Federal Register - August 4, 2021
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Source: Federal Register
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Federal Register / Vol. 86, No. 147 / Wednesday, August 4, 2021 / Rules and Regulations
Based on our definition of the laborrelated share and the cost categories in the 2016-based IPF market basket, we proposed to calculate the labor-related share for FY 2022 as the sum of the FY
2022 relative importance of Wages and Salaries; Employee Benefits;
Professional Fees: Labor-related;
Administrative and Facilities Support Services; Installation, Maintenance, and Repair Services; All Other: Labor-related Services; and a portion of the CapitalRelated relative importance from the 2016-based IPF market basket. For more details regarding the methodology for determining specific cost categories for inclusion in the 2016-based IPF laborrelated share, see the FY 2020 IPF PPS
final rule 84 FR 38445 through 38447.
The relative importance reflects the different rates of price change for these cost categories between the base year FY 2016 and FY 2022. Based on IGIs fourth quarter 2020 forecast of the 2016based IPF market basket, the sum of the FY 2022 relative importance for Wages and Salaries; Employee Benefits;
Professional Fees: Labor-related;
Administrative and Facilities Support Services; Installation Maintenance &
Repair Services; and All Other: Labor related Services was 74.0 percent. We proposed that the portion of CapitalRelated costs that are influenced by the local labor market is 46 percent. Since the relative importance for CapitalRelated costs was 6.7 percent of the 2016-based IPF market basket for FY
2022, we proposed to take 46 percent of 6.7 percent to determine the laborrelated share of Capital-Related costs for FY 2022 of 3.1 percent. Therefore, we proposed a total labor-related share for FY 2022 of 77.1 percent the sum of 74.0
percent for the labor-related share of operating costs and 3.1 percent for the labor-related share of Capital-Related costs. We also proposed that if more recent data became available after publication of the proposed rule and before the publication of this final rule for example, a more recent estimate of the labor-related share, we would use such data, if appropriate, to determine the FY 2022 IPF labor-related share in the final rule.
Based on IGIs second quarter 2021
forecast of the 2016-based IPF market basket, the sum of the FY 2022 relative importance for Wages and Salaries;
Employee Benefits; Professional Fees:
Labor-related; Administrative and Facilities Support Services; Installation Maintenance & Repair Services; and All Other: Labor-related Services is 74.1
percent. Since the relative importance for Capital-Related costs is 6.7 percent of the 2016-based IPF market basket for FY 2022, we take 46 percent of 6.7
percent to determine the labor-related share of Capital-Related costs for FY
2022 of 3.1 percent. Therefore, the current estimate of the total laborrelated share for FY 2022 is equal to 77.2 percent the sum of 74.1 percent for the labor-related share of operating costs and 3.1 percent for the labor-related share of Capital-Related costs. Table 1
shows the final FY 2022 labor-related share and the final FY 2021 laborrelated share using the 2016-based IPF
market basket relative importance.
TABLE 1: FY 2022 IPF Labor-Related Share and FY 2021 IPF Labor-Related Share
Waes and Salaries Employee Benefits Professional Fees: Laborrelated Administrative and Facilities Support Services Installation, Maintenance and Repair All Other Labor-related Services Capital-related .46
Total
Relative importance, labor-related share, FY 2021 1
52.9
Relative importance, labor-related share, FY20222
52.8
13.6
13.6
4.3
4.3
0.6
0.6
1.3
1.3
1.5
1.5
3.1
77.3
3.1
77.2
We invited public comments on the proposed labor-related share for FY
2022.
Comment: Several commenters supported the decrease in the laborrelated share from 77.3 percent in FY
2021 to 77.1 percent in FY 2022 noting that it will help any facility that has a wage index less than 1.0. The commenters stated that, across this country there is a growing disparity
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between high-wage and low-wage states.
Recognizing this disparity and slightly lowering the labor-related share provides some aid to hospitals in many rural and underserved communities.
Response: We thank the commenter for their support. We agree with the commenters that the labor-related share should reflect the proportion of costs that are attributable to labor and vary geographically to account for differences
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in labor-related costs across geographic areas. More recent data became available; therefore, based on IGIs second quarter 2021 forecast with historical data through the first quarter 2021 the FY 2022 labor-related share for the final rule is 77.2 percent as shown in Table 1.
After consideration of comments received, we are finalizing the use of the sum of the FY 2022 relative importance
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