[Federal Register Volume 65, Number 69 (Monday, April 10, 2000)]
[Notices]
[Pages 18999-19000]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-8774]



[[Page 18999]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

[HCFA-2893-N]


Medicare Program; Deductible Amount for Medigap High Deductible 
Options for Calendar Year 2000

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Notice.

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SUMMARY: This notice announces the annual deductible amount of 
$1,530.00 for the Medicare supplemental health insurance (Medigap) high 
deductible options for 2000. High deductible options are those with 
benefit packages classified as F or J that have a high deductible 
feature. The deductible amount represents the annual out-of-pocket 
expenses (not including premiums) that a beneficiary who chooses one of 
these options must pay before the policy begins paying benefits.

EFFECTIVE DATE: January 1, 2000.

FOR FURTHER INFORMATION CONTACT: Kathryn McCann, (410) 786-7623.

SUPPLEMENTARY INFORMATION:  

I. Background

Medicare Supplemental Insurance

    A Medicare supplemental, or Medigap, policy is the principal type 
of private health insurance that a beneficiary may purchase to cover 
costs that Medicare does not cover. Medicare beneficiaries are 
responsible for certain deductibles and coinsurance amounts for both 
Part A (hospital insurance) and Part B (supplementary medical 
insurance) of the Medicare program. In addition, Medicare generally 
does not cover custodial nursing home care, eyeglasses, dental care, 
and most outpatient prescription drugs. Beneficiaries must either pay 
the full cost of these services themselves, or they may purchase 
additional private health insurance to help pay these costs. Medigap 
policies offer coverage for some or all of the deductibles and 
coinsurance amounts required by Medicare. Additionally, Medigap 
policies may provide coverage for some services that are not covered 
under Medicare.
    Section 1882 of the Social Security Act (the Act) establishes, 
among other things, standards for Medigap policies. This section of the 
Act states that no Medigap policy may be issued in a State unless the 
policy meets the following criteria: (a) It has been approved by the 
Health Care Financing Administration as meeting federal standards, or 
(b) it complies with State laws established in accordance with section 
1882(b)(1) of the Act.
    The Omnibus Budget Reconciliation Act of 1990 (OBRA 90) amended the 
Act by standardizing Medigap benefits and requiring that no more than 
ten Medigap benefit packages, Plans A through J, be offered nationwide. 
\1\ Plan A is the basic benefit package. It includes Medicare Part A 
hospital coinsurance plus coverage for 365 additional days over the 
beneficiary's lifetime, Medicare Part B coinsurance (generally 20% of 
Medicare-approved expenses), and coverage for the first 3 pints of 
blood per year. Medigap Plans B through J contain this basic benefit 
package, as well as different combinations of coverage for some or all 
of the following benefits: Medicare Part A inpatient hospital 
deductibles, skilled-nursing facility coinsurance, foreign travel 
health emergencies, at home recovery, preventive care, some 
prescription drug coverage, and Medicare Part B excess charges 
protection.
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    \1\ Three states (Wisconsin, Minnesota, and Massachusetts) 
experimented with standardizing benefits prior to enactment of 
federal standards. These states were granted a waiver and permitted 
to keep their alternative forms of Medigap standardization.
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B. High Deductible Medigap Standard Policies

    Section 4031(c) of the Balanced Budget Act of 1997 (BBA) added high 
deductible versions of two of the standard Medigap policies, or their 
counterparts in the waivered states. \2\ Unlike the regular versions of 
Plans F and J, however, the high deductible versions of these policies 
will not begin paying benefits until the deductible amount is met. 
Amounts included in this deductible are the expenses that would 
ordinarily be paid by the regular version of the policy, including 
Medicare deductibles for Parts A and B. The Plan F deductible does not 
include the separate foreign travel emergency deductible of $250. The 
Plan J deductible does not include the plan's separate $250 
prescription drug deductible or the plan's separate $250 deductible for 
foreign travel emergencies.
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    \2\ In the three waivered states, high deductible versions of 
the plans that most closely approximate the benefits contained in 
Plans F and J are authorized by the Balanced Budget Act.
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II. Provisions of This Notice

    In 1998 and 1999, the high deductible amount was statutorily 
defined as $1,500.00 in section 1882(p)(11)(C)(i) of the Act. For 2000, 
the high deductible amount is increased by the percent increase in the 
Consumer Price Index (CPI) for all urban consumers (all items, U.S. 
city average) for the 12-month period ending with August of the 
preceding year. The percent increase in the CPI for all urban consumers 
(all items, U.S. city average) for the 12-month period ending in August 
1999 was 2.26%, according to the Division of Labor Statistics, 
Department of Labor. A 2.26% increase in $1,500.00 is $1,533.90. 
Section 1882(p)(11)(C)(ii) of the Act stipulates that this amount 
($1,533.90) be rounded to the nearest multiple of $10 to find the high 
deductible amount for the subsequent year. Rounding $1,533.90 to the 
nearest $10 multiple, the 2000 deductible for the Medigap high 
deductible options is $1,530.00.
    This figure can also be found by dividing the August 1999 CPI 
(167.1) by the August 1998 CPI (163.4), which equals 1.022643819. 
Multiplying this number by the 1998/1999 deductible ($1,500.00) equals 
$1,533.97 which, rounded to the nearest $10 multiple, is $1,530.00.

III. Unfunded Mandates and Executive Orders

    Section 202 of the Unfunded Mandates Reform Act of 1995 requires 
that agencies assess anticipated costs and benefits before issuing any 
rule that may result in an expenditure by State, local, or tribal 
governments, in the aggregate, or by the private sector, of $100 
million in any one year. This notice will not have an effect on the 
governments mentioned, and the private sector costs will not be greater 
than the $100 threshold.
    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.

    Authority: Section 1882 of the Social Security Act.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance, and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)



[[Page 19000]]


    Dated: March 1, 2000.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.
[FR Doc. 00-8774 Filed 4-7-00; 8:45 am]
BILLING CODE 4120-01-P