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Federal Aviation Administration (FAA), DOT.
Final special conditions.
These special conditions are issued for the Bombardier Inc. (Bombardier) Model BD-700-2A12 and BD-700-2A13 airplanes. These airplanes will have a novel or unusual design feature when compared to the state of technology envisioned in the airworthiness standards for transport category airplanes. This feature is an aluminum-lithium fuselage construction that may provide different levels of protection from post-crash fire threats than would similar airplanes constructed from traditional aluminum structure. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
Effective September 5, 2017.
Alan Sinclair, FAA, Airframe and Cabin Safety Branch, ANM-115, Transport Airplane Directorate, Aircraft Certification Service, 1601 Lind Avenue SW., Renton, Washington, 98057-3356; telephone 425-227-2195; facsimile 425-227-1232.
On May 30, 2012, Bombardier applied for an amendment to type certificate no. T00003NY to include the new Model BD-700-2A12 and BD-700-2A13 airplanes. These airplanes are derivatives of the Model BD-700 series of airplanes and are marketed as the Bombardier Global 7000 (Model BD-700-2A12) and Global 8000 (Model BD-700-2A13). These airplanes are twin-engine, transport-category, executive-interior business jets. The maximum passenger capacity is 19 and the maximum takeoff weights are 106,250 lbs. (Model BD-700-2A12) and 104,800 lbs. (Model BD-700-2A13).
Under the provisions of Title 14, Code of Federal Regulations (14 CFR) 21.101, Bombardier must show that the Model BD-700-2A12 and BD-700-2A13 airplanes meet the applicable provisions of the regulations listed in Type Certificate No. T00003NY, or the applicable regulations in effect on the date of application for the change, except for earlier amendments as agreed upon by the FAA.
If the Administrator finds that the applicable airworthiness regulations (
Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design feature, or should any other model already included on the same type certificate be modified to incorporate the same novel or unusual design feature, these special conditions would also apply to the other model under § 21.101.
In addition to the applicable airworthiness regulations and special conditions, the Model BD-700-2A12 and BD-700-2A13 airplanes must comply with the fuel-vent and exhaust-emission requirements of 14 CFR part 34, and the noise-certification requirements of 14 CFR part 36.
The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type-certification basis under § 21.101.
Bombardier Inc. Model BD-700-2A12 and BD-700-2A13 airplanes will incorporate the following novel or unusual design feature: The fuselage will be fabricated using aluminum-lithium alloy materials instead of conventional aluminum.
The certification basis for the Bombardier Model BD-700-2A12 and BD-700-2A11 airplanes does not include the burn through requirements defined in § 25.856(b) because both airplane models have a passenger capacity of fewer than 20. The Model BD-700-2A12 and BD-700-2A13 airplanes are introducing a new material other than what has traditionally been shown to be survivable from a “toxic” standpoint. The applicant must ensure that the material being installed on an airplane does not introduce a new hazard that would reduce the survivability of the passengers during a post-crash situation, or that would provide levels of toxic fumes that would be lethal or incapacitating, thus preventing evacuation of the airplane in a crash scenario.
In accordance with § 21.16, fuselage structure that includes aluminum-lithium construction is an unusual design feature for large, transport-category airplanes certificated under 14 CFR part 25.
Regulations applicable to burn requirements, including §§ 25.853 and 25.856(a), remain valid for these airplanes, but do not protect against the threat generated from potentially toxic levels of gases produced from aluminum-lithium alloy materials.
These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
Notice of Proposed Special Conditions No. 25-16-07-SC for the Bombardier Model BD-700-2A12 and BD-700-2A13 airplanes was published in the
The commenter acknowledged that the use of the aluminum-lithium alloy would require full certification to the existing regulations. However, they contend that the material is not novel and unusual and does not require special conditions.
The FAA does not agree. While it is true that, with the level of lithium in the alloys presently tested, the proposed aluminum-lithium alloy does not appear to pose a significant risk, the existing regulations, as discussed above, do not adequately address the use of this specific alloy technology. Lithium metal is highly flammable and toxic; therefore, the FAA is concerned about the use of lithium in aircraft alloys. The FAA did not have data on the properties of aluminum-lithium when exposed to a post-crash fire threat prior to applying these special conditions.
Therefore, special conditions are required until the regulations are amended to provide sufficient requirements for the application of this new alloy technology.
As discussed above, these special conditions are applicable to the Bombardier Model BD-700-2A12 and BD-700-2A13 airplanes. Should Bombardier apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to the other model as well.
This action affects only one novel or unusual design feature on Bombardier Model BD-700-2A12 and BD-700-2A13 airplanes. It is not a rule of general applicabilit.
Aircraft, Aviation safety, Reporting and recordkeeping requirements.
The authority citation for these special conditions is as follows:
49 U.S.C. 106(g), 40113, 44701, 44702, 44704.
Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for Bombardier Model BD-700-2A12 and BD-700-2A13 airplanes.
The Model BD-700-2A12 and BD-700-2A13 airplanes must show that toxic levels of gases produced from the aluminum-lithium material, when exposed to a post-crash fire threat, are in no way an additional threat to the passengers, including, but not limited to, their ability to evacuate, when compared to traditional aluminum airplane materials.
Issued in Renton, Washington.
Federal Aviation Administration (FAA), DOT.
Final special conditions; request for comments.
These special conditions are issued for the Embraer S.A. (Embraer) Model ERJ 190-300 airplane. This airplane will have a novel or unusual design feature when compared to the state of technology envisioned in the airworthiness standards for transport-category airplanes. This design feature involves flight-envelope protection functions that limit such flight parameters as, for example, angle of attack, normal load factor, attitude, bank angle, and speed during normal operation. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
This action is effective on Embraer S.A. on August 4, 2017. We must receive your comments by September 18, 2017.
Send comments identified by docket number FAA-2017-0317 using any of the following methods:
•
•
•
•
Joe Jacobsen, FAA, Airplane and Flight Crew Interface Branch, ANM-111, Transport Airplane Directorate, Aircraft Certification Service, 1601 Lind Avenue SW., Renton, Washington 98057-3356; telephone 425-227-2011; facsimile 425-227-1320.
The substance of these special conditions has been subject to the notice and comment period in several prior instances and has been derived without substantive change from those previously issued. It is unlikely that prior public comment would result in a significant change from the substance contained herein. Therefore, because a delay would significantly affect the certification of the airplane, the FAA has determined that prior public notice and comment are unnecessary and impracticable.
In addition, since the substance of these special conditions has been subject to the public comment process in several prior instances with no substantive comments received, the FAA finds it unnecessary to delay the effective date and finds that good cause exists for adopting these special conditions upon publication in the
The FAA is requesting comments to allow interested persons to submit views that may not have been submitted in response to the prior opportunities for comment described above.
We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.
We will consider all comments we receive by the closing date for comments. We may change these special conditions based on the comments we receive.
On September 13, 2013, Embraer applied for an amendment to Type Certificate No. A57NM to include the new Model ERJ 190-300 airplane. The Model ERJ 190-300 airplane, which is a derivative of the Embraer Model ERJ 190-100 STD airplane currently approved under Type Certificate No. A57NM, is a 97- to 114-passenger transport-category airplane. The maximum take-off weight is 124,340 lbs (56,400 kg).
Under the provisions of Title 14, Code of Federal Regulations (14 CFR) 21.101, Embraer must show that the Model ERJ 190-300 airplane meets the applicable provisions of the regulations listed in Type Certificate No. A57NM, or the applicable regulations in effect on the date of application for the change, except for earlier amendments as agreed upon by the FAA.
If the Administrator finds that the applicable airworthiness regulations (
Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design feature, or should any other model already included on the same type certificate be modified to incorporate the same novel or unusual design feature, these special conditions would also apply to the other model under § 21.101.
In addition to the applicable airworthiness regulations and special conditions, the Model ERJ 190-300 airplane must comply with the fuel-vent and exhaust-emission requirements of 14 CFR part 34 and the noise-certification requirements of 14 CFR part 36.
The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type certification basis under § 21.101.
The Embraer Model ERJ 190-300 airplane will incorporate the following novel or unusual design feature: Flight-envelope protection functions that limit such flight parameters as, for example, angle of attack, normal load factor, attitude, bank angle, and speed during normal operation.
The Model ERJ 190-300 airplane incorporates normal load-factor limiting on a full-time basis, which prevents the pilot from exceeding the positive or negative airplane limit load factor. The application of this load-factor limiting function affects airplane-handling characteristics and may compromise the airplane's maneuverability and controllability. The current regulations do not contain adequate safety standards for these novel protection features.
The Embraer Model ERJ 190-300 design has a complex, fully digital flight-control system, referred to as fly-by-wire (FBW) architecture. This FBW architecture provides closed-loop flight-control laws and multiple protection functions.
Airplanes with conventional flight-control systems (mechanical linkages) are limited in the pitch axis only by the elevator surface area and deflection limit. The elevator-control power is normally derived for adequate controllability and maneuverability at the most critical longitudinal pitching moment. The result is that, for traditional airplanes, maneuverability in excess of limit structural design values, within a significant portion of the flight envelope, is possible.
Part 25 does not specify requirements or policy for demonstrating maneuver control that imposes any handling-qualities requirements beyond the design limit structural loads. Nevertheless, the availability of this excess maneuver capacity, in the event of extreme emergency such as upset recoveries or collision avoidance, is recognized.
These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
As discussed above, these special conditions are applicable to the Embraer Model ERJ 190-300 airplane. Should Embraer apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to that model as well.
This action affects only a certain novel or unusual design feature on one model of airplane. It is not a rule of general applicability.
Aircraft, Aviation safety, Reporting and recordkeeping requirements.
The authority citation for these special conditions is as follows:
49 U.S.C. 106(g), 40113, 44701, 44702, 44704.
Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for Embraer Model ERJ 190-300 airplanes.
1. Normal Load Factor (g) Limiting. To meet the intent of adequate maneuverability and controllability required by § 25.143(a); and in addition to the requirements of § 25.143(a), and in the absence of other limiting factors, the following special conditions apply, based on § 25.333(b):
a. The positive limiting load factor must not be less than:
i. 2.5 g for the normal state of the electronic flight-control system with the high-lift devices retracted up to V
ii. 2.0 g for the normal state of the electronic flight-control system with the high-lift devices extended.
b. The negative limiting load factor must be equal to or more negative than:
i. Minus 1.0 g for the normal state of the electronic flight-control system with the high-lift devices retracted.
ii. 0.0 g for the normal state of the electronic flight-control system with high-lift devices extended
c. Maximum reachable positive load factor, wings level, may be limited by the characteristics of the electronic
i. The required values are readily achievable in turns, and
ii. Wings-level pitch-up is satisfactory.
d. Maximum achievable negative load factor may be limited by the characteristics of the electronic flight-control system or flight-envelope protections (other than load-factor protection), provided that:
i. Pitch-down responsiveness is satisfactory, and
ii. From level flight, 0g is readily achievable, or alternatively, a satisfactory trajectory change is readily achievable at operational speeds. For the FAA to consider a trajectory change as satisfactory, the applicant should propose and justify a pitch rate that provides sufficient maneuvering capability in the most critical scenarios.
e. Compliance demonstration with the above requirements may be performed without ice accretion on the airframe.
f. These special conditions do not impose an upper bound for the normal load-factor limit, nor do they require that the limiter exist. If the limit is set at a value beyond the structural design limit maneuvering load factor
Federal Aviation Administration (FAA), DOT.
Final special conditions; request for comments.
These special conditions are issued for the Airbus Model A330 NEO airplanes. This airplane will have novel or unusual design features when compared to the state of technology envisioned in the airworthiness standards for transport-category airplanes. These design features include systems that, directly or as a result of failure or malfunction, affect airplane structural performance. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
This action is effective on Airbus on August 4, 2017. We must receive your comments by September 18, 2017.
Send comments identified by docket number FAA-2017-0356 using any of the following methods:
•
•
•
•
Todd Martin, FAA, Airframe and Cabin Safety, ANM-115, Transport Airplane Directorate, Aircraft Certification Service, 1601 Lind Avenue SW., Renton, Washington 98057-3356; telephone 425-227-1178; facsimile 425-227-1320.
The FAA has determined that notice of, and opportunity for prior public comment on, these special conditions is impracticable because these procedures would significantly delay issuance of the design approval and thus delivery of the affected airplanes.
In addition, the substance of these special conditions has been subject to the public comment process in several prior instances with no substantive comments received. The FAA therefore finds it unnecessary to delay the effective date and finds that good cause exists for making these special conditions effective upon publication in the
We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.
We will consider all comments we receive by the closing date for comments. We may change these special conditions based on the comments we receive.
On January 20, 2015, Airbus applied for an amendment to Type Certificate no. A46NM to include the new Model A330-841 (A330-800NEO) and A330-941 (A330-900NEO) airplanes, collectively marketed as Model A330NEO airplanes. These airplanes, which are derivatives of the Model A330-200 and A330-300 airplanes currently approved under Type Certificate no. A46NM, are wide-body, jet-engine airplanes with a maximum takeoff weight of 533,519 pounds, and a passenger capacity of 257 (A330-841); or a maximum takeoff weight of 535,503 pounds, and a passenger capacity of 287 (A330-941).
Under the provisions of Title 14, Code of Federal Regulations (14 CFR) 21.101, Airbus must show that the Model A330NEO airplanes meet the applicable provisions of the regulations listed in Type Certificate No. A46NM, or the applicable regulations in effect on the date of application for the change except for earlier amendments as agreed upon by the FAA.
If the Administrator finds that the applicable airworthiness regulations (
Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design feature, or should any other model already included on the same type certificate be modified to incorporate the same novel or unusual design feature, these special conditions would also apply to the other model under § 21.101.
In addition to the applicable airworthiness regulations and special conditions, the Airbus Model A330NEO airplanes must comply with the fuel-vent and exhaust-emission requirements of 14 CFR part 34 and the noise-certification requirements of 14 CFR part 36.
The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type certification basis under § 21.101.
The Airbus Model A330NEO airplanes will incorporate the following novel or unusual design features:
Systems that, directly or as a result of failure or malfunction, affect airplane structural performance. That is, the airplane's systems affect how it responds in maneuver and gust conditions, and thereby affect its structural capability. These systems may also affect the aeroelastic stability of the airplane. Such systems include flight control systems, autopilots, stability augmentation systems, load alleviation systems, and fuel management systems. These systems represent novel and unusual features when compared to the technology envisioned in the current airworthiness standards.
Special conditions have been applied on past airplane programs to require consideration of the effects of systems on structures. The regulatory authorities and industry developed standardized criteria in the Aviation Rulemaking Advisory Committee (ARAC) forum based on the criteria defined in Advisory Circular (AC) 25.672-1, dated November 15, 1983. The ARAC recommendations have been incorporated in European Aviation Safety Agency (EASA) Certification Specifications (CS) 25.302 and CS 25 Appendix K, which are applicable to Airbus. FAA rulemaking on this subject is not complete, thus the need for the special conditions.
The special conditions are similar to those previously applied to other airplane models and to the requirements of CS 25.302. The major differences between these special conditions and the current CS 25.302 are as follows:
(1) Both the special conditions and CS 25.302 (and by reference Appendix K) specify the design load conditions to be considered. Effects of Systems on Structure, special conditions 2.a. and 3.b.i., clarify that, in some cases, different load conditions are to be considered due to other special conditions or equivalent-level-of-safety findings.
(2) Both the special conditions (see special condition 5, below) and CS 25.302 allow consideration of the probability of being in a dispatched configuration when assessing subsequent failures and potential “continuation of flight” loads. The special conditions, however, also allow using probability when assessing failures that induce loads at the “time of occurrence,” whereas CS 25.302 does not.
These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
As discussed above, these special conditions are applicable to Airbus Model A330NEO airplanes. Should Airbus apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to that model as well.
This action affects only certain novel or unusual design features on one model series of airplanes. It is not a rule of general applicability.
The substance of these special conditions has been subject to the notice and comment period in several prior instances and has been derived without substantive change from those previously issued. It is unlikely that prior public comment would result in a significant change from the substance contained herein. Therefore, because a delay would significantly affect the certification of the airplane, which is imminent, the FAA has determined that prior public notice and comment are unnecessary and impracticable, and good cause exists for adopting these special conditions upon publication in the
Aircraft, Aviation safety, Reporting and recordkeeping requirements.
The authority citation for these special conditions is as follows:
49 U.S.C. 106(g), 40113, 44701, 44702, 44704.
Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for Airbus Model A330-841 and A330-941 airplanes.
For airplanes equipped with systems that affect structural performance, either directly or as a result of a failure or malfunction, the influence of these systems and their failure conditions must be taken into account when showing compliance with the requirements of part 25, subparts C and D.
For airplanes equipped with flight-control systems, autopilots, stability-augmentation systems, load-alleviation systems, fuel-management systems, and other systems that either directly, or as a result of failure or malfunction, affect structural performance, the following criteria must be used for showing compliance. If these special conditions are used for other systems, it may be necessary to adapt the criteria to the specific system.
1. The criteria defined herein only address the direct structural consequences of the system responses and performance. They cannot be considered in isolation, but should be included in the overall safety evaluation of the airplane. These criteria may, in some instances, duplicate standards already established for this evaluation. These criteria are only applicable to structure the failure of which could prevent continued safe flight and landing. Specific criteria that define acceptable limits on handling characteristics or stability requirements, when operating in the system-degraded or inoperative mode, are not provided in these special conditions.
2. Depending upon the specific characteristics of the airplane, additional studies that go beyond the
3. The following definitions are applicable to these special conditions.
a.
b.
c.
d.
e.
1.
2.
a. Limit loads must be derived in all normal operating configurations of the system from all the limit conditions specified in part 25, subpart C (or defined by special conditions or findings of equivalent level of safety in lieu of those specified in subpart C), taking into account any special behavior of such a system or associated functions, or any effect on the structural performance of the airplane that may occur up to the limit loads. In particular, any significant nonlinearity (rate of displacement of control surface, thresholds, or any other system nonlinearities) must be accounted for in a realistic or conservative way when deriving limit loads from limit conditions.
b. The airplane must meet the strength requirements of part 25 (static strength, residual strength), using the specified factors to derive ultimate loads from the limit loads defined above. The effect of nonlinearities must be investigated beyond limit conditions to ensure that the behavior of the system presents no anomaly compared to the behavior below limit conditions. However, conditions beyond limit conditions need not be considered when it can be shown that the airplane has design features that will not allow it to exceed those limit conditions.
c. The airplane must meet the aeroelastic stability requirements of § 25.629.
3.
a. At the time of occurrence. Starting from 1g level flight conditions, a realistic scenario, including pilot corrective actions, must be established to determine the loads occurring at the time of failure and immediately after the failure.
i. For static-strength substantiation, these loads, multiplied by an appropriate factor of safety that is related to the probability of occurrence of the failure, are ultimate loads to be considered for design. The factor of safety is defined in Figure 1, below.
ii. For residual-strength substantiation, the airplane must be able to withstand two thirds of the ultimate loads defined in special condition 3.a.i. For pressurized cabins, these loads must be combined with the normal operating differential pressure.
iii. Freedom from aeroelastic instability must be shown up to the speeds defined in § 25.629(b)(2). For failure conditions that result in speeds beyond V
iv. Failures of the system that result in forced structural vibrations (oscillatory failures) must not produce loads that could result in detrimental deformation of primary structure.
b. For the continuation of the flight. For the airplane in the system-failed state, and considering any appropriate reconfiguration and flight limitations, the following apply:
i. The loads derived from the following conditions (or defined by special conditions or findings of equivalent level of safety in lieu of the following conditions) at speeds up to V
1. The limit symmetrical maneuvering conditions specified in §§ 25.331 and 25.345.
2. the limit gust and turbulence conditions specified in §§ 25.341 and 25.345.
3. the limit rolling conditions specified in § 25.349, and the limit unsymmetrical conditions specified in §§ 25.367, and 25.427(b) and (c).
4. the limit yaw-maneuvering conditions specified in § 25.351.
5. the limit ground-loading conditions specified in §§ 25.473, 25.491, 25.493(d), and 25.503.
ii. For static-strength substantiation, each part of the structure must be able to withstand the loads in special condition 3.b.i., multiplied by a factor of safety depending on the probability of being in this failure state. The factor of safety is defined in Figure 2, below.
If P
iii. For residual-strength substantiation, the airplane must be able to withstand two-thirds of the ultimate loads defined in paragraph 3.b.ii. of these special conditions. For pressurized cabins, these loads must be combined with the normal operating differential pressure.
iv. If the loads induced by the failure condition have a significant effect on fatigue or damage tolerance, then their effects must be taken into account.
v. Freedom from aeroelastic instability must be shown up to a speed determined from Figure 3, below. Flutter clearance speeds V′ and V″ may be based on the speed limitation specified for the remainder of the flight using the margins defined by § 25.629(b).
If P
vi. Freedom from aeroelastic instability must also be shown up to V′ in Figure 3, above, for any probable system-failure condition, combined with any damage required or selected for investigation by § 25.571(b).
c. Consideration of certain failure conditions may be required by other sections of part 25 regardless of calculated system reliability. Where analysis shows the probability of these failure conditions to be less than 10
4.
a. The system must be checked for failure conditions, not extremely improbable, that degrade the structural capability below the level required by part 25, or that significantly reduce the reliability of the remaining system. As far as reasonably practicable, the flightcrew must be made aware of these failures before flight. Certain elements of the control system, such as mechanical and hydraulic components, may use special periodic inspections, and electronic components may use daily checks, in lieu of detection and indication systems, to achieve the objective of this requirement. These certification-maintenance requirements
b. The existence of any failure condition, not extremely improbable, during flight, that could significantly affect the structural capability of the airplane, and for which the associated reduction in airworthiness can be minimized by suitable flight limitations, must be signaled to the flightcrew. For example, failure conditions that result in a factor of safety between the airplane strength and the loads of part 25, subpart C below 1.25, or flutter margins below V″, must be signaled to the crew during flight.
5.
Federal Aviation Administration (FAA), DOT.
Final special conditions; request for comments.
These special conditions are issued for the Embraer S.A. (Embraer) Model ERJ 190-300 series airplanes. These airplanes will have a novel or unusual design feature when compared to the state of technology envisioned in the airworthiness standards for transport category airplanes. This design feature is an electronic flight control system (EFCS) that provides control of the airplane through pilot inputs to the flight computer. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
This action is effective on Embraer on August 4, 2017. We must receive your comments by September 18, 2017.
Send comments identified by docket number FAA-2017-0732 using any of the following methods:
•
•
•
•
Greg Schneider, FAA, Airframe and Cabin Safety Branch, ANM-115, Transport Airplane Directorate, Aircraft Certification Service, 1601 Lind Avenue SW., Renton, Washington, 98057-3356; telephone 425-227-2116; facsimile 425-227-1320.
The FAA has determined that notice of, and opportunity for prior public comment on, these special conditions is impracticable because these procedures would delay issuance of the design approval and thus delivery of the affected airplane.
In addition, the substance of these special conditions has been subject to the public comment process in several prior instances with no substantive comments received. The FAA finds it is unnecessary to delay the effective date and finds that good cause exists for adopting these special conditions upon publication in the
The FAA is requesting comments to allow interested persons to submit views that may not have been submitted in response to the prior opportunities for comment described above. We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.
We will consider all comments we receive by the closing date for comments. We may change these special conditions based on the comments we receive.
On September 13, 2013, Embraer applied for an amendment to Type
The flight-control system for the Model ERJ 190-300 airplane does not have a direct mechanical link nor a linear gain between the airplane flight-control surface and the pilot's flight-deck control device, which is not accounted for in title 14, Code of Federal Regulations (14 CFR) 25.349(a). Instead, a flight-control computer commands the airplane flight-control surfaces, based on input received from the flight-deck control device. The flight-control computer modifies pilot input before the command is given to the flight-control surface.
Under the provisions of 14 CFR 21.101, Embraer must show that the Model ERJ 190-300 airplane meets the applicable provisions of the regulations listed in Type Certificate No. A57NM or the applicable regulations in effect on the date of application for the change, except for earlier amendments as agreed upon by the FAA.
If the Administrator finds that the applicable airworthiness regulations (
Special conditions are initially applicable to the Model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design features, or should any other model already included on the same type certificate be modified to incorporate the same novel or unusual design feature, these special conditions would also apply to the other model under § 21.101.
In addition to the applicable airworthiness regulations and special conditions, the ERJ 190-300 must comply with the fuel vent and exhaust emission requirements of 14 CFR part 34 and the noise-certification requirements of 14 CFR part 36.
The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type certification basis under § 21.101.
The ERJ 190-300 will incorporate the following novel or unusual design features: An electronic flight control system that provides control of the airplane through pilot inputs to the flight computer. Current part 25 airworthiness regulations account for control laws where aileron deflection is proportional to control stick deflection. They do not address any nonlinearities,
These special conditions differ from current regulatory requirements in that they require that the roll maneuver result from defined movements of the cockpit roll control as opposed to defined aileron deflections. Also, these special conditions require an additional load condition at design maneuvering speed (V
These special conditions differ from similar special conditions previously issued on this topic. These special conditions are limited to the roll axis only, whereas other special conditions also included pitch and yaw axes. Special conditions are no longer needed for the yaw axis because 14 CFR 25.351 was revised at Amendment 25-91 to take into account effects of an electronic flight control system. No special conditions are needed for the pitch axis because the method that Embraer proposed for the pitch maneuver takes into account effects of an electronic flight control system.
These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
As discussed above, these special conditions are applicable to the Model ERJ 190-300 airplanes. Should Embraer apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to that model as well.
This action affects only certain novel or unusual design features on one model of airplanes. It is not a rule of general applicability.
Aircraft, Aviation safety, Reporting and recordkeeping requirements.
The authority citation for these special conditions is as follows:
49 U.S.C. 106(g), 40113, 44701, 44702, 44704.
Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for the Embraer Model ERJ 190-300 series airplanes.
In lieu of compliance to 14 CFR 25.349(a), the Embraer Model ERJ 190-300 airplane must comply with the following:
The following conditions, speeds, and cockpit roll control motions (except as the motions may be limited by pilot effort) must be considered in combination with an airplane load factor of zero and of two-thirds of the positive maneuvering factor used in design. In determining the resulting control surface deflections, the torsional flexibility of the wing must be considered in accordance with 14 CFR 25.301(b).
(a) Conditions corresponding to steady rolling velocities must be investigated. In addition, conditions corresponding to maximum angular acceleration must be investigated for airplanes with engines or other weight concentrations outboard of the fuselage. For the angular acceleration conditions, zero rolling velocity may be assumed in the absence of a rational time history investigation of the maneuver.
(b) At V
(c) At V
(d) At V
Issued in Renton, Washington.
Federal Aviation Administration (FAA), DOT.
Final special conditions; request for comments.
These special conditions are issued for the Embraer S.A. (Embraer) Model ERJ 190-300 airplane. This airplane will have novel or unusual design features when compared to the state of technology envisioned in the airworthiness standards for transport-category airplanes. These design features include systems that, directly or as a result of failure or malfunction, affect airplane structural performance. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
This action is effective on Embraer on August 4, 2017. Send your comments by September 18, 2017.
Send comments identified by docket number FAA-2017-0318 using any of the following methods:
•
•
•
•
Greg Schneider, FAA, Airframe and Cabin Safety Branch, ANM-115, Transport Airplane Directorate, Aircraft Certification Service, 1601 Lind Avenue SW., Renton, Washington 98057-3356; telephone 425-227-2116; facsimile 425-227-1320.
The FAA has determined that notice of, and opportunity for prior public comment on, these special conditions is impracticable because these procedures would significantly delay issuance of the design approval and thus delivery of the affected airplanes.
In addition, the substance of these special conditions has been subject to the public-comment process in several prior instances with no substantive comments received. The FAA therefore finds it unnecessary to delay the effective date and that good cause exists for making these special conditions effective upon publication in the
We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.
We will consider all comments we receive by the closing date for comments. We may change these special conditions based on the comments we receive.
On September 13, 2013, Embraer applied for an amendment to Type Certificate No. A57NM to include the new Model ERJ 190-300 airplane. The Model ERJ 190-300 airplane, which is a derivative of the Embraer Model ERJ 190-100 STD airplane currently approved under Type Certificate No. A57NM, is a 97- to 114-passenger transport-category airplane. The maximum take-off weight is 124,340 lbs (56,400 kg).
Under the provisions of Title 14, Code of Federal Regulations (14 CFR) 21.101, Embraer must show that the Model ERJ 190-300 airplane meets the applicable provisions of the regulations listed in Type Certificate No. A57NM, or the applicable regulations in effect on the date of application for the change, except for earlier amendments as agreed upon by the FAA.
If the Administrator finds that the applicable airworthiness regulations (
Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design feature, or should any other model already included on the same type certificate be modified to incorporate the same novel or unusual design feature, these special conditions would also apply to the other model under § 21.101.
In addition to the applicable airworthiness regulations and special conditions, the Model ERJ 190-300 airplane must comply with the fuel-vent and exhaust-emission requirements of 14 CFR part 34 and the noise-certification requirements of 14 CFR part 36.
The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type certification basis under § 21.101.
The Embraer Model ERJ 190-300 airplane will incorporate the following novel or unusual design feature:
Systems that, directly or as a result of failure or malfunction, affect airplane structural performance. That is, the
Special conditions have been applied on past airplane programs to require consideration of the effects of systems on structures. The regulatory authorities and industry developed standardized criteria in the Aviation Rulemaking Advisory Committee (ARAC) forum based on the criteria defined in Advisory Circular (AC) 25.672-1, dated November 15, 1983. The ARAC recommendations have been incorporated in European Aviation Safety Agency (EASA) Certification Specifications (CS) 25.302 and CS 25 Appendix K, which are applicable to Embraer. FAA rulemaking on this subject is not complete, thus the need for the special conditions.
The special conditions are similar to those previously applied to other airplane models and to the requirements of CS 25.302. The major differences between these special conditions and the current CS 25.302 are as follows:
(1) Both the special conditions and CS 25.302 (and by reference Appendix K) specify the design load conditions to be considered. Effects of Systems on Structures, special conditions 2.a. and 3.b.i. clarify that, in some cases, different load conditions are to be considered due to other special conditions or equivalent-level-of-safety findings.
(2) Both the special conditions (see special condition 5, below) and CS 25.302 allow consideration of the probability of being in a dispatched configuration when assessing subsequent failures and potential “continuation of flight” loads. The special conditions, however, also allow using probability when assessing failures that induce loads at the “time of occurrence,” whereas CS 25.302 does not.
These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
As discussed above, these special conditions are applicable to the Embraer Model ERJ 190-300 airplane. Should Embraer apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to that model as well.
This action affects only a certain novel or unusual design feature on one model of airplane. It is not a rule of general applicability.
The substance of these special conditions has been published in the
Aircraft, Aviation safety, Reporting and recordkeeping requirements.
The authority citation for these special conditions is as follows:
49 U.S.C. 106(g), 40113, 44701, 44702, 44704.
Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for Embraer Model ERJ 190-300 airplanes.
For airplanes equipped with systems that affect structural performance, either directly or as a result of a failure or malfunction, the influence of these systems and their failure conditions must be taken into account when showing compliance with the requirements of part 25, subparts C and D.
For airplanes equipped with flight-control systems, autopilots, stability-augmentation systems, load-alleviation systems, fuel-management systems, and other systems that either directly, or as a result of failure or malfunction, affect structural performance, the following criteria must be used for showing compliance. If these special conditions are used for other systems, it may be necessary to adapt the criteria to the specific system.
1. The criteria defined herein only address the direct structural consequences of the system responses and performance. They cannot be considered in isolation, but should be included in the overall safety evaluation of the airplane. These criteria may, in some instances, duplicate standards already established for this evaluation. These criteria are only applicable to structure the failure of which could prevent continued safe flight and landing. Specific criteria that define acceptable limits on handling characteristics or stability requirements, when operating in the system-degraded or inoperative mode, are not provided in these special conditions.
2. Depending upon the specific characteristics of the airplane, additional studies that go beyond the criteria provided in these special conditions may be required to demonstrate the airplane's capability to meet other realistic conditions, such as alternative gust or maneuver descriptions for an airplane equipped with a load-alleviation system.
3. The following definitions are applicable to these special conditions.
a.
b.
c.
d.
e.
1.
2.
a. Limit loads must be derived in all normal operating configurations of the system from all the limit conditions specified in part 25, subpart C (or defined by special conditions or findings of equivalent level of safety in lieu of those specified in subpart C), taking into account any special behavior of such a system or associated functions, or any effect on the structural performance of the airplane that may occur up to the limit loads. In particular, any significant nonlinearity (rate of displacement of control surface, thresholds, or any other system nonlinearities) must be accounted for in a realistic or conservative way when deriving limit loads from limit conditions.
b. The airplane must meet the strength requirements of part 25 (static strength, residual strength), using the specified factors to derive ultimate loads from the limit loads defined above. The effect of nonlinearities must be investigated beyond limit conditions to ensure that the behavior of the system presents no anomaly compared to the behavior below limit conditions. However, conditions beyond limit conditions need not be considered when it can be shown that the airplane has design features that will not allow it to exceed those limit conditions.
c. The airplane must meet the aeroelastic stability requirements of § 25.629.
3.
a. At the time of occurrence. Starting from 1g level flight conditions, a realistic scenario, including pilot corrective actions, must be established to determine the loads occurring at the time of failure and immediately after the failure.
i. For static-strength substantiation, these loads, multiplied by an appropriate factor of safety that is related to the probability of occurrence of the failure, are ultimate loads to be considered for design. The factor of safety is defined in Figure 1, below.
ii. For residual-strength substantiation, the airplane must be able to withstand two thirds of the ultimate loads defined in special condition 3.a.i. For pressurized cabins, these loads must be combined with the normal operating differential pressure.
iii. Freedom from aeroelastic instability must be shown up to the speeds defined in § 25.629(b)(2). For failure conditions that result in speeds beyond V
iv. Failures of the system that result in forced structural vibrations (oscillatory failures) must not produce loads that could result in detrimental deformation of primary structure.
b. For the continuation of the flight. For the airplane in the system-failed state, and considering any appropriate reconfiguration and flight limitations, the following apply:
i. The loads derived from the following conditions (or defined by special conditions or findings of equivalent level of safety in lieu of the following conditions) at speeds up to V
1. The limit symmetrical maneuvering conditions specified in §§ 25.331 and 25.345.
2. the limit gust and turbulence conditions specified in §§ 25.341 and 25.345.
3. the limit rolling conditions specified in § 25.349, and the limit unsymmetrical conditions specified in §§ 25.367, and 25.427(b) and (c).
4. the limit yaw-maneuvering conditions specified in § 25.351.
5. the limit ground-loading conditions specified in §§ 25.473, 25.491, 25.493(d), and 25.503.
ii. For static-strength substantiation, each part of the structure must be able to withstand the loads in special condition 3.b.i., multiplied by a factor of safety depending on the probability of being in this failure state. The factor of safety is defined in Figure 2, below.
If P
iii. For residual-strength substantiation, the airplane must be able to withstand two-thirds of the ultimate loads defined in paragraph 3.b.ii. of these special conditions. For pressurized cabins, these loads must be combined with the normal operating differential pressure.
iv. If the loads induced by the failure condition have a significant effect on fatigue or damage tolerance, then their effects must be taken into account.
v. Freedom from aeroelastic instability must be shown up to a speed determined from Figure 3, below. Flutter clearance speeds V′ and V″ may be based on the speed limitation specified for the remainder of the flight using the margins defined by § 25.629(b).
If P
vi. Freedom from aeroelastic instability must also be shown up to V′ in Figure 3, above, for any probable system-failure condition, combined with any damage required or selected for investigation by § 25.571(b).
c. Consideration of certain failure conditions may be required by other sections of part 25 regardless of calculated system reliability. Where analysis shows the probability of these failure conditions to be less than 10
4.
a. The system must be checked for failure conditions, not extremely improbable, that degrade the structural capability below the level required by part 25, or that significantly reduce the reliability of the remaining system. As far as reasonably practicable, the flightcrew must be made aware of these failures before flight. Certain elements of the control system, such as mechanical and hydraulic components, may use special periodic inspections, and electronic components may use daily checks, in lieu of detection and indication systems, to achieve the objective of this requirement. These certification-maintenance requirements must be limited to components that are not readily detectable by normal detection-and-indication systems, and where service history shows that inspections will provide an adequate level of safety.
b. The existence of any failure condition, not extremely improbable, during flight, that could significantly affect the structural capability of the airplane, and for which the associated reduction in airworthiness can be minimized by suitable flight limitations, must be signaled to the flightcrew. For example, failure conditions that result in a factor of safety between the airplane strength and the loads of part 25, subpart C below 1.25, or flutter margins below V″, must be signaled to the crew during flight.
5.
Coast Guard, DHS.
Notice of deviation from drawbridge regulation.
The Coast Guard has issued a temporary deviation from the operating schedule that governs Oregon Department of Transportation's (ODOT) Isthmus Slough Bridge, mile 1.0 across Isthmus Slough at Coos Bay, OR. This deviation is necessary to accommodate painting and preservation and upgrading electrical systems. The deviation allows the bridge to operate in single leaf mode or one half of the bascule span, and reduce the vertical clearance of the non-functional leaf.
This deviation is effective from 6 a.m. on September 1, 2017 to 6 a.m. on February 26, 2018.
The docket for this deviation, USCG-2017-0715 is available at
If you have questions on this temporary deviation, call or email Mr. Danny McReynolds, Bridge Management Specialist, Thirteenth Coast Guard District; telephone 206-220-7234, email
ODOT, bridge owner, has requested a temporary deviation from the operating schedule for the Isthmus Slough Bridge, mile 1.0 across Isthmus Slough at Coos Bay, OR. The requested deviation is to accommodate painting and preservation and upgrading electrical systems. To facilitate this event, the double bascule bridge will operate in single leaf mode (half of the span), and reduce the vertical clearance of the non-functioning leaf. Isthmus Slough Bridge provides a vertical clearance of 28 feet in the closed-to-navigation position referenced to the vertical clearance above mean high water tide level. Ten feet of containment will be installed under the closed-to-navigation leaf only, and will reduce the vertical clearance to 18 feet. Vessels that do not require an opening may transit under the bridge at any time.
The normal operating schedule for the subject bridge is 33 CFR 117.879. This deviation allows the Isthmus Bridge to operate in single leaf, half opening, and reduce the vertical clearance of the non-functioning leaf by 10 feet to 18 feet; and need not open for maritime traffic from 6 a.m. on September 1, 2017 to 6 a.m. on February 26, 2018. The functional bascule leaf shall open on signal if at least 24 hours notice is given. Waterway usage on Isthmus Slough includes vessels ranging from small commercial tugs, commercial fishing vessels, police search and rescue to small pleasure craft.
Vessels able to pass through the bridge in the closed-to-navigation position may do so at any time. The bridge will be able open half of the double bascule in single leaf mode for emergencies as soon as possible, and there is no immediate alternate route for vessels to pass. The Coast Guard will inform the users of the waterway, through our Local and Broadcast Notices to Mariners, of the change in operating schedule for the bridges so that vessels can arrange their transits to minimize any impact caused by the temporary deviation.
In accordance with 33 CFR 117.35(e), the drawbridge must return to their regular operating schedule immediately at the end of the effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35.
Coast Guard, DHS.
Notice of deviation from drawbridge regulation; modification.
The Coast Guard has modified a temporary deviation from the operating schedule that governs the Broadway Bridge across the Willamette River, mile 11.7, at Portland, OR. The modified deviation changes the period the bridge may operate the double bascule span one side at a time, single leaf, and reduce the vertical clearance to install and test new equipment.
This modified deviation is effective from 6 a.m. on August 16, 2017 to 6 p.m. on November 13, 2017.
The docket for this deviation, USCG-2017-0164, is available at
If you have questions on this temporary deviation, call or email Mr. Danny McReynolds, Bridge Management Specialist, Thirteenth Coast Guard District; telephone 206-220-7234, email
On March 15, 2017, the Coast Guard published a temporary deviation entitled “Drawbridge Operation Regulation; Willamette River, Portland, OR.” in the
The Broadway Bridge crosses the Willamette River at mile 11.7, and provides 90 feet of vertical clearance above Columbia River Datum 0.0 while in the closed-to-navigation position, and provides 125 feet of horizontal clearance with half the span open. The subject bridge operates in accordance with 33 CFR 117.897. This modified deviation allows the double bascule span of the Broadway Bridge to operate in single leaf mode for marine traffic. The deviation period allows the drawspan to operate single leaf and reduce the vertical clearance of the non-functional span from 90 feet to 80 feet during these dates: from 6 a.m. on August 16, 2017 to 6 p.m. on September 20, 2017; and from 6 a.m. on October 9, 2017, to 6 p.m. on November 13, 2017. The bridge shall operate in accordance to 33 CFR 117.897 at all other times. Waterway usage on this part of the Willamette River includes vessels ranging from commercial tug and barge to small pleasure craft. We have coordinated with the majority of known waterway users and there were no objections to this schedule.
Vessels able to pass through the bridge in the closed positions may do so at any time. The bridge will be able to open in single leaf for emergencies, and there is no immediate alternate route for vessels to pass. The Coast Guard will also inform the users of the waterways through our Local and Broadcast Notices to Mariners of the change in operating schedule for the bridge so that vessels can arrange their transits to minimize any impact caused by the modified deviation.
In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35.
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a temporary safety zone for navigable waters on the Mississippi River from mile marker (MM) 96 to MM 96.5 Above Head of Passes. The safety zone is needed to protect personnel, vessels, and the marine environment from potential hazards created by a fireworks display. Entry of vessels or persons into this zone is prohibited unless specifically authorized by the Captain of the Port, New Orleans (COTP).
This rule is effective from 7:30 p.m. through 8:30 p.m. on August 21, 2017.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email Lieutenant Commander (LCDR) Howard Vacco, Sector New Orleans, at (504) 365-2281 or
The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable. We must establish this safety zone by August 21, 2017 and we lack sufficient time to provide a reasonable comment period and then consider those comments before issuing the rule. It is also contrary to the public interest as it would delay the safety measures necessary to protect life and property from the possible hazards associated with the fireworks display launched from the waterway. The impacts on navigation are expected to be minimal as the safety zone will only be in effect for a short duration of one hour. The Coast Guard will notify the public and maritime community that the safety zone will be in effect and of its enforcement periods via Broadcast Notice to Mariners (BNM) and Marine Safety Information Bulletin (MSIB).
Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The Captain of the Port New Orleans (COTP) has determined that potential hazards associated with a fireworks display on August 21, 2017 will be a safety concern for anyone on the navigable waterways within a one-half mile range of the fireworks. This rule is needed to protect personnel, vessels, and the marine environment in the navigable waters within the safety zone while the fireworks are being launched.
This rule establishes a safety zone from 7:30 p.m. through 8:30 p.m. on August 21, 2017. The safety zone will cover all navigable waters from mile marker 96 to 96.5 Above Head of Passes on the Mississippi River. The duration of the zone is intended to protect personnel, vessels, and the marine environment in these navigable waters from the hazards of the fireworks. No vessel or person will be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative.
We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.
This regulatory action determination is based on the size, location, duration, and time-of-year of the safety zone. This safety zone will impact a small designated area of the Mississippi River for 1 hour. Moreover, the Coast Guard will issue BNMs via VHF-FM Channel 16 about the zone and the rule allows vessels to seek permission to enter the zone.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969(42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves creating a safety zone lasting one hour that will prohibit entry and navigating between mile marker 96 to 96.5, Above Head of Passes on the Mississippi River. It is categorically excluded from further review under paragraph 34(g) of Figure 2-1 of the Commandant Instruction. A Record of Environmental Consideration supporting this determination is available in the docket where indicated under
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
33 U.S.C. 1231; 50 U.S.C. 191; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 0170.1.
(a)
(b)
(c)
(2) Vessels requiring entry into this safety zone must request permission from the COTP or a designated representative. They may be contacted on VHF-FM Channel 16 or 67.
(3) Persons and vessels permitted to enter this safety zone must transit at their slowest safe speed and comply with all lawful directions issued by the COTP or the designated representative.
(d)
Environmental Protection Agency (EPA).
Withdrawal of direct final rule.
The Environmental Protection Agency (EPA) is withdrawing a direct final rule published on June 5, 2017, because one adverse comment was received during the public comment period. The withdrawn rule pertained to the EPA's receipt and approval of 20 negative declaration letters from EPA Region 8 states. These letters of negative declaration are statements by the state certifying the absence of designated facilities of a certain solid waste incinerator category or class within its jurisdiction, which obviates the statutory requirement for the state to develop a Clean Air Act (CAA) section 111(d)/129 State plan for the regulation of designated facilities of that particular category or class.
Effective August 3, 2017, the direct final rule published at 82 FR 25734, June 5, 2017 is withdrawn.
Gregory Lohrke, (303) 312-6396,
On June 5, 2017, the EPA published a direct final rule (82 FR 25734) approving several negative declarations submitted by Region 8 states, certifying the absence of designated facilities regulated under various Emissions Guidelines found in 40 CFR part 60. The promulgation of each negative declaration was to serve in lieu of a CAA section 111(d)/129 State plan, given the declared absence of facilities that would require such a State plan. The direct final rule was published without prior proposal because the EPA anticipated no adverse comments on a noncontroversial action. The direct final rule stated that if the action received adverse comment on or before July 5, 2017, the EPA would publish a timely withdrawal in the
Environmental protection, Administrative practice and procedure, Air pollution control, Commercial industrial solid waste incineration, Intergovernmental relations, Municipal solid waste combustion, Other solid waste incineration, Reporting and recordkeeping requirements.
Environmental Protection Agency (EPA).
Final rule.
This regulation establishes an exemption from the requirement of a tolerance for residues of beta cyclodextrin, methyl ethers (CAS Reg. No. 128446-36-6) when used as an inert ingredient (stabilizer and solvent) in pesticide formulations applied to growing crops pre-harvest limited to a maximum concentration of 40% by weight in the pesticide formulation. Lewis and Harrison, LLC, on behalf of Wacker Chemie AG submitted a petition to EPA under the Federal Food, Drug, and Cosmetic Act (FFDCA), requesting establishment of an exemption from the requirement of a tolerance. This regulation eliminates the need to establish a maximum permissible level for residues of beta cyclodextrin, methyl ethers that result from applications of pesticides consistent with the conditions in EPA regulations.
This regulation is effective August 4, 2017. Objections and requests for hearings must be received on or before October 3, 2017, and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2016-0507, is available at
Michael Goodis, Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Crop production (NAICS code 111).
• Animal production (NAICS code 112).
• Food manufacturing (NAICS code 311).
• Pesticide manufacturing (NAICS code 32532).
You may access a frequently updated electronic version of 40 CFR part 180 through the Government Printing Office's e-CFR site at
Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2016-0507 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before October 3, 2017. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).
In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2016-0507, by one of the following methods:
•
•
•
Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at
In the
The Agency is establishing an exemption from the requirement of a tolerance as requested, but is using the chemical abstract index name “beta-cyclodextrin, methyl ethers”, the assigned formal name rather than “methyl-beta-cyclodextrin”, the common name.
Inert ingredients are all ingredients that are not active ingredients as defined in 40 CFR 153.125 and include, but are not limited to, the following types of ingredients (except when they have a pesticidal efficacy of their own): Solvents such as alcohols and hydrocarbons; surfactants such as polyoxyethylene polymers and fatty acids; carriers such as clay and diatomaceous earth; thickeners such as carrageenan and modified cellulose; wetting, spreading, and dispersing agents; propellants in aerosol dispensers; microencapsulating agents; and emulsifiers. The term “inert” is not intended to imply nontoxicity; the ingredient may or may not be chemically active. Generally, EPA has exempted inert ingredients from the requirement of a tolerance based on the low toxicity of the individual inert ingredients.
Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue . . . .”
EPA establishes exemptions from the requirement of a tolerance only in those cases where it can be clearly demonstrated that the risks from aggregate exposure to pesticide chemical residues under reasonably foreseeable circumstances will pose no appreciable risks to human health. In order to determine the risks from aggregate exposure to pesticide inert ingredients, the Agency considers the toxicity of the inert in conjunction with possible exposure to residues of the inert ingredient through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings. If EPA is able to determine that a finite tolerance is not necessary to ensure that there is a reasonable certainty that no harm will result from aggregate exposure to the
Consistent with FFDCA section 408(c)(2)(A), and the factors specified in FFDCA section 408(c)(2)(B), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for beta cyclodextrin, methyl ethers including exposure resulting from the exemption established by this action. EPA's assessment of exposures and risks associated with beta cyclodextrin, methyl ethers follows.
EPA has evaluated the available toxicity data and considered their validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. Specific information on the studies received and the nature of the adverse effects caused by beta cyclodextrin, methyl ethers as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies are discussed in this unit.
All studies are conducted with beta cyclodextrin, methyl ethers except the developmental/reproduction toxicity studies which are conducted with beta-cyclodextrin (β-CD) and 2-hydroxypropyl-beta-cyclodextrin (HP-β-CD). These chemicals are structurally similar to beta cyclodextrin, methyl ethers and are considered suitable surrogates. A quantitative structural-activity relationship (QSAR) analysis demonstrates that results are nearly identical for these chemicals; therefore, data from the developmental/reproduction toxicity studies conducted with β-CD and HP-β-CD are used to assess potential developmental/reproduction toxicity from beta cyclodextrin, methyl ethers exposure.
The acute oral toxicity is low in rats and mice for beta cyclodextrin, methyl ethers. The lethal dose (LD
Beta cyclodextrin, methyl ethers administered via the diet for 28 days causes tubular degeneration of the renal cortex at 1,000 milligrams/kilogram/day (mg/kg/day). The no-observed-adverse-effect level (NOAEL) is 300 mg/kg/day.
No fetal susceptibility was observed in any of the developmental and reproduction toxicity studies. Following oral administration of beta-cyclodextrin in rats and rabbits, no developmental toxicity was observed at doses as high as 5,000 mg/kg/day and 600 mg/kg/day, respectively. No maternal toxicity was observed at doses as high as 2,500 mg/kg/day and 600 mg/kg/day in rats and rabbits, respectively. Similarly, no developmental or maternal toxicity was observed in rats following oral exposure to doses of 2-hydroxypropyl-beta-cyclodextrin as high as 5,000 mg/kg/day and in rabbits following oral exposure to doses as high as 500 mg/kg/day. Following intravenous administration of 2-hydroxypropyl-beta-cyclodextrin to rats, slight maternal toxicity was observed at 400 mg/kg/day (with a NOAEL at 100 mg/kg/day), but no developmental toxicity was observed. No maternal or developmental toxicity was observed in rabbits exposed to doses of 2-hydroxypropyl-beta-cyclodextrin at 400 mg/kg/day, the highest dose tested. In the three-generation reproduction toxicity study in rats, no effects were observed in parental or offspring animals at doses up to 1,099 mg/kg/day beta-cyclodextrin. No reproduction effects were observed up to 2,277 mg/kg/day.
Beta cyclodextrin, methyl ethers administered for 26 weeks via gavage causes tubular vacuolation in the kidney at 500 mg/kg/day. The NOAEL is 100 mg/kg/day. The chronic reference dose (cRfD) is based on this study.
Carcinogenicity studies with beta cyclodextrin, methyl ethers are not available; however, a Deductive Estimation of Risk from Existing Knowledge (Derek) Nexus structural alert analysis was conducted with beta cyclodextrin, methyl ethers and indicated no structural alerts for carcinogenicity or mutagenicity. Therefore, beta cyclodextrin, methyl ethers is not expected to be carcinogenic.
All available mutagenicity studies (Ames tests, gene mutation, chromosomal aberrations, unscheduled DNA synthesis and micronucleus tests) were negative; therefore, beta cyclodextrin, methyl ethers is not mutagenic.
Although neurotoxicity and immunotoxicity studies are not available for review, evidence of neurotoxicity and immunotoxicity is not observed in the submitted studies.
Beta cyclodextrin, methyl ethers is not metabolized and very little is absorbed. Following oral exposure, it is mostly excreted in the feces and 0.92% is excreted in the urine. 0.97-0.92% of an orally administered dose is absorbed. A distribution study shows that beta cyclodextrin, methyl ethers is found along the gastrointestinal tract, in the kidney and bladder. Dermal absorption is estimated to be 0.4% in 126 hours in rats.
Once a pesticide's toxicological profile is determined, EPA identifies toxicological points of departure (POD) and levels of concern to use in evaluating the risk posed by human exposure to the pesticide. For hazards that have a threshold below which there is no appreciable risk, the toxicological POD is used as the basis for derivation of reference values for risk assessment. PODs are developed based on a careful analysis of the doses in each toxicological study to determine the dose at which no adverse effects are observed (the NOAEL) and the lowest dose at which adverse effects of concern are identified (the LOAEL). Uncertainty/safety factors are used in conjunction with the POD to calculate a safe exposure level—generally referred to as a population-adjusted dose (PAD) or a reference dose (RfD)—and a safe margin of exposure (MOE). For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk. Thus, the Agency estimates risk in terms of the probability of an occurrence of the adverse effect expected in a lifetime. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see
A summary of the toxicological endpoints for beta cyclodextrin, methyl ethers used for human risk assessment is shown in Table 1 of this unit.
1.
2.
3.
Beta cyclodextrin, methyl ethers may be used in inert ingredients in products that are registered for specific uses that may result in residential exposure, such as pesticides used in and around the home. The Agency conducted an assessment to represent conservative residential exposure by assessing beta cyclodextrin, methyl ethers in pesticide formulations (outdoor scenarios) and in disinfectant-type uses (indoor scenarios). The Agency's assessment of adult residential exposure combines high end dermal and inhalation handler exposure from liquids/backpack sprayer/home garden with a high end post application dermal exposure from contact with treated lawns. The Agency's assessment of children's residential exposure includes total post-application exposures associated with contact with treated surfaces (dermal and hand-to-mouth exposures).
4.
EPA has not found beta cyclodextrin, methyl ethers to share a common mechanism of toxicity with any other substances, and beta cyclodextrin, methyl ethers does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that beta cyclodextrin, methyl ethers does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's Web site at
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EPA determines whether acute and chronic dietary pesticide exposures are safe by comparing aggregate exposure estimates to the acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA calculates the lifetime probability of acquiring cancer given the estimated aggregate exposure. Short-, intermediate-, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the appropriate PODs to ensure that an adequate MOE exists.
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2.
3.
Beta cyclodextrin, methyl ethers may be used as an inert ingredient in pesticide products that are registered for uses that could result in short-term residential exposure, and the Agency has determined that it is appropriate to aggregate chronic exposure through food and water with short-term residential exposures to beta cyclodextrin, methyl ethers.
Using the exposure assumptions described above for short-term exposures, EPA has concluded the combined short-term food, water, and residential exposures result in aggregate MOEs of 1910 for both adult males and females respectively. EPA has concluded the combined short-term aggregated food, water, and residential pesticide exposures result in an aggregate MOE of 500 for children. Because EPA's level of concern for beta cyclodextrin, methyl ethers is a MOE of 100 or below, these MOEs are not of concern.
4.
Beta cyclodextrin, methyl ethers may be used as an inert ingredient in pesticide products that are registered for uses that could result in intermediate-term residential exposure, and the Agency has determined that it is appropriate to aggregate chronic exposure through food and water with intermediate-term residential exposures to beta cyclodextrin, methyl ethers.
Using the exposure assumptions described above for intermediate-term exposures, EPA has concluded that the combined intermediate-term food, water, and residential exposures result in aggregate MOEs of 650 for adult males and females. EPA has concluded the combined intermediate-term aggregated food, water, and residential exposures result in an aggregate MOE of 170 for children. Because EPA's level of concern for beta cyclodextrin, methyl ethers is a MOE of 100 or below, these MOEs are not of concern.
5.
6.
An analytical method is not required for enforcement purposes since the Agency is not establishing a numerical tolerance for residues of beta cyclodextrin, methyl ethers in or on any food commodities. EPA is establishing limitations on the amount of beta cyclodextrin, methyl ethers that may be used in pesticide formulations applied to growing crops. These limitations will be enforced through the pesticide registration process under the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”), 7 U.S.C. 136
Therefore, an exemption from the requirement of a tolerance is established under 40 CFR 180.920 for beta cyclodextrin, methyl ethers (CAS Reg. No. 128446-36-6) when used as an inert ingredient (stabilizer and solvent) in pesticides applied to growing crops pre-harvest limited to a maximum concentration of 40% by weight in the pesticide formulation.
This action establishes an exemption from the requirement of a tolerance under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501
Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the exemption in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
This action directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501
This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.
Therefore, 40 CFR chapter I is amended as follows:
21 U.S.C. 321(q), 346a and 371.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Interim rule; request for comments.
NMFS issues regulations under authority of the Western and Central Pacific Fisheries Convention Implementation Act (WCPFC Implementation Act) to modify a limit on the amount of bigeye tuna (
Effective on August 4, 2017. Comments must be submitted in writing by September 5, 2017.
You may submit comments on this document, identified by NOAA-NMFS-2017-0085, and the regulatory impact review (RIR) prepared for the interim rule, by either of the following methods:
•
1. Go to
2. Click the “Comment Now!” icon, complete the required fields, and
3. Enter or attach your comments.
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Copies of the RIR, and the programmatic environmental assessment and supplemental information report prepared for National Environmental Policy Act purposes are available at
Rini Ghosh, NMFS PIRO, 808-725-5033.
A map showing the boundaries of the area of application of the Convention (Convention Area), which comprises the majority of the WCPO, can be found on the WCPFC Web site at:
As a Contracting Party to the Convention and a Member of the Commission, the United States is obligated to implement the decisions of the Commission. The WCPFC Implementation Act (16 U.S.C. 6901
At its Thirteenth Regular Session, in December 2016, the WCPFC adopted Conservation and Management Measure (CMM) 2016-01, “Conservation and Management Measure for Bigeye, Yellowfin and Skipjack Tuna in the Western and Central Pacific Ocean.” CMM 2016-01 is the most recent in a series of CMMs for the management of tropical tuna stocks under the purview of the Commission. CMM 2016-01 maintains the provisions of its predecessor, CMM 2015-01. These and other CMMs are available at:
The stated general objective of CMM 2016-01 and several of its predecessor CMMs is to ensure that the stocks of bigeye tuna (
CMM 2016-01 went into effect February 2017, and is generally applicable for 2017. The CMM includes provisions for purse seine vessels, longline vessels, and other types of vessels that fish for HMS. The CMM's provisions for longline vessels include catch limits for bigeye tuna and a general provision not to increase catches of yellowfin tuna.
In 2016, NMFS established catch limits for bigeye tuna that may be captured in the Convention Area by longline gear and retained on board by fishing vessels of the United States for calendar years 2016 and 2017, putting into place provisions of CMM 2015-01, the predecessor to CMM 2016-01 (81 FR 41239). The limit for 2016 was set at 3,554 mt and the limit for 2017 was set at 3,345 mt. (
This interim rule is limited to implementing the 2017 calendar year longline bigeye tuna catch limit for U.S. fisheries in the Convention Area, as mandated under CMM 2016-01 which continues the relevant provisions adopted by CMM 2015-01. As stated above, the Commission-adopted limit for 2017 continues to be 3,345 mt less any overage of the limit applicable in 2016. The limit for 2016 was 3,554 mt (
The 2017 longline bigeye tuna catch limit will apply only to U.S.-flagged longline vessels operating as part of the U.S. longline fisheries. The limit will not apply to U.S. longline vessels operating as part of the longline fisheries of American Samoa, the CNMI, or Guam. Existing regulations at 50 CFR 300.224(b), (c), and (d) detail the manner in which longline-caught bigeye tuna is attributed among the fisheries of the United States and the U.S. Participating Territories.
Consistent with the basis for the limits prescribed in CMM 2016-01 and with regulations issued by NMFS to implement bigeye tuna catch limits in U.S. longline fisheries as described below, the catch limit is measured in terms of retained catches—that is, bigeye tuna that are caught by longline gear and retained on board the vessel.
As set forth under the existing regulations at 50 CFR 300.224(e), if NMFS determines that the limit is expected to be reached in 2017, NMFS will publish a notice in the
As set forth under the existing regulations at 50 CFR 300.224(f), if the limit is reached, the restrictions that will be in effect will include the following:
First, any bigeye tuna already on board a fishing vessel upon the effective date of the restrictions can be retained on board, transshipped, and/or landed, provided that they are landed within 14 days after the restrictions become effective. A vessel that had declared to NMFS pursuant to 50 CFR 665.803(a) that the current trip type is shallow-setting is not subject to this 14-day landing restriction, so these vessels will be able to land bigeye tuna more than 14 days after the restrictions become effective.
Second, bigeye tuna captured by longline gear can be retained on board, transshipped, and/or landed if they are caught by a fishing vessel registered for use under a valid American Samoa Longline Limited Access Permit, or if they are landed in American Samoa, Guam, or the CNMI. However, the bigeye tuna must not be caught in the portion of the U.S. EEZ surrounding the Hawaiian Archipelago, and must be landed by a U.S. fishing vessel operated in compliance with a valid permit issued under 50 CFR 660.707 or 665.801.
Third, bigeye tuna captured by longline gear can be retained on board, transshipped, and/or landed if they are caught by a vessel that is included in a specified fishing agreement under 50 CFR 665.819(d), in accordance with 50 CFR 300.224(f)(iv).
The Administrator, Pacific Islands Region, NMFS, has determined that this interim rule is consistent with the WCPFC Implementation Act and other applicable laws.
There is good cause under 5 U.S.C. 553(b)(B) to waive prior notice and the opportunity for public comment on this action, because prior notice and the opportunity for public comment would be contrary to the public interest. This rule adjusts a bigeye tuna catch limit for U.S. longline fisheries in the Convention Area for 2017. Data on the amount of the 2016 overage only recently became available, and NMFS must publish the revised limit for 2017 as soon as possible to ensure it is not exceeded and the United States complies with its international legal obligations with respect to CMM 2016-01. Based on preliminary data available to date, NMFS expects that the applicable limit of 3,138 mt is likely to be reached in late summer of 2017. Delaying this rule to allow for advance notice and public comment increases the risk that more than 3,138 mt of bigeye tuna would be caught by U.S. longline fisheries operating in the WCPO, potentially constituting non-compliance by the United States with respect to the longline bigeye tuna catch limit provisions of CMM 2016-01 for calendar year 2017. Because a delay in implementing this limit for 2017 could result in the United States violating its international legal obligations to conserve tropical tuna stocks in the WCPO, allowing advance notice and the opportunity for public comment would be contrary to the public interest.
Additionally, prior notice and opportunity for public comment is unnecessary because this rule only adjusts a previously established limit for 2017 (
NMFS will, however, take and consider public comments received on this interim final and, if appropriate, NMFS will issue a revised final rule in response to public comment.
For the reasons articulated above, there is also good cause under 5 U.S.C. 553(d)(3) to waive the 30-day delay in effective date for this rule. As described above, NMFS must implement the longline bigeye tuna catch limit provisions of CMM 2016-01 for 2017 as soon as possible, in order to ensure that the catch limit is not exceeded. The catch limit is intended to reduce or otherwise control fishing pressure on bigeye tuna in the WCPO in order to restore this stock to levels capable of producing maximum sustainable yield on a continuing basis. According to the NMFS stock status determination criteria, bigeye tuna in the Pacific Ocean is currently experiencing overfishing. Failure to immediately implement the 2017 catch limit would result in additional fishing pressure on this stock, in violation of international and domestic legal obligations.
This interim rule has been determined to be not significant for purposes of Executive Order 12866.
Because prior notice and opportunity for public comment are not required for this rule by 5 U.S.C. 553, or any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601
Administrative practice and procedure, Fish, Fisheries, Fishing, Marine resources, Reporting and recordkeeping requirements, Treaties.
For the reasons set out in the preamble, 50 CFR part 300 is amended as follows:
16 U.S.C. 6901
(a) * * *
(2) During calendar year 2017 there is a limit of 3,138 metric tons of bigeye tuna that may be captured in the Convention Area by longline gear and retained on board by fishing vessels of the United States.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Final rule.
NMFS issues regulations to implement management measures described in Framework Amendment 4 to the Fishery Management Plan for the Coastal Migratory Pelagics Fishery of the Gulf of Mexico and Atlantic Region (FMP) as prepared and submitted by the South Atlantic Fishery Management Council (Council). For the recreational sector, this final rule establishes bag and vessel limits, and revises the minimum size limit and accountability measures (AMs) for Atlantic migratory group cobia (Atlantic cobia). This final rule also establishes a commercial trip limit for Atlantic cobia. Framework Amendment 4 and this final rule apply to the commercial and recreational harvest of Atlantic cobia in the exclusive economic zone (EEZ) from Georgia through New York. The purpose of Framework Amendment 4 and this final rule is to slow the rate of harvest of Atlantic cobia and reduce the likelihood that landings will exceed the commercial and recreational annual catch limits (ACL), thereby triggering the AMs and reducing harvest opportunities.
This final rule is effective September 5, 2017.
Electronic copies of Framework Amendment 4 may be obtained from the Southeast Regional Office Web site at
Karla Gore, Southeast Regional Office, NMFS, telephone: 727-551-5753, or email:
The coastal migratory pelagic fishery of the Gulf and Atlantic Regions is managed under the FMP and includes the management of the Gulf and Atlantic migratory groups of king mackerel, Spanish mackerel, and cobia. The FMP was prepared by the Council and is implemented through regulations at 50 CFR part 622 under authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act).
On February 21, 2017, NMFS published a proposed rule to implement Framework Amendment 4 and requested public comment (82 FR 11166).
The AM for the recreational sector requires that if the recreational annual catch limit (ACL) is exceeded, and the stock ACL (recreational ACL plus commercial ACL) is exceeded, the recreational AM is triggered. To determine whether an ACL was exceeded, the FMP requires that a 3-year average of landings be compared to the ACL unless an ACL changed, in which case the sequence of future ACLs begins again starting with a single year of landings compared to the ACL for that year, followed by 2-year average landings compared to the ACL in the next year, followed by a 3-year average of landings ACL for the third year and thereafter. Because Amendment 20B to the FMP changed the Atlantic cobia ACLs beginning in 2015 (80 FR 4216, January 27, 2015), NMFS could only use the 2015 landings to determine whether the recreational and stock ACLs were exceeded such that the AM was triggered for the 2016 fishing year. In 2015, recreational landings for Atlantic cobia exceeded the 2015 recreational ACL and the stock ACL, and the recreational AM required that the 2016 recreational season for Atlantic cobia in Federal waters close on June 20, 2016 (81 FR 12601, March 10, 2016).
For the 2017 fishing year, the FMP required recreational landings to be averaged for the 2015 and 2016 fishing years, and the average of those landings exceeded the 2016 recreational ACL and the 2016 stock ACL. Therefore, the recreational AM was triggered, requiring that the 2017 recreational season for Atlantic cobia in Federal waters again close early in the fishing year on January 24, 2017 (82 FR 8363, January 25, 2017).
These recreational closures likely had negative social and economic impacts on the recreational sector, including recreational anglers, charter vessels and headboat (for-hire) businesses.
The following actions in Framework Amendment 4 and this final rule are intended to slow the rate of harvest of Atlantic cobia and reduce the likelihood that sector landings will exceed the sector and stock ACLs, thereby triggering the AMs and reducing harvest opportunities. The goal is to also provide equitable access for all participants in the Atlantic cobia component of the coastal migratory pelagics fishery.
For the recreational sector, this final rule establishes bag and vessel limits, and revises the minimum size limit and AMs for Atlantic cobia. This final rule also establishes a commercial trip limit for Atlantic cobia. As a result of the recreational bag and possession limits and the commercial trip limit, Atlantic migratory cobia will no longer be subject to the two fish per person per day possession limit for limited harvest species.
The current minimum size limit for the recreational harvest of Atlantic cobia in the EEZ is 33 inches (83.8 cm), fork length. This final rule increases the recreational minimum size limit for the Atlantic cobia recreational sector to 36 inches (91.4 cm), fork length. This modification will result in a recreational harvest reduction in the Atlantic, that in combination with the recreational bag and vessel limits, is expected to slow the rate of recreational harvest and thereby reduce the likelihood of exceeding the recreational and stock ACLs and thereby triggering the AM.
Atlantic cobia is currently a limited harvest species with a possession limit of two cobia per person per day for both the commercial and recreational sectors. This final rule would remove Atlantic cobia from the limited harvest species possession limit and would establish a recreational bag limit of one fish per person per day or six fish per vessel, whichever is more restrictive.
This final rule would enhance the recreational AMs for Atlantic cobia. Currently, if recreational landings of Atlantic cobia exceed the recreational ACL and the sum of the commercial and recreational landings of cobia exceed the stock ACL, then during the following fishing year, the length of the recreational fishing season will be reduced to ensure that the harvest achieves the recreational ACT, but does not exceed the recreational ACL. The current recreational AM uses a moving average of the most recent 3 years of landings to compare to the recreational ACL. Finally, if Atlantic cobia are overfished, and the stock ACL is exceeded, then during the following fishing year the recreational ACL and ACT would be reduced by the amount of any recreational ACL overage.
The recreational AM in this final rule requires that if the recreational ACL and the stock ACL are exceeded, then during the following fishing year recreational landings will be monitored for a persistence in increased landings. Further, if necessary to prevent landings from exceeding the recreational ACL during the next fishing year, and based on the best scientific information available, the Assistant Administrator for Fisheries, NOAA (AA), will file a notification with the Office of the Federal Register to reduce the recreational vessel limit, to no less than two fish per vessel. NMFS notes that the recreational bag limit implemented through this final rule of one cobia per person would still apply during any reduction of the recreational vessel limit. Any reduction to the recreational vessel limit would only apply for the fishing year in which it is implemented. In addition, the AM requires that if the reduction to the vessel limit is insufficient to ensure that recreational landings will not exceed the recreational ACL, then the length of the recreational fishing season would be reduced to ensure that recreational landings do not exceed the recreational ACL in that fishing year. This AM is intended to help prevent recreational landings from exceeding the recreational ACL in that fishing year.
The recreational vessel limit and the length of the recreational fishing season would not be reduced if NMFS determines, based on the best scientific information available, that a recreational vessel limit and fishing season reduction are unnecessary to prevent landings from exceeding the recreational ACL. The Council determined that first reducing the vessel limit to no less than two fish per vessel, prior to any reduction in or closure of the recreational sector, was a preferable first step in the AM rather than first reducing the length of the recreational season, because they determined that greater negative socio-economic impacts result from a reduced season.
Also, this final rule will change the AM to compare the recreational ACL with the most recent single year of landings instead of a moving average of the most recent 3 years that was established in Amendment 18 to the FMP (76 FR 82058, December 29, 2011). The Council selected a comparison of 3-year average of landings to the recreational ACL as their preferred alternative in Amendment 18 because they decided that it would ensure that the amount of the previous year's total ACL overage would be accounted for in the subsequent year's AM protection with a reduced season, and thus would be biologically beneficial. However, the Council has reevaluated the use of a 3-year average in Framework Amendment 4, as well as in recent amendments to the FMP for the Snapper-Grouper Fishery of the South Atlantic Region (Snapper-Grouper FMP). The Council has determined that when using the methodology established through Amendment 18, an exceptionally high and unusual spike in landings incorporated into a 3-year running average could penalize anglers for the next several years whenever there is an evaluation of an ACL overage. Conversely, incorporating a year of abnormally low recreational landings into the 3-year average could result in an AM not being triggered when high landings are encountered in subsequent years, which could have negative biological effects on the stock. The revised AMs implemented here will reduce the likelihood of those longer term adverse effects.
Furthermore, the Council is taking action through Framework Amendment 4 to enhance the recreational AM by considering both a reduction in the vessel limit and the recreational season length, if needed, to prevent recreational landings from exceeding the recreational ACL in that fishing year, instead of only reducing the length of the fishing season. Thus, the revised recreational AM provides additional measures to reduce the risk of exceeding the recreational ACL while providing opportunities to extend the recreational fishing season. Using the most recent year of landings for the cobia AM is expected to result in a more timely and accurate representation of recreational landings and therefore, respond to the best scientific information available.
Currently, no specific commercial trip limit applies to Atlantic cobia. However, Atlantic cobia is currently a limited harvest species subject to a possession limit of two cobia per person per day for both the commercial and recreational sectors. This final rule will remove Atlantic cobia from the limited harvest species possession limit and establish a commercial trip limit for Atlantic cobia of two fish per person per day or six fish per vessel per day, whichever is more restrictive.
Establishing a commercial trip limit with a maximum vessel limit will reduce the rate of harvest of cobia and increase the likelihood that the commercial and stock ACLs are not exceeded and the AMs are not triggered, resulting in a reduced season length or reduced vessel limit for the recreational sector and a commercial closure as a result of exceeding the commercial quota.
NMFS received a total of 133 comments on the proposed rule to implement Framework Amendment 4. The commenters included commercial, private recreational, and charter vessel fishing entities, representatives of fishing associations, and individuals from the general public. Several comments were in support of the measures in Framework Amendment 4 but some comments opposed at least one of the management measures. Most comments received were outside the scope of this amendment, including requests to modify the management boundary for Atlantic cobia, to transfer management of cobia to the states, and to reopen the Atlantic cobia recreational sector in Federal waters during 2017. Because those comments are outside of the scope of the actions considered in Framework Amendment 4 and the proposed rule, NMFS is not providing responses to those comments in this final rule. Many commenters raised the same issues, and NMFS responds to those collectively below, having identified seven distinct issues raised in the comments specific to Framework Amendment 4 and its proposed rule. These seven specific comments and NMFS' respective responses are summarized below.
In Framework Amendment 4, the Council and NMFS determined that more conservative regulations are appropriate for the recreational sector because recreational landings greatly exceeded their ACL and were 248 and 217 percent of the recreational ACL in 2015 and 2016, respectively. In comparison, commercial landings were 120 and 97 percent of the commercial ACL in 2015 and 2016, respectively, and the current sector allocations for Atlantic cobia are 8 percent of the stock ACL to the commercial sector and 92 percent to the recreational sector. There is greater uncertainty associated with catch estimates as a result of less timely catch reporting for the recreational sector compared to the commercial sector, because recreational landings are reported in 2-month intervals with a greater than 4-month time lag in the availability of information, while commercial landings are reported weekly with the information available within a week.
Therefore, the Council determined, and NMFS agrees, that different management measures between sectors for Atlantic cobia is an appropriate approach to increase the likelihood that landings do not exceed the respective sector harvest limits.
The Council is taking action in Framework Amendment 4 to enhance the recreational AM by considering both a reduction in the vessel limit and the recreational season length, if needed, to prevent recreational landings from exceeding the recreational ACL in that fishing year.
The Regional Administrator, Southeast Region, NMFS, has determined that this final rule is consistent with Framework Amendment 4, the Magnuson-Stevens Act, and other applicable law.
This final rule has been determined to be not significant for purposes of Executive Order 12866.
The Magnuson-Stevens Act provides the statutory basis for this rule. No duplicative, overlapping, or conflicting Federal rules have been identified. In addition, no new reporting, recordkeeping, or other compliance requirements are introduced by this rule.
The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration (SBA) during the proposed rule stage that this rule, if adopted, would not have significant economic impacts on a substantial number of small entities. The factual basis for this determination was published in the proposed rule and is not repeated here. NMFS did not receive any comments from SBA's Office of Advocacy or the public on the certification in the proposed rule. As a result, a final regulatory flexibility analysis is not required and none was prepared.
Annual catch limits, Cobia, Fisheries, Fishing, Gulf of Mexico, South Atlantic.
For the reasons set out in the preamble, 50 CFR part 622 is amended as follows:
16 U.S.C. 1801
(a)
(2)
(ii) 36 inches (91.4 cm), fork length, for cobia that are not sold (recreational sector).
(a)
(1) * * *
(vi) Atlantic migratory group cobia that are not sold (recreational sector)—1, not to exceed 6 fish per vessel per day.
(b)
(c)
(2) [Reserved]
(f)
(i) If the sum of the cobia landings that are sold, as estimated by the SRD, reach or are projected to reach the quota specified in § 622.384(d)(2) (ACL), the AA will file a notification with the Office of the Federal Register to prohibit the sale and purchase of cobia for the remainder of the fishing year.
(ii) In addition to the measures specified in paragraph (f)(1)(i) of this section, if the sum of the cobia landings that are sold and not sold in or from the Atlantic migratory group, as estimated by the SRD, exceeds the stock ACL, as specified in paragraph (f)(3) of this section, and Atlantic migratory group cobia are overfished, based on the most recent status of U.S. Fisheries Report to Congress, the AA will file a notification with the Office of the Federal Register, at or near the beginning of the following fishing year to reduce the applicable quota (ACL), as specified in paragraph (f)(1)(i) of this section, for that following year by the amount of any applicable sector-specific ACL overage in the prior fishing year.
(2) The following ACLs and AMs apply to cobia that are not sold (recreational sector). If recreational landings for cobia, as estimated by the SRD, exceed both the recreational ACL of 620,000 lb (281,227 kg), and the stock ACL, as specified paragraph (f)(3) of this section, then during the following fishing year, recreational landings will be monitored for a persistence in increased landings, and, if necessary, the AA will file a notification with the Office of the Federal Register to reduce the recreational vessel limit, specified in
(3) The stock ACL for Atlantic migratory group cobia is 670,000 lb (303,907 kg).
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; closure.
NMFS is prohibiting directed fishing for Kamchatka flounder in the Bering Sea and Aleutian Islands management area (BSAI). This action is necessary to prevent exceeding the 2017 Kamchatka flounder initial total allowable catch (ITAC) in the BSAI.
Effective 1200 hours, Alaska local time (A.l.t.), August 1, 2017, through 2400 hours, A.l.t., December 31, 2017.
Steve Whitney, 907-586-7228.
NMFS manages the groundfish fishery in the BSAI according to the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.
The 2017 Kamchatka flounder ITAC in the BSAI is 4,250 metric tons (mt) as established by the final 2017 and 2018 harvest specifications for groundfish in the BSAI (82 FR 11826, February 27, 2017). In accordance with § 679.20(d)(1)(i), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that the 2017 Kamchatka flounder ITAC in the BSAI will soon be reached. Therefore, the Regional Administrator is establishing a directed fishing allowance of 2,000 mt, and is setting aside the remaining 2,250 mt as incidental catch. In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for Kamchatka flounder in the BSAI.
After the effective date of this closure the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.
This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of Kamchatka flounder to directed fishing in the BSAI. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of July 31, 2017.
The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.
This action is required by § 679.20 and is exempt from review under Executive Order 12866.
16 U.S.C. 1801
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Request for information (RFI).
The U.S. Department of Energy (“DOE”) is initiating a data collection process through this request for information to consider whether to amend DOE's test procedure for room air conditioners (“room ACs”). To inform interested parties and to facilitate this process, DOE has gathered data, identifying several issues associated with the currently applicable test procedure on which DOE is interested in receiving comment. The issues outlined in this document mainly concern issues initially identified in an RFI issued in 2015 considering amendments to the current energy conservation standards and test procedure for room ACs; harmonization with the recently established portable air conditioner (“portable AC”) test procedure; clarification of the test setup and testing conditions; updated industry test procedures for room ACs; and any additional topics that may inform DOE's decisions in a future test procedure rulemaking, including methods to reduce regulatory burden while ensuring the procedure's accuracy. DOE welcomes written comments from the public on any subject within the scope of this document (including topics not raised in this RFI).
Written comments and information are requested on or before September 5, 2017.
Interested persons are encouraged to submit comments using the Federal eRulemaking Portal at
•
•
•
•
No telefacsimilies (faxes) will be accepted. For detailed instructions on submitting comments and additional information on this process, see section III of this document.
The docket Web page can be found at
Mr. Bryan Berringer, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-0371. Email:
Ms. Sarah Butler, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-1777. Email:
For further information on how to submit a comment or review other public comments and the docket, contact the Appliance and Equipment Standards Program staff at (202) 586-6636 or by email:
Room ACs are included in the list of “covered products” for which DOE is authorized to establish and amend energy conservation standards and test procedures. (42 U.S.C. 6292(a)(2)) DOE's test procedure for room ACs appears at title 10 of the Code of Federal Regulations (“CFR”) part 430, subpart B, appendix F (“appendix F”). The following sections discuss DOE's authority to establish and amend the test procedure for room ACs, as well as relevant background information regarding DOE's consideration of test procedures for this product.
The Energy Policy and Conservation Act of 1975 (“EPCA” or “the Act”),
Under EPCA, DOE's energy conservation program consists essentially of four parts: (1) Testing, (2) labeling, (3) Federal energy conservation standards, and (4) certification and enforcement procedures. Relevant provisions of the Act specifically include definitions (42 U.S.C. 6291), energy conservation standards (42 U.S.C. 6295), test procedures (42 U.S.C. 6293), labeling provisions (42 U.S.C. 6294), and the authority to require information and reports from manufacturers (42 U.S.C. 6296).
Federal energy efficiency requirements for covered products established under EPCA generally supersede State laws and regulations concerning energy conservation testing, labeling, and standards. (See 42 U.S.C. 6297) DOE may, however, grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions of EPCA. (42 U.S.C. 6297(d))
The Federal testing requirements consist of test procedures that manufacturers of covered products must use as the basis for: (1) Certifying to DOE that their products comply with the applicable energy conservation standards adopted pursuant to EPCA (42 U.S.C. 6295(s)), and (2) making representations about the efficiency of those consumer products (42 U.S.C. 6293(c)). Similarly, DOE must use these test procedures to determine whether the products comply with relevant standards promulgated under EPCA. (42 U.S.C. 6295(s))
Under 42 U.S.C. 6293, EPCA sets forth the criteria and procedures DOE must follow when prescribing or amending test procedures for covered products. EPCA requires that any test procedures prescribed or amended under this section shall be reasonably designed to produce test results which measure energy efficiency, energy use or estimated annual operating cost of a covered product during a representative average use cycle or period of use and shall not be unduly burdensome to conduct. (42 U.S.C. 6293(b)(3))
In addition, if DOE determines that a test procedure amendment is warranted, it must publish a proposed test procedure and offer the public an opportunity to present oral and written comments on them. (42 U.S.C. 6293(b)(2))
EPCA also requires that, at least once every 7 years, DOE evaluate test procedures for each type of covered equipment, including room ACs, to determine whether amended test procedures would more accurately or fully comply with the requirements for the test procedures to not be unduly burdensome to conduct and be reasonably designed to produce test results that reflect energy efficiency, energy use, and estimated operating costs during a representative average use cycle. (42 U.S.C. 6293(b)(1)(A)) If amended test procedures are appropriate, DOE must publish a final rule to incorporate the amendments. If DOE determines that test procedure revisions are not appropriate, DOE must publish its determination not to amend the test procedures. DOE is publishing this RFI to collect data and information to inform a potential test procedure rulemaking to satisfy the 7-year review requirement specified in EPCA, which requires that DOE publish, by January 6, 2018, either a final rule amending the test procedures or a determination that amended test procedures are not required. (42 U.S.C. 6293(b)(1)(A))
DOE's current test procedures for room ACs are codified at appendix F and the room AC performance metric calculations are codified at 10 CFR 430.23(f). Test procedures for room ACs were established on June 1, 1977, and were subsequently redesignated and editorially amended on June 29, 1979. 42 FR 27898 (June 1, 1977); 44 FR 37938 (June 29, 1979).
The Energy Independence and Security Act of 2007 (“EISA 2007”) amended EPCA, directing DOE to amend its energy efficiency test procedures for all covered products to include measures of standby mode and off mode energy consumption. (42 U.S.C. 6295(gg)(2)(A)) In compliance with the EISA 2007 requirements, on January 6, 2011, DOE published a final rule amending the room AC test procedure to include measurements of standby mode and off mode energy consumption and to introduce a new combined efficiency metric, Combined Energy Efficiency Ratio (“CEER”), that accounts for energy consumption in active mode, standby mode, and off mode. 76 FR 972. DOE also incorporated a new standard, International Electrotechnical Commission (“IEC”) Standard 62301, to measure the standby and off mode energy consumption. Id. In addition to IEC Standard 62301, the final rule updated the references to standards developed by the American National Standards Institute (“ANSI”), the Association of Home Appliance Manufacturers (“AHAM”), and the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (“ASHRAE”). Id. In sum, the current room AC test procedure incorporates by reference three industry test standards: (1) ANSI/AHAM RAC-1-2008, “Room Air Conditioners” (“ANSI/AHAM RAC-1”);
DOE published an RFI (hereinafter the “June 2015 RFI”) regarding the energy conservation standards and the test procedures for room ACs. 80 FR 34843 (June 18, 2015). In addition to soliciting information regarding the energy conservations standards, the June 2015 RFI discussed and sought comment on the following test procedure related items: (1) Potential updates to the energy efficiency metric that would address performance in additional operating modes; (2) alternate methods for measuring cooling mode performance; (3) addressing heating mode performance and any relevant test methods, existing industry standards, operating conditions, and associated test burden; (4) methods for measuring part-load performance and the prevalence of units on the market with components optimized for efficient part-load operation; (5) testing and certification of units that can operate on multiple voltages; and (6) the energy usage
In the following sections, DOE has identified a variety of issues on which it seeks input to aid in the development of the technical and economic analyses regarding whether amended test procedures for room ACs may be warranted. Specifically, DOE is requesting comment on any opportunities to streamline and simplify testing requirements for room ACs.
Additionally, DOE welcomes comments on other issues relevant to the conduct of this process that may not specifically be identified in this document. In particular, DOE notes that under Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” Executive Branch agencies such as DOE are directed to manage the costs associated with the imposition of expenditures required to comply with Federal regulations. See 82 FR 9339 (Feb. 3, 2017). Pursuant to that Executive Order, DOE encourages the public to provide input on measures DOE could take to lower the cost of its regulations applicable to room ACs consistent with the requirements of EPCA. DOE also requests comment on the benefits and burdens of adopting any industry/voluntary consensus-based or other appropriate test procedure, without modification.
As discussed in the June 2015 RFI, DOE believes that consumers regard portable ACs and room ACs as similar products with similar function and consumer utility, because both are self-encased products powered by single-phase electric current that utilize refrigerant to provide cooling to defined spaces, and their product usage is broadly similar. See 80 FR 34843, 34845. Consequently, DOE believes that consumers are inclined to compare the two products based on their rated capacity and efficiency. Thus, harmonizing the test conditions for room ACs and portable ACs may allow consumers to make a more accurate comparison of the energy use or efficiency of the two products.
DOE published a test procedure final rule for portable ACs on June 1, 2016 (hereinafter the “June 2016 Portable AC Final Rule”), in which DOE established test procedures for portable ACs in 10 CFR part 430, subpart B, appendix CC (“appendix CC”). 81 FR 35242. DOE assessed both the new portable AC test procedure and the room AC test procedure to determine whether any significant differences would impede an accurate consumer comparison of measured performance of the two covered products. DOE notes that the portable AC test procedure differentiates between single-duct and dual-duct portable ACs, which require different test conditions. For the purposes of the comparison with room ACs, DOE specifically considered the dual-duct testing provisions in the portable AC test procedure, because dual-duct portable ACs are most similar to room ACs in that the condenser inlet air is drawn from the unconditioned space, unlike single-duct portable ACs that draw condenser inlet air from the conditioned space. DOE identified several key differences between the test procedures in appendix F and appendix CC that lead to incomparable results. Specifically, the portable AC test procedure includes (1) two sets of test conditions for dual-duct portable ACs, one at 95 degrees Fahrenheit (“°F”) dry-bulb and 75 °F wet-bulb outdoor temperature (identical to the room AC test procedure) and the other at 83 °F dry-bulb and 67.5 °F wet-bulb outdoor temperature;
In a portable AC test procedure supplemental notice of proposed rulemaking (“SNOPR”), published on November 27, 2015 (hereinafter the “November 2015 Portable AC SNOPR”), DOE developed a climate analysis to determine the ideal cooling mode test conditions for portable ACs. 80 FR 74020, 74026. DOE considered 2012 climate data from the National Centers for Environmental Information (“NCEI”)
In the June 2016 Portable AC Final Rule, DOE also established an energy efficiency metric, CEER, which provides a representative measure of overall
Room ACs are currently tested with a single outdoor test condition, 95 °F dry-bulb and 75 °F wet-bulb temperature, which aligns with only one of the two cooling mode test conditions for dual-duct portable ACs. Considering the similarities between the two products (
As noted in the June 2015 RFI, the current room AC test procedure measures only the full-load performance at outdoor ambient conditions of 95 °F dry-bulb and 75 °F wet-bulb temperature. 80 FR 34843, 34848. Therefore, available technologies that improve part-load performance, such as variable-speed compressors and variable-opening expansion devices, are not considered in the determination of the rated performance of a room AC under the current test procedure. Id. DOE expects that harmonizing the room AC test procedure with the portable AC test procedure by including an additional cooling mode test condition potentially would ensure the room AC efficiency metric is more representative of actual use, and it will capture benefits associated with variable-speed compressors and other components that improve part-load performance.
The portable AC test procedure in appendix CC requires that the test unit be set up and tested with all manufacturer-provided materials (including the ducts, connectors for attaching the duct(s) to the test unit, sealing, insulation, and window mounting fixtures) to ensure that the performance measured during the test is reflective of actual installation and operation. The portable AC test procedure also accounts for the impacts of infiltration air, which is caused by negative pressure in the conditioned space created by the unit's operation, thereby driving unconditioned air into the space and impacting the overall cooling provided by the unit to the conditioned space.
Room ACs are typically installed with side curtains or other window or wall mounting installation materials that, during typical operation, may allow air to leak through or around the materials and would impact the cooling provided to the conditioned space. However, DOE notes that when conducting the calorimeter test prescribed in ANSI/ASHRAE Standard 16 (as referenced by the current DOE room AC test procedure), the test unit is set up so all air leakage around the unit that would normally be present in a typical installation is precluded by means of sealing.
Considering the requirements of EPCA for DOE to adopt test procedures that are representative of an average use cycle, which would encompass typical installation and operation, DOE requests comment on testing in accordance with the manufacturer-provided installation materials.
In the June 2016 Portable AC Final Rule, DOE adopted a definition for “off-cycle mode” as a mode in which the portable air conditioner: (1) Has cycled off its main cooling or heating function by thermostat or temperature sensor signal; (2) may or may not operate its fan or blower; and (3) will reactivate the main function according to the thermostat or temperature sensor signal. 81 FR 35242, 35265. DOE notes that this off-cycle mode definition for portable ACs is different from an off-cycle mode definition that DOE proposed on December 9, 2008, in a NOPR for the previous room AC test procedure rulemaking, which explicitly excluded fan operation from the off-cycle mode.
DOE also established provisions for determining the average off-cycle mode power in the June 2016 Portable AC Final Rule. 81 FR 35242, 35267. The portable AC off-cycle mode test is conducted following the cooling mode test under the same ambient conditions, and includes a 5-minute delay prior to measuring power consumption to allow for a brief period of fan operation while the evaporator returns to its non-cooling state. Because the evaporator is still cool at the end of compressor operation following cooling mode, additional room cooling is possible through continued fan operation at relatively low energy consumption. Therefore, DOE included the 5-minute delay before the start of off-cycle mode testing to prevent penalizing manufacturers for utilizing the cooling potential of the evaporator following the compressor cycle.
In the June 2015 RFI, DOE requested comment on the merits and/or limitations of accounting for energy modes not currently included in the room AC test procedure, including off-cycle mode, referencing the definition proposed in the December 2008 NOPR. 80 FR 34843, 34846. In response to the June 2015 RFI, DOE received a comment opposed to the inclusion of off-cycle mode in the DOE test procedure for room ACs. However, due to the significant difference between that definition and the definition of off-cycle mode established in the portable AC test procedure, DOE is requesting feedback on including provisions for measuring average off-cycle mode power in the room AC test procedure, consistent with the portable AC test procedure.
The current DOE room AC test procedure references certain sections of ANSI/AHAM RAC-1 and ANSI/ASHRAE 16 for the room AC cooling mode test conditions and test methods. Section 4.2.7 of ANSI/ASHRAE 16 requires the calorimeter chamber conditions to be verified by air sampled from a location that is representative of the temperatures surrounding the unit and that simulate the conditions in which the unit operates in the field. DOE notes that there is no procedure to verify if the measured chamber temperature reading is representative of conditions at the test unit condenser and evaporator inlet, which may be affected by recirculation from the condenser and evaporator exhaust, respectively, thereby potentially reducing test repeatability and reproducibility. As a result, DOE is seeking comment on this issue and any potential modifications to the test procedure that should be considered as part of this investigative effort.
The cooling mode test in appendix F is conducted in accordance with the testing conditions, methods, and calculations in sections 4, 5, 6.1, and 6.5 of the 2008 version of ANSI/AHAM RAC-1. Since DOE last revised its room AC test procedure in 2011, ANSI/AHAM RAC-1 has been updated and the current standard was released in 2015 (ANSI/AHAM RAC-1-2015, “Room Air Conditioners”). Based on review of the 2015 standard, DOE believes that the updates to ANSI/AHAM RAC-1 provide added specificity, but do not substantively impact the results of DOE's cooling mode test. Accordingly, DOE does not expect that updating the references to ANSI/AHAM RAC-1 in the room AC test procedure at appendix F would substantively affect testing results. DOE further notes that the 2015 update to ANSI/AHAM RAC-1 included adjustments to section organization, and DOE would consider updating section references as necessary if the 2015 version of ANSI/AHAM RAC-1 is incorporated by reference in the room AC test procedure at appendix F.
Appendix F currently references in its provisions for cooling mode test conditions, methods, and calculations the 1983 version of ANSI/ASHRAE 16, which was reaffirmed in 2009. ANSI/AHAM RAC-1-2015 also references the 1983 version of ANSI/ASHRAE 16 reaffirmed in 2009. A new version of ANSI/ASHRAE 16 was published in 2016, which includes many significant updates to the standard, including heating mode testing and an air enthalpy test approach as an alternative to the calorimeter approach, while the general cooling mode methodology remains unchanged.
In addition to the issues identified earlier in this document, DOE welcomes comment on any other aspect of the existing test procedure for room ACs not already addressed by the specific areas identified in this document. DOE particularly seeks information that would improve the repeatability, reproducibility, and consumer representativeness of the test procedure. DOE also requests information that would help DOE create a procedure that would limit manufacturer test burden through streamlining or simplifying testing requirements. Comments regarding the repeatability and reproducibility are also welcome.
DOE also requests feedback on any potential amendments to the existing
Additionally, DOE requests comment on whether the existing test procedure limits a manufacturer's ability to provide additional features to consumers on room ACs. DOE particularly seeks information on how the test procedure could be amended to reduce the cost of new or additional features and make it more likely that such features are included on room ACs.
DOE invites all interested parties to submit in writing by September 5, 2017, comments and information on matters addressed in this RFI and on other matters relevant to DOE's test procedure for room ACs. These comments and information will aid in the development of a test procedure NOPR for room ACs if DOE determines that amended test procedures may be appropriate for these products.
Submitting comments via
However, your contact information will be publicly viewable if you include it in the comment or in any documents attached to your comment. Any information that you do not want to be publicly viewable should not be included in your comment, nor in any document attached to your comment. Persons viewing comments will see only first and last names, organization names, correspondence containing comments, and any documents submitted with the comments.
Do not submit to
DOE processes submissions made through
Submitting comments via email, hand delivery, or mail. Comments and documents submitted via email, hand delivery, or mail also will be posted to
Include contact information each time you submit comments, data, documents, and other information to DOE. If you submit via mail or hand delivery, please provide all items on a CD, if feasible. It is not necessary to submit printed copies. No facsimiles (faxes) will be accepted.
Comments, data, and other information submitted to DOE electronically should be provided in PDF (preferred), Microsoft Word or Excel, WordPerfect, or text (ASCII) file format. Provide documents that are not secured, written in English and free of any defects or viruses. Documents should not contain special characters or any form of encryption and, if possible, they should carry the electronic signature of the author.
Campaign form letters. Please submit campaign form letters by the originating organization in batches of between 50 to 500 form letters per PDF or as one form letter with a list of supporters' names compiled into one or more PDFs. This reduces comment processing and posting time.
Confidential Business Information. According to 10 CFR 1004.11, any person submitting information that he or she believes to be confidential and exempt by law from public disclosure should submit via email, postal mail, or hand delivery two well-marked copies: one copy of the document marked confidential including all the information believed to be confidential, and one copy of the document marked “non-confidential” with the information believed to be confidential deleted. Submit these documents via email or on a CD, if feasible. DOE will make its own determination about the confidential status of the information and treat it according to its determination.
Factors of interest to DOE when evaluating requests to treat submitted information as confidential include (1) a description of the items, (2) whether and why such items are customarily treated as confidential within the industry, (3) whether the information is generally known by or available from other sources, (4) whether the information has previously been made available to others without obligation concerning its confidentiality, (5) an explanation of the competitive injury to the submitting person which would result from public disclosure, (6) when such information might lose its confidential character due to the passage of time, and (7) why disclosure of the information would be contrary to the public interest.
It is DOE's policy that all comments may be included in the public docket, without change and as received, including any personal information provided in the comments (except information deemed to be exempt from public disclosure).
DOE considers public participation to be a very important part of the process for developing test procedures. DOE actively encourages the participation and interaction of the public during the comment period in each stage of the rulemaking process. Interactions with and between members of the public provide a balanced discussion of the issues and assist DOE in the rulemaking process. Anyone who wishes to be added to the DOE mailing list to receive future notices and information about this process or would like to request a public meeting should contact Appliance and Equipment Standards Program staff at (202) 586-6636 or via email at
Forest Service, USDA.
Notice of meeting.
The Fresno and Madera Counties Resource Advisory Committee (RAC) will meet in Clovis, California. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with the Act.
The meeting will be held on August 31, 2017, from 6:00 p.m. to 8:00 p.m.
All RAC meetings are subject to cancellation. For status of meeting prior to attendance, please contact the person listed under
The meeting will be held at the Sierra National Forest (NF) Supervisor's Office, 1600 Tollhouse Road, Clovis, California.
Written comments may be submitted as described under
Julie Roberts, RAC Coordinator, by phone at 559-297-0706 or via email at
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339 between 8:00 a.m. and 8:00 p.m., Eastern Standard Time, Monday through Friday.
The purpose of the meeting is to:
1. Discuss and agree on general operating procedures,
2. Elect a chair,
3. Review project proposals, and
4. Possibly vote to recommend project proposals for Title II Funds.
The meeting is open to the public. The agenda will include time for people to make oral statements of three minutes or less. Individuals wishing to make an oral statement should request in writing by August 18, 2017, to be scheduled on the agenda. Anyone who would like to bring related matters to the attention of the committee may file written statements with the committee staff before or after the meeting. Written comments and requests for time for oral comments must be sent to Julie Roberts, RAC Coordinator, Sierra NF Supervisor's Office, 1600 Tollhouse Road, Clovis, California 93611; by email to
Forest Service, USDA.
Notice of meeting.
The Fresno and Madera Counties Resource Advisory Committee (RAC) will meet in Clovis, California. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with the Act.
The meeting will be held on August 24, 2017, from 6:00 p.m. to 8:00 p.m.
All RAC meetings are subject to cancellation. For status of meeting prior to attendance, please contact the person listed under
The meeting will be held at the Sierra National Forest (NF) Supervisor's Office, 1600 Tollhouse Road, Clovis, California.
Written comments may be submitted as described under
Julie Roberts, RAC Coordinator, by phone at 559-297-0706 or via email at
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339 between 8:00 a.m. and 8:00 p.m., Eastern Standard Time, Monday through Friday.
The purpose of the meeting is to:
1. Discuss and agree on general operating procedures,
2. Elect a chair,
3. Review project proposals, and
4. Possibly vote to recommend project proposals for Title II Funds.
The meeting is open to the public. The agenda will include time for people to make oral statements of three minutes or less. Individuals wishing to make an oral statement should request in writing by August 11, 2017, to be scheduled on the agenda. Anyone who would like to bring related matters to the attention of the committee may file written statements with the committee staff
International Trade Administration, Department of Commerce.
Notice.
In March 2007, the Governments of the United States and Brazil established the U.S.-Brazil CEO Forum. This notice announces the opportunity for up to twelve individuals for appointment to the U.S. Section of the Forum. The three-year term of the incoming members of the U.S. Section starts on October 1, 2017, and will expire September 30, 2020. Nominations received in response to this notice will also be considered for on-going appointments to fill any future vacancies that may arise before September 30, 2020.
Applications for immediate consideration should be received no later than close of business August 25, 2017. After that date, applications will continue to be accepted through September 30, 2020 to fill any new vacancies that may arise.
Please send requests for consideration to Raquel Silva, Office of Latin America and the Caribbean, U.S. Department of Commerce, either by email at
Raquel Silva, Office of Latin America and the Caribbean, U.S. Department of Commerce, telephone: (202) 482-4157.
The Secretary of Commerce and the Director of the National Economic Council, together with the Planalto Casa Civil Minister (Presidential Chief of Staff) and the Brazilian Minister of Industry, Foreign Trade & Services, co-chair the U.S.-Brazil CEO Forum (Forum), pursuant to the Terms of Reference signed in March 2007 by the U.S. and Brazilian governments, as amended, which set forth the objectives and structure of the Forum. The Terms of Reference may be viewed at:
This notice seeks candidates to fill up to twelve positions on the U.S. Section of the Forum as well as any future vacancies that may arise before September 30, 2020. Each candidate must be the Chief Executive Officer or President (or have a comparable level of responsibility) of a U.S.-owned or -controlled company that is incorporated in and has its main headquarters in the United States and that is currently doing business in both Brazil and the United States. Each candidate also must be a U.S. citizen or otherwise legally authorized to work in the United States and able to travel to Brazil and locations in the United States to attend official Forum meetings as well as independent U.S. Section and Committee meetings. In addition, the candidate may not be a registered foreign agent under the Foreign Agents Registration Act of 1938, as amended. Evaluation of applications for membership in the U.S. Section by eligible individuals will be based on the following criteria:
Members will be selected on the basis of who will best carry out the objectives of the Forum as stated in the Terms of Reference establishing the U.S.-Brazil CEO Forum. The U.S. Section of the Forum should also include members that represent a diversity of business sectors and geographic locations. To the extent possible, U.S. Section members also should represent a cross-section of small, medium, and large firms.
U.S. members will receive no compensation for their participation in Forum-related activities. Individual members will be responsible for all travel and related expenses associated with their participation in the Forum, including attendance at Committee and Section meetings. Only appointed members may participate in official Forum meetings; substitutes and alternates will not be designated. According to the current Terms of Reference, members are normally to serve three-year terms, but may be reappointed.
To be considered for membership, please submit the following information as instructed in the
International Trade Administration, U.S. Department of Commerce.
Notice of an opportunity for travel and tourism industry leaders to apply for membership on the Board of Directors of the Corporation for Travel Promotion.
The Department of Commerce is currently seeking applications from travel and tourism leaders from specific industries for membership on the Board of Directors (Board) of the Corporation for Travel Promotion (dba Brand USA). The purpose of the Board is to guide the Corporation for Travel Promotion on matters relating to the promotion of the United States as a travel destination and communication of travel facilitation issues, among other tasks.
All applications must be received by the National Travel and Tourism Office by close of business on September 29, 2017.
Electronic applications may be sent to:
Julie Heizer, Deputy Director, National Travel and Tourism Office, Mail Stop 10003, 1401 Constitution Avenue NW., Washington, DC, 20230. Telephone: 202.482.4904. Email:
The Corporation (doing business as Brand USA) is governed by a Board of Directors, consisting of 11 members with knowledge of international travel promotion or marketing, broadly representing various regions of the United States. The TPA directs the Secretary of Commerce (after consultation with the Secretary of Homeland Security and the Secretary of State) to appoint the Board of Directors for the Corporation.
At this time, the Department will be selecting three individuals with the appropriate expertise and experience from specific sectors of the travel and tourism industry to serve on the Board as follows:
(A) 1 shall have appropriate expertise and experience in small business/retail;
(B) 1 shall have appropriate expertise and experience in state tourism office; and
(C) 1 shall have appropriate expertise and experience in travel distribution services.
To be eligible for Board membership, individuals must have international travel and tourism marketing experience, be a current or former chief executive officer, chief financial officer, or chief marketing officer or have held an equivalent management position. Additional consideration will be given to individuals who have experience working in U.S. multinational entities with marketing budgets, and/or who are audit committee financial experts as defined by the Securities and Exchange Commission (in accordance with section 407 of Pub. L. 107-204 [15 U.S.C. 7265]). Individuals must be U.S. citizens, and in addition, cannot be federally registered lobbyists or registered as a foreign agent under the Foreign Agents Registration Act of 1938, as amended.
Those selected for the Board must be able to meet the time and effort commitments of the Board.
Board members serve at the discretion of the Secretary of Commerce (who may remove any member of the Board for good cause). The terms of office of each member of the Board appointed by the Secretary shall be three (3) years. Board members can serve a maximum of two consecutive full three-year terms. Board members are not considered Federal government employees by virtue of their service as a member of the Board and will receive no compensation from the Federal government for their participation in Board activities. Members participating in Board meetings and events may be paid actual travel expenses and per diem when away from their usual places of residence by the Corporation.
Individuals who want to be considered for appointment to the Board should submit:
1. Name, title, and personal resume of the individual requesting consideration, including address, email address and phone number; and
2. A brief statement of why the person should be considered for appointment to the Board. This statement should also address the individual's relevant international travel and tourism marketing experience and indicate clearly the sector or sectors enumerated above in which the individual has the requisite expertise and experience. Individuals who have the requisite expertise and experience in more than one sector can be appointed for only one of those sectors. Appointments of members to the Board will be made by the Secretary of Commerce.
3. An affirmative statement that the applicant is a U.S. citizen and further, is not required to register as a foreign agent under the Foreign Agents Registration Act of 1938, as amended, is also required.
Notice of meeting.
The Advisory Committee on Commercial Remote Sensing (“ACCRES” or “the Committee”) will meet August 24, 2017.
The meeting is scheduled as follows: August 24, 2017, 9:00 a.m.-4:30 p.m. There will be a one hour lunch break from 11:45 a.m.-12:45 p.m.
The meeting will be held at the George Washington University, The Elliot School of International Affairs—Lindner Commons, 1957 E Street NW., Washington, DC 20052.
Samira Patel, NOAA/NESDIS/CRSRA, 1335 East West Highway, Room 8247, Silver Spring, Maryland 20910; (301) 713-7077 or
As required by Section 10(a)(2) of the Federal Advisory Committee Act, 5 U.S.C. App. 2 (FACA) and its implementing regulations,
The meeting will be open to the public pursuant to Section 10(a)(1) of the FACA. During the meeting, the Committee will receive updates on NOAA's Commercial Remote Sensing Regulatory Affairs activities, discuss updates to the new licensing conditions, and report out on committee task groups. The Committee will also discuss the new draft legislation related to commercial remote sensing activities recently introduced in the U.S. House of Representatives. The Committee will be available to receive public comments on its activities.
The meeting is physically accessible to people with disabilities. Requests for special accommodations may be directed to Samira Patel, NOAA/NESDIS/CRSRA, 1335 East West Highway, Room 8247, Silver Spring, Maryland 20910; (301) 713-7077 or
Any member of the public who plans to attend the open meeting should RSVP to Samira Patel at (301) 713-7077, or
ACCRES expects that public statements presented at its meetings will not be repetitive of previously-submitted oral or written statements. In general, each individual or group making an oral presentation may be limited to a total time of five minutes. Written comments sent to NOAA/NESDIS/CRSRA on or before August 18, 2017 will be provided to Committee members in advance of the meeting. Comments received too close to the meeting date will normally be provided to Committee members at the meeting.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; receipt of application for Letters of Authorization; request for comments and information.
NMFS has received a request from the U.S. Navy (Navy) for authorization to take small numbers of marine mammals incidental to conducting construction activities related to marine structure maintenance and pile replacement at facilities in Washington, over the course of five years from the date of issuance. Pursuant to regulations implementing the Marine Mammal Protection Act (MMPA), NMFS is announcing receipt of the Navy's request for the development and implementation of regulations governing the incidental taking of marine mammals. NMFS invites the public to provide information, suggestions, and comments on the Navy's application and request.
Comments and information must be received no later than September 5, 2017.
Comments on the applications should be addressed to Jolie Harrison, Chief, Permits and Conservation Division, Office of Protected Resources, National Marine Fisheries Service. Physical comments should be sent to 1315 East-West Highway, Silver Spring, MD 20910 and electronic comments should be sent to
Ben Laws, Office of Protected Resources, NMFS, (301) 427-8401. An electronic copy of the Navy's application may be obtained online at:
Sections 101(a)(5)(A) and (D) of the MMPA (16 U.S.C. 1361
An authorization for incidental takings shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s), will not have an unmitigable adverse impact on the availability of the species or stock(s) for subsistence uses (where relevant), and if the permissible methods of taking and requirements pertaining to the mitigation, monitoring and reporting of such takings are set forth.
NMFS has defined “negligible impact” in 50 CFR 216.103 as an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival.
The MMPA states that the term “take” means to harass, hunt, capture, kill or attempt to harass, hunt, capture, or kill any marine mammal.
Except with respect to certain activities not pertinent here, the MMPA defines “harassment” as: Any act of pursuit, torment, or annoyance which (i) has the potential to injure a marine mammal or marine mammal stock in the wild (Level A harassment); or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering (Level B harassment).
On July 24, 2017, NMFS received an adequate and complete application from the Navy requesting authorization for take of marine mammals incidental to construction activities related to marine structure maintenance and pile replacement at five Naval installations in Washington inland waters. The requested regulations would be valid for five years, from 2018 through 2023. The Navy plans to conduct necessary work, including impact and vibratory pile driving, to repair and maintain existing marine structures at six installations. The proposed action may incidentally expose marine mammals occurring in the vicinity to elevated levels of underwater sound, thereby resulting in incidental take, primarily by Level B harassment but also including some expected potential for Level A harassment. Therefore, the Navy requests authorization to incidentally take marine mammals.
Washington Naval installations covered by this request include Naval Base Kitsap Bangor, Naval Base Kitsap Bremerton, Naval Base Kitsap Keyport, Naval Base Kitsap Manchester, Zelatched Point, and Naval Station Everett. To ensure continuance of necessary missions at these installations, the Navy must conduct annual maintenance and repair activities at existing marine waterfront structures, including removal and replacement of piles of various types and sizes. Exact timing and amount of necessary in-water work is unknown, but the Navy estimates replacing up to 822 structurally unsound piles over the 5-year period, including individual actions currently planned and estimates for future marine structure repairs. Construction will include use of impact and vibratory pile driving, including removal and installation of steel, concrete, plastic, and timber piles.
Interested persons may submit information, suggestions, and comments concerning the Navy's request (see
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; proposed incidental harassment authorization; request for comments.
NMFS has received a request from the U.S. Navy (Navy) for authorization to take marine mammals incidental to construction and demolition activities as part of a pier replacement project. Pursuant to the Marine Mammal Protection Act (MMPA), NMFS is requesting comments on its proposal to issue an incidental harassment authorization (IHA) to the Navy to incidentally take marine mammals, by Level B Harassment only, during the specified activity. NMFS will consider public comments prior to making any final decision on the issuance of the requested MMPA authorizations and agency responses will be summarized in the final notice of our decision.
Comments and information must be received no later than September 5, 2017.
Comments on the application should be addressed to Jolie Harrison, Chief, Permits and Conservation Division, Office of Protected Resources, National Marine Fisheries Service. Physical comments should be sent to 1315 East-West Highway, Silver Spring, MD 20910 and electronic comments should be sent to
Laura McCue, Office of Protected Resources, NMFS, (301) 427-8401. Electronic copies of the application and supporting documents, as well as a list of the references cited in this document, may be obtained online at:
Sections 101(a)(5)(A) and (D) of the MMPA (16 U.S.C. 1361
An authorization for incidental takings shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s), will not have an unmitigable adverse impact on the availability of the species or stock(s) for subsistence uses (where relevant), and if the permissible methods of taking and requirements pertaining to the mitigation, monitoring and reporting of such takings are set forth.
NMFS has defined “negligible impact” in 50 CFR 216.103 as an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival.
The MMPA states that the term “take” means to harass, hunt, capture, kill or attempt to harass, hunt, capture, or kill any marine mammal.
Except with respect to certain activities not pertinent here, the MMPA defines “harassment” as: Any act of pursuit, torment, or annoyance which (i) has the potential to injure a marine mammal or marine mammal stock in the wild (Level A harassment); or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering (Level B harassment).
To comply with the National Environmental Policy Act of 1969 (NEPA; 42 U.S.C. 4321
This action is consistent with categories of activities identified in CE B4 of the Companion Manual for NOAA Administrative Order 216-6A, which do not individually or cumulatively have the potential for significant impacts on the quality of the human environment and for which we have not identified any extraordinary circumstances that would preclude this categorical exclusion. Accordingly, NMFS has preliminarily determined that the issuance of the proposed IHA qualifies to be categorically excluded from further NEPA review.
We will review all comments submitted in response to this notice prior to concluding our NEPA process or making a final decision on the IHA request.
On June 19, 2017, we received a request from the Navy for an IHA to take marine mammals incidental to pile installation and demolition associated with a pier replacement project in San Diego Bay at Naval Base Point Loma in San Diego, CA (NBPL), including a separate monitoring plan. The Navy also submitted a draft monitoring report on June 13, 2017, pursuant to requirements of the previous IHA. These final application and monitoring plan were deemed adequate and complete on July 20, 2017. The pier replacement project is planned to occur over multiple years; this proposed IHA would cover only the fifth year of work and would be valid for a period of one year from the date of issuance. Hereafter, use of the generic term “pile driving” may refer to both pile installation and removal unless otherwise noted. The Navy's request is for take of nine species of marine mammals by Level B harassment. Neither the Navy nor NMFS expect mortality to result from this activity and, therefore, an IHA is appropriate.
Monitoring reports are available online at
This proposed IHA would cover one year of a larger project for which the Navy obtained prior IHAs and this request for take authorization is for the fifth year of the project, following the IHAs issued effective from October 8, 2016, through October 7, 2017 (81 FR 66628), September 1, 2013, through August 31, 2014 (78 FR 44539), from October 8, 2014, through October 7, 2015 (79 FR 65378), and from October 8, 2015, through October 7, 2016 (80 FR 62032). The Navy complied with all the requirements (
NBPL provides berthing and support services for Navy submarines and other fleet assets. The existing fuel pier serves as a fuel depot for loading and unloading tankers and Navy underway replenishment vessels that refuel ships at sea (“oilers”), as well as transferring fuel to local replenishment vessels and other small craft operating in San Diego Bay, and is the only active Navy fueling facility in southern California. Portions of the pier are over one hundred years old, while the newer segment was constructed in 1942. The pier as a whole is significantly past its design service life and does not meet current construction standards.
The Navy plans to demolish and remove the existing pier and associated pipelines and appurtenances while simultaneously replacing it with a generally similar structure that meets relevant standards for seismic strength and is designed to better accommodate modern Navy ships. Demolition and construction are planned to occur in two phases to maintain the fueling capabilities of the existing pier while the new pier is being constructed. During the fifth year of construction (the specified activity considered under this proposed IHA), the Navy anticipates construction at two locations: The fuel pier area and at the Naval Mine and Anti-Submarine Warfare Command (NMAWC), where the Navy's Marine Mammal Program (MMP) was temporarily moved during fuel pier construction (see Figure 1-1 in the Navy's application). At the fuel pier, the Navy anticipates finishing all the demolition, including removal of 180 square precast (PC) concrete and poly-concrete piles of varying sizes up to 24-in using a hydraulic pile cutter; cutting 30 66-in and 5 84-in concrete-filled steel caissons with a diamond wire saw; and removing 12 30-in steel piles by cutting with a plasma torch. Only the hydraulic pile cutting and diamond saw cutting of caissons reach Level B acoustic thresholds.
At the NMAWC, twenty-three 16-in diameter PC concrete guide piles would be driven (by vibratory and/or impact hammer) to restore gangway access to the recreational marina. Sixty-four 16-in diameter round PC concrete guide piles will be removed at NMAWC by jetting followed by dry-pulling; dry pulling does not reach the Level B acoustic thresholds. Table 1 summarizes the construction activities during the fifth year of the Navy's project.
The proposed actions with the potential to incidentally harass marine mammals within the waters adjacent to NBPL are vibratory and impact pile installation and certain demolition (
The proposed activities that would be authorized by this IHA, during the fifth year of work associated with the fuel pier project, would occur for one year from the date of issuance of this proposed IHA. Under the terms of a memorandum of understanding (MOU) between the Navy and the U.S. Fish and Wildlife Service (FWS), all noise- and turbidity-producing in-water activities in designated least tern foraging habitat are to be avoided during the period when least terns are present and engaged in nesting and foraging (a window from approximately May 1 through September 15). However, it is possible that in-water work not expected to result in production of significant noise or turbidity (
NBPL is located on the peninsula of Point Loma near the mouth and along the northern edge of San Diego Bay (see Figures 1-1 and 1-2 in the Navy's application). San Diego Bay is a narrow, crescent-shaped natural embayment oriented northwest-southeast with an approximate length of 24 kilometers (km) and a total area of roughly 4,500 hectares (ha). The width of the bay ranges from 0.3 to 5.8 km, and depths range from 23 meters (m) mean lower low water (MLLW) near the tip of Ballast Point to less than 2 m at the southern end (see Figure 2-1 of the Navy's application). San Diego Bay is a heavily urbanized area with a mix of industrial, military, and recreational uses. The northern and central portions of the bay have been shaped by historic dredging to support large ship navigation. Dredging occurs as necessary to maintain constant depth within the navigation channel. Outside the navigation channel, the bay floor consists of platforms at depths that vary slightly. Sediments in northern San Diego Bay are relatively sandy as tidal currents tend to keep the finer silt and clay fractions in suspension, except in harbors and elsewhere in the lee of structures where water movement is diminished. Much of the shoreline consists of riprap and manmade structures. San Diego Bay is heavily used by commercial, recreational, and military vessels, with an average of over 80,000 vessel movements (in or out of the bay) per year (not including recreational boating within the Bay) (see Table 2-2 of the Navy's application). For more information about the specific geographic region, please see section 2.3 of the Navy's application.
In order to provide context, we described the entire project in our
Non-steel piles are typically impact-driven for their entire embedment depth, in part because non-steel piles are often displacement piles (as opposed to pipe piles) and require some impact to allow substrate penetration. However, jetting may be used to advance displacement piles to a certain embedment depth. Pile jetting utilizes a directed flow of pressurized water to assist in pile placement. The jetting technique liquefies the soils at the pile tip during pile placement, reducing the friction between adjacent sub-grade soil particles around the water jet. This greatly decreases the bearing capacity of the soils below the pile tip, causing the pile to descend toward its final tip elevation with much less soil resistance, largely under its own weight.
Piles may also be removed by simply dry pulling, or pulling after the pile has been loosened using a vibratory hammer or a pneumatic chipper. Jetting may be another option to loosen piles that could not be removed through the previous procedures. Pile removal is not generally expected to require the use of vibratory extraction or pneumatic chipping, and these methods are considered as contingency in the event other methods of extraction are not successful.
During the first in-water work season (2013-14), two primary activities were conducted: Relocation of the MMP and the Indicator Pile Program (IPP). During the second in-water work season (2014-15), the IPP was concluded and simultaneous construction of the new pier and demolition of the old pier begun. Production pile driving continued during the third in-water work season (2015-16). During the fourth in-water work season (2016-17) pile driving of fender piles and structural piles for the mooring dolphins for the new fuel pier was conducted, including two IPP piles, demolition of the old fuel pier, and pile driving and extraction at NMAWC.
The Navy MMP, administered by Space and Naval Warfare Systems (SPAWAR) Command Systems Center (SSC), was moved approximately three kilometers to the NMAWC (see Figures 1-1 and 1-2 of the Navy's Year 1 monitoring report). Although not subject to the MMPA, SSC's working animals were temporarily relocated so that they will not be affected by the project. Over the course of 25 in-water construction days from January 28 to March 13, 2014, the Navy removed thirty and installed 81 concrete piles (12- and 16-in). See Table 3-2 of the Navy's Year 1 monitoring report for details. Installation was accomplished via a D19-42 American Pile Driving Equipment, Inc. (APE) diesel hammer with energy capacity of 23,566-42,800 ft-lbs and fitted with a hydraulic tripping cylinder with four adjustable power settings that could be reset while driving. Pile removal was accomplished by jetting and dead pull.
The IPP was designed to validate the length of pile required and the method of installation (vibratory and impact) as well as to validate acoustic sound pressure levels of the various sizes and locations (
Production pile driving associated with construction of the new pier was begun in Fall 2014 and continued into Spring 2015. Both vibratory and impact driving was used, as described above, to install 238 steel pipe piles (four 18-in, 31 30-in, and 203 36-in diameter). Hammers used were the same as those described above. Demolition activity began in Spring 2015, and included the removal of four caissons, eighteen concrete fender piles, and a portion of concrete decking from the existing fuel pier. In total, this work consisted of 100 days of activity from October 16, 2014, through April 29, 2015. Of these 100 days of in-water work, 18 days involved only impact driving, 15 days included only vibratory driving, and 65 days where both types of driving occurred. The remaining two days involved only demolition activities. Please see the Year 2 monitoring report for more information.
Production pile driving continued in early 2016 during three distinct construction periods from January 11 through April 30, 2016, with 161 piles installed over the course of 50 days. Because most structural steel pipe piles were installed under the Year 2 IHA, this work primarily involved placement of non-structural concrete fender piles. Both vibratory and impact driving was used, as described above, to install 132 16-in polycarbonate coated concrete fender piles and 23 24 x 30-in concrete fender piles. In addition, six 30-in steel pipe piles were installed as structural elements to support a mooring dolphin. Hammers used for the steel piles were the same as those described above. The 16-in concrete piles were driven using an APE single action diesel impact hammer model D25-32, with energy capacity of 29,484-58,245 ft-lbs and
Production pile driving during Year 4 construction, from October 8, 2016 to April 30, 2017, included 68 piles of three types of piles driven with two different methods over 34 days: 30-in steel piles were driven with both vibratory and impact hammers, and the 24 x 30-in concrete and 16-in poly-concrete piles were installed with impact hammers. High pressure water jetting were used to “pre-drill” holes for the 24 x 30 in piles. In addition, Structural piles were installed for two dolphins to the south of the new fuel pier, fender piles were installed on the east and west sides of the new fuel pier as well as on one of the dolphins, and a single 16-inch poly-concrete pile (concrete pile lined with a polycarbonate outer sheath) was driven on the west side of the pier.
Demolition during Year 4 included removal of the caissons from the north side of the old fuel pier, as well as removal of structural and fender piles sizes under, and adjacent to, the south and north sections of the old pier. Eighteen 84-in caissons were cut using a wire saw. A total of 278 piles were clipped, including 14-in, 18-in, and 24-in fender piles and 13-in polycarbonate and poly-concrete piles. Of the 69 days of in-water work, 42 days involved pile clipping and 27 days involved pile cutting. Please see the Year 4 monitoring report for more information.
Additional work may be conducted under the existing IHA between September 15 and October 7, 2017, in which case the submitted monitoring report would be amended as necessary.
Proposed mitigation, monitoring, and reporting measures are described in detail later in this document (please see
Species with the expected potential to be present during all or a portion of the in-water work window include the California sea lion (
There are four marine mammal species which are either resident or have known seasonal occurrence in the vicinity of San Diego Bay, including the California sea lion, harbor seal, bottlenose dolphin, and gray whale (see Figures 3-1 through 3-4 and 4-1 in the Navy's application). In addition, common dolphins (see Figure 3-4 in the Navy's application), the Pacific white-sided dolphin, Risso's dolphin, and northern elephant seals are known to occur in deeper waters in the vicinity of San Diego Bay and/or have been observed within the bay during the course of this project's monitoring. Although the latter three species of cetacean would not generally be expected to occur within the project area, the potential for changes in occurrence patterns in conjunction with recent observations leads us to believe that authorization of incidental take is warranted. Common dolphins have been documented regularly at the Navy's nearby Silver Strand Training Complex, and were observed in the project area during previous years of project activity. The Pacific white-sided dolphin has been sighted along a previously used transect on the opposite side of the Point Loma peninsula (Merkel and Associates, 2008) and there were several observations of Pacific white-sided dolphins during Year 2 monitoring. Risso's dolphin is fairly common in southern California coastal waters (
Note that common dolphins could be either short-beaked (
In addition, other species that occur in the Southern California Bight may have the potential for isolated occurrence within San Diego Bay or just offshore. In particular, a short-finned pilot whale (
Sections 3 and 4 of the application summarize available information regarding status and trends, distribution and habitat preferences, and behavior and life history, of the potentially affected species. Additional information regarding population trends and threats may be found in NMFS's Stock Assessment Reports (SAR;
Table 2 lists all marine mammal species with expected potential for occurrence in the vicinity of NBPL during the project timeframe and summarizes key information, including regulatory status under the MMPA and ESA and potential biological removal (PBR), where known. See also Figures 3-1 through 3-5 of the Navy's application for observed occurrence of
Marine mammal abundance estimates presented in this document represent the total number of individuals that make up a given stock or the total number estimated within a particular study or survey area. NMFS's stock abundance estimates for most species represent the total estimate of individuals within the geographic area, if known, that comprises that stock. For some species, this geographic area may extend beyond U.S. waters. All managed stocks in this region are assessed in NMFS's U.S. 2016 stock assessment report (SARs) (
All species that could potentially occur in the proposed survey areas are included in Table 2. As described below, all eight species (with nine managed stocks) temporally and spatially co-occur with the activity to the degree that take is reasonably likely to occur, and we have proposed authorizing it.
Two populations of gray whales are recognized, Eastern and Western North Pacific (ENP and WNP). The two populations have historically been considered geographically isolated from each other; however, recent data from satellite-tracked whales indicates that there is some overlap between the stocks. Two WNP whales were tracked from Russian foraging areas along the Pacific rim to Baja California (Mate
However, only ENP whales are expected to occur in the project area. The likelihood of any gray whale being exposed to project sound to the degree considered in this document is already low, as it would require a migrating whale to linger for an extended period of time, or for multiple migrating whales to linger for shorter periods of time. While such an occurrence is not unknown, it is uncommon. Further, of the approximately 20,000 gray whales migrating through the Southern California Bight, it is extremely unlikely that one found in San Diego Bay would be one of the approximately twenty WNP whales that have been documented in the eastern Pacific (less than one percent probability). The likelihood that a WNP whale would be exposed to elevated levels of sound from the specified activities is insignificant and discountable and WNP whales are not considered further in this document.
Gray whale transitory occurrence inside San Diego Bay is sporadic and unpredictable. A mean group size of 2.9 gray whales was reported for both coastal (16 groups) and non-coastal (15 groups) areas around Southern California Bight. The largest group reported was nine animals. The largest group reported by U.S. Navy (in 1998) was 27 animals (Carretta
The California coastal stock of bottlenose dolphin is distinct from the offshore population and is resident in the immediate (within 1 km of shore) coastal waters, occurring primarily between Point Conception, California, and San Quintin, Mexico. Occasionally, during warm-water incursions such as during the 1982-1983 El Niño events, their range extends as far north as San Francisco Bay (Carretta
Coastal bottlenose dolphins have occurred sporadically and in highly variable numbers and locations in San Diego Bay. Navy surveys showed that bottlenose dolphins were most commonly sighted in April, and there were more dolphins observed during El Niño years.
Pacific white-sided dolphins are endemic to temperate waters of the North Pacific Ocean, and are common both on the high seas and along the continental margins (Carretta
Pacific white-sided dolphins are uncommon in San Diego Bay, but observations of this species increased during El Niño years. Monitoring during the Year 2 IHA documented 7 sightings of Pacific white-sided dolphins, comprising 27 individuals, with a mean group size of 3.85 individuals per sighting and an average of 0.28 individuals sighted per day of monitoring.
Short-beaked common dolphins are the most abundant cetacean off California and are widely distributed between the coast and at least 300 nmi offshore. In contrast, long-beaked common dolphins generally occur within 50 nmi of shore. Both species of common dolphin appear to shift their distributions seasonally and annually in response to oceanographic conditions and prey availability (Carretta
The occurrence of common dolphins inside San Diego Bay is uncommon (NAVFAC SW and POSD 2013). Small groups were observed briefly on several occasions in the northern part of the bay by Navy monitors during the IPP (May 2014). The animals were moving swiftly and could not be distinguished as to species, but the weight of evidence based on distributions of the two species and previous sightings of the long-beaked species near San Diego is that they were probably long-beaked common dolphins.
The entire population of California sea lions cannot be counted because all age and sex classes are never ashore at the same time. In lieu of counting all sea lions, pups are counted when all are ashore, in July during the breeding season, and the number of births is estimated from pup counts (Carretta
The California sea lion is by far the most commonly-sighted pinniped species at sea or on land in the vicinity of NBPL and northern San Diego Bay. The Navy has conducted numerous marine mammal surveys overlapping the north San Diego Bay project area and the potential ZOI for impact and vibratory pile driving operations. California sea lions regularly occur on rocks, buoys and other structures, and especially on bait barges, although numbers vary greatly.
Harbor seals are considered abundant throughout most of their range from Baja California to the eastern Aleutian
Harbor seals are relatively uncommon within San Diego Bay. Sightings in the Navy transect surveys of northern San Diego Bay through March 2012, and were limited to individuals outside of the ZOI, on the south side of Ballast Point (TDI 2012b; Jenkins 2012). However, Navy marine mammal monitoring for another project conducted intermittently at Pier 122 from 2010-2014 documented from zero to 4 harbor seals near Pier 122 (within the ZOI) at various times, with the greatest number of sightings during April and May (Jenkins 2012; Bowman 2014). An individual harbor seal was also frequently sighted near NMAWC during 2014 (McConchie 2014).
A complete population count of elephant seals is not possible because all age classes are not ashore simultaneously. The population is estimated to have grown at 3.8% annually since 1988 (Lowry
Northern elephant seals occur in the southern California bight, and have the potential to occur in San Diego Bay (NAVFAC SW and POSD 2013), but the only recent documentation of occurrence was of a single distressed juvenile observed on the beach south and inshore of the Fuel Pier during the second year IHA. Given the continuing, long-term increase in the population of northern elephant seals (Lowry
Hearing is the most important sensory modality for marine mammals underwater, and exposure to anthropogenic sound can have deleterious effects. To appropriately assess the potential effects of exposure to sound, it is necessary to understand the frequency ranges marine mammals are able to hear. Current data indicate that not all marine mammal species have equal hearing capabilities (
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The pinniped functional hearing group was modified from Southall
For more detail concerning these groups and associated frequency ranges, please see NMFS (2016) for a review of available information. Nine marine mammal species (six cetacean and three pinniped (1 otariid and 2 phocid species)) have the reasonable potential to co-occur with the proposed survey activities. Please refer to Table 2. Of the cetacean species that may be present, one is classified as low-frequency cetaceans (
This section includes a summary and discussion of the ways that components of the specified activity may impact marine mammals and their habitat. The
We provided discussion of the potential effects of the specified activity on marine mammals and their habitat in our
In the aforementioned
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This section provides an estimate of the number of incidental takes proposed for authorization through this IHA, which will inform both NMFS' consideration of whether the number of takes is “small” and the negligible impact determination. Harassment is the only type of take expected to result from these activities. Except with respect to certain activities not pertinent here, section 3(18) of the MMPA defines “harassment” as: Any act of pursuit, torment, or annoyance which (i) has the potential to injure a marine mammal or marine mammal stock in the wild (Level A harassment); or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering (Level B harassment).
Authorized takes would be by Level B harassment only, in the form of disruption of behavioral patterns for individual marine mammals resulting from exposure to acoustic sources. Based on the nature of the activity and the anticipated effectiveness of the mitigation measures (
As described previously, no mortality is anticipated or proposed to be authorized for this activity. Below we describe how the take is estimated.
Described in the most basic way, we estimate take by considering: (1) Acoustic thresholds above which NMFS believes the best available science indicates marine mammals will be behaviorally harassed or incur some degree of permanent hearing impairment; (2) the area or volume of water that will be ensonified above these levels in a day; (3) the density or occurrence of marine mammals within these ensonified areas; and, (4) and the number of days of activities. Below, we describe these components in more detail and present the proposed take estimate.
Using the best available science, NMFS has developed acoustic thresholds that identify the received level of underwater sound above which exposed marine mammals would be reasonably expected to be behaviorally harassed (equated to Level B harassment) or to incur PTS of some degree (equated to Level A harassment).
Level B Harassment for non-explosive sources—Though significantly driven by received level, the onset of behavioral disturbance from anthropogenic noise exposure is also informed to varying degrees by other factors related to the source (
The Navy's proposed activity includes the use of continuous (vibratory pile driving, demolition) and impulsive (impact pile driving) sources, and therefore the 120 and
Level A harassment for non-explosive sources—NMFS's Technical Guidance for Assessing the Effects of Anthropogenic Sound on Marine Mammal Hearing (NOAA 2016) identifies dual criteria to assess auditory injury (Level A harassment) to five different marine mammal groups (based on hearing sensitivity) as a result of exposure to noise from two different types of sources (impulsive or non-impulsive). The Navy's construction project includes the use of impulsive (impact pile driving) and non-impulsive (vibratory pile driving) sources.
These thresholds were developed by compiling and synthesizing the best available science and soliciting input multiple times from both the public and peer reviewers to inform the final product, and are provided in the table below. The references, analysis, and methodology used in the development of the thresholds are described in NMFS 2016 Technical Guidance, which may be accessed at:
Here, we describe operational and environmental parameters of the activity that will feed into identifying the area ensonified above the acoustic thresholds.
The intensity of pile driving or sounds is greatly influenced by factors such as the type of piles, hammers, and the physical environment in which the activity takes place. For the installation of 30-in steel piles and pile cutting activities, acoustic monitoring during the first and second IHA periods (NAVFAC 2015) resulted in empirical data that are directly applicable to the fifth IHA period in terms of the activities and the location, depth, sizes and types of piles.
Table 4 identifies the sound source levels that are used in evaluating impact and vibratory pile driving and extraction in the current IHA application. Sound levels for the hydraulic pile cutter, diamond saw caisson cutting, and pile jetting were measured during the fourth IHA period (NAVFAC SW 2017). No acoustic data are available from the vibratory driving of 16-in concrete piles, so the data for vibratory installation of 30-in steel piles from the second IHA period are used as a conservative proxy (NAVFAC SW 2015). Finally, SPLs were measured for the impact driving of 16-in poly-concrete piles during the third IHA monitoring period (NAVFAC SW 2016a), and are used in this application for the same activities.
Scarce data exists on airborne and underwater noise levels associated with vibratory hammer extraction. However, it can reasonably be assumed that vibratory extraction emits SPLs that are no higher than SPLs caused by vibratory hammering of the same materials, and results in lower SPLs than caused by impact hammering comparable piles. For this application, the same value (162.5 dB re 1μPa) that was obtained for vibratory hammering of the 30-in steel piles at the Fuel Pier (NAVFAC SW 2015) is used for the vibratory hammering of 16-in round concrete piles at NMAWC. None of the peak SPLs for the various sound sources reach the injury thresholds identified in the new NMFS (2016) Technical Guidance; therefore, injury from peak sound levels is not considered further.
Table 6 provides the calculated areas of Level A and Level B ZOIs associated with the impulsive and continuous sounds that are anticipated during the fifth-year IHA period. Table 5 provides the data that were used to calculate the distances to the Level A and B ZOIs presented in Table 6. It should be noted that the ZOI for Level A harassment would be closely monitored and subject to shutdowns if a marine mammal enters the area. The ZOI areas and maximum distances for the activities at the fuel pier and NMAWC are shown in Figures 6-1 and 6-2, respectively of the Navy's application. The figures reflect the conventional assumption that the natural or manmade shoreline acts as a barrier to underwater sound. It is generally accepted practice to model underwater sound propagation from pile driving as continuing in a straight line past a shoreline projection such as Ballast Point (Dahl 2012). Similarly, it is reasonable to assume that project sound would not propagate east of Zuniga Jetty (Dahl 2012).
All of the ZOIs for potential Level A acoustic harassment (Table 6) would be buffered and encompassed by a larger shutdown zone. For example, the ZOIs for potential Level A acoustic harassment to pinnipeds from impact pile driving (Table 6) would be contained within a 60 m (196 ft) shutdown zone. For impact pile driving at NMAWC, two methods identified in NMFS (2016) were evaluated to determine the most conservative distances to the Level A ZOIs using: (1) rms SPL source levels; and (2) single strike equivalent SEL. The calculations showed that the first method was the most conservative and this method was subsequently used to determine the distances to the Level A ZOIs (Table 5). In all Level A ZOI calculations, the default values for the weighting factor adjustment and practical spreading for propagation loss were used (see Appendix A of the Navy's application).
The Level B ZOIs and distances are based on the validated SPLs directly measured during the IHA monitoring (NAVFAC SW 2014-2017), as available. For example, the distance to the Level B ZOI for impact driving of 16-in poly-concrete piles was 270 m (886 ft) during Year 3 monitoring (NAVFAC SW 2016a). In cases where monitoring data are not available to empirically measure the extent of the Level B ZOI (activities at NMAWC), “practical spreading loss” from the source at 10 m has been assumed (15 log[distance/10]) and used to calculate the maximum extent of the ZOI based on the applicable threshold. Computed distances to the threshold for acoustic disturbance from non-impulsive sources are based on the distances at which the project sound source declines to ambient. Because the mean ambient sound levels in San Diego Bay range from approximately 128 to 130 dB rms (NAVFAC SW 2015), the 120 dB acoustic threshold for the Level B ZOIs are based on an approximate value between 128 and 129 dB. The distances for all activities producing sound at NMAWC will be verified via hydrophone during project activities.
Although sea lions are known to haul-out regularly on man-made objects in the vicinity of the project site (see Figure 4-1 of the Navy's application), and harbor seals are occasionally observed hauled out on rocks along the shoreline in the vicinity of the project site, none of these are within the ZOIs for airborne sound, and we believe that incidents of take resulting solely from airborne sound are unlikely. The zones for sea lions are within the minimum shutdown zone defined for underwater sound and, although the zones for harbor seals are larger, they have not been observed to haul out as readily on man-made structure in the immediate vicinity of the project site. There is a possibility that an animal could surface in-water, but with head out, within one of the defined zones and thereby be exposed to levels of airborne sound that we associate with harassment, but any such occurrence would likely be accounted for in our estimation of incidental take from underwater sound.
We generally recognize that pinnipeds occurring within an estimated airborne harassment zone, whether in the water or hauled out, could be exposed to airborne sound that may result in behavioral harassment. However, any animal exposed to airborne sound above the behavioral harassment threshold is likely to also be exposed to underwater sound above relevant thresholds (which are typically in all cases larger zones than those associated with airborne sound). Thus, the behavioral harassment of these animals is already accounted for in these estimates of potential take. Multiple incidents of exposure to sound above NMFS' thresholds for behavioral harassment are not believed to result in increased behavioral disturbance, in either nature or intensity of disturbance reaction. Therefore, we do not believe that authorization of incidental take resulting from airborne sound for pinnipeds is warranted, and airborne sound is not discussed further here. Distances associated with airborne sound and shown in Table 5 are for reference only.
When NMFS Technical Guidance (2016) was published, in recognition of the fact that ensonified area/volume could be more technically challenging to predict because of the duration component in the new thresholds, we developed a User Spreadsheet that includes tools to help predict a simple isopleth that can be used in conjunction with marine mammal density or occurrence to help predict takes. We note that because of some of the assumptions included in the methods used for these tools, we anticipate that isopleths produced are typically going to be overestimates of some degree, which will result in some degree of overestimate of Level A take. However, these tools offer the best way to predict appropriate isopleths when more sophisticated 3D modeling methods are not available, and NMFS continues to develop ways to quantitatively refine these tools, and will qualitatively address the output where appropriate. For stationary sources such as vibratory pile driving, NMFS User Spreadsheet predicts the closest distance at which, if a marine mammal remained at that distance the whole duration of the activity, it would not incur PTS. Inputs used in the User Spreadsheet, and the resulting isopleths are reported below.
In this section we provide the information about the presence, density, or group dynamics of marine mammals that will inform the take calculations.
For all species, the best scientific information available was considered for use in the marine mammal take assessment calculations. Although various regional offshore surveys for marine mammals have been conducted, it is unlikely that these data would be representative of the species or numbers that may be encountered in San Diego Bay. However, the Navy has conducted a large number of ongoing site-specific marine mammal surveys during appropriate seasons (
Year 2 project monitoring showed even greater abundance of certain species, and we consider all of these data in order to provide the most up-to-date estimates for marine mammal abundances during the period of this proposed IHA. Although Years 3 and 4 project monitoring showed declines in marine mammal abundance in the vicinity of the project, we retain prior density estimates as a conservative measure for estimating exposure.
Here we describe how the information provided above is brought together to produce a quantitative take estimate.
The following assumptions are made when estimating potential incidences of take:
• All marine mammal individuals potentially available are assumed to be present within the relevant area, and thus incidentally taken;
• An individual can only be taken once during a 24-h period;
• The assumed ZOIs and days of activity are as shown in Table 5; and,
• Exposures to sound levels at or above the relevant thresholds equate to take, as defined by the MMPA.
In this case, the estimation of marine mammal takes uses the following calculation:
The ZOI impact area is estimated using the relevant distances in Table 5, assuming that sound radiates from a central point in the water column slightly offshore of the existing pier and taking into consideration the possible affected area due to topographical constraints of the action area (
There are a number of reasons why estimates of potential incidents of take may be conservative, assuming that available density and estimated ZOI areas are accurate. We assume, in the absence of information supporting a more refined conclusion, that the output of the calculation represents the number of individuals that may be taken by the specified activity. In fact, in the context of stationary activities such as pile driving and in areas where resident animals may be present, this number more realistically represents the number of incidents of take that may accrue to a smaller number of individuals. While pile driving can occur any day throughout the period of validity, and the analysis is conducted on a per day basis, only a fraction of that time (typically a matter of hours on any given day) is actually spent pile driving. The potential effectiveness of mitigation measures in reducing the number of takes is typically not quantified in the take estimation process. For these reasons, these take estimates may be conservative. See Table 9 for total estimated incidents of take.
During the second IHA period, an average of 90.35 California sea lions were seen per day within the maximum ZOI for pile driving, an area of 5.6752 km
Sightings of harbor seals averaged 2.83 individuals per day during the period of the second IHA (NAVFAC SW 2015), a density of 0.4987/km
Only a single individual elephant seal was sighted during the second IHA period (NAVFAC SW 2015), but with increasing numbers (Carretta
Coastal bottlenose dolphins can occur at any time of year in northern San Diego Bay. Numbers sighted have been highly variable but have increased in recent years (NAVFAC SW 2014, 2015). During the second IHA period, an average of 7.09 individuals was seen per day, a density of 1.2493/km
An average of 8.67 common dolphins was seen per day, a density of 1.5277/km
Pacific white-sided dolphins are more commonly seen offshore, but were documented in the project area on several occasions during the second IHA period. An average of 0.28 individuals per day was seen during the second IHA period (NAVFAC SW 2015), a density of 0.0493/km
While there have been no sightings of Risso's dolphin within the project area, the species is considered a reasonable possibility for the fifth IHA period given recent El Niño conditions (Shane 1995) and its abundance in Southern California coastal waters (Jefferson
Gray whale occurrence within northern San Diego Bay is sporadic and would likely consist of one-few individuals that venture close to, or enter the bay for a brief period, and then continue on their migration. A density estimate based on the rare sightings of gray whales near the mouth of the bay during the second IHA period (NAVFAC SW 2015), would be less than 0.01/km
In order to issue an IHA under section 101(a)(5)(D) of the MMPA, NMFS must set forth the permissible methods of taking pursuant to such activity, and other means of effecting the least practicable impact on such species or stock and its habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of such species or stock for taking for certain subsistence uses (latter not applicable for this action). NMFS regulations require applicants for incidental take authorizations to include information about the availability and feasibility (economic and technological) of equipment, methods, and manner of conducting such activity or other means of effecting the least practicable adverse impact upon the affected species or stocks and their habitat (50 CFR 216.104(a)(11)).
In evaluating how mitigation may or may not be appropriate to ensure the least practicable adverse impact on species or stocks and their habitat, as well as subsistence uses where applicable, we carefully consider two primary factors:
(1) The manner in which, and the degree to which, the successful implementation of the measure(s) is expected to reduce impacts to marine mammals, marine mammal species or stocks, and their habitat. This considers the nature of the potential adverse impact being mitigated (likelihood, scope, range). It further considers the likelihood that the measure will be effective if implemented (probability of accomplishing the mitigating result if implemented as planned) the likelihood of effective implementation (probability implemented as planned). And;
(2) The practicability of the measures for applicant implementation, which may consider such things as cost, impact on operations, and, in the case of a military readiness activity, personnel safety, practicality of implementation, and impact on the effectiveness of the military readiness activity.
The mitigation strategies described below largely follow those required and successfully implemented under the first four IHAs associated with this project. For this proposed IHA, data from acoustic monitoring conducted during the first four years of work was used to estimate zones of influence (ZOIs; see
The following measures would apply to the Navy's mitigation through shutdown and disturbance zones:
In order to document observed incidents of harassment, monitors record all marine mammal observations, regardless of location. The observer's location, as well as the location of the pile being driven, is known from a GPS. The location of the animal is estimated as a distance from the observer, which is then compared to the location from the pile. If acoustic monitoring is being conducted for that pile, a received SPL may be estimated, or the received level may be estimated on the basis of past or subsequent acoustic monitoring. It may then be determined whether the animal was exposed to sound levels constituting incidental harassment in post-processing of observational and acoustic data, and a precise accounting of observed incidences of harassment created. Therefore, although the predicted distances to behavioral harassment thresholds are useful for estimating incidental harassment for purposes of authorizing levels of incidental take, actual take may be determined in part through the use of empirical data.
Acoustic measurements will continue during the fifth year of project activity and zones would be adjusted as indicated by empirical data. Please see the Navy's Acoustic and Marine Species Monitoring Plan (Monitoring Plan; available at
The following additional measures apply to visual monitoring:
(1) Monitoring will be conducted by qualified observers, who will be placed at the best vantage point(s) practicable (as defined in the Monitoring Plan) to monitor for marine mammals and implement shutdown/delay procedures when applicable by calling for the shutdown to the hammer operator. Qualified observers are trained biologists, with the following minimum qualifications:
(a) Visual acuity in both eyes (correction is permissible) sufficient for discernment of moving targets at the water's surface with ability to estimate target size and distance; use of binoculars may be necessary to correctly identify the target;
(b) Ability to conduct field observations and collect data according to assigned protocols;
(c) Experience or training in the field identification of marine mammals, including the identification of behaviors;
(d) Sufficient training, orientation, or experience with the construction operation to provide for personal safety during observations;
(e) Writing skills sufficient to prepare a report of observations including but not limited to the number and species of marine mammals observed; dates and times when in-water construction activities were conducted; dates and times when in-water construction activities were suspended to avoid potential incidental injury from construction sound of marine mammals observed within a defined shutdown zone; and marine mammal behavior; and
(f) Ability to communicate orally, by radio or in person, with project personnel to provide real-time information on marine mammals observed in the area as necessary.
(2) Prior to the start of pile driving activity, the shutdown zone will be monitored for fifteen minutes to ensure that it is clear of marine mammals. Pile driving will only commence once observers have declared the shutdown zone clear of marine mammals; animals will be allowed to remain in the shutdown zone (
(3) If a marine mammal approaches or enters the shutdown zone during the course of pile driving operations, activity will be halted and delayed until either the animal has voluntarily left and been visually confirmed beyond the shutdown zone or fifteen minutes have passed without re-detection of small cetaceans or pinnipeds and 30 minutes for gray whales. Monitoring will be conducted throughout the time required to drive a pile and for thirty minutes following the conclusion of pile driving.
The use of bubble curtains to reduce underwater sound from impact pile driving was considered prior to the start of the project but was determined to not be practicable. Use of a bubble curtain in a channel with substantial current may not be effective, as unconfined bubbles are likely to be swept away and confined curtain systems may be difficult to deploy effectively in high currents. Data gathered during monitoring of construction on the San Francisco-Oakland Bay Bridge indicated that no reduction in the overall linear sound level resulted from use of a bubble curtain in deep water with relatively strong current (Illingworth & Rodkin 2001). During project monitoring for pile driving associated with the Richmond-San Rafael Bridge, also in San Francisco Bay, it was observed that performance in moderate current was significantly reduced (Oestman
In-order to avoid impacts to least tern populations when they are most likely to be foraging and nesting, in-water work will be concentrated from October 1-April 1 or, depending on circumstances, to April 30. However, this limitation is in accordance with agreements between the Navy and FWS, and is not a requirement of this proposed IHA. All in-water construction activities would occur only from 45 minutes after sunrise to 45 minutes before sunset.
The use of a soft start procedure is believed to provide additional protection to marine mammals by warning or providing a chance to leave the area prior to the hammer operating at full capacity, and typically involves a requirement to initiate sound from the hammer at reduced energy followed by a waiting period. This procedure is repeated two additional times. It is difficult to specify the reduction in energy for any given hammer because of variation across drivers and, for impact hammers, the actual number of strikes at reduced energy will vary because operating the hammer at less than full power results in “bouncing” of the hammer as it strikes the pile, resulting in multiple “strikes.” The project will utilize soft start techniques for impact pile driving. We require an initial set of three strikes from the impact hammer at reduced energy, followed by a thirty-second waiting period, then two subsequent three strike sets. Soft start will be required at the beginning of each day's impact pile driving work and at any time following a cessation of impact pile driving of thirty minutes or longer; the requirement to implement soft start for impact driving is independent of whether vibratory driving has occurred within the prior thirty minutes.
Based on our evaluation of the Navy's proposed measures, as well as any other potential measures that may be relevant to the specified activity, we have preliminarily determined that the proposed mitigation measures provide the means of effecting the least practicable impact on marine mammal species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance.
In order to issue an IHA for an activity, section 101(a)(5)(D) of the MMPA states that NMFS must set forth “requirements pertaining to the monitoring and reporting of such taking.” The MMPA implementing regulations at 50 CFR 216.104(a)(13) indicate that requests for incidental take authorizations must include the suggested means of accomplishing the necessary monitoring and reporting that will result in increased knowledge of the species and of the level of taking or impacts on populations of marine mammals that are expected to be present in the proposed action area. Effective reporting is critical both to compliance as well as ensuring that the most value is obtained from the required monitoring.
Monitoring and reporting requirements prescribed by NMFS should contribute to improved understanding of one or more of the following:
• Occurrence of marine mammal species or stocks in the area in which take is anticipated (
• Nature, scope, or context of likely marine mammal exposure to potential stressors/impacts (individual or cumulative, acute or chronic), through better understanding of: (1) Action or environment (
• Individual marine mammal responses (behavioral or physiological) to acoustic stressors (acute, chronic, or cumulative), other stressors, or impacts from multiple stressors.
• How anticipated responses to stressors impact either: (1) Long-term fitness and survival of an individual; or (2) Population, species, or stock.
• Effects on marine mammal habitat (
• Mitigation and monitoring effectiveness.
Please see the Monitoring Plan (available at
• Monitor in-water construction activities, including the implementation of in-situ acoustic monitoring efforts to
• Monitor marine mammal occurrence and behavior during in-water construction activities to minimize marine mammal impacts and effectively document marine mammals occurring within ZOI boundaries.
Collection of ambient underwater sound measurements in the absence of project activities has been concluded, as a rigorous baseline dataset for the project area has been developed.
The primary purpose of acoustic monitoring is to empirically verify modeled injury and behavioral disturbance zones (defined at radial distances to NMFS-specified thresholds; see
Should monitoring results indicate it is appropriate to do so, marine mammal mitigation zones may be revised as necessary to encompass actual ZOIs. Acoustic monitoring will be conducted as specified in the approved Monitoring Plan. Please see Table 2-2 of the Plan for a list of equipment to be used during acoustic monitoring. Monitoring locations will be determined based on results of previous acoustic monitoring effort and the best professional judgment of acoustic technicians.
For activities such as demolition of the old fuel pier and temporary mooring dolphin, the Navy will continue to collect in situ acoustic data to validate source levels and ZOIs. Environmental data would be collected including but not limited to: Wind speed and direction, air temperature, humidity, surface water temperature, water depth, wave height, weather conditions and other factors that could contribute to influencing the airborne and underwater sound levels (
The Navy will collect sighting data and behavioral responses to construction for marine mammal species observed in the region of activity during the period of activity. All observers will be trained in marine mammal identification and behaviors and are required to have no other construction-related tasks while conducting monitoring. The Navy will monitor the shutdown zone and disturbance zone before, during, and after pile driving as described under
• MMOs would be located at the best vantage point(s) in order to properly see the entire shutdown zone and as much of the disturbance zone as possible.
• During all observation periods, observers will use binoculars and the naked eye to search continuously for marine mammals.
• If the shutdown zones are obscured by fog or poor lighting conditions, pile driving at that location will not be initiated until that zone is visible. Should such conditions arise while impact driving is underway, the activity would be halted.
• The shutdown and disturbance zones around the pile will be monitored for the presence of marine mammals before, during, and after any pile driving or removal activity.
One MMO will be placed in the most effective position near the active construction/demolition platform in order to observe the respective shutdown zones for vibratory and impact pile driving or for applicable demolition activities. Monitoring would be primarily dedicated to observing the shutdown zone; however, MMOs would record all marine mammal sightings beyond these distances provided it did not interfere with their effectiveness at carrying out the shutdown procedures. Additional land, pier, or vessel-based MMOs will be positioned to monitor the shutdown zones and the buffer zones, as notionally indicated in Figures 3-3 and 3-4 of the Navy's application.
For all pile driving and applicable demolition activities, a minimum of one observer shall monitor the shutdown zones. However, any action requiring the impact or vibratory hammer will necessitate two MMOs. For impact and vibratory pile driving of 16-in concrete piles, two observers shall be positioned for optimal monitoring of the surrounding waters.
The MMOs will record all visible marine mammal sightings. Confirmed takes will be registered once the sightings data has been overlaid with the isopleths identified in Table 5 and visualized in Figures 6-2, 6-3, and 6-4 of the Navy's application, or based on refined acoustic data, if amendments to the ZOIs are needed. Acousticians on duty may be noting SPLs in real-time, but, to avoid biasing the observations, will not communicate that information directly to the MMOs. These platforms may move closer to, or farther from, the source depending on whether received SPLs are less than or greater than the regulatory threshold values. All MMOs will be in radio communication with each other so that the MMOs will know when to anticipate incoming marine mammal species and when they are tracking the same animals observed elsewhere.
If any species for which take is not authorized is observed by a MMO during applicable construction or demolition activities, all construction will be stopped immediately. Pile driving will commence if the animal has not been seen inside the Level B ZOI for at least one hour of observation. If the animal is resighted again, pile driving will be stopped and a boat-based MMO (if available) will follow the animal until it has left the Level B ZOI. If the animal is resighted again, pile driving will be stopped and a boat-based MMO (if available) will follow the animal until it has left the Level B ZOI.
Individuals implementing the monitoring protocol will assess its effectiveness using an adaptive approach. Monitoring biologists will use their best professional judgment throughout implementation and seek improvements to these methods when deemed appropriate. Any modifications to protocol will be coordinated between NMFS and the Navy.
We require that observers use approved data forms. Among other
• Date and time that monitored activity begins or ends;
• Construction activities occurring during each observation period;
• Weather parameters (
• Water conditions (
• Species, numbers, and, if possible, sex and age class of marine mammals;
• Description of any observable marine mammal behavior patterns, including bearing and direction of travel and distance from pile driving activity, and if possible, the correlation to measured SPLs;
• Distance from pile driving activities to marine mammals and distance from the marine mammals to the observation point;
• Description of implementation of mitigation measures (
• Locations of all marine mammal observations; and
• Other human activity in the area.
In addition, photographs would be taken of any gray whales observed. These photographs would be submitted to NMFS' West Coast Regional Office for comparison with photo-identification catalogs to determine whether the whale is a member of the WNP population.
A draft report would be submitted to NMFS within 45 calendar days of the completion of marine mammal monitoring, or 60 days prior to the issuance of any subsequent IHA for this project, whichever comes first. The report will include marine mammal observations pre-activity, during-activity, and post-activity during pile driving days, and will also provide descriptions of any behavioral responses to construction activities by marine mammals and a complete description of all mitigation shutdowns and the results of those actions. A final report would be prepared and submitted within thirty days following resolution of comments on the draft report. Required contents of the monitoring reports are described in more detail in the Navy's Acoustic and Marine Species Monitoring Plan.
The Navy complied with the mitigation and monitoring required under the previous authorizations for this project. Acoustic and marine mammal monitoring was implemented as required, with marine mammal monitoring occurring before, during, and after each pile driving event. During the course of Year 4 activities, the Navy did not exceed the take levels authorized under the IHA (please see the Navy's monitoring report for more details and below for further discussion).
The general objectives of the monitoring plan were similar to those described above for the Year 5 monitoring plan. For acoustic monitoring, the primary goal was to continue to collect in situ data towards validation of the acoustic ZOIs defined based on previous data collection efforts and using the transmission loss modeling effort conducted prior to the start of the project, and to continue collection of data on background noise conditions in San Diego Bay.
For acoustic monitoring associated with impact pile driving, continuous hydroacoustic monitoring systems were positioned at source (10 m from the pile) and opportunistically at predicted 160-dB Level B ZOIs. The far-field data collections were conducted at multiple locations during impact driving of 16-in concrete-filled poly piles and 24 x 30-in concrete fender piles,
SPLs of pile driving and demolition activities conducted during Year 2 fell within expected levels but varied spatially relative to the existing fuel pier structure and maximum source levels for individual piles (Table 11). For both vibratory and impact pile driving methods, results from the IPP (Year 1) and 2014/2015 production pile driving (Year 2) showed that transmission loss for piles driven in shallow water inside of the existing fuel pier was greater than piles driven in deep water outside of the existing pier. Differences in depth, sediment type, and existing in-water pier/wharf structures likely accounted for variations in transmission loss and measured differences in SPLs recorded at the shutdown and far-field locations for shallow versus deep piles of the same type and size. SPLs documented during vibratory and impact pile driving of shallow and deep steel pipe piles of the same size displayed notable differences in SPLs at shutdown range and to a lesser extent at source.
Measurements of impact driving of concrete piles conducted during Year 3 produced greater than expected SPLs at source. Differences in the subsurface conditions may account for the discrepancy, as a hardened layer is found at approximately 20-40 m below the mudline. SPLs documented during driving of 16-in piles generally displayed relatively low sound source levels during initial driving then appreciable increases observed once the piles interacted with this layer. Measurements from driving of the square concrete piles showed greatest sound source levels during initial impact pile driving, which then decreased once the piles transitioned through the hardened layer. While source SPLs were observed to be greater than expected for both pile types, attenuation was also greater. Despite greater than expected source levels, the measured isopleth distances were similar to modeled predictions. Far-field impact pile driving results varied substantially between piles and locations for the various pile sizes, types, and locations. Both pile types were driven adjacent to the new fuel pier and source SPLs were subject to a wide variety of boundary conditions from recently driven piles and associated pier infrastructure. Further detail and discussion is provided in the Navy's report.
During Year 4, measurements were conducted for pile clipping, caisson cutting, pile jetting, and airborne vibratory and impact driving. The average SPLs for pile clipping at source ranged from 138.0 to 144.6 dB rms, with maximum SPLs at source ranging from
Caisson demolition was conducted on 18 84-in concrete-filled caissons, with an average duration of approximately 6 hours per caisson. Underwater acoustic data was collected for seven caissons using the vibratory setting. For some of the recordings, there were two caissons being cut simultaneously and the acousticians captured the SPLs for comparison between a single cutter versus two cutters. If two cutters were running, the distance measured was from the closest caisson to the location. Average SPLs at source for a single cutter were 136.1 and 141.4 dB rms. Maximum SPLs at source for a single cutter were 140.9 and 146.5 dB rms. Average SPLs at source for two cutters running simultaneously were 146.5 and 149.0 dB rms. Maximum SPLs at source for two cutters running simultaneously were 149.0 and 155.6 dB rms. On average, there was a 10 dB difference between a single cutter and two at source. Far-field recordings for a single cutter were collected at far-field locations ranging from 20 to 430 m (66 to 1,411 ft), with documented maximum SPL values from 136.6 to 145.5 dB rms. Far-field recordings for two cutters were also collected at far-field locations ranging from 85 to 810 m (279 to 2,657 ft), with documented maximum SPL values from 133.2 to 146.8 dB rms.
SPLs of pile installation activities for the 24 x 30 concrete piles had not been previously documented. The only jetting data collected during the Project was at NMAWC during the removal of 12-inch and 16-inch concrete piles. A total of sixteen 24 x 30 concrete non-structural fender piles were driven using two techniques: (1) Method 1 (M1) utilized a custom-made spud jet with four nozzles welded to the tip that used a high-pressure water system (900 gallons per minute with a maximum pounds per square inch [psi] of 300), to make the initial break through the bay point formation sediment layer; and (2) Method 2 (M2) used the 24 x 30 pile, outfitted with two pipes inside the full length of the pile, which then used a high-pressure water system (maximum psi of 300) to remove sediment and place the pile. Pile jetting averaged 24.5 minutes per pile and acoustic recordings were collected for the entire duration. Collection of underwater acoustic data were completed on six piles using the vibratory setting. For M1, the average sound pressure levels (SPL) at source ranged from 152.6 dB rms to 155.1 dB rms, and maximum SPLs at source ranged from 156.5 dB rms to 159.9 dB rms. For M2, the average SPL at source ranged from 133.0 dB to 149.8 dB and maximum SPLs at source ranged from 137.1 dB to 153.2 dB rms. A vessel based drift method was used to obtain far-field recordings during M1 and M2 jetting techniques; the vessel was initially positioned at the closest feasible distance to source, and then the allowed to drift on the natural tidal current until near ambient sound pressure levels were obtained. The SPLs at far-field for the first drift during jetting M1 reached near ambient at 165 m (541 ft) from pile with an SPL of 128.0 dB. The SPLs at far-field for the first drift during pile jetting M2 reached near ambient at 80 m (262 ft) from pile with an SPL of 127.6 dB. Recordings during the vessel drifts showed that jetting reached near ambient levels for both methods between 80 m (262 ft) and 165 m (541 ft; M1 and M2, respectively).
Airborne sound levels were recorded during vibratory pile driving on fourteen 30-inch steel piles. The maximum recorded airborne dB rms values at source was 106.3 dB re 20 μPa, and average values ranged from 96.0 to 102.7 dB re 20 μPa. Airborne sound levels were recorded during impact pile driving on sixteen 30-inch steel piles. The maximum recorded airborne dB values at source was 118.5 dB re 20 μPa, and average values ranged from 105.8 to 112.5 dB re 20 μPa. Further detail and discussion is provided in the Navy's report.
Monitoring results are presented in Table 12. The Navy recorded all observations of marine mammals, including pre- and post-construction monitoring efforts. Animals observed during these periods or that were determined to be outside relevant ZOIs were not considered to represent incidents of take. Please see Figures 3-11, 3-12, 3-22, 3-23, 3-30, and 3-31 of the Navy's Monitoring Report for locations of observations and incidents of take relative to the project sites. Take authorization for the second-year authorization was informed by an assumption that 115 days of in-water construction would occur, whereas only
There were considerably fewer individuals and sightings during the Year 3 IHA when compared to the same months during the Year 2 IHA, and only three species were observed. This may be due to environmental fluctuations as part of the on-going El Niño event. Water temperatures during Year 3 were warmer than during the same months during Year 2. Although the temperatures were still higher than the average water temperatures for the region prior to the current El Niño event, it shows that the event may have been dissipating. In addition, California sea lion strandings decreased. No evidently significant behavioral changes were reported.
Similar to Year 3, there were considerably fewer individuals and sightings during the Year 4 IHA when compared to the same months during the Year 2 IHA, and only four species were observed. This may be due to environmental fluctuations as part of the on-going El Niño event. Water temperatures during Year 4 were slightly warmer than during the same months during Year 2. Although the temperatures were still higher than the average water temperatures for the region prior to the current El Niño event, it shows that the event may have been dissipating. In addition, California sea lion strandings decreased, but may be returning to numbers more commonly observed. No evidently significant behavioral changes were reported.
NMFS has defined negligible impact in 50 CFR 216.103 as an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival. A negligible impact finding is based on the lack of likely adverse effects on annual rates of recruitment or survival (
Construction and demolition activities associated with the pier replacement project, as outlined previously, have the potential to disturb or displace marine mammals. Specifically, the specified activities may result in take, in the form of Level B harassment (behavioral disturbance) only, from underwater sounds generated from pile driving. Potential takes could occur if individuals of these species are present in the ensonified zone when pile driving or removal is happening.
No injury, serious injury, or mortality is anticipated given the nature of the activity and measures designed to minimize the possibility of injury to marine mammals. The potential for these outcomes is minimized through the construction method and the implementation of the planned mitigation measures. Impact pile driving produces short, sharp pulses with higher peak levels and much sharper rise time to reach those peaks. When impact driving is necessary, required measures (implementation of buffered shutdown zones) significantly reduce any possibility of injury. Given sufficient “notice” through use of soft start (for impact driving), marine mammals are expected to move away from a sound source that is annoying prior to its becoming potentially injurious. The likelihood that marine mammal detection ability by trained observers is high under the environmental conditions described for San Diego Bay (approaching 100 percent detection rate, as described by trained biologists conducting site-specific surveys) further enables the implementation of shutdowns to avoid injury, serious injury, or mortality.
Effects on individuals that are taken by Level B harassment, on the basis of reports in the literature as well as monitoring from past years of this project and other similar activities, will likely be limited to reactions such as increased swimming speeds, increased surfacing time, or decreased foraging (if such activity were occurring) (
In summary and as described above, the following factors primarily support our preliminary determination that the impacts resulting from this activity are not expected to adversely affect the species or stock through effects on annual rates of recruitment or survival:
• No mortality is anticipated or authorized;
• The anticipated incidents of Level B harassment consist of, at worst, temporary modifications in behavior;
• The absence of any significant habitat within the project area, including rookeries, significant haul-outs, or known areas or features of special significance for foraging or reproduction; and
• The presumed efficacy of the proposed mitigation measures in reducing the effects of the specified activity to the level of least practicable impact.
Based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the proposed monitoring and mitigation measures, NMFS preliminarily finds that the total marine mammal take from the proposed activity will have a negligible impact on all affected marine mammal species or stocks.
As noted above, only small numbers of incidental take may be authorized under Section 101(a)(5)(D) of the MMPA for specified activities other than military readiness activities. The MMPA does not define small numbers and so, in practice, where estimated numbers are available, NMFS compares the number of individuals taken to the most appropriate estimation of abundance of the relevant species or stock in our determination of whether an authorization is limited to small numbers of marine mammals. Additionally, other qualitative factors may be considered in the analysis, such as the temporal or spatial scale of the activities.
The number of incidents of take proposed for authorization for these stocks, with the exception of the coastal bottlenose dolphin (see below), would be considered small relative to the relevant stocks or populations (see Table 9) even if each estimated taking occurred to a new individual. This is an extremely unlikely scenario as, for pinnipeds occurring at the NBPL waterfront, there will almost certainly be some overlap in individuals present day-to-day and in general, there is likely to be some overlap in individuals present day-to-day for animals in estuarine/inland waters.
The proposed numbers of authorized take for bottlenose dolphins are higher relative to the total stock abundance estimate and would not represent small numbers if a significant portion of the take was for a new individual. However, these numbers represent the estimated incidents of take, not the number of individuals taken. That is, it is likely that a relatively small subset of California coastal bottlenose dolphins would be incidentally harassed by project activities. California coastal bottlenose dolphins range from San Francisco Bay to San Diego (and south into Mexico) and the specified activity would be stationary within an enclosed water body that is not recognized as an area of any special significance for coastal bottlenose dolphins (and is therefore not an area of dolphin aggregation, as evident in Navy observational records). We therefore believe that the estimated numbers of takes, were they to occur, likely represent repeated exposures of a much smaller number of bottlenose dolphins and that, based on the limited region of exposure in comparison with the known distribution of the coastal bottlenose dolphin, these estimated incidents of take represent small numbers of bottlenose dolphins.
Based on the analysis contained herein of the proposed activity (including the proposed mitigation and monitoring measures) and the anticipated take of marine mammals, NMFS preliminarily finds that small numbers of marine mammals will be taken relative to the population size of the affected species or stocks.
There are no relevant subsistence uses of the affected marine mammal stocks or species implicated by this action. Therefore, NMFS has preliminarily determined that the total taking of affected species or stocks would not have an unmitigable adverse impact on the availability of such species or stocks for taking for subsistence purposes.
Section 7(a)(2) of the Endangered Species Act of 1973 (ESA: 16 U.S.C. 1531
The Navy initiated informal consultation under section 7 of the ESA with NMFS Southwest Regional Office (now West Coast Regional Office) on March 5, 2013. NMFS concluded on May 16, 2013, that the proposed action may affect, but is not likely to adversely affect, WNP gray whales. The Navy has not requested authorization of the incidental take of WNP gray whales and no such authorization is proposed, and there are no other ESA-listed marine mammals found in the action area. Therefore, no consultation under the ESA is required.
As a result of these preliminary determinations, NMFS proposes to issue an IHA to the Navy for conducting the described pier replacement activities in San Diego Bay, for a period of one year from the date of issuance, provided the previously mentioned mitigation, monitoring, and reporting requirements are incorporated. This section contains a draft of the IHA itself. The wording contained in this section is proposed for inclusion in the IHA (if issued).
1. This Incidental Harassment Authorization (IHA) is valid from October 8, 2017, through October 7, 2018.
2. This IHA is valid only for pile driving and removal activities associated with the Fuel Pier Replacement Project at the Naval Station Point Loma in San Diego Bay, California.
3. General Conditions
(a) A copy of this IHA must be in the possession of the Navy, its designees, and work crew personnel operating under the authority of this IHA.
(b) The species authorized for taking are the harbor seal (
(c) The taking, by Level B harassment only, is limited to the species listed in condition 3(b). See Table 1 for numbers of take authorized.
(d) The taking by injury (Level A harassment), serious injury, or death of any of the species listed in condition 3(b) of the Authorization or any taking of any other species of marine mammal is prohibited and may result in the modification, suspension, or revocation of this IHA.
(e) The Navy shall conduct briefings between construction supervisors and crews, marine mammal monitoring team, acoustic monitoring team, and Navy staff prior to the start of all pile driving activity, and when new personnel join the work, in order to explain responsibilities, communication procedures, marine mammal monitoring protocol, and operational procedures.
4. Mitigation Measures
The holder of this Authorization is required to implement the following mitigation measures:
(a) For all pile driving, the Navy shall implement a minimum shutdown zone of 10 m radius around the pile. If a marine mammal comes within or approaches the shutdown zone, such operations shall cease. See Table 2 for minimum radial distances required for shutdown zones.
(b) The Navy shall shutdown activity as appropriate upon observation of any species for which take is not authorized. Activity shall not be resumed until those species have been observed to leave the relevant zone or until one hour has elapsed.
(c) The Navy shall deploy marine mammal observers as described below and as indicated in the Acoustic and Marine Species Monitoring Plan (Monitoring Plan; attached).
i. For all pile driving and applicable demolition activities, a minimum of one observer shall monitor the shutdown zones. However, any action requiring the impact or vibratory hammer will necessitate two MMOs.
ii. For impact and vibratory pile driving of 16-in concrete piles, two observers shall be positioned for optimal monitoring of the surrounding waters.
iii. These observers shall record all observations of marine mammals, regardless of distance from the pile being driven, as well as behavior and potential behavioral reactions of the animals.
iv. All observers shall be equipped for communication of marine mammal observations amongst themselves and to other relevant personnel (
(d) Monitoring shall take place from fifteen minutes prior to initiation of pile driving activity through thirty minutes post-completion of pile driving activity. Pre-activity monitoring shall be conducted for fifteen minutes to ensure that the shutdown zone is clear of marine mammals, and pile driving may commence when observers have declared the shutdown zone clear of marine mammals. In the event of a delay or shutdown of activity resulting from marine mammals in the shutdown zone, animals shall be allowed to remain in the shutdown zone (
(e) If a marine mammal approaches or enters the shutdown zone, all pile driving activities at that location shall be halted. If pile driving is halted or delayed due to the presence of a marine mammal, the activity may not commence or resume until either the animal has voluntarily left and been visually confirmed beyond the shutdown zone or 30 minutes have passed without re-detection of gray whales or 15 minutes for all other animals.
(f) Monitoring shall be conducted by qualified observers, as described in the Monitoring Plan. Trained observers shall be placed from the best vantage point(s) practicable to monitor for marine mammals and implement shutdown or delay procedures when applicable through communication with the equipment operator.
(g) The Navy shall use soft start techniques recommended by NMFS for impact pile driving. Soft start for impact drivers requires contractors to provide an initial set of strikes at reduced energy, followed by a thirty-second waiting period, then two subsequent reduced energy strike sets. Soft start shall be implemented at the start of each day's impact pile driving and at any time following cessation of impact pile driving for a period of 30 minutes or longer.
(h) Pile driving shall only be conducted during daylight hours.
5. Monitoring
The holder of this Authorization is required to conduct marine mammal monitoring during pile driving activity. Marine mammal monitoring and reporting shall be conducted in accordance with the Monitoring Plan.
(a) The Navy shall collect sighting data and behavioral responses to pile driving for marine mammal species observed in the region of activity during the period of activity. All observers shall be trained in marine mammal identification and behaviors, and shall have no other construction-related tasks while conducting monitoring.
(b) For all marine mammal monitoring, the information shall be recorded as described in the Monitoring Plan.
(c) The Navy shall conduct acoustic monitoring for representative scenarios of pile driving activity, as described in the Monitoring Plan.
6. Reporting
The holder of this Authorization is required to:
(a) Submit a draft report on all monitoring conducted under the IHA within 45 calendar days of the completion of marine mammal and acoustic monitoring, or 60 days prior to the issuance of any subsequent IHA for this project, whichever comes first. A final report shall be prepared and submitted within thirty days following resolution of comments on the draft report from NMFS. This report must contain the informational elements described in the Monitoring Plan, at minimum (see attached), and shall also include:
i. Detailed information about any implementation of shutdowns, including the distance of animals to the pile and description of specific actions that ensued and resulting behavior of the animal, if any.
ii. Description of attempts to distinguish between the number of individual animals taken and the number of incidences of take, such as ability to track groups or individuals.
iii. Results of acoustic monitoring, including the information described in in the Monitoring Plan.
(b) Reporting injured or dead marine mammals:
i. In the unanticipated event that the specified activity clearly causes the take of a marine mammal in a manner prohibited by this IHA, such as an injury (Level A harassment), serious injury, or mortality, Navy shall immediately cease the specified activities and report the incident to the Office of Protected Resources, NMFS, and the West Coast Regional Stranding Coordinator, NMFS. The report must include the following information:
A. Time and date of the incident;
B. Description of the incident;
C. Environmental conditions (
D. Description of all marine mammal observations in the 24 hours preceding the incident;
E. Species identification or description of the animal(s) involved;
F. Fate of the animal(s); and
G. Photographs or video footage of the animal(s).
Activities shall not resume until NMFS is able to review the circumstances of the prohibited take. NMFS will work with Navy to determine what measures are necessary to minimize the likelihood of further prohibited take and ensure MMPA compliance. Navy may not resume their activities until notified by NMFS.
i. In the event that Navy discovers an injured or dead marine mammal, and the lead observer determines that the cause of the injury or death is unknown and the death is relatively recent (
The report must include the same information identified in 6(b)(i) of this IHA. Activities may continue while NMFS reviews the circumstances of the incident. NMFS will work with Navy to determine whether additional mitigation measures or modifications to the activities are appropriate.
ii. In the event that Navy discovers an injured or dead marine mammal, and the lead observer determines that the injury or death is not associated with or related to the activities authorized in the IHA (
7. This Authorization may be modified, suspended or withdrawn if the holder fails to abide by the conditions prescribed herein, or if the authorized taking is having more than a negligible impact on the species or stock of affected marine mammals.
We request comment on our analysis, the draft authorization, and any other aspect of this Notice of Proposed IHA for Navy's pier replacement activities. Please include with your comments any supporting data or literature citations to help inform our final decision on Navy's request for an MMPA authorization.
Commodity Futures Trading Commission.
Notice.
The Commodity Futures Trading Commission (“Commission” or “CFTC”) is announcing an opportunity for public comment on the extension of a proposed collection of certain information by the agency. In compliance with the Paperwork Reduction Act of 1995, Federal agencies are required to publish notice in the
Comments must be submitted on or before October 3, 2017.
You may submit comments, identified by OMB Control No. 3038-0059 by any of the following methods:
• The Agency's Web site, at
•
•
•
All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to
David Steinberg, Associate Director, Division of Market Oversight, Commodity Futures Trading Commission, (202) 418-5102; email:
Under the PRA, Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of Information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3 and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA, 44 U.S.C. 3506(c)(2)(A), requires Federal agencies to provide a 60-day notice in the
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for the CFTC's regulations were published on December 30, 1981. See 46 FR 63035 (Dec. 30, 1981).
The Commission would like to solicit comments to:
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information will have a practical use;
• Evaluate the accuracy of the Commission's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, usefulness, and clarity of the information to be collected; and
• Minimize the burden of collection of information on those who are to respond, including through the use of appropriate automated electronic, mechanical, or other technological collection techniques or other forms of information technology;
The regulations require no new start-up or operations and maintenance costs.
30-Day information collection notice.
The Department of Defense has submitted to OMB for clearance, the following proposal for collection of information under the provisions of the Paperwork Reduction Act.
Consideration will be given to all comments received by September 5, 2017.
Comments and recommendations on the proposed information collection should be emailed to Ms. Jasmeet Seehra, DoD Desk Officer, at
Fred Licari, 571-372-0493, or
You may also submit comments and recommendations, identified by Docket ID number and title, by the following method:
•
Written requests for copies of the information collection proposal should be sent to Mr. Licari at WHS/ESD Directives Division, 4800 Mark Center Drive, East Tower, Suite 03F09, Alexandria, VA 22350-3100.
Under Secretary of Defense for Personnel and Readiness, DoD.
Notice of Federal Advisory Committee meeting.
The Department of Defense (DoD) is publishing this notice to announce that the following Federal Advisory Committee meeting of the Department of Defense Military Family Readiness Council will take place.
This meeting is open to the public and will be held on Tuesday, August 29, 2017 from 1:00 p.m. to 3:00 p.m.
1155 Defense Pentagon PLC2 Pentagon Library and Conference Center, Room B6, Washington, DC 20301.
Ms. Melody McDonald or Dr. Randy Eltringham, (571) 372-0880 (Voice); (571) 372-5315 (Voice); (571) 372-0884 (Facsimile); OSD Pentagon OUSD P-R Mailbox Family Readiness Council,
This meeting is being held under the provisions of the Federal Advisory Committee Act (FACA) of 1972 (5 U.S.C., Appendix, as amended), the Government in the Sunshine Act of 1976 (5 U.S.C. 552b, as amended), and 41 CFR 102-3.140 and 102-3.150.
Welcome & Administrative Remarks.
Review of Written Public Submissions.
Review of Military Family Readiness Related Policy Issuances.
Presentation and Voting on MFRC Recommendations for the Secretary of Defense.
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Extension of waiver.
The U.S. Department of Energy (“DOE”) is granting a waiver extension (Case No. RF-047) to Panasonic Appliances Refrigeration Systems Corporation of America (“PAPRSA”) to waive the requirements of the DOE refrigerator and refrigerator-freezer test procedures for determining the energy consumption of a specific combination cooler-refrigerator basic model, PR5181WBC. Under this extension, PAPRSA is required to test and rate this basic model in accordance with the applicable DOE test procedure, with the exception that it must calculate energy consumption using a correction factor (“K-factor”) of 0.85.
This extension of waiver applies starting on August 4, 2017.
Mr. Bryan Berringer, U.S. Department of Energy, Building Technologies Program, Mailstop EE-2J, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-0371, Email:
Mr. Michael Kido, U.S. Department of Energy, Office of the General Counsel, Mail Stop GC-33, Forrestal Building, 1000 Independence Avenue SW., Washington, DC 20585-0103. Telephone: (202) 586-8145. Email:
In accordance with 10 CFR 430.27(g), DOE gives notice of the issuance of its extension of waiver as set forth below. The extension of waiver grants PAPRSA a waiver from the applicable consumer refrigerator and refrigerator-freezer test procedures found in 10 CFR part 430, subpart B, appendix A for combination cooler-refrigerator basic model, PR5181WBC, provided that PAPRSA tests and rates the basic model using the alternate test procedure described in this notice. This extension prohibits PAPRSA from making representations concerning the energy efficiency of these products unless the product has been tested in a manner consistent with the provisions and restrictions in the alternate test procedure set forth in the extension below, and the representations fairly disclose those test results. Distributors, retailers, and private labelers are held to the same standard when making representations regarding the energy efficiency of these products. 42 U.S.C. 6293(c).
Title III, Part B of the Energy Policy and Conservation Act of 1975, as amended (“EPCA”) (42 U.S.C. 6291-6309) established the Energy Conservation Program for Consumer Products Other Than Automobiles, a program that includes consumer refrigerators and refrigerator-freezers.
The regulations set forth in 10 CFR 430.27 contain provisions that allow a person to seek a waiver from the test procedure requirements for a particular basic model of a type of covered product when the petitioner's basic model for which the petition for waiver was submitted contains one or more design characteristics that: (1) Prevent testing
A petitioner may request that DOE extend the scope of a waiver or an interim waiver to include additional basic models employing the same technology as the basic model(s) set forth in the original petition. DOE will publish any such extension in the
DOE issued a Decision and Order, in Case No. RF-022, granting PAPRSA
On May 3, 2017, PAPRSA requested an extension of that waiver, under 10 CFR 430.27(g), to a new basic model, PR5181WBC, that employs the same technology as the basic models set forth in the original petition for waiver. Specifically, PAPRSA states that basic model PR5181WBC employs the same wine compartment—beverage compartment technology and design characteristics as the basic models for which the original waiver was granted. That basic model achieves a wine-chiller compartment average temperature of 50 °F using a heater that prevents the wine-chiller compartment temperature from sinking below 42 °F. DOE is publishing at the end of this notice PAPRSA's request for extension of waiver in its entirety.
After careful consideration of all the material submitted by PAPRSA, it is
(1) The request for extension of waiver submitted by the Panasonic Appliances Refrigeration Systems Corporation of America (Case No. RF-047) is hereby granted as set forth in the paragraphs below.
(2) PAPRSA must test and rate the PAPRSA basic models specified in paragraph (3) using the current test procedure contained in 10 CFR part 430, subpart B, appendix A, with the exception that it must calculate energy consumption using a correction factor (“K-factor”) of 0.85.
Therefore, the energy consumption is defined by:
If compartment temperatures are below their respective standardized temperatures for both test settings (according to 10 CFR part 430, subpart B, appendix A, sec. 6.2.4.1):
If compartment temperatures are not below their respective standardized temperatures for both test settings, the higher of the two values calculated by the following two formulas (according to 10 CFR part 430, subpart B, appendix A, sec. 6.2.4.2):
Energy consumption of the “cooler compartment”:
Energy consumption of the “fresh food compartment”:
(3) This Order only applies to basic model PR5181WBC.
(4) Representations. PAPRSA may make representations about the energy use of its combination cooler-refrigerator product for compliance, marketing, or other purposes only to the extent that such products have been tested in accordance with the provisions above and such representations fairly disclose the results of such testing.
(5) This Order will terminate on October 28, 2019, in conjunction with the compliance date that applies to the recently published standards for miscellaneous refrigeration products (“MREFs”). See 81 FR 75194 (Oct. 28, 2016). Testing to demonstrate compliance with those standards must be performed in accordance with the MREF test procedure final rule. See 81 FR 46768 (July 18, 2016) (MREF test procedure final rule) and 81 FR 49868 (July 29, 2016) (MREF test procedure final rule correction notice).
(6) This waiver is issued on the condition that the statements, representations, and documentary materials provided by the petitioner are valid. DOE may revoke or modify this waiver at any time if it determines the factual basis underlying the petition for waiver is incorrect, or the results from the alternate test procedure are unrepresentative of the basic models' true energy consumption characteristics.
(7) Granting of this extension does not release a petitioner from the certification requirements set forth at 10 CFR part 429.
The Federal Energy Regulatory Commission (Commission) hereby gives
North American Electric Reliability Corporation, Member Representatives Committee and Board of Trustees Meetings, Board of Trustees Corporate Governance and Human Resources Committee, Finance and Audit Committee, Compliance Committee, and Standards Oversight and Technology Committee Meetings.
The Westin Ottawa, 11 Colonel By Drive, Ottawa, ON K1N 9H4 Canada.
August 9 (8:00 a.m.-5:00 p.m. eastern time) and August 10 (8:30 a.m.-12:00 p.m. eastern time), 2017.
Further information regarding these meetings may be found at:
The discussions at the meetings, which are open to the public, may address matters at issue in the following Commission proceedings:
For further information, please contact Jonathan First, 202-502-8529, or
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings
Take notice that the Commission received the following electric corporate filings:
Take notice that the Commission received the following exempt wholesale generator filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
This is a supplemental notice in the above-referenced proceeding SunE Beacon Site 2 LLC's application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is August 17, 2017.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically should submit an original and 5 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.
The filings in the above-referenced proceeding are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for electronic review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive email notification when a document is added to a subscribed docket(s). For assistance with any FERC Online service, please email
This is a supplemental notice in the above-referenced proceeding SunE Beacon Site 5 LLC's application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is August 17, 2017.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically should submit an original and 5 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.
The filings in the above-referenced proceeding are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for electronic review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive email notification when a document is added to a subscribed docket(s). For assistance with any FERC Online service, please email
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
In accordance with the National Environmental Policy Act of 1969 and the Federal Energy Regulatory Commission's (Commission) regulations, 18 CFR part 380 (Order No. 486, 52 FR 47897), the Office of Energy Projects has reviewed the application for a new license for the West Buxton Hydroelectric Project, located on the Saco River in York and Cumberland Counties, Maine, and has prepared an Environmental Assessment (EA). The project does not occupy federal land.
The EA contains Commission staff's analysis of the potential effects of the project, and concludes that licensing the project, with appropriate environmental protective measures, would not constitute a major federal action that would significantly affect the quality of the human environment.
A copy of the EA is available for review at the Commission in the Public Reference Room, or may be viewed on the Commission's Web site at
You may also register online at
Any comments should be filed within 30 days from the date of this notice. The Commission strongly encourages electronic filing. Please file comments using the Commission's eFiling system at
For further information, contact Allan Creamer at (202) 502-8365, or via email at
Take notice that the Commission has received the following Natural Gas Pipeline Rate and Refund Report filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that on July 20, 2017, Gulf South Pipeline Company, LP (Gulf South), 9 Greenway Plaza, Suite 2800, Houston, Texas 77046, filed an application pursuant to section 7(c) of the Natural Gas Act (NGA) and the Federal Energy Regulatory Commission's (Commission) regulations seeking authorization to construct, operate, and maintain: (1) A new 10,000 horsepower compressor station to be named the Westlake Compressor Station; (2) approximately 0.3 miles of 16-inch diameter natural gas pipeline; (3) a new delivery meter station; and (4) a new receipt meter station on an existing Gulf South facility site. These facilities are located in Calcasieu Parish, Louisiana, as more fully described in the application which is on file with the Commission and open to public inspection. The filing may also be viewed on the Web at
Any questions regarding this application should be directed to Kathy D. Fort, Manager Certificates & Tariffs, Gulf South Pipeline Company, LP, 610 West Second Street, Owensboro, Kentucky, 42301, or call (270) 688-6825, or by email:
Gulf South states the proposed Westlake Expansion Project will allow it to provide up to 200,000 dekatherms per day (Dth/d) of firm transportation service to Entergy Louisiana, LLC's proposed 980 megawatt natural gas-fired combined cycle electric generating unit to be located near Westlake, Louisiana.
Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9, within 90 days of this Notice the Commission staff will either: Complete its environmental assessment (EA) and place it into the Commission's public record (eLibrary) for this proceeding; or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the final environmental impact statement (FEIS) or EA for this proposal. The filing of the EA in the Commission's public record for this proceeding or the issuance of a Notice of Schedule for Environmental Review will serve to notify federal and state agencies of the timing for the completion of all necessary reviews, and the subsequent need to complete all federal authorizations within 90 days of the date of issuance of the Commission staff's FEIS or EA.
There are two ways to become involved in the Commission's review of this project. First, any person wishing to obtain legal status by becoming a party to the proceedings for this project should, on or before the comment date stated below file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, a motion to intervene in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 385.214 or 385.211) and the Regulations under the NGA (18 CFR 157.10). A person obtaining party status will be placed on the service list maintained by the Secretary of the Commission and will receive copies of all documents filed by the applicant and by all other parties. A party must submit 7 copies of filings made in the proceeding with the Commission and must mail a copy to the applicant and to every other party. Only parties to the proceeding can ask for court review of Commission orders in the proceeding.
However, a person does not have to intervene in order to have comments considered. The second way to participate is by filing with the Secretary of the Commission, as soon as possible, an original and two copies of comments in support of or in opposition to this project. The Commission will consider these comments in determining the appropriate action to be taken, but the filing of a comment alone will not serve to make the filer a party to the proceeding. The Commission's
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commentors will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with the Commission's environmental review process. Environmental commentors will not be required to serve copies of filed documents on all other parties. However, the non-party commentors will not receive copies of all documents filed by other parties or issued by the Commission (except for the mailing of environmental documents issued by the Commission) and will not have the right to seek court review of the Commission's final order.
The Commission strongly encourages electronic filings of comments, protests and interventions in lieu of paper using the eFiling link at
The staff of the Federal Energy Regulatory Commission's (FERC or Commission) Office of Energy Projects has finalized its revised
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This is a supplemental notice in the above-referenced proceeding Cottonwood Wind Project, LLC 's application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is August 17, 2017.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically should submit an original and 5 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.
The filings in the above-referenced proceeding are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for electronic review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive email notification when a document is added to a subscribed
Environmental Protection Agency (EPA).
Notice of availability.
This action announces applicability determinations, alternative monitoring decisions, and regulatory interpretations that EPA has made under the New Source Performance Standards (NSPS); the National Emission Standards for Hazardous Air Pollutants (NESHAP); and/or the Stratospheric Ozone Protection Program.
An electronic copy of each complete document posted on the Applicability Determination Index (ADI) data system is available on the Internet through the Resources and Guidance Documents for Compliance Assistance page of the Clean Air Act Compliance Monitoring Web site under “Air” at:
The General Provisions of the NSPS in 40 Code of Federal Regulations (CFR) part 60 and the General Provisions of the NESHAP in 40 CFR part 61 provide that a source owner or operator may request a determination of whether certain intended actions constitute the commencement of construction, reconstruction, or modification. The EPA's written responses to these inquiries are commonly referred to as applicability determinations. See 40 CFR 60.5 and 61.06. Although the NESHAP part 63 regulations [which include Maximum Achievable Control Technology (MACT) standards and/or Generally Available Control Technology (GACT) standards] and Section 111(d) of the Clean Air Act (CAA) contain no specific regulatory provision providing that sources may request applicability determinations, the EPA also responds to written inquiries regarding applicability for the part 63 and Section 111(d) programs. The NSPS and NESHAP also allow sources to seek permission to use monitoring or recordkeeping that is different from the promulgated requirements. See 40 CFR 60.13(i), 61.14(g), 63.8(b)(1), 63.8(f), and 63.10(f).
The EPA's written responses to these inquiries are commonly referred to as alternative monitoring decisions. Furthermore, the EPA responds to written inquiries about the broad range of NSPS and NESHAP regulatory requirements as they pertain to a whole source category.
These inquiries may pertain, for example, to the type of sources to which the regulation applies, or to the testing, monitoring, recordkeeping, or reporting requirements contained in the regulation. The EPA's written responses to these inquiries are commonly referred to as regulatory interpretations.
The EPA currently compiles EPA-issued NSPS and NESHAP applicability determinations, alternative monitoring decisions, and regulatory interpretations, and posts them to the ADI on a regular basis. In addition, the ADI contains EPA-issued responses to requests pursuant to the stratospheric ozone regulations, contained in 40 CFR part 82. The ADI is a data system on the Internet with over three thousand EPA letters and memoranda pertaining to the applicability, monitoring, recordkeeping, and reporting requirements of the NSPS, NESHAP, and stratospheric ozone regulations. Users can search for letters and memoranda by date, office of issuance, subpart, citation, control number, or by string word searches.
Today's action comprises a summary of 31 such documents added to the ADI on July 21, 2017. This action lists the subject and header of each letter and memorandum, as well as a brief abstract of the letter or memorandum. Complete copies of these documents may be obtained from the ADI on the Internet through the through the Resources and Guidance Documents for Compliance Assistance page of the Clean Air Act Compliance Monitoring Web site under “Air” at:
The following table identifies the database control number for each document posted on the ADI data system on July 21, 2017; the applicable category; the section(s) and/or subpart(s) of 40 CFR part 60, 61, or 63 (as applicable) addressed in the document; and the title of the document, which provides a brief description of the subject matter.
We have also included an abstract of each document identified with its control number after the table. These abstracts are provided solely to alert the public to possible items of interest and are not intended as substitutes for the full text of the documents. This action does not change the status of any document with respect to whether it is “of nationwide scope or effect” for purposes of CAA section 307(b)(1). For example, this document does not convert an applicability determination for a particular source into a nationwide rule. Neither does it purport to make a previously non-binding document binding.
Q: Does the EPA approve the use of the same calibration gas to perform quality assurance checks on both the low and the high ranges for a dual range hydrogen sulfide (H2S) continuous emission monitoring system subject to 40 CFR part 60 subpart Ja at the Ergon Refinery in Vicksburg, Mississippi (Ergon)?
A: Yes. Based on the information provided by the Mississippi Department of Environmental Quality (MDEQ), the EPA believes that the Ergon's proposed monitoring alternative is acceptable to satisfy the QA checks on the high concentration range for the Sola II analyzer. EPA's guidance to MDEQ is based upon the expectation that the monitor's higher range will rarely be used to demonstrate compliance because the H2S concentration at the inlet of the Refinery Flare will need to be below the monitor span value to meet the NSPS Ja limits, the highly linear response of the monitor should yield accurate results for the whole range of operation, and the safety hazards to plant employees associated with keeping high concentration H2S calibration gas cylinders onsite being valid concerns due to H2S high toxicity.
Q: Does the EPA approve site-specific alternative monitoring operating parameter limits (OPLs) under NSPS subpart Ec for the operation of two hospital/medical/infectious waste incinerators (HMIWI) at the Stericycle Springhill facility located in Sarepta, Louisiana (Stericycle)?
A: Yes. The EPA conditionally approves Stericycle's alternative OPLs, which are consistent with the permit conditions, the equipment configuration of the incinerators, and the operation of the associated air pollution control devices. EPA approval is contingent on Stericycle's successful completion of performance testing on both HWIMI to demonstrate compliance with NSPS subpart Ec emission limits. Stericycle shall conduct a performance test on each HMIWI in accordance with 40 CFR 60.8 and consistent with the proposed performance test plan included in the EPA response letter. If performance testing shows that the facility is not in compliance with NSPS Ee emission limits, retesting will be required, and the OPLs established for this petition approval may require modification, and in the event that new or modified OPLs must be established, a revised OPL petition must be submitted prior to retesting, along with a revised test plan for review and approval.
Q: Does EPA approve the revision of alternative Operating Parameter Limits (OPLs) for additional control equipment used in lieu of a wet scrubber at a contraband incinerator operated by SW Border Incineration LLC, in McAllen,
A: Yes. The EPA approves the revision of alternative OPLs contingent on the successful completion of performance testing to demonstrate compliance with NSPS subpart EEEE emission limits. The previously approved and additional OPLs are consistent with the special conditions of Texas Air Permit, which the Texas Commission on Environmental Quality approved the test plan, along with the RATA protocols. If performance testing shows that the facility is not in compliance with NSPS EEEE emission limits, retesting will be required, and the OPLs established for this petition approval may require modification. If additional new or modified OPLs must be established to achieve and maintain compliance with NSPS EEEE, a revised OPL petition must be submitted prior to retesting, along with a revised test plan for review and approval.
Q: Does the EPA approve an Alternative Monitoring Plan (AMP) in lieu of using a continuous emission monitoring system (CMS) for Event Corporation to monitor Hydrogen Sulfide (H
A: Yes. The EPA conditionally approves the AMP since installing and operating an H
Q: Does the EPA approve an Alternative Monitoring Plan (AMP) in lieu of using continuous emission monitoring system (CMS) for TriStar Global Energy Solution (Tristar) to monitor hydrogen sulfide (H
A: Yes. The EPA conditionally approves the AMP since installing and operating an H2S continuous emission monitoring system would be technically impractical due to the short term nature of tank degassing and similar operations performed by Tristar at refineries in EPA Region 3. The EPA included the AMP detailed sampling steps, the compliance demonstration procedures and conditions in the final determination letter.
Q: Does the EPA determine that the proposed addition of a biodiesel manufacturing facility at a plant owned by Patriot Renewable Fuels (Patriot) and located in Annawan, Illinois is subject to 40 CFR part 60 subpart RRR (VOC Emissions from Synthetic Organic Chemical Manufacturing Industry (SOCMI) Reactor Processes)?
A: Yes. Based on the information provided by the Illinois Environmental Protection Agency (Illinois EPA), the EPA believes that the proposed addition to the biodiesel plant would meet the applicability criteria of subpart RRR. Glycerol, is a chemical listed in 40 CFR 60.707. The EPA considers either of the following downstream uses as indicative of the production of a listed chemical as a “product”: (1) Production for sale of a listed chemical; or (2) use in another process where that listed chemical is needed. Glycerol is produced from com oil via a hydrolysis reaction during the manufacture of biodiesel. When sent to the fermenters, glycerol is used to increase the ethanol yield (
Q: Does the EPA approve an alternative monitoring plan (AMP) to use alternative concentrations of span gases used to check daily calibration drift, and as high range validation standards used during cylinder gas audits (CGAs) and relative accuracy test audits (RATAs), under NSPS subpart A for the No. 2 flare Continuous Emission Monitoring System (CEMS) at the Delek Refining (Delek) facility located in Tyler, Texas and covered under NSPS subpart Ja?
A: Yes. Based on the process data and detector information submitted, the EPA conditionally approves Delek's AMP to reduce the concentrations of the calibration gas and validation standards to certain specified range values on the No. 2 Flare CEMS. Delek must conduct linearity analysis on the pulsed ultraviolet fluorescence (PUVF) detector once every three years to determine the detector's linearity across the entire range of expected concentrations of gas vent streams. The analysis must demonstrate that linearity is maintained for the specified vent gas stream hydrogen sulfide (H2S) concentration range. A report of each completed linearity analysis must be submitted to the EPA Region 6 and to the State, and records must be maintained on-site.
Q: Does the EPA approve revised process parameter limits for a previously approved Alternative Monitoring Plan (AMP) for the Valero Refining-Texas, LP facility (Valero) located in Corpus Christi, Texas and subject to NSPS subpart J?
A: Yes. The EPA conditionally approves revised process parameter limits that should not exceed the new upper value for total sulfur and the higher proposed temperature. Valero must continue to follow the steps outlined in the previously approved AMP for monitoring the vent stream. If refinery operations change such that the sulfur content of the vent stream changes from representations made for the AMP, then Valero must document the changes and follow the appropriate steps outlined in 40 CFR 60.105(b)(3)(i)-(iii).
Q: Does the EPA conditionally approve revised alternative monitoring Operating Parameter Limits (OPLs) for a pollution control system on a new medical waste incinerator subject to NSPS subpart Ec, which consists of a wet gas scrubber (WGS) followed by a carbon adsorber and cartridge filter, located at the University of Texas Medical Branch (UTMBG) in Galveston, Texas?
A: Yes. Based on process-specific information and data provided by UTMBG, the EPA conditionally approves the revised operating parameters for the WGS, carbon adsorber and cartridge filter. UTMBG must conduct a second representative performance test in order to establish revised numerical limits for the operating parameters conditionally approved. The follow up performance testing must be conducted in accordance with 40 CFR 60.8 and State requirements, with no deviations from the EPA-approved test methods or quality assurance protocols. Other OPLs specified by Table 3 of NSPS subpart Ec
Q: Does the EPA approve the withdrawal of a previously approved Alternative Monitoring Plan (AMP) for a sulfur loading vent stream at the Valero Mckee Refinery located in Sunray, Texas and covered under NSPS subpart J?
A: Yes. The EPA approves the AMP withdrawal of a previously approved AMP because emissions from the tail gas incinerators are monitored for compliance with the sulfur dioxide (SO
Q: Does the EPA approve revisions to an Alternative Monitoring Plan (AMP) that was previously conditionally approved for re-routing a refinery fuel gas vent stream to an alternate combustion device at the Valero Refining-Meraux LLC (Valero Meraux) facility located in Meraux, Louisiana subject to NSPS subpart J?
A: Yes. The EPA approves the revisions to a previously conditionally approved AMP. Valero Meraux proposed re-routing the affected refinery fuel gas vent gas stream to a reformer recharge heater instead of combusting the stream at a stripper reboiler heater. Valero Meraux is required to continue monitoring and controlling the relevant process parameters as summarized in the EPA's previous conditional AMP approval. If refinery operations change such that the sulfur content of the vent stream changes from representations made for the AMP, then Valero must document the changes and follow the appropriate steps outlined in 40 CFR 60. 105(b)(3)(i)-(iii).
Q: Does the EPA approve the Alternative Monitoring Plan (AMP) to use the data obtained from the total sulfur (TS) continuous emissions monitoring system (CEMS) for one flare at plant 1 and one flare at plant 2 at the Suncor Energy (USA) Inc. (Suncor) Commerce City Refinery in Commerce City, Colorado subject to NSPS subpart Ja?
A: Yes. The EPA approves Suncor's AMP for flares at plants 1 and 2, pursuant to 40 CFR 60.13(i), to use the data obtained from the TS CEMS low range two-point daily calibration drift and two-point quarterly audits, as well as a one-point challenge in the high range. Because Suncor is requesting this AMP based on a significant safety hazard to refinery personnel and because this monitoring is being performed to detect the threshold for a root cause analysis, not to monitor for compliance with an emission limit, the EPA will allow for minimal use of high concentration calibration gases. This approach avoids routine use of higher level calibration gases in the field; higher level gases are only used for quarterly audits and annual testing and could be brought on-site by a testing contractor and then removed after the test/audit.
Q: Does the EPA approve the Alternative Monitoring Plan (AMP) to use the data obtained from the total sulfur (TS) continuous emissions monitoring system (CEMS) for a flare at plant 3 of the Suncor Energy (USA) Inc. (Suncor) Commerce City Refinery in Commerce City, Colorado subject to NSPS subpart Ja?
A: Yes. The EPA approves Suncor's AMP for a flare at plant 3, pursuant to 40 CFR. 40 CFR 60.13(i), to use the data obtained from the TS CEMS low range two-point daily calibration drift and two-point quarterly audits, as well as a one-point challenge in the high range. Because Suncor is requesting this AMP based on a significant safety hazard to refinery personnel and because this monitoring is being performed to detect the threshold for a root cause analysis, not to monitor for compliance with an emission limit, the EPA will allow for minimal use of high concentration calibration gases. This approach avoids routine use of higher level calibration gases in the field; higher level gases are only used for quarterly audits and annual testing and could be brought on-site by a testing contractor and then removed after the test/audit.
Q: Does the EPA approve an Alternative Monitoring Plan (AMP) under 40 CFR 60.13(i) for the monitoring of emissions using an emission factor to determine NOx emissions from two stationary gas combustion turbines located at the Power House (Plant) operated by the University of Colorado Boulder (UCB) in Boulder, Colorado, in lieu of determining emissions through Continuous Emissions Monitoring System (CEMS) installed on the bypass stack, to demonstrate compliance with the emission limit under NSPS subpart GG?
A: Yes. Based on the most recent stack testing for NOx emissions during startup of turbine 1 and turbine 2, the EPA will allow UCB use of the 0.32 lb/MMBtu emission factor rather than determining emissions through CEMS installed on the bypass stack. The use of this emission factor provides a conservative emissions estimate and is consistent with UCB permit issued by the Colorado Department of Health and Environment (CDPHE) Air Pollution Control Division (APCD). The EPA or CDPHE APCD may require UCB to conduct additional testing of emissions at the bypass stack to verify the NOx concentrations during turbine startup.
Q: Does the EPA approve waiver of a performance testing requirement for six identical stationary engines subject to 40 CFR part 60 subpart JJJJ at the Bio Town Ag facility in Reynolds, Indiana (Bio Town)?
A: Yes. Based on the information Bio Town provided, the EPA approves the performance test waiver request for six identical stationary engines operated in the same manner, pursuant to 40 CFR 60.8(b)(4). Specifically, EPA approves conducting a performance test every 8,760 hours or 3 years, whichever comes first, for the three engines that were constructed in 2011, and a performance test for the three engines that were constructed in 2014, in a staggered schedule as provided in the determination letter. Bio Town must meet Section VII. 2 of the April 27, 2009, Clean Air Act National Stack Testing Guidance, which lists the conditions that must be met for approval of a performance test waiver for identical emissions units.
Q: Does the EPA approve the use of a bag leak detection system (BLDS) as an alternative monitoring method in lieu of a continuous opacity monitoring system
A: Yes. The EPA conditionally approves the Waupaca alternative monitoring method to use BLDS in lieu of a COMS or conducting daily Method 9 readings for the mechanical and thermal sand reclamation unit (P27) being installed at Waupaca's Plant 5. Waupaca will need to develop and prepare a site-specific monitoring plan for the BLDS installed under this alternative monitoring method and meet the conditions specified in the EPA response letter. In addition, Waupaca will need to revise its current major source construction permit for the sand reclamation project, as well as its Title V permit, to incorporate this alternative monitoring method. The approval of the proposed alternative monitoring method does not alter Waupaca's legal obligation to comply with all other applicable requirements associated with Subparts A and UUU, including meeting the opacity limit.
Q1: Does the EPA determine the start-up date of Northern Industrial Sand's (NIS) sand dryer located in Auburn, Wisconsin and subject to 40 CFR part 60 subpart UUU is the date the construction permit was issued (June 18, 2015), or the date the sand dryer first processed sand (July 17, 2015)?
A1: The EPA determines that the initial start-up of NIS's sand dryer in question is July 17, 2015. “Start-up” is defined at 40 CFR 60. 2 as the setting in operation of an “affected facility” for any purpose. Based on the information provided in your letter, the sand dryer at NIS first processed sand on July 17, 2015.
Q2: For purposes of initial performance testing, does the EPA determine that the “180 days after start-up” requirement is based on consecutive days (including non-operational days) or operating days?
A2: The EPA determines that the 180 days after start-up requirement is based on calendar days, not operating days. The General Provisions, at 40 CFR 60. 19(a), state “For the purposes of this part, time periods specified in days shall be measured in calendar days, even if the word `calendar' is absent, unless otherwise specified in an applicable requirement.” Neither the General Provisions, at 40 CFR60. 8, nor the requirements of performance testing under subpart UUU, at 40 CFR 60.732 and 60.736, define the time periods for performance testing as anything other than “days”.
Q3: Does the EPA recommend any other options for NIS to consider for initial performance testing under subpart UUU before the 180-day deadline expires?
A3: Yes. The EPA suggests two testing options. Option 1: NIS may conduct initial performance testing of the sand dryer at its desired maximum throughput and store the processed sand until needed. Based on the information provided, NIS has more than adequate storage capacity for the processed sand to test under this option. Option 2: NIS may conduct performance testing of the sand dryer at less than its desired maximum throughput. However, if this option is selected, NIS will need to take operational restrictions to the reduced throughput at which it tested to show compliance with subpart UUU. The operational restrictions will need to be incorporated into a federally enforceable document (typically a federally enforceable construction or operating permit). If, at a later date, NIS is able to operate at an increased throughput and desires to operate at that increased throughput, it will need to revise its underlying federally enforceable document to accommodate the increased throughput. NIS will also be required to conduct another performance test at that increased rate and demonstrate compliance with applicable limits.
Q4: What does the EPA determine are the monitoring requirements following initial performance testing for the sand dryer?
A4: Based on the information NIS provided, the EPA determines that the sand dryer is an industrial sand fluid bed dryer. The monitoring requirements are therefore either: (a) Installation and operation of a continuous opacity monitoring system (COMS), or (b) daily visible emission readings using U. S. EPA Reference Method 9 (for no less than 18 minutes each day). The monitoring requirements of subpart UUU are found at 40 CFR 60.734(a-d).
Q1: Does EPA approve three alternative calibration methods for the total reduced sulfur (TRS) analyzers associated with three flares that are affected facilities under 40 CFR part 60 subpart Ja at the Lima Refining Company (Lima Refining) refinery in Lima, Ohio?
A1: Based on the information provided by Lima Refining, EPA approves two of the three alternative calibration methods requested for the TRS monitors to address safety concerns involving storage, handling, and life expectancy (short expiration dates) of high hydrogen sulfide (H
Q2: Does EPA approve single point calibrations for each of the TRS analyzers associated with three flares that are affected facilities under subpart Ja?
A2: Yes. EPA approves Lima Refining's request to use single point calibrations for the daily calibration requirements (zero and one other target compound(s) concentration). However, Lima Refining must conduct multi-point calibrations on at least a quarterly basis. Other conditions and requirements of this approval are included in the EPA response letter.
Q3: Does EPA approve a reduced span to that required by subpart Ja for the TRS analyzer associated with the aromatics flare that is an affected facility under subpart Ja?
A3: Yes. EPA conditionally approves Lima Refining's request to reduce the instrument span from 5,000 ppm to 1,000 ppm for the aromatics flare (LIU flare) TRS monitoring system. This approval is based on the low expected TRS concentration from the aromatics flare. However, if readings associated with the aromatics flare exceed 1,000 ppm, then Lima Refining will need to re-span the TRS monitor to a higher value which includes the higher concentration measured.
Q: Does EPA approve the use of daily visible emission observations and baghouse pressure drop readings associated with the thermal sand reclamation unit in lieu of a continuous opacity monitoring system (COMS) to meet the monitoring requirements of 40 CFR subpart UUU (Standards of Performance for Calciners and Dryers in Mineral Industries) at the Urschel Laboratories, Inc. (Urschel) in Valparaiso, IN?
A: Yes. EPA conditionally approves the alternative monitoring method to meet the monitoring requirements of subpart UUU at 40 CFR 60.734. Urschel will need to evaluate and establish an appropriate range for the pressure drop across the baghouse based on a performance test at the thermal sand reclamation unit to ensure compliance with subpart UUU. The alternative monitoring program and associated recordkeeping and reporting approved through this letter must be incorporated into its federal enforceable state operating permit. Additional conditions and requirements of this approval are included in the EPA response letter.
Q: Does EPA determine that the Urschel Laboratories, Inc. (Urschel) thermal sand reclamation unit located in Valparaiso, Indiana is exempt from the opacity monitoring requirements of 40 CFR part 60 subpart UUU (Standards of Performance for Calciners and Dryers in Mineral Industries) since its particulate emissions are well below 11 tons per year?
A: No. EPA determines that Urschel's thermal sand reclamation unit is an affected facility subject to subpart UUU and is therefore subject to the monitoring requirements at 40 CFR 60.734. Since the thermal sand reclamation unit is not one of the listed facilities under 40 CFR 60.734(b) or (c) and does not use a wet control device (40 CFR 60.734(d)), Urschel must install and operate a continuous opacity monitoring system (COMS). However, the General Provisions at 40 CFR 60.13(i) provides an owner or operator of an affected facility the ability to request, among other things, alternative monitoring to that required by an applicable subpart.
Q: Does the EPA approve using an alternative test method ASTM D-6348-12 in lieu of ASTM D-6348-03 for measuring pollutants in the engine exhaust per NSPS subpart JJJJ at Samson Resources Company's facilities on the Southern Ute Indian Reservation in La Plata County, Colorado?
A: Yes. The EPA approves the use of the updated ASTM method, D-6348-12 in lieu of D-6348-03 as prescribed in Table 2 to NSPS JJJJ for performance testing of engines at the requested facilities, pursuant to 40 CFR 60.8(b)(2).
Q1: Does the EPA approve a waiver from asbestos testing requirements for bare concrete deck bridges under 40 CFR part 61, subpart M (Asbestos NESHAP), for the Kansas Department of Transportation?
A1: No. Under the Asbestos NESHAP, there is no regulatory provision that allows the EPA to issue a waiver.
Q2: Does the EPA determine that bare concrete deck bridges are subject to the Asbestos NESHAP regulation?
A2: Yes. The EPA determines that concrete is considered a building material and needs to be evaluated for asbestos-content. At a minimum, it must be thoroughly inspected.
Q1: Does the EPA determine that airport taxiways are subject to 40 CFR part 61, subpart M (Asbestos NESHAP)?
A1: Yes. The EPA indicated to the Missouri Department of Natural Resources (MO DNR) that airport taxiways are a “facility component” as defined in 40 CFR 61.141 and therefore subject to the regulation. At a minimum, the taxiway is subject to the thorough inspection requirement of the regulation. Further, MO DNR asks that EPA reconsider a previous applicability determination which stated airport runways were not subject to the Asbestos NESHAP. This applicability determination supersedes the June 20, 1997 applicability determination with ADI Control No. A970006.
Q2: Does the EPA determine that repair operations on a taxiway are considered a renovation or demolition operation under the Asbestos NESHAP regulation?
A2: Yes. The EPA determines if work is to be done on an airport taxiway, it is considered a renovation operation as there is no load-supporting structural member being wrecked or taken out as defined under the demolition definition.
Q: Does EPA determine that McConway and Torley's Lawrenceville Foundry in Pittsburgh, Pennsylvania is subject to 40 CFR part 63 subpart XXXXXX (subpart 6X), NESHAP for Nine Metal Fabrication and Finishing Source Categories?
A: No. EPA has determined that subpart 6X does not apply to the Lawrenceville Foundry based on not meeting rule applicability requirements due to current operations, an evaluation of the SIC/NAICS codes associated with the facility, and the corresponding activities in which the facility is primarily engaged in that involves manufacturing of railroad car couplings.
Q1: Does EPA determine that the raw material used by Mica Company of Canada Incorporated (Mica Co.) at their Newport News, Virginia facility meets the definition of a “web” and that both manufacturing lines are subject to 40 CFR part 63 subpart JJJJ?
A1: Based on the description provided by Mica Co., EPA determines that the raw material used by Mica Co. processing line 2 meets the definition of a “web” at 40 CFR 63.3300 since the mica paper is fed from a roll to the web coating line. Therefore, this processing line is subject to MACT subpart JJJJ. Processing line 1 does not meet the definition of web and is therefore not subject to MACT subpart JJJJ.
Q2: Does EPA determine that the end products manufactured by Mica Co. meet the definition of a “refractory product” and that both processing lines are therefore subject to 40 CFR part 63 subpart SSSSS?
A2: No. Based on the description provided by Mica Co., EPA determines that the mica sheet insulating products manufactured by Mica Co. do not meet the definition of a “refractory product” at 40 CFR 63.9824; therefore, the manufacturing lines are not subject to MACT subpart SSSSS.
Q: Does EPA determine that the Teva Pharmaceuticals USA, Inc. Women's Health pharmaceutical manufacturing facility in Cincinnati, Ohio (Teva) is subject to the NESHAP subpart VVVVVV Title V Permit requirement if the facility took operational limits on organic compounds to become an area source before the effective date of the rule and now operate control devices, but would still be an area source without the controls?
A: No. EPA determines that the Teva pharmaceutical manufacturing operations at the Cincinnati facility are not currently subject to the Title V requirement in NESHAP subpart VVVVVV. Since the facility took operational limits to obtain area source status prior to the effective date of the rule, the Title V NESHAP subpart VVVVVV requirement does not apply, even if it now operates controls. The
Q: Does EPA determine that the Owens Corning Insulating Systems, LLC (OC) a wool fiberglass products manufacturing plant located in Delmar, NY (Delmar), is subject to 40 CFR part 63 subpart JJJJ, NESHAP for Paper and Other Web Coating Manufacturing?
A: Yes. Based on the information provided by OC, EPA determines that the Delmar plant still operates web coating lines after switching from a phenol-formaldehyde binder to a starch binder and thus remains subject to 40 CFR part 63 subpart JJJJ, and that the subsequent non applicability determination for 40 CFR part 63 subpart NNN, the NESHAP for Wool Fiberglass Manufacturing due to the binder switch is irrelevant to the applicability status of 40 CFR part 63 subpart JJJJ. This determination is consistent with the “Once-In-Always-In” policy. The Delmar plant has been required to comply with subpart JJJJ provisions (including emissions standards) since December 5, 2005, the first substantive compliance date of rule, based on 40 CFR 63.320(a) of the rule. The fact that OC chooses to comply with the subpart JJJJ emission standards at the Delmar plant using a method it was already using (
Q: Does EPA approve an Alternative Monitoring Plan (AMP) for a Wet Gas Scrubber (WGS) on a Fluidized Catalytic Cracking Unit (FCCU) subject to NSPS part 60 subpart J, and also NESHAP subpart UUU, for parametric monitoring of opacity at the WGS in lieu of a Continuous Opacity Monitoring System, due to moisture interference on opacity readings in the stack at the Valero Refining Company (Valero) facility in Ardmore, Oklahoma (Valero)?
A: Yes. Based upon the design of the WGS unit and the process specific information and performance test results provided by Valero, EPA approves the AMP request and its operating parameter limits (OPLs) for demonstrating compliance under NESHAP subpart UUU, which included minimum Liquid-to-Gas Ratio, minimum water pressure to the quench/spray tower nozzles, and minimum pressure drop across the Agglo-filtering module. Valero shall incorporate the terms of this AMP approval into the facility's New Source Review (NSR) and Title V permits for federal enforceability. If refinery operations change, Valero shall conduct another performance test to establish new limits for the OPLs listed in the EPA response letter.
Q: Does EPA determine that the Ervin Amasteel facility in Adrian, Michigan should be classified as a steel foundry subject to requirements of the NESHAP for Iron and Steel Foundries Area Source, at 40 CFR part 63 subpart ZZZZZ, and not the requirements under the NESHAP for Area Sources for Electric Arc Furnace Steelmaking Facilities, at 40 CFR part 63 subpart YYYYY, and the Standards of Performance for Steel Plants: Electric Arc Furnaces and Argon-Oxygen Decarburization Vessels Constructed After August 17, 1983, at 40 CFR part 60 Subpart AAa (NSPS AAa)?
A: No. EPA determines that the Ervin Amasteel facility is not subject to the requirements of NESHAP subpart ZZZZZ because the facility is not an iron and steel foundry as defined in 40 CFR 63.10906 of the rule. Therefore, the Ervin Amasteel facility remains subject to the applicable provisions of NESHAP subpart YYYYY and NSPS subpart AAa.
Q: Does EPA approve an alternative monitoring method for the bypass valve line associated with the thermal oxidizer in lieu of a continuous flow monitor or securing the bypass valve with a car seal or lock-and-key type system to meet the monitoring requirements of 40 CFR part 63 subpart JJJ at the INEOS Barex USA LLC (INEOS) plant in Lima, Ohio?
A: Yes. Based on the information provided by INEOS, including concerns about installation of a flow monitor on this particular bypass stream due to location and corrosion possibilities, EPA conditionally approves the alternative monitoring method that requires continuous monitoring of the bypass valve position associated with the thermal oxidizer in accordance with 40 CFR 63.8(f)(2) and (4). The recordkeeping and reporting conditions for approval are specified in the EPA response letter.
Q1: Does EPA determine that stationary engines being tested in a test cell at Maine Maritime Academy (MMA) in Castine, Maine would be subject to the NESHAP for Reciprocating Internal Combustion Engines (RICE), 40 CFR part 63 subpart ZZZZ?
A1: No. EPA determines that because the engines in question will be tested at a stationary RICE test cell as defined in Subpart PPPPP, they are not subject to subpart ZZZZ consistent with 40 CFR 63.6675 of subpart ZZZZ.
Q2: Does EPA determine that the proposed engine test cell at MMA, which is an area source of hazardous air pollutants, would be subject to the NESHAP for Engine Test Cell/Stands, 40 CFR part 63 subpart PPPPP?
A2: No. EPA determines that as long as MMA remains an area source of hazardous air pollutants (HAPs), it is not subject to subpart PPPPP, which applies to owners or operators of engine test cells/stands at a major source of HAPs.
Section 309(a) of the Clean Air Act requires that EPA make public its comments on EISs issued by other Federal agencies. EPA's comment letters on EISs are available at:
Under MAP-21 Section 1319, FHWA has issued a single FEIS and ROD. Therefore, the 30-day wait/review period under NEPA does not apply to this action.
Export-Import Bank of the United States.
Submission for OMB review and comments request.
The proposed clearance is designed to allow Ex-Im Bank to survey for the purpose of gaining insights into customers' experiences with the agency and to evaluate product and performance effectiveness. Customers' responses will help to identify potential areas of service improvement and rate overall program experiences.
Comments must be received on or before September 5, 2017 to be assured of consideration.
Comments may be submitted electronically on
Export-Import Bank of the United States.
Submission for OMB review and comments request.
The Export-Import Bank of the United States (Ex-Im Bank), as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal Agencies to comment on the proposed information collection, as required by the Paperwork Reduction Act of 1995.
Comments must be received on or before September 5, 2017 to be assured of consideration.
Comments may be submitted electronically on
By neutralizing the effect of export credit support offered by foreign governments and by absorbing credit risks that the private sector will not accept, Ex-Im Bank enables U.S. exporters to compete fairly in foreign markets on the basis of price and product. Under the Working Capital Guarantee Program, Ex-Im Bank provides repayment guarantees to lenders on secured, short-term working capital loans made to qualified exporters. The guarantee may be approved for a single loan or a revolving line of credit. In the event that a borrower defaults on a transaction guaranteed by Ex-Im Bank the guaranteed lender may seek payment by the submission of a claim.
This collection of information is necessary, pursuant to 12 U.S.C. 635(a)(1), to determine if such claim complies with the terms and conditions of the relevant working capital guarantee. The Notice of Claim and Proof of Loss, Working Capital Guarantee is used to determine compliance with the terms of the guarantee and the appropriateness of paying a claim. Export-Import Bank customers are able to submit this form on paper or electronically.
The information collection tool can be reviewed at:
The Federal Communications Commission will hold an Open Meeting on the subjects listed below on
The meeting site is fully accessible to people using wheelchairs or other mobility aids. Sign language interpreters, open captioning, and assistive listening devices will be provided on site. Other reasonable accommodations for people with disabilities are available upon request. In your request, include a description of the accommodation you will need and a way we can contact you if we need more information. Last minute requests will be accepted, but may be impossible to fill. Send an email to:
Additional information concerning this meeting may be obtained from the Office of Media Relations, (202) 418-0500; TTY 1-888-835-5322. Audio/Video coverage of the meeting will be broadcast live with open captioning over the Internet from the FCC Live web page at
For a fee this meeting can be viewed live over George Mason University's Capitol Connection. The Capitol Connection also will carry the meeting live via the Internet. To purchase these services, call (703) 993-3100 or go to
Based upon the foregoing, the Receiver has determined that the continued existence of the receivership will serve no useful purpose. Consequently, notice is given that the receivership shall be terminated, to be effective no sooner than thirty days after the date of this Notice. If any person wishes to comment concerning the termination of the receivership, such comment must be made in writing and sent within thirty days of the date of this Notice to: Federal Deposit Insurance Corporation, Division of Resolutions and Receiverships, Attention: Receivership Oversight Department 34.6, 1601 Bryan Street, Dallas, TX 75201.
No comments concerning the termination of this receivership will be considered which are not sent within this time frame.
World War One Centennial Commission.
Meeting notice.
Notice of this meeting is being provided according to the requirements of the Federal Advisory Committee Act. This notice provides the schedule and agenda for the September 13, 2017 meeting of the World War One Centennial Commission (the Commission). The meeting is open to the public.
Contact Daniel S. Dayton at
Daniel S. Dayton, Designated Federal Officer, World War 1 Centennial Commission, 701 Pennsylvania Avenue NW., 123, Washington, DC 20004-2608 202-380-0725 (note: this is not a toll-free number).
The World War One Centennial Commission was established by Public Law 112-272 (as amended), as a commission to ensure a suitable observance of the centennial of World War I, to provide for the designation of memorials to the service of members of the United States Armed Forces in World War I, and for other purposes. Under this authority, the Committee will plan, develop, and execute programs, projects, and activities to commemorate the centennial of World War I, encourage private organizations and State and local governments to organize and participate in activities commemorating the centennial of World War I, facilitate and coordinate activities throughout the United States relating to the centennial of World War I, serve as a clearinghouse for the collection and dissemination of information about events and plans for the centennial of World War I, and develop recommendations for Congress and the President for commemorating the centennial of World War I. The Commission does not have an appropriation and operates on donated funds.
Centers for Medicare & Medicaid Services.
Notice.
The Centers for Medicare & Medicaid Services (CMS) is announcing an opportunity for the public to comment on CMS' intention to collect information from the public. Under the Paperwork Reduction Act of 1995 (the PRA), federal agencies are required to publish notice in the
Comments must be received by October 3, 2017.
When commenting, please reference the document identifier or OMB control number. To be assured consideration, comments and recommendations must be submitted in any one of the following ways:
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2.
To obtain copies of a supporting statement and any related forms for the proposed collection(s) summarized in this notice, you may make your request using one of following:
1. Access CMS' Web site address at
2. Email your request, including your address, phone number, OMB number, and CMS document identifier, to
3. Call the Reports Clearance Office at (410) 786-1326.
William Parham at (410) 786-4669.
This notice sets out a summary of the use and burden associated with the following information collections. More detailed information can be found in each collection's supporting statement and associated materials (see
Under the PRA (44 U.S.C. 3501-3520), federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. The term “collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA requires federal agencies to publish a 60-day notice in the
1.
Centers for Medicare & Medicaid Services (CMS), HHS.
Notice.
This quarterly notice lists CMS manual instructions, substantive and interpretive regulations, and other
It is possible that an interested party may need specific information and not be able to determine from the listed information whether the issuance or regulation would fulfill that need. Consequently, we are providing contact persons to answer general questions concerning each of the addenda published in this notice.
The Centers for Medicare & Medicaid Services (CMS) is responsible for administering the Medicare and Medicaid programs and coordination and oversight of private health insurance. Administration and oversight of these programs involves the following: (1) Furnishing information to Medicare and Medicaid beneficiaries, health care providers, and the public; and (2) maintaining effective communications with CMS regional offices, state governments, state Medicaid agencies, state survey agencies, various providers of health care, all Medicare contractors that process claims and pay bills, National Association of Insurance Commissioners (NAIC), health insurers, and other stakeholders. To implement the various statutes on which the programs are based, we issue regulations under the authority granted to the Secretary of the Department of Health and Human Services under sections 1102, 1871, 1902, and related provisions of the Social Security Act (the Act) and Public Health Service Act. We also issue various manuals, memoranda, and statements necessary to administer and oversee the programs efficiently.
Section 1871(c) of the Act requires that we publish a list of all Medicare manual instructions, interpretive rules, statements of policy, and guidelines of general applicability not issued as regulations at least every 3 months in the
This quarterly notice provides only the specific updates that have occurred in the 3-month period along with a hyperlink to the full listing that is available on the CMS Web site or the appropriate data registries that are used as our resources. This is the most current up-to-date information and will be available earlier than we publish our quarterly notice. We believe the Web site list provides more timely access for beneficiaries, providers, and suppliers. We also believe the Web site offers a more convenient tool for the public to find the full list of qualified providers for these specific services and offers more flexibility and “real time” accessibility. In addition, many of the Web sites have listservs; that is, the public can subscribe and receive immediate notification of any updates to the Web site. These listservs avoid the need to check the Web site, as notification of updates is automatic and sent to the subscriber as they occur. If assessing a Web site proves to be difficult, the contact person listed can provide information.
This notice is organized into 15 addenda so that a reader may access the subjects published during the quarter covered by the notice to determine whether any are of particular interest. We expect this notice to be used in concert with previously published notices. Those unfamiliar with a description of our Medicare manuals should view the manuals at
States use Form OCSE-396 to report quarterly expenditures made in the previous quarter and to estimate program expenditures to be made and the incentive payments to be earned in the upcoming quarter. The Administration for Children and Families provides Federal funding to States for the Child Support Enforcement Program at the rate of 66 percent for all allowable and legitimate administrative costs of this program.
Tribes use OMB Form SF-425 to report quarterly expenditures made in the previous quarter. Form SF-425 is not included as part of this comment request.
As part of this request, minor changes are being proposed only in response to amendments to Federal regulations:
• 45 CFR 304.25(b) was amended to extend the quarterly reporting deadline for both reports from “30” to “45” days after the end of each fiscal quarter.
• 45 CFR part 95 was amended to require that all expenditures for a Statewide Child Support Enforcement System will now require an approved Advanced Planning Document (APD). Therefore, Line 6 on Form OCSE-396, “ADP Costs Without APD Required” is being eliminated as no longer necessary.
The necessary instructions are being amended in response to both changes.
Office of the Assistant Secretary for Health, Office of the Secretary, Department of Health and Human Services.
Notice.
As stipulated by the Federal Advisory Committee Act, the U.S. Department of Health and Human Service is hereby giving notice that the Presidential Advisory Council on HIV/AIDS (PACHA or the Council) will be holding a meeting and will discuss recommendations regarding programs, policies, and research to promote effective, prevention, treatment and cure of HIV disease and AIDS. The meeting will be open to the public.
The Council meeting is scheduled to convene on Wednesday, August 30, 2017 from 9:00 a.m. to approximately 5:00 p.m. (ET). The meeting will be open to the public.
200 Independence Avenue SW., Washington, DC 20201 in the Penthouse (eighth floor), Room 800.
Ms. Caroline Talev, Public Health Analyst, Presidential Advisory Council on HIV/AIDS, 330 C Street SW., Room L106B, Washington, DC 20024; (202) 795-7622 or
PACHA was established by Executive Order 12963, dated June 14, 1995, as amended by Executive Order 13009, dated June 14, 1996. In a memorandum, dated July 13, 2010, and under Executive Order 13703, dated July 30, 2015, the President gave certain authorities to the PACHA for implementation of the National HIV/AIDS Strategy for the United States (Strategy). PACHA is currently operating under the authority given in Executive Order 13708, dated September 30, 2015.
PACHA provides advice, information, and recommendations to the Secretary regarding programs, policies, and research to promote effective treatment, prevention, and cure of HIV disease and AIDS, including considering common co-morbidities of those infected with HIV as needed, to promote effective HIV prevention and treatment and quality services to persons living with HIV disease and AIDS.
Substantial progress has been made in addressing the domestic HIV epidemic since the Strategy was released in July 2010. Under Executive Order 13703, the National HIV/AIDS Strategy for the United States: Updated to 2020 (Updated Strategy) was released. PACHA shall contribute to the federal effort to improve HIV prevention and care.
The functions of the Council are solely advisory in nature.
The Council consists of not more than 25 members. Council members are selected from prominent community leaders with particular expertise in, or knowledge of, matters concerning HIV and AIDS, public health, global health, philanthropy, marketing or business, as well as other national leaders held in high esteem from other sectors of society. Council members are appointed by the Secretary or designee, in consultation with the White House. The agenda for the upcoming meeting will be posted on the
Public attendance at the meeting is limited to space available. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should notify Caroline Talev at
National Protection and Programs Directorate, DHS.
30-Day notice and request for comments; New Collection: 1670-NEW.
The Department of Homeland Security (DHS), National Protection and Programs Directorate (NPPD), Office of Cybersecurity and Communications (CS&C), Office of Emergency Communications, will submit the following Information Collection Request (ICR) to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995. DHS previously published this ICR in the
Comments are encouraged and will be accepted until September 5, 2017. DHS and OMB conducts this process in accordance with
Interested persons are invited to submit written comments on the proposed ICR to the Office of Information and Regulatory Affairs, Office of Management and Budget (OMB). Comments should be addressed to OMB Desk Officer, Department of Homeland Security and sent via electronic mail to
Enactment of 6 U.S.C. 571 governs the Office of Emergency Communications (OEC) and establishes a Director with specific responsibilities. This includes assisting the DHS Secretary in developing and implementing a program to support and promote the ability of emergency response providers and relevant government officials to continue to communicate in the event of natural disasters, acts of terrorism, and other man-made disasters; and ensure, accelerate, and attain interoperable emergency communications nationwide. In addition, 6 U.S.C. 573 authorizes the DHS Secretary acting through the OEC Director to conduct a baseline assessment of communications capabilities among emergency response providers and relevant government officials at all levels of government no less than once every five years. OEC is tasked with conducting a periodic nationwide assessment of emergency communications.
OEC's governing statute provides a framework for its periodic assessment. Accordingly, OEC, in coordination with its stakeholder partners, developed the
To gather baseline assessment information, OEC will deploy four versions of the
The SNS questions align with each of these elements. This design enables DHS to determine jurisdictional capability levels of operability, interoperability, and continuity as they collectively pertain to the use of emergency communications. For example, Governance questions will pertain to matters related to decision-making groups, agreements, funding, and strategic planning. Standard Operating Procedure questions will focus on procedures, guidelines, and content. Training and Exercise questions will focus on their nature, scope, and frequency. Technology questions will focus on infrastructure, solutions, and information-sharing. Usage questions will address frequency of use, proficiency, and resource
This is a new information collection. OMB is particularly interested in comments that:
1. Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
2. Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
3. Enhance the quality, utility, and clarity of the information to be collected; and minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Bureau of Ocean Energy Management, Interior.
Notice of availability of a Final Programmatic Environmental Impact Statement.
The Bureau of Ocean Energy Management (BOEM) is announcing the availability of a Final Programmatic Environmental Impact Statement (EIS) for evaluating potential environmental effects of geological and geophysical (G&G) activities in OCS waters of the GOM. The Final Programmatic EIS analyzes potential impacts of the proposed action, provides an analysis of reasonable alternatives to the proposed action, and identifies BOEM's preferred alternative. The Final Programmatic EIS considers G&G activities for BOEM's three programs,
The Final Programmatic EIS is available on BOEM's Web sites at
Jill Lewandowski, Ph.D., Chief, Division of Environmental Assessment, Office of Environmental Programs, Bureau of Ocean Energy Management, 45600 Woodland Road, VAM-OEP, Sterling, VA 20166 or by email at
Bureau of Ocean Energy Management, Interior.
Notice of availability of a final supplemental environmental impact statement.
The Bureau of Ocean Energy Management (BOEM) is announcing the availability of a Final Supplemental Environmental Impact Statement (Final SEIS) for the Cape Wind Energy Project. This supplement to the 2009 Final EIS has been prepared in response to a 2016 remand order of the U.S. Court of Appeals for the District of Columbia Circuit in
Michelle Morin, BOEM Office of Renewable Energy Programs, 45600 Woodland Road, Sterling, Virginia 20166, (703) 787-1722 or
On July 5, 2016, the U.S. Court of Appeals for the District of Columbia Circuit vacated the 2009 Cape Wind Energy Project Final EIS and ordered that BOEM: “supplement [the EIS] with adequate geological surveys before Cape Wind may begin construction.”
The Draft SEIS considered the only two alternatives that remained relevant as a result of the Court's remand order and CWA's lease and the approved Cape Wind COP: The Proposed Action (affirming BOEM's issuance of the existing lease), and the No Action Alternative (requiring BOEM to rescind lease issuance). BOEM published a notice in the
In the Final SEIS for the Cape Wind Energy Project, BOEM examines the available geological survey data, including the geotechnical data and reports submitted to BOEM since the 2009 Final EIS, and any other relevant data that relate to the adequacy of the seafloor to support wind turbines in the lease area. The Final SEIS also includes a summary of all the comments received on the Draft SEIS and BOEM's responses to those comments. The Final SEIS can be found on BOEM's Web site at:
This notice of availability to prepare a Final SEIS is in compliance with NEPA, as amended (42 U.S.C. 4231
U.S. International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission has received a complaint entitled
Lisa R. Barton, Secretary to the Commission, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436, telephone (202) 205-2000. The public version of the complaint can be accessed on the Commission's Electronic Document Information System (EDIS) at
General information concerning the Commission may also be obtained by accessing its Internet server at United States International Trade Commission (USITC) at
The Commission has received a complaint and a submission pursuant to § 210.8(b) of the Commission's Rules of Practice and Procedure filed on behalf of Bio-Rad Laboratories, Inc. and Lawrence Livermore National Security, LLC on July 31, 2017. The complaint alleges violations of section 337 of the Tariff Act of 1930 (19 U.S.C. 1337) in the importation into the United States, the sale for importation, and the sale within the United States after importation of certain microfluidic devices. The complaint names as a respondent 10X Genomics, Inc. of Pleasanton, CA. The complainant requests that the Commission issue a limited exclusion order, a cease and desist order, and impose a bond upon respondents' alleged infringing articles during the 60-day Presidential review period pursuant to 19 U.S.C. 1337(j).
Proposed respondents, other interested parties, and members of the public are invited to file comments, not to exceed five (5) pages in length, inclusive of attachments, on any public interest issues raised by the complaint or § 210.8(b) filing. Comments should address whether issuance of the relief specifically requested by the complainant in this investigation would affect the public health and welfare in the United States, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, or United States consumers.
In particular, the Commission is interested in comments that:
(i) Explain how the articles potentially subject to the requested remedial orders are used in the United States;
(ii) identify any public health, safety, or welfare concerns in the United States relating to the requested remedial orders;
(iii) identify like or directly competitive articles that complainant, its licensees, or third parties make in the United States which could replace the subject articles if they were to be excluded;
(iv) indicate whether complainant, complainant's licensees, and/or third party suppliers have the capacity to replace the volume of articles potentially subject to the requested exclusion order and/or a cease and desist order within a commercially reasonable time; and
(v) explain how the requested remedial orders would impact United States consumers.
Written submissions must be filed no later than by close of business, eight calendar days after the date of publication of this notice in the
Persons filing written submissions must file the original document electronically on or before the deadlines stated above and submit 8 true paper copies to the Office of the Secretary by noon the next day pursuant to § 210.4(f) of the Commission's Rules of Practice and Procedure (19 CFR 210.4(f)). Submissions should refer to the docket number (“Docket No. 3239”) in a prominent place on the cover page and/or the first page. (
Any person desiring to submit a document to the Commission in confidence must request confidential
This action is taken under the authority of section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and of §§ 201.10 and 210.8(c) of the Commission's Rules of Practice and Procedure (19 CFR 201.10, 210.8(c)).
By order of the Commission.
Bureau of Alcohol, Tobacco, Firearms and Explosives, Department of Justice
60-Day notice.
The Department of Justice (DOJ), Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), will submit the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995. The proposed collection 1140-0007 is being revised to change all references from “Implements of War” to “Defense Articles” including the title of the collection, which will be changed to Release and Receipt of Imported Firearms, Ammunition, and Defense Articles.
Comments are encouraged and will be accepted for 60 days until October 3, 2017.
If you have additional comments, particularly with respect to the estimated public burden or associated response time, have suggestions, need a copy of the proposed information collection instrument with instructions, or desire any additional information, please contact Desiree M. Dickinson, ATF Firearms and Explosives Imports Branch either by mail at 244 Needy Road, Martinsburg, WV 25405, or by email at
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address one or more of the following four points:
Overview of this information collection:
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7.
If additional information is required contact: Melody Braswell, Department
On February 15, 2017, the Assistant Administrator, Division of Diversion Control, Drug Enforcement Administration, issued an Order to Show Cause to John D. Bray-Morris, M.D. (hereinafter, Respondent), of Moriarty, New Mexico. The Show Cause Order proposed the revocation of Respondent's DEA Certificate of Registration No.FB5001538, on the ground that he does not hold authority to dispense controlled substances in New Mexico, the State in which he is registered with the Agency. Show Cause Order, at 1 (citing 21 U.S.C. 824(a)(3)).
With respect to the Agency's jurisdiction, the Show Cause Order alleged that Respondent is registered as a practitioner authorized to dispense controlled substances in schedules II through V, at the registered address of 1108 Route 66, P.O. Box 1520, Moriarty, New Mexico.
As for the substantive basis of the proposed action, the Show Cause Order alleged that on January 13, 2017, “the New Mexico [Medical] Board . . . entered an Order of Immediate Suspension and Notice of Contemplated Action . . . suspending [Respondent's] New Mexico Medical License No. 2003-0404 effective on that same date, which remains in effect until further Order of the Board, and that the Board contemplates additional action of restricting, suspending or revoking [his] license to practice as a physician.”
The Show Cause Order also alleged that the Board's Order of Immediate Suspension was based on Respondent's violation of an earlier Board order which suspended his medical license for violations of the State's Medical Practice Act.
The Show Cause Order further alleged that the Board's 2017 Order of Immediate Suspension was based on numerous new allegations, including,
The Show Cause Order thus alleged that pursuant to the Board's Order, Respondent is “not permitted to practice medicine in New Mexico” and therefore “lack[s] authority to handle controlled substances in” the State.
The Show Cause Order notified Respondent of his right to request a hearing on the allegations or to submit a written statement while waiving his right to a hearing, and the procedure for electing either option. Show Cause Order, at 3-4 (citing 21 CFR 1301.43). Finally, the Order notified Respondent of his right to submit a corrective action plan.
On February 22, 2017, a DEA Diversion Investigator assigned to the Albuquerque District Office personally served the Show Cause Order on Respondent. Gov. Mot. for Summ. Disp., at GX D, at 1-2. Thereafter, on March 23, 2017, Respondent, through his counsel, requested a hearing on the allegations and a stay pending resolution of the New Mexico Medical Board matter, then scheduled for May 17-19, 2017.
On March 23, 2017, the CALJ ordered the Government to “file proof of service” as well as evidence to support the lack of state authority allegation, as well as any motion for summary disposition, any motion challenging the timeliness of the hearing request, and any response to Respondent's stay request by March 31, 2017 at 2 p.m.
On March 31, 2017, the Government filed its Motion for Summary Disposition.
On April 10, 2017, Respondent filed his reply, requesting that the ALJ deny the Government's motion and stay the matter until after the Board hearing. Respondent's Reply, at 1. While Respondent admitted that his license to practice medicine in New Mexico had been suspended, he stated that “he has not yet had an opportunity to challenge the allegations in the . . . Order” and that “a due process hearing [was]
Respondent also argued that “[t]he plain language of Section 824(a)(3) provides that the loss of state authority constitutes a discretionary, not mandatory, basis for revocation.”
On April 11, 2017, the CALJ granted the Government's motion and recommended that Respondent's registration be revoked. Order Denying The Respondent's Request For A Stay; Granting The Government's Motion For Summary Disposition; And Recommended Rulings, Findings Of Fact, Conclusions Of Law, And Decision of the Administrative Law Judge (hereinafter, R.D.), at 4-5.
Denying Respondent's request for a stay, the CALJ noted that the Agency has repeatedly held that “revocation is warranted even where a practitioner's state authority has been summarily suspended and the State has yet to provide the practitioner with a hearing to challenge the State's action and at which he . . . may ultimately prevail.”
The CALJ also granted the Government's motion for summary disposition.
Neither party filed exceptions to the CALJ's Recommended Decision. Thereafter, the record was forwarded to my Office for Final Agency Action. Having considered the record and the Recommended Decision, I adopt the CALJ's recommendation that I revoke Respondent's registration.
Respondent holds DEA Certificate of Registration No. FB5001538, pursuant to which he is authorized to dispense controlled substances in schedules II-V as a practitioner, at the registered address of 1108 Route 66, P.O. Box 1520, Moriarty, New Mexico. Mot. for Summ. Disp., at GX A. His registration does not expire until July 31, 2017.
On January 13, 2017, the New Mexico Medical Board issued an Order of Immediate Suspension and Notice of Contemplated Action to Respondent, suspending his license to practice medicine. Mot. for Summ. Disp., Exhibit B, at 1-8. According to Respondent, a Board hearing was scheduled for May 17-18, 2017. Resp. Reply, at 1. However, subsequent to the CALJ's issuance of his decision, Respondent has submitted no evidence showing that his license had been reinstated, and according to the Board's Web site of which I take official notice, Respondent's license to practice medicine in New Mexico remains suspended as of the date of this Order.
Pursuant to 21 U.S.C. 824(a)(3), the Attorney General is authorized to suspend or revoke a registration issued under section 823 of the Controlled Substances Act (CSA), “upon a finding that the registrant . . . has had his State license . . . suspended [or] revoked . . . by competent State authority and is no longer authorized by State law to engage in the . . . dispensing of controlled substances.” With respect to
This rule derives from the text of two provisions of the CSA. First, Congress defined “the term `practitioner' [to] mean[ ] a . . . physician . . . or other person licensed, registered or otherwise permitted, by . . . the jurisdiction in which he practices . . . to distribute, dispense, [or] administer . . . a controlled substance in the course of professional practice.” 21 U.S.C. 802(21). Second, in setting the requirements for obtaining a practitioner's registration, Congress directed that “[t]he Attorney General shall register practitioners . . . if the applicant is authorized to dispense . . . controlled substances under the laws of the State in which he practices.” 21 U.S.C. 823(f). Because Congress has clearly mandated that a practitioner possess state authority in order to be deemed a practitioner under the Act, DEA has held repeatedly that revocation of a practitioner's registration is the appropriate sanction whenever he is no longer authorized to dispense controlled substances under the laws of the State in which he practices medicine.
Moreover, revocation is warranted even when a state board has resorted to summary process in suspending a practitioner's dispensing authority and the state has yet to provide the practitioner with a hearing to challenge the board's action. This is so “because `the controlling question' in a proceeding brought under 21 U.S.C. 824(a)(3) is whether the holder of a DEA registration “ `is currently authorized to handle controlled substances in the [S]tate.' ”
In his reply to the Government's Motion for Summary Disposition, Respondent argued that the authority contained in 21 U.S.C. 824(a)(3) is a “discretionary, not mandatory basis for revocation.” Respondent's Reply, at 2. While Respondent cites
Pursuant to the authority vested in me by 21 U.S.C. 824(a), as well as 28 CFR 0.100(b), I order that DEA Certificate of Registration No.FB5001538, issued to John D. Bray-Morris, M.D., be, and it hereby is, revoked. Pursuant to the authority vested in me by 21 U.S.C. 823(f), I further order that any pending application of John D. Bray-Morris, M.D., to renew or modify his registration, or for any other registration in the State of New Mexico, be, and it hereby is, denied. This Order is effective immediately.
On January 21, 2015, the Deputy Assistant Administrator, of the then Office of Diversion Control, Drug Enforcement Administration, issued an Order to Show Cause to Marcia L. Sills, M.D. (hereinafter, Respondent). The Show Cause Order proposed the revocation of Respondent's DEA Certificate of Registration AS1456361, pursuant to which she is authorized to dispense controlled substances in schedules II through V, at the registered location of 2741 NE 34 St., Fort Lauderdale, Florida. GE 1, at 6. As grounds for the proposed action, which also includes the denial of any pending application for renewal and any other applications for new DEA registrations, the Show Cause Order alleged that Respondent's “continued registration is inconsistent with the public interest.”
With respect to the Agency's jurisdiction, the Show Cause Order alleged that while Respondent's registration was due to expire on February 28, 2014, she “submitted a timely renewal” application.
As for the substantive grounds for the proceeding, the Show Cause Order set forth numerous allegations that between November 2011 and July 2012, Respondent violated Florida and Federal controlled substances laws in her prescribing of controlled substances to an undercover officer and seven other patients.
The Show Cause Order also alleged that a medical expert who reviewed at least eight medical files of patients (including the undercover officer) treated by Respondent “concluded that, in each case, [she] prescribed controlled substances to those patients without a legitimate medical purpose in the usual course of professional practice.”
The Show Cause Order also notified Respondent of her right to request a hearing on the allegations, or to submit a written statement in lieu of a hearing, the procedure for electing either option, and the consequence for failing to elect either option.
On February 6, 2015, Respondent filed a motion for extension of the time to respond to the Show Cause Order on the ground that she had been charged in a criminal case based on “essentially the same allegations and has maintained her [F]ifth [A]mendment right to remain silent pending trial” and that she “is not in a position to factually respond to this order until after her trial.” Motion for Extension of Time Pursuant to 21 CFR 1316.47(b). Respondent further requested that the proceeding be “abated . . . until the conclusion of the criminal matter.”
On February 19, 2015, Respondent filed a timely request for a hearing with the Office of Administrative Law Judges. In her request, Respondent “denie[d] all of the factual assertions” and legal conclusions of the Show Cause Order, and maintained that she “did not violate any of the provisions argued by the [G]overnment.” GE 20, at 1. However, on March 6, 2015, Respondent submitted a letter withdrawing her request for a hearing; the same day, the CALJ granted Respondent's request and terminated the proceeding.
On October 13, 2016, the Government submitted its Request for Final Agency Action and an evidentiary record. Based on Respondent's letter withdrawing her request for a hearing, I find that Respondent has waived her right to a hearing. 21 CFR 1301.43. I therefore issue this Decision and Order based on relevant evidence submitted by the Government. I make the following factual findings.
Respondent is a physician licensed by the State of Florida. Respondent is also the holder of DEA Certificate of Registration No. AS1456361, pursuant to which she is currently authorized to prescribe controlled substances in schedules II-V, at the registered address of 2741 NE 34 Street, Fort Lauderdale, Florida. GE 1, at 1. In addition, she is authorized to dispense Suboxone and Subutex, pursuant to the Drug Addiction Treatment Act of 2000 (DATA), for the purpose of treating up to 30 opiate-addicted patients.
Respondent's registration was due to expire on February 28, 2014. While other agency records show that she submitted a renewal application on March 5, 2015, according to the Government, the “renewal was marked received by the DEA mail room on March 1, 2014,” and “was likely received several days prior to March 1, 2014” due to security screening measures. RFAA, at 1 n.1. Because Respondent's renewal was timely, I find her registration has remained in effect pending the resolution of this proceeding.
At all times relevant to this proceeding (November 2011 to July 2012), Respondent was employed at the Pompano Beach Medical Center (PBM), located at 553 E. Sample Road, Pompano Beach, Florida. PBM was the subject of a criminal investigation which included undercover operations conducted on May 31 and July 16, 2012 by a former DEA Task Force Officer and Broward County Sheriff's Office Detective (hereinafter “UC”) who posed as a patient at two medical appointments during which he was seen by Respondent, who prescribed various controlled substances to him.
During both visits with Respondent, the UC used audio and visual recording devices.
Following the UC's visits, the investigators obtained a state search warrant for PBM, and during the execution of the warrant, seized numerous patient files, including those of the UC and seven other patients.
As part of its investigation, the Government retained Dr. Reuben M. Hoch, an Interventional Pain Medicine Specialist and Anesthesiologist, who reviewed the medical files, transcripts and recordings of the undercover officer's two visits with Respondent, as well as the patient files for seven other patients treated by Respondent. Dr.
Dr. Hoch, who is licensed in Florida and New York, currently practices pain medicine at Boca Raton Pain Medicine in Delray Beach, Florida, and previously served as the Chief of Multidisciplinary Pain Management Service in the Departments of Neurosurgery and Anesthesiology at The Brooklyn Hospital Center.
On May 31, 2012, the UC presented at Pompano Beach Medical (PBM) and requested an appointment. GE 25, at 1 (Declaration of UC). The UC told the receptionist he had been working out of town for an extended period and had not been to PBM in the last five months.
After the receptionist told the UC that the appointment would cost $230 plus $30 for the drug test, the UC made an appointment for later that day.
He also filled out various forms, including one titled: “Patients [sic] Follow Up Sheet.” GE 11, at 36. On the form, the UC circled the neck portion of a body diagram to indicate where he felt pain; according to the UC, he did so “even though the MRI which [he] had previously provided to PBM was of [his] lower back.” GE 25, at 2;
On a numeric pain scale of 0-10, with 10 meaning “hurts worst,” [sic] the UC indicated the intensity of his pain as “0” “with medication” (“no pain”) and “2” “without medication” (“hurts little bit”).
The UC then met with Respondent, telling her that he was a film stuntman who often travelled, that he had been away for work and just returned, and that he had “stiffness in [his] lower back and . . . neck.” GE 7, at 1-2 (Transcript of May 31, 2012 visit). Respondent asked the UC how long it had been going on, and UC told her he had seen “five . . . I think, six doctors” and “so I have a lot of times I have the stiffness . . . [u]mm aches.”
Respondent, reading paperwork, then asked the UC a series of questions, including whether he had a lockbox or safe to keep medicine in (telling him he should get one when he responded “no”), whether he had little kids living with him, if he was on disability, and whether he had “any problems with sleeping or anxiety?” GE 7, at 3. The UC replied: “Once in a while. I used to take a little bit of Xanax to sleep, but I think I can probably work without it.”
Respondent, who was still reading the form, then asked the UC if he had “seen another pain management doctor in 28 days?” UC responded “No.” GE 7, at 3.
After asking about recent hospitalizations, chest pains, shortness of breath or cardiac problems, Respondent asked the UC if he “kn[ew] the risks of the medicine, addiction, overdose, death, damage to your liver or kidneys?” GE 7, at 3-4. Without waiting for a reply from the UC, Respondent added that “we have your blood work to check your liver and kidneys and I'll look at your MRI too.”
Respondent then asked UC to stand up “carefully . . . let me see how you can bend forward.”
After asking the UC his age, Respondent asked: “[I]s your neck okay? . . . Good range of motion in your neck?” GE 7, at 4. UC, shook his head left to right, and replied: “Yeah I feel more stiffness when I do, you know, like I do heavy squats. Things like that. That's when I usually have those feelings.”
Respondent, while looking through paperwork, then stated: “so these labs are okay. And I want to look at your MRI.” GE 7, at 4. After briefly looking at the MRI, Respondent stated: “[n]othing too terrible . . . I don't see any herniated discs,” and while noting that he had a bulging disc, she added:
Continuing, Respondent stated: “we don't give narcotics for spasms . . . [a]nd we don't give [S]oma. I will give you another muscle relaxant.” GE 7, at 5. Respondent added: “[a]nd if you want something instead of Valium I'll give you something for that too.”
Respondent then told UC that Klonopin, “like Valium and Xanax, is for anxiety. And the reason why people take it at night is to reduce anxiety so they can sleep. It is not a sleeping pill.” GE 7, at 5. She added: “so Klonopin is long acting unlike Valium and Xanax which are short acting benzos [sic] every 3 to 4 hours, Klonopin is 12 to 24.”
Respondent, looking at the UC's file, then returned to discussing the UC's MRI, stating: “[o]kay so there's a bulge which by itself it wouldn't mean anything . . . [b]ut I'm gonna make a note here . . . the one up from your tailbone L4,5 . . . it has a small tear in the end which means that due to trauma, something was, the disc was trying to herniate and didn't quite make it . . . and also there is a little bit of pushing of the nerve . . . very little . . . but it is there.” GE 7, at 5-6. The UC interjected with “Okay” sporadically throughout Respondent's discussion.
Respondent then asked the UC: “[h]ow much Roxicodone were you taking? We don't do 120. What were you taking four or five a day? Tell me.” GE 7, at 6. The UC responded “[y]es,” and Respondent asked: “About four a day? Okay we're good for that. And . . . the Klonopin, I'm going to give you a milligram. . . . I'm also gonna give you some ibuprofen. Because if your [
As the video shows, only after she discussed the dosing of Flexeril, did Respondent leave her desk chair and approach the UC, who stood up. According to the UC, Respondent “asked me to stand up again, placed a stethoscope on my chest for approximately two seconds, and asked me to sit.” GE 25, at 3 (UC Declaration). While the video feed was blocked during that action, the audio reveals that Respondent told UC a story about a former patient and that she did not stop talking during the time she placed the stethoscope on the UC's chest. She then had him sit, and, according to the UC, “squeezed my calves while asking if he had any tenderness here?”
After some unrelated discussion, Respondent asked the UC how often he came back, to which he replied “I'll come every 28 days.” GE 7, at 8. She then asked: “[d]o you try to spread your medicine out if you don't have it?”; the UC replied: “[y]eah well I do the best I can with what I have.”
Respondent then asked the UC if he “had a pharmacy that would honor [his] prescriptions.” GX 25, at 3; GX 7, at 8. The UC told her that “last time I had a problem. And I actually . . . a friend . . . sent me to an online pharmacy . . . and I sent them and they sent them back I think it was in Georgia.” GX 7, at 9. Respondent told him “I would highly recommend not doing that anymore in Georgia because DEA is looking at things across the states. If you can find an online pharmacy . . . okay, a lot of them have been shut down since you've been here.”
The UC then asked if there “are any pharmacies that are known to the facility here that are pretty . . .? ” and Respondent replied: “let's ask them in the front.” GX 7, at 9. Respondent stated that she “can't recommend one. They know who goes to where. If you have a relationship with one I then was gonna [sic] encourage you to go back . . . that's your best bet.”
Respondent further told the UC what days of the week she was at the clinic, prompting him to ask: “[w]hat would you recommend? If it wasn't the oxycodone, morphine or Dilaudid?” GE 7, at 9. Respondent replied: “I would go with the Dilaudid myself.”
Respondent wrote the UC prescriptions for 112 tablets Roxicodone (oxycodone) 30 mg “for pain,” 28 tablets Klonopin (clonazepam) 1 mg “for anxiety,” 56 tablets Ibuprofen 400 mg, and 28 tablets Flexeril 10 mg. GE 8 (copies of prescriptions); GE 11, at 32 (Encounter Summary). A report in the UC's file shows that he filled the Roxicodone prescription on June 5, 2012 at Coral Springs Specialty Pharmacy in Coral Springs, Florida.
The UC's file includes a three-page visit note signed by Respondent on May
On the form, Respondent circled “back” and “lower” as the location of UC's pain, noted the “Duration of pain” as “3 yr[s],” and that the “Severity of Pain” was “severe” (as opposed to “mild” or “moderate”).
The form also contains blanks for noting the UC's “Pain Scale off meds (0-10)” and “on meds.”
The form's first page also contains a checklist for ROS (Review of Systems), on which Respondent checked: “All negative unless checked.”
The form also includes four diagrams of the human body, including a posterior view; on this diagram, Respondent circled the neck and noted “ROM WN,” circled the lower back and noted “Flex 90 Ext 10,” and circled the back of the knees and noted “reflexes =.”
The form's second page included entries for a Neurological exam.
Under “Assessment,” Respondent made marks next to the following entries:
Patient satisfied, doing well on current medication and treatment plan; pain condition stable.
Patient taking meds as prescribed and no adverse side effects, no new problems and no changes;
Denies any drug charges or arrests since last visit;
Medication storage and safety issues addressed and patient uses lock box; Diagnosis and treatment plan are justified and based on diagnostic results, history and physical exam.
Under “Diagnosis, Respondent checked “Anxiety,” “Disc Bulge,” “Muscle Spasms,” “CHRONIC NON-MALIG PAIN SYNDROME,” and “Other,” after which she made a handwritten note stating: “L45 Bulge tear annular Bilat neural foraminal encroachment.”
Under “Plan,” Respondent made lines through multiple entries. These included: (1) “wt loss, smoking cessation, reduce salt and caffeine, F/U with PCP”; (2)”, “refer to PT, neurologist, neurosurgeon, orthopedist, psychiatrist, addiction specialist as needed”; (3) “F/U in one month to follow the success of treatment and need for adjustments”; (4) “Patient understands importance of weaning meds to minimum effective dose”; (5) “Yoga, stretching exercises; Fish oil at 3-6 grams/day; glucosamine/Chondroitin Sulfate as suggested”; (6) “Discussed informed consent, risks/benefits of given medications, alternate therapies; pt understands”; and (7) “Continue meds,” followed by for a second time, “patient understands importance of weaning meds to minimum effective dose.”
The third page includes a pre-printed list of both controlled and non-controlled drugs. Of note, the only narcotic listed on the pre-printed form is Roxicodone in the 30 milligram dosage form, next to which the form contains the pre-printed notations of “#84 #112 #140 #168,” with “#112” circled on the UC's form.
On checking out, PBM's receptionist provided the UC with the four prescriptions. GE 25, at 3. She also provided him with an appointment card, which listed his next appointment as scheduled for June 28, 2012.
In his declaration, the UCs stated that at no time during his visit with Respondent did she inquire “about any past treatments for pain other than to note what other doctors at PBM had prescribed, that there was no inquiry into any underlying or coexisting diseases or conditions, the effect of pain on my physical and psychological function, or whether I had any history of substance abuse.” GE 25, at 5.
On July 16, 2012, the UC returned to PBM.
Another question on the form asked: “Has the pain affected any of the following: Social Activities, Work, Exercise, Mobility, Appetite, Sleep.”
After greeting the UC, Respondent asked him when he had last been to the clinic, to which the UC replied that he was two weeks late and offered the explanation that Respondent was gone the first week and then had a job out of town. GE 9, at 1-2. Respondent then spent several minutes preoccupied with a cellphone text message, after which she asked him a series of questions because the clinic had redone “all the forms” since his last visit.
Respondent then asked the UC “no disability, no rehab, no addiction?” to which the UC answered “no,” followed by whether he had ever “ha[d] surgery for [his] back?” and “physical therapy, injections?,” with the UC answering “no” and “nope.” GE 9, at 4; GE 5, V-0003, at 15:36:30-15:36:48.
Respondent said, “Okay, just the meds. You haven't seen anyone else in the past 28 days?” GE 9, at 4. UC replied “No.”
Next, Respondent asked the UC for his pain level “[o]ff medicine . . . on a scale of ten to zero.” GE 9, at 4. After the UC replied: “[o]ff medicine, two,” Respondent looked up from her desk at him and demonstrated a line on the desk, explaining, “Okay, ten is the worst . . . zero is perfect. Without medicine it would be closer to ten.”
Respondent then asked “Okay and then with medicine?” to which UC replied “Zero?” GE 9, at 5. Respondent stated that she was not “not trying to you know,” prompting the UC to state that he “totally underst[ood],” after which Respondent explained that “I have to go over this each time. . . . Pain worse lifting, bending, sitting, standing?”
Respondent asked: “What makes it better? Lying, resting, ice, heat, massage?”; the UC replied: “I don't really do any of those things, so it's you know, like I said, it's just” before Respondent interjected by stating “Meds” and asked “does the pain affect your work, sleep, mood, etc?.” GE 9, at 5.
Respondent replied “Okay. Uh, well we certainly wouldn't just give pain medicines and narcotics so your [sic] working out is better,” to which UC replied, “No, no, no I understand, I understand.” GE 9, at 5. The following exchange then ensued:
Respondent: “So does the pain affect anything else in your life?”
UC: “What are the options again?”
Respondent: “Work” (stated slowly and emphatically).
UC: “Let's say work.”
Respondent: “Sleeping.”
UC: “Work.”
Respondent: “Relationships.”
UC: “Work.”
Next, Respondent asked the UC if his “quality of life [is] better with medicine than without?”; UC answered “sure.” GE 9, at 6. Respondent then stated: “Otherwise you shouldn't be on the medicine,” to which the UC replied “right.”
After Respondent and the UC discussed at length whether he needed to obtain a lockbox or safe for his medicine to protect it from being stolen, Respondent looked at the UC's MRI and stated: “there was some muscle spasm there . . . bulges we don't treat. But your bulges have . . . what we call encroachment or it had narrowing of the disc in that area . . . which is kind of rare . . . I better put that down.” GE 9, at 8; GE 5, V-0003, at 15:38:37-15:42:13.
Respondent then asked UC “so you satisfied with the medicine?” GE 9, at 9. UC told her that he thought she “took me down just a little bit less from the last doctor which is no big deal but the two weeks off . . . definitely, definitely ran out of medication so.”
UC then told Respondent that from the list of seven pharmacies he had obtained from PBM at his previous visit, the seventh pharmacy filled the prescriptions. GE 9, at 9. The UC further stated that: “[t]he first six said no or they didn't have it. The problem was that the last one is, the pharmacist said `I can fill the oxycodone, I can fill the ibuprofen, and I can fill the . . . other . . . I don't even remember what the other one was to t[ell] you the truth.”
Respondent noted that “Xanax is five times more dangerous than Klonopin,” and the video shows that Respondent threw her hands in the air and stated: “I don't understand this . . . this is a low dose. That is the first time I heard that.” GE 9, at 9. UC told her that the pharmacist told him to go fill it somewhere else, to which Respondent replied: “[t]hat's a cuckoo pharmacist.”
Respondent the told the UC to “[g]o take it to another pharmacy. That's not doctor shopping.” GE 9, at 10. Continuing, Respondent stated:
Respondent then told UC she would “write that and I'll write another non-narcotic. She's gonna [sic] fill Roxicodone but she won't fill one milligram of Klonopin?” GE 9, at 10. The UC told Respondent that the pharmacist “said she wouldn't fill the oxycodone without the other ones
UC stated that this was the reason he “was sending them out to Georgia and getting them sent back,” to which Respondent replied: “If you're gonna do that then I have to have proof that you're getting them filled. . . . The reason why we have the state law is so we can track the narcotics . . . the medicines and if they go to Georgia we can't track them in Florida.” GE 9, at 10-11. After the UC told Respondent he had “filled the last ones here,” Respondent told the UC that if he ever “filled out of state . . . get us a paper copy . . . the exact medicines, the dosage and the date.”
After re-iterating that it was not doctor shopping for the UC to take the Klonopin prescription to another pharmacy, Respondent asked him to “stand up . . . and let me see how you're bending.” GE 9, at 11.
Respondent then told the UC to sit down and face her, and after he sat down, Respondent appeared to lift one leg straight out and then the other, asking “Any pain in your back?” GE 9, at 12. The UC replied: “I'm just . . . my legs are just tight, tight, tight. I just did legs. My hamstrings feel like they're gonna light up.” Respondent replied “I'm talking about your back” and UC replied “No.”
At this point, Respondent returned to her desk. As the video shows, the entire physical exam lasted just over one minute, during which the UC was never put in the supine position. GE 5, V-0003, at 15:45:36-15:46:47.
The UC then told Respondent that “most problematic thing is when I do squats . . . . heavy squats” and this is “when I can feel the majority of any kind of stiffness in my back[,] but right now it feels good.” GE 9, at 12. The UC then asked Respondent if he should “have surgery for that tear,” with Respondent stating that she “wouldn't recommend it” and then asked if his pain “seem[ed] to be worse on one side versus the other.”
After a short discussion of her having been “away for a couple of days,” Respondent, in an apparent reference to the quantity of the UC's next oxycodone prescription, stated: “Alright let's go to one forty,” prompting the UC to say “okay,” after which Respondent added: “I can't justify more than that.” GE 9, at 13; GE 5, V-0003, at 15:48:00-15:48:29.
While writing the prescription Respondent again was distracted by a cell-phone text message, which she returned before repeating: “Okay so we're gonna [sic] go up to one forty . . . any side effects you let me know about. And I'm gonna write for Klonopin again.” GE 9, at 13-14. After another brief discussion of why the pharmacist had refused to fill the previous Klonopin prescription with Respondent stating that the Klonopin “is a very good match with oxycodone and doesn't potentiate the side effects of oxycodone,” Respondent told UC she was going to give him two non-narcotic prescriptions so he could “get them filled someplace else.”
The UC and Respondent then discussed the street price of oxycodone, during which UC stated that “you can buy them on the street for [13] dollars,” prompting Respondent to state: “[n]o, [y]ou can't buy them on the street for [13] dollars” and that the price was “at least double” or “triple.” GE 9, at 14-15; GE 5, V-0003, at 15:50:25-15:50:53.
The UC explained that he knew that oxycodone was “going for a lot of money up in Tennessee and places like that” and that “it's just crazy when you spend over a thousand dollars for a prescription”; Respondent stated: “but they'll fill the Roxicodone. I mean, I'm just flabbergasted.” GE 9, at 15. After the UC stated that he was also “taken back by that,” Respondent stated: “[t]his is gonna be [140] for the pain. . . . How can a pharmacist . . . they'll fill the oxycodone . . . but they, I promise you there was another reason why that wouldn't fill it. There had to be another reason.”
Respondent then told the UC that she was giving him “two small” “non-narcotic” prescriptions for “twenty-eight” ibuprofen “for each pharmacy that you might have to go to.” GE 9, at 15-16. She then told Respondent that “there's nothing to say if you went back to the same pharmacy . . . that another pharmacist wouldn't even bat an eyelash . . . because there's nothing to bat an eyelash over.”
Respondent then prepared on a computer prescriptions for 140 oxycodone 30 (“for pain”) and 28 Klonopin 1 mg (“for anxiety”), telling him to “hold onto the Klonopin. If they won't fill it just take it.” GE 9, at 16;
In addition to the oxycodone and Klonopin prescriptions, Respondent provided the UC with a prescription for 28 Flexeril 10 mg “for muscle spasm,” and two prescriptions for 28 ibuprofen 400 mg. GE 10, at 1-5;
In the UC's patient file for the July 16, 2012 visit, Respondent noted the lower back as the location of UC's pain, that the duration of his pain was three years, and checked the box indicating that his pain was “severe.”' GE 11, at 25. As for the precipitating event, Respondent checked the box for “unknown” and wrote “”work-stunt man.”
Respondent wrote the word “meds” to indicate his “previous pain
On the second page, Respondent checked “All negative” for her review of the UC's systems.
The form's third page includes Respondent's “Assessment.”
In the Diagnosis section, Respondent checked “Anxiety,” “Disc Bulge,” “Muscle Spasms,” “Chronic Non-Malignant Pain Syndrome” and “Other,” after which she handwrote what appears as “post. Bulge c torn annulus + bilat foraminal encroachment.”
As with the form used at the previous visit, page 3 lists both controlled and non-controlled medications with specific dosage quantities and quantities. As before, the only narcotic listed is Roxicodone 30 mg with four different quantities: 84, 112, 140 and 168. Consistent with the prescriptions she issued, Respondent checked “Roxicodone 30 mg and circled “#140,” as well as Klonopin and circled both “1 mg” and “#28.”
Dr. Hoch, the Government's Expert, reviewed the medical files, transcripts and recordings of the UC's two visits with Respondent. Based on his review, the Expert found that Respondent “failed to establish a sufficient doctor/patient relationship with [UC] and that the prescribing of controlled substances was outside the usual course of professional practice and for other than a legitimate medical purpose.” GE 24, at 3. The Expert provided extensive reasons for his conclusion.
First, the Expert explained that “[t]he documented record fails to show that [Respondent] conducted an adequate evaluation of the [UC]” in that “a complete medical history was not taken.”
The Expert also found that while the UC “stated that he had seen as many as six other doctors for his pain” and “signed a release authorizing [PB] to obtain and review his prior medical records,” there are no records from physicians who treated the UC prior to his going to PBM.
The Expert further found that Respondent “failed to conduct an adequate physical examination of” the UC.
The Expert also faulted Respondent for having increased the quantity of the UC's oxycodone prescription from 112 to 140 dosage units at the July 16, 2012 visit.
Next, the Expert faulted Respondent because she “also failed to determine and/or document the effect of pain on the [UC's] physical and psychological function.”
The Expert also found that Respondent “failed to create and/or document a sufficient treatment plan.”
The Expert also concluded that his review of the transcripts and recordings of UC's visits with Respondent “indicates that [Respondent] herself doubted there was a legitimate medical need to prescribe the large amounts of opioid medications that were prescribed.”
The Expert further noted that Respondent “never inquired as to the treatment UC may have received prior to coming to [PBM][,] [n]or did she discuss any non-narcotic treatment [he] may have received from any other doctor at PBM.”
Next, the Expert concluded that Respondent “failed to sufficiently monitor [the UC's] compliance in medication usage.”
The Expert also found that Respondent “ignored the numerous inconsistencies in the records which constitute red flags for abuse and/or diversion.”
The Expert also noted that at the July 16, 2012 visit, the UC initially stated that his pain “level was `two' without medication,” but when prompted by Respondent, he “changed it to `four or five.' ”
Next, the Government's Expert opined that “there was no legitimate medical justification for the amount of oxycodone prescribed to” the UC by Respondent.
The Expert also found that “there was no justification for increasing the amount [on] July 16, 2012.”
The Expert further opined that “there was no legitimate medical justification for prescribing clonazepam, a benzodiazepine utilized to treat anxiety and, in some cases, sleep disorders.”
The Expert's ultimate conclusion was that the controlled substance prescriptions Respondent provided to the UC “were not justified given [the UC's] complaints and medical findings, and certainly not in the dosages or frequencies prescribed.”
On November 2, 2010, D.G., who was then 32 years old and listed his residence as being in Niceville, Florida, which is nearly 600 miles from Pompano Beach, first went to PBM and was seen by Dr. Gabriel Sanchez. GE 17, at 5, 22. According to the intake forms, D.G.'s chief complaint was “sharp, intermittent pain in neck & upper back” which started in 1999.
D.G. also signed a Pain Management Agreement in which he agreed that the “controlled substance prescribed must be from the physician whose signature appears on this agreement or in his/her absence, by the covering physician, unless specific authorization is obtained for an exception.”
D.G. was also subjected to a drug test at his first visit.
At D.G.'s first visit, Dr. Gabriel Sanchez
Thereafter, D.G. did not return to PBM until July 6, 2011.
D.G.'s record shows that his next visit occurred on September 7, 2011, on which date he again noted on the Follow-Up sheet that his pain was “always there,” that it got “worse when [he] moved in certain ways,” checked various activities his “pain affects,” and rated his pain “without medication” as an 8, and “with medication” as between 3 and 4.
Yet a Drug Screen Results Form indicates that D.G. tested positive for oxycodone at this visit.
Thereafter, D.G. went to PBM monthly where he saw Dr. T.R., who increased his oxycodone 30 prescription from 140 to 168 du (during his November 2, 2011 visit “as per pt. request”) as well as 24 Xanax 2 mg, (along with Nortriptyline and Mobic), after which D.G. saw Dr. A.E., who also issued him prescriptions 168 du of oxycodone 30 and 24 Xanax 2 through March 22, 2012.
On April 19, 2012, D.G. was treated by Respondent. On his “Patients [sic] Follow-Up Sheet,” he again reported that his pain was always there, that it was worse when he moved in certain ways, and that it affected his social activities, work, exercise, mobility and sleep.
In the “Pain History Follow Up” section of the visit note, Respondent indicated that D.G. has severe neck pain which was throbbing, sharp, and tingling, that the pain's “duration” was 15 years, and wrote “football” as the precipitating event.
Under Review of Systems, she indicated that all were negative.
On the second page of the note, Respondent placed check marks next to “yes” for various neurological exam items and made no notation that D.G. had any focal deficits.
In the section for her “Assessment,” Respondent placed a checkmark next to “Patient satisfied, doing well on current medication and treatment plan; pain condition stable.”
Under Plan, Respondent marked a series of marks next to each item on the list, to include “wt. loss, smoking cessation, reduce salt and caffeine, F/U with PCP”; “Refer to PT, neurologist, neurosurgeon, orthopedist, psychiatrist, addiction specialist as needed”; “urine tox screen twice a year or as needed to monitor addiction/diversion”; “Yoga, stretching exercises, Fish oil at 3-6 grams/day; Glucosamine/Chondroitin Sulfate as suggested”; “Discussed informed consent, risks/benefits of given medications, alternate therapies; pt understands”; and “Continue meds, patient understands importance of weaning meds to minimum effective dose.”
As with the UC's visit notes, Page 3 contained a list of medications at varying strengths and dosages, but only listed a single narcotic, that being Roxicodone 30 mg, next to which Respondent wrote a checkmark and circled “#168” (the maximum number listed).
A computer-generated “Encounter Summary” lists diagnoses of “Cervical Spinal Stenosis,” “Cervicalgia,” and “Chronic Pain Syndrome.”
On May 17, 2012, D.G. returned to PBM and again saw Respondent. D.G. filled out his “Patients [sic] Follow-Up Sheet” answering each question exactly as before, including indicating his pain was a “3” with medication and an “8” without medication.
Respondent filled out the Pain History Follow Up sheet, indicating that the neck was the location of D.G.'s pain, that it was severe, throbbing, and sharp, that it had been present for 15 years and precipitated by “football.”
Under ROS, she noted that all findings were negative, and in the PE section, she made a series of scribbles over the various descriptors for normal findings for each exam item.
In the neurological exam section, she checked “Yes” next to each of the items listed, and in the orthopedic section, she again noted a negative for both a right and left leg raise test.
Under Diagnosis, she again checked Cervicalgia, Disc Herniation “C56/67,” Hypertension and Chronic Non-Malignant Pain Syndrome.
On the page containing the list of medications, strengths and dosages, Respondent again checked the boxes for Roxicodone 30 (circling “#168”), Xanax 2 mg (writing “↓” and “#15”), and Amitriptyline #28, writing “50” for the drug strength.
D.G.'s next appointment with Respondent was on June 14, 2012.
Respondent filled out the revised Pain History form, with few differences from the previous visit, notably that D.G.'s “Pain Scale off meds (0-10) [was] 10”; “Pain Scale on meds (0-10) [was] 3.”
As at the previous visit, she checked “all negative” in the review of system, scribbled over various normal findings in the physical exam section, circled “yes” for each item in the neurological section, and indicated that various “orthopedic” tests were negative.
Under Assessment, Respondent checked the line for “Patient Satisfied, understands how to take current medication and treatment plan.”
As for her plan, Respondent checked the line for “PCP obtained/referred for following conditions” after which she added: “For HTN in Ft Walton Bch, Fl,” below which she wrote: “Pt will Bring copy of Doctors HTN Report Next Visit.”
Respondent prescribed 168 Roxicodone 30 mg, 56 MS Contin 30 mg BID, discontinued the Xanax and added #56 Klonopin 1 mg.
D.G.'s file contains a memo from the Clinic Director of the Hope Medical Clinic, a free clinic located in Destin, Florida, which was faxed to PBM on July 11, 2012, one day before D.G.'s next appointment.
On July 12, 2012, D.G. returned to PBM and again saw Respondent. On the “Patients [sic] Follow-Up Sheet,” he again indicated that the pain was “always there,” that it affected his social activities, work, exercise, mobility, and sleep, that the pain was 3 “with medication” and 8 “without medication,” and that he was satisfied with his current medication.
Respondent filled in the blanks in the Pain History section of the visit note, making the same notations as before, including that D.G.'s pain scale “off meds” was “10”, but “3” with medication.
The Expert reviewed D.G.'s medical file, and concluded that the controlled substance prescriptions Respondent issued to D.G. between April 19, 2012 and July 12, 2012 were issued outside the usual course of professional practice. GE 24, at 13. The Expert set forth multiple reasons for his conclusion.
First, he found that “the medical history and physical examinations [were] inadequate and that it was not reasonable for Registrant to rely on the evaluations of other providers at” PBM.
The Expert also found that Respondent “prescribed additional narcotics without any medical justification.”
The Expert further found that D.G.'s “records contain no evidence that [Respondent] addressed the effect of pain on D.G.'s physical and psychological function. The Expert further explained that “the checklist is devoid of any explanation for how D.G.'s pain affected his social activities, mobility, work, exercise or sleep.”
The Expert similarly opined that Respondent's “treatment plan was wholly inadequate and . . . consisted only of a checklist of recommendations.”
Finally, the Expert opined that Respondent “ignored numerous `red flags' for diversion.”
The Expert noted that on September 7, 2011, D.G. “tested positive for oxycodone despite no evidence he had received a prescription after June 2011.” GE 24, at 14. He also noted that “[o]n that date, [D.G.] denied having seen other `medicating prescribing pain doctors' and denied receiving any prescriptions from other physicians.”
Finally, the Expert noted that D.G. resided in Niceville, Florida, which is approximately 596 miles from PBM.
On February 28, 2011, J.A., a resident of Plantation, Florida, was initially treated at PBM by Dr. Gabriel Sanchez. GE 18, at 132-33. At his first visit, his chief complaint was nerve damage to his back and neck which had started
J.A. also signed two releases for medical records.
J.A. presented an MRI report for his lumbar spine (which was done two months earlier) which showed “[m]inimal central bulges L4-5 and L5-S1 without nerve root compressions” and “[m]inimal facet and ligamentum flavum hypertrophy at the same 2 levels.”
According to the initial evaluation form, during the neurological exam, J.A. had a positive Spurlings test bilaterally and a positive straight leg raise test bilaterally.
Dr. Sanchez listed his diagnosis as “Chronic Discogenic Mid Back and Neck Pain.”
J.A. was seen monthly at PBM by Dr. Sanchez and other physicians through July 2011, and again on October 24, 2011.
Yet at his May 26, 2011 visit, J.A. reported that his pain level was a 10 “with medication” and either 6 or 8 “without medication.”
On June 23, 2011, J.A. was seen by still another doctor, who noted that he complained of “constant pain upper thoracic spine” and that his pain level was “9/10.”
J.A. returned to PBM on July 21, 2011, this time listing his pain as an 8 “with medication” and a “10” without medication.
J.A. did not return to PBM until October 24, 2011, three months later, when he was seen by Dr. T.R.
Dr. T.R. noted his “pertinent physical exam” findings as “H/T N,” “SLR—thigh pain,” and the “L/S ROM” was “F 60” and “E 20.”
On November 21, 2011, J.A. returned to PBM and saw Respondent for the first time.
Respondent completed a “Pain History Follow Up” where she indicated that the location of J.A.'s pain was his lower back.
A handwritten note “10-24 UDS + opi + mtd + oxy” also appears on this form.
On the view of body diagram, Respondent circled the back of the neck
In the Neurological section, she filled in the “Yes” line for all neurological exam items indicating that there were no focal deficits, and in the Orthopedic Section, she indicated that she did a straight leg raise test which was negative for both legs.
On the second page of the form for this visit, Respondent handwrote “no” next to the statement: “Patient satisfied, doing well on current medication and treatment plan; pain condition stable.”
Under the Diagnosis section, Respondent checked “Disc Bulge” and handwrote “L45/L5S1,” as well as checked “Insomnia,” “Chronic Non-Malignant Pain Syndrome” and handwrote “Ligamentum flavum,” “Neuropathic pain?” and “Facet Hypertrophy.”
In the section for listing medications and other recommendations, she checked “Roxicodone 30 mg,” circled “#140” and handwrote “wean next visit”; she also checked “Xanax” and circled “1 mg” and “#28” and handwrote “wean ↓.”
Respondent next saw J.A. on December 19, 2011.
Respondent filled out the Pain History Follow Up form indicating that J.A. complained of severe lower back pain with no radiation due to burns from the 2001 incident.
In the ROS (Review of Systems) section, Respondent checked the line indicating “all negative,” and in the “PE” section, she checked the box for normal findings for every item except “Ext,” which she left blank.
On Respondent's Assessment checklist, she checked all options, including “Patient satisfied, doing well on current medication and treatment plan; pain condition stable” and “Activities of living, quality of life improved with medication.”
Under Plan, she again checked “refer to PT, neurologist, neurosurgeon . . . as needed, circling “neurologist.”
As for the prescriptions, Respondent circled “Roxicodone 30 mg” and “#140,” “Xanax,” “1mg” and “#28, after which she wrote “wean more next visit.”
On January 16, 2012, J.A. returned to PBM and again saw Respondent.
Respondent filled in the Pain History Section, on which she again indicated that J.A.'s pain was in his lower back, that it was severe, throbbing, and sharp, but did not radiate.
In the ROS section, she again noted that all systems were negative, and in the PE section, she drew either checkmarks or lines next to the normal findings for each of the various items.
In the Assessment section, she again made checkmarks next to each of the various items including that the patient was “doing well on current medication and treatment plan” and that the “Activities of living, quality of life improved with medication.”
Under Plan, Respondent placed markings next to all but one of the line items and again circled “neurologist” in the line item regarding referrals.
As for the prescriptions, Respondent checked: “Roxicodone” and circled “30 mg” and “#140.”
J.A.'s file contains a report (dated February 8, 2012) for an MRI on his cervical spine.
On February 13, 2012, J.A. returned to PBM and again saw Respondent.
In the Pain History Follow Up section, Respondent noted the location of J.A.'s pain as both his neck and lower back, that his pain was severe, throbbing and sharp, and that the precipitating event was a “fall” and not the previously reported incident when he was hit by a pot.
In the ROS section, she checked the line indicating that all were negative, and in the PE section, she placed checkmarks indicating that all exam items were normal.
Under Neurological, she checked “Yes” for each exam item and wrote “+ bilat hand strength =,” and under Orthopedic, she indicated that the straight leg raise test was negative for both legs.
Under Plan, she checked or drew a scribble next to each item, and added “Pt. wants neuro sx [surgical] opinion.”
On March 12, 2012, J.A. returned to PBM and again saw Respondent.
Respondent's notes in the Pain History Follow Up section, as well as her markings in the ROS and PE sections were exactly the same as those she made at J.A.'s previous visit.
Under Assessment, Respondent again placed a mark next to each line item.
Next to the medication list, Respondent also wrote: “Goal: cont to work as chef” and “needs meds to control pain so He can work + support Kids.”
On April 9, 2012,
Under ROS, Respondent again indicated that all systems were negative, and under PE, she again placed marks indicating normal findings for her PE.
As before, in the Assessment section, Respondent made a mark next to each item.
Under Plan, Respondent placed a mark next to each of the line items.
On May 7, 2012, J.A. returned to PBM and again saw Respondent. On the “Patients [sic] Follow-Up Sheet,” J.A. circled various areas of his body where he felt pain and against rated his pain as a 6 “with medication” and a 10 “without medication.”
In the Pain History Follow Up section of the visit note, Respondent made the same notations as before, with the exception of noting under “New Events,” “heavy hours server.”
Respondent documented the exact same findings in the Neurological and Orthopedic sections of the visit note, and placed either a checkmark of vertical line through each item in the Assessment section.
As for her Plan, Respondent placed a check mark next to the line stating: “wt lost, smoking cessation, reduce salt and caffeine, F/U with PCP,” circling the latter and writing “CXR.”
On June 4, 2012, J.A. returned to PBM and saw Respondent for the final time.
In the Pain History Follow Up section, Respondent noted that J.A.'s pain was in his neck and lower back, that it was throbbing but not radiating, that it was precipitated by a “fall,” but did not check whether the “[s]everity of pain” was “mild,” “moderate,” or “severe.”
In the ROS section, Respondent indicated that all were negative, and in the PE section, she indicted that each item was normal.
Under Assessment, Respondent circled the words “Patient satisfied” and “Patient taking meds as prescribed,” and she wrote “yes” next to the line stating “[a]ctivities of living, quality of life improved with medications.”
As for her Diagnosis, Respondent checked (and notated) the exact same diagnoses as she did at J.A.'s previous visit.
Notably, the Referrals included the following notes: (1) “2/28/11—recommend ortho eval,” (2) “11/21/11—consult neurology,” (3) “5/7/12—F/U—PCP needs CXR,” with an arrow pointing to (4) “6/27/12—pt broke & can't have done.”
The Government's Expert reviewed J.A.'s patient file and found that the medical history and physical examinations of J.A. were “inadequate and that it was not reasonable for Registrant to rely on the evaluations of other providers at” PBM. GE 24, at 14. The Expert also found that Respondent “failed to conduct an adequate physical examination or take a satisfactory medical history,” noting that “she relied on the superficial checklists which are insufficient for evaluating the types of complaints that J.A. communicated.”
The Expert also found that J.A.'s patient file “contain[s] no evidence that [Respondent] addressed the effect of pain on J.A.'s physical and psychological function.”
Next, the Expert found that Respondent's “treatment plan was wholly inadequate,” because it “consisted of only a checklist of recommendations.”
Finally, the Expert also found that Respondent “ignored numerous red flags for diversion” with respect to J.A.
Patient D.B., a 66-year-old resident of Okeechobee, Florida, first presented at PMB on January 31, 2012 with a chief complaint of back pain which started “3 yrs ago.” GE 14, at 13. D.B. noted that there was no precipitating event, and that his pain level was a 2 “with medication” and a 7 “without medication.”
On the visit note, another physician indicated that D.B. had a three-year history of middle and lower back pain as well as right and left hip pain, that the pain was moderate, severe, sharp and tingling; the physician also noted that D.B.'s pain “off meds” was an 8 and “on meds” a 3.
As to what made D.B.'s pain worse, the physician placed checkmarks next to “lifting,” “bending” and “sitting”; she also circled “standing.”
Under current meds, the physician listed several non-controlled drugs including aspirin, Plavix, Diovan, and Amlodipine, but no controlled substances.
Under ROS, the physician indicated that all were negative, and under PE, the physician indicated normal findings with the exception of “mildly obese” on the line for Abd.
Under Assessment, the physician placed a check mark next to each item.
On February 28, 2012, D.B. returned to PBM and saw the same physician.
In the Pain History section of the visit note, the physician noted that D.B.'s pain was located in his lower back and radiated, as well as in his thigh, leg and knee, that the pain was severe, and its duration was “5 yrs.”
Under ROS, the physician indicated that all were negative, and under PE, the
In the Assessment section, the physician left unchecked each line item, and in the Diagnosis section, the physician checked “Insomnia,” “Lumbago,” “Sciatica,” “Chronic Non-Malig Pain Syndrome,” and “Other,” next to which she wrote “Osteophytosis,” “Schmorl's nodes,” and “OA.” The physician then placed a checkmark next to each item in the Plan section and noted that she was discontinuing the Lortab and changing the prescription to 112 dosage units of Roxicodone 30 mg (one pill four times a day) “for better pain control.”
On March 5, 2012, D.B. returned to PBM and saw Respondent who noted that “Pt here 2-28-12” and that he had “brought back” both the oxycodone and Xanax prescriptions because he “couldn't get scripts filled st Lucie + Okeechobee three dif pharmacies where he lived.”
D.B.'s file included a report of a CT scan on his lumbar spine which was done on March 15, 2012.
On March 27, 2012, D.B. returned to PBM and again saw Respondent.
In the visit note's Pain History Follow Up section, Respondent noted that D.B.'s lower back pain was severe, throbbing, and sharp and had been precipitated by a motor vehicle accident in 2003.
Under “ROS,” she indicated that all were negative.
In the Assessment section, Respondent indicated that D.B. was “satisfied, doing well on current medication and treatment plan,” that he was “taking meds as prescribed,” that he “denied any drug charges or arrests since [his] last visit,” and that the “diagnosis and treatment plan are justified and based on diagnostic results, history and physical exam.”
Under Plan, she placed check marks next to each item and handwrote “Add glucosamine/chondroitin.”
On April 24, 2012, D.B. returned to PBM and again saw Respondent.
In the visit note's Pain History Follow Up section, Respondent filled in the form with few changes since the last visit, except to add “anxiety” to the list of co-morbidities and noted that D.B. was “Able to fill Dilaudid.”
On the body diagram, Respondent circled the thoracic spine (writing “Kyphosis”), the lumbar spine (noting Range of Motion findings of “Flex 90” and “Ext 10”), and the knees (noting “Reflex +2”).
As for her Assessment, Respondent either checked or placed a scribble for each item, and in the Diagnosis section, Respondent checked and added each of the same conditions as before with the exception of Hypertension which she did not check.
On May 31, 2012, D.B. returned to PBM and again saw Respondent.
In the Pain History Follow Up section of the visit note, Respondent again noted that D.B. suffered from lower back pain that was throbbing and sharp, and was precipitated by a 2003 motor vehicle accident.
Under ROS, Respondent checked the line to indicate that all were negative, and under PE, she again placed a checkmark or scribbled over the various normal findings for each exam item.
Under Assessment, Respondent either placed a checkmark or vertical line through each item.
As for her Plan, Respondent either made a checkmark or drew a vertical line next to each item.
On June 28, 2012, D.B. returned to PBM and again saw Respondent.
In the Pain History section of the visit note, Respondent again documented that D.B.'s pain was in his lower back, that it was severe and throbbing, and that it was precipitated by a 2003 motor vehicle accident.
Under ROS, Respondent checked that all were negative, and under Physical Exam, she circled normal findings for each item.
In the Assessment section, Respondent placed checkmarks to indicate that D.B. was satisfied and understood how to take current medication, that he would take medication as prescribed and had no side effects, that his life activities and quality of life were improved with medications, that medication storage issues were addressed, and that he lived in a stable condition with no drug related activity or persons in his home.
Under Plan, Respondent noted that “PCP obtained/referred for . . . HTN” and “chemistry screen due from PCP.”
The file also contains a release for medical records (including progress notes, a prescription profile and diagnostic reports) from a particular doctor which D.B. executed on June 28, 2012.
On July 23, 2012, D.B. saw Respondent a final time.
In the Pain History section of the progress note, Respondent noted that the pain was in D.B.'s lower back, that it was severe, throbbing, and sharp, and that it was precipitated by a 2003 motor vehicle accident.
Respondent made no checkmarks next to any of the items under ROS, and under PE, she again circled normal findings for each of the exam areas.
In the Assessment section, Respondent placed checkmarks to indicate that D.B. was satisfied and understood how to take current medication, that he would take medication as prescribed and “reported no side effects,” that his life activities and quality of life were improved with medications, that medication storage issues were addressed, and he lived in a stable condition with no drug related activity or persons in his home.
Under Plan, she again noted “PCP obtained/referred for . . . HTN,” as well as “chemistry screen due next visit.”
The Expert reviewed D.B.'s patient's file and found that “the medical history and physical examinations of D.B.” that were done by the other doctor at PBM were “inadequate and that it was not reasonable to rely on [those] evaluations.'” GE 24, at 9. The Expert also found that Respondent did not “conduct[] an adequate physical examination or t[ake] a satisfactory medical history,” and that she “relied on the superficial checklists which are insufficient for evaluating the types of complaints that D.B. communicated.”
Continuing, the Expert found that Respondent's “records contain no evidence that [she] addressed the effect of pain on D.B.'s physical and psychological function,” and that “[t]he checklist is devoid of any explanation for how D.B,'s pain affected his social activities, mobility, work, exercise or sleep.”
The Expert further found that Respondent “ignored numerous red flags for diversion” in her treatment of D.B., who lived “approximately 95 miles from” PBM in Okeechobee, Florida.
The Expert further noted that D.B.'s chart contain inconsistent statements as to the duration of his pain, with D.B. reporting at his first visit (Jan 31, 2012) that he had the pain for three years, which he then changed at his second visit (Feb. 28, 2012) to five years (having been precipitated by an auto accident), only to claim at his fourth visit (Mar. 27, 2012) that it was of nine years duration.
The Expert thus concluded that “these red flags indicate to me that Registrant failed to monitor the patient's compliance in medication usage and failed to give special attention to [him], who was clearly at risk for misusing his medications and posed a risk for medication misuse and/or diversion.”
In light of my findings with respect to the UC, D.G., J.A., and D.B., I deem it unnecessary to make detailed findings with respect to the remaining patients. I note, however, that the Expert concluded that Respondent ignored numerous red flags for diversion with each of these patients, including D.H. and J.B., who lived in Panama City, Florida, more than 500 miles from PBM, as well as W.B., who resided in Southport, Florida, which is approximately 547 miles from PBM. GE 24, at 7-8, 12-13. With respect to these patients, the Expert noted that there was “no information in the medical records to explain why [they] would travel such an extraordinarily long distance to receive what amounted to be superficial, substandard medical care.”
With respect to each of the seven chart review patients, the Expert opined that Respondent “repeatedly ignored readily identifiable red flags (aberrant behaviors) and continued to issue prescriptions for controlled substances despite unresolved red flags for abuse and/or diversion.”
Summing up, the Expert concluded that Respondent:
Section 304(a) of the Controlled Substances Act (CSA) provides that a registration to “dispense a controlled substance * * * may be suspended or revoked by the Attorney General upon a finding that the registrant * * * has committed such acts as would render his registration under section 823 of this title inconsistent with the public interest as determined under such section.” 21 U.S.C. 824(a)(4). With respect to a practitioner, the Act requires the consideration of the following factors in making the public interest determination:
(1) The recommendation of the appropriate State licensing board or professional disciplinary authority.
(2) The applicant's experience in dispensing * * * controlled substances.
(3) The applicant's conviction record under Federal or State laws relating to the manufacture, distribution, or dispensing of controlled substances.
(4) Compliance with applicable State, Federal, or local laws relating to controlled substances.
(5) Such other conduct which may threaten the public health and safety.
“These factors are * * * considered in the disjunctive.”
“In short, this is not a contest in which score is kept; the Agency is not required to mechanically count up the factors and determine how many favor the Government and how many favor the registrant. Rather, it is an inquiry which focuses on protecting the public interest; what matters is the seriousness of the registrant's or applicant's misconduct.”
The Government has the burden of proof.
The Government contends that the evidence with respect to Factors Two, Four, and Five establishes that Respondent's registration is inconsistent with the public interest and should be revoked.
However, even assuming that Respondent currently possesses authority to dispense controlled substances under Florida law and thus meets this requirement for maintaining her registration,
As to Factor Three, there is no evidence that Respondent has been convicted of an offense under either federal or Florida law “relating to the manufacture, distribution or dispensing of controlled substances.” 21 U.S.C. 823(f)(3). However, there are a number of reasons why even a person who has engaged in criminal misconduct may never have been convicted of an offense under this factor, let alone prosecuted for one.
Under a longstanding DEA regulation, a prescription for a controlled substance is not “effective” unless it is “issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice.” 21 CFR 1306.04(a). This regulation further provides that “an order purporting to be a prescription issued not in the usual course of professional treatment . . . is not a prescription within the meaning and intent of [21 U.S.C. 829] and . . . the person issuing it, shall be subject to the penalties provided for violations of the provisions of law related to controlled substances.”
As the Supreme Court has explained, “the prescription requirement . . . ensures patients use controlled substances under the supervision of a doctor so as to prevent addiction and recreational abuse. As a corollary, [it] also bars doctors from peddling to patients who crave the drugs for those prohibited uses.”
Under the CSA, it is fundamental that a practitioner must establish and maintain a legitimate doctor-patient relationship in order to act “in the usual course of . . . professional practice” and to issue a prescription for a “legitimate medical purpose.”
By regulation, the Florida Board of Medicine has adopted “Standards for the Use of Controlled Substances for the Treatment of Pain.” Fla. Admin. Code r. 64B8-9.013. The Board has explained that these “standards are not intended to define complete or best practice, but rather to communicate what the Board considers to be within the boundaries of professional practice.”
(a) Evaluation of the Patient. A complete medical history and physical examination must be conducted and documented in the medical record. The medical record shall document the nature and intensity of the pain, current and past treatments for pain, underlying or coexisting diseases or conditions, the effect of the pain on physical and psychological function, and history of substance abuse. The medical record also shall document the presence of one or more recognized medical indications for the use of a controlled substance.
(b) Treatment Plan. The written treatment plan shall state objectives that will be used to determine treatment success, such as pain relief and improved physical and psychosocial function, and shall indicate if any further diagnostic evaluations or other treatments are planned. After treatment begins, the physician shall adjust drug therapy, if necessary, to the individual medical needs of each patient. Other treatment modalities or a rehabilitation program may be necessary depending on the etiology of the pain and the extent to which the pain is associated with physical and psychosocial impairment.
(c) Informed Consent and Agreement for Treatment. The physician shall discuss the risks and benefits of the use of controlled substances with the patient, persons designated by the patient, or with the patient's surrogate or guardian if the patient is incompetent. The patient shall receive prescriptions from one physician and one pharmacy where possible. If the patient is determined to be at high risk for medication abuse or have a history of substance abuse, the physician shall employ the use of a written agreement between physician and patient outlining patient responsibilities, including, but not limited to:
1. Urine/serum medication levels screening when requested;
2. Number and frequency of all prescription refills; and
3. Reasons for which drug therapy may be discontinued (
(d) Periodic Review. Based on the individual circumstances of the patient, the physician shall review the course of treatment and any new information about the etiology of the pain. Continuation or modification of therapy shall depend on the physician's evaluation of the patient's progress. If treatment goals are not being achieved, despite medication adjustments, the physician shall reevaluate the appropriateness of continued treatment. The physician shall monitor patient compliance in medication usage and related treatment plans.
(e) Consultation. The physician shall be willing to refer the patient as necessary for additional evaluation and treatment in order to achieve treatment objectives. Special attention must be given to those pain patients who are at risk for misusing their medications and those whose living arrangements pose a risk for medication misuse or diversion. The management of pain in patients with a history of substance abuse or with a comorbid psychiatric disorder requires extra care, monitoring, and documentation, and may require consultation with or referral to an expert in the management of such patients.
(f) Medical Records. The physician is required to keep accurate and complete records to include, but not be limited to:
1. The complete medical history and a physical examination, including history of drug abuse or dependence, as appropriate;
2. Diagnostic, therapeutic, and laboratory results;
3. Evaluations and consultations;
4. Treatment objectives;
5. Discussion of risks and benefits;
6. Treatments;
7. Medications (including date, type, dosage, and quantity prescribed);
8. Instructions and agreements;
9. Drug testing results; and
10. Periodic reviews. Records must remain current, maintained in an accessible manner, readily available for review, and must be in full compliance with [Fla. Admin. Code] rule 64B8-9.003 . . . and [Fla. Stat.] Section 458.331(1)(m). . . .
The Florida Board has further explained that it “will judge the validity of prescribing based on the physician's treatment of the patient and on available documentation, rather than on the quantity and chronicity of prescribing. The goal is to control the patient's pain for its duration while effectively addressing other aspects of the patient's functioning, including physical, psychological, social, and work-related factors.”
Applying the Board's standards, the Government's Expert concluded that Respondent failed to establish a sufficient doctor/patient relationship with the UC. GE 24, at 3. He further opined that the controlled substance prescriptions issued by Respondent to the UC lacked a legitimate medical purpose and were issued outside of the usual course of professional practice.
The Expert found that Respondent failed to make “a serious inquiry into the cause of the patient's pain” and failed to take a complete medical history of the UC's pain.
The Expert further noted that while the UC had stated that he had seen as many as six other doctors for his pain and provided signed releases for his medical records, those records were not obtained. GE 24, at 3. According to the Expert, as part of the history, “it is important to review the records of other physicians who have treated the patient.”
The Expert also found that Respondent failed to conduct an adequate physical examination of the UC, noting that he “failed to demonstrate pain sufficient to justify the repeated prescribing of controlled
Moreover, as the video shows, Respondent's physical exam was limited to having the UC bend over; sit down and turn his head from side to side; placing a stethoscope on his chest; having him sit down, extend his legs and squeeze his calves and ask if there was any tenderness; and striking his knees with a neurologic hammer while his feet were still placed on the floor. GE 3, V-0002, at 14:14:24-14:14:35 and 14:18:34-14:19:18;
The Expert also found that Respondent diagnosed Respondent as having muscle spasms, without any evidence. Indeed, the UC never complained of spasms and the video shows that Respondent never palpated the UC's lower back. Moreover, Respondent diagnosed the UC has having anxiety and issued a clonazepam prescription to treat this condition, even though the UC told Respondent that “[o]nce in a while” he would “take a little bit of Xanax to sleep,” but he thought he could “probably work without it.” GE 11, at 4,
The Expert concluded that Registrant “failed to determine and/or document the effect of pain on UC's physical and psychological function, [because] there is no documentation in the record to show that she made any attempt to adequately address this important standard of pain management.” GE 24, at 4.
The Expert also found that Respondent “failed to create and/or document a sufficient treatment plan.”
The Expert also found that the transcripts and recordings of UC's visits showed that Respondent “herself doubted there was a legitimate medical need to prescribe the large amounts of opioid medications that were prescribed.”
The Expert also concluded that there was no legitimate medical justification for the amount of oxycodone prescribed to the UC because, prior to the May 31, 2012 visit, the UC had not been seen by a pain clinic physician since January 18, 2012, and was, in all likelihood, opiate naïve at the May 31, 2012 visit.
With respect to the July 16, 2012 visit, the Expert noted that Respondent increased the amount of the oxycodone prescription from 112 to 140 dosage units without any medical justification. As the evidence shows and the Expert found, while the UC reported that his pain without medication was a “2,” he changed it only after being prompted by Respondent.
Respondent also falsified the medical record at this visit by indicating that the UC's pain was made worse by “sitting, standing in one position too long,” as nothing in the record shows that the UC made such a claim. GE 11, at 25. And she again falsified the medical record by documenting findings for various neurological and orthopedic examination items (including a positive straight leg raise test on his left leg) when she never performed the tests.
Moreover, while looking at the UC's MRI, Respondent again noted that “bulges we don't treat” but that there was “encroachment or . . . narrowing of the disc” and that “
Based on the above, I conclude that Respondent knew that the UC was not a legitimate pain patient. I further conclude that Respondent acted outside of the usual course of professional practice and lacked a legitimate medical purpose in issuing each of the controlled substance prescriptions to the UC. 21 CFR 1306.04(a).
As for D.G., I also conclude that Respondent acted outside of the usual course of professional practice and lacked a legitimate medical purpose when she prescribed controlled substances to him. 21 CFR 1306.04(a). As found above, D.G. resided in Niceville, Florida, which is located nearly 600 miles from Respondent's clinic. Yet there is no evidence in any of D.G.'s records that Respondent inquired as to why D.G. was travelling these distances to obtain controlled substances from PBM.
Moreover, D.G.'s chart shows that while he obtained large prescriptions for multiple controlled substances at his first two visits at PBM, he then did not return to PBM until July 2011, seven months after his previous visit. To be sure, D.G.'s file contains a pharmacy printout showing that D.G. had obtained both oxycodone and alprazolam on multiple occasions (beginning on January 20, 2011 and ending on June 9, 2011) from a different physician who was located in Palm Beach County and yet filled each of the prescriptions in Santa Rosa Beach, Florida, which is in Walton County and near Niceville. Yet D.G.'s file contains no evidence that any inquiry was made as to why D.G. had returned to PBM. Nor is there any evidence that this other physician was contacted to determine whether D.G. was still seeing him.
While there is no evidence that D.G. obtained prescriptions at PBM at his July 6, 2011 visit, on September 7, 2011 he returned to PBM and denied having received prescription medications from other physicians as well as other sources in the last 30 days. Yet D.G. tested positive for oxycodone. Again, nothing in the chart reflects that this inconsistency was resolved. While Respondent did not treat D.G. at this visit, this information was nonetheless in his chart.
There are likely multiple legitimate pain management practices closer to Niceville, Florida than 600 miles (the distance to PBM) or 566 miles (the distance to Lake Clark Shores, where the other prescribing physician was located). Indeed, when D.G. finally presented evidence that he had made an appointment to treat his hypertension, he made the appointment with a free clinic in Destin, Florida, which is near Niceville. Yet the pharmacy profile showed that he paid cash for every prescription. GX 17, at 120-22. Likewise, given D.G.'s positive test for oxycodone while claiming that he had not obtained prescription medications from other sources clearly shows that he was non-compliant with the Pain Management Agreement he entered at his first visit.
I hold that the evidence that D.G. was travelling nearly 600 miles (one way) to obtain prescriptions at PBM, his disappearance for months only to later return, and his aberrant drug test (all of which are apparent in the chart) supports the conclusion that Respondent subjectively believed that there was a high probability that D.G. was either abusing controlled substances and/or diverting them to others.
The Expert's review of D.G.'s chart buttresses this conclusion. As he explained, it was not reasonable for Respondent to rely on the evaluations done by the other providers at PBM. Indeed, at his first visit, D.G. tested negative for all drugs. As the Expert opined with respect to the UC, D.G. was likely opiate naïve. Yet Dr. Sanchez proceeded to issue D.G. prescriptions for both 150 oxycodone 30 mg and 60 oxycodone 15 mg and 60 Xanax 2 mg. This is a quantity of oxycodone even greater than the quantity Respondent prescribed to the UC at the first visit (112 du of 30 mg), which the Expert explained was without medical justification and dangerous. GE 24, at 5;
Moreover, as the Roxicodone Package Insert explains, “[c]oncomitant use of opioids with benzodiazepines or other central nervous system (CNS) depressants, including alcohol, may result in profound sedation, respiratory depression, coma, and death.”
Nor do the visit notes prepared by the other PBM physicians who prescribed to D.G. suggest otherwise. Indeed, it is telling that the pre-printed medication lists on which the PBM doctors would note the prescriptions they issued, includes only a single narcotic—Roxicodone—and only a single dosage form—30 mg—which just happens to be the strongest dosage of immediate release oxycodone available.
Moreover, the Expert found that Respondent “failed to conduct an adequate physical examination or take a satisfactory medical history of D.G.,” in
The Expert similarly found that Respondent's “treatment plan was wholly inadequate and . . . consisted only of a checklist of recommendations.”
Finally, the Expert also found that Respondent “prescribed additional narcotics without any medical justification.”
I therefore conclude that the record supports a finding that Respondent acted outside of the usual course of professional practice and lacked a legitimate medical purpose in issuing the controlled substance prescriptions to D.G. 21 CFR 1306.04(a).
As for J.A., the evidence shows that he tested positive for opiates/morphine, methadone, and oxycodone at his October 24, 2011 visit to PBM, which immediately preceded his first visit with Respondent (Nov. 21, 2011). Notably, J.A.'s records showed that his previous visit to PBM was three months earlier on July 22, 2011, at which he received prescriptions for oxycodone and methadone for a 28-day supply. Moreover, at the October 24, 2011 visit, J.A. denied having seen any “other medication prescribing pain docs.” GE 18, at 98. While J.A.'s drug test was clearly aberrant, the October 24, 2011 visit note contains no documentation that J.A. was questioned as to why he was positive for these drugs when he had not been to the clinic in three months and denied seeing any “other medication prescribing pain doctor doctors.”
More importantly, in the visit note Respondent prepared for J.A.'s November 21, 2011 visit, she noted that his October 24, 2011 drug screen was positive for opiates, methadone and oxycodone, and yet there is no evidence that Respondent questioned J.A. as to why he was positive for these drugs given his absence from the clinic and his having denied seeing other pain doctors. Here again, this evidence supports a finding that Respondent was willfully blind to J.A.'s likely purpose in seeking the prescriptions. She nonetheless issued him prescriptions for 140 Roxicodone 30 mg and 28 Xanax 1 mg, the latter being prescribed for anxiety.
As to the latter prescription, while Respondent checked “insomnia” but not “anxiety” as one of her diagnoses, Respondent made no findings to support either diagnosis. Indeed, on the “Patients [sic] Follow-Up Sheet,” J.A. did not circle any of the six items (which included social activities and sleep) as being affected by his pain. Moreover, the Expert found that Respondent failed to conduct an adequate physical examination or take a satisfactory medical history to properly evaluate J.A.'s complaints. GE 24, at 14. The Expert also found that J.A.'s file “contains no evidence that [Respondent] addressed the effect of pain on J.A.'s physical and psychological function.”
The Expert further found that Respondent's treatment plan was wholly inadequate.
J.A.'s chart also states that at his first visit, the attending physician recommended that he obtain an orthopedic evaluation. GE 18, at 133. Here too, there is no evidence that J.A. ever obtained an orthopedic evaluation.
Moreover, notwithstanding J.A.'s failure to comply with her instruction that if he did not obtain a “neuro consult” by his February visit, she would not continue the prescriptions, at the February 2012 visit, Respondent increased his Roxicodone 30 prescription to 168 dosage units.
Of further note, while at J.A.'s first visit to PBM in February 2011, he reported that he had previously been treated by other physicians for his pain and provided signed release forms, GE 18, at 4, 19; the only such records obtained (other than an MRI report) was for his ER visit in May 2001, a decade earlier. As the Expert explained in discussing the UC's file, “[i]n completing a sufficient medical history, it is important to review the records of other physicians who have treated the patient.” GX 24, at 3. Of further note, Respondent saw J.A. eight times over the course of seven months and yet never obtained records from treating physicians other than those who
Accordingly, I find that the record supports the conclusion that Respondent acted outside of the usual course of professional practice and lacked a legitimate medical purpose in prescribing controlled substances to J.A. 21 CFR 1306.04(a).
Turning to Respondent's prescribing to D.B., as the Expert noted, the history of the origin of his pain changed multiple time during the course of his visits to PBM. Significantly, at his initial visit, D.B. noted that his pain had started had three years earlier and he answered “No” as to whether there was “an inciting event[] (Such as a car accident).” GE 14, at 13. One month later, his pain was of five years duration and had been precipitated by a car accident.
The Expert further noted that at D.B.'s initial visit, he reported that his pain level was a 2 with medication and his drug screen results showed that he was negative for all drugs including oxycodone and opiates/morphine. GE 24, at 10;
Based on the “red flags” of the distance D.B. was travelling, the changes in his story of how and when his pain originated, his story of being unable to fill the prescriptions at three different pharmacies, and his report of increasing pain levels even after being prescribed large and increasing dosages of narcotics, the Expert concluded that D.B. “was clearly at risk for misusing his medications and posed a risk for medication misuse and/or diversion” and that Respondent “failed to monitor [D.B.'s] compliance in medication usage and failed to give special attention to” him.
The Expert also found that “the medical history and physical examinations of D.B.” that were done by the other doctor at PBM were “inadequate and that it was not reasonable [for Respondent] to rely on [those] evaluations.' ” GE 24, at 9. The Expert further found that Respondent did not “conduct[ ] an adequate physical examination or t[ake] a satisfactory medical history,” and she “relied on the superficial checklists which are insufficient for evaluating the types of complaints that D.B. communicated.”
Moreover, as the Expert explained in discussing the UC, in determining a patient's pain history, “it is important to review the records of other physicians who have treated the patient.”
The Expert also found that Respondent's “records contain no evidence that [she] addressed the effect of pain on D.B's physical and psychological function,” and that “[t]he checklist is devoid of any explanation for how D.B,'s pain affected his social activities, mobility, work, exercise or sleep.” GE 24, at 9. The Expert further found that Respondent “prescribed both clonazepam for anxiety and zolpidem for insomnia, [but] fail[ed] to record any information whatsoever to justify these prescriptions other than baldly noting that D.B.
With respect to Respondent's treatment plan, the Expert found that it “was wholly inadequate and, again, consisted only of a checklist of recommendations,” and that there was no “evidence that any of the recommendations were either discussed or followed.”
Based on the above, I conclude that Respondent acted outside of the usual course of professional practice and lacked a legitimate medical purpose when she prescribed controlled substances to D.B. Indeed, with respect to D.G., J.A., and D.B., the Expert concluded that Respondent “provided them with prescriptions for controlled substances in contravention of the standards of care and practice in the State of Florida and with indifference to various indicators or `red flags' that the patients were engaged in drug abuse and/or diversion.”
The Government argues that Respondent's acts in providing the UC with two Ibuprofen prescriptions to help him fill his controlled substance prescriptions without suspicion constitute conduct to be considered under Factor Five (such other conduct which may threaten the public health and safety). RFAA, at 19. It contends there is “a substantial relationship between the conduct and the CSA's purpose of preventing drug abuse and diversion.”
In
Here, the evidence shows that at the UC's first visit, Respondent told him that she “was gonna [sic] give you some ibuprofen. Because if you['re] filling in Florida which I encourage you to do so you're on the computer list. Then . . . for two reasons: Number one, the pharmacists usually want a non-prescription drug, a non-controlled substance drug rather . . . and ibuprofen is also good for inflammation.” GE 7, at 6.
At his second visit, the UC told Respondent that a pharmacist refused to fill the Klonopin prescription she had issued previously. GE 9, at 9. Respondent advised the UC to take the prescription to another pharmacy and told him that it is not doctor-shopping if the pharmacist refused to fill the prescription; she also told the UC that she would “write that [Klonopin] and I'll write another non-narcotic.”
In advising the UC how to avoid encountering difficulties in filling his prescriptions for controlled substances and in issuing non-narcotic prescriptions to minimize any suspicions by pharmacists, Respondent engaged in “[s]uch other conduct which may threaten the public health and safety”).
I therefore hold that the Government's evidence with respect to Factors Two, Four, and Five establishes that Registrant “has committed such acts as would render her registration . . . inconsistent with the public interest.” 21 U.S.C. 824(a)(4). Because Respondent waived her right to a hearing (or to submit a written statement in lieu of a hearing), there is no evidence in the record to refute the conclusion that her continued registration is “inconsistent with the public interest.”
Pursuant to the authority vested in me by 21 U.S.C. 823(f) and 824(a), as well as 28 CFR 0.100(b), I order that DEA Certificate of Registration No. AS1456361, issued to Marcia L. Sills, M.D., be, and it hereby is, revoked. I further order that any pending application of Marcia L. Sills to renew or modify the above registration, or any pending application of Marcia L. Sills for any other registration, be, and it hereby is, denied. This Order is effective September 5, 2017.
Drug Enforcement Administration, Department of Justice.
Notice with request for comments.
The Drug Enforcement Administration (DEA) proposes to adjust the 2017 aggregate production quotas for several controlled substances in schedules I and II of the Controlled Substances Act and assessment of annual needs for the list I chemicals ephedrine, pseudoephedrine, and phenylpropanolamine.
Interested persons may file written comments on this notice in accordance with 21 CFR 1303.13(c) and 1315.13(d). Electronic comments must be submitted, and written comments must be postmarked, on or before September 5, 2017. Commenters should be aware that the electronic Federal Docket Management System will not accept comments after 11:59 p.m. Eastern Time on the last day of the comment period.
Based on comments received in response to this notice, the Administrator may hold a public hearing on one or more issues raised. In the event the Administrator decides in his sole discretion to hold such a hearing, the Administrator will publish a notice of any such hearing in the
To ensure proper handling of comments, please reference “Docket No. DEA-470P” on all correspondence, including any attachments. The Drug Enforcement Administration encourages that all comments be submitted electronically through the Federal eRulemaking Portal which provides the ability to type short comments directly into the comment field on the Web page or attach a file for lengthier comments. Please go to
Michael J. Lewis, Diversion Control Division, Drug Enforcement Administration; Mailing Address: 8701 Morrissette Drive, Springfield, Virginia 22152, Telephone: (202) 598-6812.
Please note that all comments received in response to this docket are considered part of the public record. They will, unless reasonable cause is given, be made available by the Drug Enforcement Administration (DEA) for public inspection online at
The Freedom of Information Act (FOIA) applies to all comments received. If you want to submit personal identifying information (such as your name, address, etc.) as part of your comment, but do not want it to be made publicly available, you must include the phrase “PERSONAL IDENTIFYING INFORMATION” in the first paragraph of your comment. You must also place all the personal identifying information you do not want made publicly available in the first paragraph of your comment and identify what information you want redacted.
If you want to submit confidential business information as part of your comment, but do not want it to be made publicly available, you must include the phrase “CONFIDENTIAL BUSINESS INFORMATION” in the first paragraph of your comment. You must also prominently identify confidential business information to be redacted within the comment.
Comments containing personal identifying information or confidential business information identified and located as directed above will generally be made available in redacted form. If a comment contains so much confidential business information or personal identifying information that it cannot be effectively redacted, all or part of that comment may not be made publicly available. Comments posted to
An electronic copy of this document is available at
Section 306 of the Controlled Substances Act (CSA) (21 U.S.C. 826) requires the Attorney General to establish aggregate production quotas for each basic class of controlled substance listed in schedules I and II and for the list I chemicals ephedrine, pseudoephedrine, and phenylpropanolamine. The Attorney General has delegated this function to the Administrator of the DEA pursuant to 28 CFR 0.100.
The DEA established the 2017 aggregate production quotas for substances in schedules I and II and the assessment of annual needs for the list I chemicals ephedrine, pseudoephedrine, and phenylpropanolamine on October 5, 2016 (81 FR 69079). That notice stipulated that, in accordance with 21 CFR 1303.13 and 1315.13, all aggregate production quotas and assessments of annual need are subject to adjustment.
The DEA proposes to adjust the established 2017 aggregate production quotas and assessment of annual needs for certain schedule I and II controlled substances, and the list I chemicals ephedrine, pseudoephedrine, and phenylpropanolamine, to be manufactured in the United States in 2017 to provide for the estimated medical, scientific, research, and industrial needs of the United States, for lawful export requirements, and for the establishment and maintenance of reserve stocks. These quotas do not include imports of controlled substances for use in industrial processes.
In determining the proposed adjustment, the Acting Administrator has taken into account the criteria in accordance with 21 CFR 1303.13 (adjustment of aggregate production quotas for controlled substances) and 21 CFR 1315.13 (adjustment of the assessment of annual needs for ephedrine, pseudoephedrine, and phenylpropanolamine). The DEA determined whether to propose an adjustment of the aggregate production quotas and assessment of annual needs for 2017 by considering: (1) Changes in the demand for that class or chemical, changes in the national rate of net disposal of the class or chemical, and changes in the rate of net disposal of the class or chemical by registrants holding individual manufacturing quotas for the class; (2) whether any increased demand for that class or chemical, the national and/or individual rates of net disposal of that class or chemical are temporary, short term, or long term; (3) whether any increased demand for that class or chemical can be met through existing inventories, increased individual manufacturing quotas, or increased importation, without increasing the aggregate production quota; (4) whether any decreased demand for that class or chemical will result in excessive inventory accumulation by all persons registered to handle that class or chemical; and (5) other factors affecting medical, scientific, research, and industrial needs in the United States and lawful export requirements, as the Acting Administrator finds relevant. These quotas do not include imports of controlled substances for use in industrial processes.
The Acting Administrator also considered updated information obtained from 2016 year-end inventories, 2016 disposition data submitted by quota applicants, estimates of the medical needs of the United States, product development, and other information made available to the DEA after the initial aggregate production quotas and assessment of annual needs had been established. Other factors the Acting Administrator considered in calculating the aggregate production quotas, but not the assessment of annual needs, include product development requirements of both bulk and finished dosage form manufacturers, and other pertinent information. In determining the proposed adjusted 2017 assessment of annual needs, the DEA used the calculation methodology previously described in the 2010 and 2011 established assessment of annual needs (74 FR 60294, Nov. 20, 2009, and 75 FR 79407, Dec. 20, 2010, respectively).
The Acting Administrator, therefore, proposes that the year 2017 aggregate production quotas for the nine temporarily scheduled substances be established, and to adjust the 2017 aggregate production quotas for certain schedule I and II controlled substances and assessment of annual needs for the list I chemicals ephedrine, pseudoephedrine, and phenylpropanolamine, expressed in grams of anhydrous acid or base, as follows:
The Acting Administrator further proposes that aggregate production quotas for all other schedule I and II controlled substances included in 21 CFR 1308.11 and 1308.12 remain at zero. In accordance with 21 CFR 1303.13 and 21 CFR 1315.13, upon consideration of the relevant factors, the Acting Administrator may adjust the 2017 aggregate production quotas and assessment of annual needs as needed.
After consideration of any comments or objections, or after a hearing, if one is held, the Acting Administrator will issue and publish in the
Notice of availability; request for comments.
The Department of Labor (DOL) is submitting the Office of Workers' Compensation Programs (OWCP) sponsored information collection request (ICR) revision titled, “Claim for Continuance of Compensation,” to the Office of Management and Budget (OMB) for review and approval for use in accordance with the Paperwork Reduction Act (PRA) of 1995. Public comments on the ICR are invited.
The OMB will consider all written comments that agency receives on or before September 5, 2017.
A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the
Submit comments about this request by mail or courier to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL-OWCP, Office of Management and Budget, Room 10235, 725 17th Street NW., Washington, DC 20503; by Fax: 202-395-5806 (this is not a toll-free number); or by email:
Michel Smyth by telephone at 202-693-4129, TTY 202-693-8064, (these are not toll-free numbers) or sending an email to
44 U.S.C. 3507(a)(1)(D).
This ICR seeks approval under the PRA for revisions to the Claim for Continuance of Compensation (Form CA-12)
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless it is approved by the OMB under the PRA and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid Control Number.
Interested parties are encouraged to send comments to the OMB, Office of Information and Regulatory Affairs at the address shown in the
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
National Aeronautics and Space Administration (NASA).
Notice of information collection.
The National Aeronautics and Space Administration, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995.
All comments should be submitted within 30 calendar days from August 4, 2017.
Interested persons are invited to submit written comments regarding the proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget, 725 7th Street NW., Washington, DC 20543. Attention: Desk Officer for NASA.
Requests for additional information or copies of the information collection instrument(s) and instructions should be directed to Frances Teel, NASA PRA Clearance Officer, NASA Headquarters, 300 E Street SW., Mail Code JF000, Washington, DC 20546, (202) 358-2225.
The National Aeronautics and Space Administration (NASA) Office of Diversity and Equal Opportunity and the Office of Procurement, in accordance with Title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, Section 504 of the Rehabilitation Act of 1973, and the Age Discrimination Act of 1975, requires grant awardees to submit an assurance of non-discrimination (NASA Form 1206) as part of their initial grant application package. The requirement for assurance of nondiscrimination compliance associated with federally assisted programs is long standing, derives from civil rights implementing regulations, and extends to the grant recipient's sub-grantees, contractors, successors, transferees, and assignees. Grant selectees are required to submit compliance information triennially when their award period exceeds 36 consecutive months. This information collection will also be used to enable NASA to conduct post-award civil rights compliance reviews.
Electronic.
Comments submitted in response to this notice will be summarized and included in the request to OMB for approval of this information collection. They will also become a matter of public record.
In accordance with the Federal Advisory Committee Act (Pub. L. 92-463, as amended), the National Science Foundation (NSF) announces its intent to hold proposal review meetings throughout the year. The purpose of these meetings is to provide advice and recommendations concerning proposals submitted to the NSF for financial support. The agenda for each of these meetings is to review and evaluate proposals as part of the selection process for awards. The review and evaluation may also include assessment of the progress of awarded proposals. These meetings will primarily take place at NSF's current headquarters, 4201 Wilson Blvd., Arlington, Virginia 22230 or NSF's new headquarters, 2415 Eisenhower Avenue, Alexandria, VA 22314.
These meetings will be closed to the public. The proposals being reviewed include information of a proprietary or confidential nature, including technical information; financial data, such as salaries; and personal information concerning individuals associated with the proposals. These matters are exempt under 5 U.S.C. 552b(c), (4) and (6) of the Government in the Sunshine Act. NSF will continue to review the agenda and merits of each meeting for overall compliance of the Federal Advisory Committee Act.
These closed proposal review meetings will not be announced on an individual basis in the
National Science Foundation.
Notice of availability.
The National Science Foundation (NSF) announces the availability of the Final Environmental Impact Statement (FEIS) for Arecibo Observatory. This Final EIS identifies and analyzes the potential consequences of the following alternatives:
The National Science Foundation will execute a Record of Decision no sooner than 30 days after the date of publication of the Notice of Availability published in the
The Final EIS is made available for public inspection on-line at
A copy of the DEIS will be available for review at the following libraries in Puerto Rico:
Ms. Elizabeth Pentecost, Re: Arecibo Observatory, 4201 Wilson Blvd., Room 1045, Arlington, VA 22230;
The Arecibo Observatory is an NSF-owned scientific research and education facility located in Puerto Rico. In 2011, NSF awarded a Cooperative Agreement to SRI International (SRI), which together with Universities Space Research Association (USRA) and Universidad Metropolitana (UMET) formed the Arecibo Management Team to operate and maintain the Arecibo Observatory for the benefit of research communities. The initial 5-year period of performance of the Cooperative Agreement was extended 18 months, to 31 March 2018. Arecibo Observatory enables research in three scientific disciplines: space and atmospheric sciences, radio astronomy, and solar system radar studies; the last of these is largely funded through a research award to USRA from the National Aeronautics and Space Administration. An education and public outreach program complements the Arecibo Observatory scientific program. A key component of the Arecibo Observatory research facility is a 305-meter diameter, fixed, spherical reflector. Arecibo Observatory infrastructure includes instrumentation for radio and radar astronomy and ionospheric physics, office and laboratory buildings, a heavily utilized visitor and education facility, and lodging facilities for visiting scientists.
Through a series of academic community-based and portfolio reviews, NSF identified the need to divest of several facilities from its portfolio in order to retain the balance of capabilities needed to deliver the best performance on the key science of the present decade and beyond. In 2016, NSF completed a feasibility study to inform and define options for the observatory's future disposition that would involve significantly decreasing or eliminating NSF funding of Arecibo. Concurrently, NSF sought viable concepts of operations from the scientific community via a Dear Colleague Letter NSF 16-005 (see
The Draft EIS was made available for public review and comment from October 28, 2016, through December 12, 2016. The full Draft EIS was also posted on the NSF, Division of Astronomical Sciences Web site (
Nuclear Regulatory Commission.
Draft regulatory guide; request for comment.
The U.S. Nuclear Regulatory Commission (NRC) is issuing for public comment draft regulatory guide (DG), DG-1291, “Evaluating Deviations and Reporting Defects and Noncompliance Under 10 CFR part 21.” This DG describes methods that the NRC staff considers acceptable for complying with the provisions of the regulations.
Submit comments by October 3, 2017. Comments received after this date will be considered if it is practical to do so, but the NRC is able to ensure consideration only for comments received on or before this date. Although a time limit is given, comments and suggestions in connection with items for inclusion in guides currently being developed or improvements in all published guides are encouraged at any time.
You may submit comments by any of the following methods (unless this document describes a different method for submitting comments on a specified subject):
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For additional direction on accessing information and submitting comments, see “Obtaining Information and Submitting Comments” in the
Paul Prescott, Office of New Reactors, telephone: 301-415-6263; email:
Please refer to Docket ID NRC-2017-0171 when contacting the NRC about the availability of information regarding this action. You may obtain publicly-available information related to this action, by any of the following methods:
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Please include Docket ID NRC-2017-0171 in your comment submission.
The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in your comment submission. The NRC posts all comment submissions at
If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment submissions into ADAMS.
The NRC is issuing for public comment a draft regulatory guide in the NRC's “Regulatory Guide” series. This series was developed to describe and make available to the public information regarding methods that are acceptable to the NRC staff for implementing specific parts of the NRC's regulations, techniques that the staff uses in evaluating specific issues or postulated events, and data that the staff needs in its review of applications for permits and licenses.
The draft regulatory guide, entitled, “Evaluating Deviations and Reporting Defects and Noncompliance Under 10 CFR part 21,” is a proposed new guide temporarily identified by its task number, DG-1291. The DG-1291 describes methods that the NRC staff considers acceptable for complying with the provisions of part 21 of title 10 of the
The DG-1291 provides licensees and applicants with formal guidance for an acceptable method of evaluating and reporting defects under 10 CFR part 21. This new guidance will aid in minimizing compliance challenges to licensees and vendors that have been identified through inspection activities. Specifically, this DG approves NRC licensees' use of a method of evaluating and reporting defects described in NEI 14-09, “Guidelines for Implementations of 10 CFR part 21 Reporting of Defects
The NRC seeks comments on DG-1291, “Evaluating Deviations and Reporting Defects and Noncompliance Under 10 CFR part 21,” and requests feedback from commenters about potential regulatory positions that would: (1) Not approve alternative methods for addressing types and locations of postings required under § 21.6 of the regulations in this part, Section 206 of the Energy Reorganization Act of 1974, and the procedures adopted pursuant to the regulations in part 21; and (2) describe training that should be provided for the implementation of procedures adopted pursuant to the regulations.
1. The Nuclear Energy Institute (NEI) developed guidance on implementing the regulatory requirements in 10 CFR part 21. The guidance is contained in NEI 14-09, “Guidelines for Implementation of 10 CFR part 21 Reporting of Defects and Noncompliance,” Revision 1 dated August 2014. The guidance in NEI 14-09 interprets NRC's regulations to allow postings to be hard copies, digital copies, or a combination of both. In addition, links to electronic postings may be identified on “sites” commonly frequented by workers during the performance of work subject to 10 CFR part 21.
The staff position regarding electronic versions of the documents required by 10 CFR part 21 was provided in “NRC Responses to 10 CFR part 21 and Fuel Cycle Facility Questions Received during the Vendor Workshop on New Reactor Construction,” in December 2008 (ADAMS Accession No. ML092660129). Question 27 asked, “What are the posting requirements for work at home?” The NRC staff's response stated, “Section 21.6 requires that every premise in the U.S. where activities subject to part 21 are conducted, posts current copies of (1) the regulations in part 21; (2) Section 206 of the Energy Reorganization Act of 1974; and (3) company procedures adopted pursuant to the regulations in part 21 must be posted in a conspicuous location. If work subject to part 21 is being done at a residence, then that location constitutes a premise for which the relevant notifications must be posted under § 21.6. If posting of the regulations is not practicable at the residence, then the staff considers access to part 21, Section 206, and the company's applicable part 21 reporting procedure, via the internet by `work at home' personnel to be adequate.”
The NRC is seeking input regarding the adequacy of alternative posting methods and what additional clarity could be provided in the regulatory guide for addressing alternative types and locations of postings required under § 21.6 for the regulations in this part, Section 206 of the Energy Reorganization Act of 1974, and the procedures adopted pursuant to the regulations in this part regardless of the work location.
2. The guidance in NEI 14-09 states, “10 CFR part 21 does not establish requirements for training of personnel involved in 10 CFR part 21 activities. However, as a good practice, appropriate familiarization and training in the requirements of 10 CFR part 21 should be provided initially, and as appropriate on an ongoing basis, as necessary. As another good practice, an organization should designate individuals capable of assisting the staff in part 21 evaluation, reporting requirements and training requirements.”
The staff position regarding training of personnel involved in 10 CFR part 21 activities was provided in NUREG-0302, “Remarks Presented (Questions/Answers Discussed) at Public Regional Meetings to Discuss Regulations (10 CFR part 21) for Reporting of Defects and Noncompliance,” Revision 1, dated July 1977 (ADAMS Accession No. ML062080399). Question 10 on page 21.61-4 asked, “Can an organization be cited under part 21 for not conducting training on procedures required by part 21?” The NRC staff's response stated, “part 21 does not include a requirement for training.” However, the NRC's current position is that training of personnel involved in 10 CFR part 21 activities would be covered under 10 CFR 50.120, “Training and qualification of nuclear power plant personnel.”
The NRC is seeking input regarding the position proposed in DG-1291 which approves NEI 14-09 for use because 10 CFR part 21 has no specific requirements for training and the regulation does not provide guidance requiring training of personnel.
3. Are there topics that are not addressed in the RG that should be addressed? Conversely, are there topics addressed in the RG that need not be addressed?
This DG approves a method for evaluating and reporting defects under 10 CFR part 21. Issuance of this DG, if finalized, would not constitute backfitting as defined in 10 CFR 50.109 (the Backfit Rule) and would not otherwise be inconsistent with the issue finality provisions in 10 CFR part 52. As discussed in the “Implementation” section of this DG, the NRC has no current intention to impose this guide, if finalized, on holders of current operating licenses or combined licenses.
For the Nuclear Regulatory Commission.
Weeks of August 7, 14, 21, 28, September 4, 11, 2017.
Commissioners' Conference Room, 11555 Rockville Pike, Rockville, Maryland.
Public and Closed.
There are no meetings scheduled for the week of August 7, 2017.
There are no meetings scheduled for the week of August 14, 2017.
There are no meetings scheduled for the week of August 21, 2017.
There are no meetings scheduled for the week of August 28, 2017.
There are no meetings scheduled for the week of September 11, 2017.
The schedule for Commission meetings is subject to change on short notice. For more information or to verify the status of meetings, contact Denise
The NRC Commission Meeting Schedule can be found on the Internet at:
The NRC provides reasonable accommodation to individuals with disabilities where appropriate. If you need a reasonable accommodation to participate in these public meetings, or need this meeting notice or the transcript or other information from the public meetings in another format (
Members of the public may request to receive this information electronically. If you would like to be added to the distribution, please contact the Nuclear Regulatory Commission, Office of the Secretary, Washington, DC 20555 (301-415-1969), or email
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing for the Commission's consideration concerning negotiated service agreements. This notice informs the public of the filing, invites public comment, and takes other administrative steps.
Submit comments electronically via the Commission's Filing Online system at
David A. Trissell, General Counsel, at 202-789-6820.
The Commission gives notice that the Postal Service filed request(s) for the Commission to consider matters related to negotiated service agreement(s). The request(s) may propose the addition or removal of a negotiated service agreement from the market dominant or the competitive product list, or the modification of an existing product currently appearing on the market dominant or the competitive product list.
Section II identifies the docket number(s) associated with each Postal Service request, the title of each Postal Service request, the request's acceptance date, and the authority cited by the Postal Service for each request. For each request, the Commission appoints an officer of the Commission to represent the interests of the general public in the proceeding, pursuant to 39 U.S.C. 505 (Public Representative). Section II also establishes comment deadline(s) pertaining to each request.
The public portions of the Postal Service's request(s) can be accessed via the Commission's Web site (
The Commission invites comments on whether the Postal Service's request(s) in the captioned docket(s) are consistent with the policies of title 39. For request(s) that the Postal Service states concern market dominant product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3622, 39 U.S.C. 3642, 39 CFR part 3010, and 39 CFR part 3020, subpart B. For request(s) that the Postal Service states concern competitive product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3632, 39 U.S.C. 3633, 39 U.S.C. 3642, 39 CFR part 3015, and 39 CFR part 3020, subpart B. Comment deadline(s) for each request appear in section II.
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This notice will be published in the
Postal Service.
Notice; correction.
The Postal Service published a document in the
Julie S. Moore, (202) 268-4800.
In the
1. On page 36007, in the third column, correct the
Monday, August 7, 2017, at 9:00 a.m.
2. On page 36008, in the first column, correct the first line to read:
Monday, August 7, 2017, at 9:00 a.m.
Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Rule 498 (17 CFR 230.498) under the Securities Act of 1933 (15 U.S.C. 77a
The purpose of rule 498 is to enable a fund to provide investors with a Summary Prospectus containing key information necessary to evaluate an investment in the fund. Unlike many other federal information collections, which are primarily for the use and benefit of the collecting agency, this information collection is primarily for the use and benefit of investors. The information filed with the Commission also permits the verification of compliance with securities law requirements and assures the public availability and dissemination of the information.
Based on an analysis of fund filings, the Commission estimates that approximately 10,532 portfolios are using a Summary Prospectus. The Commission estimates that the annual hourly burden per portfolio associated with the compilation of the information required on the cover page or the beginning of the Summary Prospectus is 0.5 hours, and estimates that the annual hourly burden per portfolio to comply with the Web site posting requirement is approximately 1 hour, requiring a total of 1.5 hours per portfolio per year.
Estimates of average burden hours are made solely for the purposes of the Paperwork Reduction Act and are not derived from a comprehensive or even a representative survey or study of the costs of Commission rules and forms. Under rule 498, use of the Summary Prospectus is voluntary, but the rule's requirements regarding provision of the statutory prospectus upon investor request are mandatory for funds that elect to send or give a Summary Prospectus in reliance upon rule 498. The information provided under rule 498 will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.
Written comments are invited on: (a) Whether the collections of information are necessary for the proper performance of the functions of the Commission, including whether the information has practical utility; (b) the accuracy of the Commission's estimate of the burdens of the collections of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burdens of the collections of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication.
Please direct your written comments to Pamela Dyson, Director/Chief Information Officer, Securities and Exchange Commission, C/O Remi Pavlik-Simon, 100 F Street NE., Washington, DC 20549; or send an email to:
On May 16, 2017, The NASDAQ Stock Market LLC (“Nasdaq” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Commission has approved the listing and trading of Shares under Nasdaq Rule 5735, which governs the listing and trading of Managed Fund Shares on the Exchange.
The Fund is an actively-managed exchange-traded fund (“ETF”). The Shares will be offered by the Trust, which was established as a Massachusetts business trust on January 9, 2008. The Trust, which is registered with the Commission as an investment company under the Investment Company Act of 1940 (the “1940 Act”), has filed a registration statement on Form N-1A (“Registration Statement”) relating to the Fund with the Commission.
The primary purpose of this proposed rule change is to modify certain representations set forth in the Prior Release. Since the Prior Release, in evaluating its ability to construct a portfolio that would both enable the Fund to pursue its investment objectives effectively and satisfy the representations set forth in the Prior Release, the Adviser determined that, based on certain factors, including regulatory and market developments with portfolio management implications, additional flexibility would be needed to launch and operate the Fund. Additionally, the Adviser took into account that recent increases in interest rates have been accompanied by substantial outflows from mutual funds and ETFs, and that future interest rate swings may spark increased market volatility and trigger potentially dramatic inflows and outflows. To enable the Fund to operate effectively (including, in addition to pursuing its investment objectives, responding to potential market volatility), the Adviser believes that additional portfolio management flexibility is needed and warranted. Additionally, for the reasons discussed in more detail below, the Exchange believes that the proposal is consistent with Section 6(b)(5) of the Act.
As a related matter, the Exchange notes that although the Prior Release included certain representations that were based on the generic listing standards for index-based ETFs, the Exchange's “generic listing standards” for actively-managed ETFs (the “Active ETF Generic Listing Standards”)
The Prior Release noted that the Fund would be actively managed and not tied to an index, but that under normal market conditions, on a continuous basis determined at the time of purchase, its portfolio of Municipal Securities (as defined in the Prior Release) would generally meet, as applicable, all except for two of the criteria for non-actively managed, index-based, fixed income ETFs contained in Nasdaq Rule 5705(b)(4)(A),
Additionally, the Prior Release noted that Nasdaq Rule 5705(b)(4)(A)(iii) (relating to convertible securities) was inapplicable to the Fund's portfolio of Municipal Securities. Further, the Prior Release provided that the Fund's portfolio of Municipal Securities may not satisfy 5705(b)(4)(A)(vi) (requiring that component securities that in the aggregate account for at least 90% of the weight of the index or portfolio be either exempted securities or from a specified type of issuer) and that it would not generally satisfy Rule 5705(b)(4)(A)(ii) (requiring that components that in the aggregate account for at least 75% of the weight of the index or portfolio have a minimum original principal amount outstanding of $100 million or more). However, the Prior Release stated that under normal market conditions, at least 40% (based on dollar amount invested) of the Municipal Securities in which the Fund invested would be issued by issuers with total outstanding debt issuances that, in the aggregate, have a minimum amount of municipal debt outstanding at the time of purchase of $75 million or more (the “40/75 Representation”).
In addition to the Rule 5705-Related Representations and the 40/75 Representation, the Prior Release provided that under normal market conditions, except for the initial invest-up period and periods of high cash inflows or outflows,
The Prior Release also provided that under normal market conditions, except for the initial invest-up period and periods of high cash inflows or outflows, (a) with respect to the Municipal Securities in which the Fund invested that were rated investment grade by each nationally recognized statistical rating organization (“NRSRO”) rating such securities, at the time of purchase, the applicable borrower would be obligated to pay debt service on issues of municipal obligations that have an aggregate principal amount outstanding of $100 million or more and (b) with respect to all other Municipal Securities in which the Fund invested (referred to as “Clause B Munis”), at the time of purchase of a Clause B Muni, the borrowers of all Clause B Munis held by the Fund, in the aggregate, would have a weighted average of principal municipal debt outstanding of $50 million or more (collectively, the “Borrower Debt Representations” and, together with the Borrower Exposure Representations, the Industry/State Representations, the 40/75 Representation and the Rule 5705-Related Representations, the “Prior Representations”).
As indicated above, the Adviser has reconsidered the Prior Representations and concluded that additional flexibility will be needed to launch and operate the Fund. As a result, in this proposed rule change, the Exchange is proposing that, going forward: (a) The Prior Representations, except for the Industry/State Representations, would be deleted and (b) the representations included in the next two paragraphs (referred to as the “New Representations”) would be added. Further, the Exchange notes that the New Representations have been designed to correspond to the requirements of Rule 5735(b)(1)(B), as these are more readily adapted to the Fund (as an actively-managed ETF) than the generic listing standards for index-based ETFs upon which the Rule 5705-Related Representations were based.
Although as described below, certain of the New Representations would meet or exceed similar requirements set forth in Rule 5735(b)(1)(B), it is not anticipated that the Fund would meet the requirement that components that in the aggregate account for at least 75% of the fixed income weight of the portfolio each have a minimum original principal
Under normal market conditions, except for the initial invest-up period and periods of high cash inflows or outflows,
The New Representations differ from the Prior Representations and do not, in certain respects, comply with Rule 5735(b)(1)(B) (particularly with respect to the Generic 100 Requirement). However, taking into account the nature of the municipal securities market and the manner in which municipal securities generally trade, in light of the requirements that the New Representations and the Industry/State Representations would impose (
The Prior Release stated that under normal market conditions, the Fund would seek to achieve its investment objectives by investing at least 80% of its net assets (including investment borrowings) in municipal debt securities that pay interest that is exempt from regular federal income taxes which are “exempted securities” under Section 3(a)(12) of the Act (collectively, “Municipal Securities”). In light of the Exempted Securities Representation, going forward, the Exchange proposes to revise the foregoing by deleting the phrase “which are `exempted securities' under Section 3(a)(12) of the Act.” In addition, the Prior Release stated that the Fund “may invest up to 20% of its net assets in short-term debt instruments . . . , taxable municipal securities or tax-exempt municipal securities that are not exempted securities under Section 3(a)(12) under the Act, or it may hold cash.” Going forward, the Exchange proposes to revise the foregoing by replacing the phrase “taxable municipal securities or tax-exempt municipal securities that are not exempted securities under Section 3(a)(12) under the Act,” with the phrase “and taxable municipal securities and other municipal securities that are not Municipal Securities,”.
Additionally, the Prior Release stated that under normal market conditions, the Fund would invest at least 65% of its net assets in Municipal Securities that are, at the time of investment, rated below investment grade (
As described in the Prior Release, the Fund may (i) invest in exchange-listed options on U.S. Treasury securities, exchange-listed options on U.S. Treasury futures contracts, and exchange-listed U.S. Treasury futures contracts (collectively, the “Listed Derivatives”) and (ii) acquire short positions in the Listed Derivatives. No changes are being proposed with respect to the Fund's investments in the Listed Derivatives. Going forward, however, the Exchange proposes that the Fund's ability to invest in derivatives would be expanded to permit it to also invest in OTC forward contracts and OTC swaps (collectively, the “OTC Derivatives”) to hedge interest rate risks associated with the Fund's portfolio investments.
On both an initial and continuing basis, no more than 20% of the assets in the Fund's portfolio would be invested in the OTC Derivatives and, for purposes of calculating this limitation, the Fund's investment in the OTC Derivatives would be calculated as the aggregate gross notional value of the OTC Derivatives.
The OTC Derivatives would typically be valued using information provided by a Pricing Service (as defined in the Prior Release). Pricing information for the OTC Derivatives would be available from major broker-dealer firms and/or
The Adviser represents that there would be no change to the Fund's investment objectives. Except as provided herein, all other facts presented and representations made in the Prior Release would remain unchanged. The Fund and the Shares would comply with all initial and continued listing requirements under Nasdaq Rule 5735.
Nasdaq believes that the proposal is consistent with Section 6(b) of the Act in general and Section 6(b)(5) of the Act, in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and, in general, to protect investors and the public interest. Except as provided herein, all other facts presented and representations made in the Prior Release would remain unchanged. The Fund would comply with all the initial and continued listing requirements under Nasdaq Rule 5735.
The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares would be listed and traded on the Exchange pursuant to the initial and continued listing criteria in Nasdaq Rule 5735 and, except as provided herein, all other facts presented and representations made in the Prior Release would remain unchanged. The Exchange notes that Shares have not yet been listed on the Exchange. Consistent with the Prior Release, the Exchange represents that trading in the Shares would be subject to the existing trading surveillances, administered by both Nasdaq and also the Financial Industry Regulatory Authority (“FINRA”), on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws.
The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that the Adviser represents that taking into account the nature of the municipal securities market and the manner in which municipal securities generally trade, in light of the requirements that the New Representations, the Industry/State Representations, the modified Below Investment Grade Requirement and the modified Investment Grade Limitation would impose (
With one exception, the New Representations would meet or exceed similar requirements for portfolios of fixed income securities set forth in Rule 5735(b)(1)(B). In this regard, it is not anticipated that the Fund would meet the Generic 100 Requirement. Based on its expertise and understanding of the municipal securities market and the manner in which municipal securities generally trade, the Adviser believes that, notwithstanding both the previous more stringent 40/75 Representation and the Generic 100 Requirement, the 40/50 Representation is appropriate in light of the Fund's investment objectives and the manner in which the Fund intends to pursue them. Further, given the nature of the municipal securities market and the manner in which municipal securities generally trade, the expected availability of Municipal Securities that would satisfy the Fund's investment parameters, and the debt issuance profiles of the corresponding issuers and borrowers, the 40/50 Representation should both provide the Fund with flexibility to construct its portfolio and, when combined with the Industry/State Representations, the other New Representations, the modified Below Investment Grade Requirement and the modified Investment Grade Limitation, should support the potential for diversity and liquidity, thereby mitigating the Commission's concerns about manipulation.
In connection with the proposal to modify the Below Investment Grade Requirement and the Investment Grade Limitation, the Exchange notes that the Fund's ability to invest in investment grade Municipal Securities would be expanded. Accordingly, Nasdaq believes that this is consistent with the Act because the liquidity profile of the Fund's potential pool of Municipal Securities is expected to increase, which should lessen manipulation concerns.
Further, in connection with the proposal to permit the Fund to invest in the OTC Derivatives, the Exchange notes that the ability to invest in the OTC Derivatives would provide the Adviser with additional flexibility in hedging interest rate risks associated with the Fund's portfolio investments and would be subject to a limitation that is consistent with the limitation set forth in Rule 5735(b)(1)(E). Additionally, the Fund would only enter into transactions in the OTC Derivatives with counterparties that the Adviser reasonably believes are capable of performing under the applicable contract or agreement.
In addition, a large amount of information would be publicly available regarding the Fund and the Shares, thereby promoting market transparency. Moreover, the Intraday Indicative Value (as described in the Prior Release), available on the NASDAQ OMX Information LLC proprietary index data service, would be widely disseminated by one or more major market data vendors and broadly displayed at least every 15 seconds during the Regular Market Session. On each business day, before commencement of trading in Shares in the Regular Market Session on the Exchange, the Fund would disclose on its Web site the Disclosed Portfolio that will form the basis for the Fund's calculation of NAV at the end of the business day.
The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest. The Exchange notes that the Fund does not yet have publicly offered Shares and does not yet have Shares listed and traded on the Exchange. Before Shares are publicly offered, the Trust will file a post-effective amendment to its Registration Statement. The Shares will not be publicly offered until the post-effective amendment to the Registration Statement becomes effective.
For the above reasons, Nasdaq believes the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance
No written comments were either solicited or received.
After careful review, the Commission finds that the Exchange's proposal is consistent with the requirements of Section 6 of the Act
As described above, the Exchange proposes to: (a) Delete all of the Prior Representations (including the 40/75 Representation), except for the Industry/State Representations; and (b) apply the New Representations. According to the Exchange, the Fund's proposed New Representations would meet the requirements of Nasdaq Rule 5735(b)(1)(B), with the exception of the Generic 100 Requirement. In lieu of the Generic 100 Requirement, the Exchange proposes to apply New Representations, which include the 40/50 Representation. Specifically, the 40/50 Representation requires that, under normal market conditions and except for the initial invest-up period and periods of high cash inflows or outflows, at least 40% (based on dollar amount invested) of the Municipal Securities in which the Fund invests would be issued by issuers with total outstanding debt issuances that, in the aggregate, have a minimum amount of municipal debt outstanding at the time of purchase of $50 million or more.
The Commission believes that, because this Fund is a series of Managed Fund Shares under Nasdaq Rule 5735, it is reasonable and appropriate for the Exchange to use the Active ETF Generic Listing Standards of Nasdaq Rule 5735 as a point of comparison, rather than to apply the 5705-Related Representations from the Prior Release, which were based on standards applicable to the listing and trading of Index Fund Shares.
The Commission further notes that, as part of the proposed New Representations, the Exchange has made the following additional representations with respect to the Fund and the requirements applicable to its Municipal Securities investments:
(1) No component fixed income security (excluding the U.S. government securities described under the heading “Other Investments” in the Prior Release) would represent more than 15% of the Fund's net assets, and the five most heavily weighted component fixed income securities in the Fund's portfolio (excluding U.S. government securities) would not, in the aggregate, account for more than 25% of the Fund's net assets.
(2) Under normal market conditions, except for the initial invest-up period and periods of high cash inflows or outflows, the Fund's portfolio of Municipal Securities would include securities from a minimum of 30 non-affiliated issuers.
(3) Under normal market conditions, except for the initial invest-up period and periods of high cash inflows or outflows, component securities that in the aggregate account for at least 90% of the weight of the Fund's portfolio of Municipal Securities would be exempted securities as defined in Section 3(a)(12) of the Act.
(4) To the extent the Fund invests in Municipal Securities that are mortgage-backed or asset-backed securities, such investments would not account, in the aggregate, for more than 20% of the weight of the fixed income portion of the Fund's portfolio.
(5) No more than 20% of the Fund's assets will be invested in OTC Derivatives, and, for purposes of calculating this limitation, the Fund's investment in the OTC Derivatives would be calculated as the aggregate gross notional value of the OTC Derivatives.
The Exchange also proposes to change the description of certain fund investments to remove references to “exempted securities” as a redundancy because Section 3(a)(12) of the Act exempts certain Municipal Securities. The Commission believes that this clarifying change is reasonable, in light of the representations provided by the Exchange with respect to the Fund's Municipal Securities investment restrictions.
The Commission notes that the Exchange has represented that, other than the proposed changes, the Fund and the Shares will comply with all other initial and continued listing requirements under Nasdaq Rule 5735. The Commission notes that, according to the Exchange, there is no change to the Fund's investment objectives and that, except as provided herein, all other facts presented and representations made in the Prior Release would remain unchanged. Specifically, the Commission notes that in the Prior Release, the Exchange represented that all statements and representations made in the proposed rule change regarding (a) the description of the portfolio, (b) limitations on portfolio holdings or reference assets, or (c) the applicability of Exchange rules and surveillance procedures constitute continued listing requirements for listing the Shares on the Exchange. In addition, the issuer has represented to the Exchange that it will advise the Exchange of any failure by the Fund to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will monitor for compliance with the continued listing requirements. If the Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under the Nasdaq 5800 Series.
This approval order is based on all of the Exchange's representations, including those set forth above, in the Notice, and in the Prior Release, as applicable, and the Exchange's description of the Fund. The Commission notes that the Fund and the Shares must comply with the requirements of Nasdaq Rule 5735 to be listed and traded on the Exchange.
For the foregoing reasons, the Commission finds that the proposed rule change, as modified by Amendments No. 1 and 2, is consistent with Section 6(b)(5) of the Act
Interested persons are invited to submit written data, views, and arguments concerning whether Amendment No. 1 is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
The Commission finds good cause to approve the proposed rule change, as modified by Amendments No. 1 and 2, prior to the thirtieth day after the date of publication of notice of the filing of Amendment No. 1 in the
The Commission notes that Amendment No. 1 supplements the proposed rule change by providing additional information regarding the scope of the Fund's permitted investments in investment grade and below investment grade Municipal Securities. The Commission believes that the proposed change to the Fund's investment parameters does not change the Commission's determination in the Prior Release that the listing and trading of the Shares on the Exchange is consistent with the requirements of the Act. In addition, the Commission believes that Amendment No. 1 clarifies the proposed rule change by deleting references to the Liquidity Rule under the 1940 Act. The Commission believes that Amendment No. 1 does not raise any novel or unique regulatory issues under the Act. The changes and additional information in Amendment No. 1 helped the Commission to evaluate whether the listing and trading of the Shares would be consistent with the protection of investors and the public interest. Accordingly, the Commission finds good cause, pursuant to Section 19(b)(2) of the Act,
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The purpose of this filing is to amend CBOE Rule 6.1 to clarify the trading hours for options on exchange-traded funds (“ETF's”) and exchange-traded notes (“ETNs”). The text of the proposed rule change is provided below.
(additions are
The Board shall determine by resolution the days the Exchange shall be open for business and the Regular Trading Hours and Extended Trading Hours of such days during which transactions may be made on the Exchange.
.01 (a) Regular Trading Hours. The Board of Directors has resolved that, except under unusual conditions as may be determined by the Board or its designee, Regular Trading Hours during which transactions in options on individual stocks may be made on the Exchange shall correspond to the normal hours for business established by the exchanges currently trading the stocks underlying CBOE options.
(b) No change.
.02 No change.
.03
[(a) Options on Units (or ETFs). Regular Trading Hours for options on Units, as defined under Interpretation and Policy .06 to Rule 5.3, and options on the PowerShares QQQ Trust (“QQQQ”) will last until 3:15 p.m. (CT) each business day.
(b) Options on Index-Linked Securities (or ETNs). Regular Trading Hours for options on Index-Linked Securities, as defined under Interpretation and Policy .13 to Rule 5.3, will last until 3:15 p.m. (CT) each business day.]
.04—.05 No change.
The text of the proposed rule change is also available on the Exchange's Web site (
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of this filing is to amend CBOE Rule 6.1 to clarify the trading hours for options on exchange-traded funds (“ETF's”) and exchange-traded notes (“ETNs”). Specifically, the Exchange seeks to amend Interpretation and Policy .03 to Rule 6.1 to provide that options on ETF's and ETNs (collectively exchange-traded products or “ETPs”) may be traded on the Exchange until 3:15 p.m. (CT) each business day. The Exchange notes that the proposed rule is based on C2 Options Exchange, Incorporated (“C2”) Rule 6.1 and NYSE MKT LLC (“NYSE MKT”) Rule 901NY Commentary .02.
Currently, Rule 6.1 provides that all options on ETPs will be traded on the Exchange until 3:15 p.m. (CT); however, industry practice and the Exchange's current practice allow the vast majority of options on ETPs to be traded until 3:00 p.m. (CT), while allowing certain options on ETPs to trade until 3:15 p.m. (CT).
The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the “Act”) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
In particular, the proposed rule change will protect investors and the public interest by reducing potential confusing regarding CBOE's trading hours for options on ETPs and aligning CBOE's Rules regarding trading orders for options on ETPs with industry practice. The Exchange notes that the proposed rule is based on C2 Rule 6.1 and NYSE MKT Rule 901NY Commentary .02.
CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change will not impose any burden on intermarket or intramarket competition as the proposed rule change will align CBOE's Rules regarding trading orders for options on ETPs with industry practice. In addition, the proposed rule change does not modify the construct for trading hours but simply identifies the products that may close at 3:00 p.m. (CT) or 3:15 p.m. (CT), which is consistent with the industry.
The Exchange neither solicited nor received comments on the proposed rule change.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule change should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to amend Rule 1027, Discretionary Accounts, to conform it more closely to a comparable rule of the Chicago Board Options Exchange (“CBOE”) and to make minor corrections and clarifications.
The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
Rule 1027 generally imposes restrictions and various requirements on members
Rules 1027(a)(i) and (ii) apply to stock or exchange-traded fund share options and foreign currency options respectively. These provisions prohibit the exercise of any discretionary power with respect to trading in options contracts in a customer's account unless such customer has given prior written authorization with respect to such trading and the account has been accepted in writing by a designated Registered Options Principal or, in the case of foreign currency options, a Foreign Currency Options Principal.
Rule 1027(a)(i) is proposed to be amended to include index options, as their current exclusion from the rule is without a rational basis and was likely an oversight. References to Registered Options Principal “qualified persons” or “qualified individuals” in Rule 1027(a)(i) are proposed to be amended in order to refer only to “Registered Options Principals,” in order to eliminate needless ambiguity and lack of clarity as to who is a Registered Options Principal “qualified person” or “qualified individual.” Additionally, the last two sentences of Section (a)(i) currently provide that every discretionary order shall be identified as discretionary at the time of entry, and that discretionary accounts shall receive frequent review by a Registered Options Principal qualified person specifically delegated such responsibilities under Rule 1025, who is not exercising the discretionary authority. These sentences are largely duplicative of existing Rule 1027(a)(iii) and are therefore proposed to be deleted. The rule would be expanded to cover member organizations, to be more consistent with the comparable CBOE rule which applies to CBOE Trading Permit Holder (“TPH”) organizations.
The Exchange proposes to delete from Section (a)(iii) a reference to “Compliance Registered Option Principal,” a term which the Exchange no longer uses, and proposes to substitute the term “Registered Options Principal.” It also proposes to amend that section by adding language requiring the Registered Options Principal providing appropriate supervisory review to be specifically delegated such responsibilities under Rule 1025 and not be the Registered Options Principal exercising the discretionary review. These changes would conform Section (a)(iii) to the duplicative language deleted from Section (a)(i) as described above. The Exchange also proposes to delete the last sentence of Section (a)(iii), which provides that the provisions of paragraph (a) shall not apply to discretion as to the price at which or the time when an order given by a customer for the purchase or sale of a definite number of option contracts in a specified security or foreign currency shall be executed. This sentence is largely duplicative of existing language in Rule 1027(e), Discretion as to Time or Price Excepted. Rule 1027(e), however, is proposed to be amended by the addition of a reference to “foreign currency” which was present in the deleted sentence of Section (a)(iii).
The Exchange is proposing no changes to section (a)(iv) which extends the provisions of Rule 1027 to index warrants, as no changes are required.
Currently, Rule 1027(c) prohibits members as well as partners, officers and employees of a member organization having discretionary power over a customer's account from, in the exercise of such discretion, executing or causing to be executed therein any purchases or sales of option contracts which are excessive in size or frequency in view of the financial resources in such account. The prohibition is proposed to be reworded, to conform Phlx Rule 1027(c) more closely to CBOE Rule 9.10, Discretionary Accounts, section (c). Additionally, the rule would be expanded to cover member organizations as well as members and partners and employees of member organizations.
Rule 1027(d) currently requires a record to be made of every transaction in option contracts in respect to which a member or a partner, officer or employee of a member organization has exercised discretionary authority, clearly reflecting such fact and indicating the name of the customer, the designation and number of the option contracts, the premium and the date and time when such transaction was
As discussed above the Exchange proposes to amend Rule 1027(e), which generally excludes price and time discretion from the requirements of Rule 1027, to cover foreign currency options. The Exchange also proposes to correct an internal cross reference to “this paragraph (d)” which should read “this paragraph (e)”.
The Exchange believes that its proposal is consistent with Section 6(b) of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.
No written comments were either solicited or received.
Within 45 days of the date of publication of this notice in the
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2017-56 and should be submitted on or before August 25, 2017.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act” or “Exchange Act”)
The MSRB filed with the Commission a proposed amendment to MSRB Rule A-13, on underwriting and transaction assessments for brokers, dealers and municipal securities dealers (collectively “dealers”), to assess an underwriting fee on dealers that are underwriters of primary offerings of plans, as the terms “underwriter” and “plan” are defined under MSRB Rule G-45, on reporting of information on municipal fund securities (the “proposed rule change”).
Under Rule G-45(d)(ix), a “plan” is a college savings plan or program established by a state, or agency or instrumentality of a state, to operate as a qualified tuition program in accordance with Section 529 of the Internal Revenue Code of 1986, as amended. The proposed rule change will not apply to underwriters of other types of municipal fund securities.
The text of the proposed rule change is available on the MSRB's Web site at
In its filing with the Commission, the MSRB included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The MSRB has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to assess an underwriting fee on underwriters to plans to defray the costs and expenses of operating and administering the MSRB. The proposed rule change will amend Rule A-13 to add a new fee on an underwriter to a plan at a rate of .0005% ($.005 per $1,000) of the total aggregate assets for the plan underwritten as of December 31 each year, as reported on MSRB Form G-45, reporting of information on municipal fund securities. The MSRB believes that the proposed fee is reasonable as well as necessary and appropriate to help defray the costs of operating and administering the MSRB. The MSRB is committed to appropriately and equitably assessing fees across all regulated activities to ensure fairness, and, as summarized below, the MSRB's activity concerning underwriters to plans has historically been funded with minimal fees.
The MSRB's regulation of dealers that sell interests in and dealers that are underwriters to plans began over 18 years ago. In 1998, after certain states created 529 college savings plans,
Although Congress amended the Code to add Section 529 in 1996, the market for 529 college savings plans did not grow significantly until after the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”). EGTRRA made several improvements, such as permitting distributions to be withdrawn free of federal income tax, if the distributions were used for qualified higher education expenses.
To support the MSRB's regulation of dealers that are underwriters to plans, as well as its mission to protect investors in those plans, the MSRB has engaged in significant rulemaking, market transparency, educational and market outreach initiatives. In addition, the MSRB has provided examination and enforcement support to other regulatory agencies related to dealer activity regarding plans. Those initiatives and support require the Board's resources, including the resources of its staff and of its Electronic Municipal Market Access (EMMA®)
Approximately one third of the MSRB's general rules specifically
The MSRB has engaged in several market transparency initiatives relating to municipal fund securities. For example, under MSRB Rule G-32, on disclosures relating to primary offerings, an underwriter to a plan, among other things, must submit the official offering statement and any amendment thereto,
Under Rule G-45, an underwriter must submit information about each plan for which it is an underwriter on a semi-annual basis to the MSRB. To facilitate such submissions, the MSRB developed two methods through which an underwriter could make those submissions to the MSRB so that the underwriter could select the method it prefers (either through the EMMA dataport or through a computer-to-computer interface) as well as developed the database for the submissions. The MSRB continues to enhance the database as well as to assist underwriters to plans by answering inquiries relating to the submission of that data through the MSRB's call center. Further, MSRB staff utilizes the data submitted under Rule G-45 to analyze plans, monitor their growth rate, size and investment options, and compare plans based on fees, costs, and performance.
The MSRB has engaged in educational and market outreach both to underwriters to plans and to investors in those plans. That outreach has included: Conducting regional compliance seminars for dealers; MSRB staff presentations and attendance at major industry conferences; and the development and distribution of multiple educational pieces to assist dealers and investors in 529 college savings plans, including an investor's guide to 529 college savings plans.
Beyond its rulemaking, market transparency, educational and market outreach initiatives, the MSRB has engaged in market leadership activities relating to plans. Those market leadership activities, among other things, have resulted in Congressional testimony and in the development of voluntary industry disclosure standards for 529 college savings plan program disclosure booklets.
To facilitate efficient and effective examination and enforcement of MSRB rules, the MSRB provides support to the regulatory agencies that enforce the MSRB's rules. Those regulatory agencies include the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the Commission. That support includes education and guidance about MSRB rules, training of the staff of those regulatory agencies regarding the MSRB rules, and the provision of additional information about plans to support the monitoring of the market for potential misconduct. The MSRB continues and will continue in the future to provide this support.
The MSRB assesses dealers and municipal advisors (collectively, “regulated entities”) various fees designed to defray the costs of its operations and administration, including rulemaking, market transparency, educational and market outreach initiatives that fulfill its Congressional mandate to, among other things, protect investors, state and local governments and other municipal entities by promoting the fairness and efficiency of the municipal securities market. Section 15B(b)(2)(J) of the Act
$1,000 one-time registration fee to be paid by each dealer to register with the MSRB before engaging in municipal securities activities and each municipal advisor to register with the MSRB before engaging in municipal advisory activities.
$1,000 annual fee to be paid by each dealer and municipal advisor registered with the MSRB.
$.0275 per $1,000 of the par value paid by a dealer, on all municipal securities purchased from an issuer by or through such dealer, whether acting as principal or agent as part of a primary offering—except that this fee does not apply to commercial paper or municipal fund securities, such as interests in plans.
.001% ($.01 per $1,000) of the total par value to be paid by a dealer, except in limited circumstances, for inter-dealer sales and customer sales reported to the MSRB pursuant to Rule G-14(b), on transaction reporting requirements—this fee does not apply to the sale of interests in plans.
$1.00 paid by a dealer per transaction for each inter-dealer sale and for each sale to customers reported to the MSRB pursuant to Rule G-14(b)—this fee does not apply to the sale of interests in plans.
$300 per Form MA-I on file with the SEC by the municipal advisor—this fee does not apply to dealers/underwriters to plans.
$150 test development fee assessed per candidate for each MSRB examination.
$25 monthly late fee and a late fee on the overdue balance (computed according to the prime rate) until paid on balances not paid within 30 days of the invoice date by the dealer or municipal advisor.
Begun in 2015, the Board's holistic review of fees that the Board assesses on regulated entities continues. The Board evaluates those fees with the goal of better aligning revenue sources with operating expenses and all capital needs. The Board strives to diversify funding sources among regulated entities and other entities that fund MSRB services in a manner that ensures long-term sustainability, while continuing to strike an equitable balance among regulated entities and a fair allocation of the expenses of the regulatory activities, systems development and operational activities undertaken by the MSRB. Proxies used by the Board for fairly allocating to regulated entities the cost of MSRB regulation include, but are not limited to: Being registered to engage in municipal securities or municipal advisory activities; the level of dealer market activity; and the number of associated persons engaged in municipal advisory activities on behalf of a municipal advisor. Recognizing that in any given year there could be more or less activity by a particular class of regulated entities, the Board, as it has historically, sought to establish a fee structure that would result in a balanced and reasonable contribution over time from all regulated entities to defray costs and expenses of operating and administering the MSRB.
The Board's most recent evaluation focused on the fees assessed on dealers/underwriters to 529 college savings plans. Of the fees assessed to defray the costs of operating and administering the Board, dealers that sell interests in and dealers that act as underwriters to plans, that do not otherwise engage in the municipal securities business, are subject to three MSRB fees—the initial and annual registration fees, the examination fees, and the late fees (when applicable). During Fiscal Year 2016, the annual registration fees assessed on all regulated entities accounted for slightly less than 6% of the Board's total revenue, and of that amount, registration fees for dealers/underwriters that engage in transactions relating to plans exclusively accounted for 0.9% of that slightly less than 6% of registration fee revenue, or less than 0.05% of total revenue.
In 1999, the Board requested comment about a draft amendment to Rule A-13 to assess an underwriting fee on underwriters to plans.
Based on the . . . continuous nature of offerings in municipal fund securities, the programmatic nature of most customer investments and the heightened potential that underwriting assessments could create significant financial burdens on issuers to their customers' detriment justify caution in imposing the underwriting assessment.
The proposed rule change will assess an underwriter to a primary offering of a plan an underwriting fee of .0005% of the total aggregate assets of the plan for the reporting period ending December 31 each year, as required to be reported on Form G-45. For the purposes of the proposed rule change, if there are multiple underwriters of the primary offering of the interests in plans identified on Form G-45, the term “underwriter” will be limited to the underwriter identified as the primary distributor in the official statement,
Specifically, the proposed rule change will amend Rule A-13(a) to reflect the amount of the proposed rule change's underwriting fee set forth in new subsection (c)(ii). The proposed rule change also will amend Rule A-13 to add new section (b) “underwriting assessments—certain municipal fund securities” to Rule A-13. New section (b) will require that an underwriter to a plan pay an underwriting fee to the Board. As noted above, for the purposes of that new section, if there are multiple
As previously stated, new section (e) will provide that if there are multiple underwriters identified on Form G-45 for the reporting period ending December 31 each year, the Board will invoice the underwriter identified as the primary distributor in the official statement for the primary offering submitted under Rule G-32 of the relevant year. The proposed rule change will renumber current section (e) of Rule A-13 as section (f). The proposed rule change will clarify that the Board's long-standing prohibition on charging or otherwise passing through the fees required under Rule A-13 to issuers applies to all fees assessed under Rule A-13, including underwriting fees assessed on underwriters to plans.
the fees paid to the Board under rule A-13 should be characterized by dealers to issuers no differently than the annual fees paid to the Board . . . [under Rule A-12] and any other “overhead” expenses that are incurred by virtue of the dealer engaging in municipal securities business.
Exchange Act Rel. No. 34601 (Aug. 25, 1994), 59 FR 169 (Sept. 1, 1994) (File No. SR-MSRB-94-12).
The MSRB believes that the proposed rule change is consistent with Section 15B(b)(2)(J) of the Act
pay to the Board such reasonable fees and charges as may be necessary or appropriate to defray the costs and expenses of operating and administering the Board. Such rules shall specify the amount of such fees and charges, which may include charges for failure to submit to the Board, or to any information system operated by the Board, within the prescribed timeframes, any items of information or documents required to be submitted under any rule issued by the Board.
The MSRB believes that its rules provide for reasonable dues, fees, and other charges among regulated entities. The MSRB believes that the proposed rule change is necessary and appropriate to fund the operation and administration of the Board and satisfies the requirements of Section 15B(b)(2)(J),
The proposed rule change will account for the differences between municipal fund securities and other municipal securities. The Board accounts for those differences both in the manner and in the amount of the underwriting fee that the Board will assess on underwriters to plans.
To recognize the continuous nature of offerings in plans, the MSRB will assess the proposed fee in a manner that will be similar to how the SEC assesses registration fees on mutual funds pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended. The MSRB will assess the proposed rule change on the plan's total aggregate assets as of December 31 each year, as reported by an underwriter on Form G-45. Thus, the proposed rule change will account for the redemption of units in plans. Further, to recognize the differences in the commission structure between other municipal securities offerings, such as municipal bonds, and offerings in plans, the Board will assess the proposed rule change at a rate that is significantly lower than the rate the Board uses to assess underwriters subject to assessment under Rule A-13(a) (the amount of the underwriting assessment under Rule A-13(a) is .00275% of the par value of the primary offering).
The proposed rule change will defray the costs of the Board's significant rulemaking, market transparency, educational and market outreach initiatives, market leadership, and inspections/enforcement support relating to underwriters to plans, an industry with approximately $266 billion in assets as of December 31, 2016, as reported in March 2017.
Section 15B(b)(2)(C) of the Act requires that MSRB rules not be designed to impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. In accordance with certain aspects of the Board's policy on the use of economic analysis,
[t]his policy addresses rulemaking activities of the MSRB that culminate, or are expected to culminate, in a filing of a proposed rule change with the SEC under Section 19(b) of the Securities Exchange Act of 1934 . . . other than a proposed rule change that the MSRB reasonably believes would qualify for immediate effectiveness under Section 19(b)(3)(A) if filed as such or as otherwise provided under the exception process of this policy.
Policy on the Use of Economic Analysis in MSRB Rulemaking, available at
The proposed rule change will assess an annual fee of 0.0005%, or 1/20th of a basis point, on plan assets to underwriters of plans.
In addition, the MSRB does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act since it will apply equally to all underwriters engaged in a primary offering of interests in plans required to submit data to the MSRB on Form G-45. The assessment will be proportional to the overall size of each plan being underwritten; therefore, the MSRB believes the total fee charged to each underwriter will bear a reasonable relationship to the level of underwriting activities that are undertaken by the underwriter. Moreover, since the proposed rule change's amendment to Rule A-13 will result in an underwriting fee that is
The Board did not solicit comment on the proposed change. Therefore, there are no comments on the proposed rule change received from members, participants or others.
The foregoing proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549.
For the Commission, pursuant to delegated authority.
On June 1, 2017, National Securities Clearing Corporation (“NSCC”) and The Options Clearing Corporation (“OCC,” each a “Clearing Agency,” and collectively, “Clearing Agencies”) filed with the Securities and Exchange Commission (“Commission”) advance notices SR-NSCC-2017-803 and SR-OCC-2017-804 respectively (collectively, the “Advance Notices”), pursuant to Section 806(e)(1) of Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act entitled the Payment, Clearing, and Settlement Supervision Act of 2010 (“Clearing Supervision Act”)
The Advance Notices filed by the Clearing Agencies are a proposal to implement a new Stock Options and Futures Settlement Agreement (“New Accord”) between the Clearing Agencies, and to amend the Rules and Procedures of NSCC (“NSCC Rules”) and the By-Laws and Rules of OCC to accommodate the proposed provisions of the New Accord.
OCC issues and clears U.S.-listed options and futures on a number of underlying financial assets including common stocks, currencies and stock indices. OCC's Rules, however, provide that delivery of, and payment for, securities underlying certain physically settled stock options and single stock futures cleared by OCC are effected through the facilities of a correspondent clearing corporation (
The Advance Notices are a proposal by the Clearing Agencies to adopt a New Accord, which would provide for the settlement of the securities underlying certain Stock Options and delivery obligations arising from certain matured physically-settled single stock futures contracts cleared by OCC (“Stock Futures”). The New Accord would implement three major changes. First, the New Accord would expand the category of securities that would be eligible for settlement and guaranty under the agreement to certain securities (including stocks, exchange-traded funds and exchange-traded notes) that (i) are required to be delivered in the exercise and assignment of Stock Options and are eligible to be settled through NSCC's Balance Order Accounting Operation or (ii) are delivery obligations arising from Stock Futures that have reached maturity and are eligible to be settled through NSCC's CNS Accounting Operation or Balance Order Accounting Operation.
According to the Clearing Agencies, the primary purpose of the proposed changes is to: (1) Provide consistent treatment across all expiries for products with regular way
The New Accord would become effective, and wholly replace the Existing Accord, at a date specified in a service level agreement to be entered into between the Clearing Agencies.
According to the Clearing Agencies, under the Existing Accord, the settlement of underlying securities resulting from Options E&A generally proceeds according to the following sequence of events. NSCC maintains and delivers to OCC a list (“CNS Eligibility Master File”) that enumerates all CNS Securities, which are defined in NSCC Rule 1 and generally include securities that have been designated by NSCC as eligible for processing through NSCC's CNS Accounting Operation and eligible for book entry delivery at NSCC's affiliate, The Depository Trust
According to the Clearing Agencies, under the Existing Accord, even after NSCC's trade guarantee has taken effect,
In the event that NSCC or OCC ceases to act on behalf of or suspends a Common Member, that Common Member would become a “defaulting member.” Once a Common Member becomes a defaulting member, the Existing Accord provides that if OCC were to suspend a Common Member, NSCC would be required to make a payment to OCC equal to the lesser of OCC's total loss resulting from the closeout or the positive mark-to-market (“MTM”) amount relating to the defaulting member's Options E&A and that if NSCC were to suspend a Common Member, OCC would be required to make a payment to NSCC equal to the lesser of NSCC's total loss resulting from closeout or the negative mark-to-market amount relating to the defaulting member's Options E&A. A Clearing Agency must request the transfer of any such payments by the close of business on the tenth business day following the day of default and, after a request is made, the other Clearing Agency is required to make payment within five business days of the request.
As noted above, the Clearing Agencies propose to adopt a New Accord, which would provide for the settlement of certain securities underlying Stock Options and Stock Futures transactions. According to the Clearing Agencies, the New Accord is primarily designed to, among other things, expand the category of securities that are eligible for settlement and guaranty under the agreement; simplify the time of the transfer of responsibilities from OCC to NSCC (specifically, the Guaranty Substitution); and put additional arrangements into place concerning the procedures, information sharing, and overall governance processes under the agreement. The material provisions of the New Accord are described in detail below.
Pursuant to the proposed New Accord, on each day that both OCC and NSCC are open for accepting trades for clearing (“Activity Date”), NSCC would deliver to OCC an “Eligibility Master File,” which would identify the securities, including stocks, exchange-traded funds and exchange-traded notes, that are: (1) Eligible to settle through NSCC's CNS Accounting Operation (as is currently the case under the Existing Accord) or NSCC's Balance Order Accounting Operation (which is a feature of the New Accord) and (2) required to be physically delivered in settlement of (i) exercises and assignments of Stock Options (as is currently the case under the Existing Accord) or (ii) delivery obligations arising from maturing physically settled Stock Futures (which is a feature of the New Accord) (all such securities collectively being “Eligible Securities”). OCC, in turn, would deliver to NSCC its file of E&A/Delivery Transactions
As with the Existing Accord, the proposed New Accord would continue to provide for the settlement of securities underlying Stock Options that settle through NSCC's CNS Accounting Operation and are designated to settle regular way. In addition, the New Accord would expand the category of securities eligible for settlement and guarantee by NSCC to include Stock Futures deliveries that are eligible to settle through NSCC's CNS Accounting Operation and are designated to settle regular way. The New Accord would also provide for the settlement of securities underlying both Stock Options and Stock Futures that are eligible to settle through NSCC's Balance Order Accounting Operation on a regular way basis. The primary purpose of expanding the category of securities that are eligible for settlement and guaranty under the agreement is to provide consistent treatment across all expiries for products with regular way settlement cycle specifications and simplify the settlement process for these additional securities transactions.
The New Accord would not apply to Stock Options or Stock Futures that are designated to settle on a shorter timeframe than the regular way settlement timeframe. These Stock Options would continue to be processed and settled as they would be today, outside of the New Accord. The New Accord also would not apply to any Stock Options or Stock Futures with underlying securities that are neither CNS Securities nor Balance Order Securities.
The New Accord would adopt a fundamentally different approach to the delineation of the rights and responsibilities of the Clearing Agencies with respect to Guaranty Substitution.
As described above, the Existing Accord provides that, following the default of a Common Member, and depending on the timing of the exercise or assignment guarantee, the Clearing Agency that suspends the Common Member will receive payment from the other Clearing Agency to compensate for potential losses incurred in connection with the Common Member's default. The proposed New Accord, in contrast, would clearly delineate a point in time at which OCC's Guaranty ends and NSCC's Guaranty begins (
Under the New Accord, after NSCC has received an E&A/Delivery Transaction, the Guaranty Substitution would normally occur when NSCC has received all Required Deposits to its Clearing Fund, calculated taking into account such E&A/Delivery Transaction, of Common Members (“Guaranty Substitution Time”).
The Guaranty Substitution would not occur, however, with respect to any E&A/Delivery Transaction if NSCC has rejected such E&A/Delivery Transaction due to an improper submission, as described above. The Guaranty Substitution also would not occur if, after NSCC's receipt of the E&A/Delivery Transaction but prior to receiving corresponding Clearing Fund deposits, a Common Member involved in the E&A/Delivery Transaction has defaulted on its obligations to NSCC by failing to meet its Clearing Fund obligations, or NSCC has otherwise ceased to act for such Common Member pursuant to the NSCC Rules (in either case, such Common Member becomes a “Defaulting NSCC Member”).
NSCC would be required to promptly notify OCC if a Common Member becomes a Defaulting NSCC Member, as described above. Upon receiving such a notice, OCC would not submit to NSCC any additional E&A/Delivery Transactions involving the Defaulting NSCC Member for settlement, unless authorized representatives of both OCC and NSCC otherwise consent. OCC would, however, deliver to NSCC a list of all E&A/Delivery Transactions that have already been submitted to NSCC and that involve the Defaulting NSCC Member (“Defaulted NSCC Member Transactions”). The Guaranty Substitution would not occur with respect to such Defaulted NSCC Member Transactions, unless both Clearing Agencies agree otherwise. Therefore, NSCC would have no obligation to guarantee such Defaulted NSCC Member Transactions, and OCC would continue to be responsible for effecting the settlement of such Defaulted NSCC Member Transactions pursuant to OCC's By-Laws and Rules. Once NSCC has confirmed the list of Defaulted NSCC Member Transactions, Guaranty Substitution would occur for all submitted E&A/Delivery Transactions for that Activity Date that are not included on such list (
If OCC suspends a Common Member after NSCC has received the E&A/Delivery Transactions but before the Guaranty Substitution has occurred, and that Common Member has not become a Defaulting NSCC Member, the Guaranty Substitution would proceed at the Guaranty Substitution Time. In such a scenario, OCC would continue to be responsible for guaranteeing the settlement of the E&A/Delivery Transactions in question until the Guaranty Substitution Time, at which time the responsibility would transfer to NSCC. If, however, the suspended Common Member also becomes a Defaulting NSCC Member after NSCC has received the E&A/Delivery Transactions but before the Guaranty Substitution has occurred, Guaranty Substitution would not occur, and OCC would continue to be responsible for effecting the settlement of such Defaulted NSCC Member Transactions pursuant to OCC's By-Laws and Rules (unless both Clearing Agencies agree otherwise).
Finally, the New Accord also would provide for the consistent treatment of all exercise and assignment activity under the agreement. Under the Existing Accord, “standard”
The New Accord would include a number of other provisions intended to maintain certain terms of the Existing Accord or improve the procedures, information sharing, and overall governance process under the new agreement. Many of these terms are additions to or improvements upon the terms of the Existing Accord.
Under the proposed New Accord, the Clearing Agencies would agree to address the specifics regarding the time, form, and manner of various required notifications and actions in a separate service level agreement, which the parties would be able to revisit as their operational needs evolve. The separate service level agreement also would specify an effective date for the New Accord, which would occur on a date following approval and effectiveness of all required regulatory submissions to be filed by OCC and NSCC with the appropriate regulatory authorities. Similar to the Existing Accord, the proposed New Accord would remain in effect: (a) Until it is terminated by the mutual written agreement of OCC and NSCC; (b) until it is unilaterally terminated by either Clearing Agency upon one year's written notice (as opposed to six months under the Existing Accord); or (c) until it is terminated by either NSCC or OCC upon the bankruptcy or insolvency of the other, provided that the election to terminate is communicated to the other party within three business days by written notice.
Under the proposed New Accord, NSCC would agree to notify OCC if NSCC ceases to act for a Common Member pursuant to the NSCC Rules no later than the earlier of NSCC's provision of notice of such action to the governmental authorities or notice to other NSCC Members. Furthermore, if an NSCC Member for which NSCC has not yet ceased to act fails to satisfy its Clearing Fund obligations to NSCC, NSCC would be required to notify OCC promptly after discovery of the failure. Likewise, OCC would be required to notify NSCC of the suspension of a Common Member no later than the earlier of OCC's provision of notice to the governmental authorities or other OCC Clearing Members.
Under the Existing Accord, NSCC and OCC agree to share certain reports and information regarding settlement activity and obligations under the agreement. The New Accord would enhance this information sharing between the Clearing Agencies. For example, the Clearing Agencies would agree to share certain information, including general risk management due diligence regarding Common Members, lists of Common Members, and information regarding margin and settlement obligations of the Common Members. The Clearing Agencies would also agree to provide each other with any other information that the other reasonably requests in connection with their obligations under the New Accord. All such information would be required to be kept confidential, using the same care and discretion that each Clearing Agency uses for the safekeeping of its own members' confidential information. NSCC and OCC would each be required to act in good faith to resolve and notify the other of any errors, discrepancies or delays in the information it provides.
The New Accord also would include new terms to provide that, to the extent a Clearing Agency is unable to perform any obligation as a result of the failure of the other Clearing Agency to perform its responsibilities on a timely basis, the time for the non-failing Clearing Agency's performance would be extended, its performance would be reduced to the extent of any such impairment, and it would not be liable for any failure to perform its obligations. Further, NSCC and OCC would agree that neither Clearing Agency would be liable to the other Clearing Agency in connection with its performance of its obligations under the proposed New Accord to the extent it has acted, or omitted or ceased to act, with the permission or at the direction of a governmental authority. Moreover, the proposed New Accord would provide that in no case would either Clearing Agency be liable to the other for punitive, incidental or consequential damages. The purpose of these new provisions is to provide clear and specific terms regarding each Clearing Agency's liability for non-performance under the agreement.
The proposed New Accord would also contain the usual and customary representations and warranties for an agreement of this type, including representations as to the parties' good standing, corporate power and authority and operational capability, that the agreement complies with laws and all government documents and does not violate any agreements, and that all of the required regulatory notifications and filings would be obtained prior to the New Accord's effective date. It would also include representations that the proposed New Accord constitutes a legal, valid and binding obligation on each of OCC and NSCC and is enforceable against each, subject to standard exceptions. Furthermore, the proposed New Accord would contain a force majeure provision, under which NSCC and OCC would agree to notify the other no later than two hours upon learning that a force majeure event has occurred and both parties would be required to cooperate in good faith to mitigate the effects of any resulting inability to perform or delay in performing.
Given the key differences between the Existing Accord and the New Accord, as described above, NSCC proposes certain changes to Procedures III and XV of the NSCC Rules to accommodate the terms of the New Accord. In particular, NSCC would update Section B of Procedure III to define the scope of the New Accord. First, the proposed Section B of Procedure III would identify the E&A/Delivery Transactions, and would make clear that the New Accord would apply only to E&A/Delivery Transactions that are in either CNS Securities or Balance Order Securities, as such terms are defined in the NSCC Rules. The proposed Section B of Procedure III would also define the Common Members, or firms that must be named as counterparties to E&A/Delivery Transactions, as “Participating Members.” The proposal would describe the Guaranty Substitution Time and would describe the circumstances under which the Guaranty Substitution would not occur. Finally, the proposed Section B of Procedure III would describe how E&A/Delivery Transactions for which the Guaranty Substitution has occurred would be processed at NSCC both if they are covered by the proposed New Accord and if they are not covered by the proposed New Accord because, for example, they are not transactions in CNS Securities or Balance Order Securities or were not submitted for regular way settlement.
Finally, NSCC is also proposing to amend Procedure XV to remove
OCC also proposes certain changes to its By-Laws and Rules to accommodate the terms of the New Accord. The primary purpose of the proposed changes is to: (1) Reflect the expanded scope of the New Accord, (2) reflect changes related to the new Guaranty Substitution mechanics of the New Accord; and (3) make other changes necessary to conform to the terms of the New Accord or to otherwise provide additional clarity around the settlement and margining
First, OCC proposes to amend and replace the defined term “CNS-eligible”
Next, because the New Accord would include the settlement of securities underlying Stock Futures, OCC proposes to make several changes to its rules regarding Stock Futures to accommodate this expansion. More specifically, OCC proposes a conforming amendment to Rule 901 Interpretation and Policy (.02) to clarify that, under the New Accord, OCC will, subject to its discretion, cause the settlement of all matured Stock Futures to be made through the facilities of NSCC to the extent that the underlying securities are CCC-eligible as the term is currently proposed.
OCC also proposes clarifying and conforming revisions to newly renumbered Rule 901(e) (currently Rule 901(d)) to specify that settlements made through the facilities of the correspondent clearing corporation are governed by Rule 901 and to clarify that, under the New Accord, specifications made in any Delivery Advice may be revoked up until the point at which NSCC's Guaranty has taken effect (the “obligation time” as discussed below) and not the opening of business on the delivery date.
OCC also proposes a series of amendments to its Rules to accurately reflect the process under which the Guaranty Substitution occurs under the New Accord. First, OCC proposes to amend Rule 901(c) so that the term “obligation time”—the time that the correspondent clearing corporation becomes unconditionally obligated, in accordance with its rules, to effect settlement in respect thereof or to close out the securities contract arising therefrom—is synonymous with the Guaranty Substitution Time under the New Accord (
Next, OCC proposes to amend language in newly renumbered Rule 901(i) (currently Rule 901(h)) regarding the timing of the end of a Clearing Member's obligations to OCC with respect to securities to be settled through NSCC. Under the Existing Accord and OCC's existing Rules, a Clearing Member's obligations to OCC end only once settlement is completed. Under the New Accord, however, a Clearing Member's obligations to OCC will end when OCC's obligations with respect to guaranteeing settlement of the security would end (
As discussed above, the New Accord eliminates the provisions of the Existing Accord whereby OCC and NSCC guaranteed each other the performance of Common Members and made certain payments to the other upon the default of a Common Member. Therefore, OCC proposes to delete discussions of such guarantees and payments from newly renumbered Rule 901(i) and Rule 1107.
OCC also proposes amendments to Rules 910 and 911, which set forth procedures for handling failures to make or take delivery of securities in settlement of exercised or assigned Stock Options and matured physically-settled Stock Futures, to add language to both rules to clarify that the failure procedures set forth therein would not apply with respect to any delivery to be made through NSCC pursuant to Rule 901. Under the New Accord, once the Guaranty Substitution Time with respect to a specific E&A/Delivery Transaction occurs, OCC's Guaranty ends and NSCC's Guaranty begins, leaving OCC with no involvement with or responsibility for the settlement of the securities underlying that transaction. Therefore, if there is a failure to make or take delivery with respect to that transaction after Guaranty Substitution has occurred, the
Under the New Accord, OCC will no longer collect margin on a transaction once it is no longer guaranteeing settlement for that transaction. Therefore, OCC proposes to add language to Rule 601(f) to clarify that OCC's margin calculations will not include delivery obligations arising from any Stock Options or Stock Futures that are eligible for settlement through NSCC and for which OCC has no further settlement obligations because either (i) Guaranty Substitution has occurred for E&A/Delivery Transactions under the New Accord (as described in revised Rule 901(c)) or (ii) NSCC has otherwise accepted transactions for non-regular way settlement under the NSCC Rules (as describe in newly proposed Rule 901(d)).
OCC also proposes to delete Rule 608A in its entirety. The New Accord seeks to eliminate the situation under the Existing Accord where Common Members are effectively “double-margined” or required to simultaneously post margin with OCC and NSCC with respect to the same position. As the New Accord eliminates this double-margining scenario, Rule 608A, which provides procedures pursuant to which a Clearing Member could use the securities deposited as margin with OCC as collateral to secure a loan to pay its margin obligations to NSCC, is now unnecessary.
OCC also proposes to amend its Rules to make clarifying changes that are not directly required by the New Accord but would provide additional clarity in its Rules in light of other changes being made to accommodate the New Accord. Specifically, OCC proposes to revise Rule 901 Interpretation and Policy (.02) to provide that transactions that involve the delivery of non-CCC eligible securities made on a broker-to-broker basis (and away from NSCC) may nevertheless involve the use of certain services of NSCC (
Further, OCC proposes to add a new paragraph (d) to Rule 901 to clarify that OCC still intends, at its discretion, to effect settlement of Stock Options and Stock Futures that are scheduled to be settled on the first business day after exercise or maturity through NSCC pursuant to Rule 901 and the relevant provisions of the NSCC Rules, even though such contracts are outside the scope of the New Accord. These contracts would continue to be settled as they are currently today.
OCC also proposes clarifying and conforming changes to the introductory language of Chapter IX of the Rules. Specifically, OCC proposes conforming changes to the Rule to reflect the replacement of the defined term “CNS-eligible” with “CCC-eligible” as described above. The proposed changes would also clarify that OCC's broker-to-broker settlement rules are contained in Rules 903-912, as Rule 902 concerns Delivery Advices, which also may be applicable to settlements made through the correspondent clearing corporation pursuant to Rule 901. In addition, the proposed changes to the introductory language of Chapter IX of the Rules would provide additional clarity around OCC's existing authority to alter a previous designation of a settlement method at any time prior to the designated delivery date by specifying that this authority would apply to both settlements to be made through the facilities of the correspondent clearing corporation pursuant to Rule 901 or settlements to be made on a broker-to-broker basis pursuant to Rules 903 through 912. Finally, OCC proposes a number of conforming changes to Rules 901 and 912 to reflect the renumbering of various Rule provisions due to the proposed amendments described above.
Although the Clearing Supervision Act does not specify a standard of review for an advance notice, its stated purpose is instructive: To mitigate systemic risk in the financial system and promote financial stability by, among other things, promoting uniform risk management standards for systemically important financial market utilities and strengthening the liquidity of systemically important financial market utilities.
Section 805(a)(2) of the Clearing Supervision Act
• To promote robust risk management;
• to promote safety and soundness;
• to reduce systemic risks; and
• to support the stability of the broader financial system.
The Commission has adopted risk management standards under Section 805(a)(2) of the Clearing Supervision Act
The Commission believes that the changes proposed in the Advance Notices are consistent with Section 805(b) of the Clearing Supervision Act
The proposal would expand the category of securities eligible for settlement and guarantee under the New Accord to include Stock Futures deliveries that are eligible to settle through NSCC's CNS Accounting Operation, as well as securities underlying Stock Options and Stock Futures that are eligible to settle through NSCC's Balance Order Accounting Operation, where each are scheduled to settle regular way. By including these additional securities as part of the New Accord, the proposal would provide for more uniform settlement processing of securities with regular way settlement. According to the Clearing Agencies, the expansion of the category of securities eligible for settlement and guarantee under the New Accord would simplify the settlement process for these additional securities transactions. By providing for more uniform settlement processing, simplifying the settlement process, and subjecting such transactions to enhanced information sharing and governance, as described below, this change is intended to promote robust risk management by mitigating operational risk.
The proposal would establish additional arrangements concerning the procedures, information sharing, and overall governance processes under the New Accord. For example, the Clearing Agencies would agree to share certain information, including general risk management due diligence regarding Common Members, lists of Common Members, and information regarding margin and settlement obligations of the Common Members. The Clearing Agencies also would agree to provide each other with any other information that the other reasonably requests in connection with their obligations under the New Accord. Such agreements are designed to help the Clearing Agencies to more effectively identify, monitor, and manage risks that may be presented by certain Common Members.
The New Accord also would establish the Guaranty Substitution Time (
By assisting the Clearing Agencies with mitigating operational risk, as well as more effectively managing risks presented by certain Common Members, including the risk presented by Common Member defaults, the proposed changes are designed to reduce systemic risk and promote robust risk management. Therefore, the Commission believes that the changes proposed in the Advance Notices are consistent with Section 805(b) of the Clearing Supervision Act.
The Commission believes that the changes proposed in the Advance Notices are consistent with Rule 17Ad-22(e)(20) under the Act, which requires, in part, that the Clearing Agencies establish, implement, maintain and enforce written policies and procedures reasonably designed to identify, monitor, and manage risks related to any link the clearing agency establishes with one or more other clearing agencies.
Under the terms of the Existing Accord, even after NSCC's trade guarantee has taken effect, OCC is not released from its trade guarantee with respect to the transactions until certain deadlines have passed, as discussed above. As a result, the Existing Accord creates a complicated framework for the settlement of securities underlying certain Stock Options, which could lead to an unanticipated disruption to the Clearing Agencies' respective clearing operations.
The New Accord is designed to better mitigate and manage the risks related to the link the Clearing Agencies have established with each other to settle the securities underlying Stock Options and Stock Futures. For example, by instituting the Guaranty Substitution Time, the New Accord would provide for a clearer, simpler framework for the settlement of securities underlying certain Stock Options and Stock Futures by setting a specific time at which trade guarantee obligations would transfer from OCC to NSCC. This would help eliminate the ambiguity that currently exists regarding which Clearing Agency is responsible for guaranteeing settlement at any given moment. It would also provide greater certainty that in the event of a Common Member default, the default would be handled pursuant to the rules and procedures of the Clearing Agency whose guarantee is then in effect. This greater certainty, in turn, is designed to help improve the OCC's and NSCC's ability to plan for and manage the risk presented by the default of a Common Member, and the effects that such a default could have on other members and the markets the Clearing Agencies serve.
In connection with the proposal to put additional arrangements into place concerning the procedures, information sharing, and overall governance processes under the New Accord, the Clearing Agencies would agree to share certain information, including general surveillance information regarding their members. Such arrangements are designed to help each Clearing Agency more effectively identify, monitor, and manage risks that may be presented by Common Members.
For the above reasons, the Commission believes that the New Accord is designed to assist the Clearing Agencies in identifying, monitoring, and managing risks related to the link between the Clearing Agencies. Therefore, the Commission believes that the changes proposed in the Advance Notices are consistent with Rule 17Ad-22(e)(20).
The Commission believes that the proposal is consistent with Rule 17Ad-22(e)(21) under the Act, which requires, in part, that the Clearing Agencies establish, implement, maintain and enforce written policies and procedures reasonably designed to be efficient and effective in meeting the requirements of
Furthermore, as described above, the proposed changes would establish additional arrangements between the Clearing Agencies concerning the procedures, information sharing, and overall governance processes under the New Accord. Such arrangements could enhance information sharing between the Clearing Agencies and enable them to more effectively identify, monitor, and manage risks that may be presented by certain Common Members.
Because the New Accord would allow for greater information sharing and eliminate the need for Common Members to post margin at both Clearing Agencies for the same transactions, the Commission believes the proposal is designed to be efficient and effective in meeting the requirements of Common Members. Therefore, the Commission believes that the changes proposed in the Advance Notices are consistent with the requirements of Rule 17Ad-22(e)(21).
By the Commission.
On June 1, 2017, National Securities Clearing Corporation (“NSCC”) and The Options Clearing Corporation (“OCC,” each a “Clearing Agency,” and collectively, “Clearing Agencies”) filed with the Securities and Exchange Commission (“Commission”) proposed rule changes SR-NSCC-2017-007 and SR-OCC-2017-013 respectively (collectively, the “Proposed Rule Changes”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Proposed Rule Changes filed by the Clearing Agencies are a proposal to implement a new Stock Options and Futures Settlement Agreement (“New Accord”) between the Clearing Agencies, and to amend the Rules and Procedures of NSCC (“NSCC Rules”) and the By-Laws and Rules of OCC to accommodate the proposed provisions of the New Accord.
OCC issues and clears U.S.-listed options and futures on a number of underlying financial assets including common stocks, currencies and stock indices. OCC's Rules, however, provide that delivery of, and payment for, securities underlying certain physically settled stock options and single stock futures cleared by OCC are effected through the facilities of a correspondent clearing corporation (
The Proposed Rule Changes are a proposal by the Clearing Agencies to adopt a New Accord, which would provide for the settlement of the securities underlying certain Stock Options and delivery obligations arising from certain matured physically-settled single stock futures contracts cleared by OCC (“Stock Futures”). The New Accord would implement three major changes. First, the New Accord would expand the category of securities that would be eligible for settlement and guaranty under the agreement to certain securities (including stocks, exchange-traded funds and exchange-traded notes) that (i) are required to be delivered in the exercise and assignment of Stock Options and are eligible to be settled through NSCC's Balance Order Accounting Operation or (ii) are delivery obligations arising from Stock Futures that have reached maturity and are eligible to be settled through NSCC's CNS Accounting Operation or Balance Order Accounting Operation.
According to the Clearing Agencies, the primary purpose of the proposed changes is to: (1) Provide consistent treatment across all expiries for products with regular way
The New Accord would become effective, and wholly replace the Existing Accord, at a date specified in a service level agreement to be entered into between the Clearing Agencies.
According to the Clearing Agencies, under the Existing Accord, the settlement of underlying securities resulting from Options E&A generally proceeds according to the following sequence of events. NSCC maintains and delivers to OCC a list (“CNS Eligibility Master File”) that enumerates all CNS Securities, which are defined in NSCC Rule 1 and generally include securities that have been designated by NSCC as eligible for processing through NSCC's CNS Accounting Operation and eligible for book entry delivery at NSCC's affiliate, The Depository Trust Company (“CNS Eligible Securities”).
According to the Clearing Agencies, under the Existing Accord, even after NSCC's trade guarantee has taken effect,
In the event that NSCC or OCC ceases to act on behalf of or suspends a Common Member, that Common Member would become a “defaulting member.” Once a Common Member becomes a defaulting member, the Existing Accord provides that if OCC were to suspend a Common Member, NSCC would be required to make a payment to OCC equal to the lesser of OCC's total loss resulting from the closeout or the positive mark-to-market (“MTM”) amount relating to the defaulting member's Options E&A and that if NSCC were to suspend a Common Member, OCC would be required to make a payment to NSCC equal to the lesser of NSCC's total loss resulting from closeout or the negative mark-to-market amount relating to the defaulting member's Options E&A. A Clearing Agency must request the transfer of any such payments by the close of business on the tenth business day following the day of default and, after a request is made, the other Clearing Agency is required to make payment within five business days of the request.
As noted above, the Clearing Agencies propose to adopt a New Accord, which would provide for the settlement of certain securities underlying Stock Options and Stock Futures transactions. According to the Clearing Agencies, the New Accord is primarily designed to, among other things, expand the category of securities that are eligible for settlement and guaranty under the agreement; simplify the time of the transfer of responsibilities from OCC to NSCC (specifically, the Guaranty Substitution); and put additional arrangements into place concerning the procedures, information sharing, and overall governance processes under the agreement. The material provisions of the New Accord are described in detail below.
Pursuant to the proposed New Accord, on each day that both OCC and NSCC are open for accepting trades for clearing (“Activity Date”), NSCC would deliver to OCC an “Eligibility Master File,” which would identify the securities, including stocks, exchange-traded funds and exchange-traded notes, that are: (1) Eligible to settle through NSCC's CNS Accounting Operation (as is currently the case under the Existing Accord) or NSCC's Balance Order Accounting Operation (which is a feature of the New Accord) and (2) required to be physically delivered in settlement of (i) exercises and assignments of Stock Options (as is currently the case under the Existing Accord) or (ii) delivery obligations arising from maturing physically settled Stock Futures (which is a feature of the New Accord) (all such securities collectively being “Eligible Securities”). OCC, in turn, would deliver to NSCC its file of E&A/Delivery Transactions
As with the Existing Accord, the proposed New Accord would continue to provide for the settlement of securities underlying Stock Options that settle through NSCC's CNS Accounting Operation and are designated to settle regular way. In addition, the New Accord would expand the category of securities eligible for settlement and guarantee by NSCC to include Stock Futures deliveries that are eligible to settle through NSCC's CNS Accounting Operation and are designated to settle regular way. The New Accord would also provide for the settlement of securities underlying both Stock Options and Stock Futures that are eligible to settle through NSCC's Balance Order Accounting Operation on a regular way basis. The primary purpose of expanding the category of securities that are eligible for settlement and guaranty under the agreement is to provide consistent treatment across all expiries for products with regular way settlement cycle specifications and simplify the settlement process for these additional securities transactions.
The New Accord would not apply to Stock Options or Stock Futures that are designated to settle on a shorter timeframe than the regular way settlement timeframe. These Stock Options would continue to be processed and settled as they would be today, outside of the New Accord. The New Accord also would not apply to any Stock Options or Stock Futures with underlying securities that are neither CNS Securities nor Balance Order Securities.
The New Accord would adopt a fundamentally different approach to the delineation of the rights and responsibilities of the Clearing Agencies with respect to Guaranty Substitution.
As described above, the Existing Accord provides that, following the default of a Common Member, and depending on the timing of the exercise or assignment guarantee, the Clearing Agency that suspends the Common Member will receive payment from the other Clearing Agency to compensate for potential losses incurred in connection
Under the New Accord, after NSCC has received an E&A/Delivery Transaction, the Guaranty Substitution would normally occur when NSCC has received all Required Deposits to its Clearing Fund, calculated taking into account such E&A/Delivery Transaction, of Common Members (“Guaranty Substitution Time”).
The Guaranty Substitution would not occur, however, with respect to any E&A/Delivery Transaction if NSCC has rejected such E&A/Delivery Transaction due to an improper submission, as described above. The Guaranty Substitution also would not occur if, after NSCC's receipt of the E&A/Delivery Transaction but prior to receiving corresponding Clearing Fund deposits, a Common Member involved in the E&A/Delivery Transaction has defaulted on its obligations to NSCC by failing to meet its Clearing Fund obligations, or NSCC has otherwise ceased to act for such Common Member pursuant to the NSCC Rules (in either case, such Common Member becomes a “Defaulting NSCC Member”).
NSCC would be required to promptly notify OCC if a Common Member becomes a Defaulting NSCC Member, as described above. Upon receiving such a notice, OCC would not submit to NSCC any additional E&A/Delivery Transactions involving the Defaulting NSCC Member for settlement, unless authorized representatives of both OCC and NSCC otherwise consent. OCC would, however, deliver to NSCC a list of all E&A/Delivery Transactions that have already been submitted to NSCC and that involve the Defaulting NSCC Member (“Defaulted NSCC Member Transactions”). The Guaranty Substitution would not occur with respect to such Defaulted NSCC Member Transactions, unless both Clearing Agencies agree otherwise. Therefore, NSCC would have no obligation to guarantee such Defaulted NSCC Member Transactions, and OCC would continue to be responsible for effecting the settlement of such Defaulted NSCC Member Transactions pursuant to OCC's By-Laws and Rules. Once NSCC has confirmed the list of Defaulted NSCC Member Transactions, Guaranty Substitution would occur for all submitted E&A/Delivery Transactions for that Activity Date that are not included on such list (
If OCC suspends a Common Member after NSCC has received the E&A/Delivery Transactions but before the Guaranty Substitution has occurred, and that Common Member has not become a Defaulting NSCC Member, the Guaranty Substitution would proceed at the Guaranty Substitution Time. In such a scenario, OCC would continue to be responsible for guaranteeing the settlement of the E&A/Delivery Transactions in question until the Guaranty Substitution Time, at which time the responsibility would transfer to NSCC. If, however, the suspended Common Member also becomes a Defaulting NSCC Member after NSCC has received the E&A/Delivery Transactions but before the Guaranty Substitution has occurred, Guaranty Substitution would not occur, and OCC would continue to be responsible for effecting the settlement of such Defaulted NSCC Member Transactions pursuant to OCC's By-Laws and Rules (unless both Clearing Agencies agree otherwise).
Finally, the New Accord also would provide for the consistent treatment of all exercise and assignment activity under the agreement. Under the Existing Accord, “standard”
The New Accord would include a number of other provisions intended to maintain certain terms of the Existing Accord or improve the procedures, information sharing, and overall governance process under the new agreement. Many of these terms are additions to or improvements upon the terms of the Existing Accord.
Under the proposed New Accord, the Clearing Agencies would agree to address the specifics regarding the time, form, and manner of various required notifications and actions in a separate service level agreement, which the parties would be able to revisit as their operational needs evolve. The separate service level agreement also would specify an effective date for the New Accord, which would occur on a date following approval and effectiveness of all required regulatory submissions to be filed by OCC and NSCC with the appropriate regulatory authorities. Similar to the Existing Accord, the proposed New Accord would remain in effect: (a) Until it is terminated by the mutual written agreement of OCC and NSCC; (b) until it is unilaterally terminated by either Clearing Agency upon one year's written notice (as opposed to six months under the Existing Accord); or (c) until it is terminated by either NSCC or OCC upon the bankruptcy or insolvency of the other, provided that the election to terminate is communicated to the other party within three business days by written notice.
Under the proposed New Accord, NSCC would agree to notify OCC if NSCC ceases to act for a Common Member pursuant to the NSCC Rules no later than the earlier of NSCC's provision of notice of such action to the governmental authorities or notice to other NSCC Members. Furthermore, if an NSCC Member for which NSCC has not yet ceased to act fails to satisfy its Clearing Fund obligations to NSCC, NSCC would be required to notify OCC promptly after discovery of the failure. Likewise, OCC would be required to notify NSCC of the suspension of a Common Member no later than the earlier of OCC's provision of notice to
Under the Existing Accord, NSCC and OCC agree to share certain reports and information regarding settlement activity and obligations under the agreement. The New Accord would enhance this information sharing between the Clearing Agencies. For example, the Clearing Agencies would agree to share certain information, including general risk management due diligence regarding Common Members, lists of Common Members, and information regarding margin and settlement obligations of the Common Members. The Clearing Agencies would also agree to provide each other with any other information that the other reasonably requests in connection with their obligations under the New Accord. All such information would be required to be kept confidential, using the same care and discretion that each Clearing Agency uses for the safekeeping of its own members' confidential information. NSCC and OCC would each be required to act in good faith to resolve and notify the other of any errors, discrepancies or delays in the information it provides.
The New Accord also would include new terms to provide that, to the extent a Clearing Agency is unable to perform any obligation as a result of the failure of the other Clearing Agency to perform its responsibilities on a timely basis, the time for the non-failing Clearing Agency's performance would be extended, its performance would be reduced to the extent of any such impairment, and it would not be liable for any failure to perform its obligations. Further, NSCC and OCC would agree that neither Clearing Agency would be liable to the other Clearing Agency in connection with its performance of its obligations under the proposed New Accord to the extent it has acted, or omitted or ceased to act, with the permission or at the direction of a governmental authority. Moreover, the proposed New Accord would provide that in no case would either Clearing Agency be liable to the other for punitive, incidental or consequential damages. The purpose of these new provisions is to provide clear and specific terms regarding each Clearing Agency's liability for non-performance under the agreement.
The proposed New Accord would also contain the usual and customary representations and warranties for an agreement of this type, including representations as to the parties' good standing, corporate power and authority and operational capability, that the agreement complies with laws and all government documents and does not violate any agreements, and that all of the required regulatory notifications and filings would be obtained prior to the New Accord's effective date. It would also include representations that the proposed New Accord constitutes a legal, valid and binding obligation on each of OCC and NSCC and is enforceable against each, subject to standard exceptions. Furthermore, the proposed New Accord would contain a force majeure provision, under which NSCC and OCC would agree to notify the other no later than two hours upon learning that a force majeure event has occurred and both parties would be required to cooperate in good faith to mitigate the effects of any resulting inability to perform or delay in performing.
Given the key differences between the Existing Accord and the New Accord, as described above, NSCC proposes certain changes to Procedures III and XV of the NSCC Rules to accommodate the terms of the New Accord. In particular, NSCC would update Section B of Procedure III to define the scope of the New Accord. First, the proposed Section B of Procedure III would identify the E&A/Delivery Transactions, and would make clear that the New Accord would apply only to E&A/Delivery Transactions that are in either CNS Securities or Balance Order Securities, as such terms are defined in the NSCC Rules. The proposed Section B of Procedure III would also define the Common Members, or firms that must be named as counterparties to E&A/Delivery Transactions, as “Participating Members.” The proposal would describe the Guaranty Substitution Time and would describe the circumstances under which the Guaranty Substitution would not occur. Finally, the proposed Section B of Procedure III would describe how E&A/Delivery Transactions for which the Guaranty Substitution has occurred would be processed at NSCC both if they are covered by the proposed New Accord and if they are not covered by the proposed New Accord because, for example, they are not transactions in CNS Securities or Balance Order Securities or were not submitted for regular way settlement.
Finally, NSCC is also proposing to amend Procedure XV to remove reference to the exclusion of E&A/Delivery Transactions from the calculation of the mark-to-market margin component of its Clearing Fund calculations, which is no longer applicable under the proposed New Accord where the Guaranty Substitution would replace the transfer of a defaulting Common Member's margin payments under the Existing Accord. Therefore, NSCC is not proposing any change to its margining methodology, but will include E&A/Delivery Transactions in the calculation of the mark-to-market margin component of Common Members' Clearing Fund Required Deposits following implementation of the New Accord.
OCC also proposes certain changes to its By-Laws and Rules to accommodate the terms of the New Accord. The primary purpose of the proposed changes is to: (1) Reflect the expanded scope of the New Accord, (2) reflect changes related to the new Guaranty Substitution mechanics of the New Accord; and (3) make other changes necessary to conform to the terms of the New Accord or to otherwise provide additional clarity around the settlement and margining
First, OCC proposes to amend and replace the defined term “CNS-eligible”
Next, because the New Accord would include the settlement of securities underlying Stock Futures, OCC proposes to make several changes to its rules regarding Stock Futures to accommodate this expansion. More specifically, OCC proposes a conforming amendment to Rule 901 Interpretation and Policy (.02) to clarify that, under the New Accord, OCC will, subject to its discretion, cause the settlement of all matured Stock Futures to be made through the facilities of NSCC to the extent that the underlying securities are CCC-eligible as the term is currently proposed.
OCC also proposes clarifying and conforming revisions to newly renumbered Rule 901(e) (currently Rule 901(d)) to specify that settlements made through the facilities of the correspondent clearing corporation are governed by Rule 901 and to clarify that, under the New Accord, specifications made in any Delivery Advice may be revoked up until the point at which NSCC's Guaranty has taken effect (the “obligation time” as discussed below) and not the opening of business on the delivery date.
OCC also proposes a series of amendments to its Rules to accurately reflect the process under which the Guaranty Substitution occurs under the New Accord. First, OCC proposes to amend Rule 901(c) so that the term “obligation time”—the time that the correspondent clearing corporation becomes unconditionally obligated, in accordance with its rules, to effect settlement in respect thereof or to close out the securities contract arising therefrom—is synonymous with the Guaranty Substitution Time under the New Accord (
Next, OCC proposes to amend language in newly renumbered Rule 901(i) (currently Rule 901(h)) regarding the timing of the end of a Clearing Member's obligations to OCC with respect to securities to be settled through NSCC. Under the Existing Accord and OCC's existing Rules, a Clearing Member's obligations to OCC end only once settlement is completed. Under the New Accord, however, a Clearing Member's obligations to OCC will end when OCC's obligations with respect to guaranteeing settlement of the security would end (
As discussed above, the New Accord eliminates the provisions of the Existing Accord whereby OCC and NSCC guaranteed each other the performance of Common Members and made certain payments to the other upon the default of a Common Member. Therefore, OCC proposes to delete discussions of such guarantees and payments from newly renumbered Rule 901(i) and Rule 1107.
OCC also proposes amendments to Rules 910 and 911, which set forth procedures for handling failures to make or take delivery of securities in settlement of exercised or assigned Stock Options and matured physically-settled Stock Futures, to add language to both rules to clarify that the failure procedures set forth therein would not apply with respect to any delivery to be made through NSCC pursuant to Rule 901. Under the New Accord, once the Guaranty Substitution Time with respect to a specific E&A/Delivery Transaction occurs, OCC's Guaranty ends and NSCC's Guaranty begins, leaving OCC with no involvement with or responsibility for the settlement of the securities underlying that transaction. Therefore, if there is a failure to make or take delivery with respect to that transaction after Guaranty Substitution has occurred, the NSCC Rules will govern that failure. With respect to deliveries made on a broker-to-broker basis under OCC Rules 903 through 912 (including those that may utilize NSCC's Obligation Warehouse services), and which are not governed by Rule 901, Guaranty Substitution does not occur and OCC's failure procedures would apply.
Under the New Accord, OCC will no longer collect margin on a transaction once it is no longer guaranteeing settlement for that transaction. Therefore, OCC proposes to add language to Rule 601(f) to clarify that OCC's margin calculations will not include delivery obligations arising from any Stock Options or Stock Futures that are eligible for settlement through NSCC and for which OCC has no further settlement obligations because either (i) Guaranty Substitution has occurred for E&A/Delivery Transactions under the New Accord (as described in revised Rule 901(c)) or (ii) NSCC has otherwise accepted transactions for non-regular way settlement under the NSCC Rules (as describe in newly proposed Rule 901(d)).
OCC also proposes to delete Rule 608A in its entirety. The New Accord seeks to eliminate the situation under the Existing Accord where Common Members are effectively “double-margined” or required to simultaneously post margin with OCC and NSCC with respect to the same position. As the New Accord eliminates this double-margining scenario, Rule 608A, which provides procedures pursuant to which a Clearing Member could use the securities deposited as margin with OCC as collateral to secure a loan to pay its margin obligations to NSCC, is now unnecessary.
OCC also proposes to amend its Rules to make clarifying changes that are not directly required by the New Accord but would provide additional clarity in its Rules in light of other changes being made to accommodate the New Accord. Specifically, OCC proposes to revise Rule 901 Interpretation and Policy (.02) to provide that transactions that involve the delivery of non-CCC eligible securities made on a broker-to-broker basis (and away from NSCC) may
Further, OCC proposes to add a new paragraph (d) to Rule 901 to clarify that OCC still intends, at its discretion, to effect settlement of Stock Options and Stock Futures that are scheduled to be settled on the first business day after exercise or maturity through NSCC pursuant to Rule 901 and the relevant provisions of the NSCC Rules, even though such contracts are outside the scope of the New Accord. These contracts would continue to be settled as they are currently today.
OCC also proposes clarifying and conforming changes to the introductory language of Chapter IX of the Rules. Specifically, OCC proposes conforming changes to the Rule to reflect the replacement of the defined term “CNS-eligible” with “CCC-eligible” as described above. The proposed changes would also clarify that OCC's broker-to-broker settlement rules are contained in Rules 903-912, as Rule 902 concerns Delivery Advices, which also may be applicable to settlements made through the correspondent clearing corporation pursuant to Rule 901. In addition, the proposed changes to the introductory language of Chapter IX of the Rules would provide additional clarity around OCC's existing authority to alter a previous designation of a settlement method at any time prior to the designated delivery date by specifying that this authority would apply to both settlements to be made through the facilities of the correspondent clearing corporation pursuant to Rule 901 or settlements to be made on a broker-to-broker basis pursuant to Rules 903 through 912. Finally, OCC proposes a number of conforming changes to Rules 901 and 912 to reflect the renumbering of various Rule provisions due to the proposed amendments described above.
Section 19(b)(2)(C) of the Act directs the Commission to approve a proposed rule change of a self-regulatory organization if it finds that such proposed rule change is consistent with the requirements of the Act and rules and regulations thereunder applicable to such organization.
Section 17A(b)(3)(F) of the Act requires, in part, that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions, to assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible, and to foster cooperation and coordination with persons engaged in the clearance and settlement of securities transactions.
The proposal would expand the category of securities eligible for settlement and guarantee under the New Accord to include Stock Futures deliveries that are eligible to settle through NSCC's CNS Accounting Operation, as well as securities underlying Stock Options and Stock Futures that are eligible to settle through NSCC's Balance Order Accounting Operation, where each are scheduled to settle regular way. By including these additional securities as part of the New Accord, the proposal would provide for more uniform settlement processing of securities with regular way settlement. According to the Clearing Agencies, the expansion of the category of securities eligible for settlement and guarantee under the New Accord would simplify the settlement process for these additional securities transactions. By providing for more uniform settlement processing, simplifying the settlement process, and subjecting such transactions to enhanced information sharing and governance, as described below, this change would promote the prompt and accurate clearance and settlement of these additional securities transactions.
The proposal would establish additional arrangements concerning the procedures, information sharing, and overall governance processes under the New Accord. For example, the Clearing Agencies would agree to share certain information, including general risk management due diligence regarding Common Members, lists of Common Members, and information regarding margin and settlement obligations of the Common Members. The Clearing Agencies also would agree to provide each other with any other information that the other reasonably requests in connection with their obligations under the New Accord. Such arrangements would foster cooperation and coordination between OCC and NSCC in the settlement of securities transactions.
The New Accord also would establish the Guaranty Substitution Time (
The proposed changes to the NSCC Rules would provide additional clarity, transparency, and certainty around the application of the New Accord to the applicable E&A/Delivery Transactions. Other proposed changes to OCC's Rules also would provide additional clarity, transparency, and certainty around the
Therefore, for the reasons stated above, the Commission believes that the Proposed Rule Changes are consistent with the requirements of Section 17A(b)(3)(F) of the Act.
The Commission believes that the changes proposed in the Proposed Rule Changes are consistent with Rule 17Ad-22(e)(20) under the Act, which requires, in part, that the Clearing Agencies establish, implement, maintain and enforce written policies and procedures reasonably designed to identify, monitor, and manage risks related to any link the clearing agency establishes with one or more other clearing agencies.
Under the terms of the Existing Accord, even after NSCC's trade guarantee has taken effect, OCC is not released from its trade guarantee with respect to the transactions until certain deadlines have passed, as discussed above. As a result, the Existing Accord creates a complicated framework for the settlement of securities underlying certain Stock Options, which could lead to an unanticipated disruption to the Clearing Agencies' respective clearing operations.
The New Accord is designed to better mitigate and manage the risks related to the link the Clearing Agencies have established with each other to settle the securities underlying Stock Options and Stock Futures. For example, by instituting the Guaranty Substitution Time, the New Accord would provide for a clearer, simpler framework for the settlement of securities underlying certain Stock Options and Stock Futures by setting a specific time at which trade guarantee obligations would transfer from OCC to NSCC. This would help eliminate the ambiguity that currently exists regarding which Clearing Agency is responsible for guaranteeing settlement at any given moment. It would also provide greater certainty that in the event of a Common Member default, the default would be handled pursuant to the rules and procedures of the Clearing Agency whose guarantee is then in effect. This greater certainty, in turn, is designed to help improve the OCC's and NSCC's ability to plan for and manage the risk presented by the default of a Common Member, and the effects that such a default could have on other members and the markets the Clearing Agencies serve.
In connection with the proposal to put additional arrangements into place concerning the procedures, information sharing, and overall governance processes under the New Accord, the Clearing Agencies would agree to share certain information, including general surveillance information regarding their members. Such arrangements are designed to help each Clearing Agency more effectively identify, monitor, and manage risks that may be presented by Common Members.
For the above reasons, the Commission believes that the New Accord is designed to assist the Clearing Agencies in identifying, monitoring, and managing risks related to the link between the Clearing Agencies. Therefore, the Commission believes that the changes proposed in the Proposed Rule Changes are consistent with Rule 17Ad-22(e)(20).
The Commission believes that the proposal is consistent with Rule 17Ad-22(e)(21) under the Act, which requires, in part, that the Clearing Agencies establish, implement, maintain and enforce written policies and procedures reasonably designed to be efficient and effective in meeting the requirements of its participants and the markets it serves.
Furthermore, as described above, the proposed changes would establish additional arrangements between the Clearing Agencies concerning the procedures, information sharing, and overall governance processes under the New Accord. Such arrangements could enhance information sharing between the Clearing Agencies and enable them to more effectively identify, monitor, and manage risks that may be presented by certain Common Members.
Because the New Accord would allow for greater information sharing and eliminate the need for Common Members to post margin at both Clearing Agencies for the same transactions, the Commission believes the proposal is designed to be efficient and effective in meeting the requirements of Common Members. Therefore, the Commission believes that the changes proposed in the Proposed Rule Changes are consistent with the requirements of Rule 17Ad-22(e)(21).
On the basis of the foregoing, the Commission finds that the Proposed Rule Changes are consistent with the requirements of the Act, in particular the requirements of Section 17A of the Act
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Securities and Exchange Commission (“Commission”).
Notice.
Notice of an application under section 6(c) of the Investment Company Act of 1940 (the “Act”) for an exemption from sections 18(a)(2), 18(c) and 18(i) of the Act, under sections 6(c) and 23(c)(3) of the Act for an exemption from rule 23c-3 under the Act, and for an order pursuant to section 17(d) of the Act and rule 17d-1 under the Act.
Secretary, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090; Applicants: 101 Jefferson Drive, Menlo Park, California 94025.
Barbara T. Heussler, Senior Attorney, at (202) 551-6990, or Robert H. Shapiro, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
The following is a summary of the application. The complete application may be obtained via the Commission's Web site by searching for the file number, or for an applicant using the Company name box, at
1. The Initial Fund is a Delaware statutory trust that is registered under the Act as a non-diversified, closed-end management investment company. The Initial Fund's investment objective is capital appreciation. The Initial Fund seeks to achieve its investment objective by investing in the equity securities of certain private, operating, late-stage growth companies primarily comprising the SharesPost 100, a list of companies selected and maintained by the Adviser.
2. The Adviser, a Delaware limited liability company, is registered as an investment adviser under the Investment Advisers Act of 1940. The Adviser serves as investment adviser to the Initial Fund.
3. The applicants seek an order to permit the Initial Fund to issue multiple classes of shares, each having its own fee and expense structure, and to impose asset-based distribution and/or service fees, EWCs and Repurchase Fees.
4. Applicants request that the order also apply to any continuously offered registered closed-end management investment company that has been previously organized or that may be organized in the future for which the Adviser, or any entity controlling, controlled by, or under common control with the Adviser, or any successor in interest to any such entity,
5. The Initial Fund is currently making a continuous public offering of its common shares. Applicants state that additional offerings by any Fund relying on the order may be on a private placement or public offering basis. Shares of the Funds will not be listed on any securities exchange nor quoted on any quotation medium. The Funds do not expect there to be a secondary trading market for their shares.
6. If the requested relief is granted, the Initial Fund intends to redesignate its common shares as “Class A Shares” and to amend its registration statement in order to continuously offer an additional class of shares, designated as “Class I Shares”. Each of the Class A Shares and Class I Shares will have its own fee and expense structure. The Funds may in the future offer additional classes of shares and/or another sales charges structure. Because of the different distribution and/or service fees, services and any other class expenses that may be attributable to the Class A Shares and Class I Shares, the net income attributable to, and the dividends payable on, each class of shares may differ from each other.
7. Applicants state that, from time to time, the Initial Fund may create additional classes of shares, the terms of which may differ from Class A Shares and Class I Shares in the following respects: (i) The amount of fees permitted by different distribution plans and/or different service fee arrangements; (ii) voting rights with respect to a distribution and/or service plan of a class; (iii) different class designations; (iv) the impact of any class expenses directly attributable to a particular class of shares allocated on a class basis as described in the application; (v) any differences in dividends and net asset value resulting from differences in fees under a distribution and/or service plan or in class expenses; (vi) any EWC or other sales load structure; and (vii) exchange or conversion privileges of the classes as permitted under the Act.
8. Applicants state that shares of a Fund will be subject to a Repurchase Fee at a rate of no greater than 2% of the aggregate net asset value of a shareholder's shares repurchased by the Fund if the interval between the date of purchase of the shares and the valuation date with respect to the repurchase of those shares is less than one year.
9. Applicants state that the Initial Fund has adopted a fundamental policy to repurchase a specified percentage of its shares (no less than 5% and no more than 25%) at net asset value on a quarterly basis. Such repurchase offers will be conducted pursuant to rule 23c-3 under the Act. Each of the other Funds will likewise adopt fundamental investment policies and make periodic repurchase offers to its shareholders in compliance with rule 23c-3 or will provide periodic liquidity with respect to its shares pursuant to rule 13e-4 under the Exchange Act.
10. Applicants represent that any asset-based service and distribution fees for each class of shares of the Funds will comply with the provisions of the Financial Industry Regulatory Authority (“FINRA”) Rule 2341 (“FINRA Sales Charge Rule”).
11. Each of the Funds will comply with any requirements that the Commission or FINRA may adopt regarding disclosure at the point of sale and in transaction confirmations about the costs and conflicts of interest arising out of the distribution of open-end investment company shares, and regarding prospectus disclosure of sales loads and revenue sharing arrangements, as if those requirements applied to the Fund. In addition, each Fund will contractually require that any distributor of the Fund's shares comply with such requirements in connection with the distribution of such Fund's shares.
12. Each Fund will allocate all expenses incurred by it among the various classes of shares based on the net assets of that Fund attributable to each class, except that the net asset value and expenses of each class will reflect the expenses associated with the distribution and/or service plan of that class, service fees, and any other incremental expenses of that class. Expenses of a Fund allocated to a particular class of shares will be borne on a pro rata basis by each outstanding share of that class. Applicants state that each Fund will comply with the provisions of rule 18f-3 under the Act as if it were an open-end investment company.
13. Applicants state that each Fund may impose an EWC on shares submitted for repurchase that have been held less than a specified period and may waive the EWC for certain categories of shareholders or transactions to be established from time to time. Applicants state that each Fund will apply the EWC (and any waivers or scheduled variations of the EWC) uniformly to all shareholders in a given class and consistently with the requirements of rule 22d-1 under the Act as if the Funds were open-end investment companies.
14. Each Fund operating as an interval fund pursuant to rule 23c-3 under the Act may offer its shareholders an exchange feature under which the shareholders of the Fund may, in connection with such Fund's periodic repurchase offers, exchange their shares of the Fund for shares of the same class of (i) registered open-end investment companies or (ii) other registered closed-end investment companies that comply with rule 23c-3 under the Act and continuously offer their shares at net asset value, that are in the Fund's group of investment companies (collectively, “Other Funds”). Shares of a Fund operating pursuant to rule 23c-3 that are exchanged for shares of Other Funds will be included as part of the amount of the repurchase offer amount for such Fund as specified in rule 23c-3 under the Act. Any exchange option will comply with rule 11a-3 under the Act, as if the Fund were an open-end investment company subject to rule 11a-3. In complying with rule 11a-3, each Fund will treat an EWC as if it were a contingent deferred sales load (“CDSL”).
1. Section 18(a)(2) of the Act provides that a closed-end investment company may not issue or sell a senior security that is a stock unless certain requirements are met. Applicants state that the creation of multiple classes of shares of the Funds may violate section 18(a)(2) because the Funds may not meet such requirements with respect to a class of shares that may be a senior security.
2. Section 18(c) of the Act provides, in relevant part, that a closed-end investment company may not issue or sell any senior security if, immediately thereafter, the company has outstanding more than one class of senior security. Applicants state that the creation of multiple classes of shares of the Funds may be prohibited by section 18(c), as a class may have priority over another class as to payment of dividends because shareholders of different classes would pay different fees and expenses.
3. Section 18(i) of the Act provides that each share of stock issued by a registered management investment company will be a voting stock and have equal voting rights with every other outstanding voting stock. Applicants state that multiple classes of shares of the Funds may violate section 18(i) of the Act because each class would be entitled to exclusive voting rights with respect to matters solely related to that class.
4. Section 6(c) of the Act provides that the Commission may exempt any person, security or transaction or any class or classes of persons, securities or transactions from any provision of the Act, or from any rule or regulation under the Act, if and to the extent such
5. Applicants submit that the proposed allocation of expenses relating to distribution and voting rights among multiple classes is equitable and will not discriminate against any group or class of shareholders. Applicants submit that the proposed arrangements would permit a Fund to facilitate the distribution of its shares and provide investors with a broader choice of shareholder services. Applicants assert that the proposed closed-end investment company multiple class structure does not raise the concerns underlying section 18 of the Act to any greater degree than open-end investment companies' multiple class structures that are permitted by rule 18f-3 under the Act. Applicants state that each Fund will comply with the provisions of rule 18f-3 as if it were an open-end investment company.
1. Section 23(c) of the Act provides, in relevant part, that no registered closed-end investment company shall purchase securities of which it is the issuer, except: (a) On a securities exchange or other open market; (b) pursuant to tenders, after reasonable opportunity to submit tenders given to all holders of securities of the class to be purchased; or (c) under other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors.
2. Rule 23c-3 under the Act permits a registered closed-end investment company (an “interval fund”) to make repurchase offers of between five and twenty-five percent of its outstanding shares at net asset value at periodic intervals pursuant to a fundamental policy of the interval fund. Rule 23c-3(b)(1) under the Act permits an interval fund to deduct from repurchase proceeds only a repurchase fee, not to exceed two percent of the proceeds, that is paid to the interval fund and is reasonably intended to compensate the fund for expenses directly related to the repurchase.
3. Section 23(c)(3) provides that the Commission may issue an order that would permit a closed-end investment company to repurchase its shares in circumstances in which the repurchase is made in a manner or on a basis that does not unfairly discriminate against any holders of the class or classes of securities to be purchased.
4. Applicants request relief under section 6(c), discussed above, and section 23(c)(3) from rule 23c-3 to the extent necessary for the Funds to impose EWCs, which are distribution-related fees payable to the distributor, on shares of the Funds submitted for repurchase that have been held for less than a specified period.
5. Applicants state that the EWCs they intend to impose are functionally similar to CDSLs imposed by open-end investment companies under rule 6c-10 under the Act. Rule 6c-10 permits open-end investment companies to impose CDSLs, subject to certain conditions. Applicants note that rule 6c-10 is grounded in policy considerations supporting the employment of CDSLs where there are adequate safeguards for the investor and state that the same policy considerations support imposition of EWCs in the interval fund context. In addition, applicants state that EWCs may be necessary for the distributor to recover distribution costs. Applicants represent that any EWC imposed by the Funds will comply with rule 6c-10 under the Act as if the rule were applicable to closed-end investment companies. The Funds will disclose EWCs in accordance with the requirements of Form N-1A concerning CDSLs.
1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit an affiliated person of a registered investment company, or an affiliated person of such person, acting as principal, from participating in or effecting any transaction in connection with any joint enterprise or joint arrangement in which the investment company participates unless the Commission issues an order permitting the transaction. In reviewing applications submitted under section 17(d) and rule 17d-1, the Commission considers whether the participation of the investment company in a joint enterprise or joint arrangement is consistent with the provisions, policies and purposes of the Act, and the extent to which the participation is on a basis different from or less advantageous than that of other participants.
2. Rule 17d-3 under the Act provides an exemption from section 17(d) and rule 17d-1 to permit open-end investment companies to enter into distribution arrangements pursuant to rule 12b-1 under the Act. Applicants request an order under section 17(d) and rule 17d-1 under the Act to the extent necessary to permit the Fund to impose asset-based distribution and service fees. Applicants have agreed to comply with rules 12b-1 and 17d-3 as if those rules applied to closed-end investment companies, which they believe will resolve any concerns that might arise in connection with a Fund financing the distribution of its shares through asset-based distribution fees.
3. For the reasons stated above, applicants submit that the exemptions requested under section 6(c) are necessary and appropriate in the public interest and are consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Applicants further submit that the relief requested pursuant to section 23(c)(3) will be consistent with the protection of investors and will insure that applicants do not unfairly discriminate against any holders of the class of securities to be purchased. Finally, applicants state that the Funds' imposition of asset-based distribution and/or service fees is consistent with the provisions, policies and purposes of the Act and does not involve participation on a basis different from or less advantageous than that of other participants.
Applicants agree that any order granting the requested relief will be subject to the following condition:
Each Fund relying on the order will comply with the provisions of rules 6c-10, 12b-1, 17d-3, 18f-3, 22d-1, and, where applicable, 11a-3 under the Act, as amended from time to time, as if those rules applied to closed-end management investment companies, and will comply with the FINRA Sales Charge Rule, as amended from time to time, as if that rule applied to all closed-end management investment companies.
For the Commission, by the Division of Investment Management, under delegated authority.
Securities and Exchange Commission (“Commission”).
Notice.
Notice of an application under section 6(c) of the Investment Company Act of 1940 (the “Act”) for an exemption from sections 18(a)(2), 18(c) and 18(i) of the Act, under sections 6(c) and 23(c) of the Act for an exemption from rule 23c-3 under the Act, and for an order pursuant to section 17(d) of the Act and rule 17d-1 under the Act.
Secretary, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090; Applicants: USQ Core Real Estate Fund and Union Square Capital Partners, LLC, 235 Whitehorse Lane, Suite 200, Kennett Square, PA 19348.
Kieran G. Brown, Senior Counsel, at (202) 551-8707, or David Marcinkus, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
The following is a summary of the application. The complete application may be obtained via the Commission's Web site by searching for the file number, or for an applicant using the Company name box, at
1. The Fund is a Delaware statutory trust that is registered under the Act as a non-diversified, closed-end management investment company. Applicants expect that the Fund's investment objective will be to generate a return comprised of both current income and capital appreciation with moderate volatility and low correlation to the broader markets.
2. The Adviser is a Delaware limited liability company and will register as an investment adviser under the Investment Advisers Act of 1940. The Adviser will serve as investment adviser to the Fund.
3. The applicants seek an order to permit the Fund to issue multiple classes of shares, each having its own fee and expense structure, and to impose asset-based distribution and service fees, and EWCs.
4. Applicants request that the order also apply to any continuously-offered registered closed-end management investment company that has been previously organized or that may be organized in the future for which the Adviser or any entity controlling, controlled by, or under common control with the Adviser, or any successor in interest to any such entity,
5. The Fund intends to make a continuous public offering of its shares following the effectiveness of its registration statement. Applicants state that additional offerings by any Fund relying on the order may be on a private placement or public offering basis. Shares of the Funds will not be listed on any securities exchange, nor quoted on any quotation medium. The Funds do not expect there to be a secondary trading market for their shares.
6. If the requested relief is granted, the Fund intends to offer an initial class of shares and may also offer additional classes of shares in the future, with each class having its own fee and expense structure. Because of the different distribution fees, services and any other class expenses that may be attributable to a class of a Fund's shares, the net income attributable to, and the dividends payable on, each class of shares may differ from each other.
7. Applicants state that, from time to time, Funds may create additional classes of shares, the terms of which may differ from the initial class in the following respects: (i) The amount of fees permitted by different distribution plans or different service fee arrangements; (ii) voting rights with respect to a distribution plan of a class; (iii) different class designations; (iv) the impact of any class expenses directly attributable to a particular class of shares allocated on a class basis as described in the application; (v) any differences in dividends and net asset value resulting from differences in fees under a distribution plan or service fee arrangement or in class expenses; (vi) any EWC or other sales load structure; and (vii) exchange or conversion privileges of the classes as permitted under the Act.
8. Applicants state that the Fund expects to adopt a fundamental policy to repurchase a specified percentage of its shares (no less than 5% and not more than 25%) at net asset value on a periodic basis. Such repurchase offers will be conducted pursuant to rule 23c-3 under the Act.
9. Applicants represent that any asset-based service and distribution fees for each class of shares will comply with the provisions of FINRA Rule 2341 (“Sales Charge Rule”).
10. Each of the Funds will comply with any requirements that the Commission or FINRA may adopt regarding disclosure at the point of sale and in transaction confirmations about the costs and conflicts of interest arising out of the distribution of open-end investment company shares, and regarding prospectus disclosure of sales loads and revenue sharing arrangements, as if those requirements applied to the Fund. In addition, each Fund will contractually require that any distributor of the Fund's shares comply with such requirements in connection with the distribution of such Fund's shares.
11. Each Fund will allocate all expenses incurred by it among the various classes of shares based on the net assets of the Fund attributable to each class, except that the net asset value and expenses of each class will reflect distribution fees, service fees, and any other incremental expenses of that class. Expenses of the Fund allocated to a particular class of shares will be borne on a pro rata basis by each outstanding share of that class. Applicants state that each Fund will comply with the provisions of rule 18f-3 under the Act as if it were an open-end investment company.
12. Applicants state that each Fund may impose an EWC on shares submitted for repurchase that have been held less than a specified period and may waive the EWC for certain categories of shareholders or transactions to be established from time to time. Applicants state that each of the Funds will apply the EWC (and any waivers or scheduled variations of the EWC) uniformly to all shareholders in a given class and consistently with the requirements of rule 22d-1 under the Act as if the Funds were open-end investment companies.
13. Each Fund operating as an interval fund pursuant to rule 23c-3 under the Act may offer its shareholders an exchange feature under which the shareholders of the Fund may, in connection with the Fund's periodic repurchase offers, exchange their shares of the Fund for shares of the same class of (i) registered open-end investment companies or (ii) other registered closed-end investment companies that comply with rule 23c-3 under the Act and continuously offer their shares at net asset value, that are in the Fund's group of investment companies (collectively, “Other Funds”). Shares of a Fund operating pursuant to rule 23c-3 that are exchanged for shares of Other Funds will be included as part of the amount of the repurchase offer amount for such Fund as specified in rule 23c-3 under the Act. Any exchange option will comply with rule 11a-3 under the Act, as if the Fund were an open-end investment company subject to rule 11a-3. In complying with rule 11a-3, each Fund will treat an EWC as if it were a contingent deferred sales load (“CDSL”).
1. Section 18(a)(2) of the Act makes it unlawful for a closed-end investment company to issue a senior security that is a stock unless (a) immediately after such issuance it will have an asset coverage of at least 200% and (b) provision is made to prohibit the declaration of any distribution, upon its common stock, or the purchase of any such common stock, unless in every such case such senior security has at the time of the declaration of any such distribution, or at the time of any such purchase, an asset coverage of at least 200% after deducting the amount of such distribution or purchase price, as the case may be. Applicants state that the creation of multiple classes of shares of the Funds may violate section 18(a)(2) because the Funds may not meet such requirements with respect to a class of shares that may be a senior security.
2. Section 18(c) of the Act provides, in relevant part, that a closed-end investment company may not issue or sell any senior security if, immediately thereafter, the company has outstanding more than one class of senior security. Applicants state that the creation of multiple classes of shares of the Funds may be prohibited by section 18(c), as a class may have priority over another class as to payment of dividends because shareholders of different classes would pay different fees and expenses.
3. Section 18(i) of the Act provides that each share of stock issued by a registered management investment company will be a voting stock and have equal voting rights with every other outstanding voting stock. Applicants state that multiple classes of shares of the Funds may violate section 18(i) of the Act because each class would be entitled to exclusive voting rights with respect to matters solely related to that class.
4. Section 6(c) of the Act provides that the Commission may exempt any person, security or transaction or any class or classes of persons, securities or transactions from any provision of the Act, or from any rule or regulation under the Act, if and to the extent such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Applicants request an exemption under section 6(c) from sections 18(a)(2), 18(c) and 18(i) to permit the Funds to issue multiple classes of shares.
5. Applicants submit that the proposed allocation of expenses relating to distribution and voting rights among multiple classes is equitable and will not discriminate against any group or class of shareholders. Applicants submit that the proposed arrangements would permit a Fund to facilitate the distribution of its shares and provide investors with a broader choice of shareholder services. Applicants assert that the proposed closed-end investment company multiple class structure does not raise the concerns underlying section 18 of the Act to any greater degree than open-end investment companies' multiple class structures that are permitted by rule 18f-3 under the Act. Applicants state that each Fund will comply with the provisions of rule 18f-3 as if it were an open-end investment company.
1. Section 23(c) of the Act provides, in relevant part, that no registered closed-end investment company shall purchase securities of which it is the issuer, except: (a) On a securities exchange or other open market; (b) pursuant to tenders, after reasonable opportunity to submit tenders given to all holders of securities of the class to be purchased; or (c) under other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors.
2. Rule 23c-3 under the Act permits a registered closed-end investment
3. Section 23(c)(3) provides that the Commission may issue an order that would permit a closed-end investment company to repurchase its shares in circumstances in which the repurchase is made in a manner or on a basis that does not unfairly discriminate against any holders of the class or classes of securities to be purchased.
4. Applicants request relief under section 6(c), discussed above, and section 23(c)(3) from rule 23c-3 to the extent necessary for the Funds to impose EWCs on shares of the Funds submitted for repurchase that have been held for less than a specified period.
5. Applicants state that the EWCs they intend to impose are functionally similar to CDSLs imposed by open-end investment companies under rule 6c-10 under the Act. Rule 6c-10 permits open-end investment companies to impose CDSLs, subject to certain conditions. Applicants note that rule 6c-10 is grounded in policy considerations supporting the employment of CDSLs where there are adequate safeguards for the investor and state that the same policy considerations support imposition of EWCs in the interval fund context. In addition, applicants state that EWCs may be necessary for the distributor to recover distribution costs. Applicants represent that any EWC imposed by the Funds will comply with rule 6c-10 under the Act as if the rule were applicable to closed-end investment companies. The Funds will disclose EWCs in accordance with the requirements of Form N-1A concerning CDSLs.
1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit an affiliated person of a registered investment company, or an affiliated person of such person, acting as principal, from participating in or effecting any transaction in connection with any joint enterprise or joint arrangement in which the investment company participates unless the Commission issues an order permitting the transaction. In reviewing applications submitted under section 17(d) and rule 17d-1, the Commission considers whether the participation of the investment company in a joint enterprise or joint arrangement is consistent with the provisions, policies and purposes of the Act, and the extent to which the participation is on a basis different from or less advantageous than that of other participants.
2. Rule 17d-3 under the Act provides an exemption from section 17(d) and rule 17d-1 to permit open-end investment companies to enter into distribution arrangements pursuant to rule 12b-1 under the Act. Applicants request an order under section 17(d) and rule 17d-1 under the Act to the extent necessary to permit the Funds to impose asset-based service and distribution fees. Applicants have agreed to comply with rules 12b-1 and 17d-3 as if those rules applied to closed-end investment companies, which they believe will resolve any concerns that might arise in connection with a Fund financing the distribution of its shares through asset-based service and distribution fees.
3. For the reasons stated above, applicants submit that the exemptions requested under section 6(c) are necessary and appropriate in the public interest and are consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Applicants further submit that the relief requested pursuant to section 23(c)(3) will be consistent with the protection of investors and will insure that applicants do not unfairly discriminate against any holders of the class of securities to be purchased. Finally, applicants state that the Funds' imposition of asset-based service and distribution fees is consistent with the provisions, policies and purposes of the Act and does not involve participation on a basis different from or less advantageous than that of other participants.
Applicants agree that any order granting the requested relief will be subject to the following condition:
Each Fund relying on the order will comply with the provisions of rules 6c-10, 12b-1, 17d-3, 18f-3, 22d-1, and, where applicable, 11a-3 under the Act, as amended from time to time, as if those rules applied to closed-end management investment companies, and will comply with the Sales Charge Rule, as amended from time to time, as if that rule applied to all closed-end management investment companies.
For the Commission, by the Division of Investment Management, under delegated authority.
On April 11, 2017, Nasdaq ISE, LLC (“ISE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
On June 21, 2016, the Commission approved a proposed rule change relating to a corporate transaction in which Nasdaq, Inc. would become the ultimate parent of ISE (the “Nasdaq Acquisition”), Nasdaq GEMX, LLC (“GEMX”), and Nasdaq MRX, LLC (“MRX,” and together with ISE and GEMX, the “ISE Exchanges”).
The Exchange intends to effect a merger with a newly-formed Delaware limited liability company (“Merger”) under Nasdaq, Inc. that would result in ISE as the surviving entity with new corporate governance documents. In connection with that Merger, the Exchange proposes various changes to its corporate governance documents and rules (“Rules”).
The Exchange represents that the proposed changes are designed to align the Exchange's corporate governance framework with the existing structure of the Nasdaq Exchanges, particularly as it relates to the board and committee structure, nomination and election processes, and related governance practices.
After careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.
ISE is currently structured as a Delaware limited liability company (“Delaware LLC”)
Pursuant to the proposed rule change, ISE will be merged with a newly formed Delaware LLC, whereby ISE will be the surviving entity, governed by the New Governing Documents. ISE Holdings will continue to be the direct owner of ISE and will be defined as the “Company Member” or “Sole LLC Member” in the New LLC Agreement and New By-Laws.
The Commission believes that the proposed restrictions on ISE Holdings' assignment of its ownership interest in ISE, taken together with restrictions on voting and ownership limitations in the governing documents of ISE's Upstream Owners that were previously approved by the Commission,
With the replacement of the Current Governing Documents with the New Governing Documents, the Exchange proposes to replace certain provisions pertaining to governance of the Exchange with related provisions that are based on provisions currently in the Nasdaq LLC Agreement and Nasdaq By-Laws.
Under the New Governing Documents and consistent with the Current LLC Agreement,
ISE Holdings, as the Sole LLC Member, may determine at any time, in its sole and absolute discretion, the number of Directors to constitute the Board of Directors.
As discussed in more detail below,
An “Industry member” will be a member of any committee appointed by the Board that is associated with a broker-dealer as defined in the New By-Laws, Article I(n). A “Non-Industry member” will be defined as a member of any committee appointed by the Board who is (i) a Public member; (ii) an officer or employee of an issuer of securities listed on the Exchange; or (iii) any other individual who would not be an Industry member.
In Amendment No. 1, the Exchange clarifies the description of the functions of the Member Nominating Committee. Specifically, the Exchange clarifies that the new Member Nominating Committee is responsible for: (i) The nomination for election of Member Representative Directors to the Board and (ii) the nomination for appointment of Member Representative members to the committees requiring such members.
“Election Date" will be defined as a date selected by the Board on an annual basis, on which Exchange Members may vote with respect to Member Representative Directors in the event of a Contested Election.
Under the Exchange's Current Governing Documents, six directors on the Board are officers, directors, or partners of Exchange members, and are elected by a plurality of the holders of Exchange Rights (“Exchange Directors”), of which two must be elected by holders of PMM Rights, two must be elected by holders of CMM Rights, and two must be elected by holders of EAM Rights.
The Exchange notes that the Commission has previously found the Nasdaq LLC Agreement's (1) 20% Member Representative Director requirement, and (2) election process, provide fair representation of Nasdaq members, consistent with the requirements of Section 6(b) of the Act.
The Commission believes that the proposed composition of the Exchange's Board satisfies the requirements in Section 6(b)(3) of the Act,
The Commission also believes that the proposed requirement that at least 20% of the Directors be Member Representative Directors, and the means by which they will be chosen by Exchange Members, is consistent with Section 6(b)(3) of the Act,
In its filing, the Exchange states that, when it was acquired by Nasdaq, Inc., there were a number of harmonizing changes to its Board that resulted in a complete overlap of directors on the ISE Boards and the Nasdaq Exchanges (the “Post-Acquisition Board”).
The Commission believes the Exchange's proposal to allow the 2017 Board to continue serving until the 2018 Board would be elected pursuant to the process in the New Governing Documents is consistent with the Act, and in particular Section 6(b)(3) of the Act.
“Exchange Rights” currently means, collectively, PMM Rights, CMM Rights, and EAM Rights, which are the trading and other rights associated with the Exchange's three classes of membership.
Pursuant to the Exchange's Current Constitution, a “Public Director” means a non-industry representative who has no material relationship with a broker or dealer or any affiliate of a broker or dealer or the Exchange or any affiliate of the Exchange.
The term “non-industry representative” means any person who would not be considered an “industry representative,” as well as (i) a person affiliated with a broker or dealer that operates solely to assist the securities-related activities of the business of non-member affiliates, or (ii) an employee of an entity that is affiliated with a broker or dealer that does not account for a material portion of the revenues of the consolidated entity, and who is primarily engaged in the business of the non-member entity.
The term “industry representative” means a person who is an officer, director, or employee of a broker or dealer or who has been employed in any such capacity at any time within the prior three (3) years, as well as a person who has a consulting or employment relationship with or has provided professional services to the Exchange and a person who had any such relationship or provided any such services to the Exchange at any time within the prior three (3) years.
Pursuant to the New By-Laws, the Exchange may establish committees composed solely of Directors. Specifically, the Exchange may establish an Executive Committee and a Finance Committee, and shall establish a Regulatory Oversight Committee (“ROC”).
The Exchange states that the proposed provisions relating to the standing committees are substantially similar to the provisions in Section 9(g) of the Nasdaq LLC Agreement with respect to standing committees.
The Board may also designate additional committees consisting of one or more Directors or other persons.
The Exchange proposes that the Executive Committee be an optional committee, to be appointed only if deemed necessary by the Board.
The Board would retain oversight of the financial operations of the Exchange instead of delegating these functions to a standing committee, but would have the option to appoint a Finance Committee at the Board's discretion.
The Exchange proposes to eliminate its current Finance and Audit Committee and to have the committee's functions performed by Nasdaq, Inc.'s Audit Committee (“Nasdaq Audit Committee”), which is composed of at least three directors of Nasdaq, Inc., all of whom must satisfy the standards for independence set forth in Section 10A(m) of the Act
The current Finance and Audit Committee must be composed of at least three (3) and not more than five (5) directors, all of whom must be non-industry representatives and must be “financially literate” as determined by the Board.
The Exchange will also have a Regulatory Oversight Committee (“ROC”) under the New Governing Documents, which will have broad authority to oversee the adequacy and effectiveness of the Exchange's regulatory and self-regulatory responsibilities.
The Exchange also states that regulatory oversight functions formerly performed by the Finance and Audit Committee may be assumed by the ROC, and that like the ROCs of the Nasdaq Exchanges, the ISE ROC, because of its broad authority to oversee the adequacy and effectiveness of the Exchange's self-regulatory responsibilities, will be able to maintain oversight over controls in tandem with the Nasdaq Audit Committee's overall oversight responsibilities.
Pursuant to the New By-Laws, the Exchange will also have a Chief Regulatory Officer (“CRO”), as it does currently.
In addition to the CRO, pursuant to the New LLC Agreement, the Exchange's officers will include: a Chief Executive Officer, a President, Vice Presidents, a Chief Regulatory Officer, a Secretary, an Assistant Secretary, a Treasurer, and an Assistant Treasurer.
The ROC will assess the Exchange's regulatory performance, assist the Board in reviewing the regulatory plan and the overall effectiveness of the Exchange's regulatory functions, review the Exchange's regulatory budget and inquire into the adequacy of resources available in the budget for regulatory activities, and be informed about the compensation and promotion or termination of the CRO.
The Exchange also proposes that the Internal Audit Department of Nasdaq, Inc. (“Nasdaq Internal Audit Department”) would report to the Board on all Exchange-related internal audit matters and direct such reports to the new ROC.
The Exchange also proposes to eliminate its current Compensation Committee and its Corporate Governance Committee.
As discussed above, the Nominating Committee and Member Nominating Committee will have responsibility for, among other things, nominating candidates for election to the Board. On an annual basis, the members of these committees will nominate candidates for the succeeding year's respective committees to be elected by ISE Holdings.
The Commission notes that under the New By-Laws, the Member Nominating Committee shall nominate candidates for each Member Representative Director position to be elected by Exchange Members or the Sole LLC Member, and for appointment by the Board for each vacant or new position on any committee that is to be filled with a Member Representative member.
Finally, the Quality of Markets Committee (“QMC”) will have the following functions: (i) To provide advice and guidance to the Board on issues relating to the fairness, integrity, efficiency, and competitiveness of the information, order handling, and execution mechanisms of the Exchange from the perspective of investors, both individual and institutional, retail firms, market making firms, and other market participants; and (ii) to advise the Board with respect to national market system plans and linkages between the facilities of the Exchange and other markets.
The Exchange also states that the function of Member Representative members on committees is to provide members a voice in the administration of the Exchange's affairs on certain committees that are responsible for providing advice on any matters pertaining to the Exchange's self-regulatory function or relating to its market structure.
The Commission believes that the Exchange's proposed committees, which are similar to the committees maintained by other exchanges,
Certain provisions in ISE's Current Governing Documents, and those of its Upstream Owners, are designed to help maintain the independence of the regulatory functions of the Exchange.
• The Exchange Board will be required, when evaluating any proposal, to take into account all factors that the Board deems relevant, including, without limitation, (1) the potential impact on: The integrity, continuity, and stability of the national securities exchange operated by the Exchange and the other operations of the Exchange; the ability to prevent fraudulent and manipulative acts and practices; and
• All books and records of ISE reflecting confidential information pertaining to the self-regulatory function of the Exchange (including but not limited to disciplinary matters, trading data, trading practices, and audit information) shall be retained in confidence by ISE and its officers, directors, employees and agents; shall not be made available to persons other than to those officers, directors, employees, and agents of ISE that have a reasonable need to know; and will not be used for any non-regulatory purpose.
Pursuant to Amendment No. 1, the Exchange is not proposing that ISE, and the Board on behalf of ISE, shall not have the right to keep confidential from ISE Holdings, as the Sole LLC Member, any information that the Board would otherwise be permitted to keep confidential from the Sole LLC Member pursuant to Section 18-305(c) of the Delaware Limited Liability Company Act, 6 Del. C. § 18-101. Additionally, the Exchange is not proposing that ISE Holdings, as the Sole LLC Member and the Exchange's authorized representative, shall have an explicit right to examine the Exchange's books, records, and documents during normal business hours.
The Commission believes that the proposed provisions relating to the books and records of the Exchange are designed to maintain the independence of ISE's self-regulatory function, and are consistent with the Act. The Commission notes that these provisions are substantially similar to those the Commission has previously found to be consistent with the Act in the context of the corporate governance structures of other exchanges.
The Commission also notes that the governing documents of ISE's Upstream Owners provide that all books and records of ISE reflecting confidential information pertaining to the self-regulatory function of the Exchange will be subject to confidentiality restrictions.
• The Exchange proposes that, as is currently the case, the books and records of ISE must be maintained in the United States
The Exchange states that certain provisions in Section 16 of the New LLC Agreement are substantially similar to provisions in Section 16 of the Nasdaq LLC Agreement.
ISE also states that the Nasdaq Exchanges will separately file proposed rule changes to harmonize the books and records provisions in their respective governing documents with the language in Section 16 of the New LLC Agreement.
• Under the New LLC Agreement and New By-Laws, any amendments to those documents will not become effective until filed with, or filed with and approved by, the Commission, as required under Section 19 of the Act and the rules promulgated thereunder.
The Commission notes that, although the Current Constitution and Current LLC Agreement do not include a similar, explicit requirement regarding the filing of amendments pursuant to Section 19 of the Act, the Current Constitution and Current LLC Agreement, as rules of the Exchange, are nonetheless subject to the requirements of Section 19 of the Act and the rules and regulations thereunder.
Additionally, pursuant to the New By-Laws, either the Sole LLC Member or the vote of a majority of the whole Board may enact amendments to the By-Laws, and that the Board may adopt emergency by-laws.
• Additionally, as is currently the case pursuant to the Current LLC Agreement,
Consistent with Section 3.3 of the Current LLC Agreement, Schedule A of the New LLC Agreement defines “Regulatory Funds” as fees, fines, or penalties derived from the regulatory operations of the Exchange. However, Regulatory Funds do not include revenues derived from listing fees, market data revenues, transaction revenues, or any other aspect of the commercial operations of the Exchange even if a portion of such revenues are used to pay costs associated with the regulatory operations of the Exchange.
ISE states that the Nasdaq Exchanges will separately file proposed rule changes to harmonize the distribution provisions in their respective governing documents with the language in Section 15 of the New LLC Agreement.
The Commission believes that the provisions discussed in this section, which are designed to help ensure the independence of the Exchange's regulatory function and facilitate the ability of the Exchange to carry out its responsibility and operate in a manner consistent with the Act, are appropriate and consistent with the requirements of the Act, particularly with Section 6(b)(1), which requires, in part, an exchange to be so organized and have the capacity to carry out the purposes of the Act.
The Commission finds that proposed process regarding amendments to the New Governing Documents is consistent with Section 6(b)(1) of the Act, because it reflects the obligation of the Board to ensure compliance with the rule filing requirements under the Act. Additionally, the Commission finds these changes to be consistent with Section 19(b)(1) of the Act and Rule 19b-4 thereunder,
The Commission also finds that the prohibition on the use of regulatory fines, fees, or penalties to fund dividends is consistent with Section 6(b)(1) of the Act, because it will further the Exchange's ability to effectively comply with its statutory obligations and is designed to ensure that the regulatory authority of the Exchange is not improperly used.
While voting rights with respect to Directors will be governed by the New Governing Documents, as is the case today under the Current Governing Documents,
The Commission notes that holders of Exchange Rights also currently have the right to vote on amendments to the Current LLC Agreement or Current By-Laws, if the amendment would alter or change the powers, preferences, or special rights of one or more series of Exchange Rights so as to affect them adversely.
The Exchange notes that all of the initial Market Maker Rights provided the rights holders with an equity ownership interest in ISE as well as trading rights on the Exchange. As such, those rights were transferable or leasable to approved persons or entities (
Specifically, the Exchange proposed changes to its Rules to, among other things:
• Relocate the concept of CMM Rights from the Current LLC Agreement
The term “non-member owners” is defined as individuals and organizations that are not Members of the Exchange, or that are otherwise Members, but do not seek to exercise trading privileges associated with the Market Maker Rights that they own.
The term “Member” means an organization that has been approved to exercise trading rights associated with Exchange Rights.
• Relocate to New Rule 100(a)(12) the definition of “Competitive Market Maker,”
• Relocate the concept of EAM Rights to New Rule 100(a)(15), which will state that the term “EAM Rights” means the non-transferable rights held by an Electronic Access Member.
The current definition of EAM Rights in Rule 100(a)(14) refers to Article VI of the Current LLC Agreement.
• Relocate to New Rule 100(a)(16) the definition of “Electronic Access Member,”
• Relocate the definitions for “Exchange Transaction,” “good standing,” and “System” from the Current Constitution to the Rules,
• Relocate the concept of PMM Rights from Article VI of the Current LLC Agreement to New Rule 100(a)(39), which will state that the term “PMM Rights” means the transferable rights held by a Primary Market Maker or a “non-member owner” (as that term is defined in Rule 300(a)), and will state that there are 10 authorized PMM Rights, as is currently set forth in Section 6.1(a) of the Current LLC Agreement.
• Relocate to New Rule 100(a)(40) the definition for “Primary Market Maker”
The Exchange also proposed to add as new paragraphs (d) and (e) in New Rule 300 certain protections in the Current Governing Documents that relate to the Market Maker Rights. First, new paragraph (d) preserves the concept of Core Rights from the Current Governing Documents, and states that any increase in the number of authorized PMM or CMM Rights must be approved by the affirmative vote of the holders of at least a majority of the then outstanding PMM Rights, voting as a class, and the affirmative vote of the holders of at least a majority of the then outstanding CMM Rights, voting as a class, respectively.
The Exchange also proposes to explicitly set forth in its Rules the ownership and voting limitations for the holders of Market Maker Rights.
Under the Current LLC Agreement, a holder or lessee of Exchange Rights, together with any affiliate, is also restricted from owning (or exercising any of the non-trading rights associated with) more than 20% of the EAM Rights. As discussed above, under the New Governing Documents, a 20% voting limitation will apply to all Exchange Members with respect to participation in Contested Elections, and only holders of PMM and CMM Rights will have a right to vote on certain amendments to the New Governing Documents.
The Exchange states that this voting limitation will be calculated by class (
New Supplementary Material .02 to Rule 303 will replace the Current Supplementary Material .02 to Rule 303, which states that in approving any PMM to exercise the trading privileges associated with more than 20% of the outstanding PMM Membership, the Board will not approve any arrangement in which such PMMs would gain ownership or voting rights in excess of those permitted under the Exchange's Current LLC Agreement or Current Constitution.
The Commission notes that, because the only remaining voting rights associated with PMM Rights and CMM Rights will be the Core Rights and the right to vote on certain amendments to the New Governing Documents, as described above, the voting limitation in Supplementary Material .02 to New Rule 303 will only apply to voting on those matters. Voting on the election of Member Representative members will be governed by Article II of the New By-Laws, as described above.
In the context of a lease of Market Maker Rights, the Exchange proposes to add a requirement in New Rule 308 that the holder of Market Maker Rights must, as is currently required by Section 12.4(b) of the Current Constitution, retain the Core Rights associated with such Market Maker Rights and not transfer such voting rights to the lessee. Section 12.4(b) of the Current Constitution also provides that, under a lease agreement, the lessor may retain the voting rights with respect to the PMM Rights and CMM Rights or may transfer such voting rights, other than the Core Rights, to the lessee. Currently, the voting rights associated with the PMM Rights and CMM Rights that may be retained or transferred are the right to vote in the election of Exchange Directors and the right to vote on amendments to the Current Governing Documents that may adversely affect Market Maker Rights.
The Exchange also proposes to amend New Rule 308 to memorialize the manner in which Market Maker Rights may be subleased. Specifically, the Exchange proposes that a lessee of a Market Maker membership in good standing may sublease such membership to a Member with the permission of the owner.
The Exchange also proposes to clarify that, for the holders of Market Maker Rights who are also members of the Exchange, the right to vote on Directors representing Exchange Members will continue to be transferable under a lease agreement.
The Exchange also proposes to amend New Rule 802(b) to provide that, if a Primary Market Maker fulfills its obligations as a Primary Market Maker under the Rules, the Exchange will not reallocate the options classes to which such Primary Market Maker is appointed, unless otherwise requested by the Primary Market Maker; and would provide that the foregoing will not limit or affect the Exchange's responsibility under Rule 802(d) to reallocate any options classes in the interests of a fair and orderly market.
The Commission believes that the proposed changes to ISE's Rules are consistent with the Act and, in particular Section 6(b)(1) of the Act,
The Commission finds good cause, pursuant to Section 19(b)(2) of the Act,
Interested persons are invited to submit written data, views, and arguments concerning Amendment No. 1, including whether Amendment No. 1 is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend Rule 11.26 to modify the date of Appendix B Web site data publication pursuant to the Regulation NMS Plan to Implement a Tick Size Pilot Program (“Plan”). The proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
Rule 11.26(b) (Compliance with Data Collection Requirements)
The Exchange is proposing to amend Interpretations and Policies .08 to Rule 11.26 to delay the date by which Pre-Pilot and Pilot Appendix B data is to be made publicly available on the Exchange's or DEA's Web site from February 28, 2017, until August 31, 2017.
On April 28, 2017, the SEC granted exemptive relief to the Participants to further delay the publication of Web site data pursuant to Appendix B to the Plan from April 28, 2017 until August 31, 2017 (“Exemptive Relief II”).
The Exchange is also proposing to delete the words “and make certain data publicly available on the Exchange's or DEA's Web site” in the second sentence to Interpretations and Policies .08 to Rule 11.26 as it is duplicate of the requirement in third sentence.
Pursuant to this proposed amendment, Appendix B data publication would be delayed until August 31, 2017, with the Exchange publishing the required Appendix B data for the Pre-Pilot Period through April 30, 2017, by August 31, 2017. Thereafter, Appendix B data for a particular month would be published within 120 calendar days following such month end. Thus, for example, Appendix B data for May 2017 would be made available on the Exchange's or DEA's Web site by September 28, 2017, and data for June 2017 would be made available on the Exchange's or DEA's Web site by October 28, 2017. This proposed rule change would align the Exchange's rules with those of the other Participants and is consistent with the Commission's Exemptive Relief I and Exemptive Relief II.
The Exchange believes that its proposal is consistent with Section 6(b) of the Act,
The Plan is designed to allow the Commission, market participants, and the public to study and assess the impact of increment conventions on the liquidity and trading of the common stock of small-capitalization companies. The Exchange believes that this proposal is consistent with the Act because it is in furtherance of the objectives of Section VII(A) of the Plan in that it is designed to provide the Exchange with additional time to assess a means of addressing the confidentiality concerns raised in connection with the publication of Appendix B data and to comply with the Plan's requirements that the data made publicly available will not identify the trading center that generated the data.
The Exchange ceased operations on February 1, 2017 and erroneously understood that it was not thereafter required to modify its rules to reflect extensions of the deadlines to publish data on its Web site. The purpose of this filing is to correct that error and would align the Exchange's rules with the rules of the other Participants and is consistent with the Commission's Exemptive Relief I and Exemptive Relief II.
The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. To the contrary, the proposed rule change will result in the Exchange's rules being consistent with those of other national securities exchanges and all of the other Participants under the Plan.
No written comments were solicited or received with respect to the proposed rule change.
The Exchange has designated this proposed rule change as non-controversial under Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed under Rule 19b-4(f)(6)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On April 14, 2017, NYSE Arca, Inc. (“Exchange” or “NYSE Arca”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange proposes to adopt new NYSE Arca Equities Rule 8.900, which would govern the listing and trading of “Managed Portfolio Shares.”
The portfolio for each Fund will consist of long and/or short positions in U.S.-listed securities and shares issued by other U.S.-listed exchange-traded funds (“ETFs”).
The Royce Pennsylvania ETF will invest primarily in U.S.-listed equity securities of small-cap companies with market capitalizations up to $3 billion that Royce & Associates, LP (“Royce”), the Fund's investment sub-adviser, believes are trading below the sub-adviser's estimate of their current worth. The Fund may invest in other investment companies that invest in equity securities. The Fund may sell securities to, among other things, secure gains, limit losses, re-deploy assets into what Royce deems to be more promising opportunities, and/or manage cash levels in the Fund's portfolio.
The Royce Premier ETF will invest in a limited number of U.S.-listed equity securities of primarily small-cap companies with market capitalizations from $1 billion to $3 billion at the time of investment. The Fund may invest in other investment companies that invest in equity securities. The Fund may sell securities to, among other things, secure gains, limit losses, re-deploy assets into what Royce deems to be more promising opportunities, and/or manage cash levels in the Fund's portfolio.
The Royce Total Return ETF will invest primarily in dividend-paying U.S.-listed securities of small-cap companies with market capitalizations up to $3 billion that the sub-adviser believes are trading below its estimate of their current worth. The Fund may invest in other investment companies that invest in equity securities. The Fund may sell securities to, among other things, secure gains, limit losses, re-deploy assets into what Royce deems to be more promising opportunities, and/or manage cash levels in the Fund's portfolio.
According to the Exchange, while each Fund, under normal market conditions, will invest primarily in U.S.-listed securities, as described above, each Fund may invest its remaining assets in other securities and financial instruments as follows: (i) Repurchase agreements;
Each Fund may invest up to an aggregate amount of 15% of its net assets in illiquid assets (calculated at the time of investment),
The Funds will not invest in futures, forwards, or swaps. Further, each Fund's investments will be consistent with its investment objective and will not be used to enhance leverage. While a Fund may invest in inverse ETFs, a Fund will not invest in leveraged (
While Investment Companies issuing Managed Portfolio Shares would be actively-managed, and in that respect would be similar to those issuing Managed Fund Shares,
• First, issues of Managed Fund Shares are required to disseminate their “Disclosed Portfolio” at least once daily.
• Second, in connection with the redemption of shares in “Redemption Unit” size, the delivery of any portfolio securities in kind would be effected through a Confidential Account for the benefit of the redeeming authorized participant without disclosing the identity of the securities to the authorized participant.
• Third, for each series of Managed Portfolio Shares, a Verified Intraday Indicative Value (“VIIV”) would be disseminated by one or more major market-data vendors every second during the Exchange's Core Trading Session (normally, 9:30 a.m. to 4:00 p.m., Eastern Time (“E.T.”)).
The Exchange asserts that market makers will be able to make efficient and liquid markets priced near the VIIV, as long as a VIIV is disseminated every second, market makers have knowledge of a Fund's means of achieving its investment objective, and market makers are permitted to engage in “bona fide arbitrage,” as described below. According to the Exchange, market makers would employ bona fide arbitrage in addition to risk-management techniques such as “statistical arbitrage,”
Moreover, according to the Exchange, if an authorized participant believes that Shares of a Fund are trading at a price that is higher than the value of the underlying portfolio—for example, if the market price for the Shares is higher than the VIIV—then the authorized participant may sell Shares of the Fund short and instruct its “Trusted Agent”
Similarly, according to the Exchange, an authorized participant could buy Shares and instruct the Trusted Agent to sell the underlying portfolio securities from its Confidential Account in an attempt to profit when a Fund's Shares are trading at a discount to its portfolio. According to the Exchange, the authorized participant's purchase of a Fund's Shares in the secondary market, combined with the sale of the portfolio securities from its Confidential Account, may create upward pressure on the price of Shares and/or downward pressure on the price of portfolio securities, driving the market price of Shares and the value of a Fund's portfolio securities closer together. The Exchange states that, according to Precidian Funds LLC (“Adviser”), the investment adviser to the Trust, this process is identical to how many authorized participants currently arbitrage existing traditional ETFs, except for the use of the Confidential Account.
According to the Exchange, a market participant that is not an authorized participant would also be able to establish a Confidential Account and could engage in arbitrage activity without using the creation or redemption processes described above. If such a market participant believes that a Fund is overvalued relative to its underlying assets, the Exchange states, that market participant could sell Shares short and instruct its Trusted Agent to buy portfolio securities in its Confidential Account and then wait for the trading prices to move toward parity and close out the positions in both the Shares and the portfolio securities to realize a profit from the relative movement of their trading prices. Similarly, according to the Exchange, this market participant could buy Shares and instruct the Trusted Agent to sell the underlying portfolio securities in an attempt to profit when a Fund's Shares are trading at a discount to a Fund's underlying or reference assets.
The Exchange states that, generally, Shares will be purchased and redeemed on an in-kind basis, so that, except where the purchase or redemption will include cash under the circumstances described in the applicable Fund's registration statement, purchasers will be required to purchase “Creation Units” by making an in-kind deposit of
In the case of a redemption, a Fund's custodian (“Custodian”) will typically deliver securities to the Confidential Account on a
If the Trusted Agent is instructed to sell all securities received at the close on the redemption date, the Trusted Agent will pay the liquidation proceeds net of expenses, plus or minus any cash balancing amount, to the authorized participant through DTC.
Each Fund will be required to file with the Commission its complete portfolio schedules for the second and fourth fiscal quarters on Form N-CSR under the 1940 Act, and to file its complete portfolio schedules for the first and third fiscal quarters on Form N-Q under the 1940 Act, within 60 days of the end of the quarter. Form N-Q requires funds to file the same schedules of investments that are required in annual and semi-annual reports to shareholders. The Trust's SAI and each Fund's shareholder reports will be available free upon request from the Trust. These documents and forms may be viewed on-screen or downloaded from the Commission's Web site at
In addition, the VIIV will be widely disseminated by one or more major market-data vendors at least every second during the Exchange's Core Trading Session through the facilities of the Consolidated Tape Association. According to the Exchange, the VIIV will include all accrued income and expenses of a Fund and will assure that any extraordinary expenses, booked during the day, that would be taken into account in calculating a Fund's NAV for that day are also taken into account in calculating the VIIV.
For purposes of the VIIV, securities held by a Fund will be valued throughout the day based on the mid-point between the disseminated current national best bid and offer. According to the Exchange, by utilizing the mid-point pricing for purposes of VIIV calculation, stale prices are eliminated and more accurate representation of the real-time value of the underlying securities is provided to the market. Specifically, according to the Exchange, quotations based on the mid-point of bid/ask spreads more accurately reflect current market sentiment by providing real time information on where market participants are willing to buy or sell securities at that point in time. The Exchange also believes that the use of quotations will dampen the impact of any momentary spikes in the price of a portfolio security.
According to the Exchange, each Fund will utilize two independent pricing sources to provide pricing information. Each Fund will also utilize a “Pricing Verification Agent” and establish a computer-based protocol that will permit the Pricing Verification Agent to continuously compare the two data streams from the independent pricing sources on a real time basis.
The Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by the Exchange, as well as cross-market surveillances administered by the Financial Industry Regulatory Authority (“FINRA”) on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable Federal securities laws. The Exchange represents that these procedures are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect violations of Exchange rules and Federal securities laws applicable to trading on the Exchange.
The Exchange represents that the Funds' Adviser will make available daily to FINRA and the Exchange the portfolio holdings of each Fund in order to facilitate the performance of the surveillances referred to above. In addition, the Exchange states that it has a general policy prohibiting the distribution of material, non-public information by its employees.
The Commission has received four comment letters on the proposed rule change, each of which express opposition to the proposed rule change.
A.
In addition, the commenter asserts that market makers will face significant impediments to successfully arbitrage the Shares and predicts that this will lead to the Shares trading at wider bid-ask spreads and more variable premiums/discounts than actively-managed ETFs available today. First, the commenter questions the Exchange's assertion that the VIIV will provide an adequate basis for ensuring a Fund's ongoing price value alignment and secondary market trading efficiency. In evaluating the Exchange's statements regarding VIIVs, the commenter asserts that their utility should be compared not to the intraday indicative values (“IIVs”) of existing ETFs but rather to the independently derived, real-time estimates of underlying fund value that ETF market makers use today to identify arbitrage opportunities and manage their risks (“MM IIVs”). The commenter asserts that, because existing actively managed ETFs (and most index ETFs) provide full daily disclosure of their current portfolio, market makers of transparent funds have access to far better information about the current value of fund holdings than the proposed VIIVs would provide and, correspondingly, VIIVs will be significantly less precise than MM IIVs. The commenter also asserts that MM IIVs include significant information that would not be reflected in VIIVs, noting as follows:
• In calculating VIIVs, Fund securities would be valued based on the mid-point between the current national best bid and offer quotations. The commenter characterizes the bid-ask midpoint as a “fairly crude valuation metric” that does not capture important trading information incorporated into MM IIVs, such as the current bid-ask spread, the depth of the current order book on the bid and offer side of the market, and the predominance of current trading between bid-side and offer-side transactions.
• VIIVs would be calculated and disseminated every second and, while this interval may seem sufficient, MM IIVs are updated in fractions of a second (milliseconds or microseconds).
• The VIIV verification process would leave significant room for dissemination of erroneous values. For example, a Fund's Pricing Verification Agent would take no action to address observed discrepancies in VIIV input prices until the calculated Fund values differ by at least 25 bps for 60 seconds. The commenter characterizes that disparity as “huge,” asserting that it would be wider than the customary bid-ask spread of most domestic equity ETFs.
• The VIIV process would not address all potential intraday valuation errors. The commenter describes that corporate actions must be accurately reflected in the VIIV, which can be challenging, and market makers would not be able to verify that corporate actions are appropriately reflected in a Fund's VIIVs because of the non-transparent portfolio.
• The process for adjusting VIIVs in the event of trading halts in portfolio securities is cumbersome and likely to result in errors in disseminated VIIVs. Throughout a halt, which may be protracted, the Fund would continue to disseminate VIIVs that do not reflect fair values of the halted security, and therefore may vary significantly from the Fund's true underlying value at that time. The commenter asserts that MM IIVs would almost certainly arrive at a fair estimate of a Fund's current underlying value far faster than the VIIV specified process.
The commenter asserts that reliance on faulty VIIVs may expose market makers to unrecoverable losses, noting that: (1) Neither the Exchange nor its agents nor the Reporting Authority would be liable for disseminating erroneous VIIVs; and (2) the circumstances under which the independent pricing sources and the Pricing Verification Agent are legally liable for such errors are limited. According to the commenter, market makers' forced reliance on VIIVs to determine intraday Fund valuations is a source of significant incremental risk for them versus making markets in existing ETFs. The commenter predicts that this will result in the Shares trading at wider bid-ask spreads and more variable premiums and discounts to NAV than similar existing ETFs.
The commenter also criticizes the Confidential Accounts structure. The commenter asserts that, compared to the usual manner in which market makers in existing ETFs engage in arbitrage and buy and sell Creation Basket instruments, the Confidential Accounts arrangement exposes market makers to significant additional costs, risks, and lost opportunities, including:
• Less control over trade execution and trade order management when implementing portfolio hedging and Creation Unit transactions, which will result in more cost and risk, and less profit opportunity.
• No ability for market makers to use their market knowledge and market positions to enhance arbitrage profits and minimize costs.
• Reduced incentive for third-party service providers to trade expeditiously and with low market impact.
• Little or no ability for market makers to monitor trading in Confidential Accounts to ensure best execution or to evaluate trading performance.
• Forced
• Given the more-involved routing of trade instructions and trade orders that the Confidential Account structure would necessitate, the commenter states that hedging and Creation Unit instrument transactions through Confident Accounts will almost certainly take longer, on average, for a market maker to execute than similar transactions that the market maker executes internally. According to the commenter, slower executions may translate into less efficient arbitrage.
• Potentially significant explicit costs to establish and maintain Confidential Accounts.
Additionally, the commenter questions the Exchange's statements
The commenter expresses concerns regarding data security, misappropriation, and misuse of a Fund's confidential portfolio information in light of the dissemination of this data across a potentially broad network of Trusted Agents, affiliated broker-dealers, and other Confidential Account service providers. The commenter also raises concerns regarding the possibility that market participants could use the VIIV to reverse-engineer the Funds' portfolio holdings, subjecting the Funds to the dilutive effects of front-running. The commenter asserts that “it is far from a settled question that the Funds would not ever be susceptible to reverse engineering.”
B.
• The likelihood that the Shares' trading performance will be especially poor during periods of market stress and volatility.
• The ability of the Fund to ensure the security of confidential information disseminated to Trusted Agents.
• Potentially significant added Fund costs and risks associated with calculating, verifying, and disseminating the VIIV and associated Fund warranties.
• The potential for frequent Share trading halts.
• The likely incidence of erroneous Share trades and the absence of an Exchange program to detect and remedy such trades.
• The potential for reverse engineering of a Fund's portfolio holdings.
• The tax risk due to the Funds' distinctive in-kind redemption program.
• The costs, risk, and uncertainties to broker-dealers serving as authorized participants and non-authorized participant market makers in meeting their compliance obligations with respect to securities traded on their behalf through Confidential Accounts.
C.
In addition, the commenter expresses the following concerns:
• It is unclear whether a firm's risk management would have access to the contents of Confidential Accounts. If a firm's risk management does not have access to such information, the firm would be subject to too much risk, but if the firm's risk management does have access, information barriers would create compliance issues.
• Positions held in the Confidential Account not closed out by the end of the day would have to be settled, and that the settlement information would be available to settlement personnel.
• The Trusted Agents would have serious compliance burdens, and that these burdens could drive up the cost of being a Trusted Agent, which would subsequently drive up the cost of arbitrage. Higher costs and compliance risks would severely limit the number of firms willing to take on the burden of becoming Trusted Agents, and the resulting lack of competition could lead to higher fees and inferior service. In the event that there were many Trusted Agents, the likelihood of data breaches would increase.
In addition, the commenter believes that the VIIV calculations are dangerously flawed because they rely on sometimes flawed bid-ask quotes. The commenter believes that the VIIV calculations should instead be based on the last trade, and if the underlying market is closed or the underlying asset has not traded recently, then a reasonable fair value methodology should be used.
D.
The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Act
Pursuant to Section 19(b)(2)(B) of the Act,
The Commission requests that interested persons provide written submissions of their views, data, and arguments with respect to the issues identified above, as well as any other concerns they may have with the proposal. In particular, the Commission invites the written views of interested persons concerning whether the proposal is consistent with Section 6(b)(5) or any other provision of the Act, or the rules and regulations thereunder. Although there do not appear to be any issues relevant to approval or disapproval that would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b-4, any request for an opportunity to make an oral presentation.
Interested persons are invited to submit written data, views, and arguments regarding whether the proposal should be approved or disapproved by August 25, 2017. Any person who wishes to file a rebuttal to any other person's submission must file that rebuttal by September 8, 2017.
The Commission asks that commenters address the sufficiency of the Exchange's statements in support of the proposal, which are set forth in the Notice,
Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to modify the NYSE Arca Options Fee Schedule (“Fee Schedule”) to add clarification and consistency, but the Exchange is not proposing any changes to its fees. The Exchange proposes to implement the fee change effective July 20, 2017. The proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The purpose of this filing is to make a number of textual changes designed to clarify and add consistency to the Fee Schedule. The Exchange is not proposing to make any substantive changes to its current fees.
Earlier this month, July 2017, the Exchange submitted a filing that included clarifying changes to certain tables regarding Market Maker incentives (the “MM Cleanup Filing”).
• The Exchange proposes to re-locate the reference to Endnote 15 from the beginning [sic] to the end [sic] of each of the following tables: “Customer and Professional Customer Monthly Posting Credit Tiers and Qualifications for Executions in Penny Pilot Issues”; “Customer and Professional Customer Incentive Program”; and [sic] “Non-Customer Monthly Posting Credit Tiers and Qualifications for Executions in Non-Penny Pilot Issues”; “Take Fee Discount Qualification for Penny Pilot Issues”; and “Take Fee Discount Qualification for Non-Penny Pilot Issues” (the “Modified Tables”). Endnote 15 provides that the qualification thresholds set forth in the applicable tables “[i]ncludes transaction volume from the OTP Holder's or OTP Firm's affiliates or its Appointed OFP or Appointed MM.”
• The Exchange proposes to replace reference to “Total Industry Customer equity and ETF option average daily volume” with “TCADV” (as defined in Endnote 8)
• In each of the Modified Tables, the Exchange proposes to replace reference to “Posted Orders” with “posted interest” and any reference to “orders” with “interest” to make clear that, where applicable, liquidity may include orders or quotes.
• For consistency, the Exchange proposes to remove any capitalization from “issues” in reference to “all issues” in the Modified Tables. The Exchange also proposes to capitalize “Issues” as relates to “Penny Pilot Issues,” in the preamble to the “Customer and Professional Customer Monthly Posting Credit Tiers and Qualifications for Executions in Penny Pilot Issues,” and as relates to “non-Penny Pilot Issues,” in the preamble to the “Non-Customer Monthly Posting Credit Tiers and Qualifications for Executions in Non-Penny Pilot Issues.”
• The Exchange also proposes to add a comma and, where applicable, the word “or”, to signify an alternative qualification basis in certain of the Modified Tables as well as to remove any capitalization of the word “Plus” as relates to any alterative qualification bases in the Modified Tables.
• The Exchange also proposes to alter the language in the Modified Tables to clarify how the credits are applied,
• For ease of reference, the Exchange proposes to rename the “Non-Customer Monthly Posting Credit Tiers and Qualifications for Executions in Non-Penny Pilot Issues” to “Non-Customer, Non-Penny Pilot Posting Credit Tiers.”
In addition to the foregoing, the Exchange also proposes to consistently utilize the term “Customer” to include Professional Customers, unless otherwise specified. Per the current Fee Schedule, regarding trade-related charges for standard options, the Exchange specifies that “[u]nless Professional Customer executions are specifically delineated, such executions will be treated as Customer executions for fee purposes.”
Consistent with this change, the Exchange proposes the following changes to the Customer Posting Tiers:
• The Exchange proposes to re-name the “Customer and Professional Customer Monthly Posting Credit Tiers and Qualifications for Executions in Penny Pilot Issues,” as “Customer Penny Pilot Posting Credit Tiers.” Consistent with certain of the conforming changes referenced above regarding how the applicable credits are the [sic] applied, the Exchange also proposes to modify the preamble to provide that “OTP Holders and OTP Firms meeting the qualifications below will receive the corresponding posting credit on all electronic executions of Customer posted interest in Penny Pilot Issues.” In addition, the Exchange proposes to update cross-references to this newly named table as appears in the Firm and Broker Dealer Monthly Fee Cap.
• The Exchange proposes to add a title to signify the incentive program for “Customer and Professional Customer Posting Credit Tiers In Non Penny Pilot Issues,” which title would be “Customer Posting Credit Tiers in Non-Penny Pilot Issues.” The Exchange proposes to add a hyphen to the word “Non Penny” as appears in the table, for internal consistency. The Exchange also proposes to add a preamble to this table, which provides that “OTP Holders and OTP Firms meeting the qualifications below will receive the corresponding credit on all electronic executions of Customer posted interest in Non-Penny Pilot issues,” and to reference Endnotes 8 and 15, which describe what is included in eligible monthly volume and how that volume is calculated. Consistent with the proposed reference to Endnote 8 at the beginning of this table, which includes a description of qualifying ADV of Retail Orders of U.S. Equity Market Share on the NYSE Arca Equity Market, the Exchange proposes to remove duplicative references to Endnote 8 that appear throughout this table.
• For avoidance of doubt, the Exchange proposes to add a sentence to Endnote 8 which provides that repeats that [sic] “[u]nless Professional Customer executions are specifically delineated, such executions will be treated as “Customer” executions executions [sic] in calculating qualifications for monthly posting credits or discounts.”
The Exchange also proposes to define “Non-Customers,” as used in the Fee Schedule, to include Firms, Broker Dealers, and Market Makers.
Finally, the Exchange also proposes to re-locate the Market Maker Incentive For Penny Pilot Issues; the Market Maker Incentive For Non-Penny Pilot Issues; and the MM Tiers (collectively, the “MM Tables”), without altering the substance of these tables.
To the extent not specifically noted herein, the Exchange has also corrected certain typographical errors (such as missing hyphens or redundant endnote markings) as well as streamlined certain text to add clarity and transparency to the Fee Schedule.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes the proposed non-substantive changes to the Fee Schedule are reasonable, equitable, and not unfairly discriminatory because the changes would add clarity, transparency and internal consistency to the Fee Schedule making it easier to navigate and comprehend, which would benefit all market participants.
For these reasons, the Exchange believes that the proposal is consistent with the Act.
In accordance with Section 6(b)(8) of the Act,
The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues. In such an environment, the Exchange must continually review, and consider adjusting, its fees and credits to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment.
No written comments were solicited or received with respect to the proposed rule change.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Small Business Administration.
30-Day notice.
The Small Business Administration (SBA) is publishing this notice to comply with requirements of the Paperwork Reduction Act (PRA), which requires agencies to submit proposed reporting and recordkeeping requirements to OMB for review and approval, and to publish a notice in the
Submit comments on or before September 5, 2017.
Comments should refer to the information collection by name and/or OMB Control Number and should be sent to:
Curtis Rich, Agency Clearance Officer, (202) 205-7030
The Small Business Administration requires information to be disclosed to the buyer when a secondary market loan is transferred from one investor to another. This information includes a constant annual prepayment rate based upon the seller's analysis of prepayment histories of SBA guaranteed loans with similar maturities. Additionally, information is required on the terms, conditions and yield of the security being transferred.
(1)
This notice announces a meeting of the Department of State's International Telecommunication Advisory Committee (ITAC). The ITAC will meet on September 07, 2017 at 2:00 p.m. ET at 1120 20th St., 10th Floor, Washington, DC 20036. At this meeting, the ITAC will discuss preparations for the International Telecommunication Union (ITU) 2018 Plenipotentiary Conference (PP-18), review the results of recent multilateral meetings, and discuss preparations for upcoming multilateral meetings at ITU, the Organization for Economic Cooperation and Development (OECD), and the Asia Pacific Economic Cooperation (APEC). In
The meeting will focus on the following topics:
PP-18 will take place in Dubai, United Arab Emirates, from October 29 to November 17, 2018. A Plenipotentiary Conference, which takes place every four years, is the highest policy-making body of the Union. PP-18 is expected to determine the overall policy direction of the ITU; adopt the strategic and financial plans for the next four years; elect the 48 members of Council, 12 members of the Radio Regulations Board, and five elected officials of the ITU; and consider and adopt, if appropriate, modifications to the ITU Constitution and Convention.
Attendance at the ITAC meeting is open to the public as seating capacity allows. The public will have an opportunity to provide comments at this meeting at the invitation of the chair.
Further details on this ITAC meeting will be announced on the Department of State's email list,
Please send all inquiries to
On July 21, 2017, the Indiana Rail Road Company (INRD) filed a verified notice of exemption under 49 CFR 1180.2(d)(5) to enter into a joint project with CSX Transportation, Inc. (CSXT), involving the relocation of a segment of INRD's rail line in Terre Haute, Ind.
The purpose of the joint relocation project is to allow the removal of two crossing diamonds at Belt Junction, to eliminate conflicting INRD and CSXT train movements at both Belt Junction and Spring Hill, and to improve the efficiency of INRD and CSXT operations in the Terre Haute area. The joint relocation project notice covers the following actions:
(1) INRD will acquire overhead trackage rights on CSXT's Baker Siding extending from the connection with INRD's line at approximately CSXT Milepost 0ZA 181.1 at Belt Junction to the connection with INRD's line at approximately CSXT Milepost 0ZA 182.1 at Spring Hill, a distance of approximately 1.0 miles in Terre Haute.
(2) INRD will abandon its Chicago Subdivision line extending from approximately INRD Milepost 181.5 to approximately INRD Milepost 182.03 (the INRD Line), including the northeastern leg of the wye track to the Hulman Lead, a total distance of approximately 0.85 miles in the vicinity of Belt Junction. The diamond crossings of CSXT's CE&D Subdivision at Belt Junction at CSXT Milepost 0ZA 181.1 and the immediately adjacent INRD trackage will be removed. The INRD Line between the end of the track removal at Belt Junction and the connection to the Hulman Lead will remain in place as unregulated trackage pursuant to 49 U.S.C. 10906 and used solely to turn equipment.
INRD states that it does not serve any shippers on the INRD Line, and existing service to shippers on INRD's Hulman Lead will be preserved. INRD also states that the proposed relocation will improve the operation of INRD's through trains in the area, which will avoid two crossings of CSXT's CE&D Subdivision and interference from conflicting CSXT train movements. INRD argues that no shippers will be adversely affected by this relocation or lose access to any rail service currently provided by INRD.
The Board will exercise jurisdiction over the abandonment, construction, or sale components of a joint relocation project, and require separate approval or exemption, only where the removal of track affects service to shippers or the construction of new track or transfer of existing track involves expansion into new territory, or a change in existing competitive situations.
Under these standards, the incidental abandonment and trackage rights components require no separate approval or exemption when the relocation project, as here, will not disrupt service to shippers and thus qualifies for the class exemption at 49 CFR 1180.2(d)(5).
As a condition to this exemption, any employees affected by the trackage rights will be protected by the conditions imposed in
The transaction may be consummated on or after August 20, 2017, the effective date of the exemption (30 days after the verified notice was filed).
If the notice contains false or misleading information, the exemption is void ab initio. Petitions to revoke the exemption under 49 U.S.C. 10502(d) may be filed at any time. The filing of a petition to revoke will not automatically stay the transaction. Petitions to stay must be filed by August 11, 2017 (at least seven days before the exemption becomes effective).
An original and 10 copies of all pleadings, referring to Docket No. FD 36123, must be filed with the Surface Transportation Board, 395 E Street SW., Washington, DC 20423-0001. In addition, a copy of each pleading must be served on Thomas J. Litwiler, Fletcher & Sippel LLC, 29 North Wacker Drive, Suite 920, Chicago, IL 60606-2832.
Board decisions and notices are available on our Web site at
By the Board, Rachel D. Campbell, Director, Office of Proceedings.
Office of the United States Trade Representative.
Notice and request for comments.
The interagency Trade Policy Staff Committee (TPSC) will convene a public hearing and seeks comments to assist the Office of the United States Trade Representative (USTR) in the preparation of its annual report to Congress on Russia's implementation of its obligations as a member of the World Trade Organization (WTO).
USTR strongly prefers electronic submissions made through the Federal eRulemaking Portal:
For procedural questions concerning written comments or participating in the public hearing, contact Yvonne Jamison at (202) 395-3475. Direct all other questions regarding this notice to Betsy Hafner, Deputy Assistant United States Trade Representative for Russia and Eurasia, at (202) 395-9124.
Russia became a member of the WTO on August 22, 2012, and on December 21, 2012, following the termination of the application of the Jackson-Vanik amendment to Russia and the extension of permanent normal trade relations to the products of Russia, the United States and Russia both filed letters with the WTO withdrawing their notices of non-application and consenting to have the WTO Agreement apply between them. In accordance with section 201(a) of the Russia and Moldova Jackson-Vanik Repeal and Sergei Magnitsky Rule of Law Accountability Act of 2012 (Pub. L. 112-208), USTR is required to submit, by December 21st of each year, a report to Congress on the extent to which Russia is implementing the WTO Agreement, including the Agreement on the Application of Sanitary and Phytosanitary Measures and the Agreement on Trade Related Aspects of Intellectual Property Rights. The report also must assess Russia's progress on acceding to the Government Procurement Agreement (GPA) and the Information Technology Agreement, the latter of which Russia implemented fully in 2016. In addition, to the extent that USTR finds that Russia is not implementing fully the WTO Agreement or is not making adequate progress in acceding to the GPA, USTR must describe in the report the actions it plans to take to encourage Russia to improve its implementation and/or increase its accession efforts. In accordance with section 201(a), and to assist it in preparing this year's report, the TPSC is soliciting comments on these issues.
The terms of Russia's accession to the WTO are contained in the Marrakesh Agreement Establishing the World Trade Organization and the Protocol on the Accession of the Russian Federation to the WTO (including its annexes) (Protocol). The Report of the Working Party on the Accession of the Russian Federation (Working Party Report) provides detail and context to the commitments listed in the Protocol. You can find the Protocol and Working Party Report on USTR's Web site at
USTR must receive written comments no later than 11:59 p.m. on Friday, September 22, 2017. USTR invites written comments and/or oral testimony on Russia's implementation of the commitments made in connection with its accession to the WTO, including, but not limited to, commitments in the following areas:
a. Import regulation (
b. Export regulation.
c. Subsidies.
d. Standards and technical regulations.
e. Sanitary and phytosanitary measures.
f. Trade-related investment measures.
g. Taxes and charges levied on imports and exports.
h. Other internal policies affecting trade.
i. Intellectual property rights (including intellectual property rights enforcement).
j. Services.
k. Rule of law issues (
l. Trade-related investment measures.
m. Other WTO commitments.
The TPSC will convene a public hearing on Thursday, September 28, 2017, in Rooms 1 & 2, 1724 F Street NW., Washington, DC 20508. We must receive your written requests to present oral testimony at the hearing and a summary of that testimony by noon on by 11:59 p.m. on Friday, September 22, 2017. You must make the intent to testify notification in the “Type Comment” field under docket number USTR-2017-0012 on the
You should submit all documents in accordance with the instructions in section 3 below.
In order to be assured of consideration, we must receive your written comments in English by 11:59 p.m. on Friday, September 22, 2017. USTR strongly encourages commenters to make on-line submissions, using the
To submit comments via
The
For any comments submitted electronically containing business confidential information, the file name of the business confidential version should begin with the characters “BC”. Any page containing business confidential information must be clearly marked “BUSINESS CONFIDENTIAL” on the top of that page. Filers of submissions containing business confidential information also must submit a public version of their comments that we will place in the docket for public inspection. The file name of the public version should begin with the character “P”. The “BC” and “P” should be followed by the name of the person or entity submitting the comments. Filers submitting comments containing no business confidential information should name their file using the name of the person or entity submitting the comments.
Please do not attach separate cover letters to electronic submissions; rather, include any information that might appear in a cover letter in the comments themselves. Similarly, to the extent possible, please include any exhibits, annexes, or other attachments in the same file as the submission itself, not as separate files.
As noted, USTR strongly urges submitters to file comments through
We will post comments in the docket for public inspection, except business confidential information. You can view comments on the
Federal Railroad Administration (FRA), U.S. Department of Transportation (DOT).
Notice of availability and request for comments.
This document provides the public with notice that the Kansas City Southern Railway Company (KCS) submitted to FRA its Positive Train Control Safety Plan (PTCSP) Version 1.0, dated June 30, 2017, on FRA's Secure Information Repository site on June 30, 2017. KCS asked FRA to approve its PTCSP and issue a Positive Train Control (PTC) System Certification for KCS' Interoperable Electronic Train Management System (I-ETMS).
FRA will consider communications received by September 5, 2017 before taking final action on the PTCSP. FRA may consider comments received after that date if practicable.
All communications concerning this proceeding should identify Docket Number 2010-0059 and may be submitted by any of the following methods:
•
•
•
•
Dr. Mark Hartong, Senior Scientific Technical Advisor, at (202) 493-1332, or
In its PTCSP, KCS asserts that the I-ETMS system it is implementing is designed as a vital overlay PTC system as defined in 49 CFR 236.1015(e)(2). The PTCSP describes KCS' I-ETMS implementation and the associated I-ETMS safety processes, safety analyses, and test, validation, and verification processes used during the development of I-ETMS. The PTCSP also contains KCS' operational and support requirements and procedures.
KCS' PTCSP and the accompanying request for approval and system certification are available for review online at
Interested parties are invited to comment on the PTCSP by submitting written comments or data. During its review of the PTCSP, FRA will consider any comments or data submitted. However, FRA may elect not to respond to any particular comment and, under 49 CFR 236.1009(d)(3), FRA maintains the authority to approve or disapprove the PTCSP at its sole discretion. FRA does not anticipate scheduling a public hearing regarding KCS' PTCSP because the circumstances do not appear to warrant a hearing. If any interested party desires an opportunity for oral comment, the party should notify FRA in writing before the end of the comment period and specify the basis for his or her request.
Anyone can search the electronic form of any written communications and comments received into any of our dockets by the name of the individual submitting the comment (or signing the document, if submitted on behalf of an association, business, labor union, etc.). Under 49 CFR 211.3, FRA solicits comments from the public to better inform its decisions. DOT posts these comments, without edit, including any personal information the commenter provides, to
Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT.
Notice of actions on special permit applications.
In accordance with the procedures governing the application for, and the processing of, special permits from the Department of Transportation's Hazardous Material Regulations, notice is hereby given that the Office of Hazardous Materials Safety has received the application described herein.
Comments must be received on or before September 5, 2017.
You should address comments to: Record Center, Pipeline and Hazardous Materials Safety Administration U.S. Department of Transportation Washington, DC 20590.
Comments should refer to the application number and be submitted in triplicate. If confirmation of receipt of comments is desired, include a self-addressed stamped postcard showing the special permit number.
Ryan Paquet, Director, Office of Hazardous Materials Approvals and Permits Division, Pipeline and Hazardous Materials Safety Administration, U.S. Department of Transportation, East Building, PHH-30, 1200 New Jersey Avenue Southeast, Washington, DC 20590-0001, (202) 366-4535.
Copies of the applications are available for inspection in the Records Center, East Building, PHH-30, 1200 New Jersey Avenue Southeast, Washington DC or at
This notice of receipt of applications for special permit is published in accordance with Part 107 of the Federal hazardous materials transportation law (49 U.S.C. 5117(b); 49 CFR 1.53(b)).
Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT.
List of Applications for Special Permits.
In accordance with the procedures governing the application for, and the processing of, special permits from the Department of Transportation's Hazardous Material Regulations, notice is hereby given that the Office of Hazardous Materials Safety has received the application described herein. Each mode of transportation for which a particular special permit is requested is indicated by a number in the “Nature of Application” portion of the table below as follows: 1—Motor vehicle, 2—Rail freight, 3—Cargo vessel, 4—Cargo aircraft only, 5—Passenger-carrying aircraft.
Comments must be received on or before September 5, 2017.
You should address comments to: Record Center, Pipeline and Hazardous Materials Safety Administration, U.S. Department of Transportation, Washington, DC 20590.
Comments should refer to the application number and be submitted in triplicate. If confirmation of receipt of comments is desired, include a self-addressed stamped postcard showing the special permit number.
Ryan Paquet, Director, Office of Hazardous Materials Approvals and Permits Division, Pipeline and Hazardous Materials Safety Administration, U.S. Department of Transportation, East Building, PHH-30, 1200 New Jersey Avenue Southeast, Washington, DC 20590-0001, (202) 366-4535.
Copies of the applications are available for inspection in the Records Center, East Building, PHH-30, 1200 New Jersey Avenue Southeast, Washington, DC or at
This notice of receipt of applications for special permit is published in accordance with Part 107 of the Federal hazardous materials transportation law (49 U.S.C. 5117(b); 49 CFR 1.53(b)).
Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT.
List of applications for modification of special permits.
In accordance with the procedures governing the application for, and the processing of, special permits from the Department of Transportation's Hazardous Material Regulations, notice is hereby given that the Office of Hazardous Materials Safety has received the application described herein. Each mode of transportation for which a particular special permit is requested is indicated by a number in the “Nature of Application” portion of the table below as follows: 1—Motor vehicle, 2—Rail freight, 3—Cargo vessel, 4—Cargo aircraft only, 5—Passenger-carrying aircraft.
Comments must be received on or before August 21, 2017.
You should address comments to: Record Center, Pipeline and Hazardous Materials Safety Administration, U.S. Department of Transportation, Washington, DC 20590.
Comments should refer to the application number and be submitted in triplicate. If confirmation of receipt of comments is desired, include a self-addressed stamped postcard showing the special permit number.
Ryan Paquet, Director, Office of Hazardous Materials Approvals and Permits Division, Pipeline and Hazardous Materials Safety Administration, U.S. Department of Transportation, East Building, PHH-30, 1200 New Jersey Avenue Southeast, Washington, DC 20590-0001, (202) 366-4535.
Copies of the applications are available for inspection in the Records Center, East Building, PHH-30, 1200 New Jersey Avenue Southeast, Washington DC or at
This notice of receipt of applications for special permit is published in accordance with Part 107 of the Federal hazardous materials transportation law (49 U.S.C. 5117(b); 49 CFR 1.53(b)).
Saint Lawrence Seaway Development Corporation (SLSDC); DOT.
Notice of public meeting.
This notice announces the public meeting via conference call of the Saint Lawrence Seaway Development Corporation Advisory Board.
The public meeting will be held on (all times Eastern):
• Monday, August 28, 2017, from 2:00 p.m.-4:00 p.m.
The meeting will be held via conference call at the SLSDC's
Wayne Williams, Chief of Staff, Saint Lawrence Seaway Development Corporation, 1200 New Jersey Avenue SE., Washington, DC 20590; 202-366-0091.
Pursuant to Section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463; 5 U.S.C. App. I), notice is hereby given of a meeting of the Advisory Board of the Saint Lawrence Seaway Development Corporation (SLSDC). The agenda for this meeting will be as follows:
Attendance at the meeting is open to the interested public but limited to the space available. With the approval of the Administrator, members of the public may present oral statements at the meeting. Persons wishing further information should contact the person listed in the
Veterans Benefits Administration, Department of Veterans Affairs.
Notice.
In compliance with the Paperwork Reduction Act (PRA) of 1995, this notice announces that the Veterans Benefits Administration, Department of Veterans Affairs, will submit the collection of information abstracted below to the Office of Management and Budget (OMB) for review and comment. The PRA submission describes the nature of the information collection and its expected cost and burden and it includes the actual data collection instrument.
Comments must be submitted on or before September 5, 2017.
Submit written comments on the collection of information through
Cynthia Harvey-Pryor, Enterprise Records Service (005R1B), Department of Veterans Affairs, 810 Vermont Avenue NW., Washington, DC 20420, (202) 461-5870 or email
An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The
By direction of the Secretary.
Veterans Benefits Administration, Department of Veterans Affairs.
Notice.
In compliance with the Paperwork Reduction Act (PRA) of 1995, this notice announces that the Veterans Benefits Administration, Department of Veterans Affairs, will submit the collection of information abstracted below to the Office of Management and Budget (OMB) for review and comment. The PRA submission describes the nature of the information collection and its expected cost and burden and it includes the actual data collection instrument.
Comments must be submitted on or before September 5, 2017.
Submit written comments on the collection of information through
Cynthia Harvey-Pryor, Enterprise Records Service (005R1B), Department of Veterans Affairs, 810 Vermont Avenue NW., Washington, DC 20420, (202) 461-5870 or email
By direction of the Secretary.
Centers for Medicare & Medicaid Services (CMS), HHS.
Final rule.
This final rule updates the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs) for fiscal year (FY) 2018. It also revises and rebases the market basket index by updating the base year from 2010 to 2014, and by adding a new cost category for Installation, Maintenance, and Repair Services. The rule also finalizes revisions to the SNF Quality Reporting Program (QRP), including measure and standardized resident assessment data policies and policies related to public display. In addition, it finalizes policies for the Skilled Nursing Facility Value-Based Purchasing Program that will affect Medicare payment to SNFs beginning in FY 2019. The final rule also clarifies the regulatory requirements for team composition for surveys conducted for investigating a complaint and aligns regulatory provisions for investigation of complaints with the statutory requirements. The final rule also finalizes the performance period for the National Healthcare Safety Network (NHSN) Healthcare Personnel (HCP) Influenza Vaccination Reporting Measure included in the End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP) for Payment Year 2020.
These regulations are effective on October 1, 2017.
Penny Gershman, (410) 786-6643, for information related to SNF PPS clinical issues.
John Kane, (410) 786-0557, for information related to the development of the payment rates and case-mix indexes.
Kia Sidbury, (410) 786-7816, for information related to the wage index.
Bill Ullman, (410) 786-5667, for information related to level of care determinations, consolidated billing, and general information.
Michelle King, (410) 786-3667, for information related to skilled nursing facility quality reporting program.
James Poyer, (410) 786-2261, for information related to the skilled nursing facility value-based purchasing program.
Delia Houseal, (410) 786-2724, for information related to the end-stage renal disease quality incentive program.
Rebecca Ward, (410) 786-1732 and Caecilia Blondiaux, (410) 786-2190, for survey type definitions.
As discussed in the FY 2014 SNF PPS final rule (78 FR 47936), tables setting forth the Wage Index for Urban Areas Based on CBSA Labor Market Areas and the Wage Index Based on CBSA Labor Market Areas for Rural Areas are no longer published in the
Instead, these tables are available exclusively through the Internet on the CMS Web site. The wage index tables for this final rule can be accessed on the SNF PPS Wage Index home page, at
Readers who experience any problems accessing any of these online SNF PPS wage index tables should contact Kia Sidbury at (410) 786-7816.
To assist readers in referencing sections contained in this document, we are providing the following Table of Contents.
In addition, because of the many terms to which we refer by acronym in this final rule, we are listing these abbreviations and their corresponding terms in alphabetical order below:
This final rule updates the SNF prospective payment rates for FY 2018 as required under section 1888(e)(4)(E) of the Social Security Act (the Act). It also responds to section 1888(e)(4)(H) of the Act, which requires the Secretary to provide for publication in the
In accordance with sections 1888(e)(4)(E)(ii)(IV) and 1888(e)(5) of the Act, the federal rates in this final rule reflect an update to the rates that we published in the SNF PPS final rule for FY 2017 (81 FR 51970), which reflects the SNF market basket update, as required by section 1888(e)(5)(B)(iii) of the Act for FY 2018. Additionally, in section III.B.1. of this final rule, we are finalizing our proposal to revise and rebase the market basket index for FY 2018 and subsequent FYs by updating the base year from 2010 to 2014, and by adding a new cost category for Installation, Maintenance, and Repair Services. We are also finalizing additional polices, measures and data reporting requirements for the Skilled Nursing Facility Quality Reporting Program (SNF QRP) and requirements for the SNF VBP Program, including an exchange function to translate SNF performance scores calculated using the program's scoring methodology into value-based incentive payments.
We are also clarifying the regulatory requirements for team composition for surveys conducted for the purposes of investigating a complaint and on-site monitoring of compliance, and to align the regulatory provisions for special surveys and investigation of complaints with the statute. The changes clarify that the requirement for an interdisciplinary team that must include a registered nurse is applicable to surveys conducted under sections 1819(g)(2) and 1919(g)(2) of the Act, and not to those surveys conducted to investigate complaints or to monitor compliance on-site under sections 1819(g)(4) and 1919(g)(4) of the Act. Revising the regulatory language under §§ 488.30, 488.301, 488.308, and 488.314 to correspond to the statutory requirements found in sections 1819(g) and 1919(g) of the Act will add clarity to these requirements by making them more explicit. We are also revising the performance period for the National Healthcare Safety Network (NHSN) Healthcare Personnel (HCP) Influenza Vaccination Reporting Measure included in the End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP) for PY 2020.
As amended by section 4432 of the Balanced Budget Act of 1997 (BBA, Pub. L. 105-33, enacted on August 5, 1997), section 1888(e) of the Act provides for the implementation of a PPS for SNFs. This methodology uses prospective, case-mix adjusted per diem payment rates applicable to all covered SNF services defined in section 1888(e)(2)(A) of the Act. The SNF PPS is effective for cost reporting periods beginning on or after July 1, 1998, and covers all costs of furnishing covered SNF services (routine, ancillary, and capital-related costs) other than costs associated with approved educational activities and bad debts. Under section 1888(e)(2)(A)(i) of the Act, covered SNF services include post-hospital extended care services for which benefits are provided under Part A, as well as those items and services (other than a small number of excluded services, such as physicians' services) for which payment may otherwise be made under Part B and which are furnished to Medicare beneficiaries who are residents in a SNF during a covered Part A stay. A comprehensive discussion of these provisions appears in the May 12, 1998 interim final rule (63 FR 26252). In addition, a detailed discussion of the legislative history of the SNF PPS is available online at
Section 215(a) of the Protecting Access to Medicare Act of 2014 (PAMA, Pub. L. 113-93, enacted on April 1, 2014) added a new section 1888(g) to the Act, which requires the Secretary to specify an all-cause all-condition hospital readmission measure and an all-condition risk-adjusted potentially preventable hospital readmission measure for the SNF setting. Additionally, section 215(b) of PAMA added a new section 1888(h) to the Act, which requires the Secretary to implement a VBP program for SNFs. Finally, section 2(a) of the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act, Pub. L. 113-185, enacted on October 6, 2014) added a new section 1899B to the Act that, among other things, requires SNFs to report standardized resident assessment data, data on quality measures, and data on resource use and other measures. In addition, section 2(c)(4) of the IMPACT Act added a new section 1888(e)(6) to the Act, which requires the Secretary to implement a quality reporting program for SNFs.
Under sections 1888(e)(1)(A) and 1888(e)(11) of the Act, the SNF PPS included an initial, three-phase transition that blended a facility-specific rate (reflecting the individual facility's historical cost experience) with the federal case-mix adjusted rate. The transition extended through the facility's first 3 cost reporting periods under the PPS, up to and including the one that began in FY 2001. Thus, the SNF PPS is no longer operating under the transition, as all facilities have been paid at the full federal rate effective with cost reporting periods beginning in FY 2002. As we now base payments for SNFs entirely on the adjusted federal per diem rates, we no longer include adjustment factors under the transition related to facility-specific rates for the upcoming FY.
Section 1888(e)(4)(E) of the Act requires the SNF PPS payment rates to be updated annually. The most recent annual update occurred in a final rule that set forth updates to the SNF PPS payment rates for FY 2017 (81 FR 51970, August 5, 2016). Section 1888(e)(4)(H) of the Act specifies that we provide for publication annually in the
• The unadjusted federal per diem rates to be applied to days of covered SNF services furnished during the upcoming FY.
• The case-mix classification system to be applied for these services during the upcoming FY.
• The factors to be applied in making the area wage adjustment for these services.
Along with other revisions discussed later in this preamble, this final rule provides the required annual updates to the per diem payment rates for SNFs for FY 2018.
In response to the publication of the FY 2018 SNF PPS proposed rule, we received 247 public comments from individuals, providers, corporations, government agencies, private citizens, trade associations, and major organizations. The following are brief summaries of each proposed provision, a summary of the public comments that we received related to that proposal, and our responses to the comments.
In addition to the comments we received on specific proposals contained within the proposed rule (which we address later in this final rule), commenters also submitted the following, more general, observations on the SNF PPS and SNF care generally. A discussion of these comments, along with our responses, appears below.
Under section 1888(e)(4) of the Act, the SNF PPS uses per diem federal payment rates based on mean SNF costs in a base year (FY 1995) updated for inflation to the first effective period of the PPS. We developed the federal payment rates using allowable costs from hospital-based and freestanding SNF cost reports for reporting periods beginning in FY 1995. The data used in developing the federal rates also incorporated a Part B add-on, which is an estimate of the amounts that, prior to the SNF PPS, would have been payable under Part B for covered SNF services furnished to individuals during the course of a covered Part A stay in a SNF.
In developing the rates for the initial period, we updated costs to the first effective year of the PPS (the 15-month period beginning July 1, 1998) using a SNF market basket index, and then standardized for geographic variations
Section 1888(e)(5)(A) of the Act requires us to establish a SNF market basket index that reflects changes over time in the prices of an appropriate mix of goods and services included in covered SNF services. Accordingly, we have developed a SNF market basket index that encompasses the most commonly used cost categories for SNF routine services, ancillary services, and capital-related expenses. In the SNF PPS final rule for FY 2014 (78 FR 47939 through 47946), we revised and rebased the market basket index, which included updating the base year from FY 2004 to FY 2010. For FY 2018, as discussed in section III.D.1. of this final rule, we are rebasing and revising the SNF market basket, updating the base year from FY 2010 to 2014.
The SNF market basket index is used to compute the market basket percentage change that is used to update the SNF federal rates on an annual basis, as required by section 1888(e)(4)(E)(ii)(IV) of the Act. This market basket percentage update is adjusted by a forecast error correction, if applicable, and then further adjusted by the application of a productivity adjustment as required by section 1888(e)(5)(B)(ii) of the Act and described in section III.B.2.d. of this final rule. For FY 2018, the growth rate of the 2014-based SNF market basket is estimated to be 2.6 percent, which is based on the IHS Global Inc. (IGI) second quarter 2017 forecast with historical data through first quarter 2017.
However, we note that section 411(a) of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA, Pub. L. 114-10, enacted on April 16, 2015) amended section 1888(e) of the Act to add section 1888(e)(5)(B)(iii) of the Act. Section 1888(e)(5)(B)(iii) of the Act establishes a special rule for FY 2018 that requires the market basket percentage, after the application of the productivity adjustment, to be 1.0 percent. In accordance with section 1888(e)(5)(B)(iii) of the Act, we will use a market basket percentage of 1.0 percent to update the federal rates set forth in this final rule. In section III.B.2.e. of this final rule, we discuss the specific application of the MACRA-specified market basket adjustment to the forthcoming annual update of the SNF PPS payment rates. In addition, in section III.D.2. of this final rule, we discuss the 2 percent reduction applied to the market basket update for those SNFs that fail to submit measures data as required by section 1888(e)(6)(A) of the Act.
Section 1888(e)(5)(B) of the Act defines the SNF market basket percentage as the percentage change in the SNF market basket index from the midpoint of the previous FY to the midpoint of the current FY. Absent the addition of section 1888(e)(5)(B)(iii) of the Act, added by section 411(a) of MACRA, we would have used the percentage change in the SNF market basket index to compute the update factor for FY 2018. Based on the revision and rebasing of the SNF market basket discussed in section III.D.1. of this final rule, this factor is based on the IGI second quarter 2017 forecast (with historical data through the first quarter 2017) of the FY 2018 percentage increase in the 2014-based SNF market basket index reflecting routine, ancillary, and capital-related expenses. As discussed in sections III.B.2.c. and III.B.2.d. of this final rule, this market basket percentage change would have been reduced by the applicable forecast error correction (as described in § 413.337(d)(2)) and by the MFP adjustment as required by section 1888(e)(5)(B)(ii) of the Act. As noted previously, section 1888(e)(5)(B)(iii) of the Act, added by section 411(a) of the MACRA, requires us to use a 1.0 percent market basket percentage instead of the estimated 2.6 percent market basket percentage, adjusted as described below, to adjust the SNF PPS federal rates for FY 2018. Additionally, as discussed in section II.B. of this final rule, we no longer compute update factors to adjust a facility-specific portion of the SNF PPS rates, because the initial three-phase transition period from facility-specific to full federal rates that started with cost reporting periods beginning in July 1998 has expired.
As discussed in the June 10, 2003 supplemental proposed rule (68 FR 34768) and finalized in the August 4, 2003 final rule (68 FR 46057 through 46059), § 413.337(d)(2) provides for an adjustment to account for market basket forecast error. The initial adjustment for market basket forecast error applied to the update of the FY 2003 rate for FY 2004, and took into account the cumulative forecast error for the period from FY 2000 through FY 2002, resulting in an increase of 3.26 percent to the FY 2004 update. Subsequent adjustments in succeeding FYs take into account the forecast error from the most recently available FY for which there is final data, and apply the difference between the forecasted and actual change in the market basket when the difference exceeds a specified threshold. We originally used a 0.25 percentage point threshold for this purpose; however, for the reasons specified in the FY 2008 SNF PPS final rule (72 FR 43425, August 3, 2007), we adopted a 0.5 percentage point threshold effective for FY 2008 and subsequent FYs. As we stated in the final rule for FY 2004 that first issued the market basket forecast error adjustment (68 FR 46058, August 4, 2003), the adjustment will reflect both upward and downward adjustments, as appropriate.
For FY 2016 (the most recently available FY for which there is final data), the estimated increase in the market basket index was 2.3 percentage points, while the actual increase for FY 2016 was 2.3 percentage points, resulting in the actual increase being the same as the estimated increase. Accordingly, as the difference between the estimated and actual amount of change in the market basket index does not exceed the 0.5 percentage point threshold, the FY 2018 market basket percentage change of 2.6 percent would not have been adjusted to account for the forecast error correction. Table 1 shows the forecasted and actual market basket amounts for FY 2016.
Section 1888(e)(5)(B)(ii) of the Act, as added by section 3401(b) of the Patient Protection and Affordable Care Act (Affordable Care Act, Pub. L. 111-148, enacted on March 23, 2010) requires that, in FY 2012 and in subsequent FYs, the market basket percentage under the SNF PPS (as described in section 1888(e)(5)(B)(i) of the Act) is to be reduced annually by the multifactor productivity (MFP) adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. Section 1886(b)(3)(B)(xi)(II) of the Act, in turn, defines the MFP adjustment to be equal to the 10-year moving average of changes in annual economy-wide private nonfarm business multi-factor productivity (as projected by the Secretary for the 10-year period ending with the applicable FY, year, cost-reporting period, or other annual period). The Bureau of Labor Statistics (BLS) is the agency that publishes the official measure of private nonfarm business MFP. We refer readers to the BLS Web site at
MFP is derived by subtracting the contribution of labor and capital inputs growth from output growth. The projections of the components of MFP are currently produced by IGI, a nationally recognized economic forecasting firm with which CMS contracts to forecast the components of the market baskets and MFP. To generate a forecast of MFP, IGI replicates the MFP measure calculated by the BLS, using a series of proxy variables derived from IGI's U.S. macroeconomic models. For a discussion of the MFP projection methodology, we refer readers to the FY 2012 SNF PPS final rule (76 FR 48527 through 48529) and the FY 2016 SNF PPS final rule (80 FR 46395). A complete description of the MFP projection methodology is available on our Web site at
Per section 1888(e)(5)(A) of the Act, the Secretary shall establish a SNF market basket index that reflects changes over time in the prices of an appropriate mix of goods and services included in covered SNF services. Section 1888(e)(5)(B)(ii) of the Act, added by section 3401(b) of the Affordable Care Act, requires that for FY 2012 and each subsequent FY, after determining the market basket percentage described in section 1888(e)(5)(B)(i) of the Act, the Secretary shall reduce such percentage by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act (which we refer to as the MFP adjustment). Section 1888(e)(5)(B)(ii) of the Act further states that the reduction of the market basket percentage by the MFP adjustment may result in the market basket percentage being less than zero for a FY, and may result in payment rates under section 1888(e) of the Act being less than such payment rates for the preceding fiscal year.
If not for the enactment of section 411(a) of the MACRA, the FY 2018 update would include a calculation of the MFP adjustment as the 10-year moving average of changes in MFP for the period ending September 30, 2018, which is estimated to be 0.6 percent. Also, if not for the enactment of section 411(a) of the MACRA, consistent with section 1888(e)(5)(B)(i) of the Act and § 413.337(d)(2), the market basket percentage for FY 2018 for the SNF PPS would be based on IGI's second quarter 2017 forecast of the SNF market basket update, which is estimated to be 2.6 percent. In accordance with section 1888(e)(5)(B)(ii) of the Act (as added by section 3401(b) of the Affordable Care Act) and § 413.337(d)(3), this market basket percentage would then be reduced by the MFP adjustment (the 10-year moving average of changes in MFP for the period ending September 30, 2018) of 0.6 percent, which would be calculated as described above and based on IGI's second quarter 2017 forecast. Absent the enactment of section 411(a) of MACRA, the resulting MFP-adjusted SNF market basket update would have been equal to 2.0 percent, or 2.6 percent less 0.6 percentage point. However, as discussed above, section 1888(e)(5)(B)(iii) of the Act, added by section 411(a) of the MACRA, requires us to apply a 1.0 percent positive market basket adjustment in determining the FY 2018 SNF payment rates set forth in this final rule, without regard to the market basket update as adjusted by the MFP adjustment described above.
Sections 1888(e)(4)(E)(ii)(IV) and 1888(e)(5)(i) of the Act require that the update factor used to establish the FY 2018 unadjusted federal rates be at a level equal to the market basket index percentage change. Accordingly, we determined the total growth from the average market basket level for the period of October 1, 2016, through September 30, 2017 to the average market basket level for the period of October 1, 2017, through September 30, 2018. This process yields a percentage change in the 2014-based SNF market basket of 2.6 percent.
As further explained in section III.B.2.c. of this final rule, as applicable, we adjust the market basket percentage change by the forecast error from the most recently available FY for which there is final data and apply this adjustment whenever the difference between the forecasted and actual percentage change in the market basket exceeds a 0.5 percentage point threshold. Since the difference between the forecasted FY 2016 SNF market basket percentage change and the actual FY 2016 SNF market basket percentage change (FY 2016 is the most recently available FY for which there is historical data) did not exceed the 0.5 percentage point threshold, the FY 2018 market basket percentage change of 2.6 percent would not have been adjusted by the forecast error correction.
If not for the enactment of section 411(a) of the MACRA, the SNF market basket for FY 2018 would be determined in accordance with section 1888(e)(5)(B)(ii) of the Act, which requires us to reduce the market basket percentage change by the MFP adjustment (the 10-year moving average of changes in MFP for the period ending
Commenters submitted the following comments related to the proposed rule's discussion of the market basket update factor for FY 2018. A discussion of these comments, along with our responses, appears below.
With regard to those comments on the “gap” between the standard market basket update and the MACRA-required update, we appreciate these commenters' concerns, but we are required in section 1888(e)(5)(B)(iii) of the Act, as added by section 411(a) of MACRA, to apply the 1.0 percentage point update factor for FY 2018.
Accordingly, after considering the comments received, for the reasons specified in this final rule and in the FY 2018 SNF PPS proposed rule (82 FR 21017 through 21019), we are finalizing the FY 2018 market basket factor of 1.0 percent, as required by section 411(a) of MACRA. Historically, we have used the SNF market basket, adjusted as described above, to adjust each per diem component of the federal rates forward to reflect the change in the average prices from one year to the next. However, section 1888(e)(5)(B)(iii) of the Act, as added by section 411(a) of the MACRA, requires us to use a market basket percentage of 1.0 percent, after application of the MFP adjustment to adjust the federal rates for FY 2018. Under section 1888(e)(5)(B)(iii) of the Act, the market basket percentage increase used to determine the federal rates set forth in this final rule will be 1.0 percent for FY 2018. Tables 2 and 3 reflect the updated components of the unadjusted federal rates for FY 2018, prior to adjustment for case-mix.
In addition, we note that section 1888(e)(6)(A)(i) of the Act provides that, beginning in FY 2018, SNFs that fail to submit data, as applicable, in accordance with sections 1888(e)(6)(B)(i)(II) and (III) of the Act for a fiscal year will receive a 2.0 percentage point reduction to their market basket update for the fiscal year involved, after application of section 1888(e)(5)(B)(ii) of the Act (the MFP adjustment) and section 1888(e)(5)(B)(iii) of the Act (the 1 percent market basket increase for FY 2018) (for additional information on the SNF QRP, including the statutory authority and the selected measures, we refer readers to section III.D.2. of this final rule). In addition, section 1888(e)(6)(A)(ii) of the Act states that application of the 2.0 percentage point reduction (after application of section 1888(e)(5)(B)(ii) and (iii) of the Act) may result in the market basket index
Under section 1888(e)(4)(G)(i) of the Act, the federal rate also incorporates an adjustment to account for facility case-mix, using a classification system that accounts for the relative resource utilization of different patient types. The statute specifies that the adjustment is to reflect both a resident classification system that the Secretary establishes to account for the relative resource use of different patient types, as well as resident assessment data and other data that the Secretary considers appropriate. In the interim final rule with comment period that initially implemented the SNF PPS (63 FR 26252, May 12, 1998), we developed the RUG-III case-mix classification system, which tied the amount of payment to resident resource use in combination with resident characteristic information. Staff time measurement (STM) studies conducted in 1990, 1995, and 1997 provided information on resource use (time spent by staff members on residents) and resident characteristics that enabled us not only to establish RUG-III, but also to create case-mix indexes (CMIs). The original RUG-III grouper logic was based on clinical data collected in 1990, 1995, and 1997. As discussed in the SNF PPS proposed rule for FY 2010 (74 FR 22208), we subsequently conducted a multi-year data collection and analysis under the Staff Time and Resource Intensity Verification (STRIVE) project to update the case-mix classification system for FY 2011. The resulting Resource Utilization Groups, Version 4 (RUG-IV) case-mix classification system reflected the data collected in 2006 through 2007 during the STRIVE project, and was finalized in the FY 2010 SNF PPS final rule (74 FR 40288) to take effect in FY 2011 concurrently with an updated new resident assessment instrument, version 3.0 of the Minimum Data Set (MDS 3.0), which collects the clinical data used for case-mix classification under RUG-IV.
We note that case-mix classification is based, in part, on the beneficiary's need for skilled nursing care and therapy services. The case-mix classification system uses clinical data from the MDS to assign a case-mix group to each patient that is then used to calculate a per diem payment under the SNF PPS. As discussed in section III.C.1. of this final rule, the clinical orientation of the case-mix classification system supports the SNF PPS's use of an administrative presumption that considers a beneficiary's initial case-mix classification to assist in making certain SNF level of care determinations. Further, because the MDS is used as a basis for payment, as well as a clinical assessment, we have provided extensive training on proper coding and the time frames for MDS completion in our Resident Assessment Instrument (RAI) Manual. For an MDS to be considered valid for use in determining payment, the MDS assessment must be completed in compliance with the instructions in the RAI Manual in effect at the time the assessment is completed. For payment and quality monitoring purposes, the RAI Manual consists of both the Manual instructions and the interpretive guidance and policy clarifications posted on the appropriate MDS Web site at
In addition, we note that section 511 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, Pub. L. 108-173, enacted December 8, 2003) amended section 1888(e)(12) of the Act to provide for a temporary increase of 128 percent in the PPS per diem payment for any SNF residents with Acquired Immune Deficiency Syndrome (AIDS), effective with services furnished on or after October 1, 2004. This special add-on for SNF residents with AIDS was to remain in effect only until the Secretary certifies that there is an appropriate adjustment in the case mix to compensate for the increased costs associated with such residents. The add-on for SNF residents with AIDS is also discussed in Program Transmittal #160 (Change Request #3291), issued on April 30, 2004, which is available online at
For the limited number of SNF residents that qualify for this add-on, there is a significant increase in payments. For example, using FY 2015 data (which still used ICD-9-CM coding), we identified fewer than 5085 SNF residents with a diagnosis code of 042 (Human Immunodeficiency Virus (HIV) Infection). As explained in the FY 2016 SNF PPS final rule (80 FR 46397 through 46398), on October 1, 2015 (consistent with section 212 of PAMA), we converted to using ICD-10-CM code B20 to identify those residents for whom it is appropriate to apply the AIDS add-on established by section 511 of the MMA. For FY 2018, an urban facility with a resident with AIDS in RUG-IV group “HC2” would have a case-mix adjusted per diem payment of $443.08 (see Table 4) before the application of the MMA adjustment. After an increase of 128 percent, this urban facility would receive a case-mix adjusted per diem payment of approximately $1,010.22.
Under section 1888(e)(4)(H) of the Act, each update of the payment rates must include the case-mix classification methodology applicable for the upcoming FY. The FY 2018 payment rates set forth in this final rule reflect the use of the RUG-IV case-mix classification system from October 1, 2017, through September 30, 2018. We list the case-mix adjusted RUG-IV payment rates for FY 2018, provided separately for urban and rural SNFs, in Tables 4 and 5 with corresponding case-mix values. We use the revised OMB delineations adopted in the FY 2015 SNF PPS final rule (79 FR 45632, 45634) to identify a facility's urban or rural status for the purpose of determining which set of rate tables applies to the facility. Tables 4 and 5 do not reflect the add-on for SNF residents with AIDS enacted by section 511 of the MMA, which we apply only after making all other adjustments (such as wage index and case-mix).
Section 1888(e)(4)(G)(ii) of the Act requires that we adjust the federal rates to account for differences in area wage levels, using a wage index that the Secretary determines appropriate. Since the inception of the SNF PPS, we have used hospital inpatient wage data in developing a wage index to be applied to SNFs. We proposed to continue this practice for FY 2018, as we continue to believe that in the absence of SNF-specific wage data, using the hospital inpatient wage index data is appropriate and reasonable for the SNF PPS. As explained in the update notice for FY 2005 (69 FR 45786), the SNF PPS does not use the hospital area wage index's occupational mix adjustment, as this adjustment serves specifically to define the occupational categories more clearly in a hospital setting; moreover, the collection of the occupational wage data also excludes any wage data related to SNFs. Therefore, we believe that using the updated wage data exclusive of the occupational mix adjustment continues to be appropriate for SNF payments. For FY 2018, the updated wage data are for hospital cost reporting periods beginning on or after October 1, 2013 and before October 1, 2014 (FY 2014 cost report data).
We note that section 315 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA, Pub. L. 106-554, enacted on December 21, 2000) authorized us to establish a geographic reclassification procedure that is specific to SNFs, but only after collecting the data necessary to establish a SNF wage index that is based on wage data from nursing homes. However, to date, this has proven to be unfeasible due to the volatility of existing SNF wage data and the significant amount of resources that would be required to improve the quality of that data. More specifically, we believe auditing all SNF cost reports, similar to the process used to audit inpatient hospital cost reports for purposes of the Inpatient Prospective Payment System (IPPS) wage index, would place a burden on providers in terms of responding to documented audit requests. We also believe that adopting such an approach would require a significant commitment of resources by CMS and the Medicare Administrative Contractors, potentially far in excess of those required under the IPPS given that there are nearly five times as many SNFs as there are hospitals. Therefore, while we continue to believe that the development of such an audit process could improve SNF cost reports in such a manner as to permit us to establish a SNF-specific wage index, we do not regard an undertaking of this magnitude as being feasible within the current level of programmatic resources.
In addition, we proposed to continue to use the same methodology discussed in the SNF PPS final rule for FY 2008 (72 FR 43423) to address those geographic areas in which there are no hospitals, and thus, no hospital wage index data on which to base the calculation of the FY 2018 SNF PPS wage index. For rural geographic areas that do not have hospitals and, therefore, lack hospital wage data on which to base an area wage adjustment, we stated in the proposed rule we would use the average wage index from all contiguous Core-Based Statistical Areas (CBSAs) as a reasonable proxy. For FY 2018, there are no rural geographic areas that do not have hospitals, and thus, we stated that this methodology would not be applied. For rural Puerto Rico, we stated that we would not apply this methodology due to the distinct economic circumstances that exist there (for example, due to the close proximity to one another of almost all of Puerto Rico's various urban and non-urban areas, this methodology would produce a wage index for rural Puerto Rico that is higher than that in half of its urban areas); instead, we stated we would continue to use the most recent wage index previously available for that area. For urban areas without specific hospital wage index data, we stated we would use the average wage indexes of all of the urban areas within the state to serve as a reasonable proxy for the wage index of that urban CBSA. For FY 2018, the only urban area without wage index data available is CBSA 25980, Hinesville-Fort Stewart, GA. The wage index applicable to FY 2018 is set forth in Tables A and B available on the CMS Web site at
In the SNF PPS final rule for FY 2006 (70 FR 45026, August 4, 2005), we adopted the changes discussed in the OMB Bulletin No. 03-04 (June 6, 2003), available online at
In adopting the CBSA geographic designations, we provided for a 1-year transition in FY 2006 with a blended wage index for all providers. For FY 2006, the wage index for each provider consisted of a blend of 50 percent of the FY 2006 MSA-based wage index and 50 percent of the FY 2006 CBSA-based wage index (both using FY 2002 hospital data). We referred to the blended wage index as the FY 2006 SNF PPS transition wage index. As discussed in the SNF PPS final rule for FY 2006 (70 FR 45041), since the expiration of this one-year transition on September 30, 2006, we have used the full CBSA-based wage index values.
In the FY 2015 SNF PPS final rule (79 FR 45644 through 45646), we finalized changes to the SNF PPS wage index based on the newest OMB delineations, as described in OMB Bulletin No. 13-01, beginning in FY 2015, including a 1-year transition with a blended wage index for FY 2015. OMB Bulletin No. 13-01 established revised delineations for Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas in the United States and Puerto Rico based on the 2010 Census, and provided guidance on the use of the delineations of these statistical areas using standards published on June 28, 2010 in the
Once calculated, we stated in the proposed rule we would apply the wage index adjustment to the labor-related portion of the federal rate. Each year, we calculate a revised labor-related share, based on the relative importance of labor-related cost categories (that is, those cost categories that are labor-intensive and vary with the local labor market) in the input price index. In the
We calculate the labor-related relative importance from the SNF market basket, and it approximates the labor-related portion of the total costs after taking into account historical and projected price changes between the base year and FY 2018. The price proxies that move the different cost categories in the market basket do not necessarily change at the same rate, and the relative importance captures these changes. Accordingly, the relative importance figure more closely reflects the cost share weights for FY 2018 than the base year weights from the SNF market basket. The methodology for calculating the labor-related portion for FY 2018 is discussed in section III.D.1. of this final rule and the labor-related share is provided in Table 15.
We invited public comments on these proposals. A discussion of the comments we received, along with our responses, appear below.
Further, we appreciate these commenters' suggestion that we modify the current hospital wage data used to construct the SNF PPS wage index to reflect the SNF environment more accurately by eliminating certain job categories specific to hospitals only. While we consider whether or not such an approach may constitute an interim step in the process of developing a SNF-specific wage index, we would note that other provider types also use the hospital wage index as the basis for their associated wage index. As such, we believe that such a recommendation should be part of a broader discussion of wage index reform across Medicare payment systems.
We note that section 315 of BIPA authorized us to establish a geographic reclassification procedure that is specific to SNFs, only after collecting the data necessary to establish a SNF-specific wage index that is based on data from nursing homes. However, to date this has been infeasible due to the volatility of existing SNF wage data and the significant amount of resources that would be required to improve the quality of that data. To the extent we are able to develop and implement a SNF-specific wage index in the future, we may consider at that time whether it would be appropriate to implement a reclassification system and an occupational mix adjustment, as suggested by commenters.
As it relates to the suggestion that we adopt a rural floor policy with a SNF-specific wage index, we do not believe it would be prudent to adopt such a policy under the SNF PPS. As we stated in the FY 2016 SNF PPS final rule (80 FR 46401), MedPAC has recommended eliminating the rural floor policy (which actually sets a floor for urban hospitals) from the calculation of the IPPS wage index (see, for example, Chapter 3 of MedPAC's March 2013 Report to Congress on Medicare Payment Policy, available at
Accordingly, after considering the comments received and for the reasons discussed previously in this section and in the FY 2018 SNF PPS proposed rule (82 FR 21022 through 21026), we are finalizing the FY 2018 wage index adjustment and related policies as proposed in the FY 2018 SNF PPS proposed rule. For FY 2018, the updated wage data are for hospital cost reporting periods beginning on or after October 1, 2013 and before October 1, 2014 (FY 2014 cost report data). As noted above, the wage index applicable to FY 2018 is set forth in Tables A and B available on the CMS Web site at
Section 1888(e)(4)(G)(ii) of the Act also requires that we apply this wage index in a manner that does not result in aggregate payments under the SNF PPS that are greater or less than would otherwise be made if the wage adjustment had not been made. For FY 2018 (federal rates effective October 1, 2017), we stated in the proposed rule that we would apply an adjustment to fulfill the budget neutrality requirement. We stated we would meet this requirement by multiplying each of the components of the unadjusted federal rates by a budget neutrality factor equal to the ratio of the weighted average wage adjustment factor for FY 2017 to the weighted average wage adjustment factor for FY 2018. For this calculation, we stated we would use the same FY 2016 claims utilization data for both the numerator and denominator of this ratio. We define the wage adjustment factor used in this calculation as the labor share of the rate component multiplied by the wage index plus the non-labor share of the rate component. We proposed a budget neutrality factor of 1.0003. We did not receive any comments regarding our proposed budget neutrality calculation. Thus, we are finalizing the budget neutrality methodology as proposed. The final budget neutrality factor for FY 2018 is 1.0013. We note that this is different from the budget neutrality factor provided in the FY 2018 SNF PPS proposed rule (82 FR 21026) due to an updated wage index file and updated claims file used to calculate the budget neutrality factor.
Using the hypothetical SNF XYZ, Table 8 shows the adjustments made to the federal per diem rates to compute the provider's actual per diem PPS payment for FY 2018. We derive the Labor and Non-labor columns from Table 6. The wage index used in this example is based on the FY 2018 SNF PPS wage index, which may be found in Table A available on the CMS Web site at
The establishment of the SNF PPS did not change Medicare's fundamental requirements for SNF coverage. However, because the case-mix classification is based, in part, on the beneficiary's need for skilled nursing care and therapy, we have attempted, where possible, to coordinate claims review procedures with the existing resident assessment process and case-mix classification system discussed in section III.B.3. of this final rule. This approach includes an administrative presumption that utilizes a beneficiary's initial classification in one of the upper 52 RUGs of the 66-group RUG-IV case-mix classification system to assist in making certain SNF level of care determinations.
In accordance with § 413.345, we include in each update of the federal payment rates in the
A beneficiary assigned to any of the lower 14 RUG-IV groups is not automatically classified as either meeting or not meeting the definition, but instead receives an individual level of care determination using the existing administrative criteria. This presumption recognizes the strong likelihood that beneficiaries assigned to one of the upper 52 RUG-IV groups during the immediate post-hospital period require a covered level of care, which would be less likely for those beneficiaries assigned to one of the lower 14 RUG-IV groups.
In the July 30, 1999 final rule (64 FR 41670), we indicated that we would announce any changes to the guidelines for Medicare level of care determinations related to modifications in the case-mix classification structure. In this final rule, we continue to designate the upper 52 RUG-IV groups for purposes of this administrative presumption, consisting of all groups encompassed by the following RUG-IV categories:
• Rehabilitation plus Extensive Services.
• Ultra High Rehabilitation.
• Very High Rehabilitation.
• High Rehabilitation.
• Medium Rehabilitation.
• Low Rehabilitation.
• Extensive Services.
• Special Care High.
• Special Care Low.
• Clinically Complex.
However, we note that this administrative presumption policy does not supersede the SNF's responsibility to ensure that its decisions relating to level of care are appropriate and timely, including a review to confirm that the services prompting the beneficiary's assignment to one of the upper 52 RUG-IV groups (which, in turn, serves to trigger the administrative presumption) are themselves medically necessary. As we explained in the FY 2000 SNF PPS final rule (64 FR 41667), the administrative presumption:
. . . is itself rebuttable in those individual cases in which the services actually received by the resident do not meet the basic statutory criterion of being reasonable and necessary to diagnose or treat a beneficiary's condition (according to section 1862(a)(1) of the Act). Accordingly, the presumption would not apply, for example, in those situations in which a resident's assignment to one of the upper . . . groups is itself based on the receipt of services that are subsequently determined to be not reasonable and necessary.
Moreover, we want to stress the importance of careful monitoring for changes in each patient's condition to determine the continuing need for Part A SNF benefits after the ARD of the 5-day assessment.
In connection with the administrative level of care presumption, in the FY 2018 SNF PPS proposed rule (82 FR 21027), we proposed to amend the existing regulations text at § 413.345 by removing the parenthetical phrase “(including the designation of those specific Resource Utilization Groups under the resident classification system that represent the required SNF level of care, as provided in § 409.30 of this chapter)” that currently appears in the second sentence of § 413.345. We stated in the proposed rule that the deletion of the current reference to publishing such material annually in the
Along with this proposed revision, we also proposed to make appropriate conforming revisions in other portions of the regulations text (82 FR 21027). Specifically, we proposed to remove from the introductory text of § 409.30, the parenthetical phrase “(in the annual publication of Federal prospective payment rates described in § 413.345 of this chapter)” for the same reasons we proposed to remove the parenthetical phrase from § 413.345, as discussed in the proposed rule and in this final rule above. In addition, we proposed to replace the phrase to “one of the Resource Utilization Groups that is designated” in § 409.30's introductory text with the phrase “one of the case-mix classifiers CMS designates” to conform more closely with the statutory language in section 1888(e)(4)(G) and (H) of the Act, which refers in more general terms to the “resident classification system” or “case mix classification system,” and to clarify that “CMS” makes these designations. Additionally, we proposed to revise § 409.30 to reflect more clearly our longstanding policy that the assignment of a designated case-mix classifier would serve to trigger the administrative presumption only when that assignment is itself correct. As we noted in the FY 2000 SNF PPS final rule (64 FR 41667, July 30, 1999), “. . . the presumption would not apply, for example, in those situations in which a resident's assignment to one of the upper . . . groups is itself based on the receipt of services that are subsequently determined to be not reasonable and necessary.” We also proposed to make similar conforming revisions in the “resident classification system” definition that currently appears in § 413.333 to replace “Resource Utilization Groups” with “resident classification system”, as well as in the material in § 424.20(a)(1)(ii) on SNF level of care certifications to replace the phrase “one of the Resource Utilization Groups designated” with “one of the case-mix classifiers that CMS designates,” in both cases to conform more closely with the statutory language in section 1888(e)(4)(G) and (H) of the Act, as discussed in the proposed rule (82 FR 21027) and in this final rule, which refers in more general terms to the “resident classification system” or “case mix classification system,” and to clarify in § 424.20(a)(1)(ii) that “CMS” designates these case-mix classifiers. Finally, regarding § 424.20, we proposed to revise paragraph (e)(2)(ii)(B)(
Commenters submitted the following comments on our proposals described above related to the SNF Level of Care—Administrative Presumption aspects of the SNF PPS. A discussion of these comments, along with our responses, appears below.
After consideration of the comments received, for the reasons discussed above and in the FY 2018 SNF PPS proposed rule (82 FR 21026 through 21027), we are finalizing, without modification, our proposed revisions to §§ 409.30, 413.333, 413.345, 424.20(a)(1)(ii) and (e)(2)(ii)(B)(
Sections 1842(b)(6)(E) and 1862(a)(18) of the Act (as added by section 4432(b) of the BBA) require a SNF to submit consolidated Medicare bills to its Medicare Administrative Contractor (MAC) for almost all of the services that its residents receive during the course of a covered Part A stay. In addition, section 1862(a)(18) of the Act places the responsibility with the SNF for billing Medicare for physical therapy, occupational therapy, and speech-language pathology services that the resident receives during a noncovered stay. Section 1888(e)(2)(A) of the Act excludes a small list of services from the consolidated billing provision (primarily those services furnished by physicians and certain other types of practitioners), which remain separately billable under Part B when furnished to a SNF's Part A resident. These excluded service categories are discussed in greater detail in section V.B.2. of the May 12, 1998 interim final rule (63 FR 26295 through 26297).
A detailed discussion of the legislative history of the consolidated billing provision is available on the SNF PPS Web site at
As explained in the FY 2001 proposed rule (65 FR 19232), the amendments enacted in section 103 of the BBRA not only identified for exclusion from this provision a number of particular service codes within four specified categories (that is, chemotherapy items, chemotherapy administration services, radioisotope services, and customized prosthetic devices), but also gave the Secretary the authority to designate additional, individual services for exclusion within each of the specified service categories. In the proposed rule
As we further explained in the final rule for FY 2001 (65 FR 46790), and as is consistent with our longstanding policy, any additional service codes that we might designate for exclusion under our discretionary authority must meet the same statutory criteria used in identifying the original codes excluded from consolidated billing under section 103(a) of the BBRA: They must fall within one of the four service categories specified in the BBRA; and they also must meet the same standards of high cost and low probability in the SNF setting, as discussed in the BBRA Conference report. Accordingly, we characterized this statutory authority to identify additional service codes for exclusion as essentially affording the flexibility to revise the list of excluded codes in response to changes of major significance that may occur over time (for example, the development of new medical technologies or other advances in the state of medical practice) (65 FR 46791). In the FY 2018 SNF PPS proposed rule (82 FR 21028), we specifically invited public comments identifying HCPCS codes in any of these four service categories (chemotherapy items, chemotherapy administration services, radioisotope services, and customized prosthetic devices) representing recent medical advances that might meet our criteria for exclusion from SNF consolidated billing. We stated that we may consider excluding a particular service if it meets our criteria for exclusion as specified above. We also requested that commenters identify in their comments the specific HCPCS code that is associated with the service in question, as well as their rationale for requesting that the identified HCPCS code(s) be excluded. We note that the original BBRA amendment (as well as the implementing regulations) identified a set of excluded services by means of specifying HCPCS codes that were in effect as of a particular date (in that case, as of July 1, 1999). Identifying the excluded services in this manner made it possible for us to utilize program issuances as the vehicle for accomplishing routine updates of the excluded codes, to reflect any minor revisions that might subsequently occur in the coding system itself (for example, the assignment of a different code number to the same service). Accordingly, we stated in the proposed rule that, in the event that we identify through the current rulemaking cycle any new services that would actually represent a substantive change in the scope of the exclusions from SNF consolidated billing, we would identify these additional excluded services by means of the HCPCS codes that are in effect as of a specific date (in this case, as of October 1, 2017). By making any new exclusions in this manner, we could similarly accomplish routine future updates of these additional codes through the issuance of program instructions.
In the proposed rule, we noted that one category of services which consolidated billing excludes under § 411.15(p)(3) consists of certain exceptionally intensive types of outpatient hospital services. As we explained in the FY 2000 SNF PPS final rule, this exclusion applies to “. . . those types of outpatient hospital services that
We did not receive any public comments on our proposed revisions to § 411.15(p)(3)(iii). Therefore, for the reasons discussed in this final rule and in the FY 2018 SNF PPS proposed rule, we are finalizing our revisions to § 411.15(p)(3)(iii) as proposed, without modification.
Commenters submitted the following comments related to the proposed rule's discussion of the consolidated billing aspects of the SNF PPS. A discussion of these comments, along with our responses, appears below.
Inclusions, rather than exclusions, are given in this one case, because of the great number of surgery procedures that are excluded and can only be safely performed in a hospital operating room setting. It is easier to automate edits around the much shorter list of inclusions under this category, representing
Further, we note that we have indeed continued to solicit recommendations periodically for additional exclusions within those specified service categories (such as chemotherapy services) for which the law authorizes us to do so, and we have, in fact, adopted those recommendations to the extent that the recommended services meet the applicable criteria for exclusion.
With regard to the administrative exclusion for high-intensity outpatient hospital services, we note that we not only addressed this issue in the FY 2004 final rule itself (68 FR 46061, August 4, 2003) but, as discussed below, we have revisited it repeatedly in subsequent rulemaking in response to the recurring public comments that we have received on the issue since that time. For example, the FY 2014 final rule (78 FR 47957 through 47958, August 6, 2013) cited the explanation in numerous previous rules (along with Medicare Learning Network (MLN) Matters article SE0432, available online at
Finally, the FY 2010 final rule (74 FR 40355, August 11, 2009), while acknowledging that advances in medical technology over time may make it feasible to perform such high-intensity outpatient services more widely in nonhospital settings, then went on to cite the FY 2006 final rule in noting that such a development “. . . would not argue in favor of excluding the nonhospital performance of the service from consolidated billing, . . . but rather, would call into question whether the service should continue to be excluded from consolidated billing at all, even when performed in the hospital setting” (70 FR 45049, August 4, 2005).
Section 1883 of the Act permits certain small, rural hospitals to enter into a Medicare swing-bed agreement, under which the hospital can use its beds to provide either acute- or SNF- level care, as needed. For critical access hospitals (CAHs), Part A pays on a reasonable cost basis for SNF-level services furnished under a swing-bed agreement. However, in accordance with section 1888(e)(7) of the Act, SNF-level services furnished by non-CAH rural hospitals are paid under the SNF PPS, effective with cost reporting periods beginning on or after July 1, 2002. As explained in the FY 2002 final rule (66 FR 39562), this effective date is consistent with the statutory provision to integrate swing-bed rural hospitals into the SNF PPS by the end of the transition period, June 30, 2002.
Accordingly, all non-CAH swing-bed rural hospitals have now come under the SNF PPS. Therefore, all rates and wage indexes outlined in earlier sections of this final rule for the SNF PPS also apply to all non-CAH swing-bed rural hospitals. A complete discussion of assessment schedules, the MDS, and the transmission software (RAVEN-SB for Swing Beds) appears in the FY 2002 final rule (66 FR 39562) and in the FY 2010 final rule (74 FR 40288). As finalized in the FY 2010 SNF PPS final rule (74 FR 40356 through 40357), effective October 1, 2010, non-CAH swing-bed rural hospitals are required to complete an MDS 3.0 swing-bed assessment which is limited to the required demographic, payment, and quality items. The latest changes in the MDS for swing-bed rural hospitals appear on the SNF PPS Web site at
Section 1888(e)(5)(A) of the Act requires the Secretary to establish a market basket index that reflects the changes over time in the prices of an appropriate mix of goods and services included in covered SNF services. Accordingly, we have developed a SNF market basket index that encompasses the most commonly used cost categories for SNF routine services, ancillary services, and capital-related expenses. We use the SNF market basket index, adjusted in the manner described in section III.B. of this rule, to update the SNF PPS per diem rates and to determine the labor-related share on an annual basis.
The SNF market basket is a fixed-weight, Laspeyres-type price index. A Laspeyres price index measures the change in price, over time, of the same mix of goods and services purchased in the base period. Any changes in the quantity or mix of goods and services (that is, intensity) purchased over time relative to a base period are not measured.
The index itself is constructed in three steps. First, a base period is selected (in the FY 2018 SNF PPS proposed rule (82 FR 21029), the proposed base period was 2014) and total base period expenditures are estimated for a set of mutually exclusive and exhaustive spending categories with the proportion of total costs that each category represents being calculated. These proportions are called cost or expenditure weights. Second, each expenditure category is matched to an appropriate price or wage variable, referred to as a price proxy. In nearly every instance, these price proxies are derived from publicly available statistical series that are published on a consistent schedule (preferably at least on a quarterly basis). Finally, the expenditure weight for each cost category is multiplied by the level of its respective price proxy. The sum of these products (that is, the expenditure weights multiplied by their price levels) for all cost categories yields the composite index level of the market basket in a given period. Repeating this step for other periods produces a series of market basket levels over time. Dividing an index level for a given period by an index level for an earlier period produces a rate of growth in the input price index over that timeframe.
Effective for cost reporting periods beginning on or after July 1, 1998, we revised and rebased our 1977 routine costs input price index and adopted a total expenses SNF input price index using FY 1992 as the base year. In the FY 2002 SNF PPS final rule (66 FR 39582), we rebased and revised the market basket to a base year of FY 1997. In the FY 2008 SNF PPS final rule (72 FR 43425), we rebased and revised the market basket to a base year of FY 2004. In the FY 2014 SNF PPS final rule (78 FR 47939), we last revised and rebased the SNF market basket, which included updating the base year from FY 2004 to FY 2010. For FY 2018, we proposed (82 FR 21029) to rebase the market basket to reflect 2014 Medicare-allowable total cost data (routine, ancillary, and capital-related) from freestanding SNFs and to revise applicable cost categories and price proxies used to determine the market basket. We proposed to maintain our policy of using data from freestanding SNFs, which represent 93 percent of the total SNFs shown in Table 26. We believe using freestanding MCR data, as opposed to the hospital-based SNF MCR data, for the proposed cost weight calculation is most appropriate because of the complexity of hospital-based data and the representativeness of the freestanding data. Hospital-based SNF expenses, are embedded in the hospital cost report. Any attempt to incorporate data from hospital-based facilities requires more complex calculations and assumptions regarding the ancillary costs related to the hospital-based SNF unit. We believe the use of freestanding SNF cost report
We proposed to use 2014 as the base year as we believe that the 2014 Medicare cost reports represented the most recent, complete set of Medicare cost report (MCR) data available to develop cost weights for SNFs at the time of rulemaking. The 2014 Medicare cost reports are for cost reporting periods beginning on and after October 1, 2013 and before October 1, 2014. While these dates appear to reflect fiscal year data, we note that a Medicare cost report that begins in this timeframe is generally classified as a “2014 cost report.” For example, we found that of the available 2014 Medicare cost reports for SNFs, approximately 7 percent had an October 1, 2013 begin date, approximately 70 percent of the reports had a January 1, 2014 begin date, and approximately 12 percent had a July 1, 2014 begin date. For this reason, and for the reasons explained below, we proposed to define the base year of the market basket as “2014-based” instead of “FY 2014-based”.
Specifically, we proposed to develop cost category weights for the 2014-based SNF market basket in two stages. First, we proposed to derive eight major expenditures or cost weights from the 2014 MCR data (CMS Form 2540-10) for freestanding SNFs: Wages and Salaries; Employee Benefits; Contract Labor; Pharmaceuticals; Professional Liability Insurance; Home Office Contract Labor; Capital-related; and a residual “All Other”. With the exception of the Home Office Contract Labor cost weight, these are the same cost categories calculated using the 2010 MCR data for the FY 2010-based SNF market basket. We provided a detailed discussion of our proposal to use the 2014 MCR data to determine the Home Office Contract Labor cost weight in section IV.A.1.a of the proposed rule and in section III.D.1.a of this final rule. The residual “All Other” category would reflect all remaining costs that are not captured in the other seven cost categories. Second, we proposed to divide the residual “All Other” cost category into subcategories using U.S. Department of Commerce Bureau of Economic Analysis' (BEA) 2007 Benchmark Input-Output (I-O) “use table before redefinitions, purchaser's value” for the Nursing and Community Care Facilities industry (NAICS 623A00) aged forward to 2014 using price changes. Furthermore, we proposed to continue to use the same overall methodology as was used for the FY 2010-based SNF market basket to develop the capital related cost weights of the 2014-based SNF market basket. We note that we are no longer referring to the market basket as a “FY 2014-based” market basket and instead refer to the market basket as simply “2014-based.” We proposed this change in naming convention for the market basket because the base year cost weight data for the proposed market basket do not reflect strictly fiscal year data. For example, the 2014-based SNF market basket uses Medicare cost report data and other government data that reflects fiscal year 2014, calendar year 2014, and state fiscal year 2014 expenses to determine the base year cost weights. Given that it is based on a mix of classifications of 2014 data, we proposed to refer to the market basket simply as “2014-based” as opposed to a “FY 2014-based” or “CY 2014-based”.
We refer readers to the FY 2018 SNF PPS proposed rule (82 FR 21029 through 21041) for a complete discussion of our proposals and associated rationale related to revising and rebasing the SNF market basket. We received a number of comments on the proposed revising and rebasing of the SNF market basket. A discussion of these comments, with our responses, appears throughout this section.
In regards to the use of a fixed-weight index approach, we have found that healthcare provider cost share weights do not change substantially on an annual basis and, therefore, the use of a Laspeyres index formula, with base year weights updated on a regular basis (such as every few years), is technically appropriate for the CMS market baskets. In a 2008 paper,
To create a market basket that is representative of freestanding SNF providers serving Medicare patients and to help ensure accurate major cost weights (which is the percent of total Medicare allowable costs, as defined below), we proposed to apply edits to remove reporting errors and outliers. Specifically, the SNF Medicare cost
Additionally, for each of the major cost weights, except the Home Office Contract Labor cost weight (Wages and Salaries, Employee Benefits, Contract Labor, Pharmaceuticals, Professional Liability Insurance, and Capital-related Expenses) the data were trimmed to remove outliers (a standard statistical process) by: (1) Requiring that major expenses (such as Wages and Salaries costs) and total Medicare-allowable costs are greater than zero; and (2) excluding the top and bottom five percent of the major cost weight (for example, Wages and Salaries costs as a percent of total Medicare-allowable costs).
We note that in the FY 2018 SNF PPS proposed rule, we mistakenly referenced that we used the same trimming methodology for the Home Office Contract Labor cost weight that we used for the other major cost weights (a top and bottom five percent trimming methodology).
For the Home Office Contract Labor cost weight, we applied a one percent top-only trimming methodology. This allowed all providers' Medicare-allowable costs to be included, even if their home office contract labor costs were zero. We believe, as the Medicare cost report data (Worksheet S2 line 45) indicate, that not all SNF providers have a Home Office. Providers without a Home Office can incur these expenses directly by having their own staff, for which the costs would be included in the Wages and Salaries and Benefits cost weights. Alternatively, providers without a Home Office could also purchase related services from external contractors for which these expenses would be captured in the residual “All-Other” cost weight. We believe this one percent top-only trimming methodology is appropriate as it addresses outliers while allowing providers with zero Home Office Contract Labor costs to be included in the Home Office Contract Labor cost weight calculation. If we applied both top and bottom five percent trimming methodology we would exclude providers who have zero Home Office Contract Labor costs.
The major cost weight trimming process is done for each cost weight individually and, therefore, providers excluded from one cost weight calculation are not automatically excluded from other cost weight calculations. These were the same types of edits utilized for the FY 2010-based SNF market basket (with the exception of the Home Office Contract Labor cost weight which was not broken out using Medicare Cost Reports for the FY 2010 based SNF market basket), as well as other PPS market baskets (including but not limited to IPPS market basket and HHA market basket). We believe this trimming process improves the accuracy of the data used to compute the major cost weights by removing possible data misreporting.
Finally, the final weights of the proposed 2014-based SNF market basket were based on weighted means. For example, the final Wages and Salaries cost weight after trimming is equal to the sum of total Medicare-allowable wages and salaries divided by the sum of total Medicare-allowable costs. This methodology is consistent with the methodology used to calculate the FY 2010-based SNF market basket cost weights and other PPS market basket cost weights.
As stated above, the major cost weights of the 2014-based SNF market basket were derived from 2014 MCR data that is reported on CMS Form 2540-10, effective for freestanding SNFs with a cost reporting period beginning on or after December 1, 2010. The major cost weights for the FY 2010-based SNF market basket were derived from the 2010 MCR data that is reported on CMS Form 2540-96. CMS Form 2540-96 was effective for freestanding SNFs with cost reporting periods beginning on and after October 1, 1997. The OMB control number for both Form 2549-10 and Form 2540-96 is 0938-0463.
For all of the cost weights, we proposed to use Medicare allowable-total costs as the denominator (that is, Wages and Salaries cost weight = Wages and Salaries costs divided by Medicare-allowable total costs). Medicare-allowable total costs were proposed to be equal to total costs (after overhead allocation) from Worksheet B part 1, column 18, for lines 30, 40 through 49, 51, 52, and 71 plus Medicaid drug costs as defined below. We also proposed to include estimated Medicaid drug costs in the pharmacy cost weight, as well as the denominator for total Medicare-allowable costs. This is the same methodology used for the FY 2010-based SNF market basket and the FY 2004-based SNF market basket. The inclusion of Medicaid drug costs was finalized in the FY 2008 SNF PPS final rule (72 FR 43425 through 43430), and for the same reasons set forth in that final rule, we proposed to continue to use this methodology in the 2014-based SNF market basket.
We proposed that for the 2014-based SNF market basket we obtain costs for one new major cost category from the Medicare cost reports that was not used in the FY 2010-based SNF market basket—Home Office Contract Labor Costs.
We described the detailed methodology for obtaining costs for each of the eight major cost categories in section V.A.1.a. of the FY 2018 SNF PPS proposed rule (82 FR 21030) and below in section III.D.1.a. of this rule. The methodology used is similar to the methodology used in the FY 2010-based SNF market basket, as described in the FY 2014 SNF PPS final rule (78 FR 47940 through 47942).
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Overhead wages and salaries are attributable to the entire SNF facility; therefore, we proposed to include only the proportion attributable to the Medicare-allowable cost centers. We proposed to estimate the proportion of overhead wages and salaries that is attributable to the non-Medicare-allowable costs centers (that is, excluded areas) by multiplying the ratio of excluded area wages and salaries (as defined above) to total wages and salaries as reported on Worksheet S-3, part II, column 3, line 1 by total overhead wages and salaries as reported on Worksheet S3, Part III, column 3, line 14. We used a similar methodology to derive wages and salaries costs in the FY 2010-based SNF market basket.
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Second, similar to the FY 2010-based SNF market basket, we proposed to continue to adjust the drug expenses reported on the MCR to include an estimate of total Medicaid drug costs, which are not represented in the Medicare-allowable drug cost weight. Similar to the FY 2010-based SNF market basket, we estimated Medicaid drug costs based on data representing dual-eligible Medicaid beneficiaries. Medicaid drug costs were estimated by multiplying Medicaid dual-eligible drug costs per day times the number of Medicaid days as reported in the Medicare-allowable skilled nursing cost center (Worksheet S3, part I, column 5, line 1) in the SNF MCR. Medicaid dual-eligible drug costs per day (where the day represents an unduplicated drug supply day) were estimated using a sample of 2014 Part D claims for those dual-eligible beneficiaries who had a Medicare SNF stay during the year. Medicaid dual-eligible beneficiaries would receive their drugs through the Medicare Part D benefit, which would work directly with the pharmacy and, therefore, these costs would not be represented in the Medicare SNF MCRs. A random twenty percent sample of Medicare Part D claims data yielded a Medicaid drug cost per day of $19.62. We note that the FY 2010-based SNF market basket also relied on data from the Part D claims, which yielded a dual-eligible Medicaid drug cost per day of $17.39 for 2010.
Provided below are summaries of the comments we received related to the Pharmaceuticals cost category, as well as our responses.
Several commenters also had specific concerns regarding the methodology utilized to determine the Pharmaceuticals cost weight. The commenters stated that the vast majority of SNFs did not report costs on the cost report line for the “Pharmacy” department. They stated that only a small number of SNFs have in-house Pharmacies and that those SNFs were used as a proxy for the pharmaceutical costs for all SNFs; one commenter requested an alternative method.
Several commenters were also concerned by the addition of estimated Part D medication costs to the “Drugs Charged to Patients” data reported on Row 49 of the cost report. The commenter questioned why this type of “gross up” was not, as far as they could tell, applied to any of the other ancillary cost centers.
As stated above and in the FY 2018 SNF PPS proposed rule (82 FR 21030 through 21031), we proposed to calculate pharmaceutical costs using the non-salary costs reported in the Pharmacy cost center (Worksheet B, part I, column 0, line 11 less Worksheet A, column 1, line 11) and the Drugs Charged to Patients' cost center (Worksheet B, part I, column 0, line 49 less Worksheet A, column 1, line 49), hereafter referred to as total MCR drug costs. Since these drug costs were attributable to the entire SNF and not limited to Medicare-allowable services, we proposed to adjust the drug costs by the ratio of Medicare-allowable pharmacy total costs (Worksheet B, part I, column 11, for lines 30, 40 through 49, 51, 52, and 71) to total pharmacy
We understand the commenter's concern regarding the adjustment to the total MCR drug costs using the Pharmacy cost center as only 20 percent of providers reported Pharmacy cost center expenses. We are clarifying that the adjustment was only applied to those 20 percent of providers who reported Pharmacy costs. We assumed that all of the drug costs were Medicare-allowable for the remaining 80 percent of providers. We added a clarifying sentence in the Pharmacy cost weight calculation of this final rule. Applying this adjustment had only a marginal impact on the drug cost weight (lowering it by only 0.1 percentage point). As a sensitivity, we also derived an alternative by using the ratio of Skilled Nursing Facility days (as reported on Worksheet S3, part 1, column 7 line 1) to Total Facility days. This would result in a Pharmaceuticals cost weight of 7.1 percent compared to the 2014-based cost weight of 7.3 percent.
As stated in the proposed rule (82 FR 21031), the 2014-based SNF market basket included an adjustment to the drug expenses reported on the MCR to include an estimate of total Medicaid drug costs, which are not represented in the Medicare-allowable drug cost weight. As stated above, the 2014-based SNF market basket reflects total Medicare allowable costs (that is, total costs for all payers for those services reimbursable under the SNF PPS). For the FY 2006-based SNF market basket (72 FR 43426), commenters noted that the total pharmaceutical costs reported on the MCR did not include pharmaceutical costs for dual-eligible Medicaid patients as these were directly reimbursed by Medicaid. Since all of the other cost category weights reflect Medicaid patients (including the compensation costs for dispersing these drugs), we made an adjustment to include these drug expenses. The pharmaceutical cost weight using only 2014 MCR data without any adjustments is 3.0 percent, compared to the proposed Pharmaceuticals cost weight (including the adjustment for Medicaid dual-eligible drug costs) of 7.3 percent.
For the 2014-based SNF market basket, as stated in the FY 2018 SNF PPS proposed rule (82 FR 21031), we estimated Medicaid drug costs by multiplying Medicaid dual-eligible drug costs per day times the number of Medicaid days as reported in the Medicare-allowable skilled nursing facility cost center (Worksheet S3, part I, column 5, line 1) on the SNF MCR. The Medicaid dual-eligible drug costs per day (where the day represents an unduplicated drug supply day) were estimated using a random 20 percent sample of 2014 Part D claims for those dual-eligible beneficiaries who had a Medicare SNF stay during the year. We believe this sample is a reasonable proxy for total drug costs per day for Medicaid patients residing in a skilled nursing unit under a Medicaid stay. Our analysis of the Part D claims data shows that dual-eligible beneficiaries have higher drug costs per day than “non-duals” and that dual-eligible beneficiaries who have had a SNF Part A stay during the year have higher drug costs per day ($19.62) compared to those dual-eligible beneficiaries with no SNF Part A stay during the year ($14.82).
The total drug costs per unduplicated day represented all drug costs incurred during the 2014 calendar year for those dual-eligible beneficiaries with a SNF Medicare stay during that 2014 calendar year. Therefore, they include drug costs incurred during the Medicaid SNF stay occurring in the 2014 calendar year. The total drug costs from the Part D claims includes the drug ingredient cost, the dispensing fee, vaccine administration fee and sales tax. We used a 20 percent sample of Part D claims (approximately 287 million claims) where claims were randomly selected based on the beneficiary ID number.
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Provided below are summaries of the comments we received related to the Professional Liability Insurance cost category, as well as our responses.
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Provided below are summaries of the general comments we received related to the major cost category weights, as well as our responses.
In regards to the commenter's request for information on the treatment of missing data in the cost report fields, CMS receives Medicare cost report data via the Electronic Cost Reporting file from the Medicare Administrative Contractor. These files do not have missing values for numeric fields; therefore, fields are zero or greater. The
We recognize the commenter's concern of providers' reporting zero Professional Liability and Pharmaceutical costs. As stated, in the FY 2018 SNF PPS proposed rule (82 FR 21030), for each of the major cost weights, except for Home Office Contract Labor as discussed above, (that is (Wages and Salaries, Employee Benefits, Contract Labor, Pharmaceuticals, Professional Liability Insurance, Home Office Contract Labor, and Capital-related Expenses) the data were trimmed to remove outliers (a standard statistical process) by first requiring that major expenses and total Medicare-allowable costs are greater than zero. For these major cost weights (Wages and Salaries, Employee Benefits, Contract Labor, Professional Liability, Capital and Pharmaceuticals), we believe that providers should incur these expenses to provide SNF services to beneficiaries. Therefore, cost reports with zero costs for major expenses (except Home Office Contract Labor costs) were excluded from the market basket cost weight calculation before trimming the top and bottom five percent. We note, as stated in the proposed rule, the trimming method is done for each cost weight individually and, therefore, providers excluded from one cost weight calculation are not automatically excluded from other cost weight calculations. This methodology allows us to use the largest possible sample of providers that report expenses for any given category.
However, as discussed earlier, we do not believe, as the Medicare cost report data (Worksheet S2, line 45) indicates, that all SNF providers will have a Home Office and then will also “purchase” services from their home office. Rather, providers can incur these expenses directly by having their own staff, for which the costs would be included in the Wages and Salaries and Benefits cost weights, or be purchased from contractors that are not directly affiliated with SNF, for which these expenses would be captured in the residual “All-Other” cost weight. Therefore, as discussed above, for the Home Office Contract Labor cost weight, we instead applied a one percent top trimming methodology but allowed all providers' Medicare-allowable costs to be included, even if their home office contract labor costs were zero.
Also, we included all data for subcategories of the major cost weights, except Home Office Contract Labor costs, (such as excluded area salaries component of the Wages and Salaries costs) even if they are zero as we believe it is reasonable for some of these specific costs to not be applicable to some providers. We must rely on the data that are submitted by providers and always encourage providers to fill out the cost report forms using the most accurate and complete data available to them.
As stated above, in the FY 2018 SNF PPS proposed rule, we mistakenly indicated that we used the same trimming methodology for the Home Office Contract Labor cost weight that we used for the other major cost weights (a top and bottom five percent trimming method). For the Home Office Contract Labor cost weight we applied a one percent top-only trimming methodology. This trimming methodology allowed all providers' Medicare-allowable costs to be included, even if their home office contract labor costs were zero. We believe this one percent trimming methodology is appropriate for the Home Office Contract Labor cost weight as it addresses outliers while allowing providers with zero Home Office Contract Labor costs to be included in the Home Office Contract Labor cost weight calculation. Applying a five percent top and bottom trimming methodology would exclude providers who have zero Home Office Contract Labor costs.
After consideration of the public comments we received, for the reasons discussed above and in the FY 2018 SNF PPS proposed rule, we are finalizing the major cost weights as proposed, without modification. Table 9 below shows the major cost categories and their respective cost weights as derived from the Medicare cost reports for this final rule.
The Wages and Salaries and Employee Benefits cost weights as calculated directly from the Medicare cost reports decreased by 1.8 and 1.2 percentage points, respectively, while the Contract Labor cost weight increased 1.3 percentage points between the FY 2010-based SNF market basket and 2014-based SNF market basket. The decrease in the Wages and Salaries occurred among most cost centers and in aggregate for the General Service (overhead) and Inpatient Routine Service cost centers, which together account for about 80 percent of total facility costs.
As we did for the FY 2010-based SNF market basket (78 FR 26452), we proposed to allocate contract labor costs to the Wages and Salaries and Employee Benefits cost weights based on their relative proportions under the assumption that contract labor costs are comprised of both wages and salaries and employee benefits. The contract labor allocation proportion for wages and salaries is equal to the Wages and Salaries cost weight as a percent of the sum of the Wages and Salaries cost weight and the Employee Benefits cost weight. Using the 2014 Medicare cost report data, this percentage is 83 percent; therefore, we proposed to allocate approximately 83 percent of the Contract Labor cost weight to the Wages and Salaries cost weight and 17 percent to the Employee Benefits cost weight. For the FY 2010-based SNF market basket, the wages and salaries to employee benefit ratio was 81/19 percent.
We did not receive public comments on our proposed allocation of contract labor costs to Wages and Salaries and Employee Benefits. For the reasons discussed above and in the FY 2018 SNF PPS proposed rule, we are finalizing the allocation methodology and percentages as proposed, without modification. Table 10 below shows the Wages and Salaries and Employee Benefits cost weights after contract labor allocation for the FY 2010-based SNF market basket and the 2014-based SNF market basket.
To further divide the “All Other” residual cost weight estimated from the 2014 Medicare cost report data into more detailed cost categories, we proposed to use the 2007 BenchmarkI-O “Use Tables/Before Redefinitions/Purchaser Value” for Nursing and Community Care Facilities industry (NAICS 623A00), published by the Census Bureau's Bureau of Economic Analysis (BEA). These data are publicly available at the following Web site:
Using this methodology, we proposed to derive 21 detailed SNF market basket operating cost category weights from the proposed 2014-based SNF market basket “All Other” residual cost weight (22.6 percent). These categories are: (1) Fuel: Oil and Gas; (2) Electricity; (3) Water and Sewerage; (4) Food: Direct Purchases; (5) Food: Contract Services; (6) Chemicals; (7) Medical Instruments and Supplies; (8) Rubber and Plastics; (9) Paper and Printing Products; (10) Apparel; (11) Machinery and Equipment; (12) Miscellaneous Products; (13) Professional Fees: Labor-Related; (14) Administrative and Facilities Support Services; (15) Installation, Maintenance, and Repair Services; (16) All Other: Labor-Related Services; (17) Professional Fees: Nonlabor-Related; (18) Financial Services; (19) Telephone Services; (20) Postage; and (21) All Other: Nonlabor-Related Services.
We note that the machinery and equipment expenses are for equipment that is paid for in a given year and not depreciated over the asset's useful life. Depreciation expenses for movable equipment are reflected in the capital component of the proposed 2014-based SNF market basket (described in section V.A.1.c. of the proposed rule (82 FR 21032) and section III.D.1.c. of this final rule).
We would also note that for ease of reference we proposed to rename the Nonmedical Professional Fees: Labor-Related and Nonmedical Professional Fees: Nonlabor-related cost categories (as labeled in the FY 2010-based SNF market basket) to be Professional Fees: Labor-Related and Professional Fees: Nonlabor-Related in the 2014-based SNF market basket. These cost categories still represent the same nonmedical professional fees that were included in the FY 2010-based SNF
For the 2014-based SNF market basket, we proposed to include a separate cost category for Installation, Maintenance, and Repair Services to proxy these costs by a price index that better reflects the price changes of labor associated with maintenance-related services. Previously these costs were included in the All Other: Labor-Related Services category of the FY 2010-based SNF market basket.
Provided below are summaries of the comments we received regarding the derivation of the detailed operating cost weights, as well as our responses.
Thus, our methodology does in fact reflect changes in expenses from 2007 to 2014, but is based on the assumption that the change in quantities over this period is equal to the change in prices. We believe this is a reasonable assumption as it is consistent with historical data which shows the cost shares changing over time. We believe this is a better methodology for developing the market basket rather than keeping the shares fixed between 2007 and 2014 or proxying the “All Other” residual by an aggregate index such as the CPI All-Items, which would not reflect the unique cost structures of SNFs.
It is not until late 2018, when BEA is expected to release 2012 BenchmarkI-O data, that we will be able to determine whether the growth in quantities for these specific costs grew similarly to prices over this period, as we currently assume in the market basket. We will evaluate these data and consider its inclusion for the development of the SNF market basket in the future.
After consideration of the public comments we received, for the reasons discussed above and in the FY 2018 SNF PPS proposed rule, we are finalizing the detailed operating cost weights and methodology for deriving such weights as proposed, without modification.
Similar to the FY 2010-based SNF market basket, we proposed to further divide the Capital-related cost weight into: Depreciation, Interest, Lease and Other Capital-related cost weights.
We proposed to calculate the depreciation cost weight (that is, depreciation costs excluding leasing costs) using depreciation costs from Worksheet S-2, column 1, lines 20 and 21. Since the depreciation costs reflect the entire SNF facility (Medicare and non-Medicare-allowable units), we proposed to use total facility capital costs as the denominator. This methodology assumes that the depreciation of an asset is the same regardless of whether the asset was used for Medicare or non-Medicare patients. This methodology yielded depreciation as a percent of capital costs of 27.3 percent for 2014. We then applied this percentage to the proposed 2014-based SNF market basket Medicare-allowable Capital-related cost weight of 7.9 percent, yielding a Medicare-allowable depreciation cost weight (excluding leasing expenses, which is described in more detail below) of 2.2 percent. To further disaggregate the Medicare-allowable depreciation cost weight into fixed and moveable depreciation, we proposed to use the 2014 SNF MCR data for end-of-the-year capital asset balances as reported on Worksheet A7. The 2014 SNF MCR data showed a fixed/moveable split of 83/17. The FY 2010-based SNF market basket, which utilized the same data from the FY 2010 MCRs, had a fixed/moveable split of85/15.
We also proposed to derive the interest expense share of capital-related expenses from 2014 SNF MCR data, specifically from Worksheet A, column 2, line 81. Similar to the depreciation cost weight, we proposed to calculate the interest cost weight using total facility capital costs. This methodology yielded interest as a percent of capital costs of 27.4 percent for 2014. We then applied this percentage to the proposed 2014-based SNF market basket Medicare-allowable Capital-related cost weight of 7.9 percent, yielding a Medicare-allowable interest cost weight (excluding leasing expenses) of 2.2 percent. As done with the last SNF market basket rebasing (78 FR 26454), we proposed to determine the split of interest expense between for-profit and not-for-profit facilities based on the distribution of long-term debt outstanding by type of SNF (for-profit or not-for-profit/government) from the 2014 SNF MCR data. We estimated the split between for-profit and not-for-profit interest expense to be 27/73 percent compared to the FY 2010-based SNF market basket with 41/59 percent.
Because the detailed data were not available in the MCRs, we proposed to use the most recent 2014 Census Bureau Service Annual Survey (SAS) data to derive the capital-related expenses attributable to leasing and other capital-related expenses. The FY 2010-based SNF market basket used the 2010 SAS data. Based on the 2014 SAS data, we determined that leasing expenses are 63 percent of total leasing and capital-related expenses costs. In the FY 2010-based SNF market basket, leasing costs represent 62 percent of total leasing and capital-related expenses costs. We then applied this percentage to the proposed 2014-based SNF market basket residual Medicare-allowable capital costs of 3.6 percent derived from subtracting the Medicare-allowable depreciation cost weight and Medicare-allowable interest cost weight from the 2014-based SNF market basket of total Medicare-allowable capital cost weight (7.9 percent − 2.2 percent − 2.2 percent = 3.6 percent). This produced the proposed 2014-based SNF Medicare-allowable leasing cost weight of 2.3 percent and all-other capital-related cost weight of 1.3 percent.
Lease expenses are not broken out as a separate cost category in the SNF market basket, but are distributed among the cost categories of depreciation, interest, and other capital-related expenses, reflecting the assumption that the underlying cost structure and price movement of leasing expenses is similar to capital costs in general. As was done with past SNF market baskets and other PPS market baskets, we assumed 10 percent of lease expenses are overhead and proposed to assign them to the other capital-related expenses cost category. This is based on the assumption that leasing expenses
We did not receive any public comments on our proposed methodology for deriving the detailed capital cost weights. Therefore, for the reasons discussed above and in the FY 2018 SNF PPS proposed rule, we are finalizing the detailed capital cost weights and methodology as proposed, without modification.
Table 11 shows the capital-related expense distribution (including expenses from leases) in the final 2014-based SNF market basket and the FY 2010-based SNF market basket.
Table 12 presents the final 2014-based SNF market basket and the FY 2010-based SNF market basket.
After developing the 30 cost weights for the 2014-based SNF market basket, we selected the most appropriate wage and price proxies currently available to represent the rate of change for each expenditure category. With four exceptions (three for the capital-related expenses cost categories and one for Professional Liability Insurance (PLI)), we base the wage and price proxies on Bureau of Labor Statistics (BLS) data, and group them into one of the following BLS categories:
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We evaluated the price proxies using the criteria of reliability, timeliness, availability, and relevance. Reliability indicates that the index is based on valid statistical methods and has low sampling variability. Widely accepted statistical methods ensure that the data were collected and aggregated in a way that can be replicated. Low sampling variability is desirable because it indicates that the sample reflects the typical members of the population. (Sampling variability is variation that occurs by chance because only a sample was surveyed rather than the entire population.) Timeliness implies that the proxy is published regularly, preferably at least once a quarter. The market baskets are updated quarterly, and therefore, it is important for the underlying price proxies to be up-to-date, reflecting the most recent data available. We believe that using proxies that are published regularly (at least quarterly, whenever possible) helps to ensure that we are using the most recent data available to update the market basket. We strive to use publications that are disseminated frequently, because we believe that this is an optimal way to stay abreast of the most current data available. Availability means that the proxy is publicly available. We prefer that our proxies are publicly available because this will help ensure that our market basket updates are as transparent to the public as possible. In addition, this enables the public to be able to obtain the price proxy data on a regular basis. Finally, relevance means that the proxy is applicable and representative of the cost category weight to which it is applied. The CPIs, PPIs, and ECIs that we have selected to propose in this regulation meet these criteria. Therefore, we believe that they continue to be the best measure of price changes for the cost categories to which they would be applied.
Table 15 in the proposed rule (82 FR 21039) lists all price proxies for the 2014-based SNF market basket. Below is a detailed explanation of the proposed price proxies used for each operating cost category.
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Using the 2007 Benchmark I-O data, we found that these three NAICS industries accounted for approximately 96 percent of SNF chemical expenses. The remaining four percent of SNF chemical expenses are for three other incidental NAICS chemicals industries such as Paint and Coating Manufacturing. We proposed to create a blended index based on those three NAICS chemical expenses listed above that account for 96 percent of SNF chemical expenses. We proposed to create this blend based on each NAICS' expenses as a share of their sum. These expenses as a share of their sum are listed in Table 34.
The FY 2010-based SNF market basket also used a blended chemical proxy that was based on 2002 Benchmark I-O data. We believe our proposed chemical blended index for the 2014-based SNF market basket is technically appropriate as it reflects more recent data on SNFs purchasing patterns. Table 13 in the proposed rule (82 FR 21035) provided the weights for the 2014-based blended chemical index and the FY 2010-based blended chemical index. The table is also shown below.
As discussed below, we are finalizing the weights for the 2014-based blended chemical index as proposed, without modification.
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The FY 2010-based SNF market basket used the single, higher level PPI Commodity for Medical, Surgical, and Personal Aid Devices (BLS series code WPU156). We believe that the proposed price proxy better reflects the mix of expenses for this cost category as obtained from the 2007 Benchmark I-O data.
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We did not receive any public comments on our proposed price proxies for each of the operating cost categories. For the reasons discussed above and in the FY 2018 SNF PPS proposed rule, we are finalizing the price proxies of the operating cost categories as proposed, without modification. In addition, we did not receive any public comments on our proposed weights for the 2014-based blended chemical index. Thus, for the reasons discussed above and in the FY 2018 SNF PPS proposed rule, we are finalizing the weights for 2014-based blended chemical index as proposed, without modification.
We proposed to apply the same price proxies as were used in the FY 2010-based SNF market basket, and below is a detailed explanation of the price proxies used for each capital cost category. We also proposed to continue to vintage weight the capital price proxies for Depreciation and Interest to capture the long-term consumption of capital. This vintage weighting method is the same method that was used for the FY 2010-based SNF market basket and is described below.
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We believe that these price proxies continue to be the most appropriate proxies for SNF capital costs that meet our selection criteria of relevance, timeliness, availability, and reliability.
As stated above, we proposed to continue to vintage weight the capital price proxies for Depreciation and Interest to capture the long-term consumption of capital. To capture the long-term nature, the price proxies are vintage-weighted; and the vintage weights are calculated using a two-step process. First, we determined the expected useful life of capital and debt instruments held by SNFs. Second, we identified the proportion of expenditures within a cost category that is attributable to each individual year over the useful life of the relevant capital assets, or the vintage weights.
We proposed to rely on Bureau of Economic Analysis (BEA) fixed asset data to derive the useful lives of both fixed and movable capital, which is the same data source used to derive the useful lives for the FY 2010-based SNF market basket. The specifics of the data sources used are explained below.
Estimates of useful lives for movable and fixed assets for the 2014-based SNF market basket are 10 and 23 years, respectively. These estimates are based on three data sources from the BEA: (1) Current-cost average age; (2) historical-cost average age; and (3) industry-specific current cost net stocks of assets.
BEA current-cost and historical-cost average age data by asset type are not available by industry but are published at the aggregate level for all industries. The BEA does publish current-cost net capital stocks at the detailed asset level for specific industries. There are 61 detailed movable assets (including intellectual property) and there are 32 detailed fixed assets in the BEA estimates. Since we seek aggregate useful life estimates applicable to SNFs, we developed a methodology to approximate movable and fixed asset ages for nursing and residential care services (NAICS 623) using the published BEA data. For the proposed FY 2014 SNF market basket, we used the current-cost average age for each asset type from the BEA fixed assets Table 2.9 for all assets and weight them using current-cost net stock levels for each of these asset types in the nursing and residential care services industry, NAICS 6230. (For example, nonelectro medical equipment current-cost net stock (accounting for about 37 percent of total moveable equipment current-cost net stock in 2014) is multiplied by an average age of 4.7 years. Current-cost net stock levels are available for download from the BEA Web site at
This produced historical cost average age data for movable (equipment and intellectual property) and fixed (structures) assets specific to NAICS 6230 of 4.8 and 11.6 years, respectively. The average age reflects the average age of an asset at a given point in time, whereas we want to estimate a useful life of the asset, which would reflect the average over all periods an asset is used. To do this, we multiplied each of the average age estimates by two to convert to average useful lives with the assumption that the average age is normally distributed (about half of the assets are below the average at a given point in time, and half above the average at a given point in time). This produced estimates of likely useful lives of 9.6 and 23.2 years for movable and fixed assets, which we rounded to 10 and 23 years, respectively. We proposed an interest vintage weight time span of 21 years, obtained by weighting the fixed and movable vintage weights (23 years and 10 years, respectively) by the fixed and movable split (87 percent and 13 percent, respectively). This is the same methodology used for the FY 2010-based SNF market basket which had useful lives of 22 years and 6 years for fixed and moveable assets, respectively. The impact of revising the useful life for moveable assets from 6 years to 10 years had little to no impact on the growth rate of the 2014-based SNF market basket capital cost weight. Over the 2014 to 2026 time period, the impact on the growth rate of the capital cost weight was no larger than 0.01 percent in absolute terms.
Given the expected useful life of capital (fixed and moveable assets) and debt instruments, we then must determine the proportion of capital expenditures attributable to each year of the expected useful life for each of the three asset types: Building and fixed equipment, moveable equipment, and interest. These proportions represent the vintage weights. We were not able to find a historical time series of capital expenditures by SNFs. Therefore, we proposed to approximate the capital expenditure patterns of SNFs over time, using alternative SNF data sources. For building and fixed equipment, we used the stock of beds in nursing homes from the National Nursing Home Survey (NNHS) conducted by the National Center for Health Statistics (NCHS) for 1962 through 1999. For 2000 through 2010, we extrapolated the 1999 bed data forward using a 5-year moving average of growth in the number of beds from the SNF MCR data. For 2011 to 2014, we proposed to extrapolate the 2010 bed data forward using the average growth in the number of beds over the 2011 to 2014 time period. We then used the change in the stock of beds each year to approximate building and fixed equipment purchases for that year. This procedure assumes that bed growth reflects the growth in capital-related costs in SNFs for building and fixed equipment. We believe that this assumption is reasonable because the number of beds reflects the size of a SNF, and as a SNF adds beds, it also likely adds fixed capital.
As was done for the FY 2010-based SNF market basket (as well as prior market baskets), we proposed to estimate moveable equipment purchases based on the ratio of ancillary costs to routine costs. The time series of the ratio of ancillary costs to routine costs for SNFs measures changes in intensity in SNF services, which are assumed to be associated with movable equipment purchase patterns. The assumption here is that as ancillary costs increase compared to routine costs, the SNF caseload becomes more complex and would require more movable equipment. The lack of movable equipment purchase data for SNFs over time required us to use alternative SNF data sources. A more detailed discussion of this methodology was published in the FY 2008 SNF final rule (72 FR 43428). We believe the resulting two time series, determined from beds and the ratio of ancillary to routine costs, reflect real capital purchases of building and fixed equipment and movable equipment over time.
To obtain nominal purchases, which are used to determine the vintage weights for interest, we converted the two real capital purchase series from 1963 through 2014 determined above to nominal capital purchase series using their respective price proxies (the BEA Chained Price Index for Nonresidential Construction for Hospitals & Special Care Facilities and the PPI for Machinery and Equipment). We then combined the two nominal series into one nominal capital purchase series for 1963 through 2014. Nominal capital purchases are needed for interest vintage weights to capture the value of debt instruments.
Once we created these capital purchase time series for 1963 through 2014, we averaged different periods to obtain an average capital purchase pattern over time: (1) For building and fixed equipment, we averaged 30, 23-year periods; (2) for movable equipment, we averaged 43, 10-year periods; and (3) for interest, we averaged 32, 21-year periods. We calculate the vintage weight for a given year by dividing the capital purchase amount in any given year by the total amount of purchases during the expected useful life of the equipment or debt instrument. To provide greater transparency, we posted on the CMS market basket Web site at
We did not receive any public comments on our proposed price proxies used for each of the detailed capital cost categories or on our methodology for deriving the vintage weights. For the reasons discussed above and in the FY 2018 SNF PPS proposed rule, we are finalizing the price proxies of the capital cost categories, the vintage weights, and the methodology for deriving the vintage weights, as proposed without modification.
The vintage weights for the 2014-based SNF market basket and the FY 2010-based SNF market basket are presented in Table 14.
Table 15 shows all the price proxies for the final 2014 based SNF market basket.
We define the labor-related share (LRS) as those expenses that are labor-intensive and vary with, or are influenced by, the local labor market. Each year, we calculate a revised labor-related share based on the relative importance of labor-related cost categories in the input price index. Effective beginning with FY 2018, we proposed to revise and update the labor-related share to reflect the relative importance of the 2014-based SNF market basket cost categories that we believe are labor-intensive and vary with, or are influenced by, the local labor market. For the proposed 2014-based SNF market basket, these are: (1) Wages and Salaries (including allocated contract labor costs as described above); (2) Employee Benefits (including allocated contract labor costs as described above); (3) Professional fees: Labor-related; (4) Administrative and Facilities Support Services; (5) Installation, Maintenance, and Repair services; (6) All Other: Labor-Related Services; and (7) a proportion of capital-related expenses. We proposed to continue to include a proportion of capital-related expenses because a portion of these expenses are deemed to be labor-intensive and vary with, or are influenced by, the local labor market. For example, a proportion of construction costs for a medical building would be attributable to local construction workers' compensation expenses.
Consistent with previous SNF market basket revisions and rebasings, the All Other: Labor-related services cost category is mostly comprised of building maintenance and security services (including, but not limited to, landscaping services, janitorial services, waste management services, and investigation and security services). Because these services tend to be labor-intensive and are mostly performed at the SNF facility (and therefore, unlikely to be purchased in the national market), we believe that they meet our definition of labor-related services.
The proposed inclusion of the Installation, Maintenance, and Repair Services cost category into the labor-related share remains consistent with the current labor-related share, since this cost category was previously included in the FY 2010-based SNF market basket All Other: Labor-related Services cost category. We proposed to establish a separate Installation, Maintenance, and Repair Services cost category so that we can use the ECI for Total Compensation for All Civilian Workers in Installation, Maintenance, and Repair to reflect the specific price
As discussed in the FY 2014 SNF PPS proposed rule (78 FR 26462), in an effort to determine more accurately the share of nonmedical professional fees (included in the 2014-based SNF market basket Professional Fees cost categories) that should be included in the labor-related share, we surveyed SNFs regarding the proportion of those fees that are attributable to local firms and the proportion that are purchased from national firms. Based on these weighted results, we determined that SNFs purchase, on average, the following portions of contracted professional services inside their local labor market:
• 78 percent of legal services.
• 86 percent of accounting and auditing services.
• 89 percent of architectural, engineering services.
• 87 percent of management consulting services.
Together, these four categories represent 3.3 percentage points of the total costs for the 2014-based SNF market basket. We applied the percentages from this special survey to their respective SNF market basket weights to separate them into labor-related and nonlabor-related costs. As a result, we proposed to designate 2.8 percentage points of the 3.3 percentage points to the labor-related share, with the remaining 0.5 percentage point is categorized as nonlabor-related.
For the proposed 2014-based SNF market basket, we conducted a similar analysis of home office data. The Medicare cost report CMS Form 2540-10 requires a SNF to report information regarding their home office provider. Approximately 57 percent of SNFs reported some type of home office information on their Medicare cost report for 2014 (for example, city, state, zip code). Using the data reported on the Medicare cost report, we compared the location of the SNF with the location of the SNF's home office. For the FY 2010-based SNF market basket, we used the Medicare HOMER database to determine the location of the provider's home office as this information was not available on the Medicare cost report CMS Form 2540-96. For the 2014-based SNF market basket, we proposed to determine the proportion of home office contract labor costs that should be allocated to the labor-related share based on the percent of total SNF home office contract labor costs as reported in Worksheet S-3, Part II attributable to those SNFs that had home offices located in their respective local labor markets—defined as being in the same Metropolitan Statistical Area (MSA). We determined a SNF's and home office's MSAs using their zip code information from the Medicare cost reports.
Using this methodology, we determined that 28 percent of SNFs' home office contract labor costs were for home offices located in their respective local labor markets. Therefore, we proposed to allocate 28 percent of home office expenses to the labor-related share. The FY 2010-based SNF market basket allocated 32 percent of home office expenses to the labor-related share.
In the proposed 2014-based SNF market basket, home office expenses that were subject to allocation based on the home office allocation methodology represent 0.7 percent of the 2014-based SNF market basket. Based on the home office results, we proposed to apportion 0.2 percentage point of the 0.7 percentage point figure into the labor-related share (0.7 × 0.28 = 0.193, or 0.2) and designate the remaining 0.5 percentage point as nonlabor-related. Therefore, based on the two allocations mentioned above, we proposed to apportion 3.0 percentage points into the labor-related share. This amount is added to the portion of professional fees that we continue to identify as labor-related using the I-O data such as contracted advertising and marketing costs (0.8 percentage point of total operating costs) resulting in a Professional Fees: Labor-Related cost weight of 3.8 percent.
We did not receive any public comments on our proposed methodology for deriving the labor-related share. For the reasons discussed above and in the FY 2018 SNF PPS proposed rule, we are finalizing our proposals, without modification, as discussed above to update and revise the labor-related share effective October 1, 2017, to reflect the relative importance of the following 2014-based SNF market basket cost weights that we believe are labor-intensive and vary with, or are influenced by, the local labor market: (1) Wages and Salaries (including allocated contract labor costs as described above); (2) Employee Benefits (including allocated contract labor costs as described above); (3) Professional fees: Labor-related; (4) Administrative and Facilities Support Services; (5) Installation, Maintenance, and Repair services; (6) All Other: Labor-Related Services; and (7) a proportion of capital-related expenses.
Table 16 compares the 2014-based labor-related share and the FY 2010-based labor-related share based on the relative importance of IGI's most recent second quarter 2017 forecast with historical data through the first quarter of 2017. The FY 2018 SNF PPS proposed rule (82 FR 21040) reflected IGI's first quarter 2017 forecast with historical data through the fourth quarter of 2016. As stated in the FY 2018 SNF PPS proposed rule (82 FR 21019), our policy has been that, if more recent data becomes available (for example, a more recent estimate of the SNF market basket and/or MFP adjustment), we would use such data, if appropriate, to determine the SNF market basket percentage change, labor-related share relative importance, forecast error adjustment, and MFP adjustment in the SNF PPS final rule.
We note that in Table 16 of the FY 2018 SNF PPS proposed rule (82 FR 21041), we misreported the FY 2017 labor-related share as 69.1 percent (this was the FY 2016 labor-related share (80 FR 46402)). The FY 2017 labor-related share was 68.8 percent as finalized in the FY 2017 SNF PPS final rule (81 FR 51979, 51980). We present the FY 2017 labor-related share in Table 16 below.
The FY 2018 SNF labor-related share (LRS) is 2.0 percentage points higher than the FY 2017 SNF LRS, which is based on the FY 2010-based SNF market basket relative importance. This implies an increase in the quantity of the labor-related services because rebasing the index contributed significantly to the increase. Also contributing to the higher labor-related share is a higher capital-related cost weight in the 2014-based SNF market basket compared to the FY 2010-based SNF market basket. As stated above, we include a proportion of capital-related expenses in the labor-related share as we believe a portion of these expenses (such as construction labor costs) are deemed to be labor-intensive and vary with, or are influenced by, the local labor market.
As discussed previously in this final rule, beginning with the FY 2018 SNF PPS update, we are adopting the 2014-based SNF market basket as the appropriate market basket of goods and services for the SNF PPS. Based on IHS Global Inc.'s (IGI) second quarter 2017 forecast with historical data through the first quarter of 2017, the most recent estimate of the 2014-based SNF market basket for FY 2018 is 2.6 percent. As stated above, the FY 2018 SNF PPS proposed rule reflected IGI's first quarter 2017 forecast with historical data through the fourth quarter of 2016. IGI is a nationally recognized economic and financial forecasting firm that contracts with CMS to forecast the components of CMS' market baskets.
Table 17 compares the 2014-based SNF market basket and the FY 2010-based SNF market basket percent changes. For the historical period between FY 2013 and FY 2016, the average difference between the two market baskets is −0.3 percentage point. This is primarily the result of the lower pharmaceuticals cost category weight, increased Fuel: Oil and Gas cost category weight, and the change in the Fuels price proxy. For the forecasted period between FY 2017 and FY 2019, there is no difference in the average growth rate.
While we ordinarily would adopt the use of this 2014-based SNF market basket percentage to update the SNF PPS per diem rates for FY 2018, we note that section 411(a) of the MACRA amended section 1888(e) of the Act to add section 1888(e)(5)(B)(iii) of the Act, which establishes a special rule for FY 2018 that requires the market basket percentage, after the application of the productivity adjustment, to be 1.0 percent. In accordance with section 1888(e)(5)(B)(iii) of the Act, we will use a market basket percentage of 1.0 percent to update the federal rates set forth in this final rule. We proposed to use the 2014-based SNF market basket to determine the market basket percentage update for the SNF PPS per diem rates effective FY 2019. For the reasons discussed above and in the FY 2018 SNF PPS proposed rule, we are finalizing our proposal to use the 2014-based SNF market basket to determine
Section 1888(e)(6)(A)(i) of the Act, as added by section 2(c)(4) of the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act), requires that for fiscal years beginning with FY 2018, in the case of a SNF that does not submit data as applicable in accordance with sections 1888(e)(6)(B)(i)(II) and (III) of the Act for a fiscal year, the Secretary reduce the market basket percentage described in section 1888(e)(5)(B)(i) of the Act for payment rates during that fiscal year by two percentage points. In section III.B.2. of this final rule, we discuss revisions in the market basket update regulations at § 413.337(d) that will implement this provision. In accordance with this statutory mandate, we have implemented a SNF Quality Reporting Program (QRP), which we believe promotes higher quality and more efficient health care for Medicare beneficiaries. The SNF QRP applies to freestanding SNFs, SNFs affiliated with acute care facilities, and all non-CAH swing-bed rural hospitals. We refer readers to the FY 2016 SNF PPS final rule (80 FR 46427 through 46429) for a full discussion of the statutory background and policy considerations that have shaped the SNF QRP.
When we use the term “FY (year)SNF QRP,” we are referring to the fiscal year for which the SNF QRP requirements applicable to that fiscal year must be met in order for a SNF to receive the full market basket percentage when calculating the payment rates applicable to it for that fiscal year.
The IMPACT Act (Pub. L. 113-185) amended Title XVIII of the Act, in part, by adding a new section 1899B that requires the Secretary to establish new data reporting requirements for certain post-acute care (PAC) providers, including SNFs. Specifically, new sections 1899B(a)(1)(A)(ii) and (iii) of the Act require SNFs, inpatient rehabilitation facilities (IRFs), Long Term Care Hospitals (LTCHs), and home health agencies (HHAs), under the provider-type's respective quality reporting program (which, for SNFs, is found at section 1888(e)(6) of the Act), to report data on quality measures specified under section 1899B(c)(1) of the Act for at least five domains, and data on resource use and other measures specified under section 1899B(d)(1) of the Act for at least three domains. Section 1899B(a)(1)(A)(i) of the Act further requires each of these PAC provider-types to report under its respective quality reporting program standardized resident assessment data in accordance with subsection (b), for at least the quality measures specified under subsection (c)(1), and that is for at least five specific categories: Functional status; cognitive function and mental status; special services, treatments, and interventions; medical conditions and co-morbidities; and impairments. Section 1899B(a)(1)(B) of the Act requires that all of the data that must be reported in accordance with section 1899B(a)(1)(A) of the Act be standardized and interoperable to allow for the exchange of the information among PAC providers and other providers and the use of such data to enable access to longitudinal information and to facilitate coordinated care. We refer readers to the FY 2016 SNF PPS final rule (80 FR 46427 through 46429) for additional information on the IMPACT Act and its applicability to SNFs.
We refer readers to the FY 2016 SNF PPS final rule (80 FR 46429 through 46431) for a detailed discussion of the considerations we apply in measure selection for the SNF QRP, such as alignment with the CMS Quality Strategy,
As part of our consideration for measures for use in the SNF QRP, we review and evaluate measures that have been implemented in other programs and take into account measures that have been endorsed by NQF for provider settings other than the SNF setting. We have previously adopted measures that we referred to as “applications” of those measures. We have received questions pertaining to the term “application” and want to clarify that when we refer to a proposed or implemented measure as an “application of” the measure, we mean that the measure will be used in the SNF setting, rather than the setting for which it was endorsed by the NQF. For example, in the FY 2016 SNF PPS final rule (80 FR 46440 through 46444), we adopted a measure entitled Application of Percent of Residents Experiencing One or More Falls With Major Injury (Long Stay) (NQF #0674), which is currently endorsed for the nursing home setting but not for the SNF setting. For such measures, we intend to seek NQF endorsement for the SNF setting, and if the NQF endorses one or more of them, we will update the title of the measure to remove the reference to “application”.
We received several comments generally related to the proposed measures, the IMPACT Act, NQF endorsement, and training needs. The comments and our responses are discussed below.
In, the FY 2018 SNF PPS proposed rule (82 FR 21042 through 21043), we discussed accounting for social risk factors in the SNF QRP. We stated that we consider related factors that may affect measures in the SNF QRP. We understand that social risk factors such as income, education, race and ethnicity, employment, disability, community resources, and social support (certain factors of which are also sometimes referred to as socioeconomic status (SES) factors or socio-demographic status (SDS) factors) play a major role in health. One of our core objectives is to improve beneficiary outcomes including reducing health disparities, and we want to ensure that all beneficiaries, including those with social risk factors, receive high quality care. In addition, we seek to ensure that the quality of care furnished by providers and suppliers is assessed as fairly as possible under our programs while ensuring that beneficiaries have adequate access to excellent care.
We have been reviewing reports prepared by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) and the National Academies of Sciences, Engineering, and Medicine on the issue of measuring and accounting for social risk factors in CMS' quality measurement and payment programs, and considering options on how to address the issue in these programs. On December 21, 2016, ASPE submitted a Report to Congress on a study it was required to conduct under section 2(d) of the IMPACT Act. The study analyzed the effects of certain social risk factors of Medicare beneficiaries on quality measures and measures of resource use used in one or more of nine Medicare value-based purchasing programs.
In addition, the NQF undertook a 2-year trial period in which new measures, measures undergoing maintenance review, and measures endorsed with the condition that they enter the trial period were assessed to determine whether risk adjustment for selected social risk factors was appropriate for these measures. This trial entailed temporarily allowing inclusion of social risk factors in the risk-adjustment approach for these measures. The trial has concluded and NQF will issue recommendations on the future inclusion of social risk factors in risk adjustment for quality measures.
As we continue to consider the analyses and recommendations from these reports and await the recommendations of the NQF trial on risk adjustment for quality measures, we are continuing to work with stakeholders in this process. As we have previously communicated, we are concerned about holding providers to different standards for the outcomes of their patients with social risk factors because we do not want to mask potential disparities or minimize incentives to improve the outcomes for disadvantaged populations. Keeping this concern in mind, while we sought input on this topic previously, we continue to seek public comment on whether we should account for social risk factors in measures in the SNF QRP, and if so, what method or combination of methods would be most appropriate for accounting for social risk factors. Examples of methods include: Confidential reporting to providers of measure rates stratified by social risk factors, public reporting of stratified measure rates, and potential risk adjustment of a particular measure as appropriate based on data and evidence.
In addition, in the FY 2018 SNF PPS proposed rule (82 FR 21042 through 21043), we sought public comment on which social risk factors might be most appropriate for reporting stratified measure scores and/or potential risk adjustment of a particular measure. Examples of social risk factors include, but are not limited to, dual eligibility/low-income subsidy, race and ethnicity, and geographic area of residence. We also sought comments on which of these factors, including current data sources where this information would be available, could be used alone or in combination, and whether other data should be collected to better capture the effects of social risk. We will take commenters' input into consideration as we continue to assess the appropriateness and feasibility of accounting for social risk factors in the SNF QRP. We note that any such changes would be proposed through future notice and comment rulemaking.
We look forward to working with stakeholders as we consider the issue of accounting for social risk factors and reducing health disparities in CMS programs. Of note, implementing any of the above methods would be taken into consideration in the context of how this and other CMS programs operate (for example, data submission methods, availability of data, statistical considerations relating to reliability of data calculations, among others), so we sought comment on operational considerations. We are committed to ensuring that Medicare beneficiaries have access to and receive excellent care, and that the quality of care furnished by providers and suppliers is assessed fairly in CMS programs. A discussion of the comments we received on this topic, along with our responses, appears below.
A few commenters, while acknowledging the influence of social risk factors on health outcomes, cautioned against adjusting for them in quality measurement due to the potential for unintended consequences. These commenters expressed concern
Regarding the methodology for risk adjustment, some commenters made specific recommendations regarding the type of risk adjustment that should be used. One commenter suggested that both risk stratification and statistical risk adjustment be used. Commenters stated that any risk stratification should be considered on a measure-by-measure basis, and that measures that are broadly within the control of the facility and reflective of direct care, such as pressure ulcers, should not be stratified. Multiple commenters recommended that we conduct further research and testing of risk-adjustment methods. A few commenters noted the importance of continued monitoring of the effect of social risk factors on health outcomes and on the SNF QRP over time. Other commenters recommended adjusting for social risk factors, specifically for resource use measures assessing potentially preventable readmissions, Medicare Spending Per Beneficiary, and social and environmental risk factors for functional improvement measures. Another commenter noted there are meaningful SES, clinical or other differences between traditional Medicare versus Medicare Advantage (MA) enrollees that could affect comparisons between facilities with different proportion of Medicare Advantage and Part A stays. The commenter further requested that this possibility should be investigated.
In addition to support for our suggested categories of race and ethnicity, dual eligibility status, and geographical location, specific social risk factors suggested by commenters included: Patient-level factors such as lack of personal resources, education level, healthcare literacy, employment, and limited English proficiency. Commenters also suggested community resources and other factors such as access to adequate food, medications, availability of primary care and therapy services, living conditions including living alone, lack of an adequate support system or caregiver availability. Regarding sources for data collection, a commenter suggested the use of confidential patient-reported data to determine social risk and another commenter suggested using confidential electronic health records to collect data relevant to social risk factors.
There were a few comments discussing confidential and public reporting of data adjusted for social risk factors. While a commenter recommended that risk-stratified measures should be publicly reported for purposes of transparency, another commenter noted that the public reporting of stratified rates could create a disincentive to care for disadvantaged populations.
We will consider all suggestions as we continue to assess each measure and the overall program. We intend to explore options including but not limited to measure stratification by social risk factors in a consistent manner across programs, informed by considerations of stratification methods described in section IX.A.13 of the preamble of the FY 2018 IPPS/LTCH PPS final rule. We thank commenters for this important feedback and will continue to consider options to account for social risk factors that would allow us to view disparities and potentially incentivize improvement in care for patients and beneficiaries. We will also consider providing feedback to providers on outcomes for individuals with social risk factors in confidential reports.
Section 1888(e)(6)(B)(i)(III) of the Act requires that for fiscal year 2019 (beginning October 1, 2018) and each subsequent year, SNFs report standardized resident assessment data required under section 1899B(b)(1) of the Act. For purposes of meeting this requirement, section 1888(e)(6)(B)(ii) of the Act requires a SNF to submit the standardized resident assessment data required under section 1819(b)(3) of the Act using the standard instrument designated by the state under section 1819(e)(5) of the Act.
For purposes of the SNF QRP, we refer to beneficiaries who receive services from SNFs as “residents,” and we collect certain information about the SNF services they receive using the Resident Assessment Instrument Minimum Data Set (MDS).
Section 1899B(b)(1)(B) of the Act describes standardized resident assessment data as data required for at least the quality measures described in sections 1899B(c)(1) of the Act and that is for the following categories:
• Functional status, such as mobility and self-care at admission to a PAC provider and before discharge from a PAC provider;
• Cognitive function, such as ability to express ideas and to understand and mental status, such as depression and dementia;
• Special services, treatments and interventions such as the need for ventilator use, dialysis, chemotherapy, central line placement and total parenteral nutrition;
• Medical conditions and comorbidities such as diabetes, congestive heart failure and pressure ulcers;
• Impairments, such as incontinence and an impaired ability to hear, see or swallow; and
• Other categories deemed necessary and appropriate.
As required under section 1899B(b)(1)(A) of the Act, the standardized resident assessment data must be reported at least for SNF admissions and discharges, but the Secretary may require the data to be reported more frequently.
In the FY 2018 SNF PPS proposed rule (82 FR 21043 through 21044), we proposed to define the standardized resident assessment data that SNFs must report to comply with section 1888(e)(6) of the Act, as well as the requirements for the reporting of these data. The collection of standardized resident assessment data is critical to our efforts to drive improvement in health care quality across the four post-acute care (PAC) settings to which the IMPACT Act applies. We intend to use these data for a number of purposes, including facilitating their exchange and longitudinal use among health care providers to enable high quality care and outcomes through care coordination, as well as for quality measure calculation, and identifying comorbidities that might increase the medical complexity of a particular admission.
SNFs are currently required to report resident assessment data through the MDS by responding to an identical set of assessment questions using an identical set of response options (we refer to each solitary question/response option as a data element and we refer to a group of questions/responses as data elements), both of which incorporate an identical set of definitions and standards. The primary purpose of the identical questions and response options is to ensure that we collect a set of standardized resident assessment data elements across SNFs which we
LTCHs, IRFs, and HHAs are also required to report patient assessment data through their applicable PAC assessment instruments, and they do so by responding to identical assessment questions developed for their respective settings using an identical set of response options (which incorporate an identical set of definitions and standards). Like the MDS, the questions and response options for each of these other PAC assessment instruments are standardized across the PAC provider type to which the PAC assessment instrument applies. However, the assessment questions and response options in the four PAC assessment instruments are not currently standardized with each other. As a result, questions and response options that appear on the MDS cannot be readily compared with questions and response options that appear, for example, on the Inpatient Rehabilitation Facility-Patient Assessment Instrument (IRF-PAI) the PAC assessment instrument used by IRFs. This is true even when the questions and response options are similar. This lack of standardization across the four PAC provider types has limited our ability to compare one PAC provider type with another for purposes such as care coordination and quality improvement.
To achieve a level of standardization across SNFs, LTCHs, IRFs, and HHAs that enables us to make comparisons between them, we proposed to define “standardized resident assessment data”
We sought comment on this definition. A discussion of these comments, along with our responses, appears below.
As part of our effort to identify appropriate standardized resident assessment data for purposes of collecting under the SNF QRP, we sought input from the general public, stakeholder community, and subject matter experts on items that would enable person-centered, high quality health care, as well as access to longitudinal information to facilitate coordinated care and improved beneficiary outcomes.
To identify optimal data elements for standardization, our data element contractor organized teams of researchers for each category, and each team worked with a group of advisors made up of clinicians and academic researchers with expertise in PAC. Information-gathering activities were used to identify data elements, as well as key themes related to the categories described in section 1899B(b)(1)(B) of the Act. In January and February 2016, our data element contractor also conducted provider focus groups for each of the four PAC provider types, and a focus group for consumers that included current or former PAC patients and residents, caregivers, ombudsmen, and patient advocacy group representatives. The Development and Maintenance of Post-Acute Care Cross-Setting Standardized Patient Assessment Data Focus Group Summary Report is available at
We also assembled a 16-member TEP that met on April 7 and 8, 2016, and January 5 and 6, 2017, in Baltimore, Maryland, to provide expert input on data elements that are currently in each PAC assessment instrument, as well as data elements that could be standardized. The Development and Maintenance of Post-Acute Care Cross-Setting Standardized Patient Assessment Data TEP Summary Reports are available at
As part of the environmental scan, data elements currently in the four existing PAC assessment instruments were examined to see if any could be considered for proposal as standardized resident assessment data. Specifically, this evaluation included consideration of data elements in OASIS-C2 (effective January 2017); IRF-PAI, v1.4 (effective October 2016); LCDS, v3.00 (effective April 2016); and MDS 3.0, v1.14 (effective October 2016). Data elements in the standardized assessment instrument that we tested in the Post-Acute Care Payment Reform Demonstration (PAC PRD)—the Continuity Assessment Record and Evaluation (CARE) were also considered. A literature search was also conducted to determine whether additional data elements to propose as standardized resident assessment data could be identified.
We additionally held four Special Open Door Forums (SODFs) on October 27, 2015; May 12, 2016; September 15, 2016; and December 8, 2016, to present data elements we were considering and to solicit input. At each SODF, some stakeholders provided immediate input, and all were invited to submit additional comments via the CMS IMPACT Mailbox at
We also convened a meeting with federal agency subject matter experts (SMEs) on May 13, 2016. In addition, a public comment period was open from August 12, to September 12, 2016, to solicit comments on detailed candidate data element descriptions, data collection methods, and coding methods. The IMPACT Act Public Comment Summary Report containing the public comments (summarized and verbatim) and our responses, is available at
We specifically sought to identify standardized resident assessment data that we could feasibly incorporate into the LTCH, IRF, SNF, and HHA assessment instruments and that have
In the FY 2016 SNF PPS final rule (80 FR 46431 through 46432), we adopted our policy for measure removal and also finalized that when we initially adopt a measure for the SNF QRP, this measure will be automatically retained in the SNF QRP for all subsequent payment determinations unless we propose to remove, suspend, or replace the measure. In the FY 2018 SNF PPS proposed rule (82 FR 21044) we proposed to apply this policy to the standardized resident assessment data that we adopt for the SNF QRP.
We sought public comment on our proposal. A discussion of these comments, along with our responses, appears below.
In the FY 2016 SNF PPS final rule (80 FR 46432), we finalized our policy pertaining to the process for adoption of non-substantive and substantive changes to SNF QRP measures. We did not propose to make any changes to this policy in the FY 2018 SNF PPS proposed rule (82 FR 21044 through 20145). We did propose to apply this policy to the standardized resident assessment data that we adopt for the SNF QRP.
We sought public comment on our proposal. A discussion of these comments, along with our responses, appears below.
The SNF QRP currently has seven adopted measures as outlined in Table 18.
We received several comments about quality measures currently adopted for the SNF QRP which are summarized and discussed below.
In the FY 2018 SNF PPS proposed rule (82 FR 21045 through 21057), beginning with the FY 2020 SNF QRP, in addition to the quality measures we are retaining under our policy described in section III.D.2.f. of this final rule, we proposed to remove the current pressure ulcer measure entitled Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678) and to replace it with a modified version of the measure entitled Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury and to adopt four function
The measures are as follows:
• Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury.
• Application of IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633).
• Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634).
• Application of IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients (NQF #2635).
• Application of IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients (NQF #2636).
The measures are described in more detail below.
(1) Replacing the Current Pressure Ulcer Quality Measure, Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678), with a Modified Pressure Ulcer Measure, Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury
In the FY 2018 SNF PPS proposed rule (82 FR 21045 through 21049), we proposed to remove the current pressure ulcer measure, Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678) from the SNF QRP measure set and replace it with a modified version of that measure, Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury, beginning with the FY 2020 SNF QRP. The change in the measure name is to reduce confusion about the new modified measure. The modified version differs from the current version of the measure because it includes new or worsened unstageable pressure ulcers, including deep tissue injuries (DTIs), in the measure numerator. The modified version of the measure would satisfy the IMPACT Act domain of skin integrity and changes in skin integrity.
We note that the technical specifications for the pressure ulcer measure were updated in August 2016 through a subregulatory process to ensure technical alignment of the SNF measure specifications with the LTCH, IRF, and HH specifications. The technical updates were added to ensure clarity in how the measure is calculated, and to avoid possible over counting of pressure ulcers in the numerator. We corrected the technical specifications to mitigate the risk of over counting new or worsened pressure ulcers and to reflect the actual unit of analysis as finalized in the rule, which is a stay (Medicare Part A stay) for SNF QRP, consistent with the IRF, and LTCH QRPs, rather than an episode (which could include multiple stays) as is used in the case of Nursing Home Compare. Thus, we updated the SNF measure specifications to reflect all resident stays, rather than the most-recent episode in a quarter, which is comprised of one or more stays in that measure calculation. Also, to ensure alignment, we corrected our specifications to ensure that healed wounds are not incorrectly captured in the measure. Further, we corrected the specifications to ensure the exclusion of residents who expire during their SNF stay. The SNF specifications can be reviewed on our Web site at
As described in the FY 2016 SNF PPS final rule (80 FR 46433), pressure ulcers are high-cost adverse events and an important measure of quality. For information on the history and rationale for the relevance, importance, and applicability of having a pressure ulcer measure in the SNF QRP, we refer readers to the FY 2016 SNF PPS final rule (80 FR 46433 through 46434).
We proposed to adopt a modified version of the current pressure ulcer measure because unstageable pressure ulcers, including DTIs, are similar to Stage 2, Stage 3, and Stage 4 pressure ulcers in that they represent poor outcomes, are a serious medical condition that can result in death and disability, are debilitating and painful, and are often an avoidable outcome of medical care.
Furthermore, some studies indicate that DTIs, if managed using appropriate care, can be resolved without deteriorating into a worsened pressure ulcer.
While there are few studies that provide information regarding the incidence of unstageable pressure ulcers in PAC settings, an analysis conducted by a contractor suggests the incidence of unstageable pressure ulcers varies according to the type of unstageable pressure ulcer and setting.
The inclusion of unstageable pressure ulcers, including DTIs, in the numerator of this measure is expected to increase measure scores and variability in measure scores, thereby improving the ability to discriminate among poor- and high-performing SNFs. In the currently implemented pressure ulcer measure, Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678), analysis using data from Quarter 4 2015 through Quarter 3 2016 reveals that the SNF mean score is 1.75 percent; the 25th and 75th percentiles are 0.0 percent and 2.53 percent, respectively; and 29.11 percent of facilities have perfect scores. In the measure, Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury, during the same timeframe, the SNF mean score is 2.58 percent; the 25th and 75th percentiles are 0.65 percent and 3.70 percent, respectively; and 20.32 percent of facilities have perfect scores.
Our measure development contractor sought input from subject matter experts, including Technical Expert Panels (TEPs), over the course of several years on various skin integrity topics and specifically those associated with the inclusion of unstageable pressure ulcers, including DTIs. Most recently, on July 18, 2016, a TEP convened by our measure development contractor provided input on the technical specifications of this quality measure, including the feasibility of implementing the proposed measure's updates related to the inclusion of unstageable ulcers, including DTIs, across PAC settings. The TEP supported the updates to the measure across PAC settings, including the inclusion in the numerator of unstageable pressure ulcers due to slough and/or eschar that are new or worsened, new unstageable pressure ulcers due to a non-removable dressing or device, and new DTIs. The TEP recommended supplying additional guidance to providers regarding each type of unstageable pressure ulcer. This support was in agreement with earlier TEP meetings, held on June 13, and November 15, 2013, which had recommended that CMS update the specifications for the pressure ulcer measure to include unstageable pressure ulcers in the numerator.
We solicited stakeholder feedback on this proposed measure by means of a public comment period held from October 17 through November 17, 2016. In general, we received considerable support for the proposed measure. A few commenters supported all of the changes to the current pressure ulcer measure that resulted in the measure, with one commenter noting the significance of the work to align the pressure ulcer quality measure specifications across the PAC settings. Many commenters supported the inclusion of unstageable pressure ulcers due to slough/eschar, due to non-removable dressing/device, and DTIs in the quality measure. Other commenters did not support the inclusion of DTIs in the quality measure because they stated that there is no universally accepted definition for this type of skin injury.
The public comment summary report for the proposed measure is available on the CMS Web site at
The NQF-convened Measures Application Partnership (MAP) Post-Acute Care/Long-Term Care (PAC/LTC) Workgroup met on December 14 and 15, 2016, and provided input to us about this measure. The workgroup provided a recommendation of “support for rulemaking” for use of the measure in the SNF QRP. The MAP Coordinating Committee met on January 24 and 25, 2017, and provided a recommendation of “conditional support for rulemaking” for use of the proposed measure in the SNF QRP. The MAP's conditions of support include that, as a part of measure implementation, CMS provide guidance on the correct collection and calculation of the measure result, as well as guidance on public reporting Web sites explaining the impact of the specification changes on the measure result. The MAP's conditions also specify that CMS continue analyzing the proposed measure to investigate unexpected results reported in public comment. We intend to fulfill these conditions by offering additional training opportunities and educational materials in advance of public reporting, and by continuing to monitor and analyze the proposed measure. More information about the MAP's recommendations for this measure is available at
We reviewed the NQF's consensus endorsed measures and were unable to identify any NQF-endorsed pressure ulcer quality measures for PAC settings that are inclusive of unstageable pressure ulcers. There are related measures, but after careful review, we determined these measures are not applicable for use in SNFs based on the populations addressed or other aspects of the specifications. We are unaware of any other such quality measures that have been endorsed or adopted by another consensus organization for the SNF setting. Therefore, based on the evidence discussed above, we proposed to adopt the quality measure entitled, Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury, for the SNF QRP beginning with the FY 2020 SNF QRP. We plan to submit the proposed measure to the NQF for endorsement consideration as soon as feasible.
The data for this quality measure would be collected using the MDS, which is currently submitted by SNFs through the Quality Improvement and Evaluation System (QIES) Assessment Submission and Processing (ASAP) System. The proposed standardized resident assessment data applicable to this measure that must be reported by SNFs for admissions as well as discharges occurring on or after October
To view the updated MDS, with the proposed changes, we refer to the reader to
For technical information about this proposed measure, including information about the measure calculation and the standardized resident assessment data elements used to calculate this measure, we refer readers to the document titled,
We proposed that SNFs begin reporting the proposed pressure ulcer measure, Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury, which will replace the current pressure ulcer measure, with data collection beginning October 1, 2018 for admissions as well as discharges.
We sought public comment on our proposal to replace the current pressure ulcer measure, Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678), with a modified version of that measure, entitled Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury, beginning with the FY 2020 SNF QRP. A discussion of these comments, along with our responses, appears below.
The reliability and validity of the data elements used to calculate this quality measure have been tested in several ways. Rigorous testing on both reliability and validity of the data elements in the MDS 3.0 provides evidence for the data elements used in the SNF, LTCH, and IRF settings.
To assess the construct validity of this measure, or the degree to which the measure construct measures what it claims or purports to be measuring, our measure contractor sought input from TEPs over the course of several years. Most recently, on July 18, 2016, a TEP supported the inclusion in the numerator of unstageable pressure ulcers due to slough and/or eschar that are new or worsened, new unstageable pressure ulcers/injuries due to a non-removable dressing or device, and new DTIs. The measure testing activities were presented to TEP members for their input on the reliability, validity, and feasibility of this measure change. The TEP members supported the measure construct.
The proposed measure also increased the variability of measures scores between providers, as noted by some commenters. We would like to clarify that the goal of the proposed measure is not to create performance variation where none exists, but rather to better measure existing performance variation. This increased variability of scores between facilities will improve the ability of the measure to distinguish between high- and low-performing facilities.
We will continue to perform reliability and validity testing in compliance with NQF guidelines and the Blueprint for the CMS Measures Management System to ensure that that the measure demonstrates scientific acceptability (including reliability and validity) and meets the goals of the QRP.
To provide greater clarity about the definitions of different types of unstageable pressure ulcers and how to code them on the MDS, we are currently engaged in multiple educational efforts. These include training events, updates to the manuals and training materials, and responses to Help Desk questions to promote understanding and proper coding of these data elements. We will continue to engage in these training activities prior to implementation of the proposed measure.
When considering the addition of DTIs to the measure numerator, we convened cross-setting TEPs in June and November 2013, and obtained input from clinicians, experts, and other stakeholders. An additional cross-setting TEP convened by our measure development contractor in July 2016 also supported the recommendation to include unstageable pressure ulcers, including DTIs, in the numerator of the quality measure. Given DTIs' potential impact on mortality, morbidity, and quality of life, it may be detrimental to the quality of care to exclude DTIs from a pressure ulcer quality measure.
We do not intend to include the proposed measure in the Five Star Quality Rating System calculations.
The Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury measure is harmonized across all PAC settings and uses standardized resident assessment data as required by the IMPACT Act. Further, we would like to clarify that the M0300 data element used to calculate this measure is standardized across all PAC settings, enabling interoperability. This standardization and interoperability of data elements allows for the exchange of information among PAC providers and other providers to whom this data is applicable. We refer readers to the measure specifications, which describe the specifications for the measure in PAC settings,
The short stay measure does not include unstageable pressure ulcers in the numerator. The measure is used in the NHQI and reported on Nursing Home Compare, and is also currently applied to SNF residents for the SNF QRP.
We reviewed both the short stay and long stay measures for suitability, but the short stay measure does not include unstageable pressure ulcers in the numerator, as described above, and the long stay measure was determined to not be applicable for use in SNFs due to the populations addressed. The proposed measure is to be applied to the SNF population, which comprises residents who are receiving skilled nursing services. This measure includes new or worsened pressure ulcers that are numerically staged or unstageable, and is standardized across the PAC settings. Further information about the specifications of this measure can be found at
In the FY 2018 SNF PPS proposed rule (82 FR 21047 through 21057) we proposed for the SNF QRP four measures that we are specifying under section 1899B(c)(1) of the Act for the purposes of meeting the functional status, cognitive function, and changes in function and cognitive function domain: (1) Application of the IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633); (2) Application of the IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634); (3) Application of the IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients (NQF #2635); and (4) Application of the IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients (NQF #2636). We finalized the same functional outcome measures for the IRF QRP in the FY 2016 IRF PPS final rule (80 FR 47111 through 47117). These measures are: (1) IRF Functional Outcome Measure: Change in Self-Care for Medical Rehabilitation Patients (NQF #2633); (2) IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation (NQF #2634); (3) IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients (NQF #2635); and (4) IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients (NQF #2636). We believe these measures satisfy section 1899B(c)(1)(A) of the Act because they address functional status, cognitive function, and changes in function and cognitive function domain. We intend to propose functional outcome measures for the home health and long-term care hospital settings in the future.
In developing these SNF functional outcome quality measures, we sought to build on our cross-setting function work by leveraging data elements currently collected in the MDS section GG, which would minimize additional data collection burden while increasing the feasibility of cross-setting item comparisons.
SNFs provide skilled services, such as skilled nursing or therapy services. Residents receiving care in SNFs include those whose illness, injury, or condition has resulted in a loss of function, and for whom rehabilitative care is expected to help regain that function. Treatment goals may include fostering residents' ability to manage their daily activities so that they can complete self-care and mobility activities as independently as possible, and, if feasible, return to a safe, active, and productive life in a community-based setting. Given that the primary goal of many SNF residents is improvement in function, SNF clinicians assess and document residents' functional status at admission and at discharge to evaluate the effectiveness of the rehabilitation care provided to individual residents and the SNF's effectiveness.
Examination of SNF data shows that SNF treatment practices directly influence resident outcomes. For example, therapy services provided to SNF residents have been found to be correlated with the functional improvement that SNF residents achieve (that is, functional outcomes).
Among SNF residents receiving rehabilitation services, the amount of treatment received can vary. For example, the amount of therapy treatment provided varies by type (that is, for-profit versus not-for-profit) and facility location (that is, urban versus rural).
Measuring residents' functional improvement across all SNFs on an ongoing basis would permit identification of SNF characteristics, such as ownership types or locations, associated with better or worse resident risk adjusted outcomes and thus help SNFs optimally target quality improvement efforts.
MedPAC
In addition, a recent analysis that examined the incidence, prevalence, and costs of common rehabilitation conditions found that back pain, osteoarthritis, and rheumatoid arthritis are the most common and costly conditions affecting more than 100 million individuals and costing more than $200 billion per year.
The use of standardized mobility and self-care data elements would standardize the collection of functional status data, which could improve communication when residents are transferred between providers. Most SNF residents receive care in an acute care hospital prior to the SNF stay, and many SNF residents receive care from another provider after the SNF stay.
Recent research provides empirical support for the risk adjustment variables for these quality measures. In a study of resident functional improvement in SNFs, Wysocki et al.
These outcome-based quality measures could inform SNFs about opportunities to improve care in the area of function and strengthen incentives for quality improvement related to resident function.
We describe each of the four functional outcome quality measures below, and then follow with a discussion of the comments we received.
The outcome quality measure, Application of IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633), is an application of the outcome measure finalized in the IRF QRP entitled, IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633). The quality measure estimates the mean risk-adjusted improvement in self-care score between admission and discharge among SNF residents. A summary of the NQF-endorsed quality measure specifications can be accessed on the NQF Web site:
The functional outcome measure, the Application of IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633), requires the collection of admission and discharge functional status data by trained clinicians using standardized patient data elements that assess specific functional self-care activities such as shower/bathe self, dressing upper body and dressing lower body. These self-care items are daily activities that clinicians typically assess at the time of admission and/or discharge to determine residents' needs, evaluate resident progress, and/or prepare residents and families for a transition to home or to another provider. The standardized self-care function data elements are coded using a 6-level rating scale that indicates the resident's level of independence with the activity; higher scores indicate more independence. The outcome quality measure also requires the collection of risk factor data, such as resident functioning prior to the current reason for admission, bladder continence, communication ability and cognitive function, at the time of admission.
The data elements included in the quality measure were originally developed and tested as part of the PAC PRD version of the Continuity Assessment Record and Evaluation (CARE) Item Set,
A cross-setting function TEP convened by our measure development contractor on September 9, 2013 provided input on the initial technical specifications of this quality measure, Application of IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633). The TEP was supportive of the implementation of this measure and supported CMS's efforts to standardize patient/resident assessment data elements. The TEP summary report is available at
The MAP met on December 14 and 15, 2015, and provided input on the measure, Application of IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633) for use in the SNF QRP. The MAP recognized that this quality outcome measure is an adaptation of a currently endorsed measure for the IRF population, and encouraged continued development to ensure alignment of this measure across PAC settings. The MAP noted there should be some caution in the interpretation of measure results due to resident differentiation between facilities. The MAP also noted possible duplication as the MDS already includes function data elements. We note that the data elements for the measure are similar, but not the same as the existing MDS Section G function data elements. The data elements for the measure include those that are the standardized patient assessment data for functional status under section 1899B(b)(1)(B)(i) of the Act. The MAP also stressed the importance of considering burden on providers when measures are considered for implementation. The MAP's overall recommendation was for “encourage further development.” More information about the MAP's recommendations for this measure is available at
Since the MAP's review and recommendation for further development, we have continued to develop this measure by soliciting input via a TEP, providing a public comment opportunity, and providing an update on measure development to the MAP via the feedback loop. More specifically, our measure development contractor convened a SNF-specific function TEP on May 5, 2016, to provide further input on the technical specifications of this quality measure by reviewing the IRF specifications and the specifications of competing and related function quality measures. Overall, the TEP was supportive of the measure and supported our efforts to standardize patient assessment data elements. The SNF-specific function TEP summary report is available at
We also solicited stakeholder feedback on the development of this measure by means of a public comment period that was open from October 7, 2016, until November 4, 2016. There was general support of the measure concept and the importance of functional improvement. Comments on the measure varied, with some commenters supportive of the measure, while others were either not in favor of the measure, or in favor of suggested potential modifications to the measure specifications. The public comment summary report for the measure is available on the CMS Web site at
Further, we engaged with stakeholders when we presented an update on the development of this quality measure to the MAP on October 19, 2016, during a MAP feedback loop meeting. Slides from that meeting are available at
During the development of this proposed functional outcome measure, we have monitored and reviewed NQF-endorsed measures that are competing and/or related to the proposed quality measures. We identified six competing and related quality measures focused on self-care functional improvement for residents in the SNF setting entitled: (1) CARE: Improvement in Self Care (NQF #2613); (2) Functional Change: Change in Self-Care Score for Skilled Nursing Facilities (NQF #2769); (3) Functional Status Change for Patients with Shoulder Impairments (NQF #0426); (4) Functional Status Change for Patients with Elbow, Wrist and Hand Impairments (NQF #0427); (5) Functional Status Change for Patients with General Orthopedic Impairments (NQF #0428); and (6) Change in Daily Activity Function as Measures by the AM-PAC (NQF #0430). We reviewed the technical specifications for these six quality measures and compared these specifications to those of our outcome-based quality measure, the Application of IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633), and have noted the following differences in the technical specifications: (1) The number of risk adjustors and variance explained by these risk adjustors in the regression models; (2) the use of functional assessment items that were developed and tested for cross-setting use; (3) the use of items that are already on the MDS 3.0 and what this means for burden; (4) the handling of missing functional status data; and (5) the use of exclusion criteria that are baseline clinical conditions. We describe these key specifications of the proposed outcome measure, Application of IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633), in detail below.
Our literature review, input from technical expert panels, public comment feedback, and data analyses demonstrated the importance of adequate risk adjustment of admission case mix factors for functional outcome measures. Inadequate risk adjustment of admission case mix factors may lead to erroneous conclusions about the quality of care delivered within the facility, and thus is a potential threat to the validity of a quality measure that examines outcomes of care, such as functional outcomes. The quality measure, the Application of IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633) risk adjusts for more than 60 risk factors, explaining approximately 25 percent of the variance in change in function, and includes all of the following risk factors: prior functioning, prior device use, age, functional status at admission, primary diagnosis, and comorbidities. These risk factors are key predictors of functional performance and should be accounted for in any facility-level comparison of functional outcomes.
Another key feature of the measure, the Application of IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633), is that it uses the functional assessment data elements and the associated rating scale that were developed and tested for cross-setting
A third important consideration is that some of the data elements associated with the measure are already included on the MDS in section GG, because we adopted a cross-setting function process measure in the SNF QRP FY 2016 Final Rule (FR 80 46444 through 46453). Three of the self-care data elements necessary to calculate that quality measure, an Application of the Percent of Long-Term Care Hospital Patient with a Functional Assessment and a Care Plan that Addresses Function (NQF #2631) are used to calculate the quality measure. Provider burden of reporting on multiple items was a key consideration discussed by stakeholders in our recent TEP is available at
We believe it is important to include the records of residents with missing functional assessment data when calculating a facility-level functional outcome quality measure for SNFs. The proposed measure, the Application of IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633), incorporates a method to address missing functional assessment data.
We believe certain clinically-defined exclusion criteria are important to specify in a functional outcome quality measure to maintain the validity of the quality measure. Exclusions for the quality measure, Application of IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633), were selected through a review of the literature, input from Technical Expert Panels, and input from the public comment process. The quality measure, Application of IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633) is intended to capture improvement in self-care function from admission to discharge for residents who are admitted with an expectation of functional improvement. Therefore, we exclude residents with certain conditions, for example progressive neurologic conditions, because these residents are typically not expected to improve on self-care skills for activities such as lower body dressing. Furthermore, we exclude residents who are independent on all self-care items at the time of admission, because no improvement in self-care can be measured with the selected set of items by discharge. Including residents with limited expectation for improvement could introduce incentives for SNFs to restrict access to these residents.
We would like to note that our measure developer presented and discussed these technical specification differentiations with TEP members during the May 6, 2016 TEP meeting to obtain TEP input on preferred specifications for valid functional outcome quality measures. The differences in measure specifications and the TEP feedback are presented in the TEP Summary Report, which is available at
Data for the quality measure, the Application of IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633), would be collected using the MDS, with the submission through the QIES ASAP system. For more information on SNF QRP reporting through the QIES ASAP system, refer to CMS Web site at
If finalized for implementation into the SNF QRP, the MDS would be modified so as to enable us to calculate this quality measure using additional data elements that are standardized with the IRF-PAI and such data would be obtained at the time of admission and discharge for all SNF residents covered under a Part A stay. The standardized items used to calculate this proposed quality measure do not duplicate existing Section G items currently used for data collection within the MDS. The quality measure and standardized data element specifications for the Application of IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633) can be found on the SNF QRP Measures and Technical Information Web site at
This quality measure is an application of the outcome measure finalized in the IRF QRP entitled, IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634). This quality measure estimates the risk-adjusted mean improvement in mobility score between admission and discharge among SNF residents. A summary of this quality measure can be accessed on the NQF Web site:
As previously noted, residents seeking care in SNFs include those whose illness, injury, or condition has resulted in a loss of function, and for whom rehabilitative care is expected to help regain that function. Several studies found patients' functional outcomes vary based on treatment. Physical and occupational therapy treatment was associated with greater functional gains, shorter stays, and a greater likelihood of a discharge to a community. Among SNF residents receiving rehabilitation services, the amount of therapy prescribed can vary widely, and this variation is not always associated with resident characteristics. This variation in rehabilitation services supports the need to monitor SNF resident's functional outcomes, as we believe there is an opportunity for improvement in this area.
The functional outcome measure, the Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634), requires the collection of admission and discharge functional status data by trained clinicians using standardized resident data elements that assess specific functional mobility activities such as toilet transfer and walking. These mobility items are daily activities that clinicians typically assess at the time of admission and/or discharge to determine resident's needs, evaluate resident progress, and prepare residents and families for a transition to home or to another care provider. The standardized mobility function items are coded using a 6-level rating scale that indicates the resident's level of independence with the activity; higher scores indicate more independence.
The functional assessment items included in the outcome quality measures were originally developed and tested as part of the Post-Acute Care Payment Reform Demonstration version of the CARE Item Set, which was designed to standardize assessment of patients' status across acute and post-acute providers, including SNFs, HHAs, IRFs, and LTCHs.
This outcome quality measure also requires the collection of risk factors data, such as resident functioning prior to the current reason for admission, history of falls, bladder continence, communication ability and cognitive function, at the time of admission.
A cross-setting function TEP convened by our measure development contractor on September 9, 2013 provided input on the initial technical specifications of this proposed quality measure, the Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634). The TEP was supportive of the implementation of this measure and supported our efforts to standardize patient/resident assessment data elements. The TEP summary report is available at
The list of measures under consideration for the SNF QRP, including this quality measure, was released to the public on November 27, 2015, and early comments were submitted between December 1 and December 7, 2015. The MAP met on December 14 and 15, 2015, sought public comment on this measure from December 23, 2015, to January 13, 2015, and met on January 26 and 27, 2016. The NQF provided the MAP's input to us as required under section 1890A(a)(3) of the Act in the final report, MAP 2016 Considerations for Implementing Measures for Federal Programs: Post-Acute and Long-Term Care, which is available at
The MAP also noted possible duplication as the MDS already includes function data elements. The data elements for the measure are similar, but not the same as the existing MDS Section G function data elements. The data elements for the measures include those that are the proposed standardized resident assessment data elements for function. The MAP also stressed the importance of considering burden on providers when measures are considered for implementation. We appreciate the issue of burden and have taken that into consideration in developing the measure. Please refer to the FY 2016 SNF PPS final rule (80 FR 46428) for more information on the MAP.
The MAP's overall recommendation was for “encourage further development.” More information about the MAP's recommendations for this proposed measure is available at
Since the MAP's review and recommendation for further development, we have continued to develop this measure including soliciting input from a TEP, providing a public comment opportunity, and providing an update on measure development to the MAP via the feedback loop. More specifically, our measure development contractor convened a SNF-specific TEP on May 5, 2016 to provide further input on the technical specifications of this proposed quality measure by reviewing the IRF specifications and the specifications of competing and related function quality measures. Overall, the TEP was supportive of the measure and supported our efforts to standardize patient/resident assessment data elements. The SNF-specific function TEP summary report is available at
We also solicited stakeholder feedback on the development of this measure by means of a public comment period open from October 7, until November 4, 2016. There was general support of the measure concept and the importance of functional improvement. Comments on the measure varied, with some commenters supportive of the measure, while others were either not in favor of the measure, or in favor of suggested potential modifications to the measure specifications. The public comment summary report for the proposed measure is available on the CMS Web site at
We also engaged with the NQF convened MAP when we presented an update on the development of this quality measure on October 19, 2016, during a MAP feedback loop meeting. Slides from that meeting are available at
During the development of this measure, we have monitored and reviewed NQF-endorsed measures that are competing and related. We identified seven competing and related quality measures focused on improvement in mobility for residents in the SNF setting entitled: (1) CARE: Improvement in Mobility (NQF #2612); (2) Functional Change: Change in Mobility Score (NQF 2774); (3) Functional Status Change for Patients with Knee Impairments (NQF #0422); (4) Functional Status Change for Patients with Hip Impairments (NQF #0423); (5) Functional Status Change for Patients with Foot and Ankle Impairments (NQF #0424); (6) Functional Status Change for Patients with Lumbar Impairments (NQF #0425); and (7) Change in Basic Mobility as Measures by the AM-PAC (NQF #0429). We reviewed the technical specifications for these seven measures carefully and compared them with the specifications of the proposed quality measure, the Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634) and have noted the following differences in the technical specifications: (1) The number of risk adjustors and variance explained by these risk adjustors in the regression models; (2) the use of functional assessment items that were developed and tested for cross-setting use; (3) the use of items that are already on the MDS 3.0 and what this means for burden; (4) the handling of missing functional status data; and (5) the use of exclusion criteria that are baseline clinical conditions. We describe these key specifications of the proposed outcome measure, the Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634), below in more detail.
Our literature review, input from technical expert panels, public comment feedback, and analyses demonstrated the importance of adequate risk adjustment of admission case mix factors for functional outcome measures. Inadequate risk adjustment of admission case mix factors may lead to erroneous conclusions about the quality of care delivered within the facility, and thus is a potential threat to the validity of a quality measure that examines outcomes of care, such as functional status. The quality measure, the Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634) risk adjusts for more than 60 risk factors, explaining approximately 23 percent of the variance in change in function, and includes all of the following risk adjusters: Prior functioning, prior device use, age, functional status at admission, primary diagnosis and comorbidities. These are key predictors of functional performance and need to be accounted for in any facility-level functional outcome quality measure.
Another key feature of the proposed measure, Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634), is that it uses the functional assessment data elements and the associated rating scale that were developed and tested for cross-setting use. The measure uses functional assessment items from the CARE Item Set, which were developed and tested as part of the PAC PRD between 2006 and 2010.
The items were designed to build on the existing science for functional assessment instruments, and included a review of the strengths and limitations of existing functional assessment instruments. An important strength of the cross-setting function items from the CARE instrument is that they allow tracking of patients' and residents' functional outcomes as they move across post-acute settings. Specifically, the CARE Item Set was designed to standardize assessment of patients' and residents' status across acute and post-acute settings, including SNFs, IRFs, LTCHs, and HHAs. MedPAC has publicly supported a coordinated approach to measurement across settings using standardized resident assessment data elements.
A third important consideration is that some of the data elements associated with the measure, Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634), are already included on the MDS in section GG, because we adopted a cross-setting function process measure in the SNF QRP FY 2016 Final Rule (FR 80 46444 through 46453), and seven of the mobility data elements necessary to calculate that quality measure, an Application of the Percent of Long-Term Care Hospital Patient with a Functional Assessment and a Care Plan that Addresses Function (NQF #2631) are used to calculate the proposed quality measure. Provider burden of reporting on multiple measures was a key consideration discussed by stakeholders in our recent TEP:
We believe it is important to include the records of residents with missing functional assessment data when calculating a facility-level functional outcome quality measure for SNFs. The measure, Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634), incorporates a method to address missing functional assessment data.
We believe certain clinically-defined exclusion criteria are important to specify in a functional outcome quality measure to maintain the validity of the quality measure. Exclusions for the proposed quality measure, Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634), were selected through a literature review, input from TEPs, and input from the public comment process. The Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634) is intended to capture improvement in mobility from admission to discharge for residents who are admitted with an expectation of functional improvement. Therefore, we exclude residents with certain conditions, for example progressive neurologic conditions, because these residents are typically not expected to improve on mobility skills for activities such as walking. Furthermore, we exclude residents who are independent on all mobility items at the time of admission, because no improvement can be measured with the selected set of items by discharge. Inclusion of residents with limited expectation for improvement could introduce incentives for SNF providers to limited access to these residents.
Our measure developer contractor presented and discussed these technical specification differentiations during the May 6, 2016 TEP meeting to obtain TEP input on preferred specifications for valid functional outcome quality measures. The differences in measure specifications and the TEP feedback are presented in the TEP Summary Report, which is available at
Data for the quality measure, the Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634), would be collected using the MDS, with the submission through the QIES ASAP system. For more information on SNF QRP reporting through the QIES ASAP system, refer to
The calculation of the quality measure would be based on the data collection of standardized items to be included in the MDS. The function items used to calculate this measure are the same set of functional status data items that have been added to the IRF-PAI version 1.4, for the purpose of providing standardized resident assessment data elements under the domain of functional status. If this quality measure is finalized for implementation in the SNF QRP, the MDS would be modified so as to enable the calculation of these standardized items that are used to calculate this proposed quality measure. The collection of data by means of the standardized items would be obtained at admission and discharge. The standardized items used to calculate this quality measure do not duplicate existing items currently used for data collection within the MDS. The quality measure and standardized data element specifications for the Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634) is available on the SNF QRP Measures and Technical Information Web site at
This quality measure is an application of the outcome quality measure finalized in the IRF QRP entitled, IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients (NQF #2635). The quality measure estimates the percentage of SNF residents who meet or exceed an expected discharge self-care score. A summary of this quality measure can be accessed on the NQF Web site at
As previously noted, residents seeking care in SNFs include individuals whose illness, injury, or condition has resulted in a loss of function, and for whom rehabilitative care is expected to help regain that function. Several studies found patients' functional outcomes vary based on treatment by physical and occupational therapists. Therapy was associated with greater functional gains, shorter stays, and a greater likelihood of discharge to community. Among SNF residents receiving rehabilitation services, the amount of treatment prescribed can vary widely, and this variation is not associated with resident characteristics. This variation in rehabilitation services supports the need to monitor SNF resident's functional outcomes, as we believe there is an opportunity for improvement in this area.
The outcome quality measure, Application of IRF Functional Outcome Measure: Discharge Self-Care Score or Medical Rehabilitation Patients (NQF #2635), requires the collection of functional status data at admission and discharge by trained clinicians using standardized resident assessment data elements such as eating, oral hygiene, and lower body dressing. These self-care items are daily activities that clinicians typically assess at the time of admission and discharge to determine residents' needs, evaluate resident progress, and prepare residents and families for a transition to home or to another provider. The self-care function data elements are coded using a 6-level rating scale that indicates the resident's level of independence with the activity; higher scores indicate more independence.
The functional assessment items included in the outcome quality measures were originally developed and tested as part of the Post-Acute Care Payment Reform Demonstration version of the CARE Item Set, which was designed to standardize assessment of patients' status across acute and post-acute providers, including SNFs, HHAs, IRFs, and LTCHs.
This outcome quality measure also requires the collection of risk factors data, such as resident functioning prior to the current reason for admission, bladder continence, communication ability, and cognitive function at the time of admission.
A cross-setting function TEP convened by our measure development contractor on September 9, 2013 provided input on the initial technical specifications of this proposed quality measure, the Application of IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients (NQF #2635). The TEP was supportive of the implementation of this measure and supported CMS's efforts to standardize patient/resident assessment data elements. The TEP summary report is available at
The MAP met on December 14 and 15, 2015, and provided input on the proposed measure, Application of IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients (NQF #2635) for use in the SNF QRP. The MAP recognized that this quality measure is an adaptation of a currently endorsed measure for the IRF population, and encouraged continued development to ensure alignment of this measure across PAC settings. The MAP also noted there should be some caution in the interpretation of measure results due to patient/resident differentiation between facilities. The MAP also stressed the importance of considering burden on providers when measures are considered for implementation. The MAP also noted possible duplication as the MDS already includes function data elements. The data elements for the proposed measure are similar, but not the same as the existing MDS function data elements. The data elements for the measures include those that are the proposed standardized assessment data elements for function. The MAP's overall recommendation was to “encourage further development.” More information about the MAP's recommendations for this measure is available at
Since the 2015 MAP's review and recommendation for further development, we have continued to develop this measure including soliciting input via a TEP, proving a public comment opportunity and providing an update on measure development to the MAP via the feedback loop. More specifically, our measure development contractor convened a SNF-specific TEP on May 5, 2016 to provide further input on the
We also solicited stakeholder feedback on the development of this measure by means of a public comment period open from October 7, 2016 until November 4, 2016. There was general support of the measure concept and the importance of functional improvement. Comments on the measure varied, with some commenters supportive of the measure, while others were either not in favor of the measure, or in favor of suggested potential modifications to the measure specifications. Some comments focused on suggestions for additional risk adjustors, and the data elements. The public comment summary report for the measure is available on the CMS Web site at
We also engaged with stakeholders when we presented an update on the development of this quality measure to the MAP on October 19, 2016, during a MAP feedback loop meeting. Slides from that meeting are available at
During the development of this measure, we monitored and reviewed NQF-endorsed measures that are competing and related. We identified six competing and related quality measures focused on self-care functional improvement for residents in the SNF setting entitled: (1) CARE: Improvement in Self Care (NQF #2613); (2) Functional Change: Change in Self-Care Score (NQF #2286); (3) Functional Status Change for Patients with Shoulder Impairments (NQF #0426); (4) Functional Status Change for Patients with Elbow, Wrist and Hand Impairments (NQF #0427); (5) Functional Status Change for Patients with General Orthopedic Impairments (NQF #0428); and (6) Change in Daily Activity Function as Measures by the AM-PAC (NQF #0430).
As described above, we reviewed the technical specifications for these six measures and compared them with the specifications for the quality measure, Application of IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients (NQF #2635) and, as described in detail above, we noted the following differences in the technical specifications: (1) The number of risk adjustors and variance explained by these risk adjustors in the regression models; (2) the use of functional assessment items that were developed and tested for cross-setting use; (3) the use of items that are already on the MDS 3.0 and what this means for burden; (4) the handling of missing functional status data; and (5) the use of exclusion criteria that are baseline clinical conditions.
Consistent with the other functional outcome measures, the specifications for this quality measure, Application of IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients (NQF #2635), were developed based on our literature review, input from technical expert panels, public comment feedback and data analyses. The details about the specifications for the measures described above also apply to this quality measure. Overall, the TEP supported the use of a risk adjustment model that addressed prior functioning, admission functioning, prior diagnosis and comorbidities. In addition, they supported exclusion criteria that would address functional improvement expectations of residents.
Our measure developer contractor presented and discussed these technical specification differentiations during the May 6, 2016 TEP meeting to obtain TEP input on preferred specifications for valid functional outcome quality measures. The differences in measure specifications and the TEP feedback are presented in the TEP Summary Report, which is available at
Data for the quality measure, the Application of IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients (NQF #2635), would be collected using the MDS, with the submission through the QIES ASAP system. For more information on SNF QRP reporting through the QIES ASAP system, refer to CMS Web site at
The calculation of the proposed quality measure would be based on the data collection of standardized items to be included in the MDS. The function items used to calculate this measure are the same set of functional status data items that have been added to the IRF-PAI version 1.4, for the purpose of providing standardized resident assessment data elements under the domain of functional status.
The collection of data by means of the standardized items would be obtained at admission and discharge. The standardized items used to calculate this quality measure do not duplicate existing items currently used for data collection within the MDS. The quality measure and standardized data element specifications for the Application of IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients (NQF #2635) can be found on the SNF QRP Measures and Technical Information Web site at
If finalized for implementation into the SNF QRP, the MDS would be modified so as to enable us to calculate the proposed measure using additional data elements that are standardized with the IRF-PAI and such data would be obtained at the time of admission and discharge for all SNF residents covered under a Part A stay.
This quality measure is an application of the outcome quality measure finalized in the IRF QRP entitled, IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients (NQF #2636). This quality measure estimates the percentage of SNF residents who meet or exceed an expected discharge mobility score. A summary of this quality measure can be accessed on the NQF Web site:
As previously noted, residents seeking care in SNFs include individuals whose illness, injury, or condition has resulted in a loss of function, and for whom rehabilitative care is expected to help regain that function. Several studies found patients' functional outcomes vary based on treatment by physical and occupational therapists. Therapy was associated with greater functional gains, shorter stays, and a greater likelihood of discharge to community. Among SNF residents receiving rehabilitation services, the amount of treatment prescribed can vary widely, and this variation is not associated with resident characteristics. This variation in rehabilitation services supports the need to monitor SNF resident's functional outcomes, as we believe there is an opportunity for improvement in this area.
The functional outcome measure, Application of IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients (NQF #2636), requires the collection of admission and discharge functional status data by trained clinicians using standardized resident data elements that assess specific functional mobility activities such as bed mobility and walking. These standardized mobility items are daily activities that clinicians typically assess at the time of admission and/or discharge to determine residents' needs, evaluate resident progress and prepare residents and families for a transition to home or to another care provider. The standardized mobility function items are coded using a 6-level rating scale that indicates the resident's level of independence with the activity; higher scores indicate more independence.
The functional assessment items included in the outcome quality measures were originally developed and tested as part of the Post-Acute Care Payment Reform Demonstration version of the CARE Item Set, which was designed to standardize assessment of patient or resident status across acute and post-acute providers, including SNFs, HHAs, IRFs, and LTCHs.
This quality measure requires the collection of risk factors data, such as resident functioning prior to the current reason for admission, history of falls, bladder continence, communication ability and cognitive function, at the time of admission.
A cross-setting function TEP convened by our measure development contractor on September 9, 2013 provided input on the initial technical specifications of this quality measure, Application of IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients (NQF #2636). The TEP was supportive of the implementation of this measure and supported our efforts to standardize patient assessment data elements. The TEP summary report is available at
The MAP met on December 14 and 15, 2015, and provided input on the measure, Application of IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients (NQF #2636), for use in the SNF QRP. The MAP recognized that this quality measure is an adaptation of a currently endorsed measure for the IRF population, and encouraged continued development to ensure alignment of this measure across PAC settings. The MAP noted there should be some caution in the interpretation of measure results due to patient/resident differentiation between facilities. The MAP also stressed the importance of considering burden on providers when measures are considered for implementation. The MAP also noted possible duplication as the MDS already includes function data elements. The data elements for the proposed measure are similar, but not the same as the existing MDS function data elements. The data elements for the measure include those that are the standardized patient data elements for function. The MAP's overall recommendation was to “encourage further development.” More information about the MAP's recommendations for this proposed measure is available at
Since the MAP's review and recommendation for further development, we have continued to develop this measure including soliciting input via a TEP, proving a public comment opportunity and providing an update on measure development to the MAP via the feedback loop. More specifically, our measure development contractor convened a SNF-specific TEP on May 5, 2016, to provide further input on the technical specifications of this quality measure by reviewing the IRF specifications and the specifications of competing and related function quality measures. Overall, the TEP was supportive of the measure and supported our efforts to standardize patient/resident assessment data elements. The SNF-specific function TEP summary report is available at
We also solicited stakeholder feedback on the development of this measure by means of a public comment period open from October 7, 2016, until November 4, 2016. There was general support of the measure concept and the importance of functional improvement. Comments on the measure varied, with some commenters supportive of the measure, while others were either not in favor of the measure, or suggested potential modifications to the measure specifications.
The public comment summary report for the proposed measure is available on the CMS Web site at
We also engaged with stakeholders when we presented an update on the development of this quality measure to the MAP on October 19, 2016, during a MAP feedback loop meeting. Slides from that meeting are available at
During the development of this measure, we have monitored and reviewed the NQF-endorsed measures that are competing and related. We identified seven competing and related quality measures focused on mobility functional improvement for residents in the SNF setting entitled: (1) CARE: Improvement in Mobility (NQF #2612); (2) Functional Change: Change in Mobility Score (NQF #2774); (3) Functional Status Change for Patients with Knee Impairments (NQF #0422); (4) Functional Status Change for Patients with Hip Impairments (NQF #0423); (5) Functional Status Change for Patients with Foot and Ankle Impairments (NQF #0424); (6) Functional Status Change for Patients with Lumbar Impairments (NQF #0425); and (7) Change in Basic Mobility as Measures by the AM-PAC (NQF #0429). As described above, we reviewed the technical specifications for these seven measures carefully and compared them with the specifications of the proposed quality measure, Application of IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients (NQF #2636) and have noted the following differences in the technical specifications: (1) The
Consistent with the other functional outcome measures, the specifications for this quality measure, Application of IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients (NQF #2636), were developed based on our literature review, input from technical expert panels, public comment feedback and data analyses. The details about how the specifications for the measures differ as described in the previous functional outcome measure sections, also apply to this quality measure.
Our measure developer contractor presented and discussed these technical specification differentiations during the May 6, 2016 TEP meeting to obtain TEP input on preferred specifications for valid functional outcome quality measures. The differences in measure specifications and the TEP feedback are presented in the TEP Summary Report, which is available at
Data for the quality measure, the Application of IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients (NQF #2636), would be collected using the MDS, with the submission through the QIES ASAP system. Additional information on SNF QRP reporting through the QIES ASAP system can be found on the CMS Web site at
The calculation of the quality measure would be based on the data collection of standardized items to be included in the MDS. The function items used to calculate this measure are the same set of functional status data items that have been added to the IRF-PAI version 1.4, for the purpose of providing standardized resident assessment data elements under the domain of functional status.
The collection of data by means of the standardized items would be obtained at admission and discharge. The standardized items used to calculate this quality measure do not duplicate existing items currently used for data collection within the MDS. The quality measure and standardized resident data element specifications for the Application of IRF Functional Outcome Measure: Discharge Change in Mobility Score for Medical Rehabilitation Patients (NQF #2636) can be found on the SNF QRP Measures and Technical Information Web site at
If finalized for implementation into the SNF QRP, the MDS would be modified so as to enable us to calculate the measure using additional data elements that are standardized with the IRF-PAI and such data would be obtained at the time of admission and discharge for all SNF residents covered under a Part A stay.
We sought public comments on our proposal to adopt the four functional outcome quality measures, entitled Application of IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633); Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634);, Application of IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients (NQF #2635); and Application of IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients (NQF #2636), beginning with the FY 2020 SNF QRP. All of the comments we received addressed all four measures, and our discussion of them follows.
As part of our quality measure development work, we conducted additional reliability and validity testing, including Rasch analysis, which showed acceptable reliability and validity, and these results were discussed during the May 2016 TEP meeting and are summarized in the SNF Function TEP Summary Report, which is available at
In addition, beginning October 1, 2016, SNFs are reporting several of the self-care and mobility data elements that are needed to calculate these measures. The quality measure, an Application of the Percent of LTCH Patients with a Functional Assessment and a Care Plan that Addresses Function (NQF #2631), was finalized for use in the SNF QRP in FY 2016 (80 FR 46444 through 46453). This process measure includes several of the self-care and mobility items included in the SNF functional outcome measures, and we are conducting tests of the reliability and validity of that data. We conduct ongoing analysis of reliability and validity of adopted measures.
We appreciate the comments pertaining to NQF endorsement of the measures before they are publicly displayed and comments on the titling of the proposed functional outcome measures. With regard to the measure title, we recognize the confusion of leveraging the words “IRF” in our title application when we are collecting for a SNF population, and we will reassess the titling for these outcome measures to decrease confusion among all stakeholders.
Finally, we would like to note that the Nursing Home Quality Initiative includes two quality measures focused on functional maintenance and slowing decline. These measures are reported to the public on the Nursing Home Compare Web site and are calculated using MDS Section G data elements. We intend to develop similar quality measures focused on maintenance of function and decline in function that would be calculated using section GG Self-Care and Mobility data elements. With regard to unintended consequences, we will monitor potential unintended consequences of this exclusion criterion, and take these suggestions into consideration during our ongoing efforts to improve our quality measures.
We recognize that a resident's status or goals may change during the SNF stay, and the measures include several exclusions that are applied based on the resident's status at discharge to reflect this change prior to the end of the stay. For example, a resident may experience an incomplete stay due to an urgent medical condition and is discharged to an acute care hospital. We recognize that it is challenging to collect discharge functional assessment data under these circumstances. For this reason, these residents are excluded from the four functional outcome measures. We would also like to clarify that the collection of a patient's goal is simply to track whether a patient's goal was established on admission rather than to track the expectation of function improvement.
Another exclusion criterion in the 4 functional outcome measures relates to residents who are discharged to hospice. This may be a circumstance where a resident's status changed during the stay due to a new medical diagnosis or an unexpected worsening of a resident's condition. The list of all measure exclusions and the specifications for each of these exclusion criteria are
One commenter who disagreed with the proposed exclusions criterion further noted that the exclusion of “residents who do not receive physical or occupational therapy services,” for the 4 functional outcome measures is substantively different than the May 2016 SNF Function TEP discussion, and the 2016 CMS Measurement Management Public Comment document. This commenter recognized that the exclusion did refer to “Residents who do not have an expectation of functional improvement,” which was subsequently clarified to exclude “Residents who do not receive physical or occupational therapy services.” The commentator expressed that no explanation or data analysis was provided to justify the change in the exclusion definition.
Another commenter noted that this recoding can result in different statistical and clinical inferences compared to not recoding items to 01. The commenter recommended further detail regarding the use of “activity did not occur” codes and that an analysis be conducted that compares the recoding method to excluding any or all the four “activity did not occur” item responses, and provide the percentage of patient stays impacted. The commenter requested that these results be shared with stakeholders for comment before adopting these four proposed functional outcomes measures.
Another commenter voiced concern that the calculated “Expected score” for the function outcome measures would be an inaccurate point of comparison if the risk adjustors were not accurate. The commenter suggested that we fully evaluate the risk adjustors in a large data sample to ensure they are appropriate prior to implementation. The commenter also suggested that we should have a transparent process that is clearly communicated with stakeholders to clarify and refine risk adjustors for the functional outcome measures. The commenter noted that if there is not a refinement period of the risk adjustors, providers will be penalized for their performance on these measures at the same time that we are examining the risk adjustors' accuracy and possibly modifying them.
We agree with the commenter that it is important for risk adjustment of quality measures to be reliable and valid. As mentioned previously, the risk adjustors were determined based on data analysis, stakeholder input, literature review, clinical relevance and public comment. As noted above, we agree with the commenter for the need to re-examine the risk adjustment model when additional data become available. In addition, we appreciate the continued involvement of stakeholders in all phases of measure development and implementation.
We refer the commenter to the Specifications for SNF QRP Quality Measures and Standardized Resident Assessment Data Elements document available at
With regard to the use of the discharge goals, we would like to note that the quality measure, Application of Percent of Long-Term Care Hospital Patients with an Admission and Discharge Functional Assessment and a Care Plan that Addresses Function (NQF #2631), requires documentation of only one goal. Using goals to determine outcomes would require SNFs to complete all goals in section GG, which would add significant burden. With regard to the suggestion of using the median rather than the mean value, we will examine this approach as we examine additional data to determine how it affects quality measure scores.
We would like to note that the risk adjustment model for these outcomes includes up to 60 risk-adjusters, and includes more clinically and statistically relevant adjusters for function than other risk-adjusted functional outcomes measures. We will pursue ongoing monitoring and analysis of these proposed functional outcome measures to identify any potential disparities across patient and facility characteristics.
One commenter requested that we use the same set of definitions for standardized and interoperable functional assessment data in each PAC setting. The commenter further stated that this would mitigate providers collecting and calculating data for these measures differently across settings. The commenter was concerned discrepancies could result in unintended consequences with regard to payment and public reporting.
With regard to the request for standardized and interoperable functional assessment data in each PAC setting, we agree with the commenter about the importance of accurate collection of standardized patient assessment data across the PAC settings. The item definitions are the same across PAC settings, and we continue to work to harmonize the coding guidance for the standardized assessment data elements as we believe that this is key to the collection of accurate data.
In the FY 2017 SNF PPS final rule (81 FR 52030 through 52034), we adopted the Potentially Preventable 30-Day Post-Discharge Readmission Measure for SNF QRP. This measure was developed to meet section 1899B(d)(1)(C) of the Act, which calls for measures to reflect all-condition risk-adjusted potentially preventable hospital readmission rates for PAC providers, including SNFs.
This measure was specified to be calculated using 1 year of Medicare FFS claims data; however, in the FY 2018 SNF PPS proposed rule (82 FR 21057) we proposed to increase the measurement period to 2 years of claims data. The rationale for this change is to expand the number of SNFs with 25 stays or more, which is the minimum number of stays that we require for public reporting. Furthermore, this modification will align the SNF measure more closely with other potentially preventable hospital readmission measures developed to meet the IMPACT Act requirements and adopted for the IRF and LTCH QRPs, which are
We also proposed to update the dates associated with public reporting of SNF performance on this measure. In the FY 2017 SNF PPS final rule (81 FR 52030 through 52034), we finalized initial confidential feedback reports by October 2017 for this measure based on 1 calendar year of claims data from discharges during CY 2016 and public reporting by October 2018 based on data from CY 2017. However, to make these measure data publicly available by October 2018, we proposed to shift this measure from calendar year to fiscal year, beginning with publicly reporting on claims data for discharges in fiscal years 2016 and 2017.
Additional information regarding the Potentially Preventable 30-Day Post-Discharge Readmission Measure for SNF QRP can be found at
We sought public comment on our proposal to increase the length of the measurement period and to update the public reporting dates for this measure. A discussion of these comments, along with our responses, appears below.
Some commenters were concerned that the greater lag associated with expanding the reporting period to 2 years would make the measure less valuable or sensitive to quality improvement. One commenter was concerned that publicly reporting performance data based on 2 years of data may not accurately reflect the quality of care that SNFs are currently furnishing. Some commenters were opposed to the proposal because it would not align with measurement periods used in other SNF quality measures. One commenter was specifically opposed to shifting this measure to a fiscal year cycle because most SNF data are based on calendar years, noting that inconsistent time periods may create confusion. Another commenter did not oppose the shift to fiscal year as long as confidential feedback reports and review and correction timelines would not be negatively impacted.
In the FY 2018 SNF PPS proposed rule (82 FR 21058), we invited public comment on the importance, relevance, appropriateness, and applicability of each of the quality measures listed in Table 19 for future years in the SNF QRP.
We are also considering a measure focused on pain that relies on the collection of patient-reported pain data, and another measure regarding the Percent of Residents Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine. Finally, we are considering a measure related to patient safety, that is, Patients Who Received an Antipsychotic Medication.
Commenters submitted the following comments related to the proposed rule's discussion of the SNF QRP Quality Measures Under Consideration for Future Years. A discussion of these comments, along with our responses, appears below.
One commenter suggested that a measure be developed that reflects patient-centered care pain management regardless of ability to self-report as a significant portion of SNF residents are not able to self-report pain and suggested using reliable and valid observational assessment items such as those in the current MDS 3.0 Section J0800 and J0850. The commenter encouraged us to consider incorporating the standardized observational pain assessment data elements that are currently being developed and tested to fulfill the requirements of the IMPACT Act. The commenter also urged us to seek NQF endorsement for any new measures to be incorporated into the SNF QRP program. Another commenter encouraged assessment for communication about pain rather than experience of pain without inadvertently incentivizing the use of opioid medications in alignment with proposed changes to HCAHPS. Another commenter suggested modifying this measure to reflect the proportion of residents for which moderate to severe pain interferes with or prevents important daily functional tasks and drive improvements in quality of life.
In the FY 2017 SNF PPS final rule (81 FR 52021 through 52029), we finalized the Discharge to Community-Post Acute Care (PAC) Skilled Nursing Facility (SNF) Quality Reporting Program (QRP) measure, which assesses successful discharge to the community from a SNF setting, with successful discharge to the community including no unplanned rehospitalizations and no death in the 31 days following discharge from the SNF. We received public comments (see 81 FR 52025 through 52026) recommending exclusion of baseline nursing facility residents from the measure, as these residents did not live in the community prior to their SNF stay. At that time, we highlighted that using Medicare FFS claims alone, we were unable to accurately identify baseline nursing facility residents. We stated that potential future modifications of the measure could include assessment of the feasibility and impact of excluding baseline nursing facility residents from the measure through the addition of patient assessment-based data. In response to these public comments, we are considering a future modification of the Discharge to Community-PAC SNF QRP measure, which would exclude baseline nursing facility residents from the measure. Further, this measure is specified to be calculated using one year of Medicare FFS claims data. We are considering expanding the measurement period in the future to two consecutive years of data to increase SNF sample sizes and reduce the number of SNFs with fewer than 25 stays that would otherwise be excluded from public reporting. This modification would also align the measurement period with that of the discharge to community measures adopted for the IRF and LTCH Quality Reporting Programs to meet the IMPACT Act requirements; both the IRF and LTCH measures have measurement periods of two consecutive years.
We sought public comment on these considerations for Discharge to Community-PAC SNF QRP measure in future years of the SNF QRP. A discussion of these comments, along with our responses, appears below.
As a result of the input and suggestions provided by technical experts at the TEPs held by our measure developer, and through public comment, we are engaging in additional development work for two measures that would satisfy the domain of accurately communicating the existence of and providing for the transfer of health information and care preferences when the individual transitions, in section 1899B(c)(1)(E) of the Act, including performing additional testing. The measures under development are:
Commenters submitted the following comments related to the proposed rule's discussion of the IMPACT Act Implementation Update. A discussion of these comments, along with our responses, appears below.
Section 1888(e)(6)(B)(i)(III) of the Act requires that for fiscal year 2019 and each subsequent year, SNFs report standardized resident assessment data required under section 1899B(b)(1) of the Act. As we describe in section III.D.2.g.(1) above, we are finalizing in this final rule that the current pressure ulcer measure, Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678), will be replaced with the proposed pressure ulcer measure, Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury, beginning with the FY 2020 SNF QRP. The current pressure ulcer measure will remain in the SNF QRP until that time. Accordingly, for the requirement that SNFs report standardized resident assessment data for the FY 2019 SNF QRP, we proposed that the data elements used to calculate that measure meet the definition of standardized resident assessment data for medical conditions and co-morbidities under section 1899B(b)(1)(B)(iv) and that the successful reporting of that data under section 1888(e)(6)(B)(i)(II) for admissions as well as discharges occurring during fourth quarter CY 2017 would also satisfy the requirement to report standardized resident assessment data for the FY 2019 SNF QRP.
The collection of assessment data pertaining to skin integrity, specifically pressure related wounds, is important for multiple reasons. Clinical decision support, care planning, and quality improvement all depend on reliable assessment data collection. Pressure related wounds represent poor outcomes, are a serious medical condition that can result in death and disability, are debilitating, painful and are often an avoidable outcome of medical care.
As we note above, the data elements needed to calculate the current pressure ulcer measure are already included on the MDS and reported for SNFs, and exhibit validity and reliability for use across PAC providers. Item reliability for these data elements was also tested for the nursing home setting during implementation of MDS 3.0. Testing results are from the RAND Development and Validation of MDS 3.0 project.
The data elements used to calculate the current pressure ulcer measure received public comment on several occasions, including when that measure was proposed in the FY 2012 IRF PPS (76 FR 47876) and IPPS/LTCH PPS proposed rules (76 FR 51754). Further, they were discussed in the past by TEPs held by our measure development contractor on June 13 and November 15, 2013, and recently by a TEP on July 18, 2016. TEP members supported the measure and its cross-setting use in PAC. The report,
We sought public comment on this proposal. A discussion of these comments, along with our responses, appears below.
In the FY 2018 SNF PPS proposed rule (82 FR 21059 through 21076), we described our proposals for the reporting of standardized resident assessment data by SNFs beginning with the FY 2020 SNF QRP. SNFs would be required to report these data for SNF admissions at the start of the Medicare Part A stay and SNF discharges at the end of the Medicare Part A stay that occur between October 1, 2018 and December 31, 2018, with the exception of two data elements (Hearing and Vision), which would be required for SNF admissions at the start of the Medicare Part A stay only that occur between October 1, 2018, and December 31, 2018. Following the initial reporting year for the FY 2020 SNF QRP, subsequent years for the SNF QRP would be based on a full calendar year of such data reporting.
In selecting the data elements, we carefully weighed the balance of burden in assessment-based data collection and aimed to minimize additional burden through the utilization of existing data in the assessment instruments. We also note that the resident assessment instruments are considered part of the medical record, and sought the inclusion of data elements relevant to resident care. We also took into consideration the following factors for each data element: overall clinical relevance; ability to support clinical decisions, care planning and interoperable exchange to facilitate care coordination during transitions in care; and the ability to capture medical complexity and risk factors that can inform both payment and quality. Additionally, the data elements had to have strong scientific reliability and validity; be meaningful enough to inform longitudinal analysis by providers; had to have received general consensus agreement for its usability; and had to have the ability to collect such data once but support multiple uses. Further, to inform the final set of data elements for proposal, we took into account technical and clinical subject matter expert review, public comment and consensus input in which such principles were applied. We also took into account the consensus work and empirical findings from the PAC PRD. We acknowledge that during the development process that led to these proposals, some providers expressed concern that changes to the MDS to accommodate standardized resident assessment data reporting would lead to an overall increased reporting burden. However, we note that there is no additional data collection burden for standardized data already collected and submitted on the quality measures.
Several commenters expressed concern related to the implementation timeline in the proposed rule, which would require SNFs to begin collecting the proposed standardized resident assessment data elements in the timeframe stated in the proposed rule. A few commenters noted that CMS had not yet provided sufficient specifications or educational materials to support implementation of the new resident assessments in the proposed timeline.
Several commenters urged CMS to delay the reporting of new standardized resident assessment data elements by at least one year, and to carefully assess whether all of the proposed standardized resident assessment data elements are necessary under the IMPACT Act. Commenters suggested ways to delay the proposals for standardized resident assessment data elements in the categories of Cognitive Function and Mental Status; Special Services, Treatments, and Interventions; and Impairments, including allowing voluntary or limited reporting for a period of time before making comprehensive reporting mandatory, and delaying the beginning of mandatory data collection for a period of time. Some commenters recommended that during the delay, CMS re-evaluate whether it can require the reporting of standardized resident assessment data in a less burdensome manner.
In this final rule, we are finalizing the standardized resident assessment data elements that we proposed to adopt for the IMPACT Act categories of Functional Status and Medical Conditions and Co-Morbidities. Unlike the standardized resident assessment data that we are not finalizing, the standardized resident assessment data that we proposed for these categories are already required to calculate the Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (NQF #0678) quality measure, the Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury quality measure (which we are finalizing in this final rule), and the Application of Percent of Long-Term Care Hospital Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function (NQF #2631) quality measure (which we finalized in the FY 2016 SNF PPS final rule). As a result, we do not believe that finalizing these proposals creates a new reporting burden for SNFs or otherwise necessitates a delay.
A full discussion of the standardized resident assessment data elements that we proposed to adopt for the categories described in sections 1899B(b)(1)(B)(ii), (iii) and (v) can be found in the FY 2018 SNF PPS proposed rule (82 FR 21060 through 21076). In light of our decision to not finalize our proposals with respect to these categories, we are not going to address in this final rule the specific technical comments that we received on these proposed data elements. However, we appreciate the many technical comments we did receive specific to each of these data elements, and we will take them into consideration as we develop new proposals for these categories. Below we discuss the comments we received specific to the standardized resident assessment data we proposed to adopt, and are finalizing in this final rule, for the categories of Functional Status and Medical Conditions and Co-Morbidities.
We proposed that the data elements currently reported by SNFs to calculate the measure, Application of Percent of Long-Term Care Hospital Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function (NQF #2631), would also meet the definition of standardized resident assessment data for functional status under section 1899B(b)(1)(B)(i) of the Act, and that the successful reporting of that data under section 1886(m)(5)(F)(i) of the Act would also satisfy the requirement to report standardized resident assessment data under section 1886(m)(5)(F)(ii) of the Act.
These patient assessment data for functional status are from the CARE Item Set. The development of the CARE Item Set and a description and rationale for each item is described in a report entitled “The Development and Testing of the Continuity Assessment Record and Evaluation (CARE) Item Set: Final Report on the Development of the CARE Item Set: Volume 1 of 3.”
We sought public comment on this proposal. A discussion of these comments, along with our responses, appears below.
We proposed that the data elements needed to calculate the current measure, Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678), and the proposed measure, Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury, meet the definition of standardized resident assessment data for medical conditions and co-morbidities under section 1899B(b)(1)(B)(iv) of the Act, and that the successful reporting of that data under section 1888(e)(6)(B)(i)(II) of the Act would also satisfy the requirement to report standardized resident assessment data under section 1888(e)(6)(B)(i)(III) of the Act.
“Medical conditions and comorbidities” and the conditions addressed in the standardized resident assessment data used in the calculation and risk adjustment of these measures, that is, the presence of pressure ulcers, diabetes, incontinence, peripheral vascular disease or peripheral arterial disease, mobility, as well as low body mass index, are all health-related conditions that indicate medical complexity that can be indicative of underlying disease severity and other comorbidities.
Specifically, the data elements used in the measure are important for care planning and provide information pertaining to medical complexity. Pressure ulcers are serious wounds representing poor healthcare outcomes, and can result in sepsis and death. Assessing skin condition, care planning for pressure ulcer prevention and healing, and informing providers about their presence in patient transitions of care is a customary and best practice. Venous and arterial disease and diabetes are associated with low blood flow which may increase the risk of tissue damage. These diseases are indicators of factors that may place individuals at risk for pressure ulcer development and are therefore important for care planning. Low BMI, which may be an indicator of underlying disease severity, may be associated with loss of fat and muscle, resulting in potential risk for pressure ulcers. Bowel incontinence and the possible maceration to the skin associated, can lead to higher risk for pressure ulcers. In addition, the bacteria associated with bowel incontinence can complicate current wounds and cause local infection. Mobility is an indicator of impairment or reduction in mobility and movement which is a major risk factor for the development of pressure ulcers. Taken separately and together, these data elements are important for care planning, transitions in services and identifying medical complexities.
In sections III.D.2.g.1. and III.D.2.j.1. of this final rule, we discuss our rationale for proposing that the data elements used in the measures meet the definition of standardized resident assessment data. In summary, we believe that the collection of such assessment data is important for multiple reasons, including clinical decision support, care planning, and quality improvement, and that the data elements assessing pressure ulcers and the data elements used to risk adjust showed good reliability. We solicited stakeholder feedback on the quality measure, and the data elements from which it is derived, by means of a public comment period and TEPs, as described in section III.D.2.g.1. of this final rule.
We sought public comment on this proposal. A discussion of these comments, along with our responses, appears below.
In the FY 2016 SNF PPS final rule (80 FR 46455), we adopted timing for new SNFs to begin reporting quality data under the SNF QRP beginning with the FY 2018 SNF QRP. We proposed in the FY 2018 SNF PPS proposed rule (82 FR
We sought public comment on the proposal that new SNFs will be required to begin reporting standardized resident assessment data on the same schedule. A discussion of these comments, along with our responses, appears below.
Under our current policy, SNFs report data by completing applicable sections of the MDS, and submitting the MDS-RAI to CMS through the QIESASAP system. For more information on SNF QRP reporting through the QIES ASAP system, refer to the “Related Links” section at the bottom of
We sought public comments on this proposal. A discussion of these comments, along with our responses, appears below.
Starting with the FY 2019 SNF QRP, we proposed to apply our current schedule for the reporting of measure data to the reporting of standardized resident assessment data. Under this proposed policy, except for the first program year for which a measure is adopted, SNFs must report data on measures for SNF Medicare admissions that occur during the 12-month calendar year (CY) period that apply to the program year. For the first program year for which a measure is adopted, SNFs are only required to report data on SNF Medicare admissions that occur on or after October 1 and discharged from the SNF up to and including December 31 of the calendar year that applies to that program year. For example, for the FY 2018 SNF QRP, data on measures adopted for earlier program years must be reported for all CY 2016 SNF Medicare admissions that occur on or after October 1, 2016 and discharges that occur on or before December 31, 2016. However, data on newly adopted measures for the FY 2018 SNF QRP program year must only be reported for SNF Medicare admissions and discharges that occur during the last calendar quarter of 2016.
Tables 20 and 21 illustrate this policy using the FY 2019 and FY 2020 SNF QRP as examples.
In the FY 2018 SNF PPS proposed rule (82 FR 21076 through 21077), we proposed that for the SNF QRP starting with the 2019 SNF QRP, we would apply our current schedule for the reporting of measure data to the reporting of standardized resident assessment data. Specifically, we proposed to apply to the submission of standardized resident assessment data our policy that except for the first program year for which a measure is adopted, SNFs must report data on measures for SNF Medicare admissions that occur during the 12 month calendar year period that apply to the program year and that for the first program year for which a measure is adopted, SNFs are only required to report data on SNF Medicare admissions that occur on or after October 1 and are discharged from the SNF up to and including December 31 of the calendar year that applies to the program year. We sought comment on our proposal to extend our current policy governing the schedule for reporting the quality measure data to the reporting of standardized resident assessment data beginning with the FY 2019 SNF QRP. A discussion of these comments, along with our responses, appears below.
As discussed in section III.D.2.g. of this final rule, we are finalizing the adoption of five quality measures beginning with the FY 2020 SNF QRP: (1) Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury; (2) Application of IRF Functional Outcome Measure: Change in Self-Care for Medical Rehabilitation Patients (NQF #2633); (3) Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634); (4) Application of IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients (NQF #2635); (5) and Application of IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients (NQF #2636). In the FY 2018 SNF PPS proposed rule (82 FR 21077) we proposed that SNFs would report data on these measures using the MDS that is submitted through the QIES ASAP system. For the FY 2020 SNF QRP, SNFs would be required to report these data for admissions as well as discharges that occur between October 1, 2018 and December 31, 2018. More information on SNF reporting using the QIES ASAP system is located at
We sought public comment on this proposal. A discussion of these comments, along with our responses, appears below.
Through various means of public input, including that through previous rules (FY 2016 SNF PPS final rule, 80 FR 46415), public comment on measures, and the MAP, we received input suggesting that we expand the quality measures to include all residents and patients regardless of payer status so as to ensure representation of the quality of the services provided on the population as a whole, rather than a subset limited to Medicare. While we appreciate that many SNF residents are also Medicare beneficiaries, we agree that collecting quality data on all residents in the SNF setting supports our mission to ensure quality care for all individuals, including Medicare beneficiaries. We also agree that collecting data on all patients provides the most robust and accurate reflection of quality in the SNF setting. Accurate representation of quality provided in SNFs is best conveyed using data on all SNF residents, regardless of payer. We also appreciate that collecting quality data on all SNF residents regardless of payer source may create additional burden. However, we also note that the effort to separate out SNF residents covered by other non-FFS Medicare payers could have clinical and work flow implications with an associated burden, and we further appreciate that it is common practice for SNFs to collect MDS data on all residents regardless of payer source. Additionally, we note that data collected through MDS for Medicare beneficiaries should match that beneficiary's claims data in certain key respects (for example, diagnoses and procedures); this makes it easier for us to evaluate the accuracy of
We sought comments on this topic. A discussion of these comments, along with our responses, appears below.
One commenter noted a preference for using claims-based data and urged that claims-based SNF QRP measures be re-specified to allow for this inclusion. Another commenter highlighted the value in using readily available MDS assessment-based data to better represent facility performance on measures previously reported using Medicare Part A claims data only.
We have received questions surrounding the data completion policy we adopted beginning with the FY 2018 program year, specifically with respect to how that policy applies to patients who reside in the SNF for part of an applicable period, for example, a patient who is admitted to a SNF during one reporting period but discharged in another, or a patient who is assessed upon admission using one version of the MDS but assessed at discharge using another version. We previously finalized in the FY 2016 SNF PPS final rule (80 FR 46458) that SNFs must report all of the data necessary to calculate the measures that apply to that program year on at least 80 percent of the MDS assessments that they submit. The term “measures” refers to quality measures, resource use, and other measures. We also stated, in response to a comment, that we would consider data to have been satisfactorily submitted for a program year if the SNF reported all of the data necessary to calculate the measures if the data actually can be used for purposes of such calculations (as opposed to, for example, the use of a dash [-]).
Some stakeholders interpreted our requirement that data elements be necessary to calculate the measures to mean that if a patient is assessed, for example, using one version of the MDS at admission and another version of the MDS at discharge, the two assessments are included in the pool of assessments used to determine data completion only if the data elements at admission and discharge can be used to calculate the measures. Our intention, however, was not to exclude assessments on this basis. Rather, our intention was solely to clarify that for purposes of determining whether a SNF has met the data completion threshold, we would only look at the completeness of the data elements in the MDS for which reporting is required under the SNF QRP.
To clarify our intended policy, in the FY 2018 SNF PPS proposed rule (82 FR 21077 through 21078), we proposed that for the purposes of determining whether a SNF has met the data completion threshold, we would consider whether the SNF has reported all of the required data elements applicable to the program year on at least 80 percent of the MDS assessments that they submit for that program year. For example, if a resident is admitted on December 20, 2017 but discharged on January 10, 2018: (1) The resident's 5-Day PPS assessment would be used to determine whether the SNF met the data completion threshold for the 2017 reporting period (and associated program year), and (2) the discharge assessment would be used to determine whether the SNF met the data completion threshold for the 2018 reporting period (and associated program year). We also clarified in the FY 2018 SNF PPS proposed rule (82 FR 21078) that some assessment data will not invoke a response; in those circumstances, data are not “missing” or incomplete. For example, in the case of a resident who does not have any of the medical conditions in a check all that apply listing, the absence of a response indicates that the condition is not present, and it would be incorrect to consider the absence of such data as missing in a threshold determination.
We also proposed to apply this policy to the submission of standardized resident assessment data, and to codify it at § 413.360(b) of our regulations. We sought comment on these proposals. A discussion of these comments, along with our responses, appears below.
Another commenter requested additional explanation and examples regarding how the threshold compliance calculation is applied. One commenter suggested that the 80 percent data completion threshold finalized in the SNF PPS FY 2016 final rule is set too low and requested that, for the FY 2018 payment determination year and beyond, the data completion threshold be increased to at least ninety percent. We also received a comment suggesting that requiring that SNFs submit data on 100% of all items necessary to calculate quality measures and all additional standardized resident assessment data elements is set too high. They also expressed that the tracking of dash use, which is what is used to determine compliance, is burdensome. Another
One commenter did not support the codification of this proposal in our regulations with respect to the FY 2019 SNF QRP, and requested that we first review the results of the initial implementation of this policy and propose such codification in the future.
We do not believe that the Review and Correct Reports would be an appropriate mechanism for informing SNFs whether they have complied with our data completion threshold. This report is intended to provide SNFs information related to their overall quality measure calculations. It will not provide SNFs with the discrete, data element level information on what response was coded for every resident assessment data element. We refer to the CMS SNF QRP Training Web site for detailed information on the Review and Correct Reports:
Although the Review and Correct Reports do not enable SNFs to track the coding of dashes which is what can lead to non-compliance, we provide other reports via the Certification and Survey Provider Enhanced Reports Reporting (CASPER) System which SNFs can use to track their dash use in the assessment data they have submitted and other submission information. These reports include: Submitter Validation Reports, Facility Final Validation Reports, Error Detail by Facility Reports, Activity or Submission Activity Reports and Assessment Print Reports. We are also looking into other mechanisms and reports that would serve to further assist SNFs in easily identifying their data completion thresholds.
To illustrate an example as requested, if a provider submitted 100 records in a reporting period and 80% of those records had all of the standardized resident assessment data elements that we require and the data necessary to calculate the measures used in the SNF QRP, the SNF would meet our compliance determination.
We currently believe that the completion of all of the required data elements on at least 80 percent of all required assessments is a fair criterion for a new program and is consistent with other post-acute care programs. Regarding the suggestion that we not consider the initial quarter of data reporting by SNFs on new data that is required, we have analyzed the first quarter of data reporting and found that most SNFs were successful in their data submission. We appreciate that SNFs seek to track their compliance rates and the burden that may be associated with their tracking of such data submission. However, we believe that ensuring the submission of accurate data is an inherent responsibility of the SNF. We note that the use of dashes, which is what can lead to a determination of non-compliance, should be rare in that the assessment data collected is required and the expectation is that SNFs perform these assessments on their residents for not only data reporting purposes for the SNF QRP, but also for other purposes as well. As has been noted, overall dash use by SNFs is already low. That said, the reports we provide can assist in a SNF's tracking of their dash rates and we will evaluate other types of reports that can assist.
We refer readers to the FY 2016 SNF PPS final rule (80 FR 46458 through 46459) for a summary of our approach to the development of data validation process for the SNF QRP. At this time, we are continuing to explore data validation methodology that will limit the amount of burden and cost to SNFs, while allowing us to establish estimations of the accuracy of SNF QRP data.
We refer readers to the FY 2016 SNF PPS final rule (80 FR 46459 through 46460) for our finalized policies regarding submission exception and extension requirements for the FY 2018 SNF QRP. We did not propose any changes to the SNF QRP requirements that we adopted in these final rules. However, in the FY 2018 SNF PPS proposed rule (82 FR 21078) we proposed to codify the SNF QRP Submission Exception and Extension Requirements at new § 413.360(c).
We remind readers that, in the FY 2016 SNF PPS final rule (80 FR 46459 through 46460) we stated that SNF's must request an exception or extension by submitting a written request along with all supporting documentation to CMS via email to the SNF Exception and Extension mailbox at
We refer the reader to the FY 2016 SNF PPS final rule (80 FR 46460 through 46461) for a summary of our finalized reconsideration and appeals procedures for the SNF QRP beginning with the FY 2018 SNF QRP. We did not propose any changes to these procedures in the FY 2018 SNF PPS proposed rule (82 FR 21078). However, we proposed to codify the SNF QRP Reconsideration and Appeals procedures at new § 413.360(d). Under these procedures, a SNF must follow a defined process to file a request for reconsideration if it believes that a finding of noncompliance with the reporting requirements for the applicable fiscal year is erroneous, and the SNF can file a request for reconsideration only after it has been found to be noncompliant. To be considered, a request for a reconsideration must contain all of the elements outlined on our Web site at
We sought public comments on our proposal to codify the SNF QRP reconsideration and appeals procedures. A discussion of these comments, along with our responses, appears below.
Section 1899B(g) of the Act requires the Secretary to establish procedures for the public reporting of SNFs' performance, including the performance of individual SNFs, on the quality measures specified under section (c)(1) and resource use and other measures specified under section (d)(1) of the Act (collectively, IMPACT Act measures) beginning not later than 2 years after the specified application date under section 1899B(a)(2)(E) of the Act. This is consistent with the process applied under section 1886(b)(3)(B)(viii)(VII) of the Act, which refers to the public display and review requirements for the Hospital Inpatient Quality Reporting (IQR) Program. For a more detailed discussion about the provider's confidential review process prior to public display of measures, we refer readers to the FY 2017 SNF PPS final rule (81 FR 52045 through 52048).
In the FY 2018 SNF PPS proposed rule, pending the availability of data, we proposed to publicly report data in CY 2018 for the following 3 assessment-based measures: (1) Application of Percent of Long-Term Care Hospital (LTCH) Patients With an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function (NQF #2631); (2) Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (NQF #0678); and (3) Application of Percent of Residents Experiencing One or More Falls with Major Injury (NQF #0674). Data collection for these 3 assessment-based measures began on October 1, 2016. We proposed to display data for the assessment-based measures based on rolling quarters of data, and we would initially use discharges from January 1, 2016 through December 31, 2016.
In addition, we proposed to publicly report 3 claims-based measures for: (1) Medicare Spending Per Beneficiary-PAC SNF QRP; (2) Discharge to Community-PAC SNF QRP; and (3) Potentially Preventable 30-Day Post-Discharge Readmission Measure for SNF QRP.
These measures were adopted for the SNF QRP in the FY 2017 SNF PPS rule to be based on data from one calendar year. As previously adopted in the FY 2017 SNF PPS final rule (81 FR 52045 through 52047), confidential feedback reports for these 3 claims-based measures will be based on data collected for discharges beginning January 1, 2016 through December 31, 2016. However, our current proposal revises the dates for public reporting and we proposed to transition from calendar year to fiscal year to make these measure data publicly available by October 2018.
For the Medicare Spending Per Beneficiary-PAC SNF QRP and Discharge to Community-PAC SNF QRP measures, we proposed public reporting beginning in calendar year 2018 based on data collected from discharges beginning October 1, 2016, through September 30, 2017 and rates will be displayed based on one fiscal year of data. For the Potentially Preventable 30-day Post-Discharge Readmission Measure for SNF QRP, we also proposed to increase the years of data used to calculate this measure from one year to 2 years and to update the associated reporting dates. These proposed revisions to the Potentially Preventable 30-Day Post-Discharge Readmission Measure for SNF QRP will result in the data being publicly reported with discharges beginning October 1, 2015, through September 30, 2017 and rates will be displayed based on two consecutive fiscal years of data.
Also, we proposed to discontinue the public display of data on the assessment-based measure “Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678)” and to replace it with a modified version of the measure entitled “Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury” from the SNF QRP by October 2020.
For the assessment-based measures, Application of Percent of Long-Term Care Hospital (LTCH) Patients With an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function (NQF #2631); Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (NQF #0678); and Application of Percent of Residents Experiencing One or More Falls with Major Injury (NQF #0674), to ensure the statistical reliability of the measures, we proposed to assign SNFs with fewer than 20 eligible cases during a performance period to a separate category: “The number of cases/resident stays is too small to report”. If a SNF had fewer than 20 eligible cases, then the SNF's performance would not be publicly reported for the measure for that performance period.
For the claims-based measures Medicare Spending Per Beneficiary-PAC SNF QRP; Discharge to Community-PAC SNF QRP; and Potentially Preventable 30-Day Post-Discharge Readmission Measure for SNF QRP, we proposed to assign SNFs with fewer than 25 eligible cases during a performance period to a separate category: “The number of cases/resident stays is too small to report,” to ensure the statistical reliability of the measures. If a SNF had fewer than 25 eligible cases, the SNF's performance would not be publicly reported for the measure for that performance period. For Medicare Spending Per Beneficiary-PAC SNF QRP we proposed to assign SNFs with fewer than 20 eligible cases during a performance period to a separate category: “The number of cases/resident stays is too small to report” to ensure the statistical reliability of the measure. If a SNF has fewer than 20 eligible cases, the SNF's performance would not be publicly reported for the measure for that performance period.
We invited public comment on the proposal for the public display of these three assessment-based measures and three claims-based measures, and the replacement of “Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678)” with a modified version of the measure, “Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury” described above. A discussion of these comments, along with our responses, appears below.
Section 1899B(f) of the Act requires the Secretary to provide confidential feedback reports to PAC providers on their performance on the measures specified under subsections (c)(1) and (d)(1) of section 1899B of the Act, beginning 1 year after the specified application date that applies to such measures and PAC providers. In the FY 2017 SNF PPS final rule (81 FR 52046 through 52048), we finalized processes to provide SNFs the opportunity to review their data and information using confidential feedback reports that will enable SNFs to review their performance on the measures required under the SNF QRP. Information on how to obtain these and other reports available to the SNF QRP can be found at
The Review and Correct reports, currently available to SNFs, provide aggregate performance for up to the past four full quarters as the data are available. The reports contain information on assessment based measures performance at the facility-level and observed rates. The reports also display data correction deadlines and whether the data correction period is open or closed. Please refer to the SNF QRP Web site for information from the training on the Review and Correct reports:
Finally, the Provider Preview reports will be available beginning in the summer of 2018. Provider Preview reports are available about 5 months after the end of each reporting period. They contain facility-level quality measure data results and will contain information such as the numerator, denominator, facility observed percent, facility adjusted percent, and national average. Providers will have 30 days upon receiving the Provider Preview reports via their CASPER system folders to review their data. We note at that point in time providers are no longer able to correct the underlying data in these reports. At this point, the data correction period has ended so providers are not able to correct the underlying data in these reports.
Section 215 of the Protecting Access to Medicare Act of 2014 (PAMA) (Pub. L. 113-93) authorized the SNF VBP Program (the “Program”) by adding sections 1888(g) and (h) to the Act. As a prerequisite to implementing the SNF VBP Program, in the FY 2016 SNF PPS final rule (80 FR 46409 through 46426) we adopted an all-cause, all-condition hospital readmission measure, as required by section 1888(g)(1) of the Act. In the FY 2017 SNF PPS final rule (81 FR 51986 through 52009), we adopted an all-condition, risk-adjusted potentially preventable hospital readmission measure for SNFs, as required by section 1888(g)(2) of the Act. In this final rule, we are finalizing proposals related to the Program's implementation.
Section 1888(h)(1)(B) of the Act requires that the SNF VBP Program apply to payments for services furnished on or after October 1, 2018. The SNF VBP Program applies to freestanding SNFs, SNFs affiliated with acute care facilities, and all non-CAH swing-bed rural hospitals. We believe the implementation of the SNF VBP Program is an important step towards transforming how care is paid for, moving increasingly towards rewarding better value, outcomes, and innovations instead of merely volume.
For additional background information on the SNF VBP Program, including an overview of the SNF VBP Report to Congress and a summary of the Program's statutory requirements, we refer readers to the FY 2016 SNF PPS final rule (80 FR 46409 through 46410). We also refer readers to the FY 2017 SNF PPS final rule (81 FR 51986 through 52009) for discussion of the policies that we adopted related to the potentially preventable hospital readmission measure, scoring, and other topics.
In this rule, we are finalizing requirements for the SNF VBP Program, as well as codifying some of those requirements at § 413.338, including certain definitions, the process for making value-based incentive payments, and limitations on review.
We received several general comments on the SNF VBP Program. We note that we did not receive any comments specific to the proposed regulation text. A discussion of the general comments that we received, along with our responses, appears below.
We thank the commenters for this feedback.
For background on the measures in the SNF VBP Program, we refer readers to the FY 2016 SNF PPS final rule (80 FR 46419), where we finalized the Skilled Nursing Facility 30-Day All-Cause Readmission Measure (SNFRM) (NQF #2510) that we will use for the SNF VBP Program. We also refer readers to the FY 2017 SNF PPS final rule (81 FR 51987 through 51995), where we finalized the Skilled Nursing Facility 30-Day Potentially Preventable Readmission Measure (SNFPPR) that we will use for the SNF VBP Program instead of the SNFRM as soon as practicable.
Section 1886(h)(2)(B) of the Act requires us to apply the SNFPPR to the SNF VBP Program instead of the SNFRM “as soon as practicable.” We intend to propose a timeline for replacing the SNFRM with the SNFPPR in future rulemaking, after we have had a sufficient opportunity to analyze the potential effects of this replacement on SNFs' measured performance. We believe we must approach the decision about when it is practicable to replace the SNFRM thoughtfully, and we continue to welcome public feedback on when it is practicable to replace the SNFRM with the SNFPPR.
In the FY 2017 SNF PPS final rule (81 FR 51995), we summarized the public comments we received in response to our request for when we should begin to measure SNFs on their performance on the SNFPPR instead of the SNFRM. Commenters' views were mixed; one suggested that we replace the SNFRM immediately, while others requested that we wait until the SNFPPR receives NQF endorsement, or that we allow SNFs to receive and understand their SNFPPR data for at least 1 year prior to beginning to use it. Another commenter suggested that we decline to use the SNFPPR until the measure receives additional support from the Measure Application Partnership and is the subject of additional public comment.
We would like to thank stakeholders for their input on this issue. We believe the first opportunity to replace the SNFRM with the SNFPPR would be the FY 2021 program year, which would give SNFs experience with the SNFRM and other measures of readmissions such as those adopted under the SNF QRP. However, we have not yet determined if it would be practicable to replace the SNFRM at that time. We intend to continue to analyze SNF performance on the SNFPPR in comparison to the SNFRM and assess how the replacement of the SNFRM with the SNFPPR will affect the quality of care provided to Medicare beneficiaries.
In the FY 2018 SNF PPS proposed rule, we sought public comments on when we should replace the SNFRM with the SNFPPR, particularly in light of our proposal (discussed further in this section) to adopt performance and baseline periods based on the federal FY rather than on the calendar year. A discussion of these comments, along with our responses, appears below.
We also intend to provide SNFs with their SNFPPR rates prior to the replacement so that they have an opportunity to learn more about the measure and incorporate that information into their quality improvement and care transitions efforts to reduce readmissions. We also intend to further analyze the SNFPPR prior to replacing the SNFRM for any association with social risk factors, in collaboration with the Assistant Secretary for Planning and Evaluation. We intend to update stakeholders on this analysis in future rulemaking.
We thank the commenters for this feedback and will take it into consideration in the future. We also received a number of unsolicited comments on the SNF VBP Program measures. The comments, together with our responses, appear below.
We thank commenters for their feedback.
Since finalizing the SNFRM for use in the SNF VBP Program, we have continued to conduct analyses using more recent data, as well as to make some necessary non-substantive measure refinements. Results of this work and all refinements are detailed in a
We did not receive any public comments on this topic.
We understand that social risk factors such as income, education, race and ethnicity, employment, disability, community resources, and social support (certain factors of which are also sometimes referred to as socioeconomic status (SES) factors or socio-demographic status (SDS) factors) play a major role in health. One of our core objectives is to improve beneficiary outcomes including reducing health disparities, and we want to ensure that all beneficiaries, including those with social risk factors, receive high quality care. In addition, we sought to ensure that the quality of care furnished by providers and suppliers is assessed as fairly as possible under our programs while ensuring that beneficiaries have adequate access to excellent care.
We have been reviewing reports prepared by the Office of the Assistant Secretary for Planning and Evaluation (ASPE)
As noted in the FY 2017 IPPS/LTCH PPS final rule, the NQF has undertaken a 2-year trial period in which certain new measures, measures undergoing maintenance review, and measures endorsed with the condition that they enter the trial period can be assessed to determine whether risk adjustment for selected social risk factors is appropriate for these measures. This trial entails temporarily allowing inclusion of social risk factors in the risk-adjustment approach for these measures. At the conclusion of the trial, NQF will issue recommendations on the future inclusion of social risk factors in risk adjustment for these quality measures, and we will closely review its findings.
The SNF VBP section of ASPE's report examined the relationship between social risk factors and performance on the 30-day SNF readmission measure for beneficiaries in SNFs. Findings indicated that beneficiaries with social risk factors were more likely to be re-hospitalized but that this effect was significantly smaller when the measure's risk adjustment variables were applied (including adjustment for age, gender, and comorbidities), and that the effect of dual enrollment disappeared. In addition, being at a SNF with a high proportion of beneficiaries with social risk factors was associated with an increased likelihood of readmissions, regardless of a beneficiary's social risk factors.
As we continue to consider the analyses and recommendations from these reports and await the results of the NQF trial on risk adjustment for quality measures, we are continuing to work with stakeholders in this process. As we
In addition, we sought public comment on which social risk factors might be most appropriate for stratifying measure scores and/or potential risk adjustment of a particular measure. Examples of social risk factors include, but are not limited to, dual eligibility/low-income subsidy, race and ethnicity, and geographic area of residence. We are seeking comments on which of these factors, including current data sources where this information would be available, could be used alone or in combination, and whether other data should be collected to better capture the effects of social risk. We will take commenters' input into consideration as we continue to assess the appropriateness and feasibility of accounting for social risk factors in the SNF VBP Program. We note that any such changes would be proposed through future notice-and-comment rulemaking.
We look forward to working with stakeholders as we consider the issue of accounting for social risk factors and reducing health disparities in CMS programs. Of note, implementing any of the above methods would be taken into consideration in the context of how this and other CMS programs operate (for example, data submission methods, availability of data, statistical considerations relating to reliability of data calculations, among others), and we also welcome comment on operational considerations. CMS is committed to ensuring that its beneficiaries have access to and receive excellent care, and that the quality of care furnished by providers and suppliers is assessed fairly in CMS programs.
Commenters submitted the following comments related to the proposed rule's discussion of the Accounting for Social Risk Factors in the SNF VBP Program. A discussion of these comments, along with our responses, appears below.
Other commenters encouraged us to incorporate into our future policies the findings both from NQF's sociodemographics trial and from ASPE's report. One commenter noted that the ASPE report found that provider-level factors are more powerful predictors of readmissions than beneficiary-level factors, and that high-dual SNFs were among the best performers on the readmission measure examined. The commenter stated that these results alone do not suggest a need for risk adjustment, but suggested again that we examine NQF's results before determining whether or not risk adjustment is appropriate in the Program, and further suggested that incorporating SES variables into the measures' risk-adjustment model could embed health disparities, create biases in reporting, undermine system-based approaches to providing high-quality care, and create care access problems. Another commenter noted that adjusting for social risk factors could negatively affect providers and facilities in regions where social risk factors are higher, but cautioned that adjusting for such factors may increase health disparities by essentially masking them.
One commenter suggested that we consider developing readmission measures or statistical approaches to report quality performance specifically for beneficiaries with social risk factors. The commenter noted that high social risk beneficiaries are substantially more likely to be re-hospitalized, and that beneficiaries at SNFs serving a high proportion of beneficiaries with social risk factors are also more likely to be re-hospitalized. The commenter stated that these findings suggest that the SNFPPR's outcomes could vary significantly due to factors beyond the SNF's control.
We thank commenters for their feedback. We will take it into account in future rulemaking.
We refer readers to the FY 2017 SNF PPS final rule (81 FR 51995 through 51998) for a summary of the statutory provisions governing performance standards under the SNF VBP Program and our finalized performance standards policy, as well as the numerical values for the achievement threshold and benchmark for the FY 2019 program year. We also responded to public comments on these policies in that final rule.
In the proposed rule (82 FR 21081 through 21802), we proposed estimated performance standards for the FY 2020 SNF VBP Program based on the FY 2016 MedPAR files including a 3-month run-out period. We stated our intention to include the final numerical values of the performance standards in the final rule. We have displayed the estimated performance standards' numerical values from the proposed rule in Table 23. As we have done previously, we have inverted the SNFRM rates in Table 23 so that higher values represent better performance.
We sought public comments on these estimated achievement threshold and benchmark values. A discussion of these comments, along with our responses, appears below.
In this final rule, we are providing the finalized numerical values of the achievement threshold and the benchmark for the FY 2020 program year. We note that the values have not changed since we published the proposed rule.
Additionally, as discussed further below, we are finalizing baseline and performance periods for the FY 2020 program year based on the federal fiscal year rather than the calendar year as we had finalized for the FY 2019 program year. The numerical values for the achievement threshold and benchmark in Table 24 reflect this final policy by using FY 2016 claims data. As we have done in prior rulemaking, we have inverted the SNFRM rates in Table 24 so that higher values represent better performance.
After consideration of the public comments that we received, we are finalizing the performance standards for the FY 2020 SNF VBP Program as proposed.
We refer readers to the FY 2016 SNF PPS final rule (80 FR 46422) for a discussion of the considerations that we took into account when specifying performance periods for the SNF VBP Program. Based on those considerations, as well as public comments received, we adopted CY 2017 as the performance period for the FY 2019 SNF VBP Program, with a corresponding baseline period of CY 2015.
As we stated in the proposed rule (82 FR 21082), we continue to believe that a 12-month performance and baseline period are appropriate for the Program, and we are concerned about the operational challenges of linking the 12-month periods to the calendar year. Specifically, the allowance of an approximately 90-day claims run out period following the last date of discharge, coupled with the length of time needed to calculate the measure rates using multiple sources of claims needed for statistical modeling, determine achievement and improvement scores, allow SNFs to review their measure rates, and determine the amount of payment adjustments could risk delay in meeting requirement at section 1888(h)(7) of the Act to notify SNFs of their value-based incentive payment percentages not later than 60 days prior to the fiscal year involved.
We therefore considered what policy options we had to mitigate this risk and ensure that we comply with the statutory deadline to notify SNFs of their payment adjustments under the Program.
We continue to believe that a 12-month performance and baseline period provide a sufficiently reliable and valid data set for the SNF VBP Program. We
We are aware that making this transition from the calendar year to the FY will result in our measuring SNFs on their performance during Q4 of 2017 (October 1, 2017, through December 31, 2017) for both the FY 2019 program year and the FY 2020 program year. During the FY 2019 program year, that quarter will fall at the end of the finalized performance period (January 1, 2017, through December 31, 2017), while during the FY 2020 program year, that quarter will fall at the beginning of the proposed performance period (October 1, 2017, through September 30, 2018). We believe that, on balance, this overlap in data is more beneficial than the alternative. We considered proposing not to use that quarter of measured performance during the FY 2020 program year, but, as a result, we would be left with fewer than 12 months of data with which to score SNFs under the program. As we have stated, we believe it is important to use 12 months of data to avoid seasonality issues and to assess SNFs fairly. We therefore believe that meeting these operational challenges, in total, outweighs any cost to SNFs associated with including a single quarter's SNFRM data in their SNF performance scores twice.
However, as an alternative, we requested comments on whether or not we should instead consider adopting for the FY 2020 Program a one-time, three-quarter performance period of January 1, 2018, through September 30, 2018, and a one-time, three-quarter baseline period of January 1, 2016 through September 30, 2016 to avoid the overlap in performance period quarters that we describe above. We believe this option could provide us with sufficiently reliable SNFRM data for purposes of the Program's scoring while ensuring that SNFs are not scored on the same quality measure data in successive Program years. However, we noted that the shorter measurement period could result in lower denominator counts and seasonal variations in care, as well as disparate effects of cold weather months on SNFs' care could also create variations in quality measurement, and could potentially disproportionately affect SNFs in different areas of the country. Under this alternative, we would resume a 12-month performance and baseline period beginning with the FY 2021 program year.
We sought public comments on our proposal and alternative. In addition, as we continue considering potential policy changes once we replace the SNFRM with the SNFPPR, we also sought comment on whether we should consider other potential performance and baseline periods for that measure. We specifically sought comments on whether we should attempt to align the SNF VBP Program's performance and baseline periods with other CMS value-based purchasing programs, such as the Hospital VBP Program or Hospital Readmissions Reduction Program, which could mean proposing to adopt performance and baseline periods that run from July 1st to June 30th. A discussion of these comments, along with our responses, appears below.
Additionally, we believe that using a full year of claims data to calculate performance on the measures ensures that the variation found among SNF performance is due to real differences in care delivery between SNFs, and not within-facility variation due to issues such as seasonality. Based on our SNFRM denominator analysis, we do not believe that using a 9-month performance period would provide us with sufficiently reliable data for a performance year, and given the Program's focus on a single quality measure, we do not believe scoring insufficiently reliable quality measure data to be a practical policy.
After consideration of the public comments that we have received, we are finalizing the performance and baseline period for the FY 2020 SNF VBP Program as proposed.
We refer readers to the FY 2017 SNF PPS final rule (81 FR 52000 through 52005) for a detailed discussion of the scoring methodology that we have finalized for the Program, along with responses to public comments on our policies and examples of scoring calculations.
In the FY 2017 SNF PPS final rule (81 FR 52001), we adopted formulas for scoring SNFs on achievement and improvement. The final step in these calculations is rounding the scores to the nearest whole number.
As we have continued examining SNFRM data, we have identified a concern related to that rounding step. Specifically, we are concerned that rounding SNF performance scores to the nearest whole number is insufficiently precise for purposes of establishing value-based incentive payments under the Program. Rounding scores in this manner has the effect of producing significant numbers of tie scores, since SNFs have between 0 and 100 points available under the Program, and we estimate that more than 15,000 SNFs will participate in the Program. As discussed further in this section, the exchange function methodology that we proposed to adopt is most easily implemented when we are able to differentiate precisely among SNF performance scores to provide each SNF with a unique value-based incentive payment percentage.
We therefore proposed to change the rounding policy from that previously finalized for SNF VBP Program scoring methodology, and instead to award points to SNFs using the formulas that we adopted in last year's rule by rounding the results to the nearest ten-thousandth of a point. Using significant digits terminology, we proposed to use no more than five significant digits to the right of the decimal point when calculating SNF performance scores and subsequently calculating value-based incentive payments.
We view this policy change as necessary to ensure that the Program scores SNFs as precisely as possible and to ensure that value-based incentive payments reflect SNF performance scores as accurately as possible.
We sought public comments on this proposal. A discussion of these comments, along with our responses, appears below.
After consideration of the public comments that we have received, we are finalizing that we will round the SNF performance scores to the fifth significant digit.
In our analyses of historical SNFRM data, we identified a unit imputation issue associated with certain SNFs' measured performance. Specifically, we found that a small number of facilities had zero readmissions during the applicable performance period. An observed readmission rate of zero is a desirable outcome; however, due to risk-adjustment and the statistical approach used to calculate the measure, outlier values are shifted towards the mean, particularly for smaller SNFs. As a result, observed readmission rates of zero result in risk-standardized readmission rates that are greater than zero. Analysis conducted by our measure development contractor revealed that it may be possible—although rare—for SNFs with zero readmissions to receive a negative value-based incentive payment adjustment. We are concerned that assigning a net negative value-based incentive payment to a SNF that achieved zero readmissions during the applicable performance period would not support the Program's goals.
We considered our policy options for SNFs that could be affected by this issue, including excluding SNFs with zero readmissions from the Program entirely to ensure that they are not unduly harmed by being assigned a non-zero RSRR by the measure's finalized methodology. However, because the Program's statute requires us to include all SNFs in the Program, we do not believe we have the authority to exclude any SNFs from the payment withhold and from value-based incentive payments. We also considered proposing to replace SNF performance scores for those SNFs in this situation with the median SNF performance score. But because we must pay SNFs ranked in the lowest 40 percent less than the amount they would otherwise be paid in the absence of the SNF VBP, we do not believe that assigning these SNFs the median performance rate on the applicable measure would necessarily protect them from receiving net negative value-based incentive payments.
We are considering different policy options to ensure that SNFs achieving zero readmissions among their patient populations during the performance period do not receive a negative payment adjustment. We intend to address this topic in future rulemaking, and we request public comments on what accommodations, if any, we should employ to ensure that SNFs meeting our quality goals are not penalized under the Program. We specifically sought comments on the form this potential accommodation should take. A discussion of these comments, along with our responses, appears below.
We thank the commenters for their feedback, and will take it into account in the future.
In other value-based purchasing programs, such as the Hospital VBP Program (see 78 FR 50704 through 50706), as well as several of our quality reporting programs, we have adopted Extraordinary Circumstances Exceptions policies intended to allow participating facilities to receive administrative relief from program requirements due to natural disasters or other circumstances beyond the facility's control that may affect the facility's ability to provide high-quality health care.
We are considering whether this type of policy would be appropriate for the SNF VBP Program. We intend to address this topic in future rulemaking. We therefore sought public comments on whether we should implement such a policy, and if so, the form the policy should take. If we propose such a policy in the future, our preference would be to align it with the Extraordinary Circumstances Exception policy adopted under our other quality programs. A summary of the public comments that we received, along with our responses, appears below.
We refer readers to the FY 2017 SNF PPS final rule (81 FR 52005 through 52006) for discussion of four possible exchange functions that we considered adopting to translate SNFs' performance scores into value-based incentive payments. We created new graphical representations of the four functions that we have considered in the past—linear, cube, cube root, and logistic—and presented those updated representations in the proposed rule (82 FR 21084). We noted that the actual exchange functions' forms and slopes will vary depending on the distributions of SNFs' performance scores from the FY 2019 performance period, and wished to emphasize that these representations are presented solely for the reader's clarity as we discussed our exchange function policy.
We have continued examining historical SNFRM data while considering our policy options for this program. We have attempted to assess how each of the four possible exchange functions that we set out in the FY 2017 SNF PPS final rule, as well as potential variations, would affect SNFs' incentive payments under the Program. We specifically considered the effects of the statutory constraints on the Program's value-based incentive payments and our belief that to create an effective incentive payment program, SNFs' value-based incentive payments must be widely distributed to reward higher performing SNFs through increased payment and to make reduced payments to lower performing SNFs. We also considered our desire to avoid unintended consequences of the Program's incentive payments, particularly since the Program is limited by statute to using a single measure at a time, and our view that an equitable distribution of value-based incentive payments would be most appropriate to ensure that all SNFs, including SNFs serving at-risk populations, could potentially qualify for incentive payments.
In our view, important factors when adopting an exchange function include the number of SNFs that receive more in value-based incentive payments than the number of SNFs for which a reduction is applied to their Medicare payments, as well as the incentive for SNFs to reduce hospital readmissions. We hold this view because we believe that the Program will be most effective at encouraging SNFs to improve the quality of care that they provide to Medicare beneficiaries if SNFs have the opportunity to earn incentives, rather than simply avoid penalties, through high performance on the applicable quality measure. We also believe that SNFs must have incentives to reduce hospital readmissions for their patients
Taking those considerations into account, we analyzed the four exchange functions on which we have previously sought comment—linear, cube, cube root, and logistic—as well as variations of those exchange functions. We scored SNFs using historical SNFRM data and modeled SNFs' value-based incentive payments using each of the functions in turn. We evaluated the distribution of value-based incentive payments that resulted from each function, as well as the number of SNFs with positive payment adjustments and the value-based incentive payment percentages that resulted from each function. We also evaluated the functions' results for the statutory requirements in section 1888(h)(5)(C)(ii) of the Act, including the requirements in subclause (I) that the percentage be based on the SNF performance score for each SNF, in subclause (II) that the application of all such percentages results in an appropriate distribution, and in items (aa), (bb), and (cc) of subclause (II), specifying that SNFs with the highest rankings receive the highest value-based incentive payment amounts, that SNFs with the lowest rankings receive the lowest value-based incentive payment amounts, and that the SNFs in the lowest 40 percent of the ranking receive a lower payment rate than would otherwise apply.
In our analyses of the four baseline functions, we found that the logistic function maximized the number of SNFs with positive payment adjustments among SNFs measured using the SNFRM. We also found that the logistic function best fulfills the requirement that the SNFs in the lowest 40 percent of the ranking receive a lower payment rate than would otherwise apply, resulted in an appropriate distribution of value-based incentive payment percentages, and fulfilled the other statutory requirements described in this final rule. Specifically, we noted that the logistic function provided a broad range of SNFs with net-positive value-based incentive payments, and while it did not provide the highest value-based incentive payment percentage to the top performers of all the functions, we viewed the number of SNFs with positive payment adjustments as a more important consideration than the highest value-based incentive payment percentages being awarded.
We also considered alignment of VBP payment methodologies across fee-for-service Medicare VBP programs, including the Hospital VBP program and Quality Payment Program (QPP). We recognize that aligning payment methodologies would help stakeholders that use VBP payment information across care settings better understand the SNF VBP payment methodology. Both the Hospital VBP program and QPP use some form of a linear exchange function for payment. Three key program aspects that facilitate the use of a linear exchange function are the programs' number of measures, measure weights, and correlation across program measures. These three aspects in tandem contribute to the approximately normal distribution of scores expected in the Hospital VBP program and QPP. No single measure is the key driver that might “tilt” scores to a non-normal distribution. Since both programs are required to be budget neutral, our modeling estimates that scores translate into an approximately equal number of providers with positive payment adjustments and providers receiving a net payment reduction.
In contrast, the SNF VBP payment adjustment is driven, in part, by two specific SNF VBP statutory requirements: The program's use of a single measure; and the requirement that the total amount of value-based incentive payments for all SNFs in a fiscal year be between 50 and 70 percent of the total amount of reductions to payments for that fiscal year, as estimated by the Secretary. Our analysis of the linear exchange function showed that more SNFs would receive a net payment reduction than a payment incentive because the total amount available for incentive payments in a fiscal year is limited to between 50 and 70 percent of the total amount of the reduction to SNF payments for that fiscal year. The linear exchange function also results in the provision of a net payment reduction to a higher percentage of SNFs that exceeded the 50th percentile of national performance, relative to the logistic payment function. We believe that these findings are unique to the SNF VBP program, relative to other fee-for-service Medicare programs, because of the limitation on the total amount that we can use for incentive payments, coupled with the use of a single measure and the corresponding scoring distribution.
In addition to the four baseline functions described further above, we considered adjusting the linear function to be able to make positive payment adjustments to a greater number of SNFs. Specifically, we tested an alternative where we reduced the baseline linear function by 20 percent, then redistributed the resulting funds to the middle 40 percent of SNFs. We found that the use of this linear function with adjustment would enable us to make a positive payment adjustment to a slightly greater number of SNFs than we would be able to make using the logistic function. However, we were concerned with the additional complexity involved in implementing this type of two-step adjustment to the linear exchange function.
Taking all of these considerations into account, we proposed to adopt a logistic function for the FY 2019 SNF VBP Program and subsequent years. Under this policy, we would:
1. Estimate Medicare spending on SNF services for the FY 2019 payment year;
2. Estimate the total amount of reductions to SNFs' adjusted Federal per diem rates for that year, as required by statute;
3. Calculate the amount realized under the payback percentage policy (discussed further below);
4. Order SNFs by their SNF performance scores; and
5. Assign a value-based incentive payment multiplier to each SNF that corresponds to a point on the logistic exchange function that corresponds to its SNF performance score.
As we discussed in the proposed rule (82 FR 21085), we would model the logistic exchange function in such a form that the estimated total amount of value-based incentive payments equals not more than 60 percent of the amounts withheld from SNFs' claims. While the function's specific form would also depend on the distribution of SNF performance scores during the performance period, the formula that we used to construct the logistic exchange function and that we proposed to use for FY 2019 program calculations is:
We sought public comments on this proposal, and in particular, on whether a linear function with adjustment would alternatively be feasible for the SNF VBP Program, potentially beginning with FY 2019. A discussion of these comments, along with our responses, appears below.
A SNF with a baseline period SNFRM rate of 0.16980, which inverts to 0.83020, and a performance period SNFRM rate of 0.19989, which inverts to 0.80011, would, according to the formulas that we have adopted in previous regulations, receive 20.56057 points for achievement and 0 points for improvement since its measured performance declined. The higher of those two values is 20.56057, and that value would become the SNF's performance score. Based on the distribution of historical performance in the data sets that we analyzed, that SNF performance score translates into a value-based incentive payment multiplier of 0.150052 percent, which would be applied after the application of the 2% reduction required by section 1888(h)(6)(B).
Conversely, a SNF with a baseline period SNFRM rate of 0.18842, which inverts to 0.81158, and a performance period SNFRM rate of 0.17384, which inverts to 0.82616, would, according to the formulas that we have adopted in previous regulations, receive 70.23616 points for achievement and 4.78908 points for improvement. The higher of those two values is 70.23616, and that value would become the SNF's performance score. Based on the distribution of historical performance in the data sets that we analyzed, that SNF performance score translates into a value-based incentive payment multiplier of 2.64944 percent, which would be applied after the application of the 2 percent reduction required by section 1888(h)(6)(B) of the Act.
In response to the commenter's request that we provide the scaling factor that we would use to ensure that value-based incentive payments under the Program equal the 60 percent payback percentage that we proposed and are finalizing in this final rule, we note that the distribution of incentive payments provided under the Program depends entirely on the distribution of SNFs' performance on the applicable measure during the baseline and performance periods. We are unable to provide a scaling factor for the FY 2019 program year at this time because the performance period (CY 2017) has not concluded yet, though we may consider doing so after the performance period has concluded. We intend to provide additional detail on the distribution of SNF performance scores and the resulting value-based incentive payment percentages, potentially including the scaling factor, in the future.
After consideration of the public comments that we have received, we are finalizing the logistic exchange function as proposed.
Section 1888(h)(6)(A) of the Act requires the Secretary to reduce the adjusted federal per diem rate determined under section 1888(e)(4)(G) of the Act otherwise applicable to a SNF for services furnished by that SNF during a fiscal year by the applicable percent (which, under section 1888(h)(6)(B) of the Act is 2 percent for FY 2019 and succeeding fiscal years) to fund the value-based incentive payments for that fiscal year. Section 1888(h)(5)(C)(ii)(III) of the Act further specifies that the total amount of value-based incentive payments under the Program for all SNFs in a fiscal year must be greater than or equal to 50 percent, but not greater than 70 percent, of the total amount of the reductions to payments for that fiscal year under the Program, as estimated by the Secretary. Thus, we must decide what percentage of the total amount of the reductions to payments for a fiscal year we will pay as value-based incentive payments to SNFs based on their performance under the Program for that fiscal year.
As with our exchange function policy described in this final rule, we view the important factors when specifying a payback percentage to be the number of SNFs that receive a positive payment adjustment, the marginal incentives for all SNFs to reduce hospital readmissions and make broad-based care quality improvements, and the Medicare Program's long-term sustainability through the additional estimated Medicare trust fund savings. We intend for the proposed payback percentage to appropriately balance these factors. We analyzed the distribution of value-based incentive payments using historical data, focusing on the full range of available payback percentages.
Taking these considerations into account, we proposed that the total amount of funds that would be available to pay as value-based incentive payments in a fiscal year would be 60 percent of the reductions to payments otherwise applicable to SNF Medicare payments for that fiscal year, as estimated by the Secretary. We believe that 60 percent is the most appropriate payback percentage to balance the considerations described in the proposed rule.
We noted that we intend to closely monitor the effects of the payback percentage policy on Medicare beneficiaries, on participating SNFs, and on their measured performance. We also stated that we intend to consider proposing to adjust the payback percentage in future rulemaking. In our consideration, we would include the Program's effects on readmission rates, potential unintended consequences of SNF care to beneficiaries included in the measure, and SNF profit margins. Since the SNF VBP Program is a new, single measure value-based purchasing program and will continue to evolve as we implement it—including, for example, changing from the SNFRM to the SNFPPR as required by statute—we stated that we intend to evaluate its effects carefully.
We noted also that the Medicare Payment Advisory Commission's research has shown that for-profit SNFs' average Medicare margins are significantly positive,
We sought public comments on this proposal. A discussion of these comments, along with our responses, appears below.
Other commenters stated that the greatest percentage of dollars should be made available to facilities that invest in their staffs and are therefore top performers, noting also that MedPAC analysis shows that top performers are not enjoying large margins on their Medicare business, and that a larger incentive pool would provide more incentive dollars to high-performing SNFs. Commenters also stated that the Medicare Trust Fund will benefit from reduced hospital spending resulting from lower readmission rates.
Some commenters recommended that we adopt a 70 percent payback percentage and that we use the other 30 percent of amounts withheld from SNFs' Medicare payments to fund quality improvement initiatives. One commenter cited the reduction to SNF PPS rates to fund physician payments, significant MDS changes that will drive staffing and training costs, and the possible revamping of the RUG methodology, as rationale for selecting the maximum possible payback percentage under the Program. The commenter stated that these changes mean that CMS should not make any additional funding reductions beyond those absolutely required.
In response to comments that we finalize 70 percent as the payback percentage for the Program, we intended for the proposed payback percentage to balance several policy considerations, including the number of SNFs that receive a positive payment adjustment, the marginal incentives for SNFs to reduce hospital readmissions and make broad-based care quality improvements, and the long-term financial sustainability of the Medicare Program. We do not believe that finalizing a 70 percent payback percentage appropriately balances those factors, particularly the Medicare Program's long-term sustainability, because it results in significantly higher Medicare spending under the Program in a provider sector already experiencing significantly positive Medicare margins. We believe that the other policies we are finalizing in this final rule, including the logistic exchange function, ensure that we provide strong incentives for quality improvement to SNFs within the constraints imposed by the SNF VBP Program's statute.
We intend to carefully monitor the Program's effects on SNFs' care quality improvement efforts and providers' Medicare margins. We would also like to clarify that the savings realized from the Program (that is, the 30 to 50 percent of the amounts withheld from SNFs' claims) are not authorized to be distributed separately for quality improvement initiatives, and are instead retained in the Medicare Trust Fund and used for other Medicare Program purposes authorized by statute.
In response to the commenter's question about funds not being redistributed to SNFs (that is, the 30 to 50 percent of SNFs' Medicare payments remaining after the payment withhold is determined), as we stated above, those funds are not authorized to be distributed separately for quality improvement initiatives, and are instead retained in the Medicare Trust Fund and used for other Medicare Program purposes authorized by statute.
After consideration of the public comments that we received, we are finalizing the payback percentage for the FY 2019 SNF VBP program as 60 percent of the total amount of the reduction to SNFs' Medicare payments for that fiscal year, as estimated by the Secretary. We will set the exchange function such that we remit 60 percent of the estimated total amount withheld from SNFs' Medicare payments as value-based incentive payments, though each individual SNF's value-based incentive payment percentage will vary according to its SNF performance score.
We refer readers to the FY 2017 SNF PPS final rule (81 FR 52006 through 52007) for discussion of our intention to use the QIES system CASPER files to fulfill the requirement in section 1888(g)(5) of the Act that we provide quarterly confidential feedback reports to SNFs on their performance on the Program's measures. We also responded in that final rule to public comments on the appropriateness of the QIES system.
We provided SNFs with a test report in September 2016, followed by data on SNFs' CY 2013 performance on the SNFRM in December 2016 and SNFs' CY 2014 performance on the SNFRM in March 2017. We then provided SNFs with their CY 2015 performance on the SNFRM in June 2017, along with a supplemental workbook providing patient-level data. We intend to continue providing SNFs with their performance data each quarter as required by the statute.
We sought feedback from SNFs on the contents of the quarterly reports and what additional elements, if any, we should consider including that would be useful for quality improvement efforts. We specifically sought comment on what patient-level data would be most helpful to SNFs if they were to request such data from us as part of their quality improvement efforts. A discussion of these comments, along with our responses, appears below.
We intend to publish performance standards for each program year in the SNF PPS final rule, and we intend to provide peer ranking information to SNFs as it becomes available. We believe that providing the SNF VBP program measure rate calculations using 12 rolling months of data updated quarterly would create confusion among providers regarding which of these rates would be used to calculate value-based incentive payments for a specific program year. We strive to provide information that is as user-friendly as possible and will take the commenter's request for SNF-specific trend data and top causes of readmission under consideration. Finally, while we appreciate the need for frequent updates, monthly reports containing this information are not logistically
We thank the commenters for this feedback.
In the FY 2017 SNF PPS final rule (81 FR 52007 through 52009), we adopted a two-phase review and corrections process for SNFs' quality measure data that will be made public under section 1888(g)(6) of the Act and SNF performance information that will be made public under section 1888(h)(9) of the Act. We explained that we would accept corrections to the quality measure data used to calculate the measure rates that is included in any SNF's quarterly confidential feedback report, and also that we would provide SNFs with an annual confidential feedback report containing the performance information that will be made public. We detailed the process for requesting Phase One corrections and finalized a policy whereby we would accept Phase One corrections to SNFs' quarterly reports through March 31 following the report's issuance via the CASPER system.
In the proposed rule (82 FR 21086 through 21087), we proposed additional specific requirements for the Phase Two review and correction process that we are finalizing in this final rule. Specifically, we proposed to limit Phase Two correction requests to the SNF's performance score and ranking because all SNFs would have already had the opportunity to correct their quality measure data through the Phase One corrections process.
We also proposed to provide these reports to SNFs at least 60 days prior to the FY involved. SNFs will not be allowed to request corrections to their value-based incentive payment adjustments. However, we stated that we will make confirming corrections to a SNF's value-based incentive payment adjustment if a SNF successfully requests a correction to its SNF performance score.
As with Phase One, we proposed that Phase Two correction requests must be submitted to the
• SNF's CMS Certification Number (CCN);
• SNF Name;
• The correction requested and the SNF's basis for requesting the correction.
Specifically, the SNF must identify the error for which it is requesting correction, and explain the reason for requesting the correction. The SNF must also submit documentation or other evidence, if available, supporting the request. As noted above, corrections requested during Phase Two will be limited to SNFs' performance score and ranking. However, we noted that the
We further proposed that SNFs must make any correction requests no later than 30 days following the date of our posting of their annual SNF performance score report via the QIES system CASPER files. For example, if we post the reports on August 1, 2017, SNFs must review these reports and submit any correction requests by 11:59 p.m. Eastern Standard Time on August 31, 2017 (or the next business day, if the 30th day following the date of the posting is a weekend or federal holiday). We stated that we would not consider any requests for corrections to SNF performance scores or rankings that are received after this deadline.
We proposed to review all timely Phase Two correction requests that we receive and provide responses to SNFs that have requested corrections as soon as practicable. We also proposed to issue an updated SNF performance score report to any SNF that requests a correction with which we agree, and if necessary, to update any public postings on
We sought public comments on this proposed Phase Two corrections process. A discussion of these comments, along with our responses, appears below.
After consideration of the public comments that we received, we are finalizing the Phase Two review and corrections process, as proposed.
We refer readers to the FY 2017 SNF PPS final rule (81 FR 52009) for discussion of the statutory requirements governing the public reporting of SNFs' performance information under the SNF VBP Program. We also sought and responded to public comments on issues that we should take into account when posting performance information on
We proposed to begin publishing SNF performance information under the SNF VBP Program on
After consideration of the public comments that we have received, we are finalizing our public reporting policy as proposed.
We refer readers to the FY 2017 SNF PPS final rule (81 FR 52009) for discussion of the statutory requirement that we rank SNFs based on their performance on the Program. In that rule, we discussed the statutory requirements to order SNF performance scores from low to high and publish those rankings on both the
Having considered those statutory requirements, we proposed to rank SNFs for the FY 2019 program year and to publish the ranking after August 1, 2018. We further proposed that the ranking include the following data elements:
• Rank,
• Provider ID,
• Facility name,
• Address,
• Baseline period (CY 2015) risk-standardized readmission rate,
• Performance period (CY 2017) risk-standardized readmission rate,
• Achievement score,
• Improvement score, and
• SNF performance score.
We believe that these data elements will provide consumers and other stakeholders with the necessary information to evaluate SNFs' performance under the program, including each component of the SNF performance score, including both achievement and improvement. We sought public comments on these proposals. We stated in the proposed rule that we would address rankings for future program years in subsequent rulemaking. A discussion of these comments, along with our responses, appears below.
After consideration of the public comments, we are finalizing the SNF VBP Program's ranking policies as proposed.
To participate in the Medicare and Medicaid programs, long term care facilities, including skilled nursing facilities (SNFs) in Medicare and nursing facilities (NFs) in Medicaid, must be certified as meeting Federal
Sections 1819(g) and 1919(g) of the Act, and corresponding regulations at 42 CFR part 488, subpart E, specify the requirements for the types and periodicity of surveys that are to be performed for each facility. Specifically, sections 1819(g)(2) and 1919(g)(2) of the Act reference standard, special, and extended surveys. Sections 1819(g)(2)(E) and 1919(g)(2)(E) of the Act specify that surveys under section 1819(g)(2) of the Act in general must consist of a multidisciplinary team of professionals, including a registered nurse. In addition, the statutory requirements governing the investigation of complaints and for monitoring on-site a SNF's or NF's compliance with participation requirements are found in sections 1819(g)(4) and 1919(g)(4) of the Act and § 488.332.
These sections specify that a specialized team, including an attorney, an auditor, and appropriate health care professionals may be maintained and utilized in the investigation of complaints for the purpose of identifying, surveying, gathering and preserving evidence, and carrying out appropriate enforcement actions against SNFs and NFs, respectively.
Consistent with the statutory provisions noted above, two separate regulations directly address survey team composition. Section 488.314, Survey Teams, reflects the statutory language under sections 1819(g)(2)(E)(i) and 1919(g)(2)(E)(i) of the Act, and states that “[s]urvey teams must be conducted by an interdisciplinary team of professions, which must include a registered nurse.” Section 488.332, Investigation of Complaints of Violations and Monitoring of Compliance, reflects the statutory language under sections 1819(g)(4) and 1919(g)(4) of the Act, and states that the state survey agency may use a specialized team, which may include an attorney, auditor, and appropriate health professionals, but not necessarily a registered nurse, to investigate complaints and conduct on-site monitoring. A survey conducted to monitor on-site a SNF's or NF's compliance with participation requirements, such as a revisit survey to determine whether a noncompliant facility has achieved substantial compliance, is also subject to the provisions of § 488.332, and not § 488.314.
Section 488.308(e) also addresses complaint investigations, but as currently written, it combines special surveys, which are authorized under sections 1819(g)(2)(A)(iii)(II) and 1919(g)(2)(A)(iii)(II) of the Act, with the requirements associated with the investigations of complaints, which are governed by sections 1819(g)(4) and 1919(g)(4) of the Act. In the statute, “special surveys” are referenced at sections 1819(g)(2)(A)(iii)(II) and 1919(g)(2)(A)(iii)(II) of the Act, while the investigation of complaints is referenced at sections 1819(g)(4) and 1919(g)(4) of the Act.
The regulations as currently written do not clearly indicate which survey team requirement applies to complaint surveys. The language at § 488.314 could be broadly interpreted to cover the survey team composition for all surveys, including those used to investigate a complaint. Such an interpretation, however, would ignore the provisions of § 488.332, which allow a state survey agency to utilize a specialized investigative team that does not necessarily include a registered nurse to survey a facility in connection with a complaint investigation. The placement of surveys to investigate a complaint together with special surveys under § 488.308(e) further places into question which survey team requirement applies to complaint surveys. However, CMS' State Operations Manual (SOM) (Internet Only Manual Pub. 100-07) notes that “Section 488.332 provides the Federal regulatory basis for the investigation of complaints about nursing homes,” thus indicating CMS' view that provisions related to survey team composition in § 488.332 apply to complaint surveys.
The lack of clarity as to which regulatory provision, that is, § 488.314 or § 488.332, applies to the survey team composition related to the investigation of complaints has been the cause of recent administrative litigation. We thus believe that regulatory changes are needed to clarify that only surveys conducted under sections 1819(g)(2) and 1919(g)(2) of the Act are subject to the requirement at § 488.314 that a survey team consist of an interdisciplinary team that must include a registered nurse. Complaint surveys and surveys related to on-site monitoring, including revisit surveys, are subject to the requirements of sections 1819(g)(4) and 1919(g)(4) of the Act and § 488.332, which allow the state survey agency to use a specialized investigative team that may include appropriate health care professionals but need not include a registered nurse.
We proposed to make changes to §§ 488.30, 488.301, 488.308, and 488.314 to clarify the regulatory requirements for team composition for surveys conducted for investigating a complaint and to align regulatory provisions for investigation of complaints with the statutory requirements found in sections 1819 and 1919 of the Act.
(a) Proposed revision of the definition of “complaint survey” under § 488.30 to add a provision stating that the requirements of sections 1819(g)(4) and 1919(g)(4) of the Act and § 488.332 apply to complaint surveys.
(b) Proposed revision of the definition of “abbreviated standard survey” under § 488.301 to clarify that abbreviated standard surveys conducted to investigate a complaint or to conduct on-site monitoring to verify compliance with participation requirements are subject to the requirements of § 488.332.
(c) Proposed relocation of the requirements included in § 488.308(e)(2) and (3) related to surveys conducted to investigate a complaint from under the heading “Special Surveys” to a new paragraph (f), titled “Investigations of Complaints.”
(d) Proposed revision of the language at § 488.314(a)(1) to specify that the team composition requirements at § 488.314(a)(1) apply only to surveys under sections 1819(g)(2) and 1919(g)(2) of the Act.
Commenters submitted the following comments related to the proposed rule's discussion of the Survey Team Composition. A discussion of these comments, along with our responses, appears below.
Based on the comments received, we are proceeding with the finalization of our proposal without any changes.
In the CY 2017 ESRD PPS final rule (81 FR 77834), we finalized that the performance period for the NHSN Healthcare Personnel Influenza Vaccination Reporting Measure for Payment Year (PY) 2020 would be from October 1, 2016, through March 31, 2017 (81 FR 77915). We proposed to revise that performance period so that it aligns with the schedule we previously set for this measure. Specifically, we previously finalized that for the PY 2018 ESRD QIP, the performance period for this measure would be from October, 1, 2015 through March 31, 2016, which is consistent with the length of the 2015-2016 influenza season (79 FR 66209), and that for the PY 2019 ESRD QIP, the performance period for this measure would be from October, 1, 2016 through March 31, 2017, which is consistent with the length of the 2016- 2017 influenza season (80 FR 69059 through 69060). Maintaining the performance period we finalized in the CY 2017 ESRD PPS final rule would result in scoring facilities on the same data twice, and would not be consistent with our intended schedule to collect data on the measure in successive influenza seasons. Therefore, we proposed to revise the performance period for the NHSN HCP Influenza Vaccination Reporting Measure for the PY 2020 ESRD QIP. Specifically, we proposed that for the PY 2020 ESRD QIP, the performance period for this measure would be October 1, 2017, through March 31, 2018, which is consistent with the length of the 2017-2018 influenza season.
We sought comments on this proposal. A discussion of these comments, along with our responses, appears below.
After carefully considering the comments received we are finalizing the Performance Period for the NHSN HCP Influenza Vaccination Reporting Measure for the ESRD QIP for Payment Year 2020 as proposed.
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501
To fairly evaluate whether an information collection should be approved by OMB, PRA section 3506(c)(2)(A) requires that we solicit comment on the following issues:
• The need for the information collection and its usefulness in carrying out the proper functions of our agency.
• The accuracy of our burden estimates.
• The quality, utility, and clarity of the information to be collected.
• Our effort to minimize the information collection burden on the affected public, including the use of automated collection techniques.
We solicited public comment in the FY 2018 SNF PPS proposed rule on each of the section 3506(c)(2)(A)-required issues for the following information collection requirements (ICRs).
As discussed in the FY 2016 SNF PPS final rule (80 FR 46473) and the FY 2017 SNF PPS final rule (81 FR 52049 through 52050), we have specified claims-based measures to fulfill the SNF VBP Program's requirements. As required by the SNF VBP Program's statute, we will score SNFs' performance on these measures in order to make value-based incentive payments to SNFs beginning in FY 2019.
In this final rule, we are finalizing additional policies for the SNF VBP Program, including performance standards and performance/baseline periods for the FY 2020 Program year, an exchange function for the FY 2019 Program year, and administrative requirements related to review and correction of performance information to be made public. None of these requirements result in any additional information collections or reporting burden associated with the Program.
Additionally, because claims-based measures are calculated based on claims figures that are already submitted to the Medicare program for payment purposes, there is no additional respondent burden associated with data collection or submission for either the SNFRM or SNFPPR measures. Thus, there is no additional reporting burden associated with the SNF VBP Program's measures finalized in this rule.
This rule modifies the Potentially Preventable 30-Day Post-Discharge Readmission Measure by increasing the length of the measurement period and updating the confidential feedback and public reporting dates, as described in section III.D.2.h. Because this is a claims-based measure, no data collection beyond Medicare claims submitted by SNFs for the furnishing of SNF covered services are required for the calculation of this measure. We believe the SNF QRP burden estimate is unaffected by the modifications of this measure as the modifications have no impact on any of the claims-based reported data fields.
As discussed in this final rule, we are adopting five new measures beginning with the FY 2020 SNF QRP (see section III.D.2.g). The five new measures being finalized are: (1) Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury; (2) Application of the IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633); (3) Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634); (4) Application of IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients (NQF #2635); and (5) Application of IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients (NQF #2636). The measures must be collected by SNFs and reported to CMS using the Resident Assessment Instrument, Minimum Data Set (MDS).
These measures will be calculated using data elements that are included in the MDS. The data elements are discrete questions and response codes that collect information on a SNF patient's health status, preferences, goals and general administrative information. To view the MDS, with the finalized data elements, we refer to the reader to
This rule also finalizes that SNFs would be required to report certain standardized resident assessment data beginning with the FY 2019 SNF QRP (see section III.D.2.j.). We are finalizing our definition of the term “standardized resident assessment data” as patient assessment questions and response options that are identical in all four PAC assessment instruments, and to which identical standards and definitions apply. The standardized resident assessment data are intended to be shared electronically among PAC providers and will otherwise enable the data to be comparable for various purposes, including the development of cross-setting quality measures and to inform payment models that take into account patient characteristics rather than setting.
Under section 1899B(m) of the Act, the Paperwork Reduction Act does not apply to the specific changes in the collections of information described in this final rule. These changes to the collections of information are being
For the new measure “Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury” (NQF #2633) the items used to calculate this measure are already present on the MDS, so the adoption of this measure will not require SNFs to report any new data elements. In addition, we are removing some data elements related to pressure ulcers that have been identified as duplicative. Taking these final policies together, we estimate that there will be a 1.5 minute reduction in clinical staff time needed to report the pressure ulcer measure data. We are also removing 9 additional data elements from the MDS 3.0. The removal of these data elements from the skin integrity section of the MDS provide a reduction in burden with data reporting by SNFs and therefore serve as offsets to the SNF QRP. These removals are: Date of oldest Stage 2 pressure ulcer; three items pertaining to the dimensions of an unhealed pressure ulcer; the most severe tissue type for any pressure ulcer; and four data elements pertaining to healed pressure ulcers. We estimate that the data elements we are removing will reduce overall reporting burden from the assessments, constituting a reduction of an additional 7 minutes of clinical staff time per stay which provide a reduction in burden with data reporting by SNFs. Taken together, we are removing a total of 12 data elements from the skin integrity section of the MDS. Based on the data provided in Table 25 of this final rule, and estimating 2,886,336 discharges from 15,447 SNFs annually, we also estimate that the total cost of reporting these data will reduce overall reporting burden for the assessments from what was proposed constituting a total reduction of 8.5 minutes of clinical staff time per stay or $1,837 per SNF annually, or $28,377,493 for all SNFs annually. We believe that the MDS items will be completed by registered nurses (BLS Occupation Code: 29-1141) at $69.40/hr
For the four functional outcome measures (NQF: #2633, #2634, #2635, and #2636) that we are finalizing in this final rule, we note that although some of the data elements needed to calculate these measures are currently included on the MDS, other data elements need to be added to the MDS. As a result, we estimate that reporting these measures will require an additional 9 minutes of nursing and therapy staff time to report data on admission and 5.5 minutes of nursing and therapy time to report data on discharge, for a total of 14.5 additional minutes per stay. We estimate that the additional MDS items we are finalizing will be completed by Registered Nurses for approximately 7 percent of the time. Occupational Therapists (BLS Occupation Code: 29-1122) at $80.50/hr including overhead and fringe benefits for approximately 41 percent of the time, and Physical Therapists (BLS Occupation Code: 29-1123) at $83.86/hr including overhead and fringe benefits for approximately 52 percent of the time. Individual providers determine the staffing resources necessary. With 2,886,336 discharges from 15,447 SNFs annually, we estimate that the reporting of the four functional outcome measures would impose on SNFs an additional burden of 697,531 total hours (2,886,336 discharges × 14.5 min/60) or 45.16 hours per SNF (697,531 hr/15,447 SNFs). Of the 14.5 minutes per stay, 1 minute of that time is for a Registered Nurse, 3.5 minutes is for an Occupational Therapist, and 4.5 minutes is for a Physical Therapist for a total of 9 minutes are required for admission. For discharge, 2.5 minutes are for an Occupational Therapist, and 3 minutes for a Physical Therapist for a total of 5.5 minutes. For one stay we estimate a cost of $19.69 or, in aggregate, an annual cost of $56,829,551. Per SNF, we estimate an annual cost of $3,679. A summary of these estimates is provided in Table 25.
We are not finalizing our proposal to adopt 1 new standardized resident assessment data elements with respect to SNF admissions and 11 new standardized resident assessment data elements with respect to SNF discharges. This results in a reduction to the burden that we estimated in the proposed rule. We refer readers to the proposed rule (82 FR 21091 through 21092) for a discussion of our burden estimates for these proposals. Our updated estimate is provided in Table 25 (Revised Calculation of Burden), and results in a final estimated burden for the SNF QRP of $28,452,058.
We received the following public comments on our collection of information estimates.
We have examined the impacts of this final rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA, September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA, March 22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 1999), the Congressional Review Act (5 U.S.C. 804(2)), and Executive Order 13771 on Reducing Regulation and Controlling Regulatory Costs (January 30, 2017). 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). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been designated an economically significant rule, under section 3(f)(1) of Executive Order 12866. Accordingly, we have prepared a regulatory impact analysis (RIA) as further discussed below.
Executive Order 13771, titled Reducing Regulation and Controlling Regulatory Costs, was issued on January 30, 2017. This final rule is considered an EO 13771 regulatory action. Details on the estimated costs of this rule can be found in the preceding and subsequent analyses.
This final rule updates the FY 2017 SNF prospective payment rates as required under section 1888(e)(4)(E) of the Act. It also responds to section 1888(e)(4)(H) of the Act, which requires the Secretary to provide for publication in the
This final rule sets forth updates of the SNF PPS rates contained in the SNF PPS final rule for FY 2017 (81 FR 51970). Based on the above, we estimate that the aggregate impact is an increase of $370 million in payments to SNFs in FY 2018, resulting from the SNF market basket update to the payment rates, as required by section 1888(e)(5)(B)(iii) of the Act. We would note that this estimate is different from the estimated impact of $390 million provided in the FY 2018 SNF PPS proposed rule (82 FR 21016, 21093), as we relied on an updated SNF baseline spending figure for the final rule which reflect baseline spending from the FY 2018 President's budget, as opposed to that used in the proposed rule which was based on the Mid-session review of the FY 2017 President's budget.
We would note that events may occur to limit the scope or accuracy of our impact analysis, as this analysis is future-oriented, and thus, very susceptible to forecasting errors due to events that may occur within the assessed impact time period.
In accordance with sections 1888(e)(4)(E) and 1888(e)(5) of the Act, if not for the enactment of section 411(a) of MACRA (as discussed in section III.B.2. of this final rule), we would update the FY 2017 payment rates by a factor equal to the market basket index percentage change adjusted by the MFP adjustment to determine the payment rates for FY 2018. As discussed previously, section 1888(e)(5)(B)(iii) of the Act establishes a special rule for FY 2018 requiring the market basket percentage used to update the federal SNF PPS rates to be equal to 1.0 percent. The impact to Medicare is included in the total column of Table 25. In updating the SNF PPS rates for FY 2018, we made a number of standard annual revisions and clarifications mentioned elsewhere in this final rule (for example, the update to the wage and market basket indexes used for adjusting the federal rates).
The annual update set forth in this final rule applies to SNF PPS payments in FY 2018. Accordingly, the analysis of the impact of the annual update that follows only describes the impact of this single year. Furthermore, in accordance with the requirements of the Act, we will publish a rule or notice for each subsequent FY that will provide for an update to the payment rates and include an associated impact analysis.
We estimate the impact for the SNF QRP based on 15,447 SNFs in FY 2016 which had a total of 2,886,336 Medicare covered discharges for Medicare fee for service beneficiaries. This would equate to 288,633 total added hours or 18.69 hours per SNF annually. We anticipate that the additional MDS items we finalized will be completed by Registered Nurses (RN), Occupational Therapists (OT), and/or Physical Therapists (PT), depending on the item. Individual providers determine the staffing resources necessary. We obtained mean hourly wages for these staff from the U.S. Bureau of Labor Statistics' May 2016 National Occupational Employment and Wage Estimates (
Estimated impacts for the SNF QRP are based on analysis discussed in section III.D.2. of this final rule. For the 8.5 minute reduction in burden associated with the new pressure ulcer measure and the removal of duplicative pressure ulcer data elements and data elements no longer being used, and the additional 14.5 additional minutes of burden for the functional outcome measures, the overall cost associated with finalized changes to the SNF QRP is $28,452,058.
The FY 2018 SNF PPS payment impacts appear in Table 26. Using the most recently available data, in this case FY 2016, we apply the current FY 2017
• The first column shows the breakdown of all SNFs by urban or rural status, hospital-based or freestanding status, census region, and ownership.
• The first row of figures describes the estimated effects of the various changes on all facilities. The next 6 rows show the effects on facilities split by hospital-based, freestanding, urban, and rural categories. The next 19 rows show the effects on facilities by urban versus rural status by census region. The last 3 rows show the effects on facilities by ownership (that is, government, profit, and non-profit status).
• The second column shows the number of facilities in the impact database.
• The third column shows the effect of the annual update to the wage index. This represents the effect of using the most recent wage data available. The total impact of this change is zero percent; however, there are distributional effects of the change.
• The fourth column shows the effect of all of the changes on the FY 2018 payments. The update of 1.0 percent is constant for all providers and, though not shown individually, is included in the total column. It is projected that aggregate payments will increase by 1.0 percent, assuming facilities do not change their care delivery and billing practices in response.
As illustrated in Table 26, the combined effects of all of the changes vary by specific types of providers and by location. For example, due to changes finalized in this rule, providers in the urban Pacific region could experience a 1.5 percent increase in FY 2018 total payments.
We estimate the impact for the SNF QRP based on 15,447 SNFs in FY 2016 which had a total of 2,886,336 Medicare covered discharges for Medicare fee for service beneficiaries. This would equate to 288,633 total added hours or 18.69 hours per SNF annually. We anticipate that the additional MDS items we finalized will be completed by Registered Nurses (RN), Occupational Therapists (OT), and/or Physical Therapists (PT), depending on the item. Individual providers determine the staffing resources necessary. We obtained mean hourly wages for these staff from the U.S. Bureau of Labor Statistics' May 2016 National Occupational Employment and Wage Estimates (
Estimated impacts for the SNF QRP are based on analysis discussed in section III.D.2. of this final rule. For the 8.5 minute reduction in burden associated with the new pressure ulcer measure and the removal of duplicative pressure ulcer data elements and data elements no longer being used, and the additional 14.5 additional minutes of burden for the functional outcome measures, the overall cost associated with finalized changes to the SNF QRP is $28,452,058.
Estimated impacts of the FY 2019 SNF VBP Program are based on historical data that appear in Table 28. We modeled SNFs' performance under the Program using SNFRM data from CY 2013 as the baseline period and CY 2015 as the performance period. Additionally, we modeled a logistic exchange function with a payback percentage of 60 percent, as discussed further in the preamble to this final rule.
As illustrated in Table 28, the effects of the SNF VBP Program vary by specific types of providers and by location. For example, we estimate that rural SNFs perform better on the SNFRM, on average, compared to urban SNFs. Similarly, we estimate that non-profit SNFs perform better on the SNFRM compared to for-profit SNFs, and that government-owned SNFs perform better still. We also estimate that smaller SNFs (measured by bed size) tend to perform better, on average, compared to larger SNFs. (We note that the risk-standardized readmission rates presented below are
These differences in performance on the SNFRM result in differences in value-based incentive payment percentages computed by the Program. For example, we estimate that, at the proposed 60 percent payback percentage, SNFs in urban areas would receive a 1.161 percent incentive multiplier, on average, in FY 2019, while SNFs in rural areas would receive a slightly higher incentive multiplier of 1.227 percent, on average. Additionally, SNFs in the smallest 25 percent as measured by bed size would receive an incentive multiplier of 1.203 percent, on average, while SNFs in the 2nd quartile as measured by bed size would receive an incentive multiplier of 1.166 percent, on average. We note that the multipliers that we have listed in Table 27 are applied to SNFs' adjusted Federal per diem rates
If regulations impose administrative costs on private entities, such as the time needed to read and interpret this final rule, we should estimate the cost associated with regulatory review. Due to the uncertainty involved with accurately quantifying the number of entities that will review the rule, we assume that the total number of unique commenters on the published proposed rule will be the number of reviewers of this final rule. We acknowledge that this assumption may understate or overstate the costs of reviewing this final rule. It is possible that not all commenters reviewed the proposed rule in detail, and it is also possible that some reviewers chose not to comment on the proposed rule. For these reasons we thought that the number of comments received on the proposed rule would be a fair estimate of the number of reviewers of this final rule.
We also recognize that different types of entities are in many cases affected by mutually exclusive sections of this final rule, and therefore for the purposes of our estimate we assume that each reviewer reads approximately 50 percent of the rule.
Using the wage information from the BLS for medical and health service managers (Code 11-9111), we estimate that the cost of reviewing this rule is $105.16 per hour, including overhead and fringe benefits (
As described in this section, we estimate that the aggregate impact for FY 2018 under the SNF PPS is an increase of $370 million in payments to SNFs, resulting from the SNF market basket update to the payment rates, as required by section 1888(e)(5)(B)(iii) of the Act.
Section 1888(e) of the Act establishes the SNF PPS for the payment of Medicare SNF services for cost reporting periods beginning on or after July 1, 1998. This section of the statute prescribes a detailed formula for calculating base payment rates under the SNF PPS, and does not provide for the use of any alternative methodology. It specifies that the base year cost data to be used for computing the SNF PPS payment rates must be from FY 1995 (October 1, 1994, through September 30, 1995). In accordance with the statute, we also incorporated a number of elements into the SNF PPS (for example, case-mix classification methodology, a market basket index, a wage index, and the urban and rural distinction used in the development or adjustment of the federal rates). Further, section 1888(e)(4)(H) of the Act specifically requires us to disseminate the payment rates for each new FY through the
As required by OMB Circular A-4 (available online at
This final rule sets forth updates of the SNF PPS rates contained in the SNF PPS final rule for FY 2017 (81 FR 51970). Based on the above, we estimate the overall estimated payments for SNFs in FY 2018 are projected to increase by $370 million, or 1.0 percent, compared with those in FY 2017. We estimate that in FY 2018 under RUG-IV, SNFs in urban and rural areas will experience, on average, a 1.1 percent increase and 0.4 percent increase, respectively, in estimated payments compared with FY 2017. Providers in the rural New England region will experience the largest estimated increase in payments of approximately 2.5 percent. Providers in the urban Outlying region will experience the largest estimated decrease in payments of 1.0 percent.
Additionally, § 488.314 regarding survey team composition implements section 1819(g)(4) of the Act and provides that States may maintain and
Sections 4204(b) and 4214(d) of OBRA 87 pertain to SNFs and NFs, respectively, and provide for a waiver of PRA requirements for the regulations that implement the OBRA 87 requirements. The provisions of OBRA 87 that exempt agency actions to collect information from states or facilities relevant to survey and enforcement activities from the PRA are not time-limited.
The RFA requires agencies to analyze options for regulatory relief of small entities, if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, non-profit organizations, and small governmental jurisdictions. Most SNFs and most other providers and suppliers are small entities, either by reason of their non-profit status or by having revenues of $27.5 million or less in any 1 year. We utilized the revenues of individual SNF providers (from recent Medicare Cost Reports) to classify a small business, and not the revenue of a larger firm with which they may be affiliated. As a result, we estimate approximately 97 percent of SNFs are considered small businesses according to the Small Business Administration's latest size standards (NAICS 623110), with total revenues of $27.5 million or less in any 1 year. (For details, see the Small Business Administration's Web site at
This final rule sets forth updates of the SNF PPS rates contained in the SNF PPS final rule for FY 2017 (81 FR 51970). Based on the above, we estimate that the aggregate impact for FY 2018 is an increase of $370 million in payments to SNFs, resulting from the SNF market basket update to the payment rates. While it is projected in Table 26 that most providers will experience a net increase in payments, we note that some individual providers within the same region or group may experience different impacts on payments than others due to the distributional impact of the FY 2018 wage indexes and the degree of Medicare utilization.
Guidance issued by the Department of Health and Human Services on the proper assessment of the impact on small entities in rulemakings, utilizes a cost or revenue impact of 3 to 5 percent as a significance threshold under the RFA. In their March 2017 Report to Congress (available at
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 of an MSA and has fewer than 100 beds. This final rule affects small rural hospitals that (1) furnish SNF services under a swing-bed agreement or (2) have a hospital-based SNF.
We anticipate that the impact on small rural hospitals will be similar to the impact on SNF providers overall. Moreover, as noted in previous SNF PPS final rules (most recently, the one for FY 2017 (81 FR 51970)), the category of small rural hospitals is included within the analysis of the impact of this final rule on small entities in general. As indicated in Table 25, the effect on facilities for FY 2018 is projected to be an aggregate positive impact of 1.0 percent. As the overall impact on the industry as a whole is less than the 3 to 5 percent threshold discussed above, the Secretary has determined that this final rule does not have a significant impact on a substantial number of small rural hospitals for FY 2018.
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 2017, that threshold is approximately $148 million. This final rule will impose no mandates on state, local, or tribal governments or on the private sector.
Executive Order 13132 establishes certain requirements that an agency must meet when it issues a final rule that imposes substantial direct requirement costs on state and local governments, preempts state law, or otherwise has federalism implications. This final rule has no substantial direct effect on state and local governments, preempt state law, or otherwise have federalism implications.
This regulation is subject to the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801
In accordance with the provisions of Executive Order 12866, this final rule was reviewed by the Office of Management and Budget.
Health facilities, Medicare.
Diseases, Medicare, Reporting and recordkeeping requirements.
Health facilities, Diseases, Medicare, Reporting and recordkeeping requirements.
Emergency medical services, Health facilities, Health professions, Medicare, Reporting and recordkeeping requirements.
Administrative practice and procedure, Health facilities, Medicare, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services amends 42 CFR chapter IV as set forth below:
Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh).
Posthospital SNF care, including SNF-type care furnished in a hospital or CAH that has a swing-bed approval, is covered only if the beneficiary meets the requirements of this section and only for days when he or she needs and receives care of the level described in § 409.31. A beneficiary in an SNF is also considered to meet the level of care requirements of § 409.31 up to and including the assessment reference date for the 5-day assessment prescribed in § 413.343(b) of this chapter, when correctly assigned one of the case-mix classifiers that CMS designates for this purpose as representing the required level of care. For the purposes of this section, the assessment reference date is defined in accordance with § 483.315(d) of this chapter, and must occur no later than the eighth day of posthospital SNF care.
Secs. 1102, 1860D-1 through 1860D-42, 1871, and 1877 of the Social Security Act (42 U.S.C. 1302, 1395w-101 through 1395w-152, 1395hh, and 1395nn).
(p) * * *
(3) * * *
(iii) The beneficiary receives outpatient services from a Medicare-participating hospital or CAH (but only for those services that CMS designates as being beyond the general scope of SNF comprehensive care plans, as required under § 483.21(b) of this chapter); or
42 U.S.C. 1302; 42 U.S.C. 1395d(d); 42 U.S.C. 1395f(b); 42 U.S.C. 1395g; 42 U.S.C. 1395l(a), (i), and (n); 42 U.S.C. 1395x(v); 42 U.S.C. 1395hh; 42 U.S.C. 1395rr; 42 U.S.C. 1395tt; 42 U.S.C. 1395ww; sec. 124 of Public Law 106-113, 113 Stat. 1501A-332; sec. 3201 of Public Law 112-96, 126 Stat. 156; sec. 632 of Public Law 112-240, 126 Stat. 2354; sec. 217 of Public Law 113-93, 129 Stat. 1040; sec. 204 of Public Law 113-295, 128 Stat. 4010; and sec. 808 of Public Law 114-27, 129 Stat. 362.
(d) * * *
(4)
(i) In the case of a SNF that does not meet the requirements in § 413.360, for a fiscal year, the SNF market basket index percentage change for the fiscal year (as specified in paragraph (d)(1)(v) of this section, as modified by any applicable forecast error adjustment under paragraph (d)(2) of this section, reduced by the MFP adjustment specified in paragraph (d)(3) of this section, and as specified for FY 2018 in section 1888(e)(5)(B)(iii) of the Act), is further reduced by 2.0 percentage points.
(ii) The application of the 2.0 percentage point reduction specified in paragraph (d)(4)(i) of this section to the SNF market basket index percentage change may result in such percentage being less than zero for a fiscal year, and may result in payment rates for that fiscal year being less than such payment rates for the preceding fiscal year.
(iii) Any 2.0 percentage point reduction applied pursuant to paragraph (d)(4)(i) of this section will apply only to the fiscal year involved and will not be taken into account in computing the payment amount for a subsequent fiscal year.
(a)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(b)
(c)
(2)
(ii)
(iii)
(iv)
(d)
(i) CMS will award from 1 to 99 points for achievement to each SNF whose performance meets or exceeds the achievement threshold but is less than the benchmark.
(ii) CMS will award from 0 to 90 points for improvement to each SNF whose performance exceeds the improvement threshold but is less than the benchmark.
(iii) CMS will award 100 points to a SNF whose performance meets or exceeds the benchmark.
(2) The highest of the SNF's achievement, improvement and benchmark score will be the SNF's performance score for the fiscal year.
(e)
(2) Beginning not later than 60 days prior to each fiscal year, CMS will provide SNF performance score reports to SNFs on their performance under the SNF VBP Program for a fiscal year. SNFs will have the opportunity to review and submit corrections to their SNF performance scores and ranking contained in these reports for 30 days following the date that CMS provides the reports. Any such correction requests must be accompanied by appropriate evidence showing the basis for the correction.
(3) CMS will publicly report the information described in paragraphs (e)(1) and (2) of this section on the Nursing Home Compare Web site.
(f)
(1) The methodology used to determine the value-based incentive payment percentage and the amount of the value-based incentive payment under section 1888(h)(5) of the Act.
(2) The determination of the amount of funding available for value-based incentive payments under section 1888(h)(5)(C)(ii)(III) of the Act and the payment reduction under section 1888(h)(6) of the Act.
(3) The establishment of the performance standards under section 1888(h)(3) of the Act and the performance period.
(4) The methodology developed under section 1888(h)(4) of the Act that is used to calculate SNF performance scores and the calculation of such scores.
(5) The ranking determinations under section 1888(h)(4)(B) of the Act.
CMS publishes information pertaining to each update of the Federal payment rates in the
(a)
(b)
(2) CMS will consider a SNF to have complied with paragraph (b)(1) of this section for a program year if the SNF reports: 100 percent of the required data elements on at least 80 percent of the MDS assessments submitted for that program year.
(c)
(2) A SNF may request an exception or extension within 90 days of the date that the extraordinary circumstances occurred by sending an email to
(i) SNF CMS Certification Number (CCN).
(ii) SNF Business Name.
(iii) SNF Business Address.
(iv) CEO or CEO-designated personnel contact information including name, telephone number, title, email address, and mailing address. (The address must be a physical address, not a post office box.)
(v) SNF's reason for requesting the exception or extension.
(vi) Evidence of the impact of extraordinary circumstances, including, but not limited to, photographs, newspaper, and other media articles.
(vii) Date when the SNF believes it will be able to again submit SNF QRP data and a justification for the proposed date.
(3) Except as provided in paragraph (c)(4) of this section, CMS will not consider an exception or extension request unless the SNF requesting such exception or extension has complied fully with the requirements in this paragraph (c).
(4) CMS may grant exceptions or extensions to SNFs without a request if it determines that one or more of the following has occurred:
(i) An extraordinary circumstance affects an entire region or locale.
(ii) A systemic problem with one of CMS's data collection systems directly affected the ability of a SNF to submit data in accordance with paragraph (b) of this section.
(d)
(2) Reconsideration requests must be submitted to CMS by sending an email to
(i) SNF CCN.
(ii) SNF Business Name.
(iii) SNF Business Address.
(iv) CEO or CEO-designated personnel contact information including name, telephone number, title, email address, and mailing address. (The address must be a physical address, not a post office box.)
(v) CMS identified reason(s) for non-compliance stated in the non-compliance letter.
(vi) Reason(s) for requesting reconsideration, including all supporting documentation.
(3) CMS will not consider a reconsideration request unless the SNF has complied fully with the requirements in paragraph (d)(2) of this section.
(4) CMS will make a decision on the request for reconsideration and provide notice of the decision to the SNF through the QIES-ASAP system and via letter sent through the United States Postal Service.
(e)
Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh).
Secs. 1102, 1128l, 1864, 1865, 1871 and 1875 of the Social Security Act, unless otherwise noted (42 U.S.C 1302, 1320a-7j, 1395aa, 1395bb, 1395hh) and 1395ll.
(a) * * *
The addition and revision read as follows:
(e) * * *
(2) [Reserved]
(f)
(a) * * *
(1) Surveys under sections 1819(g)(2) and 1919(g)(2) of the Social Security Act must be conducted by an interdisciplinary team of professionals, which must include a registered nurse.
Centers for Medicare & Medicaid Services (CMS), HHS.
Final rule.
This final rule will update the hospice wage index, payment rates, and cap amount for fiscal year (FY) 2018. Additionally, this rule includes new quality measures and provides an update on the hospice quality reporting program.
These regulations are effective on October 1, 2017.
Debra Dean-Whittaker, (410) 786-0848 for questions regarding the CAHPS® Hospice Survey.
Cindy Massuda, (410) 786-0652 for questions regarding the hospice quality reporting program.
For general questions about hospice payment policy, please send your inquiry via email to:
Wage index addenda will be available only through the internet on the CMS Web site at: (
Because of the many terms to which we refer by acronym in this final rule, we are listing the acronyms used and their corresponding meanings in alphabetical order:
This final rule updates the hospice payment rates for fiscal year (FY) 2018, as required under section 1814(i) of the Social Security Act (the Act). This rule also discusses new quality measures and provides an update on the hospice quality reporting program (HQRP), consistent with the requirements of section 1814(i)(5) of the Act. In accordance with section 1814(i)(5)(A) of the Act, hospices that fail to meet quality reporting requirements receive a 2 percentage point reduction to their payments.
Section III.B.1 of this final rule updates the hospice wage index with updated wage data and makes the application of the updated wage data budget neutral for all four levels of hospice care. In section III.B.2 of this final rule, we discuss the FY 2018 hospice payment update percentage of 1.0 percent. Sections III.B.3 and III.B.4 of this final rule update the hospice payment rates and hospice cap amount for FY 2018 by the hospice payment update percentage discussed in section III.B.2 of this final rule.
In section III.C of this final rule, we discuss comments on the appropriate source(s) of the required clinical information for certification of a medical prognosis of a life expectancy of 6 months or less.
Finally, in section III.D of this final rule, we discuss updates to HQRP, including changes to the Consumer Assessment of Healthcare Providers and Systems (CAHPS)® Hospice Survey measures as well as the possibility of utilizing a new assessment instrument to collect quality data. We also discuss the enhancements to the current Hospice Item Set (HIS) data collection instrument to be more in line with other post-acute care settings. The new data collection instrument would be a comprehensive patient assessment instrument, rather than the current chart abstraction tool. Finally, we discuss our plans for sharing HQRP data publicly later in calendar year (CY) 2017, as well as plans to provide public reporting via a Compare Site in CY 2017 and future years.
The overall economic impact of this final rule is estimated to be $180 million in increased payments to hospices during FY 2018.
Hospice care is a comprehensive, holistic approach to treatment that recognizes that the impending death of an individual, upon his or her choice, warrants a change in the focus from curative care to palliative care for relief of pain and for symptom management. 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, nursing, social, psychological, emotional, and spiritual services through a collaboration of professionals and other caregivers, with the goal of making the beneficiary as physically and emotionally comfortable as possible. Hospice is compassionate beneficiary and family/caregiver-centered care for those who are terminally ill.
Medicare regulations define “palliative care” as patient and family-centered care that optimizes quality of life by anticipating, preventing, and treating suffering. Palliative care throughout the continuum of illness involves addressing physical, intellectual, emotional, social, and spiritual needs and to facilitate patient autonomy, access to information, and choice (42 CFR 418.3). Palliative care is at the core of hospice philosophy and care practices, and is a critical component of the Medicare hospice benefit. For more information, see “Medicare and Medicaid Programs: Hospice Conditions of Participation” final rule (73 FR 32088, June 5, 2008). The goal of palliative care in hospice is to improve the quality of life of beneficiaries and their families and caregivers through early identification and management of pain and other issues associated with a life limiting condition. The hospice interdisciplinary group works with the beneficiary, family, and caregivers to develop a coordinated, comprehensive care plan; reduce unnecessary diagnostics or ineffective therapies; and maintain ongoing communication with individuals and their families about changes in their condition. The beneficiary's care plan will shift over time to meet the changing needs of the individual, family, and caregiver(s) as the individual approaches the end of life.
Medicare hospice care is palliative care for individuals with a prognosis of living 6 months or less if the terminal illness runs its normal course. When a beneficiary is terminally ill, many health problems are related to the underlying condition(s), as bodily systems are interdependent. In the 2008 Hospice Conditions of Participation final rule, we stated that “the [hospice] medical director must consider the primary terminal condition, related diagnoses, current subjective and objective medical findings, current medication and treatment orders, and information about unrelated conditions when considering the initial certification of the terminal illness” (73 FR 32176). As referenced in our regulations at § 418.22(b)(1), to be eligible for Medicare hospice services, the patient's attending physician (if any)
While the goal of hospice care is to allow the beneficiary to remain in his or her home, circumstances during the end of life may necessitate short-term inpatient admission to a hospital, skilled nursing facility (SNF), or hospice facility for necessary pain control or acute or chronic symptom management that cannot be managed in any other setting. These acute hospice care services ensure that any new or worsening symptoms are intensively addressed so that the beneficiary can return to his or her home. Limited, short-term, intermittent, inpatient respite care (IRC) is also available because of the absence or need for relief of the family or other caregivers. Additionally, an individual can receive continuous home care (CHC) during a period of crisis in which an individual requires continuous care to achieve palliation or management of acute medical symptoms so that the individual can remain at home. Continuous home care may be covered for as much as 24 hours a day, and these periods must be predominantly nursing care, in accordance with our regulations at § 418.204. A minimum of 8 hours of nursing care, or nursing and aide care, must be furnished on a particular day to qualify for the continuous home care rate (§ 418.302(e)(4)).
Hospices are expected to comply with all civil rights laws, including the provision of auxiliary aids and services to ensure effective communication with patients and patient care representatives with disabilities consistent with section 504 of the Rehabilitation Act of 1973 and the Americans with Disabilities Act. Additionally, they must provide language access for such persons who are limited in English proficiency, consistent with Title VI of the Civil Rights Act of 1964. Further information about these requirements may be found at
Before the creation of the Medicare hospice benefit, hospice programs were originally operated by volunteers who cared for the dying. During the early development stages of the Medicare hospice benefit, hospice advocates were clear that they wanted a Medicare benefit that provided all-inclusive care for terminally-ill individuals, provided pain relief and symptom management, and offered the opportunity to die with dignity in the comfort of one's home rather than in an institutional setting.
As stated in the December 16, 1983 Hospice final rule, the fundamental premise upon which the hospice benefit was designed was the “revocation” of traditional curative care and the “election” of hospice care for end-of-life symptom management and maximization of quality of life (48 FR 56008). After electing hospice care, the beneficiary typically returns home from an institutional setting or remains in the home, to be surrounded by family and friends, and to prepare emotionally and spiritually, if requested, for death while receiving expert symptom management and other supportive services. Election of hospice care also requires waiving the right to Medicare payment for curative treatment for the terminal prognosis, and instead receiving palliative care to manage pain or other symptoms.
The benefit was originally designed to cover hospice care for a finite period of time that roughly corresponded to a life expectancy of 6 months or less. Initially, beneficiaries could receive three election periods: Two 90-day periods and one 30-day period. Currently, Medicare beneficiaries can elect hospice care for two 90-day periods and an unlimited number of subsequent 60-day periods; however, at the beginning of each period, a physician must certify that the beneficiary has a life expectancy of 6 months or less if the terminal illness runs its normal course.
One requirement for coverage under the Medicare Hospice benefit is that hospice services must be reasonable and necessary for the palliation and management of the terminal illness and related conditions. Section 1861(dd)(1) of the Act establishes the services that are to be rendered by a Medicare-certified hospice program. These covered services include: Nursing care; physical therapy; occupational therapy; speech-language pathology therapy; medical social services; home health aide services (now called hospice aide services); physician services; homemaker services; medical supplies (including drugs and biologicals); medical appliances; counseling services (including dietary counseling); short-term inpatient care in a hospital, nursing facility, or hospice inpatient facility (including both respite care and procedures necessary for pain control and acute or chronic symptom management); continuous home care during periods of crisis, and only as necessary to maintain the terminally ill individual at home; and any other item or service which is specified in the plan of care and for which payment may otherwise be made under Medicare, in accordance with Title XVIII of the Act.
Section 1814(a)(7)(B) of the Act requires that a written plan for providing hospice care to a beneficiary who is a hospice patient be established before care is provided by, or under arrangements made by, that hospice program and that the written plan be periodically reviewed by the beneficiary's attending physician (if any), the hospice medical director, and an interdisciplinary group (described in section 1861(dd)(2)(B) of the Act). The services offered under the Medicare hospice benefit must be available to beneficiaries as needed, 24 hours a day, 7 days a week (section 1861(dd)(2)(A)(i) of the Act). Upon the implementation of the hospice benefit, the Congress expected hospices to continue to use volunteer services, though these services are not reimbursed by Medicare (see section 1861(dd)(2)(E) of the Act). As stated in the August 22, 1983 Hospice proposed rule, the hospice interdisciplinary group should comprise paid hospice employees as well as hospice volunteers (48 FR 38149). This expectation supports the hospice philosophy of community based, holistic, comprehensive, and compassionate end-of-life care.
Before the Medicare hospice benefit was established, the Congress requested a demonstration project to test the feasibility of covering hospice care under Medicare.
• Patient and family know of the terminal condition.
• Further medical treatment and intervention are indicated only on a supportive basis.
• Pain control should be available to patients as needed to prevent rather than to just ameliorate pain.
• Interdisciplinary teamwork is essential in caring for patient and family.
• Family members and friends should be active in providing support during the death and bereavement process.
• Trained volunteers should provide additional support as needed.
The cost data and the findings on what services hospices provided in the demonstration project were used to design the Medicare hospice benefit. The identified hospice services were incorporated into the service requirements under the Medicare hospice benefit. Most importantly, in the August 22, 1983 Hospice proposed rule, we stated “the hospice benefit and the resulting Medicare reimbursement is not intended to diminish the voluntary spirit of hospices” (48 FR 38149).
Sections 1812(d), 1813(a)(4), 1814(a)(7), 1814(i), and 1861(dd) of the Act, and our regulations in part 418, establish eligibility requirements, payment standards and procedures; define covered services; and delineate the conditions a hospice must meet to be approved for participation in the Medicare program. Part 418, subpart G, provides for a per diem payment in one of four prospectively-determined rate categories of hospice care (routine home care (RHC), continuous home care (CHC), inpatient respite care (IRC), and general inpatient care (GIP)), based on each day a qualified Medicare beneficiary is under hospice care (once the individual has elected). This per diem payment is to include all of the hospice services and items needed to manage the beneficiary's care, as required by section 1861(dd)(1) of the Act. There has been little change in the hospice payment structure since the benefit's inception. The per diem rate based on level of care was established in 1983, and this payment structure remains today with some adjustments, as noted below.
Section 6005(a) of the Omnibus Budget Reconciliation Act of 1989 (Pub. L. 101-239) amended section 1814(i)(1)(C) of the Act and provided for the following two changes in the methodology concerning updating the daily payment rates: (1) Effective January 1, 1990, the daily payment rates for RHC and other services included in hospice care were increased to equal 120 percent of the rates in effect on September 30, 1989; and (2) the daily payment rate for RHC and other services included in hospice care for fiscal years (FYs) beginning on or after October 1, 1990, were the payment rates in effect during the previous federal FY increased by the hospital market basket percentage increase.
Section 4441(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) amended section 1814(i)(1)(C)(ii)(VI) of the Act to establish updates to hospice rates for FYs 1998 through 2002. Hospice rates were updated by a factor equal to the hospital market basket percentage increase, minus 1 percentage point. Payment rates for FYs from 2002 have been updated according to section 1814(i)(1)(C)(ii)(VII) of the Act, which states that the update to the payment rates for subsequent FYs will be the hospital market basket percentage increase for the FY. The Act requires us to use the inpatient hospital market basket to determine hospice payment rates.
In the August 8, 1997 FY 1998 Hospice Wage Index final rule (62 FR 42860), we implemented a new methodology for calculating the hospice wage index based on the recommendations of a negotiated rulemaking committee. The original hospice wage index was based on 1981 Bureau of Labor Statistics hospital data and had not been updated since 1983. In 1994, because of disparity in wages from one geographical location to another, the Hospice Wage Index Negotiated Rulemaking Committee was
Inpatient hospital pre-floor and pre-reclassified wage index values, as described in the August 8, 1997 Hospice Wage Index final rule, were subject to either a budget neutrality adjustment or application of the wage index floor. Wage index values of 0.8 or greater were adjusted by the BNAF. Starting in FY 2010, a 7-year phase-out of the BNAF began (FY 2010 Hospice Wage Index final rule, (74 FR 39384, August 6, 2009)), with a 10 percent reduction in FY 2010, an additional 15 percent reduction for a total of 25 percent in FY 2011, an additional 15 percent reduction for a total 40 percent reduction in FY 2012, an additional 15 percent reduction for a total of 55 percent in FY 2013, and an additional 15 percent reduction for a total 70 percent reduction in FY 2014. The phase-out continued with an additional 15 percent reduction for a total reduction of 85 percent in FY 2015, and an additional, and final, 15 percent reduction for complete elimination in FY 2016. We note that the BNAF was an adjustment which increased the hospice wage index value. Therefore, the BNAF phase-out reduced the amount of the BNAF increase applied to the hospice wage index value. It was not a reduction in the hospice wage index value itself or in the hospice payment rates.
Starting with FY 2013 (and in subsequent FYs), the market basket percentage update under the hospice payment system referenced in sections 1814(i)(1)(C)(ii)(VII) and 1814(i)(1)(C)(iii) of the Act is subject to annual reductions related to changes in economy-wide productivity, as specified in section 1814(i)(1)(C)(iv) of the Act. In FY 2013 through FY 2019, the market basket percentage update under the hospice payment system will be reduced by an additional 0.3 percentage point (although for FY 2014 to FY 2019, the potential 0.3 percentage point reduction is subject to suspension under conditions specified in section 1814(i)(1)(C)(v) of the Act).
In addition, sections 1814(i)(5)(A) through (C) of the Act, as added by section 3132(a) of the Affordable Care Act, require hospices to begin submitting quality data, based on measures to be specified by the Secretary of the Department of Health and Human Services (the Secretary), for FY 2014 and subsequent FYs. Beginning in FY 2014, hospices that fail to report quality data will have their market basket percentage increase reduced by 2 percentage points.
Section 1814(a)(7)(D)(i) of the Act, as added by section 3132(b)(2) of the Affordable Care Act, requires, effective January 1, 2011, that a hospice physician or nurse practitioner have a face-to-face encounter with the beneficiary to determine continued eligibility of the beneficiary's hospice care prior to the 180th-day recertification and each subsequent recertification, and to attest that such visit took place. When implementing this provision, we finalized in the CY 2011 Home Health Prospective Payment System final rule (75 FR 70435) that the 180th-day recertification and subsequent recertifications would correspond to the beneficiary's third or subsequent benefit periods. Further, section 1814(i)(6) of the Act, as added by section 3132(a)(1)(B) of the Affordable Care Act, authorizes the Secretary to collect additional data and information determined appropriate to revise payments for hospice care and other purposes. The types of data and information suggested in the Affordable Care Act could capture accurate resource utilization, which could be collected on claims, cost reports, and possibly other mechanisms, as the Secretary determined to be appropriate. The data collected could be used to revise the methodology for determining the payment rates for RHC and other services included in hospice care, no earlier than October 1, 2013, as described in section 1814(i)(6)(D) of the Act. In addition, we were required to consult with hospice programs and the Medicare Payment Advisory Commission (MedPAC) regarding additional data collection and payment revision options.
When the Medicare Hospice benefit was implemented, the Congress included an aggregate cap on hospice payments, which limits the total aggregate payments any individual hospice can receive in a year. The Congress stipulated that a “cap amount” be computed each year. The cap amount was set at $6,500 per beneficiary when first enacted in 1983 and has been adjusted annually by the change in the medical care expenditure category of the consumer price index for urban consumers from March 1984 to March of the cap year (section 1814(i)(2)(B) of the Act). The cap year was defined as the period from November 1st to October 31st. In the August 4, 2011 FY 2012 Hospice Wage Index final rule (76 FR 47308 through 47314) for the 2012 cap year and subsequent cap years, we announced that subsequently, the hospice aggregate cap would be calculated using the patient-by-patient proportional methodology, within certain limits. We allowed existing hospices the option of having their cap calculated via the original streamlined methodology, also within certain limits. As of FY 2012, new hospices have their cap determinations calculated using the patient-by-patient proportional methodology. The patient-by-patient proportional methodology and the streamlined methodology are two different methodologies for counting beneficiaries when calculating the hospice aggregate cap. A detailed explanation of these methods is found in the August 4, 2011 FY 2012 Hospice Wage Index final rule (76 FR 47308 through 47314). If a hospice's total Medicare payments for the cap year exceed the hospice aggregate cap, then the hospice must repay the excess back to Medicare.
When electing hospice, a beneficiary waives Medicare coverage for any care for the terminal illness and related conditions except for services provided by the designated hospice and attending physician. The FY 2015 Hospice Wage Index and Payment Rate Update final rule (79 FR 50452) finalized a requirement that requires the Notice of Election (NOE) be filed within 5 calendar days after the effective date of hospice election. If the NOE is filed beyond this 5-day period, hospice providers are liable for the services furnished during the days from the effective date of hospice election to the date of NOE filing (79 FR 50474).
A hospice “attending physician” is described by the statutory and regulatory definitions as a medical doctor, osteopath, or nurse practitioner whom the beneficiary identifies, at the time of hospice election, as having the most significant role in the determination and delivery of his or her medical care. Over time, we have received reports of problems with the identification of the person's designated attending physician and a third of hospice patients had multiple providers submit Part B claims as the “attending physician,” using a claim modifier. The FY 2015 Hospice Wage Index and Payment Rate Update final rule finalized a requirement that the election form include the beneficiary's choice of attending physician and that the beneficiary provide the hospice with a signed document when he or she chooses to change attending physicians (79 FR 50479).
Hospice providers are required to begin using a Hospice Experience of Care Survey for informal caregivers of hospice patients as of 2015. The FY 2015 Hospice Wage Index and Payment Rate Update final rule provided background and a description of the development of the Hospice Experience of Care Survey, including the model of survey implementation, the survey respondents, eligibility criteria for the sample, and the languages in which the survey is offered. The FY 2015 Hospice Wage Index and Payment Rate Update final rule also set out participation requirements for CY 2015 and discussed vendor oversight activities and the reconsideration and appeals process for entities that failed to win CMS approval as vendors (79 FR 50496).
Finally, the FY 2015 Hospice Wage Index and Payment Rate Update final rule required providers to complete their aggregate cap determination not sooner than 3 months after the end of the cap year, and not later than 5 months after, and remit any overpayments. Those hospices that fail to timely submit their aggregate cap determinations will have their payments suspended until the determination is completed and received by the Medicare Administrative Contractor (MAC) (79 FR 50503).
The Improving Medicare Post-Acute Care Transformation Act of 2014 (Pub. L. 113-185) (IMPACT Act) became law on October 6, 2014. Section 3(a) of the IMPACT Act mandated that all Medicare certified hospices be surveyed every 3 years beginning April 6, 2015 and ending September 30, 2025. In addition, section 3(c) of the IMPACT Act requires medical review of hospice cases involving beneficiaries receiving more than 180 days care in select hospices that show a preponderance of such patients; section 3(d) of the IMPACT Act contains a new provision mandating that the cap amount for accounting years that end after September 30, 2016, and before October 1, 2025 be updated by the hospice payment update rather than using the consumer price index for urban consumers (CPI-U) for medical care expenditures.
In the FY 2016 Hospice Wage Index and Payment Rate Update final rule, we created two different payment rates for RHC that resulted in a higher base payment rate for the first 60 days of hospice care and a reduced base payment rate for subsequent days of hospice care (80 FR 47172). We also created a Service Intensity Add-on (SIA) payment payable for services during the last 7 days of the beneficiary's life, equal to the CHC hourly payment rate multiplied by the amount of direct patient care provided by a registered nurse (RN) or social worker that occurs during the last 7 days (80 FR 47177).
In addition to the hospice payment reform changes discussed, the FY 2016 Hospice Wage Index and Payment Rate Update final rule implemented changes mandated by the IMPACT Act, in which the cap amount for accounting years that end after September 30, 2016 and before October 1, 2025 is updated by the hospice payment update percentage rather than using the CPI-U. This was applied to the 2016 cap year, starting on November 1, 2015 and ending on October 31, 2016. In addition, we finalized a provision to align the cap accounting year for both the inpatient cap and the hospice aggregate cap with the fiscal year for FY 2017 and later (80 FR 47186). This allows for the timely implementation of the IMPACT Act changes while better aligning the cap accounting year with the timeframe described in the IMPACT Act.
Finally, the FY 2016 Hospice Wage Index and Payment Rate Update final rule clarified that hospices must report all diagnoses of the beneficiary on the hospice claim as a part of the ongoing data collection efforts for possible future hospice payment refinements. Reporting of all diagnoses on the hospice claim aligns with current coding guidelines as well as admission requirements for hospice certifications.
In the FY 2017 Hospice Wage Index and Payment Rate Update final rule, we finalized several new policies and requirements related to the HQRP. First, we codified our policy that if the National Quality Forum (NQF) makes non-substantive changes to specifications for HQRP measures as part of the NQF's re-endorsement process, we will continue to utilize the measure in its new endorsed status, without going through new notice-and-comment rulemaking (81 FR 52160). We will continue to use rulemaking to adopt substantive updates made by the NQF to the endorsed measures we have adopted for the HQRP; determinations about what constitutes a substantive versus non-substantive change will be made on a measure-by-measure basis. Second, we finalized two new quality measures for the HQRP for the FY 2019 payment determination and subsequent years: Hospice Visits when Death is Imminent Measure Pair and Hospice and Palliative Care Composite Process Measure-Comprehensive Assessment at Admission (81 FR 52173). The data collection mechanism for both of these measures is the HIS, and the measures are effective April 1, 2017. Regarding the CAHPS® Hospice Survey, we finalized a policy that hospices that receive their CMS Certification Number (CCN) after January 1, 2017 for the FY 2019 Annual Payment Update (APU) and January 1, 2018 for the FY 2020 APU will be exempted from the Hospice CAHPS® requirements due to newness (81 FR 52182). The exemption is
Since the implementation of the hospice benefit in 1983, and especially within the last decade, there has been substantial growth in hospice benefit utilization. The number of Medicare beneficiaries receiving hospice services has grown from 513,000 in FY 2000 to nearly 1.4 million in FY 2016. Similarly, Medicare hospice expenditures have risen from $2.8 billion in FY 2000 to approximately $16.5 billion in FY 2016. Our Office of the Actuary (OACT) projects that hospice expenditures are expected to continue to increase, by approximately 7 percent annually, reflecting an increase in the number of Medicare beneficiaries, more beneficiary awareness of the Medicare Hospice Benefit for end-of-life care, and a growing preference for care provided in home and community-based settings.
There have also been changes in the diagnosis patterns among Medicare hospice enrollees. Specifically, as described in Table 2, there have been notable increases between 2002 and 2016 in neurologically-based diagnoses, including diagnoses of Alzheimer's disease. Additionally, there have been significant increases in the use of non-specific, symptom-classified diagnoses, such as “debility” and “adult failure to thrive.” In FY 2013, “debility” and “adult failure to thrive” were the first and sixth most common hospice claims-reported diagnoses, respectively, accounting for approximately 14 percent of all diagnoses. Effective October 1, 2014, hospice claims are returned to the provider if “debility” and “adult failure to thrive” are coded as the principal hospice diagnosis as well as other ICD-9-CM (and as of October 1, 2015, ICD-10-CM) codes that are not permissible as principal diagnosis codes per ICD-9-CM (or ICD-10-CM) coding guidelines. In the FY 2015 Hospice Wage Index and Payment Rate Update final rule (79 FR 50452), we reminded the hospice industry that this policy would go into effect and claims would start to be returned to the provider effective October 1, 2014. As a result of this, there has been a shift in coding patterns on hospice claims. For FY 2016, the most common hospice principal diagnoses were Alzheimer's disease, Heart Failure, Chronic Obstructive Pulmonary Disease, Lung Cancer, and Senile Degeneration of the Brain, which constituted approximately 30 percent of all claims-reported principal diagnosis codes reported in FY 2016 (see Table 2).
While there has been a shift in the reporting of the principal diagnosis as a result of diagnosis clarifications, a significant proportion of hospice claims (49 percent) in FY 2014 only reported a single principal diagnosis, which may not fully explain the characteristics of Medicare beneficiaries who are approaching the end of life. To address this pattern of single diagnosis reporting, the FY 2015 Hospice Wage Index and Payment Rate Update final rule (79 FR 50498) reiterated ICD-9-CM coding guidelines for the reporting of the principal and additional diagnoses on the hospice claim. We reminded providers to report all diagnoses on the hospice claim for the terminal illness and related conditions, including those that affect the care and clinical management for the beneficiary. Additionally, in the FY 2016 Hospice Wage Index and Payment Rate Update final rule (80 FR 47201), we provided further clarification regarding diagnosis reporting on hospice claims. We clarified that hospices will report
On May 3, 2017, we published the FY 2018 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Requirements proposed rule in the
In this final rule, we provide a summary of each proposed provision, a summary of the public comments received and our responses to them, and the policies we are finalizing for the FY 2018 Hospice Payment Rate Update and Hospice Quality Reporting Requirements. Comments related to the paperwork burden are addressed in section IV “Collection of Information Requirements” of this final rule. Comments related to the impact analysis are addressed in section V “Regulatory Impact Analysis” of this final rule.
In the FY 2018 Hospice Wage Index and Payment Rate Update proposed rule (82 FR 20750), we provided a summary of analysis conducted on hospice length of stay, live discharge rates, skilled visits in the last days of life, and non-hospice spending. Additionally, we discussed initial analyses of data from recently revised cost reports. We will continue to monitor the impact of future payment and policy changes and will provide the industry with periodic updates on our analysis in future rulemaking and/or announcements on the Hospice Center Web page at:
We received several comments on the analysis and CMS's plans for future monitoring efforts with regards to hospice payment reform outlined in the proposed rule.
The comments and our responses are set forth below.
The hospice wage index is used to adjust payment rates for hospice agencies under the Medicare program to reflect local differences in area wage levels, based on the location where services are furnished. The hospice wage index utilizes the wage adjustment factors used by the Secretary for purposes of section 1886(d)(3)(E) of the Act for hospital wage adjustments. Our regulations at § 418.306(c) require each labor market to be established using the most current hospital wage data available, including any changes made by Office of Management and Budget (OMB) to the Metropolitan Statistical Areas (MSAs) definitions.
We use the previous FY's hospital wage index data to calculate the hospice wage index values. For FY 2018, the hospice wage index will be based on the FY 2017 hospital pre-floor, pre-reclassified wage index. This means that the hospital wage data used for the hospice wage index is not adjusted to take into account any geographic reclassification of hospitals including those in accordance with section 1886(d)(8)(B) or 1886(d)(10) of the Act. The appropriate wage index value is applied to the labor portion of the payment rate based on the geographic area in which the beneficiary resides when receiving RHC or CHC. The appropriate wage index value is applied to the labor portion of the payment rate based on the geographic location of the facility for beneficiaries receiving GIP or IRC.
There exist some geographic areas where there were no hospitals, and thus, no hospital wage index data on which to base the calculation of the hospice wage index. In the FY 2008 Hospice Wage Index final rule (72 FR 50214), we implemented a methodology to update the hospice wage index for such areas. In cases where there was a rural area without rural hospital wage data, we use the average pre-floor, pre-reclassified hospital wage index data from all contiguous Core-Based Statistical Areas (CBSAs), to represent a reasonable proxy for the rural area. The term “contiguous” means sharing a border (72 FR 50217). Currently, the only rural area without a hospital from which hospital wage data could be derived is Puerto Rico. However, for rural Puerto Rico, we would not apply this methodology due to the distinct economic circumstances that exist there (for example, due to the close proximity to one another of almost all of Puerto Rico's various urban and non-urban areas, this methodology would produce a wage index for rural Puerto Rico that is higher than that in half of its urban areas); instead, we would continue to use the most recent wage index previously available for that area. For FY 2018, we will continue to use the most recent pre-floor, pre-reclassified hospital wage index value available for Puerto Rico, which is 0.4047.
In the FY 2010 Hospice Wage Index final rule (74 FR 39386), we adopted the policy that for urban labor markets without a hospital from which hospital wage index data could be derived, all of the CBSAs within the state would be used to calculate a statewide urban average pre-floor, pre-reclassified hospital wage index value to use as a reasonable proxy for these areas. For FY 2018, the only CBSA without a hospital from which hospital wage data can be derived is 25980, Hinesville-Fort Stewart, Georgia.
As described in the August 8, 1997 Hospice Wage Index final rule (62 FR 42860), the pre-floor and pre-reclassified hospital wage index is used as the raw wage index for the hospice benefit. These raw wage index values are subject to application of the hospice floor to compute the hospice wage index used to determine payments to hospices. Pre-floor, pre-reclassified hospital wage index values below 0.8 are adjusted by a 15 percent increase subject to a maximum wage index value of 0.8. For example, if County A has a pre-floor, pre-reclassified hospital wage index value of 0.3994, we would multiply 0.3994 by 1.15, which equals 0.4593. Since 0.4593 is not greater than 0.8, then County A's hospice wage index would be 0.4593. In another example, if County B has a pre-floor, pre-reclassified hospital wage index value of 0.7440, we would multiply 0.7440 by 1.15 which equals 0.8556. Because 0.8556 is greater than 0.8, County B's hospice wage index would be 0.8.
On February 28, 2013, OMB issued OMB Bulletin No. 13-01, announcing revisions to the delineation of MSAs, Micropolitan Statistical Areas, and Combines Statistical Areas, and guidance on uses of the delineation in these areas. In the FY 2016 Hospice Wage Index and Payment Rate Update final rule (80 FR 47178), we adopted the OMB's new area delineations using a 1-year transition. Also, in the FY 2016 Hospice Wage Index and Payment Rate Update final rule, we stated that beginning October 1, 2016, the wage index for all hospice payments would be fully based on the new OMB delineations. The most recent bulletin (No. 15-01) concerning the revised delineations was published by the OMB on July 15, 2015.
A summary of the comments we received regarding the wage index and our responses to those comments appears below.
“I HEREBY CERTIFY that I have read the above statement and that I have examined the accompanying cost report and the Balance Sheet and Statement of Revenue and Expenses prepared by _____ (provider name(s) and number(s) for the cost report beginning ___ and ending ___ and to the best of my knowledge and belief, this report and statement are true, correct, complete and prepared from the books and records of the provider in accordance with applicable instructions, except as noted. I further certify that I am familiar with the laws and regulations regarding the provision of health care services, and that the services identified in this cost report were provided in compliance with such laws and regulations.”
We also note that the hospital Medicare cost report referenced statement above includes the following:
“Misrepresentation or falsification of any information contained in this cost report may be punishable by criminal, civil and administrative action, fine and/or imprisonment under federal law. Furthermore, if services identified in this report were provided or procured through the payment directly or indirectly of a kickback or were otherwise illegal, criminal, civil and administrative action, fines and/or imprisonment may result.”
As always, we encourage providers to fill out the Medicare cost reports as accurately as possible.
The commenter proposes that CMS should use the wage index defined for the neighboring U.S. Virgin Islands for CY 2018, as this would be in harmony with the policy defined for Part B GPCIs, by providing more consistency across the payment policies among neighboring Territories. Alternatively, the commenter proposes that Puerto Rico wage indices in Hospice care should not be lower than the average ratio of Puerto Rico wages to U.S. wages, using the data from the OES. The Puerto Rico average wage is at 58 percent of the national average, the commenter considers that the Hospice wage index should be at least equal to that ratio.
The wage index applicable for FY 2018 is available on our Web site at
Section 4441(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) amended section 1814(i)(1)(C)(ii)(VI) of the Act to establish updates to
Section 3401(g) of the Affordable Care Act mandated that, starting with FY 2013 (and in subsequent FYs), the hospice payment update percentage would be annually reduced by changes in economy-wide productivity as specified in section 1886(b)(3)(B)(xi)(II) of the Act. The statute defines the productivity adjustment to be equal to the 10-year moving average of changes in annual economy-wide private nonfarm business multifactor productivity (MFP). In addition to the MFP adjustment, section 3401(g) of the Affordable Care Act also mandated that in FY 2013 through FY 2019, the hospice payment update percentage would be reduced by an additional 0.3 percentage point (although for FY 2014 to FY 2019, the potential 0.3 percentage point reduction is subject to suspension under conditions specified in section 1814(i)(1)(C)(v) of the Act).
Prior to the enactment of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10, enacted April 16, 2015), which amended section 1814(i)(1)(C) of the Act, the proposed hospice update percentage for FY 2018 would have been based on the estimated inpatient hospital market basket update of 2.7 percent (based on IHS Global Inc.'s second quarter 2017 forecast with historical data through the first quarter of 2017 of the 2014-based IPPS market basket). Due to the requirements at section 1886(b)(3)(B)(xi)(II) of the Act prior to enactment of the MACRA, the estimated FY 2018 inpatient hospital market basket update of 2.7 percent would have been reduced by a MFP adjustment as mandated by Affordable Care Act (currently estimated to be 0.6 percentage point for FY 2018) and a 0.3 percentage point reduction as mandated by section 1814(i)(1)(C)(v) of the Act. In effect, the hospice payment update percentage for FY 2018 would be 1.8 percent. However, section 411(d) of the MACRA amended section 1814(i)(1)(C) of the Act, such that for hospice payments for FY 2018, the market basket percentage increase is required to be 1 percent.
Currently, the labor portion of the hospice payment rates is as follows: For RHC, 68.71 percent; for CHC, 68.71 percent; for General Inpatient Care, 64.01 percent; and for Respite Care, 54.13 percent. The non-labor portion is equal to 100 percent minus the labor portion for each level of care. Therefore, the non-labor portion of the payment rates is as follows: For RHC, 31.29 percent; for CHC, 31.29 percent; for General Inpatient Care, 35.99 percent; and for Respite Care, 45.87 percent. Beginning with cost reporting periods starting on or after October 1, 2014, freestanding hospice providers are required to submit cost data using CMS Form 1984-14 (
A summary of the comments we received regarding the payment update and our responses to those comments appear below.
There are four payment categories that are distinguished by the location and intensity of the services provided. The base payments are adjusted for geographic differences in wages by multiplying the labor share, which varies by category, of each base rate by the applicable hospice wage index. A hospice is paid the RHC rate for each day the beneficiary is enrolled in hospice, unless the hospice provides CHC, IRC, or GIP. CHC is provided during a period of patient crisis to maintain the patient at home; IRC is short-term care to allow the usual caregiver to rest and be relieved from caregiving; and GIP is to treat symptoms that cannot be managed in another setting.
As discussed in the FY 2016 Hospice Wage Index and Payment Rate Update final rule (80 FR 47172), we implemented two different RHC payment rates, one RHC rate for the first 60 days and a second RHC rate for days 61 and beyond. In addition, in the final rule, we adopted a Service Intensity Add-on (SIA) payment for RHC for when direct patient care is provided by a RN or social worker during the last 7 days of the beneficiary's life. The SIA payment is equal to the CHC hourly rate multiplied by the hours of nursing or social work provided (up to 4 hours total) that occurred on the day of service, if certain criteria are met. In order to maintain budget neutrality, as required under section 1814(i)(6)(D)(ii) of the Act, the new RHC rates were adjusted by a SIA budget neutrality factor.
As discussed in the FY 2016 Hospice Wage Index and Payment Rate Update final rule (80 FR 47177), we will continue to make the SIA payments budget neutral through an annual determination of the SIA budget neutrality factor (SBNF), which will then be applied to the RHC payment rates. The SBNF will be calculated for each FY using the most current and complete FY utilization data available at the time of rulemaking. For FY 2018, we calculated the SBNF using FY 2016 utilization data. We examined skilled nursing and social work visit data for the last 7 days of life where RHC was billed and found that, from January 1
In the FY 2017 Hospice Wage Index and Payment Rate Update final rule (81 FR 52156), we initiated a policy of applying a wage index standardization factor to hospice payments in order to eliminate the aggregate effect of annual variations in hospital wage data. In order to calculate the wage index standardization factor, we simulate total payments using the FY 2018 hospice wage index and compare it to our simulation of total payments using the FY 2017 hospice wage index. By dividing payments for each level of care using the FY 2018 wage index by payments for each level of care using the FY 2017 wage index, we obtain a wage index standardization factor for each level of care (RHC days 1-60, RHC days 61+, CHC, IRC, and GIP). The wage index standardization factors for each level of care are shown in the tables below.
Lastly, the hospice payment rates for hospices that submit the required quality data would be increased by the FY 2018 hospice payment update percentage of 1.0 percent as discussed in section III.B.2 of this final rule. The FY 2018 RHC rates are shown in Table 12. The FY 2018 payment rates for CHC, IRC, and GIP are shown in Table 13.
Sections 1814(i)(5)(A) through (C) of the Act require that hospices submit quality data, based on measures to be specified by the Secretary. In the FY 2012 Hospice Wage Index final rule (76 FR 47320 through 47324), we implemented a Hospice Quality Reporting Program (HQRP) as required by section 3004 of the Affordable Care Act. Hospices were required to begin collecting quality data in October 2012, and submit that quality data in 2013. Section 1814(i)(5)(A)(i) of the Act requires that beginning with FY 2014 and each subsequent FY, the Secretary shall reduce the market basket update by 2 percentage points for any hospice that does not comply with the quality data submission requirements with respect to that FY. The FY 2018 rates for hospices that do not submit the required quality data would be updated by the FY 2018 hospice payment update percentage of 1 percent minus 2 percentage points. These rates are shown in Tables 14 and 15.
As discussed in the FY 2016 Hospice Wage Index and Payment Rate Update final rule (80 FR 47183), we implemented changes mandated by the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act). Specifically, for accounting years that end after September 30, 2016 and before October 1, 2025, the hospice cap is updated by the hospice payment update percentage rather than using the consumer price index for urban consumers (CPI-U). The hospice cap amount for the 2018 cap year will be $28,689.04, which is equal to the 2017 cap amount ($28,404.99) updated by the FY 2018 hospice payment update percentage of 1.0 percent.
A summary of the comments we received regarding the hospice cap amount and our responses to those comments appears below.
In accordance with the regulations at § 418.20, a patient must be certified as terminally ill in order to be eligible to elect the Medicare Hospice benefit. Furthermore, hospice admission is predicated on the certification of terminal illness that determines eligibility. In reaching a decision to certify, § 418.25 requires a hospice medical director to consider the diagnosis of the terminal condition of the patient, other health conditions (whether related or unrelated to the terminal condition), and current clinically relevant information supporting all diagnoses. In the FY 2018 Hospice Wage Index and Payment Rate Update proposed rule, we discussed a potential proposal for a regulatory text change at § 418.25, clarifying that the documentation used for the initial certification must come from the referring physician's or acute/post-acute care facility's medical records (84 FR 20771). We also discussed the potential benefit of an initial face-to-face visit by the hospice medical director or physician designee, if needed, to support the clinical documentation required to accompany the certification of terminal illness. Although we did not propose this regulatory change, we requested public input on the possible amendment. We solicited comments on current processes used by hospices to ensure comprehensive clinical review to support certification, and encouraged submission of any alternate suggestions for supporting clinical documentation sources that ensure appropriate hospice admission.
We would also like to clarify that the hospice medical director or physician designee would not be required to perform a face-to-face visit before the third benefit period recertification, as currently required by the regulations at § 418.22(a)(4). Rather, the intent of the discussion and solicitation of comments in the FY 2018 Hospice Wage Index and Payment Rate Update proposed rule was to determine whether such optional visits could be useful to augment the referral source's clinical documentation to support a medical prognosis of 6 months or less.
We appreciate and thank all commenters for providing feedback on this discussion. We will carefully consider all comments for any future rulemaking proposals, if needed, regarding the sources of clinical information to support the certification of terminal illness.
Section 3004(c) of the Affordable Care Act amended section 1814(i)(5) of the Act to authorize a quality reporting program for hospices. Section 1814(i)(5)(A)(i) of the Act requires that beginning with FY 2014 and each subsequent FY, the Secretary shall reduce the market basket update by 2 percentage points for any hospice that does not comply with the quality data submission requirements for that FY. Depending on the amount of the annual update for a particular year, a reduction of 2 percentage points could result in the annual market basket update being less than 0 percent for a FY and may result in payment rates that are less than payment rates for the preceding FY. Any reduction based on failure to comply with the reporting requirements, as required by section 1814(i)(5)(B) of the Act, would apply only for the particular year involved. Any such reduction would not be cumulative or be taken into account in computing the payment amount for subsequent FYs. Section 1814(i)(5)(C) of the Act requires that each hospice submit data to the Secretary on quality measures specified by the Secretary. The data must be submitted in a form, manner, and at a time specified by the Secretary.
Any measures selected by the Secretary must be endorsed by the consensus-based entity, which holds a contract regarding performance measurement, including the endorsement of quality measures, with the Secretary under section 1890(a) of the Act. This contract is currently held by the National Quality Forum (NQF). However, section 1814(i)(5)(D)(ii) of the Act provides that in the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the consensus-based entity, the Secretary may specify measures that are not so endorsed as long as due consideration is given to measures that have been endorsed or adopted by a consensus-based organization identified by the Secretary. Our paramount concern is the successful development of a HQRP that promotes the delivery of high quality healthcare services. We seek to adopt measures for the HQRP that promote person-centered, high quality, and safe care. Our measure selection activities for the HQRP take into consideration input from the Measure Applications Partnership (MAP), convened by the NQF, as part of the established CMS pre-rulemaking process required under section 1890A of the Act. The MAP is a public-private partnership comprised of multi-stakeholder groups convened by the NQF for the primary purpose of providing input to CMS on the selection of certain categories of quality and efficiency measures, as required by section 1890A(a)(3) of the Act. By February 1st of each year, the NQF must provide that input to CMS. Input from the MAP is located at:
In the FY 2018 Hospice proposed rule (82 FR 20773 through 20774), we discussed accounting for social risk factors in the HQRP. We stated that we consider related factors that may affect measures in the HQRP. We understand that social risk factors such as income, education, race and ethnicity, employment, disability, community resources, and social support (certain factors of which are also sometimes referred to as socioeconomic status (SES) factors or socio-demographic status (SDS) factors) play a major role in health. One of our core objectives is to improve beneficiary outcomes including reducing health disparities, and we want to ensure that all beneficiaries, including those with social risk factors, receive high quality care. In addition, we seek to ensure that the quality of care furnished by providers and suppliers is assessed as fairly as possible under our programs while ensuring that beneficiaries have adequate access to excellent care.
We have been reviewing reports prepared by the Office of the Assistant Secretary for Planning and Evaluation (ASPE)
As we continue to consider the analyses and recommendations from these reports and await the recommendations of the NQF trial on risk adjustment for quality measures, we are continuing to work with stakeholders in this process. As we have previously communicated, we are concerned about holding providers to different standards for the outcomes of their patients with social risk factors because we do not want to mask potential disparities or minimize incentives to improve the outcomes for disadvantaged populations. Keeping this concern in mind, while we sought input on this topic previously, we continue to seek public comment on whether we should account for social risk factors in measures in the HQRP, and if so, what method or combination of methods would be most appropriate for accounting for social risk factors. Examples of methods include: Confidential reporting to providers of measure rates stratified by social risk factors, public reporting of stratified measure rates, and potential risk adjustment of a particular measure as appropriate based on data and evidence.
In addition, in the proposed rule, we sought public comment on which social risk factors might be most appropriate for reporting stratified measure scores and/or potential risk adjustment of a particular measure. Examples of social risk factors include, but are not limited to, dual eligibility/low-income subsidy, race and ethnicity, and geographic area of residence. We also sought comments on which of these factors, including current data sources where this information would be available, could be used alone or in combination, and whether other data should be collected to better capture the effects of social risk. We will take commenters' input into consideration as we continue to assess the appropriateness and feasibility of accounting for social risk factors in the HQRP. We note that any such changes would be proposed through future notice and comment rulemaking.
We look forward to working with stakeholders as we consider the issue of accounting for social risk factors and reducing health disparities in CMS programs. Of note, implementing any of the above methods would be taken into consideration in the context of how this and other CMS programs operate (for example, data submission methods, availability of data, statistical considerations relating to reliability of data calculations, among others), so we sought comment on operational considerations. We are committed to ensuring that its beneficiaries have access to and receive excellent care, and that the quality of care furnished by providers and suppliers is assessed fairly in our programs.
We received many comments in response to our request for public comment on whether we should account for social risk factors in the Hospice Quality Reporting Program.
Regarding methodology for adjustment, overall, commenters were supportive of risk adjustment in general, but a few commenters indicated preference for stratification or peer grouping, due to the minimal measure-level research required and low impact on provider incentives to improve care when their adjusted performance is transparent. One commenter suggested using standard statistical methodology and adopting the approach used for adjusting CAHPS® data. Prior to conducting social risk factor stratification, however, a few commenters noted that they would like for CMS to evaluate and disseminate the testing results from the NQF and solicit provider comment on the results. Several commenters encouraged CMS to determine the feasibility and appropriateness of identifying social risk factors, and a couple commenters recommended involving hospice providers in determining appropriate social risk factors and associated outcome measures. One commenter recommended piloting the outcome measures with social risk factors in advanced care planning pilot instead of incorporating them with current hospice measures. However, several commenters expressed concern that risk adjusting may lead to the unintended consequences of discouraging providers from admitting patients with identified social risk factors, and enabling providers to deliver sub-optimal care to disadvantaged populations. One commenter noted providers wishing to maintain or improve scores on quality measures may consider exclusively admitting patients who will demonstrate positive care outcomes. Another commenter emphasized that patients impacted by many social risk factors require intensified, complex care at end of life, so CMS should not unfairly penalize providers when taking these patient needs and challenges into account in the quality measurement process. Additionally, commenters offered specific suggestions for types of social risk factors to identify and recommended ways CMS could manage the testing, data collection, and reporting. In commenters' discussion of suggested social risk factors, a few
For the purpose of streamlining the rulemaking process, we finalized our policy in the FY 2016 Hospice Wage Index final rule (80 FR 47187) that when we adopt measures for the HQRP beginning with a payment determination year, these measures would automatically be adopted for all subsequent years' payment determinations, unless we proposed to remove, suspend, or replace the measures. Quality measures would be considered for removal by us for reasons including, but not limited to the following:
• Measure performance among hospices was so high and unvarying that meaningful distinction in improvements in performance could no longer be made.
• Performance or improvement on a measure did not result in better patient outcomes.
• A measure did not align with current clinical guidelines or practice.
• A more broadly applicable measure (across settings, populations, or conditions) for the particular topic was unavailable.
• A measure that was more proximal in time to desired patient outcomes for the particular topic was not available.
• A measure that was more strongly associated with desired patient outcomes for the particular topic was not available.
• Collection or public reporting of a measure led to negative unintended consequences.
For any such removal, the public would be given an opportunity to comment through the annual rulemaking process. However, if there was reason to believe continued inclusion of a measure in the HQRP would encourage delivery of care that raised potential safety concerns, we would take immediate action to remove the measure from the HQRP and not wait for the annual rulemaking cycle. The measures would be promptly removed and we would immediately notify hospices and the public of such a decision through the CMS HQRP Web site, listserv messages via the Post-Acute Care Quality Reporting Program listserv,
To further streamline the rulemaking process, we finalized in the FY 2017 Hospice Wage Index final rule (81 FR 52159) that if measures in the HQRP undergo non-substantive changes in specifications as part of their NQF re-endorsement process, we would subsequently utilize the measure with their new endorsed status in the HQRP without going through new notice-and-comment rulemaking. As mentioned previously, quality measures selected for the HQRP must be endorsed by the NQF unless they meet the statutory criteria for exception under section 1814(i)(5)(D)(ii) of the Act. The NQF is a voluntary consensus standard-setting organization with a diverse representation of consumer, purchaser, provider, academic, clinical, and other healthcare stakeholder organizations. The NQF was established to standardize healthcare quality measurement and reporting through its consensus measure development process (
Finally, we will continue to use rulemaking to adopt substantive updates made by the NQF to the endorsed measures we have adopted for the HQRP. We continue to make these determinations about what constitutes a substantive versus non-substantive change on a measure-by-measure basis. A change would be deemed substantive if the intent of the measure changes, the facility/setting changes, the data sources changes, the level of analysis changes, and/or the measure is removed. We will continue to provide updates about changes to measure specifications as a result of NQF endorsement or maintenance processes through the CMS HQRP Web site, listserv messages on the Post-Acute Care QRP listserv, MLN Connects® National Provider Calls & Events, MLN Connects® Provider eNews and announcements on Open Door Forums and Special Open Door Forums.
In the FY 2014 Hospice Wage Index final rule (78 FR 48257), and in compliance with section 1814(i)(5)(C) of the Act, we finalized the specific collection of data items that support the following 7 NQF-endorsed measures for hospice:
• NQF #1617 Patients Treated with an Opioid who are Given a Bowel Regimen,
• NQF #1634 Pain Screening,
• NQF #1637 Pain Assessment,
• NQF #1638 Dyspnea Treatment,
• NQF #1639 Dyspnea Screening,
• NQF #1641 Treatment Preferences,
• NQF #1647 Beliefs/Values Addressed (if desired by the patient).
We finalized the following two additional measures in the FY 2017 Hospice Wage Index final rule effective April 1, 2017. Data collected will, if not reported, affect payments for FY 2019 and subsequent years. (81 FR 52163 through 52173):
We finalized the HIS effective July 1, 2014 (78 FR 48258). The HIS is the data collection mechanism for all of the aforementioned measures. To meet the quality reporting requirements for hospices for the FY 2016 payment determination and each subsequent year, we require regular and ongoing electronic submission of the HIS data for each patient admission to hospice after July 1, 2014, regardless of payer or patient age (78 FR 48234 through 48258). For the two measures finalized in the FY 2017 Hospice Wage Index final rule, we require regular and ongoing electronic submission for each patient admission to hospice after April 1, 2017. We finalized a requirement in the FY 2014 Hospice Wage Index final rule (78 FR 48258) that hospice providers collect data on all patients to ensure that all patients regardless of payer or patient age are receiving the same care and that provider metrics measure performance across the spectrum of patients. Table 16 provides a summary of measures previously finalized affecting the FY 2019 APU, data collection mechanism, and data submission deadline.
Hospices are required to complete and submit a HIS-Admission and a HIS-Discharge record for each patient admission. Hospices failing to report quality data via the HIS for patient admissions occurring in 2017 will have their market basket update reduced by 2 percentage points in FY 2019 (beginning in October 1, 2018). In the FY 2015 Hospice Wage Index final rule (79 FR 50485 through 50487), we finalized the proposal to codify the HIS submission requirement at § 418.312. The System of Record (SOR) Notice entitled “Hospice Item Set (HIS) System,” SOR number 09-70-0548, was published in the
The 7 NQF endorsed HIS measures adopted in FY 2014 Hospice Wage Index final rule successfully underwent NQF Endorsement Maintenance in 2016.
The comment and our response are set forth below.
We did not propose to remove any of the current HQRP measures at this time. Any future proposals regarding removal, suspension, or replacement of measures will be proposed here in this preamble of future rules. As stated in section III.D.3 of the FY 2018 Hospice Wage Index proposed rule (82 FR 20750), a quality measure that is adopted and implemented in the HQRP will be retained for all subsequent years, unless the measure is proposed for removal, suspension, or replacement by CMS. Policies and criteria for removing a measure were also discussed.
Although we did not propose any HIS-based measures, we have measure concepts under consideration for future years. Our paramount concern is to develop quality measures that promote care that is person-centered, high quality, and safe. We continue to work with our measure development contractor, RTI International, to identify measure concepts for future implementation in the HQRP. In identifying priority areas for future measure enhancement and development, we take into consideration input from numerous stakeholders, including the MAP, the MedPAC, Technical Expert Panels (TEP), and national priorities, such as those established by the Department of Health and Human Services (HHS) Strategic Plan, the National Strategy for Quality Improvement in Healthcare, and the CMS Quality Strategy. In addition, we take into consideration vital feedback and input from research published by our payment reform contractor. The current HQRP measure set is also an important consideration for future measure development areas; future measure development areas should complement the current HQRP measure set, including current HIS measures and CAHPS® Hospice Survey measures, without creating unnecessary burden or redundant reporting. Based on input from stakeholders, we identified two high priority areas that will be addressed by claims-based measure development. Developing quality measures using claims does not require new data collection, thus minimizing provider burden and expediting implementation.
The concept of a claims-based measure focusing on transitions of care was first introduced in the FY 2016 Hospice Wage Index final rule (80 FR 47188 through 47189). Comments received during this rule were overall supportive of our efforts to develop more robust quality measures that capture hospice performance and show links to patient and family outcomes. We refer readers to the FY 2016 Hospice Wage Index final rule (80 FR 47188 through 47189) and for additional details:
Potentially avoidable hospice care transitions at end of life are burdensome to patients, families, and the health care system at large, because they are associated with adverse health outcomes, lower patient and family satisfaction, higher health care costs, and fragmentation of care delivery.
The Medicare Hospice Benefit covers four levels of care to meet patients' and families' clinical needs: Routine home care (RHC), continuous home care (CHC), general inpatient care (GIP), and inpatient respite care. The goal of this measure concept is to assess the rates at which hospices provide different levels of hospice care. The measure has the potential to improve access to various levels of care for patients and caregivers. Appropriate use of CHC and GIP increases the likelihood of a hospice patient dying in his or her location of choice, decreases health resource utilization resulting in potential cost savings, and increases patient and caregiver satisfaction.
We solicited comments regarding high priority measure areas for future measure development including two specific measures under consideration related to: (1) Potentially avoidable hospice care transitions, and (2) access to levels of hospice care.
The comments and our responses have been grouped below: (1) Comments applying to both high priority measure areas, (2) comments specific to the potentially avoidable hospice care transitions measure area, (3) comments specific to the access to levels of hospice care measure area, and (4) other comments and suggestions regarding future HQRP measure development.
Moreover, both measure concepts show relationship with patient and family outcomes. Care transitions from hospice including live discharge can result in adverse health outcomes, lower patient and family satisfaction, higher health care costs, and fragmentation of care delivery.
In response to commenters' requests that we provide examples of potentially avoidable hospice care transitions, we would like to reiterate that this measure is currently in development and thus, its specifications have not yet been finalized. As previously stated, this measure is intended to address lack of continuity of care during a vulnerable time for patients and families. Thus, measure specifications will focus on live discharges from hospice followed by either death or acute care use during a short period of time. We will continue to carefully examine patterns of care for live discharge and consider them in measure development. We will continue to solicit and consider stakeholder input before finalizing measure definitions and specifications. The public will have the opportunity to comment on proposed measures and their specifications if and when these measure concepts are proposed in future rulemaking cycles.
• Congruence of place of death and patient wishes;
• Psychological, psychiatric, and psychosocial aspects of care;
• Spiritual well-being;
• Bereavement services offered by a hospice;
• Volunteer services offered by a hospice;
• Occupational therapy outcomes;
• Provider commitment to credentialing their staff;
• Care planning (for example, regular review of patient and family goals; shared decision making);
• Timely communication of patient's goals across all providers;
• Cost of care; and
• Care coordination among providers.
In addition, commenters suggested measures specific to certain subpopulations of hospice patients including:
• Pediatric patients;
• Patients with a diagnosis of Alzheimer's or Dementia;
• Patients with a short length of stay; and
• Patients receiving hospice care in a nursing facility or assisted living facility.
Section 1814(i)(5)(C) of the Act requires that each hospice submit data to the Secretary on quality measures specified by the Secretary. Such data must be submitted in a form and manner, and at a time specified by the Secretary. Section 1814(i)(5)(A)(i) of the Act requires that beginning with the FY 2014 and for each subsequent FY, the Secretary shall reduce the market basket update by 2 percentage points for any hospice that does not comply with the quality data submission requirements for that FY.
In the FY 2015 Hospice Wage Index final rule (79 FR 50488), we finalized a policy stating that any hospice that receives its CMS Certification Number (CCN) (also known as the Medicare Provider Number) notification letter dated on or after November 1 of the preceding year involved is excluded from any payment penalty for quality reporting purposes for the following FY. This requirement was codified at § 418.312.
In the FY 2016 Hospice Wage Index final rule (80 FR 47189), we further clarified and finalized our policy for the timing of new providers to begin reporting data to CMS. The clarified policy finalized in the FY 2016 Hospice Wage Index final rule (80 FR 47189) distinguished between when new hospice providers are required to begin submitting HIS data and when providers will be subject to the potential 2 percentage point annual payment update (APU) reduction for failure to comply with HQRP requirements. In summary, the policy finalized in the FY 2016 Hospice Wage Index final rule (80 FR 47189 through 47190) clarified that providers must begin submitting HIS data on the date listed in the letterhead of the CCN Notification letter received from CMS but will be subject to the APU reduction based on whether the CCN Notification letter was dated before or after November 1 of the reporting year involved. Thus, beginning with the FY 2018 payment determination and for each subsequent payment determination, we finalized our policy that a new hospice be responsible for HQRP quality data submission beginning on the date of the CCN notification letter; we retained our prior policy that hospices not be subject to the APU reduction if the CCN notification letter was dated after November 1 of the year involved. For example, if a provider receives their CCN notification letter and the date in the letterhead is November 5, 2017, that provider will begin submitting HIS data for patient admissions occurring after November 5, 2017. However, since the CCN notification letter was dated after November 1st, they would not be evaluated for, or subject to any payment penalties for, the relevant FY APU update (which in this instance is the FY 2019 APU, which is associated with patient admissions occurring January 1, 2017 through December 31, 2017).
This policy allows us to receive HIS data on all patient admissions on or after the date a hospice receives their CCN notification letter, while at the same time allowing hospices flexibility and time to establish the necessary accounts for data submission before they are subject to the potential APU reduction for a given reporting year. Currently, new hospices may experience a lag between Medicare certification and receipt of their actual CCN Number. Since hospices cannot submit data to the QIES ASAP system without a valid CCN Number, we finalized that new hospices begin collecting HIS quality data beginning on the date noted on the CCN notification letter. We believe this policy provides sufficient time for new hospices to establish appropriate collection and reporting mechanisms to submit the required quality data to CMS. Requiring quality data reporting beginning on the date listed in the letterhead of the CCN notification letter aligns our policy requirements for new providers with the functionality of the HIS data submission system (QIES ASAP).
In the FY 2015 Hospice Wage Index final rule (79 FR 50486), we finalized our policy requiring that hospices complete and submit HIS records for all patient admissions to hospice after July 1, 2014. For each HQRP program year, we require that hospices submit data on each of the adopted measures in accordance with the reporting requirements specified in sections III.C.9.b through III.C.9.c of the FY 2015 Hospice final rule (79 FR 50486) for the designated reporting period. This requirement applies to previously finalized and adopted measures, as well as new measures proposed through the rulemaking process. Electronic submission is required for all HIS records. Although electronic submission of HIS records is required, hospices do not need to have an electronic medical record to complete or submit HIS data. In the FY 2014 Hospice Wage Index final rule (78 FR 48258), we finalized a provision requiring that providers use either the Hospice Abstraction Reporting Tool (HART) (which is free to download and use) or vendor-designed software to complete HIS records. HART provides an alternative option for hospice providers to collect and maintain facility, patient, and HIS Record information for subsequent submission to the QIES ASAP system. Once HIS records are complete, electronic HIS files must be submitted to CMS via the QIES ASAP system. Electronic data submission via the QIES ASAP system is required for all HIS submissions; there are no other data submission methods available. Hospices have 30 days from a patient admission or discharge to submit the appropriate HIS record for that patient through the QIES ASAP system. We will continue to make HIS completion and submission software available to hospices at no cost. We provided details on data collection and submission timing under the downloads section of the HIS Web page on the CMS.gov Web site at
The QIES ASAP system provides reports upon successful submission and processing of the HIS records. The final validation report may serve as evidence of submission. This is the same data submission system used by nursing homes, inpatient rehabilitation facilities, home health agencies, and long-term care hospitals for the submission of Minimum Data Set Version 3.0 (MDS 3.0), Inpatient Rehabilitation Facility-patient assessment instrument (IRF-PAI), Outcome Assessment Information Set (OASIS), and Long-Term Care Hospital Continuity Assessment Record & Evaluation Data Set (LTCH CARE), respectively. We have provided hospices with information and details about use of the HIS through postings on the HQRP Web site, Open Door Forums, announcements in the CMS
Hospices are evaluated for purposes of the quality reporting program based on whether or not they submit data, not on their substantive performance level for the required quality measures. In order for us to appropriately evaluate the quality reporting data received by hospice providers, it is essential HIS data be received in a timely manner. The submission date is the date on which the completed record is submitted and accepted by the QIES ASAP system. In the FY 2016 Hospice Wage Index final rule (80 FR 47191), we finalized our policy that beginning with the FY 2018 payment determination, hospices must submit all HIS records within 30 days of the event date, which is the patient's admission date for HIS-Admission records or discharge date for HIS-Discharge records. For HIS-Admission records, the submission date must be no later than the admission date plus 30 calendar days. The submission date can be equal to the admission date, or no greater than 30 days later. The QIES ASAP system will issue a warning on the Final Validation Report if the submission date is more than 30 days after the patient's admission date. For HIS-Discharge records, the submission date must be no later than the discharge date plus 30 calendar days. The submission date can be equal to the discharge date, or no greater than 30 days later. The QIES ASAP system will issue a warning on the Final Validation Report if the submission date is more than 30 days after the patient's discharge date.
The QIES ASAP system validation edits are designed to monitor the timeliness of submission and ensure that providers' submitted records conform to the HIS data submission specifications. Providers are notified when timing criteria have not been met by warnings that appear on their Final Validation Reports. A standardized data collection approach that coincides with timely submission of data is essential to establish a robust quality reporting program and ensure the scientific reliability of the data received.
In the FY 2016 Hospice Wage Index final rule (80 FR 47191), we also clarified the difference between the completion deadlines and the submission deadlines. Current sub-regulatory guidance produced by CMS (for example, HIS Manual, HIS trainings) states that the completion deadlines for HIS records are 14 days after the Event Date for HIS Admission records and 7 days after the Event Date for HIS Discharge records. Completion deadlines continue to reflect CMS guidance only; these guidelines are not statutorily specified and are not designated through regulation. These guidelines are intended to offer clear direction to hospice agencies in regards to the timely completion of HIS-Admission and HIS-Discharge records. The completion deadlines define only the latest possible date on which a hospice should complete each HIS record. This guidance is meant to better align HIS completion processes with clinical workflow processes; however, hospices may develop alternative internal policies to complete HIS records. Although it is at the discretion of the hospice to develop internal policies for completing HIS records, we will continue to recommend that providers complete and attempt to submit HIS records early, prior to the previously finalized submission deadline of 30 days, beginning in FY 2018. Completing and attempting to submit records early allows providers ample time to address any technical issues encountered in the QIES ASAP submission process, such as correcting fatal error messages. Completing and attempting to submit records early will ensure that providers are able to comply with the 30 day submission deadline. HQRP guidance documents, including the CMS HQRP Web site, HIS Manual, HIS trainings, Frequently Asked Questions, and Fact Sheets, continue to offer the most up-to-date CMS guidance to assist providers in the successful completion and submission of HIS records. Availability of updated guidance will be communicated to providers through the CMS HQRP Web site, listserv messages via the Post-Acute Care QRP listserv, MLN Connects® National Provider Calls & Events, MLN Connects® Provider eNews and announcements on Open Door Forums and Special Open Door Forums.
The comment and our response are below.
We have made great progress in implementing the objectives set forth in the quality reporting and data collection activities required by sections 3004 of the Affordable Care Act. To date, we have established the HQRP, which includes clinical quality measures from the HIS and patient experience of care measures from the CAHPS® Hospice Survey. We have also finalized payment reform measures, including changes to the RHC payment rate and the implementation of a Service Intensity Add-On (SIA) payment, effective January 1st, 2016.
As discussed in the FY 2017 Hospice Wage Index final rule (81 FR 52177), to facilitate continued progress towards the requirements set forth in section 3004 of the Affordable Care Act, we are in the early stages of the development of a new data collection mechanism for use by hospices. This new data collection mechanism would be a hospice patient assessment tool, which would serve two primary objectives concordant with the Affordable Care Act legislation: (1) To provide the quality data necessary for HQRP requirements and the current function of the HIS; and
We did not propose a hospice patient assessment tool at this time; we are still in the early stages of development of an assessment tool to determine the appropriate content and feasibility of such a tool. As such, we have made progress over the past year in the development of a hospice patient assessment tool, preliminarily called the Hospice Evaluation & Assessment Reporting Tool (HEART). CMS's measure development contractor, RTI International, has begun preliminary HEART development activities, including: Conducting environmental scans and engaging clinical experts to determine which domains of care are important to capture in a hospice patient assessment; posting a national provider call and forming a Clinical Committee comprised of hospice organizations from across the United States to participate in the early development of an assessment; and collaborating within CMS to assess various stakeholder needs and encourage collaboration within CMS and across other HHS agencies. As we move forward with the development of the HEART patient assessment tool, we will continue to keep the public informed of our progress and solicit input as we establish and finalize domains of care to include in the assessment, and as we move towards specific item wording and development. Once we move past the preliminary phases of development and conceptualization, we will communicate a timeline for the HEART development, testing, and proposed implementation in future rulemaking cycles.
As mentioned in the FY 2017 Hospice Wage Index final rule (81 FR 52143), it is important for CMS to develop a hospice patient assessment tool that is scientifically rigorous and clinically appropriate for the hospice population, thus we believe that continued and transparent involvement of stakeholders is critical. We will continue to receive stakeholder input from MedPAC and ongoing input from the provider community, Medicare beneficiaries, and technical experts. Additionally, it is important for CMS to minimize data collection burden on providers in the development of HEART. We will ensure that hospice patient assessment data items are not duplicative or overly burdensome to providers, patients, caregivers, or their families. We will also work with the public and other stakeholders to ensure that HEART takes into account the unique aspects of hospice care delivery including symptom burden and psychosocial needs, patient and family preferences, care of imminently dying patients, and the complexity of providing hospice care in multiple settings and at multiple intensity levels.
The comments and our responses are set forth below.
We are committed to a development process that will ensure rigorous and iterative testing of the patient assessment tool in hospices with varying organizational characteristics, patient populations, settings of care delivery, and levels of care. As with the development of patient assessment instruments in other care settings, tentative development processes may include holding TEPs to gather input from hospice clinicians and researchers, conducting small-scale pilot tests to determine feasibility of a patient assessment instrument for hospice, conducting a larger, national test to establish reliability and validity of items and determine appropriate use of each item, providing ongoing opportunities for input and engagement from the hospice community. Only after completion of a thorough development process over the next several years would CMS consider proposing HEART through rulemaking for implementation in the HQRP. We believe our tentative development process to be aligned with commenters' recommendations for a thorough and iterative testing approach, allowing ample opportunity for the refinement of HEART prior to implementation. Further details on HEART development and testing will be communicated in future rulemaking cycles and through sub-regulatory communication channels. We will also announce opportunities for stakeholder input and participation regularly through sub-regulatory communication channels (for example, MLN eNews ListServs, ODFs, SODFs). Regarding the commenter's request for information on the current draft version of HEART, we are still in the early, initial phases of HEART development; we look forward to sharing our progress with the provider community as developments become available.
Several commenters offered suggestions regarding the implementation of HEART. Commenters encouraged CMS to provide advanced notice prior to any final implementation date in order to allow ample time for infrastructure and IT system development, as well as clinician training. Several commenters recommended CMS use a phased implementation or dry run approach, which would ensure adequate time (that is, at least 1 year) for EMR vendors to incorporate HEART into their software; for hospices to initiate and thoroughly test HEART data collection processes; and, to train staff and ensure competency in use. One commenter noted that issues experienced with the implementation of prior HQRP data collection efforts (for example, NQF #0209 measure) might have been alleviated with longer implementation and dry run periods. Several commenters underscored the importance of adequately training clinicians and other staff on HEART data collection, coding rules, and definitions to ensure accurate data collection. These commenters recommended CMS to provide ample and ongoing educational opportunities to support HEART implementation. Commenters encouraged CMS to include clear definitions for each data element included in HEART. These commenters believed that clear definitions that are readily understood are imperative to the success of any patient assessment data collection effort. One commenter noted that although CMS training materials for the HIS are thorough and comprehensive, proving useful for staff responsible for HIS data submission, the level of detail included in CMS materials is often too great for clinical staff. This commenter recommended that, in addition to providing traditional educational and training materials, CMS consider developing streamlined educational materials geared towards clinical staff. Finally, a few commenters touched on the information technology (IT) burden related to potential implementation of HEART. These commenters noted the
Regarding burden to the provider, commenters cautioned CMS against designing an assessment that would be overly burdensome for providers, noting that the move to a more comprehensive patient assessment would require investments in chart review and other data completion activities. One commenter recommended CMS to accurately account for any potential increases in burden and cost in calculations of burden and costs of regulatory impacts. Commenters mentioned collaboration with the provider community and efficiencies from EMR software as potential ways to reduce burden. One commenter raised the relationship between HEART and existing CoP requirements and. questioned how CMS envisioned this tool being minimally burdensome when CMS stated in the proposed rule that HEART would not replace initial or comprehensive assessment requirements.
Finally, several commenters noted the tradeoff between time spent on assessment tools and regulatory requirements and time spent delivering care and addressing patient and family needs. Commenters recommended CMS to ensure that HEART data elements are overall meaningful and contribute to care planning, and cautioned CMS against the creation of a patient assessment tool that would simply be an exercise in “filling out forms” and “checking off boxes”. Commenters noted that time spent completing HEART would be time spent away from providing direct care and implored CMS to keep this tradeoff in mind in the development of HEART.
Regarding burden to hospice providers, we are not including HEART in this rule, so there is no additional burden associated with this rule. Once the HEART assessment has been tested and is proposed in rulemaking, CMS will provide a PRA package and burden estimates. As noted in this rule, the HEART assessment would replace the current HIS reporting requirement, meaning HEART would not represent an additional reporting requirement for hospices. Although HEART would not replace current CoP requirements for the initial and comprehensive assessment, CMS's intent is to design HEART in a way that is complementary to the initial and comprehensive assessment to minimize burden on providers. Similar to how CoP requirements for the initial and comprehensive assessment do not require hospices to use specific formats, we envision HEART having similar levels of flexibility for providers. We believe that a flexible patient assessment tool that allows for clinician judgment will help minimize burden
We will continue to collaborate with stakeholders and will ensure that any patient assessment is minimally burdensome and not duplicative. We consider the perspective of clinicians and patients, and caregivers integral to the development process and will provide ample opportunity for stakeholder input to ensure any assessment tool is clinically appropriate and minimally burdensome. Moreover, burden will be a focus of the pilot data collection efforts in order to ensure we are appropriately assessing burden of data collection.
Several commenters addressed HEART's relationship to resource utilization and payment, offering suggestions to CMS as to how assessment data might be useful for future payment refinements. One commenter discussed data that HEART would need to capture if CMS moved to a case-mix payment methodology. The commenter noted that hospices should be paid higher rates for patients needing higher levels of services, including patients who have pain or other symptoms that are difficult to manage, and patients with wounds who need higher levels of skilled care. The commenter suggested that CMS not set a payment rate lower than the rate hospices receive under current payment policy. MedPAC recommended CMS to ensure that elements of HEART were not unduly subject to provider manipulation if HEART data was to be used for payment purposes.
We also thank commenters for their suggestions regarding HEART's relationship to resource utilization and payment. As noted earlier in the preamble, we will need to complete extensive analysis before we determine what—if any—utility HEART will have for future payment refinements. That said, we recognize that resource utilization in hospice is unique and is most often linked to patient symptomology and service needs rather than diagnosis. As such, it is our paramount concern to develop a patient assessment tool that appropriately reflects the needs of patients and services provided by hospices to meet those needs. We will continue to involve stakeholders, including hospice organizations and clinicians, in the development process to ensure this objective is met. We also recognize the importance of developing patient assessment data elements that are scientifically rigorous and are not easily manipulated by providers. We will ensure that any data elements included in HEART undergo rigorous testing and validation prior to implementation.
The HQRP is currently designed as a “pay-for-reporting” system, meaning that it is the act of submitting data that determines compliance with HQRP requirements. Performance level is not a consideration when determining market basket updates/APU. Reporting compliance is determined by successfully fulfilling both the Hospice CAHPS® Survey requirements and the HIS data submission requirements.
To accurately analyze quality reporting data received by hospice providers, it is imperative we receive ongoing and timely submission of all HIS-Admission and HIS-Discharge records. In the FY 2016 Hospice Wage Index final rule (80 FR 47192), we finalized the timeliness criteria for submission of HIS-Admission and HIS-Discharge records. The finalized timeliness criteria were in response to input from our stakeholders seeking additional specificity related to HQRP compliance affecting FY payment determinations and, due to the importance of ensuring the integrity of quality data submitted.
As stated in that rule, beginning with the FY 2018 payment determination and subsequent FY payment determinations, all HIS records would have to be submitted within 30 days of the event date, which is the patient's admission date or discharge date. In conjunction with the timeliness criteria for submission of HIS-Admission and HIS-Discharge records, in the FY 2016 Hospice Wage Index final rule (80 FR 47192) we also finalized a policy to establish an incremental threshold for compliance over a 3-year period. To be compliant for the FY 2018 APU determination, hospices must submit no less than 70 percent of their total number of HIS-Admission and HIS-Discharge records by no later than 30 days from the event date. The timeliness threshold is set at 80 percent for the FY 2019 APU determination and at 90 percent for the FY 2020 APU determination and subsequent years. The threshold corresponds with the overall amount of HIS records received from each provider that fall within the established 30 day submission timeframes. Our ultimate goal is to require all hospices to achieve a compliance rate of 90 percent or more.
To summarize, in the FY 2016 Hospice Wage Index final rule (80 FR 47193), we finalized our policy to implement the timeliness threshold requirement beginning with all HIS-Admission and HIS-Discharge records that occur after January 1, 2016, in accordance with the following schedule
• Beginning January 1, 2016 to December 31, 2016, hospices must submit at least 70 percent of all required HIS records within the 30 day submission timeframe for the year or be subject to a 2 percentage point reduction to their market basket update for FY 2018.
• Beginning January 1, 2017 to December 31, 2017, hospices must submit at least 80 percent of all required HIS records within the 30 day submission timeframe for the year or be subject to a 2 percentage point reduction to their market basket update for FY 2019.
• Beginning January 1, 2018 to December 31, 2018 and thereafter, hospices must submit at least 90 percent of all required HIS records within the 30 day submission timeframe for the year or be subject to a 2 percentage point reduction to their market basket update for FY 2020.
In July of 2016, we released the Hospice Timeliness Compliance Threshold Report in the Certification and Survey Provider Enhanced Reports (CASPER) system. This report allows providers with a QIES ASAP User ID to check their preliminary compliance with the 70/80/90 timeliness compliance threshold described above. For more information on the Hospice Timeliness Compliance Threshold Report, we refer readers to the Timeliness Compliance Threshold Fact Sheet, available on the HIS portion of the CMS HQRP Web site:
In the FY 2016 Hospice Wage Index final rule (80 FR 47192 through 47193), we provided clarification regarding the methodology used in calculating the 70 percent/80 percent/90 percent compliance thresholds. In general, HIS records submitted for patient admissions and discharges occurring during the reporting period (January 1st to December 31st of the reporting year involved) will be included in the denominator for the compliance threshold calculation. The numerator of the compliance threshold calculation would include any records from the denominator that were submitted within the 30 day submission deadline. In the FY 2016 Hospice Wage Index final rule (80 FR 47192), we also stated that we would make allowances in the calculation methodology for two circumstances. First, the calculation methodology will be adjusted following the applicable reporting period for records for which a hospice is granted an extension or exemption by CMS. Second, adjustments will be made for instances of modification/inactivation requests (Item A0050. Type of Record = 2 or 3). Additional helpful resources regarding the timeliness compliance threshold for HIS submissions can be found under the “downloads” section of the HIS Web page at
In the FY 2015 Hospice Wage Index final rule, we added the CAHPS® Hospice Survey to the Hospice Quality Reporting Program requirements for the FY 2017 payment determination and determinations for subsequent FY APU years (79 FR 50491).
In the FY 2017 Hospice Wage Index final rule, we finalized that to meet the HQRP requirements for the FY 2018, FY 2019 and FY 2020 APU payment determinations, hospices would collect survey data on a monthly basis for the months of January 1, 2016 through December 31, 2016 to qualify for the full FY 2018 APU; hospices would collect survey data on a monthly basis for the months of January 1, 2017 through December 31, 2017, to qualify for the full FY 2019 APU, and hospices would collect survey data on a monthly basis for the months of January 1, 2018 through December 31, 2018 for the full FY 2020 APU (81 FR 25529 through 25530). In the May 2017 proposed rule we proposed that in order to meet the HQRP requirements for the FY 2021 APU payment determination, hospices would collect survey data on a monthly basis for the months of January 1, 2019 through December 31, 2019 to qualify for the FY 2021 APU. In addition, we proposed that in order to meet the HQRP requirements for the FY 2022 APU payment determination, hospices would collect survey data on a monthly basis for the months of January 1, 2020 through December 31, 2020 to qualify for the FY 2022 APU.
In the FY 2015 Hospice Wage Index final rule (79 FR 50488), we finalized our proposal to allow hospices to request, and for CMS to grant, exemptions/extensions for the reporting of required HIS quality data when there are extraordinary circumstances beyond the control of the provider. Such extraordinary circumstances may include, but are not limited to, acts of nature or other systemic issues with our data systems. We further finalized that hospices must request such an exemption or extension within 30 days of the date that the extraordinary circumstances occurred. In certain instances, however, it may be difficult for hospices to timely evaluate the impact of extraordinary circumstances within 30 calendar days. For other quality reporting programs such as the Hospital Inpatient Quality Reporting (81 FR 57182), Inpatient Rehabilitation Facility Quality Reporting Program (81 FR 52125) and the Long term Care Hospital Quality Reporting Program (81 FR 25205), we have reevaluated our policy and subsequently finalized through rulemaking an extension of that period of time to 90 calendar days. Therefore, we proposed to extend the deadline for submitting an exemption or extension request to 90 calendar days from the qualifying event which is preventing a hospice from submitting their quality data for the HQRP. We believe that extending the deadline to 90 calendar days would allow hospices more time to determine whether it is necessary and appropriate to submit an exemption or extension request and to provide a more comprehensive account of the qualifying event in their request form to CMS. For example, if a hospice has suffered damage due to a hurricane on January 1st, it would have until March 31st to submit a request form to CMS via email to the HQRP mailbox at
Further, while we finalized our policy in the past for exception/extension for the submission of the HIS data, we proposed to extend this policy beyond the submission of the HIS date to submission of the CAHPS® Hospice Survey data, given that multiple data submission processes could be impacted by the same qualifying event. Therefore, we proposed for FY 2019 payment determination and subsequent payment determinations to extend the period of time a hospice may have to submit a request for an extension or exception for quality reporting purposes from 30 calendar days to 90 calendar days after the date that the extraordinary circumstances occurred, by submitting a request to CMS via email to the HQRP mailbox at
This process does not preclude us from granting extensions/exemptions to hospices that have not requested them when we determine that an extraordinary circumstance, such as an act of nature, affects an entire region or locale. We may grant an extension/exemption to a hospice if we determine that a systemic problem with our data collection systems directly affected the ability of the hospice to submit data. If we make the determination to grant an extension/exemption to hospices in a region or locale, we will communicate this decision through the various means, including the CMS HQRP Web site, listserv messages via the Post-Acute Care QRP listserv, MLN Connects® National Provider Calls & Events, MLN Connects® Provider eNews and announcements on Open Door Forums and Special Open Door Forums.
We solicited comments on these proposals. The comments and our responses are set forth below.
We previously finalized a volume-based exemption for CAHPS® Hospice Survey Data Collection and Reporting requirements in the FY 2017 Final Rule (81 FR 52143). Hospices that have fewer than 50 survey eligible decedents/caregivers in the period from January 1, 2017 through December 31, 2017 are eligible to apply for an exemption from CAHPS® Hospice Survey data collection and reporting requirements for the FY 2020 payment determination (corresponds to the CY 2018 data collection period). To qualify, hospices must submit an exemption request form for the FY 2020 APU. The exemption request form is available on the official CAHPS® Hospice Survey Web site
Hospices that have fewer than 50 survey eligible decedents/caregivers in the period from January 1, 2018 through December 31, 2018 are eligible to apply for an exemption from CAHPS® Hospice Survey data collection and reporting requirements for the FY 2021 payment determination. Hospices that intend to claim the size exemption are required to submit to CMS their total unique patient count for the period of January 1, 2018 through December 31, 2018. The due date for submitting the exemption request form for the FY 2021 APU is December 31, 2019. Small hospices that meet the exemption for size criteria for FY 2021 must complete an exemption form for FY 2021.
Hospices that have fewer than 50 survey eligible decedents/caregivers in the period from January 1, 2019 through December 31, 2019 are eligible to apply for an exemption from CAHPS® Hospice Survey data collection and reporting requirements for the FY 2022 payment determination. Hospices that intend to claim the size exemption are required to submit to CMS their total unique patient count for the period of January 1, 2019 through December 31, 2019. The due date for submitting the exemption request form for the FY 2022 APU is December 31, 2020. If a hospice continues to meet the eligibility requirements for this exemption in future FY APU periods, the organization should request the exemption annually for every applicable FY APU period.
We previously finalized a one-time newness exemption for hospices that meet the criteria (81 FR 52181). Accordingly, hospices that are notified about their Medicare CCN after January 1, 2018 are exempted from the FY 2020 APU CAHPS® Hospice Survey requirements due to newness. No action is required on the part of the hospice to receive this exemption. The newness exemption is a one-time exemption from the survey. Likewise, hospices notified about their Medicare CCN after January 1, 2019, are exempted from the FY 2021 APU CAHPS® Hospice Survey and hospices notified about their Medicare CCN after January 1, 2020, are exempted from the FY 2022 APU CAHPS® Hospice Survey requirements.
The CAHPS® Hospice Survey of CMS' Hospice Quality Reporting Program is used to collect data on the experiences of hospice patients and the primary caregivers listed in their hospice records. Readers who want more information are referred to our extensive discussion of the Hospice Experience of Care prior to our proposal for the public reporting of measures should refer to 79 FR 50452 and 78 FR 48261.
The CAHPS® Hospice Survey is the first standardized national survey available to collect information on patients' and informal caregivers' experience of hospice care. Patient-centered experience measures are a key component of the CMS Quality Strategy, emphasizing patient-centered care by rating experience as a means to empower patients and their caregivers and improving the quality of their care.
Details regarding CAHPS® Hospice Survey national implementation, survey administration, participation requirements, exemptions from the survey's requirements, hospice patient and caregiver eligibility criteria, fielding schedules, sampling requirements, survey instruments, and the languages that are available for the survey, are all available on the official CAHPS® Hospice Survey Web site,
The CAHPS® Hospice Survey was developed in line with the U.S. Department of Health and Human Services' Transparency Initiative to measure patient experience. Unlike the Hospital CAHPS® Survey deployed in 2006 (71 FR 48037 through 48039) and other subsequent CAHPS® surveys, the CAHPS® Hospice Survey is administered after the patient is deceased and queries the decedent's primary caregiver regarding the patient and family experience of care. National implementation of the CAHPS® Hospice Survey commenced January 1, 2015 as stated in the FY 2015 Hospice Wage Index and Payment Rate Update final rule (79 FR 50452).
The survey consists of 47 questions and is available (using the mailed version) in English, Spanish, Chinese, Russian, Portuguese, Vietnamese, Polish, and Korean. It covers topics such as access to care, communications, getting help for symptoms, and interactions with hospice staff. The survey also contains two global rating questions and asks for self-reported demographic information (race/ethnicity, educational attainment level, languages spoken at home, among others). The CAHPS® Hospice Survey measures received NQF endorsement on October 26th, 2016 (NQF number 2651). Measures derived from the CAHPS® Hospice Survey include six multi-item (composite) measures and two global ratings measures under NQF 2651. We proposed to adopt these eight survey-based measures for the CY 2018 data collection period and for subsequent years. We believe these survey-based measures will be useful in assessing aspects of hospice care where the family/primary caregiver is the most useful or only source of information, and to allow meaningful and objective comparisons between hospice providers. The six CAHPS® Hospice Survey composite survey-based measures are:
• Hospice Team Communication;
• Getting Timely Care;
• Treating Family Member with Respect;
• Getting Emotional and Religious Support;
• Getting Help for Symptoms; and
• Getting Hospice Care Training.
Each of the six composite survey-based measures consists of two or more questions. The two global survey-based measures are:
• Rating of Hospice; and
• Willingness to Recommend Hospice.
The two global survey-based measures comprise a single question each and ask the primary caregiver of the decedent to rate the care provided by the hospice facility and his or her willingness to recommend the hospice to family and friends. More information about these measures can be found on the official CAHPS® Hospice Survey Web site,
The eight survey-based measures we proposed were included on the CY 2016 MUC
The MAP supported rulemaking for all eight “patient-reported” measures derived from the CAHPS® Hospice Survey. We received no comments about these items and therefore, we are adopting these measures as final for CY 2018.
As discussed in the CAHPS® Hospice Survey Quality Assurance Guidelines V3.0 (QAG V3.0) (
Hospices are required to provide lists of the patients who died under their care, along with the associated primary caregiver information, to their respective survey vendors to form the samples for the CAHPS® Hospice Survey. We emphasize the importance of hospices providing complete and accurate information to their respective survey vendors in a timely manner. Hospices must contract with an approved CAHPS® Hospice Survey vendor to conduct the survey on their behalf. Hospices are responsible for making sure their respective survey vendors meet all data submission deadlines. Vendor failures to submit data on time are the responsibility of the hospices.
To meet participation requirements for the FY 2020 annual payment update (APU), Medicare-certified hospices must collect CAHPS® Hospice Survey data on an ongoing monthly basis from January 2018 through December 2018 (all 12 months) in order to receive their full payment for the FY 2020 APU. All data submission deadlines for the FY 2020 APU are in Table 17. CAHPS® Hospice Survey vendors must submit data by the deadlines listed in Table 17 for all APU periods listed in the table and moving forward. There are no late submissions permitted after the deadlines, except for extraordinary circumstances beyond the control of the provider as discussed above.
To meet participation requirements for the FY 2021 APU, Medicare-certified hospices must collect CAHPS® Hospice Survey data on an ongoing monthly basis from January 2019 through December 2019 (all 12 months) in order to receive their full payment for the FY 2021 APU. All data submission deadlines for the FY 2021 APU are in Table 17. CAHPS® Hospice Survey vendors must submit data by the deadlines listed in Table 17 for all APU periods listed in the table and moving
To meet participation requirements for the FY 2022 APU, Medicare-certified hospices must collect CAHPS® Hospice Survey data on an ongoing monthly basis from January 2020 through December 2020 (all 12 months) in order to receive their full payment for the FY 2022 APU. All data submission deadlines for the FY 2022 APU are in Table 17. CAHPS® Hospice Survey vendors must submit data by the deadlines listed in Table 17 for all APU periods listed in the table and moving forward. There are no late submissions permitted after the deadlines, except for extraordinary circumstances beyond the control of the provider as discussed above.
As noted above, we proposed to adopt six composite CAHPS® Hospice Survey-based measures and two global survey-based measures. As with other measures adopted for HQRP, a hospice's performance for a given payment determination year will be based upon the successful submission of data required in accordance with the administrative, form, manner and timing requirements established for the program. Therefore, hospices' substantive scores on the CAHPS® Hospice Survey-based measures will not affect whether they are subject to the 2.0 percentage point payment reduction for hospices that fail to report data required to be submitted. Rather, the 2.0 percentage point reduction will be applied based on whether the data were submitted in accordance with our requirements.
We proposed that CAHPS® Hospice Survey scores for a given hospice be displayed as “top box” scores, with the national average top-box score for participating hospices provided for comparison. Top-box scores reflect the proportion of caregiver respondents that endorse the most positive response(s) to a given measure, such as the proportion that rate the hospice a 9 or 10 out of 10 on a 0 to 10 scale, or the proportion that report that they “always” received timely care. The top-box numerator for each question within a measure is the number of respondents that endorse the most positive response(s) to the question. The denominator includes all respondents eligible to respond to the question, with one exception. The exception is the Getting Hospice Care Training measure; for this measure, the measure score is calculated only among those respondents who indicated that their family member received hospice care at home or in an assisted living facility.
For additional information on the specifications of these measures, including details regarding top-box scoring methodology and mode and case-mix adjustment, please refer to the CAHPS® Hospice Survey Web page at
Unadjusted hospice scores on each composite CAHPS® Hospice Survey-based measure would be calculated by determining the proportion of “top-box” responses for each question within the composite and averaging these proportions over all the questions in the composite measure. For example, to assess hospice performance on the composite measure CAHPS® Hospice Survey—Hospice Team Communication, we would calculate the proportion of top-box responses for each of the measure's six questions, add those proportions together, and divide by the number of questions in the composite measure (in this case, six).
As a specific example, we take a theoretical hospice facility that had 50 surveys completed and received the proportions of “top-box” responses through sample calculations:
Based on the above responses, we would calculate that hospice's unadjusted measure score for public reporting as follows:
This calculation would give this example hospice an unadjusted score of 0.78 or 78 percent for the Hospice Team Communication measure for purposes of public reporting. We note that an adjusted hospice score would be calculated by adjusting the score for each question for differences in the characteristics of decedents and caregivers across hospices and for mode, and then averaging across questions within the measure as described here. Further detailed information regarding scoring and risk adjustment can be found at the CAHPS® Hospice Survey Web site (
We proposed to adopt two global CAHPS® Hospice Survey measures. CAHPS® Hospice Survey—Rating of Hospice asks the primary caregiver of the decedent to rate the care provided by the hospice on a scale of 0 to 10, and CAHPS® Hospice Survey—Willingness to Recommend asks about the caregiver's willingness to recommend the hospice to family and friends on a scale of “Definitely No” to “Definitely Yes”. Unadjusted hospice performance on each of the two global CAHPS® Hospice Survey-based measures would be calculated by the proportion of respondents providing high-value responses (that is, a 9 to 10 rating or “Definitely Yes”) to the survey questions over the total number of respondents. For example, if a hospice received 45 ratings of 9 or 10 points out of 50 responses, this hospital would receive a 0.9 or 90 percent unadjusted score, which would then be adjusted for differences in the characteristics of decedents and caregivers across hospices and modes.
The CAHPS® Hospice Survey is administered to all eligible patients/caregivers—or a random sample thereof—who meet the eligibility criteria. Eligible patients, regardless of insurance or payment, can participate.
For purposes of each survey-based measure captured in the CAHPS® Hospice Survey, an “eligible patient” is a decedent 18 years or older:
• With death at least 48 hours following last admission to hospice care.
• for whom there is a caregiver of record.
• whose caregiver is someone other than a non-familial legal guardian.
• for whom the caregiver has a United States or United States Territory home address.
Patients who are still alive or whose admission to the hospice resulted in a live discharge, are not eligible to participate in the survey. In addition, decedents/caregivers who initiate or voluntarily request that the hospice not reveal the patient's identity; and/or not survey the patient/caregiver (“no publicity patients/caregivers”) are excluded from the sample.
The CAHPS® Hospice Survey measures assess activities that are fully under the control of hospice care professionals and/or hospice organizations. In order to ensure fair comparisons in public reporting, we believe it is necessary and appropriate to adjust for factors that are not directly related to hospice performance, such as patient mix, for these CAHPS® Hospice Survey measures. The survey based measures are adjusted for decedent and caregiver characteristics (including the lag time between patient death and survey response; decedent's age, payer for hospice care, decedent's primary diagnosis, decedent's length of final episode of hospice care, caregiver's education, decedent's relationship to caregiver, caregiver's preferred language and language in which the survey was completed, and caregiver's age) known to be associated with systematic difference in survey responses.
Previous research, on both CAHPS® surveys and other types of surveys, has identified respondent characteristics that are not under the control of the entities being assessed but tend to be related to survey responses. Hence, variations in the proportion of respondents with such characteristics will be associated with variations in survey responses that are unrelated to the actual quality of hospice care. To ensure that comparisons between hospices reflect differences in performance rather than differences in patient and/or caregiver characteristics, publicly reported hospice scores will be adjusted for variations of such characteristics across hospices. This adjustment is performed using a linear regression model applied to all data within a quarter, with indicator variables for each hospice and each characteristic as an independent variable in the model.
We conducted an experiment to determine whether survey mode adjustments were needed to fairly compare CAHPS® Hospice Survey scores. The experiment found that mode adjustments are needed. Publicly reported CAHPS® Hospice Survey scores will be adjusted for the mode of survey administration, which affects scores but is not related to quality of hospice care (Authorized survey modes are: mail-only, telephone-only, and mail with telephone follow up, also called mixed mode.). Mode adjustment is performed prior to patient-mix adjustment; a mode adjustment value is added/subtracted (depending on the mode) to each response to the survey by mail-only mode or mixed mode. Responses obtained using telephone-only mode are not adjusted since this is the reference mode. As a result of the risk adjustment methodologies proposed here, the final percentages may vary from the unadjusted percentage as calculated in the examples provided above.
We encourage hospices and other entities to learn more about the survey on
The comments and our responses are set forth below.
In the FY 2015 Hospice final rule (79 FR 50496), we notified hospice providers on how to seek reconsideration if they received a noncompliance decision for the FY 2016 payment determination and subsequent years. A hospice may request reconsideration of a decision by CMS that the hospice has not met the requirements of the HQRP for a particular period.
We clarified that any hospice that wishes to submit a reconsideration request must do so by submitting an email to CMS containing all of the requirements listed on the HQRP Web site at:
In the past, only hospices found to be non-compliant with the reporting requirements set forth for a given payment determination received a notification from CMS of this finding along with instructions for requesting reconsideration in the form of a USPS letter. In the FY 2016 Hospice Wage Index final rule (80 FR 47198), we stated that we would use the QIES CASPER reporting system as an additional mechanism to communicate to hospices regarding their compliance with the reporting requirements for the given reporting cycle. We have implemented this additional communication mechanism via the CASPER Hospice Timeliness Compliance Threshold Report previously discussed in the FY 2017 Hospice Wage Index proposed rule at 81 FR 25527 and 25528. We will continue to send notification of noncompliance via delivery of a letter via the USPS. We previously finalized our proposal (80 FR 47198) to publish a list of hospices who successfully meet the reporting requirements for the applicable payment determination on the CMS HQRP Web site. The list of providers found to be compliant with the FY 2017 APU requirements can be found on the CMS HQRP Web site here:
As part of our effort to promote use of standardized quality data to improve quality of care, in December 2016, we made available two new provider feedback reports: The Hospice-Level Quality Measure Report and the Patient Stay-Level Quality Measure Report. These confidential feedback reports are available to each hospice using the CASPER system, and are part of the class of CASPER reports known as Quality Measure (QM) Reports. These reports are separate from public reporting and are for provider viewing only (to the extent permissible under federal law), for the purposes of internal provider quality improvement. These reports are on-demand and thus enable hospice providers to view and compare their performance to the national average for a reporting period of their choice.
Hospices are able to view their data and information at both the hospice and patient stay levels for their HIS-based quality measures. The CASPER hospice-level QM Reports contain information such as the numerator, denominator, hospice-level QM score, and national average. The CASPER patient stay-level QM Reports show whether each patient stay is counted toward each quality measure. The HIS based QMs reported in both reports include:
• NQF #1641 Treatment Preferences
• NQF #1647 Beliefs/Values
• NQF #1634 Pain Screening
• NQF #1637 Pain Assessment
• NQF #1639 Dyspnea Screening
• NQF #1638 Dyspnea Treatment
• NQF #1617 Bowel Regimen
For more information on the CASPER QM Reports, we refer readers to the CASPER QM Factsheet on the HQRP Web site at
As new HIS measures are implemented in the HQRP, we will continue to expand the functionality of the QM reports to allow providers to view data on additional HIS measures. We will announce refinements and additions to the QM reports through sub-regulatory communication channels and in future rulemaking cycles.
We also proposed to provide hospices with preview reports of their data prior to the quarterly publication of CAHPS® Hospice Survey data on the Compare site. The reports will be provided through the CASPER reporting system. Each hospice will receive only its own, individual reports.
Under section 1814(i)(5)(E) of the Act, the Secretary is required to establish procedures for making any quality data submitted by hospices available to the public. These procedures shall ensure that a hospice has the opportunity to review the data that is to be made public for the hospice prior to such data being made public. The Secretary shall report quality measures that relate to hospice
In the FY 2017 Hospice final rule, we discussed our analysis of HIS data to inform which measures were eligible for public reporting and reportability analysis to determine data selection period and minimum denominator size for measures to be publicly reported. Based on analysis results, we determined that all 7 HIS quality measures adopted for the FY 2016 and beyond (NQF #1634, NQF #1637, NQF #1639, NQF #1638, NQF #1641, NQF #1647, NQF #1617), calculated based on a rolling 12-month data selection period, to be eligible for public reporting with a minimum denominator size of 20 patient stays. For additional details on these analyses, we refer readers to the FY 2017 Hospice final rule (81 FR 52183 through 52184).
In the FY 2017 Hospice final rule, we also clarified policies for reportability analyses for new measures. As stated in the FY 2017 Hospice final rule, new measures will undergo reportability analysis to determine (1) appropriateness for public reporting and (2) appropriate data selection period. In accordance with discussion in the prior year's rule, we will use the same analytic approach used in previous reportability analyses to determine data selection period and minimum denominator size for the Hospice and Palliative Care Composite Process Measure—Comprehensive Assessment at Admission. We will begin reportability analyses for the Hospice Visits When Death is Imminent Measure Pair once data for the measure are available. Results of reportability analyses conducted for these new measures will be communicated through future rulemaking.
To meet the Affordable Care Act's requirement for making quality measure data public, we are developing a CMS Hospice Compare Web site, which will allow consumers, providers and stakeholders to search for all Medicare-certified hospice providers and view their information and quality measure scores. We anticipate that public reporting of HQRP data on the CMS Compare Web site will begin August 2017. To help providers prepare for public reporting, we will offer opportunities for stakeholder engagement and education prior to the rollout of a CMS Hospice Compare site. We will offer outreach opportunities for providers through CMS HQRP Public reporting Web page:
We will provide hospices an opportunity to preview their quality measure data prior to publicly reporting information. These quality measure data reports or “preview reports” will be made available in the CASPER system prior to public reporting and will offer providers the opportunity to preview their quality measure data prior to public reporting on the CMS Hospice Compare Web site. We will provide hospices 30 days to review the preview report beginning from the date on which they can access the report. Hospices will have an opportunity to request review of their data by CMS during the 30 day preview period if they believe that errors in data submitted to CMS may have resulted in incorrect measure scores and can submit proof along with a plan describing how the errors will be corrected. We will review these requests and if we confirm that the errors have affected the measures and agree to correct the measure, we will suppress the measure on the Hospice Compare Web site for one time only and display the corrected measure during the subsequent quarterly refresh of the Compare Web site. When the preview reports are ready for providers to access, anticipated August 2017 prior to the release of Hospice Compare, we will post the policies and procedures for providers to submit requests for reviewing of their data by CMS on the CMS HQRP Web site:
We proposed to begin public reporting of CAHPS® Hospice Survey measures in 2018. Specifically, we proposed to publicly report data in winter CY 2018 on all eight CAHPS® Hospice Survey measures. Scores would be displayed based on eight rolling quarters of data and would initially use CAHPS® Hospice Survey data collected from caregivers of patients who died while receiving hospice care between April 1, 2015 and March 31, 2017. We proposed that the display of these scores be updated quarterly, and that scores be displayed only for those hospices for which there are 30 or more completed questionnaires during the reporting period. Scores will not be displayed for hospices with fewer than 30 completed questionnaires during the reporting period.
Like other CMS Compare Web sites, the Hospice Compare Web site will, in time, feature a quality rating system that gives each hospice a rating of between 1 and 5 stars. Hospices will have prepublication access to their own agency's quality data, which enables each agency to know how it is performing before public posting of data on the Hospice Compare Web site. Public comments regarding how the rating system would determine a hospice's star rating and the methods used for calculations, as well as a proposed timeline for implementation will be announced via the CMS HQRP Web page, listserv messages via the Post-Acute Care QRP listserv, MLN Connects® National Provider Calls & Events, MLN Connects® Provider eNews and announcements on Open Door Forums and Special Open Door Forums. We will announce the timeline for development and implementation of the star rating system in future rulemaking. Lastly, as part of our ongoing efforts to make healthcare more transparent, affordable, and accountable for all hospice stakeholders, we have posted a hospice directory and quality data on a public data set located at
The comments and our responses are set forth below.
Finally, the Hospice Compare Web site will likely feature a quality rating system that gives each hospice a rating such as between 1 and 5 stars. This will help supplement the measure scores by presenting the data as a rating. We will announce the timeline for the development and implementation of the star rating system in future rulemaking.
To prevent the public display of incorrect HIS measure data, we encourage hospices to use their CASPER QM reports (see section III.D.13 of the FY 2018 Hospice proposed rule) to regularly review their HIS quality measure scores. If hospices determine that erroneous data have been submitted, providers should use the HIS record modification and inactivation processes, as outlined in the HIS Manual available on the “Hospice Item Set (HIS)” portion of the CMS HQRP Web site:
Once the preview reports are generated, the underlying data cannot be corrected. If a hospice disagrees with the QM scores presented in their preview report, the hospice will have the opportunity to request review of their data by CMS during the 30-calendar day preview period. We will review these requests and if CMS agrees that the data is incorrect, the data will be suppressed for one quarter and the corrected data will be posted during the subsequent quarterly refresh of the Compare site. The process for CMS review of data is posted on the “Hospice Quality Public Reporting” portion of the CMS HQRP Web site:
Under the Paperwork Reduction Act of 1995, we are required to provide 60-day notice in the
• The need for the information collection and its usefulness in carrying out the proper functions of our agency.
• The accuracy of our estimate of the information collection burden.
• The quality, utility, and clarity of the information to be collected.
• Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.
Unless noted otherwise, all salary information is from the Bureau of Labor Statistics (BLS) Web site at
Section 1814(i)(5)(C) of the Act requires that each hospice submit data to the Secretary on quality measures specified by the Secretary. This data must be submitted in a form and manner, and at a time specified by the Secretary.
We solicited public comment and received no comments on each of these issues for the following sections of this document that contain information collection requirements (ICRs) and are finalizing them.
In the FY 2014 Hospice Wage Index final rule (78 FR 48257), and in compliance with section 1814(i)(5)(C) of the Act, we finalized the specific collection of data items that support the following 7 NQF endorsed measures for hospice:
• NQF #1617 Patients Treated with an Opioid who are Given a Bowel Regimen,
• NQF #1634 Pain Screening,
• NQF #1637 Pain Assessment,
• NQF #1638 Dyspnea Treatment,
• NQF #1639 Dyspnea Screening,
• NQF #1641 Treatment Preferences,
• NQF #1647 Beliefs/Values Addressed (if desired by the patient).
We finalized the following two additional measures in the FY 2017 Hospice Wage Index final rule affecting FY 2019 payment determinations (81 FR 52163 through 52173):
Data for the aforementioned 9 measures is collected via the HIS as discussed in the FY 2017 Hospice Wage Index final rule (81 FR 52189) and covered under OMB control number 0938-1153. The HIS V2.00.0 was approved by the Office of Management and Budget on April 17, 2017 under control number 0938-1153. We are not making any new updates or additional collections of information in this rule in regards to the Hospice Item Set or its constituent quality measures.
National Implementation of the Hospice Experience of Care Survey (CAHPs Hospice Survey) data measures are covered under OMB control number 0938-1257 and is summarized here for convenience. We have implemented patient experience surveys in a number of settings including Medicare, Medicare Advantage, and Part D Prescription Drug Plans, hospitals, and home health agencies. Other CAHPS® surveys exist for hemodialysis facilities, nursing homes, and physician practices. The hospice survey differs from most other CMS patient experience surveys because its target population is bereaved family members or close friends of patients who died in hospice care. Family members and friends are the best source of information regarding the entire trajectory of hospice care. In addition, many hospice patients are very ill and unable to answer survey questions.
Surveys are administered by CMS-approved survey vendors hired by hospice providers to conduct the survey on their behalf. The survey vendor may collect data in one of three modes: Mail-only, telephone-only, or mixed mode (mail with telephone follow-up). The sample consists of bereaved family members or close friends of patients who died while receiving hospice care (1) at home, (2) in a nursing home, or (3) an inpatient setting (that is, freestanding inpatient unit or acute care hospital). The questionnaire is composed of 47 items.
The estimated annualized burden hours and costs to respondents for the national implementation of the CAHPS® Hospice Survey are shown in Tables 18 and 19. Based on participation in national implementation in the CAHPS® Hospice Survey from Quarter 2 2015 through Quarter 1 2016, we assume that
This final rule meets the requirements of our regulations at § 418.306(c), which requires annual issuance, in the
We estimate that the aggregate impact of the payment provisions in this final rule will result in an increase of $180 million in payments to hospices, resulting from the hospice payment update percentage of 1.0 percent. The impact analysis of this final rule represents the projected effects of the changes in hospice payments from FY 2017 to FY 2018. Using the most recent data available at the time of rulemaking, in this case FY 2016 hospice claims data, we apply the current FY 2017 wage index and labor-related share values to the level of care per diem payments and SIA payments for each day of hospice care to simulate FY 2017 payments. Then, using the same FY 2016 data, we apply the FY 2018 wage index and labor-related share values to simulate FY 2018 payments. Certain events may limit the scope or accuracy of our impact analysis, because such an analysis is susceptible to forecasting errors due to other changes in the forecasted impact time period. The nature of the Medicare program is such that the changes may interact, and the complexity of the interaction of these changes could make it difficult to predict accurately the full scope of the impact upon hospices.
We have examined the impacts of this rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4,
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 3(f) 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 President's priorities, or the principles set forth in the Executive Order.
A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). We estimate that this rulemaking is “economically significant” as measured by the $100 million threshold, and hence also a major rule under the Congressional Review Act. Accordingly, we have prepared a RIA that, to the best of our ability presents the costs and benefits of the rulemaking.
The Regulatory Flexibility Act (RFA) requires agencies to analyze options for regulatory relief of small businesses if a rule has a significant impact on a substantial number of small entities. The great majority of hospitals and most other health care providers and suppliers are small entities by meeting the Small Business Administration (SBA) definition of a small business (in the service sector, having revenues of less than $7.5 million to $38.5 million in any 1 year), or being nonprofit organizations. For purposes of the RFA, we consider all hospices as small entities as that term is used in the RFA. HHS's practice in interpreting the RFA is to consider effects economically “significant” only if greater than 5 percent of providers reach a threshold of 3 to 5 percent or more of total revenue or total costs. The effect of the FY 2018 hospice payment update percentage results in an overall increase in estimated hospice payments of 1.0 percent, or $180 million. Therefore, the Secretary has determined that this final rule will not create a significant economic impact on a substantial number of small entities.
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 of a metropolitan statistical area and has fewer than 100 beds. This final rule only affects hospices. Therefore, the Secretary has determined that this final rule will not have a significant impact on the operations of a substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 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 2017, that threshold is approximately $148 million. This final rule is not anticipated to have an effect on state, local, or tribal governments, in the aggregate, or on the private sector of $148 million or more.
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 final rule under these criteria of Executive Order 13132, and have determined that it will not impose substantial direct costs on state or local governments.
If regulations impose administrative costs on private entities, such as the time needed to read and interpret this final rule, we should estimate the cost associated with regulatory review. Due to the uncertainty involved with accurately quantifying the number of entities that will review the rule, we assume that the total number of unique commenters on the published proposed rule will be the number of reviewers of this final rule. We acknowledge that this assumption may understate or overstate the costs of reviewing this final rule. It is possible that not all commenters reviewed the proposed rule in detail, and it is also possible that some reviewers chose not to comment on the proposed rule. For these reasons we thought that the number of comments received on the proposed rule would be a fair estimate of the number of reviewers of this final rule. We also recognize that different types of entities are in many cases affected by mutually exclusive sections of this final rule, and therefore for the purposes of our estimate we assume that each reviewer reads approximately 50 percent of the rule. Using the wage information from the BLS for medical and health service managers (Code 11-9111), we estimate that the cost of reviewing this rule is $105.16 per hour, including overhead and fringe benefits (
A summary of the comments we received on the RIA and our responses to those comments are set forth below.
The FY 2018 hospice payment impacts appear in Table 20. We tabulate the resulting payments according to the classifications in Table 20 (for example, facility type, geographic region, facility ownership), and compare the difference between current and future payments to determine the overall impact.
The first column shows the breakdown of all hospices by urban or rural status, census region, hospital-based or freestanding status, size, and type of ownership, and hospice base. The second column shows the number of hospices in each of the categories in the first column.
The third column shows the effect of the annual update to the wage index. This represents the effect of using the FY 2018 hospice wage index. The aggregate impact of this change is zero percent, due to the hospice wage index standardization factor. However, there are distributional effects of the FY 2018 hospice wage index.
The fourth column shows the effect of the hospice payment update percentage for FY 2018. The FY 2018 hospice payment update percentage of 1 percent is mandated by section 1814(i)(1)(C) of the Act, as amended by section 411(d) of the MACRA.
The fifth column shows the effect of all the changes on FY 2018 hospice payments. It is projected that aggregate payments will increase by 1.0 percent, assuming hospices do not change their service and billing practices.
As illustrated in Table 20, the combined effects of all the proposals vary by specific types of providers and by location. For example, due to the changes in this rule, the estimated impacts on FY 2018 payments range from a 0.9 percent decrease for hospices providing care in the rural outlying region to a 1.7 percent increase for hospices providing care in the urban Pacific region.
As required by OMB Circular A-4 (available at
Executive Order 13771, entitled “Reducing Regulation and Controlling Regulatory Costs,” was issued on January 30, 2017 (82 FR 9339, February 3, 2017). It has been determined that this final rule is a transfer rule that does not impose more than de minimis costs as described above and thus is not a regulatory or deregulatory action for the purposes of Executive Order 13771.
We estimate that aggregate payments to hospices in FY 2018 will increase by $180 million, or 1.0 percent, compared to payments in FY 2017. We estimate that in FY 2018, hospices in urban and rural areas will experience, on average, 1.0 percent and 1.1 percent increases, respectively, in estimated payments compared to FY 2017. Hospices providing services in the urban Pacific and rural Middle Atlantic regions will experience the largest estimated increases in payments of 1.7 percent and 1.6 percent, respectively. Hospices serving patients in urban areas in the New England region will experience, on average, the lowest estimated increase of 0.3 percent in FY 2018 payments.
In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget.
Category | Regulatory Information | |
Collection | Federal Register | |
sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
Publisher | Office of the Federal Register, National Archives and Records Administration |