Department of Health and Human Services, Centers for Medicare & Medicaid Services: Medicare Program; Changes to the Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and Fiscal Year 2010 Rates; and Changes to the Long-Term Care Hospital Prospective Payment System and Rate Years 2010 and 2009 Rates

GAO-09-984R, Sep 11, 2009

Contact:

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

GAO reviewed the Department of Health and Human Services, Centers for Medicare and Medicaid Services' (CMS) new rule on Medicare Program changes to the Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and Fiscal Year 2010 rates. GAO found that (1) the final rule revises Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals to implement changes arising from CMS's continuing experience with those systems. It also implements certain statutory provisions relating to payments to long-term care hospitals (LTCHs) and LTCH satellite facilities, the establishment of LTCHs and LTCH satellite facilities, and increases in beds in existing LTCHs and LTCH satellite facilities under the LTCH prospective payment system (PPS); and (2) although CMS did not comply with the 60-day delay in effective date required by the Congressional Review Act, CMS complied with other applicable requirements in promulgating the rule.

Department of Health and Human Services, Centers for Medicare & Medicaid Services: Medicare Program; Changes to the Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and Fiscal Year 2010 Rates; and Changes to the Long-Term Care Hospital Prospective Payment System and Rate Years 2010 and 2009 Rates, GAO-09-984R, September 11, 2009

B-318602

September 11, 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 & Medicaid Services: Medicare Program; Changes to the Hospital InpatientProspective Payment Systems for Acute Care Hospitals and Fiscal Year 2010 Rates; and Changes to the Long-Term Care Hospital Prospective Payment System and Rate Years 2010 and 2009 Rates

Pursuant to section801(a)(2)(A) of title 5, United States Code, this is our report on major rulespromulgated by the Department of Health and Human Services, Centers forMedicare & Medicaid Services (CMS), entitled "Medicare Program; Changes tothe Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals andFiscal Year 2010 Rates; and Changes to the Long-Term Care Hospital ProspectivePayment System and Rate Years 2010 and 2009 Rates" (RINs: 0938-AP33, 0938-AP39,0938-AP76). We received the rules on July31, 2009. They were published in the Federal Register as "final rules andinterim final rule with comment period" on August 27, 2009, with a statedeffective date of October 1, 2009, with certain exceptions. 74 Fed. Reg. 43,754.

The final rule revises the Medicare hospital inpatientprospective payment systems (IPPS) for operating and capital-related costs ofacute care hospitals to implement changes arising from CMS's continuing experiencewith those systems. It also implementscertain statutory provisions relating to payments to long-term care hospitals (LTCHs)and LTCH satellite facilities, the establishment of LTCHs and LTCH satellitefacilities, and increases in beds in existing LTCHs and LTCH satellite facilitiesunder the LTCH prospective payment system (PPS). This rule also updates the rate-of-increaselimits for certain hospitals excluded from the IPPS that are paid on areasonable cost basis subject to these limits.Additionally, this rule updates the payment policy and the annualpayment rates for the Medicare PPS for inpatient hospital services provided by LTCHsfor rate year. This rule also revisesthe Medicare severity long-term care diagnosis-related group relative weights forpayments under the LTCH PPS for the remainder of fiscal year 2009.

The Addendum to this final rule describes the changes to theamounts and factors used to determine the rates for Medicare acute carehospital inpatient services for operating costs and capital-related costs andsets forth the changes to the payment rates, factors, and other payment ratepolicies under the LTCH PPS for rate year 2010.

This final was received on July 31, 2009, and published onAugust 27, 2009. This rule has a statedeffective date of October 1, 2009, for most provisions.[1] The Congressional Review Act requires majorrules to have a 60-day delay in their effective date following theirpublication in the Federal Registeror receipt of the rules by Congress, whichever is later. 5 U.S.C. sect.801(a)(3)(A). Therefore, the provisions of this ruleeffective October 1, 2009, do not have the 60-day delay in effective daterequired by the Congressional Review Act.

Enclosed is our assessment of the CMS's compliance withthe procedural steps required by section 801(a)(1)(B)(i) through (iv) of title5 with respect to the rule. Although CMSdid not comply with the 60-day delay in effective date required by theCongressional Review Act, our review of the procedural steps taken indicates thatCMS complied with the other 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 MAJOR RULES
ISSUED BY THE
DEPARTMENT OF HEALTH AND HUMAN SERVICES,
CENTERS FOR MEDICARE & MEDICAID SERVICES
ENTITLED
"MEDICARE PROGRAM; CHANGES TO THE HOSPITAL INPATIENT PROSPECTIVE PAYMENTSYSTEMS FOR ACUTE CARE HOSPITALS AND FISCAL YEAR 2010 RATES; AND CHANGES TO THELONG-TERM CARE HOSPITAL PROSPECTIVE PAYMENT SYSTEM AND RATE YEARS 2010 AND 2009RATES"
(RINs: 0938-AP33, 0938-AP39, 0938-AP76)

(i) Cost-benefit analysis

The Centers for Medicare & Medicaid Services analyzedthe costs and benefits of this final rule.CMS estimates that the market basket update to the inpatient prospectivepayment systems rates will result in an estimated $1.73 billion increase in FY2010 operating payments (or 1.6 percent increase), and $171 million increase inFY 2010 capital payments (or 1.9 percent increase). In addition, long-term care hospitals areexpected to experience an increase in payments by $153 million (or 3.3percent).

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

CMS determined that provisions of this final rule relatingto acute care hospitals would have a significant impact on small entities andconducted a regulatory flexibility analysis.

(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 rule does not mandate anyrequirements for state, local, or tribal governments, nor would it affectprivate sector costs.

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

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

On May 6, 2008, and May 22, 2008, CMS published two interimfinal rules with comment period relating to the long-term care hospitalprospective payment system. 73 Fed. Reg.24,871; 73 Fed. Reg. 29,699. CMSreceived six timely pieces of correspondence from the public in response to theMay 6, 2008, interim final rule with comment period and 30 timely pieces of correspondencefrom the public in response to the May 22, 2008, interim final rule with commentperiod, to which CMS responded in this rule.On May 22, 2009, CMS published a proposed rule setting forth proposed changesto the Medicare IPPS for operating costs and for capital-related costs of acutecare hospitals in FY 2010 among other items.74 Fed. Reg. 24,080. On June 3, 2009,CMS published a supplemental proposed rule and an interim final rule related toMedicare severity long-term care diagnosis-related group relative weights. 74 Fed. Reg. 26,600; 74 Fed. Reg. 26,546. CMS received 11 timely pieces of correspondencefrom the public in response to the June 3, 2009, interim final rule with commentperiod, to which it responded in this rule.

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

CMS determined that this rule contains information collectionrequirements under the Act and has submitted them to the Office of Managementand Budget (OMB) for review.

Statutory authorization for the rule

CMS promulgated this rule under the authority of sections 1102,1812(d), 1814(b), 1815, 1819, 1820(e), 1833(a), (i), and (n), 1861, 1864(m),1866, 1869, 1871, 1881, 1883, and 1886 of the Social Security Act (42 U.S.C. sections1302, 1395d(d), 1395f(b), 1395i-3, 1395g, 1395l(a), (i), and (n), 1395x(v),1395aa(m), 1395cc, 1395ff, 1395hh, 1395rr, 1395tt, and 1395ww) and section 124of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999(Pub. L. No. 106113, app. F, sect. 124, 113 Stat. 1501A332 (Nov. 29, 1999)).

Executive Order No. 12,866 (Regulatory Planning andReview)

CMS determined that this rule is a significant rule underthe Order. CMS estimates that thechanges for FY 2010 acute care hospital operating and capital payments willredistribute in excess of $100 million among different types of inpatientcases. Parts of this rule have been reviewedby OMB.

Executive Order No. 13,132 (Federalism)

CMS determined that this rule will not have a substantialeffect on state and local governments.


[1]The rule states that provisions of sections 412.534(c) through (e) and (h) and412.536(a)(2) are effective for cost reporting periods beginning on or afterJuly 1, 2007, or October 1, 2007, as applicable. CMS determined that retroactive application ofthese provisions is necessary under statute and that failure to apply thechanges retroactively would be contrary to public interest. The Congressional Review Act's 60-day delaydoes not apply when an agency for good cause finds that notice and publicprocedure thereon are impractical, unnecessary, or contrary to the publicinterest. 5 U.S.C. sect.808(2).