[Federal Register Volume 85, Number 219 (Thursday, November 12, 2020)]
[Notices]
[Pages 71904-71913]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25029]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-8076-N]
RIN 0938-AU16


Medicare Program; Medicare Part B Monthly Actuarial Rates, 
Premium Rates, and Annual Deductible Beginning January 1, 2021

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

ACTION: Notice.

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SUMMARY: This notice announces the monthly actuarial rates for aged 
(age 65 and over) and disabled (under age 65) beneficiaries enrolled in 
Part B of the Medicare Supplementary Medical Insurance (SMI) program 
beginning January 1, 2021. In addition, this notice announces the 
monthly premium for aged and disabled beneficiaries, the deductible for 
2021, and the income-related monthly adjustment amounts to be paid by 
beneficiaries with modified adjusted gross income above certain 
threshold amounts. The monthly actuarial rates for 2021 are $291.00 for 
aged enrollees and $349.90 for disabled enrollees. The standard monthly 
Part B premium rate for all enrollees for 2021 is $148.50, which is 
equal to 50 percent of the monthly actuarial rate for aged enrollees 
(or approximately 25 percent of the expected average total cost of Part 
B coverage for aged enrollees) plus the $3.00 repayment amount required 
under current law. (The 2020 standard premium rate was $144.60, which 
included the $3.00 repayment amount.) The Part B deductible for 2021 is 
$203.00 for all Part B beneficiaries. If a beneficiary has to pay an 
income-related monthly adjustment, he or she will have to pay a total 
monthly premium of about 35, 50, 65, 80 or 85 percent of the total cost 
of Part B coverage plus a repayment amount of $4.20, $6.00, $7.80, 
$9.60 or $10.20, respectively.

DATES: The premium and related amounts announced in this notice are 
effective on January 1, 2021.

FOR FURTHER INFORMATION CONTACT: M. Kent Clemens, (410) 786-6391.

SUPPLEMENTARY INFORMATION:

I. Background

    Part B is the voluntary portion of the Medicare program that pays 
all or part of the costs for physicians' services; outpatient hospital 
services; certain home health services; services furnished by rural 
health clinics, ambulatory surgical centers, and comprehensive 
outpatient rehabilitation facilities; and certain other medical and 
health services not covered by Medicare Part A, Hospital Insurance. 
Medicare Part B is available to individuals who are entitled to 
Medicare Part A, as well as to U.S. residents who have attained age 65 
and are citizens and to aliens who were lawfully admitted for permanent 
residence and have resided in the United States for 5 consecutive 
years. Part B requires enrollment and payment of monthly premiums, as 
described in 42 CFR part 407, subpart B, and part 408, respectively. 
The premiums paid by (or on behalf of) all enrollees fund approximately 
one-fourth of the total incurred costs, and transfers from the general 
fund of the Treasury pay approximately three-fourths of these costs.
    The Secretary of the Department of Health and Human Services (the 
Secretary) is required by section 1839 of the Social Security Act (the 
Act) to announce the Part B monthly actuarial rates for aged and 
disabled beneficiaries as well as the monthly Part B premium. The Part 
B annual deductible is included because its determination is directly 
linked to the aged actuarial rate.
    The monthly actuarial rates for aged and disabled enrollees are 
used to determine the correct amount of general revenue financing per 
beneficiary each month. These amounts, according to actuarial 
estimates, will equal, respectively, one-half of the expected average 
monthly cost of Part B for each aged enrollee (age 65 or over) and one-
half of the expected average monthly cost of Part B for each disabled 
enrollee (under age 65).
    The Part B deductible to be paid by enrollees is also announced. 
Prior to the Medicare Prescription Drug, Improvement, and Modernization 
Act of 2003 (MMA) (Pub. L. 108-173), the Part B deductible was set in 
statute. After setting the 2005 deductible amount at $110, section 629 
of the MMA (amending section 1833(b) of the Act) required that the Part 
B deductible be indexed beginning in 2006. The inflation factor to be 
used each year is the annual percentage increase in the Part B 
actuarial rate for enrollees age 65 and over. Specifically, the 2021 
Part B deductible is calculated by multiplying the 2020 deductible by 
the ratio of the 2021 aged actuarial rate to the 2020 aged actuarial 
rate. The amount determined under this formula is then rounded to the 
nearest $1.
    The monthly Part B premium rate to be paid by aged and disabled 
enrollees is also announced. (Although the costs to the program per 
disabled enrollee are different than for the aged, the statute provides 
that the two groups pay the same premium amount.) Beginning with the 
passage of section 203 of the Social Security Amendments of 1972 (Pub. 
L. 92-603), the premium rate, which was determined on a fiscal-year 
basis, was limited to the lesser of the actuarial rate for aged 
enrollees, or the current monthly premium rate increased by the same 
percentage as the most recent general increase in monthly Title II 
Social Security benefits.
    However, the passage of section 124 of the Tax Equity and Fiscal 
Responsibility Act of 1982 (TEFRA) (Pub. L. 97-248) suspended this 
premium determination process. Section 124 of TEFRA changed the premium 
basis to 50 percent of the monthly actuarial rate for aged enrollees 
(that is, 25 percent of program costs for aged enrollees). Section 606 
of the Social Security Amendments of 1983 (Pub. L. 98-21), section 2302 
of the Deficit Reduction Act of 1984 (DEFRA 84) (Pub. L. 98-369), 
section 9313 of the Consolidated Omnibus Budget Reconciliation Act of 
1985 (COBRA 85) (Pub. L. 99-272), section 4080 of the Omnibus Budget 
Reconciliation Act of

[[Page 71905]]

1987 (OBRA 87) (Pub. L. 100-203), and section 6301 of the Omnibus 
Budget Reconciliation Act of 1989 (OBRA 89) (Pub. L. 101-239) extended 
the provision that the premium be based on 50 percent of the monthly 
actuarial rate for aged enrollees (that is, 25 percent of program costs 
for aged enrollees). This extension expired at the end of 1990.
    The premium rate for 1991 through 1995 was legislated by section 
1839(e)(1)(B) of the Act, as added by section 4301 of the Omnibus 
Budget Reconciliation Act of 1990 (OBRA 90) (Pub. L. 101-508). In 
January 1996, the premium determination basis would have reverted to 
the method established by the 1972 Social Security Act Amendments. 
However, section 13571 of the Omnibus Budget Reconciliation Act of 1993 
(OBRA 93) (Pub. L. 103-66) changed the premium basis to 50 percent of 
the monthly actuarial rate for aged enrollees (that is, 25 percent of 
program costs for aged enrollees) for 1996 through 1998.
    Section 4571 of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-
33) permanently extended the provision that the premium be based on 50 
percent of the monthly actuarial rate for aged enrollees (that is, 25 
percent of program costs for aged enrollees).
    The BBA included a further provision affecting the calculation of 
the Part B actuarial rates and premiums for 1998 through 2003. Section 
4611 of the BBA modified the home health benefit payable under Part A 
for individuals enrolled in Part B. Under this section, beginning in 
1998, expenditures for home health services not considered ``post-
institutional'' are payable under Part B rather than Part A. However, 
section 4611(e)(1) of the BBA required that there be a transition from 
1998 through 2002 for the aggregate amount of the expenditures 
transferred from Part A to Part B. Section 4611(e)(2) of the BBA also 
provided a specific yearly proportion for the transferred funds. The 
proportions were one-sixth for 1998, one-third for 1999, one-half for 
2000, two-thirds for 2001, and five-sixths for 2002. For the purpose of 
determining the correct amount of financing from general revenues of 
the Federal Government, it was necessary to include only these 
transitional amounts in the monthly actuarial rates for both aged and 
disabled enrollees, rather than the total cost of the home health 
services being transferred.
    Section 4611(e)(3) of the BBA also specified, for the purpose of 
determining the premium, that the monthly actuarial rate for enrollees 
age 65 and over be computed as though the transition would occur for 
1998 through 2003 and that one-seventh of the cost be transferred in 
1998, two-sevenths in 1999, three-sevenths in 2000, four-sevenths in 
2001, five-sevenths in 2002, and six-sevenths in 2003. Therefore, the 
transition period for incorporating this home health transfer into the 
premium was 7 years while the transition period for including these 
services in the actuarial rate was 6 years.
    Section 811 of the MMA, which amended section 1839 of the Act, 
requires that, starting on January 1, 2007, the Part B premium a 
beneficiary pays each month be based on his or her annual income. 
Specifically, if a beneficiary's modified adjusted gross income is 
greater than the legislated threshold amounts (for 2021, $88,000 for a 
beneficiary filing an individual income tax return and $176,000 for a 
beneficiary filing a joint tax return), the beneficiary is responsible 
for a larger portion of the estimated total cost of Part B benefit 
coverage. In addition to the standard 25-percent premium, these 
beneficiaries now have to pay an income-related monthly adjustment 
amount. The MMA made no change to the actuarial rate calculation, and 
the standard premium, which will continue to be paid by beneficiaries 
whose modified adjusted gross income is below the applicable 
thresholds, still represents 25 percent of the estimated total cost to 
the program of Part B coverage for an aged enrollee. However, depending 
on income and tax filing status, a beneficiary can now be responsible 
for 35, 50, 65, 80, or 85 percent of the estimated total cost of Part B 
coverage, rather than 25 percent. Section 402 of the Medicare Access 
and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10) modified 
the income thresholds beginning in 2018, and section 53114 of the 
Bipartisan Budget Act of 2018 (BBA of 2018) (Pub. L. 115-123) further 
modified the income thresholds beginning in 2019. For years beginning 
in 2019, the BBA of 2018 established a new income threshold. If a 
beneficiary's modified adjusted gross income is greater than or equal 
to $500,000 for a beneficiary filing an individual income tax return 
and $750,000 for a beneficiary filing a joint tax return, the 
beneficiary is responsible for 85 percent of the estimated total cost 
of Part B coverage. The BBA of 2018 specified that these new income 
threshold levels be inflation-adjusted beginning in 2028. The end 
result of the higher premium is that the Part B premium subsidy is 
reduced, and less general revenue financing is required, for 
beneficiaries with higher income because they are paying a larger share 
of the total cost with their premium. That is, the premium subsidy 
continues to be approximately 75 percent for beneficiaries with income 
below the applicable income thresholds, but it will be reduced for 
beneficiaries with income above these thresholds. The MMA specified 
that there be a 5-year transition period to reach full implementation 
of this provision. However, section 5111 of the Deficit Reduction Act 
of 2005 (DRA) (Pub. L. 109-171) modified the transition to a 3-year 
period.
    Section 4732(c) of the BBA added section 1933(c) of the Act, which 
required the Secretary to allocate money from the Part B trust fund to 
the state Medicaid programs for the purpose of providing Medicare Part 
B premium assistance from 1998 through 2002 for the low-income Medicaid 
beneficiaries who qualify under section 1933 of the Act. This 
allocation, while not a benefit expenditure, was an expenditure of the 
trust fund and was included in calculating the Part B actuarial rates 
through 2002. For 2003 through 2015, the expenditure was made from the 
trust fund because the allocation was temporarily extended. However, 
because the extension occurred after the financing was determined, the 
allocation was not included in the calculation of the financing rates 
for these years. Section 211 of MACRA permanently extended this 
expenditure, which is included in the calculation of the Part B 
actuarial rates for 2016 and subsequent years.
    Another provision affecting the calculation of the Part B premium 
is section 1839(f) of the Act, as amended by section 211 of the 
Medicare Catastrophic Coverage Act of 1988 (MCCA 88) (Pub. L. 100-360). 
(The Medicare Catastrophic Coverage Repeal Act of 1989 (Pub. L. 101-
234) did not repeal the revisions to section 1839(f) of the Act made by 
MCCA 88.) Section 1839(f) of the Act, referred to as the ``hold-
harmless'' provision, provides that, if an individual is entitled to 
benefits under section 202 or 223 of the Act (the Old-Age and Survivors 
Insurance Benefit and the Disability Insurance Benefit, respectively) 
and has the Part B premium deducted from these benefit payments, the 
premium increase will be reduced, if necessary, to avoid causing a 
decrease in the individual's net monthly payment. This decrease in 
payment occurs if the increase in the individual's Social Security 
benefit due to the cost-of-living adjustment under section 215(i) of 
the Act is less than the increase in the premium. Specifically, the 
reduction in the premium amount applies if the individual is entitled 
to

[[Page 71906]]

benefits under section 202 or 223 of the Act for November and December 
of a particular year and the individual's Part B premiums for December 
and the following January are deducted from the respective month's 
section 202 or 223 benefits. The hold-harmless provision does not apply 
to beneficiaries who are required to pay an income-related monthly 
adjustment amount.
    A check for benefits under section 202 or 223 of the Act is 
received in the month following the month for which the benefits are 
due. The Part B premium that is deducted from a particular check is the 
Part B payment for the month in which the check is received. Therefore, 
a benefit check for November is not received until December, but 
December's Part B premium has been deducted from it.
    Generally, if a beneficiary qualifies for hold-harmless protection, 
the reduced premium for the individual for that January and for each of 
the succeeding 11 months is the greater of either--
     The monthly premium for January reduced as necessary to 
make the December monthly benefits, after the deduction of the Part B 
premium for January, at least equal to the preceding November's monthly 
benefits, after the deduction of the Part B premium for December; or
     The monthly premium for that individual for that December.
    In determining the premium limitations under section 1839(f) of the 
Act, the monthly benefits to which an individual is entitled under 
section 202 or 223 of the Act do not include retroactive adjustments or 
payments and deductions on account of work. Also, once the monthly 
premium amount is established under section 1839(f) of the Act, it will 
not be changed during the year even if there are retroactive 
adjustments or payments and deductions on account of work that apply to 
the individual's monthly benefits.
    Individuals who have enrolled in Part B late or who have re-
enrolled after the termination of a coverage period are subject to an 
increased premium under section 1839(b) of the Act. The increase is a 
percentage of the premium and is based on the new premium rate before 
any reductions under section 1839(f) of the Act are made.
    Section 1839 of the Act, as amended by section 601(a) of the 
Bipartisan Budget Act of 2015 (Pub. L. 114-74), specified that the 2016 
actuarial rate for enrollees age 65 and older be determined as if the 
hold-harmless provision did not apply. The premium revenue that was 
lost by using the resulting lower premium (excluding the forgone 
income-related premium revenue) was replaced by a transfer of general 
revenue from the Treasury, which will be repaid over time to the 
general fund.
    Similarly, section 1839 of the Act, as amended by section 2401 of 
the Continuing Appropriations Act, 2021 and Other Extensions Act (Pub. 
L. 116-159), specifies that the 2021 actuarial rate for enrollees age 
65 and older be determined as the sum of the 2020 actuarial rate for 
enrollees age 65 and older and one-fourth of the difference between the 
2020 actuarial rate and the preliminary 2021 actuarial rate (as 
determined by the Secretary of HHS) for such enrollees. The premium 
revenue lost by using the resulting lower premium (excluding the 
forgone income-related premium revenue) will be replaced by a transfer 
of general revenue from the Treasury, which will be repaid over time.
    Starting in 2016, in order to repay the balance due (which includes 
the transfer amounts and the forgone income-related premium revenue 
from the Bipartisan Budget Act of 2015 and the Continuing 
Appropriations Act, 2021 and Other Extensions Act), the Part B premium 
otherwise determined will be increased by $3.00. These repayment 
amounts will be added to the Part B premium otherwise determined each 
year and will be paid back to the general fund of the Treasury, and 
they will continue until the balance due is paid back.
    High-income enrollees pay the $3 repayment amount plus an 
additional $1.20, $3.00, $4.80, $6.60, or $7.20 in repayment as part of 
the income-related monthly adjustment amount (IRMAA) premium dollars, 
which reduce (dollar for dollar) the amount of general revenue received 
by Part B from the general fund of the Treasury. Because of this 
general revenue offset, the repayment IRMAA premium dollars are not 
included in the direct repayments made to the general fund of the 
Treasury from Part B in order to avoid a double repayment. (Only the 
$3.00 monthly repayment amounts are included in the direct repayments).
    These repayment amounts will continue until the balance due is 
zero. (In the final year of the repayment, the additional amounts may 
be modified to avoid an overpayment.) The repayment amounts (excluding 
those for high-income enrollees) are subject to the hold-harmless 
provision. The original balance due was $9,066,409,000, consisting of 
$1,625,761,000 in forgone income-related premium revenue plus a 
transfer amount of $7,440,648,000 from the provisions of the Bipartisan 
Budget Act of 2015. The increase in the balance due in 2021 will be 
$8,799,829,000, consisting of $946,046,000 in forgone income-related 
premium income plus a transfer amount of $7,853,783,000 from the 
provisions of the Continuing Appropriations Act, 2021 and Other 
Extensions Act. An estimated $6,761,022,000 will have been collected 
for repayment to the general fund by the end of 2020.

II. Provisions of the Notice

A. Notice of Medicare Part B Monthly Actuarial Rates, Monthly Premium 
Rates, and Annual Deductible

    The Medicare Part B monthly actuarial rates applicable for 2021 are 
$291.00 for enrollees age 65 and over and $349.90 for disabled 
enrollees under age 65. In section II.B. of this notice, we present the 
actuarial assumptions and bases from which these rates are derived. The 
Part B standard monthly premium rate for all enrollees for 2021 is 
$148.50.
    The following are the 2021 Part B monthly premium rates to be paid 
by (or on behalf of) beneficiaries who file either individual tax 
returns (and are single individuals, heads of households, qualifying 
widows or widowers with dependent children, or married individuals 
filing separately who lived apart from their spouses for the entire 
taxable year), or joint tax returns.

------------------------------------------------------------------------
                                                    Income-
    Beneficiaries who file        Beneficiaries     related      Total
  individual tax returns with    who file joint     monthly     monthly
            income:             tax returns with  adjustment    premium
                                     income:        amount      amount
------------------------------------------------------------------------
Less than or equal to $88,000.  Less than or           $0.00     $148.50
                                 equal to
                                 $176,000.
Greater than $88,000 and less   Greater than           59.40      207.90
 than or equal to $111,000.      $176,000 and
                                 less than or
                                 equal to
                                 $222,000.

[[Page 71907]]

 
Greater than $111,000 and less  Greater than          148.50      297.00
 than or equal to $138,000.      $222,000 and
                                 less than or
                                 equal to
                                 $276,000.
Greater than $138,000 and less  Greater than          237.60      386.10
 than or equal to $165,000.      $276,000 and
                                 less than or
                                 equal to
                                 $330,000.
Greater than $165,000 and less  Greater than          326.70      475.20
 than $500,000.                  $330,000 and
                                 less than
                                 $750,000.
Greater than or equal to        Greater than or       356.40      504.90
 $500,000.                       equal to
                                 $750,000.
------------------------------------------------------------------------

    In addition, the monthly premium rates to be paid by (or on behalf 
of) beneficiaries who are married and lived with their spouses at any 
time during the taxable year, but who file separate tax returns from 
their spouses, are as follows:

------------------------------------------------------------------------
                                                    Income-
  Beneficiaries who are married and lived with      related      Total
 their spouses at any time during the year, but     monthly     monthly
    who file separate tax  returns from their     adjustment    premium
                    spouses:                        amount      amount
------------------------------------------------------------------------
Less than or equal to $88,000...................       $0.00     $148.50
Greater than $88,000 and less than $412,000.....      326.70      475.20
Greater than or equal to $412,000...............      356.40      504.90
------------------------------------------------------------------------

    The Part B annual deductible for 2021 is $203.00 for all 
beneficiaries.

B. Statement of Actuarial Assumptions and Bases Employed in Determining 
the Monthly Actuarial Rates and the Monthly Premium Rate for Part B 
Beginning January 2021

    The actuarial assumptions and bases used to determine the monthly 
actuarial rates and the monthly premium rates for Part B are 
established by the Centers for Medicare & Medicaid Services' Office of 
the Actuary. The estimates underlying these determinations are prepared 
by actuaries meeting the qualification standards and following the 
actuarial standards of practice established by the Actuarial Standards 
Board.
1. Actuarial Status of the Part B Account in the Supplementary Medical 
Insurance Trust Fund
    Under section 1839 of the Act, the starting point for determining 
the standard monthly premium is the amount that would be necessary to 
finance Part B on an incurred basis. This is the amount of income that 
would be sufficient to pay for services furnished during that year 
(including associated administrative costs) even though payment for 
some of these services will not be made until after the close of the 
year. The portion of income required to cover benefits not paid until 
after the close of the year is added to the trust fund and used when 
needed.
    Because the premium rates are established prospectively, they are 
subject to projection error. Additionally, legislation enacted after 
the financing was established, but effective for the period in which 
the financing is set, may affect program costs. As a result, the income 
to the program may not equal incurred costs. Trust fund assets must 
therefore be maintained at a level that is adequate to cover an 
appropriate degree of variation between actual and projected costs, and 
the amount of incurred, but unpaid, expenses. Numerous factors 
determine what level of assets is appropriate to cover variation 
between actual and projected costs. For 2021, the four most important 
of these factors are (1) the impact of the COVID-19 pandemic on program 
spending; (2) the difference from prior years between the actual 
performance of the program and estimates made at the time financing was 
established; (3) the likelihood and potential magnitude of expenditure 
changes resulting from enactment of legislation affecting Part B costs 
in a year subsequent to the establishment of financing for that year; 
and (4) the expected relationship between incurred and cash 
expenditures. The first factor, the impact of the pandemic on program 
spending, brings a higher-than-usual degree of uncertainty to projected 
costs for the 2021 Part B financing. The other three factors are 
analyzed on an ongoing basis, as the trends can vary over time.
    Table 1 summarizes the estimated actuarial status of the trust fund 
as of the end of the financing period for 2019 and 2020.

 Table 1--Estimated Actuarial Status of the Part B Account in the Supplementary Medical Insurance Trust Fund as
                                       of the End of the Financing Period
----------------------------------------------------------------------------------------------------------------
                                                                                                    Assets less
                     Financing period ending                        Assets (in      Liabilities     liabilities
                                                                     millions)     (in millions)   (in millions)
----------------------------------------------------------------------------------------------------------------
December 31, 2019...............................................         $99,602         $31,566         $68,036
December 31, 2020...............................................         123,051          32,884          90,167
----------------------------------------------------------------------------------------------------------------


[[Page 71908]]

2. Monthly Actuarial Rate for Enrollees Age 65 and Older
    The monthly actuarial rate for enrollees age 65 and older is one-
half of the sum of monthly amounts for (1) the projected cost of 
benefits; and (2) administrative expenses for each enrollee age 65 and 
older, after adjustments to this sum to allow for interest earnings on 
assets in the trust fund and an adequate contingency margin. The 
contingency margin is an amount appropriate to provide for possible 
variation between actual and projected costs and to amortize any 
surplus assets or unfunded liabilities.
    Section 1839 of the Act, as amended by section 2401 of the 
Continuing Appropriations Act, 2021 and Other Extensions Act (Pub. L. 
116-159), specifies that the 2021 monthly actuarial rate for enrollees 
age 65 and older be determined as the sum of the 2020 monthly actuarial 
rate for enrollees age 65 and older and one-fourth of the difference 
between the 2020 monthly actuarial rate and the preliminary 2021 
monthly actuarial rate (as determined by the Secretary of HHS) for such 
enrollees. The premium revenue lost by using the resulting lower 
premium (excluding the forgone income-related premium revenue) will be 
replaced by a transfer of general revenue from the Treasury, which will 
be repaid over time.
    The preliminary monthly actuarial rate for enrollees age 65 and 
older for 2021 is determined by first establishing per enrollee costs 
by type of service from program data through 2020 and then projecting 
these costs for subsequent years. The projection factors used for 
financing periods from January 1, 2018 through December 31, 2021 are 
shown in Table 2. The 2020 monthly actuarial rate for enrollees age 65 
and older is $283.20, and the preliminary 2021 monthly actuarial rate 
for enrollees age 65 and older is $314.30. In accordance with the 
provisions of the Continuing Appropriations Act, 2021 and Other 
Extensions Act, the 2021 monthly actuarial rate for enrollees age 65 
and older is $291.00 ($283.20 + 0.25 x (314.30-283.20)).
    As indicated in Table 3, the projected per enrollee amount required 
to pay for one-half of the total of benefits and administrative costs 
for enrollees age 65 and over for 2021 is $307.52. Based on current 
estimates, the assets at the end of 2020 are not sufficient to cover 
the amount of incurred, but unpaid, expenses, to provide for 
substantial variation between actual and projected costs, and to 
accommodate the unusually high degree of uncertainty due to the COVID-
19 pandemic. Thus, a positive contingency margin is needed to increase 
assets to a more appropriate level. The preliminary monthly actuarial 
rate of $314.30 provides an adjustment of $8.17 for a contingency 
margin and -$1.39 for interest earnings.
    The contingency margin for 2021 is affected by several factors. 
First, in response to the pandemic, about $43 billion was paid out of 
the Part B account as part of the Accelerated and Advanced Payment 
(AAP) programs. Providers are to repay their AAP payments to Part B 
over time through reduced Part B claims payments. However, until the 
AAP payments have been repaid, the Part B account would not have the 
roughly $43 billion in assets, and the financing for 2021 would need to 
be increased to restore the assets used to make these payments. The 
Continuing Appropriations Act, 2021 and Other Extensions Act requires 
that a transfer be made from the Treasury to Part B to restore the 
roughly $43 billion in AAP payments paid out and specifies that any 
future AAP provider repayments be transferred to the Treasury. Because 
the 2021 Part B financing includes the assumption that roughly $43 
billion will be transferred from the Treasury to Part B before the end 
of calendar year 2020, the AAP payments do not impact contingency 
margin.
    Second, in order to take into account the uncertainty and potential 
impact of the COVID-19 pandemic, assumptions were developed for testing 
and treatment for COVID-19, utilization of non-COVID-related care, 
potential costs for COVID-19 vaccines, and possible paths of the 
pandemic. Several Part B pandemic cost scenarios were developed based 
on these assumptions. The difference between the best-estimate pandemic 
scenario and the highest-cost pandemic scenario was used to establish 
the additional contingency margin needed to account for the potential 
costs and uncertainty from the pandemic.
    Third, starting in 2011, manufacturers and importers of brand-name 
prescription drugs pay a fee that is allocated to the Part B account of 
the SMI trust. For 2021, the total of these brand-name drug fees is 
estimated to be $2.8 billion. The contingency margin for 2021 has been 
reduced to account for this additional revenue.
    The traditional goal for the Part B reserve has been that assets 
minus liabilities at the end of a year should represent between 15 and 
20 percent of the following year's total incurred expenditures. To 
accomplish this goal, a 17-percent reserve ratio, which is a fully 
adequate contingency reserve level, has been the normal target used to 
calculate the Part B premium. The financing rates for 2021 are set 
above the normal target due to the higher-than-usual uncertainty for 
2021. The actuarial rate of $291.00 per month for aged beneficiaries, 
as announced in this notice for 2021, reflects the combined effect of 
the factors and legislation previously described and the projected 
assumptions listed in Table 2.
3. Monthly Actuarial Rate for Disabled Enrollees
    Disabled enrollees are those persons under age 65 who are enrolled 
in Part B because of entitlement to Social Security disability benefits 
for more than 24 months or because of entitlement to Medicare under the 
end-stage renal disease (ESRD) program. Projected monthly costs for 
disabled enrollees (other than those with ESRD) are prepared in a 
manner parallel to the projection for the aged using appropriate 
actuarial assumptions (see Table 2). Costs for the ESRD program are 
projected differently because of the different nature of services 
offered by the program.
    As shown in Table 4, the projected per enrollee amount required to 
pay for one-half of the total of benefits and administrative costs for 
disabled enrollees for 2021 is $377.23. The monthly actuarial rate of 
$349.90 also provides an adjustment of -$1.61 for interest earnings and 
-$25.72 for a contingency margin, reflecting the same factors and 
legislation described previously for the aged actuarial rate at 
magnitudes appropriate to the disabled rate determination. Based on 
current estimates, the assets associated with the disabled Medicare 
beneficiaries at the end of 2020 are sufficient to cover the amount of 
incurred, but unpaid, expenses and to provide for a significant degree 
of variation between actual and projected costs. As noted for the aged 
actuarial rate, the 2021 contingency margin is set above the normal 
target level in order to accommodate the higher uncertainty due to the 
COVID-19 pandemic.
    The actuarial rate of $349.90 per month for disabled beneficiaries, 
as announced in this notice for 2021, reflects the combined net effect 
of the factors and legislation described previously for aged 
beneficiaries and the projection assumptions listed in Table 2.
4. Sensitivity Testing
    Several factors contribute to uncertainty about future trends in 
medical care costs. It is appropriate to

[[Page 71909]]

test the adequacy of the rates using alternative cost growth rate 
assumptions. The results of those assumptions are shown in Table 5. One 
set represents increases that are higher and, therefore, more 
pessimistic than the current estimate. The other set represents 
increases that are lower and, therefore, more optimistic than the 
current estimate. The values for the alternative assumptions were 
determined from a statistical analysis of the historical variation in 
the respective increase factors. The historical variation may not be 
representative of the current level of uncertainty due to the COVID-19 
pandemic.
    As indicated in Table 5, the monthly actuarial rates would result 
in an excess of assets over liabilities of $101,796 million by the end 
of December 2021 under the cost growth rate assumptions shown in Table 
2 and under the assumption that the provisions of current law are fully 
implemented. This result amounts to 21.6 percent of the estimated total 
incurred expenditures for the following year.
    Assumptions that are somewhat more pessimistic (and that therefore 
test the adequacy of the assets to accommodate projection errors) 
produce a surplus of $65,262 million by the end of December 2021 under 
current law, which amounts to 12.4 percent of the estimated total 
incurred expenditures for the following year. Under fairly optimistic 
assumptions, the monthly actuarial rates would result in a surplus of 
$176,475 million by the end of December 2021, or 34.2 percent of the 
estimated total incurred expenditures for the following year.
    The sensitivity analysis indicates that, in a typical year, the 
premium and general revenue financing established for 2021, together 
with existing Part B account assets, would be adequate to cover 
estimated Part B costs for 2021 under current law, should actual costs 
prove to be somewhat greater than expected. However, the current level 
of uncertainty due to the pandemic may differ from the historical 
variation included in this analysis.
5. Premium Rates and Deductible
    As determined in accordance with section 1839 of the Act, the 
following are the 2021 Part B monthly premium rates to be paid by 
beneficiaries who file either individual tax returns (and are single 
individuals, heads of households, qualifying widows or widowers with 
dependent children, or married individuals filing separately who lived 
apart from their spouses for the entire taxable year) or joint tax 
returns.

------------------------------------------------------------------------
                                                    Income-
    Beneficiaries who file        Beneficiaries     related      Total
  individual tax returns with    who file joint     monthly     monthly
            income:             tax returns with  adjustment    premium
                                     income:        amount      amount
------------------------------------------------------------------------
Less than or equal to $88,000.  Less than or           $0.00     $148.50
                                 equal to
                                 $176,000.
Greater than $88,000 and less   Greater than           59.40      207.90
 than or equal to $111,000.      $176,000 and
                                 less than or
                                 equal to
                                 $222,000.
Greater than $111,000 and less  Greater than          148.50      297.00
 than or equal to $138,000.      $222,000 and
                                 less than or
                                 equal to
                                 $276,000.
Greater than $138,000 and less  Greater than          237.60      386.10
 than or equal to $165,000.      $276,000 and
                                 less than or
                                 equal to
                                 $330,000.
Greater than $165,000 and less  Greater than          326.70      475.20
 than $500,000.                  $330,000 and
                                 less than
                                 $750,000.
Greater than or equal to        Greater than or       356.40      504.90
 $500,000.                       equal to
                                 $750,000.
------------------------------------------------------------------------

    In addition, the monthly premium rates to be paid by beneficiaries 
who are married and lived with their spouses at any time during the 
taxable year, but who file separate tax returns from their spouses, are 
as follows:

------------------------------------------------------------------------
                                                    Income-
  Beneficiaries who are married and lived with      related      Total
 their spouses at any time during the year, but     monthly     monthly
    who file separate tax  returns from their     adjustment    premium
                    spouses:                        amount      amount
------------------------------------------------------------------------
Less than or equal to $88,000...................       $0.00     $148.50
Greater than $88,000 and less than $412,000.....      326.70      475.20
Greater than or equal to $412,000...............      356.40      504.90
------------------------------------------------------------------------


                                                        Table 2--Projection Factors \1\ 12-Month Periods Ending December 31 of 2018-2021
                                                                                          [In percent]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Other
                                                                    Physicians'    Durable     Carrier     Physician-      carrier     Outpatient    Home    Hospital       Other       Managed
                           Calendar year                              services     medical     lab \2\    administered     services     hospital    health   lab \4\    intermediary      care
                                                                                  equipment                   drugs          \3\                    agency              services \5\
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Aged:
    2018..........................................................          1.6         18.1       11.4            12.2          2.3          8.4      1.4       -1.0             7.6        7.4
    2019..........................................................          3.8          7.3        4.3            11.0          2.2          5.6      3.9       -3.6             5.5        8.4
    2020..........................................................        -14.0         -1.5      -13.5             6.3         -5.8         -6.5     -3.7       -7.0            -3.7        8.5
    2021..........................................................         29.3          0.5       17.7             9.6         14.9         36.6     19.0        8.8            15.0        3.6
Disabled:
    2018..........................................................         -0.6         13.5        3.7             7.9          1.9          4.8      0.5       -1.3             5.3        7.6
    2019..........................................................          5.5          5.4       10.4            12.0          5.8          7.3      3.7        0.6            11.1        8.3
    2020..........................................................         -9.3          0.3      -15.2            11.5          1.6         -3.7     -1.5       -3.8            -0.6        9.5
    2021..........................................................         24.7          1.5       23.0             8.9          8.8         34.9     22.4        6.8            22.2        3.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ All values for services other than managed care are per fee-for-service enrollee. Managed care values are per managed care enrollee.
\2\ Includes services paid under the lab fee schedule furnished in the physician's office or an independent lab.
\3\ Includes ambulatory surgical center facility costs, ambulance services, parenteral and enteral drug costs, supplies, etc.

[[Page 71910]]

 
\4\ Includes services paid under the lab fee schedule furnished in the outpatient department of a hospital.
\5\ Includes services furnished in dialysis facilities, rural health clinics, federally qualified health centers, rehabilitation and psychiatric hospitals, etc.


    Table 3--Derivation of Monthly Actuarial Rate for Enrollees Age 65 and Over for Financing Periods Ending
                                   December 31, 2018 Through December 31, 2021
----------------------------------------------------------------------------------------------------------------
                                                                                  Preliminary CY
                                      CY 2018         CY 2019         CY 2020          2021           CY 2021
----------------------------------------------------------------------------------------------------------------
Covered services (at level
 recognized):
    Physician fee schedule......          $72.28          $73.02          $60.48          $76.83          $76.83
    Durable medical equipment...            6.05            6.32            5.99            5.93            5.93
    Carrier lab \1\.............            4.28            4.35            3.61            4.19            4.19
    Physician-administered drugs           16.07           17.37           17.74           19.92           19.92
    Other carrier services \2\..            9.33            9.28            8.41            9.52            9.52
    Outpatient hospital.........           49.46           50.84           45.71           61.52           61.52
    Home health.................            8.85            8.95            8.29            9.72            9.72
    Hospital lab \3\............            2.17            2.04            1.82            1.95            1.95
    Other intermediary services            18.61           19.13           17.70           20.06           20.06
     \4\........................
    Managed care................          100.65          113.46          129.87          137.11          137.11
                                 -------------------------------------------------------------------------------
        Total services..........          287.76          304.75          299.62          346.77          346.77
Cost sharing:
    Deductible..................           -6.40           -6.32           -6.74           -6.94           -6.94
    Coinsurance.................          -28.62          -28.79          -26.02          -30.36          -30.36
Sequestration of benefits.......           -5.05           -5.39           -1.78           -6.17           -6.17
HIT payment incentives..........            0.16            0.00            0.00            0.00            0.00
                                 -------------------------------------------------------------------------------
    Total benefits..............          247.85          264.26          265.07          303.30          303.30
Administrative expenses.........            3.90            4.11            4.71            4.21            4.21
                                 -------------------------------------------------------------------------------
Incurred expenditures...........          251.75          268.36          269.79          307.52          307.52
Value of interest...............           -1.80           -1.88           -1.09           -1.39           -1.39
Contingency margin for                     11.95           -1.58           14.50            8.17          -15.13
 projection error and to
 amortize the surplus or deficit
 \5\............................
                                 -------------------------------------------------------------------------------
    Monthly actuarial rate......         $261.90         $264.90         $283.20         $314.30         $291.00
----------------------------------------------------------------------------------------------------------------
\1\ Includes services paid under the lab fee schedule furnished in the physician's office or an independent lab.
\2\ Includes ambulatory surgical center facility costs, ambulance services, parenteral and enteral drug costs,
  supplies, etc.
\3\ Includes services paid under the lab fee schedule furnished in the outpatient department of a hospital.
\4\ Includes services furnished in dialysis facilities, rural health clinics, federally qualified health
  centers, rehabilitation and psychiatric hospitals, etc.
\5\ The significant negative margin included in the 2021 actuarial rate is attributable to the application of
  the provisions of the Continuing Appropriations Act, 2021 and Other Extensions Act.


 Table 4--Derivation of Monthly Actuarial Rate for Disabled Enrollees for Financing Periods Ending December 31,
                                         2018 Through December 31, 2020
----------------------------------------------------------------------------------------------------------------
                                                      CY 2018         CY 2019         CY 2020         CY 2021
----------------------------------------------------------------------------------------------------------------
Covered services (at level recognized):
    Physician fee schedule......................          $73.05          $72.63          $61.25          $72.93
    Durable medical equipment...................           12.09           12.02           11.02           10.81
    Carrier lab \1\.............................            5.71            6.00            4.73            5.51
    Physician-administered drugs................           14.80           15.54           15.84           17.51
    Other carrier services \2\..................           12.32           12.38           11.70           12.20
    Outpatient hospital.........................           65.16           65.53           57.86           75.43
    Home health.................................            6.95            6.78            6.19            7.20
    Hospital lab \3\............................            2.61            2.48            2.21            2.26
    Other intermediary services \4\.............           50.78           52.79           51.68           53.18
    Managed care................................          103.40          124.70          154.31          168.50
                                                 ---------------------------------------------------------------
        Total services..........................          346.87          370.84          376.79          425.52
Cost sharing:
    Deductible..................................           -6.16           -6.05           -6.45           -6.65
    Coinsurance.................................          -41.95          -41.78          -38.85          -41.50
Sequestration of benefits.......................           -5.97           -6.45           -2.21           -7.53
HIT payment incentives..........................            0.16            0.00            0.00            0.00
                                                 ---------------------------------------------------------------
    Total benefits..............................          292.95          316.56          329.29          369.85
Administrative expenses.........................            4.60            4.92            7.89            7.38
                                                 ---------------------------------------------------------------
Incurred expenditures...........................          297.55          321.48          337.15          377.23
Value of interest...............................           -2.68           -2.52           -1.38           -1.61

[[Page 71911]]

 
Contingency margin for projection error and to              0.13           -3.56            7.83          -25.72
 amortize the surplus or deficit \5\............
                                                 ---------------------------------------------------------------
    Monthly actuarial rate......................         $295.00         $315.40         $343.60         $349.90
----------------------------------------------------------------------------------------------------------------
\1\ Includes services paid under the lab fee schedule furnished in the physician's office or an independent lab.
\2\ Includes ambulatory surgical center facility costs, ambulance services, parenteral and enteral drug costs,
  supplies, etc.
\3\ Includes services paid under the lab fee schedule furnished in the outpatient department of a hospital.
\4\ Includes services furnished in dialysis facilities, rural health clinics, federally qualified health
  centers, rehabilitation and psychiatric hospitals, etc.
\5\ The significant negative margin included in the 2021 actuarial rate is attributable to the application of
  the provisions of the Continuing Appropriations Act, 2021 and Other Extensions Act.


    Table 5--Actuarial Status of the Part B Account in the SMI Trust Fund Under Three Sets of Assumptions for
                                   Financing Periods Through December 31, 2021
----------------------------------------------------------------------------------------------------------------
                       As of December 31,                              2019            2020            2021
----------------------------------------------------------------------------------------------------------------
Actuarial status (in millions):
    Assets......................................................         $99,602        $123,051        $138,974
    Liabilities.................................................         $31,566         $32,884         $37,178
                                                                 -----------------------------------------------
    Assets less liabilities.....................................         $68,036         $90,167        $101,796
    Ratio \1\...................................................           17.7%           20.2%           21.6%
Low-cost projection:
    Actuarial status (in millions):
        Assets..................................................         $99,602        $144,338        $176,457
        Liabilities.............................................         $31,566         $30,519         $35,245
                                                                 -----------------------------------------------
        Assets less liabilities.................................         $68,036        $113,819        $141,212
        Ratio \1\...............................................           18.9%           28.2%           34.2%
High-cost projection:
    Actuarial status (in millions):
        Assets..................................................         $99,602        $101,797        $104,088
        Liabilities.............................................         $31,566         $35,245         $38,826
                                                                 -----------------------------------------------
        Assets less liabilities.................................         $68,036         $66,552         $65,262
        Ratio \1\...............................................           16.7%           13.7%           12.4%
----------------------------------------------------------------------------------------------------------------
\1\ Ratio of assets less liabilities at the end of the year to the total incurred expenditures during the
  following year, expressed as a percent.

III. Collection of Information Requirements

    This document does not impose information collection requirements--
that is, reporting, recordkeeping, or third-party disclosure 
requirements. Consequently, there is no need for review by the Office 
of Management and Budget under the authority of the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.).

IV. Regulatory Impact Analysis

A. Statement of Need

    Section 1839 of the Act requires us to annually announce (that is, 
by September 30th of each year) the Part B monthly actuarial rates for 
aged and disabled beneficiaries as well as the monthly Part B premium. 
We also announce the Part B annual deductible because its determination 
is directly linked to the aged actuarial rate.

B. Overall Impact

    We have examined the impacts 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), the Congressional Review Act (5 U.S.C. 804(2)), and 
Executive Order 13771 on Reducing and Controlling Regulatory Costs 
(January 30, 2017).
    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 notices 
with economically significant effects ($100 million or more in any one 
year). The 2021 standard Part B premium of $148.50 is $3.90 higher than 
the 2020 premium of $144.60. We estimate that this premium increase, 
for the approximately 59 million Part B enrollees in 2021, will have an 
annual effect on the economy of $100 million or more. As a result, this 
notice is economically significant under section 3(f)(1) of Executive 
Order 12866 and is a major action as defined under the Congressional 
Review Act (5 U.S.C. 804(2)).
    As discussed earlier, this notice announces that the monthly 
actuarial rates applicable for 2021 are $291.00 for enrollees age 65 
and over and $349.90 for disabled enrollees under age 65. It also 
announces the 2021 monthly Part B premium rates to be paid by

[[Page 71912]]

beneficiaries who file either individual tax returns (and are single 
individuals, heads of households, qualifying widows or widowers with 
dependent children, or married individuals filing separately who lived 
apart from their spouses for the entire taxable year) or joint tax 
returns.

------------------------------------------------------------------------
                                                    Income-
    Beneficiaries who file        Beneficiaries     related      Total
  individual tax returns with    who file joint     monthly     monthly
            income:             tax returns with  adjustment    premium
                                     income:        amount      amount
------------------------------------------------------------------------
Less than or equal to $88,000.  Less than or           $0.00     $148.50
                                 equal to
                                 $176,000.
Greater than $88,000 and less   Greater than           59.40      207.90
 than or equal to $111,000.      $176,000 and
                                 less than or
                                 equal to
                                 $222,000.
Greater than $111,000 and less  Greater than          148.50      297.00
 than or equal to $138,000.      $222,000 and
                                 less than or
                                 equal to
                                 $276,000.
Greater than $138,000 and less  Greater than          237.60      386.10
 than or equal to $165,000.      $276,000 and
                                 less than or
                                 equal to
                                 $330,000.
Greater than $165,000 and less  Greater than          326.70      475.20
 than $500,000.                  $330,000 and
                                 less than
                                 $750,000.
Greater than or equal to        Greater than or       356.40      504.90
 $500,000.                       equal to
                                 $750,000.
------------------------------------------------------------------------

    In addition, the monthly premium rates to be paid by beneficiaries 
who are married and lived with their spouses at any time during the 
taxable year, but who file separate tax returns from their spouses, are 
also announced and listed in the following chart:

------------------------------------------------------------------------
                                                    Income-
  Beneficiaries who are married and lived with      related      Total
 their spouses at any time during the year, but     monthly     monthly
    who file separate tax  returns from their     adjustment    premium
                    spouses:                        amount      amount
------------------------------------------------------------------------
Less than or equal to $88,000...................       $0.00     $148.50
Greater than $88,000 and less than $412,000.....      326.70      475.20
Greater than or equal to $412,000...............      356.40      504.90
------------------------------------------------------------------------

    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 small 
governmental jurisdictions. Individuals and states are not included in 
the definition of a small entity. This notice announces the monthly 
actuarial rates for aged (age 65 and over) and disabled (under 65) 
beneficiaries enrolled in Part B of the Medicare SMI program beginning 
January 1, 2021. Also, this notice announces the monthly premium for 
aged and disabled beneficiaries as well as the income-related monthly 
adjustment amounts to be paid by beneficiaries with modified adjusted 
gross income above certain threshold amounts. As a result, we are not 
preparing an analysis for the RFA because the Secretary has determined 
that this notice will not have a significant economic impact on a 
substantial number 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 that is located outside of a Metropolitan 
Statistical Area and has fewer than 100 beds. As we discussed 
previously, we are not preparing an analysis for section 1102(b) of the 
Act because the Secretary has determined that this notice will not have 
a significant effect on a substantial number of small rural hospitals.
    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 one year of 
$100 million in 1995 dollars, updated annually for inflation. In 2020, 
that threshold is approximately $156 million. Part B enrollees who are 
also enrolled in Medicaid have their monthly Part B premiums paid by 
Medicaid. The cost to each state Medicaid program from the 2021 premium 
increase is estimated to be less than the threshold. This notice does 
not impose mandates that will have a consequential effect of the 
threshold amount or more on state, local, or tribal governments or on 
the private sector.
    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 compliance costs on state 
and local governments, preempts state law, or otherwise has Federalism 
implications. We have determined that this notice does not 
significantly affect the rights, roles, and responsibilities of states. 
Accordingly, the requirements of Executive Order 13132 do not apply to 
this notice.
    Executive Order 13771, titled ``Reducing Regulation and Controlling 
Regulatory Costs,'' was issued on January 30, 2017 (82 FR 9339, 
February 3, 2017). It has been determined that this notice is a 
transfer notice that does not impose more than de minimis costs and 
thus is not a regulatory action for the purposes of E.O. 13771.
    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.

V. Waiver of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite public comment prior to a rule taking 
effect in accordance with section 1871 of the Act and section 553(b) of 
the Administrative Procedure Act (APA). Section 1871(a)(2) of the Act 
provides that no rule, requirement, or other statement of policy (other 
than a national coverage determination) that establishes or changes a 
substantive legal standard

[[Page 71913]]

governing the scope of benefits, the payment for services, or the 
eligibility of individuals, entities, or organizations to furnish or 
receive services or benefits under Medicare shall take effect unless it 
is promulgated through notice and comment rulemaking. Unless there is a 
statutory exception, section 1871(b)(1) of the Act generally requires 
the Secretary of the Department of Health and Human Services (the 
Secretary) to provide for notice of a proposed rule in the Federal 
Register and provide a period of not less than 60 days for public 
comment before establishing or changing a substantive legal standard 
regarding the matters enumerated by the statute. Similarly, under 5 
U.S.C. 553(b) of the APA, the agency is required to publish a notice of 
proposed rulemaking in the Federal Register before a substantive rule 
takes effect. Section 553(d) of the APA and section 1871(e)(1)(B)(i) of 
the Act usually require a 30-day delay in effective date after issuance 
or publication of a rule, subject to exceptions. Sections 553(b)(B) and 
553(d)(3) of the APA provide for exceptions from the advance notice and 
comment requirement and the delay in effective date requirements. 
Sections 1871(b)(2)(C) and 1871(e)(1)(B)(ii) of the Act also provide 
exceptions from the notice and 60-day comment period and the 30-day 
delay in effective date. Section 553(b)(B) of the APA and section 
1871(b)(2)(C) of the Act expressly authorize an agency to dispense with 
notice and comment rulemaking for good cause if the agency makes a 
finding that notice and comment procedures are impracticable, 
unnecessary, or contrary to the public interest.
    The annual updated amounts for the Part B monthly actuarial rates 
for aged and disabled beneficiaries, the Part B premium, and Part B 
deductible set forth in this notice do not establish or change a 
substantive legal standard regarding the matters enumerated by the 
statute or constitute a substantive rule that would be subject to the 
notice requirements in section 553(b) of the APA. However, to the 
extent that an opportunity for public notice and comment could be 
construed as required for this notice, we find good cause to waive this 
requirement.
    Section 1839 of the Act requires the Secretary to determine the 
monthly actuarial rates for aged and disabled beneficiaries, as well as 
the monthly Part B premium (including the income-related monthly 
adjustment amounts to be paid by beneficiaries with modified adjusted 
gross income above certain threshold amounts), for each calendar year 
in accordance with the statutory formulae, in September preceding the 
year to which they will apply. Further, the statute requires that the 
agency promulgate the Part B premium amount, in September preceding the 
year to which it will apply, and include a public statement setting 
forth the actuarial assumptions and bases employed by the Secretary in 
arriving at the amount of an adequate actuarial rate for enrollees age 
65 and older. We include the Part B annual deductible, which is 
established pursuant to a specific formula described in section 1833(b) 
of the Act, because the determination of the amount is directly linked 
to the rate of increase in actuarial rate under section 1839(a)(1) of 
the Act. We have calculated the monthly actuarial rates for aged and 
disabled beneficiaries, the Part B deductible, and the monthly Part B 
premium as directed by the statute; since the statute establishes both 
when the monthly actuarial rates for aged and disabled beneficiaries 
and the monthly Part B premium must be published and the information 
that the Secretary must factor into those amounts, we do not have any 
discretion in that regard. We find notice and comment procedures to be 
unnecessary for this notice and we find good cause to waive such 
procedures under section 553(b)(B) of the APA and section 1871(b)(2)(C) 
of the Act, if such procedures may be construed to be required at all. 
Through this notice, we are simply notifying the public of the updates 
to the monthly actuarial rates for aged and disabled beneficiaries and 
the Part B deductible, as well as the monthly Part B premium amounts 
and the income-related monthly adjustment amounts to be paid by certain 
beneficiaries, in accordance with the statute, for CY 2021. As such, we 
also note that even if notice and comment procedures were required for 
this notice, for the previously stated reason, we would find good cause 
to waive the delay in effective date of the notice, as additional delay 
would be contrary to the public interest under section 
1871(e)(1)(B)(ii) of the Act. Publication of this notice is consistent 
with section 1839 of the Act, and we believe that any potential delay 
in the effective date of the notice, if such delay were required at 
all, could cause unnecessary confusion both for the agency and Medicare 
beneficiaries.

    Dated: October 30, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: November 2, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-25029 Filed 11-6-20; 4:15 pm]
BILLING CODE 4120-01-P