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33430 Federal Register / Vol. 72, No.

116 / Monday, June 18, 2007 / Proposed Rules

TABLE 12a.—NRS CASE-MIX ADJUSTMENT VARIABLES AND SCORES—Continued


Description Score

28 ................................. M0476 = 2 (status of most problematic stasis ulcer: early/partial granulation) ......................................... 18
29 ................................. M0476 = 3 (status of most problematic stasis ulcer: not healing) ............................................................. 28
30 ................................. M0488 = 3 (status of most problematic surgical wound: not healing) ....................................................... 18
31 ................................. M0488 = 2 (status of most problematic surgical wound: early/partial granulation) ................................... 5
Other Clinical Factors:
32 ................................. M0550 = 1 (ostomy not related to inpt stay/no regimen change) .............................................................. 21
33 ................................. M0550 = 2 (ostomy related to inpt stay/regimen change) ......................................................................... 35
34 ................................. Any ‘‘Selected Skin Conditions’’ AND M0550 = 1 (ostomy not related to inpt stay/no regimen change) 22
35 ................................. Any ‘‘Selected Skin Conditions’’ AND M0550 = 2 (ostomy related to inpt stay/regimen change) ............ 7
36 ................................. M0250 (Therapy at home) = 1 (IV/Infusion) .............................................................................................. 11
37 ................................. M0470 = 2 or 3 (2 or 3 stasis ulcers) ........................................................................................................ 17
38 ................................. M0470 = 4 (4 stasis ulcers) ....................................................................................................................... 34
39 ................................. M0520 = 2 (patient requires urinary catheter) ........................................................................................... 17

10. On page 25444, after Table 23b rate including NRS for that particular DEPARTMENT OF HEALTH AND
entitled ‘‘Proposed National 60–Day episode.’’ HUMAN SERVICES
Episode Amounts Updated by the 11. On page 25447, in the 12th line,
Estimated Home Health Market Basket Office of Inspector General
the figure ‘‘0.22198’’ is corrected to read
Update for CY 2008, Before Case-Mix ‘‘0.22918’’.
Adjustment, Wage Index Adjustment 42 CFR Part 1001
Based on the Site of Service for the 12. On page 25459, in Addendum A,
RIN 0991–AB23
Beneficiary or Applicable Payment a. In the first column, in line 29, the
Adjustment for Episodes Beginning and Wage Index for ‘‘Massachusetts’’ the Medicare and State Health Care
Ending in CY 2008,’’ in the first column, figure ‘‘1.0661’’ is corrected to read Programs: Fraud and Abuse;
in the first full paragraph, in lines 14 ‘‘1.1662’’. Clarification of Terms and Application
through 43, the sentence ‘‘Therefore, to b. In the second column, in line 15, of Program Exclusion Authority for
calculate an episode’s prospective the superscript ‘‘1’’ which appears after Submitting Claims Containing
payment amount * * *’’ and ending Excessive Charges
‘‘New Jersey’’ is deleted.
with the sentence ‘‘The resulting AGENCY: Office of Inspector General
c. In the third column, in lines 17
amount is the national case-mix and (OIG), HHS.
through 22, the footnote ‘‘1’’ at the end
wage adjusted national standardized 60- ACTION: Notice of withdrawal of
of Addendum A, the sentence ‘‘All
day episode payment rate for that proposed rulemaking.
counties within the State are classified
particular episode’’ is corrected to read
as rural. No short-term acute care SUMMARY: On September 15, 2003, we
as follows: ‘‘To calculate an episode’s
hospitals are located in the area(s)’’ is published a notice of proposed
prospective payment amount, take the
corrected to read as follows: ‘‘There are rulemaking (68 FR 53939) soliciting
non-adjusted national standardized 60-
no short-term, acute care hospitals public comments regarding further
day episode payment rate and multiply
located in rural area(s) in Massachusetts guidance on OIG’s exclusion authority
it by the appropriate case-mix weight
from Table 5 of this rule. Next, multiply from which to calculate a wage index under section 1128(b)(6)(A) of the Social
the case-mix adjusted national for CY 2008.’’ Security Act and 42 CFR 1001.701 of
standardized 60-day episode payment (Catalog of Federal Domestic Assistance our regulations. Having considered the
by the labor portion (77.082 percent); Program No. 93.773, Medicare—Hospital public comments and for the reasons
multiply this result by the appropriate Insurance; and Program No. 93.774, explained below, we are not
wage index factor listed in Addendum Medicare—Supplementary Medical promulgating a final rule.
A or B to wage-adjust the 60-day Insurance Program) DATES: The notice of proposed
episode payment. Next multiply the Dated: June 12, 2007.
rulemaking published on September 15,
case-mix adjusted national standardized 2003 at 68 FR 53939 is withdrawn as of
Ann C. Agnew,
60-day episode payment by 22.918 June 18, 2007.
Executive Secretary to the Department. FOR FURTHER INFORMATION CONTACT: Joel
percent to compute the non-labor [FR Doc. 07–2987 Filed 6–13–07; 11:55 am]
portion. Add this result to the wage- Schaer, Office of External Affairs, (202)
adjusted labor portion to get the case- BILLING CODE 4120–01–P 619–0089.
mix and wage adjusted national 60-day SUPPLEMENTARY INFORMATION:
episode payment without NRS. I. Background
Calculate the NRS amount by
multiplying the episode’s NRS weight A. Current Legal Framework
(taken from Table 11 of this proposed Section 1128(b)(6)(A) of the Social
rule) by the NRS conversion factor. This Security Act (the Act) provides that the
jlentini on PROD1PC65 with PROPOSALS

adjusted NRS payment is added to the Secretary may exclude any individual or
case-mix and wage-adjusted national entity from participation in any Federal
standardized 60-day episode payment. health care program if the Secretary
The resulting amount is the case-mix determines that the individual or entity:
and wage-adjusted national ‘‘has submitted or caused to be submitted
standardized 60-day episode payment bills or requests for payment (where such

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Federal Register / Vol. 72, No. 116 / Monday, June 18, 2007 / Proposed Rules 33431

bills or requests are based on charges or cost) indirectly on the provider’s charges or provider’s usual charges or costs. We
under title XVIII [of the Act] or a State health costs, especially in Medicare Part B, specifically sought public comment on
care program containing charges (or, in including, but not limited, to clinical the proposed definition of
applicable cases, requests for payment of
laboratory services, durable medical ‘‘substantially in excess’’ and the 120
costs) for items or services furnished
substantially in excess of such individual’s or equipment, medical supplies, and drugs percent benchmark. We also solicited
entity’s usual charges (or, in applicable cases, (65 FR 53939, 53940).2 comments on whether the benchmark
substantially in excess of such individual’s or In the notice of proposed rulemaking, should vary based on certain factors
entity’s costs) for such items or services, we proposed to define the term ‘‘usual (e.g., whether the benchmark should be
unless the Secretary finds there is good cause charges’’ by using one of two alternative lower for some providers than others
for such bills or requests containing such approaches that we described in the based on the type or location of a
charges or costs.’’ proposed rule—either the provider’s provider or the reimbursement
The Secretary has specifically delegated average charge or the provider’s median methodology applicable to the provider
the authority under section 1128 of the charge (the ‘‘fiftieth percentile’’ or whether the benchmark should take
Act to the Department’s Office of method). We proposed that a provider’s into account certain market
Inspector General (OIG) (53 FR 12993, ‘‘usual charges’’ would include: (1) considerations) and, if so, how and why
April 20, 1988). Charges billed directly to cash paying (68 FR 53939, 53942).
The regulations interpreting section patients; (2) the amounts billed to We also proposed to clarify the
1128(b)(6)(A) of the Act are set forth at patients covered by indemnity insurers statutory ‘‘good cause’’ exception by
42 CFR 1001.701. Under with which the provider has no amending § 1001.701(c)(1) to provide
§ 1001.701(a)(1), OIG may exclude an contractual arrangement; (3) any fee-for- that an individual or entity would not
individual or entity that has service rate that a provider contractually be excluded for submitting, or causing
‘‘[s]ubmitted, or caused to be submitted, agrees to accept from any payor, to be submitted, bills or requests for
bills or requests for payments under including any discounted fee-for-service payment that contain charges or costs
Medicare or any of the State health care rates negotiated with managed care substantially in excess of usual charges
programs containing charges or costs for plans; (4) rates offered to the or costs when such charges or costs are
items or services furnished that are Department of Defense for its various due to (1) unusual circumstances or
substantially in excess of such health care plans, including TriCare; medical complications requiring
individual’s or entity’s usual charges or and (5) charges of the provider’s additional time, effort, or expense; (2)
costs for such items or services.’’ In affiliated entities. This approach increased costs associated with serving
addition, § 1001.701(c)(1) provides that recognized the increasing prevalence of Medicare or Medicaid beneficiaries; or
an individual or entity will not be contractually negotiated rates with (3) other good cause.
excluded for ‘‘[s]ubmitting, or causing to private customers. We also specifically We received 323 timely comments to
be submitted, bills or requests for proposed that certain charges would not the proposed rule from a cross-section
payment that contain charges or costs be included when determining the usual of interested parties. Some commenters
substantially in excess of usual charges charge, such as (1) charges for services supported the proposed rule, noting that
or costs when such charges or costs are provided to uninsured patients free of certain providers were continuing to
due to unusual circumstances or charge or at a substantially reduced rate; charge Medicare substantially in excess
medical complications requiring (2) capitated payments; (3) rates offered of their usual charges or costs and that,
additional time, effort, expense or other under hybrid fee-for-service in some cases, these practices resulted
good cause.’’ The regulations at arrangements whereby more than 10 in unfair competition. Other
§ 1001.701(d)(1) further provide that an percent of the individual’s or entity’s commenters considered the proposed
exclusion imposed under section maximum potential compensation could rule unnecessary given Medicare’s
1128(b)(6)(A) of the Act will be for a be paid in the form of a bonus and/or increasing reliance on prospective
period of 3 years, unless certain withhold payment; and (4) fees set by payment and fee schedules for
aggravating or mitigating circumstances Medicare, State health care programs, reimbursement of providers, while other
exist. and other Federal health care programs, commenters thought that our proposed
subject to certain limitations. definitions of ‘‘usual charges’’ and
B. The Proposed Rule ‘‘substantially in excess’’ were flawed or
In addition, we proposed to defined
OIG published a notice of proposed the term ‘‘substantially in excess’’ for unworkable. In particular, some
rulemaking on September 15, 2003 to the purposes of section 1128(b)(6)(A) of commenters argued that the 120 percent
provide further guidance on OIG’s the Act to mean only those charges or benchmark was too low or arbitrary, and
exclusion authority under section costs that are more than 120 percent of that a single, fixed benchmark was not
1128(b)(6)(A) of the Act and 42 CFR an individual’s or entity’s usual charges appropriate across all types of providers
1001.701 (68 FR 53939).1 We noted in or costs. In other words, providers or across all items and services.
the preamble to the proposed rule that, submitting charges or costs that were In addition, several commenters
notwithstanding the increasing use of equal to or less than 120 percent of their expressed concern that finalizing the
fee schedules by Federal health care usual charges or costs would not be rule might have the unintended
programs, many payment provisions of subject to OIG’s permissive exclusion consequence of increasing health care
the Act continue to be charge-based in authority under section 1128(b)(6)(A) of costs generally. These commenters
that programs are only obligated to pay explained that, to comply with the rule,
the Act. Notwithstanding the 120
the lower of the actual charge or the fee providers that were charging Medicare
percent benchmark, exclusion would
schedule amount. Therefore, section and State health care programs in excess
remain within the discretion of OIG for
1128(b)(6)(A) of the Act could still of the 120 percent benchmark could
those providers submitting charges or
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apply to bills and requests for payment either lower charges to Medicare and
costs to Medicare or State health care
submitted for items or services for State health care programs or increase
programs more than 120 percent of the
which payment is based directly or charges to other payors. The
2 For convenience, the term ‘‘provider’’ in this commenters were concerned that some
1 Forprior OIG rulemaking history, see 68 FR notice of withdrawal of proposed rulemaking providers would opt to raise their prices
53939, 53940. includes both suppliers and providers. to other payors rather than lower their

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33432 Federal Register / Vol. 72, No. 116 / Monday, June 18, 2007 / Proposed Rules

charges to Medicare and State health paying more than other customers. Unless paying patients for the items or services
care programs. This behavior, the the price differential can be justified by costs furnished.’’ (http://oig.hhs.gov/fraud/
commenters noted, could result in that are uniquely associated with the docs/alertsandbulletins/2004/
Medicare program, the provider is simply
increased health care costs across the overcharging Medicare. In such
FA021904hospitaldiscounts.pdf)
health care industry. circumstances, section 1128(b)(6)(A) of the Nothing in this withdrawal notice
Act obligates providers to either charge affects OIG’s long-standing
C. Determination Not To Promulgate a
Medicare and Medicaid approximately the interpretation of the statute in this
Final Rule same amount as they usually charge their regard, and it continues to be OIG’s
We have carefully reviewed the other purchasers for the same items or position that, when calculating their
public comments and considered the services or risk exclusion from all Federal ‘‘usual charges’’ for purposes of section
issues raised by promulgating a final health care programs.’’ (68 FR 53939, 53940). 1128(b)(6)(A) of the Act, individuals
rule that would define the terms While the principal protection against and entities do not need to consider free
‘‘substantially in excess’’ and ‘‘usual overpaying for items and services or substantially reduced charges to (i)
charges,’’ and clarify the ‘‘good cause’’ furnished to Medicare and Medicaid uninsured patients or (ii) underinsured
exception in the manner proposed in beneficiaries is timely and accurate patients who are self-pay patients for
the notice of proposed rulemaking. For updating of the fee schedules, OIG the items or services furnished.
the reasons set forth below, we decline continues to believe that section
to promulgate a final rule. 1128(b)(6)(A) of the Act provides useful II. Withdrawal of Notice of Proposed
First, we have concluded that we do backstop protection for the public fisc Rulemaking
not have sufficient information at this from providers that routinely charge Accordingly, the notice of proposed
time to establish a single, fixed Medicare or Medicaid substantially rulemaking that was published in the
numerical benchmark for ‘‘substantially more than their other customers (68 FR Federal Register on September 15, 2003
in excess’’ that could be applied 53939, 53941). We will continue to (68 FR 53939) is withdrawn.
equitably across health care sectors and evaluate billing patterns of individuals
across items and services, as we and entities on a case-by-case basis and III. Regulatory Impact Analysis
originally proposed. Our intent in to use all tools available to OIG to Since this action only withdraws a
proposing the 120 percent benchmark address instances where Medicare or notice of proposed rulemaking, it is
was to create a bright line standard by Medicaid are charged substantially more neither a proposed nor a final rule, and
which all providers could evaluate their than other payors, without good cause. therefore, is not covered under
usual charges. Upon reviewing the Executive Order 12866 or the Regulatory
D. Application of Section 1128(b)(6)(A)
comments, we believe that a single Flexibility Act (5 U.S.C. 601–612).
of the Act to Discounts to the Uninsured
benchmark for ‘‘substantially in excess’’
In the past, some providers have List of Subjects in 42 CFR Part 1001
is unadvisable at this time. We believe
it is more appropriate to continue to expressed concern that offering Administrative practice and
evaluate billing patterns of individuals discounts to uninsured patients or other procedure, Fraud, Health facilities,
and entities on a case-by-case basis. patients who cannot afford their care Health professions, Medicaid, Medicare.
Second, based on our review of the might skew the provider’s ‘‘usual Dated: May 10, 2007.
comments, we have determined that charges’’ for purposes of section
Daniel R. Levinson,
there is insufficient information at this 1128(b)(6)(A) of the Act and possibly
subject them to exclusion. OIG has Inspector General.
time to assure ourselves that a final rule
never excluded or contemplated Approved: May 25, 2007.
would not have the unintended effect of
increasing health care costs across the excluding any provider for offering bona Michael O. Leavitt,
industry. fide discounts to uninsured patients or Secretary.
OIG remains concerned about to other patients who cannot afford the [FR Doc. E7–11663 Filed 6–15–07; 8:45 am]
disparities in the amounts charged to provider’s care. OIG believes that BILLING CODE 4150–01–P
Medicare and Medicaid when compared section 1128(b)(6)(A) of the Act can be
to private payers. While Medicare pays reasonably interpreted to allow
for many items and services using fee providers to carve out discounts to these DEPARTMENT OF HOMELAND
schedules that serve as payment patients when calculating their ‘‘usual SECURITY
ceilings, many of these fee schedules are charges’’ to other customers. To this
infrequently updated or may be updated end, the September 15, 2003 proposed Federal Emergency Management
using methods that do not adequately rule made clear that free or substantially Agency
capture prevailing market rates for the reduced prices offered to such patients
same items and services. We recognize would not be factored into a provider’s 44 CFR Part 67
that, in most cases, these fee schedules usual charges for purposes of the
exclusion authority (68 FR 53939, [Docket No. FEMA–D–7802]
are intended to approximate a
reasonable payment amount. However, 53941). To further assure the industry, Proposed Flood Elevation
fee schedules are administered prices we issued guidance on our Web site on
Determinations
that, in some situations, may quickly February 19, 2004 specifically providing
become out-dated. As we noted in the that, pending a decision with respect to AGENCY: Federal Emergency
preamble to the September 15, 2003 the September 15, 2003 proposed rule, Management Agency, DHS.
proposed rule: it would continue to be OIG’s ACTION: Proposed rule.
enforcement policy ‘‘that, when
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‘‘When market forces cause a provider’s calculating their ‘usual charges’ for SUMMARY: Technical information or
usual charge to most of its customers to drop
substantially below the Medicare fee
purposes of section 1128(b)(6)(A), comments are requested on the
schedule allowance, some providers continue individuals and entities do not need to proposed Base (1% annual chance)
to charge Medicare at least the fee schedule consider free or substantially reduced Flood Elevations (BFEs) and proposed
amount. In this situation, the provider creates charges to (i) uninsured patients or (ii) BFEs modifications for the communities
a two-tier pricing structure with Medicare underinsured patients who are self- listed below. The BFEs are the basis for

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