[Federal Register Volume 71, Number 180 (Monday, September 18, 2006)]
[Notices]
[Pages 54661-54662]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-7710]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-8028-N]
RIN 0938-AO18


Medicare Program; Part A Premium for Calendar Year 2007 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 annual notice announces Medicare's Hospital Insurance 
(Part A) premium for uninsured enrollees in calendar year (CY) 2007. 
This premium is to be paid by enrollees age 65 and over who are not 
otherwise eligible (hereafter known as the ``uninsured aged'') and for 
certain disabled individuals who have exhausted other entitlement. The 
monthly Part A premium for the 12 months beginning January 1, 2007 for 
these individuals will be $410. The reduced premium for certain other 
individuals as described in this notice will be $226. Section 1818(d) 
of the Social Security Act specifies the method to be used to determine 
these amounts.

DATES: Effective Date: This notice is effective on January 1, 2007.

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 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 section 1818(f) of 
the Act for the aged will also apply to certain disabled individuals as 
described above.
    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 incurred in the following calendar 
year (including the associated administrative costs) on behalf of 
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 CY. 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).
    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 enrollees 
(section 1818 and section 1818A). 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 CY 2007 will be equal to 
the premium for uninsured aged enrollees reduced by 45 percent.

II. Monthly Premium Amount for CY 2007

    The monthly premium for the uninsured aged and certain disabled 
individuals who have exhausted other entitlement for the 12 months 
beginning January 1, 2007, is $410.
    The monthly premium for those individuals subject to the 45 percent 
reduction in the monthly premium is $226.

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 CY 2007 
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 Part A enrollees aged 65 years and over as well as 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 CY 2007 on: (a) Current historical 
data, and (b) projection assumptions derived from current law and the 
Mid-Session Review of the President's Fiscal Year 2007 Budget.
    We estimate that in CY 2007, 35.808 million people aged 65 years 
and over will be entitled to benefits (without premium payment) and 
that they will incur $176.264 billion of benefits and related 
administrative costs. Thus, the estimated monthly average per capita 
amount is $410.21 and the monthly premium is $410. The full monthly 
premium reduced by 45 percent is $226.

IV. Costs to Beneficiaries

    The CY 2007 premium of $410 is about 4 percent higher than the CY 
2006 premium of $393.
    We estimate that approximately 556,000 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 $114 million in CY 2007

[[Page 54662]]

over the amount that they paid in CY 2006.

V. Waiver of Proposed Notice and Comment Period

    We are not using notice and comment rulemaking in this notification 
of Part A premiums for CY 2007, 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 (APA) permits agencies 
to waive notice and comment rulemaking when 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 19, 1980, Pub. L. 96-
354), section 1102(b) of the Act, the Unfunded Mandates Reform Act of 
1995 (Pub. L. 104-4), and Executive Order 13132.
    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). As stated in section IV of 
this notice, we estimate that the overall effect of these changes in 
the Part A premium will be a cost to voluntary enrollees (section 1818 
and section 1818A of the Act) of about $114 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 
included in the definition of a small entity. 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 (MSA) 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 expenditure in any 1 year by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $120 million. This notice has no consequential effect on 
State, local, or tribal governments or on the private sector. However, 
States are required to pay premiums for dually-eligible beneficiaries.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it publishes 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. 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: September 11, 2006.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.

    Dated: September 12, 2006.
Michael O. Leavitt,
Secretary.
[FR Doc. 06-7710 Filed 9-12-06; 4:00 pm]
BILLING CODE 4120-01-P