Federal Register / Vol. 65, No. 203 / Thursday, October 19, 2000 / Notices 62727

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 these

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 and the Regulatory Flexibility Act

(RFA) (Public Law 96–354). Executive

Order 12866 directs agencies to assess

all costs and benefits of available

regulatory alternatives and, when

regulation is necessary, to select

regulatory approaches that maximize

net benefits (including potential

economic, environmental, public health

and safety effects; distributive impacts;

and equity). The RFA requires agencies

to analyze options for regulatory relief

for small businesses. For purposes of the

RFA, States and individuals are not

considered small entities.

Also, section 1102(b) of the Act

requires the Secretary to prepare a

regulatory impact analysis for any

notice that may have a significant

impact on the operations of a substantial

number of small rural hospitals. Such

an analysis must conform to the

provisions of section 604 of the RFA.

For purposes of section 1102(b) of the

Act, we consider a small rural hospital

as a hospital that is located outside of

a Metropolitan Statistical Area and has

fewer than 50 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.

As stated in section IV of this notice,

we estimate that the total increase in

costs to beneficiaries associated with

this notice is about $480 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.

In accordance with the provisions of

Executive Order 12866, this notice was

reviewed by the Office of Management

and Budget.

We have reviewed this notice under

the threshold criteria of Executive Order

13132, Federalism. We have determined

that it does not significantly affect the

rights, roles, and responsibilities of

States.

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 5, 2000.

Nancy-Ann Min DeParle,

Administrator, Health Care Financing

Administration.

Dated: September 26, 2000.

Donna E. Shalala,

Secretary.

[FR Doc. 00–26846 Filed 10–18–00; 8:45 am]

BILLING CODE 4120–01–P

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Health Care Financing Administration

[HCFA–8009–N]

Medicare Program; Monthly Actuarial

Rates and Monthly Supplementary

Medical Insurance Premium Rate

Beginning January 1, 2001

AGENCY: Health Care Financing

Administration (HCFA), HHS.

ACTION: Notice.

SUMMARY: In accordance with section

1839 of the Social Security Act, this

notice announces the monthly actuarial

rates for aged (aged 65 and over) and

disabled (under age 65) enrollees in the

Medicare Supplementary Medical

Insurance (SMI) program for 2001. It

also announces the monthly SMI

premium to be paid by all enrollees

during 2001. The monthly actuarial

rates for 2001 are $101.00 for aged

enrollees and $132.00 for disabled

enrolless. The monthly SMI premium

rate for 2001 is $50.00. This compares

to projections of the 2001 SMI premium

of $49.90 in the 2000 Trustees Report

and $57.00 in the 1998 Trustees Report.

The 2000 premium rate was $45.50 and

a good portion of the increase for 2001

is due to additional amounts of home

health being transferred into Part B (the

2001 monthly premium includes $3.09

for home health services being

transferred into Part B). The 2001 Part

B premium is not equal to 50 percent of

the monthly actuarial rate because of the

differential between the amount of

home health that is transferred into Part

B in 2001 (four-sixths) and the amount

in Part B that is included in the

premium calculation (four-sevenths).

EFFECTIVE DATE: January 1, 2001.

FOR FURTHER INFORMATION CONTACT:

Carter S. Warfield, (410) 786–6396.

SUPPLEMENTARY INFORMATION:

I. Background

The Medicare Supplementary Medical

Insurance (SMI) program is the

voluntary Medicare Part B program that

pays all or part of the costs for

physicians’ services, outpatient hospital

services, home health services, services

furnished by rural health clinics,

ambulatory surgical centers,

comprehensive outpatient rehabilitation

facilities, and certain other medical and

health services not covered by hospital

insurance (HI) (Medicare Part A). The

SMI program is available to individuals

who are entitled to HI and to U.S.

residents who have attained age 65 and

are citizens, or aliens who were lawfully

admitted for permanent residence and

have resided in the United States for 5

consecutive years. This program

requires enrollment and payment of

monthly premiums, as provided in 42

CFR part 407, subpart B, and part 408,

respectively. The difference between the

premiums paid by all enrollees and total

incurred costs is met from the general

revenues of the Federal government.

The Secretary of Health and Human

Services is required by section 1839 of

the Social Security Act (the Act) to issue

two annual notices relating to the SMI

program.

One notice announces two amounts

that, according to actuarial estimates,

will equal respectively, one-half the

expected average monthly cost of SMI

for each aged enrollee (age 65 or over)

and one-half the expected average

monthly cost of SMI for each disabled

enrollee (under age 65) during the year

beginning the following January. These

amounts are called ‘‘monthly actuarial

rates.’’

The second notice announces the

monthly SMI premium rate to be paid

by aged and disabled enrollees for the

year beginning the following January.

(Although the costs to the program per

disabled enrollee are different than for

the aged, the law provides that they pay

the same premium amount.) Beginning

with the passage of section 203 of the

Social Security Amendments of 1972

(Public Law 92–603), the premium rate,

which was determined on a fiscal year

basis, was limited to the lesser of the

actuarial rate for aged enrollees, or the

62728 Federal Register / Vol. 65, No. 203 / Thursday, October 19, 2000 / Notices

current monthly premium rate increased

by the same percentage as the most

recent general increase in monthly Title

II social security benefits.

However, the passage of section 124

of the Tax Equity and Fiscal

Responsibility Act of 1982 (TEFRA)

(Public Law 97–248) suspended this

premium determination process.

Section 124 of TEFRA changed the

premium basis to 50 percent of the

monthly actuarial rate for aged enrollees

(that is, 25 percent of program costs for

aged enrollees). Section 606 of the

Social Security Amendments of 1983

(Public Law 98–21), section 2302 of the

Deficit Reduction Act of 1984 (DRA

1984) (Public Law 98–369), section 9313

of the Consolidated Omnibus Budget

Reconciliation Act of 1985 (COBRA

1985) (Public Law 99–272), section 4080

of the Omnibus Budget Reconciliation

Act of 1987 (OBRA 1987) (Public Law

100–203), and section 6301 of the

Omnibus Budget Reconciliation Act of

1989 (OBRA 1989) (Public Law 101–

239) extended the provision that the

premium be based on 50 percent of the

monthly actuarial rate for aged enrollees

(that is, 25 percent of program costs for

aged enrollees). This extension expired

at the end of 1990.

The premium rate for 1991 through

1995 was legislated by section

1839(e)(1)(B) of the Act, as added by

section 4301 of the Omnibus Budget

Reconciliation Act of 1990 (OBRA 1990)

(Public Law 101–508). In January 1996,

the premium determination basis would

have reverted to the method established

by the 1972 Social Security Act

Amendments. However, section 13571

of the Omnibus Budget Reconciliation

Act of 1993 (OBRA 1993) (Public Law

103–66) changed the premium basis to

50 percent of the monthly actuarial rate

for aged enrollees (that is, 25 percent of

program costs for aged enrollees) for

1996 through 1998.

Section 4571 of the Balanced Budget

Act of 1997 (BBA 1997) (Public Law

105–33) permanently extended the

provision that the premium be based on

50 percent of the monthly actuarial rate

for aged enrollees (that is, 25 percent of

program costs for aged enrollees).

BBA 1997 included a further

provision affecting the calculation of the

SMI actuarial rates and premiums for

1998 though 2003. Section 4611 of BBA

1997 modified the home health benefit

payable under the HI program for

individuals enrolled in the SMI

program. In doing so, expenditures for

home health services not considered

‘‘post-institutional’’ will be payable

under the SMI program rather than the

HI program beginning in 1998.

However, section 4611(e)(1) of BBA

1997 requires that there be a transition

from 1998 through 2002 for the

aggregate amount of the expenditures

transferred from the HI program to the

SMI program. Section 4611(e)(2) also

provides a specific yearly proportion for

the transferred funds. The proportions

are 1⁄6 for 1998, 1⁄3 for 1999, 1⁄2 for 2000, 2⁄3 for 2001, and 5⁄6 for 2002. For

purposes of determining the correct

amount of financing from general

revenues of the Federal government, it

is necessary to include only these

transitional amounts in the monthly

actuarial rates for both aged and

disabled enrollees, rather than the total

cost of the home health services being

transferred. Accordingly, the actuarial

rates shown in this announcement

reflect the net transitional cost only.

Section 4611(e)(3) of BBA 1997 also

specifies, for the purposes of

determining the premium, that the

monthly actuarial rate for enrollees age

65 and over shall be computed as

though the transition would occur for

1998 through 2003 and that 1⁄7 of the

cost would be transferred in 1998, 2⁄7 in

1999, 3⁄7 in 2000, 4⁄7 in 2001, 5⁄7 in 2002,

and 6⁄7 in 2003. Therefore, the transition

period for incorporating this home

health transfer into the premium is 7

years while the transition period for

including these services in the actuarial

rate is 6 years. As a result, the premium

rate for this year and each of the next

2 years, through 2003, will be less than

50 percent of the actuarial rate for aged

enrollees announced by the Secretary.

New section 1933(c) of the Act, as

added by section 4732(c) of BBA 1997,

requires the Secretary to allocate money

from the SMI trust fund to the State

Medicaid programs for the purpose of

providing Medicare Part B premium

assistance from 1998 through 2002 for

the section 1933 qualifying low-income

Medicaid beneficiaries. This allocation,

while not being a benefit expenditure,

will be an expenditure of the trust fund

and has been included in calculating the

SMI actuarial rates for this year. The

allocation will be included in

calculating the SMI actuarial rates

through 2002.

As determined according to section

1839(a)(3) of the Act and section

4611(e)(3) of BBA 1997, the premium

rate for 2001 is $50.00. Included in the

premium rate is $3.09 for home health

services being transferred into Part B.

A further provision affecting the

calculation of the SMI premium is

section 1839(f) of the Act, as amended

by section 211 of the Medicare

Catastrophic Coverage Act of 1988

(Public Law 100–360). (The Medicare

Catastrophic Coverage Repeal Act of

1989 (Public Law 101–234) did not

repeal the revisions to section 1839(f)

made by Public Law 100–360.) Section

1839(f) provides that if an individual is

entitled to benefits under section 202 or

223 of the Act (the Old-Age and

Survivors Insurance Benefit and the

Disability Insurance Benefit,

respectively) and has the SMI premiums

deducted from these benefit payments,

the premium increase will be reduced to

avoid causing a decrease in the

individual’s net monthly payment. This

occurs if the increase in the individual’s

social security benefit due to the costof-living adjustment under section

215(i) of the Act is less than the increase

in the premium. Specifically, the

reduction in the premium amount

applies if the individual is entitled to

benefits under section 202 or 223 of the

Act for November and December of a

particular year and the individual’s SMI

premiums for December and the

following January are deducted from the

respective month’s section 202 or 223

benefits.

A check for benefits under section 202

or 223 is received in the month

following the month for which the

benefits are due. The SMI premium that

is deducted from a particular check is

the SMI payment for the month in

which the check is received. Therefore,

a benefit check for November is not

received until December, but has the

December’s SMI premium deducted

from it. This change, in effect,

perpetuates former amendments that

prohibited SMI premium increases from

reducing an individual’s benefits in

years in which the dollar amount of the

individual’s cost-of-living increase in

benefits was not at least as great as the

dollar amount of the individual’s SMI

premium increase.

Generally, if a beneficiary qualifies for

this protection that is, the beneficiary

must have been in current payment

status for November and December of

the previous year, the reduced premium

for the individual for that January and

each of the succeeding 11 months for

which he or she is entitled to benefits,

under section 202 or 203 of the Act, is

the greater of the following:

(1) The monthly premium for January

reduced as necessary to make the

December monthly benefits, after the

deduction of the SMI premium for

January, at least equal to the preceding

November’s monthly benefits, after the

deduction of the SMI premium for

December; or

(2) The monthly premium for that

individual for that December.

In determining the premium

limitations under section 1839(f) of the

Act, the monthly benefits to which an

individual is entitled under section 202

Federal Register / Vol. 65, No. 203 / Thursday, October 19, 2000 / Notices 62729

or 223 do not include retroactive

adjustments or payments and

deductions on account of work. Also,

once the monthly premium amount has

been established under section 1839(f)

of the Act, it will not be changed during

the year even if there are retroactive

adjustments or payments and

deductions on account of work that

apply to the individual’s monthly

benefits.

Individuals who have enrolled in the

SMI program late or have reenrolled

after the termination of a coverage

period are subject to an increased

premium under section 1839(b) of the

Act. The increase is a percentage of the

premium and is based on the new

premium rate before any reductions

under section 1839(f) are made.

II. Notice of Monthly Actuarial Rates

and Monthly Premium Rate

The monthly actuarial rates

applicable for 2001 are $101.00 for

enrollees age 65 and over, and $132.20

for disabled enrollees under age 65.

Section III of this notice gives the

actuarial assumptions and bases from

which these rates are derived. The

monthly premium rate will be $50.00

during 2001. Included in the monthly

premium rate is $3.09 for home health

services being transferred into Part B.

III. Statement of Actuarial Assumptions

and Bases Employed in Determining the

Monthly Actuarial Rates and the

Monthly Premium Rate for the

Supplementary Medical Insurance

Program Beginning January 2001

A. Actuarial Status of the

Supplementary Medical Insurance Trust

Fund

Under the law, the starting point for

determining the monthly premium is

the amount that would be necessary to

finance the SMI program on an incurred

basis. This is the amount of income that

would be sufficient to pay for services

furnished during that year (including

associated administrative costs) even

though payment for some of these

services will not be made until after the

close of the year. The portion of income

required to cover benefits not paid until

after the close of the year, is added to

the trust fund and used when needed.

The rates are established

prospectively and are, therefore, subject

to projection error. Additionally,

legislation enacted after the financing

has been established, but effective for

the period in which the financing has

been set, may affect program costs. As

a result, the income to the program may

not equal incurred costs. Therefore,

trust fund assets should be maintained

at a level that is adequate to cover a

moderate degree of variation between

actual and projected costs, and the

amount of incurred, but unpaid

expenses. An appropriate level for

assets to cover a moderate degree of

variation between actual and projected

costs depends on numerous factors. The

most important of these factors are: (1)

The difference from prior years between

the actual performance of the program

and estimates made at the time

financing was established, and (2) the

expected relationship between incurred

and cash expenditures. Ongoing

analysis is made of both factors as the

trends vary over time.

Table 1 summarizes the estimated

actuarial status of the trust fund as of

the end of the financing period for 1999

and 2000.

TABLE 1.—ESTIMATED ACTUARIAL

STATUS OF THE SUPPLEMENTARY

MEDICAL INSURANCE TRUST FUND

AS OF THE END OF THE FINANCING

PERIOD

[In millions of dollars]

Financing

period

ending

Assets Liabilities

Assets

less liabilities

Dec. 31,

1999 .. $44,787 $6,502 $38,284

Dec. 31,

2000 .. 40,351 5,398 34,953

B. Monthly Actuarial Rate for Enrollees

Age 65 and Older

The monthly actuarial rate for

enrollees age 65 and older is one-half of

the monthly projected cost of benefits,

the Medicaid transfer (for 1998 through

2002), and administrative expenses for

each enrollee age 65 and older, adjusted

to allow for interest earnings on assets

in the trust fund and a contingency

margin. The contingency margin is an

amount appropriate to provide for a

moderate degree of variation between

actual and projected costs and to

amortize any surplus or unfunded

liabilities. As noted in section I of this

announcement, section 4611(e)(2) of

BBA 1997 requires that only 2⁄3 of the

cost of the home health services being

transferred be included in the actuarial

rate for 2001, rather than the full cost of

such benefits.

The monthly actuarial rate for

enrollees age 65 and older for 2001 is

determined by first establishing perenrollee cost by type of service from

program data through 1999 and then

projecting these costs for subsequent

years. The projection factors used are

shown in Table 2. The projected values

for financing periods from January 1,

1998 through December 31, 2001, are

shown in Table 3.

The projected monthly rate required

to pay for one-half of the total of

benefits, the transfer to Medicaid, and

administrative costs for enrollees age 65

and over for 2001 is $114.74. Included

in the total of $114.74 is $8.87 for home

health services and $22.12 for managed

care services. The amount of $8.87 for

home health services includes (1) the

full cost of fee-for-service home health

services being transferred from the HI

program as a result of BBA 1997 as if the

transition did not apply ($8.67) as well

as (2) the cost of furnishing all home

health services to those individuals

enrolled in SMI only ($0.20). The

amount of $22.12 for managed care

services includes (1) The full cost of

managed care home health services

being transferred from the HI program as

a result of BBA 1997 as if the transition

did not apply ($2.14) as well as (2) the

cost of furnishing all other SMI services

to those individuals enrolled in

managed care plans ($19.98). Since

section 4611(e)(2) of BBA 1997 requires

that only 2⁄3 of the cost for those services

being transferred be included in the

actuarial rate for 2001, the monthly

actuarial rate provides for an adjustment

of ¥$3.60, representing 1⁄3 of the full

cost of such services. The monthly

actuarial rate of $101.00 also provides

an adjustment of ¥$3.44 for interest

earnings and ¥$6.70 for a contingency

margin. Based on current estimates, it

appears that the assets are more than

sufficient to cover the amount of

incurred but unpaid expenses and to

provide for a moderate degree of

variation between actual and projected

costs. Thus, a negative contingency

margin is needed to reduce assets to a

more appropriate level.

C. Monthly Actuarial Rate for Disabled

Enrollees

Disabled enrollees are those persons

enrolled in SMI because of entitlement

(before age 65) to disability benefits for

more than 24 months or because of

entitlement to Medicare under the endstage renal disease program. Projected

monthly costs for disabled enrollees

(other than those suffering from endstage renal disease) are prepared in a

fashion parallel to the projection for the

aged using appropriate actuarial

assumptions (see Table 2). Costs for the

end-stage renal disease program are

projected differently because of the

different nature of services offered by

the program. The combined results for

all disabled enrollees are shown in

Table 4.

62730 Federal Register / Vol. 65, No. 203 / Thursday, October 19, 2000 / Notices

The projected monthly rate required

to pay for one-half of the total of

benefits, the transfer to Medicaid, and

administrative costs for disabled

enrollees for 2001 is $128.77. Included

in the total of $128.77 is $6.59 for home

health services and $11.18 for managed

care services. The amount of $6.59 is the

full cost of the home health services

being transferred from the HI program as

a result of BBA 1997 as if the transition

did not apply. The amount of $11.18 for

managed care services includes (1) the

full cost of managed care home health

services being transferred from the HI

program as a result of BBA 1997 as if the

transition did not apply ($1.11) as well

as (2) the cost of furnishing all other

SMI services to those individuals

enrolled in managed care plans ($10.07).

Since section 4611(e)(2) of BBA 1997

requires that only 2⁄3 of the cost for those

services being transferred be included in

the actuarial rate for 2001, the monthly

actuarial rate provides for an adjustment

of ¥$2.57, representing 1⁄3 of the full

cost of such services. The monthly

actuarial rate of $132.20 also provides

an adjustment of ¥$1.29 for interest

earnings and $7.29 for a contingency

margin. Based on current estimates, it

appears that the assets are not sufficient

to cover the amount of incurred, but

unpaid expenses and to provide for a

moderate degree of variation between

actual and projected costs. Thus, a

positive contingency margin is needed

to increase assets to a more appropriate

level.

D. Sensitivity Testing

Several factors contribute to

uncertainty about future trends in

medical care costs. It is appropriate to

test the adequacy of the rates using

alternative assumptions. The results of

those assumptions are shown in Table 5.

One set represents increases that are

lower and is, therefore, more optimistic

than the current estimate. The other set

represents increases that are higher and

is therefore, more pessimistic than the

current version. The values for the

alternative assumptions were

determined from a statistical analysis of

the historical variation in the respective

increase factors.

Table 5 indicates that, under the

assumptions used in preparing this

report, the monthly actuarial rates

would result in an excess of assets over

liabilities of $30,528 million by the end

of December 2001. This amounts to 27.1

percent of the estimated total incurred

expenditures for the following year.

Assumptions that are somewhat more

pessimistic (and therefore, test the

adequacy of the assets to accommodate

projection errors) produce a surplus of

$17,949 million by the end of December

2001, which amounts to 14.2 percent of

the estimated total incurred

expenditures for the following year.

Under fairly optimistic assumptions, the

monthly actuarial rates would result in

a surplus of $44,350 million by the end

of December 2001, which amounts to

44.4 percent of the estimated total

incurred expenditures for the following

year.

E. Premium Rate

As determined by section 1839(a)(3)

of the Act and section 4611(e)(3) of BBA

1997, the monthly premium rate for

2001, for both aged and disabled

enrollee, is $50.00.

TABLE 2.—PROJECTION FACTORS 1 12-MONTH PERIODS ENDING DECEMBER 31 OF 1998–2001

[In percent]

Calendar

year

Physicians’ services Durable

medical

equipment

Carrier

lab 4

Other carrier services 5

Outpatient

hospital

Home

health

agency

Hospital

lab 6

Other

intermediary

services 7

Managed

care Fees 2 Residual 3

Aged:

1998 .. 2.9 2.7 ¥1.2 ¥9.2 11.1 1.3 8 2,527.5 3.7 ¥2.5 24.5

1999 .. 2.7 1.2 6.4 ¥0.1 10.7 5.1 ¥23.0 1.0 ¥19.2 9.2

2000 .. 6.0 0.8 8.1 4.0 9.3 7.3 16.1 4.3 11.2 ¥0.6

2001 .. 6.1 1.5 6.7 2.0 6.9 10.6 16.5 3.7 5.7 2.0

Disabled:

1998 .. 2.9 2.4 2.7 ¥6.4 9.6 ¥0.8 (8) ¥0.8 ¥20.9 14.2

1999 .. 2.7 0.4 5.4 2.1 11.0 6.1 ¥16.0 2.6 ¥12.4 2.9

2000 .. 6.0 0.8 7.1 3.9 7.4 5.8 5.7 4.6 12.9 ¥3.1

2001 .. 6.1 1.4 6.6 1.9 6.8 11.7 15.8 3.6 5.4 2.0

1All values for services other than managed care are per fee-for-service enrollee. Managed care values are per managed care enrollee. 2As recognized for payment under the program.

3 Increase in the number of services received per enrollee and greater relative use of more expensive services.

4 Includes services paid under the lab fee schedule furnished in the physicians office or an independent lab.

5 Includes ambulatory surgical center facility costs, ambulance services, parenteral and enteral drug costs, supplies, etc.

6 Includes services paid under the lab fee schedule furnished in the outpatient department of a hospital.

7 Includes services furnished in rehabilitation and psychiatric hospitals, dialysis facilities, rural health clinics, federally qualified health centers,

etc.8Effective January 1, 1998, the coverage of home health agency services not considered ‘‘post-institutional’’ for those individuals entitled to HI

and enrolled in SMI were transferred from the HI program to the SMI program. As a result, as of January 1, 1998, there was a large increase in

SMI expenditures for these services for the aged enrollees, and SMI coverage for these services will resume for disabled enrollees.

TABLE 3.—DERIVATION OF MONTHLY ACTUARIAL RATE FOR ENROLLEES AGE 65 AND OVER FOR FINANCING PERIODS

ENDING DECEMBER 31, 1998 THROUGH DECEMBER 31, 2001

Financing periods

CY 1998 CY 1999 CY 2000 CY 2001

Covered services (at level recognized):

Physician Fee Schedule ........................................................................................... $49.64 $50.84 $58.63 $54.39

Durable Medical Equipment ..................................................................................... 5.58 5.85 6.33 6.77

Carrier Lab 1 .............................................................................................................. 2.32 2.29 2.38 2.43

Other Carrier Services 2 ............................................................................................ 8.51 9.29 10.16 10.88

Federal Register / Vol. 65, No. 203 / Thursday, October 19, 2000 / Notices 62731

TABLE 3.—DERIVATION OF MONTHLY ACTUARIAL RATE FOR ENROLLEES AGE 65 AND OVER FOR FINANCING PERIODS

ENDING DECEMBER 31, 1998 THROUGH DECEMBER 31, 2001—Continued

Financing periods

CY 1998 CY 1999 CY 2000 CY 2001

Outpatient Hospital ................................................................................................... 18.73 19.41 20.85 23.11

Home health ............................................................................................................. 5 8.62 5 6.54 5 7.59 5 8.87

Hospital Lab 3 ........................................................................................................... 1.57 1.56 1.63 1.69

Other Intermediary Services 4 ................................................................................... 6.81 5.42 6.04 6.39

Managed Care .......................................................................................................... 6 19.02 622.06 6 21.85 6 22.12

Total services .................................................................................................... 120.79 123.26 131.22 140.88

Cost-sharing:

Deductible ................................................................................................................. ¥3.81 ¥3.83 ¥3.83 ¥3.85

Coinsurance .............................................................................................................. ¥22.32 ¥22.92 ¥23.76 ¥24.28

Total benefits ..................................................................................................... 94.67 96.52 103.63 112.76

Transfer to Medicaid ........................................................................................................ 7 0.00 7 0.00 7 0.06 7 0.07

Administrative expenses .................................................................................................. 1.60 1.77 1.88 1.92

Incurred expenditures ...................................................................................................... 96.26 98.29 105.57 114.74

Value of interest ............................................................................................................... ¥2.04 ¥3.49 ¥3.76 ¥3.44

Adjustment for home health agency services transferred from HI .................................. 8¥8.54 8¥5.35 8¥4.66 8¥3.60

Contingency margin for projection error and to amortize the surplus or deficit .............. 2.21 2.84 ¥5.25 ¥6.70

Monthly actuarial rate ...................................................................................................... 87.90 92.30 91.90 101.00

1 Includes services paid under the lab fee schedule furnished in the physicians office or an independent lab.

2 Includes ambulatory surgical center facility costs, ambulance services, parenteral and enteral drug costs, supplies, etc.

3 Includes services paid under the lab fee schedule furnished in the outpatient department of a hospital.

4 Includes services furnished in rehabilitation and psychiatric hospitals, dialysis facilities, rural health clinics, federally qualified health centers,

etc.5This amount includes the full cost of the fee-for-service home health services being transferred from the HI program as a result of BBA 1997

as if the transition did not apply, as well as the cost of furnishing all home health services to those individuals enrolled in SMI only. 6This amount includes the full cost of the managed care home health services being transferred from the HI program as a result of BBA 1997

as if the transition did not apply, as well as the cost of furnishing all other SMI services to individuals enrolled in managed care. 7Section 1933(c)(2) of the Act, as added by section 4732(c) of BBA 1997, allocates an amount to be transferred from the SMI trust fund to the

state Medicaid programs. This transfer is for the purpose of paying the SMI premiums for certain low-income beneficiaries. It is not a benefit expenditure but is used in determining the SMI actuarial rates since it is an expenditure of the trust fund. 8Section 4611 of BBA 1997 specifies that expenditures for home health services not considered ‘‘post-institutional’’ will be payable under the

SMI program rather than the HI program beginning in 1998. However, section 4611(e)(1) requires there be a transition from 1998 through 2002

for the aggregate amount of the expenditures transferred from the HI program to the SMI program. For 1998, the amount transferred is 1⁄6 of the

full cost for such services, for 1999, 1⁄3, for 2000, 1⁄2, and for 2001, 2⁄3. Therefore, the adjustment for 1998 represents 5⁄6 of the full cost, for 1999, 2⁄3, for 2000, 1⁄2, and for 2001, 1⁄3. This amount adjusts the actuarial rate to reflect the correct amount attributable to home health services.

TABLE 4.—DERIVATION OF MONTHLY ACTUARIAL RATE FOR ENROLLEES AGE 65 AND OVER FOR FINANCING PERIODS

ENDING DECEMBER 31, 1998 THROUGH DECEMBER 31, 2001

Financing periods

CY 1998 CY 1999 CY 2000 CY 2001

Covered services (at level recognized):

Physician Fee Schedule ........................................................................................... $52.21 $52.98 $56.66 $60.93

Durable Medical Equipment ..................................................................................... 9.09 9.45 10.11 10.77

Carrier Lab 1 .............................................................................................................. 2.79 2.72 2.83 2.89

Other Carrier Services 2 ............................................................................................ 9.70 10.31 11.09 11.86

Outpatient Hospital ................................................................................................... 23.16 24.07 25.52 28.45

Home health ............................................................................................................. 5 6.50 5 5.40 5 5.70 5 6.59

Hospital Lab 3 ........................................................................................................... 2.56 2.39 2.45 2.54

Other Intermediary Services 4 ................................................................................... 28.12 28.02 29.34 30.41

Managed Care .......................................................................................................... 6 9.72 610.94 6 10.77 6 11.18

Total services .................................................................................................... 143.84 146.28 154.46 165.62

Cost-sharing:

Deductible ................................................................................................................. ¥3.53 ¥3.54 ¥3.56 ¥3.56

Coinsurance .............................................................................................................. ¥32.65 ¥33.56 ¥34.64 ¥35.50

Total benefits ..................................................................................................... 107.65 109.17 116.26 126.56

Transfer to Medicaid ........................................................................................................ 7 0.00 7 0.00 7 0.04 7 0.05

Administrative expenses .................................................................................................. 1.87 2.03 2.11 2.15

Incurred expenditures ...................................................................................................... 109.53 111.20 118.42 128.77

Value of interest ............................................................................................................... ¥0.30 ¥1.14 ¥0.81 ¥1.29

Adjustment for home health agency services transferred from HI .................................. 8¥6.21 8¥4.20 8¥3.33 8¥2.57

62732 Federal Register / Vol. 65, No. 203 / Thursday, October 19, 2000 / Notices

TABLE 4.—DERIVATION OF MONTHLY ACTUARIAL RATE FOR ENROLLEES AGE 65 AND OVER FOR FINANCING PERIODS

ENDING DECEMBER 31, 1998 THROUGH DECEMBER 31, 2001—Continued

Financing periods

CY 1998 CY 1999 CY 2000 CY 2001

Contingency margin for projection error and to amortize the surplus or deficit .............. ¥5.92 ¥2.86 ¥6.82 ¥7.29

Monthly actuarial rate ...................................................................................................... 97.10 103.00 121.10 132.20

1 Includes services paid under the lab fee schedule furnished in the physicians office or an independent lab.

2 Includes ambulatory surgical center facility costs, ambulance services, parenteral and enteral drug costs, supplies, etc.

3 Includes services paid under the lab fee schedule furnished in the outpatient department of a hospital.

4 Includes services furnished in rehabilitation and psychiatric hospitals, dialysis facilities, rural health clinics, federally qualified health centers,

etc.5This amount includes the full cost of the fee-for-service home health services being transferred from the HI program as a result of BBA 1997

as if the transition did not apply, as well as the cost of furnishing all home health services to those individuals enrolled in SMI only. 6This amount includes the full cost of the managed care home health services being transferred from the HI program as a result of BBA 1997

as if the transition did not apply, as well as the cost of furnishing all other SMI services to individuals enrolled in managed care. 7Section 1933(c)(2) of the Act, as added by section 4732(c) of BBA 1997, allocates an amount to be transferred from the SMI trust fund to the

state Medicaid programs. This transfer is for the purpose of paying the SMI premiums for certain low-income beneficiaries. It is not a benefit expenditure but is used in determining the SMI actuarial rates since it is an expenditure of the trust fund. 8Section 4611 of BBA 1997 specifies that expenditures for home health services not considered ‘‘post-institutional’’ will be payable under the

SMI program rather than the HI program beginning in 1998. However, section 4611(e)(1) requires there be a transition from 1998 through 2002

for the aggregate amount of the expenditures transferred from the HI program to the SMI program. For 1998, the amount transferred is 1⁄6 of the

full cost for such services, for 1999, 1⁄3, for 2000, 1⁄2, and for 2001, 2⁄3. Therefore, the adjustment for 1998 represents 5⁄6 of the full cost, for 1999, 2⁄3, for 2000, 1⁄2, and for 2001, 1⁄3. This amount adjusts the actuarial rate to reflect the correct amount attributable to home health services.

TABLE 5.—ACTUARIAL STATUS OF THE SMI TRUST FUND UNDER THREE SETS OF ASSUMPTIONS FOR FINANCING PERIODS

THROUGH DECEMBER 31, 2001

As of December 31 1999 2000 2001

This Projection:

Actuarial Status (in millions):

Assets ........................................................................................................................................ $44,787 $40,351 $37,737

Liabilities .................................................................................................................................... 6,502 5,398 6,209

Assets Less Liabilities ........................................................................................................ 38,284 34,953 30,528

Ratio (in percent) 1 .................................................................................................................... 41.4 34.0 27.1

Low Cost Projection:

Actuarial Status (in millions):

Assets ........................................................................................................................................ 44,787 44,919 50,192

Liabilities .................................................................................................................................... 6,502 4,890 5,842

Assets Less Liabilities ........................................................................................................ 38,284 40,029 44,350

Ratio (in percent) 1 .................................................................................................................... 43.9 42.6 44.4

High Cost Projection:

Actuarial Status (in millions):

Assets ........................................................................................................................................ 44,787 35,989 24,546

Liabilities .................................................................................................................................... 6,502 5,882 6,597

Assets Less Liabilities ........................................................................................................ 38,284 30,107 17,949

Ratio (in percent)1 ..................................................................................................................... 39.4 27.0 14.2

1 Ratio of assets less liabilities at the end of the year to the total incurred expenditures during the following year, expressed as a percent.

IV. Regulatory Impact Analysis

We have examined the impacts of this

notice as required by Executive Order

12866 and the Regulatory Flexibility Act

(RFA) (Public Law 96–354). 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).

The RFA requires agencies to analyze

options for regulatory relief of small

businesses. 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 $5

million or less annually. For purposes of

the RFA, States and individuals are not

considered to be small entities.

In addition, section 1102(b) of the Act

requires us to prepare an RIA 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 603

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 50

beds. We have determined that this

notice will not have a significant effect

on a substantial number of small entities

nor 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.

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

compliance costs on State and local

Federal Register / Vol. 65, No. 203 / Thursday, October 19, 2000 / Notices 62733

governments, preempts State law, or

otherwise has Federalism implications.

We have determined that this notice

does not significantly affect the rights,

roles, and responsibilities of States.

This notice announces that the

monthly actuarial rates applicable for

2001 are $101.00 for enrollees age 65

and over, and $132.20 for disabled

enrollees under age 65. It also

announces that the monthly SMI

premium rate for calendar year 2001 is

$50.00. The SMI premium rate of $50.00

is 9.9% higher than the $45.50 premium

rate for 2000. We estimate that the cost

of this increase from the current

premium to the approximately 38

million SMI enrollees will be about

$2.042 billion for 2001. 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.

In accordance with the provisions of

Executive Order 12866, this notice was

reviewed by the Office of Management

and Budget.

V. Waiver of Proposed Notice

The Medicare statute requires the

publication of the monthly actuarial

rates and the Part B premium amounts

in September. We ordinarily use general

notices, rather than notice and comment

rulemaking procedures, to make such

announcements. In doing so, we note

that under the Administrative Procedure

Act; 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 formula used

to calculate the SMI premium is

statutorily directed, and we can exercise

no discretion in following that formula.

Moreover, the statute establishes the

time period for which the premium

rates will apply, and delaying

publication of the SMI premium rate

would be contrary to the public interest.

Therefore, we find good cause to waive

publication of a proposed notice and

solicitation of public comments.

(Section 1839 of the Social Security Act; 42

U.S.C. 1395r)

(Catalog of Federal Domestic Assistance

Program No. 93.774, Medicare—

Supplementary Medical Insurance)

Dated: September 25, 2000.

Nancy-Ann Min DeParle,

Administrator, Health Care Financing

Administration.

Dated: September 26, 2000.

Donna E. Shalala,

Secretary.

[FR Doc. 00–26848 Filed 10–18–00; 8:45 am]

BILLING CODE 4120–01–P

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Health Care Financing Administration

[HCFA–8008–N]

RIN 0938–AK34

Medicare Program; Part A Premium for

2001 for the Uninsured Aged and for

Certain Disabled Individuals Who Have

Exhausted Other Entitlement

AGENCY: Health Care Financing

Administration (HCFA), HHS.

ACTION: Notice.

SUMMARY: This notice announces the

hospital insurance premium for

calendar year 2001 under Medicare’s

hospital insurance program (Part A) for

the uninsured aged and for certain

disabled individuals who have

exhausted other entitlement. The

monthly Medicare Part A premium for

the 12 months beginning January 1,

2001 for these individuals is $300. The

reduced premium for certain other

individuals as described in this notice is

$165. Section 1818(d) of the Social

Security Act specifies the method to be

used to determine these amounts.

EFFECTIVE DATE: This notice is effective

on January 1, 2001.

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 for social

security or railroad retirement benefits

and do not otherwise meet the

requirements for entitlement to

Medicare Part A. (Persons insured under

the Social Security or Railroad

Retirement Acts need not pay premiums

for hospital insurance.)

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 performed, and related

administrative costs incurred, in the

following calendar year with respect to

individuals aged 65 and over who will

be entitled to benefits under Medicare

Part A. We must then, during September

of each year, determine the monthly

actuarial rate (the per capita amount

estimated above divided by 12) and

publish the dollar amount for the

monthly premium in the succeeding

calendar year. 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). The

2000 premium under this method was

$301 and was effective January 1, 2000.

(See 64 FR 57110, October 22, 1999.)

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

us to determine and publish, during

September of each calendar year, the

amount of the monthly premium for the

following calendar year for persons who

voluntarily enroll in Medicare Part A.

Section 1818A of the Act provides for

voluntary enrollment in Medicare Part

A, subject to payment of a monthly

premium, of certain disabled

individuals who have exhausted other

entitlement. These individuals are those

not now entitled but who have been

entitled under section 226(b) of the Act,

who continue to have the disabling

impairment upon which their

entitlement was based, and whose

entitlement ended solely because they

had earnings that exceeded the

substantial gainful activity amount (as

defined in 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 (f) of the Act for the aged will

also apply to certain disabled

individuals as described above.

Therefore, the premium amounts

applicable to the aged, as announced in

this notice, also apply to these certain

disabled individuals.

Section 13508 of the Omnibus Budget

Reconciliation Act of 1993 (Public Law

103–66) amended section 1818(d) of the

Act to provide for a reduction in the

monthly premium amount for certain

voluntary enrollees. The reduction

applies for an individual who is not

eligible for social security or railroad

retirement benefits but who, with

respect to a month, 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