[Federal Register: October 24, 2003 (Volume 68, Number 206)]
[Notices]
[Page 60995-60997]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24oc03-100]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
[CMS-8016-N]
RIN 0938-AM31
Medicare Program; Inpatient Hospital Deductible and Hospital and
Extended Care Services Coinsurance Amounts for 2004
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 2004 under Medicare's Hospital
Insurance program (Medicare Part A). The Medicare statute specifies the
formulae used to determine these amounts.
The inpatient hospital deductible will be $876. The daily
coinsurance amounts will be: (a) $219 for the 61st through 90th day of
hospitalization in a benefit period; (b) $438 for lifetime reserve
days; and (c) $109.50 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, 2004.
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
furnished in the following calendar year.
II. Computing the Inpatient Hospital Deductible for 2004
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 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 fiscal year 2004 for hospitals
paid under the prospective payment system is the market basket
percentage increase.
Under section 1886(b)(3)(B)(ii) of the Act, the percentage increase
used to update the payment rates for fiscal year 2004 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 fiscal year 2004 is 3.4
percent, as announced in the final rule titled ``Medicare Program;
Changes to the Hospital Inpatient Prospective Payment Systems and
Fiscal Year 2004 Rates,'' published in the Federal Register on August
1, 2003 (68 FR 45346). Therefore, the percentage increase for hospitals
paid under the prospective payment system is 3.4 percent. The average
payment percentage increase for hospitals excluded from the prospective
payment system is 3.4 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 fiscal year
2004 is 3.4 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
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computed the change in average case mix for hospitals paid under the
Medicare prospective payment system in fiscal year 2003 compared to
fiscal year 2002. (We excluded from this calculation hospitals excluded
from the prospective payment system because their payments are based on
reasonable costs. We used bills from prospective payment hospitals
received in CMS as of July 2003. These bills represent a total of about
9.0 million discharges for fiscal year 2003 and provide the most recent
case mix data available at this time. Based on these bills, the change
in average case mix in fiscal year 2003 is 0.87 percent. Based on past
experience, we expect the overall case mix change to be 1 percent as
the year progresses and more fiscal year 2003 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 fiscal year 2003 is 1 percent.
Thus, the estimate of the payment-weighted average of the
applicable percentage increases used for updating the payment rates is
3.4 percent, and the real case mix adjustment factor for the deductible
is 1 percent. Therefore, under the statutory formula, the inpatient
hospital deductible for services furnished in calendar year 2004 is
$876. This deductible amount is determined by multiplying $840 (the
inpatient hospital deductible for 2003) by the payment-weighted average
increase in the payment rates of 1.034 multiplied by the increase in
real case mix of 1.01, which equals $877 and is rounded to $876.
III. Computing the Inpatient Hospital and Extended Care Services
Coinsurance Amounts for 2004
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 2004, 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 $219 (one-fourth of the inpatient hospital
deductible); the daily coinsurance for lifetime reserve days will be
$438 (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 $109.50 (one-
eighth of the inpatient hospital deductible).
IV. Cost to Beneficiaries
Table 1 summarizes the deductible and coinsurance amounts for 2003
and 2004, as well as the number of each that is estimated to be paid.
Table 1.--Part A Deductible and Coinsurance Amounts for Calendar Years 2003 and 2004
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Value Number paid (in
---------------------------- millions)
Type of Cost Sharing -------------------------
2003 2004 2003 2004
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Inpatient hospital deductible............................. $840 $876 9.22 9.40
Daily coinsurance for 61st-90th Day....................... 210 219 2.46 2.50
Daily coinsurance for lifetime reserve days............... 420 438 1.14 1.16
SNF coinsurance........................................... 105.00 109.50 27.73 28.18
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The estimated total increase in cost to beneficiaries is about $720
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 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,
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 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), and Executive Order 13132.
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). As stated in Section IV, we
estimate that the total increase in costs to beneficiaries associated
with this notice is about $720 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,
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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. For purposes of the RFA, States and individuals are not
considered small entities. 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 notice 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
notice 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, 2003.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
Dated: October 3, 2003.
Tommy G. Thompson,
Secretary.
[FR Doc. 03-26455 Filed 10-16-03; 10:06 am]
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