Medicare Program; Medicare Part B Monthly Actuarial Rates, Premium Rate, and Annual Deductible Beginning January 1, 2016, 70811-70820 [2015-29181]

Download as PDF tkelley on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices technology to minimize the information collection burden. DATES: Comments on the collection(s) of information must be received by the OMB desk officer by December 16, 2015. ADDRESSES: When commenting on the proposed information collections, please reference the document identifier or OMB control number. To be assured consideration, comments and recommendations must be received by the OMB desk officer via one of the following transmissions: OMB, Office of Information and Regulatory Affairs, Attention: CMS Desk Officer, Fax Number: (202) 395–5806 OR Email: OIRA_submission@omb.eop.gov. To obtain copies of a supporting statement and any related forms for the proposed collection(s) summarized in this notice, you may make your request using one of following: 1. Access CMS’ Web site address at https://www.cms.hhs.gov/ PaperworkReductionActof1995. 2. Email your request, including your address, phone number, OMB number, and CMS document identifier, to Paperwork@cms.hhs.gov. 3. Call the Reports Clearance Office at (410) 786–1326. FOR FURTHER INFORMATION CONTACT: Reports Clearance Office at (410) 786– 1326. SUPPLEMENTARY INFORMATION: Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501–3520), federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. The term ‘‘collection of information’’ is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires federal agencies to publish a 30-day notice in the Federal Register concerning each proposed collection of information, including each proposed extension or reinstatement of an existing collection of information, before submitting the collection to OMB for approval. To comply with this requirement, CMS is publishing this notice that summarizes the following proposed collection(s) of information for public comment: 1. Type of Information Collection Request: Extension without change of a currently approved collection; Title of Information Collection: Statement of Deficiencies and Plan of Correction Supporting Regulations; Use: Section 1864(a) of the Social Security Act requires that the Secretary use state VerDate Sep<11>2014 19:47 Nov 13, 2015 Jkt 238001 survey agencies to conduct surveys to determine whether health care facilities meet Medicare and Clinical Laboratory Improvement Amendments participation requirements. The Form CMS–2567 is the means by which the survey findings are documented. This section of the law further requires that compliance findings resulting from these surveys be made available to the public within 90 days of such surveys. The Form CMS–2567 is the vehicle for this disclosure. The form is also used by health care facilities to document their plan of correction and by CMS, the states, facilities, purchasers, consumers, advocacy groups, and the public as a source of information about quality of care and facility compliance. The regulations at 42 CFR 488.18 require that state survey agencies document all deficiency findings on a statement of deficiencies and plan of correction, which is the CMS–2567. Sections 488.26 and 488.28 further delineate how compliance findings must be recorded and that CMS prescribed forms must be used. Form Number: CMS–2567 (OMB Control Number: 0938–0391); Frequency: Yearly and occasionally; Affected Public: Private Sector (Business or other for-profit and Not-for-profit institutions); Number of Respondents: 64,500; Total Annual Responses: 64,500; Total Annual Hours: 128,083. (For policy questions regarding this collection contact Karen Tritz at 410– 786–8021.) 2. Type of Information Collection Request: Revision of a currently approved collection; Title of Information Collection: Monthly File of Medicaid/Medicare Dual Eligible Enrollees; Use: The monthly data file is provided to CMS by states on dually eligible Medicaid and Medicare beneficiaries, listing the individuals on the Medicaid eligibility file, their Medicare status and other information needed to establish subsidy level, such as income and institutional status. The file is used to count the exact number of individuals who should be included in the phased-down state contribution calculation that month. We merge the data with other data files and establishes Part D enrollment for those individuals on the file. The file may be used by CMS partners to obtain accurate counts of duals on a current basis. Form Number: CMS–10143 (OMB Control Number: 0938–0958); Frequency: Monthly; Affected Public: State, Local, or Tribal Governments; Number of Respondents: 51; Total Annual Responses: 612; Total Annual Hours: 6,120. (For policy questions regarding PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 70811 this collection contact Vasanthi Kandasamy at 410–786–0433). Dated: November 10, 2015. William N. Parham, III, Director, Paperwork Reduction Staff, Office of Strategic Operations and Regulatory Affairs. [FR Doc. 2015–29159 Filed 11–13–15; 8:45 am] BILLING CODE 4120–01–P DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services [CMS–8061–N] RIN 0938–AS38 Medicare Program; Medicare Part B Monthly Actuarial Rates, Premium Rate, and Annual Deductible Beginning January 1, 2016 Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Notice. AGENCY: 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, 2016. In addition, this notice announces the monthly premium for aged and disabled beneficiaries, the deductible for 2016, the income-related monthly adjustment amounts to be paid by beneficiaries with modified adjusted gross income above certain threshold amounts, and the transfer amount equal to the reduction in premiums payable as a result of amendments made by the Bipartisan Budget Act of 2015. The monthly actuarial rates for 2016 are $237.60 for aged enrollees and $282.60 for disabled enrollees. The standard monthly Part B premium rate for all enrollees for 2016 is $121.80, which is equal to 50 percent of the monthly actuarial rate for aged enrollees (or approximately 25 percent of the expected average total cost of Part B coverage for aged enrollees) plus $3.00. (The 2015 standard premium rate was $104.90.) The Part B deductible for 2016 is $166.00 for all Part B beneficiaries. If a beneficiary has to pay an incomerelated monthly adjustment, they will have to pay a total monthly premium of about 35, 50, 65, or 80 percent of the total cost of Part B coverage plus $4.20, $6.00, $7.80, or $9.60. Section 1844(d) of the Social Security Act, as added by section 601(b) of the Bipartisan Budget Act of 2015, provides for a transfer from the general fund to the Part B account SUMMARY: E:\FR\FM\16NON1.SGM 16NON1 70812 Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices of the SMI Trust Fund. This transfer of $7,440,648,000 consists of $5,237,880,000 in reduced premium revenue for enrollees age 65 and older, and $2,202,768,000 in reduced premium revenue for enrollees under age 65. DATES: Effective Date: January 1, 2016. FOR FURTHER INFORMATION CONTACT: M. Kent Clemens, (410) 786–6391. SUPPLEMENTARY INFORMATION: tkelley on DSK3SPTVN1PROD with NOTICES 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 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 described in 42 CFR part 407, subpart B, and part 408, respectively. The premiums paid by (or on behalf of) all enrollees fund approximately one-fourth of the total incurred costs, and transfers from the general fund of the Treasury pay approximately three-fourths of these costs. The Secretary of the Department of Health and Human Services (the Secretary) is required by section 1839 of the Social Security Act (the Act) to announce the Part B monthly actuarial rates for aged and disabled beneficiaries as well as the monthly Part B premium. The Part B annual deductible is included because its determination is directly linked to the aged actuarial rate. The monthly actuarial rates for aged and disabled enrollees are used to determine the correct amount of general revenue financing per beneficiary each month. These amounts, according to actuarial estimates, will equal, respectively, one-half of the expected average monthly cost of Part B for each aged enrollee (age 65 or over) and onehalf of the expected average monthly cost of Part B for each disabled enrollee (under age 65). The Part B deductible to be paid by enrollees is also announced. Prior to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108–173), the Part B deductible was set in statute. After VerDate Sep<11>2014 19:47 Nov 13, 2015 Jkt 238001 setting the 2005 deductible amount at $110, 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 2016 Part B deductible is calculated by multiplying the 2015 deductible by the ratio of the 2016 aged actuarial rate to the 2015 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 PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 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 811 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108– 173, also known as the Medicare Modernization Act, or MMA), which amended section 1839 of the Act, requires that, starting on January 1, 2007, the Part B premium a beneficiary pays each month be based on their annual income. Specifically, if a beneficiary’s ‘‘modified adjusted gross E:\FR\FM\16NON1.SGM 16NON1 tkelley on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices income’’ is greater than the legislated threshold amounts (for 2016, $85,000 for a beneficiary filing an individual income tax return, and $170,000 for a beneficiary filing a joint tax return) the beneficiary is responsible for a larger portion of the estimated total cost of Part B benefit coverage. In addition to the standard 25 percent premium, these beneficiaries now have to pay an income-related monthly adjustment amount. The MMA made no change to the actuarial rate calculation, and the standard premium, which will continue to be paid by beneficiaries whose modified adjusted gross income is below the applicable thresholds, still represents 25 percent of the estimated total cost to the program of Part B coverage for an aged enrollee. However, depending on income and tax filing status, a beneficiary can now be responsible for 35, 50, 65, or 80 percent of the estimated total cost of Part B coverage, rather than 25 percent. (For 2018 and subsequent years, the income thresholds are lower for the two highest income ranges, as a result of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114–10).) The end result of the higher premium is that the Part B premium subsidy is reduced and less general revenue financing is required for beneficiaries with higher income because they are paying a larger share of the total cost with their premium. That is, the premium subsidy continues to be approximately 75 percent for beneficiaries with income below the applicable income thresholds, but will be reduced for beneficiaries with income above these thresholds. The MMA specified that there be a 5-year transition to full implementation of this provision. However, section 5111 of the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109–171) modified the transition to a 3-year period. Section 4732(c) of the BBA added section 1933(c) of the Act, which required the Secretary to allocate money from the Part B trust fund to the State Medicaid programs for the purpose of providing Medicare Part B premium assistance from 1998 through 2002 for the low-income Medicaid beneficiaries who qualify under section 1933 of the Act. This allocation, while not a benefit expenditure, was an expenditure of the trust fund and was included in calculating the Part B actuarial rates through 2002. For 2003 through 2015, the expenditure was made from the trust fund because the allocation was temporarily extended. However, because the extension occurred after the financing was determined, the VerDate Sep<11>2014 19:47 Nov 13, 2015 Jkt 238001 allocation was not included in the calculation of the financing rates for these years. Section 211 of MACRA permanently extended this expenditure, which is included in the calculation of the Part B actuarial rates for 2016 and subsequent years. Another provision affecting the calculation of the Part B premium is section 1839(f) of the Act, as amended by section 211 of the Medicare Catastrophic Coverage Act of 1988 (MCCA 88) (Pub. L. 100–360). (The Medicare Catastrophic Coverage Repeal Act of 1989 (Pub. L. 101–234) did not repeal the revisions to section 1839(f) of the Act made by MCCA 88.) Section 1839(f) of the Act, referred to as the ‘‘hold-harmless’’ provision, provides that if an individual is entitled to benefits under section 202 or 223 of the Act (the Old-Age and Survivors Insurance Benefit and the Disability Insurance Benefit, respectively) and has the Part B premium deducted from these benefit payments, the premium increase will be reduced, if necessary, to avoid causing a decrease in the individual’s net monthly payment. This decrease in payment occurs if the increase in the individual’s social security benefit due to the cost-of-living adjustment under section 215(i) of the Act is less than the increase in the premium. Specifically, the reduction in the premium amount applies if the individual is entitled to benefits under section 202 or 223 of the Act for November and December of a particular year and the individual’s Part B premiums for December and the following January are deducted from the respective month’s section 202 or 223 benefits. The ‘‘hold-harmless’’ provision does not apply to beneficiaries who are required to pay an income-related monthly adjustment amount. A check for benefits under section 202 or 223 of the Act is received in the month following the month for which the benefits are due. The Part B premium that is deducted from a particular check is the Part B payment for the month in which the check is received. Therefore, a benefit check for November is not received until December, but has December’s Part B premium deducted from it. Generally, if a beneficiary qualifies for hold-harmless protection, the reduced premium for the individual for that January and for each of the succeeding 11 months is the greater of either— • The monthly premium for January reduced as necessary to make the December monthly benefits, after the deduction of the Part B premium for January, at least equal to the preceding November’s monthly benefits, after the PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 70813 deduction of the Part B premium for December; or • The monthly premium for that individual for that December. In determining the premium limitations under section 1839(f) of the Act, the monthly benefits to which an individual is entitled under section 202 or 223 of the Act do not include retroactive adjustments or payments and deductions on account of work. Also, once the monthly premium amount is established under section 1839(f) of the Act, it will not be changed during the year even if there are retroactive adjustments or payments and deductions on account of work that apply to the individual’s monthly benefits. Individuals who have enrolled in Part B late or who have re-enrolled after the termination of a coverage period are subject to an increased premium under section 1839(b) of the Act. The increase is a percentage of the premium and is based on the new premium rate before any reductions under section 1839(f) of the Act are made. For 2016, social security benefits will receive no cost-of-living adjustment under section 215(i) of the Act. As a result, the majority of Part B enrollees can pay no increase in their monthly premium. The Bipartisan Budget Act of 2015 helps to ensure the financial adequacy of the Part B account of the SMI Trust Fund without transferring the financial burden of the entire increase in 2016 premium requirements to the minority of enrollees who are not held harmless. Section 1839 of the Social Security Act, as amended by section 601(a) of the Bipartisan Budget Act of 2015 (Pub. L. 114–74), specifies that the 2016 actuarial rate for enrollees age 65 and older be determined as if the holdharmless provision does not apply. The premium revenue that is lost by using the resulting lower premium (excluding the foregone income-related premium revenue) is to be replaced by a transfer of general revenue from the Treasury, which will be repaid over time to the general fund. The transfer amount will be $7,440,648,000, consisting of $5,237,880,000 for the lost aged premium revenue and $2,202,768,000 for the lost disabled premium revenue. Starting in 2016, in order to repay the balance due (which is to include the transfer amount and the foregone income-related premium revenue), the Part B premium otherwise determined will be increased by $3.00. These repayment amounts will be added to the Part B premium otherwise determined each year and paid back to the general fund of the Treasury. E:\FR\FM\16NON1.SGM 16NON1 70814 Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices High-income enrollees will pay an additional $1.20, $3.00, $4.80, or $6.60 as part of the income-related monthly adjustment amount (IRMAA) premium dollars, which reduce (dollar for dollar) the amount of general revenue received by Part B from the general fund of the Treasury. Because of this general revenue offset, the repayment IRMAA premium dollars are not included in the direct repayments made to the general fund of the Treasury from Part B in order to avoid a double repayment. (Only the $3.00 monthly repayment amounts are included in the direct repayments). These repayment amounts will continue until the total amount collected is equal to the beginning balance due. (In the final year of the repayment, the additional amounts may be modified in order to avoid an overpayment.) The repayment amounts (excluding the repayment amounts for high-income enrollees) are subject to the hold harmless provision. The beginning balance due is $9,066,409,000, consisting of the transfer amount plus $1,625,761,000 in foregone incomerelated premium revenue. II. Provisions of the Notice A. Notice of Medicare Part B Monthly Actuarial Rates, Monthly Premium Rates, Annual Deductible, and Transfer Amount The Medicare Part B monthly actuarial rates applicable for 2016 are $237.60 for enrollees age 65 and over and $282.60 for disabled enrollees under age 65. In section II.B. of this notice, we present the actuarial assumptions and bases from which these rates are derived. The Part B standard monthly premium rate for all enrollees for 2016 is $121.80. The following are the 2016 Part B monthly premium rates to be paid by beneficiaries who file an individual tax return (including those who are single, head of household, qualifying widow(er) with dependent child, or married filing separately who lived apart from their spouse for the entire taxable year), or a joint tax return. Beneficiaries who file an individual tax return with income: Beneficiaries who file a joint tax return with income: Less than or equal to $85,000 ..................................... Greater than $85,000 and less than or equal to $107,000. Greater than $107,000 and less than or equal to $160,000. Greater than $160,000 and less than or equal to $214,000. Greater than $214,000 ................................................. Income-related monthly adjustment amount Total monthly premium amount $0.00 48.70 $121.80 170.50 121.80 243.60 194.90 316.70 268.00 389.80 Less than or equal to $170,000 ................................... Greater than $170,000 and less than or equal to $214,000. Greater than $214,000 and less than or equal to $320,000. Greater than $320,000 and less than or equal to $428,000. Greater than $428,000 ................................................. In addition, the monthly premium rates to be paid by beneficiaries who are married and lived with their spouse at any time during the taxable year, but file a separate tax return from their spouse, are as follows: Beneficiaries who are married and lived with their spouse at any time during the year, but file a separate tax return from their spouse: Income-related monthly adjustment amount Total monthly premium amount $0.00 194.90 268.00 $121.80 316.70 389.80 tkelley on DSK3SPTVN1PROD with NOTICES Less than or equal to $85,000 ................................................................................................................................ Greater than $85,000 and less than or equal to $129,000 ..................................................................................... Greater than $129,000 ............................................................................................................................................ The Part B annual deductible for 2016 is $166.00 for all beneficiaries. The transfer amount is the estimate by the Chief Actuary of the aggregate reduction in premiums payable, separately for enrollees age 65 and older and for enrollees under age 65, as a result of the amendments made by the Bipartisan Budget Act of 2015 (excluding the reduction in the incomerelated monthly adjustment amounts). The 2016 actuarial rate for enrollees age 65 and older is $237.60, and the actuarial rate portion of the 2016 premium is $118.80. If the only change to the 2016 actuarial rate for enrollees age 65 and older was the absence of the Bipartisan Budget Act amendments, then the 2016 actuarial rate for enrollees age 65 and older would be $318.00, and the actuarial rate portion of the 2016 premium would be $159.00. VerDate Sep<11>2014 19:47 Nov 13, 2015 Jkt 238001 The reduction in premiums payable as a result of the Bipartisan Budget Act amendments is estimated separately for—(1) enrollees held harmless; (2) enrollees not held harmless who are age 65 or older; and (3) enrollees not held harmless who are under age 65. All enrollees that are subject to the hold harmless provision will have no reduction in their premiums payable in 2016 as a result of these amendments. (The 2016 monthly premium for enrollees subject to the hold harmless provision in 2016 will be the same as their 2015 monthly premium.) An estimated 11.8 million enrollees age 65 and older (with 10.8 million enrollee years of premium payments) will not be held harmless and will have a reduction in monthly premiums payable from $159.00 to $118.80. Based on this difference in premiums payable and PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 adjusting for the additional premiums payable by individuals subject to the late enrollment penalty (assuming a historical average penalty), the transfer amount for enrollees age 65 and older is $5,237,880,000. An estimated 4.9 million enrollees under age 65 (with 4.6 million enrollee years of premium payments) will not be held harmless and will have a reduction in monthly premiums payable from $159.00 to $118.80. Based on this difference in premiums payable and adjusting for the additional premiums payable by individuals subject to the late enrollment penalty (assuming a historical average penalty), the transfer amount for enrollees under age 65 is $2,202,768,000. The total transfer amount will be $7,440,648,000. E:\FR\FM\16NON1.SGM 16NON1 70815 Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices B. Statement of Actuarial Assumptions and Bases Employed in Determining the Monthly Actuarial Rates and the Monthly Premium Rate for Part B Beginning January 2016 Except where noted, the actuarial assumptions and bases used to determine the monthly actuarial rates and the monthly premium rates for Part B are established by the Centers for Medicare & Medicaid Services Office of the Actuary. The estimates underlying these determinations are prepared by actuaries meeting the qualification standards and following the actuarial standards of practice established by the Actuarial Standards Board. 1. Actuarial Status of the Part B Account in the Supplementary Medical Insurance Trust Fund Under section 1839 of the Act, the starting point for determining the standard monthly premium is the amount that would be necessary to finance Part B on an incurred basis. This is the amount of income that would be sufficient to pay for services furnished during that year (including associated administrative costs) even though payment for some of these services will not be made until after the close of the year. The portion of income required to cover benefits not paid until after the close of the year is added to the trust fund and used when needed. The premium 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 an appropriate degree of variation between actual and projected costs, and the amount of incurred, but unpaid, expenses. Numerous factors determine what level of assets is appropriate to cover variation between actual and projected costs. The three most important of these factors are the: (1) Difference from prior years between the actual performance of the program and estimates made at the time financing was established; (2) likelihood and potential magnitude of expenditure changes resulting from enactment of legislation affecting Part B costs in a year subsequent to the establishment of financing for that year; and (3) expected relationship between incurred and cash expenditures. These factors are analyzed on an ongoing basis, as the trends can vary over time. Table 1 summarizes the estimated actuarial status of the trust fund as of the end of the financing period for 2014 and 2015. 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 ($ in millions) Financing period ending December 31, 2014 ..................................................................................................................... December 31, 2015 ..................................................................................................................... tkelley on DSK3SPTVN1PROD with NOTICES 2. Monthly Actuarial Rate for Enrollees Age 65 and Older The monthly actuarial rate for enrollees age 65 and older is one-half of the sum of monthly amounts for: (1) The projected cost of benefits; and (2) administrative expenses for each enrollee age 65 and older, after adjustments to this sum to allow for interest earnings on assets in the trust fund and an adequate contingency margin. The contingency margin is an amount appropriate to provide for possible variation between actual and projected costs and to amortize any surplus assets or unfunded liabilities. The monthly actuarial rate for enrollees age 65 and older for 2016 is determined by first establishing perenrollee cost by type of service from program data through 2015 and then projecting these costs for subsequent years. The projection factors used for financing periods from January 1, 2013 through December 31, 2016 are shown in Table 2. As indicated in Table 3, the projected per-enrollee amount required to pay for one-half of the total of benefits and administrative costs for enrollees age 65 and over for 2016 is $227.86. Based on current estimates, the assets at the end VerDate Sep<11>2014 19:47 Nov 13, 2015 Jkt 238001 of 2015 are not sufficient to cover the amount of incurred, but unpaid, expenses and to provide for a significant degree of variation between actual and projected costs. Thus, a positive contingency margin is needed to increase assets to a more appropriate level. The monthly actuarial rate of $237.60 provides an adjustment of $11.61 for a contingency margin (determined as if the hold harmless provision did not apply for 2016, as required by the Bipartisan Budget Act of 2015) and ¥$1.87 for interest earnings. Two other factors affect the contingency margin for 2016. Starting in 2011, manufacturers and importers of brand-name prescription drugs have paid a fee that is allocated to the Part B account of the SMI trust. For 2016, the total of these brand-name drug fees is estimated to be $3.0 billion. The contingency margin has been reduced to account for this additional revenue. Another factor impacting the contingency margin comes from the requirement that certain payment incentives, to encourage the development and use of health information technology (HIT) by Medicare physicians, are to be excluded from the premium determination. HIT positive incentive payments or penalties PO 00000 Frm 00069 Fmt 4703 Sfmt 4703 Liabilities ($ in millions) Assets less liabilities ($ in millions) 68,074 58,261 23,716 23,292 44,358 34,969 will be directly offset through transfers with the general fund of the Treasury. The monthly actuarial rate includes an adjustment of ¥$0.36 for HIT positive incentive payments in 2016. The traditional goal for the Part B reserve has been that assets minus liabilities at the end of a year should represent between 15 and 20 percent of the following year’s total incurred expenditures. To accomplish this goal, a 17 percent reserve ratio has been the normal target used to calculate the Part B premium. The contingency margin included in establishing the 2016 actuarial rate of $237.60 per month for aged beneficiaries, as announced in this notice, is projected to fully restore the Part B assets under the projection assumptions listed in Table 2. 3. Monthly Actuarial Rate for Disabled Enrollees Disabled enrollees are those persons under age 65 who are enrolled in Part B because of entitlement to Social Security disability benefits for more than 24 months or because of entitlement to Medicare under the endstage renal disease (ESRD) program. Projected monthly costs for disabled enrollees (other than those with ESRD) E:\FR\FM\16NON1.SGM 16NON1 70816 Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices factors described previously for aged beneficiaries and the projection assumptions listed in Table 2. 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 per-enrollee amount required to pay for one-half of the total of benefits and administrative costs for disabled enrollees for 2016 is $272.94. The monthly actuarial rate of $282.60 also provides an adjustment of ¥$2.86 for interest earnings and $12.52 for a contingency margin, reflecting the same factors described previously for the aged actuarial rate at magnitudes appropriate to the disabled rate determination. Based on current estimates, the assets associated with the disabled Medicare beneficiaries at the end of 2015 are not sufficient to cover the amount of incurred, but unpaid, expenses and to provide for a significant degree of variation between actual and projected costs. Thus, a positive contingency margin is needed to increase assets to an appropriate level. The actuarial rate of $282.60 per month for disabled beneficiaries, as announced in this notice for 2016, reflects the combined net effect of the 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 cost growth rate assumptions. The results of those assumptions are shown in Table 5. One set represents increases that are higher and, therefore, more pessimistic than the current estimate. The other set represents increases that are lower and, therefore, more optimistic than the current estimate. The values for the alternative assumptions were determined from a statistical analysis of the historical variation in the respective increase factors. As indicated in Table 5, the monthly actuarial rates would result in an excess of assets over liabilities of $53,052 million by the end of December 2016 under the cost growth rate assumptions shown in Table 2 and assuming that the provisions of current law are fully implemented. This amounts to 17.0 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 $8,962 million by the end of December 2016 under current law, which amounts to 2.5 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 $94,727 million by the end of December 2016, or 34.9 percent of the estimated total incurred expenditures for the following year. The sensitivity analysis indicates that the premium and general revenue financing established for 2016, together with existing Part B account assets would be adequate to cover estimated Part B costs for 2016 under current law, even if actual costs prove to be somewhat greater than expected. 5. Premium Rates and Deductible As determined in accordance with section 1839 of the Act, listed are the 2016 Part B monthly premium rates to be paid by beneficiaries who file an individual tax return (including those who are single, head of household, qualifying widow(er) with dependent child, or married filing separately who lived apart from their spouse for the entire taxable year), or a joint tax return. Beneficiaries who file an individual tax return with income: Beneficiaries who file a joint tax return with income: Less than or equal to $85,000 ..................................... Greater than $85,000 and less than or equal to $107,000. Greater than $107,000 and less than or equal to $160,000. Greater than $160,000 and less than or equal to $214,000. Greater than $214,000 ................................................. Income-related monthly adjustment amount Total monthly premium amount $0.00 48.70 $121.80 170.50 121.80 243.60 194.90 316.70 268.00 389.80 Less than or equal to $170,000 ................................... Greater than $170,000 and less than or equal to $214,000. Greater than $214,000 and less than or equal to $320,000. Greater than $320,000 and less than or equal to $428,000. Greater than $428,000 ................................................. In addition, the monthly premium rates to be paid by beneficiaries who are married and lived with their spouse at any time during the taxable year, but file a separate tax return from their spouse, are listed as follows: Beneficiaries who are married and lived with their spouse at any time during the year, but file a separate tax return from their spouse: Income-related monthly adjustment amount Total monthly premium amount $0.00 194.90 268.00 $121.80 316.70 389.80 Less than or equal to $85,000 ................................................................................................................................ Greater than $85,000 and less than or equal to $129,000 ..................................................................................... Greater than $129,000 ............................................................................................................................................ tkelley on DSK3SPTVN1PROD with NOTICES TABLE 2—PROJECTION FACTORS 1 12-MONTH PERIODS ENDING DECEMBER 31 OF 2013–2016 [In percent] Physicians’ services Residual 3 Durable medical equipment 0.2 ¥10.3 Calendar year Fees 2 Aged: 2013 ............................... VerDate Sep<11>2014 19:47 Nov 13, 2015 ¥0.1 Jkt 238001 PO 00000 Frm 00070 Carrier lab 4 Other carrier services 5 Outpatient hospital 2.6 7.4 0.1 Fmt 4703 Sfmt 4703 Home health agency E:\FR\FM\16NON1.SGM Hospital lab 6 ¥0.7 16NON1 ¥0.7 Other intermediary services 7 ¥0.6 Managed care 1.4 70817 Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices TABLE 2—PROJECTION FACTORS 1 12-MONTH PERIODS ENDING DECEMBER 31 OF 2013–2016—Continued [In percent] Physicians’ services Residual 3 Durable medical equipment Calendar year Fees 2 2014 2015 2016 Disabled: 2013 2014 2015 2016 Other carrier services 5 Carrier lab 4 Outpatient hospital Home health agency Other intermediary services 7 Hospital lab 6 Managed care ............................... ............................... ............................... 0.5 ¥0.4 0.1 0.8 ¥0.6 1.2 ¥14.4 4.8 ¥5.8 6.6 4.4 4.6 2.8 3.9 1.6 12.7 5.2 4.1 ¥1.3 ¥0.3 1.6 ¥28.8 4.1 3.9 4.7 5.7 4.8 7.0 2.2 2.8 ............................... ............................... ............................... ............................... ¥0.1 0.5 ¥0.4 0.1 1.4 2.5 ¥0.8 1.3 ¥9.2 ¥10.8 4.4 ¥5.7 10.8 14.0 6.5 4.7 1.1 4.6 4.8 1.4 7.0 14.4 5.6 4.1 3.9 ¥1.1 ¥0.3 2.0 ¥1.8 ¥35.4 2.9 3.9 1.7 8.3 7.8 5.1 4.0 9.2 0.7 2.6 1 All values for services other than managed care are per fee-for-service enrollee. Managed care values are per managed care enrollee. recognized for payment under the program. 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. 2 As 3 Increase TABLE 3—DERIVATION OF MONTHLY ACTUARIAL RATE FOR ENROLLEES AGE 65 AND OVER FOR FINANCING PERIODS ENDING DECEMBER 31, 2013 THROUGH DECEMBER 31, 2016 [In dollars] CY 2013 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 2014 CY 2015 CY 2016 78.23 7.29 4.21 22.07 37.87 10.15 3.27 16.53 65.60 77.10 6.07 4.37 22.06 41.49 9.75 2.26 16.83 74.26 74.44 6.21 4.45 22.36 42.57 9.47 2.30 17.35 79.49 74.40 5.77 4.60 22.43 43.74 9.50 2.36 17.95 83.65 Total services .................................................................................... Cost sharing: Deductible ................................................................................................. Coinsurance .............................................................................................. Sequestration of benefits ................................................................................. HIT payment incentives ................................................................................... 245.22 254.20 258.64 264.39 ¥5.63 ¥29.17 ¥3.17 ¥2.04 ¥5.63 ¥28.38 ¥4.40 ¥2.40 ¥5.64 ¥28.84 ¥4.48 ¥0.43 ¥6.36 ¥28.26 ¥4.59 ¥0.36 Total benefits ..................................................................................... Administrative expenses .................................................................................. 205.20 2.77 213.38 3.49 219.25 3.00 224.82 3.05 Incurred expenditures ...................................................................................... Value of interest ............................................................................................... Contingency margin for projection error and to amortize the surplus or deficit ................................................................................................................. 207.97 ¥1.80 216.87 ¥1.93 222.25 ¥1.73 227.86 ¥1.87 3.63 ¥5.14 ¥10.72 11.61 Monthly actuarial rate ........................................................................ 209.80 209.80 209.80 237.60 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. TABLE 4—DERIVATION OF MONTHLY ACTUARIAL RATE FOR DISABLED ENROLLEES FOR FINANCING PERIODS ENDING DECEMBER 31, 2013 THROUGH DECEMBER 31, 2016 [In dollars] tkelley on DSK3SPTVN1PROD with NOTICES CY 2013 Covered services (at level recognized): Physician fee schedule .................................................................................... Durable medical equipment ............................................................................. Carrier lab 1 ...................................................................................................... Other carrier services 2 .................................................................................... Outpatient hospital ........................................................................................... Home health .................................................................................................... VerDate Sep<11>2014 19:47 Nov 13, 2015 Jkt 238001 PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 CY 2014 83.88 13.88 6.54 25.26 54.25 9.18 E:\FR\FM\16NON1.SGM 83.87 11.99 7.21 25.43 60.32 8.79 16NON1 CY 2015 80.07 12.08 7.42 25.55 61.47 8.45 CY 2016 79.56 11.15 7.61 25.42 62.72 8.43 70818 Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices TABLE 4—DERIVATION OF MONTHLY ACTUARIAL RATE FOR DISABLED ENROLLEES FOR FINANCING PERIODS ENDING DECEMBER 31, 2013 THROUGH DECEMBER 31, 2016—Continued [In dollars] CY 2013 CY 2014 CY 2015 CY 2016 Hospital lab 3 .................................................................................................... Other intermediary services 4 ........................................................................... Managed care .................................................................................................. 4.64 44.34 55.05 2.87 44.87 65.50 2.86 45.36 72.71 2.91 46.37 78.31 Total services ........................................................................................... Cost sharing: Deductible ........................................................................................................ Coinsurance ..................................................................................................... Sequestration of benefits ................................................................................. HIT payment incentives ................................................................................... 297.03 310.86 315.95 322.46 ¥5.29 ¥44.36 ¥3.73 ¥2.13 ¥5.29 ¥43.31 ¥5.24 ¥2.58 ¥5.30 ¥42.74 ¥5.36 ¥0.45 ¥5.97 ¥41.32 ¥5.50 ¥0.39 Total benefits ............................................................................................ Administrative expenses .................................................................................. 241.52 3.26 254.43 4.16 262.10 3.59 269.28 3.65 Incurred expenditures ...................................................................................... Value of interest ............................................................................................... Contingency margin for projection error and to amortize the surplus or deficit ................................................................................................................. 244.78 ¥3.47 258.59 ¥2.50 265.69 ¥1.88 272.94 ¥2.86 ¥5.81 ¥37.19 ¥9.01 12.52 Monthly actuarial rate ............................................................................... 235.50 218.90 254.80 282.60 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. 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, 2016 As of December 31, 2014 Actuarial status (in $ millions): Assets ............................................................................................................................ Liabilities ........................................................................................................................ Assets less liabilities .............................................................................................. Ratio (in percent) 1 ....................................................................................................................... Low cost projection: Actuarial status (in $ millions): Assets ............................................................................................................................ Liabilities ........................................................................................................................ 2015 2016 68,074 23,716 58,261 23,292 76,806 23,754 44,358 15.9 34,969 11.9 53,052 17.0 68,0741 23,716 73,027 21,651 117,319 22,592 Assets less liabilities .............................................................................................. Ratio (in percent) 1 ....................................................................................................................... High cost projection: Actuarial status (in $ millions): Assets ............................................................................................................................ Liabilities ........................................................................................................................ 44,358 16.9 51,376 19.3 94,727 34.9 68,074 23,716 43,044 24,982 34,020 25,058 Assets less liabilities .............................................................................................. Ratio (in percent) 1 ....................................................................................................................... 44,358 15.0 18,062 5.6 8,962 2.5 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. tkelley on DSK3SPTVN1PROD with NOTICES III. Collection of Information Requirements IV. Regulatory Impact Analysis B. Overall Impact A. Statement of Need 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.). Section 1839 of the Act requires us to annually announce (that is by September 30th of each year) the Part B monthly actuarial rates for aged and disabled beneficiaries as well as the monthly Part B premium. We also announce the Part B annual deductible because its determination is directly linked to the aged actuarial rate. 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), the Regulatory Flexibility Act (RFA) (September 19, 1980, Public Law 96–354), section 1102(b) of the Social Security Act, section 202 of the VerDate Sep<11>2014 19:47 Nov 13, 2015 Jkt 238001 PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 E:\FR\FM\16NON1.SGM 16NON1 70819 Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices Unfunded Mandates Reform Act of 1995 (March 22, 1995, Public Law 104–4), Executive Order 13132 on Federalism (August 4, 1999) and the Congressional Review Act (5 U.S.C. 804(2)). Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major notices with economically significant effects ($100 million or more in any 1 year). For 2016 approximately 70 percent of Part B enrollees will be held harmless and pay no increase in their Part B premium, but the standard Part B premium rate, the Part B incomerelated premium rates, and the Part B deductible are higher than the respective amounts for 2015 and have an annual effect on the economy of $100 million or more. As a result, this notice is economically significant under section 3(f)(1) of Executive Order 12866 and is a major action as defined under the Congressional Review Act (5 U.S.C. 804(2)). As discussed earlier, this notice announces that the monthly actuarial rates applicable for 2016 are $237.60 for enrollees age 65 and over and $282.60 for disabled enrollees under age 65. It also announces the 2016 monthly Part B premium rates to be paid by beneficiaries who file an individual tax return (including those who are single, head of household, qualifying widow(er) with a dependent child, or married filing separately who lived apart from their spouse for the entire taxable year), or a joint tax return. Beneficiaries who file an individual tax return with income: Beneficiaries who file a joint tax return with income: Less than or equal to $85,000 ..................................... Greater than $85,000 and less than or equal to $107,000. Greater than $107,000 and less than or equal to $160,000. Greater than $160,000 and less than or equal to $214,000. Greater than $214,000 ................................................. Total monthly premium amount $0.00 48.70 $121.80 170.50 121.80 243.60 194.90 316.70 268.00 389.80 Less than or equal to $170,000 ................................... Greater than $170,000 and less than or equal to $214,000. Greater than $214,000 and less than or equal to $320,000. Greater than $320,000 and less than or equal to $428,000. Greater than $428,000 ................................................. In addition, the monthly premium rates to be paid by beneficiaries who are married and lived with their spouse at any time during the taxable year, but file a separate tax return from their spouse, are also announced and listed in the following chart: Beneficiaries who are married and lived with their spouse at any time during the year, but file a separate tax return from their spouse: Less than or equal to $85,000 .................................................................................................................... Greater than $85,000 and less than or equal to $129,000 ........................................................................ Greater than $129,000 ................................................................................................................................ tkelley on DSK3SPTVN1PROD with NOTICES Income-related monthly adjustment amount The RFA requires agencies to analyze options for regulatory relief of small businesses, if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Individuals and States are not included in the definition of a small entity. This notice announces the monthly actuarial rates for aged (age 65 and over) and disabled (under 65) beneficiaries enrolled in Part B of the Medicare SMI program beginning January 1, 2016. Also, this notice announces the monthly premium for aged and disabled beneficiaries as well as the income-related monthly adjustment amounts to be paid by beneficiaries with modified adjusted gross income above certain threshold amounts. As a result, we are not preparing an analysis for the RFA because the Secretary has determined VerDate Sep<11>2014 22:10 Nov 13, 2015 Jkt 238001 that this notice will not have a significant economic impact on a substantial number of small entities. In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds. As we discussed previously, we are not preparing an analysis for section 1102(b) of the Act because the Secretary has determined that this notice will not have a significant effect on a substantial number of small rural hospitals. Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires that agencies assess PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 Income-related monthly adjustment amount $0.00 .................... 194.90 .................. 268.00 .................. Total monthly premium amount $121.80 316.70 389.80 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 2015, that threshold is approximately $144 million. Part B enrollees who are also enrolled in Medicaid have their monthly Part B premiums paid by Medicaid. The 2016 premium increase is estimated to be a cost to the state Medicaid programs that is less than $144 million per state. This notice does not impose mandates that will have a consequential effect of $144 million or more on State, local, or tribal governments or on the private sector. Executive Order 13132 establishes certain requirements that an agency must meet when it publishes a proposed rule (and subsequent final rule) that imposes substantial direct compliance costs on State and local governments, preempts State law, or otherwise has E:\FR\FM\16NON1.SGM 16NON1 70820 Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices Federalism implications. We have determined that this notice does not significantly affect the rights, roles, and responsibilities of States. Accordingly, the requirements of Executive Order 13132 do not apply to this notice. In accordance with the provisions of Executive Order 12866, this notice was reviewed by the Office of Management and Budget. Dated: November 6, 2015. Andrew M. Slavitt, Acting Administrator, Centers for Medicare & Medicaid Services. Dated: November 9, 2015. Sylvia M. Burwell, Secretary. Department of Health and Human Services. tkelley on DSK3SPTVN1PROD with NOTICES [Docket No. FDA–2015–N–3972] Eighth Annual Sentinel Initiative; Public Workshop; Request for Comments AGENCY: Food and Drug Administration, Notice of public workshop; request for comments. ACTION: 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. 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. Moreover, we find that notice and comment are unnecessary because the formulas used to calculate the Part B premiums are statutorily directed. Therefore, we find good cause to waive publication of a proposed notice and solicitation of public comments. BILLING CODE 4120–01–P Food and Drug Administration HHS. V. Waiver of Proposed Notice [FR Doc. 2015–29181 Filed 11–10–15; 4:15 pm] DEPARTMENT OF HEALTH AND HUMAN SERVICES The Food and Drug Administration (FDA) is announcing a public workshop entitled ‘‘Eighth Annual Sentinel Initiative Public Workshop.’’ Convened by the Center for Health Policy at the Brookings Institution and supported by a cooperative agreement with FDA, this 1day workshop will bring the stakeholder community together to discuss a variety of topics on active medical product surveillance. Topics will include an update on the state of FDA’s Sentinel Initiative, including an overview of the transition from the Mini-Sentinel pilot to the full Sentinel System, and key activities and uses of the Sentinel System accomplished in 2015. In addition, panelists will discuss the future of the Sentinel System and opportunities to expand its medical product surveillance capabilities. This workshop will also engage stakeholders to discuss current and emerging Sentinel projects. DATES: The public workshop will be held on February 3, 2016, from 9 a.m. to 4 p.m., Eastern Standard Time (EST). Location: The public workshop will be held at the Renaissance Washington, DC Dupont Circle Hotel, 1143 New Hampshire Ave. NW., Washington, DC 20037. For additional travel and hotel information, please refer to https:// www.eventbrite.com/e/sentinel-publicevent-2016-tickets-19294863456. (FDA has verified the Web site addresses throughout this notice, but FDA is not responsible for subsequent changes to the Web sites after this document publishes in the Federal Register.) There will also be a live webcast for those unable to attend the meeting in person (see Streaming Webcast of the Public Workshop). ADDRESSES: You may submit comments as follows: SUMMARY: Electronic Submissions Submit electronic comments in the following way: • Federal eRulemaking Portal: https:// www.regulations.gov. Follow the instructions for submitting comments. VerDate Sep<11>2014 19:47 Nov 13, 2015 Jkt 238001 PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 Comments submitted electronically, including attachments, to https:// www.regulations.gov will be posted to the docket unchanged. Because your comment will be made public, you are solely responsible for ensuring that your comment does not include any confidential information that you or a third party may not wish to be posted, such as medical information, your or anyone else’s Social Security number, or confidential business information, such as a manufacturing process. Please note that if you include your name, contact information, or other information that identifies you in the body of your comments, that information will be posted on https://www.regulations.gov. • If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see ‘‘Written/Paper Submissions’’ and ‘‘Instructions’’). Written/Paper Submissions Submit written/paper submissions as follows: • Mail/Hand delivery/Courier (for written/paper submissions): Division of Dockets Management (HFA–305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852. • For written/paper comments submitted to the Division of Dockets Management, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in ‘‘Instructions.’’ Instructions: All submissions received must include the Docket No. FDA– 2015–N–3972 for ‘‘Eighth Annual Sentinel Initiative; Public Workshop.’’ Received comments will be placed in the docket and, except for those submitted as ‘‘Confidential Submissions,’’ publicly viewable at https://www.regulations.gov or at the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday. • Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states ‘‘THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.’’ The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the E:\FR\FM\16NON1.SGM 16NON1

Agencies

[Federal Register Volume 80, Number 220 (Monday, November 16, 2015)]
[Notices]
[Pages 70811-70820]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-29181]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-8061-N]
RIN 0938-AS38

Medicare Program; Medicare Part B Monthly Actuarial Rates,
Premium Rate, and Annual Deductible Beginning January 1, 2016

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, 2016. In addition, this notice announces the
monthly premium for aged and disabled beneficiaries, the deductible for
2016, the income-related monthly adjustment amounts to be paid by
beneficiaries with modified adjusted gross income above certain
threshold amounts, and the transfer amount equal to the reduction in
premiums payable as a result of amendments made by the Bipartisan
Budget Act of 2015. The monthly actuarial rates for 2016 are $237.60
for aged enrollees and $282.60 for disabled enrollees. The standard
monthly Part B premium rate for all enrollees for 2016 is $121.80,
which is equal to 50 percent of the monthly actuarial rate for aged
enrollees (or approximately 25 percent of the expected average total
cost of Part B coverage for aged enrollees) plus $3.00. (The 2015
standard premium rate was $104.90.) The Part B deductible for 2016 is
$166.00 for all Part B beneficiaries. If a beneficiary has to pay an
income-related monthly adjustment, they will have to pay a total
monthly premium of about 35, 50, 65, or 80 percent of the total cost of
Part B coverage plus $4.20, $6.00, $7.80, or $9.60. Section 1844(d) of
the Social Security Act, as added by section 601(b) of the Bipartisan
Budget Act of 2015, provides for a transfer from the general fund to
the Part B account

[[Page 70812]]

of the SMI Trust Fund. This transfer of $7,440,648,000 consists of
$5,237,880,000 in reduced premium revenue for enrollees age 65 and
older, and $2,202,768,000 in reduced premium revenue for enrollees
under age 65.

DATES: Effective Date: January 1, 2016.

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 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 described in 42 CFR part
407, subpart B, and part 408, respectively. The premiums paid by (or on
behalf of) all enrollees fund approximately one-fourth of the total
incurred costs, and transfers from the general fund of the Treasury pay
approximately three-fourths of these costs.
The Secretary of the Department of Health and Human Services (the
Secretary) is required by section 1839 of the Social Security Act (the
Act) to announce the Part B monthly actuarial rates for aged and
disabled beneficiaries as well as the monthly Part B premium. The Part
B annual deductible is included because its determination is directly
linked to the aged actuarial rate.
The monthly actuarial rates for aged and disabled enrollees are
used to determine the correct amount of general revenue financing per
beneficiary each month. These amounts, according to actuarial
estimates, will equal, respectively, one-half of the expected average
monthly cost of Part B for each aged enrollee (age 65 or over) and one-
half of the expected average monthly cost of Part B for each disabled
enrollee (under age 65).
The Part B deductible to be paid by enrollees is also announced.
Prior to the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003 (MMA) (Pub. L. 108-173), the Part B deductible was set in
statute. After setting the 2005 deductible amount at $110, section 629
of the MMA (amending section 1833(b) of the Act) 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 2016
Part B deductible is calculated by multiplying the 2015 deductible by
the ratio of the 2016 aged actuarial rate to the 2015 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 811 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Pub. L. 108-173, also known as the Medicare
Modernization Act, or MMA), which amended section 1839 of the Act,
requires that, starting on January 1, 2007, the Part B premium a
beneficiary pays each month be based on their annual income.
Specifically, if a beneficiary's ``modified adjusted gross

[[Page 70813]]

income'' is greater than the legislated threshold amounts (for 2016,
$85,000 for a beneficiary filing an individual income tax return, and
$170,000 for a beneficiary filing a joint tax return) the beneficiary
is responsible for a larger portion of the estimated total cost of Part
B benefit coverage. In addition to the standard 25 percent premium,
these beneficiaries now have to pay an income-related monthly
adjustment amount. The MMA made no change to the actuarial rate
calculation, and the standard premium, which will continue to be paid
by beneficiaries whose modified adjusted gross income is below the
applicable thresholds, still represents 25 percent of the estimated
total cost to the program of Part B coverage for an aged enrollee.
However, depending on income and tax filing status, a beneficiary can
now be responsible for 35, 50, 65, or 80 percent of the estimated total
cost of Part B coverage, rather than 25 percent. (For 2018 and
subsequent years, the income thresholds are lower for the two highest
income ranges, as a result of the Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10).) The end result
of the higher premium is that the Part B premium subsidy is reduced and
less general revenue financing is required for beneficiaries with
higher income because they are paying a larger share of the total cost
with their premium. That is, the premium subsidy continues to be
approximately 75 percent for beneficiaries with income below the
applicable income thresholds, but will be reduced for beneficiaries
with income above these thresholds. The MMA specified that there be a
5-year transition to full implementation of this provision. However,
section 5111 of the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-
171) modified the transition to a 3-year period.
Section 4732(c) of the BBA added section 1933(c) of the Act, which
required the Secretary to allocate money from the Part B trust fund to
the State Medicaid programs for the purpose of providing Medicare Part
B premium assistance from 1998 through 2002 for the low-income Medicaid
beneficiaries who qualify under section 1933 of the Act. This
allocation, while not a benefit expenditure, was an expenditure of the
trust fund and was included in calculating the Part B actuarial rates
through 2002. For 2003 through 2015, the expenditure was made from the
trust fund because the allocation was temporarily extended. However,
because the extension occurred after the financing was determined, the
allocation was not included in the calculation of the financing rates
for these years. Section 211 of MACRA permanently extended this
expenditure, which is included in the calculation of the Part B
actuarial rates for 2016 and subsequent years.
Another provision affecting the calculation of the Part B premium
is section 1839(f) of the Act, as amended by section 211 of the
Medicare Catastrophic Coverage Act of 1988 (MCCA 88) (Pub. L. 100-360).
(The Medicare Catastrophic Coverage Repeal Act of 1989 (Pub. L. 101-
234) did not repeal the revisions to section 1839(f) of the Act made by
MCCA 88.) Section 1839(f) of the Act, referred to as the ``hold-
harmless'' provision, provides that if an individual is entitled to
benefits under section 202 or 223 of the Act (the Old-Age and Survivors
Insurance Benefit and the Disability Insurance Benefit, respectively)
and has the Part B premium deducted from these benefit payments, the
premium increase will be reduced, if necessary, to avoid causing a
decrease in the individual's net monthly payment. This decrease in
payment occurs if the increase in the individual's social security
benefit due to the cost-of-living adjustment under section 215(i) of
the Act is less than the increase in the premium. Specifically, the
reduction in the premium amount applies if the individual is entitled
to benefits under section 202 or 223 of the Act for November and
December of a particular year and the individual's Part B premiums for
December and the following January are deducted from the respective
month's section 202 or 223 benefits. The ``hold-harmless'' provision
does not apply to beneficiaries who are required to pay an income-
related monthly adjustment amount.
A check for benefits under section 202 or 223 of the Act is
received in the month following the month for which the benefits are
due. The Part B premium that is deducted from a particular check is the
Part B payment for the month in which the check is received. Therefore,
a benefit check for November is not received until December, but has
December's Part B premium deducted from it.
Generally, if a beneficiary qualifies for hold-harmless protection,
the reduced premium for the individual for that January and for each of
the succeeding 11 months is the greater of either--
The monthly premium for January reduced as necessary to
make the December monthly benefits, after the deduction of the Part B
premium for January, at least equal to the preceding November's monthly
benefits, after the deduction of the Part B premium for December; or
The monthly premium for that individual for that December.
In determining the premium limitations under section 1839(f) of the
Act, the monthly benefits to which an individual is entitled under
section 202 or 223 of the Act do not include retroactive adjustments or
payments and deductions on account of work. Also, once the monthly
premium amount is established under section 1839(f) of the Act, it will
not be changed during the year even if there are retroactive
adjustments or payments and deductions on account of work that apply to
the individual's monthly benefits.
Individuals who have enrolled in Part B late or who have re-
enrolled after the termination of a coverage period are subject to an
increased premium under section 1839(b) of the Act. The increase is a
percentage of the premium and is based on the new premium rate before
any reductions under section 1839(f) of the Act are made.
For 2016, social security benefits will receive no cost-of-living
adjustment under section 215(i) of the Act. As a result, the majority
of Part B enrollees can pay no increase in their monthly premium. The
Bipartisan Budget Act of 2015 helps to ensure the financial adequacy of
the Part B account of the SMI Trust Fund without transferring the
financial burden of the entire increase in 2016 premium requirements to
the minority of enrollees who are not held harmless.
Section 1839 of the Social Security Act, as amended by section
601(a) of the Bipartisan Budget Act of 2015 (Pub. L. 114-74), specifies
that the 2016 actuarial rate for enrollees age 65 and older be
determined as if the hold-harmless provision does not apply. The
premium revenue that is lost by using the resulting lower premium
(excluding the foregone income-related premium revenue) is to be
replaced by a transfer of general revenue from the Treasury, which will
be repaid over time to the general fund. The transfer amount will be
$7,440,648,000, consisting of $5,237,880,000 for the lost aged premium
revenue and $2,202,768,000 for the lost disabled premium revenue.
Starting in 2016, in order to repay the balance due (which is to
include the transfer amount and the foregone income-related premium
revenue), the Part B premium otherwise determined will be increased by
$3.00. These repayment amounts will be added to the Part B premium
otherwise determined each year and paid back to the general fund of the
Treasury.

[[Page 70814]]

High-income enrollees will pay an additional $1.20, $3.00, $4.80, or
$6.60 as part of the income-related monthly adjustment amount (IRMAA)
premium dollars, which reduce (dollar for dollar) the amount of general
revenue received by Part B from the general fund of the Treasury.
Because of this general revenue offset, the repayment IRMAA premium
dollars are not included in the direct repayments made to the general
fund of the Treasury from Part B in order to avoid a double repayment.
(Only the $3.00 monthly repayment amounts are included in the direct
repayments).
These repayment amounts will continue until the total amount
collected is equal to the beginning balance due. (In the final year of
the repayment, the additional amounts may be modified in order to avoid
an overpayment.) The repayment amounts (excluding the repayment amounts
for high-income enrollees) are subject to the hold harmless provision.
The beginning balance due is $9,066,409,000, consisting of the transfer
amount plus $1,625,761,000 in foregone income-related premium revenue.

II. Provisions of the Notice

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

The Medicare Part B monthly actuarial rates applicable for 2016 are
$237.60 for enrollees age 65 and over and $282.60 for disabled
enrollees under age 65. In section II.B. of this notice, we present the
actuarial assumptions and bases from which these rates are derived. The
Part B standard monthly premium rate for all enrollees for 2016 is
$121.80. The following are the 2016 Part B monthly premium rates to be
paid by beneficiaries who file an individual tax return (including
those who are single, head of household, qualifying widow(er) with
dependent child, or married filing separately who lived apart from
their spouse for the entire taxable year), or a joint tax return.

----------------------------------------------------------------------------------------------------------------
Income-related
Beneficiaries who file an individual tax Beneficiaries who file a joint tax monthly Total monthly
return with income: return with income: adjustment premium amount
amount
----------------------------------------------------------------------------------------------------------------
Less than or equal to $85,000.............. Less than or equal to $170,000..... $0.00 $121.80
Greater than $85,000 and less than or equal Greater than $170,000 and less than 48.70 170.50
to $107,000. or equal to $214,000.
Greater than $107,000 and less than or Greater than $214,000 and less than 121.80 243.60
equal to $160,000. or equal to $320,000.
Greater than $160,000 and less than or Greater than $320,000 and less than 194.90 316.70
equal to $214,000. or equal to $428,000.
Greater than $214,000...................... Greater than $428,000.............. 268.00 389.80
----------------------------------------------------------------------------------------------------------------

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

------------------------------------------------------------------------
Beneficiaries who are married and lived Income-related
with their spouse at any time during the monthly Total monthly
year, but file a separate tax return adjustment premium amount
from their spouse: amount
------------------------------------------------------------------------
Less than or equal to $85,000........... $0.00 $121.80
Greater than $85,000 and less than or 194.90 316.70
equal to $129,000......................
Greater than $129,000................... 268.00 389.80
------------------------------------------------------------------------

The Part B annual deductible for 2016 is $166.00 for all
beneficiaries.
The transfer amount is the estimate by the Chief Actuary of the
aggregate reduction in premiums payable, separately for enrollees age
65 and older and for enrollees under age 65, as a result of the
amendments made by the Bipartisan Budget Act of 2015 (excluding the
reduction in the income-related monthly adjustment amounts). The 2016
actuarial rate for enrollees age 65 and older is $237.60, and the
actuarial rate portion of the 2016 premium is $118.80. If the only
change to the 2016 actuarial rate for enrollees age 65 and older was
the absence of the Bipartisan Budget Act amendments, then the 2016
actuarial rate for enrollees age 65 and older would be $318.00, and the
actuarial rate portion of the 2016 premium would be $159.00.
The reduction in premiums payable as a result of the Bipartisan
Budget Act amendments is estimated separately for--(1) enrollees held
harmless; (2) enrollees not held harmless who are age 65 or older; and
(3) enrollees not held harmless who are under age 65. All enrollees
that are subject to the hold harmless provision will have no reduction
in their premiums payable in 2016 as a result of these amendments. (The
2016 monthly premium for enrollees subject to the hold harmless
provision in 2016 will be the same as their 2015 monthly premium.) An
estimated 11.8 million enrollees age 65 and older (with 10.8 million
enrollee years of premium payments) will not be held harmless and will
have a reduction in monthly premiums payable from $159.00 to $118.80.
Based on this difference in premiums payable and adjusting for the
additional premiums payable by individuals subject to the late
enrollment penalty (assuming a historical average penalty), the
transfer amount for enrollees age 65 and older is $5,237,880,000. An
estimated 4.9 million enrollees under age 65 (with 4.6 million enrollee
years of premium payments) will not be held harmless and will have a
reduction in monthly premiums payable from $159.00 to $118.80. Based on
this difference in premiums payable and adjusting for the additional
premiums payable by individuals subject to the late enrollment penalty
(assuming a historical average penalty), the transfer amount for
enrollees under age 65 is $2,202,768,000. The total transfer amount
will be $7,440,648,000.

[[Page 70815]]

B. Statement of Actuarial Assumptions and Bases Employed in Determining
the Monthly Actuarial Rates and the Monthly Premium Rate for Part B
Beginning January 2016

Except where noted, the actuarial assumptions and bases used to
determine the monthly actuarial rates and the monthly premium rates for
Part B are established by the Centers for Medicare & Medicaid Services
Office of the Actuary. The estimates underlying these determinations
are prepared by actuaries meeting the qualification standards and
following the actuarial standards of practice established by the
Actuarial Standards Board.
1. Actuarial Status of the Part B Account in the Supplementary Medical
Insurance Trust Fund
Under section 1839 of the Act, the starting point for determining
the standard monthly premium is the amount that would be necessary to
finance Part B on an incurred basis. This is the amount of income that
would be sufficient to pay for services furnished during that year
(including associated administrative costs) even though payment for
some of these services will not be made until after the close of the
year. The portion of income required to cover benefits not paid until
after the close of the year is added to the trust fund and used when
needed.
The premium 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 an
appropriate degree of variation between actual and projected costs, and
the amount of incurred, but unpaid, expenses. Numerous factors
determine what level of assets is appropriate to cover variation
between actual and projected costs. The three most important of these
factors are the: (1) Difference from prior years between the actual
performance of the program and estimates made at the time financing was
established; (2) likelihood and potential magnitude of expenditure
changes resulting from enactment of legislation affecting Part B costs
in a year subsequent to the establishment of financing for that year;
and (3) expected relationship between incurred and cash expenditures.
These factors are analyzed on an ongoing basis, as the trends can vary
over time.
Table 1 summarizes the estimated actuarial status of the trust fund
as of the end of the financing period for 2014 and 2015.

Table 1--Estimated Actuarial Status of the Part B Account in the Supplementary Medical Insurance Trust Fund as
of the End of the Financing Period
----------------------------------------------------------------------------------------------------------------
Assets less
Financing period ending Assets ($ in Liabilities ($ liabilities ($
millions) in millions) in millions)
----------------------------------------------------------------------------------------------------------------
December 31, 2014............................................... 68,074 23,716 44,358
December 31, 2015............................................... 58,261 23,292 34,969
----------------------------------------------------------------------------------------------------------------

2. Monthly Actuarial Rate for Enrollees Age 65 and Older
The monthly actuarial rate for enrollees age 65 and older is one-
half of the sum of monthly amounts for: (1) The projected cost of
benefits; and (2) administrative expenses for each enrollee age 65 and
older, after adjustments to this sum to allow for interest earnings on
assets in the trust fund and an adequate contingency margin. The
contingency margin is an amount appropriate to provide for possible
variation between actual and projected costs and to amortize any
surplus assets or unfunded liabilities.
The monthly actuarial rate for enrollees age 65 and older for 2016
is determined by first establishing per-enrollee cost by type of
service from program data through 2015 and then projecting these costs
for subsequent years. The projection factors used for financing periods
from January 1, 2013 through December 31, 2016 are shown in Table 2.
As indicated in Table 3, the projected per-enrollee amount required
to pay for one-half of the total of benefits and administrative costs
for enrollees age 65 and over for 2016 is $227.86. Based on current
estimates, the assets at the end of 2015 are not sufficient to cover
the amount of incurred, but unpaid, expenses and to provide for a
significant degree of variation between actual and projected costs.
Thus, a positive contingency margin is needed to increase assets to a
more appropriate level. The monthly actuarial rate of $237.60 provides
an adjustment of $11.61 for a contingency margin (determined as if the
hold harmless provision did not apply for 2016, as required by the
Bipartisan Budget Act of 2015) and -$1.87 for interest earnings.
Two other factors affect the contingency margin for 2016. Starting
in 2011, manufacturers and importers of brand-name prescription drugs
have paid a fee that is allocated to the Part B account of the SMI
trust. For 2016, the total of these brand-name drug fees is estimated
to be $3.0 billion. The contingency margin has been reduced to account
for this additional revenue.
Another factor impacting the contingency margin comes from the
requirement that certain payment incentives, to encourage the
development and use of health information technology (HIT) by Medicare
physicians, are to be excluded from the premium determination. HIT
positive incentive payments or penalties will be directly offset
through transfers with the general fund of the Treasury. The monthly
actuarial rate includes an adjustment of -$0.36 for HIT positive
incentive payments in 2016.
The traditional goal for the Part B reserve has been that assets
minus liabilities at the end of a year should represent between 15 and
20 percent of the following year's total incurred expenditures. To
accomplish this goal, a 17 percent reserve ratio has been the normal
target used to calculate the Part B premium.
The contingency margin included in establishing the 2016 actuarial
rate of $237.60 per month for aged beneficiaries, as announced in this
notice, is projected to fully restore the Part B assets under the
projection assumptions listed in Table 2.
3. Monthly Actuarial Rate for Disabled Enrollees
Disabled enrollees are those persons under age 65 who are enrolled
in Part B because of entitlement to Social Security disability benefits
for more than 24 months or because of entitlement to Medicare under the
end-stage renal disease (ESRD) program. Projected monthly costs for
disabled enrollees (other than those with ESRD)

[[Page 70816]]

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 per-enrollee amount required to
pay for one-half of the total of benefits and administrative costs for
disabled enrollees for 2016 is $272.94. The monthly actuarial rate of
$282.60 also provides an adjustment of -$2.86 for interest earnings and
$12.52 for a contingency margin, reflecting the same factors described
previously for the aged actuarial rate at magnitudes appropriate to the
disabled rate determination. Based on current estimates, the assets
associated with the disabled Medicare beneficiaries at the end of 2015
are not sufficient to cover the amount of incurred, but unpaid,
expenses and to provide for a significant degree of variation between
actual and projected costs. Thus, a positive contingency margin is
needed to increase assets to an appropriate level.
The actuarial rate of $282.60 per month for disabled beneficiaries,
as announced in this notice for 2016, reflects the combined net effect
of the factors described previously for aged beneficiaries and the
projection assumptions listed in Table 2.
4. Sensitivity Testing
Several factors contribute to uncertainty about future trends in
medical care costs. It is appropriate to test the adequacy of the rates
using alternative cost growth rate assumptions. The results of those
assumptions are shown in Table 5. One set represents increases that are
higher and, therefore, more pessimistic than the current estimate. The
other set represents increases that are lower and, therefore, more
optimistic than the current estimate. The values for the alternative
assumptions were determined from a statistical analysis of the
historical variation in the respective increase factors.
As indicated in Table 5, the monthly actuarial rates would result
in an excess of assets over liabilities of $53,052 million by the end
of December 2016 under the cost growth rate assumptions shown in Table
2 and assuming that the provisions of current law are fully
implemented. This amounts to 17.0 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 $8,962 million by the end of December 2016 under
current law, which amounts to 2.5 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
$94,727 million by the end of December 2016, or 34.9 percent of the
estimated total incurred expenditures for the following year.
The sensitivity analysis indicates that the premium and general
revenue financing established for 2016, together with existing Part B
account assets would be adequate to cover estimated Part B costs for
2016 under current law, even if actual costs prove to be somewhat
greater than expected.
5. Premium Rates and Deductible
As determined in accordance with section 1839 of the Act, listed
are the 2016 Part B monthly premium rates to be paid by beneficiaries
who file an individual tax return (including those who are single, head
of household, qualifying widow(er) with dependent child, or married
filing separately who lived apart from their spouse for the entire
taxable year), or a joint tax return.

Table 2--Projection Factors \1\ 12-Month Periods Ending December 31 of 2013-2016
[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:
2013...................... -0.1 0.2 -10.3 0.1 2.6 7.4 -0.7 -0.7 -0.6 1.4

[[Page 70817]]

2014...................... 0.5 0.8 -14.4 6.6 2.8 12.7 -1.3 -28.8 4.7 7.0
2015...................... -0.4 -0.6 4.8 4.4 3.9 5.2 -0.3 4.1 5.7 2.2
2016...................... 0.1 1.2 -5.8 4.6 1.6 4.1 1.6 3.9 4.8 2.8
Disabled:
2013...................... -0.1 1.4 -9.2 10.8 1.1 7.0 3.9 -1.8 1.7 4.0
2014...................... 0.5 2.5 -10.8 14.0 4.6 14.4 -1.1 -35.4 8.3 9.2
2015...................... -0.4 -0.8 4.4 6.5 4.8 5.6 -0.3 2.9 7.8 0.7
2016...................... 0.1 1.3 -5.7 4.7 1.4 4.1 2.0 3.9 5.1 2.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
\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, 2013 Through December 31, 2016
[In dollars]
----------------------------------------------------------------------------------------------------------------
CY 2013 CY 2014 CY 2015 CY 2016
----------------------------------------------------------------------------------------------------------------
Covered services (at level recognized):
Physician fee schedule...................... 78.23 77.10 74.44 74.40
Durable medical equipment................... 7.29 6.07 6.21 5.77
Carrier lab \1\............................. 4.21 4.37 4.45 4.60
Other carrier services \2\.................. 22.07 22.06 22.36 22.43
Outpatient hospital......................... 37.87 41.49 42.57 43.74
Home health................................. 10.15 9.75 9.47 9.50
Hospital lab \3\............................ 3.27 2.26 2.30 2.36
Other intermediary services \4\............. 16.53 16.83 17.35 17.95
Managed care................................ 65.60 74.26 79.49 83.65
---------------------------------------------------------------
Total services.......................... 245.22 254.20 258.64 264.39
Cost sharing:
Deductible.................................. -5.63 -5.63 -5.64 -6.36
Coinsurance................................. -29.17 -28.38 -28.84 -28.26
Sequestration of benefits....................... -3.17 -4.40 -4.48 -4.59
HIT payment incentives.......................... -2.04 -2.40 -0.43 -0.36
---------------------------------------------------------------
Total benefits.......................... 205.20 213.38 219.25 224.82
Administrative expenses......................... 2.77 3.49 3.00 3.05
---------------------------------------------------------------
Incurred expenditures........................... 207.97 216.87 222.25 227.86
Value of interest............................... -1.80 -1.93 -1.73 -1.87
Contingency margin for projection error and to 3.63 -5.14 -10.72 11.61
amortize the surplus or deficit................
---------------------------------------------------------------
Monthly actuarial rate.................. 209.80 209.80 209.80 237.60
----------------------------------------------------------------------------------------------------------------
\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.

Table 4--Derivation of Monthly Actuarial Rate for Disabled Enrollees for Financing Periods Ending December 31,
2013 Through December 31, 2016
[In dollars]
----------------------------------------------------------------------------------------------------------------
CY 2013 CY 2014 CY 2015 CY 2016
----------------------------------------------------------------------------------------------------------------
Covered services (at level recognized):
Physician fee schedule.......................... 83.88 83.87 80.07 79.56
Durable medical equipment....................... 13.88 11.99 12.08 11.15
Carrier lab \1\................................. 6.54 7.21 7.42 7.61
Other carrier services \2\...................... 25.26 25.43 25.55 25.42
Outpatient hospital............................. 54.25 60.32 61.47 62.72
Home health..................................... 9.18 8.79 8.45 8.43

[[Page 70818]]

Hospital lab \3\................................ 4.64 2.87 2.86 2.91
Other intermediary services \4\................. 44.34 44.87 45.36 46.37
Managed care.................................... 55.05 65.50 72.71 78.31
---------------------------------------------------------------
Total services.............................. 297.03 310.86 315.95 322.46
Cost sharing:
Deductible...................................... -5.29 -5.29 -5.30 -5.97
Coinsurance..................................... -44.36 -43.31 -42.74 -41.32
Sequestration of benefits....................... -3.73 -5.24 -5.36 -5.50
HIT payment incentives.......................... -2.13 -2.58 -0.45 -0.39
---------------------------------------------------------------
Total benefits.............................. 241.52 254.43 262.10 269.28
Administrative expenses......................... 3.26 4.16 3.59 3.65
---------------------------------------------------------------
Incurred expenditures........................... 244.78 258.59 265.69 272.94
Value of interest............................... -3.47 -2.50 -1.88 -2.86
Contingency margin for projection error and to -5.81 -37.19 -9.01 12.52
amortize the surplus or deficit................
---------------------------------------------------------------
Monthly actuarial rate...................... 235.50 218.90 254.80 282.60
----------------------------------------------------------------------------------------------------------------
\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.

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, 2016
----------------------------------------------------------------------------------------------------------------
As of December 31, 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
Actuarial status (in $ millions):
Assets.................................................. 68,074 58,261 76,806
Liabilities............................................. 23,716 23,292 23,754
-----------------------------------------------
Assets less liabilities............................. 44,358 34,969 53,052
Ratio (in percent) \1\.......................................... 15.9 11.9 17.0
Low cost projection:
Actuarial status (in $ millions):
Assets.................................................. 68,0741 73,027 117,319
Liabilities............................................. 23,716 21,651 22,592
-----------------------------------------------
Assets less liabilities............................. 44,358 51,376 94,727
Ratio (in percent) \1\.......................................... 16.9 19.3 34.9
High cost projection:
Actuarial status (in $ millions):
Assets.................................................. 68,074 43,044 34,020
Liabilities............................................. 23,716 24,982 25,058
-----------------------------------------------
Assets less liabilities............................. 44,358 18,062 8,962
Ratio (in percent) \1\.......................................... 15.0 5.6 2.5
----------------------------------------------------------------------------------------------------------------
\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. Collection of Information Requirements

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

IV. Regulatory Impact Analysis

A. Statement of Need

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

B. Overall Impact

We have examined the impacts of this 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), the Regulatory Flexibility Act (RFA) (September 19,
1980, Public Law 96-354), section 1102(b) of the Social Security Act,
section 202 of the

[[Page 70819]]

Unfunded Mandates Reform Act of 1995 (March 22, 1995, Public Law 104-
4), Executive Order 13132 on Federalism (August 4, 1999) and the
Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). A
regulatory impact analysis (RIA) must be prepared for major notices
with economically significant effects ($100 million or more in any 1
year). For 2016 approximately 70 percent of Part B enrollees will be
held harmless and pay no increase in their Part B premium, but the
standard Part B premium rate, the Part B income-related premium rates,
and the Part B deductible are higher than the respective amounts for
2015 and have an annual effect on the economy of $100 million or more.
As a result, this notice is economically significant under section
3(f)(1) of Executive Order 12866 and is a major action as defined under
the Congressional Review Act (5 U.S.C. 804(2)).
As discussed earlier, this notice announces that the monthly
actuarial rates applicable for 2016 are $237.60 for enrollees age 65
and over and $282.60 for disabled enrollees under age 65. It also
announces the 2016 monthly Part B premium rates to be paid by
beneficiaries who file an individual tax return (including those who
are single, head of household, qualifying widow(er) with a dependent
child, or married filing separately who lived apart from their spouse
for the entire taxable year), or a joint tax return.

------------------------------------------------------------------------
Beneficiaries who are married
and lived with their spouse at Income-related
any time during the year, but monthly adjustment Total monthly
file a separate tax return from amount premium amount
their spouse:
------------------------------------------------------------------------
Less than or equal to $85,000... $0.00............. $121.80
Greater than $85,000 and less 194.90............ 316.70
than or equal to $129,000.
Greater than $129,000........... 268.00............ 389.80
------------------------------------------------------------------------

The RFA requires agencies to analyze options for regulatory relief
of small businesses, if a rule has a significant impact on a
substantial number of small entities. For purposes of the RFA, small
entities include small businesses, nonprofit organizations, and small
governmental jurisdictions. Individuals and States are not included in
the definition of a small entity. This notice announces the monthly
actuarial rates for aged (age 65 and over) and disabled (under 65)
beneficiaries enrolled in Part B of the Medicare SMI program beginning
January 1, 2016. Also, this notice announces the monthly premium for
aged and disabled beneficiaries as well as the income-related monthly
adjustment amounts to be paid by beneficiaries with modified adjusted
gross income above certain threshold amounts. As a result, we are not
preparing an analysis for the RFA because the Secretary has determined
that this notice will not have a significant economic impact on a
substantial number of small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area and has fewer than 100 beds. As we discussed
previously, we are not preparing an analysis for section 1102(b) of the
Act because the Secretary has determined that this notice will not have
a significant effect on a substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1-year of $100
million in 1995 dollars, updated annually for inflation. In 2015, that
threshold is approximately $144 million. Part B enrollees who are also
enrolled in Medicaid have their monthly Part B premiums paid by
Medicaid. The 2016 premium increase is estimated to be a cost to the
state Medicaid programs that is less than $144 million per state. This
notice does not impose mandates that will have a consequential effect
of $144 million or more on State, local, or tribal governments or on
the private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it publishes a proposed rule (and subsequent
final rule) that imposes substantial direct compliance costs on State
and local governments, preempts State law, or otherwise has

[[Page 70820]]

Federalism implications. We have determined that this notice does not
significantly affect the rights, roles, and responsibilities of States.
Accordingly, the requirements of Executive Order 13132 do not apply to
this notice.
In accordance with the provisions of Executive Order 12866, this
notice was reviewed by the Office of Management and Budget.

V. 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. 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.
Moreover, we find that notice and comment are unnecessary because the
formulas used to calculate the Part B premiums are statutorily
directed. Therefore, we find good cause to waive publication of a
proposed notice and solicitation of public comments.

Dated: November 6, 2015.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
Dated: November 9, 2015.
Sylvia M. Burwell,
Secretary. Department of Health and Human Services.
[FR Doc. 2015-29181 Filed 11-10-15; 4:15 pm]
BILLING CODE 4120-01-P

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