67568 Federal Register / Vol. 76, No. 211 / Tuesday, November 1, 2011 / Notices 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[CMS–8043–N] 

RIN 0938–AQ14 

Medicare Program; Inpatient Hospital 

Deductible and Hospital and Extended 

Care Services Coinsurance Amounts 

for CY 2012 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Notice. 

SUMMARY: This notice announces the 

inpatient hospital deductible and the 

hospital and extended care services 

coinsurance amounts for services 

furnished in calendar year (CY) 2012 

under Medicare’s Hospital Insurance 

Program (Medicare Part A). The 

Medicare statute specifies the formulae 

used to determine these amounts. For 

CY 2012, the inpatient hospital 

deductible will be $1,156. The daily 

coinsurance amounts for CY 2012 will 

be—(1) $289 for the 61st through 90th 

day of hospitalization in a benefit 

period; (2) $578 for lifetime reserve 

days; and (3) $144.50 for the 21st 

through 100th day of extended care 

services in a skilled nursing facility in 

a benefit period. 

DATES: Effective Date: This notice is 

effective on January 1, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Clare McFarland, (410) 786–6390 for 

general information. Gregory J. Savord, 

(410) 786–1521 for case-mix analysis. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Section 1813 of the Social Security 

Act (the Act) provides for an inpatient 

hospital deductible to be subtracted 

from the amount payable by Medicare 

for inpatient hospital services furnished 

to a beneficiary. It also provides for 

certain coinsurance amounts to be 

subtracted from the amounts payable by 

Medicare for inpatient hospital and 

extended care services. Section 

1813(b)(2) of the Act requires us to 

determine and publish each year the 

amount of the inpatient hospital 

deductible and the hospital and 

extended care services coinsurance 

amounts applicable for services 

furnished in the following calendar year 

(CY). 

II. Computing the Inpatient Hospital 

Deductible for CY 2012 

Section 1813(b) of the Act prescribes 

the method for computing the amount of 

the inpatient hospital deductible. The 

inpatient hospital deductible is an 

amount equal to the inpatient hospital 

deductible for the preceding CY, 

adjusted by our best estimate of the 

payment-weighted average of the 

applicable percentage increases (as 

defined in section 1886(b)(3)(B) of the 

Act) used for updating the payment 

rates to hospitals for discharges in the 

fiscal year (FY) that begins on October 

1 of the same preceding CY, and 

adjusted to reflect changes in real casemix. The adjustment to reflect real casemix is determined on the basis of the 

most recent case-mix data available. The 

amount determined under this formula 

is rounded to the nearest multiple of $4 

(or, if midway between two multiples of 

$4, to the next higher multiple of $4). 

Under section 1886(b)(3)(B)(i)(XX) of 

the Act, the percentage increase used to 

update the payment rates for FY 2012 

for hospitals paid under the inpatient 

prospective payment system is the 

market basket percentage increase, 

otherwise known as the market basket 

update, reduced by 0.1 percentage 

points (see section 1886(b)(3)(B)(xii)(II) 

of the Act), and an adjustment based on 

changes in the economy-wide 

productivity (the multifactor 

productivity (MFP) adjustment (see 

section 1886(b)(3)(B)(xi)(II) of the Act). 

Under section 1886(b)(3)(B)(viii) of the 

Act, hospitals will receive this update 

only if they submit quality data as 

specified by the Secretary. The update 

for hospitals that do not submit this data 

is reduced by 2.0 percentage points. We 

are estimating that after accounting for 

those hospitals receiving the lower 

market basket update in the paymentweighted average update, the calculated 

deductible will remain the same, as the 

majority of hospitals submit quality data 

and receive the full market basket 

update. 

Under section 1886(b)(3)(B)(ii)(VIII) of 

the Act, the percentage increase used to 

update the payment rates for FY 2012 

for hospitals excluded from the 

inpatient prospective payment system is 

as follows: 

• For FY 2012, the percentage 

increase for long term care hospitals is 

the market basket percentage increase 

reduced by 0.1 percentage points and 

the MFP adjustment (see section 

1886(m)(3)(A) of the Act). 

• For FY 2012, the percentage 

increase for inpatient rehabilitation 

facilities is the market basket percentage 

increase reduced by 0.1 percentage 

points and the MFP adjustment (see 

section 1886(j)(3)(C) of the Act). 

• For FY 2012, the percentage 

increase used to update the payment 

rate for psychiatric hospitals is the 

market basket percentage increase 

reduced by 0.25 percentage points (see 

section 1886(s)(2)(A)(ii) of the Act). 

The market basket percentage increase 

for 2012 is 3.0 percent and the MFP 

adjustment is 1.0 percent, as announced 

in the final rule with comment period 

published in the Federal Register on 

August 18, 2011 entitled, ‘‘Changes to 

the Hospital Inpatient Prospective 

Payment Systems for Acute Care 

Hospitals and FY 2012 Rates and to the 

Long Term Care Hospital PPS and FY 

2012 Rates.’’ Therefore, the percentage 

increase for hospitals paid under the 

inpatient prospective payment system is 

1.9 percent. The average payment 

percentage increase for hospitals 

excluded from the inpatient prospective 

payment system is 2.29 percent. 

Weighting these percentages in 

accordance with payment volume, our 

best estimate of the payment-weighted 

average of the increases in the payment 

rates for FY 2012 is 1.95 percent. 

To develop the adjustment to reflect 

changes in real case-mix, we first 

calculated for each hospital an average 

case-mix that reflects the relative 

costliness of that hospital’s mix of cases 

compared to those of other hospitals. 

We then computed the change in 

average case-mix for hospitals paid 

under the Medicare prospective 

payment system in FY 2011 compared 

to FY 2010. (We excluded from this 

calculation hospitals whose payments 

are not based on the inpatient 

prospective payment system because 

their payments are based on alternate 

prospective payment systems or 

reasonable costs.) We used Medicare 

bills from prospective payment 

hospitals that we received as of July 

2011. These bills represent a total of 

about 8 million Medicare discharges for 

FY 2011 and provide the most recent 

case-mix data available at this time. 

Based on these bills, the change in 

average case-mix in FY 2011 is ¥0.3 

percent. Based on these bills and past 

experience, we expect the overall case 

mix change to be zero percent as the 

year progresses and more FY 2011 data 

become available. 

Section 1813 of the Act requires that 

the inpatient hospital deductible be 

adjusted only by that portion of the 

case-mix change that is determined to 

be real. Since we are not expecting any 

overall case mix to increase, the real 

case mix will remain unchanged for FY 

2011. 

Thus, the estimate of the paymentweighted average of the applicable 

percentage increases used for updating 

the payment rates is 1.95 percent, and 

the real case-mix adjustment factor for 

the deductible is zero percent. 


emcdonald on DSK5VPTVN1PROD with NOTICES2
Federal Register / Vol. 76, No. 211 / Tuesday, November 1, 2011 / Notices 67569 

Therefore, under the statutory formula, 

the inpatient hospital deductible for 

services furnished in CY 2012 is $1156. 

This deductible amount is determined 

by multiplying $1132 (the inpatient 

hospital deductible for CY 2011) by the 

payment-weighted average increase in 

the payment rates of 1.0195 multiplied 

by the increase in real case-mix of 1.000, 

which equals $1154.07 and is rounded 

to $1156. 

III. Computing the Inpatient Hospital 

and Extended Care Services 

Coinsurance Amounts for CY 2012 

The coinsurance amounts provided 

for in section 1813 of the Act are 

defined as fixed percentages of the 

inpatient hospital deductible for 

services furnished in the same CY. The 

increase in the deductible generates 

increases in the coinsurance amounts. 

For inpatient hospital and extended care 

services furnished in CY 2012, in 

accordance with the fixed percentages 

defined in the law, the daily 

coinsurance for the 61st through 90th 

day of hospitalization in a benefit 

period will be $289 (one-fourth of the 

inpatient hospital deductible); the daily 

coinsurance for lifetime reserve days 

will be $578 (one-half of the inpatient 

hospital deductible); and the daily 

coinsurance for the 21st through 100th 

day of extended care services in a 

skilled nursing facility in a benefit 

period will be $144.50 (one-eighth of 

the inpatient hospital deductible). 

IV. Cost to Medicare Beneficiaries 

Table 1 below summarizes the 

deductible and coinsurance amounts for 

CYs 2011 and 2012, as well as the 

number of each that is estimated to be 

paid. 

TABLE 1—PART A DEDUCTIBLE AND COINSURANCE AMOUNTS FOR CALENDAR YEARS 2011 AND 2012 

Type of cost sharing 

Value Number paid 

(in millions) 

2011 2012 2011 2012 

Inpatient hospital deductible ............................................................................................ $1132 $1156 8.50 8.76 

Daily coinsurance for 61st–90th Day .............................................................................. 283 289 2.26 2.34 

Daily coinsurance for lifetime reserve days .................................................................... 566 578 1.13 1.17 

SNF coinsurance ............................................................................................................. 141.50 144.50 43.94 45.73 

The estimated total increase in costs 

to beneficiaries is about $970 million 

(rounded to the nearest $10 million) due 

to—(1) The increase in the deductible 

and coinsurance amounts; and (2) the 

change in the number of deductibles 

and daily coinsurance amounts paid. 

V. Waiver of Proposed Notice and 

Comment Period 

The Medicare statute, as discussed 

previously, requires publication of the 

Medicare Part A inpatient hospital 

deductible and the hospital and 

extended care services coinsurance 

amounts for services for each CY. The 

amounts are determined according to 

the statute. As has been our custom, we 

use general notices, rather than notice 

and comment rulemaking procedures, to 

make the announcements. In doing so, 

we acknowledge that, under the 

Administrative Procedure Act (APA), 

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 good cause that 

prior notice and comment are 

impracticable, unnecessary, or contrary 

to the public interest. We find that the 

procedure for notice and comment is 

unnecessary because the formulae used 

to calculate the inpatient hospital 

deductible and hospital and extended 

care services coinsurance amounts are 

statutorily directed, and we can exercise 

no discretion in following the formulae. 

Moreover, the statute establishes the 

time period for which the deductible 

and coinsurance amounts will apply 

and delaying publication would be 

contrary to the public interest. 

Therefore, we find good cause to waive 

publication of a proposed notice and 

solicitation of public comments. 

VI. Collection of Information 

Requirements 

This document does not impose 

information collection and 

recordkeeping requirements. 

Consequently, it need not be reviewed 

by the Office of Management and 

Budget under the authority of the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 35). 

VII. Regulatory Impact Statement 

We have examined the impact of this 

notice as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (January 18, 

2011), the Regulatory Flexibility Act 

(RFA) (September 19, 1980, Pub. L. 96– 

354), section 1102(b) of the Social 

Security Act, section 202 of the 

Unfunded Mandates Reform Act of 1995 

(March 22, 1995; Pub. L. 104–4), 

Executive Order 13132 on Federalism 

(August 4, 1999) and the Congressional 

Review Act (5 U.S.C. 804(2)). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). A regulatory impact analysis 

(RIA) must be prepared for major rules 

with economically significant effects 

($100 million or more in any 1 year). As 

stated in section IV of this notice, we 

estimate that the total increase in costs 

to beneficiaries associated with this 

notice is about $970 million due to 

—(1) The increase in the deductible and 

coinsurance amounts; and (2) the 

change in the number of deductibles 

and daily coinsurance amounts paid. 

Therefore, this notice is a major action 

as defined in Title 5, United States 

Code, section 804(2), and is an 

economically significant action under 

Executive Order 12866. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. Most 

hospitals and most other providers and 

suppliers are small entities, either by 

nonprofit status or by having revenues 

of $7.0 million to $34.5 million in any 

1 year. Individuals and States are not 

included in the definition of a small 

entity. We have determined that this 


emcdonald on DSK5VPTVN1PROD with NOTICES2
67570 Federal Register / Vol. 76, No. 211 / Tuesday, November 1, 2011 / Notices 

notice will not have a significant 

economic impact on a substantial 

number of small entities. Therefore, we 

are not preparing an analysis under the 

RFA. 

In addition, section 1102(b) of the 

Social Security 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 for Medicare payment 

regulations and has fewer than 100 

beds. The Secretary has determined that 

this notice will not have a significant 

impact on the operations of a substantial 

number of small rural hospitals. 

Therefore, we are not preparing an 

analysis under section 1102(b) of the 

Act. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation. 

In 2011, that threshold is approximately 

$136 million. This notice will have no 

consequential effect on State, local, or 

tribal governments or on the private 

sector. However, States may be required 

to pay the deductibles and coinsurance 

for dually-eligible beneficiaries. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

This notice will not have a substantial 

effect on State or local governments. 

In accordance with the provisions of 

Executive Order 12866, this notice was 

reviewed by the Office of Management 

and Budget. 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance) 

Dated: September 22, 2011 

Donald M. Berwick, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Dated: October 25, 2011. 

Kathleen Sebelius, 

Secretary. 

[FR Doc. 2011–28187 Filed 10–27–11; 11:15 am] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[CMS–8044–N] 

RIN 0938–AQ15 

Medicare Program; Part A Premiums 

for CY 2012 for the Uninsured Aged 

and for Certain Disabled Individuals 

Who Have Exhausted Other 

Entitlement 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Notice. 

SUMMARY: This annual notice announces 

Medicare’s Hospital Insurance (Part A) 

premium for uninsured enrollees in 

calendar year (CY) 2012. This premium 

is paid by enrollees age 65 and over who 

are not otherwise eligible for benefits 

under Medicare Part A (hereafter known 

as the ‘‘uninsured aged’’) and by certain 

disabled individuals who have 

exhausted other entitlement. The 

monthly Part A premium for the 12 

months beginning January 1, 2012, for 

these individuals will be $451. The 

reduced premium for certain other 

individuals as described in this notice 

will be $248. 

DATES: Effective Date: This notice is 

effective on January 1, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Clare McFarland, (410) 786–6390. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Section 1818 of the Social Security 

Act (the Act) provides for voluntary 

enrollment in the Medicare Hospital 

Insurance Program (Medicare Part A), 

subject to payment of a monthly 

premium, of certain persons aged 65 

and older who are uninsured under the 

Old-Age, Survivors, and Disability 

Insurance (OASDI) program or the 

Railroad Retirement Act and do not 

otherwise meet the requirements for 

entitlement to Medicare Part A. These 

‘‘uninsured aged’’ individuals are 

uninsured under the OASDI program or 

the Railroad Retirement Act, because 

they do not have 40 quarters of coverage 

under Title II of the Act (or are/were not 

married to someone who did). (Persons 

insured under the OASDI program or 

the Railroad Retirement Act and certain 

others do not have to pay premiums for 

Medicare Part A.) 

Section 1818A of the Act provides for 

voluntary enrollment in Medicare Part 

A, subject to payment of a monthly 

premium for certain disabled 

individuals who have exhausted other 

entitlement. These are individuals who 

were entitled to coverage due to a 

disabling impairment under section 

226(b) of the Act, but who are no longer 

entitled to disability benefits and free 

Medicare Part A coverage because they 

have gone back to work and their 

earnings exceed the statutorily defined 

‘‘substantial gainful activity’’ amount 

(section 223(d)(4) of the Act). 

Section 1818A(d)(2) of the Act 

specifies that the provisions relating to 

premiums under section 1818(d) 

through section 1818(f) of the Act for 

the aged will also apply to certain 

disabled individuals as described above. 

Section 1818(d) of the Act requires us 

to estimate, on an average per capita 

basis, the amount to be paid from the 

Federal Hospital Insurance Trust Fund 

for services incurred in the following 

calendar year (CY) (including the 

associated administrative costs) on 

behalf of individuals aged 65 and over 

who will be entitled to benefits under 

Medicare Part A. We must then 

determine, during September of each 

year, the monthly actuarial rate for the 

following year (the per capita amount 

estimated above divided by 12) and 

publish the dollar amount for the 

monthly premium in the succeeding CY. 

If the premium is not a multiple of $1, 

the premium is rounded to the nearest 

multiple of $1 (or, if it is a multiple of 

50 cents but not of $1, it is rounded to 

the next highest $1). 

Section 13508 of the Omnibus Budget 

Reconciliation Act of 1993 (Pub. L. 103– 

66) amended section 1818(d) of the Act 

to provide for a reduction in the 

premium amount for certain voluntary 

enrollees (section 1818 and section 

1818A of the Act). The reduction 

applies to an individual who is eligible 

to buy into the Medicare Part A program 

and who, as of the last day of the 

previous month— 

• Had at least 30 quarters of coverage 

under Title II of the Act; 

• Was married, and had been married 

for the previous 1-year period, to a 

person who had at least 30 quarters of 

coverage; 

• Had been married to a person for at 

least 1 year at the time of the person’s 

death if, at the time of death, the person 

had at least 30 quarters of coverage; or 

• Is divorced from a person and had 

been married to the person for at least 

10 years at the time of the divorce if, at 

the time of the divorce, the person had 

at least 30 quarters of coverage. 

Section 1818(d)(4)(A) of the Act 

specifies that the premium that these 

individuals will pay for CY 2012 will be 

equal to the premium for uninsured 

aged enrollees reduced by 45 percent. 


emcdonald on DSK5VPTVN1PROD with NOTICES2