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Federal Register / Vol. 86, No. 88 / Monday, May 10, 2021 / Rules and Regulations
and Regulatory Review January 18, 2011, the Regulatory Flexibility Act RFA September 19, 1980, Pub. L. 96
354, section 1102b of the Act, section 202 of the Unfunded Mandates Reform Act of 1995 March 22, 1995; Pub. L.
1044, Executive Order 13132 on Federalism August 4, 1999, and the Congressional Review Act 5 U.S.C.
8042.
Executive Orders 12866 and 13563
direct 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.
This rule does not reach the economic threshold and thus is not considered a major rule.
The RFA requires agencies to analyze options for regulatory relief of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of less than $8.0 million to $41.5
million in any 1 year. Individuals and states are not included in the definition of a small entity. We are not preparing an analysis for the RFA because we have determined, and the Secretary certifies, that this IFC would not have a significant economic impact on a substantial number of small entities.
Also, our revision to the regulatory text is a consequence of a court decision. We are amending the regulations to align our policy with the courts decision in Bates and implement the Bates courts interpretation of the requirement at section 1886d8Ei of the Act that the Secretary shall treat the hospital as being located in the rural area.
In addition, section 1102b of the Act requires us to prepare an RIA 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 1102b of the Act, we define a small rural hospital for Medicare payment regulations as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds. We are not preparing an analysis for section 1102b of the Act because we have determined, and the Secretary certifies, that this IFC would not have a
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significant impact on the operations of a substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995
dollars, updated annually for inflation.
In 2021, that threshold is approximately $158 million. This rule will have no consequential effect on state, local, or tribal governments or on the private sector.
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.
Since this regulation does not impose any costs on state or local governments, the requirements of Executive Order 13132 are not applicable.
Executive Orders 12866 and 13563
direct 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. Section 3f of Executive Order 12866 defines a significant regulatory action as an action that is likely to result in a rule: 1 Having an annual effect on the economy of $100 million or more in any 1 year, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities also referred to as economically significant; 2 creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; 3 materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or 4 raising novel legal or policy issues arising out of legal mandates, the Presidents priorities, or the principles set forth in the Executive Order.
We estimate that this rule is significant but not economically significant, as measured by the $100
million threshold. However, we have prepared an impact analysis that presents our best estimate of the costs and benefits of this rule for FY 2022
since section 3f of Executive Order 12866 defines a significant regulatory
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action as a rule that raises novel legal or policy issues arising out of legal mandates.
With regard to our impact analysis, as a result of this IFC, for FY 2022, there are approximately 22 hospitals that may qualify for a reclassification to a new or different urban area with a higher wage index than they might otherwise have received based on the information currently available to us for example, applications submitted to the MGCRB.
For FY 2022, if these hospitals qualify for and accept reclassification to a new or different urban area with a higher wage index than they might otherwise have received, we estimate a total increase in payments to these hospitals of approximately $50 million in aggregate. However, wage index adjustments such as these are made in a manner that ensures that aggregate payments to hospitals are unaffected.
This is accomplished through the application of a wage index budget neutrality adjustment as described more fully in the FY 2022 IPPS/LTCH
proposed rule. Therefore, as a consequence of the courts decision in Bates, even though an urban hospital may be able to qualify for a reclassification to a new or different urban area with a higher wage index, this would not increase aggregate hospital payments. We estimate that in FY 2022 the wage index budget neutrality adjustment could increase by one-half of a percentage point as a result of an increase in the wage index to these 22 hospitals.
We do not know as a result of this IFC: 1 How many additional hospitals will elect to apply to the MGCRB by September 1, 2021 for reclassification beginning FY 2023 that would not otherwise have applied; 2 how many hospitals that apply will qualify for a wage index higher than they otherwise would have received; 3 for those that qualify for a higher wage index how much higher that wage index will be;
and, 4 how many hospitals may elect to retain or acquire 412.103 urban-to rural reclassification that would not otherwise have done so. The MGCRB
makes determinations on reclassification requests, and hospitals make final decisions whether to accept reclassifications approved by the MGCRB.
We also note that OMB requested public comment on the recommendations it received from the Metropolitan and Micropolitan Statistical Area Standards Review Committee for changes to OMBs metropolitan and micropolitan statistical area standards 86 FR 5263.
These standards determine the
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