B-318553

August 25, 2009

The Honorable MaxBaucus
Chairman
The Honorable Charles E. Grassley
Ranking Minority Member
Committee on Finance
United States Senate

The Honorable Henry A.Waxman
Chairman
The Honorable Joe L. Barton
Ranking Minority Member
Committee on Energy and Commerce
House of Representatives

The Honorable Charles B. Rangel
Chairman
The Honorable Dave Camp
Ranking Minority Member
Committee on Ways and Means
House of Representatives

Subject: Department of Health and Human Services, Centers for Medicare andMedicaid Services: Medicare Program; Prospective Payment System andConsolidated Billing for Skilled Nursing Facilities for FY 2010; Minimum DataSet, Version 3.0 for Skilled Nursing Facilities and Medicaid Nursing Facilities

Pursuant to section801(a)(2)(A) of title 5, United States Code, this is our report on a major rulepromulgated by the Department of Health and Human Services, Centers forMedicare and Medicaid Services (CMS), entitled Medicare Program; ProspectivePayment System and Consolidated Billing for Skilled Nursing Facilities for FY2010; Minimum Data Set, Version 3.0 for Skilled Nursing Facilities and MedicaidNursing Facilities (RIN: 0938-AP46). Wereceived the rule on July 31, 2009. Itwas published in the Federal Registeras a final rule on August 11, 2009 with a stated effective date of October 1,2009. 74 Fed. Reg. 40,288.

This final rule updates the payment rates used under theprospective payment system (PPS) for skilled nursing facilities (SNFs), forfiscal year (FY) 2010. In addition, itrecalibrates the case-mix indexes so that they more accurately reflect parityin expenditures related to the implementation of case-mix refinements inJanuary 2006. The rule also makescertain technical corrections.

This final was received on July 31, 2009 and published onAugust 11, 2009. This rule has a statedeffective date of October 1, 2009. TheCongressional Review Act requires major rules to have a 60-day delay in theireffective date following their publication in the Federal Register or receipt of the rule by Congress, whichever islater. 5 U.S.C. sect.801(a)(3)(A).Therefore, this notice does not have the 60-day delay in effective daterequired by the Congressional Review Act.

Enclosed is our assessment of the CMSs compliance withthe procedural steps required by section 801(a)(1)(B)(i) through (iv) of title5 with respect to the rule.Notwithstanding the 60-day delay in effective date required by theCongressional Review Act, our review of the procedural steps taken indicatesthat CMS complied with the applicable requirements.

If you have any questions about this report or wish tocontact GAO officials responsible for the evaluation work relating to thesubject matter of the rule, please contact Shirley A. Jones, Assistant GeneralCounsel, at (202) 512-8156.

signed

Robert J. Cramer
Managing Associate General Counsel

Enclosure

cc: AnnieLamb
Regulation Coordinator
Department of Health and
Human Services

ENCLOSURE

REPORT UNDER 5 U.S.C. sect.801(a)(2)(A) ON A MAJORRULE
ISSUED BY THE
DEPARTMENT OF HEALTH AND HUMAN SERVICES,
CENTERS FOR MEDICARE AND MEDICAID SERVICES
ENTITLED
"MEDICARE PROGRAM; PROSPECTIVE PAYMENT SYSTEM AND CONSOLIDATED BILLING FORSKILLED NURSING FACILITIES FOR
FY 2010; MINIMUM DATA SET, VERSION 3.0 FOR SKILLED NURSING
FACILITIES AND MEDICAID NURSING FACILITIES"
(RIN: 0938-AP46)

(i) Cost-benefit analysis

Centers for Medicare & Medicaid Services (CMS) analyzedthe changes in estimated payments resulting from of this final rule. CMS projects that overall estimated paymentsfor skilled nursing facilities (SNFs) in fiscal year 2010 will decrease by $360million, or 1.1 percent, compared with those in fiscal year 2009. CMS further estimates that SNFs in urban areaswould experience a 1.1 percent decrease in estimated payments compared withfiscal year 2009 and SNFs in rural areas would experience a 1.3 percentdecrease in estimated payments compared with fiscal year 2009.

(ii) Agency actions relevant to the RegulatoryFlexibility Act, 5 U.S.C. sections603-605, 607, and 609

CMS determined that this final rule will not have asignificant impact on a substantial number of small entities. Further, CMS concluded that the rule will nothave a significant impact on the operations of a substantial number of smallrural hospitals.

(iii) Agency actions relevant to sections 202-205 ofthe Unfunded Mandates Reform Act of 1995, 2 U.S.C. sections1532-1535

CMS determined that this final rule would not imposespending costs on state, local, or tribal governments in the aggregate, or bythe private sector, of $100 million ($133 million adjusted for inflation).

(iv) Other relevant information or requirements underacts and executive orders

Administrative Procedure Act, 5 U.S.C. sections551 etseq.

On May 12, 2009, CMS published a notice of proposedrulemaking setting forth updates to the payment rates used under theprospective payment system for skilled nursing facilities for fiscal year2010. 74 Fed. Reg. 22,208. CMS received 112 timely items ofcorrespondence from the public. Thecomments originated primarily from various trade associations and majororganizations, but also from individual providers, corporations, governmentagencies, and private citizens. CMSresponded to the comments in the final rule.74 Fed. Reg. 40,29240,357.

Paperwork Reduction Act, 44 U.S.C. sections3501-3520

CMS determined that this final rule contains informationcollection requirements under the Act and in the rule requests public commenton the information collection requirements.CMS determined that the resident assessment information collectionrequirement is currently approved under OMB Control Number 0938-0739. CMS determined that the specification forresident assessment instrument information collection requirement is exempt fromthe Act under sections 4204(b) and 4214(d) of the Omnibus Budget ReconciliationAct of 1987 because these statutory provisions waive Paperwork Reduction Actrequirements with respect to the revised requirement for participationintroduced by the nursing home reform legislation. 42 U.C.S. sections1395i-3 note, 1396r note.

Statutory authorization for the rule

CMS stated that it promulgated this final rule under theauthority of sections 1302 and 1395hh, title 42, United States Code.

Executive Order No. 12,866 (Regulatory Planning and Review

CMS determined that this final rule is an economicallysignificant rule under the Order because it estimates impact of the rule willbe a $690 million increase from the update to the payment rates and a $1.05billion reduction (on an incurred basis) from the recalibration of the case-mixadjustment, thereby yielding a net decrease of $360 million in payments toskilled nursing facilities. OMB reviewedthis rule.

Executive Order No. 13,132 (Federalism)

CMS determined that this final rule would have nosubstantial direct effect on state and local governments, preempt state law, orotherwise have federalism implications.