[Federal Register Volume 69, Number 174 (Thursday, September 9, 2004)]
[Notices]
[Pages 54673-54674]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-20413]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-8022-N]
RIN 0938-AN15


Medicare Program; Part A Premium for 2005 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 2005 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, 2005 for these individuals is $375. 
The reduced premium for certain other individuals as described in this 
notice is $206. 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, 2005.

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 (OASDI) program or the Railroad 
Retirement Act and do not otherwise meet the requirements for 
entitlement to Medicare Part A. (Persons insured under the OASDI 
program or the Railroad Retirement Act 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 2004 premium under this method was $343 and 
was effective January 1, 2004. (See 68 FR 61002, October 24, 2003.)
    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 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 2005 will be equal to the 
premium for uninsured aged enrollees reduced by 45 percent.

II. Monthly Premium Amount for 2005

    The monthly premium for the uninsured aged and certain disabled 
individuals who have exhausted other entitlement, for the 12 months 
beginning January 1, 2005, is $375.
    The monthly premium for those individuals subject to the 45 percent 
reduction in the monthly premium is $206.

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 2005 
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:

[[Page 54674]]

     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 2005 on: (a) current historical data, 
and (b) projection assumptions derived from current law and the Mid-
Session Review of the President's Fiscal Year 2005 Budget.
    We estimate that in calendar year 2005, 34.89 million people aged 
65 and over will be entitled to benefits (without premium payment) and 
that they will incur $156.827 billion of benefits and related 
administrative costs. Thus, the estimated monthly average per capita 
amount is $374.57 and the monthly premium is $375. The full monthly 
premium reduced by 45 percent is $206.

IV. Costs to Beneficiaries

    The 2005 premium of $375 is about 9 percent higher than the 2004 
premium of $343.
    We estimate that approximately 433,000 enrollees will voluntarily 
enroll in Medicare Part A by paying the full premium. We estimate an 
additional 1,000 enrollees will pay the reduced premium. We estimate 
that the aggregate cost to enrollees paying these premiums will be 
about $166 million in 2005 over the amount that they paid in 2004. We 
estimate that the total cost, in 2005, to enrollees paying these 
premiums will be about $1.951 billion.

V. Waiver of Notice of Proposed Rulemaking

    We are not using notice and comment rulemaking in this notification 
of Part A premiums for 2005, 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 comment 
thereon are unnecessary. 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), 
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 (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). As stated 
in Section IV, we estimate that the overall effect of these changes in 
the premium will be a cost to voluntary enrollees (section 1818 and 
1818A of the Act) of about $166 million. 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, 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. Individuals and States are not 
considered to be 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 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. 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 expenditures 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 rule that imposes substantial 
direct requirement costs on State and local governments, preempts State 
law, or otherwise has Federalism implications. This notice will not 
have a substantial effect on State or local governments.
    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: August 30, 2004.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.

    Dated: September 1, 2004.
Tommy G. Thompson,
Secretary.
[FR Doc. 04-20413 Filed 9-3-04; 5:00 pm]
BILLING CODE 4120-01-P