Notices. Notice

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BILLING CODE 4120-03-P DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services [CMS-1264-N] RIN 0938-AM78 Medicare Program; Hospice Wage Index for Fiscal Year 2005 AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Notice. SUMMARY: This notice announces the annual update to the hospice wage index as required by statute. This fiscal year 2005 update is effective from October 1, 2004 through September 30, 2005. The wage index is used to reflect local differences in wage levels.

The hospice wage index methodology and values are based on recommendations of a negotiated rulemaking advisory committee and were originally published in the August 8, 1997 **Federal Register** . EFFECTIVE DATE: October 1, 2004. FOR FURTHER INFORMATION CONTACT: Terri Deutsch,

(410)786-9462. SUPPLEMENTARY INFORMATION: I. Background Hospice care is an approach to treatment that recognizes that the impending death of an individual warrants a change in the focus from curative care to palliative care (relief of pain and other uncomfortable symptoms). The goal of hospice care is to help terminally ill individuals continue life with minimal disruption to normal activities while remaining primarily in the home environment. A hospice uses an interdisciplinary approach to deliver medical, social, psychological, emotional, and spiritual services through use of a broad spectrum of professional and other caregivers, with the goal of making the individual as physically and emotionally comfortable as possible. Counseling and inpatient respite services are available to the family of the hospice patient. Hospice programs consider both the patient and the family as a unit of care. Section 1861(dd) of the Social Security Act (the Act) provides for coverage of hospice care for terminally ill Medicare beneficiaries who elect to receive care from a participating hospice. The statutory authority for payment to hospices participating in the Medicare program is contained in section 1814(i) of the Act. Our existing regulations under 42 CFR part 418 establish eligibility requirements and payment standards and procedures, define covered services, and delineate the conditions a hospice must meet to be approved for participation in the Medicare program. Subpart G of part 418 provides for payment to hospices based on one of four prospectively determined rates for each day in which a qualified Medicare beneficiary is under the care of a hospice. The four rate categories are routine home care, continuous home care, inpatient respite care, and general inpatient care. Payment rates are established for each category. The regulations at § 418.306(c), which require the rates to be adjusted by a wage index, were revised in the August 8, 1997 final rule (62 FR 42860). This rule implemented a new methodology for calculating the hospice wage index based on the recommendations of a negotiated rulemaking committee. The committee reached consensus on the methodology. We included the resulting committee statement, describing that consensus, as an appendix to the August 8, 1997 final rule (62 FR 42883). The provisions of the final hospice wage index rule are as follows: • The revised hospice wage index will be calculated using the most current available hospital wage data. • The revised hospice wage index was phased in over a 3-year transition period. For the first year of the transition period, October 1, 1997 through September 30, 1998, a blended index was calculated by adding two-thirds of the 1983 index value for an area to one-third of the revised wage index value for that area. During the second year of the transition period, October 1, 1998 through September 30, 1999, the calculation was similar, except that the blend was one-third of the 1983 index value and two-thirds of the revised wage index value for that area. We fully implemented the revised wage index during the third year of the transition period,October 1, 1999 through September 30, 2000. Payments to hospices under the wage index (as published in the August 8, 1997 final hospice wage index rule) are subject to a budget-neutrality adjustment to ensure that aggregate adjustments to payment using the new wage index, irrespective of other payment adjustments, are not greater than they would have been had the original 1983 wage index been applied. To achieve this budget neutrality, the hospice wage index is multiplied by a budget-neutrality factor. The budget-neutrality factor is computed and applied annually. The hospice budget-neutrality adjustment is not applied uniformly to all providers in calculating payments. Based on the methodology developed and signed by the negotiated rulemaking committee and adopted by CMS, a hospice's area wage index is adjusted using either the budget-neutrality factor or the hospice wage index floor described below. Hospice wage index values of 0.8 or greater are multiplied by the budget-neutrality factor. Hospice wage index values below 0.8 are adjusted by the greater of:

(1)The hospice budget-neutrality factor; or

(2)the hospice wage index floor (a 15 percent increase, subject to a maximum wage index value of 0.8). The wage index is to be updated annually, in the **Federal Register** , based on the most current available hospital wage data. These data will include any changes to the definitions of Metropolitan Statistical Areas (MSAs). We acknowledge that on June 6, 2003, the Office of Management and Budget

(OMB)issued an OMB Bulletin(No. 03-04) announcing revised definitions for MSAs, new definitions for Micropolitan Statistical Areas and Combined Statistical Areas, and guidance on using the statistical definitions. A copy of the Bulletin may be obtained at the following Internet address: *http://www.whitehouse.gov/omb/bulletins/b03-04.html* . These new definitions will not apply to the 2005 fiscal year

(FY)wage index used in this **Federal Register** notice because we use the FY 2004 hospital wage index that does not reflect these revisions. The new definitions will be addressed in the FY 2006 wage index. Section 4441(a) of the Balanced Budget Act of 1997

(BBA)amended section 1814(i)(1)(C)(ii) of the Act to establish updates to hospice rates for FYs 1998 through 2002. Hospice rates were to be updated by a factor equal to the market basket index, minus 1 percentage point. However, neither the BBA nor subsequent legislation specified the market basket adjustment to be used to compute payment for FY 2005. Therefore, payment rates for FY 2005 will be updated according to section 1814(i)(1)(C)(ii)(VII) of the Act, which states that the update to the payment rates after 2002 will be the market basket percentage for the FY. Accordingly, the FY 2005 update to the payment rates will be the full market basket percentage increase for FY 2005. This rate update is implemented through a separate Recurring Update Notification published July 2004 and is not part of this notice. Historically, the rate update has been published through a separate program memorandum issued annually in July to provide adequate time to implement system change requirements. The wage index in this notice is applied to the labor portion of the rates published in the Recurring Update Notification in order for providers to determine their payment rates. II. Provisions of the Notice A. Update to the Hospice Wage Index This annual update is effective October 1, 2004 through September 30, 2005. In accordance with the agreement we signed with other members of the Hospice Wage Index Negotiated Rulemaking Committee, we are using the most current hospital data available to us. The FY 2004 hospital wage index was the most current hospital wage data available when the FY 2005 wage index values were calculated. We used the pre-reclassified and pre-floor hospital area wage index data. All wage index values are adjusted by a budget-neutrality factor of 1.065819 and are subject to the wage index floor adjustment, if applicable. We have completed all of the calculations described above and have included them in the wage index values reflected in both Tables A and B below. A detailed description of the method used to compute the hospice wage index is contained in both the September 4, 1996 proposed rule (61 FR 46579) and the August 8, 1997 final rule (62 FR 42860). B. Tables Table A.—Hospice Wage Index for Urban Areas MSA code number Urban area (constituent counties or county equivalents) 1 Wage index 2 0040 Abilene, TX 0.8129 Taylor, TX 0060 Aguadilla, PR 0.4952 Aguada, PR Aguadilla, PR Moca, PR 0080 Akron, OH 0.9855 Portage, OH Summit, OH 0120 Albany, GA 1.1578 Dougherty, GA Lee, GA 0160 Albany-Schenectady-Troy, NY 0.9048 Albany, NY Montgomery, NY Rensselaer, NY Saratoga, NY Schenectady, NY Schoharie, NY 0200 Albuquerque, NM 0.9912 Bernalillo, NM Sandoval, NM Valencia, NM 0220 Alexandria, LA 0.8547 Rapides, LA 0240 Allentown-Bethlehem-Easton, PA 1.0361 Carbon, PA Lehigh, PA Northampton, PA 0280 Altoona, PA 0.9386 Blair, PA 0320 Amarillo, TX 0.9577 Potter, TX Randall, TX 0380 Anchorage, AK 1.3020 Anchorage, AK 0440 Ann Arbor, MI 1.1803 Lenawee, MI Livingston, MI Washtenaw, MI 0450 Anniston, AL 0.8622 Calhoun, AL 0460 Appleton-Oshkosh-Neenah, WI 0.9630 Calumet, WI Outagamie, WI Winnebago, WI 0470 Arecibo, PR 0.4778 Arecibo, PR Camuy, PR Hatillo, PR 0480 Asheville, NC 1.0360 Buncombe, NC Madison, NC 0500 Athens, GA 1.0464 Clarke, GA Madison, GA Oconee, GA 0520 Atlanta, GA 1.0797 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-Cape May, NJ 1.1506 Atlantic, NJ Cape May, NJ 0580 Auburn-Opelika, AL 0.9053 Lee, AL 0600 Augusta-Aiken, GA-SC 1.0259 Columbia, GA McDuffie, GA Richmond, GA Aiken, SC Edgefield, SC 0640 Austin-San Marcos, TX 1.0241 Bastrop, TX Caldwell, TX Hays, TX Travis, TX Williamson, TX 0680 Bakersfield, CA 1.0456 Kern, CA 0720 Baltimore, MD 1.0572 Anne Arundel, MD Baltimore, MD Baltimore City, MD Carroll, MD Harford, MD Howard, MD Queen Anne's, MD 0733 Bangor, ME 1.0556 Penobscot, ME 0743 Barnstable-Yarmouth, MA 1.3809 Barnstable, MA 0760 Baton Rouge, LA 0.8959 Ascension, LA East Baton Rouge, LA Livingston, LA West Baton Rouge, LA 0840 Beaumont-Port Arthur, TX 0.8978 Hardin, TX Jefferson, TX Orange, TX 0860 Bellingham, WA 1.2531 Whatcom, WA 0870 Benton Harbor, MI 0.9455 Berrien, MI 0875 Bergen-Passaic, NJ 1.2462 Bergen, NJ Passaic, NJ 0880 Billings, MT 0.9551 Yellowstone, MT 0920 Biloxi-Gulfport-Pascagoula, MS 0.9623 Hancock, MS Harrison, MS Jackson, MS 0960 Binghamton, NY 0.8983 Broome, NY Tioga, NY 1000 Birmingham, AL 0.9818 Blount, AL Jefferson, AL St. Clair, AL Shelby, AL 1010 Bismarck, ND 0.8489 Burleigh, ND Morton, ND 1020 Bloomington, IN 0.9232 Monroe, IN 1040 Bloomington-Normal, IL 0.9413 McLean, IL 1080 Boise City, ID 0.9815 Ada, ID Canyon, ID 1123 Boston-Worcester-Lawrence-Lowell-Brockton, MA-NH 1.1972 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 1.0710 Boulder, CO 1145 Brazoria, TX 0.8673 Brazoria, TX 1150 Bremerton, WA 1.1276 Kitsap, WA 1240 Brownsville-Harlingen-San Benito, TX 1.0981 Cameron, TX 1260 Bryan-College Station, TX 0.9613 Brazos, TX 1280 Buffalo-Niagara Falls, NY 1.0236 Erie, NY Niagara, NY 1303 Burlington, VT 1.0343 Chittenden, VT Franklin, VT Grand Isle, VT 1310 Caguas, PR 0.4782 Caguas, PR Cayey, PR Cidra, PR Gurabo, PR San Lorenzo, PR 1320 Canton-Massillon, OH 0.9668 Carroll, OH Stark, OH 1350 Casper, WY 0.9694 Natrona, WY 1360 Cedar Rapids, IA 0.9458 Linn, IA 1400 Champaign-Urbana, IL 1.0559 Champaign, IL 1440 Charleston-North Charleston, SC 0.9946 Berkeley, SC Charleston, SC Dorchester, SC 1480 Charleston, WV 0.9464 Kanawha, WV Putnam, WV 1520 Charlotte-Gastonia-Rock Hill, NC-SC 1.0402 Cabarrus, NC Gaston, NC Lincoln, NC Mecklenburg, NC Rowan, NC Stanly, NC Union, NC York, SC 1540 Charlottesville, VA 1.0685 Albemarle, VA Charlottesville City, VA Fluvanna, VA Greene, VA 1560 Chattanooga, TN-GA 0.9684 Catoosa, GA Dade, GA Walker, GA Hamilton, TN Marion, TN 1580 Cheyenne, WY 0.9375 Laramie, WY 1600 Chicago, IL 1.1609 Cook, IL DeKalb, IL Du Page, IL Grundy, IL Kane, IL Kendall, IL Lake, IL McHenry, IL Will, IL 1620 Chico-Paradise, CA 1.0864 Butte, CA 1640 Cincinnati, OH-KY-IN 1.0033 Brown, OH Clermont, OH Hamilton, OH Warren, OH Boone, KY Campbell, KY Gallatin, KY Grant, KY Kenton, KY Pendleton, KY Dearborn, IN Ohio, IN 1660 Clarksville-Hopkinsville, TN-KY 0.8787 Christian, KY Montgomery, TN 1680 Cleveland-Lorain-Elyria, OH 1.0308 Ashtabula, OH Cuyahoga, OH Geauga, OH Lake, OH Lorain, OH Medina, OH 1720 Colorado Springs, CO 1.0480 El Paso, CO 1740 Columbia, MO 0.9267 Boone, MO 1760 Columbia, SC 0.9488 Lexington, SC Richland, SC 1800 Columbus, GA-AL 0.9266 Chattahochee, GA Harris, GA Muscogee, GA Russell, AL 1840 Columbus, OH 1.0283 Delaware, OH Fairfield, OH Franklin, OH Licking, OH Madison, OH Pickaway, OH 1880 Corpus Christi, TX 0.9082 Nueces, TX San Patricio, TX 1890 Corvallis, Oregon 1.2274 Benton, OR 1900 Cumberland, MD-WV 0.8740 Allegany, MD Mineral, WV 1920 Dallas, TX 1.0630 Collin, TX Dallas, TX Denton, TX Ellis, TX Henderson, TX Hunt, TX Kaufman, TX Rockwall, TX 1950 Danville, VA 0.9630 Danville City, VA Pittsylvania, VA 1960 Davenport-Moline-Rock Island, IA-IL 0.9576 Scott, IA Henry, IL Rock Island, IL 2000 Dayton-Springfield, OH 1.0144 Clark, OH Greene, OH Miami, OH Montgomery, OH 2020 Daytona Beach, FL 0.9676 Flagler, FL Volusia, FL 2030 Decatur, AL 0.9409 Lawrence, AL Morgan, AL 2040 Decatur, IL 0.8698 Macon, IL 2080 Denver, CO 1.1550 Adams, CO Arapahoe, CO Denver, CO Douglas, CO Jefferson, CO 2120 Des Moines, IA 0.9705 Dallas, IA Polk, IA Warren, IA 2160 Detroit, MI 1.0766 Lapeer, MI Macomb, MI Monroe, MI Oakland, MI St. Clair, MI Wayne, MI 2180 Dothan, AL 0.8251 Dale, AL Houston, AL 2190 Dover, DE 1.0450 Kent, DE 2200 Dubuque, IA 0.9471 Dubuque, IA 2240 Duluth-Superior, MN-WI 1.0840 St. Louis, MN Douglas, WI 2281 Dutchess County, NY 1.1654 Dutchess, NY 2290 Eau Claire, WI 0.9661 Chippewa, WI Eau Claire, WI 2320 El Paso, TX 0.9801 El Paso, TX 2330 Elkhart-Goshen, IN 1.0427 Elkhart, IN 2335 Elmira, NY 0.8928 Chemung, NY 2340 Enid, OK 0.9122 Garfield, OK 2360 Erie, PA 0.9167 Erie, PA 2400 Eugene-Springfield, OR 1.2210 Lane, OR 2440 Evansville-Henderson, IN-KY 0.8984 Posey, IN Vanderburgh, IN Warrick, IN Henderson, KY 2520 Fargo-Moorhead, ND-MN 1.0442 Clay, MN Cass, ND 2560 Fayetteville, NC 0.9577 Cumberland, NC 2580 Fayetteville-Springdale-Rogers, AR 0.8949 Benton, AR Washington, AR 2620 Flagstaff, AZ-UT 1.2079 Coconino, AZ Kane, UT 2640 Flint, MI 1.1573 Genesee, MI 2650 Florence, AL 0.8257 Colbert, AL Lauderdale, AL 2655 Florence, SC 0.9282 Florence, SC 2670 Fort Collins-Loveland, CO 1.0773 Larimer, CO 2680 Ft. Lauderdale, FL 1.0832 Broward, FL 2700 Fort Myers-Cape Coral, FL 1.0462 Lee, FL 2710 Fort Pierce-Port St. Lucie, FL 1.0667 Martin, FL St. Lucie, FL 2720 Fort Smith, AR-OK 0.8978 Crawford, AR Sebastian, AR Sequoyah, OK 2750 Fort Walton Beach, FL 0.9556 Okaloosa, FL 2760 Fort Wayne, IN 1.0216 Adams, IN Allen, IN De Kalb, IN Huntington, IN Wells, IN Whitley, IN 2800 Forth Worth-Arlington, TX 0.9975 Hood, TX Johnson, TX Parker, TX Tarrant, TX 2840 Fresno, CA 1.0758 Fresno, CA Madera, CA 2880 Gadsden, AL 0.8746 Etowah, AL 2900 Gainesville, FL 1.0331 Alachua, FL 2920 Galveston-Texas City, TX 0.9890 Galveston, TX 2960 Gary, IN 1.0029 Lake, IN Porter, IN 2975 Glens Falls, NY 0.9033 Warren, NY Washington, NY 2980 Goldsboro, NC 0.9189 Wayne, NC 2985 Grand Forks, ND-MN 0.9204 Grand Forks, ND Polk, MN 2995 Grand Junction, CO 1.0267 Mesa, CO 3000 Grand Rapids-Muskegon-Holland, MI 1.0092 Allegan, MI Kent, MI Muskegon, MI Ottawa, MI 3040 Great Falls, MT 0.9389 Cascade, MT 3060 Greeley, CO 0.9989 Weld, CO 3080 Green Bay, WI 1.0084 Brown, WI 3120 Greensboro-Winston-Salem-High Point, NC 0.9769 Alamance, NC Davidson, NC Davie, NC Forsyth, NC Guilford, NC Randolph, NC Stokes, NC Yadkin, NC 3150 Greenville, NC 0.9697 Pitt, NC 3160 Greenville-Spartanburg-Anderson, SC 0.9949 Anderson, SC Cherokee, SC Greenville, SC Pickens, SC Spartanburg, SC 3180 Hagerstown, MD 0.9776 Washington, MD 3200 Hamilton-Middletown, OH 0.9820 Butler, OH 3240 Harrisburg-Lebanon-Carlisle, PA 0.9767 Cumberland, PA Dauphin, PA Lebanon, PA Perry, PA 3283 Hartford, CT 1.2316 Hartford, CT Litchfield, CT Middlesex, CT Tolland, CT 3285 Hattiesburg, MS 0.8000 Forrest, MS Lamar, MS 3290 Hickory-Morganton-Lenoir, NC 0.9850 Alexander, NC Burke, NC Caldwell, NC Catawba, NC 3320 Honolulu, HI 1.1828 Honolulu, HI 3350 Houma, LA 0.8258 Lafourche, LA Terrebonne, LA 3360 Houston, TX 1.0481 Chambers, TX Fort Bend, TX Harris, TX Liberty, TX Montgomery, TX Waller, TX 3400 Huntington-Ashland, WV-KY-OH 1.0227 Boyd, KY Carter, KY Greenup, KY Lawrence, OH Cabell, WV Wayne, WV 3440 Huntsville, AL 0.9853 Limestone, AL Madison, AL 3480 Indianapolis, IN 1.0569 Boone, IN Hamilton, IN Hancock, IN Hendricks, IN Johnson, IN Madison, IN Marion, IN Morgan, IN Shelby, IN 3500 Iowa City, IA 1.0176 Johnson, IA 3520 Jackson, MI 0.9577 Jackson, MI 3560 Jackson, MS 0.8907 Hinds, MS Madison, MS Rankin, MS 3580 Jackson, TN 0.9575 Madison, TN Chester, TN 3600 Jacksonville, FL 1.0156 Clay, FL Duval, FL Nassau, FL St. Johns, FL 3605 Jacksonville, NC 0.9106 Onslow, NC 3610 Jamestown, NY 0.8273 Chautauqua, NY 3620 Janesville-Beloit, WI 0.9893 Rock, WI 3640 Jersey City, NJ 1.1847 Hudson, NJ 3660 Johnson City-Kingsport-Bristol, TN-VA 0.8796 Carter, TN Hawkins, TN Sullivan, TN Unicoi, TN Washington, TN Bristol City, VA Scott, VA Washington, VA 3680 Johnstown, PA 0.8695 Cambria, PA Somerset, PA 3700 Jonesboro, AR 0.8307 Craighead, AR 3710 Joplin, MO 0.9252 Jasper, MO Newton, MO 3720 Kalamazoo-Battlecreek, MI 1.1191 Calhoun, MI Kalamazoo, MI Van Buren, MI 3740 Kankakee, IL 1.1105 Kankakee, IL 3760 Kansas City, KS-MO 1.0354 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 1.0403 Kenosha, WI 3810 Killeen-Temple, TX 0.9762 Bell, TX Coryell, TX 3840 Knoxville, TN 0.9401 Anderson, TN Blount, TN Knox, TN Loudon, TN Sevier, TN Union, TN 3850 Kokomo, IN 0.9640 Howard, IN Tipton, IN 3870 La Crosse, WI-MN 0.9856 Houston, MN La Crosse, WI 3880 Lafayette, LA 0.8728 Acadia, LA Lafayette, LA St. Landry, LA St. Martin, LA 3920 Lafayette, IN 0.9631 Clinton, IN Tippecanoe, IN 3960 Lake Charles, LA 0.8357 Calcasieu, LA 3980 Lakeland-Winter Haven, FL 0.9391 Polk, FL 4000 Lancaster, PA 0.9893 Lancaster, PA 4040 Lansing-East Lansing, MI 1.0353 Clinton, MI Eaton, MI Ingham, MI 4080 Laredo, TX 0.8624 Webb, TX 4100 Las Cruces, NM 0.9260 Dona Ana, NM 4120 Las Vegas, NV-AZ 1.2287 Mohave, AZ Clarke, NV Nye, NV 4150 Lawrence, KS 0.9248 Douglas, KS 4200 Lawton, OK 0.8811 Comanche, OK 4243 Lewiston-Auburn, ME 1.0001 Androscoggin, ME 4280 Lexington, KY 0.9257 Bourbon, KY Clark, KY Fayette, KY Jessamine, KY Madison, KY Scott, KY Woodford, KY 4320 Lima, OH 1.0149 Allen, OH Auglaize, OH 4360 Lincoln, NE 1.0693 Lancaster, NE 4400 Little Rock-North Little Rock, AR 0.9510 Faulkner, AR Lonoke, AR Pulaski, AR Saline, AR 4420 Longview-Marshall, TX 0.9713 Gregg, TX Harrison, TX Upshur, TX 4480 Los Angeles-Long Beach, CA 1.2571 Los Angeles, CA 4520 Louisville, KY-IN 0.9850 Clark, IN Floyd, IN Harrison, IN Scott, IN Bullitt, KY Jefferson, KY Oldham, KY 4600 Lubbock, TX 0.8816 Lubbock, TX 4640 Lynchburg, VA 0.9735 Amherst, VA Bedford, VA Bedford City, VA Campbell, VA Lynchburg City, VA 4680 Macon, GA 0.9542 Bibb, GA Houston, GA Jones, GA Peach, GA Twiggs, GA 4720 Madison, WI 1.0940 Dane, WI 4800 Mansfield, OH 0.9784 Crawford, OH Richland, OH 4840 Mayaguez, PR 0.5514 Anasco, PR Cabo Rojo, PR Hormigueros, PR Mayaguez, PR Sabana Grande, PR San German, PR 4880 McAllen-Edinburg-Mission, TX 0.8933 Hidalgo, TX 4890 Medford-Ashland, OR 1.1481 Jackson, OR 4900 Melbourne-Titusville-Palm Bay, FL 1.0419 Brevard, FL 4920 Memphis, TN-AR-MS 0.9602 Crittenden, AR DeSoto, MS Fayette, TN Shelby, TN Tipton, TN 4940 Merced, CA 1.0328 Merced, CA 5000 Miami, FL 1.0545 Dade, FL 5015 Middlesex-Somerset-Hunterdon, NJ 1.2114 Hunterdon, NJ Middlesex, NJ Somerset, NJ 5080 Milwaukee-Waukesha, WI 1.0645 Milwaukee, WI Ozaukee, WI Washington, WI Waukesha, WI 5120 Minneapolis-St. Paul, MN-WI 1.1725 Anoka, MN Carver, MN Chisago, MN Dakota, MN Hennepin, MN Isanti, MN Ramsey, MN Scott, MN Sherbune, MN Washington, MN Wright, MN Pierce, WI St. Croix, WI 5140 Missoula, MT 0.9292 Missoula, MT 5160 Mobile, AL 0.8520 Baldwin, AL Mobile, AL 5170 Modesto, CA 1.2017 Stanislaus, CA 5190 Monmouth-Ocean, NJ 1.1677 Monmouth, NJ Ocean, NJ 5200 Monroe, LA 0.8443 Ouachita, LA 5240 Montgomery, AL 0.8427 Autauga, AL Elmore, AL Montgomery, AL 5280 Muncie, IN 0.9353 Delaware, IN 5330 Myrtle Beach, SC 0.9712 Horry, SC 5345 Naples, FL 1.0434 Collier, FL 5360 Nashville, TN 1.0504 Cheatham, TN Davidson, TN Dickson, TN Robertson, TN Rutherford TN Sumner, TN Williamson, TN Wilson, TN 5380 Nassau-Suffolk, NY 1.4005 Nassau, NY Suffolk, NY 5483 New Haven-Bridgeport-Stamford-Waterbury-Danbury, CT 1.3200 Fairfield, CT New Haven, CT 5523 New London-Norwich, CT 1.2397 New London, CT 5560 New Orleans, LA 0.9778 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 1.4941 Bronx, NY Kings, NY New York, NY Putnam, NY Queens, NY Richmond, NY Rockland, NY Westchester, NY 5640 Newark, NJ 1.2276 Essex, NJ Morris, NJ Sussex, NJ Union, NJ Warren, NJ 5660 Newburgh, NY-PA 1.2267 Orange, NY Pike, PA 5720 Norfolk-Virginia Beach-Newport News, VA-NC 0.9186 Currituck, NC Chesapeake City, VA Gloucester, VA Hampton City, VA James City, VA Isle of Wight, 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 1.5903 Alameda, CA Contra Costa, CA 5790 Ocala, FL 1.0368 Marion, FL 5800 Odessa-Midland, TX 0.9941 Ector, TX Midland, TX 5880 Oklahoma City, OK 0.9575 Canadian, OK Cleveland, OK Logan, OK McClain, OK Oklahoma, OK Pottawatomie, OK 5910 Olympia, WA 1.1685 Thurston, WA 5920 Omaha, NE-IA 1.0386 Pottawattamie, IA Cass, NE Douglas, NE Sarpy, NE Washington, NE 5945 Orange County, CA 1.2120 Orange, CA 5960 Orlando, FL 1.0289 Lake, FL Orange, FL Osceola, FL Seminole, FL 5990 Owensboro, KY 0.8925 Daviess, KY 6015 Panama City, FL 0.8742 Bay, FL 6020 Parkersburg-Marietta, WV-OH 0.8568 Washington, OH Wood, WV 6080 Pensacola, FL 0.9280 Escambia, FL Santa Rosa, FL 6120 Peoria-Pekin, IL 0.9309 Peoria, IL Tazewell, IL Woodford, IL 6160 Philadelphia, PA-NJ 1.1599 Burlington, NJ Camden, NJ Gloucester, NJ Salem, NJ Bucks, PA Chester, PA Delaware, PA Montgomery, PA Philadelphia, PA 6200 Phoenix-Mesa, AZ 1.0796 Maricopa, AZ Pinal, AZ 6240 Pine Bluff, AR 0.8383 Jefferson, AR 6280 Pittsburgh, PA 0.9487 Allegheny, PA Beaver, PA Butler, PA Fayette, PA Washington, PA Westmoreland, PA 6323 Pittsfield, MA 1.0952 Berkshire, MA 6340 Pocatello, ID 0.9637 Bannock, ID 6360 Ponce, PR 0.5414 Guayanilla, PR Juana Diaz, PR Penuelas, PR Ponce, PR Villalba, PR Yauco, PR 6403 Portland, ME 1.0604 Cumberland, ME Sagadahoc, ME York, ME 6440 Portland-Vancouver, OR-WA 1.1951 Clackamas, OR Columbia, OR Multnomah, OR Washington, OR Yamhill, OR Clark, WA 6483 Providence-Warwick-Pawtucket, RI 1.1699 Bristol, RI Kent, RI Newport, RI Providence, RI Washington, RI 6520 Provo-Orem, UT 1.0633 Utah, UT 6560 Pueblo, CO 0.9356 Pueblo, CO 6580 Punta Gorda, FL 1.0136 Charlotte, FL 6600 Racine, WI 0.9394 Racine, WI 6640 Raleigh-Durham-Chapel Hill, NC 1.0614 Chatham, NC Durham, NC Franklin, NC Johnston, NC Orange, NC Wake, NC 6660 Rapid City, SD 0.9386 Pennington, SD 6680 Reading, PA 0.9734 Berks, PA 6690 Redding, CA 1.2099 Shasta, CA 6720 Reno, NV 1.1385 Washoe, NV 6740 Richland-Kennewick-Pasco, WA 1.1307 Benton, WA Franklin, WA 6760 Richmond-Petersburg, VA 0.9964 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 1.2087 Riverside, CA San Bernardino, CA 6800 Roanoke, VA 0.9273 Botetourt, VA Roanoke, VA Roanoke City, VA Salem City, VA 6820 Rochester, MN 1.2512 Olmsted, MN 6840 Rochester, NY 1.0051 Genesee, NY Livingston, NY Monroe, NY Ontario, NY Orleans, NY Wayne, NY 6880 Rockford, IL 1.0302 Boone, IL Ogle, IL Winnebago, IL 6895 Rocky Mount, NC 0.9673 Edgecombe, NC Nash, NC 6920 Sacramento, CA 1.2625 El Dorado, CA Placer, CA Sacramento, CA 6960 Saginaw-Bay City-Midland, MI 1.0692 Bay, MI Midland, MI Saginaw, MI 6980 St. Cloud, MN 1.0132 Benton, MN Stearns, MN 7000 St. Joseph, MO 1.0399 Andrew, MO Buchanan, MO 7040 St. Louis, MO-IL 0.9628 Franklin, MO Jefferson, MO Lincoln, MO St. Charles, Mo St. Louis, MO St. Louis City, MO Warren, MO Clinton, IL Jersey, IL Madison, IL Monroe, IL St. Clair, IL 7080 Salem, OR 1.1172 Marion, OR Polk, OR 7120 Salinas, CA 1.5283 Monterey, CA 7160 Salt Lake City-Ogden, UT 1.0565 Davis, UT Salt Lake, UT Weber, UT 7200 San Angelo, TX 0.9097 Tom Green, TX 7240 San Antonio, TX 0.9454 Bexar, TX Comal, TX Guadalupe, TX Wilson, TX 7320 San Diego, CA 1.1881 San Diego, CA 7360 San Francisco, CA 1.5469 Marin, CA San Francisco, CA San Mateo, CA 7400 San Jose, CA 1.5589 Santa Clara, CA 7440 San Juan-Bayamon, PR 0.5645 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 Also, PR Vega Alta, PR Vega Baja, PR Yabucoa, PR 7460 San Luis Obispo-Atascadero-Paso Robles, CA 1.2181 San Luis Obispo, CA 7480 Santa Barbara-Santa Maria-Lompoc, CA 1.1128 Santa Barbara, CA 7485 Santa Cruz-Watsonville, CA 1.3794 Santa Cruz, CA 7490 Santa Fe, NM 1.1354 Los Alamos, NM Santa Fe, NM 7500 Santa Rosa, CA 1.3725 Sonoma, CA 7510 Sarasota-Bradenton, FL 1.0620 Manatee, FL Sarasota, FL 7520 Savannah, GA 1.0095 Bryan, GA Chatham, GA Effingham, GA 7560 Scranton—Wilkes-Barre—Hazleton, PA 0.8966 Columbia, PA Lackawanna, PA Luzerne, PA Wyoming, PA 7600 Seattle-Bellevue-Everett, WA 1.2323 Island, WA King, WA Snohomish, WA 7610 Sharon, PA 0.8261 Mercer, PA 7620 Sheboygan, WI 0.9192 Sheboygan, WI 7640 Sherman-Denison, TX 1.0338 Grayson, TX 7680 Shreveport-Bossier City, LA 0.9681 Bossier, LA Caddo, LA Webster, LA 7720 Sioux City, IA-NE 0.9585 Woodbury, IA Dakota, NE 7760 Sioux Falls, SD 0.9922 Lincoln, SD Minnehaha, SD 7800 South Bend, IN 1.0467 St. Joseph, IN 7840 Spokane, WA 1.1618 Spokane, WA 7880 Springfield, IL 0.9533 Menard, IL Sangamon, IL 7920 Springfield, MO 0.9014 Christian, MO Greene, MO Webster, MO 8003 Springfield, MA 1.1237 Hampden, MA Hampshire, MA 8050 State College, PA 0.9315 Centre, PA 8080 Steubenville-Weirton, OH-WV 0.8951 Jefferson, OH Brooke, WV Hancock, WV 8120 Stockton-Lodi, CA 1.1089 San Joaquin, CA 8140 Sumter, SC 0.8786 Sumter, SC 8160 Syracuse, NY 1.0031 Cayuga, NY Madison, NY Onondaga, NY Oswego, NY 8200 Tacoma, WA 1.1848 Pierce, WA 8240 Tallahassee, FL 0.9081 Gadsden, FL Leon, FL 8280 Tampa-St. Petersburg-Clearwater, FL 0.9702 Hernando, FL Hillsborough, FL Pasco, FL Pinellas, FL 8320 Terre Haute, IN 0.8873 Clay, IN Vermillion, IN Vigo, IN 8360 Texarkana, AR-Texarkana, TX 0.8686 Miller, AR Bowie, TX 8400 Toledo, OH 0.9998 Fulton, OH Lucas, OH Wood, OH 8440 Topeka, KS 0.9707 Shawnee, KS 8480 Trenton, NJ 1.1209 Mercer, NJ 8520 Tucson, AZ 0.9572 Pima, AZ 8560 Tulsa, OK 0.9790 Creek, OK Osage, OK Rogers, OK Tulsa, OK Wagoner, OK 8600 Tuscaloosa, AL 0.8753 Tuscaloosa, AL 8640 Tyler, TX 1.0023 Smith, TX 8680 Utica-Rome, NY 0.8956 Herkimer, NY Oneida, NY 8720 Vallejo-Fairfield-Napa, CA 1.4257 Napa, CA Solano, CA 8735 Ventura, CA 1.1792 Ventura, CA 8750 Victoria, TX 0.8723 Victoria, TX 8760 Vineland-Millville-Bridgeton, NJ 1.1090 Cumberland, NJ 8780 Visalia-Tulare-Porterville, CA 1.0439 Tulare, CA 8800 Waco, TX 0.8946 McLennan, TX 8840 Washington, DC-MD-VA-WV 1.1622 District of Columbia, DC Calvert, MD Charles, MD Frederick, MD Montgomery, MD Prince Georges, MD Alexandria City, VA Arlington, VA Clarke, VA Culpeper, 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 0.8917 Black Hawk, IA 8940 Wausau, WI 1.0330 Marathon, WI 8960 West Palm Beach-Boca Raton, FL 1.0443 Palm Beach, FL 9000 Wheeling, WV-OH 0.8000 Belmont, OH Marshall, WV Ohio, WV 9040 Wichita, KS 0.9846 Butler, KS Harvey, KS Sedgwick, KS 9080 Wichita Falls, TX 0.8890 Archer, TX Wichita, TX 9140 Williamsport, PA 0.8695 Lycoming, PA 9160 Wilmington-Newark, DE-MD 1.1598 New Castle, DE Cecil, MD 9200 Wilmington, NC 1.0192 Brunswick, NC New Hanover, NC 9260 Yakima, WA 1.1055 Yakima, WA 9270 Yolo, CA 0.9810 Yolo, CA 9280 York, PA 0.9719 York, PA 9320 Youngstown-Warren, OH 0.9820 Columbiana, OH Mahoning, OH Trumbull, OH 9340 Yuba City, CA 1.0867 Sutter, CA Yuba, CA 9360 Yuma, AZ 0.9480 Yuma, AZ 1 This column lists each MSA area name and each county or county equivalent, in the MSA area. Counties not listed in this Table are considered to be rural areas. Wage Index values for these areas are found in Table B. 2 Wage index values are based on FY 2000 hospital cost report data before reclassification. This wage index is further adjusted. Wage index values greater than 0.8 are subject to a budget-neutrality adjustment calculated by multiplying the hospital wage index value for a given area by a budget-neutrality factor of 1.065819. Wage index values below 0.8 are adjusted to be the greater of a 15-percent increase, subject to a maximum wage index value of 0.8, or a budget-neutrality adjustment calculated by multiplying the hospital wage index value for a given area by the budget-neutrality factor. We have completed all of these adjustments and included them in the wage index values reflected in this table. Table B.—Wage Index for Rural Areas MSA code number Nonurban area Wage index 3 9901 Alabama 0.8000 9902 Alaska 1.2668 9903 Arizona 0.9880 9904 Arkansas 0.8243 9905 California 1.0687 9906 Colorado 0.9942 9907 Connecticut 1.2985 9908 Delaware 1.0186 9910 Florida 0.9454 9911 Georgia 0.8920 9912 Hawaii 1.0613 9913 Idaho 0.9565 9914 Illinois 0.8797 9915 Indiana 0.9405 9916 Iowa 0.8970 9917 Kansas 0.8563 9918 Kentucky 0.8498 9919 Louisiana 0.8000 9920 Maine 0.9392 9921 Maryland 0.9726 9922 Massachusetts 1.1119 9923 Michigan 0.9469 9924 Minnesota 0.9944 9925 Mississippi 0.8290 9926 Missouri 0.8411 9927 Montana 0.9379 9928 Nebraska 0.9403 9929 Nevada 1.0451 9930 New Hampshire 1.0690 9931 New Jersey 4 9932 New Mexico 0.8814 9933 New York 0.9087 9934 North Carolina 0.9015 9935 North Dakota 0.8290 9936 Ohio 0.9401 9937 Oklahoma 0.8033 9938 Oregon 1.0652 9939 Pennsylvania 0.8929 9940 Puerto Rico 0.4621 9941 Rhode Island 4 9942 South Carolina 0.9057 9943 South Dakota 0.8734 9944 Tennessee 0.8405 9945 Texas 0.8292 9946 Utah 0.9565 9947 Vermont 0.9920 9948 Virgin Islands 0.8000 9949 Virginia 0.9057 9950 Washington 1.1072 9951 West Virginia 0.8546 9952 Wisconsin 0.9916 9953 Wyoming 0.9710 9965 Guam 1.0244 3 Wage index values are based on FY 2000 hospital cost report data before reclassification. This wage index is further adjusted. Wage index values greater than 0.8 are subject to a budget-neutrality adjustment calculated by multiplying the hospital wage index value for a given area by a budget-neutrality factor of 1.065819. Wage index values below 0.8 are adjusted to be the greater of a 15-percent increase, subject to a maximum wage index value of 0.8, or a budget-neutrality adjustment calculated by multiplying the hospital wage index value for a given area by the budget-neutrality factor. We have completed all of these adjustments and included them in the wage index values reflected in this table. 4 All counties within the State are classified as urban. III. Waiver of Proposed Rulemaking Under the Administrative Procedure Act (5 U.S.C. section (553(b)(B)), we may waive notice and comment rulemaking procedures if we find good cause to do so (that is, notice and comment procedures are impracticable, unnecessary, or contrary to the public interest) and the agency incorporates a statement of the finding and the reasons for waiver in the notice issued. We are waiving notice and comment rulemaking before the provisions of this notice take effect. We find it unnecessary to undertake notice and comment rulemaking because the methodologies used to determine the hospice wage index have been previously subjected to public comments, and this notice merely reflects the application of those previously established methodologies. In this notice, we are not changing the methodologies, but merely performing the ministerial function of applying methodologies previously subject to notice and public comment. Therefore, we believe it is unnecessary to engage in notice and comment rulemaking and, for good cause, we waive notice and comment procedures. We also believe that good cause exists to waive notice and comment rulemaking because it is in the public interest to make this notice effective on October 1, 2004. The statute in 1814(i)(1)(C)(ii)(VII) of the Act requires annual updates to the hospice payment rates and wage indices. In addition, the Federal Regulations at 42 CFR 418.306(b)(2) and

(c)require annual updates to hospice wage indices and require that such updates be effective for the FY, beginning on October 1. We do not have sufficient time to engage in notice and comment rulemaking before that date. Moreover, if we do not make this notice effective on the implementation date of October 1, 2004, the hospice agencies would be required to continue to use the previous 2004 FY wage index for the 2005 payment rates. Therefore, for the reasons stated above, we find there is good cause to waive notice and comment procedures of the Administrative Procedure Act. IV. Regulatory Impact Analysis A. Overall Impact We have examined the impacts of this notice as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act

(RFA)(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132. In this notice, we identified the impact on hospices as a result of updating the hospice wage index. The methodology for computing the wage index for FY 2005 was determined through a negotiated rulemaking committee and implemented in the August 8, 1997 final rule (62 FR 42860). This notice only updates the hospice wage index in accordance with that methodology. We believe these changes to be insignificant. As Table C below indicates, we estimate that the total hospice payments will increase from last year by 1.0 percent, or $60,113,000. We have compared estimated payments using the FY 1983 hospice wage index to estimated payments using the FY 2005 wage index and determined the current hospice wage index to be budget neutral. Budget neutrality means that, in a given year, estimated aggregate payments for Medicare hospice services using the FY 2005 Wage Index will equal estimated aggregate payments that would have been made for the same services if the 1983 wage index had remained in effect. Budget neutrality to 1983 does not imply that estimated payments will not increase since the budget neutrality applies only to the wage index portion and not the total payment rate, which accommodates inflation. Executive Order 12866 (as amended by Executive Order 13258, which merely reassigns responsibility of duties) directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis

(RIA)must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). We have determined that this notice is not an economically significant rule under this Executive Order. The RFA requires agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and government agencies. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $6 million to $29 million in any 1 year (for details, see the Small Business Administration's regulation at 65 FR 69432, that sets forth size standards for health care industries). For purposes of the RFA, most hospices are small entities. As indicated in Table C below, there are 2,385 hospices. Approximately 70 percent of Medicare certified hospices are identified as voluntary, government, or other agencies, and, therefore, are considered small entities. Because the National Hospice and Palliative Care Organization estimates that approximately 79 percent of hospice patients are Medicare beneficiaries, we have not considered other sources of revenue in this analysis. As discussed below, rural hospices will receive an increase in payment that is greater than urban hospices. Overall rural hospices will receive an increase of 2.9 percent and urban hospices will receive an increase of 0.7 percent. All hospices, both urban and rural, will receive a 1.0 percent increase in payment representing an increase of $60,113,000. Urban hospices in East North Central and Puerto Rico regions will experience a decrease of 0.2 percent and 0.3 percent respectively. New England and Puerto Rico rural regions will also experience a decrease of 0.5 and 4.1 percent respectively. Of the urban hospices, the West South Central and Mountain regions will experience the greatest increase of 1.7 percent and 1.8 percent, respectively. The remaining urban regions will experience an increase in payment ranging from 0.3 percent in the Middle Atlantic region to a 0.9 percent increase in New England. Of the rural hospices, the East South Central and West North Central regions will experience the greatest increase of all hospices with 6.5 percent and 4.0 percent, respectively. The remaining rural hospices, with the exception of New England and Puerto Rico, will experience an increase in payment ranging from 1.0 percent for the Pacific region to 2.3 percent in the South Atlantic region. Puerto Rico will experience decreased payment in both its urban and rural areas. Overall, Puerto Rico rural hospices will receive the largest decrease of all hospices with a decrease of 4.1 percent. Most regions, however, will experience an increase in payment in both urban and rural regions. Therefore, based upon analysis of the wage index changes for FY 2005, the urban and rural Puerto Rico, urban East North Central and rural New England hospices will be most negatively impacted. The remaining urban and rural regions will be positively impacted. The payment decreases in certain areas indicate that this notice will have an impact on a small number of small entities. However, nationwide, hospices will receive an overall increase in estimated payments. We estimate that total hospice payments will increase by 1.0 percent, or $60,113,000. Rural hospices, with the exception of Puerto Rico and New England regions, will receive the largest increase in payments for FY 2005. We estimate that rural hospice payments overall will increase by $23,336,000. We believe the anomaly of Puerto Rico rural region, with the greatest decrease overall in payment, the rural East South Central region increase of 6.5 percent, and the rural West North Central region increase of 4.0 percent are attributable to hospital wages in these geographic areas. Under the Medicare hospice benefit, hospices can provide four different levels of care days. The majority of the days provided by a hospice are routine home care days. Therefore, the number of routine home care days can be used as a proxy for the size of the hospice, that is, the more days of care provided, the larger the hospice. Using routine home care days as a proxy for size, our analysis indicates that the impact of the wage index update on small hospices (those that provide up to 1,754 days of routine home care) will experience a 10.2 percent increase. Rural Puerto Rico with 4 hospices and 150,000 routine care days will experience a decrease of 4.1 percent while rural East South Central with 111 hospices and 1,541,000 routine home care days, which represents the highest number of routine home days, will have an increase of 6.5 percent. Rural South Atlantic and East North Central, each with 139 hospices and 1,390 and 924,000 routine home care days, respectively, will experience an increase of 2.3 percent and 1.4 percent, respectively. Rural New England region with 27 hospices and the lowest number of routine home care days of 111,000 will experience a 0.5 percent decrease. Furthermore, the wage index methodology was previously determined by consensus, through a negotiated rulemaking committee that included representatives of national hospice associations; rural, urban, large and small hospices; multi-site hospices; and consumer groups. Based on all of the options considered, the committee agreed on the methodology described in the committee statement, and it was adopted into regulation in the August 8, 1997 final rule. The committee also agreed that this was favorable for the hospice community, as well as for beneficiaries. In developing the process for updating the wage index in the 1997 final rule, we fully considered the impact of this methodology on small entities and attempted to mitigate any potential negative effects. In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside an MSA and has fewer than 100 beds. Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in an expenditure in any 1 year by State, local, and tribal governments, in the aggregate, or by the private sector, of $110 million or more. This notice has no substantial effect on State, local or tribal governments or on the private sector. We have determined that this notice will not have a significant impact on the operations of a substantial number of small rural hospitals. Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. We have reviewed this notice under the threshold criteria of Executive Order 13132, Federalism, and have determined that this notice will not have an impact on the rights, roles, and responsibilities of State, local, or tribal governments. B. Anticipated Effects We have compared estimated payments using the FY 1983 hospice wage index to estimated payments using the FY 2005 wage index and determined the current hospice wage index to be budget neutral. This impact analysis compares hospice payments using the FY 2004 hospice wage index to the estimated payments using the FY 2005 wage index. The data used in developing the quantitative analysis for this notice were obtained from the March 2004 update of the national claims history file of all bills submitted during FY 2003. We deleted bills from hospices that have since closed. Table C below demonstrates the results of our analysis. In column 2 of Table C, we indicate the number of routine home care days that were included in our analysis, although the analysis was performed on all types of hospice care. Column 3 of Table C indicates payments that were made using the FY 2004 wage index. Column 4 of Table C is based on FY 2004 claims (for hospices in business during that time period) and estimates payments to be made to hospices using the FY 2005 wage index. The final column, which compares columns 3 and 4, shows the percent change in estimated hospice payments made based on the category of the hospice. Table C categorizes hospices by various geographic and provider characteristics. The first row displays the results of the impact analysis for all Medicare certified hospices. The second and third rows of the table categorize hospices according to their geographic location (urban and rural). Our analysis indicted that there are 1,469 hospices located in urban areas and 916 hospices located in rural areas. The next two groupings in the table indicate the number of hospices by census region, also broken down by urban and rural hospices. The sixth grouping shows the impact on hospices based on the size of the hospice's program. We determined that the majority of hospice payments are made at the routine home care rate. Therefore, we based the size of each individual hospice's program on the number of routine home care days provided in 2003. The next grouping shows the impact on hospices by type of ownership. The final grouping shows the impact on hospices defined by whether they are provider-based or freestanding. The results of our analysis shows that the majority of hospices are in urban areas and provide the vast majority of routine home care days. However, rural hospices will receive a larger percent increase in payment of 2.9 percent in contrast to 0.7 percent for urban hospices. The greatest increases in payment are for rural East South Central and West North Central regions with a 6.5 percent and 4.0 percent increase, respectively. Four regions will experience a decrease in payment with the greatest decrease in payment for rural Puerto Rico with a 4.1 percent decrease followed by rural New England, urban Puerto Rico, and urban East North Central regions with 0.5 percent, 0.3 percent, and 0.2 percent decreases, respectively. The remainder of the urban areas varies from an increase of 0.3 percent in the Middle Atlantic region to an increase of 1.8 percent in the Mountain region. The breakdown by size indicates an increase of 10.2 percent in payment for hospices with routine home care days under 1,754 followed by a 4.5 percent increase in moderate size hospices with 1,754 to 4,373 days and an increase of 0.8 percent for large size hospitals. Proprietary-owned hospices will experience the highest increase of 1.4 percent while voluntary owned hospices with the largest number of routine home care days will receive 0.8 percent increase in payment. Freestanding agency based hospices with the highest number of routine home care days and with the largest number of hospice agencies will have the highest increase of a 1.1 percent payment increase. In contrast, skilled nursing facility based hospices will have an increase of 0.3 percent, which represents the lowest number of routine home care days. Table C.—Impact of Hospice Wage Index Change Number of hospices

(1)Number of routine home care days in thousands

(2)Payments using FY 2004 wage index in thousands

(3)Estimated payments using FY 2005 wage index in thousands

(4)Percent change in hospice payments

(5)(BY GEOGRAPHIC LOCATION): ALL HOSPICES 2,385 42,728 5,873,005 5,933,118 1.0 URBAN HOSPICES 1,469 35,552 5,072,557 5,109,334 0.7 RURAL HOSPICES 916 7,177 800,448 823,784 2.9 BY REGION—URBAN: NEW ENGLAND 91 1,049 171,309 172,885 0.9 MIDDLE ATLANTIC 172 3,562 532,324 533,710 0.3 SOUTH ATLANTIC 205 7,421 1,167,357 1,175,429 0.7 EAST NORTH CENTRAL 240 5,231 751,343 750,026 −0.2 EAST SOUTH CENTRAL 107 2,638 335,046 337,478 0.7 WEST NORTH CENTRAL 110 2,446 305,713 307,835 0.7 WEST SOUTH CENTRAL 223 5,718 716,376 728,268 1.7 MOUNTAIN 104 2,684 399,776 406,833 1.8 PACIFIC 187 4,376 658,216 661,869 0.6 PUERTO RICO 30 427 35,098 35,000 −0.3 BY REGION—RURAL: NEW ENGLAND 27 111 14,399 14,334 −0.5 MIDDLE ATLANTIC 36 230 27,634 28,053 1.5 SOUTH ATLANTIC 139 1,390 161,998 165,728 2.3 EAST NORTH CENTRAL 139 924 106,674 108,215 1.4 EAST SOUTH CENTRAL 111 1,541 161,972 172,497 6.5 WEST NORTH CENTRAL 180 859 95,425 99,252 4.0 WEST SOUTH CENTRAL 120 1,088 113,083 115,326 2.0 MOUNTAIN 102 530 62,304 63,432 1.8 PACIFIC 58 353 45,320 45,780 1.0 PUERTO RICO 4 150 11,640 11,167 −4.1 ROUTINE HOME CARE DAYS: 0-1,754 DAYS 343 301 33,025 36,401 10.2 1,754-4,373 DAYS 400 1,236 144,480 150,910 4.5 4,373-9,681 DAYS 517 3,504 431,211 436,948 1.3 9,681 + DAYS 1,122 35,702 5,033,559 5,075,608 0.8 TYPE OF OWNERSHIP: VOLUNTARY 1,319 23,772 3,320,004 3,345,602 0.8 PROPRIETARY 844 17,972 2,427,181 2,460,362 1.4 GOVERNMENT 187 879 112,468 113,682 1.1 OTHER 35 106 13,351 13,473 0.9 HOSPICE BASE: FREESTANDING 1,186 28,948 4,050,201 4,051,763 1.1 HOME HEALTH AGENCY 634 8,075 1,105,167 1,113,613 0.8 HOSPITAL 549 5,524 733,743 739,760 0.8 SKILLED NURSING FACILITY 16 182 28,893 28,983 0.3 C. Conclusion Our impact analysis compared hospice payments by using the FY 2004 wage index to the estimated payments using the FY 2005 wage index. Through the analysis, we estimate that total hospice payments will increase from last year by 1.0 percent or by $60,113,000. Additionally, we compared estimated payments using the FY 1983 hospice wage index to estimated payments using the FY 2005 wage index and determined the current hospice wage index to be budget neutral, as required by the negotiated rulemaking committee. We have determined that this rule is not an economically significant rule under Executive Order 12866. Although we believe that this rule will not have a significant economic impact on a substantial number of small entities, we took any negative effects into consideration during the negotiated rulemaking process. We have determined that this notice will not have a significant impact on the operations of a substantial number of small rural hospitals. Finally, this notice will not have a consequential effect on State, local, or tribal governments. OMB Review In accordance with the provisions of Executive Order 12866, the Office of Management and Budget reviewed this notice. Authority: Section 1814(i) of the Social Security Act (42 U.S.C. 1395f (i)(1)) (Catalog of Federal Domestic Assistance Program No. 93.773 Medicare—Hospital Insurance Program; and No. 93.774, Medicare—Supplementary Medical Insurance Program) Dated: Mark B. McClellan, Administrator, Centers for Medicare & Medicaid Services. Dated: Tommy G. Thompson, Secretary. [FR Doc. 04-19697 Filed 8-26-04; 8:45 am]

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