[Federal Register Volume 66, Number 208 (Friday, October 26, 2001)]
[Notices]
[Pages 54264-54265]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-26702]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-8012-N]
RIN 0938-ZA20


Medicare Program; Part A Premium for 2002 for the Uninsured Aged 
and for Certain Disabled Individuals Who Have Exhausted Other 
Entitlement

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Notice.

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SUMMARY: This notice announces the hospital insurance premium for 
calendar year 2002 under Medicare's hospital insurance program (Part A) 
for the uninsured, not otherwise eligible aged (hereafter known as the 
``uninsured aged'') and for certain disabled individuals who have 
exhausted other entitlement. The monthly Medicare Part A premium for 
the 12 months beginning January 1, 2002 for these individuals is $319. 
The reduced premium for certain other individuals as described in this 
notice is $175. Section 1818(d) of the Social Security Act specifies 
the method to be used to determine these amounts.

EFFECTIVE DATE: This notice is effective January 1, 2002.

FOR FURTHER INFORMATION CONTACT: Clare McFarland, (410) 786-6390.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 1818 of the Social Security Act (the Act) provides for 
voluntary enrollment in the Medicare hospital insurance program 
(Medicare Part A), subject to payment of a monthly premium, of certain 
persons aged 65 and older who are uninsured under the Old Age Survivors 
and Disability Insurance Program (OASDI) or Railroad Retirement Acts 
and do not otherwise meet the requirements for entitlement to Medicare 
Part A. (Persons insured under the OASDI or Railroad Retirement Acts 
and certain others do not have to pay premiums for hospital insurance.)
    Section 1818(d) of the Act requires us to estimate, on an average 
per capita basis, the amount to be paid from the Federal Hospital 
Insurance Trust Fund for services performed and related administrative 
costs incurred in the following calendar year with respect to 
individuals aged 65 and over who will be entitled to benefits under 
Medicare Part A. We must then determine, during September of each year, 
the monthly actuarial rate for the following year (the per capita 
amount estimated above divided by 12) and publish the dollar amount for 
the monthly premium in the succeeding calendar year. If the premium is 
not a multiple of $1, the premium is rounded to the nearest multiple of 
$1 (or, if it is a multiple of 50 cents but not of $1, it is rounded to 
the next highest $1). The 2001 premium under this method was $300 and 
was effective January 1, 2001. (See 65 FR 62733, October 19, 2000.)
    Section 1818A of the Act provides for voluntary enrollment in 
Medicare Part A, subject to payment of a monthly premium, of certain 
disabled individuals who have exhausted other entitlement. These are 
individuals who are not currently entitled to Part A coverage, but who 
were entitled to coverage due to a disabling impairment under section 
226(b) of the Act, and who would still be entitled to Part A coverage 
if their earnings had not exceeded the statutorily defined substantial 
gainful activity amount (section 223(d)(4) of the Act).
    Section 1818A(d)(2) of the Act specifies that the provisions 
relating to premiums under section 1818(d) through (f) of the Act for 
the aged will also apply to certain disabled individuals as described 
above.
    Section 13508 of the Omnibus Budget Reconciliation Act of 1993 
(Pub. L.103-66) amended section 1818(d) of the Act to provide for a 
reduction in the premium amount for certain voluntary (section 1818 and 
1818A) enrollees. The reduction applies to an individual who is 
eligible to buy into the Medicare Part A program and who, as of the 
last day of the previous month--
     Had at least 30 quarters of coverage under title II of the 
Act;
     Was married, and had been married for the previous 1-year 
period, to a person who had at least 30 quarters of coverage;
     Had been married to a person for at least 1 year at the 
time of the person's death if, at the time of death, the person had at 
least 30 quarters of coverage; or
     Is divorced from a person and had been married to the 
person for at least

[[Page 54265]]

10 years at the time of the divorce if, at the time of the divorce, the 
person had at least 30 quarters of coverage.
    Section 1818(d)(4)(A) of the Act specifies that the premium that 
these individuals will pay for calendar year 2002 will be equal to the 
premium for uninsured aged enrollees reduced by 45 percent.

II. Monthly Premium Amount for 2002

     The monthly premium for the uninsured aged and certain 
disabled individuals who have exhausted other entitlement, for the 12 
months beginning January 1, 2002, is $319.
     The monthly premium for those individuals subject to the 
45 percent reduction in the monthly premium is $175.

III. Monthly Premium Rate Calculation

    As discussed in section I of this notice, the monthly Medicare Part 
A premium is equal to the estimated monthly actuarial rate for 2002 
rounded to the nearest multiple of $1 and equals one-twelfth of the 
average per capita amount, which is determined by projecting the number 
of individuals aged 65 and over entitled to hospital insurance and the 
benefits and administrative costs that will be incurred on their 
behalf.
    The steps involved in projecting these future costs to the Federal 
Hospital Insurance Trust Fund are:
     Establishing the present cost of services furnished to 
beneficiaries, by type of service, to serve as a projection base;
     Projecting increases in payment amounts for each of the 
service types; and
     Projecting increases in administrative costs.
    We base our projections for 2002 on (a) current historical data, 
and (b) projection assumptions derived from current law and the 
Midsession Review of the President's Fiscal Year 2002 Budget.
    We estimate that in calendar year 2002, 33.852 million people aged 
65 and over will be entitled to benefits (without premium payment) and 
that they will incur $129.550 billion of benefits and related 
administrative costs. Thus, the estimated monthly average per capita 
amount is $318.91 and the monthly premium is $319. The full monthly 
premium reduced by 45 percent is $175.

IV. Costs to Beneficiaries

    The 2002 premium of $319 is about 6.3 percent higher than the 2001 
premium of $300.
    We estimate that approximately 392,000 enrollees will voluntarily 
enroll in Medicare Part A by paying the full premium. We estimate an 
additional 5,000 enrollees will pay the reduced premium. We estimate 
that the aggregate cost to enrollees paying these premiums will 
increase by about $90 million in 2002 over 2001.

V. Waiver of Notice of Proposed Rulemaking

    We are not using notice and comment rulemaking in this notification 
of Part A premiums for 2002, as that procedure is unnecessary because 
of the lack of discretion in the statutory formula that is used to 
calculate the premium and the solely ministerial function that this 
notice serves. The Administrative Procedure Act permits agencies to 
waive notice and comment rulemaking when this notice and public 
procedure thereon are unnecessary. Furthermore, given that we are 
statutorily bound to make these estimates and promulgate these rates 
all in the month of September, the Congress clearly did not envision 
the use of notice and comment rulemaking, as it is not feasible to 
conduct such a process in a 30-day period. On this basis, we waive 
publication of a proposed notice and a 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) 
and the Regulatory Flexibility Act (RFA) (September 19, 1980 Pub. L. 
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). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more annually.) The estimated 
overall effect of the changes in the premium will be a cost to 
voluntary (section 1818 and 1818A) enrollees of about $90 million. 
Therefore, this notice is not a major 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 other providers and suppliers are small entities, 
either by nonprofit status or by having revenues of $5 million to $25 
million (see 65 FR 69432.) For purposes of the RFA, individuals are not 
considered to be small entities.
    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.
    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 an expenditure in any one 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. We have determined that this notice does not 
significantly affect the rights, roles, and responsibilities of States.
    For these reasons, we are not preparing analyses for either the RFA 
or section 1102(b) of the Act because we have determined, and we 
certify, that this rule would not have a significant economic impact on 
a substantial number of small entities or a significant impact on the 
operations of a substantial number of small rural hospitals.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.


    Authority: Sections 1818(d)(2) and 1818A(d)(2) of the Social 
Security Act (42 U.S.C. 1395i-2(d)(2) and 1395i-2a(d)(2)).

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

    Dated: September 17, 2001.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.

    Dated: September 27, 2001.
Tommy G. Thompson,
Secretary.
[FR Doc. 01-26702 Filed 10-19-01; 8:45 am]
BILLING CODE 4120-01-P