54662 Federal Register / Vol. 71, No. 180 / Monday, September 18, 2006 / Notices 

over the amount that they paid in CY 

2006. 

V. Waiver of Proposed Notice and 

Comment Period 

We are not using notice and comment 

rulemaking in this notification of Part A 

premiums for CY 2007, as that 

procedure is unnecessary because of the 

lack of discretion in the statutory 

formula that is used to calculate the 

premium and the solely ministerial 

function that this notice serves. The 

Administrative Procedure Act (APA) 

permits agencies to waive notice and 

comment rulemaking when notice and 

public comment thereon are 

unnecessary. On this basis, we waive 

publication of a proposed notice and a 

solicitation of public comments. 

VI. Regulatory Impact Statement 

We have examined the impacts of this 

notice as required by Executive Order 

12866 (September 1993, Regulatory 

Planning and Review), the Regulatory 

Flexibility Act (RFA) (September 19, 

1980, Pub. L. 96–354), section 1102(b) of 

the Act, the Unfunded Mandates Reform 

Act of 1995 (Pub. L. 104–4), and 

Executive Order 13132. 

Executive Order 12866 directs 

agencies to assess all costs and benefits 

of available regulatory alternatives and, 

if regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety effects, distributive impacts, 

and equity). As stated in section IV of 

this notice, we estimate that the overall 

effect of these changes in the Part A 

premium will be a cost to voluntary 

enrollees (section 1818 and section 

1818A of the Act) of about $114 million. 

Therefore, this notice is a major rule as 

defined in Title 5, United States Code, 

section 804(2) and is an economically 

significant rule under Executive Order 

12866. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and 

government agencies. Most hospitals 

and most other providers and suppliers 

are small entities, either by nonprofit 

status or by having revenues of $6 

million to $29 million in any 1 year. 

Individuals and States are not included 

in the definition of a small entity. We 

have determined that this notice will 

not have a significant economic impact 

on a substantial number of small 

entities. Therefore, we are not preparing 

an analysis for the RFA. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area (MSA) 

and has fewer than 100 beds. 

We have determined that this notice 

will not have a significant effect on the 

operations of a substantial number of 

small rural hospitals. Therefore, we are 

not preparing an analysis for section 

1102(b) of the Act. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule that may result in expenditure in 

any 1 year by State, local, or tribal 

governments, in the aggregate, or by the 

private sector, of $120 million. This 

notice has no consequential effect on 

State, local, or tribal governments or on 

the private sector. However, States are 

required to pay premiums for duallyeligible beneficiaries. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it publishes a proposed 

rule (and subsequent final rule) that 

imposes substantial direct requirement 

costs on State and local governments, 

preempts State law, or otherwise has 

Federalism implications. This notice 

will not have a substantial effect on 

State or local governments. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

Authority: Sections 1818(d)(2) and 

1818A(d)(2) of the Social Security Act (42 

U.S.C. 1395i–2(d)(2) and 1395i–2a(d)(2)). 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance) 

Dated: September 11, 2006. 

Mark B. McClellan, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Dated: September 12, 2006. 

Michael O. Leavitt, 

Secretary. 

[FR Doc. 06–7710 Filed 9–12–06; 4:00 pm] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[CMS–8029–N] 

RIN 0938–AO19 

Medicare Program; Inpatient Hospital 

Deductible and Hospital and Extended 

Care Services Coinsurance Amounts 

for Calendar Year 2007 

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) 2007 

under Medicare’s Hospital Insurance 

program (Medicare Part A). The 

Medicare statute specifies the formulae 

used to determine these amounts. 

For CY 2007, the inpatient hospital 

deductible will be $992. The daily 

coinsurance amounts for CY 2007 will 

be: (a) $248 for the 61st through 90th 

day of hospitalization in a benefit 

period; (b) $496 for lifetime reserve 

days; and (c) $124 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, 2007. 

FOR FURTHER INFORMATION CONTACT: 

Clare McFarland, (410) 786–6390. For 

case-mix analysis only: Gregory J. 

Savord, (410) 786–1521. 

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, between 

September 1 and September 15 of 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. 


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Federal Register / Vol. 71, No. 180 / Monday, September 18, 2006 / Notices 54663 

II. Computing the Inpatient Hospital 

Deductible for CY 2007 

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 calendar 

year, changed 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 calendar year, 

and adjusted to reflect 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) of the 

Act, the percentage increase used to 

update the payment rates for FY 2007 

for inpatient hospitals paid under the 

prospective payment system is the 

market basket percentage increase. 

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

Act, hospitals will receive the full 

market basket update only if they 

submit quality data as specified by the 

Secretary. Those hospitals that do not 

submit data will receive an update of 

market basket minus 2.0 percentage 

points. We are estimating that after 

including the impact of those hospitals 

receiving the lower update in the 

payment-weighted average update, the 

calculated deductible will remain the 

same. 

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

Act, the percentage increase used to 

update the payment rates for FY 2007 

for hospitals excluded from the 

prospective payment system is the 

market basket percentage increase, 

defined according to section 

1886(b)(3)(B)(iii) of the Act. 

The market basket percentage increase 

for 2007 is 3.4 percent, as announced in 

the final rule published in the Federal 

Register entitled ‘‘Medicare Program; 

Changes to the Hospital Inpatient 

Prospective Payment Systems and Fiscal 

Year 2007 Rates’’ (71 FR 47870). 

Therefore, the percentage increase for 

hospitals paid under the prospective 

payment system is 3.4 percent. The 

average payment percentage increase for 

hospitals excluded from the prospective 

payment system is 3.4 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 2007 is 3.4 percent. 

To develop the adjustment for 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 casemix for hospitals paid under the 

Medicare prospective payment system 

in FY 2006 compared to FY 2005. (We 

excluded from this calculation hospitals 

excluded from the prospective payment 

system because their payments are 

based on reasonable costs.) We used 

Medicare bills from prospective 

payment hospitals that we received as of 

July 2006. These bills represent a total 

of about 9.1 million Medicare 

discharges for FY 2006 and provide the 

most recent case-mix data available at 

this time. Based on these bills, the 

change in average case-mix in FY 2006 

is 0.68 percent. Based on past 

experience, we expect the overall casemix change to be 0.8 percent as the year 

progresses and more FY 2006 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. We estimate that the change in 

real case-mix for FY 2006 is 0.8 percent. 

Thus, the estimate of the paymentweighted average of the applicable 

percentage increases used for updating 

the payment rates is 3.4 percent, and the 

real case-mix adjustment factor for the 

deductible is 0.8 percent. Therefore, 

under the statutory formula, the 

inpatient hospital deductible for 

services furnished in CY 2007 is $992. 

This deductible amount is determined 

by multiplying $952 (the inpatient 

hospital deductible for CY 2006) by the 

payment-weighted average increase in 

the payment rates of 1.034 multiplied by 

the increase in real case-mix of 1.008, 

which equals $992.24 and is rounded to 

$992. 

III. Computing the Inpatient Hospital 

and Extended Care Services 

Coinsurance Amounts for 2007 

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 calendar 

year. Thus, the increase in the 

deductible generates increases in the 

coinsurance amounts. For inpatient 

hospital and extended care services 

furnished in CY 2007, 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 $248 (onefourth of the inpatient hospital 

deductible); the daily coinsurance for 

lifetime reserve days will be $496 (onehalf 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 $124 (one-eighth of the inpatient 

hospital deductible). 

IV. Cost to Medicare Beneficiaries 

Table 1 summarizes the deductible 

and coinsurance amounts for CYs 2006 

and 2007, as well as the number of each 

that is estimated to be paid. 

TABLE 1.—PART A DEDUCTIBLE AND COINSURANCE AMOUNTS FOR CALENDAR YEARS 2006 AND 2007 

Type of cost sharing 

Value Number paid (in millions) 

2006 2007 2006 2007 

Inpatient hospital deductible ............................................................................ 952 992 8.91 8.85 

Daily coinsurance for 61st–90th Day ............................................................... 238 248 2.31 2.30 

Daily coinsurance for lifetime reserve days ..................................................... 476 496 1.08 1.08 

SNF coinsurance ............................................................................................. 119 124 37.08 38.03

The estimated total increase in costs 

to beneficiaries is about $640 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 


cprice-sewell on PROD1PC66 with NOTICES
54664 Federal Register / Vol. 71, No. 180 / Monday, September 18, 2006 / Notices 

Medicare Part A inpatient hospital 

deductible and the hospital and 

extended care services coinsurance 

amounts for services for each calendar 

year. 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 those 

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. Regulatory Impact Statement 

We have examined the impacts of this 

notice as required by Executive Order 

12866 (September 1993, Regulatory 

Planning and Review), the Regulatory 

Flexibility Act (RFA) (September 19, 

1980, Pub. L. 96–354), section 1102(b) of 

the Act, the Unfunded Mandates Reform 

Act of 1995 (Pub. L. 104–4), and 

Executive Order 13132. 

Executive Order 12866 directs 

agencies to assess all costs and benefits 

of available regulatory alternatives and, 

if regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety effects, distributive impacts, 

and equity). As stated in Section IV of 

this notice, we estimate that the total 

increase in costs to beneficiaries 

associated with this notice is about $640 

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 rule as defined in Title 5, 

United States Code, section 804(2), and 

is an economically significant rule 

under Executive Order 12866. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and 

government agencies. Most hospitals 

and most other providers and suppliers 

are small entities, either by nonprofit 

status or by having revenues of $6 

million to $29 million in any 1 year. 

Individuals and States are not included 

in the definition of a small entity. We 

have determined that this notice will 

not have a significant economic impact 

on a substantial number of small 

entities. Therefore we are not preparing 

an analysis for the RFA. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area and has 

fewer than 100 beds. We have 

determined that this notice will not 

have a significant effect on the 

operations of a substantial number of 

small rural hospitals. Therefore, we are 

not preparing an analysis for section 

1102(b) of the Act. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule that may result in expenditures in 

any 1 year by State, local, or tribal 

governments, in the aggregate, or by the 

private sector, of $120 million. This 

notice has no consequential effect on 

State, local, or tribal governments or on 

the private sector. However, States are 

required to pay premiums for duallyeligible 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 has no consequential effect 

on State or local governments. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

Authority: Sections 1813(b)(2) of the Social 

Security Act (42 U.S.C. 1395e–2(b)(2)). 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance) 

Dated: September 11, 2006. 

Mark B. McClellan, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Dated: September 12, 2006. 

Michael O. Leavitt, 

Secretary. 

[FR Doc. 06–7711 Filed 9–12–06; 4:00 pm] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[CMS–5042–N] 

RIN 0938–ZA90 

Medicare Program: Solicitation for 

Proposals To Participate in the 

Medicare Hospital Gainsharing 

Demonstration Program Under Section 

5007 of the Deficit Reduction Act 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Notice. 

SUMMARY: This notice is to inform 

interested parties of an opportunity to 

apply to participate in the Medicare 

Hospital Gainsharing Demonstration 

being implemented by CMS. The 

Medicare Hospital Gainsharing 

Demonstration authorized under 

Section 5007 of the Deficit Reduction 

Act (DRA) of 2005 was established to 

test and evaluate methodologies and 

arrangements between hospitals and 

physicians designed to govern the 

utilization of inpatient hospital 

resources and physician work. The 

purpose of this demonstration is to 

improve the quality and efficiency of 

care provided to Medicare beneficiaries 

and to develop improved operational 

and financial hospital performance with 

the sharing of remuneration payments 

between hospitals and physicians in six 

projects, each project consisting of one 

hospital. Two projects must be rural. 

This demonstration will be limited in 

scope: we intend to focus on the shortterm impacts of gainsharing programs. 

DATES: Applications will be considered 

timely if we receive them no later than 

5 p.m., Eastern Standard Time (E.S.T.), 

on November 17, 2006. 

FOR FURTHER INFORMATION CONTACT: Lisa 

Waters at (410) 786–6615 or 

GAINSHARING@cms.hhs.gov. 

Interested parties can obtain a complete 

solicitation, application, and supporting 

information on the following CMS Web 

sites at http://www.cms.hhs.gov/ 

DemoProjectsEvalRpts/MD/ 

itemdetail.asp?itemID=CMS1186805 or 


cprice-sewell on PROD1PC66 with NOTICES