[Federal Register Volume 73, Number 186 (Wednesday, September 24, 2008)]
[Notices]
[Pages 55089-55096]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-22314]


-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-8036-N]
RIN 0938-APOO


Medicare Program; Medicare Part B Monthly Actuarial Rates, 
Premium Rate, and Annual Deductible Beginning January 1, 2009

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, 2009. 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 2009 are $192.70 for aged enrollees and 
$224.20 for disabled enrollees. The standard monthly Part B premium 
rate for 2009 is $96.40, 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 
2008 standard premium rate was also $96.40.) The Part B deductible for 
2009 is $135.00 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: Effective Date: January 1, 2009.

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 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 by 
payments from the Supplementary Medical Insurance Fund.
    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 one-
half 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 2009 
Part B deductible is calculated by multiplying the 2008 deductible by 
the ratio of the 2009 aged actuarial rate over the 2008 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

[[Page 55090]]

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 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 2009, $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 will 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, once the 
adjustments are fully phased in, and depending on income and tax filing 
status, a beneficiary could 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 will continue 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 2007, 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 ``hold-harmless'' 
provision, provides that if an individual is entitled to benefits under 
section 202 or 223 of the Act (the Old-Age and Survivors Insurance 
Benefit and the Disability Insurance Benefit, respectively) and has the 
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, 
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--
    <bullet> 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
    <bullet> The monthly premium for that individual for that December.
    <bullet> In determining the premium limitations under section 
1839(f) of the Act, the monthly benefits to which an

[[Page 55091]]

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.
    <bullet> 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 2009 are 
$192.70 for enrollees age 65 and over and $224.20 for disabled 
enrollees under age 65. Section II.B. of this notice below, presents 
the actuarial assumptions and bases from which these rates are derived. 
The Part B standard monthly premium rate for 2009 is $96.40. The Part B 
annual deductible for 2009 is $135.00. Listed below are the 2009 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.

----------------------------------------------------------------------------------------------------------------
                                                                                  Income-related
   Beneficiaries who file an individual tax      Beneficiaries who file a joint       monthly      Total monthly
              return with income:                    tax return with income:        adjustment    premium amount
                                                                                      amount
----------------------------------------------------------------------------------------------------------------
Less than or equal to $85,000.................  Less than or equal to $170,000..           $0.00          $96.40
Greater than $85,000 and less than or equal to  Greater than $170,000 and less             38.50          134.90
 $107,000.                                       than or equal to $214,000.
Greater than $107,000 and less than or equal    Greater than $214,000 and less             96.30          192.70
 to $160,000.                                    than or equal to $320,000.
Greater than $160,000 and less than or equal    Greater than $320,000 and less            154.10          250.50
 to $213,000.                                    than or equal to $426,000.
Greater than $213,000.........................  Greater than $426,000...........          211.90          308.30
----------------------------------------------------------------------------------------------------------------

    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.

------------------------------------------------------------------------
                                          Income-related
 Beneficiaries who are married and lived      monthly
with their spouse at any time during the    adjustment     Total monthly
  year, but file a separate tax return        amount      premium amount
           from their spouse:
------------------------------------------------------------------------
Less than or equal to $85,000...........           $0.00          $96.40
Greater than $85,000 and less than or             154.10          250.50
 equal to $128,000......................
Greater than $128,000...................          211.90          308.30
------------------------------------------------------------------------

    The Part B annual deductible for 2009 is $ 135.00 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 2009

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 2007 and 2008.

[[Page 55092]]



 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
----------------------------------------------------------------------------------------------------------------
                                                                                                    Assets less
                     Financing period ending                          Assets        Liabilities     liabilities
                                                                    (millions)      (millions)      (millions)
----------------------------------------------------------------------------------------------------------------
Dec. 31, 2007...................................................         $51,358          12,773         $38,585
Dec. 31, 2008...................................................          59,088          12,269          46,819
----------------------------------------------------------------------------------------------------------------

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 2009 
is determined by first establishing per-enrollee cost by type of 
service from program data through 2007 and then projecting these costs 
for subsequent years. The projection factors used for financing periods 
from January 1, 2006 through December 31, 2009 are shown in Table 2.
    As indicated in Table 3, the projected monthly rate required to pay 
for one-half of the total of benefits and administrative costs for 
enrollees age 65 and over for 2009 is $198.47. Based on current 
estimates, the assets are somewhat more than 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 negative contingency margin can be included to decrease assets 
to a slightly lower but still adequate level, relative to expenditures. 
The monthly actuarial rate of $192.70 provides an adjustment of -$3.14 
for a contingency margin and -$2.63 for interest earnings.
    The size of the contingency margin for 2009 is affected by several 
factors. The assets in the Part B account in the Supplementary Medical 
Insurance Trust Fund were below the level considered adequate for the 
four years, 2003-2006. Consequently, Part B premiums and general 
revenue financing in recent years have been set at somewhat higher 
levels than would otherwise have been required in order to restore the 
contingency reserve to an appropriate level. The projected assets in 
the Part B account in the Supplementary Medical Insurance Trust Fund 
are now somewhat above the level considered adequate by the end of 2008 
as a result of: (1) The planned increases in the contingency margins 
built into the Part B financing for several years, including 2008, in 
order to increase these assets; and (2) a $9.3 billion restoration of 
the Part B account assets for certain Part A hospice benefits that were 
inadvertently drawn from the Part B account.
    The formula specified in current law will result in a reduction in 
physician fees of approximately 20 percent in 2010 and is projected to 
cause additional reductions in subsequent years. For each year from 
2003 through 2009, Congress has acted to prevent physician fee 
reductions from occurring. In recognition of the strong possibility of 
increases in Part B expenditures that would result from similar 
legislation to override the decreases in physician fees in 2010 or 
later years, it is appropriate to maintain a somewhat larger Part B 
contingency reserve than would otherwise be necessary. The asset level 
projected for the end of 2009 is adequate to temporarily accommodate 
this contingency. Such legislation, however, would raise the future 
cost of Part B compared to current law and would necessitate additional 
increases in the premium and general revenue financing after 2009.
    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. Within 
this range, 17 percent has been the normal target. In view of the 
strong likelihood of actual expenditures exceeding estimated levels, 
due to the enactment of legislation after the financing has been set 
for a given year, 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 $192.70 per month for aged beneficiaries, as 
announced in this notice for 2009, reflects the combined net effect of 
the factors described above 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 
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 
one-half of the total of benefits and administrative costs for disabled 
enrollees for 2009 is $230.36. The monthly actuarial rate of $224.20 
also provides an adjustment of -$6.17 for interest earnings and $0.01 
for a 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 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 near-zero contingency margin is sufficient to maintain assets 
at an appropriate level.
    The actuarial rate of $224.20 per month for disabled beneficiaries, 
as announced in this notice for 2009, 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 assumptions. The results of those assumptions are 
shown in Table 5. One set represents increases that are

[[Page 55093]]

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 $45,882 million by the end 
of December 2009 under the assumptions used in preparing this report. 
This amounts to 23.1 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 $25,400 million by the end of December 2009, which 
amounts to 11.5 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 $66,697 million by 
the end of December 2009, or 37.4 percent of the estimated total 
incurred expenditures for the following year.
    The above analysis indicates that the premium and general revenue 
financing established for 2009, together with existing Part B account 
assets would be adequate to cover estimated Part B costs for 2009 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 
below are the 2009 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.

----------------------------------------------------------------------------------------------------------------
                                                                                  Income-related
   Beneficiaries who file an individual tax      Beneficiaries who file a joint       monthly      Total monthly
              return with income:                    tax return with income:        adjustment    premium amount
                                                                                      amount
----------------------------------------------------------------------------------------------------------------
Less than or equal to $85,000.................  Less than or equal to $170,000..           $0.00          $96.40
Greater than $85,000 and less than or equal to  Greater than $170,000 and less             38.50          134.90
 $107,000.                                       than or equal to $214,000.
Greater than $107,000 and less than or equal    Greater than $214,000 and less             96.30          192.70
 to $160,000.                                    than or equal to $320,000.
Greater than $160,000 and less than or equal    Greater than $320,000 and less            154.10          250.50
 to $213,000.                                    than or equal to $426,000.
Greater than $213,000.........................  Greater than $426,000...........          211.90          308.30
----------------------------------------------------------------------------------------------------------------

    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  Income-related
with their spouse at any time during the      monthly      Total monthly
  year, but file a separate tax return      adjustment    premium amount
           from their spouse:                 amount
------------------------------------------------------------------------
Less than or equal to $85,000...........           $0.00          $96.40
Greater than $85,000 and less than or             154.10          250.50
 equal to $128,000......................
Greater than $128,000...................          211.90          308.30
------------------------------------------------------------------------


                                    Table 2--Projection Factors \1\ 12-Month Periods Ending December 31 of 2006-2009
                                                                      [In percent]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                 Physicians' services                              Other
                               ------------------------   Durable     Carrier     carrier   Outpatient     Home      Hospital       Other       Managed
         Calendar year                       Residual     medical     lab \4\    services    hospital     health      lab \6\   intermediary     care
                                 Fees \2\       \3\      equipment                  \5\                   agency                services \7\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Aged:
    2006......................         0.2         4.2         4.7         7.2         5.1         4.3        17.3         3.9          6.4         12.5
    2007......................        -1.4         3.9         3.1         8.1         5.0         8.4        21.7         3.9          8.4          3.4
    2008......................         0.4         2.9         4.9         6.3         6.4         5.6        10.7         4.3          7.0          4.8
    2009......................         2.3         3.0         3.5         8.9         9.8         5.7         5.7         6.2          5.6          5.3
Disabled:
    2006......................         0.2         2.8         6.6         8.7        -3.3         4.5        19.5         5.5         14.1         18.7
    2007......................        -1.4         3.1         3.3        15.3         5.7         8.2        20.2         6.2         13.6          8.7
    2008......................         0.4         3.2         6.5         8.6         9.8         7.2        11.4         5.8          8.2          6.0
    2009......................         2.3         3.4         4.2         9.2        10.1         6.0         6.4         6.5          6.0         7.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ All values for services other than managed care are per fee-for-service enrollee. Managed care values are per managed care enrollee.
\2\ As 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.


[[Page 55094]]


    Table 3--Derivation of Monthly Actuarial Rate for Enrollees Age 65 and Over for Financing Periods Ending
                                   December 31, 2006 Through December 31, 2009
----------------------------------------------------------------------------------------------------------------
                                                                         Financing periods
                                                 ---------------------------------------------------------------
                                                      CY 2006         CY 2007         CY 2008         CY 2009
----------------------------------------------------------------------------------------------------------------
Covered services (at level recognized):
    Physician fee schedule......................           79.95           78.54           77.77           80.19
    Durable medical equipment...................            9.77            9.66            9.70            9.82
    Carrier lab \1\.............................            3.75            3.89            3.96            4.22
    Other carrier services \2\..................           19.61           19.75           20.13           21.62
    Outpatient hospital.........................           28.50           29.61           29.96           30.98
    Home health.................................            8.62           10.06           10.66           11.03
    Hospital lab \3\............................            2.82            2.81            2.81            2.92
    Other intermediary services \4\.............           12.75           13.25           13.59           14.03
    Managed care................................           34.84           42.41           51.04           57.15
                                                 ---------------------------------------------------------------
        Total services..........................          200.61          209.97          219.62          231.96
Cost sharing:
    Deductible..................................           -5.05           -5.33           -5.50           -5.50
    Coinsurance.................................          -31.18          -30.73          -30.49          -31.18
                                                 ---------------------------------------------------------------
        Total benefits..........................          164.39          173.91          183.63          195.28
Administrative expenses.........................            7.89            5.69            3.28            3.20
                                                 ---------------------------------------------------------------
Incurred expenditures...........................          172.28          179.60          186.91          198.47
Value of interest...............................           -1.52           -1.98           -2.48           -2.63
Contingency margin for projection error and to              6.14            9.38            8.27           -3.14
 amortize the surplus or deficit................
                                                 ---------------------------------------------------------------
        Monthly actuarial rate..................          176.90          187.00          192.70          192.70
----------------------------------------------------------------------------------------------------------------
\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, and rehabilitation and psychiatric hospitals, etc.


 Table 4--Derivation of Monthly Actuarial Rate for Disabled Enrollees for Financing Periods Ending December 31,
                                         2006 Through December 31, 2009
----------------------------------------------------------------------------------------------------------------
                                                                         Financing periods
                                                 ---------------------------------------------------------------
                                                      CY 2006         CY 2007         CY 2008         CY 2009
----------------------------------------------------------------------------------------------------------------
Covered services (at level recognized):
    Physician fee schedule......................           79.80           79.03           80.09           83.67
    Durable medical equipment...................           16.91           17.10           17.80           18.33
    Carrier lab \1\.............................            4.62            5.13            5.43            5.86
    Other carrier services \2\..................           22.47           23.26           24.94           27.13
    Outpatient hospital.........................           38.16           40.05           41.81           43.81
    Home health.................................            7.07            8.29            9.03            9.49
    Hospital lab \3\............................            4.27            4.42            4.56            4.80
    Other intermediary services \4\.............           39.91           41.08           42.30           43.45
    Managed care................................           23.30           30.30           36.77           41.98
                                                 ---------------------------------------------------------------
        Total services..........................          236.52          248.66          262.74          278.52
Cost sharing:
    Deductible..................................           -4.71           -4.86           -5.14           -5.15
    Coinsurance.................................          -44.03          -44.19          -44.89          -46.45
                                                 ---------------------------------------------------------------
        Total benefits..........................          187.79          199.61          212.70          226.92
Administrative expenses.........................            4.96            3.88            3.55            3.44
                                                 ---------------------------------------------------------------
Incurred expenditures...........................          192.75          203.49          216.25          230.36
Value of interest...............................           -3.49           -3.40           -3.61           -6.17
Contingency margin for projection error and to             14.44           -2.79           -2.94            0.01
 amortize the surplus or deficit................
                                                 ---------------------------------------------------------------
        Monthly actuarial rate..................          203.70          197.30          209.70          224.20
----------------------------------------------------------------------------------------------------------------
\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.

[[Page 55095]]

 
\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, 2009
----------------------------------------------------------------------------------------------------------------
                      As of December 31,                           CY 2007          CY 2008          CY 2009
----------------------------------------------------------------------------------------------------------------
This projection:
    Actuarial status (in millions):
    Assets...................................................         51,358           59,088           58,618
    Liabilities..............................................         12,773           12,269           12,736
                                                              --------------------------------------------------
    Assets less liabilities..................................         38,585           46,819           45,882
    Ratio (in percent) \1\...................................             20.2             22.7             23.1
Low cost projection:
    Actuarial status (in millions):
    Assets...................................................         51,358           65,860           78,759
    Liabilities..............................................         12,773           11,517           12,061
                                                              --------------------------------------------------
    Assets less liabilities..................................         38,585           54,343           66,697
    Ratio (in percent) \1\...................................             21.0             28.3             37.4
High cost projection:
    Actuarial status (in millions):
    Assets...................................................         51,358           52,592           38,854
    Liabilities..............................................         12,773           12,991           13,453
                                                              --------------------------------------------------
    Assets less liabilities..................................         38,585           39,601           25,400
    Ratio (in percent) \1\...................................             19.5             17.9             11.5
----------------------------------------------------------------------------------------------------------------
\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 impacts of this notice as required by 
Executive Order 12866 on Regulatory Planning and Review (September 30, 
1993, as further amended), 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 
(Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 1999), 
and the Congressional Review Act (5 U.S.C. 804(2)).
    Executive Order 12866 (as amended by Executive Order 13258) 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). A regulatory impact analysis (RIA) must be prepared for 
major rules with economically significant effects ($100 million or more 
in any one year).
    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 
$6.5 million to $31.5 million in any one 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 2008, that 
threshold is approximately $130 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 2009 are $192.70 for enrollees age 65 and over and $224.20 for 
disabled enrollees under age 65. It also

[[Page 55096]]

announces the 2009 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.

----------------------------------------------------------------------------------------------------------------
                                                                                  Income-related
   Beneficiaries who file an individual tax      Beneficiaries who file a joint       monthly      Total monthly
              return with income:                    tax return with income:        adjustment    premium amount
                                                                                      amount
----------------------------------------------------------------------------------------------------------------
Less than or equal to $85,000.................  Less than or equal to $170,000..           $0.00          $96.40
Greater than $85,000 and less than or equal to  Greater than $170,000 and less             38.50          134.90
 $107,000.                                       than or equal to $214,000.
Greater than $107,000 and less than or equal    Greater than $214,000 and less             96.30          192.70
 to $160,000.                                    than or equal to $320,000.
Greater than $160,000 and less than or equal    Greater than $320,000 and less            154.10          250.50
 to $213,000.                                    than or equal to $426,000.
Greater than $213,000.........................  Greater than $426,000...........          211.90          308.30
----------------------------------------------------------------------------------------------------------------

    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 below.

------------------------------------------------------------------------
 Beneficiaries who are married and lived  Income-related
with their spouse at any time during the      monthly      Total monthly
  year, but file a separate tax return      adjustment    premium amount
           from their spouse:                 amount
------------------------------------------------------------------------
Less than or equal to $85,000...........           $0.00          $96.40
Greater than $85,000 and less than or             154.10          250.50
 equal to $128,000......................
Greater than $128,000...................          211.90          308.30
------------------------------------------------------------------------

    The Part B deductible for calendar year 2009 is $135.00. The 
standard Part B premium rate of $96.40 is the same as the premium rate 
for 2008, so there will be no additional costs to the approximately 
42.3 million Part B enrollees for 2009. The monthly impact on the 
beneficiaries who are required to pay a higher premium for 2009 because 
their incomes exceed specified thresholds is $38.50, $96.30, $154.10, 
or $211.90, which is in addition to the standard monthly premium. These 
amounts are higher than the 2008 amounts of $25.80, $64.50, $103.30, 
and $142.00, respectively, which results in $770 million in additional 
costs to the approximately 1.7 million Part B enrollees who are 
affected. 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 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 formulas 
used to calculate the Part B premiums are statutorily directed, and we 
can exercise no discretion in applying those formulas. 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, 2008.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
Michael O. Leavitt,
Secretary.
 [FR Doc. E8-22314 Filed 9-19-08; 9:00 am]
BILLING CODE 4120-01-P