69850 Federal Register / Vol. 77, No. 225 / Wednesday, November 21, 2012 / Notices 

The estimated total increase in costs 

to beneficiaries is about $1,030 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 Statement 

We have examined the impact of this 

notice as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (January 18, 

2011), the Regulatory Flexibility Act 

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

354), section 1102(b) of the Social 

Security Act, section 202 of the 

Unfunded Mandates Reform Act of 1995 

(March 22, 1995; Pub. L. 104–4), 

Executive Order 13132 on Federalism 

(August 4, 1999) and the Congressional 

Review Act (5 U.S.C., 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 rules 

with economically significant effects 

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

stated in section IV of this notice, we 

estimate that the total increase in costs 

to beneficiaries associated with this 

notice is about $1,030 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. 

Therefore, this notice is a major action 

as defined in Title 5, United States 

Code, Part I, Ch. 8), and is an 

economically significant action under 

Executive Order 12866. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. Most 

hospitals and most other providers and 

suppliers are small entities, either by 

nonprofit status or by having revenues 

of $7.0 million to $34.5 million in any 

1 year. Individuals and States are not 

included in the definition of a small 

entity. We have determined that this 

notice will not have a significant 

economic impact on a substantial 

number of small entities. Therefore, we 

are not preparing an analysis under the 

RFA. 

In addition, section 1102(b) of the 

Social Security Act requires us to 

prepare a regulatory impact analysis if 

a rule may have a significant impact on 

the operations of a substantial number 

of small rural hospitals. This analysis 

must conform to the provisions of 

section 604 of the RFA. For purposes of 

section 1102(b) of the Act, we define a 

small rural hospital as a hospital that is 

located outside of a Metropolitan 

Statistical Area for Medicare payment 

regulations and has fewer than 100 

beds. The Secretary has determined that 

this notice will not have a significant 

impact on the operations of a substantial 

number of small rural hospitals. 

Therefore, we are not preparing an 

analysis under section 1102(b) of the 

Act. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation. 

In 2012, that threshold is approximately 

$139 million. This notice will have no 

consequential effect on State, local, or 

tribal governments or on the private 

sector. However, States may be required 

to pay the deductibles and coinsurance 

for dually-eligible beneficiaries. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

This notice will not have a substantial 

effect on State or local governments. 

In accordance with the provisions of 

Executive Order 12866, this notice was 

reviewed by the Office of Management 

and Budget. 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance) 

Dated: November 6, 2012. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Dated: November 15, 2012. 

Kathleen Sebelius, 

Secretary. 

[FR Doc. 2012–28273 Filed 11–16–12; 11:15 am] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[CMS–8048–N] 

RIN 0938–AR16 

Medicare Program; Medicare Part B 

Monthly Actuarial Rates, Premium 

Rate, and Annual Deductible 

Beginning January 1, 2013 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Notice. 

SUMMARY: This notice announces the 

monthly actuarial rates for aged (age 65 

and over) and disabled (under age 65) 

beneficiaries enrolled in Part B of the 

Medicare Supplementary Medical 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 77, No. 225 / Wednesday, November 21, 2012 / Notices 69851 

Insurance (SMI) program beginning 

January 1, 2013. In addition, this notice 

announces the monthly premium for 

aged and disabled beneficiaries as well 

as the income-related monthly 

adjustment amounts to be paid by 

beneficiaries with modified adjusted 

gross income above certain threshold 

amounts. The monthly actuarial rates 

for 2013 are $209.80 for aged enrollees 

and $235.50 for disabled enrollees. The 

standard monthly Part B premium rate 

for all enrollees for 2013 is $104.90, 

which is equal to 50 percent of the 

monthly actuarial rate for aged enrollees 

or approximately 25 percent of the 

expected average total cost of Part B 

coverage for aged enrollees. (The 2012 

standard premium rate was $99.90.) The 

Part B deductible for 2013 is $147.00 for 

all Part B beneficiaries. If a beneficiary 

has to pay an income-related monthly 

adjustment, they may have to pay a total 

monthly premium of about 35, 50, 65, 

or 80 percent of the total cost of Part B 

coverage. 

DATES: January 1, 2013. 

FOR FURTHER INFORMATION CONTACT: M. 

Kent Clemens, (410) 786–6391. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Part B is the voluntary portion of the 

Medicare program that pays all or part 

of the costs for physicians’ services, 

outpatient hospital services, certain 

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 Medicare Part 

A, Hospital Insurance. Medicare Part B 

is available to individuals who are 

entitled to Medicare Part A, as well as 

to U.S. residents who have attained age 

65 and are citizens, and aliens who were 

lawfully admitted for permanent 

residence and have resided in the 

United States for 5 consecutive years. 

Part B requires enrollment and payment 

of monthly premiums, as described 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 

by transfers from the general fund of the 

Treasury. 

The Secretary of the Department of 

Health and Human Services (the 

Secretary) is required by section 1839 of 

the Social Security Act (the Act) to 

announce the Part B monthly actuarial 

rates for aged and disabled beneficiaries 

as well as the monthly Part B premium. 

The Part B annual deductible is 

included because its determination is 

directly linked to the aged actuarial rate. 

The monthly actuarial rates for aged 

and disabled enrollees are used to 

determine the correct amount of general 

revenue financing per beneficiary each 

month. These amounts, according to 

actuarial estimates, will equal, 

respectively, one-half of the expected 

average monthly cost of Part B for each 

aged enrollee (age 65 or over) and onehalf of the expected average monthly 

cost of Part B for each disabled enrollee 

(under age 65). 

The Part B deductible to be paid by 

enrollees is also announced. Prior to the 

Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (MMA) (Pub. L. 108–173), the Part 

B deductible was set in statute. After 

setting the 2005 deductible amount at 

$110, section 629 of the MMA 

(amending section 1833(b) of the Act) 

requires that the Part B deductible be 

indexed beginning in 2006. The 

inflation factor to be used each year is 

the annual percentage increase in the 

Part B actuarial rate for enrollees age 65 

and over. Specifically, the 2013 Part B 

deductible is calculated by multiplying 

the 2012 deductible by the ratio of the 

2013 aged actuarial rate over the 2012 

aged actuarial rate. The amount 

determined under this formula is then 

rounded to the nearest $1. 

The monthly Part B premium rate to 

be paid by aged and disabled enrollees 

is also announced. (Although the costs 

to the program per disabled enrollee are 

different than for the aged, the statute 

provides that they pay the same 

premium amount.) Beginning with the 

passage of section 203 of the Social 

Security Amendments of 1972 (Pub. L. 

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 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) 

(Pub. L. 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 

(Pub. L. 98–21), section 2302 of the 

Deficit Reduction Act of 1984 (DEFRA 

84) (Pub. L. 98–369), section 9313 of the 

Consolidated Omnibus Budget 

Reconciliation Act of 1985 (COBRA 85) 

(Pub. L. 99–272), section 4080 of the 

Omnibus Budget Reconciliation Act of 

1987 (OBRA 87) (Pub. L. 100–203), and 

section 6301 of the Omnibus Budget 

Reconciliation Act of 1989 (OBRA 89) 

(Pub. L. 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 90) 

(Pub. L. 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 93) (Pub. L. 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) (Pub. L. 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). 

The BBA included a further provision 

affecting the calculation of the Part B 

actuarial rates and premiums for 1998 

through 2003. Section 4611 of the BBA 

modified the home health benefit 

payable under Part A for individuals 

enrolled in Part B. Under this section, 

beginning in 1998, expenditures for 

home health services not considered 

‘‘post-institutional’’ are payable under 

Part B rather than Part A. However, 

section 4611(e)(1) of the BBA required 

that there be a transition from 1998 

through 2002 for the aggregate amount 

of the expenditures transferred from 

Part A to Part B. Section 4611(e)(2) of 

the BBA also provided a specific yearly 

proportion for the transferred funds. 

The proportions were 1⁄6 for 1998, 1⁄3 for 

1999, 1⁄2 for 2000, 2⁄3 for 2001, and 5⁄6

for 2002. For the purpose of determining 

the correct amount of financing from 

general revenues of the Federal 

Government, it was 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. 

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

specified, for the purpose of 

determining the premium, that the 

monthly actuarial rate for enrollees age 

65 and over be computed as though the 

transition would occur for 1998 through 

2003 and that 1⁄7 of the cost be 

transferred in 1998, 2⁄7 in 1999, 3⁄7 in 


srobinson on DSK4SPTVN1PROD with 
69852 Federal Register / Vol. 77, No. 225 / Wednesday, November 21, 2012 / Notices 

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 was 7 years 

while the transition period for including 

these services in the actuarial rate was 

6 years. 

Section 811 of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 (Pub. L. 108– 

173, also known as the Medicare 

Modernization Act, or MMA), which 

amended section 1839 of the Act, 

requires that, starting on January 1, 

2007, the Part B premium a beneficiary 

pays each month be based on their 

annual income. Specifically, if a 

beneficiary’s ‘‘modified adjusted gross 

income’’ is greater than the legislated 

threshold amounts (for 2013, $85,000 

for a beneficiary filing an individual 

income tax return, and $170,000 for a 

beneficiary filing a joint tax return) the 

beneficiary is responsible for a larger 

portion of the estimated total cost of 

Part B benefit coverage. In addition to 

the standard 25 percent premium, these 

beneficiaries now have to pay an 

income-related monthly adjustment 

amount. The MMA made no change to 

the actuarial rate calculation, and the 

standard premium, which will continue 

to be paid by beneficiaries whose 

modified adjusted gross income is 

below the applicable thresholds, still 

represents 25 percent of the estimated 

total cost to the program of Part B 

coverage for an aged enrollee. However, 

depending on income and tax filing 

status, a beneficiary can now be 

responsible for 35, 50, 65, or 80 percent 

of the estimated total cost of Part B 

coverage, rather than 25 percent. The 

end result of the higher premium is that 

the Part B premium subsidy is reduced 

and less general revenue financing is 

required for beneficiaries with higher 

income because they are paying a larger 

share of the total cost with their 

premium. That is, the premium subsidy 

continues to be approximately 75 

percent for beneficiaries with income 

below the applicable income thresholds, 

but will be reduced for beneficiaries 

with income above these thresholds. 

The MMA specified that there be a 5- 

year transition to full implementation of 

this provision. However, section 5111 of 

the Deficit Reduction Act of 2005 (Pub. 

L. 109–171) (DRA) modified the 

transition to a 3-year period. 

Section 4732(c) of the BBA added 

section 1933(c) of the Act, which 

required the Secretary to allocate money 

from the Part B trust fund to the State 

Medicaid programs for the purpose of 

providing Medicare Part B premium 

assistance from 1998 through 2002 for 

the low-income Medicaid beneficiaries 

who qualify under section 1933 of the 

Act. This allocation, while not a benefit 

expenditure, was an expenditure of the 

trust fund and was included in 

calculating the Part B actuarial rates 

through 2002. For 2003 through 2012, 

the expenditure was made from the trust 

fund because the allocation was 

temporarily extended. However, 

because the extension occurred after the 

financing was determined, the 

allocation was not included in the 

calculation of the financing rates. 

A further provision affecting the 

calculation of the Part B premium is 

section 1839(f) of the Act, as amended 

by section 211 of the Medicare 

Catastrophic Coverage Act of 1988 

(MCCA 88) (Pub. L. 100–360). (The 

Medicare Catastrophic Coverage Repeal 

Act of 1989 (Pub. L. 101–234) did not 

repeal the revisions to section 1839(f) 

made by MCCA 88.) Section 1839(f) of 

the Act, referred to as the ‘‘holdharmless’’ provision, provides that if an 

individual is entitled to benefits under 

section 202 or 223 of the Act (the OldAge and Survivors Insurance Benefit 

and the Disability Insurance Benefit, 

respectively) and has the Part B 

premiums deducted from these benefit 

payments, the premium increase will be 

reduced, if necessary, to avoid causing 

a decrease in the individual’s net 

monthly payment. This decrease in 

payment occurs if the increase in the 

individual’s social security benefit due 

to the cost-of-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 Part 

B premiums for December and the 

following January are deducted from the 

respective month’s section 202 or 223 

benefits. The ‘‘hold-harmless’’ provision 

does not apply to beneficiaries who are 

required to pay an income-related 

monthly adjustment amount. 

A check for benefits under section 202 

or 223 of the Act is received in the 

month following the month for which 

the benefits are due. The Part B 

premium that is deducted from a 

particular check is the Part B payment 

for the month in which the check is 

received. Therefore, a benefit check for 

November is not received until 

December, but has December’s Part B 

premium deducted from it. 

Generally, if a beneficiary qualifies for 

hold-harmless protection, the reduced 

premium for the individual for that 

January and for each of the succeeding 

11 months is the greater of— 

• The monthly premium for January 

reduced as necessary to make the 

December monthly benefits, after the 

deduction of the Part B premium for 

January, at least equal to the preceding 

November’s monthly benefits, after the 

deduction of the Part B premium for 

December; or 

• 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 

or 223 of the Act do not include 

retroactive adjustments or payments and 

deductions on account of work. Also, 

once the monthly premium amount is 

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 Part 

B late or who have re-enrolled 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) of 

the Act are made. 

II. Provisions of the Notice 

A. Notice of Medicare Part B Monthly 

Actuarial Rates, Monthly Premium 

Rates, and Annual Deductible 

The Medicare Part B monthly 

actuarial rates applicable for 2013 are 

$209.80 for enrollees age 65 and over 

and $235.50 for disabled enrollees 

under age 65. In section II.B. of this 

notice, we present the actuarial 

assumptions and bases from which 

these rates are derived. The Part B 

standard monthly premium rate for all 

enrollees for 2013 is $104.90. The Part 

B annual deductible for 2013 is $147.00. 

Listed below are the 2013 Part B 

monthly premium rates to be paid by 

beneficiaries who file an individual tax 

return (including those who are single, 

head of household, qualifying 

widow(er) with dependent child, or 

married filing separately who lived 

apart from their spouse for the entire 

taxable year), or a joint tax return. 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 77, No. 225 / Wednesday, November 21, 2012 / Notices 69853 

Beneficiaries who file an individual tax return with 

income: Beneficiaries who file a joint tax return with income: 

Incomerelated 

monthly adjustment 

amount 

Total 

monthly 

premium 

amount 

Less than or equal to $85,000 .......................................... Less than or equal to $170,000 ....................................... $0.00 $104.90 

Greater than $85,000 and less than or equal to 

$107,000.

Greater than $170,000 and less than or equal to 

$214,000.

42.00 146.90 

Greater than $107,000 and less than or equal to 

$160,000.

Greater than $214,000 and less than or equal to 

$320,000.

104.90 209.80 

Greater than $160,000 and less than or equal to 

$214,000.

Greater than $320,000 and less than or equal to 

$428,000.

167.80 272.70 

Greater than $214,000 ...................................................... Greater than $428,000 ..................................................... 230.80 335.70 

In addition, the monthly premium 

rates to be paid by beneficiaries who are 

married and lived with their spouse at 

any time during the taxable year, but file 

a separate tax return from their spouse, 

are listed below. 

Beneficiaries who are married and lived with their spouse at any time during the year, but file a separate tax return 

from their spouse: 

Incomerelated 

monthly 

adjustment 

amount 

Total 

monthly 

premium 

amount 

Less than or equal to $85,000 ........................................................................................................................................ $0.00 $104.90 

Greater than $85,000 and less than or equal to $129,000 ............................................................................................. 167.80 272.70 

Greater than $129,000 .................................................................................................................................................... 230.80 335.70 

The Part B annual deductible for 2013 

is $147.00 for all beneficiaries. 

B. Statement of Actuarial Assumptions 

and Bases Employed in Determining the 

Monthly Actuarial Rates and the 

Monthly Premium Rate for Part B 

Beginning January 2013 

Except where noted, the actuarial 

assumptions and bases used to 

determine the monthly actuarial rates 

and the monthly premium rates for Part 

B are established by the Office of the 

Actuary in the Centers for Medicare & 

Medicaid Services. The estimates 

underlying these determinations are 

prepared by actuaries meeting the 

qualification standards and following 

the actuarial standards of practice 

established by the Actuarial Standards 

Board. 

1. Actuarial Status of the Part B Account 

in the Supplementary Medical 

Insurance Trust Fund 

Under the statute, the starting point 

for determining the standard monthly 

premium is the amount that would be 

necessary to finance Part B 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 premium rates are established 

prospectively and are, therefore, subject 

to projection error. Additionally, 

legislation enacted after the financing 

was established, but effective for the 

period in which the financing is set, 

may affect program costs. As a result, 

the income to the program may not 

equal incurred costs. Therefore, trust 

fund assets must be maintained at a 

level that is adequate to cover an 

appropriate degree of variation between 

actual and projected costs, and the 

amount of incurred, but unpaid, 

expenses. Numerous factors determine 

what level of assets is appropriate to 

cover variation between actual and 

projected costs. The three 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; (2) the likelihood and 

potential magnitude of expenditure 

changes resulting from enactment of 

legislation affecting Part B costs in a 

year subsequent to the establishment of 

financing for that year, and (3) the 

expected relationship between incurred 

and cash expenditures. These factors are 

analyzed on an ongoing basis, as the 

trends can vary over time. 

Table 1 summarizes the estimated 

actuarial status of the trust fund as of 

the end of the financing period for 2011 

and 2012. 

TABLE 1—ESTIMATED ACTUARIAL STATUS OF THE PART B ACCOUNT IN THE SUPPLEMENTARY MEDICAL INSURANCE TRUST

FUND AS OF THE END OF THE FINANCING PERIOD

Financing period ending Assets 

(millions) 

Liabilities 

(millions) 

Assets less 

liabilities 

(millions) 

December 31, 2011 ........................................................................................................................... $79,693 $15,015 $64,678 

December 31, 2012 ........................................................................................................................... 68,164 17,162 51,002 


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2. Monthly Actuarial Rate for Enrollees 

Age 65 and Older 

The monthly actuarial rate for 

enrollees age 65 and older is one-half of 

the sum of monthly amounts for: (1) The 

projected cost of benefits; and (2) 

administrative expenses for each 

enrollee age 65 and older, after 

adjustments to this sum to allow for 

interest earnings on assets in the trust 

fund and an adequate contingency 

margin. The contingency margin is an 

amount appropriate to provide for 

possible variation between actual and 

projected costs and to amortize any 

surplus assets or unfunded liabilities. 

The monthly actuarial rate for 

enrollees age 65 and older for 2013 is 

determined by first establishing perenrollee cost by type of service from 

program data through 2011 and then 

projecting these costs for subsequent 

years. The projection factors used for 

financing periods from January 1, 2010 

through December 31, 2013 are shown 

in Table 2. 

As indicated in Table 3, the projected 

monthly rate required to pay for onehalf of the total of benefits and 

administrative costs for enrollees age 65 

and over for 2013 is $198.11. Based on 

current estimates, the assets are not 

sufficient to cover the amount of 

incurred, but unpaid, expenses and to 

provide for a significant degree of 

variation between actual and projected 

costs. Thus, a positive contingency 

margin is needed to increase assets to a 

more appropriate level. The monthly 

actuarial rate of $209.80 provides an 

adjustment of $14.07 for a contingency 

margin and ¥$2.38 for interest 

earnings. 

The size of the contingency margin for 

2013 is affected by several factors. The 

largest factor involves the current law 

formula for physician fees, which is 

scheduled to result in a reduction in 

physician fees of nearly 30 percent in 

2013. For each year from 2003 through 

2012, Congress has acted to prevent 

physician fee reductions from occurring. 

In recognition of the strong possibility 

of substantial increase in Part B 

expenditures that would result from 

similar legislation to override the 

decreases in physician fees in 2013, it 

is appropriate to maintain a 

significantly larger Part B contingency 

reserve than would otherwise be 

necessary. The asset level projected for 

the end of 2012 is not adequate to 

accommodate this contingency. 

As noted, the scheduled physician fee 

schedule reductions have been 

legislatively overridden for each year 

since 2003. During this period, 

lawmakers enacted physician payment 

updates that ranged from 0 percent to 

2.2 percent; the average increase was 1 

percent per year over this period. The 

2012 Medicare Technical Review Panel 

recommended using a 1-percent 

physician fee schedule update 

assumption for alternative analysis and 

financial projection purposes, and the 

Office of the Actuary has adopted this 

recommendation. However, the 

contingency margin for the 2013 Part B 

premium has been calculated based on 

an assumption that the scheduled 

physician payment reduction for 2013 

will be legislatively changed to 0 

percent. Use of the 0-percent physician 

fee update assumption for purposes of 

the contingency margin was directed by 

the Secretary, who determines the Part 

B premium each year under section 

1839 of the Act. In view of the 

additional data that are now available, 

and the continuing uncertainty 

associated with the legislative process, 

an assessment of the reasonableness of 

this assumption and its impact on the 

adequacy of Part B assets in 2013 would 

require substantial additional time and 

analysis. Such an analysis is not feasible 

within the available time. Accordingly, 

the Office of the Actuary is unable to 

determine the reasonableness of this 

assumption for the purposes of 

determining the contingency margin. 

Another factor affecting the size of the 

contingency margin comes from section 

302 of The Budget Control Act of 2011 

(Pub. L. 112–25), which mandates a 

government-wide sequestration process 

to reduce Federal outlays. The 

sequestration process will automatically 

start in February 2013 under current 

law. Medicare benefit payments are 

subject to a maximum 2-percent 

reduction. Total Part B expenditures are 

estimated to be reduced by $4.3 billion 

in 2013 as a result of this sequestration. 

However, reductions of this dollar 

magnitude from the physician payment 

formula have been legislatively 

overridden in past years, and there is a 

possibility that the sequestration 

requirements will be modified or 

postponed before taking effect. The 

contingency margin has been adjusted 

to accommodate this possibility. 

Two other, smaller factors affect the 

contingency margin for 2013. Starting in 

2011, manufacturers and importers of 

brand-name prescription drugs have 

paid a fee that is allocated to the Part 

B account of the SMI trust. For 2013, the 

total of these brand-name drug fees is 

estimated to be $2.7 billion. The 

contingency margin has been reduced to 

account for this additional revenue. 

Another small factor impacting the 

contingency margin comes from the 

requirement that certain payment 

incentives, to encourage the 

development and use of health 

information technology (HIT) by 

Medicare physicians, are to be excluded 

from the premium determination. HIT 

bonuses or penalties will be directly 

offset through transfers with the general 

fund of the Treasury. The monthly 

actuarial rate includes an adjustment of 

¥$0.86 for HIT bonus payments in 

2013. 

The traditional goal for the Part B 

reserve has been that assets minus 

liabilities at the end of a year should 

represent between 15 and 20 percent of 

the following year’s total incurred 

expenditures. To accomplish this goal, a 

17 percent reserve has been the normal 

target used to calculate the Part B 

premium. In view of the strong 

likelihood of actual expenditures 

exceeding estimated levels, due to the 

likelihood of the enactment of 

legislation after the financing has been 

set for 2013 as a result of the scheduled 

2013 physician update and, possibly in 

addition, the scheduled 2013 

sequestration, a contingency reserve 

ratio in excess of 20 percent of the 

following year’s expenditures would 

better ensure that the assets of the Part 

B account can adequately cover the cost 

of incurred-but-not-reported benefits 

together with variations between actual 

and estimated cost levels. 

The actuarial rate of $209.80 per 

month for aged beneficiaries, as 

announced in this notice for 2013, 

reflects the combined net effect of the 

factors previously described and the 

projection assumptions listed in Table 

2. 

3. Monthly Actuarial Rate for Disabled 

Enrollees 

Disabled enrollees are those persons 

under age 65 who are enrolled in Part 

B because of entitlement to Social 

Security disability benefits for more 

than 24 months or because of 

entitlement to Medicare under the endstage renal disease (ESRD) program. 

Projected monthly costs for disabled 

enrollees (other than those with ESRD) 

are prepared in a fashion parallel to the 

projection for the aged using 

appropriate actuarial assumptions (see 

Table 2). Costs for the ESRD program are 

projected differently because of the 

different nature of services offered by 

the program. 

As shown in Table 4, the projected 

monthly rate required to pay for onehalf of the total of benefits and 

administrative costs for disabled 

enrollees for 2013 is $231.92. The 

monthly actuarial rate of $235.50 also 

provides an adjustment of ¥$4.07 for 

interest earnings and $7.65 for a 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 77, No. 225 / Wednesday, November 21, 2012 / Notices 69855 

contingency margin, reflecting the same 

factors described above for the aged 

actuarial rate. Based on current 

estimates, the assets associated with the 

disabled Medicare beneficiaries are not 

sufficient to cover the amount of 

incurred, but unpaid, expenses and to 

provide for a significant degree of 

variation between actual and projected 

costs. Thus, a positive contingency 

margin is needed to increase assets to an 

appropriate level. 

The actuarial rate of $235.50 per 

month for disabled beneficiaries, as 

announced in this notice for 2013, 

reflects the combined net effect of the 

factors described above for aged 

beneficiaries and the projection 

assumptions listed in Table 2. 

4. 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 cost growth rate 

assumptions. The results of those 

assumptions are shown in Table 5. One 

set represents increases that are lower 

and, therefore, more optimistic than the 

current estimate. The other set 

represents increases that are higher and, 

therefore, more pessimistic than the 

current estimate. The values for the 

alternative assumptions were 

determined from a statistical analysis of 

the historical variation in the respective 

increase factors. 

As indicated in Table 5, the monthly 

actuarial rates would result in an excess 

of assets over liabilities of $71,851 

million by the end of December 2013 

under the cost growth rate assumptions 

used in preparing this report and 

assuming that the provisions of current 

law are fully implemented. This 

amounts to 28.5 percent of the estimated 

total incurred expenditures for the 

following year. 

Assumptions that are somewhat more 

pessimistic (and that therefore test the 

adequacy of the assets to accommodate 

projection errors) produce a surplus of 

$38,839 million by the end of December 

2013 under current law, which amounts 

to 13.8 percent of the estimated total 

incurred expenditures for the following 

year. If the physician fee reduction and 

the scheduled 2-percent sequestration of 

Medicare expenditures were 

legislatively overridden, the ratio under 

the pessimistic assumptions would be 

very close to zero. Under fairly 

optimistic assumptions, the monthly 

actuarial rates would result in a surplus 

of $96,011 million by the end of 

December 2013, or 42.0 percent of the 

estimated total incurred expenditures 

for the following year. 

The previous analysis indicates that 

the premium and general revenue 

financing established for 2013, together 

with existing Part B account assets 

would be adequate to cover estimated 

Part B costs for 2013 under current law, 

even if actual costs prove to be 

somewhat greater than expected. 

5. Premium Rates and Deductible 

As determined in accordance with 

section 1839 of the Act, listed are the 

2013 Part B monthly premium rates to 

be paid by beneficiaries who file an 

individual tax return (including those 

who are single, head of household, 

qualifying widow(er) with dependent 

child, or married filing separately who 

lived apart from their spouse for the 

entire taxable year), or a joint tax return. 

Beneficiaries who file an individual tax return with income: Beneficiaries who file a joint tax return with income: 

Incomerelated 

monthly 

adjustment 

amount 

Total 

monthly 

premium 

amount 

Less than or equal to $85,000 .......................................... Less than or equal to $170,000 ....................................... $0.00 $104.90 

Greater than $85,000 and less than or equal to 

$107,000.

Greater than $170,000 and less than or equal to 

$214,000.

42.00 146.90 

Greater than $107,000 and less than or equal to 

$160,000.

Greater than $214,000 and less than or equal to 

$320,000.

104.90 209.80 

Greater than $160,000 and less than or equal to 

$214,000.

Greater than $320,000 and less than or equal to 

$428,000.

167.80 272.70 

Greater than $214,000 ...................................................... Greater than $428,000 ..................................................... 230.80 335.70 

In addition, the monthly premium 

rates to be paid by beneficiaries who are 

married and lived with their spouse at 

any time during the taxable year, but file 

a separate tax return from their spouse, 

are listed below. 

Beneficiaries who are married and lived with their spouse at any time during the year, but file a separate tax return 

from their spouse: 

Incomerelated 

monthly 

adjustment 

amount 

Total 

monthly 

premium 

amount 

Less than or equal to $85,000 ........................................................................................................................................ $0.00 $104.90 

Greater than $85,000 and less than or equal to $129,000 ............................................................................................. 167.80 272.70 

Greater than $129,000 .................................................................................................................................................... 230.80 335.70 

TABLE 2—PROJECTION FACTORS 1 12-MONTH PERIODS ENDING DECEMBER 31 OF 2010–2013 

[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: 

2010 ................................................... 2.5 1.4 1.8 1.4 3.4 5.1 2.4 2.2 1.0 ¥1.8 

2011 ................................................... 0.9 1.8 ¥3.9 ¥2.9 4.5 7.6 ¥1.6 4.9 4.4 0.9 

2012 ................................................... ¥1.0 2.6 4.4 6.8 3.6 9.3 0.5 5.1 8.1 2.6 

2013 ................................................... ¥28.5 8.1 ¥0.3 2.9 5.0 5.6 1.7 1.6 ¥6.4 4.3 


srobinson on DSK4SPTVN1PROD with 
69856 Federal Register / Vol. 77, No. 225 / Wednesday, November 21, 2012 / Notices 

TABLE 2—PROJECTION FACTORS 1 12-MONTH PERIODS ENDING DECEMBER 31 OF 2010–2013—Continued 

[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

Disabled: 

2010 ................................................... 2.5 2.9 2.7 ¥3.9 3.2 5.4 1.1 0.5 ¥0.1 ¥0.9 

2011 ................................................... 0.9 1.9 ¥2.2 3.7 3.5 8.3 ¥1.4 7.2 0.9 1.3 

2012 ................................................... ¥1.0 2.5 4.4 21.8 3.5 10.3 2.1 4.3 7.4 0.9 

2013 ................................................... ¥28.5 8.0 ¥0.4 2.8 4.9 5.5 2.7 1.6 ¥0.6 4.6 

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 physician’s office or an independent lab. 

5 Includes physician-administered drugs, 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 dialysis facilities, rural health clinics, Federally qualified health centers, rehabilitation and psychiatric hospitals, etc. 

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

ENDING DECEMBER 31, 2010 THROUGH DECEMBER 31, 2013 

Financing periods 

CY 2010 CY 2011 CY 2012 CY 2013 

Covered services (at level recognized): 

Physician fee schedule ............................................................................................................. 80.62 81.75 81.25 62.90 

Durable medical equipment ...................................................................................................... 8.94 8.49 8.67 8.66 

Carrier lab 1 ............................................................................................................................... 4.31 4.13 4.32 4.45 

Other carrier services 2 ............................................................................................................. 21.23 21.89 22.20 23.36 

Outpatient hospital .................................................................................................................... 32.93 34.99 37.41 39.58 

Home health ............................................................................................................................. 11.85 11.50 11.31 11.53 

Hospital lab 3 ............................................................................................................................. 3.66 3.79 3.90 3.97 

Other intermediary services 4 ................................................................................................... 14.18 14.62 15.47 14.50 

Managed care ........................................................................................................................... 54.74 57.06 61.63 64.00 

Total services .................................................................................................................... 232.47 238.22 246.16 232.95 

Cost sharing: 

Deductible ................................................................................................................................. ¥5.91 ¥6.19 ¥5.37 ¥5.62 

Coinsurance .............................................................................................................................. ¥30.91 ¥30.92 ¥31.77 ¥28.13 

HIT payment incentives ................................................................................................................... 0.00 ¥0.17 ¥0.74 ¥0.86 

Total pre-sequester benefits ............................................................................................. 195.64 200.94 208.28 198.34 

Pre-sequester administrative expenses .......................................................................................... 2.94 3.29 3.66 3.43 

Sequester ......................................................................................................................................... 0.00 0.00 0.00 ¥3.65 

Incurred expenditures ...................................................................................................................... 198.58 204.23 211.94 198.11 

Value of interest ............................................................................................................................... ¥2.74 ¥2.52 ¥2.12 ¥2.38 

Contingency margin for projection error and to amortize the surplus or deficit .............................. 25.16 28.99 ¥10.02 14.07 

Monthly actuarial rate ........................................................................................................ 221.00 230.70 199.80 209.80 

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

2 Includes physician-administered drugs, 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 dialysis facilities, rural health clinics, Federally qualified health centers, rehabilitation and psychiatric hospitals, 

etc. 

TABLE 4—DERIVATION OF MONTHLY ACTUARIAL RATE FOR DISABLED ENROLLEES FOR FINANCING PERIODS ENDING

DECEMBER 31, 2010 THROUGH DECEMBER 31, 2013 

Financing periods 

CY 2010 CY 2011 CY 2012 CY 2013 

Covered services (at level recognized): 

Physician fee schedule ............................................................................................................. 85.33 86.85 86.45 66.85 

Durable medical equipment ...................................................................................................... 16.89 16.24 16.62 16.59 

Carrier lab 1 ............................................................................................................................... 5.84 5.10 6.05 6.24 

Other carrier services 2 ............................................................................................................. 25.89 26.27 26.38 27.72 

Outpatient hospital .................................................................................................................... 46.13 49.37 53.31 56.33 

Home health ............................................................................................................................. 10.10 9.82 9.82 10.11 

Hospital lab 3 ............................................................................................................................. 5.16 5.38 5.50 5.59 

Other intermediary services 4 ................................................................................................... 41.05 41.70 42.66 42.61 

Managed care ........................................................................................................................... 40.77 43.51 47.40 48.99 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 77, No. 225 / Wednesday, November 21, 2012 / Notices 69857 

TABLE 4—DERIVATION OF MONTHLY ACTUARIAL RATE FOR DISABLED ENROLLEES FOR FINANCING PERIODS ENDING

DECEMBER 31, 2010 THROUGH DECEMBER 31, 2013—Continued 

Financing periods 

CY 2010 CY 2011 CY 2012 CY 2013 

Total services .................................................................................................................... 277.16 284.24 294.20 281.03 

Cost sharing: 

Deductible ................................................................................................................................. ¥5.55 ¥5.81 ¥5.05 ¥5.28 

Coinsurance .............................................................................................................................. ¥45.71 ¥46.19 ¥46.76 ¥42.62 

HIT payment incentives ................................................................................................................... 0.00 ¥0.18 ¥0.77 ¥0.90 

Total pre-sequester benefits ............................................................................................. 225.90 232.05 241.62 232.23 

Pre-sequester administrative expenses .......................................................................................... 3.38 3.80 4.26 3.97 

Sequester ......................................................................................................................................... 0.00 0.00 0.00 ¥4.27 

Incurred expenditures ...................................................................................................................... 229.28 235.85 245.87 231.92 

Value of interest ............................................................................................................................... ¥4.05 ¥5.05 ¥4.52 ¥4.07 

Contingency margin for projection error and to amortize the surplus or deficit .............................. 45.17 35.49 ¥48.85 7.65 

Monthly actuarial rate ........................................................................................................ 270.40 266.30 192.50 235.50 

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

2 Includes physician-administered drugs, 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 dialysis facilities, rural health clinics, Federally qualified health centers, rehabilitation and psychiatric hospitals, 

etc. 

TABLE 5—ACTUARIAL STATUS OF THE PART B ACCOUNT IN THE SMI TRUST FUND UNDER THREE SETS OF ASSUMPTIONS

FOR FINANCING PERIODS THROUGH DECEMBER 31, 2013 

As of December 31, 2011 2012 2013 

This projection: 

Actuarial status (in millions): 

Assets ........................................................................................................................................................... 79,693 68,164 88,193 

Liabilities ....................................................................................................................................................... 15,015 17,162 16,341 

Assets less liabilities ..................................................................................................................................... 64,678 51,002 71,851 

Ratio (in percent) 1 ............................................................................................................................................... 26.6 21.7 28.5 

Low cost projection: 

Actuarial status (in millions): 

Assets ........................................................................................................................................................... 79,693 77,325 111,554 

Liabilities ....................................................................................................................................................... 15,015 16,144 15,542 

Assets less liabilities ..................................................................................................................................... 64,678 61,180 96,011 

Ratio (in percent) 1 ........................................................................................................................................ 27.8 28.2 42.0 

High cost projection: 

Actuarial status (in millions): 

Assets ........................................................................................................................................................... 79,693 57,291 55,997 

Liabilities ....................................................................................................................................................... 15,015 18,370 17,158 

Assets less liabilities ..................................................................................................................................... 64,678 38,921 38,839 

Ratio (in percent)1 ........................................................................................................................................ 25.3 15.2 13.8 

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. 

These estimates are based on the assumption that all provisions of current law will be implemented in full, including (i) the approximately 28.0- 

percent reduction in Medicare payment rates to physicians required by the statutory ‘‘sustainable growth rate’’ formula, and (ii) the sequestration 

of up to 2 percent of all Medicare payments to providers and plans as required by the Budget Control Act of 2011. Under the intermediate projection assumptions (as shown in table 2), if the 2013 physician payment reduction were overridden through new legislation, then the Part B 

asset reserve ratio for December 31, 2013 would be approximately 9.3 percentage points lower than shown here. If, in addition, the 2013 sequestration were similarly overridden, then the reserve ratios at the end of 2013 would be reduced by approximately another 2 percentage 

points. The impacts of these potential overrides on the 2013 reserve ratio for the low cost and high cost projections would be similar. 

III. Regulatory Impact Analysis 

A. Statement of Need 

Section 1839 of the Act requires us to 

annually announce (that is by 

September 30th of each year) the Part B 

monthly actuarial rates for aged and 

disabled beneficiaries as well as the 

monthly Part B premium. We also 

announce the Part B annual deductible 

because its determination is directly 

linked to the aged actuarial rate. 

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 


srobinson on DSK4SPTVN1PROD with 
69858 Federal Register / Vol. 77, No. 225 / Wednesday, November 21, 2012 / Notices 

(August 4, 1999) and the Congressional 

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

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). A regulatory impact analysis 

(RIA) must be prepared for major notice 

with economically significant effects 

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

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses, 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 $7.0 million to $34.5 million in any 

1 year. Individuals and States are not 

included in the definition of a small 

entity. This notice will not have a 

significant impact on a substantial 

number of small businesses or other 

small entities. Therefore, 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 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 a substantial 

number of small entities or on the 

operations of a substantial number of 

small rural hospitals. Therefore, we are 

not preparing analyses for either the 

RFA or section 1102(b) of the Act. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any 1 year of $100 

million in 1995 dollars, updated 

annually for inflation. In 2012, that 

threshold is approximately $139 

million. This notice has no 

consequential effect on State, local, or 

tribal governments. We believe the 

private sector costs of this notice fall 

below this threshold as well. 

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 compliance 

costs on State and local 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 

2013 are $209.80 for enrollees age 65 

and over and $235.50 for disabled 

enrollees under age 65. It also 

announces the 2013 monthly Part B 

premium rates to be paid by 

beneficiaries who file an individual tax 

return (including those who are single, 

head of household, qualifying 

widow(er) with a dependent child, or 

married filing separately who lived 

apart from their spouse for the entire 

taxable year), or a joint tax return. 

Beneficiaries who file an individual tax return with income: Beneficiaries who file a joint tax return with income: 

Incomerelated 

monthly 

adjustment 

amount 

Total 

monthly 

premium 

amount 

Less than or equal to $85,000 .......................................... Less than or equal to $170,000 ....................................... $0.00 $104.90 

Greater than $85,000 and less than or equal to 

$107,000.

Greater than $170,000 and less than or equal to 

$214,000.

42.00 146.90 

Greater than $107,000 and less than or equal to 

$160,000.

Greater than $214,000 and less than or equal to 

$320,000.

104.90 209.80 

Greater than $160,000 and less than or equal to 

$214,000.

Greater than $320,000 and less than or equal to 

$428,000.

167.80 272.70 

Greater than $214,000 ...................................................... Greater than $428,000 ..................................................... 230.80 335.70 

In addition, the monthly premium 

rates to be paid by beneficiaries who are 

married and lived with their spouse at 

any time during the taxable year, but file 

a separate tax return from their spouse, 

are also announced and listed in the 

following chart. 

Beneficiaries who are married and lived with their spouse at any time during the year, but file a separate tax return 

from their spouse: 

Incomerelated 

monthly 

adjustment 

amount 

Total 

monthly 

premium 

amount 

Less than or equal to $85,000 ........................................................................................................................................ $0.00 $104.90 

Greater than $85,000 and less than or equal to $129,000 ............................................................................................. 167.80 272.70 

Greater than $129,000 .................................................................................................................................................... 230.80 335.70 

The standard Part B premium rate of 

$104.90 is 5 percent higher than the 

$99.90 premium rate for 2012. We 

estimate that this increase will cost 

approximately 48.1 million Part B 

enrollees about $2.4 billion for 2013. 

Therefore, this notice is a major rule as 

defined in 5 U.S.C. 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. 

IV. 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 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 77, No. 225 / Wednesday, November 21, 2012 / Notices 69859 

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, for good cause, 

that prior notice and comment are 

impracticable, unnecessary, or contrary 

to the public interest. The statute 

establishes the time period for which 

the premium rates will apply, and 

delaying publication of the Part B 

premium rate such that it would not be 

published before that time would be 

contrary to the public interest. 

Moreover, we find that notice and 

comment are unnecessary because the 

formulas used to calculate the Part B 

premiums are statutorily directed. 

Therefore, we find good cause to waive 

publication of a proposed notice and 

solicitation of public comments. 

(Catalog of Federal Domestic Assistance 

Program No. 93.774, Medicare— 

Supplementary Medical Insurance Program) 

Dated: November 15, 2012. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: November 15, 2012. 

Kathleen Sebelius, 

Secretary. Department of Health and Human 

Services. 

[FR Doc. 2012–28275 Filed 11–16–12; 11:15 am] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[CMS–8047–N] 

RIN 0938–AR15 

Medicare Program; Part A Premiums 

for CY 2013 for the Uninsured Aged 

and for Certain Disabled Individuals 

Who Have Exhausted Other 

Entitlement 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Notice. 

SUMMARY: This annual notice announces 

Medicare’s Hospital Insurance (Part A) 

premium for uninsured enrollees in 

calendar year (CY) 2013. This premium 

is paid by enrollees age 65 and over who 

are not otherwise eligible for benefits 

under Medicare Part A (hereafter known 

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

disabled individuals who have 

exhausted other entitlement. The 

monthly Part A premium for the 12 

months beginning January 1, 2013, for 

these individuals will be $441. The 

reduced premium for certain other 

individuals as described in this notice 

will be $243. 

DATES: This notice is effective on 

January 1, 2013. 

FOR FURTHER INFORMATION CONTACT: 

Clare McFarland, (410) 786–6390. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Section 1818 of the Social Security 

Act (the Act) provides for voluntary 

enrollment in the Medicare Hospital 

Insurance Program (Medicare Part A), 

subject to payment of a monthly 

premium, of certain persons aged 65 

and older who are uninsured under the 

Old-Age, Survivors, and Disability 

Insurance (OASDI) program or the 

Railroad Retirement Act and do not 

otherwise meet the requirements for 

entitlement to Medicare Part A. These 

‘‘uninsured aged’’ individuals are 

uninsured under the OASDI program or 

the Railroad Retirement Act, because 

they do not have 40 quarters of coverage 

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

married to someone who did). (Persons 

insured under the OASDI program or 

the Railroad Retirement Act and certain 

others do not have to pay premiums for 

Medicare Part A.) 

Section 1818A of the Act provides for 

voluntary enrollment in Medicare Part 

A, subject to payment of a monthly 

premium for certain disabled 

individuals who have exhausted other 

entitlement. These are individuals who 

were entitled to coverage due to a 

disabling impairment under section 

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

entitled to disability benefits and free 

Medicare Part A coverage because they 

have gone back to work and their 

earnings exceed the statutorily defined 

‘‘substantial gainful activity’’ amount 

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

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

specifies that the provisions relating to 

premiums under section 1818(d) 

through section 1818(f) of the Act for 

the aged will also apply to certain 

disabled individuals as described above. 

Section 1818(d) of the Act requires us 

to estimate, on an average per capita 

basis, the amount to be paid from the 

Federal Hospital Insurance Trust Fund 

for services incurred in the impending 

calendar year (CY) (including the 

associated administrative costs) on 

behalf of individuals aged 65 and over 

who will be entitled to benefits under 

Medicare Part A. We must then 

determine the monthly actuarial rate for 

the following year (the per capita 

amount estimated above divided by 12) 

and publish the dollar amount for the 

monthly premium in the succeeding CY. 

If the premium is not a multiple of $1, 

the premium is rounded to the nearest 

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

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

the next highest $1). 

Section 13508 of the Omnibus Budget 

Reconciliation Act of 1993 (Pub. L. 103– 

66) amended section 1818(d) of the Act 

to provide for a reduction in the 

premium amount for certain voluntary 

enrollees (section 1818 and section 

1818A of the Act). The reduction 

applies to an individual who is eligible 

to buy into the Medicare Part A program 

and who, as of the last day of the 

previous month— 

• Had at least 30 quarters of coverage 

under Title II of the Act; 

• Was married, and had been married 

for the previous 1-year period, to a 

person who had at least 30 quarters of 

coverage; 

• Had been married to a person for at 

least 1 year at the time of the person’s 

death if, at the time of death, the person 

had at least 30 quarters of coverage; or 

• Is divorced from a person and had 

been married to the person for at least 

10 years at the time of the divorce if, at 

the time of the divorce, the person had 

at least 30 quarters of coverage. 

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

specifies that the premium that these 

individuals will pay for CY 2013 will be 

equal to the premium for uninsured 

aged enrollees reduced by 45 percent. 

II. Monthly Premium Amount for CY 

2013 

The monthly premium for the 

uninsured aged and certain disabled 

individuals who have exhausted other 

entitlement for the 12 months beginning 

January 1, 2013, is $441. 

The monthly premium for those 

individuals subject to the 45 percent 

reduction in the monthly premium is 

$243. 

III. Monthly Premium Rate Calculation 

As discussed in section I of this 

notice, the monthly Medicare Part A 

premium is equal to the estimated 

monthly actuarial rate for CY 2013 

rounded to the nearest multiple of $1 

and equals one-twelfth of the average 

per capita amount, which is determined 

by projecting the number of Part A 

enrollees aged 65 years and over as well 

as the benefits and administrative costs 

that will be incurred on their behalf. 


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