**GAO-03-283R**                      Nov 04, 2002                  

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## Highlights

GAO reviewed the Centers for Medicare and Medicaid Services' (CMS) rule on monthly actuarial rates for aged and disabled enrollees in the Medicare Supplementary Medical Insurance (SMI) program for 2003 and the monthly and the monthly SMI premium rate to be paid by all enrollees during 2003. GAO found that (1) the rule would announce the monthly actuarial rates for aged and disabled enrollees in the SMI program for 2003 and announce the monthly SMI premium rate to be paid by all enrollees during 2003, and (2) CMS complied with applicable requirements in promulgating the rule.

##  Department of Health and Human Services, Centers for Medicare and Medicaid Services: Medicare Program; Monthly Actuarial Rates and Monthly Supplementary Medical Insurance PremiumRate Beginning January 1, 2003, GAO-03-283R, November 4, 2002

B-291638November 4, 2002The Honorable Max Baucus     Chairman     The Honorable Chuck Grassley     Ranking Minority Member     Committee on Finance     United States SenateThe Honorable W. J. Billy Tauzin     Chairman     The Honorable John D. Dingell     Ranking Minority Member     Committee on Energy and Commerce     House of Representatives     The Honorable Bill Thomas     Chairman     The Honorable Charles Rangel     Ranking Minority Member     Committee on Ways and Means     House of Representatives     Subject:Department of Health and Human Services, Centers for Medicare and Medicaid Services: Medicare Program; Monthly Actuarial Rates and    Monthly Supplementary Medical Insurance Premium Rate Beginning January 1, 2003Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a major rule promulgated by the Department of Health and    Human Services, Centers for Medicare and Medicaid Services (CMS), entitled Medicare Program; Monthly Actuarial Rates and Monthly Supplementary Medical Insurance Premium Rate Beginning    January 1, 2003 (RIN: 0938-AL63).  We received the rule on October 21, 2002.  It was published in the Federal Register as a notice on October 21, 2002.  67 Fed. Reg.    64643.     The notice announces the monthly actuarial rates for aged (age 65 or over) and disabled (under age 65) enrollees in the Medicare Supplementary Medical Insurance (SMI) program for 2003.  It    also announces the monthly SMI premium rate to be paid by all enrollees during 2003.  The monthly actuarial rates for 2003 are $118.70 for aged enrollees and $141.00 for disabled    enrollees.  The monthly SMI premium rate is $58.70.     Enclosed is our assessment of the CMS's compliance with the procedural steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule.  Our review indicates that    the CMS complied with the applicable requirements.     If you have any questions about this report, please contact James W. Vickers, Assistant General Counsel, at (202) 512-8210.  The official responsible for GAO evaluation work relating to the    subject matter of the rule is William Scanlon, Managing Director, Health Care.  Mr. Scanlon can be reached at (202) 512-7114.                 signed     Kathleen E. Wannisky     Managing Associate General Counsel     cc:  Ann Stallion            Regulations Coordinator            Department of Health and Human Services            ENCLOSURE     ANALYSIS UNDER 5 U.S.C.  801(a)(1)(B)(i)-(iv) OF A MAJOR RULE     ISSUED BY THE     DEPARTMENT OF HEALTH AND HUMAN SERVICES,     CENTERS FOR MEDICARE AND MEDICAID SERVICES     ENTITLED     "MEDICARE PROGRAM; MONTHLY ACTUARIAL RATES AND     MONTHLY SUPPLEMENTARY MEDICAL INSURANCE     PREMIUM RATE BEGINNING JANUARY 1, 2003"     (RIN 0938-AL63)(i) Cost-benefit analysis     While a cost-benefit analysis was not conducted because the increases were statutorily directed, the cost to the beneficiaries is discussed in the notice.  It is estimated that the cost of    the increase in the premium to the approximately 38 million SMI enrollees will be about $2.161 billion for 2003.(ii) Agency actions relevant to the Regulatory Flexibility Act, 5 U.S.C.  603-605, 607, and 609     CMS has reviewed the notice and has found that no analyses under the Act are required.  Since states and individuals are not considered small entities, there will be no significant impact    on a substantial number of small entities.(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C.  1532-1535     The notice will not impose either an intergovernmental or private sector mandate, as defined in title II, of more than $100 million in any one year.(iv) Other relevant information or requirements under acts and executive orders     Administrative Procedure Act, 5 U.S.C.  551 etseq.     In accordance with CMS's past practice regarding publication of the monthly actuarial rates and the Part B premium amount under Medicare where such amounts are determined according to statute,    general notice rather than notice and comment rulemaking procedures contained in section 553 of the Administrative Procedure Act are used.  CMS states that it found good cause to waive    publication of a prior notice and solicitation of public comments because, as noted, the amounts are statutorily directed.     Likewise, since there was no notice and public comment, the exception contained at 5 U.S.C. 808(2) regarding the need for a 60-day delay in the effective date of a major rule is properly invoked    and the rule may become effective when CMS determines.     Paperwork Reduction Act, 44 U.S.C.  3501-3520     The notice does not contain any information collections that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act.     Statutory authorization for the rule     The notice was issued pursuant to the authority contained in section 1839 of the Social Security Act (42 U.S.C. 1395r).     Executive Order No. 12866     The notice was reviewed by OMB and found to be an economically significant regulatory action.

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