Medicare program; changes to the hospital inpatient prospective payment systems and rates and costs of graduate medical education: fiscal year 2002 rates; provisions of the Balanced Budget Refinement Act of 1999; and provisions of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000. Final rules.

We are revising the Medicare hospital inpatient prospective payment systems for operating and capital costs to: implement applicable statutory requirements, including a number of provisions of the Medicare, Medicaid, and SCHIP [State Children's Health Insurance Program] Benefits Improvement and Protection Act of 2000 (Public Law 106-554); and implement changes arising from our continuing experience with these systems. In addition, in the Addendum to this final rule, we describe changes to the amounts and factors used to determine the rates for Medicare hospital inpatient services for operating costs and capital-related costs. These changes apply to discharges occurring on or after October 1, 2001. We also set forth the rate-of-increase limits as well as policy changes for hospitals and hospital units excluded from the prospective payment systems. We are making changes to the policies governing payments to hospitals for the direct costs of graduate medical education and critical access hospitals. Lastly, we are responding to public comments received on the following two related interim final rules that we published in the Federal Register and finalizing those interim rules: An August 1, 2000 interim final rule with comment period (65 FR 47026, HCFA-1131-IFC) that implemented, or conformed the regulations to, certain statutory provisions relating to Medicare payments to hospitals for inpatient services that were contained in the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (Public Law 106-113), and that were effective during FY 2000. These provisions related to reclassification of hospitals from urban to rural status, reclassification of certain hospitals for purposes of payment during fiscal year 2000, critical access hospitals, payments to hospitals excluded from the prospective payment system, and payments for indirect and direct graduate medical education costs. A June 13, 2001 interim final rule with comment period (66 FR 32172, HCFA-1178-IFC) that implemented, or conformed the regulations to, certain statutory provisions relating to Medicare payments to hospitals for inpatient services that were contained in Public Law 106- 554, and that were effective prior to passage of Public Law 106-554 on December 21, 2000; on April 1, 2001; or on July 1, 2001. Many of the provisions of Public Law 106-554 modified changes to the Social Security Act made by Public Law 106-113 or the Balanced Budget Act of 1997 (Public Law 105-33), or both.