---
kind: "section"
citation: "42 C.F.R. § 412.316"
title: "42"
number: "412.316"
heading: "Geographic adjustment factors."
url: "https://uscodex.org/cfr/42/412.316"
---

# §412.316. Geographic adjustment factors.

- (a) **Local cost variation.** CMS adjusts for local cost variation based on the hospital wage index value that is applicable to the hospital under [subpart D](/cfr/42/subpartD.md) of this part. The adjustment factor equals the hospital wage index value applicable to the hospital raised to the .6848 power and is applied to 100 percent of the Federal rate.
- (b) **Large urban location.** For discharges occurring on or before September 30, 2007, CMS provides an additional payment to a hospital located in a large urban area equal to 3.0 percent of what would otherwise be payable to the hospital based on the Federal rate.
  - (1) For discharges occurring on or before September 30, 2004, the payment adjustment under this section is based on a hospital's location for the purpose of receiving payment under [§ 412.63(a)](/cfr/42/412.63.md?p=a). The term “large urban area” is defined under [§ 412.63(c)(6)](/cfr/42/412.63.md?p=c-6).
  - (2) For discharges occurring on or after October 1, 2004, and before October 1, 2007, the definition of large urban areas under [§ 412.63(c)(6)](/cfr/42/412.63.md?p=c-6) continues be in effect for purposes of the payment adjustment under this section, based on the geographic classification under [§ 412.64](/cfr/42/412.64.md), except as provided for in [paragraph (b)(3)](#b-3) of this section.
  - (3) For purposes of this section, the geographic classifications specified under [§ 412.64](/cfr/42/412.64.md) apply, except that, effective for discharges occurring on or after October 1, 2006, and before October 1, 2007, for an urban hospital that is reclassified as rural as set forth in [§ 412.103](/cfr/42/412.103.md), the geographic classification is rural.
- (c) **Cost-of-living adjustment.** CMS provides an additional payment to a hospital located in Alaska and Hawaii equal to [0.3152 × (the cost-of-living adjustment factor used to determine payments under [subpart D](/cfr/42/subpartD.md) of this part − 1)] percent.

## Notes

### Amendments

[56 FR 43449, Aug. 30, 1991, Aug. 11, 2004, as amended at 69 FR 49250, Aug. 11, 2004; 71 FR 48140, Aug. 18, 2006; 72 FR 47412, Aug. 22, 2007]

### Source

Source: 56 FR 43449, Aug. 30, 1991, unless otherwise noted.

### Authority

Authority: 42 U.S.C. 1302 and 1395hh.

### Source

Source: 50 FR 12741, Mar. 29, 1985, unless otherwise noted.

### Amendments

[56 FR 43449, Aug. 30, 1991, Aug. 11, 2004, as amended at 69 FR 49250, Aug. 11, 2004; 71 FR 48140, Aug. 18, 2006; 72 FR 47412, Aug. 22, 2007]