Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices 55897 

premium is $393. The full monthly 

premium reduced by 45 percent is $216. 

IV. Costs to Beneficiaries 

The CY 2006 premium of $393 is 

about 5 percent higher than the CY 2005 

premium of $375. 

We estimate that approximately 

523,000 enrollees will voluntarily enroll 

in Medicare Part A by paying the full 

premium. We estimate an additional 

1,000 enrollees will pay the reduced 

premium. We estimate that the aggregate 

cost to enrollees paying these premiums 

will be about $113 million in CY 2006 

over the amount that they paid in CY 

2005. 

V. Waiver of Proposed Notice and 

Comment Period 

We are not using notice and comment 

rulemaking in this notification of Part A 

premiums for CY 2006, as that 

procedure is unnecessary because of the 

lack of discretion in the statutory 

formula that is used to calculate the 

premium and the solely ministerial 

function that this notice serves. The 

Administrative Procedure Act (APA) 

permits agencies to waive notice and 

comment rulemaking when notice and 

public comment thereon are 

unnecessary. On this basis, we waive 

publication of a proposed notice and a 

solicitation of public comments. 

VI. Regulatory Impact Statement 

We have examined the impacts of this 

notice as required by Executive Order 

12866 (September 1993, Regulatory 

Planning and Review), the Regulatory 

Flexibility Act (RFA) (September 19, 

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

the Act, the Unfunded Mandates Reform 

Act of 1995 (Pub. L. 104–4), and 

Executive Order 13132. 

Executive Order 12866 directs 

agencies to assess all costs and benefits 

of available regulatory alternatives and, 

if regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety effects, distributive impacts, 

and equity). As stated in section IV of 

this notice, we estimate that the overall 

effect of these changes in the Part A 

premium will be a cost to voluntary 

enrollees (section 1818 and section 

1818A of the Act) of about $113 million. 

Therefore, this notice is a major rule as 

defined in Title 5, United States Code, 

section 804(2) and is an economically 

significant rule under Executive Order 

12866. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and 

government agencies. Most hospitals 

and most other providers and suppliers 

are small entities, either by nonprofit 

status or by having revenues of $6 

million to $29 million in any 1 year. 

Individuals and States are not included 

in the definition of a small entity. We 

have determined that this notice will 

not have a significant economic impact 

on a substantial number of small 

entities. Therefore, we are not preparing 

an analysis for the RFA. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area (MSA) 

and has fewer than 100 beds. 

We have determined that this notice 

will not have a significant effect on the 

operations of a substantial number of 

small rural hospitals. Therefore, we are 

not preparing an analysis for section 

1102(b) of the Act. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule that may result in expenditure in 

any 1 year by State, local, or tribal 

governments, in the aggregate, or by the 

private sector, of $110 million. This 

notice has no consequential effect on 

State, local, or tribal governments or on 

the private sector. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it publishes a proposed 

rule (and subsequent final rule) that 

imposes substantial direct requirement 

costs on State and local governments, 

preempts State law, or otherwise has 

Federalism implications. This notice 

will not have a substantial effect on 

State or local governments. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

Authority: Sections 1818(d)(2) and 

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

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

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance) 

Dated: September 12, 2005. 

Mark B. McClellan, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Dated: September 15, 2005. 

Michael O. Leavitt, 

Secretary. 

[FR Doc. 05–18839 Filed 9–16–05; 4:00 pm] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[CMS–8027–N] 

RIN 0938–AO02 

Medicare Program; Medicare Part B 

Monthly Actuarial Rates, Premium 

Rate, and Annual Deductible for 

Calendar Year 2006 

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 

Insurance (SMI) program beginning 

January 1, 2006. In addition, this notice 

announces the monthly premium for 

aged and disabled beneficiaries and the 

annual deductible to be paid during 

2006. The monthly actuarial rates for 

2006 are $176.90 for aged enrollees and 

$203.70 for disabled enrollees. The 

monthly Part B premium rate for 2006 

is $88.50 which is equal to 50 percent 

of the monthly actuarial rate for aged 

enrollees or about 25 percent of Part B 

costs for aged enrollees. (The 2005 

premium rate was $78.20.) The Part B 

deductible for 2006 is $124.00. 

EFFECTIVE DATE: January 1, 2006. 

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 

55898 Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices 

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 provided for 

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 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 the expected 

average monthly cost of Part B for each 

aged enrollee (age 65 or over) and onehalf 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 

$110.00, 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 2006 Part B 

deductible is calculated by multiplying 

the 2005 deductible by the ratio of the 

2006 aged actuarial rate over the 2005 

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 

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 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, 2004, and 2005, 

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 

Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices 55899 

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. 

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, that is, if the 

beneficiary was in current payment 

status for November and December of 

the previous year, the reduced premium 

for the individual for that January and 

for 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—

• 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 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) of 

the Act are made. 

II. Provisions of the Notice 

A. Notice of Medicare Part B Monthly 

Actuarial Rates, Monthly Premium Rate, 

and Annual Deductible 

The Medicare Part B monthly 

actuarial rates applicable for 2006 are 

$176.90 for enrollees age 65 and over, 

and $203.70 for disabled enrollees 

under age 65. Subsection B of this 

notice below, presents the actuarial 

assumptions and bases from which 

these rates are derived. The Part B 

monthly premium rate for 2006 is 

$88.50. The Part B annual deductible for 

2006 is $124.00. 

B. Statement of Actuarial Assumptions 

and Bases Employed in Determining the 

Monthly Actuarial Rates and the 

Monthly Premium Rate for Part B 

Beginning January 2006 

1. Actuarial Status of the Part B Account 

in the Supplementary Medical 

Insurance Trust Fund 

Under the statute, the starting point 

for determining the 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 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 a 

moderate 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 a moderate degree of variation 

between actual and projected costs. The 

two 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. Both factors are 

analyzed on an ongoing basis, 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 2004 

and 2005. 

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) 

Dec. 31, 2004 .............................................................................................................................. $19,430 $9,920 $9,510 

Dec. 31, 2005 .............................................................................................................................. f21,349 9,398 11,951 

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: (a) the 

projected cost of benefits; and (b) 

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 a 

moderate degree of variation between 

actual and projected costs and to 

amortize any surplus or unfunded 

liabilities. 

55900 Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices 

The monthly actuarial rate for 

enrollees age 65 and older for 2006 is 

determined by first establishing perenrollee cost by type of service from 

program data through 2004 and then 

projecting these costs for subsequent 

years. The projection factors used for 

financing periods from January 1, 2003 

through December 31, 2006 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 2006 is $166.33. The 

monthly actuarial rate of $176.90 also 

provides an adjustment of ¥$1.63 for 

interest earnings and $12.20 for a 

contingency margin. Based on current 

estimates, 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. This situation has arisen primarily 

due to faster than expected expenditure 

growth, along with the enactment of the 

Consolidated Appropriations Resolution 

(Pub. L. 108–7) in February 2003 and 

the Medicare Modernization Act in 

December 2003. Each of these two 

legislative packages was enacted after 

the establishment of the Part B premium 

(for 2003 and 2004, respectively). 

Because each Act raised Part B 

expenditures subsequent to the setting 

of the premium, total Part B revenues 

from premiums and general fund 

transfers have been inadequate to cover 

total costs. As a consequence, the assets 

of the Part B account in the 

Supplementary Medical Insurance trust 

fund were drawn on to cover the 

shortfall. Due to faster than expected 

growth in Part B expenditures, only a 

minimal increase in assets occurred in 

2005, despite a large increase in the 

2005 Part B premium, in an attempt to 

partially replenish the assets in the Part 

B account. Therefore, the remaining 

level of assets is inadequate for 

contingency purposes. 

The contingency margin included in 

establishing the 2006 actuarial rate and 

beneficiary premiums takes another step 

towards restoring the assets to an 

adequate level. In an effort to balance 

the financial integrity of the Part B 

account with the increase in the Part B 

premium, the financing rates for 2006 

are set to increase the asset level in the 

Part B account towards the fully 

adequate level, with the expectation that 

future financing rates will need to 

include contingency margins to fully 

restore the assets. 

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 disability 

benefits for more than 24 months or 

because of entitlement to Medicare 

under the end-stage 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 2006 is $191.42. The 

monthly actuarial rate of $203.70 also 

provides an adjustment of ¥$2.91 for 

interest earnings and $15.19 for a 

contingency margin. 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 moderate degree of 

variation between actual and projected 

costs. Thus, a positive contingency 

margin is needed to increase assets to a 

more appropriate level. 

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 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. 

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 $25,557 million by the end 

of December 2006. This amounts to 15.0 

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 

$12,409 million by the end of December 

2006, which amounts to 6.5 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 $38,276 million by the end 

of December 2006, or 25.2 percent of the 

estimated total incurred expenditures 

for the following year. 

5. Premium Rate and Deductible 

As determined by section 1839(a)(3) 

of the Act, the monthly premium rate 

for 2006, for both aged and disabled 

enrollees, is $88.50. In addition, as 

specified by section 1833(b) of the Act, 

the annual deductible for 2006 is 

$124.00. 

TABLE 2.—PROJECTION FACTORS 1 12-MONTH PERIODS ENDING DECEMBER 31 OF 2003–2006 

[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 

2003 .................. 1.4 4.4 14.2 6.8 16.2 5.3 2.9 7.7 3.0 3.3 

2004 .................. 3.8 6.2 0.6 7.8 7.8 10.1 13.0 7.3 15.2 12.3 

2005 .................. 1.5 5.6 ¥2.3 7.2 4.7 9.2 10.4 9.0 13.1 8.7 

2006 .................. ¥4.5 6.4 ¥0.3 4.5 10.4 7.9 7.8 4.9 1.7 11.2 

Disabled 

2003 .................. 1.4 5.3 16.2 6.3 24.8 5.6 22.3 6.9 ¥2.5 ¥1.9 

2004 .................. 3.8 6.5 1.5 10.1 14.8 12.7 11.8 9.6 0.5 4.8 

2005 .................. 1.5 6.0 ¥1.8 8.7 16.7 8.8 10.8 10.8 13.9 6.0 

Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices 55901 

TABLE 2.—PROJECTION FACTORS 1 12-MONTH PERIODS ENDING DECEMBER 31 OF 2003–2006—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

2006 .................. ¥4.5 6.4 ¥0.3 4.3 9.0 7.8 7.9 4.9 ¥1.6 11.1 

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, 2003 THROUGH DECEMBER 31, 2006 

Financing periods 

CY 2003 CY 2004 CY 2005 CY 2006 

Covered services (at level recognized): 

Physician fee schedule ............................................................................................. 69.32 76.40 80.84 78.53 

Durable medical equipment ...................................................................................... 9.73 9.78 9.44 8.99 

Carrier lab 1 ............................................................................................................... 3.20 3.45 3.65 3.65 

Other carrier services 2 ............................................................................................. 17.62 18.99 19.64 20.72 

Outpatient hospital .................................................................................................... 23.97 26.39 28.45 29.33 

Home health ............................................................................................................. 5.90 6.66 7.27 7.49 

Hospital lab 3 ............................................................................................................. 2.51 2.70 2.90 2.91 

Other intermediary services 4 ................................................................................... 9.44 10.88 12.15 11.81 

Managed care ........................................................................................................... 20.06 22.55 26.24 36.00 

Total services .................................................................................................... 5 161.76 5 177.80 5 190.58 199.43 

Cost-sharing: 

Deductible ................................................................................................................. ¥4.07 ¥4.40 ¥4.48 –5.04 

Coinsurance .............................................................................................................. ¥28.64 ¥30.87 ¥32.64 ¥30.73 

Total benefits ..................................................................................................... 129.05 142.53 153.47 163.66 

Administrative expenses .................................................................................................. 2.44 3.01 4.21 2.67 

Incurred expenditures ...................................................................................................... 131.49 145.55 157.67 166.33 

Value of interest ............................................................................................................... ¥2.30 ¥1.63 ¥1.27 ¥1.63 

Contingency margin for projection error and to amortize the surplus or deficit .............. ¥10.49 ¥10.71 0.00 12.20 

Monthly actuarial rate ...................................................................................................... 118.70 133.20 156.40 176.90 

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. 5 Includes transfers to Medicaid. Section 1933(c)(2) of the Act, as added by section 4732(c) of the BBA, allocates an amount to be transferred 

from the Part B account in the SMI trust fund to the state Medicaid programs. This transfer is for the purpose of paying the Part B premiums for 

certain low-income beneficiaries. It is not a benefit expenditure but is used in determining the Part B actuarial rates since it is an expenditure of 

the trust fund. 

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

DECEMBER 31, 2003 THROUGH DECEMBER 31, 2006 

Financing periods 

CY 2003 CY 2004 CY 2005 CY 2006 

Covered services (at level recognized): 

Physician fee schedule ............................................................................................. 70.61 78.23 83.54 83.06 

Durable medical equipment ...................................................................................... 16.38 16.64 16.26 15.86 

Carrier lab 1 ............................................................................................................... 3.80 4.21 4.59 4.69 

Other carrier services 2 ............................................................................................. 20.01 22.85 26.38 28.17 

Outpatient hospital .................................................................................................... 31.90 35.90 38.67 40.80 

Home health ............................................................................................................. 4.72 5.26 5.78 6.11 

Hospital lab 3 ............................................................................................................. 3.74 4.11 4.51 4.62 

Other intermediary services 4 ................................................................................... 35.02 37.46 39.70 39.83 

55902 Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices 

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

DECEMBER 31, 2003 THROUGH DECEMBER 31, 2006—Continued 

Financing periods 

CY 2003 CY 2004 CY 2005 CY 2006 

Managed care ........................................................................................................... 9.77 10.57 12.26 17.10 

Total services .................................................................................................... 5 195.94 5 215.24 5 231.68 240.14 

Cost-sharing: 

Deductible ................................................................................................................. ¥3.78 ¥3.79 ¥4.17 ¥4.70 

Coinsurance .............................................................................................................. ¥40.38 ¥43.66 ¥47.02 ¥47.09 

Total benefits ..................................................................................................... 151.78 167.79 180.49 188.36 

Administrative expenses .................................................................................................. 2.88 6 7.83 4.66 3.07 

Incurred expenditures ...................................................................................................... 154.66 175.62 185.15 191.42 

Value of interest ............................................................................................................... ¥1.22 ¥1.37 ¥1.75 ¥2.91 

Contingency margin for projection error and to amortize the surplus or deficit .............. ¥12.43 1.25 8.40 15.19 

Monthly actuarial rate ...................................................................................................... 141.00 175.50 191.80 203.70 

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. 5 Includes transfers to Medicaid. Section 1933(c)(2) of the Act, as added by section 4732(c) of the BBA, allocates an amount to be transferred 

from the Part B account in the SMI trust fund to the state Medicaid programs. This transfer is for the purpose of paying the Part B premiums for 

certain low-income beneficiaries. It is not a benefit expenditure but is used in determining the Part B actuarial rates since it is an expenditure of 

the trust fund. 6 Includes payment of estimated contingent liability payable to States (to reimburse them for payments they have made on behalf of beneficiaries) for probable unasserted claims that resulted from processing errors where incorrect Medicare eligibility determinations were made. 

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, 2006 

As of December 31 2004 2005 2006 

This projection: 

Actuarial status (in millions): 

Assets ......................................................................................................................................... 19,430 21,349 34,766 

Liabilities ..................................................................................................................................... 9,920 9,398 9,209 

Assets less liabilities ................................................................................................................... 9,510 11,951 25,557 

Ratio (in percent) 1 ............................................................................................................................. 6 .2 7 .3 15 .0 

Low cost projection: 

Actuarial status (in millions): 

Assets ......................................................................................................................................... 19,430 21,349 46,939 

Liabilities ..................................................................................................................................... 9,920 8,596 8,664 

Assets less liabilities ................................................................................................................... 9,510 12,753 38,276 

Ratio (in percent) 1 ............................................................................................................................. 6 .5 8 .5 25 .2 

High cost projection: 

Actuarial status (in millions): 

Assets ......................................................................................................................................... 19,430 21,349 22,140 

Liabilities ..................................................................................................................................... 9,920 10,234 9,730 

Assets less liabilities ................................................................................................................... 9,510 11,114 12,409 

Ratio (in percent) 1 ............................................................................................................................. 5 .9 6 .3 6 .5 

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. 

III. Regulatory Impact Analysis 

We have examined the impact of this 

notice as required by Executive Order 

12866 (September 1993, Regulatory 

Planning and Review) and the 

Regulatory Flexibility Act (RFA) 

(September 19, 1980, Pub. L. 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 small 

governmental jurisdictions. Most 

hospitals and most other providers and 

suppliers are small entities, either by 

nonprofit status or by having revenues 

of $6 million to $29 million in any 1- 

year. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. 

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 

Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices 55903 

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 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule that may result in expenditure in 

any 1 year by State, local, or tribal 

governments, in the aggregate, or by the 

private sector, of $110 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 

2006 are $176.90 for enrollees age 65 

and over and $203.70 for disabled 

enrollees under age 65. It also 

announces that the monthly Part B 

premium rate for calendar year 2006 is 

$88.50 and that the Part B deductible for 

calendar year 2006 is $124.00. The Part 

B premium rate of $88.50 is 13.2 percent 

higher than the $78.20 premium rate for 

2005. We estimate that this increase will 

cost approximately 40 million Part B 

enrollees about $4.9 billion for 2006. In 

addition, we estimate that the increase 

in the annual deductible will cost 

approximately $0.4 billion in 2006. 

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. 

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 

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. We find that the 

procedure for notice and comment is 

unnecessary because the formula used 

to calculate the Part B premium is 

statutorily directed, and we can exercise 

no discretion in applying that formula. 

Moreover, 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. Therefore, we find 

good cause to waive publication of a 

proposed notice and solicitation of 

public comments. 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: September 12, 2005. 

Mark B. McClellan, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: September 15, 2005. 

Michael O. Leavitt, 

Secretary. 

[FR Doc. 05–18837 Filed 9–16–05; 4 pm] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[CMS–1269–N5] 

Medicare Program; Emergency Medical 

Treatment and Labor Act (EMTALA) 

Technical Advisory Group (TAG) 

Meeting—October 26, 2005 Through 

October 28, 2005 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Notice of meeting. 

SUMMARY: In accordance with section 

10(a) of the Federal Advisory Committee 

Act (FACA) (5 U.S.C. Appendix 2), this 

notice announces the third meeting of 

the Emergency Medical Treatment and 

Labor Act (EMTALA) Technical 

Advisory Group (TAG). The purpose of 

the EMTALA TAG is to review 

regulations affecting hospital and 

physician responsibilities under 

EMTALA to individuals who come to a 

hospital seeking examination or 

treatment for medical conditions. The 

primary purpose of the third meeting is 

to enable the EMTALA TAG to hear 

additional testimony and further 

consider written responses from 

medical societies and other 

organizations on specific issues 

considered by the TAG at previous 

meetings. However, the public is 

permitted to attend this meeting and, to 

the extent that time permits and at the 

discretion of the Chairperson, the 

EMTALA TAG may hear comments 

from the floor. 

DATES: Meeting Date: The meetings of 

the EMTALA TAG announced in this 

notice are as follows: Wednesday, 

October 26, 2005, 9 a.m. to 5 p.m. e.s.t.; 

Thursday, October 27, 2005, 11 a.m. to 

5 p.m. e.s.t.; Friday, October 28, 2005, 

9 a.m. to 12 noon e.s.t. 

Registration Deadline: All individuals 

must register to attend this meeting. 

Individuals who wish to attend the 

meeting but do not wish to present 

testimony must register by October 19, 

2005. Individuals who wish both to 

attend the meeting and to present their 

testimony must register by October 5, 

2005, and must submit copies of their 

testimony in writing by October 12, 

2005. 

Comment Deadline: Written 

comments/statements to be presented to 

the EMTALA TAG must be received by 

October 12, 2005. 

Special Accommodations: Individuals 

requiring sign-language interpretation or 

other special accommodations should 

send a request to these services to 

Beverly J. Parker by 5 p.m., October 12, 

2005 at address listed below. 

ADDRESSES: Meeting Address: The 

EMTALA TAG meeting will be held in 

the Multipurpose Room at the CMS 

Headquarters (Central Bldg), 7500 

Security Boulevard, Baltimore, MD 

21244–1850. 

Mailing and E-mail Addresses for 

Inquiries or Comments: Inquiries or 

comments regarding this meeting may 

be sent to—Beverly J. Parker, Division of 

Acute Care, Centers for Medicare & 

Medicaid Services, Mail Stop C4–08–06, 

7500 Security Boulevard, Baltimore, MD 

21244–1850. Inquiries or comments may 

also be e-mailed to 

Beverly.Parker@cms.hhs.gov or 

EMTALATAG@cms.hhs.gov. 

Web Site Address for Additional 

Information: For additional information 

on the EMTALA TAG meeting agenda 

topics, updated activities, and to obtain 

Charter copies, please search our 

Internet Web site at: http://