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13 August 2008
[Federal Register: August 13, 2008 (Volume 73, Number 157)]
[Rules and Regulations]
[Page 47075-47092]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13au08-14]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 483
[CMS-3191-F]
RIN 0938-AN79
Medicare and Medicaid Programs; Fire Safety Requirements for Long
Term Care Facilities, Automatic Sprinkler Systems
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule requires all long term care facilities to be
equipped with sprinkler systems by August 13, 2013. Additionally, this
final rule requires affected facilities to maintain their automatic
sprinkler systems once they are installed.
DATES: These regulations are effective on October 14, 2008. The
incorporation by reference listed in the rule is approved by the
Director of the Federal Register October 14, 2008.
FOR FURTHER INFORMATION CONTACT: Danielle Shearer, (410) 786-6617;
James Merrill, (410) 786-6998; Marcia Newton, (410) 786-5265; or
Jeannie Miller, (410) 786-3164.
SUPPLEMENTARY INFORMATION:
I. Background
A. Overview of the Life Safety Code
The Life Safety Code (LSC), published by the National Fire
Protection Association (NFPA), a private, nonprofit organization
dedicated to reducing loss of life due to fire, is a compilation of
fire safety requirements. The LSC contains fire safety requirements for
both new and existing buildings. It is updated through a consensus
process and generally published every 3 years. Sections 1819(d)(2)(B)
and 1919(d)(2)(B) of the Social Security Act (the Act) require that
long term care facilities participating in the Medicare and Medicaid
programs generally meet the applicable provisions of the edition of the
LSC that is adopted by the Secretary.
Beginning with the adoption of the 1967 edition of the LSC in 1971,
Medicare and Medicaid regulations have historically incorporated the
LSC requirements by reference for all long term care facilities as well
as other providers, while providing the opportunity for a Secretarial
waiver of a requirement under certain circumstances. The statutory
basis for incorporating NFPA's LSC for our other providers is under the
Secretary's general rulemaking authority at sections 1102 and 1871 of
the Act, and under provider-specific provisions of title XVIII that
permit us to issue regulations to protect the health and safety of
participants in Medicare and Medicaid.
We adopted the LSC to ensure that patients and residents are
consistently protected from fire, regardless of the location in which
they receive care. Since adopting and enforcing the 1967 and subsequent
editions of the LSC, there has been a significant decline in the number
of multiple death fires, indicating that the LSC has been effective in
improving fire safety in health care facilities.
On October 26, 2001, we published a proposed rule (66 FR 54179),
and on January 10, 2003, we published a final rule in the Federal
Register, entitled ``Fire Safety Requirements for Certain Health Care
Facilities'' (68 FR 1374). In that final rule, we adopted the 2000
edition of the LSC provisions as the standard governing Medicare and
Medicaid health care facilities, including long term care facilities.
The final rule required all existing long term care facilities to
comply with the 2000 edition of the LSC.
The 2000 edition of the LSC required all newly constructed
buildings containing health care facilities to have an automatic
sprinkler system installed throughout the building. However, like all
previous editions, the LSC did not require existing buildings to
install automatic sprinkler systems throughout if they met certain
construction standards, ranging from the size of the buildings to the
types of material used in their construction.
In accordance with the 2000 edition of the LSC, an existing
building that meets the above-mentioned construction standards must
install sprinklers if it undergoes a major renovation. However, in such
cases, it is required to install sprinklers only in the renovated
section(s). Therefore, a building may have sprinklers only on one floor
or in one wing. We did not receive any timely public comments in
response to the October 2001 proposed rule that addressed the issue of
installing automatic sprinkler systems in buildings not undergoing
major renovations. That is to say, no public comments supported,
questioned or challenged our proposal to incorporate this LSC provision
by reference.
In the 2006 edition of the LSC, the NFPA decided to include an
automatic sprinkler system requirement for all long term care
facilities. We support the NFPA in its decision. We decided to proceed
with this rule, without proposing adoption of the NFPA 2006 edition of
the LSC, because we want to avoid further delay in requiring an
automatic sprinkler system in long term care facilities. As stated in
the October 27, 2006 proposed rule (71 FR 62957, 62960), given the
large scope of the LSC, we would not be able to adopt and enforce
compliance with the 2006 edition of the LSC until 2009 or 2010.
Therefore, we decided at this time to proceed with rulemaking that does
not include adoption of the NFPA 2006 LSC.
We will continue to work with the NFPA to revise and refine each
edition of the LSC. We are currently working with the NFPA through its
consensus process to revise and refine the 2009 edition of the LSC.
Once the 2009 edition is issued, we will review the code in its
entirety and explore the possibility of adopting it for all
[[Page 47076]]
Medicare and Medicaid-participating health care facilities.
B. Recent Fire Safety Developments
A Government Accountability Office (GAO) report entitled ``Nursing
Home Fire Safety: Recent Fires Highlight Weaknesses in Federal
Standards and Oversight'' (GAO-04-660, July 16, 2004, http://
www.gao.gov/new.items/d04660.pdf) examined two long term care facility
fires (Hartford and Nashville) in 2003 that resulted in 31 total
resident deaths. The report examined Federal fire safety standards and
enforcement procedures, as well as results from the fire investigations
of these two incidents. The report recommended that fire safety
standards for unsprinklered facilities be strengthened and the report
cited the effectiveness of smoke detectors' and sprinklers' fire
protection features for long term care facilities.
In response to a recommendation made in the GAO report, on March
25, 2005, we published an interim final rule with comment period in the
Federal Register entitled, ``Fire Safety Requirements for Certain
Health Care Facilities; Amendment'' (70 FR 15229). This interim final
rule added paragraph (a)(7) to Sec. 483.70, to require long term care
facilities, at minimum, to install battery-operated smoke detectors in
resident sleeping rooms and public areas, unless they had a hard-wired
smoke detector system in resident rooms and public areas or a sprinkler
system installed throughout the facility. This IFC was finalized
September 22, 2006 (71 FR 55326).
Structural fires in long term care facilities are relatively common
events. From 1994 to 1999, an average of 2,300 long term care
facilities reported a structural fire each year (2004 GAO Report).
Although approximately 2,300 facilities per year reported fires, those
fires resulted in an average of only 5 fatalities nationwide per year
(2004 GAO Report). The likelihood of a fatality occurring due to a long
term care facility fire was quite low.
From 1990 to 2002, there were no fires in long term care facilities
that resulted in more than one or two fatalities. During that time
period there were no fires in long term care facilities that resulted
in a loss of life comparable to that of the Hartford and Nashville
fires.
We believe the low number of fire-related fatalities each year is
attributable, in part, to the increasing use of automatic sprinkler
systems in long term care facilities as a fire protection method. State
and local jurisdictions often adopt an edition of the LSC or a
comparable fire safety code shortly after it is published. Therefore, a
building constructed in the early 1990s likely met the requirements of
the 1991 edition of the LSC or another comparable code. Beginning with
the 1991 edition of the LSC, all newly built facilities were required
to have automatic sprinkler systems. In addition, beginning with the
1991 edition of the LSC, all facilities undergoing major renovations
were also required by the LSC to install automatic sprinkler systems at
least in those renovated areas. Therefore, as new facilities have
replaced old facilities, and as facilities have been renovated, the
number of residents protected by automatic sprinkler systems has
increased. The increase in the number of automatic sprinkler systems
and the number of residents residing in sprinklered buildings has
decreased significantly the likelihood of a fatality occurring due to
fire.
According to NFPA data cited in the 2004 GAO report, there is an 82
percent reduction in the chance of death occurring in a sprinklered
building when compared to the chance of death occurring in an
unsprinklered building. In addition, we note that there has never been
a multiple death fire in a long term care facility that had an
automatic sprinkler system installed throughout the facility.
Automatic sprinkler systems are effective in reducing the risk of
fatalities due to fire because they limit the size of a developing fire
and prevent the fire from growing and spreading beyond the area where
the fire ignited. In addition, impeding the fire's growth gives the
facility staff and residents and the local fire department more time to
respond to the situation.
Automatic fire suppression through sprinklers also alleviates some
of the current heavy reliance on facility staff to implement the
facility's emergency plan. Fires often occur at night, as both the
Hartford and Tennessee fires did, when staffing levels are lowest.
Investigators of the Hartford fire determined that the facility's staff
did not fully implement the facility's emergency plan, which may have
contributed to the number of fatalities in that fire. The 2004 GAO
report concluded that ``reliance on staff response as a key component
of fire protection may not always be realistic, particularly in an
unsprinklered facility.'' Limiting the area of a building affected by a
fire may result in less of a need to evacuate or relocate residents.
The effectiveness of automatic sprinkler systems has prompted some
States, including Virginia, Connecticut, and Tennessee, to require that
all long term care facilities have sprinklers. The NFPA also requires
all long term care facilities to have automatic sprinkler systems as
part of the 2006 edition of the LSC.
II. Provisions of the Proposed Regulations
We published a proposed rule in the Federal Register on October 27,
2006 (71 FR 62957) that would require all long term care facilities to
be equipped with sprinkler systems. That proposed rule also requested
public comments on the duration of a phase-in period to allow such
facilities to install such systems.
For the reasons described in section I of this preamble, we
proposed a rule with three main components. First, the regulation
proposed to add a sunset provision to paragraph (a)(7) in Sec. 483.70
that would correspond to the phase-in date of the sprinkler
requirement. This sunset provision would provide that, as of the phase-
in date, we would no longer enforce the requirement that facilities
have and maintain at least battery-operated smoke alarms. We proposed
to add the sunset date because the requirements of Sec. 483.70(a)(7)
apply only to unsprinklered and partially sprinklered long term care
facilities. Once all long term care facilities are fully sprinklered,
there would not be any unsprinklered or partially sprinklered
facilities to which Sec. 483.70(a)(7) would apply.
Second, we proposed to require every long term care facility to
install an approved, supervised automatic sprinkler system in
accordance with the 1999 edition of NFPA 13, Standard for the
Installation of Sprinkler Systems, throughout the facility if it did
not have such a system already. If a long term care facility was part
of another building, such as a hospital, then the building would be
required to have sprinklers only in the long term care facility
section. The NFPA 13 specifies how to properly design and install
sprinkler systems using the proper components. The standards of NFPA 13
cover a wide variety of factors that are involved in designing and
installing sprinkler systems. The NFPA 13 is divided into 10 main
chapters governing the design and installation phases of automatic
sprinkler systems, and the October 2006 proposed rule summarized the
content of these chapters.
The NFPA 13 is a very detailed document, with a wide variety of
standards and exceptions to those standards. The document provides many
options for the design and
[[Page 47077]]
installation of sprinkler systems so that each system may be tailored
to the building in which it is installed.
Third, the regulation proposed to require every long term care
facility to test, inspect, and maintain an approved, supervised
automatic sprinkler system in accordance with the 1998 edition of NFPA
25, Standard for the Inspection, Testing and Maintenance of Water-Based
Fire Protection Systems. Proper inspections, tests, and maintenance of
sprinkler systems are critical to ensuring that sprinkler systems
function properly on a continuous basis. Fires are, by nature,
unpredictable, and sprinkler systems must be operable at all times to
ensure that buildings are protected whenever and wherever fires occur.
NFPA 25 covers a wide variety of testing, inspection, and maintenance
requirements for the numerous types of sprinkler systems that
facilities may install and the auxiliary equipment that may be
necessary for some facilities. We summarized the content of NFPA 25 in
the proposed rule.
The proposed requirements of this regulation include three
technical terms: ``approved,'' ``automatic,'' and ``supervised.'' These
terms are terms of art in the fire safety community and are included in
NFPA 101, Life Safety Code, with which long term care facilities must
already comply. There may be, however, individuals who are not familiar
with the terms. Their definitions, as used in the fire safety
community, are as follows:
Approved means acceptable to the authority having
jurisdiction (from 2000 edition of NFPA 101, the LSC).
Automatic means that which provides a function without the
necessity of human intervention (from 2000 edition of NFPA 101, the
LSC).
Supervised means that the system and particular components
of the system are monitored by a device with auditory and visual
signals that are capable of alerting facility staff should the system
or one of its components become inoperable for any reason (adapted from
1999 edition of NFPA 13, Standard for the Installation of Sprinkler
Systems).
III. Analysis of and Responses to Public Comments
We received 107 comments from the public on the October 27, 2006
proposed rule. The comments received and our responses to those
comments are discussed below.
Comment: The vast majority of commenters strongly supported our
intent to require automatic sprinkler systems throughout all long term
care facilities. Conversely, a small minority of commenters disagreed
with the proposed rule, citing the expense of purchasing and installing
sprinklers and the availability of other fire safety features such as
water-based fire-proof coatings and fire walls as reasons for not
requiring sprinklers in all long term care facilities.
Response: We appreciate the strong support expressed by most
commenters. While we agree that there are other methods for improving
fire safety in long term care facilities, these other methods do not
achieve the same high level of fire safety as automatic sprinkler
systems. We are proceeding with this final rule requiring all long term
care facilities to install and maintain automatic sprinkler systems
because we agree with the GAO that such systems are the single most
effective fire safety method currently available and that the presence
of such systems will help save lives and property.
Comment: Several commenters submitted comments related to the
specific facilities that are, or should be, affected by this final
rule. One commenter explicitly supported our decision to apply the
proposed sprinkler requirements to all affected long term care
facilities, regardless of their size. Some commenters requested that
this rule be expanded to apply to any residential facility that cares
for individuals on a 24-hour basis. One commenter suggested that the
rule should apply to federally operated nursing homes as well, such as
those operated by the U.S. Department of Veterans Affairs. Another
commenter suggested that the rule should apply to inpatient facilities
such as hospitals and critical access hospitals with swing beds. Still
other commenters asked whether the requirements of the final rule will
affect adult day care centers.
Response: We proposed to require all long term care facilities to
install automatic sprinkler systems regardless of their size because
their recent fire history and current staffing levels indicated the
need for additional fire safety features. We do not believe it is
necessary for us to require sprinkler systems in other facility types,
such as intermediate care facilities, adult day care facilities, or
critical access hospitals at this time because there is no demonstrated
need for such regulation. While we agree that it may be appropriate for
federally operated nursing homes, such as those operated by the U.S.
Department of Veterans Affairs, to install automatic sprinkler systems,
we do not have regulatory authority over these facilities. Therefore,
we are unable to promulgate a regulation applying to them.
Comment: Numerous commenters discussed the financial impact that
the proposed rule will have on long term care facilities, and suggested
a variety of methods to offset the expected impact. Of these
commenters, several suggested that CMS should support legislation in
the Congress that will provide financial incentives for long term care
facilities to install sprinkler systems. A few commenters indicated
that they are actively working with the Congress to obtain financial
assistance for long term care facilities in implementing the
requirements of this final rule. Other commenters suggested that CMS
should make financial assistance available to facilities, with some
suggesting that such assistance should be limited to those facilities
with not-for-profit status or those that are not profitable. Still
another commenter suggested that CMS should compel State Medicaid
programs to increase reimbursement rates to fund capital improvements
in long term care facilities.
Response: We recognize that purchasing and installing an automatic
sprinkler system throughout a long term care facility requires a
substantial capital investment. We defer to the Congress and States to
provide financial assistance to long term care facilities to complete
the purchase and installation process, whether such assistance comes in
the form of loans, grants, tax relief, and/or increased reimbursement
rates.
We have included a 5 year phase-in period in this final rule. This
phase-in period allows facilities the time and flexibility to install
sprinkler systems in a manner that is sensitive to the individual
circumstances of each facility. We believe this phase-in period will
help mitigate the financial impact of this final rule.
Comment: Numerous commenters stated that this final rule should
provide additional discussion of the role that State and locally
imposed building and fire safety codes play in protecting long term
care facility residents.
Response: We acknowledge that State and local authorities use their
authority to require long term care facilities to meet building and
fire safety codes independent of the codes applied to facilities
through Federal regulations. State and local authorities often adopt
more recent editions of such codes than those required by Federal
rules. Until 2003, Federal fire safety regulations referenced
simultaneously Life Safety Code provisions from several editions
including the editions of 1967, 1973, and 1985. However, health care
facilities were not being built to these older standards because State
and local jurisdictions adopted and enforced far
[[Page 47078]]
more recent editions of building and fire safety codes. Such prompt
adoption of updated codes by State and local jurisdictions likely has
led to the large number of long term care facilities that currently
have automatic sprinkler systems throughout their facilities. We
continue to support the right of State and local authorities to impose
building and fire safety codes independent of these Federal
requirements and will continue to monitor all efforts to improve safety
for long term care facility residents.
Comment: Some commenters expressed concern that this final rule
will preempt State and local fire safety requirements. Of these
commenters, a few expressed concern that this Federal rulemaking
preempted State and local efforts and did not respond to the unique
needs of different localities. Furthermore, some of these commenters
requested a more detailed discussion of Executive Order 13132
(Federalism) as it relates to this rulemaking action. Conversely,
several commenters indicated that they agreed with our conclusion that
this rule is in accordance with the actions of State and local
governments, and that it is appropriate for the Federal government to
require automatic sprinkler systems in Medicare and Medicaid-
participating long term care facilities.
Response: The Federal regulations for long term care facilities are
considered to be the minimum standards that a facility must meet in
order to participate in the Medicare and Medicaid programs. As such,
they will not preempt more stringent State and local requirements. For
example, if a State or local authority requires a long term care
facility to install an automatic sprinkler system within 3 years after
adoption of a law requiring it, then a facility must comply with that
shorter time frame, even though this Federal regulation allows a
facility up to 5 years to install an automatic sprinkler system.
However, if a State or local authority requires a long term care
facility to install an automatic sprinkler system only in hazardous
areas, then a facility must go beyond the State or local requirement
and install an automatic sprinkler system throughout its building in
order to participate in Medicare or Medicaid. We believe that all
facilities must install an automatic sprinkler system throughout a
facility by 2013, regardless of the State or locality where a facility
is located. In order to achieve this goal, it is necessary to
promulgate a Federal regulation. State and local jurisdictions have
always had the authority to require automatic sprinkler systems in
existing long term care facilities. However, few States have taken
action to require existing long term care facilities to retrofit their
buildings with such systems. Thus, we believe it is necessary to take
this Federal action.
In addition, this rule adopts the sprinkler installation and
maintenance requirements established by the NFPA. The NFPA is a
national standard setting body with representatives from all members of
the fire safety community, including State and local jurisdictions. As
such, these representatives had active input in the content and
framework of the NFPA sprinkler standards. The standards allow
flexibility in the design, installation, and maintenance of sprinkler
systems to adapt to the needs of individual facilities as well as
jurisdictions. Facilities are required by the NFPA standards to submit
their design and installation plans to the appropriate authorities
having jurisdiction. This allows local and State authorities the
opportunity to ensure that such plans meet their individual needs.
Since this action does not impinge upon a State or local jurisdiction's
authority to impose more stringent fire safety requirements upon long
term care facilities in response to the unique needs and concerns of
the particular area, and gives State and local authorities the
opportunity to provide further input into individual sprinkler planning
activities, we do not believe this final rule has Federalism
implications as described in Executive Order 13132.
Furthermore, we regularly communicate with State and local
officials and with the long term care provider community through Open
Door Forums, as well as through responses to letters, informal phone
calls, and informal e-mails. Through these communications, as well as
through the public comment process for this proposed rule, we believe
we have sufficiently consulted with all affected parties, including
State and local jurisdictions, as is required by Executive Order 13132.
Comment: Several commenters submitted views regarding the
assumptions and estimates we used in the impact analysis for the
proposed rule. Commenters questioned our estimates of the cost per
square foot, the projected number of facilities affected, and the
projected number of lives saved.
Response: We appreciate the suggestions that we received, and we
considered them as we revised the impact analysis for this final rule.
The final impact analysis reflects an increase in our estimate of the
cost per square foot, from a high of $6.10 to a high of $7.95, to
reflect inflation since the publication of the proposed rule. The final
analysis also revises the number of facilities that are affected by
this rule by replacing projections of future sprinkler system
installations with the actual number of facilities lacking automatic
sprinkler systems as of December 2007. The final impact analysis does
not revise the method for estimating future lives saved by this rule.
Although a commenter questioned this methodology, the commenter did not
offer an alternative methodology that would more accurately estimate
this number. Since we are not aware of an alternative method to
estimate the number of lives that will be saved, we have retained the
method used in the proposed rule.
Comment: Some commenters agreed with our proposal to require
automatic sprinkler systems in all facilities, while a small number of
commenters requested that certain long term care facilities be exempt
from the requirements of this final rule.
Response: Automatic sprinkler systems are generally considered to
be the single most effective fire protection feature in a building. As
such, we believe all long term care facilities, regardless of their
size or location in relationship to another type of health care
facility, should be required to have sprinklers. Exempting a particular
class of long term care facilities, regardless of the criteria used,
will not provide a consistent level of fire safety across the country.
Comment: Several commenters submitted comments regarding CMS
enforcement of this final rule. Some of these commenters sought
assurance that surveyors would be appropriately trained to enforce the
new sprinkler requirement. One commenter suggested that we should
survey each facility annually to ensure compliance with this rule.
Other commenters asked about the enforcement remedies that would be
available if a facility was non-compliant with the requirements of this
final rule, going so far as to suggest that non-compliant facilities
should receive reduced payments from Medicare and Medicaid. Still other
commenters requested that additional information about the sprinkler
status of particular facilities and facilities as a whole be included
on CMS' Nursing Home Compare Web site.
Response: We agree that it is essential to ensure that surveyors
are appropriately trained to survey facilities for compliance with all
fire safety requirements, including automatic sprinkler systems. To
that end, we conduct annual training sessions for surveyors to educate
them on, among
[[Page 47079]]
other things, fire safety requirements and appropriate survey
procedures. This training ensures surveyor competency in this area. We
also agree that frequent surveys of long term care facilities are key
to ensuring continued compliance with these requirements. By law, we
are required to survey long term care facilities every 15 months to
ensure compliance with all health and safety requirements, and we will
incorporate this new requirement into the existing survey process. If a
facility is found to be non-compliant with the provisions of this final
rule, we have the full complement of enforcement remedies available to
ensure that a facility comes into compliance. In addition to
termination of the provider agreement, available remedies include the
following: (1) Temporary management (that is, the temporary appointment
by CMS or the State of a temporary director or administrator of a
facility); (2) denial of payment, including denial of payment for all
individuals, imposed by CMS upon a skilled nursing facility for
Medicare payments, by a State for Medicaid payments, or denial of
payment for all new admissions; (3) civil money penalties; (4) State
monitoring; (5) transfer of residents; or (6) transfer of residents and
closure of the facility. CMS currently includes information about a
facility's sprinkler status on the Nursing Home Compare Web site to
enable consumers to make an informed decision.
Comment: A commenter suggested that installation of sprinkler
systems should be limited to pre-approved companies with proven fire
safety records. Another commenter suggested that we should create a
special task force in each State to visit each facility and examine the
information used to design the facility's sprinkler system.
Response: While we agree that long term care facilities should look
for qualified contractors to design and install their sprinkler
systems, we do not believe it is appropriate to, nor do we have the
authority to, select or approve such contractors. In addition, we do
not believe it is appropriate for us to develop task forces in each
State to review a facility's research and design plan. There are
numerous qualified designers who are capable of designing sprinkler
systems that fulfill facility-specific specifications. It is incumbent
upon facilities to assure that their automatic sprinkler systems meet
their specific facility needs as identified during a thorough review of
their current fire and building safety features and various other
factors.
Comment: A few commenters submitted additional information on their
own fire safety features and requirements (for example State sprinkler
requirements and facility-specific fire safety plans).
Response: We appreciate the additional information provided by the
commenters. It validates our understanding of current fire safety
efforts, both on the facility and State levels.
Comment: A commenter suggested that staffing levels may also impact
facility fire safety, and that we should require additional staffing
during the phase-in period to ensure that facility residents are
protected from fire.
Response: We agree that sufficient staffing is necessary to ensure
resident health and safety, including fire safety. Ensuring resident
health and safety, which is closely tied to facility staffing, is
already required in Sec. 483.15, ``Quality of life,'' Sec. 483.30,
``Nursing services,'' and Sec. 483.70, ``Physical environment.'' We
believe these regulations ensure sufficient staffing levels in long
term care facilities to promote and protect resident health and safety
in all circumstances.
Comment: A commenter questioned the conclusions of the GAO report
regarding the two multiple death fires in Connecticut and Tennessee.
The commenter stated that the GAO report did not demonstrate the
superiority of sprinklers over smoke alarms. The commenter also stated
that the number of multiple death fires before 1990 was zero, and that
the installation of sprinklers in new facilities after 1990 thus had no
bearing on the number of fires between 1990 and 1992.
Response: While we recognize that the commenter disagrees with the
data analysis of current fire safety levels in long term care
facilities presented by the GAO, we continue to support the GAO's data,
collection methodology, analytic methodology, and conclusions. We
concur with the GAO that smoke alarms are necessary in unsprinklered
facilities; we now require unsprinklered facilities to have such alarms
in accordance with the requirements of Sec. 483.70(a)(7). We also
concur with the GAO that before 1990, multiple death fires occurred on
a more frequent basis. As stated in the GAO report, ``When the federal
government first adopted the NFPA fire safety standards in 1971, the
number of multiple-death fires in nursing homes was about 15 to 18 per
year. With the adoption and enforcement of these standards, including
the requirement for sprinklers in homes that were not highly fire
resistant, the number of fire-related nursing home fatalities dropped
dramatically.'' (p. 14; we note that the average annual number of long
term care facility fire fatalities, according to the GAO report, is now
5.) Furthermore, we concur with the GAO that sprinklers improve the
level of fire safety beyond that which is provided by smoke alarms, and
we are implementing this final rule to require sprinklers in all long
term care facilities.
Comment: A commenter suggested that all facilities that currently
have automatic sprinkler systems throughout their buildings be required
to maintain those systems in accordance with the requirements of NFPA
25.
Response: Long term care facilities are required to meet the
standards of the LSC, which requires facilities with existing
sprinklers to maintain those sprinklers in accordance with the
requirements of NFPA 25. We agree with the commenter and are adopting
NFPA 25 by reference at Sec. 483.70(a)(8)(ii).
Comment: A commenter stated that NFPA 101, NFPA 13, and NFPA 25 can
all be viewed without charge at http://www.nfpa.org/freecodes/free_
access_document.asp.
Response: We thank the commenter for providing this Web site
citation. Unfortunately, the citation provided does not link to the
documents that a long term care facility will need to comply with this
final rule. Instead, an alternative, free Web site for this information
is http://www.nfpa.org/aboutthecodes/list_of_codes_and_
standards.asp.
Comment: A few commenters suggested that facilities be permitted to
have a reduced water supply that does not meet the specifications of
the NFPA requirements for health care facilities when an adequate level
of safety can be assured with less water.
Response: The NFPA uses a consensus process to establish the
requirements of its sprinkler installation and maintenance codes. It
would not be in the best interests of long term care facilities and
their residents to reduce the NFPA standards. We believe that the NFPA
standards represent the absolute minimum standards that long term care
facilities must meet, and that lowering the standards below those of
the NFPA would jeopardize long term care facility resident and staff
safety.
Comment: A commenter requested a 90-day extension of the public
comment period.
Response: We do not believe it is necessary to extend the standard
comment period. We received 107 unique comments, as well as numerous
duplicate comments, from interested parties during the comment period,
and we believe these comments adequately reflect public sentiment on
this matter.
[[Page 47080]]
Comment: A few commenters suggested additional requirements to
which long term care facilities should be held. One commenter suggested
that, in addition to installing and maintaining automatic sprinkler
systems, long term care facilities should be required to install and
maintain automatic fire alarm systems incorporating commercial smoke
detectors that comply with the audio and visual notification standards
of the Americans with Disabilities Act. Another commenter suggested
that long term care facilities should be required to have mattresses
that comply with certain fire safety standards.
Response: We agree with the commenters that numerous additional
options are available to long term care facilities that wish to further
enhance their fire safety levels. Long term care facilities may explore
these options in addition to meeting all requirements of the LSC and
this final rule.
Comment: A small number of commenters submitted comments on the
existing provision that a State may apply to CMS to use its own
alternative fire safety code imposed by State law if that code
adequately protects patients. The commenters inquired as to the status
of their own particular applications for a waiver under this provision.
Response: CMS actively considers any application submitted by a
State regarding the use of an alternate fire safety code in health care
facilities. However, these applications have no bearing on the
requirements of this final rule because this final rule requires
automatic sprinklers independent of the requirements of the LSC.
Comment: A commenter asked us to present a list of those States in
the early 1990s that adopted the 1991 or later edition of the LSC or
another code requiring newly constructed long term care facilities to
install automatic sprinkler systems.
Response: We do not believe it is necessary to present such a list
of information regarding the requirements of individual States. While
such a list may provide additional historic background on fire safety
requirements in the United States, all unsprinklered long term care
facilities must install and maintain automatic sprinkler systems.
Comment: A commenter suggested that, instead of requiring all long
term care facilities to install an automatic sprinkler system, we
should permit such facilities an exemption if they have all of the
following features: Smoke detectors, mattresses that meet certain fire
safety requirements, and upholstered furniture that meets certain fire
safety requirements.
Response: The fire safety measures noted above are valuable tools
for enhancing fire safety in long term care facilities. However, none
of these features serve the same purpose as an automatic sprinkler
system, which is to actively suppress a fire once it is ignited. Thus,
we do not believe the suggested options achieve the same level of fire
safety as automatic sprinklers.
Comment: A commenter suggested that we should include regulatory
language that endorses standardization and provides for system
interconnectivity.
Response: We are not clear regarding the commenter's suggestion. If
the commenter is referring to the standardization of installation and
maintenance requirements, we believe that referencing the NFPA
installation and maintenance standards does endorse standardization of
fire safety across long term care facilities.
Comment: Many commenters submitted comments regarding the placement
of smoke alarms in long term care facilities. In September 2006 we
published a final rule requiring all unsprinklered long term care
facilities to, at minimum, install and maintain battery-operated smoke
alarms in all resident rooms and common areas. In the October 2006
proposed sprinkler rule, we proposed to add a sunset date to this smoke
alarm requirement. The smoke alarm requirement would, according to our
proposal, cease to be effective on the phase-in date of the sprinkler
requirement. Many commenters disagreed with our proposal to add a
sunset date to the smoke alarm requirement. Furthermore, many of these
commenters stated that all long term care facilities should be required
to have both automatic sprinkler systems throughout their buildings and
smoke alarms in resident rooms and common areas. Conversely, several
commenters agreed with our proposal to add a sunset provision to the
smoke alarm requirement. Of these commenters, many requested that the
sunset date be flexible for individual long term care facilities. These
commenters suggested that, rather than having a single sunset date, the
final rule should state that a long term care facility is no longer
required to meet the smoke alarm provision as soon as it installs and
begins using an automatic sprinkler system. Additionally, one commenter
sought clarification of the relationship between the CMS smoke alarm
requirement and the smoke alarm requirement of the 2000 edition of the
Life Safety Code that long term care facilities are required to meet.
Response: The proposed smoke alarm sunset provision appears to have
caused significant confusion and concern, and we thank the commenters
for the opportunity to clarify our intent. The smoke alarm requirements
of paragraph (a)(7) apply only to unsprinklered or partially
sprinklered long term care facilities. This final rule will require all
facilities to be fully sprinklered. Thus, there will no longer be any
facilities that are unsprinklered or partially sprinklered. Since
(a)(7) applies only to unsprinklered or partially sprinklered
facilities, it will be a moot requirement. Nonetheless, we believe that
it is appropriate to retain the requirements of paragraph (a)(7) until
the end of the 5-year phase-in period. At the end of this period we
will consider proposing a rule which would delete both this provision
and reference to the phase-in period.
Moreover, facilities that are required to have smoke alarms or
smoke detection systems in accordance with the requirements of the 2000
edition of the LSC as incorporated by reference in paragraph Sec.
483.70(a)(1) must continue to comply with those existing LSC standards.
A significant number of commenters advocated for smoke alarms and/
or smoke detection systems in all long term care facilities, even those
that have automatic sprinkler systems throughout their buildings. All
long term care facilities may consider installing smoke detection
systems in their facilities in addition to installing automatic
sprinkler systems. We may consider the appropriateness of such a
requirement in future rulemaking.
Comment: We received a large number of public comments regarding
the appropriate length of a phase-in period for the sprinkler
installation requirement. Commenter suggestions for the length of the
phase-in period ranged from as little as 18 months to as long as 15
years. The most frequently suggested phase-in period was 3-5 years.
Other commenters made more general recommendations such as ``the sooner
the better'' and ``sooner rather than later.'' Additionally, many
commenters suggested that nursing homes should be allowed phase-in
waivers on a case-by-case basis to provide additional time to those
nursing homes who make a good faith effort to comply within the stated
timeframe, but who do not do so. One commenter suggested that we
include an additional requirement that long term care facility owners
file a statement with CMS detailing their intent to
[[Page 47081]]
comply with the final rule within 180 days of publication of the final
rule.
Response: We agree with commenters that a phase-in period is
necessary to allow long term care facilities sufficient time to
purchase and install automatic sprinkler systems throughout their
buildings. While we recognize that a relatively short phase-in period
(such as 18 months-3 years) will rapidly increase the level of fire
safety in long term care facilities, we believe such a short time frame
will not allow facilities enough time to comply with the provisions of
this final rule. Re-allocating and/or securing financial resources,
securing the services of a system designer and installation contractor,
purchasing system components, securing any necessary permits,
completing ancillary projects, and completing the actual installation
process can take a substantial amount of time. We do not believe an 18-
month to 3-year phase-in period allows enough time for all of these
tasks to be completed in all affected facilities. Furthermore, we do
not believe it is appropriate to allow waivers of this important
requirement. Likewise, we do not believe it will be appropriate to
allow long term care facilities 7 or more years to install automatic
sprinkler systems, as some commenters suggested. While such a lengthy
phase-in period will allow more than ample time for facilities to
complete the installation process, it may also unnecessarily encourage
facilities to postpone this much-needed fire safety improvement. In
light of these considerations, we are finalizing a 5-year phase-in
period. A long term care facility has 5 years from the date of
publication of this final rule to purchase and install a fully-
operational automatic sprinkler system throughout its building. A 5-
year phase-in period balances our dual goals of improved fire safety
and feasibility. It ensures that facilities begin planning for
installation within a short period of time from the publication of this
final rule and allows sufficient time for all facilities to complete
the full installation process.
Comment: Numerous commenters submitted comments regarding the exact
fire safety codes that should be used in long term care facilities.
Many of these commenters supported our proposal to require facilities
to meet the requirements of the 1999 edition of NFPA 13 and the 1998
edition of NFPA 25. Some of the commenters suggested that we require
facilities to meet more recent editions of the NFPA standards. Other
commenters questioned the role of the building codes issued by the
International Code Council (ICC). Of these commenters, some suggested
that we require facilities to meet the ICC codes in place of the NFPA
codes. Others suggested that States, local jurisdictions, and/or
facilities be given the option to meet either the NFPA or ICC codes.
Response: While we agree that more recent editions of NFPA
sprinkler codes or sprinkler codes issued by other code-setting bodies
may include appropriate installation and maintenance requirements for
automatic sprinkler systems in long term care facilities, we believe it
is most appropriate to require long term care facilities to comply with
the 1998 and 1999 editions of the NFPA sprinkler codes. If we require
facilities to meet more recent editions of the sprinkler codes, we
could be placing them out of compliance with the provisions of the 2000
edition of the LSC. Similarly, if we were to require or permit
facilities to meet another sprinkler code issued by a separate code-
setting body, the standards could be incompatible with the 2000 edition
of the LSC. We do not believe this will be in the best interest of
facilities and their residents.
Comment: A substantial number of commenters submitted thoughts in
response to our discussion of potentially adopting the 2006 edition of
the LSC, which requires existing long term care facilities to install
automatic sprinkler systems. Commenters were nearly evenly divided in
their support of or opposition to adopting the 2006 LSC. The commenters
who supported adopting the 2006 LSC stressed that this edition is the
most recent version and has the potential to increase fire safety
levels in all health care facilities. The commenters who did not
support adopting the 2006 LSC cited potential delays in implementing
the automatic sprinkler requirement and overall facility burden as key
factors in their recommendation.
Response: The 2006 edition of the LSC made numerous changes to the
requirements applicable to long term care facilities. The most
substantial change in the 2006 LSC is the requirement that all long
term care facilities must have automatic sprinkler systems. However,
since we are addressing that issue in this rulemaking, we do not
believe it should affect our evaluation of the overall merits of the
2006 LSC. We do not believe that the other changes in the 2006 edition
of the LSC offers substantial improvements in the level of fire safety
in long term care facilities that outweigh the additional burden to
facilities of complying with the requirements of a newer edition of the
LSC at this time. Therefore, we are not adopting the 2006 edition of
the LSC at this time. We will continue to participate in the NFPA
consensus process as the NFPA revises and refines subsequent editions
of the LSC. Additionally, we will carefully examine the 2009 edition of
the LSC when it is published for possible incorporation by reference in
our regulations governing long term care facilities and a variety of
other health care provider types.
IV. Provisions of the Final Regulations
In this final rule we are adopting the provisions as set forth in
the October 27, 2006 proposed rule with the following revisions:
Deleted proposed Sec. 483.70(a)(7)(iv), the sunset
provision.
Added a 5-year phase-in date to Sec. 483.70(2)(8)(i).
V. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 30-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 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 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.
We solicited public comment on each of these issues for the
following sections of this document that contain information collection
requirements:
In summary, Sec. 483.70(a)(8)(ii) requires that all long term care
facilities test, inspect, and maintain an approved, supervised
automatic sprinkler system in accordance with the 1998 edition of NFPA
25, Standard for the Inspection, Testing, and Maintenance of Water-
Based Fire Protection Systems. This section states that facilities will
be required by this proposed rule to comply with all applicable
chapters of NFPA 25 once they have installed their sprinkler systems in
accordance with the requirements of NFPA 13.
We believe facilities will utilize the services of a contractor for
all inspection, testing, and maintenance activities, including
documentation of
[[Page 47082]]
those activities. Therefore, no burden will be associated with the
development of the documentation. The burden associated with this
requirement, is the time and effort necessary for facilities to
maintain documentation of inspections, tests, and maintenance
activities in accordance with the standards outlined in the NFPA 25.
The burden associated with these requirements is estimated to be 1
hour per long term care facility. Therefore, we estimate it will take
2,446 total annual hours (1 hour x 2,446 estimated affected long term
care facilities) to satisfy this burden.
These requirements are not effective until they are approved by
OMB.
VI. Regulatory Impact Analysis
A. Overall Impact
We have examined the impacts of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review), the
Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), Executive Order 13132 on
Federalism, and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for major rules with economically
significant effects ($100 million or more in any 1 year). We have
examined this rule, and we have determined that this rule would meet
the criteria to be considered economically significant, and it would
meet the criteria for a major rule. This determination is based on
2,446 long term care facilities being required to install automatic
sprinkler systems at an estimated cost of $7.95 per square foot, for a
total cost of about $847 million over the 5-year phase-in period.
Hence, in any one year costs in excess of $100 million will be incurred
regardless of the decisions of individual facilities as to when to make
the investment.
The estimated cost for installing a sprinkler system throughout an
existing average size unsprinklered facility (50,000 square feet to be
sprinklered at $7.95 per square foot) will be $397,500. Because these
systems are capital investments, their costs are properly amortized
over time in estimating their impact on facility finances. We believe
that a reasonable estimate of the useful life of a sprinkler system is
20 years. The projected installation cost of this requirement will
account for approximately one fourth of one percent of an average
unsprinklered facility's actual revenue over a 20-year period. The
estimated cost for installing a sprinkler system throughout an existing
average size partially sprinklered facility (37,125 square feet to be
sprinklered at $7.95 per square foot) will be $295,143. The projected
installation cost of this requirement will account for approximately
one fifth of one percent of an average partially sprinklered facility's
actual revenue over a 20-year period.
The RFA requires agencies to analyze options for regulatory relief
of small entities. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small government
jurisdictions (including tribal governments). Individuals and States
are not included in the definition of a small entity. For purposes of
the RFA, most long term care facilities are considered to be small
entities, either by virtue of their nonprofit or government status or
by having revenues of less than $12.5 million in any one year. The
latest SBA size standards classify a ``Nursing Care Facility'' under
North American Industry Classification System (NAICS) as code 623110,
and as ``small'' if its annual revenues fall below $12.5 million (for
details, see the Small Business Administration's Table of Small
Business Size Standards at http://www.sba.gov/idc/groups/public/
documents/sba_homepage/serv_sstd_tablepdf.pdf.) According to our
statistics, long term care facilities, all of which will be required to
have sprinkler systems throughout their buildings, received a total of
$124.9 billion in revenue in 2006 (National Health Expenditures
Accounts, http://www.cms.hhs.gov/NationalHealthExpendData/02_
NationalHealth AccountsHistorical.asp). Also according to CMS data,
there were 15,941 nursing facilities in operation at that time. The
average facility therefore had annual revenue of $7.8 million and thus
fell well below the SBA size threshold. Taking into account both
typical revenue, and that non-profit facilities of any size are ``small
entities'' within the meaning of the RFA, we assume for purposes of our
analysis that all LTC facilities are ``small entities'' for purposes of
the RFA. Although the average LTC facility has revenues well below the
SBA size threshold, we have, as described in what follows, also
analyzed impacts on entities that fall even farther below the size
threshold. (Note: In the following paragraphs the terms ``average
facility'' and ``smaller facility'' are strictly based on a revenue
metric, just as are most of the SBA size thresholds, including that for
NAICS code 623110. That is, the terms only describe facilities in terms
of the amount of annual revenue.)
Long term care facilities vary in a number of ways, ranging from
the number of residents to the predominant source of payment for those
residences. For the purposes of our analysis, we chose to assess the
financial impact of this final rule on a facility with average revenue
and a facility with a much smaller revenue (50 percent below the mean).
An average facility had approximately $7,837,714 in revenue in 2006. A
facility with revenue 50 percent below this average received
$3,918,857, or less than one third of the amount set by SBA to define
``small.'' Over the 20-year amortization period revenues of an average
facility will be about $157 million. The ``smaller'' facility will have
revenues of about $78 million over the same 20-year amortization
period. We calculate that the projected cost of this requirement will
account for about one fourth of one percent of an average unsprinklered
``smaller'' facility's actual revenue over the 20-year period. Taking
into account their smaller size and lower investment cost, the
projected cost of this requirement will account about one fifth of one
percent of a partially sprinklered ``smaller'' facility's actual
revenue over the 20-year period. We are assuming that a smaller
facility's square footage and number of beds are 50 percent less than
an average facility's square footage because there is a strong
correlation between the size of a facility, as reflected by the number
of resident beds it has, and the facility's revenue level. According to
CMS data from December 2007, there (see Table 3 later in this analysis)
the median bed size of LTC facilities is about 100 beds, and there are
433 unsprinklered or partially sprinklered long term care facilities
that have fewer than 50 beds and presumably meet our revenue definition
of a ``smaller facility.'' Hence, there are relatively few very small
(``smaller'') facilities that will be affected by this rule. That said,
a total of about 2,446 unsprinklered or partially sprinklered facilites
will be affected, and the great majority of these (we assume all) are
``small entities'' under the RFA (again, see Table 3 for the size
distribution of affected entities).
As a result of these calculations, and because we normally only
regard an
[[Page 47083]]
impact that reaches several percent of annual revenue as
``significant'' under the RFA, we certify that this final rule would
not have a significant impact on a substantial number of small
entities. However, some facilities may face financing or other problems
that concentrate the impact and make its effect proportionally much
larger than would otherwise be the case. While we do not believe that
there would be a substantial number of facilities in this circumstance,
we have prepared a voluntary regulatory flexibility analysis. This
Regulatory Impact Analysis section, taken together with the remainder
of the preamble, constitutes this analysis.
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. We know that 8.41 percent
of long term care facilities, 1,332 nationwide, are located in
hospitals, but we do not know how many of those hospitals are small
rural hospitals. However, it is likely that the affected number is
quite small. Applying the same percentages that apply to the long term
care universe to the 1,332 long term care facilities located in
hospitals, we estimate that 1,125 are fully sprinklered, 176 are
partially sprinklered, and only 31 are not sprinklered. Using these
estimates and the preceding cost amortization calculations, we have
concluded that this final rule will not have a significant impact on
the operations of a substantial number of small rural hospitals and
that a regulatory flexibility analysis is not required. Our voluntary
analysis, however, applies equally to facilities regardless of location
or affiliation and hence covers hospital-based facilities.
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 one year by
either the private sector or by State, local, and tribal governments of
$100 million in 1995 dollars, updated annually for inflation. That
threshold level is currently approximately $130 million. This final
rule does contain mandates that will impose annual spending costs on
private long term care facilities of $154 million, and on public long
term care facilities of $16 million, based on an estimated cost of
about $847 million distributed over a 5-year phase-in period, for an
average annual cost of about $170 million for all public and private
facilities. Estimated impacts on State, local, and tribal governments
are well below the UMRA threshold, since over ninety percent of long
term care facilities are privately owned, as shown the Federalism
analysis that follows. With respect to private sector facilities, this
Regulatory Impact Section, together with the remainder of the preamble,
constitutes the analysis required under UMRA.
Note: For a more detailed discussion of the cost estimates, see
part B.2 of this section.) In the proposed rule we estimated that
this rule would cost $47.8 to $69.9 million, $73.5 to $107.5
million, and $107.7 to $157.6 million annually. These estimates were
based on example phase-in periods of 10 years, 7 years, and 5 years,
and cost-per-square-foot estimates of $4.10, $5.50, and $6.10,
respectively. We sought public comment on the length of an
appropriate phase-in period, and received suggestions ranging from
18 months to 15 years. The most frequently suggested phase-in period
was 3-5 years. We selected the longer phase-in period, 5 years, to
help mitigate the impact of this rule upon long term care
facilities. We also increased our cost-per-square-foot estimates to
reflect increases in construction costs that have occurred since
publication of the proposed rule.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a final rule that imposes
substantial direct compliance costs on State or local governments,
preempts State law, or otherwise has Federalism implications. Of the
2,446 facilities that will be affected by this final rule, 216
facilities (8.83 percent of all affected facilities) are owned by State
and local governments. The majority of these facilities (188) are
already partially sprinklered. Of the 188 partially sprinklered
facilities, 31 have less than 50 resident beds, 43 have 50-99 resident
beds, 63 have 100-199 resident beds, and 49 have 200 or more resident
beds. We estimate that it will cost on average about $14.24 million
annually for 5 years to install sprinklers throughout the unsprinklered
portions of these facilities. Of the remaining 30 completely
unsprinklered facilities, 13 have less than 50 resident beds, 8 have
50-99 resident beds, 7 have 100-199 resident beds, and 2 have 200 or
more resident beds. We estimate that it will cost on average about
$2.12 million annually for 5 years to install sprinklers throughout
these unsprinklered facilities. The total of these annual average cost
estimates, about $16 million, is negligible in the context of overall
State and local budgets and as a capital expense can be financed over a
period of years by borrowing. Therefore, we believe that this final
rule will not impose substantial direct compliance costs on State or
local governments, and thus has no Federalism implications.
B. Anticipated Effects
1. Benefits
a. Decreasing Loss of Life
We believe that installing an approved, supervised automatic
sprinkler system in accordance with NFPA 13, Standard for the
Installation of Sprinkler Systems, throughout a long term care facility
will have a positive impact on resident safety. According to the July
2004 GAO report discussed above, installing sprinklers decreases the
chances of fire-related deaths by 82 percent. In unsprinklered
facilities, there are 10.8 deaths per 1,000 fires. In sprinklered
facilities, there are 1.9 deaths per 1,000 fires.
The 2003 fires in Hartford and Nashville resulted in more fire
related deaths (31) than there were for several previous years
combined. Both of these fires occurred in unsprinklered buildings. If
sprinklers had been installed in these facilities, and if they were
properly maintained, we estimate that 82 percent of those fire-related
deaths may have been prevented, based on an 82 percent reduction in the
chances of death occurring in a sprinklered facility. We estimate that,
based on this reduction, 25 (82 percent of 31 deaths = 25) lives could
have been saved by sprinklers in these two fires, or 13 lives in the
Hartford fire and 12 lives in the Nashville fire.
According to the U.S. Census Bureau, in 2006, the average age of a
long term care facility resident was 83.2 years. This number reflects
the overall demographic trend in long term care facilities toward an
older patient population. In 2003 (the most recent year of data
available), the average life expectancy for an individual at age 85 was
6.6 years (Older Americans Update 2006: Key Indicators of Well-Being.
Federal Interagency Forum on Aging-Related Statistics. http://
www.agingstats.gov/agingstatsdotnet/Main_Site/Data/2006_Documents/
Health_Status.pdf). This means that an 85-year-old long term care
facility resident could expect to live an average of 6.6 more years. We
acknowledge that the average age of a long term care facility resident
(83.2 years) is slightly younger than the 85 year data point used to
assess average life expectancy; however, we believe that using the life
expectancy of an 85 year old is an
[[Page 47084]]
acceptable proxy for the life expectancy of an 83.2 year old.
Based on a life expectancy at age 85 of 6.6 years, we estimate that
sprinklers in these two fires would have added 165 life years (25 lives
saved x 6.6 life years per life saved).
While the number of deaths in these two fires is not typical of the
number of fire-related deaths in long term care facilities as a whole,
we believe that they should still be taken into consideration when
discussing the impact on the general long term care facility resident
population.
In a typical year from 1994 through 1999, about 2,300 long term
care facilities report structural fires (July 2004 GAO report). We
estimate that 25 percent (575) of the 2,300 facilities that reported
fires annually during the 1994-1999 time period did not have sprinklers
installed throughout their buildings. This estimate is based on the
results of the 2004 GAO report and a nationwide survey of long term
care facilities conducted by CMS following the results of the GAO
report.
Based on the rate of 10.8 deaths per 1,000 unsprinklered facility
fires, we estimate that 6 deaths occurred in 575 fires in unsprinklered
and partially sprinklered facilities annually. (575 facilities = 57.5
percent of 1,000 facilities; 57.5 percent of 10.8 deaths = 6 deaths).
This estimate differs slightly from the average number of deaths (5)
that occurred due to long term care facility fires, as presented in the
July 2004 GAO report, because this estimate predicts the number of
deaths that statistically would be expected to occur, based on
established percentages, rather than the average number of deaths that
occurred annually in the past. This estimate is prospective, whereas
the 2004 GAO figure is retrospective.
If these unsprinklered or partially sprinklered facilities install
sprinklers throughout their buildings and those sprinklers are properly
maintained, then we estimate that there will be 1 death (57.5 percent x
1.9 deaths per 1,000 fully sprinklered facility fires according to the
2004 GAO report = 1) in those same 575 facilities. Installing
sprinklers in unsprinklered and partially sprinklered buildings would,
based on these estimates, save 5 lives annually.
Table 1--Estimated Annual Fire Deaths
----------------------------------------------------------------------------------------------------------------
Number of estimated annual fire- Number of estimated annual fire-
related deaths in unsprinklered long related deaths if those facilities Number of estimated annual lives
term care facilities were sprinklered saved by sprinklers
----------------------------------------------------------------------------------------------------------------
6 1 5
----------------------------------------------------------------------------------------------------------------
Given the estimate described above that installing and maintaining
sprinkler systems in existing long term care facilities will save 5
lives annually, we estimate that sprinklers will save 33 life years
annually (5 lives saved x 6.6 years gained per life).
Table 2--Life Years
------------------------------------------------------------------------
Number of life years gained per Number of life years gained
life saved annually
------------------------------------------------------------------------
6.6 33
------------------------------------------------------------------------
There are a wide variety of estimates regarding the statistical
value of a life or of a quality-adjusted life year. For example, there
are numerous studies that attempt to quantify how much individuals and
society are willing to pay to gain a single, quality year of life,
known as a quality-adjusted life year. These studies, using one or more
of four different methodologies, have estimated that individuals and
society are willing to pay between $50,000 and $450,000 for a quality-
adjusted life year (see R.A. Hirth, et al, ``Willingness to Pay for
Quality-Adjusted Life Year: In Search of a Standard,'' Medical Decision
Making, Volume 20, Number 3, July-Sep. 2000). Due to the fact that
there is no widely accepted standard value, we refrained in the
proposed rule from estimating the statistical value of each life or
life year that will be gained as a result of a final rule requiring
sprinklers in all long term care facilities. However, a recent FDA rule
used an estimate of $5 million as the value of a statistical life and
derived from this figure values of between $213,000 (at a 3 percent
discount rate) and $373,000 (at a 7 percent discount rate) for a
quality adjusted life-year (QALY). (See the FDA Final Rule on ``Medical
Devices: Patient Examination and Surgeon's Gloves; Test Procedures and
Acceptance Criteria,'' December 19, 2006, 71 FR 75865, as corrected
January 19, 2007, 72 FR 2436.) These are intended to be rough estimates
of societal willingness to pay for saving a ``statistical life'' (not a
particular person) or for adding a year of life that does not involve
total disability. It is not a settled issue in the literature of
valuation of life as to how well these estimates fit an elderly
population, and we use them here only to provide a rough estimate as to
one of the major benefits of this final rule in the same dollar metric
as costs.
Applying these estimates, the life-saving benefits of this final
rule once all facilities are compliant will be approximately $25
million dollars annually based on a value of $5 million per statistical
life saved. These benefits accrue over the entire 20-year horizon
during which automatic sprinkler systems save lives. Hence,
undiscounted future benefits from life saving would be as much as $500
million ($5 million times 5 lives times 20 years).
There are additional life-year benefits, to the extent that
residents who survive a fire are nonetheless physically injured in ways
that that greatly reduce their future quality of life. For example, a
person who spends months in the hospital recovering from burn injuries
and the remainder of his life partially incapacitated by those
injuries, or a person whose lungs are permanently damaged by smoke
inhalation, do not have the same good health that they would have
enjoyed absent the fire. We do not have at this time any basis for
estimating the amount of severe morbidity caused by facility fires that
sprinklers can mitigate, but it could be very substantial, likely
approaching and perhaps exceeding the number of life-years lost to
mortality. For purposes of this analysis, we assume that it equals the
mortality QALYs, and that total benefits from morbidity reduction range
from $7 to $10 million a year (33 life years times 20 years time either
$213,000 or $373,000).
The FDA estimates were based on a ``willingness to pay'' analysis
of wage differentials necessary to attract labor to riskier
occupations. Such analyses have shown that people demand significantly
higher wages to accept even a small additional risk of death. The
estimated value of an additional year of life is based on life
expectancy in the FDA analysis. However, there are other ways to create
such estimates and many studies have done so. For example, an estimate
using data on rural interstate highway driving speeds found that the
value of a statistical life could be estimated as between $1.6 and $5.9
million (Orley Ashenfelter, ``Measuring the Value of a Statistical
Life: Problems
[[Page 47085]]
and Prospects,'' Working Paper 11916, National Bureau of Economic
Research, January 2006). As another example, a recent study of the
willingness to pay for better health care found that a reasonable
estimate of the value of a QALY lies between $183,000 and $264,000 per
life year (R. Scott Braithwaite, et al, ``What Does the Value of Modern
Medicine Say About the $50,000 per Quality-Adjusted Life-Year Decision
Rule?,'' Medical Care, Volume 46, Number 4, April 2008). Thus, the
estimates used by the FDA, and in this CMS analysis, are broadly
consistent with estimates from other sources, such as the Hirth and
Braithwaite studies.
The reasonableness of applying such estimates to an elderly
population is unclear, particularly when that population is, by
definition, at least temporarily unable to live outside an
institutional setting. However, the general approach used most often in
the literature is to use the same value of a statistical life for
persons of all ages. As to value of a life-year, there is considerable
evidence in the literature that the kinds of disabilities most commonly
found in nursing homes, such as mobility and mental impairments, do not
substantially reduce the value of a life-year (see Chaim M. Bell, et
al, ``An Off-the-Shelf Help List: A comprehensive Catalog of Preference
Scores from Published Cost-Utility Analyses,'' Medical Decision Making,
Volume 21, Number 4, July-August 2001). For example, on a scale of zero
to 1, where zero is represented by a persistent vegetative state and 1
is best attainable health, this synthesis shows that disability after a
hip fracture is rated at .8, and even after major stroke from .2 to .5.
Absent a compelling rationale to the contrary, we therefore use the
full values of a statistical life and a QALY in our analysis.
A few commenters questioned our methodology for assessing the
potential life-saving benefits of installing and maintaining automatic
sprinkler systems. However, these commenters did not suggest an
alternate method for assessing these potential benefits. Therefore, we
reaffirm the methodology and results described above.
b. Decreasing Loss of Property
As a result of installing and properly maintaining sprinklers, we
anticipate that facilities that experience fires would lose less
property. While the amount of property damage and loss that would be
prevented by installing and maintaining sprinklers is not readily
quantifiable from existing data, we believe that the amount of damage
prevented will be substantial, and that this prevention will benefit
affected long term care facilities.
Preventing property damage and loss may also reduce the amount of
money paid by insurers to cover fire-related losses. Such reductions
may help control long term care facility insurance costs and reduce any
spill-over effect for other insurance markets. Again, these benefits
are not easy to estimate reliably from existing data. However, we
believe that they should be considered as part of the overall analysis
of the benefits of purchasing, installing, and maintaining automatic
sprinkler systems in long term care facilities.
For purposes of estimating overall benefits and costs, we believe
that an estimate of about $26 million a year would not be unreasonable.
We base this on the following calculations. First, as previously
discussed there are approximately 2,300 structural fires annually in
long term care facilities, a rate of about one fire per every seven
facilities. However, we estimate that the number of fires in
unsprinklered or partially sprinklered facilities is far higher, with
these 2,446 facilities accounting for one fourth of all structural
fires, or about one fire per every four such facilities (575 fires in
2,446 facilities). Assuming that the rate could be reduced to the 13
percent rate in fully sprinklered facilities (1,725 fires in 13,495
facilities), approximately 260 structural fires a year would be
prevented. We have no specific data for estimating the dollar cost of
fighting these fires and restoring the properties, but assuming
illustratively that the average cost of a structural fire is $100,000,
total annual savings would be on the order of $26 million a year.
c. Decreasing Fire Recovery Disruption and Time
In addition to losing less property due to fire, we anticipate that
long term care facilities that experience fires will be able to recover
more quickly with fewer disturbances to residents. Because sprinkler
heads generally activate only in the area immediately near the fire
source, the area that will be damaged by a fire will likely be much
smaller in a sprinklered building than it would be in a building
without sprinklers, thus reducing recovery costs. In addition, by
limiting the area affected by the fire, there would be fewer
disturbances to residents during the recovery time. In particular,
fewer residents would be forced into a change in residence, a
disruption that often affects residents' physical and mental well-being
severely. Finally, by limiting the affected area and duration of
disruption, an affected facility will reduce the number of paid
patient-days that it loses. While we cannot quantify most of these
benefits to long term care facilities and their residents, we believe
that they are substantial. Assuming illustratively that they equal half
the cost of a fire prevented, annual savings would be on the order of
$6.5 million a year.
d. Decreasing Legal Liability and Insurance Cost
As a result of installing sprinklers, facilities will greatly
reduce their potential exposure to legal costs and legal damages, as
well as reduce their costs for liability insurance. Again, we cannot
quantify these benefits but they could be very substantial. For
example, were a court to find that a facility was negligent either in
not installing a state-of-the-art system, or in being unable to save
residents who would have been saved had such a system been in place,
tort liability could be imposed. Absent any way to predict what might
occur (which might depend, for example, not only on specific factual
circumstances but also on the tort law in the state in which such a
fire might occur), we do not estimate the dollar value of these
benefits.
e. Reducing Major Medical Care Costs
Fires cause morbidity as well as mortality. Not all residents who
suffer deadly burns die immediately. Treatment of severely burned
persons is among the most expensive kinds of medical care. Other
effects of fires that require medical treatment include smoke
inhalation and injuries cause by falls when fleeing from rooms affected
by fire or smoke. No data are available to us on the extent of these
medical costs, and hence on costs prevented by this final rule, but
they are likely to be substantial. Assuming illustratively that there
are ten expensive medical care cases prevented for each death prevented
by this rule, and that such cases average $100,000, annual benefits
would be $5 million (5 x 10 x $100,000).
2. Costs
This final rule requires a long term care facility to install an
approved, supervised automatic sprinkler system in accordance with NFPA
13, Standard for the Installation of Sprinkler Systems, throughout the
building. This final rule also allows long term care facilities to
install automatic sprinkler systems over a 5-year phase-in period.
Number and Size of Affected Facilities
Following publication of the GAO report, CMS incorporated a data
collection element on the long term care facility survey form. When
completing a
[[Page 47086]]
survey, a long term care facility surveyor must note whether the
facility is fully sprinklered, partially sprinklered, or unsprinklered.
Based on data collected during the survey process, we know that 13,391
facilities are fully sprinklered, 2,086 facilities are partially
sprinklered, and 360 facilities are unsprinklered. The following table
groups the partially and unsprinklered facilities by the number of
beds.
Table 3--Number of Affected Facilities by Size
----------------------------------------------------------------------------------------------------------------
<50 beds 50-99 beds 100-199 beds 200+ beds
----------------------------------------------------------------------------------------------------------------
Partially sprinklered........................... 315 675 870 226
Unsprinklered................................... 118 128 102 12
----------------------------------------------------------------------------------------------------------------
The number of resident beds in a facility strongly corresponds to
its physical size. Simply put, larger buildings have more resident
beds, and smaller buildings have fewer resident beds. Therefore, based
on the number of beds in a facility, we are able to estimate the square
footage of a long term care facility. For purposes of our analysis, we
estimate that a long term care facility has 500 total square feet for
each resident bed. This estimate, which includes space for the
resident's room, community spaces, and administrative spaces, is based
on discussions with architects and engineers who are familiar with the
design of older long term care facilities. Therefore, for purposes of
our analysis, an average facility with fewer than 50 beds is 24,500 sq
ft, 50-99 beds is 37,000 sq ft, 100-199 beds is 74,500 sq ft, and 200+
beds is 99,501 sq ft. When estimating the cost of installing an
automatic sprinkler system in an unsprinklered facility, we use these
square footage estimates.
However, these estimates do not reflect the area that must still be
sprinklered in a partially sprinklered long term care facility. By
definition, a partially sprinklered facility already has an automatic
sprinkler system in one or more sections of the facility. For purposes
of this impact analysis, we assume that a partially sprinklered
building is 25 percent sprinklered, leaving 75 percent of the building
to be sprinklered in accordance with this final rule. Buildings in this
category may have more or less sprinkler coverage than this assumption.
For facilities with fewer than 50 resident beds, we estimate that
sprinklers will be installed for 18,375 square feet (75 percent of
maximum square footage in this size category). For facilities with 50
to 99 resident beds, we estimate that sprinklers will be installed for
27,750 square feet (75 percent of average square footage in this size
category). For facilities with 100 to 199 resident beds, we estimate
that sprinklers will be installed for 55,875 square feet (75 percent of
average square footage in this size category). For facilities with more
than 199 resident beds, we estimate that sprinklers will be installed
for 75,000 square feet (75 percent of minimum square footage in this
size category).
a. Installation Cost per Square Foot
Purchasing and installing a sprinkler system according to the
requirements of NFPA 13 encompasses a wide variety of factors,
including those briefly described in section II of this final rule.
Within the requirements of NFPA 13, there are numerous variables that
can impact the purchase and installation costs for a facility. Each
facility has different needs that must be addressed when purchasing and
installing a sprinkler system, and this cost estimate cannot address
each particular need or combination of needs. Therefore, we are basing
our cost estimates not on the individual requirements of NFPA 13 for an
individual facility, but on a bundled purchase and installation
estimate for an average facility, as described below. Individual
facilities may have costs above or below those of this average facility
due to facility size and facility-specific sprinkler system needs. Long
term care facilities that are based in other health care facilities,
such as hospitals, are required by this final rule only to have
sprinklers in the long term care facility section of the building.
Therefore, we do not believe that facility-based long term care
facilities will have different installation costs than freestanding
facilities with similar resident bed and square footage numbers.
We estimate that it will cost $7.95 per square foot to purchase and
install a sprinkler in an existing facility. According to the
Architects, Contractors, Engineers Guide to Construction Costs, 2008
Edition by Design and Construction Resources, purchasing and installing
sprinklers in new long term care facilities costs $2.65 per square
foot. This cost estimate incorporates all contractor costs such as
labor, materials, and a 20 percent overhead fee; 35 percent taxes and
insurance on labor, equipment, and tools; and 5 percent sales tax.
Although we recognize that capital and interest costs may increase
the cost of purchasing and installing automatic sprinkler systems in
long term care facilities, these costs are not included in our
estimates. Due to the individual circumstances of each facility,
unknown future interest rates, and various other factors, we are unable
to accurately estimate the capital and interest costs of installing
sprinkler systems. Therefore, we have chosen to exclude these costs
from our estimates while acknowledging that they do exist and will play
a role to some degree in the decisions of long term care facilities
that will be affected by this final rule. Note, however, that the
economic costs of financing this capital investment would not be the
gross cost of borrowing, but the much smaller opportunity cost of the
capital devoted to sprinklers rather than some other investment.
Furthermore, to the potentially substantial extent that facilities gain
from this investment (reduced disruption, revenue loss, etc. as
previously discussed) the opportunity cost may be very low.
Renovation costs are typically two to three times higher than new
construction costs because installing the sprinkler system must be
completed in a piecemeal fashion while the building remains occupied.
This increases the length of the construction time and, thus, increases
its costs. In addition, renovations to add sprinkler systems often
require upgrading or adding related building components such as water
lines and fire pumps. The upgrades and additions require more capital
investment and construction time. Increased investment and construction
time also increases costs.
For purposes of this impact analysis, we assume that renovating a
typical facility to add sprinklers would cost three times more than
purchasing and installing sprinklers in new long term care facilities.
In the proposed rule, we presented a range of cost per square foot
estimates from two to three times the costs of installation in a new
building. Commenters indicated that the lower estimates in this range
did not reflect the actual costs incurred by existing
[[Page 47087]]
long term care facilities. Therefore, we eliminated the lower range and
only use the highest estimate (three times the cost of installing
sprinklers in new construction, $7.95).
b. Cost Estimates
The cost estimates for both unsprinklered and partially sprinklered
facilities are presented in the following tables. They are based on all
of the above-described estimates about the number of facilities that
would be affected, the sizes of those facilities, and the installation
cost per square foot. We estimate that this final rule will cost
$846,680,105 over the 5-year phase-in period, or an average of
$169,336,021 annually for 5 years for all affected partially
sprinklered and unsprinklered long term care facilities.
Table 4--One-Time Installation Cost for Partially Sprinklered Facilities at $7.95 per Square Foot by Size
----------------------------------------------------------------------------------------------------------------
>50 beds (18,375 50-99 beds 100-199 beds 200+ beds (75,000
sq ft to be (27,750 sq ft to (55,875 sq ft to sq ft to be
sprinklered) be sprinklered) be sprinklered) sprinklered)
----------------------------------------------------------------------------------------------------------------
Cost per facility................... $146,081 $220,613 $444,206 $596,250
Number of affected facilities....... 315 675 870 226
Cost for all facilities............. $46,015,515 $148,913,775 $386,459,220 $134,752,500
----------------------------------------------------------------------------------------------------------------
Table 5--One-Time Cost for Unsprinklered Facilities at $7.95 per Square Foot by Size
----------------------------------------------------------------------------------------------------------------
>50 beds (24,500 50-99 beds 100-199 beds 00+ beds (99,501
sq ft to be (37,000 sq ft to (74,500 sq ft to sq ft to be
sprinklered) be sprinklered) be sprinklered) sprinklered)
----------------------------------------------------------------------------------------------------------------
Cost per facility................... $194,775 $294,150 $592,275 $791,033
Number of affected facilities....... 118 128 102 12
Cost for all facilities............. $22,983,450 $37,651,200 $60,412,050 $9,492,395
----------------------------------------------------------------------------------------------------------------
Table 6--Total One-Time Installation Cost for All Facilities by Size
----------------------------------------------------------------------------------------------------------------
>50 beds 50-99 beds 100-199 beds 200+ beds
----------------------------------------------------------------------------------------------------------------
Partially sprinklered............... $46,015,515 $148,913,775 $386,459,220 $134,752,500
Unsprinklered....................... 22,983,450 37,651,200 60,412,050 9,492,395
---------------------------------------------------------------------------
Total........................... 68,998,965 186,564,975 446,871,270 144,244,895
----------------------------------------------------------------------------------------------------------------
We do not expect all affected long term care facilities to have all
necessary resources immediately available to purchase and install
automatic sprinkler systems. Therefore, we are allowing all facilities
up to five years from the date of publication of this final rule to
purchase and install sprinklers. While we will encourage all facilities
to immediately begin the process of purchasing and installing
sprinklers, we understand that some facilities will choose to wait
until later in the phase-in period to begin this process. Therefore, we
expect that the one-time cost of this final rule will be distributed
over a period of several years as facilities nationwide will likely
stagger their installation schedules to meet their individual needs and
circumstances. We estimate that long term care facilities will spend,
on average, $169,336,021 annually for five years to purchase and
install automatic sprinkler systems throughout their facilities.
c. Maintenance
After installing an approved, supervised automatic sprinkler system
in accordance with the 1999 edition of NFPA 13 throughout the building,
all long term care facilities must test, inspect, and maintain their
sprinkler systems in accordance with the 1998 edition NFPA 25. We
estimate that long term care facilities will conduct quarterly
inspections of their sprinkler systems and annual trip tests. We assume
that each inspection will take 4 hours to complete, at a cost of $150
per inspection. We also assume that each trip test will take 6 hours,
at a cost of $250. Based on these assumptions, we estimate that long
term care facilities will spend $850 annually to test and inspect their
sprinkler systems. In addition, we assume that long term care
facilities will spend an additional $150 annually to perform any
necessary maintenance duties.
Individuals who perform these testing, inspection, and maintenance
duties will have to be properly trained and, in some States and local
jurisdictions, they will have to be licensed. Generally, long term care
facilities will not have enough sprinkler system work needs to directly
employ someone with the necessary skills, training, and licensure.
Therefore, we believe that long term care facilities will likely
contract with another company to meet their testing, inspection, and
maintenance needs. However, long term care facilities are not required
by this rule to contract for these services. In addition to actually
conducting the necessary testing, inspection, and maintenance
activities, we believe that a contract will also include a provision
that the contractor prepares adequate documentation of the activities
conducted. We estimate that the total cost of meeting these
requirements will be $1,000 ($150 x 4 quarterly inspections = $600 +
$250 annual trip test + $150 general maintenance costs = $1,000). We
estimate that the total maintenance cost for all affected facilities
will be $2,446,000. We recognize that some commenters suggested that
this estimate is not sufficient to capture the cost of maintaining an
automatic sprinkler system. However, the commenters did not suggest a
more suitable method for assessing the potential maintenance costs or a
more suitable dollar estimate for such costs. Therefore, we reaffirm
our original estimates.
[[Page 47088]]
In addition, all long term care facilities that will be affected by
this final regulation are required to maintain documentation of all
inspection, maintenance, and testing activities. The burden associated
with these requirements is estimated to be 1 hour per long term care
facility. Therefore, we estimate it will take 2,446 total annual hours
(1 hour x 2,446 estimated affected long term care facilities) to meet
this requirement. This documentation maintenance requirement will cost
an affected facility $19 a year, based on an hourly rate of $19 for an
office employee ($19 per hour x 1 hour). The total annual cost of this
final documentation requirement will be $46,474 ($19 per facility x
2,446 facilities).
3. Summary of Estimated Costs and Benefits
Taking into account all these categories of benefits and costs, and
their timing, we believe that this final rule creates a substantial
excess of benefits over costs at a social discount rate of 3 percent
and a slight excess of benefits over costs at 7 percent. As shown in
the table, costs are heavily concentrated in the first five years (we
assume one-fifth is invested in each of the five years allowed for
compliance) while benefits accrue over the entire 20-year life of these
investments.
[[Page 47089]]
Table 7--Total Fire Sprinkler System Costs and Benefits
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits Costs
---------------------------------------------------------------------------------------------------------------------------------------------------
Decreasing
Life years Life years Monetized Decreasing fire Reducing
Year Statistical saved from saved from Monetized morbidity loss of recovery major Total Installation Maintenance Total
lives saved mortality morbidity statistical reduction property disruption medical benefits ($M) ($M) costs
reduction reduction lives ($M) ($M)* ($M) and time costs ($M) ($M)
($M) ($M)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1........................................... 1 6.6 6.6 5 1 5 2.6 1 15.2 169 0.5 169.5
2........................................... 2 13.2 13.2 10 3 13 6.5 2 34.3 169 1.0 170.0
3........................................... 3 19.8 19.8 15 4 16 7.8 3 45.6 169 1.5 170.5
4........................................... 4 26.4 26.4 20 6 21 10.4 4 60.8 169 2.0 171.0
5........................................... 5 33 33 25 7 26 13 5 76.0 169 2.5 171.5
6........................................... 5 33 33 25 7 26 13 5 76.0 0 2.5 2.5
7........................................... 5 33 33 25 7 26 13 5 76.0 0 2.5 2.5
8........................................... 5 33 33 25 7 26 13 5 76.0 0 2.5 2.5
9........................................... 5 33 33 25 7 26 13 5 76.0 0 2.5 2.5
10.......................................... 5 33 33 25 7 26 13 5 76.0 0 2.5 2.5
11.......................................... 5 33 33 25 7 26 13 5 76.0 0 2.5 2.5
12.......................................... 5 33 33 25 7 26 13 5 76.0 0 2.5 2.5
13.......................................... 5 33 33 25 7 26 13 5 76.0 0 2.5 2.5
14.......................................... 5 33 33 25 7 26 13 5 76.0 0 2.5 2.5
15.......................................... 5 33 33 25 7 26 13 5 76.0 0 2.5 2.5
16.......................................... 5 33 33 25 7 26 13 5 76.0 0 2.5 2.5
17.......................................... 5 33 33 25 7 26 13 5 76.0 0 2.5 2.5
18.......................................... 5 33 33 25 7 26 13 5 76.0 0 2.5 2.5
19.......................................... 5 33 33 25 7 26 13 5 76.0 0 2.5 2.5
20.......................................... 5 33 33 25 7 26 13 5 76.0 0 2.5 2.5
Undiscounted Total.......................... 90 594 594 450.0 126.5 470.6 235.3 90.0 1,372.4 845.0 45.0 890.0
Net Present Value at 3%..................... ........... .......... .......... ........... 3% .......... ........... .......... 991.4 ............ ............ 806.4
Discount Rate............................... ........... .......... .......... ........... .......... .......... ........... .......... ......... ............ ............ ........
Net Present Value at 7% Discount Rate*...... ........... .......... .......... ........... 7% .......... ........... .......... 722.4 ............ ............ 715.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Estimate at 3% discount rate, shown in table, uses a value of $213,000 per QALY; estimate at 7% uses a value of $373,000 per QALY.
[[Page 47090]]
The Office of Management and Budget has stated that the value of a
statistical life could be put anywhere between $1 and $10 million (in
practice a number as low as $1 million is almost never used). Clearly
using the lower end of this range would greatly reduce the benefits of
this final rule, and using the higher end would greatly increase those
benefits. Broad (though not equally broad) ranges of comparisons could
be made for most categories of benefits. However, only if the most
conservative possible estimates were used for almost every category of
benefits would total discounted benefits fall below discounted costs at
a discount rate of 3 percent. Therefore, we have chosen not to present
a detailed sensitivity analysis.
Our installation cost estimates, in contrast, do not pose remotely
as wide a range of possibilities. In our view we have estimated these
quite conservatively, and actual costs could easily be ten or twenty
percent lower than the estimates we use. For example, the five year
compliance horizon we provide means that many facilities will be able
to combine sprinkler installation with other major renovations such
that the cost of sprinkler installation will be considerably less. In
fact, during the next five years it is quite likely that a considerable
fraction of long term care providers in the older facilities most
affected by this final rule will for unrelated business reasons decide
to move to new facilities and dispose of their older facility
buildings. We have not attempted to estimate the effects of such
estimate-reducing actions.
Finally, there is an alternative way to estimate and present the
effects of this rule. Approaching these estimates from the perspective
of cost-effectiveness analysis (CEA), Table 7 shows that we estimate a
total of 1,188 undiscounted life years saved from both mortality and
morbidity reductions. Subtracting from total monetary costs the
monetary benefits from reduced property damage, disruption, and medical
costs, the net undiscounted costs are $94.1 million. Undiscounted, the
cost per life-year saved is $79,000. Discounting both life years and
costs to present value, the cost per life-year saved would be $270,000
at a 3 percent discount rate, and $553,000 at a 7 percent discount
rate. These results are markedly sensitive to the discount rate because
the benefits of the rule accrue roughly evenly over time, while the
costs are highly concentrated in the early years. Despite the fact that
this mostly elderly population has relatively few years of life
expectancy compared to an average population, even at a 7 percent
discount rate the cost per life-year saved, while higher than the most
widely used values for a QALY, is within the range of accepted
``willingness to pay'' values (e.g., the Hirsch study published in 2000
presents $450,000 as an accepted value, which adjusted for inflation
roughly equals our estimate of $553,000).
C. Alternatives Considered
1. Maintain Current Fire Safety Requirements
We currently require long term care facilities to comply with the
fire safety requirements in the LSC. In addition, we currently require
long term care facilities that do not have sprinklers installed
throughout the building to have and maintain at least battery operated
smoke alarms in resident rooms and public areas. We believe that these
requirements are a solid foundation for ensuring that all long term
care facility residents are protected from the threat of fire.
We also believe that these current measures do not go far enough to
protect long term care facility residents. Both the Hartford and
Nashville facilities were in substantial compliance with the LSC, yet
both facilities experienced severe fires with large numbers of
fatalities.
The smoke alarm requirement that we published in the Federal
Register on March 25, 2005 (70 FR 15229) after these fires was a step
toward improving fire safety and avoiding another devastating fire.
Unfortunately, single station smoke alarms can only warn facility staff
and residents of the fire. They cannot suppress a fire or prevent it
from spreading to other areas.
Long-term care facility residents often have multiple or severe
health problems that complicate the facility's ability to ensure their
safety in the event of a fire. For example, frail elderly residents may
rely on facility staff to assist them in transferring and otherwise
moving about the facility. These types of residents are unable to
independently protect themselves from the threat of fire by moving away
from the danger. They are dependent on facility staff, who are also
responsible for ensuring the safety of dozens of other residents. A
rapidly growing fire can overwhelm both the staff and residents,
leading to tragic consequences.
However, a properly designed, installed, and maintained sprinkler
system effectively prevents a fire from spreading to other areas and
overwhelming the staff and residents. Containing a fire reduces the
threat to residents in other portions of the building and allows
facility staff to focus their energy on the area that is most affected
by the fire, without worry about the fire spreading to other areas and
threatening other residents. Sprinkler systems have consistently served
this function for many years, and they are commonly recognized as the
single most effective fire safety device currently available.
Given the past success of sprinkler systems and their potential for
saving lives in the future, we believe that maintaining the existing
fire safety requirements without adding sprinkler requirements does not
ensure the safety of long term care facility residents to the greatest
extent possible.
In addition, maintaining the existing fire safety requirements will
have left decisions regarding more stringent fire safety measures in
the hands of State and local governments. State and local governments
have, in the past, made very different decisions about fire safety
requirements in long-term care facilities. For example, some States,
such as Tennessee and Virginia, already require all long-term care
facilities to have sprinklers throughout their buildings. In contrast,
other States, such as South Dakota, Michigan, and the District of
Columbia, do not have such requirements, resulting in almost 50 percent
or more of their long-term care facilities lacking sprinklers
throughout their buildings. This level of variability is not acceptable
because residents of long-term care facilities should be assured the
same minimum level of fire safety regardless of what State or locality
they reside in. Federal regulation is the most efficient and expedient
manner for achieving the goal of uniform nationwide minimum fire safety
standards; therefore, we chose to pursue Federal regulation rather than
depending on State and local governments.
2. Exempt Smaller Facilities
The Medicare Conditions of Participation are the minimum
requirements that providers are required to meet in order to be
Medicare and Medicaid certified. Many other standards setting
organizations have requirements that go beyond what Medicare and
Medicaid require. Facilities may choose to strive for these higher
standards, although Medicare and Medicaid do not require them to do so.
Exempting any facility from this final minimum requirement will be
a disservice to the residents of that facility. Residents deserve to be
safe from the threat of fire, whether they reside in a large facility
or a smaller one. The final sprinkler requirement will ensure that,
regardless of the size or
[[Page 47091]]
location of their residence, all residents are protected by the same
basic minimum fire safety requirements.
However, we did consider whether there might be some size or other
threshold creating a ``cut off'' point below which some facilities
might be exempted on the grounds that the cost of sprinkler
installation is prohibitively expensive in relation to the number of
residents to be protected. We were unable to identify any such
threshold from the GAO study, our own analysis, or the comments we
received. To the contrary, it appears that there is a linear or near
linear relationship among facility revenue, facility size, number of
facility residents, and cost of installing automated sprinkler systems.
Nor are there any data suggesting that risk or rates of fire vary with
facility size. The one certainty is that automated sprinkler systems
are the most certainly effective method of preventing and controlling
expansion of fires.
We believe that the 5-year phase-in period will substantially help
to mitigate the costs of installing sprinklers for small facilities by
providing substantial flexibility to coordinate sprinkler decisions
with other business arrangements, including financing and renovation
decisions. Therefore, we have no reasonable basis to exempt any
particular type of facility, including smaller facilities, from this
requirement.
3. Require Compliance in Less Than or More Than Five Years
Requiring compliance with this final rule in less than five years
would, we believe, be a hardship for affected long term care
facilities. Allocating resources, designing a sprinkler system,
purchasing it, obtaining necessary permits, installing it, and testing
it all require a significant amount of time. In 15 states, 20% or more
of all long term care facilities will be required to go through this
process, potentially increasing the wait time permit applications and
for the availability of qualified system designers and installers. For
these reasons, and to provide flexibility to coordinate with other
business decisions, we have chosen to allow up to 5 years to complete
this process.
Allowing facilities more than 5 years to complete the sprinkler
process could encourage facilities to unnecessarily delay the
installation process. Such delays could unduly jeopardize resident and
staff safety. Therefore, we believe that a phase-in period of more than
five years would not be in the best interest of long term care facility
resident and staff safety and would not accomplish the goals of this
final rule.
D. Accounting Statement
As Required by OMB Circular A-4 (available at http://
www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 7 below, we
have prepared an accounting statement showing the classification of the
costs and benefits associated with the provisions of this final rule.
This table is based on our best estimate of the undiscounted total cost
of $845 million, over a five year phase in period, for the 2,446 long
term care facilities being required to install automatic sprinkler
systems at an estimated cost of $7.95 per square foot, plus an
additional $45 million undiscounted for maintenance costs of about $2.5
million annually. After discounting to present value, total costs are
estimated to be $806 million at a 3 percent discount rate, and $715
million at a 7 percent discount rate. The table also reflects total
benefits of $1,372 million undiscounted, $991 million discounted to
present value at 3 percent, and $722 million discounted to present
value at 7 percent.
Table 7--Accounting Statement
------------------------------------------------------------------------
Primary
Category estimate
($M)
------------------------------------------------------------------------
Monetized Costs ($ Millions):
Total Cost Over 20-Year Period (PV at 0% discount rate).. $890
Total Cost Over 20-Year Period (PV at 3% discount rate).. 806
Total Cost Over 20-Year Period (PV at 7% discount rate).. 715
Monetized Benefits:
Total Benefits (PV at 0% discount rate).................. 1372
Total Benefits (PV at 3% discount rate).................. 991
Total Benefits (PV at 7% discount rate).................. 722
------------------------------------------------------------------------
E. Conclusion
We estimate that this regulation will result in private sector
expenditures of $846,680,105, over a 5-year phase-in period, or
$169,336,021 annually for 5 years, to purchase and install automatic
sprinkler systems throughout affected long-term care facilities. We
also estimate that this regulation will result in private sector
expenditures of $2,492,474 ($2,446,000 for maintenance + $46,474 for
documentation) annually to maintain those automatic sprinkler systems.
While the effects of this regulation are substantial, they are
necessary to protect the safety of long-term care facility residents
and staff.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects in 42 CFR Part 483
Grant programs--health, Health facilities, Health professions,
Health records, Incorporation by Reference, Medicaid, Medicare, Nursing
homes, Nutrition, Reporting and recordkeeping requirements, Safety.
0
For the reasons set forth in the preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR chapter IV as set forth below:
PART 483--REQUIREMENTS FOR STATES AND LONG-TERM CARE FACILITIES
0
1. The authority citation for part 483 continues to read as follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
Subpart B--Requirements for Long-Term Care Facilities
0
2. In Sec. 483.70, add new paragraph (a)(8) to read as follows:
Sec. 483.70 Physical environment.
(a) * * *
(8) A long term care facility must:
(i) Install an approved, supervised automatic sprinkler system in
accordance with the 1999 edition of NFPA 13, Standard for the
Installation of Sprinkler Systems, as incorporated by reference,
throughout the building by August 13, 2013. The Director of the Office
of the Federal Register has approved the NFPA 13 1999 edition of the
Standard for the Installation of Sprinkler Systems, issued July 22,
1999 for incorporation by reference in accordance with 5 U.S.C. 552(a)
and 1 CFR part 51. A copy of the Code is available for inspection at
the CMS Information Resource Center, 7500 Security Boulevard,
Baltimore, MD or at the National Archives and Records Administration
(NARA). For information on the availability of this material at NARA,
call 202-741-6030, or go to: http://www.archives.gov/federal_register/
code_of_federal_regulations/ibr_locations.html. Copies may be
obtained from the National Fire Protection Association, 1 Batterymarch
Park, Quincy, MA 02269.
(ii) Test, inspect, and maintain an approved, supervised automatic
sprinkler system in accordance with the 1998 edition of NFPA 25,
Standard for the Inspection, Testing, and Maintenance of Water-Based
Fire
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Protection Systems, as incorporated by reference. The Director of the
Office of the Federal Register has approved the NFPA 25, Standard for
the Inspection, Testing, and Maintenance of Water-Based Fire Protection
Systems, 1998 edition, issued January 16, 1998 for incorporation by
reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. A copy
of the Code is available for inspection at the CMS Information Resource
Center, 7500 Security Boulevard, Baltimore, MD or at the National
Archives and Records Administration (NARA). For information on the
availability of this material at NARA, call 202-741-6030, or go to:
http://www.archives.gov/federal_register/code_of_federal_
regulations/ibr_locations.html. Copies may be obtained from the
National Fire Protection Association, 1 Batterymarch Park, Quincy, MA
02269.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical
Assistance Program) (Catalog of Federal Domestic Assistance Program
No. 93.773, Medicare--Hospital Insurance; and Program No. 93.774,
Medicare--Supplementary Medical Insurance Program)
Dated: March 6, 2008.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: May 6, 2008.
Michael O. Leavitt,
Secretary.
[FR Doc. E8-18670 Filed 8-8-08; 3:30 pm]
BILLING CODE 4120-01-P