Medicare Program; Schedule of Limits on Home Health Agency Costs Per Visit for Cost Reporting Periods Beginning On or After July 1, 1996

SUMMARY: This notice sets forth a revised schedule of limits on home

health agency costs that may be paid under the Medicare program. These

limits replace the per-visit limits that were set forth in our February

14, 1995 notice with comment period (60 FR 8389). This notice also

responds to comments on the February 14, 1995 notice. This notice does

not provide for a permanent extension of the provision of the Omnibus

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

in the home health agency cost limits for cost reporting periods

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

proposal to extend the effects of the OBRA '93 freeze is included in

President Clinton's FY 1997 Budget.

DATES: Effective Date: The schedule of limits is effective for cost

reporting periods beginning on or after July 1, 1996.

Comment Date: Written comments will be considered if we receive

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

p.m. on August 30, 1996.

ADDRESSES: Mail comments (one original and three copies) to the

following address:

Health Care Financing Administration, Department of Health and Human

Services,

Attention: BPD-867-NC

P.O. Box 7517

Baltimore, MD 21207-0517

If you prefer, you may deliver your written comments (one original

and three copies) to one of the following addresses:

Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW,

Washington, DC 20221, or

Room C5-09-26, 7500 Security Boulevard, Baltimore, Maryland 21244-1850.

Because of staffing and resource limitations, we cannot accept

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

file code BPD-867-NC. Comments received timely will be available for

public inspection as they are received, generally beginning

approximately 3 weeks after publication of a document, in Room 309-G of

the Department's offices at 200 Independence Avenue, SW., Washington,

DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m.

(Phone: (202) 690-7890).

Copies: To order copies of the Federal Register containing this

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

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

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

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

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

calling the order desk at (202) 783-3238 or by faxing to (202) 275-

6802. The cost for each copy is $8.00. As an alternative, you may view

and photocopy the Federal Register document at most libraries

designated as U.S. Government 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) 786-4602.

SUPPLEMENTARY INFORMATION:

I. Background

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

authorizes the Secretary to establish limits on allowable costs

incurred by a provider of services that may be paid under the Medicare

program, based on estimates of the costs necessary in the efficient

delivery of needed health services. Under this authority, we have

maintained limits on home health agency (HHA) per-visit costs since

1979. The limits may be applied to direct or indirect overall costs or

to the costs incurred for specific items or services furnished by the

provider. Implementing regulations are located at 42 CFR 413.30.

Additional statutory provisions specifically 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 on or after July 1, 1986, and 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 (except for cost reporting periods beginning on or after July 1,

1994, and before July 1, 1996). In establishing these limits, the Act

directs the Secretary to use the applicable hospital wage index, as

discussed below.

On February 14, 1995, we published in the Federal Register (60 FR

8389) a notice with comment period that set forth 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. These limits

replaced the per-visit limits that were set forth in our July 8, 1993

notice with comment period (58 FR 36748). Like the July 8, 1993 limits,

the February 14, 1995 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 later estimates in

the ``market basket'' index to reflect changes in the prices of goods

and services furnished by HHAs. The February 14, 1995 notice also

provided, in accordance with section 13564(a) of the Omnibus Budget

Reconciliation Act of 1993 (OBRA `93) (Public Law 103-66), that there

be no changes in the HHA costs limits for cost reporting periods

beginning on or after July 1, 1994, and before July 1, 1996 (except as

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

hospital-based HHAs, effective for cost reporting periods beginning on

or after October 1, 1993).

This notice with comment period sets forth cost limits for cost

reporting periods beginning on or after July 1, 1996. As required by

section 1861(v)(1)(L)(iii) of the Act, we are using the area wage index

applicable under section 1886(d)(3)(E) of the Act determined using the

survey of the most recent available wages and wage-related costs of

hospitals located in the geographic area in which the HHA is located.

For purposes of this notice, the HHA wage index is based on the most

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

for hospital discharges on or after October 1, 1995, which uses FY 1992

wage data. As the statute also specifies, in applying the hospital wage

index to HHAs, no adjustments are to be made to account for hospital

reclassifications under section 1886(d)(8)(B) of the Act, decisions of

the Medicare Geographic Classification Review Board under

[[Page 34345]]

section 1886(d)(10) of the Act, or decisions by the Secretary.

II. Analysis of and Response to Public Comments

We received 14 items of timely correspondence on the February 14,

1995 notice with comment period. These comments and our responses are

discussed below.

Comment: Nine commenters stated that, in view of the elimination,

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

1993, of the payment adjustment for the A&G cost of hospital-based

HHAs, it was no longer appropriate to establish cost limits based only

on cost reporting data from freestanding HHAs. Although the commenters

acknowledged that section 1861(v)(1)(L)(i) of the Act continues to

require that the limits be based on the ``* * * per visit costs for

freestanding home health agencies'', they suggested that this provision

was inconsistent with the elimination of the A&G add-on under section

13564(b) of OBRA `93 and requested that cost reporting data from both

hospital-based and freestanding agencies be used in establishing the

limits.

Response: As the commenters noted, 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 mean per-visit costs of freestanding

agencies. Although section 13564(b) of OBRA '93 amended section

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

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

make a payment adjustment to the limits to account for the A&G costs of

hospital-based agencies, this provision of OBRA '93 did not amend the

explicit requirement of section 1861(v)(1)(L)(i) of the Act concerning

the agency costs upon which the limits are to be based. Therefore, the

limits continue to be based on the costs of freestanding home health

agencies, as required by the Act. We have no discretion to include

hospital-based providers in the calculation of HHA limits.

Comment: One commenter suggested that certain services be allowed

when provided by a pharmacist in the patient's home such as patient

counseling/education, clinical assessment, drug regimen review and drug

therapy monitoring.

Response: Section 1861(m) of the Act provides for per-visit payment

to HHAs solely for those services provided by the six home health

disciplines. Current policy does not provide for payment for home

visits by pharmacists as suggested by the commenter.

Comment: One commenter asked if the special adjustment factors for

cost reporting periods of other than 12 months would have to be revised

because of the changes in the revised schedule of limits published on

February 14, 1995.

Response: The projected annual rates of inflation used in the July

8, 1993 and February 14, 1995 notices were the same, as were the

adjustment factors in both notices. Therefore, no change in the special

adjustment factors to be applied by the intermediaries was necessary.

Comment: Two commenters requested clarification on how HCFA applies

the add-on adjustment to the limits for those agencies with costs in

excess of their limit that are attributable to the Occupational Safety

and Health Administration (OSHA) universal precaution requirement.

Response: As discussed in detail later, the OSHA add-on is no

longer necessary for cost reporting periods beginning on or after July

1, 1996. Even for cost reporting periods prior to that date, the OSHA

add-on is not an automatic adjustment to the home health agency cost

limits. An agency must apply to the intermediary for the add-on amount

and the agency must demonstrate that it will exceed its cost limit and

provide adequate documentation to support the add-on adjustment. The

agency must show that it has incurred expenses to comply with the OSHA

requirements.

Documentation should include copies of the agency's infection

control procedure, invoices documenting the purchase of gloves, gowns

and other disposable items. The costs of inoculations of hepatitis B

vaccine can also be used to support the adjustment. An HHA can also

provide documentation that it has given training to the employees

concerning blood-borne pathogens. We provided instructions to HCFA's

intermediaries spelling out these requirements in a 1994 program

memorandum.

Comment: One commenter stated that the HHA market basket increases

have consistently lagged behind actual cost-per-visit increases.

Response: As discussed in detail below in section IV of this notice

and the Appendix, we have used a revised and rebased market basket in

calculating the cost limits set forth in this notice. Actual aggregate

cost-per-visit increases reflect changes in both the mix of visit types

and the quantity and intensity of services per visit, as well as

discretionary purchase price increases higher than reasonable costs. In

contrast, the HHA market basket is designed to measure price to

inflation for inputs used to produce HHA service. Thus, we would not

expect actual aggregate cost-per-visit increases to equal changes in an

HHA market basket that reflects pure price increases for efficient

purchases.

Comment: Nine commenters questioned whether HCFA had correctly

interpreted the requirement under section 13564(a) of OBRA `93 that

there be no changes in the previous per-visit HHA cost limits for cost

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

1996. The commenters pointed out that, under our July 8, 1993 notice,

the cost limits of HHAs with cost reporting periods beginning on or

after July 1, 1993, and before July 1, 1994, were subject to monthly

cost reporting period adjustment factors to allow for the effects of

inflation on the cost limits of HHAs with different cost reporting

periods. Subsequently, under our February 14, 1995 notice, we specified

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

or after July 1, 1993, and before July 1, 1994, was to remain in effect

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

Thus, HHAs with cost reporting periods beginning on July 1, 1993, for

example, would be subject to lower limits than HHAs with cost reporting

periods that began any time after that date. Commenters asserted that

this policy created continuing inequities and suggested several

alternatives, including:

Eliminate the monthly cost reporting period adjustment

factors for all HHAs.

Set the cost reporting period adjustment factor for all

HHAs to the level that would have been in effect for an agency whose

cost reporting period began on June 30, 1994, effectively equalizing

payment to all HHAs at the highest possible level under the limits

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

1993, until the establishment of the new limits effective for cost

reporting periods beginning on or after July 1, 1996.

Amend OBRA '93 to allow for the use of the market basket

inflation factors set forth in our July 8, 1993 notice with comment

period.

Response: We recognize that the provisions of OBRA '93 produced

differences in per-visit limits for HHAs depending on their cost

reporting periods. However, we do not believe that the interpretations

of OBRA '93 suggested by the commenter are within our authority, given

the explicit language of section 13564 of OBRA '93, which precludes

``any change'' to the existing limits (except for those related

[[Page 34346]]

to the elimination of the A&G add-on for hospital-based HHAs). The

Congress undoubtedly was aware that not all HHAs have the same cost

reporting periods, but chose not to make any adjustments to the

existing cost limits in setting forth the relevant provisions. In our

view, none of the three specific alternatives raised by the commenters

could be accomplished through rulemaking, but would require further

legislative action.

Comment: Several commenters recommended that HCFA study the

weighting and price proxies of the present market basket index.

Response: As discussed in detail below, in the process of

developing a revised and rebased market basket, we have thoroughly

examined the current market basket cost categories, weights, and price

proxies. We have tabulated freestanding HHA 1993 Medicare cost report

data, the latest available data that are relatively complete, in order

to develop the cost structure of freestanding home health agencies. New

cost categories based on the latest Medicare Cost Reports and other

sources have been used and revised price proxies have been applied that

more accurately represent reasonable price changes of the new cost

categories.

The 1993-based weights reflect the latest available structure of

costs for HHAs. The 1993-based market basket has 12 cost categories,

only three of which replicate the previous, 1976-based market basket

cost categories. Both the wages and salaries and employee benefit price

proxies are occupational indexes and have relative weights specific to

the home health industry. Price proxies reflect economy-wide as well as

hospital wages. The occupational indexes each contain four occupational

subcategories: professional and technical workers (including registered

nurses, therapists, medical social workers and other professional/

technical workers); managerial and supervisory workers; clerical

workers; and service workers (which includes home health aides). The

non-labor proxies include price series which represent specific cost

categories such as telephones and postage expenses as well as more

general categories, such as All Other Expenses.

We believe that the 1993-based market basket cost categories

accurately reflect the structure of HHA costs, and that the price

proxies accurately reflect the price changes in the goods and services

purchased by prudent HHAs.

Comment: Several commenters recommended that HCFA include service-

related measures in order to make the market basket a better

prognosticator of costs per visit.

Response: Under a case-mix system of payment, service-related

measures may be useful in setting upper limits for particular illness

levels for each of the categories of HHA visits, just as prospective

payment system for hospitals uses different illness levels for various

diagnostic groups. Under the current HHA payment system, however,

different intensities of HHA services associated with patients' illness

levels and needs for care are reflected in the mix of types of visits

used and in the number and length of visits per week. The percent

increase in costs per visit per unit of time are approximately the same

for all categories of visits. Thus, we apply a uniform HHA market

basket inflation adjustment, just as the hospital prospective payment

system uses a single hospital market basket adjustment factor for all

DRGs.

Comment: One commenter stated that the wage indices in the February

14, 1995 and July 8, 1993 notices should have reflected changes to the

Metropolitan Statistical Areas (MSAs) that were included in the

hospital prospective payment system proposed rule published on May 26,

1993 (58 FR 30222).

Response: Section 1861(v)(I)(L)(iii) of the Act specifies that in

establishing the HHA cost limits, we use the area wage index applicable

under section 1886(d)(3)(E) of the Act. The hospital wage index used in

both our July 8, 1993 and February 14, 1995 notices was the index

applicable on July 1, 1993, the effective date of the July 8, 1993 and

February 14, 1995 cost limits notices. (Subsequently, section 13564(a)

of OBRA '93 specified that there be no changes in the HHA costs limits,

except those related to the elimination of the A&G add-on, for cost

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

1996.) As noted in our May 26, 1993 proposed rule and confirmed in the

September 1, 1993 hospital prospective payment system final rule, the

revisions to MSA designations that were discussed in the May 26, 1993

proposed rule did not take effect until October 1, 1993 (58 FR 46292).

Thus, for HHA payment purposes these MSA changes are now taking effect,

under this notice, for cost reporting periods beginning on or after

July 1, 1996.

III. Updating the Wage Index on a Budget-Neutral Basis

Section 4207(d)(2) of the Omnibus Budget Reconciliation Act of l990

(OBRA '90) (Public Law 101-508) requires that, in updating the wage

index, aggregate payments to HHAs will remain the same as they would

have been if the wage index had not been updated. Therefore, overall

payments to HHAs are not affected by changes in the wage index values.

To comply with the requirement of section 4207(d)(2) of OBRA '90

that updating the wage index be budget neutral, we determined that it

is necessary to apply a budget neutrality adjustment factor of 0.91 to

the labor-related portion of the cost limits. This adjustment ensures

that aggregate payments to HHAs are not affected by the change to a

wage index based on the hospital wage index published on September 1,

1995. That is, an adjustment of -9.1 percent in the labor-related

portion of the limits results in the same program expenditures as if we

had not updated the wage index (See the example in section VIII.A of

this notice regarding the adjustment of cost limits by the wage index

and the budget neutrality factor.)

IV. Update of Limits

The methodology used to develop the schedule of limits set forth in

this notice is the same as that used in setting the limits effective

July 1, 1993. We are continuing to use the latest settled cost report

data from freestanding HHAs to develop the HHA cost limits. We have

updated the cost limits to reflect the expected cost increases

occurring between the cost reporting periods for the data contained in

the data base and June 30, 1997.

A. Data Used

To develop the schedule of limits effective July 1, 1996, we

extracted actual cost per-visit data from settled Medicare cost reports

for periods beginning on or after June 1, 1991, and settled by October

1, 1995. The majority of the cost reports were from Federal fiscal year

(FY) 1993. We then adjusted the data using the latest available market

basket indexes to reflect expected cost increases occurring between the

cost reporting periods contained in our data base and June 30, 1997.

In previous cost limits, HCFA used the market basket index to

adjust the cost report data to the midpoint (December 31) of the first

cost reporting period to which the limits applied (July 1). The present

limits adjust the data to the end of the first cost reporting period to

which the limits apply (June 30, 1997), a change that will enable

fiscal intermediaries to calculate the applicable adjustment factors

for HHAs with a cost reporting period of fewer than 12 months.

Previously, the

[[Page 34347]]

intermediaries had to contact HCFA's central office for this

adjustment.

We note that, under this notice, we are no longer providing for an

add-on to the HHA cost limits for those HHAs that incur costs

associated with the OSHA universal precaution requirements. This add-on

is no longer necessary because these updated limits were computed using

a data base that includes the costs of complying with the OSHA

standards.

B. Wage Index

The wage index is used to adjust the labor-related portion of the

limits to reflect differing wage levels among areas. In setting this

schedule of limits, we used the FY 1996 hospital wage index, which is

based on 1992 hospital wage data.

Each HHA's labor market area is determined based on the definitions

of MSAs issued by the Office of Management and Budget (OMB). Section

1861(v)(1)(L) of the Act requires that we use the current hospital wage

index (that is, the FY 1996 hospital wage index, which was published in

the Federal Register on September 1, 1995 (60 FR 45883)) to establish

the HHA cost limits. Therefore, this schedule of limits reflects the

MSA definitions that currently are in effect under the hospital

prospective payment system.

We are continuing to incorporate exceptions to the MSA

classification system for certain New England counties that were

identified in the July 1, 1992 notice (57 FR 29410). These exceptions

have been recognized in setting hospital cost limits for cost reporting

periods beginning on and after July 1, 1979 (45 FR 41218), and were

authorized under section 601(g) of the Social Security Amendments of

1983 (Public Law 98-21). Section 601(g) of Public Law 98-21 requires

that any hospital in New England that was classified as being in an

urban area under the classification system in effect in 1979 will be

considered urban for the purposes of the hospital prospective payment

system. This provision is intended to ensure equitable treatment under

the hospital prospective payment system. Under this authority, the

following counties have been deemed to be urban areas for purposes of

payment under the inpatient hospital prospective payment system:

Litchfield County, CT in the Hartford, CT MSA.

York County, ME and Sagadahoc County, ME in the Portland,

ME MSA.

Merrimack County, NH in the Boston-Brockton-Nashua, MA-NH

MSA.

Newport County, RI in the Providence Fall-Warwick, RI MSA.

We are continuing to grant these urban exceptions for the purpose

of applying the HCFA hospital wage index to the HHA cost limits. These

exceptions result in the same New England County Metropolitan Area

(NECMA) definitions for hospitals, SNFs, and HHAs. In New England, MSAs

are defined on town boundaries rather than on county lines but exclude

parts of the four counties cited above that would be considered urban

under the MSA definition. Under this notice, those four counties are

urban under either definition, NECMA or MSA.

V. Provisions of the HHA Schedule of Limits

The schedule of limits set forth below was calculated using 112

percent of the mean per-visit costs of free-standing HHAs and is

adjusted by the latest estimates in the market basket index.

The schedule of limits effective for cost reporting periods

beginning on or after July 1, 1996 is based on the latest settled cost

data available and provides for the following:

A classification system based on whether an HHA is located

within an MSA, a NECMA, or a non-MSA area. (See Tables 7a and 7b in

section X of this notice for the listing of MSAs, NECMAs, and rural

areas.)

The use of a single schedule of limits for hospital-based

and freestanding agencies. This single limit is based on the cost

experience of freestanding agencies.

The use of a market basket index, which was developed from

the price of goods and services purchased by HHAs to account for the

impact of changing wage and price levels on HHA costs. The market

basket has been rebased and revised as described in section VI of this

notice.

The use of the current hospital wage index. The wage index

is used to adjust the labor-related portion of the limits. The employee

wage portion of the market basket index, including a proportionate

share of contract services (64.226 percent), and the employee benefits

portion (13.442 percent) are used to determine the labor component

(77.668 percent) of all HHA per-visit costs used to set the limits.

Separate treatment of the labor-related and nonlabor

components of per-visit costs. The separate components of costs are

calculated by obtaining actual HHA cost data for each agency for cost

periods beginning on or after June 1, 1991 and settled before October

1, 1995, and increasing those data by the actual and projected

increases in the HHA market basket index. We then separate each HHA's

per-visit costs into labor and nonlabor portions, and divide the labor

portion by the wage index value for the agency's location to control

for the effect of geographic variations in prevailing wage levels.

Separate means are computed for the labor and nonlabor components of

per-visit costs. For each comparison group, the resulting amounts are

shown in Table 6 of section IX of this notice.

The application of a cost-of-living adjustment to the

nonlabor portion of the limit for HHAs located in Alaska, Hawaii,

Puerto Rico, and the U.S. Virgin Islands.

Limits that are determined for the per-visit cost of each

type of home health service: skilled nursing care, physical therapy,

speech pathology, occupational therapy, medical social services, and

home health aide.

Application of the limits in the aggregate after an HHA's

actual costs are adjusted. An HHA's actual costs are adjusted for

individual items of cost that are found to be excessive under Medicare

principles of provider payment and for costs that are not included in

the limitation amount. The limits are applied in the aggregate to the

cost remaining after these adjustments are made. Payment is limited to

the lower of the actual costs or the cost limits.

VI. Rebasing and Revising of the Home Health Agency Market Basket

A. Background

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

1980, HCFA developed and adopted a home health agency input price index

(that is, the home health agency ``market basket''). Although ``market

basket'' technically describes the mix of goods and services used to

produce home health care, this term is also commonly used to denote the

input price index derived from that market basket. Accordingly, the

term ``market basket'' used in this notice refers to the home health

agency input price index.

The percentage change in the market basket reflects the average

change in the price of goods and services purchased by home health

agencies to furnish reasonable cost home health care services. HCFA

first used the market basket to adjust home health agency cost limits

by an amount that reflected the average increase in the prices of the

goods and services used to furnish reasonable cost home health care.

This approach linked the increase in the cost limits to the efficient

utilization of resources. For background information on the home health

agency market basket, see the February 15, 1980

[[Page 34348]]

Federal Register (45 FR 10451) and the February 14, 1995 Federal

Register (60 FR 8392).

The home health agency market basket is a fixed-weight Laspeyres

type price index constructed in three steps. First, a base period is

selected and total base period expenditures are estimated for mutually

exclusive and exhaustive spending categories based upon type of

expenditure. Then the proportion of total costs that each category

represents is determined. These proportions are called ``cost'' or

``expenditure weights.'' The next step essential for developing an

input price index is to match each expenditure category to an

appropriate price/wage variable, called a price proxy. These proxy

variables are drawn from a publicly available statistical series

published on a consistent schedule, preferably at least quarterly. In

the final step, the price level for each spending category is

multiplied by the expenditure weight for that category. The sum of

these products (that is, weights multiplied by proxied indexed levels)

for all cost categories yields the composite index level in the market

basket in a given year. Repeating the third step (that is, establishing

a price proxy for each expenditure category) for other years will

produce a time series of market basket index levels. Dividing one index

level by an earlier index will produce rates of growth in the input

price index.

The market basket is described as a fixed-weight index because it

answers the question of how much more or less it would cost, at a later

time, to purchase the same mix of goods and services that was purchased

in the base period. The effects on total expenditures resulting from

changes in the quantity or mix of goods and services purchased

subsequent to the base period are by design not considered.

HCFA believes that it is desirable to rebase the market basket so

the cost weights reflect changes in the mix of goods and services that

HHAs purchase (HHA inputs) in furnishing home health care. The current

HHA cost weights are from calendar year 1976. To the extent feasible,

the data used to rebase the home health agency market basket are from

FY 1993. If data from other periods supplemented FY 1993 data, they

were aged forward or backward for price changes.

B. Rebasing and Revising the Home Health Agency Market Basket

The terms ``rebasing'' and ``revising'', while often used

interchangeably, actually denote different activities. Rebasing is the

term used to define moving the base year for the structure of costs of

an input price index (that is, for this notice we are moving the base

year cost structure from calendar year 1976 to Federal fiscal year

1993). Revising is the term used to define changing data sources, cost

categories, and/or price proxies used in the input price index.

HCFA has rebased and revised the home health agency market basket

to:

Reflect 1993 cost data, the latest available data on the

structure of HHA costs, rather than 1976 cost data;

Create additional cost categories; and

Modify certain variables used as the price proxies for

some of the cost categories, using improved price proxies that were not

available when the current market basket was developed.

In developing the revised market basket, HCFA reviewed HHA

expenditure data for the market basket cost categories. For each

freestanding HHA, we reviewed the latest settled cost report whose cost

reporting period began on or after June 1, 1991 and was settled by

October 1, 1995. These reports primarily were from FY 1993. Earlier and

later year cost data were aged forward or backward for price changes to

FY 1993. Data on home health agency expenditures for nine major expense

categories (wages and salaries, employee benefits, transportation,

operation and maintenance, administrative and general, insurance, fixed

capital, movable capital, and a residual ``all other'') were tabulated.

Expenditures for contract services were also tabulated from these

Medicare cost reports. After totals for these main cost categories were

calculated, we then determined the proportion of total costs that each

category represents. The proportions represent the major rebased market

basket weights.

Weights for the telephone, paper and printing, postage, and

residual all other administrative and general subcategories were

determined using the latest available (1987) U.S. Department of

Commerce Bureau of Economic Analysis (BEA) Input-Output Table, from

which data for other medical and health services were extracted. These

data were aged from 1987 to 1993 using relative price changes. The BEA

Input-Output database, which is updated at 5-year intervals, was most

recently described in the Survey of Current Business article,

``Benchmark Input-Output Accounts for the U.S. Economy, 1987'' (April

1994).

This work resulted in the identification of 12 separate cost

categories. The 1976-based home health agency market basket had nine

separate cost categories. Detailed descriptions of each category and

respective price proxy are provided in the Appendix to this notice. The

differences between the major categories for the 1993-based index and

those used for the current 1976-based index are summarized in Table 1

below. HCFA has allocated the Contracted Services weight to the Wages

and Salaries and Employee Benefits cost categories in the 1976-based

index in the same way as the 1993-based index for consistency and ease

of comparison. See Table 2 for documentation of how HCRIS contract

services' labor was allocated to three cost category components.

Table 1.--Comparison of 1993 and 1976 Home Health Agency Major Cost Categories and Weights

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

1976-based

market basket,

Rebased 1993 adjusted for

Home Health consistency of

Cost categories Agency market contract labor

basket with rebased

1993-based

market basket

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

Wages and Salaries, including allocated Contract Services' Labor................ 64.226 70.724

Employee Benefits, including allocated Contract Services' Labor................. 13.442 8.577

All Other, including allocated Contract Services' Non-Labor to Other

Administrative & General and Other Expenses.................................... 22.332 20.699

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

Total..................................................................... 100.000 100.000

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

[[Page 34349]]

The 1993-based cost categories and weights are listed in Table 2

below.

Table 2.--1993-Based Cost Categories, Weights, and Price Proxies

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

1993-based

Cost Category market basket Price proxy

weight

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

Compensation, including allocated Contract 77.668 ...........................................

Services' Labor.

Wages and Salaries, including allocated 64.226 HHA Occupational Wage Index.

Contract Services' Labor.

Employee benefits, including allocated Contract 13.442 HHA Occupational Benefits Index.

Services' Labor.

Operations & Maintenance........................... 0.832 CPI-U Fuel & Other Utilities.

Administrative & General, including allocated 9.569 ...........................................

Contract Services' Non-Labor.

Telephone...................................... 0.725 CPI-U Telephone.

Paper & Printing............................... 0.529 CPI-U Household Paper, Paper Products &

Stationery Supplies.

Postage........................................ 0.724 CPI-U Postage.

Other Administrative & General, including 7.591 CPI-U Services.

allocated Contract services Non-Labor.

Transportation..................................... 3.405 CPI-U Private Transportation.

Capital-Related.................................... 3.204 ...........................................

Insurance...................................... 0.560 CPI-U Household Insurance.

Fixed Capital.................................. 1.764 CPI-U Owner's Equivalent Rent.

Movable Capital................................ 0.880 PPI Machinery & Equipment.

Other Expenses, including allocated Contract 5.322 CPI-U All Items Less Food & Energy.

Services' Non-Labor.

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

Total........................................ 100.000 ...........................................

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

In the 1976-based market basket, the labor-related portion was

79.301 and the remaining share was 20.699. In the revised and rebased

market basket, the labor-related share is 77.668. The labor-related

share includes wages and salaries, employee benefits, and contracted

services' labor. The nonlabor-related share is 22.332. The higher share

of nonlabor-related cost in 1993 may reflect in part the changing cost

structure associated with the post-prospective payment system case mix

of home health agencies. Table 3 details the components of the labor-

related share for the 1976-based and 1993-based market baskets.

Table 3.--Labor-Related Share of Home Health Agency Market Basket

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

1993-based 1976-based

Cost category market basket market basket

weight weight

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

Wages and Salaries, including Contract

Services' Labor allocation............. 64.226 70.724

Employee Benefits, including Contract

Services' Labor allocation............. 13.442 8.577

Contracted Services, Labor-Related share (\1\) (\1\)

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

Total Labor Related............... 77.668 79.301

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

Total Non-Labor Related........... 22.332 20.699

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

\1\Included above.

After the 1993 cost weights for the rebased home health agency

market basket were computed, we selected the most appropriate wage and

price proxies currently available to monitor the rate of increase for

each expenditure category. The indicators are based on Bureau of Labor

Statistics (BLS) data and are grouped into one of the following BLS

categories:

Employment Cost Indexes--Employment Cost Indexes (ECIs)

measure the rate of change in employee wage rates and employer costs

for employee benefits per hour worked. These indexes are fixed-weight

indexes and strictly measure the change in wage rates and employee

benefits per hour. They are not affected by shifts in employment mix.

ECIs were not available when we developed the calendar year 1976-based

home health agency market basket. ECIs are superior to average hourly

earnings as price proxies for input price indexes for two reasons: (1)

They measure pure price change, and (2) they are available by

occupational groups, not just by industry.

Consumer Price Indexes--Consumer Price Indexes (CPIs)

measure change in the prices of final goods and services bought by the

typical consumer. Consumer price indexes were used when the expenditure

was more similar to that of retail consumers in general rather than a

purchase at the wholesale level, or if no appropriate Producer Price

Index (PPI) was available.

[[Page 34350]]

Producer Price Indexes--PPIs are used to measure price

changes for goods sold in other than retail markets. For example, a PPI

for movable equipment was used, rather than a CPI for equipment. PPIs

in some cases are preferable price proxies for goods that home health

agencies purchase as inputs utilized in the process of producing their

outputs.

Average Hourly Earnings--Average Hourly Earnings (AHEs)

are used to measure the rate of change of earnings for various

industries and, therefore, can reflect a changing occupational mix

within a particular industry. The AHE series is calculated by dividing

gross payrolls by total hours, and it measures actual earnings rather

than pure wage rates. It is a current-weight series rather than a

fixed-weight index and thus reflects shifts in employment mix. An AHE

rather than an ECI is used when there is no corresponding ECI category

that is an appropriate measure of growth for a given labor category or

when the ECI does not have sufficient length of history to be useful

for our purpose. The 1993-based HHA input price index does not use AHE

as a price proxy, but the 1976-based index did.

Our price proxies for the rebased home health agency market basket

are summarized in the Appendix to this notice. The forecasted rate of

growth for the fiscal year, beginning July 1, 1996, for the rebased

home health agency market basket is 3.1 percent, while the forecasted

rate of growth for the 1976-based home health agency market basket is

3.3 percent. A comparison of the yearly changes from 1993-1998 for the

1976-based market basket and the 1993-based market basket is shown

below.

Table 4--Comparison of the 1993-Based Market Basket and the 1976-Market Basket, Percent Change, 1993-1998

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

Home Health Home Health

Agency market Agency market Difference (1993-

Fiscal years beginning July 1 basket, FY basket, CY based minus 1976-

1993 base 1976 base based

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

Historical:

July 1992, FY 1993...................................... 3.4 3.8 (0.4)

July 1993, FY 1994...................................... 3.0 2.7 0.3

July 1994, FY 1995...................................... 2.9 3.2 (0.3)

Forecasted:

July 1995, FY 1996...................................... 2.7 3.1 (0.4)

July 1996, FY 1997...................................... 3.1 3.3 (0.2)

July 1997, FY 1998...................................... 3.2 3.4 (0.2)

Historical Average: 1993-1995............................... 3.1 3.2 (0.1)

Forecasted Average: 1996-1998............................... 3.0 3.3 (0.3)

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

Source: DRI/McGraw Hill HCC, 1st QTR 1996;@USSIM/TREND25YR0296 @CISSIM/CONTROL961.

Released by HCFA, OACT, Office of National Health Statistics.

Note that the historical average rate of growth for 1993-1995 for

the home health agency 1993-based market basket was only 0.1 percentage

points less than that of the 1976-based market basket, an insignificant

difference. HCFA believes that the 1993-based HHA market basket gives a

more accurate measure of the annual increases in reasonable cost care

because (1) The cost structure reflects 1993 rather than 1976 costs,

and (2) superior new wage-price variables have been incorporated into

the 1993-based index. The forecasted average annual rate of growth for

1996-1998 is 3.0 percent for the 1993-based market basket, and 3.3

percent for the 1976-based market basket. Given the complexities of

forecasting, this difference is very small.

HCFA has developed a HHA Blended Wage and Salary Index and a HHA

Blended Benefits Index. HCFA will use these blended indexes as price

proxies for the wages and salary and the employee benefits portions of

the market basket. In the 1976-based market basket, the average hourly

earnings in the hospital industry (nonsupervisory workers) was used as

a price proxy for wages and salaries, and the supplements to wages and

salaries per worker in nonagricultural establishments were used as a

price proxy for employee benefits.

The new price proxies for these two cost categories are similar to

those used in the prospective payment hospital market basket and the

excluded hospital market basket, but with occupational weights

reflecting the occupational mix in home health agencies. These proxies

are a combination of internal and external proxies (health industry

specific and economy-wide). HCFA has disaggregated the mix of home

health agency workers into specific categories and applied a

combination of internal and external price proxies in the HCFA HHA

Occupational Wage and Salary and Benefits Indexes. The supply and

demand relationships for certain professional-technical occupations

such as registered nurses may be more appropriately reflected in the

blended indicators of compensation changes for professional and

technical employees. The occupational composition of the HHA

Occupational Wage and Salary Index and the HHA Occupational Benefits

Index are shown in the Appendix to this notice.

VII. Methodology for Determining Cost-per-Visit Limits

A. Data

For this notice, the cost-per-visit limit values were determined by

extracting settled actual cost-per-visit data from Medicare cost

reports for periods beginning on or after June 30, 1991, and settled

before October 1, 1995. We then adjusted the data using the latest

available market basket factors to reflect expected cost increases

occurring between the cost reporting periods contained in our data base

and June 30, 1997. The following adjustment factors were used to

compute the per-visit costs:

[[Page 34351]]

Table 5.--Factors for Inflating Data Base Dollars to June 30, 1997

[Inflation Adjustment Factors] \1\

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

Fiscal year end 1992 1993 1994

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

January 31...................................................... .............. 1.13729 1.10178

February 28..................................................... .............. 1.13412 1.09908

March 31........................................................ .............. 1.13096 1.09642

April 30........................................................ .............. 1.12782 1.09380

May 31.......................................................... .............. 1.12473 1.09121

June 30......................................................... 1.15976 1.12172 1.08863

July 31......................................................... 1.15643 1.11878 1.08606

August 31....................................................... 1.15316 1.11589 1.08349

September 30.................................................... 1.14995 1.11301 1.08090

October 31...................................................... 1.14678 1.11015 1.07830

November 30..................................................... 1.14363 1.10731 1.07571

December 31..................................................... 1.14047 1.10453 1.07316

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

\1\ By multiplying nominal dollars for a given fiscal year end by its respective inflation adjustment factor

will express those dollars in the dollar levels for June 30, 1997.

Sources: Input Price Index used to develop adjustment factors were obtained from DRI/McGraw-Hill for the period

between 1989:4 and 1999:4.

The forecasts are from DRI's 1st QTR 1996;@USSIM/TREND25YR 0296 @CISSIM/Control 961 forecast exercise which has

historical data through 1995:4.

B. Cost Reporting Periods Consisting of Fewer Than 12 Months

HHAs may have cost reporting periods that are fewer than 12 months

in duration. This may happen, for example, when a new provider enters

the Medicare program after its selected fiscal year has already begun,

or when a provider experiences a change of ownership before the end of

the cost reporting period. As explained in section IV of this preamble,

the data used in calculating the cost limits were updated to June 30,

1997. Therefore, the cost limits published in this notice are for a 12-

month cost reporting period beginning July 1, 1996 and ending June 30,

1997. For 12-month cost reporting periods beginning after July 1, 1996

and before July 1, 1997, cost reporting year adjustment factors are

provided in Table 8. However, when a cost reporting period consists of

fewer than 12 months, adjustments must be made to the data that have

been developed for use with 12-month cost reporting periods. In

previous notices, we instructed intermediaries to contact HCFA for

short period adjustment factors. In this notice, however, to promote

the efficient dissemination of cost limits to providers with cost

reporting periods of fewer than 12 months, we are publishing the

following examples and tables to enable intermediaries to calculate the

applicable adjustment factors.

Cost reporting periods of fewer than 12 months may not necessarily

begin on the first of the month or end on the last day of the month. In

order to simplify the process in calculating ``short period''

adjustment factors, if the short cost reporting period begins before

the sixteenth of the month, we will consider the period have begun on

the first of that month. If the start period begins on or after the

sixteenth of the month, it will be considered to have begun at the

beginning of the next month. Also, if the short period ends before the

sixteenth of the month, we will consider the period to have ended at

the end of the preceding month; if the short period ends on or after

the sixteenth of the month it will be considered to have ended at the

end of that month.

Examples

1. After approval by its intermediary, an HHA changes its fiscal

year end from June 30 to December 31. Therefore, the HHA had a short

cost reporting period beginning on July 1, 1996 and ending on December

31, 1996. The cost limits that apply to this short period must be

adjusted as follows:

Step 1--From Table 9, sum the index levels for the months of July, 1996

through December, 1996: 6.84863.

Step 2--Divide the results from Step 1 by the number of months in the

short period.

6.84963 6 = 1.141438

Step 3--From Table 9, sum the index levels for the months in the common

period of July, 1996 through June, 1997.

13.79728

Step 4--Divide the results in Step 3 by the number of months in the

common period.

13.79728 12 = 1.149773

Step 5--Divide the results from Step 2 by the results from Step 4. This

is the adjustment factor to be applied to the published limits

1.141438 1.149773 = .992751

Step 6--Apply the results from Step 5 to the published cost limits.

a. Urban Skilled Nursing Labor Portion

$76.57 x .992751 = $76.01

b. Urban Skilled Nursing Nonlabor Portion

$21.62 x .992751 = $21.46.

2. A HHA with a fiscal year end of November 30, 1996 changes

ownership on September 21, 1997. The HHA is required to file a

terminated cost report for the period of December 1, 1996 to September

21, 1997. The cost limits that apply to this short period must be

adjusted as follows:

Step 1--From Table 9, sum the index level for the month of December,

1996 through September, 1997.

11.61295

Step 2--Divide the results from Step 1 by the number of months in the

short period.

11.61295 10 = 1.161295

Step 3--From Table 9, sum the index levels for the months in the common

period of July, 1996, through June, 1997.

13.79728

Step 4--Divide the results from Step 3 by the number of months in the

common period.

13.79728 12 = 1.149773

Step 5--Divide the results from Step 2 by the results from Step 4.

1.161295 1.149773 = 1.010021

Step 6--Apply the results from Step 5 to the published cost limits.

a. Urban Skilled Nursing Labor Portion

$76.57 x 1.010021 = $77.34

b. Urban Skilled Nursing Non-Labor Portion

$21.62 x 1.010021 = $21.84

C. Standardization for Wage Levels

After adjustment by the market basket index, we divided each HHA's

per-visit

[[Page 34352]]

costs into labor and nonlabor portions. The labor portion of costs

(77.668 percent as determined by the market basket) represents the

employee wage and benefit factor plus the contract services factor from

the market basket. We then divided the labor portion of per-visit costs

by the wage index applicable to the HHA's location to arrive at an

adjusted labor cost.

D. Adjustment for ``Outliers''

We transformed all per-visit cost data into their natural

logarithms and grouped them by type of service and MSA, NECMA, or non-

MSA location, in order to determine the mean cost and standard

deviation for each group. We then eliminated all ``outlier'' costs,

retaining only those per-visit costs within two standard deviations of

the mean in each service.

E. Basic Service Limit

We calculate a basic service limit equal to 112 percent of the mean

labor and nonlabor portions of the per-visit costs of freestanding HHAs

for each type of service. (See Table 6 in section IX.)

VIII. Computing the Adjusted Limit

A. Adjustment of Cost Limits by Wage Index

To arrive at the adjusted limit, which is to be applied to each

service furnished by an HHA, the HHA's intermediary first determines

the adjusted labor-related component by multiplying the labor-related

component of the limit by the appropriate wage index and by multiplying

the adjusted labor-related component by the special labor adjustment

for budget neutrality. (See example below and Tables 7a and 7b in

section X of this notice.) The sum of the nonlabor component plus the

labor-related component is the adjusted limit applicable to an HHA.

Example--Calculation of Adjusted Occupational Therapy Limit for a

Freestanding HHA in Dallas, TX

Labor component (Table 6)...................................... 83.41

Wage index value (Table 7a).................................... 0.9804

Labor portion.................................................. 81.78

Special labor adjustment for budget neutrality................. 0.91

Adjusted labor portion......................................... 74.42

Nonlabor component (Table 6)................................... 23.84

Adjusted occupational therapy limit............................ 98.26

B. Adjustment for Reporting Year

If an HHA has a 12-month cost reporting period beginning on or

after August 1, 1996, the adjusted per-visit limit for each service is

again revised by an adjustment factor from Table 8 that corresponds to

the month and year in which the cost reporting period begins. Each

factor represents the compounded rate of monthly increase derived from

the projected annual increase in the market basket index, and is used

to account for inflation in costs that will occur after the date on

which the limits become effective.

For example, if the HHA in the example above had a cost reporting

period beginning January 1, 1997, its per-visit therapy limit would be

further adjusted as follows:

Computation of Revised Limit for Occupational Therapy

Adjusted per-visit limit...................................... 98.26

Adjustment factor from Table 8................................ 1.01524

Revised per-visit limit....................................... 99.76

In this example, the revised adjusted per-visit limit for

occupational therapy applicable to this HHA for the cost reporting

period beginning January 1, l997, is $99.76 per visit.

If an HHA uses a cost reporting period that is not 12 months in

duration, a special calculation of the adjustment factor must be made.

This results from the fact that projections are computed to June 30,

1997. This calculation is done using the methodology described in

section VII.B.

IX. Schedule of Limits

The schedule of limits set forth below applies to cost reporting

periods beginning on or after July 1, 1996. The intermediaries will

compute the adjusted limits using the wage index published in Tables 7a

and 7b of section X and will notify each HHA they service of its

applicable cost per-visit limit 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 for the cost reporting

periods 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 the per-visit costs and are paid without regard to this

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

(HCFA Pub. ll).)

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 cost.

Example: HHA X, a freestanding agency located in Richmond, VA,

furnished 5,000 covered skilled nursing visits, 2,000 physical therapy

visits, and 4,000 home health aide visits to Medicare beneficiaries

during its 12-month cost reporting period beginning July 1, 1996. The

aggregate cost limit for the HHA is calculated as follows:

Determining the Aggregate Cost Limit

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

Adjusted

Type of visit Visits Nonlabor labor Adjusted Aggregate

portion portion limit \1\ limit

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

Skilled nursing..................................... 5,000 $21.62 $63.09 $84.71 $423,550

Physical therapy.................................... 2,000 23.59 69.09 92.65 185,360

Home health aide.................................... 4,000 10.56 30.60 41.16 164,640

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

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

Aggregate cost limit.......................... .......... .......... .......... .......... 773,5501

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

\1\ Includes special labor adjustment of 0.91 for budget neutrality.

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 principles of

provider payment. That is, the intermediary reviews the various

reported costs, taking into account all the Medicare payment

principles; for example, the cost guidelines for

[[Page 34353]]

physical therapy furnished under arrangements (see 42 CFR 413.106) and

the limitation on costs that are substantially out of line with those

comparable home health agencies (see 42 CFR 413.9).

Table 6.--Per Visit Limits for Home Health Agencies

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

Labor Nonlabor

Type of visit Limit portion portion

------------------------------------------------------------------\1\---

MSA (NECMA) location:

Skilled nursing care.................. 98.19 76.57 21.62

Physical therapy.................. 107.43 83.84 23.59

Speech pathology.................. 107.99 84.11 23.88

Occupational therapy.............. 107.25 83.41 23.84

Medical social services........... 142.05 110.59 31.46

Home health aide.................. 47.70 37.14 10.56

Non-MSA location:

Skilled nursing care................. 109.62 89.53 20.09

Physical therapy..................... 119.65 97.61 22.04

Speech pathology..................... 130.61 106.31 24.30

Occupational therapy................. 129.30 105.06 24.24

Medical social services.............. 184.03 149.82 34.21

Home health aide..................... 47.60 38.87 8.73

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

\1\ Nonlabor portion of limits for HHA 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

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

X. Wage Indexes

Table 7a.--Wage Index for Urban Areas

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

Wage

Urban area (constituent counties or county equivalents) index

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

0040 Abilene, TX............................................. 0.8546

Taylor, TX

0060 Aguadilla, PR........................................... 0.4744

Aguada, PR

Aguadilla, PR

Moca, PR

0080 Akron, OH............................................... 0.9558

Portage, OH

Summit, OH

0120 Albany, GA.............................................. 0.8608

Dougherty, GA

Lee, GA

0160 Albany-Schenectady-Troy, NY............................. 0.8818

Albany, NY

Montgomery, NY

Rensselaer, NY

Saratoga, NY

Schenectady, NY

Schoharie, NY

0200 Albuquerque, NM......................................... 0.9542

Bernalillo, NM

Sandoval, NM

Valencia, NM

0220 Alexandria, LA.......................................... 0.7917

Rapides, LA

0240 Allentown-Bethlehem-Easton, PA.......................... 1.0198

Carbon, PA

Lehigh, PA

Northampton, PA

0280 Altoona, PA............................................. 0.9007

Blair, PA

0320 Amarillo, TX............................................ 0.8759

Potter, TX

Randall, TX

0380 AK Anchorage, AK........................................ 1.3373

Anchorage,

0440 Ann Arbor, MI........................................... 1.2116

Lenawee, MI

Livingston, MI

Washtenaw, MI

0450 Anniston, AL............................................ 0.8158

Calhoun, AL

0460 Appleton-Oshkosh-Neenah, WI............................. 0.8844

Calumet, WI

Outagamie, WI

Winnebago, WI

0470 Arecibo, PR............................................. 0.4498

Arecibo, PR

Camuy, PR

Hatillo, PR

0480 Asheville, NC........................................... 0.9218

Buncombe, NC

Madison, NC

0500 Athens, GA.............................................. 0.9097

Clarke, GA

Madison, GA

Oconee, GA

0520 *Atlanta, GA............................................ 1.0069

Barrow, GA

Bartow, GA

Carroll, GA

Cherokee, GA

Clayton, GA

Cobb, GA

Coweta, GA

DeKalb, GA

Douglas, GA

Fayette, GA

Forsyth, GA

Fulton, GA

Gwinnett, GA

Henry, GA

Newton, GA

Paulding, GA

Pickens, GA

Rockdale, GA

Spalding, GA

Walton, GA

0560 Atlantic City- Cape May, NJ............................. 1.0935

Atlantic City, NJ

Cape May, NJ

0600 Augusta-Aiken, GA-SC.................................... 0.8955

Columbia, GA

McDuffie, GA

Richmond, GA

[[Page 34354]]

Aiken, SC

Edgefield, SC

0640 Austin-San Marcos, TX................................... 0.9255

Bastrop, TX

Caldwell, TX

Hays, TX

Travis, TX

Williamson, TX

0680 Bakersfield, CA......................................... 1.0502

Kern, CA

0720 *Baltimore, MD.......................................... 0.9865

Anne Arundel, MD

Baltimore, MD

Baltimore City, MD

Carroll, MD

Harford, MD

Howard, MD

Queen Annes, MD

0733 Bangor, ME.............................................. 0.9360

Penobscot, ME

0743 Barnstable-Yarmouth, MA................................. 1.3457

Barnstable, MA

0760 Baton Rouge, LA......................................... 0.8670

Ascension, LA

East Baton Rouge, LA

Livingston, LA

West Baton Rouge, LA

0840 Beaumont-Port Arthur, TX................................ 0.8603

Hardin, TX

Jefferson, TX

Orange, TX

0860 Bellingham, WA.......................................... 1.2681

Whatcom, WA

0870 Benton Harbor, MI....................................... 0.8258

Berrien, MI

0875 *Bergen-Passaic, NJ..................................... 1.1677

Bergen, NJ

Passaic, NJ

0880 Billings, MT............................................ 0.8705

Yellowstone, MT

0920 Biloxi-Gulfport-Pascagoula, MS.......................... 0.8448

Hancock, MS

Harrison, MS

Jackson, MS

0960 Binghamton, NY.......................................... 0.9005

Broome, NY

Tioga, NY

1000 Birmingham, AL.......................................... 0.9144

Blount, AL

Jefferson, AL

St. Clair, AL

Shelby, AL

1010 Bismarck, ND............................................ 0.8299

Burleigh, ND

Morton, ND

1020 Bloomington, IN......................................... 0.8429

Monroe, IN

1040 Bloomington-Normal, IL.................................. 0.8740

McLean, IL

1080 Boise City, ID.......................................... 0.9051

Ada, ID

Canyon, ID

1123 *Boston-Brockton-Nashua-MA-NH........................... 1.1684

Bristol, MA

Essex, MA

Middlesex, MA

Norfolk, MA

Plymouth, MA

Suffolk, MA

Worcester, MA

Hillsborough, NH

Merrimack, NH

Rockingham, NH

Strafford, NH

1125 Boulder-Longmont, CO.................................... 0.9780

Boulder, CO

1145 Brazoria, TX............................................ 0.8814

Brazoria, TX

1150 Bremerton, WA........................................... 1.0295

Kitsap, WA

1240 Brownsville-Harlingen-San Benito, TX.................... 0.8649

Cameron, TX

1260 Bryan-College Station, TX............................... 0.8987

Brazos, TX

1280 *Buffalo-Niagara Falls, NY.............................. 0.9186

Erie, NY

Niagara, NY

1303 Burlington, VT.......................................... 0.9252

Chittenden, VT

Franklin, VT

Grand Isle, VT

1310 Caguas, PR.............................................. 0.4706

Caguas, PR

Cayey, PR

Cidra, PR

Gurabo, PR

San Lorenzo, PR

1320 Canton-Massillon, OH.................................... 0.8749

Carroll, OH

Stark, OH

1350 Casper, WY.............................................. 0.8429

Natrona, WY

1360 Cedar Rapids, IA........................................ 0.8359

Linn, IA

1400 Champaign-Urbana, IL.................................... 0.8867

Champaign, IL

1440 Charleston-North Charleston, SC......................... 0.8928

Berkeley, SC

Charleston, SC

Dorchester, SC

1480 Charleston, WV.......................................... 0.9498

Kanawha, WV

Putnam, WV

1520 *Charlotte-Gastonia-Rock Hill, NC-SC.................... 0.9661

Cabarrus, NC

Gaston, NC

Lincoln, NC

Mecklenburg, NC

Rowan, NC

Union, NC

York, SC

1540 Charlottesville, VA..................................... 0.9179

Albemarle, VA

Charlottesville City, VA

Fluvanna, VA

Greene, VA

1560 Chattanooga, TN-GA...................................... 0.9129

Catoosa, GA

Dade, GA

Walker, GA

Hamilton, TN

Marion, TN

1580 Cheyenne, WY............................................ 0.7935

Laramie, WY

1600 *Chicago, IL............................................ 1.0632

Cook, IL

DeKalb, IL

DuPage, IL

Grundy, IL

Kane, IL

Kendall, IL

Lake, IL

McHenry, IL

Will, IL

1620 Chico-Paradise, CA...................................... 1.0531

Butte, CA

1640 *Cincinnati, OH-KY-IN................................... 0.9418

Dearborn, IN

Ohio, IN

Boone, KY

Campbell, KY

Gallatin, KY

Grant, KY

Kenton, KY

Pendleton, KY

Brown, OH

Clermont, OH

Hamilton, OH

Warren, OH

1660 Clarksville-Hopkinsville, TN-KY......................... 0.7542

Christian, KY

Montgomery, TN

1680 *Cleveland-Lorain-Elyria, OH............................ 0.9835

Ashtabula, OH

Cuyahoga, OH

Geauga, OH

Lake, OH

Lorain, OH

Medina, OH

1720 Colorado Springs, CO.................................... 0.9294

El Paso, CO

1740 Columbia, MO............................................ 0.9461

Boone, MO

1760 Columbia, SC............................................ 0.9033

Lexington, SC

Richland, SC

1800 Columbus, GA-AL.........................................

Russell, AL 0.7756

Chattanoochee, GA

Harris, GA

Muscogee, GA

1840 *Columbus, OH........................................... 0.9734

Delaware, OH

Fairfield, OH

Franklin, OH

Licking, OH

Madison, OH

Pickaway, OH

1880 Corpus Christi, TX...................................... 0.8941

Nueces, TX

San Patricio, TX

1900 Cumberland, MD-WV....................................... 0.8372

Allegany, MD

Mineral, WV

1920 *Dallas, TX............................................. 0.9804

Collin, TX

Dallas, TX

Denton, TX

Ellis, TX

Henderson, TX

Hunt, TX

Kaufman, TX

Rockwall, TX

[[Page 34355]]

1950 Danville, VA............................................ 0.8465

Danville City, VA

Pittsylvania, VA

1960 Davenport-Rock Island-Moline, IA-IL..................... 0.8347

Scott, IA

Henry, IL

Rock Island, IL

2000 Dayton-Springfield, OH.................................. 0.9428

Clark, OH

Greene, OH

Miami, OH

Montgomery, OH

2020 Daytona Beach, FL....................................... 0.8902

Flagler, FL

Volusia, FL

2030 Decatur, AL............................................. 0.8180

Lawrence, AL

Morgan, AL

2040 Decatur, IL............................................. 0.7790

Macon, IL

2080 *Denver, CO............................................. 1.0447

Adams, CO

Arapahoe, CO

Denver, CO

Douglas, CO

Jefferson, CO

2120 Des Moines, IA.......................................... 0.8792

Dallas, IA

Polk, IA

Warren, IA

2160 *Detroit, MI............................................ 1.0831

Lapeer, MI

Macomb, MI

Monroe, MI

Oakland, MI

St. Clair, MI

Wayne, MI

2180 Dothan, AL.............................................. 0.7751

Dale, AL

Houston, AL

2190 Dover, DE............................................... 0.8960

Kent, DE

2200 Dubuque, IA............................................. 0.8054

Dubuque, IA

2240 Duluth-Superior, MN-WI.................................. 0.9660

St. Louis, MN

Douglas, WI

2281 Dutchess County, NY..................................... 1.0754

Dutchess, NY

2290 Eau Claire, WI.......................................... 0.8660

Chippewa, WI

Eau Claire, WI

2320 El Paso, TX............................................. 0.9266

El Paso, TX

2330 Elkhart-Goshen, IN...................................... 0.8764

Elkhart, IN

2335 Elmira, NY.............................................. 0.8460

Chemung, NY

2340 Enid, OK................................................ 0.8170

Garfield, OK

2360 Erie, PA................................................ 0.9196

Erie, PA

2400 Eugene-Springfield, OR.................................. 1.1138

Lane, OR

2440 Evansville-Henderson, IN-KY............................. 0.8899

Posey, IN

Vanderburgh, IN

Warrick, IN

Henderson, KY

2520 Fargo-Moorhead, ND-MN................................... 0.8912

Clay, MN

Cass, ND

2560 Fayetteville, NC........................................ 0.8843

Cumberland, NC

2580 Fayetteville-Springdale-Rogers, AR...................... 0.7090

Benton, AR

Washington, AR

2620 Flagstaff, AZ-UT........................................ 0.8619

Coconino, AZ

Kane, UT

2640 Flint, MI............................................... 1.0738

Genesee, MI

2650 Florence, AL............................................ 0.7700

Colbert, AL

Lauderdale, AL

2655 Florence, SC............................................ 0.8522

Florence, SC

2670 Fort Collins-Loveland, CO............................... 1.0595

Larimer, CO

2680 *Ft. Lauderdale, FL..................................... 1.0499

Broward, FL

2700 Fort Myers-Cape Coral, FL............................... 0.9666

Lee, FL

2710 Fort Pierce-Port St. Lucie, FL.......................... 1.0401

Martin, FL

St. Lucie, FL

2720 Fort Smith, AR-OK....................................... 0.7588

Crawford, AR

Sebastian, AR

Sequoyah, OK

2750 Fort Walton Beach, FL................................... 0.8705

Okaloosa, FL

2760 Fort Wayne, IN.......................................... 0.8691

Adams, IN

Allen, IN

DeKalb, IN

Huntington, IN

Wells, IN

Whitley, IN

2800 *Forth Worth-Arlington, TX.............................. 1.0059

Hood, TX

Johnson, TX

Parker, TX

Tarrant, TX

2840 Fresno, CA.............................................. 1.0522

Fresno, CA

Madera, CA

2880 Gadsden, AL............................................. 0.8568

Etowah, AL

2900 Gainesville, FL......................................... 0.9007

Alachua, FL

2920 Galveston-Texas City, TX................................ 1.0304

Galveston, TX

2960 Gary, IN................................................ 0.9517

Lake, IN

Porter, IN

2975 Glens Falls, NY......................................... 0.9276

Warren, NY

Washington, NY

2980 Goldsboro, NC........................................... 0.8165

Wayne, NC

2985 Grand Forks, ND-MN...................................... 0.8946

Polk, MN

Grand Forks, ND

2995 Grand Junction, CO...................................... 0.8957

Mesa, CO

3000 Grand Rapids-Muskegon-Holland, MI....................... 1.0055

Allegan, MI

Kent, MI

Muskegon, MI

Ottawa, MI

3040 Great Falls, MT......................................... 0.8913

Cascade, MT

3060 Greeley, CO............................................. 0.9146

Weld, CO

3080 Green Bay, WI........................................... 0.8910

Brown, WI

3120 *Greensboro-Winston-Salem-High Point, NC................ 0.9160

Alamance, NC

Davidson, NC

Davie, NC

Forsyth, NC Guilford, NC

Randolph, NC

Stokes, NC

Yadkin, NC

3150 Greenville, NC.......................................... 0.9102

Pitt, NC

3160 Greenville-Spartanburg-Anderson, SC..................... 0.9047

Anderson, SC

Cherokee, SC

Greenville, SC

Pickens, SC

Spartanburg, SC

3180 Hagerstown, MD.......................................... 0.9074

Washington, MD

3200 Hamilton-Middletown, OH................................. 0.8782

Butler, OH

3240 Harrisburg-Lebanon-Carlisle, PA......................... 0.9972

Cumberland, PA

Dauphin, PA

Lebanon, PA

Perry, PA

3283 *Hartford, CT........................................... 1.2391

Hartford, CT

Litchfield, CT

Middlesex, CT

Tolland, CT

3285 Hattiesburg, MS......................................... 0.7245

Forrest, MS

Lamar, MS

3290 Hickory-Morganton-Lenoir, NC............................ 0.8677

Alexander, NC

Burke, NC

Caldwell, NC

Catawba, NC

3320 Honolulu, HI............................................ 1.1212

Honolulu, HI

3350 Houma, LA............................................... 0.7596

Lafourche, LA

Terrebonne, LA

3360 *Houston, TX............................................ 0.9874

Chambers, TX

Fort Bend, TX

Harris, TX

Liberty, TX

Montgomery, TX

Waller, TX

3400 Huntington-Ashland, WV-KY-OH............................ 0.8997

Boyd, KY

Carter, KY

[[Page 34356]]

Greenup, KY

Lawrence, OH

Cabell, WV

Wayne, WV

3440 Huntsville, AL.......................................... 0.8113

Limestone, AL

Madison, AL

3480 *Indianapolis, IN....................................... 0.9757

Boone, IN

Hamilton, IN

Hancock, IN

Hendricks, IN

Johnson, IN

Madison, IN

Marion, IN

Morgan, IN

Shelby, IN

3500 Iowa City, IA........................................... 0.9371

Johnson, IA

3520 Jackson, MI............................................. 0.9132

Jackson, MI

3560 Jackson, MS............................................. 0.7543

Hinds, MS

Madison, MS

Rankin, MS

3580 Jackson, TN............................................. 0.8511

Madison, TN

3600 Jacksonville, FL........................................ 0.8953

Clay, FL

Duval, FL

Nassau, FL

St. Johns, FL

3605 Jacksonville, NC........................................ 0.6926

Onslow, NC

3610 Jamestown, NY........................................... 0.7535

Chautaqua, NY

3620 Janesville-Beloit, WI................................... 0.8786

Rock, WI

3640 Jersey City, NJ......................................... 1.1050

Hudson, NJ

3660 Johnson City-Kingsport-Bristol, TN-VA................... 0.8746

Carter, TN

Hawkins, TN

Sullivan, TN

Unicoi, TN

Washington, TN

Bristol City, VA

Scott, VA

Washington, VA

3680 Johnstown, PA........................................... 0.8948

Cambria, PA

Somerset, PA

3710 Joplin, MO.............................................. 0.7923

Jasper, MO

Newton, MO

3720 Kalamazoo-Battlecreek, MI............................... 1.0657

Calhoun, MI

Kalamazoo, MI

Van Buren, MI

3740 Kankakee, IL............................................ 0.9114

Kankakee, IL

3760 *Kansas City, KS-MO..................................... 0.9351

Johnson, KS

Leavenworth, KS

Miami, KS

Wyandotte, KS

Cass, MO

Clay, MO

Clinton, MO

Jackson, MO

Lafayette, MO

Platte, MO

Ray, MO

3800 Kenosha, WI............................................. 0.8872

Kenosha, WI

3810 Killeen-Temple, TX...................................... 1.0526

Bell, TX

Coryell, TX

3840 Knoxville, TN........................................... 0.8518

Anderson, TN

Blount, TN

Knox, TN

Loudon, TN

Sevier, TN

Union, TN

3850 Kokomo, IN.............................................. 0.8834

Howard, IN

Tipton, IN

3870 La Crosse, WI-MN........................................ 0.8519

Houston, MN

La Crosse, WI

3880 Lafayette, LA........................................... 0.8443

Acadia, LA

Lafayette, LA

St. Landry, LA

St. Martin, LA

3920 Lafayette, IN........................................... 0.8328

Clinton, IN

Tippecanoe, IN

3960 Lake Charles, LA........................................ 0.8094

Calcasieu, LA

3980 Lakeland-Winter Haven, FL............................... 0.8879

Polk, FL

4000 Lancaster, PA........................................... 0.9569

Lancaster, PA

4040 Lansing-East Lansing, MI................................ 1.0105

Clinton, MI

Eaton, MI

Ingham, MI

4080 Laredo, TX.............................................. 0.6834

Webb, TX

4100 Las Cruces, NM.......................................... 0.8861

Dona Ana, NM

4120 *Las Vegas, NV-AZ....................................... 1.0934

Mohave, AZ

Clark, NV

Nye, NV

4150 Lawrence, KS............................................ 0.8549

Douglas, KS

4200 Lawton, OK.............................................. 0.8594

Comanche, OK

4243 Lewiston-Auburn, ME..................................... 0.9433

Androscoggin, ME

4280 Lexington, KY........................................... 0.8348

Bourbon, KY

Clark, KY

Fayette, KY

Jessamine, KY

Madison, KY

Scott, KY

Woodford, KY

4320 Lima, OH................................................ 0.8863

Allen, OH

Auglaize, OH

4360 Lincoln, NE............................................. 0.9093

Lancaster, NE

4400 Little Rock-North Little Rock, AR....................... 0.8527

Faulkner, AR

Lonoke, AR

Pulaski, AR

Saline, AR

4420 Longview-Marshall, TX................................... 0.8727

Gregg, TX

Harrison, TX

Upshur, TX

4480 *Los Angeles-Long Beach, CA............................. 1.2491

Los Angeles, CA

4520 Louisville, KY-IN....................................... 0.9327

Clark, IN

Floyd, IN

Harrison, IN

Scott, IN

Bullitt, KY

Jefferson, KY

Oldham, KY

4600 Lubbock, TX............................................. 0.8443

Lubbock, TX

4640 Lynchburg, VA........................................... 0.8319

Amherst, VA

Bedford, VA

Bedford City, VA

Campbell, VA

Lynchburg City, VA

4680 Macon, GA............................................... 0.8991

Bibb, GA

Houston, GA

Jones, GA

Peach, GA

Twiggs, GA

4720 Madison, WI............................................. 1.0055

Dane, WI

4800 Mansfield, OH........................................... 0.8373

Crawford, OH

Richland, OH

4840 Mayaguez, PR............................................ 0.4644

Anasco, PR

Cabo Rojo, PR

Hormigueros, PR

Mayaguez, PR

Sabana Grande, PR

San German, PR

4880 McAllen-Edinburg-Mission, TX............................ 0.8669

Hidalgo, TX

4890 Medford-Ashland, OR..................................... 0.9944

Jackson, OR

4900 Melbourne-Titusville-Palm Bay, FL....................... 0.9323

Brevard, FL

4920 *Memphis, TN-AR-MS...................................... 0.8399

Crittenden, AR

DeSoto, MS

Fayette, TN

Shelby, TN

Tipton, TN

4940 Merced, CA.............................................. 1.0877

Merced, CA

5000 *Miami, FL.............................................. 1.0163

Dade, FL

5015 *Middlesex-Somerset-Hunterdon, NJ....................... 1.0809

Hunterdon, NJ

Middlesex, NJ

Somerset, NJ

5080 *Milwaukee-Waukesha, WI................................. 0.9498

Milwaukee, WI

Ozaukee, WI

[[Page 34357]]

Washington, WI

Waukesha, WI

5120 *Minneapolis-St. Paul, MN-WI............................ 1.0744

Anoka, MN

Carver, MN

Chisago, MN

Dakota, MN

Hennepin, MN

Isanti, MN

Ramsey, MN

Scott, MN

Sherburne, MN

Washington, MN

Wright, MN

Pierce, WI

St. Croix, WI

5160 Mobile, AL.............................................. 0.7801

Baldwin, AL

Mobile, AL

5170 Modesto, CA............................................. 1.1161

Stanislaus, CA

5190 *Monmouth-Ocean, NJ..................................... 1.0562

Monmouth, NJ

Ocean, NJ

5200 Monroe, LA.............................................. 0.7900

Ouachita, LA

5240 Montgomery, AL.......................................... 0.7878

Autauga, AL

Elmore, AL

Montgomery, AL

5280 Muncie, IN.............................................. 0.9125

Delaware, IN

5330 Myrtle Beach, SC........................................ 0.7961

Horry, SC

5345 Naples, FL.............................................. 0.9871

Collier, FL

5360 *Nashville, TN.......................................... 0.9266

Cheatham, TN

Davidson, TN

Dickson, TN

Robertson, TN

Rutherford TN

Sumner, TN

Williamson, TN

Wilson, TN

5380 *Nassau-Suffolk, NY..................................... 1.3590

Nassau, NY

Suffolk, NY

5483 *New Haven-Bridgeport-Stamford-Danbury-Waterbury, CT.... 1.2534

Fairfield, CT

New Haven, CT

5523 New London-Norwich, CT.................................. 1.1899

New London, CT

5560 *New Orleans, LA........................................ 0.9454

Jefferson, LA

Orleans, LA

Plaquemines, LA

St. Bernard, LA

St. Charles, LA

St. James, LA

St. John The Baptist, LA

St. Tammany, LA

5600 *New York, NY........................................... 1.3815

Bronx, NY

Kings, NY

New York, NY

Putnam, NY

Queens, NY

Richmond, NY

Rockland, NY

Westchester, NY

5640 *Newark, NJ............................................. 1.1407

Essex, NJ

Morris, NJ

Sussex, NJ

Union, NJ

Warren, NJ

5660 Newburgh, NY-PA......................................... 1.0619

Orange, NY

Pike, PA

5720 *Norfolk-Virginia Beach-Newport News, VA-NC............. 0.8411

Currituck, NC

Chesapeake City, VA

Gloucester, VA

Hampton City, VA

Isle of Wight, VA

James City, VA

Mathews, VA

Newport News City, VA

Norfolk City, VA

Poquoson City, VA

Portsmouth City, VA

Suffolk City, VA

Virginia Beach City, VA

Williamsburg City, VA

York, VA

5775 *Oakland, CA............................................ 1.5202

Alameda, CA

Contra Costa, CA

5790 Ocala, FL............................................... 0.8942

Marion, FL

5800 Odessa-Midland, TX...................................... 0.8753

Ector, TX

Midland, TX

5880 *Oklahoma City, OK...................................... 0.8358

Canadian, OK

Cleveland, OK

Logan, OK

McClain, OK

Oklahoma, OK

Pottawatomie, OK

5910 Olympia, WA............................................. 1.1109

Thurston, WA

5920 Omaha, NE-IA............................................ 0.9794

Pottawattamie, IA

Cass, NE

Douglas, NE

Sarpy, NE

Washington, NE

5945 *Orange County, CA...................................... 1.2299

Orange, CA

5960 *Orlando, FL............................................ 0.9515

Lake, FL

Orange, FL

Osceola, FL

Seminole, FL

5990 Owensboro, KY........................................... 0.7498

Daviess, KY

6015 Panama City, FL......................................... 0.8182

Bay, FL

6020 Parkersburg-Marietta, WV-OH............................. 0.7751

Washington, OH

Wood, WV

6080 Pensacola, FL........................................... 0.8183

Escambia, FL

Santa Rosa, FL

6120 Peoria-Pekin, IL........................................ 0.8619

Peoria, IL

Tazewell, IL

Woodford, IL

6160 *Philadelphia, PA-NJ.................................... 1.1112

Burlington, NJ

Camden, NJ

Gloucester, NJ

Salem, NJ

Bucks, PA

Chester, PA

Delaware, PA

Montgomery, PA

Philadelphia, PA

6200 *Phoenix-Mesa, AZ....................................... 0.9808

Maricopa, AZ

Pinal, AZ

6240 Pine Bluff, AR.......................................... 0.7985

Jefferson, AR

6280 *Pittsburgh, PA......................................... 0.9743

Allegheny, PA

Beaver, PA

Butler, PA

Fayette, PA

Washington, PA

Westmoreland, PA

6323 Pittsfield, MA.......................................... 1.0838

Berkshire, MA

6360 Ponce, PR............................................... 0.4780

Guayanilla, PR

Juana Diaz, PR

Penuelas, PR

Ponce, PR

Villalba, PR

Yauco, PR

6403 Portland, ME............................................ 0.9744

Cumberland, ME

Sagadahoc, ME

York, ME

6440 *Portland-Vancouver, OR-WA.............................. 1.1248

Clackamas, OR

Columbia, OR

Multnomah, OR

Washington, OR

Yamhill, OR

Clark, WA

6483 Providence-Warwick, RI.................................. 1.1027

Bristol, RI

Kent, RI

Newport, RI

Providence, RI

Washington, RI

6520 Provo-Orem, UT.......................................... 0.9843

Utah, UT

6560 Pueblo, CO.............................................. 0.8508

Pueblo, CO

6580 Punta Gorda, FL......................................... 0.9402

Charlotte, FL

6600 Racine, WI.............................................. 0.8704

Racine, WI

6640 Raleigh-Durham-Chapel Hill, NC.......................... 0.9539

Chatham, NC

Durham, NC

Franklin, NC

Johnston, NC

Orange, NC

Wake, NC

[[Page 34358]]

6660 Rapid City, SD.......................................... 0.8267

Pennington, SD

6680 Reading, PA............................................. 0.9570

Berks, PA

6690 Redding, CA............................................. 1.1796

Shasta, CA

6720 Reno, NV................................................ 1.1087

Washoe, NV

6740 Richland-Kennewick-Pasco, WA............................ 1.0011

Benton, WA

Franklin, WA

6760 Richmond-Petersburg, VA................................. 0.9055

Charles City County, VA

Chesterfield, VA

Colonial Heights City, VA

Dinwiddie, VA

Goochland, VA

Hanover, VA

Henrico, VA

Hopewell City, VA

New Kent, VA

Petersburg City, VA

Powhatan, VA

Prince George, VA

Richmond City, VA

6780 *Riverside-San Bernardino, CA........................... 1.1616

Riverside, CA

San Bernardino, CA

6800 Roanoke, VA............................................. 0.8483

Botetourt, VA

Roanoke, VA

Roanoke City, VA

Salem City, VA

6820 Rochester, MN........................................... 1.0545

Olmsted, MN

6840 *Rochester, NY.......................................... 0.9585

Genesee, NY

Livingston, NY

Monroe, NY

Ontario, NY

Orleans, NY

Wayne, NY

6880 Rockford, IL............................................ 0.8872

Boone, IL

Ogle, IL

Winnebago, IL

6895 Rocky Mount, NC......................................... 0.8760

Edgecombe, NC

Nash, NC

6920 *Sacramento, CA......................................... 1.2539

El Dorado, CA

Placer, CA

Sacramento, CA

6960 Saginaw-Bay City-Midland, MI............................ 0.9489

Bay, MI

Midland, MI

Saginaw, MI

6980 St. Cloud, MN........................................... 0.9549

Benton, MN

Stearns, MN

7000 St. Joseph, MO.......................................... 0.8457

Andrews, MO

Buchanan, MO

7040 *St. Louis, MO-IL....................................... 0.8880

Clinton, IL

Jersey, IL

Madison, IL

Monroe, IL

St. Clair, IL

Franklin, MO

Jefferson, MO

Lincoln, MO

St. Charles, MO

St. Louis, MO

St. Louis City, MO

Warren, MO

7080 Salem, OR............................................... 0.9590

Marion, OR

Polk, OR

7120 Salinas, CA............................................. 1.4263

Monterey, CA

7160 *Salt Lake City-Ogden, UT............................... 0.9681

Davis, UT

Salt Lake, UT

Weber, UT

7200 San Angelo, TX.......................................... 0.7777

Tom Green, TX

7240 *San Antonio, TX........................................ 0.8414

Bexar, TX

Comal, TX

Guadalupe, TX

Wilson, TX

7320 *San Diego, CA.......................................... 1.1844

San Diego, CA

7360 *San Francisco, CA...................................... 1.4413

Marin, CA

San Francisco, CA

San Mateo, CA

7400 *San Jose, CA........................................... 1.4429

Santa Clara, CA

7440 *San Juan-Bayamon, PR................................... 0.4514

Aguas Buenas, PR

Barceloneta, PR

Bayamon, PR

Canovanas, PR

Carolina, PR

Catano, PR

Ceiba, PR

Comerio, PR

Corozal, PR

Dorado, PR

Fajardo, PR

Florida, PR

Guaynabo, PR

Humacao, PR

Juncos, PR

Los Piedras, PR

Loiza, PR

Luguillo, PR

Manati, PR

Morovis, PR

Naguabo, PR

Naranjito, PR

Rio Grande, PR

San Juan, PR

Toa Alta, PR

Toa Baja, PR

Trujillo Alto, PR

Vega Alta, PR

Vega Baja, PR

Yabucoa, PR

7460 San Luis Obispo-Atascadero-Paso Robles, CA.............. 1.1405

San Luis Obispo, CA

7480 Santa Barbara-Santa Maria-Lompoc, CA.................... 1.1136

Santa Barbara, CA

7485 Santa Cruz-Watsonville, CA.............................. 1.3944

Santa Cruz, CA

7490 Santa Fe, NM............................................ 1.1108

Los Alamos, NM

Santa Fe, NM

7500 Santa Rosa, CA.......................................... 1.2693

Sonoma, CA

7510 Sarasota-Bradenton, FL.................................. 0.9737

Manatee, FL

Sarasota, FL

7520 Savannah, GA............................................ 0.8968

Bryan, GA

Chatham, GA

Effingham, GA

7560 Scranton--Wilkes-Barre--Hazleton, PA.................... 0.8724

Columbia, PA

Lackawanna, PA

Luzerne, PA

Wyoming, PA

7600 *Seattle-Bellevue-Everett, WA........................... 1.1305

Island, WA

King, WA

Snohomish, WA

7610 Sharon, PA.............................................. 0.8903

Mercer, PA

7620 Sheboygan, WI........................................... 0.7981

Sheboygan, WI

7640 Sherman-Denison, TX..................................... 0.8780

Grayson, TX

7680 Shreveport-Bossier City, LA............................. 0.9007

Bossier, LA

Caddo, LA

Webster, LA

7720 Sioux City, IA-NE....................................... 0.8436

Woodbury, IA

Dakota, NE

7760 Sioux Falls, SD......................................... 0.8761

Lincoln, SD

Minnehaha, SD

7800 South Bend, IN.......................................... 0.9475

St. Joseph, IN

7840 Spokane, WA............................................. 1.0377

Spokane, WA

7880 Springfield, IL......................................... 0.8940

Menard, IL

Sangamon, IL

7920 Springfield, MO......................................... 0.7896

Christian, MO

Greene, MO

Webster, MO

8003 Springfield, MA......................................... 1.0517

Hampden, MA

Hampshire, MA

8050 State College, PA....................................... 1.0162

Centre, PA

8080 Steubenville-Weirton, OH-WV............................. 0.8455

Jefferson, OH

Brooke, WV

Hancock, WV

8120 Stockton-Lodi, CA....................................... 1.1536

San Joaquin, CA

8140 Sumter, SC.............................................. 0.8344

Sumter, SC

8160 Syracuse, NY............................................ 0.9531

Cayuga, NY

Madison, NY

Onondaga, NY

[[Page 34359]]

Oswego, NY

8200 Tacoma, WA.............................................. 1.0828

Pierce, WA

8240 Tallahassee, FL......................................... 0.8321

Gadsden, FL

Leon, FL

8280 *Tampa-St. Petersburg-Clearwater, FL.................... 0.9262

Hernando, FL

Hillsborough, FL

Pasco, FL

Pinellas, FL

8320 Terre Haute, IN......................................... 0.8672

Clay, IN

Vermillion, IN

Vigo, IN

8360 Texarkana, AR-Texarkana, TX............................. 0.8198

Miller, AR

Bowie, TX

8400 Toledo, OH.............................................. 1.0424

Fulton, OH

Lucas, OH

Wood, OH

8440 Topeka, KS.............................................. 0.9735

Shawnee, KS

8480 Trenton, NJ............................................. 1.0033

Mercer, NJ

8520 Tucson, AZ.............................................. 0.9289

Pima, AZ

8560 Tulsa, OK............................................... 0.8245

Creek, OK

Osage, OK

Rogers, OK

Tulsa, OK

Wagoner, OK

8600 Tuscaloosa, AL.......................................... 0.8090

Tuscaloosa, AL

8640 Tyler, TX............................................... 0.9430

Smith, TX

8680 Utica-Rome, NY.......................................... 0.8514

Herkimer, NY

Oneida, NY

8720 Vallejo-Fairfield-Napa, CA.............................. 1.3483

Napa, CA

Solano, CA

8735 Ventura, CA............................................. 1.1924

Ventura, CA

8750 Victoria, TX............................................ 0.8435

Victoria, TX

8760 Vineland-Millville-Bridgeton, NJ........................ 0.9966

Cumberland, NJ

8780 Visalia-Tulare-Porterville, CA.......................... 1.0446

Tulare, CA

8800 Waco, TX................................................ 0.7898

McLennan, TX

8840 *Washington, DC-MD-VA-WV................................ 1.1116

District of Columbia, DC

Calvert, MD

Charles, MD

Frederick, MD

Montgomery, MD

Prince Georges, MD

Alexandria City, VA

Arlington, VA

Clarke, VA

Culpepper, VA

Fairfax, VA

Fairfax City, VA

Falls Church City, VA

Fauquier, VA

Fredericksburg City, VA

King George, VA

Loudoun, VA

Manassas City, VA

Manassas Park City, VA

Prince William, VA

Spotsylvania, VA

Stafford, VA

Warren, VA

Berkeley, WV

Jefferson, WV

8920 Waterloo-Cedar Falls, IA................................ 0.8600

Black Hawk, IA

8940 Wausau, WI.............................................. 1.0034

Marathon, WI

8960 West Palm Beach-Boca Raton, FL.......................... 1.0217

Palm Beach, FL

9000 Wheeling, OH-WV......................................... 0.7518

Belmont, OH

Marshall, WV

Ohio, WV

9040 Wichita, KS............................................. 0.9562

Butler, KS

Harvey, KS

Sedgwick, KS

9080 Wichita Falls, TX....................................... 0.7826

Archer, TX

Wichita, TX

9140 Williamsport, PA........................................ 0.8508

Lycoming, PA

9160 Wilmington-Newark, DE-MD................................ 1.1539

New Castle, DE

Cecil, MD

9200 Wilmington, NC.......................................... 0.9299

New Hanover, NC

Brunswick, NC

9260 Yakima, WA.............................................. 0.9951

Yakima, WA

9270 Yolo, CA................................................ 1.1615

Yolo, CA

9280 York, PA................................................ 0.9165

York, PA

9320 Youngstown-Warren, OH................................... 0.9555

Columbiana, OH

Mahoning, OH

Trumbull, OH

9340 Yuba City, CA........................................... 1.0611

Sutter, CA

Yuba, CA

9360 Yuma, AZ................................................ 0.9769

Yuma, AZ

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

*Large Urban Area

Table 7b.--Wage Index for Rural Areas

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

Wage

Nonurban area index

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

Alabama....................................................... 0.7164

Alaska........................................................ 1.2034

Arizona....................................................... 0.7995

Arkansas...................................................... 0.6897

California.................................................... 1.0096

Colorado...................................................... 0.7988

Connecticut................................................... 1.3117

Delaware...................................................... 0.9019

Florida....................................................... 0.8668

Georgia....................................................... 0.7721

Hawaii........................................................ 0.9847

Idaho......................................................... 0.8378

Illinois...................................................... 0.7497

Indiana....................................................... 0.8067

Iowa.......................................................... 0.7352

Kansas........................................................ 0.7229

Kentucky...................................................... 0.7650

Louisiana..................................................... 0.7275

Maine......................................................... 0.8425

Maryland...................................................... 0.8463

Massachusetts................................................. 1.0577

Michigan...................................................... 0.8744

Minnesota..................................................... 0.8127

Mississippi................................................... 0.6697

Missouri...................................................... 0.7186

Montana....................................................... 0.8091

Nebraska...................................................... 0.7219

Nevada........................................................ 0.8788

New Hampshire................................................. 1.0013

New Jersey \1\................................................ ........

New Mexico.................................................... 0.8329

New York...................................................... 0.8647

North Carolina................................................ 0.7999

North Dakota.................................................. 0.7265

Ohio.......................................................... 0.8286

Oklahoma...................................................... 0.6985

Oregon........................................................ 0.9486

Pennsylvania.................................................. 0.8521

Puerto Rico................................................... 0.4326

Rhode Island \1\.............................................. ........

South Carolina................................................ 0.7738

South Dakota.................................................. 0.6987

Tennessee..................................................... 0.7409

Texas......................................................... 0.7316

Utah.......................................................... 0.8652

Vermont....................................................... 0.9043

Virginia...................................................... 0.7788

Washington.................................................... 0.9775

West Virginia................................................. 0.8036

Wisconsin..................................................... 0.8391

Wyoming....................................................... 0.8013

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

\1\ All counties within the State are classified urban.

Table 8.--Cost Reporting Year Adjustment Factor \1\

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

The

If the HHA cost reporting period begins adjustment

factor is

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

August 1, 1996............................................. 1.00251

September 1, 1996.......................................... 1.00505

October 1, 1996............................................ 1.00759

November 1, 1996........................................... 1.01012

December 1, 1997........................................... 1.01266

January 1, 1997............................................ 1.01524

February 1,1997............................................ 1.01788

March 1, 1997.............................................. 1.02056

April 1, 1997.............................................. 1.02326

May 1, 1997................................................ 1.02599

June 1, 1997............................................... 1.02875

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

\1\ Based on compounded projected market basket inflation rates.

[[Page 34360]]

These adjustment factors are subject to change based on later

estimates of cost increases.

If for any reason we do not publish a new schedule of limits to be

effective on July 1, 1997 or do not announce other changes in the

current schedule by that date, the current limits will continue in

effect. Intermediaries will be notified of the adjustment factors to be

applied until a new schedule of limits or other provision is issued.

Table 9.--Monthly Index Levels for Calculating Inflation Factors To Be

Applied To Home Health Agency Cost Limits

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

Index

Month level

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

July 1996..................................................... 1.13366

August 1996................................................... 1.13700

September 1996................................................ 1.13999

October 1996.................................................. 1.14299

November 1996................................................. 1.14600

December 1996................................................. 1.14899

January 1997.................................................. 1.15199

February 1997................................................. 1.15500

March 1997.................................................... 1.15700

April 1997.................................................... 1.15900

May 1997...................................................... 1.16100

June 1997..................................................... 1.16466

July 1997..................................................... 1.16832

August 1997................................................... 1.17200

September 1997................................................ 1.17499

October 1997.................................................. 1.17799

November 1997................................................. 1.18100

December 1997................................................. 1.18466

January 1998.................................................. 1.18832

February 1998................................................. 1.19200

March 1998.................................................... 1.19433

April 1998.................................................... 1.19666

May 1998...................................................... 1.19900

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

Source: DR/McGraw-Hill HCC, 1st QTR 1996; @USSIM/TREND 25YR0296 @CISSIM/

CONTROL961.

XI. Regulatory Impact Statement

For notices such as this, we generally prepare an initial

regulatory flexibility analysis that is consistent with the Regulatory

Flexibility Act (RFA) (5 U.S.C. 601 through 612) unless we certify that

the 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.

As discussed below, the aggregate impact of this notice is

relatively small, and we have no evidence that the economic impact on

most HHAs will be significant. Moreover, this notice is necessary to

implement the provisions of section 1861(v)(1)(L) of the Act; thus no

alternatives to the provisions set forth in this notice are available.

However, because this notice may have some effect on a large number of

providers, we are providing a voluntary regulatory flexibility

analysis.

This notice with comment period sets forth a schedule of HHA cost

limits for cost reporting periods beginning on or after July 1, 1996.

The methodology used to develop the schedule of limits set forth in

this notice is the same as that used in setting the limits effective

July 1, 1993. (As discussed in section IV.A of this notice, we are no

longer providing for an add-on to the HHA cost limits for those HHAs

that incur costs associated with the OSHA universal precaution

requirements, since these updated limits are computed using a data base

that includes the costs of complying with the OSHA standards.) In

accordance with section 1861(v)(1)(L)(i) of the Act, we are continuing

to set the limits not to exceed 112 percent of the mean of the labor-

related and nonlabor per-visit costs for freestanding HHAs. As required

by section 1861(v)(1)(L)(iii) of the Act, we are using the most recent

hospital wage index to calculate the HHA cost limits, that is, the

hospital wage index effective for discharges on or after October 1,

1995, which is based on 1992 wage survey data. The wage index is used

to adjust the labor-related portion of the limits to reflect differing

wage levels among areas. As discussed in section II of this notice, we

are applying a budget neutrality adjustment factor of 0.91 to the

labor-related portion of the limits to ensure that aggregate payments

to HHAs are not affected by the updating of the wage index.

We continue to use the latest settled cost report data to develop

the HHA cost-per-visit limit values for each type of home health

service: skilled nursing care, physical therapy, speech pathology,

occupational therapy, medical social services, and home health aide.

Thus, for this notice, we have updated the cost-per-visit limits by

using actual cost-per-visit data from settled Medicare cost reports for

periods beginning on or after June 1, 1991, and settled by October 1,

1995. The majority of the cost reports were from FY 1993. The data have

been adjusted by the most recent market basket factors to reflect the

expected cost increases occurring between the cost reporting periods

for the data contained in the data base and June 30, 1997. The

intermediary determines the aggregate cost 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. 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 database used to calculate these limits consists of cost

reporting data from 3,190 freestanding HHAs, compared with 2,992

freestanding HHAs used in calculating the limits in effect for cost

reporting periods beginning on or after July 1, 1993. We estimate that

the revised HHA cost limits implemented in this notice with public

comment period will result in the following costs to the Medicare

program:

Table 10.--HHA Cost Limits

[Medicare Program Costs] \1\

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

Costs (in

Fiscal year millions)

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

1996....................................................... 0

1997....................................................... 10

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

\1\ Figures are rounded to the nearest million.

The costs associated with the new HHA cost limits represent the

difference between projected aggregate Medicare expenditures under the

new limits and projected aggregate expenditures using the limits in

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

updated by the market basket increases since those limits took effect.

This notice does not provide for a permanent extension of the OBRA '93

provision that there be no changes in the home health agency cost

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

and before July 1, 1996. Because this change would require statutory

authority, President Clinton's FY 1997 Budget includes a proposal to do

so.

We are unable to identify the effects of changes to the cost limits

on individual HHAs. In general, we believe that most HHAs will

experience small revenue increases under the new limits; the degree of

that increase will vary depending on the proportion of an HHA's

revenues that come from Medicare, the distribution of services provided

by the HHA, and the HHA's ability to operate within the cost limits.

Table 11 below illustrates the proportion of HHAs that are likely to be

affected by the limits:

Table 11.--HHAs Exceeding the Cost Limits

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

Percent

HHAs of HHAs

HHAs in exceeding exceeding

database the the

limits limits

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

Total HHAs............................. 4987 1720 34.5

[[Page 34361]]

Freestanding........................... 3190 773 24.2

Hospital-based......................... 1797 947 52.7

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

Section 1102(b) of the act requires the Secretary to prepare a

regulatory impact analysis if a final notice 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

603 of the RFA. For purposes of section 1102(b) of the Act, we define a

small rural hospital as a hospital located outside a Metropolitan

Statistical Area with fewer than 50 beds.

We are not preparing a rural impact statement because the Secretary

has determined, and certifies, that this notice will not have a

significant impact on a substantial number of rural hospitals.

In accordance with the provisions of Executive Order 12866, this

notice was reviewed by the Office of Management and Budget.

XII. Other Required Information

A. Waiver of Proposed Notice and 30-Day Delay in 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 public interest.

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

establish revised HHA cost limits for cost reporting periods beginning

on or after July 1, 1991 and annually thereafter (except for cost

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

1996). As discussed in section III above, in accordance with the

statute, we have used the same methodology to develop the schedule of

limits that was used in setting the limits effective for cost reporting

periods beginning on or after July 1, 1993. The cost limits have been

updated by the appropriate market basket adjustment factor to reflect

the cost increases occurring between the cost reporting periods for the

data contained in the data base and June 30, 1997. In addition, as

required under section 1861(v)(1)(L)(iii) of the Act, we have updated

the wage index using the most recent hospital wage index.

If HHAs are to receive timely the benefits of these new cost limits

based on the updated wage index and market basket adjustment factors,

it is necessary that these limits be published in time to take effect

for cost reporting periods beginning on or after July 1, 1996. Because

the methodology used to develop this schedule of limits is for the most

part dictated by the statute and has been previously published for

public comment, we believe 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 the 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 final notice does not impose information collection

requirements. Consequently, it does not need to be reviewed by the

Office of Management and Budget under the authority of the Paperwork

Reduction Act of 1995.

C. Public Comments

Because of the large number of items of correspondence we normally

receive on a notice with comment period, we are not able to acknowledge

or respond to them individually. However, we will consider all comments

concerning the provisions of this notice that we receive by the date

and time specified in the ``DATES'' section of this notice, and we will

respond to those comments in a subsequent notice.

Appendix--Technical Features of the HHA Market Basket Index

As discussed in the preamble of this rule, we are rebasing and

revising the home health agency market basket. This appendix describes

the technical features of the 1993-based index that we are proposing

for this notice. We present this description of the market basket in

three steps:

A synopsis of the structural differences between the 1976-

and the 1993-based market baskets.

A description of the methodology used to develop the cost

category weights in the 1993-based market basket.

A description of the data sources used to measure price

change for each component of the 1993-based market basket, making note

of the differences from the price proxies used in the 1976-based market

basket.

I. Synopsis of Structural Changes Adopted in the Rebased 1993 Home

Health Agency Market Basket

Three major structural differences exist between the 1976-based and

the 1993-based home health agency market baskets.

1. More recent home health agency expenditure data are being used

in the revised and rebased home health agency market basket.

The 1976-based market basket contained cost shares that were

derived from 1976 Medicare cost reports and other available health

industry surveys. The 1993-based market basket uses data from the

latest settled Medicare Cost Reports for Freestanding Home Health

Agencies whose cost reporting periods began after June 1, 1991 and were

settled by October 1, 1995 (one per HHA). These data were primarily

reports from Federal fiscal year 1993; earlier and later data were aged

forward and backward to Federal fiscal year 1993 using price changes.

Additional information from the U.S. Department of Commerce Bureau of

Economic Analysis (BEA) 1987 Input-Output Tables was used for some

subcategories. It was aged to 1993 for relative price changes.

2. Some cost categories have been disaggregated and some cost

categories have been combined. These category changes reflect the

availability of data in the cost reports and in the BEA Input-Output

Tables.

3. We will use Blended HHA Occupational Wage and Benefits Indexes.

This parallels the use of Blended Wage and Salary and Benefits Indexes

in the PPS and Excluded Hospital market baskets, but with adjustments

for the occupational mix of home health agencies.

II. Methodology for Developing the Cost Category Weights

Cost category weights for the 1993-based market basket were

developed in two stages. First, base weights for nine main categories

(Wages and Salaries, Employee Benefits, Transportation, Operation and

Maintenance, Administrative and General, Insurance, Fixed Capital,

Movable Capital, and a residual All Other) were derived from the Home

Health Agency Medicare Cost Reports described above. A weight for

[[Page 34362]]

Contract Service Labor was derived from the HHA Medicare Cost Reports,

and allocated to (a) Wages & Salaries, (b) Employee Benefits, (c) Other

Administrative and General, and (d) Other Expenses. Contract Services

costs were allocated to the above four categories with proportionally

higher weight given to (a) Wages and Salaries and (b) Employee Benefits

to reflect that a substantial portion of contract services are from

individual independent contractors with lower overhead than the average

home health agency. Second, the weight for Administrative and General

was divided into subcategories using cost shares from the 1987 Input-

Output Table for the Other Medical and Health Services industry,

produced by the U.S. Department of Commerce, Bureau of Economic

Analysis, aged to 1993 using price changes. The Other Medical and

Health Services industry is the residual of the Health Services

industry less the Doctors and Dentists, Hospitals, and Nursing and

Personal Care Facilities industries. It includes SIC 804, Other Health

Practitioners; SIC 807, Medical and Dental Laboratories; SIC 808, Home

Health Agencies; SIC 809 Health and Allied Services, not elsewhere

classified; and SIC 074, Veterinary Services. The largest share of

employment in these industries is in home health agencies.

Below we describe the source of the nine main category weights and

their subcategories in the 1993-based market basket.

1. Wages and Salaries, including an allocation for contract

services' labor: The wages and salaries cost category is one of the

nine base weights derived from using the Medicare Cost Reports.

Contract Services, which is also derived from the Medicare Cost

Reports, is split among the (a) Wages and Salaries, (b) Employee

Benefits, (c) Other Administrative and General, and (d) Other Expenses

cost categories. An example of Contract Service Labor is registered

nurses who are employed and paid by firms which contract for their work

with home health agencies or a registered nurse who is an independent

contractor and works out of his or her personal residence. The wages

and salaries cost category was disaggregated into four occupational

subcategories (professional and technical, executive and

administrative, administrative support, home health aides, and all

other service occupations) to reflect the mix of occupational inputs

used by home health agencies. The 1993-based weights were developed

from the Medicare Cost Reports. The 1976-based market basket had a

separate cost category for Contracted Services' Labor.

2. Employee Benefits, including an allocation for contract

services' labor: The employee benefits cost category is one of the nine

base weights derived from the Medicare cost reports. A share of

contract services' labor was allocated to this cost category. Like

wages and salaries, the employee benefit weight in the 1993-based

market basket is a composite of four labor subcategories. These were

developed from the Medicare cost reports.

3. Transportation: The weight for Transportation was derived from

the Medicare Cost Reports. The 1976-based market basket had a similar

cost category.

4. Operations and Maintenance: The weight for Operations and

Maintenance was derived from the Medicare Cost Reports. The 1976-based

market basket had Utilities and Miscellaneous Cost Categories which

have been replaced.

5. Administrative and General, including an allocation for non-

labor associated with contract labor services: The weight for

Administrative and General was derived from the Medicare cost reports.

The subcategories of Telephone, Paper and Printing, Postage, and

residual Other Administrative and General expenses were derived from

the 1987 BEA Input-Output Tables, moved forward to 1993 using price

changes. A share of contract services non-labor expenses (implied other

expenses) was allocated to the Other Administrative and General

subcategory. The 1976-based market basket contained an Office

Administration Costs category.

6. Capital-related: The weights for the subcategories for

Insurance, Fixed Capital, and Movable Capital were derived from the

Medicare cost reports. The 1976-based market basket did not contain

insurance, fixed capital or movable capital as separate categories, but

did contain a Miscellaneous Costs, an Office Administration Costs, a

Rental and Leasing, and a Medical Nursing Supplies cost category.

Capital-related costs include interest expenses.

7. Other Expenses: The weight for Other Expenses was derived from

the Medicare Cost Reports. A share of contract services non-labor

expenses (implied other expenses) was allocated to the Other Expenses

cost category. The 1976-based market basket had a Miscellaneous Costs

cost category.

III. Price Proxies Used To Measure Cost Category Growth

1. Wages and Salaries, including an allocation for contract

services' labor: For measuring price growth in the 1993-based market

basket, price proxies are applied to the five occupational

subcategories within the wages and salaries component, as is done in

the hospital market baskets, weighted to reflect the home health agency

occupational mix. The Professional and Technical occupational

subcategory is represented by a blend of health industry and economy-

wide price proxies. Therefore, there are five price proxies for four

occupational subcategories (the Professional and Technical occupational

subcategory has a blend of two). Table 4 at the end of this appendix

describes the wages and salaries component of the market basket.

2. Employee Benefits, including an allocation for contract

services' labor: For measuring price growth in the 1993-based market

basket, price proxies are applied to the four occupational

subcategories within the employee benefits component, as is done in the

hospital market baskets, weighted to reflect the home health agency

occupational mix. The Professional and Technical occupational

subcategory is represented by a blend of health industry and economy-

wide price proxies. Therefore there are five price proxies for four

occupational subcategories (the Professional and Technical subcategory

has a blend of two). Table 5 at the end of this appendix describes the

employee benefits component of the market basket.

3. Operations and Maintenance: The percentage change in the price

of Fuel and Other Utilities as measured by the Consumer Price Index was

applied to this component. This is a revision from the 1976-based index

in which the percentage change in the price of utilities was measured

by a composite fuel and other utilities index.

4. Telephone: The percentage change in the price of Telephone

Service as measured by the Consumer Price Index was applied to this

component. This is a revision from the 1976-based index when the cost

of telephone service was not specifically measured.

5. Paper and Printing: The percentage change in the price of Paper

and Printing as measured by the Consumer Price Index for Household

Paper Products and Stationery Supplies was applied to this component.

This is a revision from the 1976-based index when the cost of paper and

printing was not specifically measured.

6. Postage: The percentage change in the price of Postage as

measured by the Consumer Price Index was applied to this component.

This is a revision from the 1976-based index when the cost of postage

was not specifically measured.

7. Other Administrative and General, including an allocation for

non-labor

[[Page 34363]]

expenses associated with contract services: The percentage change in

the price of services as measured by the Consumer Price Index was

applied to this component. In the 1976-based market basket the CPI for

Services was used as a proxy for Office Administration costs.

8. Insurance: The percentage change in the price of Household

Insurance as measured by the Consumer Price Index was applied to this

component. This is a revision from the 1976-based market basket in

which the price of insurance was not specifically measured.

9. Transportation: The percentage change in the price of

Transportation as measured by the Consumer Price Index was applied to

this component. The same proxy was used for Transportation in the 1976-

based market basket.

10. Fixed capital: The percentage change in the price of Owner's

Equivalent Rent as measured by the Consumer Price Index was applied to

this component. The percentage change in the price of Residential Rent

as measured by the Consumer Price Index was used as a proxy for Rental

and Leasing in the 1976-based market basket.

11. Movable Capital: The percentage change in the price of

Machinery and Equipment as measured by the Producer Price Index was

applied to this component. In the 1976-based market basket the

percentage change in the price of Medical Equipment and Supplies as

measured by the Consumer Price Index was applied to the Medical Nursing

Supplies component.

12. Other Expenses, including an allocation for non-labor expenses

associated with contract services: The percentage change in the price

of All Items Less Food and Energy as measured by the Consumer Price

Index was applied to this component. This is a revision from the 1976-

based index, when the percentage change in the price of All Items as

measured by the Consumer Price Index was applied to the Miscellaneous

Costs component.

A comparison of price proxies used in the 1993-based and the 1976-

based home health agency market baskets follows:

Appendix Table 1.--A Comparison of Price Proxies Used in the 1993-Based

and 1976-Based Home Health Agency Market Baskets

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

1993-Based price 1976-Based price

Cost category proxy proxy

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

Compensation:

Wages and Salaries...... HHA Occupational AHE Hospitals

Wage Index. (Private

nonsupervisory

workers).

Employee Benefits....... HHA Occupational BEA Supplements to

Benefits Index. Wages & Salaries

per Worker (BLS);

(BEA Aggregate

Supplements/number

of workers from

BLS).

Operations and CPI-U Fuel & Other Index composed of

Maintenance. Utilities. CPI-U Water &

Sewage; IPD Fuel &

Oil Coal (PCE); IPD

Electricity (PCE);

IPD Natural Gas

(PCE).

Administrative and .................... CPI-U Services

General. (category: Office

Administration

Costs).

Telephone............... CPI-U Telephone..... ....................

Paper and Printing...... CPI-U Household ....................

Paper, Paper

Products &

Stationery Supplies.

Postage................. CPI-U Postage....... ....................

Other Administrative and CPI-U Services...... ....................

General.

Transportation.......... CPI-U Private CPI-U

Transportation. Transportation.

Capital-Related:

Insurance............... CPI-U Household ....................

Insurance.

Fixed Capital........... CPI-U Owner's CPI-U Residential

Equivalent Rent. Rent category:

Rental & Leasing.

Movable Capital......... PPI Machinery & CPI-U

Equipment. Nonprescription

Medical Equipment &

Supplies.

Other Expenses.......... CPI-U All Items Less CPI-U All Items.

Food & Energy.

Contracted Services..... Contained within Composite All Other

Wages & Salaries, HHA Cost Category

Employee Benefits, Weights with

Other associated price

Administrative & proxy variables.

General & Other

Expenses cost

categories; see

those price proxies

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

We allocated the Contract Services' share of home health agency

expenses among (a) Wages and Salaries, (b) Employee Benefits, (c) Other

Administrative and General, and (d) Other Expenses. The split chosen is

one of three alternatives that we examined. In Alternative A, we split

the Contract Services cost share only between (a) Wages and Salaries

and (b) Employee Benefits. In Alternative B, we split the Contract

Services cost share among (a) Wages and Salaries, (b) Employee

Benefits, (c) Other Administrative and General, and (d) Other Expenses.

In Alternative C, the option selected, we split the Contract Services

cost share among (a) Wages and Salaries, (b) Employee Benefits, (c)

Other Administrative and General, and (d) Other Expenses, but we gave

proportionally more to (a) Wages and Salaries and (b) Employee

Benefits, and less to (c) Other Administrative and General and (d)

Other Expenses. This third middle-ground option recognizes that

personnel in Contract Services may be employees of a firm contracting

with home health agencies or may be independent contractors, working

out of their personal residences, with relatively small non-labor

expenses.

Results of the three alternatives appear in Appendix Table 2, while

a comparison of historical and forecasted percent changes are shown in

Appendix Table 3.

[[Page 34364]]

Appendix Table 2.--Three Alternatives for Allocation of Contract Services; Cost Share

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

Alternative C: Split of

contract services' cost

Alternative B: Split of share among (a) wages

contract services' cost and salaries, (b)

Alternative A: Split of share among (a) wages employee benefits, (c)

contract services' cost and salaries, (b) other administrative

Cost category share between (a) wages employee benefits, (c) and general, and (d)

and salaries and (b) other administrative other expenses, with

employee benefits and general, and (d) smaller allocation to

other expenses (c) and (d) and larger

allocation to (a) and

(b) (selected)

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

Compensation......................... 79.224 76.479 77.668

Wages & Salaries..................... 65.512 63.243 64.226

Employee Benefits.................... 13.712 13.327 13.442

Operations & Maintenance............. 0.832 0.832 0.832

Administrative & General............. 8.791 10.163 9.569

Telephone............................ 0.725 0.725 0.725

Paper & Printing..................... 0.529 0.529 0.529

Postage.............................. 0.724 0.724 0.724

Other Administrative & General....... 6.813 8.165 7.591

Transportation....................... 3.405 3.405 3.405

Capital-Related...................... 3.204 3.204 3.204

Insurance............................ 0.560 0.560 0.560

Fixed Capital........................ 1.764 1.764 1.764

Movable Capital...................... 0.880 0.880 0.880

All Other Expenses................... 4.544 5.916 5.322

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

Total.......................... 100.000 100.000 100.000

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

Appendix Table 3.--A Comparison of Three Alternatives for Allocation of Contract Services' Cost Share for the

1993-Based Home Health Agency Market Basket, Percent Change, 1993-1998

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

Alternative C: Split of

Contract Services' cost

Alternative B: Split of share among (a) Wages

Contract Services' cost and Salaries, (b)

Alternative A: Split of share among (a) Wages Employee Benefits, (c)

Contract Services' cost and Salaries, (b) Other Administrative

Fiscal Years beginning July 1 share between (a) Wages Employee Benefits, (c) and General, and (d)

and Salaries and (b) Other Administrative Other Expenses, with

Employee Benefits and General, and (d) smaller allocation to

Other Expenses (c) and (d) and larger

allocation to (a) and

(b) (Selected)

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

Historical:

July 1992, FY 1993............... 3.40 3.40 3.40

July 1993, FY 1994............... 3.00 3.00 3.00

July 1994, FY 1995............... 2.90 2.90 2.90

Forecasted:

July 1995, FY 1996............... 2.70 2.70 2.70

July 1996, FY 1997............... 3.10 3.10 3.10

July 1997, FY 1998............... 3.20 3.20 3.20

Historical Average: 1993-1995........ 3.10 3.10 3.10

Forecasted Average: 1996-1998........ 3.00 3.00 3.00

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

Source: DRI/McGraw Hill HCC, 1st Qtr. 1996;@USSIM/TREND25 [email protected]/CONTROL961.

Released by HCFA, OACT, Office of National Health Statistics.

Note that there is no difference in historical performance or

forecasts among the three alternatives.

The components of the HHA Occupational Wages and Salaries and

Occupational Benefit Indexes are listed below:

Appendix Table 4.-- HCFA HHA Occupational Wages and Salaries Index

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

Cost category Weight Price proxy.

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

Skilled Nursing & Therapists & Other Professional/ 45.758 50% ECI for Wages & Salaries in Private Industry

Technical, Including an allocation for Contract for Professional. Specialty & Technical Workers

Services' Labor. and 50% ECI for Wages & Salaries for Civilian

Hospital Workers.

Managerial/Supervisory, including an allocation 5.527 ECO for Wages & Salaries in Private Industry for

for Contract Services' Labor. Executive, Administrative & Managerial Workers.

Clerical, including an allocation for Contract 15.019 ECI for Wages & Salaries in Private Industry for

Services' Labor. Administrative Support, Including Clerical

Workers.

Service, including an allocation for Contract 33.696 ECI for Wages & Salaries in Private Industry

Services' Labor. Service Occupations

-----------

[[Page 34365]]

Total....................................... 100.00

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

The total weight for wages and salaries in the 1993-based Home

Health Agency market basket is 64.226 percent.

Appendix Table 5.--HCFA HHA Occupational Benefits Index (Employee Benefits Component of the 1993-Based Market

Basket)

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

Cost category Weight Price proxy

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

Skilled Nursing & Therapists & Other Professional/ 44.182 50% ECI for Benefits in Private Industry for

Technical, including an allocation for Contract Professional. Specialty & Technical Workers and

Services' Labor. 50% ECI for Benefits for Civilian Hospital

Workers.

Managerial/Supervisory, including an allocation 5.097 ECI for Benefits in Private Industry for

for Contract Services' Labor. Executive, Administrative & Managerial Workers.

Clerical, including an allocation for Contract 15.848 ECI for Benefits in Private Industry for

Services' Labor. Administrative Support, Including Clerical

Workers.

Service, including an allocation for Contract 34.873 ECI for Benefits in Private Industry Service

Services' Labor. Occupations.

-----------

Total....................................... 100.00

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

The total weight for employee benefits in the 1993-based Home

Health Agency market basket is 13.442 percent.

Authority: Section 1861(v)(1)(L) of the Social Security Act (42

U.S.C. 1395x(v)(1)(L)); section 4207(d) of Pub. L. 101-508 (42

U.S.C. 1395x (note)).

(Catalog of Federal Domestic Assistance Program No. 93.773

Medicare--Hospital Insurance)

Dated: June 24, 1996.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

Dated: June 26, 1996.

Donna E. Shalala,

Secretary.

[FR Doc. 96-16883 Filed 6-27-96; 4:08 pm]

BILLING CODE 4120-01-P