[Federal Register Volume 88, Number 199 (Tuesday, October 17, 2023)]
[Notices]
[Pages 71551-71555]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-22850]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-8083-N]
RIN 0938-AV11


Medicare Program; CY 2024 Inpatient Hospital Deductible and 
Hospital and Extended Care Services Coinsurance Amounts

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

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: This notice announces the inpatient hospital deductible and 
the hospital and extended care services coinsurance amounts for 
services furnished in calendar year (CY) 2024 under Medicare's Hospital 
Insurance (Part A) program. The Medicare statute specifies the formulas 
used to determine these amounts. For CY 2024, the inpatient hospital 
deductible will be $1,632. The daily coinsurance amounts for CY 2024 
will be as follows: $408 for the 61st through 90th day of 
hospitalization in a benefit period; $816 for lifetime reserve days; 
and $204 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, 2024.

FOR FURTHER INFORMATION CONTACT: Suzanne Codespote, (410) 786-7737.

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 amount of the inpatient hospital 
deductible and the hospital and

[[Page 71552]]

extended care services coinsurance amounts applicable for services 
furnished in the following calendar year (CY).

II. Computing the Inpatient Hospital Deductible for CY 2024

    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 2024 for hospitals 
paid under the inpatient prospective payment system (IPPS) is the 
inpatient hospital operating market basket percentage increase, 
otherwise known as the IPPS market basket update, reduced by an 
adjustment based on changes in economy-wide productivity (the 
productivity adjustment) (see section 1886(b)(3)(B)(xi)(II) of the 
Act). Under section 1886(b)(3)(B)(viii) of the Act, for FY 2024, 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 most 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 most 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 2024 
for hospitals excluded from the inpatient prospective payment system is 
as follows:
     The percentage increase for long-term care hospitals is 
the LTCH market basket percentage increase reduced by the productivity 
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 IRF market basket percentage increase reduced by the 
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 for inpatient psychiatric 
facilities is the IPF market basket percentage increase reduced by the 
productivity 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 IPPS 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, religious nonmedical health 
care institutions, and hospitals located outside the 50 states, the 
District of Columbia, and Puerto Rico.
    The IPPS operating market basket percentage increase for FY 2024 is 
3.3 percent and the productivity adjustment is 0.2 percentage point, as 
announced in the final rule that appeared in the Federal Register on 
August 28, 2023, 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 2024 
Rates; Quality Programs and Medicare Promoting Interoperability Program 
Requirements for Eligible Hospitals and Critical Access Hospitals; 
Rural Emergency Hospital and Physician-Owned Hospital Requirements; and 
Provider and Supplier Disclosure of Ownership; and Medicare 
Disproportionate Share Hospital (DSH) Payments: Counting Certain Days 
Associated With Section 1115 Demonstrations in the Medicaid Fraction'' 
(88 FR 59035). Therefore, the percentage increase for hospitals paid 
under the inpatient prospective payment system that submit quality data 
and are meaningful EHR users is 3.1 percent (that is, the FY 2024 
market basket update of 3.3 percent less the productivity adjustment of 
0.2 percentage point). The average payment percentage increase for 
hospitals excluded from the inpatient prospective payment system is 
3.35 percent. This average includes long-term care hospitals, inpatient 
rehabilitation facilities, inpatient psychiatric 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 2024 is 3.13 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 with 
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 2023 compared with FY 2022. (We excluded from this 
calculation hospitals whose payments are not based on the inpatient 
prospective payment system because their payments are based on 
alternate prospective payment systems or reasonable costs.) We used 
Medicare bills from prospective payment hospitals that we received as 
of July 2023. These bills represent a total of about 6.0 million 
Medicare discharges for FY 2023 and provide the most recent case-mix 
data available at this time. Based on these bills, the change in 
average case-mix in FY 2023 is -1.0 percent. Based on these bills and 
past experience, we expect the overall FY 2023 case mix change to be -
1.0 percent as the year progresses and more FY 2023 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 changes. COVID-19 cases

[[Page 71553]]

typically have higher-weighted MS DRGs, which would cause a real 
increase in case-mix, while hospitals have experienced a reduction in 
the number of lower-weighted cases, which would also cause a real 
increase in case-mix. The lower number of COVID-19 cases in 2023 
compared with the last several years would therefore mean a decrease in 
real case mix. Because of the uncertainty, we are assuming that all of 
the recently observed care is not due to coding optimization and that 
all of the -1.0 percent is real.
    Thus, the estimate of the payment-weighted average of the 
applicable percentage increases used for updating the payment rates is 
3.13 percent, and the real case-mix adjustment factor for the 
deductible is -1.0 percent. Accordingly, using the statutory formula as 
stated in section 1813(b) of the Act, we calculate the inpatient 
hospital deductible for services furnished in CY 2024 to be $1,632. 
This deductible amount is determined by multiplying $1,600 (the 
inpatient hospital deductible for CY 2023 (86 FR 64217)) by the 
payment-weighted average increase in the payment rates of 1.0313 
multiplied by the decrease in real case-mix of 0.99, which equals 
$1,633.58 and is rounded to $1,632. (based on rounding to the nearest 
multiple of 4).

III. Computing the Inpatient Hospital and Extended Care Services 
Coinsurance Amounts for CY 2024

    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 2024, 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 
$408 (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 $816 (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 $204 (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 
2023 and 2024, as well as the number of each that is estimated to be 
paid.

                Table 1--Medicare Part A Deductible and Coinsurance Amounts for CYs 2023 and 2024
----------------------------------------------------------------------------------------------------------------
                                                               Value                 Number paid (in millions)
              Type of cost sharing               ---------------------------------------------------------------
                                                       2023            2024            2023            2024
----------------------------------------------------------------------------------------------------------------
Inpatient hospital deductible...................          $1,600          $1,632            5.15            5.05
Daily coinsurance for 61st-90th day.............             400             408            1.29            1.26
Daily coinsurance for lifetime reserve days.....             800             816            0.64            0.63
SNF coinsurance.................................             200             204           26.99           25.28
----------------------------------------------------------------------------------------------------------------

    The estimated total decrease in costs to beneficiaries is about 
$240 million (rounded to the nearest $10 million) because of (1) the 
increase in the deductible and coinsurance amounts and (2) the decrease 
in the number of deductibles and daily coinsurance amounts paid. We 
determine the decrease in cost to beneficiaries by calculating the 
difference between the CY 2023 and CY 2024 deductible and coinsurance 
amounts multiplied by the estimated decrease 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

[[Page 71554]]

determine and publish the inpatient hospital deductible and hospital 
and extended care services coinsurance amounts for each CY in 
accordance with the statutory formulas, and we are simply notifying the 
public of the changes to the deductible and coinsurance amounts for CY 
2024. We have calculated the inpatient hospital deductible and hospital 
and extended care services coinsurance amounts as directed by the 
statute; the statute establishes both when the deductible and 
coinsurance amounts must be published and what information must be 
considered by the Secretary in establishing the deductible and 
coinsurance amounts, and therefore 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 
2024. As such, we 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 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 2024, 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 rule 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), Executive Order 14094 entitled ``Modernizing 
Regulatory Review'' (April 6, 2023), 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). The 
Executive Order 14094 entitled ``Modernizing Regulatory Review'' 
(hereinafter, the Modernizing E.O.) amends section 3(f)(1) of Executive 
Order 12866 (Regulatory Planning and Review). The amended 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 $200 million or more in any 1 year (adjusted 
every 3 years by the Administrator of the Office of Information and 
Regulatory Affairs (OIRA) for changes in gross domestic product) or 
adversely affecting in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, territorial, or tribal governments 
or communities; (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 legal or policy issues, for which a centralized 
review would meaningfully further the President's priorities, or the 
principles set forth in this Executive order, as specifically 
authorized in a timely manner by the Administrator of OIRA in each 
case.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with significant regulatory action/s and/or significant effects as per 
section 3(f)(1) of Executive Order 12866 ($200 million or more in any 1 
year). Based on our estimates OMB's Office of Information and 
Regulatory Affairs has determined that this rulemaking is significant 
per section 3(f)(1) as measured by the $200 million or more in any 1 
year, 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 
decrease in costs to beneficiaries associated with this notice is about 
$240 million because of (1) the increase in the deductible and 
coinsurance amounts and (2) the decrease in the number of deductibles 
and daily coinsurance amounts paid.

C. Accounting Statement and Table

    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf), in Table 2, we have prepared an accounting 
statement showing the estimated total decrease in costs to 
beneficiaries of about $240 million, which is due to the increase in 
the deductible and coinsurance amounts and the decrease in the number 
of deductibles and daily coinsurance amounts paid. As stated in section 
IV of this notice, we determined the decrease in cost to beneficiaries 
by calculating the difference between the CY 2023 and CY 2024 
deductible and coinsurance amounts multiplied by the estimated decrease 
in the number of deductible and coinsurance amounts paid.

[[Page 71555]]



   Table 2--Estimated Transfers for CY 2024 Deductible and Coinsurance
                                 Amounts
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
Annualized monetized transfers.........  -$240 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 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 $9.0 million to $47 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 2024 and will have an impact 
on certain Medicare beneficiaries. As a result, we are not preparing an 
analysis for the RFA because the Secretary has certified 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 an 
RIA 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 2024 and will have an impact 
on certain 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 2023, that 
threshold is approximately $177 million. This notice will not impose a 
mandate that will result in the expenditure by state, local, and Tribal 
Governments, in the aggregate, or by the private sector, of more than 
$177 million in any 1 year.

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 notice 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 October 11, 
2023.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2023-22850 Filed 10-12-23; 4:15 pm]
BILLING CODE 4120-01-P