[Federal Register Volume 70, Number 184 (Friday, September 23, 2005)]
[Notices]
[Pages 55885-55887]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-18838]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
[CMS-8026-N]
RIN 0938-AO00
Medicare Program; Inpatient Hospital Deductible and Hospital and
Extended Care Services Coinsurance Amounts for Calendar Year 2006
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Notice.
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SUMMARY: This notice announces the inpatient hospital deductible and
the hospital and extended care services coinsurance amounts for
services furnished in calendar year (CY) 2006 under Medicare's Hospital
Insurance program (Medicare Part A). The Medicare statute specifies the
formulae used to determine these amounts.
For CY 2006, the inpatient hospital deductible will be $952. The
daily coinsurance amounts for CY 2006 will be: (a) $238 for the 61st
through 90th day of hospitalization in a benefit period; (b) $476 for
lifetime reserve days; and (c) $119.00 for the 21st through 100th day
of extended care services in a skilled nursing facility in a benefit
period.
EFFECTIVE DATE: This notice is effective on January 1, 2006.
FOR FURTHER INFORMATION CONTACT: Clare McFarland, (410) 786-6390. For
case-mix analysis only: Gregory J. Savord, (410) 786-1521.
SUPPLEMENTARY INFORMATION:
I. Background
Section 1813 of the Social Security Act (the Act) provides for an
inpatient hospital deductible to be subtracted from the amount payable
by Medicare for inpatient hospital services furnished to a beneficiary.
It also provides for certain coinsurance amounts to be subtracted from
the amounts payable by Medicare for inpatient hospital and extended
care services. Section 1813(b)(2) of the Act requires us to determine
and publish, between September 1 and September 15 of each year, the
amount of the inpatient hospital deductible and the hospital and
extended care services coinsurance amounts applicable for services
[[Page 55886]]
furnished in the following calendar year.
II. Computing the Inpatient Hospital Deductible for CY 2006
Section 1813(b) of the Act prescribes the method for computing the
amount of the inpatient hospital deductible. The inpatient hospital
deductible is an amount equal to the inpatient hospital deductible for
the preceding calendar year, changed by our best estimate of the
payment-weighted average of the applicable percentage increases (as
defined in section 1886(b)(3)(B) of the Act) used for updating the
payment rates to hospitals for discharges in the fiscal year (FY) that
begins on October 1 of the same preceding calendar year, and adjusted
to reflect real case-mix. The adjustment to reflect real case-mix is
determined on the basis of the most recent case-mix data available. The
amount determined under this formula is rounded to the nearest multiple
of $4 (or, if midway between two multiples of $4, to the next higher
multiple of $4).
Under section 1886(b)(3)(B)(i) of the Act, the percentage increase
used to update the payment rates for FY 2006 for inpatient hospitals
paid under the prospective payment system is the market basket
percentage increase. Under section 501 of the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003, hospitals will
receive the full market basket update only if they submit quality data
as specified by the Secretary. Those hospitals that do not submit data
will receive an update of market basket minus .4 percentage points. In
determining the payment-weighted average of the updates to payment
rates to hospitals in FY 2006, we are estimating that the payment to
hospitals not submitting quality data will be insignificant.
Under section 1886(b)(3)(B)(ii) of the Act, the percentage increase
used to update the payment rates for FY 2006 for hospitals excluded
from the prospective payment system is the market basket percentage
increase, defined according to section 1886(b)(3)(B)(iii) of the Act.
The market basket percentage increase for 2006 is 3.7 percent, as
announced in the final rule published in the Federal Register entitled
``Medicare Program; Changes to the Hospital Inpatient Prospective
Payment Systems and Fiscal Year 2006 Rates'' (70 FR 47278). Therefore,
the percentage increase for hospitals paid under the prospective
payment system is 3.7 percent. The average payment percentage increase
for hospitals excluded from the prospective payment system is 3.8
percent. Weighting these percentages in accordance with payment volume,
our best estimate of the payment-weighted average of the increases in
the payment rates for FY 2006 is 3.7 percent.
To develop the adjustment for real case-mix, we first calculated
for each hospital an average case-mix that reflects the relative
costliness of that hospital's mix of cases compared to those of other
hospitals. We then computed the change in average case-mix for
hospitals paid under the Medicare prospective payment system in FY 2005
compared to FY 2004. (We excluded from this calculation hospitals
excluded from the prospective payment system because their payments are
based on reasonable costs.) We used Medicare bills from prospective
payment hospitals that we received as of July 2005. These bills
represent a total of about 9.5 million Medicare discharges for FY 2005
and provide the most recent case-mix data available at this time. Based
on these bills, the change in average case-mix in FY 2005 is 0.15
percent. Based on past experience, we expect the overall case-mix
change to be 0.45 percent as the year progresses and more FY 2005 data
become available.
Section 1813 of the Act requires that the inpatient hospital
deductible be adjusted only by that portion of the case-mix change that
is determined to be real. We estimate that the change in real case-mix
for FY 2005 is .45 percent.
Thus, the estimate of the payment-weighted average of the
applicable percentage increases used for updating the payment rates is
3.7 percent, and the real case-mix adjustment factor for the deductible
is .45 percent. Therefore, under the statutory formula, the inpatient
hospital deductible for services furnished in CY 2006 is $952. This
deductible amount is determined by multiplying $912 (the inpatient
hospital deductible for CY 2005 by the payment-weighted average
increase in the payment rates of 1.037 multiplied by the increase in
real case-mix of 1.0045, which equals $950 and is rounded to $952.
III. Computing the Inpatient Hospital and Extended Care Services
Coinsurance Amounts for 2006
The coinsurance amounts provided for in section 1813 of the Act are
defined as fixed percentages of the inpatient hospital deductible for
services furnished in the same calendar year. Thus, the increase in the
deductible generates increases in the coinsurance amounts. For
inpatient hospital and extended care services furnished in CY 2006, in
accordance with the fixed percentages defined in the law, the daily
coinsurance for the 61st through 90th day of hospitalization in a
benefit period will be $238 (one-fourth of the inpatient hospital
deductible); the daily coinsurance for lifetime reserve days will be
$476 (one-half of the inpatient hospital deductible); and the daily
coinsurance for the 21st through 100th day of extended care services in
a skilled nursing facility in a benefit period will be $119.00 (one-
eighth of the inpatient hospital deductible).
IV. Cost to Medicare Beneficiaries
Table 1 summarizes the deductible and coinsurance amounts for CYs
2005 and 2006, as well as the number of each that is estimated to be
paid.
Table 1.--Part A Deductible and Coinsurance Amounts for Calendar Years 2005 and 2006
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Value Number paid (in
-------------------------- millions)
Type of cost sharing -------------------------
2005 2006 2005 2006
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Inpatient hospital deductible............................... $912 $952 8.91 8.70
Daily coinsurance for 61st-90th Day......................... 228 238 2.28 2.23
Daily coinsurance for lifetime reserve days................. 456 476 1.06 1.04
SNF coinsurance............................................. 114.00 119.00 32.84 31.92
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The estimated total increase in costs to beneficiaries is about
$230 million (rounded to the nearest $10 million), due to: (1) The
increase in the deductible and coinsurance amounts and (2) the change
in the number of
[[Page 55887]]
deductibles and daily coinsurance amounts paid.
V. Waiver of Proposed Notice and Comment Period
The Medicare statute, as discussed previously, requires publication
of the Medicare Part A inpatient hospital deductible and the hospital
and extended care services coinsurance amounts for services for each
calendar year. The amounts are determined according to the statute. As
has been our custom, we use general notices, rather than notice and
comment rulemaking procedures, to make the announcements. In doing so,
we acknowledge that, under the Administrative Procedure Act (APA),
interpretive rules, general statements of policy, and rules of agency
organization, procedure, or practice are excepted from the requirements
of notice and comment rulemaking.
We considered publishing a proposed notice to provide a period for
public comment. However, we may waive that procedure if we find good
cause that prior notice and comment are impracticable, unnecessary, or
contrary to the public interest. We find that the procedure for notice
and comment is unnecessary because the formulae used to calculate the
inpatient hospital deductible and hospital and extended care services
coinsurance amounts are statutorily directed, and we can exercise no
discretion in following those formulae. Moreover, the statute
establishes the time period for which the deductible and coinsurance
amounts will apply and delaying publication would be contrary to the
public interest. Therefore, we find good cause to waive publication of
a proposed notice and solicitation of public comments.
VI. Regulatory Impact Statement
We have examined the impacts of this notice as required by
Executive Order 12866 (September 1993, Regulatory Planning and Review),
the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-
354), section 1102(b) of the Act, the Unfunded Mandates Reform Act of
1995 (Pub. L. 104-4), and Executive Order 13132.
Executive Order 12866, which merely reassigns responsibility of
duties) 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). As stated in Section IV of this notice, we
estimate that the total increase in costs to beneficiaries associated
with this notice is about $230 million due to: (1) The increase in the
deductible and coinsurance amounts and (2) the change in the number of
deductibles and daily coinsurance amounts paid. Therefore, this notice
is a major rule as defined in Title 5, United States Code, section
804(2), and is an economically significant rule under Executive Order
12866.
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 government agencies.
Most hospitals and most other providers and suppliers are small
entities, either by nonprofit status or by having revenues of $6
million to $29 million in any 1 year. Individuals and States are not
included in the definition of a small entity. We have determined that
this notice will not have a significant economic impact on a
substantial number of small entities. Therefore we are not preparing an
analysis for the RFA.
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 have determined that
this notice will not have a significant effect on the operations of a
substantial number of small rural hospitals. Therefore, we are not
preparing an analysis for section 1102(b) of the Act.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule that may result in expenditure in any 1 year by State,
local, or tribal governments, in the aggregate, or by the private
sector, of $110 million. This notice has no consequential effect on
State, local, or tribal governments or on the private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. This notice has no consequential effect on State or local
governments.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
Authority: Sections 1813(b)(2) of the Social Security Act (42
U.S.C. 1395e-2(b)(2)).
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance)
Dated: September 12, 2005.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
Dated: September 15, 2005.
Michael O. Leavitt,
Secretary.
[FR Doc. 05-18838 Filed 9-16-05; 4:00 pm]
BILLING CODE 4120-01-P