proposals. Therefore, we believe it would be appropriate to
consider, as we have in the past, whether or not a transition period
should be used to implement these proposed changes to the wage index.
We considered having no transition period and fully implementing
the proposed updated wage index values and new OMB delineations
beginning in FY 2021. This would mean that we would adopt the updated
wage index and revised OMB delineations for all providers on October 1,
2020. However, this would not provide any time for providers to adapt
to the new OMB delineations or wage index values. As previously stated,
some providers would experience a decrease in wage index due to
implementation of the proposed new OMB delineations and wage index
updates. Thus, we believe that it would be appropriate to provide for a
transition period to mitigate the resulting short-term instability and
negative impacts on these providers to provide time for them to adjust
to their new labor market area delineations and wage index values.
Furthermore, in light of the comments received during the RY 2007 and
FY 2016 rulemaking cycles on our proposals to adopt revised CBSA
definitions without a transition period, we believe that a transition
period is appropriate for FY 2021.
[[Page 20639]]
We considered transitioning the proposed wage index changes over a
number of years to minimize their impact in a given year. However, as
discussed in the FY 2016 IPF PPS final rule (80 FR 46689), we continue
to believe that a longer transition period would reduce the accuracy of
the overall labor market area wage index system. The wage index is a
relative measure of the value of labor in prescribed labor market
areas; therefore, we believe it is important to implement the new
delineations with as minimal a transition as is reasonably possible. As
such, we believe that utilizing a 2-year (rather than a multiple year)
transition period would strike the most appropriate balance between
giving providers time to adapt to the new wage index changes while
maintaining the accuracy of the overall labor market area wage index
system.
We considered a transition methodology similar to that used to
address past decreases in the wage index, as in FY 2016 (80 FR 46689)
when major changed to CBSA delineations were introduced. Under that
methodology, all IPF providers would receive a 1-year blended wage
index using 50 percent of their FY 2021 wage index based on the
proposed new OMB delineations and 50 percent of their FY 2021 wage
index based on the OMB delineations used in FY 2020. However, if we
were to propose a similar blended adjustment for FY 2021, we would have
to calculate wage indexes for all providers using both old and new
labor market definitions even though the blended wage index would only
apply to providers that experienced a decrease in wage index values due
to a change in labor market area definitions.
Because of the administrative complexity involved in implementing a
blended adjustment, we decided to consider alternative transition
methodologies that might provide greater transparency. Moreover, for FY
2021, we are not proposing the same transition policy we established in
FY 2016 when we adopted new OMB delineations based on the decennial
census data. However, consistent with our past practice of using
transition policies to help mitigate negative impacts on hospitals of
certain wage index proposals, we do believe it is appropriate to
propose a transition policy for our proposed implementation of the
revised OMB delineations.
We believe adopting a transition of the 5-percent cap on a decrease
in an IPFs wage index from the IPF's final wage index from the prior FY
is an appropriate transition for FY 2021 for the revised OMB
delineations as it provides greater transparency and consistency with
other payment systems. This 2-year transition would allow the proposed
adoption of the revised CBSA delineations to be phased in over 2 years,
where the estimated reduction in an IPF's wage index would be capped at
5 percent in FY 2021. This approach strikes an appropriate balance by
providing for a transition period to mitigate the resulting short-term
instability and negative impacts on these providers and provide time
for them to adjust to their new labor market area delineations and wage
index values. No cap would be applied to the reduction in the wage
index for the second year, that is, FY 2022.
Following the rationale outlined in the FY 2020 IPPS/LTCH PPS final
rule (84 FR 42336), we continue to we believe 5 percent is a reasonable
level for the cap because it would effectively mitigate any significant
decreases in the wage index for FY 2021. Therefore, for FY 2021, we are
proposing to provide for a transition of a 5-percent cap on any
decrease in an IPF's wage index from the IPF's final wage index from
the prior FY, which would be FY 2020. Consistent with the application
of the 5 percent cap transition provided in FY 2020 for the IPPS, this
5-percent cap on wage index decreases would be applied to all IPF
providers that have any decrease in their wage indexes, regardless of
the circumstance causing the decline, so that an IPF's final wage index
for FY 2021 would not be less than 95 percent of its final wage index
for FY 2020, regardless of whether the IPF is part of an updated CBSA.
We invite comments on our proposed implementation of the new OMB
delineations and our proposed transition methodology.
e. Proposed Adjustment for Rural Location
In the November 2004 IPF PPS final rule, (69 FR 66954) we provided
a 17 percent payment adjustment for IPFs located in a rural area. This
adjustment was based on the regression analysis, which indicated that
the per diem cost of rural facilities was 17 percent higher than that
of urban facilities after accounting for the influence of the other
variables included in the regression. This 17 percent adjustment has
been part of the IPF PPS each year since the inception of the IPF PPS.
For FY 2021, we are proposing to continue to apply a 17 percent payment
adjustment for IPFs located in a rural area as defined at Sec.
412.64(b)(1)(ii)(C) (see 69 FR 66954) for a complete discussion of the
adjustment for rural locations.
f. Proposed Budget Neutrality Adjustment
Changes to the wage index are made in a budget-neutral manner so
that updates do not increase expenditures. Therefore, for FY 2021, we
are proposing to continue to apply a budget-neutrality adjustment in
accordance with our existing budget-neutrality policy. This policy
requires us to update the wage index in such a way that total estimated
payments to IPFs for FY 2021 are the same with or without the changes
(that is, in a budget-neutral manner) by applying a budget neutrality
factor to the IPF PPS rates. We use the following steps to ensure that
the rates reflect the update to the wage indexes (based on the FY 2016
hospital cost report data) and the labor-related share in a budget-
neutral manner:
Step 1. Simulate estimated IPF PPS payments, using the FY 2020 IPF
wage index values (available on the CMS website) and labor-related
share (as published in the FY 2020 IPF PPS final rule (84 FR 38424).
Step 2. Simulate estimated IPF PPS payments using the proposed FY
2021 IPF wage index values (available on the CMS website) and proposed
FY 2021 labor-related share (based on the latest available data as
discussed previously).
Step 3. Divide the amount calculated in step 1 by the amount
calculated in step 2. The resulting quotient is the FY 2021 budget-
neutral wage adjustment factor of 0.9979.
Step 4. Apply the FY 2021 budget-neutral wage adjustment factor
from step 3 to the FY 2020 IPF PPS federal per diem base rate after the
application of the market basket update described in section III.A of
this rule, to determine the FY 2021 IPF PPS federal per diem base rate.
2. Proposed Teaching Adjustment
In the November 2004 IPF PPS final rule, we implemented regulations
at Sec. 412.424(d)(1)(iii) to establish a facility-level adjustment
for IPFs that are, or are part of, teaching hospitals. The teaching
adjustment accounts for the higher indirect operating costs experienced
by hospitals that participate in graduate medical education (GME)
programs. The payment adjustments are made based on the ratio of the
number of full-time equivalent (FTE) interns and residents training in
the IPF and the IPF's average daily census (ADC).
Medicare makes direct GME payments (for direct costs such as
resident and teaching physician salaries, and other direct teaching
costs) to all teaching hospitals including those paid under a PPS, and
those paid under the TEFRA
[[Page 20640]]
rate-of-increase limits. These direct GME payments are made separately
from payments for hospital operating costs and are not part of the IPF
PPS. The direct GME payments do not address the estimated higher
indirect operating costs teaching hospitals may face.
The results of the regression analysis of FY 2002 IPF data
established the basis for the payment adjustments included in the
November 2004 IPF PPS final rule. The results showed that the indirect
teaching cost variable is significant in explaining the higher costs of
IPFs that have teaching programs. We calculated the teaching adjustment
based on the IPF's ``teaching variable,'' which is (1 + (the number of
FTE residents training in the IPF/the IPF's ADC)). The teaching
variable is then raised to 0.5150 power to result in the teaching
adjustment. This formula is subject to the limitations on the number of
FTE residents, which are described in this section of this rule.
We established the teaching adjustment in a manner that limited the
incentives for IPFs to add FTE residents for the purpose of increasing
their teaching adjustment. We imposed a cap on the number of FTE
residents that may be counted for purposes of calculating the teaching
adjustment. The cap limits the number of FTE residents that teaching
IPFs may count for the purpose of calculating the IPF PPS teaching
adjustment, not the number of residents teaching institutions can hire
or train. We calculated the number of FTE residents that trained in the
IPF during a ``base year'' and used that FTE resident number as the
cap. An IPF's FTE resident cap is ultimately determined based on the
final settlement of the IPF's most recent cost report filed before
November 15, 2004 (publication date of the IPF PPS final rule). A
complete discussion of the temporary adjustment to the FTE cap to
reflect residents due to hospital closure or residency program closure
appears in the RY 2012 IPF PPS proposed rule (76 FR 5018 through 5020)
and the RY 2012 IPF PPS final rule (76 FR 26453 through 26456).
In the regression analysis, the logarithm of the teaching variable
had a coefficient value of 0.5150. We converted this cost effect to a
teaching payment adjustment by treating the regression coefficient as
an exponent and raising the teaching variable to a power equal to the
coefficient value. We note that the coefficient value of 0.5150 was
based on the regression analysis holding all other components of the
payment system constant. A complete discussion of how the teaching
adjustment was calculated appears in the November 2004 IPF PPS final
rule (69 FR 66954 through 66957) and the RY 2009 IPF PPS notice (73 FR
25721). As with other adjustment factors derived through the regression
analysis, we do not plan to rerun the teaching adjustment factors in
the regression analysis until we more fully analyze IPF PPS data as
part of the IPF PPS refinement we discuss in section IV of this rule.
Therefore, in this FY 2021 proposed rule, we are proposing to continue
to retain the coefficient value of 0.5150 for the teaching adjustment
to the federal per diem base rate.
3. Proposed Cost of Living Adjustment for IPFs Located in Alaska and
Hawaii
The IPF PPS includes a payment adjustment for IPFs located in
Alaska and Hawaii based upon the area in which the IPF is located. As
we explained in the November 2004 IPF PPS final rule, the FY 2002 data
demonstrated that IPFs in Alaska and Hawaii had per diem costs that
were disproportionately higher than other IPFs. Other Medicare
prospective payment systems (for example: The IPPS and LTCH PPS)
adopted a COLA to account for the cost differential of care furnished
in Alaska and Hawaii.
We analyzed the effect of applying a COLA to payments for IPFs
located in Alaska and Hawaii. The results of our analysis demonstrated
that a COLA for IPFs located in Alaska and Hawaii would improve payment
equity for these facilities. As a result of this analysis, we provided
a COLA in the November 2004 IPF PPS final rule.
A COLA for IPFs located in Alaska and Hawaii is made by multiplying
the non-labor-related portion of the federal per diem base rate by the
applicable COLA factor based on the COLA area in which the IPF is
located.
The COLA factors through 2009 were published by the Office of
Personnel Management (OPM), and the OPM memo showing the 2009 COLA
factors is available at https://www.chcoc.gov/content/nonforeign-area-retirement-equity-assurance-act.
We note that the COLA areas for Alaska are not defined by county as
are the COLA areas for Hawaii. In 5 CFR 591.207, the OPM established
the following COLA areas:
City of Anchorage, and 80-kilometer (50-mile) radius by
road, as measured from the federal courthouse.
City of Fairbanks, and 80-kilometer (50-mile) radius by
road, as measured from the federal courthouse.
City of Juneau, and 80-kilometer (50-mile) radius by road,
as measured from the federal courthouse.
Rest of the state of Alaska.
As stated in the November 2004 IPF PPS final rule, we update the
COLA factors according to updates established by the OPM. However,
sections 1911 through 1919 of the Nonforeign Area Retirement Equity
Assurance Act, as contained in subtitle B of title XIX of the National
Defense Authorization Act (NDAA) for FY 2010 (Pub. L. 111-84, October
28, 2009), transitions the Alaska and Hawaii COLAs to locality pay.
Under section 1914 of NDAA, locality pay was phased in over a 3-year
period beginning in January 2010, with COLA rates frozen as of the date
of enactment, October 28, 2009, and then proportionately reduced to
reflect the phase-in of locality pay.
When we published the proposed COLA factors in the RY 2012 IPF PPS
proposed rule (76 FR 4998), we inadvertently selected the FY 2010 COLA
rates, which had been reduced to account for the phase-in of locality
pay. We did not intend to propose the reduced COLA rates because that
would have understated the adjustment. Since the 2009 COLA rates did
not reflect the phase-in of locality pay, we finalized the FY 2009 COLA
rates for RY 2010 through RY 2014.
In the FY 2013 IPPS/LTCH final rule (77 FR 53700 through 53701), we
established a new methodology to update the COLA factors for Alaska and
Hawaii, and adopted this methodology for the IPF PPS in the FY 2015 IPF
final rule (79 FR 45958 through 45960). We adopted this new COLA
methodology for the IPF PPS because IPFs are hospitals with a similar
mix of commodities and services. We think it is appropriate to have a
consistent policy approach with that of other hospitals in Alaska and
Hawaii. Therefore, the IPF COLAs for FY 2015 through FY 2017 were the
same as those applied under the IPPS in those years. As finalized in
the FY 2013 IPPS/LTCH PPS final rule (77 FR 53700 and 53701), the COLA
updates are determined every 4 years, when the IPPS market basket
labor-related share is updated. Because the labor-related share of the
IPPS market basket was updated for FY 2018, the COLA factors were
updated in FY 2018 IPPS/LTCH rulemaking (82 FR 38529). As such, we also
updated the IPF PPS COLA factors for FY 2018 (82 FR 36780 through
36782) to reflect the updated COLA factors finalized in the FY 2018
IPPS/LTCH rulemaking. We are proposing to continue to apply the same
COLA factors in FY 2021 that were used in FY 2018 and FY 2019.
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The proposed IPF PPS COLA factors for FY 2021 are also shown in
Addendum A to this proposed rule, and is available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/tools.html.
4. Proposed Adjustment for IPFs With a Qualifying Emergency Department
(ED)
The IPF PPS includes a facility-level adjustment for IPFs with
qualifying EDs. We provide an adjustment to the federal per diem base
rate to account for the costs associated with maintaining a full-
service ED. The adjustment is intended to account for ED costs incurred
by a psychiatric hospital with a qualifying ED or an excluded
psychiatric unit of an IPPS hospital or a CAH, for preadmission
services otherwise payable under the Medicare Hospital Outpatient
Prospective Payment System (OPPS), furnished to a beneficiary on the
date of the beneficiary's admission to the hospital and during the day
immediately preceding the date of admission to the IPF (see Sec.
413.40(c)(2)), and the overhead cost of maintaining the ED. This
payment is a facility-level adjustment that applies to all IPF
admissions (with one exception which we described), regardless of
whether a particular patient receives preadmission services in the
hospital's ED.
The ED adjustment is incorporated into the variable per diem
adjustment for the first day of each stay for IPFs with a qualifying
ED. Those IPFs with a qualifying ED receive an adjustment factor of
1.31 as the variable per diem adjustment for day 1 of each patient
stay. If an IPF does not have a qualifying ED, it receives an
adjustment factor of 1.19 as the variable per diem adjustment for day 1
of each patient stay.
The ED adjustment is made on every qualifying claim except as
described in this section of the proposed rule. As specified in Sec.
412.424(d)(1)(v)(B), the ED adjustment is not made when a patient is
discharged from an IPPS hospital or CAH and admitted to the same IPPS
hospital's or CAH's excluded psychiatric unit. We clarified in the
November 2004 IPF PPS final rule (69 FR 66960) that an ED adjustment is
not made in this case because the costs associated with ED services are
reflected in the DRG payment to the IPPS hospital or through the
reasonable cost payment made to the CAH.
Therefore, when patients are discharged from an IPPS hospital or
CAH and admitted to the same hospital's or CAH's excluded psychiatric
unit, the IPF receives the 1.19 adjustment factor as the variable per
diem adjustment for the first day of the patient's stay in the IPF. For
FY 2021, we are proposing to continue to retain the 1.31 adjustment
factor for IPFs with qualifying EDs. A complete discussion of the steps
involved in the calculation of the ED adjustment factors are in the
November 2004 IPF PPS final rule (69 FR 66959 through 66960) and the RY
2007 IPF PPS final rule (71 FR 27070 through 27072).
E. Other Proposed Payment Adjustments and Policies
1. Outlier Payment Overview
The IPF PPS includes an outlier adjustment to promote access to IPF
care for those patients who require expensive care and to limit the
financial risk of IPFs treating unusually costly patients. In the
November 2004 IPF PPS final rule, we implemented regulations at Sec.
412.424(d)(3)(i) to provide a per-case payment for IPF stays that are
extraordinarily costly. Providing additional payments to IPFs for
extremely costly cases strongly improves the accuracy of the IPF PPS in
determining resource costs at the patient and facility level. These
additional payments reduce the financial losses that would otherwise be
incurred in treating patients who require costlier care, and therefore,
reduce the incentives for IPFs to under-serve these patients. We make
outlier payments for discharges in which an IPF's estimated total cost
for a case exceeds a fixed dollar loss threshold amount (multiplied by
the IPF's facility-level adjustments) plus the federal per diem payment
amount for the case.
In instances when the case qualifies for an outlier payment, we pay
80 percent of the difference between the estimated cost for the case
and the adjusted threshold amount for days 1 through 9 of the stay
(consistent with the median LOS for IPFs in FY 2002), and 60 percent of
the difference for day 10 and thereafter. The adjusted threshold amount
is equal to the outlier threshold amount adjusted for wage area,
teaching status, rural area, and the COLA adjustment (if applicable),
plus the amount of the Medicare IPF payment for the case. We
established the 80 percent and 60 percent loss sharing ratios because
we were concerned that a single ratio established at 80 percent (like
other Medicare PPSs) might provide an incentive under the IPF per diem
payment system to increase LOS in order to receive additional payments.
[[Page 20642]]
After establishing the loss sharing ratios, we determined the
current fixed dollar loss threshold amount through payment simulations
designed to compute a dollar loss beyond which payments are estimated
to meet the 2 percent outlier spending target. Each year when we update
the IPF PPS, we simulate payments using the latest available data to
compute the fixed dollar loss threshold so that outlier payments
represent 2 percent of total estimated IPF PPS payments.
2. Proposed Update to the Outlier Fixed Dollar Loss Threshold Amount
In accordance with the update methodology described in Sec.
412.428(d), we are proposing to update the fixed dollar loss threshold
amount used under the IPF PPS outlier policy. Based on the regression
analysis and payment simulations used to develop the IPF PPS, we
established a 2 percent outlier policy, which strikes an appropriate
balance between protecting IPFs from extraordinarily costly cases while
ensuring the adequacy of the federal per diem base rate for all other
cases that are not outlier cases.
Based on an analysis of the latest available data (the December
2019 update of FY 2019 IPF claims) and rate increases, we believe it is
necessary to update the fixed dollar loss threshold amount to maintain
an outlier percentage that equals 2 percent of total estimated IPF PPS
payments. We are proposing to update the IPF outlier threshold amount
for FY 2021 using FY 2019 claims data and the same methodology that we
used to set the initial outlier threshold amount in the RY 2007 IPF PPS
final rule (71 FR 27072 and 27073), which is also the same methodology
that we used to update the outlier threshold amounts for years 2008
through 2020. Based on an analysis of these updated data, we estimate
that IPF outlier payments as a percentage of total estimated payments
are approximately 2.2 percent in FY 2020. Therefore, we are proposing
to update the outlier threshold amount to $16,520 to maintain estimated
outlier payments at 2 percent of total estimated aggregate IPF payments
for FY 2021. This proposed rule update is an increase from the FY 2020
threshold of $14,960.
3. Proposed Update to IPF Cost-to-Charge Ratio Ceilings
Under the IPF PPS, an outlier payment is made if an IPF's cost for
a stay exceeds a fixed dollar loss threshold amount plus the IPF PPS
amount. In order to establish an IPF's cost for a particular case, we
multiply the IPF's reported charges on the discharge bill by its
overall cost-to-charge ratio (CCR). This approach to determining an
IPF's cost is consistent with the approach used under the IPPS and
other PPSs. In the FY 2004 IPPS final rule (68 FR 34494), we
implemented changes to the IPPS policy used to determine CCRs for IPPS
hospitals, because we became aware that payment vulnerabilities
resulted in inappropriate outlier payments. Under the IPPS, we
established a statistical measure of accuracy for CCRs to ensure that
aberrant CCR data did not result in inappropriate outlier payments.
As we indicated in the November 2004 IPF PPS final rule (69 FR
66961), we believe that the IPF outlier policy is susceptible to the
same payment vulnerabilities as the IPPS; therefore, we adopted a
method to ensure the statistical accuracy of CCRs under the IPF PPS.
Specifically, we adopted the following procedure in the November 2004
IPF PPS final rule:
Calculated two national ceilings, one for IPFs located in
rural areas and one for IPFs located in urban areas.
Computed the ceilings by first calculating the national
average and the standard deviation of the CCR for both urban and rural
IPFs using the most recent CCRs entered in the most recent Provider
Specific File available.
For FY 2021, we are proposing to continue to follow this
methodology.
To determine the rural and urban ceilings, we multiplied each of
the standard deviations by 3 and added the result to the appropriate
national CCR average (either rural or urban). The upper threshold CCR
for IPFs in FY 2021 is 1.9572 for rural IPFs, and 1.7387 for urban
IPFs, based on CBSA-based geographic designations. If an IPF's CCR is
above the applicable ceiling, the ratio is considered statistically
inaccurate, and we assign the appropriate national (either rural or
urban) median CCR to the IPF.
We apply the national median CCRs to the following situations:
New IPFs that have not yet submitted their first Medicare
cost report. We continue to use these national median CCRs until the
facility's actual CCR can be computed using the first tentatively or
final settled cost report.
IPFs whose overall CCR is in excess of three standard
deviations above the corresponding national geometric mean (that is,
above the ceiling).
Other IPFs for which the Medicare Administrative
Contractor (MAC) obtains inaccurate or incomplete data with which to
calculate a CCR.
We are proposing to continue to update the FY 2021 national median
and ceiling CCRs for urban and rural IPFs based on the CCRs entered in
the latest available IPF PPS Provider Specific File. Specifically, for
FY 2021, to be used in each of the three situations listed previously,
using the most recent CCRs entered in the CY 2020 Provider Specific
File, we provide an estimated national median CCR of 0.5720 for rural
IPFs and a national median CCR of 0.4280 for urban IPFs. These
calculations are based on the IPF's location (either urban or rural)
using the CBSA-based geographic designations. A complete discussion
regarding the national median CCRs appears in the November 2004 IPF PPS
final rule (69 FR 66961 through 66964).
IV. Update on IPF PPS Refinements
For RY 2012, we identified several areas of concern for future
refinement, and we invited comments on these issues in the RY 2012 IPF
PPS proposed and final rules. For further discussion of these issues
and to review the public comments, we refer readers to the RY 2012 IPF
PPS proposed rule (76 FR 4998) and final rule (76 FR 26432).
We have delayed making refinements to the IPF PPS until we have
completed a thorough analysis of IPF PPS data on which to base those
refinements. Specifically, we would delay updating the adjustment
factors derived from the regression analysis until we have IPF PPS data
that include as much information as possible regarding the patient-
level characteristics of the population that each IPF serves. We have
begun and will continue the necessary analysis to better understand IPF
industry practices so that we may refine the IPF PPS in the future, as
appropriate. Our preliminary analysis has also revealed variation in
cost and claim data, particularly related to labor costs, drugs costs,
and laboratory services. Some providers have very low labor costs, or
very low or missing drug or laboratory costs or charges, relative to
other providers. As we noted in the FY 2016 IPF PPS final rule (80 FR
46693 through 46694), our preliminary analysis of 2012 to 2013 IPF data
found that over 20 percent of IPF stays reported no ancillary costs,
such as laboratory and drug costs, in their cost reports, or laboratory
or drug charges on their claims. Because we expect that most patients
requiring hospitalization for active psychiatric treatment would need
drugs and laboratory services, we again remind providers that the IPF
PPS federal per diem base rate includes the cost of all ancillary
services, including drugs and laboratory services.
On November 17, 2017, we issued Transmittal 12, which made changes
to
[[Page 20643]]
the hospital cost report form CMS-2552-10 (OMB No. 0938-0050), and
included the requirement that cost reports from psychiatric hospitals
include certain ancillary costs, or the cost report will be rejected.
On January 30, 2018, we issued Transmittal 13, which changed the
implementation date for Transmittal 12 to be for cost reporting periods
ending on or after September 30, 2017. For details, we refer readers to
see these Transmittals, which are available on the CMS website at
https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/index.html. CMS suspended the requirement that cost reports from
psychiatric hospitals include certain ancillary costs effective April
27, 2018, in order to consider excluding all-inclusive rate providers
from this requirement. CMS issued Transmittal 15 on October 19, 2018,
reinstating the requirement that cost reports from psychiatric
hospitals, except all-inclusive rate providers, include certain
ancillary costs.
We only pay the IPF for services furnished to a Medicare
beneficiary who is an inpatient of that IPF (except for certain
professional services), and payments are considered to be payments in
full for all inpatient hospital services provided directly or under
arrangement (see 42 CFR 412.404(d)), as specified in 42 CFR 409.10.
V. Collection of Information Requirements
This rule proposes to update the prospective payment rates, the
outlier threshold, and the wage index for Medicare inpatient hospital
services provided by IPFs. It also proposes to expand the IPPS wage
index disparities policy and revise CBSA delineations. With regard to
the Paperwork Reduction Act of 1995 (PRA; 44 U.S.C. 3501 et seq.), the
rule's proposed changes would not impose any new or revised
``collection of information'' requirements or burden. While discussed
in section IV (Update on IPF PPS Refinements) of this preamble, the
active requirements and burden associated with our hospital cost report
form CMS-2552-10 (OMB control number 0938-0050) are unaffected by this
rule. Since this rule would not impose any new or revised collection of
information requirements/burden, the rule is not subject to the PRA and
OMB review under the authority of the PRA. With respect to the PRA and
this section of the preamble, collection of information is defined
under 5 CFR 1320.3(c) of the PRA's implementing regulations.
VI. Regulatory Impact Analysis
A. Statement of Need
This rule proposes updates to the prospective payment rates for
Medicare inpatient hospital services provided by IPFs for discharges
occurring during FY 2021 (October 1, 2020 through September 30, 2021).
We are proposing to apply the 2016-based IPF market basket increase of
3.0 percent, less the productivity adjustment of 0.4 percentage point
as required by 1886(s)(2)(A)(i) of the Act for a proposed total FY 2021
payment rate update of 2.6 percent. In this proposed rule, we are
proposing to update the IPF labor-related share and update the IPF wage
index to reflect the FY 2021 hospital inpatient wage index, and adopt
the most recent Office of Management and Budget (OMB) statistical area
delineations.
B. Overall Impact
We have examined the impacts of this proposed rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011), the Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96 354), section 1102(b) of the Social
Security Act (the Act), section 202 of the Unfunded Mandates Reform Act
of 1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on
Federalism (August 4, 1999), and Executive Order 13771 on Reducing
Regulation and Controlling Regulatory Costs (January 30, 2017).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Section
3(f) of Executive Order 12866 defines a ``significant regulatory
action'' as an action that is likely to result in a rule: (1) Having an
annual effect on the economy of $100 million or more in any 1 year, or
adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating a serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order. In accordance with the
provisions of Executive Order 12866, this regulation was reviewed by
the Office of Management and Budget.
We estimate that this rulemaking is economically significant as
measured by the $100 million threshold. Accordingly, we have prepared a
Regulatory Impact Analysis that to the best of our ability presents the
costs and benefits of the rulemaking.
We estimate that the total impact of these changes for FY 2021
payments compared to FY 2020 payments will be a net increase of
approximately $100 million. This reflects an $110 million increase from
the update to the payment rates (+$125 million from the 4th quarter
2019 IGI forecast of the 2016-based IPF market basket of 3.0 percent,
and -$15 million for the productivity adjustment of 0.4 percentage
point), as well as a -$10 million decrease as a result of the update to
the outlier threshold amount. Outlier payments are estimated to change
from 2.2 percent in FY 2020 to 2.0 percent of total estimated IPF
payments in FY 2021.
C. Detailed Economic Analysis
In this section, we discuss the historical background of the IPF
PPS and the impact of this proposed rule on the Federal Medicare budget
and on IPFs.
1. Budgetary Impact
As discussed in the November 2004 and RY 2007 IPF PPS final rules,
we applied a budget neutrality factor to the federal per diem base rate
and ECT payment per treatment to ensure that total estimated payments
under the IPF PPS in the implementation period would equal the amount
that would have been paid if the IPF PPS had not been implemented. The
budget neutrality factor includes the following components: Outlier
adjustment, stop-loss adjustment, and the behavioral offset. As
discussed in the RY 2009 IPF PPS notice (73 FR 25711), the stop-loss
adjustment is no longer applicable under the IPF PPS.
As discussed in section III.D.1 of this proposed rule, we are
updating the wage index and labor-related share in a budget neutral
manner by applying a wage index budget neutrality factor to the federal
per diem base rate and ECT payment per treatment. Therefore, the
budgetary impact to the Medicare program of this proposed rule will be
due to the market basket update for FY
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2021 of 3.0 percent (see section III.A.4 of this proposed rule) less
the productivity adjustment of 0.4 percentage point required by section
1886(s)(2)(A)(i) of the Act and the update to the outlier fixed dollar
loss threshold amount.
We estimate that the FY 2021 impact will be a net increase of $100
million in payments to IPF providers. This reflects an estimated $110
million increase from the update to the payment rates and a -$10
million decrease due to the update to the outlier threshold amount to
set total estimated outlier payments at 2.0 percent of total estimated
payments in FY 2021. This estimate does not include the implementation
of the required 2.0 percentage point reduction of the market basket
increase factor for any IPF that fails to meet the IPF quality
reporting requirements (as discussed in section V.A. of this proposed
rule).
2. Impact on Providers
To show the impact on providers of the changes to the IPF PPS
discussed in this proposed rule, we compare estimated payments under
the IPF PPS rates and factors for FY 2021 versus those under FY 2020.
We determined the percent change in the estimated FY 2021 IPF PPS
payments compared to the estimated FY 2020 IPF PPS payments for each
category of IPFs. In addition, for each category of IPFs, we have
included the estimated percent change in payments resulting from the
update to the outlier fixed dollar loss threshold amount; the updated
wage index data including the updated labor-related share; the adoption
of the revised CBSA delineations based on the OMB Bulletin No. 18-04
published September 14, 2018; the implementation of the proposed low
wage index policy and 5 percent cap on decreases to providers' wage
index values; and the market basket update for FY 2021, as adjusted by
the productivity adjustment according to section 1886(s)(2)(A)(i) of
the Act.
To illustrate the impacts of the FY 2021 changes in this proposed
rule, our analysis begins with FY 2019 IPF PPS claims (based on the
2019 MedPAR claims, December 2019 update). We estimate FY 2020 IPF PPS
payments using these 2019 claims and the finalized FY 2020 IPF PPS
federal per diem base rates and the finalized FY 2020 IPF PPS patient
and facility level adjustment factors (as published in the FY 2020 IPF
PPS final rule (84 FR 38424 through 38482)). We then estimate the FY
2020 outlier payments based on these simulated FY 2020 IPF PPS payments
using the same methodology as finalized in the FY 2020 IPF PPS final
rule (84 FR 38457) where total outlier payments are maintained at 2
percent of total estimated FY 2020 IPF PPS payments.
Each of the following changes is added incrementally to this
baseline model in order for us to isolate the effects of each change:
The proposed update to the outlier fixed dollar loss
threshold amount.
The proposed FY 2021 IPF wage index and the FY 2021 labor-
related share.
The proposed adoption of the revised CBSAs based on OMB
Bulletin No. 18-04.
The 5 percent cap on decreases to the wage index for
providers whose wage index decreases from FY 2020.
The proposed market basket update for FY 2021 of 3.0
percent less the productivity adjustment of 0.4 percentage point in
accordance with section 1886(s)(2)(A)(i) of the Act for a payment rate
update of 2.6 percent.
Our proposed column comparison in Table 6 illustrates the percent
change in payments from FY 2020 (that is, October 1, 2019, to September
30, 2020) to FY 2021 (that is, October 1, 2020, to September 30, 2021)
including all the payment policy changes in this proposed rule.
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3. Impact Results
Table 6 displays the results of our analysis. The table groups IPFs
into the categories listed here based on characteristics provided in
the Provider of Services (POS) file, the IPF provider specific file,
and cost report data from the Healthcare Cost Report Information
System:
Facility Type.
Location.
Teaching Status Adjustment.
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Census Region.
Size.
The top row of the table shows the overall impact on the 1,565 IPFs
included in this analysis. In column 3, we present the effects of the
update to the outlier fixed dollar loss threshold amount. We estimate
that IPF outlier payments as a percentage of total IPF payments are 2.2
percent in FY 2020. Thus, we are adjusting the outlier threshold amount
in this proposed rule to set total estimated outlier payments equal to
2.0 percent of total payments in FY 2021. The estimated change in total
IPF payments for FY 2021, therefore, includes an approximate 0.2
percent decrease in payments because the outlier portion of total
payments is expected to decrease from approximately 2.2 percent to 2.0
percent.
The overall impact of this outlier adjustment update (as shown in
column 3 of Table 6), across all hospital groups, is to decrease total
estimated payments to IPFs by 0.2 percent. The largest decrease in
payments due to this change is estimated to be 0.7 percent for teaching
IPFs with more than 30 percent interns and residents to beds.
In column 4, we present the effects of the budget-neutral update to
the IPF wage index and the Labor-Related Share (LRS). This represents
the effect of using the concurrent hospital wage data without taking
into account the updated OMB delineations, or the 5 percent cap on
decreases to providers' wage index values for providers whose wage
index decreases from FY 2020 as discussed in section III.D.1.b.iii of
this proposed rule. That is, the impact represented in this column
reflects the update from the FY 2020 IPF wage index to the proposed FY
2021 IPF wage index, which includes basing the FY 2021 IPF wage index
on the FY 2021 pre-floor, pre-reclassified IPPS hospital wage index
data and updating the LRS from 76.9 percent in FY 2020 to 77.2 percent
in FY 2021. We note that there is no projected change in aggregate
payments to IPFs, as indicated in the first row of column 4, however,
there will be distributional effects among different categories of
IPFs. For example, we estimate the largest increase in payments to be
0.5 percent for Mid-Atlantic IPFs, and the largest decrease in payments
to be 1.0 percent for New England IPFs.
Next, column 5 shows the effect of the proposed update to the
delineations used to identify providers as urban or rural providers and
the CBSAs into which urban providers are classified. Additionally,
column 5 shows the effect of the proposed five percent cap on wage
index decreases in FY 2021 as discussed in section III.D.1.b.iii of
this proposed rule. The new delineations would be based on the
September 14, 2018 OMB Bulletin No. 18-04. In the aggregate, we do not
estimate that these proposed updates will affect overall estimated
payments of IPFs since these changes were implemented in a budget
neutral manner. We observe that urban providers would experience no
change in payments and rural providers would see a 0.1 percent increase
in payments.
Finally, column 6 compares the total proposed changes reflected in
this proposed rule for FY 2021 to the estimates for FY 2020 (without
these changes). The average estimated increase for all IPFs is
approximately 2.4 percent. This estimated net increase includes the
effects of the 2016-based market basket update of 3.0 percent reduced
by the productivity adjustment of 0.4 percentage point, as required by
section 1886(s)(2)(A)(i) of the Act. It also includes the overall
estimated 0.2 percent decrease in estimated IPF outlier payments as a
percent of total payments from the proposed update to the outlier fixed
dollar loss threshold amount. Column 6 also includes the distributional
effects of the proposed updates to the IPF wage index and the labor-
related share whose impacts are displayed in columns 4 and 5.
IPF payments are estimated to increase by 2.4 percent in urban
areas and 2.5 percent in rural areas. Overall, IPFs are estimated to
experience a net increase in payments as a result of the updates in
this proposed rule. The largest payment increase is estimated at 3.3
percent for IPFs in the Mid-Atlantic region.
4. Effect on Beneficiaries
Under the IPF PPS, IPFs will receive payment based on the average
resources consumed by patients for each day. We do not expect changes
in the quality of care or access to services for Medicare beneficiaries
under the FY 2021 IPF PPS, but we continue to expect that paying
prospectively for IPF services will enhance the efficiency of the
Medicare program.
5. Regulatory Review Costs
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this proposed rule, we
should estimate the cost associated with regulatory review. Due to the
uncertainty involved with accurately quantifying the number of entities
that will be directly impacted and will review this proposed rule, we
assume that the total number of unique commenters on the most recent
IPF proposed rule from FY 2020 (84 FR 16948) will be the number of
reviewers of this proposed rule. We acknowledge that this assumption
may understate or overstate the costs of reviewing this proposed rule.
It is possible that not all commenters reviewed the FY 2020 IPF
proposed rule in detail, and it is also possible that some reviewers
chose not to comment on that proposed rule. For these reasons, we
thought that the number of commenters would be a fair estimate of the
number of reviewers who are directly impacted by this proposed rule. We
solicited comments on this assumption.
We also recognize that different types of entities are in many
cases affected by mutually exclusive sections of this proposed rule;
therefore, for the purposes of our estimate, we assume that each
reviewer reads approximately 50 percent of this proposed rule.
Using the May, 2018 mean (average) wage information from the BLS
for medical and health service managers (Code 11-9111), we estimate
that the cost of reviewing this proposed rule is $61.54 per hour,
including overhead and fringe benefits (https://www.bls.gov/oes/current/oes119111.htm). Assuming an average reading speed of 250 words
per minute, we estimate that it would take approximately 1\1/2\ hours
for the staff to review half of this proposed rule. For each IPF that
reviews the proposed rule, the estimated cost is (1 hour and 35 mins x
$61.54) or $83.05. Therefore, we estimate that the total cost of
reviewing this proposed rule is $1993.31 ($83.05 x 24 reviewers).
D. Alternatives Considered
The statute does not specify an update strategy for the IPF PPS and
is broadly written to give the Secretary discretion in establishing an
update methodology. Therefore, we are updating the IPF PPS using the
methodology published in the November 2004 IPF PPS final rule; applying
the 2016-based IPF PPS market basket update for FY 2021 of 3.0 percent,
reduced by the statutorily required multifactor productivity adjustment
of 0.4 percentage point along with the wage index budget neutrality
adjustment to update the payment rates; proposing a FY 2021 IPF wage
index which is fully based upon the OMB CBSA designations from Bulletin
18-04 and which uses the FY 2021 pre-floor, pre-reclassified IPPS
hospital wage index as its basis.
E. Accounting Statement
As required by OMB Circular A-4 (available at www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf), in Table 7, we
have prepared an accounting statement showing the
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classification of the expenditures associated with the updates to the
IPF wage index and payment rates in this proposed rule. Table 7
provides our best estimate of the increase in Medicare payments under
the IPF PPS as a result of the changes presented in this proposed rule
and based on the data for 1,565 IPFs in our database.
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F. Regulatory Flexibility Act
The RFA requires agencies to analyze options for regulatory relief
of small entities if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, nonprofit organizations, and small
governmental jurisdictions. Most IPFs and most other providers and
suppliers are small entities, either by nonprofit status or having
revenues of $8 million to $41.5 million or less in any 1 year.
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 IPFs or the proportion of
IPFs' revenue derived from Medicare payments. Therefore, we assume that
all IPFs are considered small entities.
The Department of Health and Human Services generally uses a
revenue impact of 3 to 5 percent as a significance threshold under the
RFA. As shown in Table 6, we estimate that the overall revenue impact
of this proposed rule on all IPFs is to increase estimated Medicare
payments by approximately 2.4 percent. As a result, since the estimated
impact of this proposed rule is a net increase in revenue across almost
all categories of IPFs, the Secretary has determined that this proposed
rule will have a positive revenue 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 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has fewer than 100 beds. As discussed in section
V.C.1 of this proposed rule, the rates and policies set forth in this
proposed rule will not have an adverse impact on the rural hospitals
based on the data of the 246 rural excluded psychiatric units and 64
rural psychiatric hospitals in our database of 1,565 IPFs for which
data were available. Therefore, the Secretary has determined that this
proposed rule will not have a significant impact on the operations of a
substantial number of small rural hospitals.
G. Unfunded Mandate Reform Act (UMRA)
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2020, that
threshold is approximately $156 million. This proposed rule does not
mandate any requirements for state, local, or tribal governments, or
for the private sector. This proposed rule would not impose a mandate
that will result in the expenditure by state, local, and Tribal
Governments, in the aggregate, or by the private sector, of more than
$156 million in any one year.
H. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule that imposes
substantial direct requirement costs on state and local governments,
preempts state law, or otherwise has Federalism implications. This
proposed rule does not impose substantial direct costs on state or
local governments or preempt state law.
I. Regulatory Reform Analysis Under Executive Order 13771
Executive Order 13771, entitled ``Reducing Regulation and
Controlling Regulatory Costs,'' was issued on January 30, 2017 and
requires that the costs associated with significant new regulations
``shall, to the extent permitted by law, be offset by the elimination
of existing costs associated with at least two prior regulations. It
has been determined that this proposed rule is an action that primarily
results in transfers and does not impose more than de minimis costs as
described above and thus is not a regulatory or deregulatory action for
the purposes of Executive Order 13771.
Dated: March 24, 2020.
Seema Verma
Administrator, Centers for Medicare & Medicaid Services.
Dated: April 9, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-07870 Filed 4-10-20; 4:15 pm]
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