[Federal Register Volume 68, Number 229 (Friday, November 28, 2003)]
[Rules and Regulations]
[Pages 66721-66723]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-28718]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 408

RIN 0938-AL49

[CMS-6016-F]


Medicare Program; Reduction in Medicare Part B Premiums as 
Additional Benefits Under Medicare+Choice Plans

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

ACTION: Final rule.

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SUMMARY: This final rule revises the regulations to provide for a 
Medicare+Choice organization to offer a reduction in the standard 
Medicare Part B premium as an additional benefit under one or more 
Medicare+Choice (M+C) plans. The legislation specifies that the 
reduction to the Medicare Part B premium cannot exceed the standard 
Medicare Part B premium amount and cannot be applied to surcharges. 
Surcharges are increased premiums for late enrollment and for 
reenrollment. The Medicare Part B premium may be collected by a variety 
of methods: Paid directly to the Centers of Medicare & Medicaid 
Services by the beneficiary; collected as an adjustment to any Social 
Security, Railroad Retirement, or Civil Service Retirement benefits; 
paid by an employer as part of an annuity package; or, paid by the 
State for individuals enrolled in a qualifying State Medicaid program. 
This legislation applies to benefits under Medicare M+C plans offered 
by an M+C organization electing this option, beginning January 1, 2003. 
This final rule revises the regulations to set out the basic rules 
under section 606 of the Medicare, Medicaid, and SCHIP Benefits 
Improvement Protection Act of 2000 (BIPA) for adjustment and payment of 
the Medicare Part B premium.

EFFECTIVE DATE: The provisions of this final rule are effective 
December 29, 2003.

FOR FURTHER INFORMATION CONTACT: Michele Sanders, (410) 786-0808.

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I. Background

    Section 606 of the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000 (BIPA) amended section 1854 (f) 
(1) of the Social Security Act (the Act) by allowing Medicare+Choice 
(M+C) organizations to elect to receive a reduction in its payment 
under Sec.  422.250(a)(1), 80 percent of which would be applied to 
reduce (or eliminate) the standard Medicare Part B premium otherwise 
paid by, or on behalf of, its Medicare enrollees. This was intended to 
make the M+C plan more attractive to Medicare beneficiaries and 
increase enrollment in M+C plans.
    Beneficiaries must pay a premium in order to receive Supplementary 
Medical Insurance benefits commonly referred to as Medicare Part B. The 
Part B premiums are collected monthly, most commonly as deductions from 
the beneficiary's Social Security or other retirement benefits. They 
also may be paid by a third party, such as an employer or the State 
Medicaid program, or are paid directly by the beneficiary.
    The provisions of this final rule revising part 408 to reflect the 
provisions of section 606 of BIPA are described in detail in section 
II, Provisions of the Final Rule.

II. Provisions of the Final Rule

    We are making the following revisions to 42 CFR part 408 to reflect 
changes in the statute made in section 606 of BIPA:
    We are adding a new Sec.  408.21 entitled ``Reduction in Medicare 
Part B Premium as an Additional Benefit Under Medicare+Choice Plans.'' 
This new provision includes paragraphs treating, respectively, the 
basis for a reduction of Medicare Part B premiums, the administrative 
requirements for a Medicare Part B premium reduction,

[[Page 66722]]

beneficiary eligibility, and notification of premium reductions.
    In Sec.  408.21(a), we set forth language reflecting the fact that, 
under section 606 of BIPA, an M+C organization may offer, as an 
additional benefit under an M+C plan, a reduction in the amount that an 
enrollee in the M+C plan pays to Medicare for the Medicare Part B 
premium. For the Medicare Part B premium reduction to occur, the M+C 
organization must accept a reduction in its monthly capitation payments 
under Sec.  422.250(a)(1). The Medicare Part B premium paid by a 
beneficiary enrolled in an M+C plan that offers this additional benefit 
will be reduced by 80 percent of the amount that the capitation payment 
to the M+C organization is reduced. The Medicare Part B premium 
reduction may not exceed the standard Medicare Part B premium amount, 
and if the beneficiary owes less than this amount, the difference is 
not paid to the Medicare beneficiary.
    In Sec.  408.21(b), we set forth the administrative requirements 
under section 606 of BIPA for the Medicare Part B premium reductions. 
These requirements include: (1) The M+C capitation reduction must not 
result in a Medicare Part B premium reduction greater than the standard 
premium amount determined for the year under section 1839 of the Act 
(the reduction to the Medicare Part B premium may be less); (2) the 
Medicare Part B premium reduction will use only multiples of 10 cents; 
(3) the Medicare Part B premium reduction will be applied to all 
beneficiaries who are enrolled in the M+C plan under which the benefit 
is offered without regard to who actually pays/collects the Medicare 
Part B premium (Social Security Administration (SSA), Railroad 
Retirement Board (RRB), Office of Personnel Management (OPM), the 
beneficiary, the State, or employer); (4) The Medicare Part B premium 
reduction will never result in a payment to a beneficiary. (If the 
amount of the reduction is equal to or greater than the amount a 
beneficiary owes due to hold harmless premiums, the beneficiary will 
owe $0.)
    Section 408.21(c) specifies the eligibility requirements under 
section 606 of BIPA for the Medicare Part B premium reduction; namely 
that, in order to be eligible for the reduction, a beneficiary must be 
enrolled in an M+C plan that offers the reduction to the Medicare Part 
B premium as an additional benefit.
    Section 408.21(d) explains that after the Centers for Medicare & 
Medicaid Services (CMS) determines the Medicare Part B premium 
reduction amount for each eligible beneficiary, the SSA, RRB, or OPM, 
as applicable, will include the adjusted amount of the Medicare Part B 
premium in benefit check amounts as appropriate and notify the 
beneficiaries of their new benefit amount. The paragraph also notes 
that we will notify States, formal groups, and directly billed 
beneficiaries of each beneficiary's reduced Medicare Part B premium 
amounts in the regular monthly billing process.

III. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506c(2)(A) of the Paperwork Reduction Act of 
1995 requires that we solicit comment on the following issues:

--The need for the information collection and its usefulness in 
carrying out the proper functions of our agency.
--The accuracy of our estimate of the information collection burden.
--The quality, utility, and clarity of the information to be collected.
--Recommendations to minimize the information collection burden on the 
affected public, including automated collection techniques.

    There are no information collection requirements associated with 
this final rule. This provision is strictly voluntary and is provided 
as a benefit option for M+C organizations.

IV. Regulatory Impact

    We have examined the impacts of this final rule 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 Social Security Act, the Unfunded Mandates 
Reform Act of 1955 (Pub. L. 104-4), and Executive Order 13132.
    Executive Order 12866 (as amended by Executive Order 13258, 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). A 
regulatory impact analysis (RIA) must be prepared for major rules with 
economically significant effects ($100 million or more annually). This 
is not a major rule. It will have no significant economic impact on 
either costs or savings and may result in lower premiums for some 
beneficiaries.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. 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 annually (see 65 FR 69432). Individuals and 
States are not included in the definition of 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 located outside of a Metropolitan Statistical 
Area with fewer than 100 beds.
    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 
will have no impact on any small entities or rural hospitals.
    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 in any one year by State, local, 
or tribal governments, in the aggregate, or by the private sector, of 
$110 million. This final rule will have a positive effect on the annual 
expenditures of any State, local, or tribal government, or private 
sector with enrollees covered under a State buy-in agreement or group 
payer arrangement as set forth in subpart C and E, respectively, of 
part 407 of this chapter; and, whose enrollees opt to enroll in a 
Medicare+Choice organization's (M+CO) Plan Benefit Package that offers 
a reduction to the Medicare Part B premium permitted as an additional 
benefit, authorized under section 606 of the BIPA and defined under 
part 422, subpart A of this chapter. Any reduction to the beneficiary's 
Medicare Part B premium will be applied regardless of the entity that 
actually pays the Medicare Part B premium on behalf of the beneficiary. 
The entity that actually pays the

[[Page 66723]]

Medicare Part B premium would receive the benefit of this reduction 
under this rule. If a beneficiary is paying the premium, he or she 
would pay a lower premium. If another entity pays the premium, they 
would receive the savings.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a final rule that imposes 
substantial direct requirement costs on State and local governments, 
preempts State law, or otherwise has Federalism implications. This 
final rule would impose no direct requirement costs on State and local 
governments, would not preempt State law, or have any Federalism 
implications. Participation is strictly voluntary.
    In accordance with the provisions of Executive Order 12866, this 
final rule was reviewed by the Office of Management and Budget. This 
final rule is not a major rule as defined at 5 U.S.C. 804(2).

V. Waiver of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite public comment on the proposed rule. The 
notice of proposed rulemaking includes a reference to the legal 
authority under which the rule is proposed, and the terms and 
substances of the proposed rule or a description of the subjects and 
issues involved. The notice of proposed rulemaking can be waived, 
however, if an agency finds good cause that notice and comment 
procedures are impracticable, unnecessary, or contrary to the public 
interest, and it incorporates a statement of the finding and its 
reasons in the rule issued.
    Publishing a proposed rule is unnecessary in this instance, as this 
final rule only makes conforming changes to the regulations to 
implement sections of the BIPA in which the Congress allowed no 
discretion as to the actions to be taken and the times in which they 
must be completed. These changes were enacted by the Congress, and 
would be in effect on the date mandated by the legislation without 
regard to whether they are reflected in conforming changes to the 
regulation text, since a statute controls over a regulation. In this 
final rule we merely have revised the regulation text to reflect these 
new statutory provisions. The BIPA provisions have been incorporated 
virtually verbatim, with no interpretation necessary. We do not believe 
that publishing a notice of proposed rulemaking is necessary, nor would 
it be practicable given that a number of the provisions have already 
taken effect consistent with the effective dates established under the 
BIPA.

List of Subjects in 42 CFR Part 408

    Medicare.

0
For the reasons set forth in the preamble, the Centers for Medicare & 
Medicaid Services amends 42 CFR chapter IV, part 408 as set forth 
below:

PART 408--PREMIUMS FOR SUPPLEMENTAL MEDICAL INSURANCE

0
1. The authority citation for part 408 continues to read as follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

Subpart B--Amount of Monthly Premiums

0
2. Section 408.21 is added to read as follows:


Sec.  408.21  Reduction in Medicare Part B premium as an additional 
benefit under Medicare+Choice plans.

    (a) Basis for reduction in Part B premium. Beginning January 1, 
2003 an M+C organization may elect to receive a reduction in its 
payments under Sec.  422.250(a)(1) of this chapter if--
    (1) 80 percent of the payment reduction is applied to reduce the 
standard Medicare Part B premiums of its Medicare enrollees.
    (2) The Medicare Part B premium is reduced monthly and is offered 
to all Medicare enrollees in a specific plan benefit package.
    (b) Administrative requirements for the Part B premium reduction. 
(1) The Medicare Part B premium reduction cannot be greater than the 
standard premium amount determined for the year, under section 
1839(a)(3) of the Act. However, it may be less.
    (2) The Medicare Part B premium reduction must be a multiple of 10 
cents.
    (3) The Medicare Part B premium reduction is applied regardless of 
who pays or collects the Part B premium on behalf of the beneficiary.
    (4) The Medicare Part B premium can never be less than zero and 
will never result in a payment to a beneficiary for a specific month.
    (c) Beneficiary eligibility. In order for a beneficiary to be 
eligible for the Medicare Part B premium reduction, the beneficiary 
must be enrolled in an M+C plan that offers the Medicare Part B premium 
reduction as an additional benefit.
    (d) Notifications. After determining the Medicare Part B premium 
reduction amount for each eligible beneficiary, CMS will--
    (1) Transmit this information to the Social Security 
Administration, Railroad Retirement Board, or the Office of Personnel 
Management, as appropriate, which will adjust the benefit check amounts 
as appropriate and notify the beneficiaries of their new benefit 
amount.
    (2) Notify states and formal groups and direct billed beneficiaries 
of their reduced premium amounts in the regular monthly billing 
process.

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

    Dated: May 6, 2003.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.

    Approved: July 28, 2003.
Tommy G. Thompson,
Secretary.
[FR Doc. 03-28718 Filed 11-26-03; 8:45 am]
BILLING CODE 4120-01-P