Medicare Program; Medicare Part B Monthly Actuarial Rates, Premium Rate, and Annual Deductible for Calendar Year 2006, 55897-55903 [05-18837]
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Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices
premium is $393. The full monthly
premium reduced by 45 percent is $216.
IV. Costs to Beneficiaries
The CY 2006 premium of $393 is
about 5 percent higher than the CY 2005
premium of $375.
We estimate that approximately
523,000 enrollees will voluntarily enroll
in Medicare Part A by paying the full
premium. We estimate an additional
1,000 enrollees will pay the reduced
premium. We estimate that the aggregate
cost to enrollees paying these premiums
will be about $113 million in CY 2006
over the amount that they paid in CY
2005.
V. Waiver of Proposed Notice and
Comment Period
We are not using notice and comment
rulemaking in this notification of Part A
premiums for CY 2006, as that
procedure is unnecessary because of the
lack of discretion in the statutory
formula that is used to calculate the
premium and the solely ministerial
function that this notice serves. The
Administrative Procedure Act (APA)
permits agencies to waive notice and
comment rulemaking when notice and
public comment thereon are
unnecessary. On this basis, we waive
publication of a proposed notice and a
solicitation of public comments.
VI. Regulatory Impact Statement
We have examined the impacts of this
notice as required by Executive Order
12866 (September 1993, Regulatory
Planning and Review), the Regulatory
Flexibility Act (RFA) (September 19,
1980, Pub. L. 96–354), section 1102(b) of
the Act, the Unfunded Mandates Reform
Act of 1995 (Pub. L. 104–4), and
Executive Order 13132.
Executive Order 12866 directs
agencies to assess all costs and benefits
of available regulatory alternatives and,
if regulation is necessary, to select
regulatory approaches that maximize
net benefits (including potential
economic, environmental, public health
and safety effects, distributive impacts,
and equity). As stated in section IV of
this notice, we estimate that the overall
effect of these changes in the Part A
premium will be a cost to voluntary
enrollees (section 1818 and section
1818A of the Act) of about $113 million.
Therefore, this notice is a major rule as
defined in Title 5, United States Code,
section 804(2) and is an economically
significant rule under Executive Order
12866.
The RFA requires agencies to analyze
options for regulatory relief of small
entities. For purposes of the RFA, small
entities include small businesses,
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nonprofit organizations, and
government agencies. Most hospitals
and most other providers and suppliers
are small entities, either by nonprofit
status or by having revenues of $6
million to $29 million in any 1 year.
Individuals and States are not included
in the definition of a small entity. We
have determined that this notice will
not have a significant economic impact
on a substantial number of small
entities. Therefore, we are not preparing
an analysis for the RFA.
In addition, section 1102(b) of the Act
requires us to prepare a regulatory
impact analysis if a rule may have a
significant impact on the operations of
a substantial number of small rural
hospitals. This analysis must conform to
the provisions of section 604 of the
RFA. For purposes of section 1102(b) of
the Act, we define a small rural hospital
as a hospital that is located outside of
a Metropolitan Statistical Area (MSA)
and has fewer than 100 beds.
We have determined that this notice
will not have a significant effect on the
operations of a substantial number of
small rural hospitals. Therefore, we are
not preparing an analysis for section
1102(b) of the Act.
Section 202 of the Unfunded
Mandates Reform Act of 1995 also
requires that agencies assess anticipated
costs and benefits before issuing any
rule that may result in expenditure in
any 1 year by State, local, or tribal
governments, in the aggregate, or by the
private sector, of $110 million. This
notice has no consequential effect 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 requirement
costs on State and local governments,
preempts State law, or otherwise has
Federalism implications. This notice
will not have a substantial effect on
State or local governments.
In accordance with the provisions of
Executive Order 12866, this regulation
was reviewed by the Office of
Management and Budget.
Authority: Sections 1818(d)(2) and
1818A(d)(2) of the Social Security Act (42
U.S.C. 1395i-2(d)(2) and 1395i-2a(d)(2)).
(Catalog of Federal Domestic Assistance
Program No. 93.773, Medicare—Hospital
Insurance)
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55897
Dated: September 12, 2005.
Mark B. McClellan,
Administrator, Centers for Medicare &
Medicaid Services.
Dated: September 15, 2005.
Michael O. Leavitt,
Secretary.
[FR Doc. 05–18839 Filed 9–16–05; 4:00 pm]
BILLING CODE 4120–01–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
[CMS–8027–N]
RIN 0938–AO02
Medicare Program; Medicare Part B
Monthly Actuarial Rates, Premium
Rate, and Annual Deductible for
Calendar Year 2006
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Notice.
AGENCY:
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, 2006. In addition, this notice
announces the monthly premium for
aged and disabled beneficiaries and the
annual deductible to be paid during
2006. The monthly actuarial rates for
2006 are $176.90 for aged enrollees and
$203.70 for disabled enrollees. The
monthly Part B premium rate for 2006
is $88.50 which is equal to 50 percent
of the monthly actuarial rate for aged
enrollees or about 25 percent of Part B
costs for aged enrollees. (The 2005
premium rate was $78.20.) The Part B
deductible for 2006 is $124.00.
EFFECTIVE DATE: January 1, 2006.
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, 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
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to U.S. residents who have attained age
65 and are citizens, and 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 provided for
in 42 CFR part 407, subpart B, and part
408, respectively. The difference
between the premiums paid by all
enrollees and total incurred costs is met
from the general revenues of the Federal
Government.
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 the expected
average monthly cost of Part B for each
aged enrollee (age 65 or over) and onehalf 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
$110.00, section 629 of the MMA
(amending section 1833(b) of the Act)
requires 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 2006 Part B
deductible is calculated by multiplying
the 2005 deductible by the ratio of the
2006 aged actuarial rate over the 2005
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 they 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
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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
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
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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 1⁄6 for 1998, 1⁄3 for
1999, 1⁄2 for 2000, 2⁄3 for 2001, and 5⁄6
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 1⁄7 of the cost be
transferred in 1998, 2⁄7 in 1999, 3⁄7 in
2000, 4⁄7 in 2001, 5⁄7 in 2002, and 6⁄7 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 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, 2004, and 2005,
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.
A further 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)
made by MCCA 88.) Section 1839(f) of
the Act referred to as the ‘‘holdharmless’’ provision, provides that if an
individual is entitled to benefits under
section 202 or 223 of the Act (the OldAge and Survivors Insurance Benefit
and the Disability Insurance Benefit,
respectively) and has the Part B
premiums deducted from these benefit
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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
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.
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 has December’s Part B
premium deducted from it.
Generally, if a beneficiary qualifies for
hold-harmless protection, that is, if the
beneficiary was in current payment
status for November and December of
the previous year, the reduced premium
for the individual for that January and
for each of the succeeding 11 months for
which he or she is entitled to benefits,
under section 202 or 203 of the Act, is
the greater of the following—
• 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 reenrolled 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.
II. Provisions of the Notice
A. Notice of Medicare Part B Monthly
Actuarial Rates, Monthly Premium Rate,
and Annual Deductible
The Medicare Part B monthly
actuarial rates applicable for 2006 are
$176.90 for enrollees age 65 and over,
and $203.70 for disabled enrollees
under age 65. Subsection B of this
notice below, presents the actuarial
assumptions and bases from which
these rates are derived. The Part B
monthly premium rate for 2006 is
$88.50. The Part B annual deductible for
2006 is $124.00.
B. Statement of Actuarial Assumptions
and Bases Employed in Determining the
Monthly Actuarial Rates and the
Monthly Premium Rate for Part B
Beginning January 2006
1. Actuarial Status of the Part B Account
in the Supplementary Medical
Insurance Trust Fund
Under the statute, the starting point
for determining the 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.
The rates are established
prospectively and are, therefore, 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. Therefore, trust
fund assets must be maintained at a
level that is adequate to cover a
moderate 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 a moderate degree of variation
between actual and projected costs. The
two most important of these factors are:
(1) The difference from prior years
between the actual performance of the
program and estimates made at the time
financing was established; and (2) the
expected relationship between incurred
and cash expenditures. Both factors are
analyzed on an ongoing basis, as the
trends vary over time.
Table 1 summarizes the estimated
actuarial status of the trust fund as of
the end of the financing period for 2004
and 2005.
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
(millions)
Financing period ending
Dec. 31, 2004 ..............................................................................................................................
Dec. 31, 2005 ..............................................................................................................................
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: (a) the
projected cost of benefits; and (b)
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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
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$19,430
f21,349
Liabilities
(millions)
$9,920
9,398
Assets less
liabilities
(millions)
$9,510
11,951
amount appropriate to provide for a
moderate degree of variation between
actual and projected costs and to
amortize any surplus or unfunded
liabilities.
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The monthly actuarial rate for
enrollees age 65 and older for 2006 is
determined by first establishing perenrollee cost by type of service from
program data through 2004 and then
projecting these costs for subsequent
years. The projection factors used for
financing periods from January 1, 2003
through December 31, 2006 are shown
in Table 2.
As indicated in Table 3, the projected
monthly rate required to pay for onehalf of the total of benefits and
administrative costs for enrollees age 65
and over for 2006 is $166.33. The
monthly actuarial rate of $176.90 also
provides an adjustment of ¥$1.63 for
interest earnings and $12.20 for a
contingency margin. Based on current
estimates, the assets are not sufficient to
cover the amount of incurred, but
unpaid, expenses and to provide for a
moderate degree of variation between
actual and projected costs. Thus, a
positive contingency margin is needed
to increase assets to a more appropriate
level. This situation has arisen primarily
due to faster than expected expenditure
growth, along with the enactment of the
Consolidated Appropriations Resolution
(Pub. L. 108–7) in February 2003 and
the Medicare Modernization Act in
December 2003. Each of these two
legislative packages was enacted after
the establishment of the Part B premium
(for 2003 and 2004, respectively).
Because each Act raised Part B
expenditures subsequent to the setting
of the premium, total Part B revenues
from premiums and general fund
transfers have been inadequate to cover
total costs. As a consequence, the assets
of the Part B account in the
Supplementary Medical Insurance trust
fund were drawn on to cover the
shortfall. Due to faster than expected
growth in Part B expenditures, only a
minimal increase in assets occurred in
2005, despite a large increase in the
2005 Part B premium, in an attempt to
partially replenish the assets in the Part
B account. Therefore, the remaining
level of assets is inadequate for
contingency purposes.
The contingency margin included in
establishing the 2006 actuarial rate and
beneficiary premiums takes another step
towards restoring the assets to an
adequate level. In an effort to balance
the financial integrity of the Part B
account with the increase in the Part B
premium, the financing rates for 2006
are set to increase the asset level in the
Part B account towards the fully
adequate level, with the expectation that
future financing rates will need to
include contingency margins to fully
restore the assets.
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 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
fashion 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
monthly rate required to pay for onehalf of the total of benefits and
administrative costs for disabled
enrollees for 2006 is $191.42. The
monthly actuarial rate of $203.70 also
provides an adjustment of ¥$2.91 for
interest earnings and $15.19 for a
contingency margin. Based on current
estimates, the assets associated with the
disabled Medicare beneficiaries are not
sufficient to cover the amount of
incurred, but unpaid, expenses and to
provide for a moderate degree of
variation between actual and projected
costs. Thus, a positive contingency
margin is needed to increase assets to a
more appropriate level.
4. Sensitivity Testing
Several factors contribute to
uncertainty about future trends in
medical care costs. It is appropriate to
test the adequacy of the rates using
alternative assumptions. The results of
those assumptions are shown in Table 5.
One set represents increases that are
lower and, therefore, more optimistic
than the current estimate. The other set
represents increases that are higher and,
therefore, more pessimistic 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.
Table 5 indicates that, under the
assumptions used in preparing this
report, the monthly actuarial rates
would result in an excess of assets over
liabilities of $25,557 million by the end
of December 2006. This amounts to 15.0
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
$12,409 million by the end of December
2006, which amounts to 6.5 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 $38,276 million by the end
of December 2006, or 25.2 percent of the
estimated total incurred expenditures
for the following year.
5. Premium Rate and Deductible
As determined by section 1839(a)(3)
of the Act, the monthly premium rate
for 2006, for both aged and disabled
enrollees, is $88.50. In addition, as
specified by section 1833(b) of the Act,
the annual deductible for 2006 is
$124.00.
TABLE 2.—PROJECTION FACTORS 1 12-MONTH PERIODS ENDING DECEMBER 31 OF 2003–2006
[In percent]
Physicians’ Services
Calendar Year
Fees 2
Aged
2003
2004
2005
2006
Disabled
2003
2004
2005
Residual 3
Durable
medical
equipment
Carrier
lab 4
Other
carrier
services 5
Outpatient
hospital
Home
Health
Agency
Hospital
lab 6
Other
intermediary
services 7
Managed
care
..................
..................
..................
..................
1.4
3.8
1.5
¥4.5
4.4
6.2
5.6
6.4
14.2
0.6
¥2.3
¥0.3
6.8
7.8
7.2
4.5
16.2
7.8
4.7
10.4
5.3
10.1
9.2
7.9
2.9
13.0
10.4
7.8
7.7
7.3
9.0
4.9
3.0
15.2
13.1
1.7
3.3
12.3
8.7
11.2
..................
..................
..................
1.4
3.8
1.5
5.3
6.5
6.0
16.2
1.5
¥1.8
6.3
10.1
8.7
24.8
14.8
16.7
5.6
12.7
8.8
22.3
11.8
10.8
6.9
9.6
10.8
¥2.5
0.5
13.9
¥1.9
4.8
6.0
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TABLE 2.—PROJECTION FACTORS 1 12-MONTH PERIODS ENDING DECEMBER 31 OF 2003–2006—Continued
[In percent]
Physicians’ Services
Calendar Year
Fees 2
2006 ..................
Residual 3
¥4.5
Durable
medical
equipment
6.4
Carrier
lab 4
¥0.3
4.3
Other
carrier
services 5
Outpatient
hospital
9.0
Home
Health
Agency
7.8
Other
intermediary
services 7
Hospital
lab 6
7.9
Managed
care
¥1.6
11.1
4.9
1 All
values for services other than managed care are per fee-for-service enrollee. Managed care values are per managed care enrollee.
2 As recognized for payment under the program.
3 Increase in the number of services received per enrollee and greater relative use of more expensive services.
4 Includes services paid under the lab fee schedule furnished in the physician’s office or an independent lab.
5 Includes physician-administered drugs, ambulatory surgical center facility costs, ambulance services, parenteral and enteral drug costs, supplies, etc.
6 Includes services paid under the lab fee schedule furnished in the outpatient department of a hospital.
7 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, 2003 THROUGH DECEMBER 31, 2006
Financing periods
CY 2003
Covered services (at level recognized):
Physician fee schedule .............................................................................................
Durable medical equipment ......................................................................................
Carrier lab 1 ...............................................................................................................
Other carrier services 2 .............................................................................................
Outpatient hospital ....................................................................................................
Home health .............................................................................................................
Hospital lab 3 .............................................................................................................
Other intermediary services 4 ...................................................................................
Managed care ...........................................................................................................
CY 2004
CY 2005
CY 2006
69.32
9.73
3.20
17.62
23.97
5.90
2.51
9.44
20.06
76.40
9.78
3.45
18.99
26.39
6.66
2.70
10.88
22.55
80.84
9.44
3.65
19.64
28.45
7.27
2.90
12.15
26.24
78.53
8.99
3.65
20.72
29.33
7.49
2.91
11.81
36.00
Total services ....................................................................................................
Cost-sharing:
Deductible .................................................................................................................
Coinsurance ..............................................................................................................
5 161.76
5 177.80
5 190.58
199.43
¥4.07
¥28.64
¥4.40
¥30.87
¥4.48
¥32.64
–5.04
¥30.73
Total benefits .....................................................................................................
Administrative expenses ..................................................................................................
129.05
2.44
142.53
3.01
153.47
4.21
163.66
2.67
Incurred expenditures ......................................................................................................
Value of interest ...............................................................................................................
Contingency margin for projection error and to amortize the surplus or deficit ..............
Monthly actuarial rate ......................................................................................................
131.49
¥2.30
¥10.49
118.70
145.55
¥1.63
¥10.71
133.20
157.67
¥1.27
0.00
156.40
166.33
¥1.63
12.20
176.90
1 Includes
2 Includes
services paid under the lab fee schedule furnished in the physician’s office or an independent lab.
physician-administered drugs, ambulatory surgical center facility costs, ambulance services, parenteral and enteral drug costs, sup-
plies, 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 Includes transfers to Medicaid. Section 1933(c)(2) of the Act, as added by section 4732(c) of the BBA, allocates an amount to be transferred
from the Part B account in the SMI trust fund to the state Medicaid programs. This transfer is for the purpose of paying the Part B premiums for
certain low-income beneficiaries. It is not a benefit expenditure but is used in determining the Part B actuarial rates since it is an expenditure of
the trust fund.
TABLE 4.—DERIVATION OF MONTHLY ACTUARIAL RATE FOR DISABLED ENROLLEES FINANCING PERIODS ENDING
DECEMBER 31, 2003 THROUGH DECEMBER 31, 2006
Financing periods
CY 2003
Covered services (at level recognized):
Physician fee schedule .............................................................................................
Durable medical equipment ......................................................................................
Carrier lab 1 ...............................................................................................................
Other carrier services 2 .............................................................................................
Outpatient hospital ....................................................................................................
Home health .............................................................................................................
Hospital lab 3 .............................................................................................................
Other intermediary services 4 ...................................................................................
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70.61
16.38
3.80
20.01
31.90
4.72
3.74
35.02
E:\FR\FM\23SEN1.SGM
CY 2004
78.23
16.64
4.21
22.85
35.90
5.26
4.11
37.46
23SEN1
CY 2005
83.54
16.26
4.59
26.38
38.67
5.78
4.51
39.70
CY 2006
83.06
15.86
4.69
28.17
40.80
6.11
4.62
39.83
55902
Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices
TABLE 4.—DERIVATION OF MONTHLY ACTUARIAL RATE FOR DISABLED ENROLLEES FINANCING PERIODS ENDING
DECEMBER 31, 2003 THROUGH DECEMBER 31, 2006—Continued
Financing periods
CY 2003
CY 2004
CY 2005
CY 2006
Managed care ...........................................................................................................
9.77
10.57
12.26
17.10
Total services ....................................................................................................
Cost-sharing:
Deductible .................................................................................................................
Coinsurance ..............................................................................................................
5 195.94
5 215.24
5 231.68
240.14
¥3.78
¥40.38
¥3.79
¥43.66
¥4.17
¥47.02
¥4.70
¥47.09
Total benefits .....................................................................................................
Administrative expenses ..................................................................................................
Incurred expenditures ......................................................................................................
Value of interest ...............................................................................................................
Contingency margin for projection error and to amortize the surplus or deficit ..............
Monthly actuarial rate ......................................................................................................
151.78
2.88
154.66
¥1.22
¥12.43
141.00
167.79
6 7.83
175.62
¥1.37
1.25
175.50
180.49
4.66
185.15
¥1.75
8.40
191.80
188.36
3.07
191.42
¥2.91
15.19
203.70
1 Includes
2 Includes
services paid under the lab fee schedule furnished in the physician’s office or an independent lab.
physician-administered drugs, ambulatory surgical center facility costs, ambulance services, parenteral and enteral drug costs, sup-
plies, 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 Includes transfers to Medicaid. Section 1933(c)(2) of the Act, as added by section 4732(c) of the BBA, allocates an amount to be transferred
from the Part B account in the SMI trust fund to the state Medicaid programs. This transfer is for the purpose of paying the Part B premiums for
certain low-income beneficiaries. It is not a benefit expenditure but is used in determining the Part B actuarial rates since it is an expenditure of
the trust fund.
6 Includes payment of estimated contingent liability payable to States (to reimburse them for payments they have made on behalf of beneficiaries) for probable unasserted claims that resulted from processing errors where incorrect Medicare eligibility determinations were made.
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, 2006
As of December 31
2004
2005
2006
19,430
9,920
9,510
6.2
21,349
9,398
11,951
7.3
34,766
9,209
25,557
15.0
19,430
9,920
9,510
6.5
21,349
8,596
12,753
8.5
46,939
8,664
38,276
25.2
19,430
9,920
9,510
5.9
21,349
10,234
11,114
6.3
22,140
9,730
12,409
6.5
This projection:
Actuarial status (in millions):
Assets .........................................................................................................................................
Liabilities .....................................................................................................................................
Assets less liabilities ...................................................................................................................
Ratio (in percent) 1 .............................................................................................................................
Low cost projection:
Actuarial status (in millions):
Assets .........................................................................................................................................
Liabilities .....................................................................................................................................
Assets less liabilities ...................................................................................................................
Ratio (in percent) 1 .............................................................................................................................
High cost projection:
Actuarial status (in millions):
Assets .........................................................................................................................................
Liabilities .....................................................................................................................................
Assets less liabilities ...................................................................................................................
Ratio (in percent) 1 .............................................................................................................................
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. Regulatory Impact Analysis
We have examined the impact of this
notice as required by Executive Order
12866 (September 1993, Regulatory
Planning and Review) and the
Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96–354).
Executive Order 12866 directs agencies
to assess all costs and benefits of
available regulatory alternatives and, if
regulation is necessary, to select
regulatory approaches that maximize
net benefits (including potential
economic, environmental, public health
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15:21 Sep 22, 2005
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and safety effects, distributive impacts,
and equity).
The RFA requires agencies to analyze
options for regulatory relief of small
businesses. For purposes of the RFA,
small entities include small businesses,
nonprofit organizations, and small
governmental jurisdictions. Most
hospitals and most other providers and
suppliers are small entities, either by
nonprofit status or by having revenues
of $6 million to $29 million in any 1year. For purposes of the RFA, small
entities include small businesses,
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nonprofit organizations, and small
governmental jurisdictions.
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. We have
E:\FR\FM\23SEN1.SGM
23SEN1
Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices
determined that this notice will not
have a significant effect on a substantial
number of small entities or on the
operations of a substantial number of
small rural hospitals. Therefore, we are
not preparing analyses for either the
RFA or section 1102(b) of the Act.
Section 202 of the Unfunded
Mandates Reform Act of 1995 also
requires that agencies assess anticipated
costs and benefits before issuing any
rule that may result in expenditure in
any 1 year by State, local, or tribal
governments, in the aggregate, or by the
private sector, of $110 million. This
notice has no consequential effect on
State, local, or tribal governments. We
believe the private sector costs of this
notice fall below this threshold as well.
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.
This notice announces that the
monthly actuarial rates applicable for
2006 are $176.90 for enrollees age 65
and over and $203.70 for disabled
enrollees under age 65. It also
announces that the monthly Part B
premium rate for calendar year 2006 is
$88.50 and that the Part B deductible for
calendar year 2006 is $124.00. The Part
B premium rate of $88.50 is 13.2 percent
higher than the $78.20 premium rate for
2005. We estimate that this increase will
cost approximately 40 million Part B
enrollees about $4.9 billion for 2006. In
addition, we estimate that the increase
in the annual deductible will cost
approximately $0.4 billion in 2006.
Therefore, this notice is a major rule as
defined in Title 5, United States Code,
section 804(2) and is an economically
significant rule under Executive Order
12866.
In accordance with the provisions of
Executive Order 12866, this notice was
reviewed by the Office of Management
and Budget.
IV. Waiver of Proposed Notice
The Medicare statute requires the
publication of the monthly actuarial
rates and the Part B premium amounts
in September. We ordinarily use general
notices, rather than notice and comment
rulemaking procedures, to make such
announcements. In doing so, we note
that, under the Administrative
Procedure Act, interpretive rules,
general statements of policy, and rules
of agency organization, procedure, or
VerDate Aug<31>2005
15:21 Sep 22, 2005
Jkt 205001
practice are excepted from the
requirements of notice and comment
rulemaking.
We considered publishing a proposed
notice to provide a period for public
comment. However, we may waive that
procedure if we find, for good cause,
that prior notice and comment are
impracticable, unnecessary, or contrary
to the public interest. We find that the
procedure for notice and comment is
unnecessary because the formula used
to calculate the Part B premium is
statutorily directed, and we can exercise
no discretion in applying that formula.
Moreover, the statute establishes the
time period for which the premium
rates will apply, and delaying
publication of the Part B premium rate
such that it would not be published
before that time would be contrary to
the public interest. Therefore, we find
good cause to waive publication of a
proposed notice and solicitation of
public comments.
(Catalog of Federal Domestic Assistance
Program No. 93.773, Medicare—Hospital
Insurance; and Program No. 93.774,
Medicare—Supplementary Medical
Insurance Program)
Dated: September 12, 2005.
Mark B. McClellan,
Administrator, Centers for Medicare &
Medicaid Services.
Approved: September 15, 2005.
Michael O. Leavitt,
Secretary.
[FR Doc. 05–18837 Filed 9–16–05; 4 pm]
BILLING CODE 4120–01–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
[CMS–1269–N5]
Medicare Program; Emergency Medical
Treatment and Labor Act (EMTALA)
Technical Advisory Group (TAG)
Meeting—October 26, 2005 Through
October 28, 2005
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Notice of meeting.
AGENCY:
SUMMARY: In accordance with section
10(a) of the Federal Advisory Committee
Act (FACA) (5 U.S.C. Appendix 2), this
notice announces the third meeting of
the Emergency Medical Treatment and
Labor Act (EMTALA) Technical
Advisory Group (TAG). The purpose of
the EMTALA TAG is to review
regulations affecting hospital and
physician responsibilities under
PO 00000
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Fmt 4703
Sfmt 4703
55903
EMTALA to individuals who come to a
hospital seeking examination or
treatment for medical conditions. The
primary purpose of the third meeting is
to enable the EMTALA TAG to hear
additional testimony and further
consider written responses from
medical societies and other
organizations on specific issues
considered by the TAG at previous
meetings. However, the public is
permitted to attend this meeting and, to
the extent that time permits and at the
discretion of the Chairperson, the
EMTALA TAG may hear comments
from the floor.
DATES: Meeting Date: The meetings of
the EMTALA TAG announced in this
notice are as follows: Wednesday,
October 26, 2005, 9 a.m. to 5 p.m. e.s.t.;
Thursday, October 27, 2005, 11 a.m. to
5 p.m. e.s.t.; Friday, October 28, 2005,
9 a.m. to 12 noon e.s.t.
Registration Deadline: All individuals
must register to attend this meeting.
Individuals who wish to attend the
meeting but do not wish to present
testimony must register by October 19,
2005. Individuals who wish both to
attend the meeting and to present their
testimony must register by October 5,
2005, and must submit copies of their
testimony in writing by October 12,
2005.
Comment Deadline: Written
comments/statements to be presented to
the EMTALA TAG must be received by
October 12, 2005.
Special Accommodations: Individuals
requiring sign-language interpretation or
other special accommodations should
send a request to these services to
Beverly J. Parker by 5 p.m., October 12,
2005 at address listed below.
ADDRESSES: Meeting Address: The
EMTALA TAG meeting will be held in
the Multipurpose Room at the CMS
Headquarters (Central Bldg), 7500
Security Boulevard, Baltimore, MD
21244–1850.
Mailing and E-mail Addresses for
Inquiries or Comments: Inquiries or
comments regarding this meeting may
be sent to—Beverly J. Parker, Division of
Acute Care, Centers for Medicare &
Medicaid Services, Mail Stop C4–08–06,
7500 Security Boulevard, Baltimore, MD
21244–1850. Inquiries or comments may
also be e-mailed to
Beverly.Parker@cms.hhs.gov or
EMTALATAG@cms.hhs.gov.
Web Site Address for Additional
Information: For additional information
on the EMTALA TAG meeting agenda
topics, updated activities, and to obtain
Charter copies, please search our
Internet Web site at: https://
E:\FR\FM\23SEN1.SGM
23SEN1
]]>Agencies
[Federal Register Volume 70, Number 184 (Friday, September 23, 2005)]
[Notices]
[Pages 55897-55903]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-18837]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
[CMS-8027-N]
RIN 0938-AO02
Medicare Program; Medicare Part B Monthly Actuarial Rates,
Premium Rate, and Annual Deductible for Calendar Year 2006
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Notice.
-----------------------------------------------------------------------
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, 2006. In addition, this notice announces the
monthly premium for aged and disabled beneficiaries and the annual
deductible to be paid during 2006. The monthly actuarial rates for 2006
are $176.90 for aged enrollees and $203.70 for disabled enrollees. The
monthly Part B premium rate for 2006 is $88.50 which is equal to 50
percent of the monthly actuarial rate for aged enrollees or about 25
percent of Part B costs for aged enrollees. (The 2005 premium rate was
$78.20.) The Part B deductible for 2006 is $124.00.
EFFECTIVE DATE: January 1, 2006.
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, 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
[[Page 55898]]
to U.S. residents who have attained age 65 and are citizens, and 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 provided for in 42 CFR part 407,
subpart B, and part 408, respectively. The difference between the
premiums paid by all enrollees and total incurred costs is met from the
general revenues of the Federal Government.
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 the expected average
monthly cost of Part B for each aged enrollee (age 65 or over) and one-
half 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 $110.00, section
629 of the MMA (amending section 1833(b) of the Act) requires 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 2006
Part B deductible is calculated by multiplying the 2005 deductible by
the ratio of the 2006 aged actuarial rate over the 2005 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 they 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 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 \1/6\ for 1998, \1/3\ for 1999, \1/2\ for 2000, \2/3\
for 2001, and \5/6\ 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 \1/7\ of the cost be transferred in 1998,
\2/7\ in 1999, \3/7\ in 2000, \4/7\ in 2001, \5/7\ in 2002, and \6/7\
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 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, 2004, and 2005, 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.
A further 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) 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 premiums deducted from these benefit
[[Page 55899]]
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 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.
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 has
December's Part B premium deducted from it.
Generally, if a beneficiary qualifies for hold-harmless protection,
that is, if the beneficiary was in current payment status for November
and December of the previous year, the reduced premium for the
individual for that January and for each of the succeeding 11 months
for which he or she is entitled to benefits, under section 202 or 203
of the Act, is the greater of the following--
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 reenrolled
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.
II. Provisions of the Notice
A. Notice of Medicare Part B Monthly Actuarial Rates, Monthly Premium
Rate, and Annual Deductible
The Medicare Part B monthly actuarial rates applicable for 2006 are
$176.90 for enrollees age 65 and over, and $203.70 for disabled
enrollees under age 65. Subsection B of this notice below, presents the
actuarial assumptions and bases from which these rates are derived. The
Part B monthly premium rate for 2006 is $88.50. The Part B annual
deductible for 2006 is $124.00.
B. Statement of Actuarial Assumptions and Bases Employed in Determining
the Monthly Actuarial Rates and the Monthly Premium Rate for Part B
Beginning January 2006
1. Actuarial Status of the Part B Account in the Supplementary Medical
Insurance Trust Fund
Under the statute, the starting point for determining the 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.
The rates are established prospectively and are, therefore, 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. Therefore, trust fund assets
must be maintained at a level that is adequate to cover a moderate
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 a moderate degree of variation
between actual and projected costs. The two most important of these
factors are: (1) The difference from prior years between the actual
performance of the program and estimates made at the time financing was
established; and (2) the expected relationship between incurred and
cash expenditures. Both factors are analyzed on an ongoing basis, as
the trends vary over time.
Table 1 summarizes the estimated actuarial status of the trust fund
as of the end of the financing period for 2004 and 2005.
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 Liabilities liabilities
(millions) (millions) (millions)
----------------------------------------------------------------------------------------------------------------
Dec. 31, 2004................................................... $19,430 $9,920 $9,510
Dec. 31, 2005................................................... f21,349 9,398 11,951
----------------------------------------------------------------------------------------------------------------
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: (a) the projected cost of
benefits; and (b) 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 a moderate
degree of variation between actual and projected costs and to amortize
any surplus or unfunded liabilities.
[[Page 55900]]
The monthly actuarial rate for enrollees age 65 and older for 2006
is determined by first establishing per-enrollee cost by type of
service from program data through 2004 and then projecting these costs
for subsequent years. The projection factors used for financing periods
from January 1, 2003 through December 31, 2006 are shown in Table 2.
As indicated in Table 3, the projected monthly rate required to pay
for one-half of the total of benefits and administrative costs for
enrollees age 65 and over for 2006 is $166.33. The monthly actuarial
rate of $176.90 also provides an adjustment of -$1.63 for interest
earnings and $12.20 for a contingency margin. Based on current
estimates, the assets are not sufficient to cover the amount of
incurred, but unpaid, expenses and to provide for a moderate degree of
variation between actual and projected costs. Thus, a positive
contingency margin is needed to increase assets to a more appropriate
level. This situation has arisen primarily due to faster than expected
expenditure growth, along with the enactment of the Consolidated
Appropriations Resolution (Pub. L. 108-7) in February 2003 and the
Medicare Modernization Act in December 2003. Each of these two
legislative packages was enacted after the establishment of the Part B
premium (for 2003 and 2004, respectively). Because each Act raised Part
B expenditures subsequent to the setting of the premium, total Part B
revenues from premiums and general fund transfers have been inadequate
to cover total costs. As a consequence, the assets of the Part B
account in the Supplementary Medical Insurance trust fund were drawn on
to cover the shortfall. Due to faster than expected growth in Part B
expenditures, only a minimal increase in assets occurred in 2005,
despite a large increase in the 2005 Part B premium, in an attempt to
partially replenish the assets in the Part B account. Therefore, the
remaining level of assets is inadequate for contingency purposes.
The contingency margin included in establishing the 2006 actuarial
rate and beneficiary premiums takes another step towards restoring the
assets to an adequate level. In an effort to balance the financial
integrity of the Part B account with the increase in the Part B
premium, the financing rates for 2006 are set to increase the asset
level in the Part B account towards the fully adequate level, with the
expectation that future financing rates will need to include
contingency margins to fully restore the assets.
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 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 fashion
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 monthly rate required to pay for
one-half of the total of benefits and administrative costs for disabled
enrollees for 2006 is $191.42. The monthly actuarial rate of $203.70
also provides an adjustment of -$2.91 for interest earnings and $15.19
for a contingency margin. Based on current estimates, the assets
associated with the disabled Medicare beneficiaries are not sufficient
to cover the amount of incurred, but unpaid, expenses and to provide
for a moderate degree of variation between actual and projected costs.
Thus, a positive contingency margin is needed to increase assets to a
more appropriate level.
4. Sensitivity Testing
Several factors contribute to uncertainty about future trends in
medical care costs. It is appropriate to test the adequacy of the rates
using alternative assumptions. The results of those assumptions are
shown in Table 5. One set represents increases that are lower and,
therefore, more optimistic than the current estimate. The other set
represents increases that are higher and, therefore, more pessimistic
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.
Table 5 indicates that, under the assumptions used in preparing
this report, the monthly actuarial rates would result in an excess of
assets over liabilities of $25,557 million by the end of December 2006.
This amounts to 15.0 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 $12,409 million by
the end of December 2006, which amounts to 6.5 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 $38,276 million by the end of December 2006, or 25.2 percent
of the estimated total incurred expenditures for the following year.
5. Premium Rate and Deductible
As determined by section 1839(a)(3) of the Act, the monthly premium
rate for 2006, for both aged and disabled enrollees, is $88.50. In
addition, as specified by section 1833(b) of the Act, the annual
deductible for 2006 is $124.00.
Table 2.--Projection Factors \1\ 12-Month Periods Ending December 31 of 2003-2006
[In percent]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Physicians' Services Other
---------------------- Durable Carrier carrier Outpatient Home Hospital Other Managed
Calendar Year Residual medical lab \4\ services hospital Health lab \6\ intermediary care
Fees \2\ \3\ equipment \5\ Agency services \7\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Aged
2003.............................. 1.4 4.4 14.2 6.8 16.2 5.3 2.9 7.7 3.0 3.3
2004.............................. 3.8 6.2 0.6 7.8 7.8 10.1 13.0 7.3 15.2 12.3
2005.............................. 1.5 5.6 -2.3 7.2 4.7 9.2 10.4 9.0 13.1 8.7
2006.............................. -4.5 6.4 -0.3 4.5 10.4 7.9 7.8 4.9 1.7 11.2
Disabled
2003.............................. 1.4 5.3 16.2 6.3 24.8 5.6 22.3 6.9 -2.5 -1.9
2004.............................. 3.8 6.5 1.5 10.1 14.8 12.7 11.8 9.6 0.5 4.8
2005.............................. 1.5 6.0 -1.8 8.7 16.7 8.8 10.8 10.8 13.9 6.0
[[Page 55901]]
2006.............................. -4.5 6.4 -0.3 4.3 9.0 7.8 7.9 4.9 -1.6 11.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ All values for services other than managed care are per fee-for-service enrollee. Managed care values are per managed care enrollee.
\2\ As recognized for payment under the program.
\3\ Increase in the number of services received per enrollee and greater relative use of more expensive services.
\4\ Includes services paid under the lab fee schedule furnished in the physician's office or an independent lab.
\5\ Includes physician-administered drugs, ambulatory surgical center facility costs, ambulance services, parenteral and enteral drug costs, supplies,
etc.
\6\ Includes services paid under the lab fee schedule furnished in the outpatient department of a hospital.
\7\ 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, 2003 Through December 31, 2006
----------------------------------------------------------------------------------------------------------------
Financing periods
---------------------------------------------------
CY 2003 CY 2004 CY 2005 CY 2006
----------------------------------------------------------------------------------------------------------------
Covered services (at level recognized):
Physician fee schedule.................................. 69.32 76.40 80.84 78.53
Durable medical equipment............................... 9.73 9.78 9.44 8.99
Carrier lab \1\......................................... 3.20 3.45 3.65 3.65
Other carrier services \2\.............................. 17.62 18.99 19.64 20.72
Outpatient hospital..................................... 23.97 26.39 28.45 29.33
Home health............................................. 5.90 6.66 7.27 7.49
Hospital lab \3\........................................ 2.51 2.70 2.90 2.91
Other intermediary services \4\......................... 9.44 10.88 12.15 11.81
Managed care............................................ 20.06 22.55 26.24 36.00
--------------
Total services...................................... \5\ 161.76 \5\ 177.80 \5\ 190.58 199.43
Cost-sharing:
Deductible.............................................. -4.07 -4.40 -4.48 -5.04
Coinsurance............................................. -28.64 -30.87 -32.64 -30.73
--------------
Total benefits...................................... 129.05 142.53 153.47 163.66
Administrative expenses..................................... 2.44 3.01 4.21 2.67
--------------
Incurred expenditures....................................... 131.49 145.55 157.67 166.33
Value of interest........................................... -2.30 -1.63 -1.27 -1.63
Contingency margin for projection error and to amortize the -10.49 -10.71 0.00 12.20
surplus or deficit.........................................
Monthly actuarial rate...................................... 118.70 133.20 156.40 176.90
----------------------------------------------------------------------------------------------------------------
\1\ Includes services paid under the lab fee schedule furnished in the physician's office or an independent
lab.
\2\ Includes physician-administered drugs, 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\ Includes transfers to Medicaid. Section 1933(c)(2) of the Act, as added by section 4732(c) of the BBA,
allocates an amount to be transferred from the Part B account in the SMI trust fund to the state Medicaid
programs. This transfer is for the purpose of paying the Part B premiums for certain low-income beneficiaries.
It is not a benefit expenditure but is used in determining the Part B actuarial rates since it is an
expenditure of the trust fund.
Table 4.--Derivation of Monthly Actuarial Rate for Disabled Enrollees Financing Periods Ending December 31, 2003
Through December 31, 2006
----------------------------------------------------------------------------------------------------------------
Financing periods
---------------------------------------------------
CY 2003 CY 2004 CY 2005 CY 2006
----------------------------------------------------------------------------------------------------------------
Covered services (at level recognized):
Physician fee schedule.................................. 70.61 78.23 83.54 83.06
Durable medical equipment............................... 16.38 16.64 16.26 15.86
Carrier lab \1\......................................... 3.80 4.21 4.59 4.69
Other carrier services \2\.............................. 20.01 22.85 26.38 28.17
Outpatient hospital..................................... 31.90 35.90 38.67 40.80
Home health............................................. 4.72 5.26 5.78 6.11
Hospital lab \3\........................................ 3.74 4.11 4.51 4.62
Other intermediary services \4\......................... 35.02 37.46 39.70 39.83
[[Page 55902]]
Managed care............................................ 9.77 10.57 12.26 17.10
--------------
Total services...................................... \5\ 195.94 \5\ 215.24 \5\ 231.68 240.14
Cost-sharing:
Deductible.............................................. -3.78 -3.79 -4.17 -4.70
Coinsurance............................................. -40.38 -43.66 -47.02 -47.09
--------------
Total benefits...................................... 151.78 167.79 180.49 188.36
Administrative expenses..................................... 2.88 \6\ 7.83 4.66 3.07
Incurred expenditures....................................... 154.66 175.62 185.15 191.42
Value of interest........................................... -1.22 -1.37 -1.75 -2.91
Contingency margin for projection error and to amortize the -12.43 1.25 8.40 15.19
surplus or deficit.........................................
Monthly actuarial rate...................................... 141.00 175.50 191.80 203.70
----------------------------------------------------------------------------------------------------------------
\1\ Includes services paid under the lab fee schedule furnished in the physician's office or an independent lab.
\2\ Includes physician-administered drugs, 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\ Includes transfers to Medicaid. Section 1933(c)(2) of the Act, as added by section 4732(c) of the BBA,
allocates an amount to be transferred from the Part B account in the SMI trust fund to the state Medicaid
programs. This transfer is for the purpose of paying the Part B premiums for certain low-income beneficiaries.
It is not a benefit expenditure but is used in determining the Part B actuarial rates since it is an
expenditure of the trust fund.
\6\ Includes payment of estimated contingent liability payable to States (to reimburse them for payments they
have made on behalf of beneficiaries) for probable unasserted claims that resulted from processing errors
where incorrect Medicare eligibility determinations were made.
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, 2006
------------------------------------------------------------------------
As of December 31 2004 2005 2006
------------------------------------------------------------------------
This projection:
Actuarial status (in
millions):
Assets.................... 19,430 21,349 34,766
Liabilities............... 9,920 9,398 9,209
Assets less liabilities... 9,510 11,951 25,557
Ratio (in percent) \1\........ 6.2 7.3 15.0
Low cost projection:
Actuarial status (in
millions):
Assets.................... 19,430 21,349 46,939
Liabilities............... 9,920 8,596 8,664
Assets less liabilities... 9,510 12,753 38,276
Ratio (in percent) \1\........ 6.5 8.5 25.2
High cost projection:
Actuarial status (in
millions):
Assets.................... 19,430 21,349 22,140
Liabilities............... 9,920 10,234 9,730
Assets less liabilities... 9,510 11,114 12,409
Ratio (in percent) \1\........ 5.9 6.3 6.5
------------------------------------------------------------------------
\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. Regulatory Impact Analysis
We have examined the impact of this notice as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review) and the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354).
Executive Order 12866 directs agencies to assess all costs and benefits
of available regulatory alternatives and, if regulation is necessary,
to select regulatory approaches that maximize net benefits (including
potential economic, environmental, public health and safety effects,
distributive impacts, and equity).
The RFA requires agencies to analyze options for regulatory relief
of small businesses. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small governmental
jurisdictions. Most hospitals and most other providers and suppliers
are small entities, either by nonprofit status or by having revenues of
$6 million to $29 million in any 1-year. For purposes of the RFA, small
entities include small businesses, nonprofit organizations, and small
governmental jurisdictions.
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. We have
[[Page 55903]]
determined that this notice will not have a significant effect on a
substantial number of small entities or on the operations of a
substantial number of small rural hospitals. Therefore, we are not
preparing analyses for either the RFA or section 1102(b) of the Act.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule that may result in expenditure in any 1 year by State,
local, or tribal governments, in the aggregate, or by the private
sector, of $110 million. This notice has no consequential effect on
State, local, or tribal governments. We believe the private sector
costs of this notice fall below this threshold as well.
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.
This notice announces that the monthly actuarial rates applicable
for 2006 are $176.90 for enrollees age 65 and over and $203.70 for
disabled enrollees under age 65. It also announces that the monthly
Part B premium rate for calendar year 2006 is $88.50 and that the Part
B deductible for calendar year 2006 is $124.00. The Part B premium rate
of $88.50 is 13.2 percent higher than the $78.20 premium rate for 2005.
We estimate that this increase will cost approximately 40 million Part
B enrollees about $4.9 billion for 2006. In addition, we estimate that
the increase in the annual deductible will cost approximately $0.4
billion in 2006. Therefore, this notice is a major rule as defined in
Title 5, United States Code, section 804(2) and is an economically
significant rule under Executive Order 12866.
In accordance with the provisions of Executive Order 12866, this
notice was reviewed by the Office of Management and Budget.
IV. Waiver of Proposed Notice
The Medicare statute requires the publication of the monthly
actuarial rates and the Part B premium amounts in September. We
ordinarily use general notices, rather than notice and comment
rulemaking procedures, to make such announcements. In doing so, we note
that, under the Administrative Procedure Act, interpretive rules,
general statements of policy, and rules of agency organization,
procedure, or practice are excepted from the requirements of notice and
comment rulemaking.
We considered publishing a proposed notice to provide a period for
public comment. However, we may waive that procedure if we find, for
good cause, that prior notice and comment are impracticable,
unnecessary, or contrary to the public interest. We find that the
procedure for notice and comment is unnecessary because the formula
used to calculate the Part B premium is statutorily directed, and we
can exercise no discretion in applying that formula. Moreover, the
statute establishes the time period for which the premium rates will
apply, and delaying publication of the Part B premium rate such that it
would not be published before that time would be contrary to the public
interest. Therefore, we find good cause to waive publication of a
proposed notice and solicitation of public comments.
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: September 12, 2005.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
Approved: September 15, 2005.
Michael O. Leavitt,
Secretary.
[FR Doc. 05-18837 Filed 9-16-05; 4 pm]
BILLING CODE 4120-01-P
