[Federal Register Volume 73, Number 186 (Wednesday, September 24, 2008)]
[Notices]
[Pages 55086-55089]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-22310]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-8034-N]
RIN 0938-AP03


Medicare Program; Inpatient Hospital Deductible and Hospital and 
Extended Care Services Coinsurance Amounts for Calendar Year 2009

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

ACTION: Notice.

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SUMMARY: This notice announces the inpatient hospital deductible and 
the hospital and extended care services coinsurance amounts for 
services furnished in calendar year (CY) 2009 under Medicare's Hospital 
Insurance

[[Page 55087]]

program (Medicare Part A). The Medicare statute specifies the formulae 
used to determine these amounts. For CY 2009, the inpatient hospital 
deductible will be $1068. The daily coinsurance amounts for CY 2009 
will be: (a) $267 for the 61st through 90th day of hospitalization in a 
benefit period; (b) $534 for lifetime reserve days; and (c) $133.50 for 
the 21st through 100th day of extended care services in a skilled 
nursing facility in a benefit period.

DATES: Effective Date: This notice is effective on January 1, 2009.

FOR FURTHER INFORMATION CONTACT: Clare McFarland, (410) 786-6390 for 
general information. Gregory J. Savord, (410) 786-1521 for case-mix 
analysis.

SUPPLEMENTARY INFORMATION: 

I. Background

    Section 1813 of the Social Security Act (the Act) provides for an 
inpatient hospital deductible to be subtracted from the amount payable 
by Medicare for inpatient hospital services furnished to a beneficiary. 
It also provides for certain coinsurance amounts to be subtracted from 
the amounts payable by Medicare for inpatient hospital and extended 
care services. Section 1813(b)(2) of the Act requires us to determine 
and publish each year the amount of the inpatient hospital deductible 
and the hospital and extended care services coinsurance amounts 
applicable for services furnished in the following CY.

II. Computing the Inpatient Hospital Deductible for CY 2009

    Section 1813(b) of the Act prescribes the method for computing the 
amount of the inpatient hospital deductible. The inpatient hospital 
deductible is an amount equal to the inpatient hospital deductible for 
the preceding CY, adjusted by our best estimate of the payment-weighted 
average of the applicable percentage increases (as defined in section 
1886(b)(3)(B) of the Act) used for updating the payment rates to 
hospitals for discharges in the fiscal year (FY) that begins on October 
1 of the same preceding CY, and adjusted to reflect real case-mix. The 
adjustment to reflect real case-mix is determined on the basis of the 
most recent case-mix data available. The amount determined under this 
formula is rounded to the nearest multiple of $4 (or, if midway between 
two multiples of $4, to the next higher multiple of $4).
    Under section 1886(b)(3)(B)(i) of the Act, the percentage increase 
used to update the payment rates for FY 2009 for hospitals paid under 
the inpatient prospective payment system is the market basket 
percentage increase, otherwise known as the market basket update. Under 
section 1886(b)(3)(B)(viii) of the Act, hospitals will receive the full 
market basket update only if they submit quality data as specified by 
the Secretary. The market basket update for hospitals that do not 
submit this data is reduced by 2.0 percentage points. We are estimating 
that after accounting for those hospitals receiving the lower market 
basket update in the payment-weighted average update, the calculated 
deductible will remain the same.
    Under section 1886(b)(3)(B)(ii) of the Act, the percentage increase 
used to update the payment rates for FY 2009 for hospitals excluded 
from the prospective payment system is the market basket percentage 
increase, defined according to section 1886(b)(3)(B)(iii) of the Act.
    The market basket percentage increase for 2009 is 3.6 percent, as 
announced in the final rule published in the Federal Register entitled, 
``Medicare Program; Changes to the Hospital Inpatient Prospective 
Payment Systems and Fiscal Year 2009 Rates'' (73 FR 48434, August 19, 
2008). Therefore, the percentage increase for hospitals paid under the 
prospective payment system is 3.6 percent. The average payment 
percentage increase for hospitals excluded from the prospective payment 
system is 3.5 percent. Weighting these percentages in accordance with 
payment volume, our best estimate of the payment-weighted average of 
the increases in the payment rates for FY 2009 is 3.6 percent.
    To develop the adjustment for real case-mix, we first calculated 
for each hospital an average case-mix that reflects the relative 
costliness of that hospital's mix of cases compared to those of other 
hospitals. We then computed the change in average case-mix for 
hospitals paid under the Medicare prospective payment system in FY 2008 
compared to FY 2007. (We excluded from this calculation hospitals 
excluded from the prospective payment system because their payments are 
based on reasonable costs.) We used Medicare bills from prospective 
payment hospitals that we received as of July 2008. These bills 
represent a total of about 8.9 million Medicare discharges for FY 2008 
and provide the most recent case-mix data available at this time. Based 
on these bills, the change in average case-mix in FY 2008 is 1.55 
percent. Based on these bills and past experience, we expect the 
overall case mix change to be 1.75 percent as the year progresses and 
more FY 2008 data become available.
    Section 1813 of the Act requires that the inpatient hospital 
deductible be adjusted only by that portion of the case-mix change that 
is determined to be real. In the FY 2008 IPPS final rule with comment 
period, we indicated that we believe the adoption of the MS-DRGs had 
the potential to lead to increases in aggregate payments without a 
corresponding increase in actual patient severity of illness due to the 
incentives for improved documentation and coding. In that final rule, 
we estimated that changes in coding or classification that do not 
reflect real change in case-mix would be 1.2 percent for FY 2008. 
Therefore, since we are expecting overall case mix to increase by 1.75 
percent and 1.2 percent of that to be caused by coding changes, real 
case mix changes resulted in an increase of 0.55 percent for FY 2008.
    Thus, the estimate of the payment-weighted average of the 
applicable percentage increases used for updating the payment rates is 
3.6 percent, and the real case-mix adjustment factor for the deductible 
is 0.55 percent. Therefore, under the statutory formula, the inpatient 
hospital deductible for services furnished in CY 2009 is $1068. This 
deductible amount is determined by multiplying $1024 (the inpatient 
hospital deductible for CY 2008) by the payment-weighted average 
increase in the payment rates of 1.036 multiplied by the increase in 
real case-mix of 1.0055, which equals $1066.70 and is rounded to $1068.

III. Computing the Inpatient Hospital and Extended Care Services 
Coinsurance Amounts for CY 2009

    The coinsurance amounts provided for in section 1813 of the Act are 
defined as fixed percentages of the inpatient hospital deductible for 
services furnished in the same CY. Thus, the increase in the deductible 
generates increases in the coinsurance amounts. For inpatient hospital 
and extended care services furnished in CY 2009, in accordance with the 
fixed percentages defined in the law, the daily coinsurance for the 
61st through 90th day of hospitalization in a benefit period will be 
$267 (one-fourth of the inpatient hospital deductible); the daily 
coinsurance for lifetime reserve days will be $534 (one-half of the 
inpatient hospital deductible); and the daily coinsurance for the 21st 
through 100th day of extended care services in a skilled nursing 
facility in a benefit period will be $133.50 (one-eighth of the 
inpatient hospital deductible).

[[Page 55088]]

IV. Cost to Medicare Beneficiaries

    Table 1 summarizes the deductible and coinsurance amounts for CYs 
2008 and 2009, as well as the number of each that is estimated to be 
paid.

               Table 1--Part A Deductible and Coinsurance Amounts for Calendar Years 2008 and 2009
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                                                               Value                Number paid  (in millions)
              Type of cost sharing               ---------------------------------------------------------------
                                                       2008            2009            2008            2009
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Inpatient hospital deductible...................           $1024           $1068            8.54            8.53
Daily coinsurance for 61st-90th day.............             256             267            2.22            2.22
Daily coinsurance for lifetime reserve days.....             512             534            1.06            1.06
SNF coinsurance.................................             128          133.50           39.66           40.05
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    The estimated total increase in costs to beneficiaries is about 
$680 million (rounded to the nearest $10 million) due to: (1) The 
increase in the deductible and coinsurance amounts; and (2) the change 
in the number of deductibles and daily coinsurance amounts paid.

V. Waiver of Proposed Notice and Comment Period

    The Medicare statute, as discussed previously, requires publication 
of the Medicare Part A inpatient hospital deductible and the hospital 
and extended care services coinsurance amounts for services for each 
CY. The amounts are determined according to the statute. As has been 
our custom, we use general notices, rather than notice and comment 
rulemaking procedures, to make the announcements. In doing so, we 
acknowledge that, under the Administrative Procedure Act (APA), 
interpretive rules, general statements of policy, and rules of agency 
organization, procedure, or practice are excepted from the requirements 
of notice and comment rulemaking.
    We considered publishing a proposed notice to provide a period for 
public comment. However, we may waive that procedure if we find good 
cause that prior notice and comment are impracticable, unnecessary, or 
contrary to the public interest. We find that the procedure for notice 
and comment is unnecessary because the formulae used to calculate the 
inpatient hospital deductible and hospital and extended care services 
coinsurance amounts are statutorily directed, and we can exercise no 
discretion in following the formulae. Moreover, the statute establishes 
the time period for which the deductible and coinsurance amounts will 
apply and delaying publication would be contrary to the public 
interest. Therefore, we find good cause to waive publication of a 
proposed notice and solicitation of public comments.

VI. Collection of Information Requirements

    This document does not impose information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 35).

VII. Regulatory Impact Statement

    We have examined the impact of this rule as required by Executive 
Order 12866 on regulatory planning and review (September 30 1993), as 
further amended, the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 
1999) and the Congressional Review Act (5 U.S.C. 804(2)).
    Executive Order 12866 (as amended by Executive Orders 13258 and 
13422) 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 in any 1 year). As stated in section IV of this notice, 
we estimate that the total increase in costs to beneficiaries 
associated with this notice is about $680 million due to: (1) The 
increase in the deductible and coinsurance amounts and (2) the change 
in the number of deductibles and daily coinsurance amounts paid. 
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 businesses, if a rule has a significant impact on a 
substantial number 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 $6.5 million to $31.5 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 and has fewer than 100 beds. Therefore, the Secretary 
has determined that this notice will not have a significant impact 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 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2008, that 
threshold is approximately $130 million. This notice has no 
consequential effect on State, local, or tribal governments or on the 
private sector. However, States may be required to pay the deductibles 
and coinsurance for dually-eligible beneficiaries.

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    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. This notice will not have a substantial effect on State 
or local governments.
    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.

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

    Dated: August 28, 2008.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Dated: September 5, 2008.
Michael O. Leavitt,
Secretary.
 [FR Doc. E8-22310 Filed 9-19-08; 9:00 am]
BILLING CODE 4120-01-P