[Federal Register Volume 66, Number 249 (Friday, December 28, 2001)]
[Notices]
[Pages 67266-67267]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-31721]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-2135-N]
RIN: 0938-AL34


Medicare Program; Deductible Amount for Medigap High Deductible 
Options for Calendar Year 2002

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Notice.

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SUMMARY: This notice announces the annual deductible amount of $1,620 
for the Medicare supplemental health insurance (Medigap) high 
deductible options for 2002. High deductible policy options are those 
with benefit packages classified as ``F'' or ``J'' that have a high 
deductible feature. The deductible amount represents the annual out-of-
pocket expenses (excluding premiums) that a beneficiary who chooses one 
of these options must pay before the policy begins paying benefits.

EFFECTIVE DATE: January 1, 2002.

FOR FURTHER INFORMATION CONTACT: Kathryn McCann, (410) 786-7623.

SUPPLEMENTARY INFORMATION:

I. Background

A. Medicare Supplemental Insurance

    A Medicare supplemental, or Medigap, policy is the principal type 
of private health insurance that a beneficiary may purchase to cover 
certain costs that Medicare does not cover. The beneficiary is 
responsible for deductibles and coinsurance amounts for both Part A 
(hospital insurance) and Part B (supplementary medical insurance) of 
the Medicare program. In addition, Medicare generally does not cover 
custodial nursing home care, eyeglasses, dental care, and most 
outpatient prescription drugs. A beneficiary must either pay the full 
cost of these services, or he or she may purchase additional private 
health insurance to help pay these costs. Medigap policies offer 
coverage for some or all of the deductibles and coinsurance amounts 
required by Medicare. Additionally, Medigap policies may provide 
coverage for some services that are not covered under the Medicare 
program.
    Section 1882 of the Social Security Act (the Act) establishes, 
among other things, minimum standards for Medigap policies. No Medigap 
policy may be issued in a State unless the policy complies with State 
laws that conform to section 1882(b)(1) of the Act.

[[Page 67267]]

    The Omnibus Budget Reconciliation Act of 1990 (OBRA 90) amended the 
Act by standardizing Medigap benefits and requiring that no more than 
10 Medigap benefit packages, Plans ``A'' through ``J,'' be offered 
nationwide. Three States (Wisconsin, Minnesota, and Massachusetts) 
experimented with standardizing benefits before the enactment of 
Federal standards. These States were permitted to keep their 
alternative forms of Medigap standardization and are referred to as the 
``waivered States.''
    Plan ``A'' is the basic benefit package. It covers Medicare Part A 
hospital coinsurance plus coverage for 365 additional days after 
Medicare benefits end, over the beneficiary's lifetime, Medicare Part B 
coinsurance (generally 20 percent of the Medicare-approved amount or, 
in the case of hospital outpatient department services under a 
prospective payment system, the applicable copayment), and coverage for 
the first 3 pints of blood per year. Medigap Plans ``B'' through ``J'' 
contain this basic benefit package, as well as different combinations 
of additional benefits. Plans ``F'' and ``J'' contain:
    <bullet> Medicare Part A inpatient hospital deductible.
    <bullet> Skilled-nursing facility coinsurance.
    <bullet> Part B deductible.
    <bullet> Foreign travel health emergencies.
    <bullet> 100% of Medicare Part B excess charges.
    In addition, Plan ``J'' includes:
    <bullet> At-home recovery.
    <bullet> Some prescription drug coverage.
    <bullet> Preventive care.

B. High Deductible Medigap Policies

    Section 4032 of the Balanced Budget Act of 1997 (BBA) authorized 
high deductible versions of Plans ``F'' and ``J'' and their closest 
counterparts in the waivered States. Unlike the regular versions of 
Plans ``F'' and ``J,'' the high deductible versions of these policies 
do not begin paying benefits until the deductible amount is met. Out-
of-pocket expenses that can be applied toward this deductible are 
expenses that would ordinarily be paid by the policy, including 
Medicare deductibles for Parts A and B, emergency foreign travel 
expenses in the case of both high deductible policies, and outpatient 
prescription drug costs in the case of the high deductible version of 
Plan J. The Plan ``F'' deductible does not include the separate foreign 
travel emergency deductible of $250. The Plan ``J'' deductible does not 
include the plan's separate $250 prescription drug deductible or the 
plan's separate $250 deductible for foreign travel emergencies. Even 
though foreign travel emergency expenses and prescription drug expenses 
may be applied toward meeting the plan's overall deductible, these 
types of expenses can only be paid after the separate $250 deductible 
for the benefit has been met.

II. Provisions of This Notice

    The high deductible amount is determined in accordance with section 
1882(p)(11)(C)(i) of the Act. That provision prescribed a deductible of 
$1500 for 1998 and 1999, and directed that the amount increase each 
subsequent year by the percent increase in the Consumer Price Index for 
all urban consumers (CPI-U), all items, U.S. city average. For 2001, 
the high deductible amount was $1,580. For 2002, the high deductible 
amount is increased by the percent increase in the CPI-U for the 12-
month period ending August 2001. As reported by the Bureau of Labor 
Statistics, Department of Labor, the CPI-U index was 172.7 in August 
2000 and 177.5 in August 2001, resulting in a 2.78 percent increase for 
the 12-month period ending August 2001. A 2.78 percent increase in 
$1,580.00 is $1,623.92. Section 1882(p)(11)(C)(ii) of the Act 
stipulates that this amount be rounded to the nearest multiple of $10. 
After rounding $1,623.92 to the nearest $10 multiple, the 2002 
deductible for the Medigap high deductible options is $1,620.

III. Regulatory Impact Statement

    We have examined the impacts of this notice as required by 
Executive Order 12866 (September 1993, Regulatory Planning and Review) 
and the Regulatory Flexibility Act (RFA) (September 19, 1980 Public Law 
96-354). Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more annually). The aggregate 
impact of this notice on beneficiaries is negligible, therefore, this 
is not a major notice.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. This notice does not effect small businesses, 
individuals and States are not included in the definition of a small 
business 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 
notice does not effect small rural hospitals.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. This notice does not require an impact analysis because 
it does not have an economic impact on small entities, small rural 
hospitals, or State, local, or tribal governments.
    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.

IV. Collection of Information Requirements

    This document does not impose information collection and 
recordkeeping requirements. Consequently it need not be reviewed by the 
Office of Management and Budget under the authority of the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

    Authority: Section 1882 of the Social Security Act. (Catalog of 
Federal Domestic Assistance Program No. 93.773, Medicare--Hospital 
Insurance, and Program No. 93.774, Medicare--Supplementary Medical 
Insurance Program)

    Dated: November 21, 2001.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 01-31721 Filed 12-27-01; 8:45 am]
BILLING CODE 4120-01-P