Medicare Program; Schedule of Limits on Home Health Agency Costs Per Visit

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

[BPD-793-NC]

RIN 0938-AG54

Medicare Program; Schedule of Limits on Home Health Agency Costs

Per Visit

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Notice with comment period.

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SUMMARY: This notice with comment period sets forth a revised schedule

of limits on home health agency costs that may be paid under the

Medicare program for cost reporting periods beginning on or after July

1, 1993. These limits replace the per-visit limits that were set forth

in our July 8, 1993 notice with comment period (58 FR 36748). This

notice also provides, in accordance with the provisions of the Omnibus

Budget Reconciliation Act of 1993 (OBRA '93), that there will be no

changes in the home health agency (HHA) cost limits for cost reporting

periods beginning on or after July 1, 1994, and before July 1, 1996. In

addition, this notice responds to public comments on the July 8, 1993

notice with comment period, which originally set forth the HHA cost

limits for cost reporting periods beginning on or after July 1, 1993,

and on the January 6, 1994 notice with comment period (59 FR 760),

which announced the elimination of the hospital based add-on effective

for cost reporting periods beginning on or after October 1, 1993.

DATES: Effective date: The revised schedule of limits on HHA costs set

forth in this notice is effective for cost reporting periods beginning

on or after July 1, 1993.

The OBRA '93 provision providing that there be no changes in the

HHA cost limits for cost reporting periods beginning on or after July

1, 1994, and before July 1, 1996, as set forth in this notice, is

effective for cost reporting periods beginning on or after July 1,

1994.

Comment date: Written comments will be considered if we receive

them at the appropriate address, as provided below, no later than 5:00

p.m. on April 17, 1995.

ADDRESSES: Mail written comments (1 original and 3 copies) to the

following address: Health Care Financing Administration, Department of

Health and Human Services, Attention: BPD-793-NC, P.O. Box 7571,

Baltimore Maryland 21207-0517.

If you prefer, you may deliver your comments (1 original and 3

copies) to one of the following addresses: Room 309-G, Hubert H.

Humphrey Building, 200 Independence Ave., SW., Washington DC 20201, or

Room 132, East High Rise Building, 6325 Security Boulevard, Baltimore

Maryland 21207.

Because of staffing and resource limitations, we cannot accept

comments by facsimile (FAX) transmission. In commenting, please refer

to file code BPD-793-NC. Comments received timely will be available for

public inspection as they are received, beginning approximately 3 weeks

after publication of a document, in Room 309-G of the Department's

offices at 200 Independence Avenue, SW, Washington DC, on Monday

through Friday of each week from 8:30 a.m. to 5 p.m. (phone: (202) 690-

7890).

Copies: To order copies of the Federal Register containing this

document, send your request to: New Orders, Superintendent of

Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date

of the issue requested and enclose a check or money order payable to

the Superintendent of Documents, or enclose your Visa or Master Card

number and expiration date. Credit card orders can also be placed by

calling the order desk at (202) 783-3238 or by faxing to (202) 512-

2250. The cost for each copy is $8.00. As an alternative, you can view

and photocopy the Federal Register document at most libraries

designated as Federal Depository Libraries and at many other public and

academic libraries throughout the country that receive the Federal

Register.

FOR FURTHER INFORMATION CONTACT: Michael Bussacca, (410) 966-4602.

SUPPLEMENTARY INFORMATION:

I. Background

A. History

Section 1861(v)(1)(A) of the Social Security Act (the Act)

authorizes the Secretary to set limits on allowable costs incurred by a

provider of services for which payment may be made under the Medicare

program. These limits are based on estimates of the costs necessary for

the efficient delivery of needed health services. Under this

[[Page 8390]] authority, we have maintained limits on home health

agency (HHA) per-visit costs since 1979. The limits may be applied to

direct and indirect overall costs or to the costs incurred for specific

items or services furnished by the provider. Implementing regulations

appear at 42 CFR 413.30. Additional statutory provisions governing the

limits applicable to HHAs are contained at section 1861(v)(1)(L) of the

Act. Section 1861(v)(1)(L)(i) of the Act specifies that the cost limits

are not to exceed 112 percent of the mean of the labor-related and

nonlabor per-visit costs for freestanding HHAs. For cost reporting

periods beginning before October 1, 1993, section 1861(v)(1)(L)(ii) of

the Act requires that the Secretary make an adjustment to the cost

limits for the administrative and general (A&G) costs of hospital-based

HHAs. Section 1861(v)(1)(L)(iii) of the Act requires that the Secretary

establish HHA cost limits on an annual basis for cost reporting periods

beginning on or after July 1 of each year.

Accordingly, we published a notice with comment period that

appeared in the July 8, 1993, issue of the Federal Register (58 FR

36748), which set forth a schedule of limits on HHA costs for cost

reporting periods beginning on or after July 1, 1993. The limits were

computed using the actual cost per-visit data from cost reporting

periods ending on or after June 30, 1989, and before May 31, 1991, and

were adjusted by the latest estimates in the ``market basket'' index to

reflect changes in the price of goods and services furnished by HHAs.

B. Omnibus Budget Reconciliation Act of 1993

On August 10, 1993, the Omnibus Budget Reconciliation Act of 1993

(OBRA '93) (Public Law 103-66) was enacted. Section 13564(a) of OBRA

'93 amended section 1861(v)(1)(L)(iii) of the Act to provide that there

be no changes in the HHA per-visit cost limits (except as may be

necessary to take into account the elimination of the A&G add-on for

hospital-based HHAs) for cost reporting periods beginning on or after

July 1, 1994, and before July 1, 1996. In addition, section 13564(b) of

OBRA '93 amended section 1861(v)(1)(L)(ii) of the Act to require that,

effective for cost reporting periods beginning on or after October 1,

1993, we no longer include a payment adjustment for A&G costs of

hospital-based HHAs in computing the HHA limits. The A&G per-visit add-

on for hospital-based HHAs had been applied since 1980. Under this

provision, hospital-based HHAs and freestanding HHAs will be treated

identically for payment purposes.

On January 6, 1994, we published a notice with comment period in

the Federal Register to announce the elimination of the A&G add-on for

hospital-based HHAs (59 FR 760). In that notice, we stated that in

computing a hospital-based HHA's cost limits for cost reporting periods

beginning on or after October 1, 1993, the A&G add-on amounts that were

to apply, as set forth in Table II of the July 8, 1993 notice (58 FR

36753), will not be used. We also stated that we would publish a

separate Federal Register notice to explain the effects of the

requirement under section 13564(a) of OBRA '93 that there be no changes

in the per-visit cost limits for home health services for cost

reporting periods beginning on or after July 1, 1994 and before July 1,

1996.

II. Discussion of Public Comments

A. Response to Public Comments Received On the July 8, 1993 Notice With

Comment Period

We received 28 items of timely correspondence on our HHA cost

limits notice issued in the Federal Register on July 8, 1993 (58 FR

36748). A discussion of the comments we received on that notice and our

responses to those comments is set forth below.

1. Cost Limits

Comment: Many commenters stated that the per-discipline cost limits

for skilled nursing and home health aides are inadequate. They believe

that the cost limits are arbitrary and not at the level required by

law. In addition, two commenters suggested that the limits effective

July 1, 1993 should be phased in.

Response: Section 1861(v)(1)(L) of the Act governs the methodology

for computing the HHA limits. As noted in section I.A of this notice,

section 1861(v)(1)(L)(i) of the Act specifies that the HHA per-visit

cost limits are not to exceed 112 percent of the mean of the labor-

related and nonlabor per-visit costs for freestanding HHAs. Section

1861(v)(1)(L)(iii) of the Act requires that we establish cost limits on

an annual basis for cost reporting periods beginning on or after July 1

of each year (except for cost reporting periods beginning on or after

July 1, 1994, and before July 1, 1996) and that we use the current

hospital wage index to calculate the limits.

Thus, in calculating the limits, we use actual cost-per-visit data

from the latest available settled Medicare cost reports. From those

data, we compute an average per-visit cost for each Medicare covered

home health service. The labor portion of the average per-visit cost is

adjusted, using the current hospital wage index, to account for

variations in area wage levels. We then apply a statistically valid

methodology for eliminating outlier costs to the average per-visit

costs for each service. The resulting average per-visit costs are

increased by 112 percent, the maximum the statute allows. We believe

the methodology used to calculate the cost limits correctly implements

the statute and results in a statistically valid national average of

the costs estimated to be necessary in the efficient delivery of needed

home health services under the Medicare program.

In summary, the implementation of the schedule of limits set forth

in our July 8, 1993 notice and the methodology for developing the

limits are in full compliance with statutory directives. In developing

these limits, we have made no changes, beyond those directly required

by OBRA '93, in the methodology used in setting the limits effective

July 1, 1991 and July 1, 1992. Finally, the statute does not provide

for a phase-in of the limits.

2. Database

Comment: Several commenters questioned the database used to develop

the cost limits. Some commenters raised concerns about the possible

omission of providers from California. Others suggested that the

provider database used to develop the limits was not representative

because HCFA relies only on settled cost reports to compute the HHA

cost limits.

Response: The data used in the calculations of the cost limits

effective July 1, 1993, were actual cost per-visit data extracted from

settled Medicare cost reports, for cost reporting periods ending on or

after June 30, 1989, and before May 31, 1991. This resulted in a

database of 2602 freestanding agencies located throughout the country.

Due to concerns with under-representation of HHAs, we reviewed the

Provider of Services (POS) file to determine the number of HHAs that

were Medicare-certified as of November, 1992 (the cut-off date of the

HHA database used to develop the HHA cost limits effective for cost

reporting periods beginning on or after July 1, 1993). Our review

showed that the POS file contained all HHA providers of service,

including terminated providers, existing providers, and new providers.

However, the POS file does not indicate whether a HHA needs to file a

cost report, or if a cost report is due from an HHA.

Accordingly, we extended our review. We instructed the nine

regional home health intermediaries (RHHIs) servicing the freestanding

HHAs to review their [[Page 8391]] files for the time period of our

data collection (before November 1992) to determine if any providers

had been omitted erroneously when the intermediaries filed their cost

report data for the HHA database. The RHHIs identified 309 freestanding

``missing'' providers. Our review of the original database showed that

it did not include data from Blue Cross and Blue Shield of California.

All ``missing'' providers' cost data were entered into the database and

were subject to an extensive edit process to validate the data. In

addition, we reexamined the entire database to identify duplicates and

as-submitted cost reports. This examination resulted in elimination of

120 duplicate reports from freestanding HHAs and the elimination of 100

hospital-based as-submitted cost reports. The revised database consists

of 2911 freestanding providers.

The following table shows the effects of the revised database on

the per-discipline cost limits for Metropolitan Statistical Area (MSA)

and non-MSA HHAs published in our July 8, 1993 notice. See section IV

of this notice for a revised table of limits effective for cost

reporting periods beginning on or after July 1, 1993, and before July

1, 1994.

Effect on Per-Visit Cost Limits for MSA and Non-MSA HHAs

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

Effect Effect

on on

Type of visit limits limits

for MSA for non-

HHAs MSA HHAs

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Skilled nursing care................................ $+0.72 $+0.75

Physical therapy.................................... -1.59 -0.02

Speech pathology.................................... -1.50 +0.02

Occupational therapy................................ -1.20 +0.54

Medical social services............................. +0.06 -1.00

Home health aide.................................... +0.54 +0.26

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The following table shows the effects of the revised database on

the per-visit hospital-based add-on for MSA and non-MSA HHAs published

in our July 8, 1993 notice. See section IV of this notice for a revised

table of add-on amounts for hospital-based HHAs with cost reporting

periods beginning on or after July 1, 1993, and before October 1, 1993.

Effect on Per-Visit Add-On for MSA and Non-MSA HHAs

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

Effect on

Effect on hospital-

hospital- based add-

Type of visit based add- on for

on for non-MSA

MSA HHAs HHAs

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

Skilled nursing care.............................. $+0.03 $+0.57

Physical therapy.................................. -0.22 +0.22

Speech pathology.................................. -0.07 +0.51

Occupational therapy.............................. -0.20 +1.03

Medical social services........................... -1.14 +0.16

Home health aide.................................. +0.03 +0.25

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We recognize that the conversion to a limited number of fiscal

intermediaries and the lack of a internal HCFA system to track settled

cost reports for HHAs resulted in missing providers. In the future,

HCFA will request that each of the nine regional intermediaries submit

a list of all HHAs that it is servicing at the time of data collection.

Upon collecting the data, HCFA will cross-check the HHAs included in

the database with the lists submitted by the intermediaries.

Concerning the comment on the use of settled cost reports, all of

the RHHIs met the Contractor Performance Evaluation (CPEP) standard for

settling cost reports timely for FY 1991/1992. For example, in FY 1992,

90 percent of freestanding HHA cost reports were settled timely by the

RHHIs and would be available to be included in HCFA's database. Thus,

the use of settled cost reports does not affect the representative

nature of the database.

Comment: Some commenters believe that the conversion to a limited

number of intermediaries that specialize in handling home health claims

and the exclusive use of settled cost reports in the database

invalidate the rationale for excluding certain outliers from the

database as a first step, before proceeding with the calculation of the

cost limits. One commenter raised a series of specific questions about

the outlier exclusion process, including what constitutes an outlier,

how many agencies are classified as outliers, and whether all of an

HHA's costs are excluded if the agency has a single outlier discipline?

Response: The use of settled cost report data does not eliminate

the need to exclude outliers from the database. Outliers are aberrant

costs; these costs are not representative of industry norms. As in

previous schedules of HHA cost limits, the elimination of cost per-

visit outliers continues to be necessary in developing the limits

because the per-discipline cost data in our database are extracted from

actual cost reports. Although these cost reports have been settled, the

settlement process is designed to ensure that cost report data reflect

actual costs associated with covered visits; it does not assess whether

the actual costs are reasonable.

The elimination of outliers is on a per-discipline basis. That is,

we eliminate costs associated with a specific discipline that are

statistical outliers. Based on our longstanding policy, we consider

outliers to be those costs that are two standard deviations or more

from the mean. Therefore, the high outliers, as well as the low

outliers, are eliminated. All other per-discipline costs would be

included in the computation of the per-discipline limits. In the table

below we have listed the range of high and low per-visit costs for each

discipline for both the labor and the nonlabor portions for both MSA

limits and non-MSA limits. Only per-visit costs outside these ranges

are considered outliers. We believe that using costs beyond these

ranges, that is, outliers, to develop the per-visit limits subverts the

statistical validity of the national average of estimated costs.

Home Health Agency Cost Limits Outliers Labor and Nonlabor Portions Highs and Lows

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

Urban Labor low Labor high Nonlabor low Nonlabor high

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Skilled nursing care............................ $33.85 $131.24 $6.08 $36.06

Physical therapy................................ 33.02 132.78 5.37 31.69

Speech pathology................................ 31.59 141.76 6.05 32.45

Occupational therapy............................ 29.85 139.01 6.19 35.88

Medical social services......................... 31.43 252.36 6.09 58.58

Home health aide................................ 16.16 75.30 2.87 19.21

Rural

Skilled nursing care............................ 39.98 141.46 4.74 29.15

[[Page 8392]]

Physical therapy................................ 41.77 147.54 6.69 28.34

Speech pathology................................ 40.28 160.19 7.36 37.65

Occupational therapy............................ 35.69 161.74 6.22 30.35

Medical social services......................... 36.42 350.59 6.85 62.15

Home health aide................................ 16.18 72.55 2.52 17.07

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Comment: Two commenters recommended that we use data from hospital-

based agencies in the calculation of the limits. The commenters believe

that the calculation of the limits using only freestanding facilities

does not reflect the higher costs associated with hospital-based HHAs.

Response: Section 1861(v)(1)(L)(i) of the Act specifies that the

Secretary is to establish a single schedule of HHA cost limits based on

the cost experience of freestanding agencies. We have no discretion to

include hospital-based providers in the calculation of the HHA limits.

Comment: A commenter suggested that the use of settled cost reports

ignores the higher claims presented before the Provider Reimbursement

Review Board (PRRB) and that these claims should be included in the

database for calculation of the HHA cost limits.

Response: The use of settled cost reports in developing the HHA

cost limits was established for cost reporting periods beginning on or

after July 1, 1992 (see 57 FR 29411). Before July 1, 1992, HHA

databases included data from both settled and as-submitted cost

reports. We were able to begin using settled cost report data as a

result of revised CPEP standards that required Medicare fiscal

intermediaries to settle the HHA cost reports sooner than was required

under former standards. Consequently, as explained in our July 1, 1992

notice with comment period, settled data are available much sooner than

in previous cost reporting periods, and we believe the data accurately

reflect current conditions in the health care industry. The use of

settled cost reports allows us to eliminate misstated data including

nonallowable costs and noncovered visits that inevitably result from

using as-submitted cost reports. (See 57 FR 29410.)

Providers that file an appeal before the PRRB must have received a

Notice of Program Reimbursement for the fiscal year in question, before

filing the appeal. During the cost reporting periods ending on or after

June 30, 1989, and before May 31, 1991, on an annual basis, fewer than

2 percent of certified HHAs submitted appeals to the PRRB. If an appeal

was decided before we develop the annual HHA per-visit cost limits, the

final data would be entered into the database. In those cases in which

the PRRB appeal and administrative review processes are not completed

until after we have developed the annual HHA per-visit cost limits, the

settled data from the cost reports in question would be entered.

Including the adjusted data that may result from PRRB appeals into the

database would have no significant effect on the calculation of the

cost limits. Moreover, since the cost limits are set prospectively, it

would be neither necessary nor administratively feasible to include

adjusted data resulting from the completed appeals process into the HHA

database used to develop the annual limits. We note that the HHA per-

visit limits constitute an estimated national average of costs, and

individual providers are free to pursue exceptions to these averages

where justified.

Comment: Several commenters stated that the limits do not reflect

the costs associated with the implementation of the Omnibus Budget

Reconciliation Act of 1987 (OBRA '87) (Public Law 100-203) quality

assurance provisions, specifically, the requirements for home health

aide training and competency evaluation programs. They asserted that no

additional amount has been added to the HHA limits to account for these

costs.

Response: Section 1891(a)(3) of the Act requires HHAs to comply

with the requirements relating to home health aide training and

competency programs, established by OBRA '87. The cost-per-visit data

used in the calculations of the cost limits effective on July 1, 1993

were extracted from settled Medicare cost reports for periods ending on

or after June 30, 1989, and before May 31, 1991. We published

regulations on August 14, 1989 at 42 CFR Sec. 484.36 to require that

HHAs establish a competency evaluation program for home health aides by

February 14, 1990 (see 54 FR 33357-33360 and 33372). Therefore, the

costs associated with home health aide training and competency

evaluation programs are included in this database. However, if a

provider believes that it has incurred additional costs not included in

the limits relating to home health aide training and competency

evaluation programs, the provider may apply for an exception to the

cost limits under the exceptions process outlined in Sec. 413.30. This

situation could be recognized as an ``extraordinary circumstance''

exception under Sec. 413.30(f)(2).

Comment: A commenter indicated that the database from which the HHA

cost limits were developed was not available for public use when the

regulation was issued on July 8, 1993.

Response: It is our standard practice to make available to the

public the database used to construct the cost limits. HCFA's Bureau of

Data Management and Strategy annually publishes a ``Public Use Files

Catalog'' that identifies available Medicare/Medicaid data files and

gives instructions on how to obtain them. The database used to

construct the cost limits outlined in the July 8, 1993 notice (that is,

Medicare HHA Cycle 11 Data Set, containing data for cost reporting

periods ending on June 30, 1989, and before May 31, 1991) was available

from the Bureau of Data Management and Strategy, HCFA, to the public,

on the date the regulation was published. The HHA database is available

on tape or diskette for $680. For further information on obtaining data

used in calculating the HHA cost limits, see section VI.C of this

notice.

3. Market Basket

Comment: Several commenters believe that the market basket factors

that have been used to update the 1990 cost data seemed to understate

home care market basket cost increases of between 5 to 7 percent for

the 1992-1993 period and need to be updated for current weights and

revised wage-price proxies. Specifically, the commenters believe that

the market basket factors fail to account properly for increases in the

Federal minimum wage, base rates for workers' compensation premiums,

reimbursement for mileage, Federal gasoline tax, computers to submit

claims via electronic media communications, additional A&G costs,

[[Page 8393]] and FICA taxes. They indicated that there is evidence

that the market basket factors now used to update the cost limits are

too low and that appropriate alternatives exist and are being used to

make budget projections for the Administration and Congress.

Response: For the last several years, the HHA input price index

(market basket) has increased at the fastest rate of all the market

basket indices for the Medicare program. The increase in the market

basket reflects the weights and wage-price proxies in the market basket

to capture the special market conditions for HHA services (such as the

shortage of several categories of licensed health professionals

providing HHA services). The compensation and nonlabor proxies used in

the market basket include the effects of taxes on the rates of

increase. Wages and salaries include employer contributions (payroll

taxes) for social insurance (old age, survivors, disability and

hospital insurance). The wage and salary category also includes State

unemployment insurance, supplemental unemployment insurance and

workmen's compensation. The price proxies for transportation and

utilities include the relevant sales taxes. Further, the price proxy

for rental and leasing costs includes the impact of all costs including

property taxes.

The market basket factors used to update the cost limits are

consistent with, but not identical to, the cost-per-visit budget

projections for the Administration and Congress. The HHA market basket

is designed to measure price inflation for inputs used to produce HHA

services. It, therefore, does not take into account changes in the

quantity, mix or intensity of services per visit. In contrast, the

Administration's budget projections take into account the change in mix

of types of visits and the effects of productivity changes on per-visit

costs. Productivity changes are a major determinant of cost-per-visit

increases and are specifically excluded from the HHA market basket.

We believe that it would be appropriate to do a special study of

the weighting and wage-price proxies for the HHA market basket. We

intend to begin such a study in the near future, and we welcome public

comments on data sources for weights and wage-price proxies.

4. Wage Index

Comment: One commenter stated that the wage index factors used in

the calculation of the cost limits effective July 1, 1993 are lower

than the July 1, 1992 cost limits in almost all cases. In addition, the

commenter stated that the Omnibus Budget Reconciliation Act of 1990

(OBRA '90) mandates use of the most recent hospital wage index for

calculation of the labor portion of the cost limits, but it also

requires that aggregate payments to HHAs be budget neutral. The

commenter asserted that the use of a lower budget neutrality factor

than in the previous schedule of limits accounted in itself for a

reduction of approximately 2.5 percent in the cost limits. In addition,

the commenter noted that the budget neutrality factor of 2.7 percent

used in calculating the limits effective July 1, 1993 is a considerable

reduction from the 5.9 percent used in calculating the limits effective

July 1, 1992 and fails to provide Congressionally mandated budget

neutrality between the 1982 and the 1988 hospital wage indexes.

Response: Section 4207(d)(1) of OBRA '90 amended section

1861(v)(1)(L)(iii) of the Act to require that in establishing the HHA

schedule of limits annually on July 1 of each year we are to use the

current hospital wage index. To lessen the effect on individual HHAs

that would have been caused by implementing this requirement

immediately, section 4207(d)(3) of OBRA '90 provided for a 2-year

transition period during which we would use a blend of 1982 and 1988

hospital wage data. As required by section 1861(v)(1)(L)(iii) of the

Act, the limits effective for cost reporting periods beginning on or

after July 1, 1993, and before July 1, 1994, use the FY 1993 hospital

wage index, that is the hospital wage index effective for hospital

discharges on or after October 1, 1992, which is based entirely on 1988

wage survey data (see 58 FR 36750). Thus, although the wage indices

used in calculating the limits effective for cost reporting periods

beginning on or after July 1, 1993 are in many cases lower than in the

past, they reflect the latest available actual wages.

Section 4207(d)(2) of OBRA '90 requires that, in updating the wage

index used for establishing the HHA limits, aggregate payments will

remain the same as they would have been if the wage index had not been

updated. To meet this requirement, as explained in detail in our July

8, 1993 notice with comment period, we determined that it was necessary

to apply a budget neutrality adjustment factor of 1.027 (that is, an

increase of 2.7 percent) to the labor-related portion of the cost

limits (58 FR 36748-36749). However, for this notice, we have

recalculated the budget neutrality adjustment factor and have

determined that a factor of 1.067 should be applied (that is, a 6.7

percent increase). The change in the budget neutrality adjustment is

attributable to the revised limits that have resulted from our

validation of the HHA database.

Comment: A commenter stated that a persistent problem in the

application of the cost limits that is made more difficult by the new

limits are that HHAs, like hospitals, are sometimes assigned to the

``wrong'' geographic area. The commenter suggested that we consider

basing hospital wage indices on the wage levels paid by neighboring

providers and that wage levels should be standardized according to some

predefined occupational mix.

Response: Under section 1886(d)(3)(E) of the Act, the Secretary

annually establishes a wage index for the purposes of adjusting payment

rates for hospital inpatient services to reflect wages in a geographic

area relative to the national average. Section 1861(v)(1)(L)(iii) of

the Act requires that, in establishing the HHA schedule of limits, the

Secretary is to use the current hospital wage index.

Almost from the beginning of the hospital prospective payment

system, we have received comments from the hospital industry objecting

to the use of labor market areas based on Metropolitan Statistical

Areas (MSAs) established by the Office of Management and Budget to

construct the wage index. The Prospective Payment Assessment Commission

(ProPAC) has also recommended changes in how the labor market areas

used to construct the hospital wage index should be defined. We

recognize that, as currently structured, there are certain

inefficiencies inherent in the MSA-based system. In light of these

concerns, we have continued to examine a variety of options for

revising wage index labor market areas.

On May 27, 1994, we published a proposed rule in the Federal

Register (59 FR 27708) that detailed changes to the hospital

prospective payment system for FY 1995. In the proposed rule, we

discussed in detail issues raised by commenters concerning a ``nearest

neighbor'' approach to the wage index, as recommended by ProPAC, and

our research and analysis on alternative methodologies for defining

labor market areas (59 FR 27724 through 27732). These alternatives are

still under review, and no final decision has been made at this time to

use a different methodology in determining future payment rates.

5. Additional Costs/Exceptions

Comment: A commenter suggested that new HHAs be exempt from the

limits for the first two full year cost [[Page 8394]] reports, citing

the exemptions presently granted for inpatient facilities (non-PPS

hospitals and skilled nursing facilities). The commenter believes that

this resulted in discrimination against the establishment of home

health care services when the emphasis of health care is away from

inpatient services and toward home care.

Response: Prior to 1987, Sec. 413.40(f)(7) (formerly

Sec. 405.460(f)(7)) granted an exception to the cost limits to minimize

financial barriers to HHAs wanting to enter Medicare markets for the

first time, especially in underserved areas. On June 4, 1987, we

published a final rule with comment period (52 FR 21216) indicating

that the exception for newly-established HHAs was eliminated. As

discussed in detail in that final rule with comment period, evidence

acquired from FY 1980 through FY 1985 indicated a changing composition

of HHAs that suggested that financing was no longer a significant

obstacle to entering the market place, and therefore the exception was

rescinded. In fact, while hospital-based and proprietary agencies had

access to financial resources and patient populations, nonprofit and

free-standing agencies did not. We continue to believe that an

exception for newly-established HHAs is not necessary to encourage the

spread of HHAs services. Moreover, we note that the number of HHAs

servicing Medicare beneficiaries has increased approximately 28 percent

since 1987, from 5,857 to 7,473 as of March, 1994.

Comment: Several commenters indicated that the recruitment and

retention of occupational therapists and physical therapists,

especially in rural areas, results in increased costs not incorporated

in the HHA cost limits.

In addition, one commenter indicated that the additional amount of

$.18 allowed for the OSHA adjustment to account for new standards for

universal precautions is not adequate to account for the actual,

necessary and reasonable cost being incurred by HHAs after May 31,

1991.

The commenters believe that the failure to reflect these costs

fully in the per-visit limits will reduce access and quality of care to

beneficiaries.

Response: If a provider can quantify the costs it incurs as a

result of recruiting and retaining occupational therapists or physical

therapists, or an OSHA add-on amount that exceeds the allowed $.18, the

provider may apply for an exception to the cost limits under the

exceptions process outlined in Sec. 413.30. These situations could be

recognized as an ``extraordinary circumstances'' as defined in

Sec. 413.30(f)(2). The HHA cost limits effective for cost reporting

periods beginning on or after July 1, 1992 and on or after July 1, 1993

allow a provider an adjustment for costs incurred for OSHA, upon

presentation of documentation to the intermediary to substantiate the

adjustment. If a provider exceeds the adjustment, an exception to the

cost limits is made only to the extent that costs are reasonable,

attributable to the circumstances specified, separately identified by

the provider, and verified by the intermediary.

Comment: Some of the commenters believe that filing for a waiver to

seek an exception from the limits is time consuming, expensive and

impractical.

Response: The purpose of establishing the per-visit limits is to

cover the costs necessary in the efficient delivery of needed health

services. However, because the limits are not intended to take into

account every cost, we have established an exceptions process for

situations in which providers incur additional costs in excess of the

cost limits. Providers may apply for an exception to the cost limits

under the exceptions process outlined in Sec. 413.30. We believe that

the exceptions process is a fair and equitable method for HHAs to

substantiate costs exceeding the limit.

6. Administrative Procedure Act

Comment: A commenter stated that the schedule of cost limits

published on July 8, 1993 (58 FR 36748) is void because it is a product

of retroactive rulemaking, which is not authorized by the Social

Security Act and is prohibited by the Administrative Procedure Act

(APA). Specifically, the rule had an effective date of July 1, 1993,

but was not published in the Federal Register until July 8, 1993.

Further, the commenter stated that the rule is void because it was

issued in violation of the notice and comment requirements of the

Medicare statute and APA. The commenter believes that we did not have

``good cause'' to waive publication of a proposed notice and to waive

the 30-day delayed effective date requirements of the APA. The

commenter stated that HCFA failed to offer any explanation as to why

the rule could not have been published earlier.

Response: Section 1861(v)(1)(L)(iii) of the Act requires that the

Secretary update the HHA cost limits on an annual basis for cost

reporting periods beginning on or after July 1 of each year. On July 1,

1993, the schedule of limits on HHA costs per visit, effective for cost

reporting periods beginning on or after July 1, 1993, was filed with

the Office of the Federal Register and was made available for public

inspection (see 58 FR 36762 for file date). Under 44 U.S.C. section

1507, the filing of the document is sufficient to give constructive

notice of the contents of the document to a person subject to or

affected by it.

As explained in our July 8, 1993 notice with comment period, we

used the same methodology to develop the schedule of limits that was

used in setting the limits published on July 1, 1992. The cost limits

were updated to reflect the cost increases occurring between the cost

reporting periods for the data contained in the database and December

31, 1993.

Because the methodology used to develop the July 1, 1993 schedule

of limits was previously published for public comment and because we

are required by section 1861(v)(1)(L)(iii) of the Act to use the

current hospital wage index, which was based on 1988 wage survey data,

we determined that it would be impractical and unnecessary to request

public comment before we implemented the cost limits effective for cost

reporting periods beginning on or after July 1, 1993. Thus, we stated

that it would be contrary to public interest, and we found good cause

to waive publication of a proposed notice.

In response to the comment on the waiver of the 30-day delayed

effective date, as we explained in our July 8, 1993 notice with comment

period, in order for HHAs to receive timely the benefits of the cost

limits that are based on the updated wage index, it was necessary that

the limits be effective for cost reporting periods beginning on or

after July 1, 1993 as required by section 1861(v)(1)(L)(iii) of the Act

(see 58 FR 36762).

B. Response to Public Comments Received on the January 6, 1994 Notice

With Comment Period

We received 10 items of timely correspondence on our notice

eliminating payment adjustments for the A&G costs of hospital-based

HHAs. The comments we received on that notice and our responses to

those comments are set forth below.

Many of the comments we received on that notice addressed issues

that we have already addressed in section II.A of this notice,

particularly, the exclusion of hospital-based agencies from the

database. Since we have already addressed these comments, we are not

repeating our responses to the comments here.

1. Elimination of the A&G Add-on

Comment: One commenter agreed that the A&G add-on should be

eliminated. However, most commenters objected to [[Page 8395]] the

elimination of the A&G add-on, emphasizing that the costs incurred by

hospital-based and freestanding agencies are different. One commenter

stated that although section 13564 of OBRA '93 eliminates the A&G add-

on, it does not preclude the Secretary from making the adjustments that

are necessary to ensure fair payment to providers. In addition, another

commenter believes that the elimination of the add-on should be phased-

in.

Response: Section 13564(b) of OBRA '93 amended section

1861(v)(1)(L)(ii) of the Act to require that, effective for cost

reporting periods beginning on or after October 1, 1993, we no longer

include a payment adjustment for the A&G costs of hospital-based HHAs

in computing the HHA limits. Under this provision, for cost reporting

periods beginning on or after October 1, 1993, hospital-based HHAs and

free-standing HHAs will be treated identically for payment purposes.

The statute does not provide for a phase-in period.

Section 1861(v)(1)(L)(i)(III) of the Act defines fair payment to

HHAs at some level determined by the Secretary, but not in excess of

112 percent of the cost experience of freestanding providers. Section

1861(v)(1)(L)(ii) of the Act provides the Secretary with the authority

to provide for exceptions to the cost limits. Accordingly, if a

provider quantifies and provides an explanation of costs that exceed

the limits, it may apply for an exception to the cost limits under the

exceptions process outlined in Sec. 413.30.

2. Reimbursement Methodology

Comment: Two commenters indicated that the reimbursement

methodology for HHAs should be assessed, including a review of the

Medicare step-down cost methodology and the use of severity of illness

to determine the cost of care and length of stay for post-acute versus

community-based referrals. One commenter stated that the change in

methodology, that is, the elimination of the hospital-based add-on,

imposes a systematic error in accurately measuring costs of caring for

home health patients. Another commenter stated that HCFA should wait

for the results of the Federally funded demonstration projects that are

currently evaluating home care reimbursement before any changes are

made to the present home care reimbursement structure. The commenter

stated that the information we obtain from these studies should be used

to develop an appropriate industry-wide home care reimbursement system.

Response: We agree that further study of the HHA reimbursement

system is desirable. HCFA's Office of Research and Demonstrations is

presently conducting a demonstration relating to prospective payment

for HHAs. During the second phase of this demonstration, we intend to

develop a prototype case-mix or severity adjustment to be tested under

the demonstration for possible use in future payment methodologies. In

addition, HCFA has begun the Medicare Home Health Initiative, which

will review a variety of issues related to the home health benefit

including those presented above.

III. Provisions of This Notice With Comment Period

A. Revised Schedule of Limits

As discussed in section II.A.2 of this notice, we have identified

problems with the validity of the database used to calculate the cost

limits for cost reporting periods beginning on or after July 1, 1993,

as set forth in our July 8, 1993 notice. Therefore, we are setting

forth in this notice a revised schedule of limits on HHA costs that may

be paid under the Medicare program for cost reporting periods beginning

on or after July 1, 1993. We also are setting forth revised add-on

amounts for hospital-based HHAs for cost reporting periods beginning on

or after July 1, 1993, and before October 1, 1993.

Before adopting this approach, which entails the retroactive

application of the schedule of limits set forth in this notice, we

considered three possible alternatives for dealing with the problems

with the database used in the calculation of the cost limits effective

July 1, 1993. One option was to take no action to revise the limits, in

accordance with the provisions of section 13564(a) of OBRA '93, which

explicitly prohibit any changes in the cost limits for HHAs for cost

reporting periods beginning on or after July 1, 1994, and before July

1, 1996. However, we believe that in enacting these provisions,

Congress could not have envisioned that there would be errors in the

database that would necessitate revisions to the limits. Thus, we do

not believe that the revision of the limits under these circumstances

is inconsistent with the statute. In addition, we do not believe that

it is appropriate to base payments to HHAs on limits that are known to

be based on a limited database and are estimated to result in lower

Medicare payments to HHAs. (See section V of this notice for a

discussion of its economic impact.)

We also considered applying the changes to the cost limits

prospectively, that is, effective upon publication of this notice.

Although this option would avoid the administrative difficulties

associated with implementing revised limits retroactively for cost

reporting periods beginning on or after July 1, 1993, it still would

not conform strictly to the OBRA '93 provisions prohibiting any changes

in the cost limits until July 1, 1996. In addition, this option again

would disadvantage HHAs by not assigning accurate limits effective for

cost reporting periods beginning on or after July 1, 1993.

Our remaining option was to apply the changes to the cost limits

retroactively. That is, we would publish revised limits that would be

effective for cost reporting periods beginning on or after July 1,

1993, in place of the limits set forth in our July 8, 1993 notice. The

statute allows us to set the cost limits at a maximum of 112 percent of

the mean of per-visit costs for freestanding agencies. As in the past,

for the cost limits applicable to cost reporting periods beginning on

or after July 1, 1993, we set the limits at that maximum. Because we

have identified errors in the database of costs for freestanding

agencies, we believe that it is in keeping with the intent of the

statute that these errors be rectified. Therefore, we believe it is

appropriate, and consistent with the statute, to revise the limits for

cost reporting periods beginning on or after July 1, 1993, so that they

are based on 112 percent of the mean of the more accurate database of

freestanding agencies' per-visit costs. Also, despite the

administrative difficulties that may arise, we believe this option is

in the best interests of HHAs. Therefore, we have determined that

revising the limits, effective for cost reporting periods beginning on

or after July 1, 1993 is the most appropriate course of action.

Thus, the revised schedule of limits set forth in Table I of

section IV of this notice replaces the per-visit limits set forth in

our July 8, 1993 notice. As required by section 13564(a) of OBRA '93,

these limits will remain in effect for cost reporting periods beginning

before July 1, 1996. In addition, we are setting forth in Table II of

section IV of this notice revised A&G add-on amounts for hospital-based

HHAs to replace the add-on amounts set forth in our July 8, 1993

notice. In accordance with section 1861(v)(1)(L)(ii) of the Act, as

amended by section 13564 of OBRA '93, the intermediaries will make an

adjustment for the A&G add-on in computing the adjusted limits for

hospital-based HHAs with cost reporting periods beginning on or after

July 1, 1993, and before October 1, 1993.

For the convenience of the reader, we are republishing Tables IIIa,

IIIb, and IV [[Page 8396]] that were published in our July 8, 1993

notice. These tables contain the wage indices for urban and rural areas

and cost reporting year adjustment factor and also are presented in

section IV of this notice.

The intermediaries will compute the adjusted limits using the wage

index in Tables IIIa and IIIb set forth in section IV of this notice,

and will notify each HHA that they service of its applicable cost per-

visit limits for each type of service. Each HHA's aggregate limit

cannot be determined prospectively, but depends on each HHA's Medicare

visits for each type of service and actual costs for the cost reporting

period subject to this notice.

The HHA costs that are subject to the limits include the cost of

medical supplies routinely furnished in conjunction with patient care.

Durable medical equipment, orthotics, prosthetics, and other medical

supplies directly identifiable as services to an individual patient are

excluded from per-visit costs and are paid without regard to this

schedule of limits. (See Chapter IV of the Home Health Agency Manual

(HCFA Pub. 11).)

The intermediary will determine the limit for each HHA by

multiplying the number of Medicare visits for each type of service

furnished by the HHA by the respective per-visit cost limit. The sum of

these amounts is compared to the HHA's total allowable costs.

Example: HHA X, a free-standing agency located in Richmond VA,

furnishes 5,000 covered skilled nursing visits, 2,000 covered

physical therapy visits, and 4,000 covered home health aide visits

to Medicare beneficiaries during its 12-month cost reporting period

beginning on July 1, 1993.

The Aggregate Cost Limit is Determined As Follows:

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

Adjusted

Type of visit Visits Nonlabor labor Adjusted Aggregate

portion portion limit limit

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

Skilled Nursing Care................................... 5,000 $16.44 $74.72 $92.32 $461,600

Physical Therapy....................................... 2,000 16.52 75.28 92.96 185,920

Home Health Aide....................................... 4,000 8.33 37.65 46.57 186,280

Total Visits........................................... 11,000 ......... ......... ......... ...........

Aggregate Cost Limit................................... ......... ......... ......... ......... $833,800

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

As noted in section III.A of our July 8, 1993 notice, in order to

account for OSHA's universal precaution requirements, we also will

allow an additional adjustment to the aggregate cost limit of $.18 per

visit for those HHAs that incur costs in complying with these

requirements (see 58 FR 36749). An HHA must apply to its intermediary

for the add-on amount. The agency must demonstrate that it will exceed

its cost limit in order to be in compliance with the OSHA mandated

requirements. The HHA must provide the intermediary with adequate

documentation to support the add-on amount.

Before the limits are applied during settlement of the cost report,

the HHA's actual costs are reduced by the amount of individual items of

cost (for example, administrative compensation and contract services)

that are found to be excessive under the Medicare reasonable cost

principles of provider payment. That is, the intermediary reviews the

various reported costs, taking into account all Medicare payment

principles (for example, the cost guidelines for physical therapy

furnished under arrangement (see Sec. 413.106) and the limitation on

costs that are substantially out of line with those of comparable HHAs

(see Sec. 413.9)).

B. No Changes in the Cost Limits

As discussed in section I.B of this notice, section 13564(a) of

OBRA '93 amended section 1861(v)(1)(L)(iii) of the Act to provide that

there be no changes in the HHA per-visit cost limits (except as may be

necessary to take into account the elimination of the A&G add-on for

hospital-based HHAs) for cost reporting periods beginning on or after

July 1, 1994, and before July 1, 1996. The effect of this provision is

that a HHA's latest per-discipline cost limit for a period beginning on

or after July 1, 1993, and before July 1, 1994, as calculated under

this notice, without regard to subsequent adjustments under section

1861(v)(1)(L)(ii) of the Act for exceptions, will remain in effect

until its cost reporting period beginning on or after July 1, 1996. As

explained in our January 6, 1994 notice with comment period, section

13564(b) of OBRA '93 eliminated the A&G add-on for hospital-based HHAs.

Accordingly, there will be no changes, besides those due to the

elimination of the A&G add-on, to a HHA's cost limit for cost reporting

periods beginning on or after July 1, 1994, and before July 1, 1996, to

account for inflation, changes to the wage index or to MSA

designations. Thus, in computing a provider's cost limit for cost

reporting periods beginning on or after July 1, 1994, and before July

1, 1996, the cost reporting period adjustment factors that were to

apply for cost reporting periods beginning on or after July 1, 1994,

will not be used. (In our July 8, 1993 notice with comment period, we

specified that if we did not publish new limits to be effective on July

1, 1994, the limits effective July 1, 1993 would continue in effect,

but the last cost reporting year adjustment factor in Table IV would be

multiplied by an inflation factor once for each month between June 1,

1994, and the month in which the cost reporting period begins, until a

new schedule of limits or other provision is issued (58 FR 36760). In

accordance with section 13564(a) of OBRA '93, the inflation factor will

not be used for cost reporting periods beginning on or after July 1,

1994, and before July 1, 1996.) The revised schedule of per-visit

limits set forth in Table I of section IV of this notice, which

replaces the schedule of limits set forth in our July 8, 1993 notice,

will be used to compute the limits. Revised Table II will be used to

calculate the A&G add-on, when applicable. The wage indices in Tables

IIIa and IIIb that were originally published in our July 8, 1993 notice

and are republished in section IV of this notice will continue to be

used to compute the limits.

In the example below, a freestanding HHA in Dallas, Texas has a

cost reporting period beginning date of January 1, 1994. As calculated

under this notice, its cost limit for the 12-month period beginning

January 1, 1994, for occupational therapy is $96.13. Under the

provisions of this notice, the cost limit of $96.13 will remain in

effect for its 12-month cost reporting periods beginning January 1,

1995, and January 1, 1996. As explained above, the cost reporting

period adjustment factors that would have been used under the July 8,

1993 notice with comment period for calculating the limits for the

HHA's new cost reporting periods beginning January 1, 1995, and January

1, 1996, are not used. [[Page 8397]] Accordingly, the provider in this

example will not have any change in its cost limit until its cost

reporting period beginning January 1, 1997.

Example: Calculation of Adjusted Limit for Occupational Therapy

for a Freestanding HHA Located in Dallas, Texas: Computation of

Revised Limit for Occupational Therapy:

Labor Related Component............... $74.97 (Table I)

Wage Index............................ x 0.9599 (Table IIIa)

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

Labor Portion......................... 71.96 ..................

Special Labor Adjustment for Budget x 1.067 ..................

Neutrality.

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

Adjusted Labor Component.............. 76.79 ..................

Nonlabor-Related Component............ +16.78 (Table I)

OSHA Per Diem Add-On.................. +.18 ..................

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

Adjusted Occupational Therapy Limit... 93.75 ..................

Cost Reporting Period Adjustment x 1.0254 (Table IV)

Factor (January 1, 1994).

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

Inflation Adjusted Limit (Limit in 96.13 ..................

Effect for January 1, 1994, January

1, 1995, and January 1, 1996).

As noted above, for cost reporting periods beginning on or after

July 1, 1994, but before July 1, 1996, a freestanding HHA's cost limit

will be its latest per-discipline cost limit for the period beginning

on or after July 1, 1993, and before July 1, 1994, as calculated under

this notice and without regard to any subsequent adjustments, such as

an exception to the limit. Thus, if the HHA in the above example

received an exception to its cost limit for its cost reporting period

beginning January 1, 1993, its cost limit for the cost reporting period

beginning January 1, 1994, would not include the exception amount for

the previous period. To receive an exception or other adjustment to its

cost limit, the HHA would need to submit a request to its fiscal

intermediary in accordance with the procedures set forth in Sec. 413.30

of our regulations.

As explained in detail in our January 6, 1994 notice with comment

period, a hospital-based HHA's cost limit is computed in an identical

manner (59 FR 761) to the example above, since the A&G add-on for

hospital-based HHAs is no longer applicable for cost reporting periods

beginning on or after October 1, 1993.

C. Periods Other Than 12 Months

The above methodology applies to providers with cost reporting

periods of 12 months in duration. If a HHA's cost reporting period is

not 12 months in duration, a special adjustment factor is calculated.

This is necessary because inflation projections are computed to the

midpoint of a cost reporting period, and the adjustment factors in

Table IV (58 FR 36760) are based on 12-month reporting periods. For

cost reporting periods of other than 12 months, the calculation must be

made based on the midpoint of the specific cost reporting period. The

HHA's intermediary obtains this adjustment factor from HCFA central

office. This methodology results in a different cost limit than if a

12-month adjustment factor were used. However, since the provisions of

OBRA '93 require no changes in the cost limit on or after July 1, 1994,

the limit calculated with the special adjustment factor will remain in

place for subsequent cost reporting periods beginning before July 1,

1996.

D. Providers Entering the Medicare Program

For providers entering the Medicare program on or after July 1,

1994, and before July 1, 1996, the applicable cost limit will be the

cost limit for the identical period beginning on or after July 1, 1993,

through June 30, 1994. (The only exception to this policy is that, as a

result of the elimination of the A&G add-on for hospital-based HHAs

effective for cost reporting periods beginning on or after October 1,

1993, the A&G add-on amount is not included in the cost limit

calculation for hospital-based HHAs that enter the program.) For

example, if a provider enters the Medicare program on October 1, 1994,

with a 12-month cost reporting period, its cost limit will be

determined in the same manner as a cost limit for a period beginning

October 1, 1993, and ending September 30, 1994. If the provider's cost

reporting period is a short period, for example, a period beginning

October 1, 1994, and ending December 31, 1994, the provider's cost

limit will be determined in the same manner as a cost limit for a

period beginning October 1, 1993, and ending December 31, 1993. In

addition, whether the first period is a full 12-month period or a

period other than 12 months, the cost limit determined for the first

period will remain in effect until the provider's first cost reporting

period beginning on or after July 1, 1996.

E. Next Update of Limits

Before the enactment of OBRA '93, section 1861(v)(1)(L)(iii) of the

Act required that the HHA per-discipline cost limits be updated on July

1, 1994, and every year thereafter. Section 13564(a)(2) of OBRA '93

amended that section of the Act to delay the next update until July 1,

1996, and every year thereafter. Accordingly, there will be no changes

to the HHA per-discipline cost limits effective under this notice for

cost reporting periods beginning on or after July 1, 1993 for

inflation, changes in the wage index, or geographic designation until

July 1, 1996.

F. Adjustments to the Per-Visit Cost Limits

Section 1861(v)(1)(L)(ii) of the Act provides for appropriate

adjustments to the HHA per-discipline cost limits. These adjustments

are set forth at Sec. 413.30(f) and include: exceptions to the limits

for atypical services and extraordinary circumstances; and other

provisions. Section 13564(a)(1) of OBRA '93 mandates that the effect of

allowing no changes in the HHA per-visit cost limits for cost reporting

periods beginning on or after July 1, 1994, and before July 1, 1996,

not be considered in making adjustments to the per-visit cost limits

under the exceptions process. Therefore, effective for cost reporting

periods beginning on or after July 1, 1994, and before July 1, 1996, a

provider may request an exception only for costs incurred above the

amount that the limit would have been had the OBRA '93 provisions set

forth in this notice regarding no changes in the cost limits not been

enacted. Accordingly, for the purpose of determining the amount of an

exception to the HHA per-discipline cost limits under the regulations

at [[Page 8398]] Sec. 413.30(f), the difference between the amount of a

provider's cost limit as determined by the provisions set forth in this

notice, and the amount that a provider's cost limit would have been

under this notice had the OBRA '93 provisions requiring no changes in

the cost limits not been enacted, is not subject to an exception to the

per-discipline cost limits. We note that this provision does not apply

to the A&G add-on for hospital-based HHAs. That is, for cost reporting

periods beginning on or after October 1, 1993, the A&G add-on for

hospital-based HHAs will not be used in computing the amount that the

hospital-based cost limit would have been had the OBRA '93 provisions

requiring no changes in the limits not been enacted.

The example below demonstrates the computation to determine the

amount not subject to an exception under the provisions set forth in

this notice. The provider's cost limit for occupational therapy is

computed for the cost reporting period beginning January 1, 1994, in

accordance with the provisions set forth in this notice, and this limit

remains in effect until the cost reporting period beginning January 1,

1996. In the example, the provider has requested an exception to its

limit for the period beginning January 1, 1995. Again, we calculate

what the limit would have been had the OBRA '93 provisions requiring no

changes in the limits not been enacted. The difference between the

actual limit and the amount the limit would have been ($5.14) is the

amount not subject to an exception.

Example: Calculation of Amount Not Subject to an Exception to

the Limits for Occupational Therapy for a Freestanding HHA Located

in Dallas, Texas

Labor Related Component............... $74.97 (Table I)

Wage Index............................ x 0.9599 (Table IIIa)

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

Labor Portion......................... $71.96

Special Labor Adjustment for Budget x 1.067 ..................

Neutrality.

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

Adjusted Labor Component.............. $76.79

Nonlabor-Related Component............ +16.78 (Table I)

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

OSHA Per Diem Add-On.................. +.18 ..................

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

Limit Prior to Inflation Adjustment... $93.75

Cost Reporting Period Adjustment x 1.0254 (Table IV)

Factor.

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

(January 1, 1994)

Inflation Adjusted Limit (Limit in $96.13

Effect for January 1, 1994, January

1, 1995, and January 1, 1996).

Cost Reporting Period Adjustment x 1.0803 (Table IV)

Factor (January 1, 1995 for Exception

Purposes Only).

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

(Using the calculation procedures in

Table IV for cost reporting periods

beginning on January 1, 1995,

1.0475 is multiplied by 1.00442

seven times and the resulting

factor equals 1.0803.) (1.0475 x

(1.00442)\7\=1.0803).

Inflation Adjusted Limit (January 1, $101.27

1994 for Exception Purposes Only).

Amount Not Subject to Exception

($101.27-$96.13=$5.14)

IV. Tables

Table I.--Per Visit Limits for Home Health Agencies

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

Labor Non-labor

Type of visit Limit portion portion\1\

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

MSA (NECMA) Location:

Skilled Nursing Care........... $91.16 $74.72 $16.44

Physical Therapy............... 91.80 75.28 16.52

Speech Pathology............... 93.18 76.30 16.88

Occupational Therapy........... 91.75 74.97 16.78

Medical Social Services........ 129.62 105.99 23.63

Home Health Aide............... 45.98 37.65 8.33

Non-MSA Location:

Skilled Nursing Care........... $99.83 $84.88 $14.95

Physical Therapy............... 105.55 89.71 15.84

Speech Pathology............... 110.45 93.74 16.71

Occupational Therapy........... 107.02 90.55 16.47

Medical Social Services........ 164.60 139.56 25.04

Home Health Aide............... 46.30 39.36 6.94

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

\1\Non-labor portion of limits for HHAs located in Alaska, Hawaii,

Puerto Rico, and the Virgin Islands are increased by multiplying them

by the following cost-of-living adjustment factors:

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

Adjustment

Location factor

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

Alaska.................................................. 1.250

Hawaii:

Oahu.................................................. 1.225

Kauai................................................. 1.175

Maui, Lanai, and Molokai.............................. 1.200

Hawaii (Island)....................................... 1.150

Puerto Rico............................................. 1.100

Virgin Islands.......................................... 1.125

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

[[Page 8399]]

Table II.--Add-On Amounts for Hospital-Based Home health Agencies

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

Labor Non-labor

Type of visit A&G Add-on portion portion

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

MSA (NECMA) Location:

Skilled Nursing Care........... $12.20 $9.99 $2.21

Physical Therapy............... 11.30 9.25 2.05

Speech Pathology............... 11.48 9.39 2.09

Occupational Therapy........... 11.48 9.35 2.12

Medical Social Services........ 17.73 14.42 3.32

Home Health Aide............... 5.50 4.50 1.00

Non-MSA Location:

Skilled Nursing Care........... $14.99 $12.74 $2.25

Physical Therapy............... 16.14 13.73 2.41

Speech Pathology............... 16.09 13.67 2.42

Occupational Therapy........... 17.00 14.36 2.64

Medical Social Services........ 24.20 20.41 3.80

Home Health Aide............... 6.01 5.11 0.90

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

Table IIIa.--Wage Index for Urban Areas

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

Wage

Urban areas (constituent counties or county equivalents) index

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

Abilene TX..................................................... 0.9183

Taylor, TX

Aguadilla, PR.................................................. 0.4549

Aguada, PR

Aguadilla, PR

Isabella, PR

Moca, PR

Akron, OH...................................................... 0.9455

Portage, OH

Summit, OH

Albany, GA..................................................... 0.8017

Dougherty, GA

Lee, GA

Albany-Schenectady-Troy, NY.................................... 0.8887

Albany, NY

Greene, NY

Montgomery, NY

Rensselaer, NY

Saratoga, NY

Schenectady, NY

Albuquerque, NM................................................ 1.0083

Bernalillo, NM

Alexandria, LA................................................. 0.8242

Rapides, LA

Allentown-Bethlehem, PA-NJ..................................... 0.9957

Warren, NJ

Carbon, PA

Lehigh, PA

Northampton, PA

Altoona, PA.................................................... 0.9201

Blair, PA

Amarillo, TX................................................... 0.8703

Potter, TX

Randall, TX

Anaheim-Santa Ana, CA.......................................... 1.2217

Orange, CA

Anchorage, AK.................................................. 1.4119

Anchorage, AK

Anderson, IN................................................... 0.9544

Madison, IN

Anderson, SC................................................... 0.7229

Anderson, SC

Ann Arbor, MI.................................................. 1.1815

Washtenaw, MI

Anniston, AL................................................... 0.7899

Calhoun, AL

Appleton-Oshkosh-Neenah, WI.................................... 0.9142

Calumet, WI

Outagamie, WI

Winnebago, WI

Arecibo, PR.................................................... 0.3938

Arecibo, PR

Camuy, PR

Hatillo, PR

Quebradillas, PR

Asheville, NC.................................................. 0.8760

Buncombe, NC

Athens, GA..................................................... 0.8518

Clarke, GA

Jackson, GA

Madison, GA

Oconee, GA

Atlanta, GA.................................................... 0.9557

Barrow, GA

Butts, GA

Cherokee, GA

Clayton, GA

Cobb, GA

Coweta, GA

De Kalb, GA

Douglas, GA

Fayette, GA

Forsyth, GA

Fulton, GA

Gwinnett, GA

Henry, GA

Newton, GA

Paulding, GA

Rockdale, GA

Spalding, GA

Walton, GA

Atlantic City, NJ.............................................. 1.0464

Atlantic , NJ

Cape May, NJ

Augusta, GA-SC................................................. 0.9363

Columbia, GA

McDuffie, GA

Richmond, GA

Aiken, SC

Aurora-Elgin, IL............................................... 0.9626

Kane, IL

Kendall, IL

Austin, TX..................................................... 0.9560

Hays, TX

Travis, TX

Williamson, TX

Bakersfield, CA................................................ 1.0824

Kern, CA

Baltimore, MD.................................................. 1.0115

Anne Arundel, MD

Baltimore, MD

Baltimore City, MD

Carroll, MD

Harford, MD

Howard, MD

Queen Annes, MD

Bangor, ME..................................................... 0.9027

Penobscot, ME

Baton Rouge, LA................................................ 0.9052

Ascension, LA

East Baton Rouge, LA

Livingston, LA

West Baton Rouge, LA

Battle Creek, MI............................................... 0.9480

Calhoun, MI

Beaumont-Port Arthur, TX....................................... 0.9599

Hardin, TX

Jefferson, TX

Orange, TX

Beaver County, PA.............................................. 1.0124

Beaver, PA

Bellingham, WA................................................. 1.0454

Whatcom, WA

Benton Harbor, MI.............................................. 0.8421

Berrien, MI

Bergen-Passaic, NJ............................................. 1.0733

Bergen, NJ

Passaic, NJ

Billings, MT................................................... 0.9287

Yellowstone, MT

Biloxi-Gulfport, MS............................................ 0.8030

Hancock, MS

Harrison, MS

Binghamton, NY................................................. 0.9223

Broome, NY

Tioga, NY

Birmingham, AL................................................. 0.8734

Blount, AL

Jefferson, AL

Saint Clair, AL

Shelby, AL

Walker, AL

Bismarck, ND................................................... 0.8845

Burleigh, ND

Morton, ND

Bloomington, IN................................................ 0.8604

Monroe, IN

[[Page 8400]]

Bloomington-Normal, IL......................................... 0.8723

McLean, IL

Boise City, ID................................................. 0.9718

Ada, ID

Boston-Lawrence-Salem-Lowell-Brockton, MA...................... 1.1762

Essex, MA

Middlesex, MA

Norfolk, MA

Plymouth, MA

Suffolk, MA

Boulder-Longmont, CO........................................... 1.0155

Boulder, CO

Bradenton, FL.................................................. 0.9225

Manatee, FL

Brazoria, TX................................................... 0.9276

Brazoria, TX

Bremerton, WA.................................................. 0.9495

Kitsap, WA

Bridgeport-Stamford-Norwalk-Danbury............................ 1.1984

Fairfield, CT

Brownsville-Harlingen, TX...................................... 0.8592

Cameron, TX

Bryan-College Station, TX...................................... 0.9451

Brazos, TX

Buffalo, NY.................................................... 0.8873

Erie, NY

Burlington, NC................................................. 0.7954

Alamance, NC

Burlington, VT................................................. 0.9320

Chittenden, VT

Grand Isle, VT

Caguas, PR..................................................... 0.4461

Caguas, PR

Gurabo, PR

San Lorenz, PR

Aguas Buenas, PR

Cayey, PR

Cidra, PR

Canton, OH..................................................... 0.8776

Carroll, OH

Stark, OH

Casper, WY..................................................... 0.8855

Natrona, WY

Cedar Rapids, IA............................................... 0.8938

Linn, IA

Champaign-Urbana-Rantoul, IL................................... 0.8710

Champaign, IL

Charleston, SC................................................. 0.8298

Berkeley, SC

Charleston, SC

Dorchester, SC

Charleston, WV................................................. 0.9653

Kanawha, WV

Putnam, WV

Charlotte-Gastonia-Rock Hill, NC-SC............................ 0.9432

Cabarrus, NC

Gaston, NC

Lincoln, NC

Mecklenburg, NC

Rowan, NC

Union, NC

York, SC

Charlottesville, VA............................................ 0.9576

Albermarle, VA

Charlottesville City, VA

Fluvanna, VA

Greene, VA

Chattanooga, TN-GA............................................. 0.9161

Catoosa, GA

Dade, GA

Walker, GA

Hamilton, TN

Marion, TN

Sequatchie, TN

Cheyenne, WY................................................... 0.7876

Laramie, WY

Chicago, IL.................................................... 1.0475

Cook, IL

Du Page, IL

McHenry, IL

Chico, CA...................................................... 1.0937

Butte, CA

Cincinnati, OH-KY-IN........................................... 0.9972

Dearborn, IN

Boone, KY

Campbell, KY

Kenton, KY

Clermont, OH

Hamilton, OH

Warren, OH

Clarksville-Hopkinsville, TN-KY................................ 0.7352

Christian, KY

Montgomery, TN

Cleveland, OH.................................................. 1.0695

Cuyahoga, OH

Geauga, OH

Lake, OH

Medina, OH

Colorado Springs, CO........................................... 0.9777

El Paso, CO

Columbia, MO................................................... 0.9468

Boone, MO

Columbia, SC................................................... 0.8904

Lexington, SC

Richland, SC

Columbus, GA-AL................................................ 0.7452

Russell, AL

Chattanoochee, GA

Muscogee, GA

Columbus, OH................................................... 0.9634

Delaware, OH

Fairfield, OH

Franklin, OH

Licking, OH

Madison, OH

Pickaway, OH

Union, OH

Corpus Christi, TX............................................. 0.8559

Nueces, TX

San Patricio, TX

Cumberland, MD-WV.............................................. 0.8155

Allegany, MD

Mineral, WV

Dallas, TX..................................................... 0.9599

Collin, TX

Dallas, TX

Denton, TX

Ellis, TX

Kaufman, TX

Rockwall, TX

Danville, VA................................................... 0.7476

Danville City, VA

Pittsylvania, VA

Davenport-Rock Island-Moline, IA-IL............................ 0.8640

Scott, IA

Henry, IL

Rock Island, IL

Dayton-Springfield, OH......................................... 0.9686

Clark, OH

Greene, OH

Miami, OH

Montgomery, OH

Daytona Beach, FL.............................................. 0.8907

Volusia, FL

Decatur, AL.................................................... 0.7457

Lawrence, AL

Morgan, AL

Decatur, IL.................................................... 0.8253

Macon, IL

Denver, CO..................................................... 1.0714

Adams, CO

Arapahoe, CO

Denver, CO

Douglas, CO

Jefferson, CO

Des Moines, IA................................................. 0.9225

Dallas, IA

Polk, IA

Warren, IA

Detroit, MI.................................................... 1.0924

Lapeer, MI

Livingston, MI

Macomb, MI

Monroe, MI

Oakland, MI

Saint Clair, MI

Wayne, MI

Dothan, AL..................................................... 0.7524

Dale, AL

Houston, AL

Dubuque, IA.................................................... 0.8341

Dubuque, IA

Duluth, MN-WI.................................................. 0.9479

St. Louis, MN

Douglas, WI

Eau Claire, WI................................................. 0.8444

Chippewa, WI

Eau Claire, WI

El Paso, TX.................................................... 0.8679

El Paso, TX

Elkhart-Goshen, IN............................................. 0.8913

Elkhart, IN

Elmira, NY..................................................... 0.8775

Chemung, NY

Enid, OK....................................................... 0.8877

Garfield, OK

Erie, PA....................................................... 0.9118

Erie, PA

Eugene-Springfield, OR......................................... 1.0123

Lane, OR

Evansville, IN-KY.............................................. 0.9422

Posey, IN

Vanderburgh, IN

Warrick, IN

Henderson, KY

Fargo-Moorhead, ND-MN.......................................... 0.9668

Clay, MN

Cass, ND

Fayetteville, NC............................................... 0.8262

Cumberland, NC

Fayetteville-Springdale, AR.................................... 0.7958

Washington, AR

Flint, MI...................................................... 1.1506

Genesee, MI

Florence, AL................................................... 0.7648

Colbert, AL

Lauderdale, AL

Florence, SC................................................... 0.8395

[[Page 8401]]

Florence, SC

Fort Collins-Loveland, CO...................................... 1.0197

Larimor, CO

Ft Lauderdale-Hollywood-Pompano Beach, FL...................... 1.0314

Broward, FL

Fort Myers-Cape Coral, FL...................................... 0.9759

Lee, FL

Fort Pierce, FL................................................ 1.0996

Martin, FL

St. Lucie, FL

Fort Smith, AR-OK.............................................. 0.7900

Crawford, AR

Sebastian, AR

Sequoyah, OK

Fort Walton Beach, FL.......................................... 0.8881

Okaloosa, FL

Fort Wayne, IN................................................. 0.8967

Allen, IN

De Kalb, IN

Whitley, IN

Forth Worth-Arlington, TX...................................... 0.9708

Johnson, TX

Parker, TX

Tarrant, TX

Fresno, CA..................................................... 1.0694

Fresno, CA

Gadsden, AL.................................................... 0.8166

Etowah, AL

Gainesville, FL................................................ 0.8763

Alachua, FL

Bradford, FL

Galveston-Texas City, TX....................................... 1.0129

Galveston, TX

Gary-Hammond, IN............................................... 0.9853

Lake, IN

Porter, IN

Glens Falls, NY................................................ 0.9193

Warren, NY

Washington, NY

Grand Forks, ND................................................ 0.9539

Grand Forks, ND

Grand Rapids, MI............................................... 0.9813

Kent, MI

Ottawa, MI

Great Falls, MT................................................ 0.9951

Cascade, MT

Greeley, CO.................................................... 0.9320

Weld, CO

Green Bay, WI.................................................. 0.9547

Brown, WI

Greensboro-Winston-Salem-High Point, NC........................ 0.9128

Davidson, NC

Davie, NC

Forsyth, NC

Guilford, NC

Randolph, NC

Stokes, NC

Yadkin, NC

Greenville-Spartanburg, SC..................................... 0.8887

Greenville, SC

Pickens, SC

Spartanburg, SC

Hagerstown, MD................................................. 0.9121

Washington, MD

Hamilton-Middletown, OH........................................ 0.9347

Butler, OH

Harrisburg-Lebanon-Carlisle, PA................................ 0.9879

Cumberland, PA

Dauphin, PA

Lebanon, PA

Perry, PA

Hartford-Middletown-New Britain-Bristol, CT.................... 1.1868

Hartford, CT

Middlesex, CT

Tolland, CT

Litchfield, CT

Hickory, NC.................................................... 0.8735

Alexander, NC

Burke, NC

Catawba, NC

Honolulu, HI................................................... 1.1534

Honolulu, HI

Houma-Thibodaux, LA............................................ 0.7315

Lafourche, LA

Terrebonne, LA

Houston, TX.................................................... 1.0022

Fort Bend, TX

Harris, TX

Liberty, TX

Montgomery, TX

Waller, TX

Huntington-Ashland, WV-KY-OH................................... 0.9400

Boyd, KY

Carter, KY

Greenup, KY

Lawrence, OH

Cabell, WV

Wayne, WV

Huntsville, AL................................................. 0.8799

Madison, AL

Indianapolis, IN............................................... 0.9665

Boone, IN

Hamilton, IN

Hancock, IN

Hendricks, IN

Johnson, IN

Marion, IN

Morgan, IN

Shelby, IN

Iowa City, IA.................................................. 0.9489

Johnson, IA

Jackson, MI.................................................... 0.9625

Jackson, MI

Jackson, MS.................................................... 0.7702

Hinds, MS

Madison, MS

Rankin, MS

Jackson, TN.................................................... 0.7878

Madison, TN

Jacksonville, FL............................................... 0.9122

Clay, FL

Duval, FL

Nassau, FL

St. Johns, FL

Jacksonville, NC............................................... 0.7125

Onslow, NC

Jamestown-Dunkirk, NY.......................................... 0.7746

Chautaqua, NY

Janesville-Beloit, WI.......................................... 0.8432

Rock, WI

Jersey City, NJ................................................ 1.0728

Hudson, NJ

Johnson City-Kingsport-Bristol, TN-VA.......................... 0.8633

Carter, TN

Hawkins, TN

Sullivan, TN

Unicoi, TN

Washington, TN

Bristol City, VA

Scott, VA

Washington, VA

Johnstown, PA.................................................. 0.8827

Cambria, PA

Somerset, PA

Joliet, IL..................................................... 1.0237

Grundy, IL

Will, IL

Joplin, MO..................................................... 0.7925

Jasper, MO

Newton, MO

Kalamazoo, MI.................................................. 1.1765

Kalamazoo, MI

Kankakee, IL................................................... 0.8454

Kankakee, IL

Kansas City, KS-MO............................................. 0.9550

Johnson, KS

Leavenworth, KS

Miami, KS

Wyandotte, KS

Cass, MO

Clay, MO

Jackson, MO

Lafayette, MO

Platte, MO

Ray, MO

Kenosha, WI.................................................... 0.8934

Kenosha, WI

Killeen-Temple, TX............................................. 1.1250

Bell, TX

Coryell, TX

Knoxville, TN.................................................. 0.8658

Anderson, TN

Blount, TN

Grainger, TN

Jefferson, TN

Knox, TN

Sevier, TN

Union, TN

Kokomo, IN..................................................... 0.9452

Howard, IN

Tipton, IN

LaCrosse, WI................................................... 0.8920

LaCrosse, WI

Lafayette, LA.................................................. 0.8194

Lafayette, LA

St. Martin, LA

Lafayette, IN.................................................. 0.8588

Tippecanoe, IN

Lake Charles, LA............................................... 0.8341

Calcasieu, LA

Lake County, IL................................................ 0.9953

Lake, IL

Lakeland-Winter Haven, FL...................................... 0.8409

Polk, FL

Lancaster, PA.................................................. 0.9221

Lancaster, PA

Lansing-East Lansing, MI....................................... 1.0242

Clinton, MI

Eaton, MI

Ingham, MI

Laredo, TX..................................................... 0.7248

Webb, TX

Las Cruces, NM................................................. 0.7877

Dona Ana, NM

Las Vegas, NV.................................................. 1.0588

Clark, NV

[[Page 8402]]

Lawrence, KS................................................... 0.8901

Douglas, KS

Lawton, OK..................................................... 0.8354

Comanche, OK

Lewiston-Auburn, ME............................................ 0.9021

Androscoggin, ME

Lexington-Fayette, KY.......................................... 0.8565

Bourbon, KY

Clark, KY

Fayette, KY

Jessamine, KY

Scott, KY

Woodford, KY

Lima, OH....................................................... 0.8030

Allen, OH

Auglaize, OH

Lincoln, NE.................................................... 0.8920

Lancaster, NE

Little Rock-North Little Rock, AR.............................. 0.8373

Faulkner, AR

Lonoke, AR

Pulaski, AR

Saline, AR

Longview-Marshall, TX.......................................... 0.8656

Gregg, TX

Harrison, TX

Lorain-Elyria, OH.............................................. 0.8933

Lorain, OH

Los Angeles-Long Beach, CA..................................... 1.2308

Los Angeles, CA

Louisville, KY-IN.............................................. 0.9291

Clark, IN

Floyd, IN

Harrison, IN

Bullitt, KY

Jefferson, KY

Oldham, KY

Shelby, KY

Lubbock, TX.................................................... 0.8766

Lubbock, TX

Lynchburg, VA.................................................. 0.8509

Amherst, VA

Campbell, VA

Lynchburg City, VA

Macon-Warner Robins, GA........................................ 0.8768

Bibb, GA

Huston, GA

Jones, GA

Peach, GA

Madison, WI.................................................... 1.0270

Dane, WI

Manchester-Nashua, NH.......................................... 1.0219

Hillsborough, NH

Merrimack, NH

Mansfield, OH.................................................. 0.8358

Richland, OH

Mayaguez, PR................................................... 0.4752

Anasco, PR

Cabo Rojo, PR

Hormigueros, PR

Mayaguez, PR

San German, PR

McAllen-Edinburg-Mission, TX................................... 0.7684

Hidalgo, TX

Medford, OR.................................................... 1.0005

Jackson, OR

Melbourne-Titusville, FL....................................... 0.9162

Brevard, FL

Memphis, TN-AR-MS.............................................. 0.9023

Crittenden, AR

De Soto, MS

Shelby, TN

Tipton, TN

Merced, CA..................................................... 1.0270

Merced, CA

Miami-Hialeah, FL.............................................. 1.0147

Dade, FL

Middlesex-Somerset-Hunterdon, NJ............................... 1.0903

Hunterdon, NJ

Middlesex, NJ

Somerset, NJ

Midland, TX.................................................... 1.0335

Midland, TX

Milwaukee, WI.................................................. 0.9680

Milwaukee, WI

Ozaukee, WI

Washington, WI

Waukesha, WI

Minneapolis-St Paul, MN-WI..................................... 1.0774

Anoka, MN

Carver, MN

Chisago, MN

Dakota, MN

Hennepin, MN

Isanti, MN

Ramsey, MN

Scott, MN

Washington, MN

Wright, MN

St. Croix, WI

Mobile, AL..................................................... 0.8454

Baldwin, AL

Mobile, AL

Modesto, CA.................................................... 1.1530

Stanislaus, CA

Monmouth-Ocean, NJ............................................. 1.0058

Monmouth, NJ

Ocean, NJ

Monroe, LA..................................................... 0.7832

Ouachita, LA

Montgomery, AL................................................. 0.7823

Autauga, AL

Elmore, AL

Montgomery, AL

Muncie, IN..................................................... 0.8397

Delaware, IN

Muskegon, MI................................................... 0.9680

Muskegon, MI

Naples, FL..................................................... 1.0282

Collier, FL

Nashville, TN.................................................. 0.9360

Cheatham, TN

Davidson, TN

Dickson, TN

Robertson, TN

Rutherford TN

Sumner, TN

Williamson, TN

Wilson, TN

Nassau-Suffolk, NY............................................. 1.3167

Nassau, NY

Suffolk, NY

New Bedford-Fall River-Attleboro, MA........................... 0.9962

Bristol, MA

New Haven-Waterbury-Meriden, CT................................ 1.2046

New Haven, CT

New London, London-Norwich..................................... 1.1525

New London, CT

New Orleans, LA................................................ 0.8967

Jefferson, LA

Orleans, LA

St. Bernard, LA

St. Charles, LA

St. John The Baptist, LA

St. Tammany, LA

New York, NY................................................... 1.3431

Bronx, NY

Kings, NY

New York City, NY

Putnam, NY

Queens, NY

Richmond, NY

Rockland, NY

Westchester, NY

Newark, NJ..................................................... 1.1350

Essex, NJ

Morris, NJ

Sussex, NJ

Union, NJ

Niagara Falls, NY.............................................. 0.8350

Niagara, NY

Norfolk-Virginia Beach-Newport News, VA........................ 0.8481

Chesapeake City, VA

Gloucester, VA

Hampton City, VA

James City Co., VA

Newport News City, VA

Norfolk City, VA

Poquoson, VA

Portsmouth City, VA

Suffolk City, VA

Virginia Beach City, VA

Williamsburg City, VA

York, VA

Oakland, CA.................................................... 1.4225

Alameda, CA

Contra Costa, CA

Ocala, FL...................................................... 0.8580

Marion, FL

Odessa, TX..................................................... 1.0835

Ector, TX

Oklahoma City, OK.............................................. 0.9195

Canadian, OK

Cleveland, OK

Logan, OK

McClain, OK

Oklahoma, OK

Pottawatomie, OK

Olympia, WA.................................................... 1.0957

Thurston, WA

Omaha, NE-IA................................................... 0.8953

Pottawattamie, IA

Douglas, NE

Sarpy, NE

Washington, NE

Orange County, NY.............................................. 0.9815

Orange, NY

Orlando, FL.................................................... 0.9582

Orange, FL

Osceola, FL

Seminole, FL

Owensboro, KY.................................................. 0.8082

Daviess, KY

Oxnard-Ventura, CA............................................. 1.2259

Ventura, CA

Panama City, FL................................................ 0.8598

Bay, FL

Parkersburg-Marietta, WV-OH.................................... 0.8505

[[Page 8403]]

Washington, OH

Wood, WV

Pascagoula, MS................................................. 0.8720

Jackson, MS

Pensacola, FL.................................................. 0.8589

Escambia, FL

Santa Rosa, FL

Peoria, IL..................................................... 0.8704

Peoria, IL

Tazewell, IL

Woodford, IL

Philadelphia, PA-NJ............................................ 1.0908

Burlington, NJ

Camden, NJ

Gloucester, NJ

Bucks, PA

Chester, PA

Delaware, PA

Montgomery, PA

Philadelphia, PA

Phoenix, AZ.................................................... 1.0387

Maricopa, AZ

Pine Bluff, AR................................................. 0.7840

Jefferson, AR

Pittsburgh, PA................................................. 1.0087

Allegheny, PA

Fayette, PA

Washington, PA

Westmoreland, PA

Pittsfield, MA................................................. 1.0739

Berkshire, MA

Ponce, PR...................................................... 0.4583

Juana Diaz, PR

Ponce, PR

Portland, ME................................................... 0.9254

Cumberland, ME

Sagadahoc, ME

York, ME

Portland, OR................................................... 1.1529

Clackamas, OR

Multnomah, OR

Washington, OR

Yamhill, OR

Portsmouth-Dover-Rochester, NH................................. 1.0039

Rockingham, NH

Strafford, NH

Poughkeepsie, NY............................................... 1.0639

Dutchess, NY

Providence-Pawtucket-Woonsocket, RI............................ 1.0590

Bristol, RI

Kent, RI

Newport, RI

Providence, RI

Washington, RI

Provo-Orem, UT................................................. 1.0189

Utah, UT

Pueblo, CO..................................................... 0.8687

Pueblo, CO

Racine, WI..................................................... 0.8814

Racine, WI

Raleigh-Durham, NC............................................. 0.9448

Durham, NC

Franklin, NC

Orange, NC

Wake, NC

Rapid City, SD................................................. 0.8366

Pennington, SD

Reading, PA.................................................... 0.8778

Berks, PA

Redding, CA.................................................... 1.0507

Shasta, CA

Reno, NV....................................................... 1.1571

Washoe, NV

Richland-Kennewick, WA......................................... 0.9364

Benton, WA

Franklin, WA

Richmond-Petersburg, VA........................................ 0.9379

Charles City Co., VA

Chesterfield, VA

Colonial Heights City, VA

Dinwiddie, VA

Goochland, VA

Hanover, VA

Henrico, VA

Hopewell City, VA

New Kent, VA

Petersburg City, VA

Powhatan, VA

Prince George, VA

Richmond City, VA

Riverside-San Bernardino, CA................................... 1.1391

Riverside, CA

San Bernardino, CA

Roanoke, VA.................................................... 0.8251

Botetourt, VA

Roanoke, VA

Roanoke City, VA

Salem City, VA

Rochester, MN.................................................. 1.0985

Olmsted, MN

Rochester, NY.................................................. 0.9671

Livingston, NY

Monroe, NY

Ontario, NY

Orleans, NY

Wayne, NY

Rockford, IL................................................... 0.9245

Boone, IL

Winnebago, IL

Sacramento, CA................................................. 1.2280

Eldorado, CA

Placer, CA

Sacramento, CA

Yolo, CA

Saginaw-Bay City-Midland, MI................................... 1.0452

Bay, MI

Midland, MI

Saginaw, MI

St. Cloud, MN.................................................. 0.9382

Benton, MN

Sherburne, MN

Stearns, MN

St. Joseph, MO................................................. 0.9376

Buchanan, MO

St. Louis, MO-IL............................................... 0.9351

Clinton, IL

Jersey, IL

Madison, IL

Monroe, IL

St. Clair, IL

Franklin, MO

Jefferson, MO

St. Charles, MO

St. Louis, MO

St. Louis City, MO

Sullivan City, MO

Salem, OR...................................................... 1.0403

Marion, OR

Polk, OR

Salinas-Seaside-Monterey, CA................................... 1.2988

Monterey, CA

Salt Lake City-Ogden, UT....................................... 0.9892

Davis, UT

Salt Lake, UT

Weber, UT

San Angelo, TX................................................. 0.8107

Tom Green, TX

San Antonio, TX................................................ 0.8418

Bexar, TX

Comal, TX

Guadalupe, TX

San Diego, CA.................................................. 1.2095

San Diego, CA

San Francisco, CA.............................................. 1.4480

Marin, CA

San Francisco, CA

San Mateo, CA

San Jose, CA................................................... 1.4840

Santa Clara, CA

San Juan, PR................................................... 0.4967

Barcelona, PR

Bayoman, PR

Canovanas, PR

Carolina, PR

Catano, PR

Corozal, PR

Dorado, PR

Fajardo, PR

Florida, PR

Guaynabo, PR

Humacao, PR

Juncos, PR

Los Piedras, PR

Loiza, PR

Luguillo, PR

Manati, PR

Naranjito, PR

Rio Grande, PR

San Juan, PR

Toa Alta, PR

Toa Baja, PR

Trojillo Alto, PR

Vega Alta, PR

Vega Baja, PR

Santa Barbara-Santa Maria-Lompoc, CA........................... 1.1721

Santa Barbara, CA

Santa Cruz, CA................................................. 1.2733

Santa Cruz, CA

Santa Fe, NM................................................... 0.9102

Los Alamos, NM

Santa Fe, NM

Santa Rosa-Petaluma, CA........................................ 1.2926

Sonoma, CA

Sarasota, FL................................................... 0.9741

Sarasota, FL

Savannah, GA................................................... 0.8294

Chatham, GA

Effingham, GA

Scranton, Wilkes Barre, PA..................................... 0.8916

Columbia, PA

Lackawanna, PA

Luzerne, PA

Monroe, PA

Wyoming, PA

Seattle, WA.................................................... 1.0827

King, WA

Snohomish, WA

Sharon, PA..................................................... 0.9024

[[Page 8404]]

Mercer, PA

Sheboygan, WI.................................................. 0.8836

Sheboygan, WI

Sherman-Denison, TX............................................ 0.9052

Grayson, TX

Shreveport, LA................................................. 0.9262

Bossier, LA

Caddo, LA

Sioux City, IA-NE.............................................. 0.8470

Woodbury, IA

Dakota, NE

Sioux Falls, SD................................................ 0.8797

Minnehaha, SD

South Bend-Mishawaka, IN....................................... 1.0142

St. Joseph, IN

Spokane, WA.................................................... 1.0648

Spokane, WA

Springfield, IL................................................ 0.9258

Menard, IL

Sangamon, IL

Springfield, MO................................................ 0.8050

Christian, MO

Greene, MO

Springfield, MA................................................ 1.0290

Hampden, MA

Hampshire, MA

State College, PA.............................................. 0.9861

Centre, PA

Steubenville-Weirton, OH-WV.................................... 0.8756

Jefferson, OH

Brooke, WV

Hancock, WV

Stockton, CA................................................... 1.1566

San Joaquin, CA

Syracuse, NY................................................... 0.9905

Madison, NY

Onondaga, NY

Oswego, NY

Tacoma, WA..................................................... 1.0276

Pierce, WA

Tallahassee, FL................................................ 0.9183

Gadsden, FL

Leon, FL

Tampa-St. Petersburg-Clearwater, FL............................ 0.9225

Hernando, FL

Hillsborough, FL

Pasco, FL

Pinellas, FL

Terre Haute, IN................................................ 0.8791

Clay, IN

Vigo, IN

Texarkana-TX-AR................................................ 0.7860

Miller, AR

Bowie, TX

Toledo, OH..................................................... 1.0160

Fulton, OH

Lucas, OH

Wood, OH

Topeka, KS..................................................... 0.9265

Shawnee, KS

Trenton, NJ.................................................... 1.0094

Mercer, NJ

Tucson, AZ..................................................... 0.9552

Pima, AZ

Tulsa, OK...................................................... 0.8542

Creeks, OK

Osage, OK

Rogers, OK

Tulsa, OK

Wagoner, OK

Tuscaloosa, AL................................................. 0.8487

Tuscaloosa, AL

Tyler, TX...................................................... 0.9798

Smith, TX

Utica-Rome, NY................................................. 0.8652

Herkimer, NY

Oneida, NY

Vallejo-Fairfield-Napa, CA..................................... 1.3150

Napa, CA

Solano, CA

Vancouver, WA.................................................. 1.0755

Clark, WA

Victoria, TX................................................... 0.8958

Victoria, TX

Vineland-Millville-Bridgeton, NJ............................... 0.9720

Cumberland, NJ

Visalia-Tulare-Porterville, CA................................. 1.0351

Tulare, CA

Waco, TX....................................................... 0.7783

McLennan, TX

Washington, DC-MD-VA........................................... 1.0928

District of Columbia, DC

Calvert, MD

Charles, MD

Frederick, MD

Montgomery, MD

Prince Georges, MD

Alexandria City, VA

Arlington, VA

Fairfax, VA

Fairfax City, VA

Falls Church City, VA

Loudoun, VA

Manassas City, VA

Manassas Park City, VA

Prince William, VA

Stafford, VA

Waterloo-Cedar Falls, IA....................................... 0.8884

Black Hawk, IA

Bremer, IA

Wausau, WI..................................................... 0.9709

Marathon, WI

West Palm Beach-Boca Raton-Delray Beach, FL.................... 1.0095

Palm Beach, FL

Wheeling, WV-OH................................................ 0.8035

Belmont, OH

Marshall, WV

Ohio, WV

Wichita, KS.................................................... 0.9770

Butler, KS

Harvey, KS

Sedgwick, KS

Wichita Falls, TX.............................................. 0.8139

Wichita, TX

Williamsport, PA............................................... 0.8829

Lycoming, PA

Wilmington, DE-NJ-MD........................................... 1.0825

New Castle, DE

Cecil, MD

Salem, NJ

Wilmington, NC................................................. 0.8677

New Hanover, NC

Worcester-Fitchburg-Leominster, MA............................. 1.0782

Worcester, MA

Yakima, WA..................................................... 1.0070

Yakima, WA

York, PA....................................................... 0.9008

Adams, PA

York, PA

Youngstown-Warren, OH.......................................... 0.9826

Mahoning, OH

Trumbull, OH

Yuba City, CA.................................................. 1.0220

Sutter, CA

Yuba, CA

Yuma, AZ....................................................... 0.8850

Yuma, AZ

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

Table IIIb.--Wage Index for Rural Areas

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

Non-urban areas Wage index

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

ALABAMA.................................................... 0.7121

ALASKA..................................................... 1.3372

ARIZONA.................................................... 0.8724

ARKANSAS................................................... 0.6979

CALIFORNIA................................................. 1.0122

COLORADO................................................... 0.8382

CONNECTICUT................................................ 1.1857

DELAWARE................................................... 0.8537

FLORIDA.................................................... 0.8704

GEORGIA.................................................... 0.7769

HAWAII..................................................... 0.9579

IDAHO...................................................... 0.8917

ILLINOIS................................................... 0.7696

INDIANA.................................................... 0.7830

IOWA....................................................... 0.7517

KANSAS..................................................... 0.7426

KENTUCKY................................................... 0.7781

LOUISIANA.................................................. 0.7355

MAINE...................................................... 0.8294

MARYLAND................................................... 0.8029

MASSACHUSETTS.............................................. 1.1607

MICHIGAN................................................... 0.8893

MINNESOTA.................................................. 0.8288

MISSISSIPPI................................................ 0.6935

MISSOURI................................................... 0.7240

MONTANA.................................................... 0.8226

NEBRASKA................................................... 0.6967

NEVADA..................................................... 0.9663

NEW HAMPSHIRE.............................................. 0.9508

NEW JERSEY................................................. \1\

NEW MEXICO................................................. 0.8289

NEW YORK................................................... 0.8371

NORTH CAROLINA............................................. 0.7992

NORTH DAKOTA............................................... 0.7688

OHIO....................................................... 0.8438

OKLAHOMA................................................... 0.7384

OREGON..................................................... 0.9643

PENNSYLVANIA............................................... 0.8620

PUERTO RICO................................................ \2\0.4316

RHODE ISLAND............................................... \1\

SOUTH CAROLINA............................................. 0.7678

SOUTH DAKOTA............................................... 0.7179

TENNESSEE.................................................. 0.7316

TEXAS...................................................... 0.7578

UTAH....................................................... 0.8977

VERMONT.................................................... 0.8997

VIRGINIA................................................... 0.7784

VIRGIN ISLANDS............................................. \2\1.0000

WASHINGTON................................................. 0.9597

WEST VIRGINIA.............................................. 0.8482

WISCONSIN.................................................. 0.8459

WYOMING.................................................... 0.8423

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

\1\All counties within State are classified urban.

[[Page 8405]]

\2\Approximate value for area.

Table IV.--Cost Reporting Year Adjustment Factor\1\

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

The

If the HHA cost reporting period begins adjustment

factor is

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

August 1, 1993............................................. 1.0042

September 1, 1993.......................................... 1.0085

October 1, 1993............................................ 1.0126

November 1, 1993........................................... 1.0169

December 1, 1993........................................... 1.0211

January 1, 1994............................................ 1.0254

February 1, 1994........................................... 1.0299

March 1, 1994.............................................. 1.0340

April 1, 1994.............................................. 1.0385

May 1, 1994................................................ 1.0430

June 1, 1994............................................... 1.0475

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

\1\Based on compounded projected market basket inflation rates of 5.10

percent for 1994 and 5.30 percent for 1995.

V. Impact Statement

For notices such as this, we generally prepare a regulatory

flexibility analysis that is consistent with the Regulatory Flexibility

Act (RFA) (5 U.S.C. 601 through 612) unless the Secretary certifies

that this notice will not have a significant economic impact on a

substantial number of small entities. For purposes of the RFA, all HHAs

are treated as small entities.

This notice with comment period sets forth a revised schedule of

HHA per-visit cost limits and A&G add-on amounts for hospital-based

HHAs for cost reporting periods beginning on or after July 1, 1993. (We

note that, in accordance with section 13564(b) of OBRA '93, the A&G

add-on for hospital-based HHAs is eliminated effective for cost

reporting periods beginning on or after October 1, 1993.) In addition,

this notice announces the provisions of section 13564(a) of OBRA '93,

which provides for a delay in the updates of the HHA per-visit cost

limits until cost reporting periods beginning on or after July 1, 1996.

As discussed below, the aggregate impact of revising the schedule

of limits effective for cost reporting periods beginning on or after

July 1, 1993 is not significant. In contrast, the requirement under

section 13564(a) of OBRA '93 that these limits remain in place for cost

reporting periods beginning before July 1, 1996 will result in

significant Federal cost savings. The impact of this OBRA '93 provision

also is discussed further below. This notice explains the revised

methodology for calculating the HHA per-visit cost limits that result

from the provisions of OBRA '93. We do not believe that merely

explaining the results of these provisions in this notice will have a

significant effect on a substantial number of small entities.

Therefore, we have determined and the Secretary certifies that a

regulatory flexibility analysis under the RFA is not required.

However, to the extent that a legislative provision being announced

by a notice such as this may have a significant effect on beneficiaries

or providers or may be viewed as controversial, we believe that we

should address any potential concerns. In this instance, we believe it

is desirable to inform the public of our estimate of the substantial

budgetary effect of the statutory requirement that there be no update

in the HHA per-visit cost limits until cost reporting periods beginning

on or after July 1, 1996.

A. Effects of Revised Cost Limits for Cost Reporting Periods Beginning

On or After July 1, 1993 and Before July 1, 1994

In response to comments on the schedule of limits set forth in our

July 8, 1993 notice with comment period, we decided to validate the

database used in calculating the limits. As discussed in section II.A.2

of this notice, we determined that data were missing from a large

number of HHAs and that duplicate cost reports were used in the

calculation of the hospital-based add-on. Consequently, it was

necessary to recalculate the limits and add-on amounts effective for

cost reporting periods beginning on or after July 1, 1993. This notice

sets forth revised per-visit cost limits and add-on amounts for

hospital-based HHAs for cost reporting periods beginning on or after

July 1, 1993. Section II.A.2 of this notice contains tables that

illustrate the effects of using the revised database to calculate the

limits and the A&G add-on amounts. As the tables illustrate, the per-

visit cost limits and A&G add-on amounts change for each discipline.

Most notable is the increase in the limits and add-on amounts for

skilled nursing care and home health aide visits, since these visits

constitute the great majority of covered HHA visits. We estimate that

the aggregate impact of these changes on Medicare spending for HHA care

will be as follows:

Table 1.--Impact of Revised Limits\1\

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

Fiscal year Costs

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

1994........................................................... 10

1995........................................................... 10

1996........................................................... 10

1997........................................................... 10

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

\1\All figures are rounded to the nearest 10 million.

We are unable to estimate the effects of these changes on

individual HHAs. In general, we believe that most HHAs will experience

small revenue increases under the revised limits; the degree of that

increase will vary depending on the proportion of the HHA's revenues

that come from the Medicare program, the distribution of services

provided by the HHA, and the HHA's ability to operate with the cost

limits.

B. Effect of Cost Limits On Cost Reporting Periods Beginning On or

After July 1, 1994 and Before July 1, 1996

In accordance with section 13564(a) of OBRA '93, this notice with

comment period specifies that there will be no changes in the per-visit

cost limits for home health services for cost reporting periods

beginning on or after July 1, 1994, and before July 1, 1996, except as

may be necessary to take into account the elimination of the A&G add-on

for hospital-based HHAs. We estimate that this statutory provision will

result in the following savings to the Medicare program:

Table 2.--Impact of Delay in the Update of HHA Limits\1\

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

Fiscal year Savings

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

1994.......................................................... $ 0

1995.......................................................... 130

1996.......................................................... 330

1997.......................................................... 100

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

\1\All figures are rounded to the nearest $10 million.

As illustrated in Table 3 below, the delay in updating the cost

limits until July 1, 1996, will result in an increase in the number of

HHAs exceeding the HHA cost limits in all categories. Table 3 below

shows the impact of these changes.

Table 3.--Agencies Exceeding the Cost Limits\1\

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

Exceeding Exceeding

HHAs in the the

Model limits as limits as

of 7/1/93 of 7/1/95

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

Freestanding HHAs...................... 2992 763 1329

Urban................................ 2001 510 911

Rural................................ 991 253 418

Hospital-based HHAs.................... 1053 408 856

Urban................................ 447 173 383

[[Page 8406]]

Rural................................ 606 235 473

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

\1\All figures are based on revised cost limits as published in this

notice for cost reporting periods beginning on or before July 1, 1993

and before July 1, 1994.

Again, we are unable to identify the effects of these provisions on

individual HHAs. However, we anticipate that overall HHA payments for

FY 1995 through FY 1997 will be approximately 0.9 percent, 2.0 percent,

and 0.5 percent less, respectively, than they would have been in those

years if the OBRA '93 provisions were not in effect. The effects of

this reduction on the total revenues of individual HHAs will depend on

the HHA's ability to operate within the cost limits and on the

proportion of the HHA's revenues that come from the Medicare program.

We estimate that the delay in updating the limits will not result in a

significant number of facilities' total revenues being increased or

reduced by 3 percent or more from the revised limits effective for cost

reporting periods beginning on July 1, 1993, as set forth in this

notice, adjusted for inflation.

Section 1102(b) of the Act requires the Secretary to prepare a

regulatory impact analysis if a notice such as this may have a

significant impact on the operations of a substantial number of small

rural hospitals. Such an analysis must conform to the provisions of

section 604 of the RFA. For purposes of section 1102(b) of the Act, we

define a small rural hospital as a hospital with fewer than 100 beds

located outside of a Metropolitan Statistical Area.

We have not prepared a rural impact statement since we have

determined and the Secretary certifies that this final notice will not

have a significant economic impact on the operations of a substantial

number of small rural hospitals.

In accordance with the provisions of Executive Order 12866, this

notice was reviewed by the Office of Management and Budget.

VI. Other Required Information

A. Waiver of Proposed Notice and 30-Day Delay in the Effective Date

In adopting notices such as this, we ordinarily publish a proposed

notice in the Federal Register with a 60-day period for public comment

as required under section 1871(b)(1) of the Act. We also normally

provide a delay of 30 days in the effective date for documents such as

this. However, we may waive these procedures if we find good cause that

prior notice and comment or a delay in the effective date are

impracticable, unnecessary, or contrary to the public interest.

This notice revises the per-visit limits effective for cost

reporting periods beginning on or after July 1, 1993. We believe the

revised limits will be beneficial to HHAs. Moreover, we have revised

the limits based on public comments on our July 8, 1993 notice with

comment period.

In addition, as discussed above, before the enactment of OBRA '93,

section 1861(v)(1)(L)(iii) of the Act required that the HHA per-

discipline cost limits be updated annually no later than July 1 of each

year. However, section 13564(a)(1) of OBRA '93 specifies that there be

no changes in the HHA cost limits (except as may be necessary to take

into account the elimination of the A&G add-on for hospital-based HHAs)

for cost reporting periods beginning on or after July 1, 1994, and

before July 1, 1996. Section 13564(a)(2) of OBRA '93 amended section

1861(v)(1)(L)(iii) of the Act to delay the next required update of the

HHA limits until July 1, 1996.

Thus, in conformance with the clear direction of section 13564(a)

of OBRA '93, this notice announces the new HHA provisions and explains

the effects of these provisions on the methodology used in calculating

the HHA cost limits. We have made no changes in this methodology beyond

those directly required by OBRA '93. Moreover, section 13564(a) of OBRA

'93 mandates that these provisions are effective beginning with cost

reporting periods beginning on or after July 1, 1994. Because many of

the provisions in this notice announce, and explain the impact of,

changes made by statute that are already effective, we believe it is

unnecessary to publish a proposed notice or delay the effective date.

In summary, the only discretionary aspect of this notice is the

revision of the schedule of HHA cost limits effective for cost

reporting periods beginning on or after July 1, 1993. As noted above,

this change is being made in response to public comment and is clearly

beneficial to HHAs. Publishing a proposed rule or delaying the

effective date would postpone the correction of errors in the database

used to compute the HHA cost limits. Thus, we have concluded that in

this instance, it would be impracticable, unnecessary, and contrary to

the public interest to publish a proposed notice or to provide for a

30-day delay in the effective date of this notice. Therefore, we find

good cause to waive publication of a proposed notice and the 30-day

delay in effective date. However, we are providing a 60-day period for

public comment, as indicated at the beginning of this notice.

B. Paperwork Reduction Act

This notice with comment period does not impose information

collection requirements. Consequently, it need not be reviewed by the

Office of Management and Budget under the authority of the Paperwork

Reduction Act of 1980 (44 U.S.C. 3501 et seq.).

C. Requests for Data From the Public

In order to respond promptly to public requests for data used in

calculating the HHA cost limits, we have set up a process under which

commenters can gain access to the raw data on an expedited basis. The

HHA database is available on computer tape format or diskette for $680.

Anyone wishing to purchase data tapes or diskettes should submit a

written request along with a company check or money order (payable to

HCFA-PUF) to cover the cost, to the following address: Health Care

Financing Administration, Public Use Files, Accounting Division, P.O.

Box 7520, Baltimore, Maryland 21207-0520, (410) 597-5151.

D. Public Comments

Because of the large number of items of correspondence we normally

receive on Federal Register documents published for comment, we are not

able to acknowledge or respond to them individually. We will consider

all comments we receive by the date and time specified in the DATES

section of this notice, and, if we proceed with a subsequent document,

we will respond to the comments in that document.

Authority: (Sections 1102, 1814(b), 1861(v)(1)(A) and (v)(1)(L),

1866(a), and 1871 of the Social Security Act (42 U.S.C. 1302,

1395f(b), 1395x(v)(1)(A) and (v)(1)(L), 1395cc(a), and 1395hh);

section 13564(a) of Public Law 103-66 (42 U.S.C. 1395x(note)) and 42

CFR 413.30.)

(Catalog of Federal Domestic Assistance Program No. 93.773,

Medicare--Hospital Insurance)

Dated: October 11, 1994.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

Dated: November 4, 1994.

Donna E. Shalala,

Secretary.

[FR Doc. 95-3526 Filed 2-13-95; 8:45 am]

BILLING CODE 4120-01-P