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[Federal Register Volume 79, Number 197 (Friday, October 10, 2014)]
[Notices]
[Pages 61309-61312]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-24257]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-8056-N]
RIN 0938-AR94

Medicare Program; CY 2015 Inpatient Hospital Deductible and 
Hospital and Extended Care Services Coinsurance Amounts

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

ACTION: Notice.

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SUMMARY: This notice announces the inpatient hospital deductible and 
the hospital and extended care services coinsurance amounts for 
services furnished in calendar year (CY) 2015 under Medicare's Hospital 
Insurance Program (Medicare Part A). The Medicare statute specifies the 
formulae used to determine these amounts. For CY 2015, the inpatient 
hospital deductible will be $1,260. The daily coinsurance amounts for 
CY 2015 will be: (1) $315 for the 61st through 90th day of 
hospitalization in a benefit

[[Page 61310]]

period; (2) $630 for lifetime reserve days; and (3) $157.50 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, 2015.

FOR FURTHER INFORMATION: 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 2015

    Section 1813(b) of the Act prescribes the method for computing the 
amount of the inpatient hospital deductible. The inpatient hospital 
deductible is an amount equal to the inpatient hospital deductible for 
the preceding CY, adjusted by our best estimate of the payment-weighted 
average of the applicable percentage increases (as defined in section 
1886(b)(3)(B) of the Act) used for updating the payment rates to 
hospitals for discharges in the fiscal year (FY) that begins on October 
1 of the same preceding CY, and adjusted to reflect changes in real 
case-mix. The adjustment to reflect real case-mix is determined on the 
basis of the most recent case-mix data available. The amount determined 
under this formula is rounded to the nearest multiple of $4 (or, if 
midway between two multiples of $4, to the next higher multiple of $4).
    Under section 1886(b)(3)(B)(i)(XX) of the Act, the percentage 
increase used to update the payment rates for FY 2015 for hospitals 
paid under the inpatient prospective payment system is the market 
basket percentage increase, otherwise known as the market basket 
update, reduced by 0.2 percentage points (see section 
1886(b)(3)(B)(xii)(IV) 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, beginning with fiscal year 
2015, the applicable percentage increase for hospitals that do not 
submit quality data as specified by the Secretary of the Department of 
Health and Human Services (the Secretary) is reduced by one quarter of 
the market basket update. We are estimating that after accounting for 
those hospitals receiving the lower market basket update in the 
payment-weighted average update, the calculated deductible will not be 
affected, since the majority of hospitals submit quality data and 
receive the full market basket update. Beginning with FY 2015, section 
1886(b)(3)(B)(ix) of the Act requires that any hospital that is not a 
meaningful electronic health record (EHR) user (as defined in section 
1886(n)(3) of the Act) will have three-quarters of the market basket 
update reduced by 33\1/3\ percent for FY 2015, 66\2/3\ percent for FY 
2016, and 100 percent for FY 2017 and each subsequent fiscal year. We 
are estimating that after accounting for these hospitals receiving the 
lower market basket update, the calculated deductible will not be 
affected, since the majority of hospitals are meaningful EHR users and 
are expected to 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 2015 for hospitals 
excluded from the inpatient prospective payment system is as follows:
     The percentage increase for long term care hospitals is 
the market basket percentage increase reduced by 0.2 percentage points 
and the MFP adjustment (see sections 1886(m)(3)(A) and 1886(m)(4)(E) of 
the Act).
     The percentage increase for inpatient rehabilitation 
facilities is the market basket percentage increase reduced by 0.2 
percentage points and the MFP adjustment (see sections 1886(j)(3)(C) 
and 1886(j)(3)(D)(iv) of the Act).
     The percentage increase used to update the payment rate 
for psychiatric hospitals is the market basket percentage increase 
reduced by 0.3 percentage points and the MFP adjustment (see sections 
1886(s)(2)(A)(i), 1886(s)(2)(A)(ii), and 1886(s)(3)(C) of the Act).
    The Inpatient Prospective Payment System market basket percentage 
increase for 2015 is 2.9 percent and the MFP adjustment is 0.5 percent, 
as announced in the final rule that appeared in the Federal Register on 
August 22, 2014 entitled, ``Hospital Inpatient Prospective Payment 
Systems for Acute Care Hospitals and the Long Term Care Hospital 
Prospective Payment System and Fiscal Year 2015 Rates; Quality 
Reporting Requirements for Specific Providers; Reasonable Compensation 
Equivalents'' (79 FR 49854). Therefore, the percentage increase for 
hospitals paid under the inpatient prospective payment system that 
submit quality data and are meaningful EHR users is 2.2 percent (that 
is, the FY 2015 market basket update of 2.9 percent less the MFP 
adjustment of 0.5 percentage point and less 0.2 percentage point). The 
average payment percentage increase for hospitals excluded from the 
inpatient prospective payment system is 2.3 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 
2015 is 2.22 percent.
    To develop the adjustment to reflect changes in real case-mix, we 
first calculated an average case-mix for each hospital that reflects 
the relative costliness of that hospital's mix of cases compared 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 2014 compared to FY 2013. (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 
2014. These bills represent a total of about 7.4 million Medicare 
discharges for FY 2014 and provide the most recent case-mix data 
available at this time. Based on these bills, the change in average 
case-mix in FY 2014 is 1.48 percent. Based on these bills and past 
experience, we expect the overall case mix change to be 1.5 percent as 
the year progresses and more FY 2014 data become available.
    Section 1813 of the Act requires that the inpatient hospital 
deductible be adjusted only by that portion of the case-mix change that 
is determined to be real. Real case-mix is that portion of case-mix 
that is due to changes in the mix of cases in the hospital and not due 
to coding optimization. We expect that all of the change in average 
case-mix will be real and estimate that this change will be 1.5 
percent.
    Thus as stated above, the estimate of the payment-weighted average 
of the applicable percentage increases used for

[[Page 61311]]

updating the payment rates is 2.22 percent, and the real case-mix 
adjustment factor for the deductible is 1.5 percent. Therefore, using 
the statutory formula as stated in section 1813(b) of the Act, we 
calculate the inpatient hospital deductible for services furnished in 
CY 2015 to be $1,260. This deductible amount is determined by 
multiplying $1,216 (the inpatient hospital deductible for CY 2014 (78 
FR 64953)) by the payment-weighted average increase in the payment 
rates of 1.0222 multiplied by the increase in real case-mix of 1.015, 
which equals $1,261.64 and is rounded to $1,260.

III. Computing the Inpatient Hospital and Extended Care Services 
Coinsurance Amounts for CY 2015

    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 2015, 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 
$315 (one-fourth of the inpatient hospital deductible as stated in 
section 1813(a)(1)(A) of the Act); the daily coinsurance for lifetime 
reserve days will be $630 (one-half of the inpatient hospital 
deductible as stated in section 1813(a)(1)(B) of the Act); and the 
daily coinsurance for the 21st through 100th day of extended care 
services in a skilled nursing facility in a benefit period will be 
$157.50 (one-eighth of the inpatient hospital deductible as stated in 
section 1813(a)(3) of the Act).

IV. Cost to Medicare Beneficiaries

    Table 1 below summarizes the deductible and coinsurance amounts for 
CYs 2014 and 2015, as well as the number of each that is estimated to 
be paid.

    Table 1--Part A Deductible and Coinsurance Amounts for Calendar Years 2014 and 2015 Type of Cost Sharing
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                                                                        Value               Number paid  (in
                                                             --------------------------         millions)
                                                                                       -------------------------
                                                                  2014         2015         2014         2015
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Inpatient hospital deductible...............................       $1,216       $1,260         7.23         7.39
Daily coinsurance for 61st-90th Day.........................          304          315         1.87         1.91
Daily coinsurance for lifetime reserve days.................          608          630         0.93         0.95
SNF coinsurance.............................................          152       157.50        41.80        43.73
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    The estimated total increase in costs to beneficiaries is about 
$1,120 million (rounded to the nearest $10 million) due to: (1) The 
increase in the deductible and coinsurance amounts, and (2) the 
increase in the number of deductibles and daily coinsurance amounts 
paid. We determine the increase in cost to beneficiaries by calculating 
the difference between the 2014 and 2015 deductible and coinsurance 
amounts multiplied by the increase in the number of deductible and 
coinsurance amounts paid.

V. Waiver of Proposed Notice and Comment Period

    Section 1813(b)(2) of the Act requires publication of the inpatient 
hospital deductible and all coinsurance amounts--the hospital and 
extended care services coinsurance amounts--between September 1 and 
September 15 of the year preceding the year to which they will apply. 
These amounts are determined according to the statute as discussed 
above. 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 here, 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 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.

VII. Regulatory Impact Analysis

A. Statement of Need

    Section 1813(b)(2) of the Act requires the Secretary to publish, 
between September 1 and September 15 of each year, the amounts of the 
inpatient hospital deductible and hospital and extended care services 
coinsurance applicable for services furnished in the following calendar 
year (CY).

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, 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., Part I, Ch. 8).
    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

[[Page 61312]]

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). As stated in section IV of this notice, we 
estimate that the total increase in costs to beneficiaries associated 
with this notice is about $1,120 million due to: (1) the increase in 
the deductible and coinsurance amounts, and (2) the increase in the 
number of deductibles and daily coinsurance amounts paid. As a result, 
this notice is economically significant under section 3(f)(1) of 
Executive Order 12866 and thus, is a major action under the 
Congressional Review Act. In accordance with the provisions of 
Executive Order 12866, this notice was reviewed by the Office of 
Management and Budget.
    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and small 
governmental jurisdictions. Most hospitals and most other providers and 
suppliers are small entities, either by nonprofit status or by having 
revenues of less than $7.5 million to $38.5 million in any 1 year (for 
details, see the Small Business Administration's Web site at http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf). 
Individuals and states are not included in the definition of a small 
entity. As discussed above, this annual notice announces the inpatient 
hospital deductible and the hospital and extended care services 
coinsurance amounts for services furnished in CY 2015 under Medicare's 
Hospital Insurance Program (Medicare Part A). 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 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. As discussed above, 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 impact on the 
operations of a substantial number of small rural hospitals.
    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. For 2014, that 
threshold accounting for inflation is approximately $141 million. This 
notice does not impose mandates that will have a consequential effect 
of $141 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 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. Since this notice does not impose any costs on state or 
local governments, preempt state law, or have Federalism implications, 
the requirements of Executive Order 13132 are not applicable.

    Dated: September 12, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: September 26, 2014.
Sylvia M. Burwell,
Secretary.
[FR Doc. 2014-24257 Filed 10-9-14; 8:45 am]
BILLING CODE 4120-01-P
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