[Federal Register Volume 86, Number 219 (Wednesday, November 17, 2021)]
[Notices]
[Pages 64217-64221]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25051]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-8077-N]
RIN 0938-AU46


Medicare Program; CY 2022 Inpatient Hospital Deductible and 
Hospital and Extended Care Services Coinsurance Amounts

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of 
Health and Human Services (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) 2022 under Medicare's Hospital 
Insurance Program (Medicare Part A). The Medicare statute specifies the 
formulae used to determine these amounts. For CY 2022, the inpatient 
hospital deductible will be $1,556. The daily coinsurance amounts for 
CY 2022 will be: $389 for the 61st through 90th day of hospitalization 
in a benefit period; $778 for lifetime reserve days; and $194.50 for 
the 21st through 100th day of extended care services in a skilled 
nursing facility in a benefit period.

DATES: The deductible and coinsurance amounts announced in this notice 
are effective on January 1, 2022.

FOR FURTHER INFORMATION CONTACT: Yaminee Thaker, (410) 786-7921 for 
general information and 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 the Secretary of 
the Department of Health and Human Services (the Secretary) to 
determine and publish each year the

[[Page 64218]]

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 2022

    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 2022 for hospitals 
paid under the inpatient prospective payment system is the market 
basket percentage increase, otherwise known as the market basket 
update, reduced by 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, for FY 2022, the applicable percentage 
increase for hospitals that do not submit quality data as specified by 
the Secretary is reduced by one quarter of the market basket update. 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 not be affected, since the majority of 
hospitals submit quality data and receive the full market basket 
update. Section 1886(b)(3)(B)(ix) of the Act requires that any hospital 
that is not a meaningful electronic health record (EHR) user (as 
defined in section 1886(n)(3) of the Act) will have three-quarters of 
the market basket update reduced by 100 percent for FY 2017 and each 
subsequent FY. We are estimating that after accounting for these 
hospitals receiving the lower market basket update, the calculated 
deductible will not be affected, since the majority of hospitals are 
meaningful EHR users and are expected to receive the full market basket 
update.
    Under section 1886 of the Act, the percentage increase used to 
update the payment rates (or target amounts, as applicable) for FY 2022 
for hospitals excluded from the inpatient prospective payment system is 
as follows:
     The percentage increase for long term care hospitals is 
the market basket percentage increase reduced by the MFP adjustment 
(see section 1886(m)(3)(A) of the Act). In addition, these hospitals 
may also be impacted by the quality reporting adjustments and the site-
neutral payment rates (see sections 1886(m)(5) and 1886(m)(6) of the 
Act).
     The percentage increase for inpatient rehabilitation 
facilities is the market basket percentage increase reduced by a 
productivity adjustment in accordance with section 1886(j)(3)(C)(ii)(I) 
of the Act. In addition, these hospitals may also be impacted by the 
quality reporting adjustments (see section 1886(j)(7) of the Act).
     The percentage increase used to update the payment rate 
for inpatient psychiatric facilities is the market basket percentage 
increase reduced by the MFP adjustment (see section 1886(s)(2)(A)(i) of 
the Act). In addition, these hospitals may also be impacted by the 
quality reporting adjustments (see section 1886(s)(4) of the Act).
     The percentage increase used to update the target amounts 
for other types of hospitals that are excluded from the inpatient 
prospective payment system and that are paid on a reasonable cost 
basis, subject to a rate-of-increase ceiling, is the inpatient 
prospective payment system operating market basket percentage increase, 
which is described at section 1886(b)(3)(B)(ii)(VIII) of the Act and 42 
CFR 413.40(c)(3). These other types of hospitals include cancer 
hospitals, children's hospitals, extended neoplastic disease care 
hospitals, and hospitals located outside the 50 states, the District of 
Columbia, and Puerto Rico.
    The inpatient prospective payment system market basket percentage 
increase for FY 2022 is 2.7 percent and the MFP adjustment is 0.7 
percentage point, as announced in the final rule that appeared in the 
Federal Register on August 13, 2021, entitled, ``Hospital Inpatient 
Prospective Payment Systems for Acute Care Hospitals and the Long-Term 
Care Hospital Prospective Payment System and Policy Changes and Fiscal 
Year 2022 Rates; Quality Programs and Medicare Promoting 
Interoperability Programs Requirements for Eligible Hospitals and 
Critical Access Hospitals; Changes to Medicaid Provider Enrollment; and 
Changes to the Medicare Shared Savings Programs'' (86 FR 45613). 
Therefore, the percentage increase for hospitals paid under the 
inpatient prospective payment system that submit quality data and are 
meaningful EHR users is 2.0 percent (that is, the FY 2022 market basket 
update of 2.7 percent less the MFP adjustment of 0.7 percentage point). 
The average payment percentage increase for hospitals excluded from the 
inpatient prospective payment system is 2.07 percent. This average 
includes long term care hospitals, inpatient rehabilitation facilities, 
and other hospitals excluded from the inpatient prospective payment 
system. 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 2022 is 2.01 percent.
    To develop the adjustment to reflect changes in real case-mix, we 
first calculated an average case-mix for each hospital 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 inpatient prospective payment 
system in FY 2021 compared to FY 2020. (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 August 2021. These bills represent a total of about 6.4 million 
Medicare discharges for FY 2021 and provide the most recent case-mix 
data available at this time. Based on these bills, the change in 
average case-mix in FY 2021 is 2.9 percent. Based on these bills and 
past experience, we expect the overall case mix change to be 2.9 
percent as the year progresses and more FY 2021 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. Real case-mix is that portion of case-mix 
that is due to changes in the mix of cases in the hospital and not due 
to coding optimization. COVID-19 has complicated the determination of 
real case-mix increase. COVID 19 cases typically have higher-weighted 
MS DRGs which would cause a real increase in case-mix while hospitals 
have experienced a reduction in lower-weighted cases which would also 
cause a real increase in case-mix. In addition, care that was deferred 
in 2020 could be

[[Page 64219]]

more costly in 2021 causing an increase in real case-mix. Due to the 
uncertainty we are assuming that all of the recently observed care is 
not due to coding optimization and hence all of the 2.9 percent is 
real.
    Thus, the estimate of the payment-weighted average of the 
applicable percentage increases used for updating the payment rates is 
2.01 percent, and the real case-mix adjustment factor for the 
deductible is 2.9 percent. Therefore, using the statutory formula as 
stated in section 1813(b) of the Act, we calculate the inpatient 
hospital deductible for services furnished in CY 2022 to be $1,556. 
This deductible amount is determined by multiplying $1,484 (the 
inpatient hospital deductible for CY 2021 (85 FR 71916)) by the 
payment-weighted average increase in the payment rates of 1.0201 
multiplied by the increase in real case-mix of 1.029, which equals 
$1,558 and is rounded to $1,556.

III. Computing the Inpatient Hospital and Extended Care Services 
Coinsurance Amounts for CY 2022

    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 2022, 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 
$389 (one-fourth of the inpatient hospital deductible as stated in 
section 1813(a)(1)(A) of the Act); the daily coinsurance for lifetime 
reserve days will be $778 (one-half of the inpatient hospital 
deductible as stated in section 1813(a)(1)(B) of the Act); and the 
daily coinsurance for the 21st through 100th day of extended care 
services in a skilled nursing facility (SNF) in a benefit period will 
be $194.50 (one-eighth of the inpatient hospital deductible as stated 
in section 1813(a)(3) of the Act).

IV. Cost to Medicare Beneficiaries

    Table 1 summarizes the deductible and coinsurance amounts for CYs 
2021 and 2022, as well as the number of each that is estimated to be 
paid.

                Table 1--Medicare Part A Deductible and Coinsurance Amounts for CYs 2021 and 2022
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                                                              Value                  Number paid (in millions)
              Type of cost sharing               ---------------------------------------------------------------
                                                       2021            2022            2021            2022
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Inpatient hospital deductible...................          $1,484          $1,556            6.11            6.43
Daily coinsurance for 61st-90th day.............             371             389            1.37            1.44
Daily coinsurance for lifetime reserve days.....             742             778            0.69            0.72
SNF coinsurance.................................          185.50          194.50           29.69           28.63
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    The estimated total increase in costs to beneficiaries is about 
$1,100 million (rounded to the nearest $10 million) due to: (1) The 
increase in the deductible and coinsurance amounts; and (2) the 
increase in the number of deductibles and daily coinsurance amounts 
paid. We determine the increase in cost to beneficiaries by calculating 
the difference between the 2021 and 2022 deductible and coinsurance 
amounts multiplied by the estimated increase in the number of 
deductible and coinsurance amounts paid.

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 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 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 inpatient hospital deductible and the hospital and 
extended care services coinsurance amounts announcement set forth in 
this notice does not establish or change a substantive legal standard 
regarding the matters enumerated by the statute or constitute a 
substantive rule which 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 1813(b)(2) of the Act requires publication of the inpatient 
hospital deductible and the hospital and extended care services 
coinsurance amounts between September 1 and September 15 of the year 
preceding the year to which they will apply. Further, the statute 
requires that the agency determine and publish the inpatient hospital 
deductible and hospital and extended care services coinsurance amounts 
for each CY in accordance with the statutory formulae, and we are 
simply notifying the public of the changes to the deductible and 
coinsurance amounts for CY 2022. We have calculated the inpatient 
hospital deductible and hospital and extended

[[Page 64220]]

care services coinsurance amounts as directed by the statute; the 
statute establishes both when the deductible and coinsurance amounts 
must be published and the information that the Secretary must factor 
into the deductible and coinsurance amounts, so 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 inpatient hospital deductible and the hospital and extended care 
services coinsurance amounts, in accordance with the statute, for CY 
2022. As such, we also note that even if notice and comment procedures 
were required for this notice, for the reasons stated above, 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 1813(b)(2) 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.

VI. 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 (OMB) under the authority of the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

VII. Regulatory Impact Analysis

    Although this notice does not constitute a substantive rule, we 
nevertheless prepared this Regulatory Impact Analysis section in the 
interest of ensuring that the impacts of this notice are fully 
understood.

A. Statement of Need

    This notice announces the Medicare Part A inpatient hospital 
deductible and associated coinsurance amounts for hospital and extended 
care services applicable for care provided in CY 2022, as required by 
section 1813 of the Act. It also responds to section 1813(b)(2) of the 
Act, which requires the Secretary to provide for publication of these 
amounts in the Federal Register between September 1 and September 15 of 
the year preceding the year to which they will apply. As this statutory 
provision prescribes a detailed methodology for calculating these 
amounts, we do not have the discretion to adopt an alternative approach 
on these issues.

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), 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). Section 
3(f) of Executive Order 12866 defines a ``significant regulatory 
action'' as an action that is likely to result in a rule: (1) Having an 
annual effect on the economy of $100 million or more in any 1 year, or 
adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or state, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating a serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive order.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with economically significant effects ($100 million or more in any 1 
year). Although we do not consider this notice to constitute a 
substantive rule, based on our estimates, OMB's Office of Information 
and Regulatory Affairs has determined this rulemaking is ``economically 
significant'' as measured by the $100 million threshold, and hence also 
a major rule under Subtitle E of the Small Business Regulatory 
Enforcement Fairness Act of 1996 (also known as the Congressional 
Review Act). As stated in section IV of this notice, we estimate that 
the total increase in costs to beneficiaries associated with this 
notice is about $1,100 million due to: (1) The increase in the 
deductible and coinsurance amounts; and (2) the increase in the number 
of deductibles and daily coinsurance amounts paid.

C. Accounting Statement and Table

    As required by OMB Circular A-4 (available at www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf), in Table 2, we 
have prepared an accounting statement showing the estimated total 
increase in costs to beneficiaries of about $1,100 million, which is 
due to the increase in the deductible and coinsurance amounts, and the 
increase in the number of deductibles and daily coinsurance amounts 
paid. As stated in section IV of this notice, we determined the 
increase in cost to beneficiaries by calculating the difference between 
the 2021 and 2022 deductible and coinsurance amounts multiplied by the 
estimated increase in the number of deductible and coinsurance amounts 
paid.

   Table 2--Estimated Transfers for CY 2022 Deductible and Coinsurance
                                 Amounts
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                 Category                             Transfers
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Annualized Monetized Transfers............  $1,100 million.
From Whom to Whom.........................  Beneficiaries to Providers.
------------------------------------------------------------------------

D. Regulatory Flexibility Act

    The RFA requires agencies to analyze options for regulatory relief 
of small entities, 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. Most hospitals and most other health care 
providers and suppliers are small entities, either by being nonprofit 
organizations or by meeting the Small Business Administration's 
definition of a small business (having revenues of less than $8.0 
million to $41.5 million in any 1 year). Individuals and states are not 
included in the definition of a small entity. This annual notice 
announces the Medicare Part A deductible and coinsurance amounts for CY 
2022 and will have an impact on the Medicare beneficiaries. As a 
result, we are not preparing an analysis for the RFA because the 
Secretary has certified that

[[Page 64221]]

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. This annual notice 
announces the Medicare Part A deductible and coinsurance amounts for CY 
2022 and will have an impact on the Medicare beneficiaries. As a 
result, we are not preparing an analysis for section 1102(b) of the Act 
because the Secretary has certified that this notice will not have a 
significant impact on the operations of a substantial number of small 
rural hospitals.

E. Unfunded Mandates Reform 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 2021, that 
threshold is approximately $158 million. This notice does not impose 
mandates that will have a consequential effect of $158 million or more 
on state, local, or tribal governments or on the private sector.

F. Federalism

    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 direct effect on 
state or local governments, preempt state law, or otherwise have 
federalism implications.

G. Congressional Review

    This final action is subject to the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801 et seq.) and has been transmitted to the Congress 
and the Comptroller General for review.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on November 10, 2021.

    Dated: November 12, 2021.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2021-25051 Filed 11-12-21; 5:00 pm]
BILLING CODE 4120-01-P