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[Federal Register Volume 78, Number 210 (Wednesday, October 30, 2013)]
[Notices]
[Pages 64953-64956]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-25595]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-8053-N]
RIN 0938-AR59

Medicare Program; Inpatient Hospital Deductible and Hospital and 
Extended Care Services Coinsurance Amounts for CY 2014

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) 2014 under Medicare's Hospital 
Insurance Program (Medicare Part A). The Medicare statute specifies the 
formulae used to determine these amounts. For CY 2014, the inpatient 
hospital deductible will be $1,216. The daily coinsurance amounts for 
CY 2014 will be: $304 for the 61st through 90th day of hospitalization 
in a benefit period; $608 for lifetime reserve days; and $152 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, 2014.

FOR FURTHER INFORMATION CONTACT: Clare McFarland, (410) 786-6390 for

[[Page 64954]]

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 2014

    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 2014 for hospitals 
paid under the inpatient prospective payment system is the market 
basket percentage increase, otherwise known as the market basket 
update, reduced by 0.3 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 
of the Department of Health and Services (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 payment-weighted 
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 2014 for hospitals 
excluded from the inpatient prospective payment system is as follows:
     For FY 2014, the percentage increase for long term care 
hospitals is the market basket percentage increase reduced by 0.3 
percentage points and the MFP adjustment (see sections 1886(m)(3)(A) 
and 1886(m)(4)(C) of the Act).
     For FY 2014, the percentage increase for inpatient 
rehabilitation facilities is the market basket percentage increase 
reduced by 0.3 percentage points and the MFP adjustment (see sections 
1886(j)(3)(C) and 1886(j)(3)(D)(ii) of the Act).
     For FY 2014, the percentage increase used to update the 
payment rate for psychiatric hospitals is the market basket percentage 
increase reduced by 0.1 percentage points and the MFP adjustment (see 
sections 1886(s)(2)(A)(ii) and 1886(s)(3)(B) of the Act).
    The Inpatient Prospective Payment System market basket percentage 
increase for 2014 is 2.5 percent and the MFP adjustment is 0.5 percent, 
as announced in the final rule with comment period published in the 
Federal Register on August 19, 2013 entitled, ``Medicare Program; 
Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals 
and the Long-Term Care Hospital Prospective Payment System and Fiscal 
Year 2014 Rates; Quality Reporting Requirements for Specific Providers; 
Hospital Conditions of Participation; Payment Policies Related to 
Patient Status '' (78 FR 50608). Therefore, the percentage increase for 
hospitals paid under the inpatient prospective payment system is 1.7 
percent. The average payment percentage increase for hospitals excluded 
from the inpatient prospective payment system is 1.94 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 2014 is 1.73 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 2013 compared to FY 2012. (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 
2013. These bills represent a total of about 7.8 million Medicare 
discharges for FY 2013 and provide the most recent case-mix data 
available at this time. Based on these bills, the change in average 
case-mix in FY 2013 is 0.89 percent. Based on these bills and past 
experience, we expect the overall case mix change to be 1.0 percent as 
the year progresses and more FY 2013 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 
will be 1.0 percent.
    Thus, the estimate of the payment-weighted average of the 
applicable percentage increases used for updating the payment rates is 
1.73 percent, and the real case-mix adjustment factor for the 
deductible is 1.0 percent. Therefore, under the statutory formula, the 
inpatient hospital deductible for services furnished in CY 2014 is 
$1,216. This deductible amount is determined by multiplying $1,184 (the 
inpatient hospital deductible for CY 2013) by the payment-weighted 
average increase in the payment rates of 1.0173 multiplied by the 
increase in real case-mix of 1.01, which equals $1,216.53 and is 
rounded to $1,216.

III. Computing the Inpatient Hospital and Extended Care Services 
Coinsurance Amounts for CY 2014

    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 2014, 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 
$304 (one-fourth of the inpatient hospital deductible); the daily 
coinsurance for lifetime reserve days will be $608 (one-half of the 
inpatient

[[Page 64955]]

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 $152 (one-eighth of the inpatient hospital 
deductible).

IV. Cost to Medicare Beneficiaries

    Table 1 below summarizes the deductible and coinsurance amounts for 
CYs 2013 and 2014, as well as the number of each that is estimated to 
be paid.

    Table 1--Part A Deductible and Coinsurance Amounts for Calendar Years 2013 and 2014 Type of Cost Sharing
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                                                         Value                     Number paid (in millions)
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                                                2013              2014              2013              2014
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Inpatient hospital deductible...........            $1,184            $1,216              7.91              8.07
Daily coinsurance for 61st-90th Day.....               296               304              2.04              2.09
Daily coinsurance for lifetime reserve                 592               608              1.02              1.04
 days...................................
SNF coinsurance.........................               148               152             42.10             43.40
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    The estimated total increase in costs to beneficiaries is about 
$870 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.

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 Analysis

A. Statement of Need

    Section 1813(b)(2) of the Act requires the Secretary 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 (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 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 $870 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 $7.0 million to $35.5 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 2014 under 
Medicare's Hospital Insurance Program (Medicare Part A). As a result, 
we are not preparing an

[[Page 64956]]

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 2013, 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. 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. 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.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance)

    Dated: September 20, 2013.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: October 18, 2013.
Kathleen Sebelius,
Secretary.
[FR Doc. 2013-25595 Filed 10-28-13; 11:15 am]
BILLING CODE 4120-01-P
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