[Federal Register Volume 64, Number 204 (Friday, October 22, 1999)]
[Notices]
[Pages 57105-57110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-27627]
[[Page 57105]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
[HCFA-8006-N]
RIN 0938-AJ80
Medicare Program; Monthly Actuarial Rates and Monthly
Supplementary Medical Insurance Premium Rate Beginning January 1, 2000
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Notice.
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SUMMARY: In accordance with section 1839 of the Social Security Act,
this notice announces the monthly actuarial rates for aged (age 65 or
over) and disabled (under age 65) enrollees in the Medicare
Supplementary Medical Insurance (SMI) program for 2000. It also
announces the monthly SMI premium rate to be paid by all enrollees
during 2000. The monthly actuarial rates for 2000 are $91.90 for aged
enrollees and $121.10 for disabled enrollees. The monthly SMI premium
rate for 2000 is $45.50. (The 1999 premium rate was also $45.50). The
2000 Part B premium is not equal to 50 percent of the monthly actuarial
rate because of the differential between the amount of home health that
is transferred into Part B in 2000 (three-sixths) and the amount in
Part B that is included in the premium calculation (three-sevenths).
Included in the monthly premium rate is $2.87 for home health services
being transferred into Part B.
EFFECTIVE DATE: January 1, 2000.
FOR FURTHER INFORMATION CONTACT: Carter S. Warfield, (410) 786-6396.
SUPPLEMENTARY INFORMATION:
I. Background
The Medicare Supplementary Medical Insurance (SMI) program is the
voluntary Medicare Part B program that pays all or part of the costs
for physicians' services, outpatient hospital services, home health
services, services furnished by rural health clinics, ambulatory
surgical centers, comprehensive outpatient rehabilitation facilities,
and certain other medical and health services not covered by hospital
insurance (HI) (Medicare Part A). The SMI program is available to
individuals who are entitled to HI and to U.S. residents who have
attained age 65 and are citizens, or aliens who were lawfully admitted
for permanent residence and have resided in the United States for 5
consecutive years. This program requires enrollment and payment of
monthly premiums, as provided in 42 CFR part 407, subpart B, and part
408, respectively. The difference between the premiums paid by all
enrollees and total incurred costs is met from the general revenues of
the Federal government.
The Secretary of Health and Human Services is required by section
1839 of the Social Security Act (the Act) to issue two annual notices
relating to the SMI program.
One notice announces two amounts that, according to actuarial
estimates, will equal respectively, one-half the expected average
monthly cost of SMI for each aged enrollee (age 65 or over) and one-
half the expected average monthly cost of SMI for each disabled
enrollee (under age 65) during the year beginning the following
January. These amounts are called ``monthly actuarial rates.''
The second notice announces the monthly SMI premium rate to be paid
by aged and disabled enrollees for the year beginning the following
January. (Although the costs to the program per disabled enrollee are
different than for the aged, the law provides that they pay the same
premium amount.) Beginning with the passage of section 203 of the
Social Security Amendments of 1972 (Public Law 92-603), the premium
rate, which was determined on a fiscal year basis, was limited to the
lesser of the actuarial rate for aged enrollees, or the current monthly
premium rate increased by the same percentage as the most recent
general increase in monthly title II social security benefits.
However, the passage of section 124 of the Tax Equity and Fiscal
Responsibility Act of 1982 (TEFRA) (Public Law 97-248) suspended this
premium determination process. Section 124 of TEFRA changed the premium
basis to 50 percent of the monthly actuarial rate for aged enrollees
(that is, 25 percent of program costs for aged enrollees). Section 606
of the Social Security Amendments of 1983 (Public Law 98-21), section
2302 of the Deficit Reduction Act of 1984 (DRA 1984) (Public Law 98-
369), section 9313 of the Consolidated Omnibus Budget Reconciliation
Act of 1985 (COBRA 1985) (Public Law 99-272), section 4080 of the
Omnibus Budget Reconciliation Act of 1987 (OBRA 1987) (Public Law 100-
203), and section 6301 of the Omnibus Budget Reconciliation Act of 1989
(OBRA 1989) (Public Law 101-239) extended the provision that the
premium be based on 50 percent of the monthly actuarial rate for aged
enrollees (that is, 25 percent of program costs for aged enrollees).
This extension expired at the end of 1990.
The premium rate for 1991 through 1995 was legislated by section
1839(e)(1)(B) of the Act, as added by section 4301 of the Omnibus
Budget Reconciliation Act of 1990 (OBRA 1990) (Public Law 101-508). In
January 1996, the premium determination basis would have reverted to
the method established by the 1972 Social Security Act Amendments.
However, section 13571 of the Omnibus Budget Reconciliation Act of 1993
(OBRA 1993) (Public Law 103-66) changed the premium basis to 50 percent
of the monthly actuarial rate for aged enrollees (that is, 25 percent
of program costs for aged enrollees) for 1996 through 1998.
Section 4571 of the Balanced Budget Act of 1997 (BBA 1997) (Public
Law 105-33) permanently extended the provision that the premium be
based on 50 percent of the monthly actuarial rate for aged enrollees
(that is, 25 percent of program costs for aged enrollees).
BBA 1997 included a further provision affecting the calculation of
the SMI actuarial rates and premiums for 1998 though 2003. Section 4611
of BBA 1997 modified the home health benefit payable under the HI
program for individuals enrolled in the SMI program. In doing so,
expenditures for home health services not considered ``post-
institutional'' will be payable under the SMI program rather than the
HI program beginning in 1998. However, section 4611(e)(1) of BBA 1997
requires that there be a transition from 1998 through 2002 for the
aggregate amount of the expenditures transferred from the HI program to
the SMI program. Section 4611(e)(2) also provides a specific yearly
proportion for the transferred funds. The proportions are \1/6\ for
1998, \1/3\ for 1999, \1/2\ for 2000, \4/6\ for 2001, and \5/6\ for
2002. For purposes of determining the correct amount of financing from
general revenues of the Federal government, it is necessary to include
only these transitional amounts in the monthly actuarial rates for both
aged and disabled enrollees, rather than the total cost of the home
health services being transferred. Accordingly, the actuarial rates
shown in this announcement reflect the net transitional cost only.
Section 4611(e)(3) of BBA 1997 also specifies, for the purposes of
determining the premium, that the monthly actuarial rate for enrollees
age 65 and over shall be computed as though the transition would occur
for 1998 through 2003 and that \1/7\ of the cost would be transferred
in 1998, \2/7\ in 1999, \3/7\ in 2000, \4/7\ in 2001, \5/7\ in 2002,
and \6/7\ in 2003. Therefore, the transition period for incorporating
this home health transfer into the premium is 7
[[Page 57106]]
years while the transition period for including these services in the
actuarial rate is 6 years. As a result, the premium rate for this year
and each of the next 3 years, through 2003, will be less than 50
percent of the actuarial rate for aged enrollees announced by the
Secretary.
New section 1933(c) of the Act, as added by section 4732(c) of BBA
1997, requires the Secretary to allocate money from the SMI trust fund
to the State Medicaid programs for the purpose of providing Medicare
Part B premium assistance from 1998 through 2002 for the section 1933
qualifying low-income Medicaid beneficiaries. This allocation, while
not being a benefit expenditure, will be an expenditure of the trust
fund and has been included in calculating the SMI actuarial rates for
this year. The allocation will be included in calculating the SMI
actuarial rates through 2002.
As determined according to section 1839(a)(3) of the Act and
section 4611(e)(3) of BBA 1997, the premium rate for 2000 is $45.50.
Included in the premium rate is $2.87 for home health services being
transferred into Part B.
A further provision affecting the calculation of the SMI premium is
section 1839(f) of the Act, as amended by section 211 of the Medicare
Catastrophic Coverage Act of 1988 (Public Law 100-360). (The Medicare
Catastrophic Coverage Repeal Act of 1989 (Public Law 101-234) did not
repeal the revisions to section 1839(f) made by Public Law 100-360.)
Section 1839(f) provides that if an individual is entitled to benefits
under section 202 or 223 of the Act (the Old-Age and Survivors
Insurance Benefit and the Disability Insurance Benefit, respectively)
and has the SMI premiums deducted from these benefit payments, the
premium increase will be reduced to avoid causing a decrease in the
individual's net monthly payment. This occurs if the increase in the
individual's social security benefit due to the cost-of-living
adjustment under section 215(i) of the Act is less than the increase in
the premium. Specifically, the reduction in the premium amount applies
if the individual is entitled to benefits under section 202 or 223 of
the Act for November and December of a particular year and the
individual's SMI premiums for December and the following January are
deducted from the respective month's section 202 or 223 benefits.
A check for benefits under section 202 or 223 is received in the
month following the month for which the benefits are due. The SMI
premium that is deducted from a particular check is the SMI payment for
the month in which the check is received. Therefore, a benefit check
for November is not received until December, but has the December's SMI
premium deducted from it. This change, in effect, perpetuates former
amendments that prohibited SMI premium increases from reducing an
individual's benefits in years in which the dollar amount of the
individual's cost-of-living increase in benefits was not at least as
great as the dollar amount of the individual's SMI premium increase.
Generally, if a beneficiary qualifies for this protection that is,
the beneficiary must have been in current payment status for November
and December of the previous year, the reduced premium for the
individual for that January and each of the succeeding 11 months, for
which he or she is entitled to benefits under section 202 or 203 of the
Act is the greater of the following:
(1) The monthly premium for January reduced as necessary to make
the December monthly benefits, after the deduction of the SMI premium
for January, at least equal to the preceding November's monthly
benefits, after the deduction of the SMI premium for December; or
(2) The monthly premium for that individual for that December.
In determining the premium limitations under section 1839(f) of the
Act, the monthly benefits to which an individual is entitled under
section 202 or 223 do not include retroactive adjustments or payments
and deductions on account of work. Also, once the monthly premium
amount has been established under section 1839(f) of the Act, it will
not be changed during the year even if there are retroactive
adjustments or payments and deductions on account of work that apply to
the individual's monthly benefits.
Individuals who have enrolled in the SMI program late or have
reenrolled after the termination of a coverage period are subject to an
increased premium under section 1839(b) of the Act. The increase is a
percentage of the premium and is based on the new premium rate before
any reductions under section 1839(f) are made.
II. Notice of Monthly Actuarial Rates and Monthly Premium Rate
The monthly actuarial rates applicable for 2000 are $91.90 for
enrollees age 65 and over, and $121.10 for disabled enrollees under age
65. Section III of this notice gives the actuarial assumptions and
bases from which these rates are derived. The monthly premium rate will
be $45.50 during 2000, the same as the 1999 premium rate. Included in
the monthly premium rate is $2.87 for home health services being
transferred into Part B.
III. Statement of Actuarial Assumptions and Bases Employed in
Determining the Monthly Actuarial Rates and the Monthly Premium
Rate for the Supplementary Medical Insurance Program Beginning
January 2000
A. Actuarial Status of the Supplementary Medical Insurance Trust Fund
Under the law, the starting point for determining the monthly
premium is the amount that would be necessary to finance the SMI
program on an incurred basis. This is the amount of income that would
be sufficient to pay for services furnished during that year (including
associated administrative costs) even though payment for some of these
services will not be made until after the close of the year. The
portion of income required to cover benefits not paid until after the
close of the year, is added to the trust fund and used when needed.
The rates are established prospectively and are, therefore, subject
to projection error. Additionally, legislation enacted after the
financing has been established, but effective for the period in which
the financing has been set, may affect program costs. As a result, the
income to the program may not equal incurred costs. Therefore, trust
fund assets should be maintained at a level that is adequate to cover a
moderate degree of variation between actual and projected costs, and
the amount of incurred, but unpaid expenses. An appropriate level for
assets to cover a moderate degree of variation between actual and
projected costs depends on numerous factors. The most important of
these factors are: (1) The difference from prior years between the
actual performance of the program and estimates made at the time
financing was established, and (2) the expected relationship between
incurred and cash expenditures. Ongoing analysis is made of both
factors as the trends vary over time.
Table 1 summarizes the estimated actuarial status of the trust fund
as of the end of the financing period for 1998 and 1999.
[[Page 57107]]
Table 1.--Estimated Actuarial Status of the Supplementary Medical Insurance Trust Fund as of the End of the
Financing Period
[In billions of dollars]
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Assets less
Financing period ending Assets Liabilities liabilities
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Dec. 31, 1998................................................... 46,212 8,842 37,369
Dec. 31, 1999................................................... 43,715 3,190 40,525
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B. Monthly Actuarial Rate for Enrollees Age 65 and Older
The monthly actuarial rate for enrollees age 65 and older is one-
half of the monthly projected cost of benefits, the Medicaid transfer
(for 1998 through 2002), and administrative expenses for each enrollee
age 65 and older, adjusted to allow for interest earnings on assets in
the trust fund and a contingency margin. The contingency margin is an
amount appropriate to provide for a moderate degree of variation
between actual and projected costs and to amortize any surplus or
unfunded liabilities. As noted in section I. of this announcement,
section 4611(e)(2) of BBA 1997 requires that only \1/2\ of the cost of
the home health services being transferred be included in the actuarial
rate for 2000, rather than the full cost of such benefits.
The monthly actuarial rate for enrollees age 65 and older for 2000
is determined by first establishing per-enrollee cost by type of
service from program data through 1998 and then projecting these costs
for subsequent years. The projection factors used are shown in Table 2.
The projected values for financing periods from January 1, 1997 through
December 31, 2000, are shown in Table 3.
The projected monthly rate required to pay for one-half of the
total of benefits, the transfer to Medicaid, and administrative costs
for enrollees age 65 and over for 2000 is $106.25. Included in the
total of $106.25 is $10.56 for home health services and $23.52 for
managed care services. The amount of $10.56 for home health services
includes (1) the full cost of fee-for-service home health services
being transferred from the HI program as a result of BBA 1997 as if the
transition did not apply ($10.20) as well as (2) the cost of furnishing
all home health services to those individuals enrolled in SMI only
($0.36). The amount of $23.52 for managed care services includes (1)
The full cost of managed care home health services being transferred
from the HI program as a result of BBA 1997 as if the transition did
not apply ($3.18) as well as (2) the cost of furnishing all other SMI
services to those individuals enrolled in managed care plans ($20.34).
Since section 4611(e)(2) of BBA 1997 requires that only \1/2\ of the
cost for those services being transferred be included in the actuarial
rate for 2000, the monthly actuarial rate provides for an adjustment of
-$6.69, representing \1/2\ of the full cost of such services. The
monthly actuarial rate of $91.90 also provides an adjustment of -$3.77
for interest earnings and -$3.89 for a contingency margin. Based on
current estimates, it appears that the assets are more than sufficient
to cover the amount of incurred but unpaid expenses and to provide for
a moderate degree of variation between actual and projected costs.
Thus, a negative contingency margin is needed to reduce assets to a
more appropriate level.
C. Monthly Actuarial Rate for Disabled Enrollees
Disabled enrollees are those persons enrolled in SMI because of
entitlement (before age 65) to disability benefits for more than 24
months or because of entitlement to Medicare under the end-stage renal
disease program. Projected monthly costs for disabled enrollees (other
than those suffering from end-stage renal disease) are prepared in a
fashion parallel to the projection for the aged using appropriate
actuarial assumptions (see Table 2). Costs for the end-stage renal
disease program are projected differently because of the different
nature of services offered by the program. The combined results for all
disabled enrollees are shown in Table 4.
The projected monthly rate required to pay for one-half of the
total of benefits, the transfer to Medicaid, and administrative costs
for disabled enrollees for 2000 is $120.56. Included in the total of
$120.56 is $7.71 for home health services and $12.00 for managed care
services. The amount of $7.71 is the full cost of the home health
services being transferred from the HI program as a result of BBA 1997
as if the transition did not apply. The amount of $12.00 for managed
care services includes (1) the full cost of managed care home health
services being transferred from the HI program as a result of BBA 1997
as if the transition did not apply ($1.31) as well as (2) the cost of
furnishing all other SMI services to those individuals enrolled in
managed care plans ($10.69). The monthly actuarial rate provides for an
adjustment of -$4.51, representing \1/2\ of the full cost of such
services. Since section 4611(e)(2) of BBA 1997 requires that only \1/2\
of the cost for those services being transferred be included in the
actuarial rate for 2000, the monthly actuarial rate of $121.10 also
provides an adjustment of $0.98 for interest earnings and $4.07 for a
contingency margin. Based on current estimates, it appears that the
assets are not sufficient to cover the amount of incurred but unpaid
expenses and to provide for a moderate degree of variation between
actual and projected costs. Thus, a positive contingency margin is
needed to increase assets to a more appropriate level.
D. Sensitivity Testing
Several factors contribute to uncertainty about future trends in
medical care costs. It is appropriate to test the adequacy of the rates
using alternative assumptions. The results of those assumptions are
shown in Table 5. One set represents increases that are lower and is,
therefore, more optimistic than the current estimate. The other set
represents increases that are higher and is therefore, more pessimistic
than the current version. The values for the alternative assumptions
were determined from a statistical analysis of the historical variation
in the respective increase factors.
Table 5 indicates that, under the assumptions used in preparing
this report, the monthly actuarial rates would result in an excess of
assets over liabilities of $37,932 billion by the end of December 2000.
This amounts to 39.7 percent of the estimated total incurred
expenditures for the following year. Assumptions that are somewhat more
pessimistic (and therefore, test the adequacy of the assets to
accommodate projection errors) produce a surplus of $28,019 billion by
the end of December 2000, which amounts to 25.9 percent of the
estimated total incurred expenditures for the following year.
[[Page 57108]]
Under fairly optimistic assumptions, the monthly actuarial rates would
result in a surplus of $47,863 billion by the end of December 2000,
which amounts to 57.6 percent of the estimated total incurred
expenditures for the following year.
E. Premium Rate
As determined by with section 1839(a)(3) of the Act and section
4611(e)(3) of BBA 1997, the monthly premium rate for 2000, for both
aged and disabled enrollee, is $45.50.
Table 2.--Projection Factors\1\ 12-Month Periods Ending December 31 of 1997-2000
[In percent]
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Physicians' services Durable Other Home Other
Calendar year ------------------------ medical Carrier carrier Outpatient Health Hospital intermediary Managed
Fees \2\ Residual equipment lab \4\ services hospital agency lab \7\ services \8\ care
---------------------------------------------------\3\--------------------------------\5\---------------------\6\---------------------------------------
Aged:
1997.......................... 0.6 3.1 12.0 -5.3 15.0 8.0 3.3 7.0 13.1 -0.9
1998.......................... 3.5 0.8 -2.7 -10.7 10.1 -0.1 \9\ 3617. 2.7 -4.6 21.6
6
1999.......................... 2.3 2.1 5.6 0.6 7.7 1.0 -19.7 5.4 -9.5 3.0
2000.......................... 5.5 1.6 6.5 1.4 7.5 4.3 4.0 4.2 1.8 5.3
Disabled:
1997.......................... 0.6 2.2 4.8 -2.9 11.7 7.6 0.0 0.0 25.2 -11.8
1998.......................... 3.5 0.6 1.6 -0.9 7.9 -2.4 (9) -1.9 -4.5 11.5
1999.......................... 2.3 2.0 5.5 1.0 6.5 2.6 -16.5 4.9 -7.4 0.2
2000.......................... 5.5 1.6 6.4 1.3 7.1 4.9 3.4 4.2 0.3 4.2
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\1\ All values for services other than managed care are per fee-for-service enrollee. Managed care values are per managed care enrollee.
\2\ As recognized for payment under the program.
\3\ Increase in the number of services received per enrollee and greater relative use of more expensive services.
\4\ Includes services paid under the lab fee schedule furnished in the physicians office or an independent lab.
\5\ Includes ambulatory surgical center facility costs, ambulance services, parenteral and enteral drug costs, supplies, etc.
\6\ From July 1, 1981 to December 31, 1997, home health agency services have been provided by the SMI program only for those SMI enrollees not entitled
to HI. Otherwise these services were provided by the HI program. Since all SMI disabled enrollees are entitled to HI, their coverage of these services
has been provided by the HI program during this period.
\7\ Includes services paid under the lab fee schedule furnished in the outpatient department of a hospital.
\8\ Includes services furnished in rehabilitation and psychiatric hospitals, dialysis facilities, rural health clinics, federally qualified health
centers, etc.
\9\ Effective January 1, 1998, the coverage of home health agency services not considered ``post-institutional'' for those individuals entitled to HI
and enrolled in SMI will be transferred from the HI program to the SMI program. As a result, as of January 1, 1998, there will be a large increase in
SMI expenditures for these services for the aged enrollees, and SMI coverage for these services will resume for disabled enrollees.
Table 3.--Derivation of Monthly Actuarial Rate for Enrollees Age 65 and Over Financing Periods Ending December
31, 1997 Through December 31, 2000
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Financing periods
---------------------------------------------------
CY 1997 CY 1998 CY 1999 CY 2000
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Covered services (at level recognized):
Physician Fee Schedule.................................. $48.63 $49.06 $50.54 $52.87
Durable Medical Equipment............................... 5.84 5.50 5.71 5.94
Carrier Lab \1\......................................... 2.64 2.28 2.26 2.24
Other Carrier Services \2\.............................. 7.93 8.44 8.95 9.40
Outpatient Hospital..................................... 19.17 18.52 18.42 18.76
Home health............................................. 0.34 \5\ 12.64 \5\ 10.15 \5\ 10.56
Hospital Lab \3\........................................ 1.58 1.57 1.63 1.66
Other Intermediary Services \4\......................... 7.30 6.74 6.00 5.97
Managed Care............................................ 13.01 \6\ 18.57 \6\ 20.43 \6\ 23.52
---------------------------------------------------
Total services...................................... 106.44 123.32 124.09 130.90
Cost-sharing:
Deductible.............................................. -3.80 -3.82 -3.84 -3.85
Coinsurance............................................. -21.55 -22.11 -22.45 -22.79
---------------------------------------------------
Total benefits.............................................. 81.09 97.39 97.81 104.27
Transfer to Medicaid........................................ 0.00 \7\ 0.08 \7\ 0.09 \7\ 0.11
Administrative expenses..................................... 1.52 1.65 1.84 1.87
---------------------------------------------------
Incurred expenditures....................................... 82.61 99.13 99.74 106.25
Value of interest........................................... -3.11 -3.49 -3.97 -3.77
Adjustment for home health agency services transferred from 0.00 \8\ -12.77 \8\ -8.31 \8\ -6.69
HI.........................................................
Contingency margin for projection error and to amortize the 8.11 5.03 4.84 -3.89
surplus or deficit.........................................
---------------------------------------------------
Monthly actuarial rate...................................... $87.60 $87.90 $92.30 $91.90
----------------------------------------------------------------------------------------------------------------
\1\ Includes services paid under the lab fee schedule furnished in the physicians office or an independent lab.
\2\ Includes ambulatory surgical center facility costs, ambulance services, parenteral and enteral drug costs,
supplies, etc.
\3\ Includes services paid under the lab fee schedule furnished in the outpatient department of a hospital.
[[Page 57109]]
\4\ Includes services furnished in rehabilitation and psychiatric hospitals, dialysis facilities, rural health
clinics, federally qualified health centers, etc.
\5\ This amount includes the full cost of the fee-for-service home health services being transferred from the HI
program as a result of BBA 1997 as if the transition did not apply, as well as the cost of furnishing all home
health services to those individuals enrolled in SMI only.
\6\ This amount includes the full cost of the managed care home health services being transferred from the HI
program as a result of BBA 1997 as if the transition did not apply, as well as the cost of furnishing all
other SMI services to individuals enrolled in group practice prepayment plans.
\7\ Section 1933(c)(2) of the Act, as added by section 4732 of BBA 1997, allocates an amount to be
transferred from the SMI trust fund to the state Medicaid programs. This transfer is for the purpose of paying
the SMI premiums for certain low-income beneficiaries. It is not a benefit expenditure but is used in
determining the SMI actuarial rates since it is an expenditure of the trust fund.
\8\ Section 4611 of BBA 1997 specifies that expenditures for home health services not considered ``post-
institutional'' will be payable under the SMI program rather than the HI program beginning in 1998. However,
section 4611(e)(1) requires there be a transition from 1998 through 2002 for the aggregate amount of the
expenditures transferred from the HI program to the SMI program. For 1998 the amount transferred is \1/6\ of
the full cost for such services, and for 1999, \1/3\, and for 2000, \1/2\. Therefore, the adjustment for 1998
represents \5/6\ of the full cost, and for 1999, \2/3\, and for 2000, \1/2\. This amount adjusts the actuarial
rate to reflect the correct amount attributable to home health services.
Table 4.--Derivation of Monthly Actuarial Rate for Disabled Enrollees Financing Periods Ending December 31, 1997
Through December 31, 2000
----------------------------------------------------------------------------------------------------------------
Financing periods
---------------------------------------------------
CY 1997 CY 1998 CY 1999 CY 2000
----------------------------------------------------------------------------------------------------------------
Covered services (at level recognized):
Physician Fee Schedule.................................. $50.67 $51.37 $53.58 $56.87
Durable Medical Equipment............................... 8.97 8.93 9.34 9.83
Carrier Lab \1\......................................... 3.23 2.73 2.68 2.70
Other Carrier Services \2\.............................. 9.35 9.65 10.26 10.94
Outpatient Hospital..................................... 24.78 23.65 23.81 24.59
Home health............................................. 0.00 \5\ 8.93 \5\ 7.46 \5\ 7.71
Hospital Lab \3\........................................ 2.74 2.55 2.66 2.76
Other Intermediary Services \4\......................... 30.70 27.88 28.25 28.72
Managed Care............................................ 6.88 \6\ 9.51 \6\ 10.30 \6\ 12.00
---------------------------------------------------
Total services...................................... 137.31 145.20 148.36 156.13
Cost-sharing:
Deductible.............................................. -3.43 -3.46 3.47 -3.48
Coinsurance............................................. 31.86 -32.42 -33.44 -34.31
---------------------------------------------------
Total benefits.............................................. 102.02 109.32 111.44 118.34
Transfer to Medicaid........................................ 0.00 \7\ 0.08 \7\ 0.09 \7\ 0.10
Administrative expenses..................................... 1.91 1.95 2.15 2.12
---------------------------------------------------
Incurred expenditures....................................... 103.93 111.35 113.69 120.56
Value of interest........................................... -0.61 -0.11 0.75 0.98
Adjustment for home health agency services transferred from 0.00 \8\-8.49 \8\-5.72 \8\-4.51
HI.........................................................
Contingency margin for projection error and to amortize the 7.08 -5.66 -5.71 4.07
surplus or deficit.........................................
---------------------------------------------------
Monthly actuarial rate...................................... $110.40 $97.10 $103.00 $121.10
----------------------------------------------------------------------------------------------------------------
\1\ Includes services paid under the lab fee schedule furnished in the physicians office or an independent lab.
\2\ Includes ambulatory surgical center facility costs, ambulance services, parenteral and enteral drug costs,
supplies, etc.
\3\ Includes services paid under the lab fee schedule furnished in the outpatient department of a hospital.
\4\ Includes services furnished in rehabilitation and psychiatric hospitals, dialysis facilities, rural health
clinics, federally qualified health centers, etc.
\5\ This amount includes the full cost of the fee-for-service home health services being transferred from the HI
program as a result of BBA 1997 as if the transition did not apply.
\6\ This amount includes the full cost of the managed care home health services being transferred from the HI
program as a result of BBA 1997 as if the transition did not apply, as well as the cost of furnishing all
other SMI services to individuals enrolled in group practice prepayment plans.
\7\ Section 1933(c)(2) of the Act, as added by section 4732 of BBA 1997, allocates an amount to be
transferred from the SMI trust fund to the state Medicaid programs. This transfer is for the purpose of paying
the SMI premiums for certain low-income beneficiaries. It is not a benefit expenditure but is used in
determining the SMI actuarial rates since it is an expenditure of the trust fund.
\8\ Section 4611 of BBA 1997 specifies that expenditures for home health services not considered ``post-
institutional'' will be payable under the SMI program rather than the HI program beginning in 1998. However,
section 4611(e)(1) requires there be a transition from 1998 through 2002 for the aggregate amount of the
expenditures transferred from the HI program to the SMI program. For 1998 the amount transferred is \1/6\ of
the full cost for such services, and for 1999, \1/3\, and for 2000, \1/2\. Therefore, the adjustment for 1998
represents \5/6\ of the full cost, and for 1999, \2/3\, and for 2000, \1/2\. This amount adjusts the actuarial
rate to reflect the correct amount attributable to home health services.
Table 5.--Actuarial Status of the SMI Trust Fund Under Three Sets of
Assumptions for Financing Periods Through December 31, 2000
------------------------------------------------------------------------
As of December 31 1998 1999 2000
------------------------------------------------------------------------
This Projection:
Actuarial Status (in
millions):
Assets....................... $46,212 $43,715 $38,886
Liabilities.................. 8,842 3,190 954
--------------------------------------
Assets Less Liabilities...... $37,369 $40,525 $37,932
[[Page 57110]]
Ratio (in percent) \1\....... 45.1 44.6 39.7
Low Cost Projection:
Actuarial Status (in
millions):
Assets....................... $46,212 $50,051 $48,512
Liabilities.................. 8,842 2,486 666
--------------------------------------
Assets Less Liabilities...... $37,369 $47,565 $47,863
Ratio (in percent) \1\....... 49.3 58.8 57.6
High Cost Projection:
Actuarial Status (in
millions):
Assets....................... $46,212 $37,379 $29,260
Liabilities.................. 8,842 3,894 1,241
--------------------------------------
Assets Less Liabilities...... $37,369 $33,485 $28,019
Ratio (in percent) \1\....... 41.6 33.2 25.9
------------------------------------------------------------------------
\1\ Ratio of assets less liabilities at the end of the year to the total
incurred expenditures during the following year, expressed as a
percent.
IV. Regulatory Impact Analysis
We have examined the impacts of this notice as required by
Executive Order 12866 and the Regulatory Flexibility Act (RFA) (Public
Law 96-354). 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). The RFA requires agencies
to analyze options for regulatory relief for small businesses. For
purposes of the RFA, States and individuals are not considered small
entities.
Also, section 1102(b) of the Act requires the Secretary to prepare
a regulatory impact analysis for any notice that may have a significant
impact on the operations of a substantial number of small rural
hospitals. Such an analysis must conform to the provisions of section
604 of the RFA. For purposes of section 1102(b) of the Act, we consider
a small rural hospital as a hospital that is located outside of a
Metropolitan Statistical Area and has fewer than 50 beds. We have
determined that this notice will not have a significant effect on a
substantial number of small entities nor on the operations of a
substantial number of small rural hospitals. Therefore, we are not
preparing an analysis for either the RFA or section 1102(b) of the Act.
This notice announces that the monthly actuarial rates applicable
for 2000 are $91.90 for enrollees age 65 and over, and $121.10 for
disabled enrollees under age 65. It also announces that the monthly SMI
premium rate for calendar year 2000 is $45.50. The SMI premium rate of
$45.50 for 2000 is the same as the premium rate for 1999. As a result,
there is no additional cost to the approximately 37 million SMI
enrollees for 2000. This notice is not a major rule as defined in Title
5, United States Code, section 804(2) and is not an economically
significant rule under Executive Order 12866.
In accordance with the provisions of Executive Order 12866, this
notice was reviewed by the Office of Management and Budget. We have
reviewed this notice under the threshold criteria of Executive Order
13132 of August 4, 1999, Federalism, published in the Federal Register
on August 10, 1999 (64 FR 43255). The Executive Order is effective
November 2, 1999, which is 90 days after the date of this Order. We
have determined that the notice does not significantly affect the
rights, roles, and responsibilities of States.
V. Waiver of Notice of Proposed Rulemaking
The Medicare statute requires the publication of the monthly
actuarial rates and the Part B premium amounts in September. We
ordinarily use general notices, rather than notice and comment
rulemaking procedures, to make such announcements. In doing so, we note
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 formula used to calculate the
SMI premium is statutorily directed, and we can exercise no discretion
in following that formula. Moreover, the statute establishes the time
period for which the premium rates will apply, and delaying publication
of the SMI premium rate would be contrary to the public interest.
Therefore, we find good cause to waive publication of a proposed notice
and solicitation of public comments.
(Section 1839 of the Social Security Act; 42 U.S.C. 1395r)
(Catalog of Federal Domestic Assistance Program No. 93.774,
Medicare--Supplementary Medical Insurance)
Dated: October 13, 1999.
Michael M. Hash,
Deputy Administrator, Health Care Financing Administration.
Dated: October 18, 1999.
Donna E. Shalala,
Secretary.
[FR Doc. 99-27627 Filed 10-19-99; 11:35 am]
BILLING CODE 4120-01-P