[Federal Register Volume 76, Number 211 (Tuesday, November 1, 2011)]
[Notices]
[Pages 67568-67570]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-28187]



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Vol. 76

Tuesday,

No. 211

November 1, 2011

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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Medicare Program; Inpatient Hospital Deductible and Hospital and 
Extended Care Services Coinsurance Amounts for CY 2012; Part A Premiums 
for CY 2012 for the Uninsured Aged and for Certain Disabled Individuals 
Who Have Exhausted Other Entitlement; Medicare Part B Monthly Actuarial 
Rates, Premium Rate, and Annual Deductible Beginning January 1, 2012; 
Notices

  Federal Register / Vol. 76 , No. 211 / Tuesday, November 1, 2011 / 
Notices  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-8043-N]
RIN 0938-AQ14


Medicare Program; Inpatient Hospital Deductible and Hospital and 
Extended Care Services Coinsurance Amounts for CY 2012

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) 2012 under Medicare's Hospital 
Insurance Program (Medicare Part A). The Medicare statute specifies the 
formulae used to determine these amounts. For CY 2012, the inpatient 
hospital deductible will be $1,156. The daily coinsurance amounts for 
CY 2012 will be--(1) $289 for the 61st through 90th day of 
hospitalization in a benefit period; (2) $578 for lifetime reserve 
days; and (3) $144.50 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, 2012.

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 calendar year (CY).

II. Computing the Inpatient Hospital Deductible for CY 2012

    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 changes in 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)(XX) of the Act, the percentage 
increase used to update the payment rates for FY 2012 for hospitals 
paid under the inpatient prospective payment system is the market 
basket percentage increase, otherwise known as the market basket 
update, reduced by 0.1 percentage points (see section 
1886(b)(3)(B)(xii)(II) of the Act), and an adjustment based on changes 
in the economy-wide productivity (the multifactor productivity (MFP) 
adjustment (see section 1886(b)(3)(B)(xi)(II) of the Act). Under 
section 1886(b)(3)(B)(viii) of the Act, hospitals will receive this 
update only if they submit quality data as specified by the Secretary. 
The 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, as the majority of hospitals submit quality data and receive the 
full market basket update.
    Under section 1886(b)(3)(B)(ii)(VIII) of the Act, the percentage 
increase used to update the payment rates for FY 2012 for hospitals 
excluded from the inpatient prospective payment system is as follows:
     For FY 2012, the percentage increase for long term care 
hospitals is the market basket percentage increase reduced by 0.1 
percentage points and the MFP adjustment (see section 1886(m)(3)(A) of 
the Act).
     For FY 2012, the percentage increase for inpatient 
rehabilitation facilities is the market basket percentage increase 
reduced by 0.1 percentage points and the MFP adjustment (see section 
1886(j)(3)(C) of the Act).
     For FY 2012, the percentage increase used to update the 
payment rate for psychiatric hospitals is the market basket percentage 
increase reduced by 0.25 percentage points (see section 
1886(s)(2)(A)(ii) of the Act).
    The market basket percentage increase for 2012 is 3.0 percent and 
the MFP adjustment is 1.0 percent, as announced in the final rule with 
comment period published in the Federal Register on August 18, 2011 
entitled, ``Changes to the Hospital Inpatient Prospective Payment 
Systems for Acute Care Hospitals and FY 2012 Rates and to the Long Term 
Care Hospital PPS and FY 2012 Rates.'' Therefore, the percentage 
increase for hospitals paid under the inpatient prospective payment 
system is 1.9 percent. The average payment percentage increase for 
hospitals excluded from the inpatient prospective payment system is 
2.29 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 2012 is 1.95 percent.
    To develop the adjustment to reflect changes in 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 2011 compared to FY 2010. (We excluded from this calculation 
hospitals whose payments are not based on the inpatient prospective 
payment system because their payments are based on alternate 
prospective payment systems or reasonable costs.) We used Medicare 
bills from prospective payment hospitals that we received as of July 
2011. These bills represent a total of about 8 million Medicare 
discharges for FY 2011 and provide the most recent case-mix data 
available at this time. Based on these bills, the change in average 
case-mix in FY 2011 is -0.3 percent. Based on these bills and past 
experience, we expect the overall case mix change to be zero percent as 
the year progresses and more FY 2011 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. Since we are not expecting any overall case 
mix to increase, the real case mix will remain unchanged for FY 2011.
    Thus, the estimate of the payment-weighted average of the 
applicable percentage increases used for updating the payment rates is 
1.95 percent, and the real case-mix adjustment factor for the 
deductible is zero percent.

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Therefore, under the statutory formula, the inpatient hospital 
deductible for services furnished in CY 2012 is $1156. This deductible 
amount is determined by multiplying $1132 (the inpatient hospital 
deductible for CY 2011) by the payment-weighted average increase in the 
payment rates of 1.0195 multiplied by the increase in real case-mix of 
1.000, which equals $1154.07 and is rounded to $1156.

III. Computing the Inpatient Hospital and Extended Care Services 
Coinsurance Amounts for CY 2012

    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. The increase in the deductible 
generates increases in the coinsurance amounts. For inpatient hospital 
and extended care services furnished in CY 2012, 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 
$289 (one-fourth of the inpatient hospital deductible); the daily 
coinsurance for lifetime reserve days will be $578 (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 $144.50 (one-eighth of the 
inpatient hospital deductible).

IV. Cost to Medicare Beneficiaries

    Table 1 below summarizes the deductible and coinsurance amounts for 
CYs 2011 and 2012, as well as the number of each that is estimated to 
be paid.

               Table 1--Part A Deductible and Coinsurance Amounts for Calendar Years 2011 and 2012
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                                                                        Value                Number paid (in
                                                             --------------------------         millions)
                    Type of cost sharing                                               -------------------------
                                                                  2011         2012         2011         2012
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Inpatient hospital deductible...............................        $1132        $1156         8.50         8.76
Daily coinsurance for 61st-90th Day.........................          283          289         2.26         2.34
Daily coinsurance for lifetime reserve days.................          566          578         1.13         1.17
SNF coinsurance.............................................       141.50       144.50        43.94        45.73
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    The estimated total increase in costs to beneficiaries is about 
$970 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 notice as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), 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 Orders 12866 and 13563 direct 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 
$970 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 
action as defined in Title 5, United States Code, section 804(2), and 
is an economically significant action 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 small governmental 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
$7.0 million to $34.5 million in any 1 year. Individuals and States are 
not included in the definition of a small entity. We have determined 
that this

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notice will not have a significant economic impact on a substantial 
number of small entities. Therefore, we are not preparing an analysis 
under the RFA.
    In addition, section 1102(b) of the Social Security 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 for Medicare payment regulations and 
has fewer than 100 beds. 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 under 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 whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2011, that 
threshold is approximately $136 million. This notice will have 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.
    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: September 22, 2011
Donald M. Berwick,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: October 25, 2011.
Kathleen Sebelius,
Secretary.
[FR Doc. 2011-28187 Filed 10-27-11; 11:15 am]
BILLING CODE 4120-01-P