[Federal Register Volume 64, Number 190 (Friday, October 1, 1999)]
[Notices]
[Pages 53394-53396]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-25527]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
[HCFA-1058-FN]
RIN 0938-AJ60
Medicare Program; Sustainable Growth Rate for Fiscal Year 2000
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final notice.
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SUMMARY: This final notice announces the fiscal year 2000 Sustainable
Growth Rate (SGR) for expenditures for physicians' services under the
Medicare Supplementary Medical Insurance (Part B) program as required
by section 1848(f) of the Social Security Act (the Act). The SGR for
fiscal year 2000 is 2.1 percent.
EFFECTIVE DATE: The provisions of the Medicare SGR for fiscal year 2000
contained in this notice are effective on October 1, 1999.
[[Page 53395]]
FOR FURTHER INFORMATION CONTACT: Raymond Bulls, (410) 786-7267.
SUPPLEMENTARY INFORMATION:
I. Background
A. Medicare Sustainable Growth Rate
Section 1848(f) of the Social Security Act (the Act), as amended by
section 4503 of the Balanced Budget Act of 1997 (BBA) (Public Law 105-
33), enacted on August 5, 1997, replaces the volume performance
standard with a Sustainable Growth Rate (SGR) standard. It specifies
the formula for establishing yearly SGR targets for physicians'
services under Medicare. The use of SGR targets is intended to control
the actual growth in Medicare expenditures for physicians' services.
The SGR targets are not limits on expenditures. Payments for
services are not withheld if the SGR target is exceeded. Rather, the
appropriate fee schedule update, as specified in section 1848(d)(3)(A)
of the Act, is adjusted to reflect the success or failure in meeting
the SGR target.
Amended section 1848(f)(2) of the Act states that ``* * * the
sustainable growth rate for all physicians' services for a fiscal year
(beginning with fiscal year 1998) shall be equal to the product of--
(A) 1 plus the Secretary's estimate of the weighted-average
percentage increase (divided by 100) in the fees for all physicians'
services in the fiscal year involved;
(B) 1 plus the Secretary's estimate of the percentage change
(divided by 100) in the average number of individuals enrolled under
this part (other than Medicare+Choice plan enrollees) from the previous
fiscal year to the fiscal year involved;
(C) 1 plus the Secretary's estimate of the projected percentage
growth in real gross domestic product per capita (divided by 100) from
the previous fiscal year to the year involved; and
(D) 1 plus the Secretary's estimate of the percentage change
(divided by 100) in expenditures for all physicians' services in the
fiscal year (compared with the previous fiscal year) which will result
from changes in law or regulations, determined without taking into
account estimated changes in expenditures resulting from the update
adjustment factor determined under subsection (d)(3)(B), minus 1 and
multiplied by 100.''
B. Physicians' Services
Because the scope of physicians' services covered by the SGR is the
same as the scope of services that was covered by the Medicare volume
performance standards, we are using the same definition of physicians'
services for the SGR in this notice as we did for the Medicare volume
performance standards published in the Federal Register (61 FR 59717)
on November 22, 1996. That final notice announced the fiscal year 1997
volume performance standard rates and contained a detailed description
of the scope of physicians' services.
II. Provisions of This Notice
Under the requirements in sections 1848(f)(2)(A) through (D) of the
Act, as amended by section 4503 of the BBA, we have determined that the
SGR for physicians' services for fiscal year 2000 is 2.1 percent. Our
determination is based on the following statutory factors:
------------------------------------------------------------------------
Percent
Statutory factors change
------------------------------------------------------------------------
Fees....................................................... 2.1
Enrollment................................................. -1.6
Increase in Gross Domestic Product......................... 1.8
Legislation................................................ -0.2
------------
Total.................................................. 2.1
------------------------------------------------------------------------
The specific calculations to determine the 2.1 percent SGR for
physicians' services for fiscal year 2000 are explained below.
III. Calculation of the Fiscal Year 2000 Sustainable Growth Rate
Our explanation of how we determined the values for each of the
four factors used in determining the SGR for fiscal year 2000 is as
follows:
Factor 1--Changes in Fees for Physicians' Services (Before Applying
Legislative Adjustments) for Fiscal Year 2000
This factor was calculated as a weighted average of the calendar
year 1999 and 2000 fee increases that apply during fiscal year 2000.
Most of the fees for physicians' services (as defined in section I.
B. of this final notice) are updated by the Medicare Economic Index
(MEI). However, the BBA provided for a 0.0 percent update in 1999 and
2000 for laboratory services, which represents about 11 percent of the
Medicare-allowed charges for physicians' services. The following table,
therefore, shows both the MEI and laboratory service updates that were
used in determining the percentage increase in physicians' fees for
fiscal year 2000.
Medicare Economic Index and Laboratory Service Update for Calendar Years
1999 and 2000
------------------------------------------------------------------------
1999 2000
------------------------------------------------------------------------
Medicare Economic Index........................... 2.3 2.3
Laboratory Service................................ 0.0 0.0
------------------------------------------------------------------------
After taking into account all the elements described above, we
estimate that the weighted-average increase in fees for physicians'
services in fiscal year 2000, before applying any legislative
adjustments to the MEI, will be 2.1 percent for all physicians'
services.
Factor 2--The Percentage Change in the Average Number of Part B
Enrollees From Fiscal Year 1999 to Fiscal Year 2000
Due to the growth in Medicare+Choice plan enrollees (whose
Medicare-covered medical care is outside the scope of the SGR), we
estimate that the average number of Medicare Part B enrollees,
excluding those in Medicare+Choice plans, will decline by 1.6 percent.
This decline was derived as follows:
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Average Medicare Part B enrollment (in
millions)
-------------------------------------------------
Fiscal year Overall,
Overall Medicare+Choice excluding
Medicare+Choice
----------------------------------------------------------------------------------------------------------------
1999.......................................................... 36.866 6.116 30.750
2000.......................................................... 37.178 6.917 30.261
Percent change............................................ .............. ............... -1.6
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[[Page 53396]]
Factor 3--Estimated Real Gross Domestic Product Per Capita Growth in
Fiscal Year 2000
Section 1848(f)(2)(C) of the Act, as amended by section 4503 of the
BBA, requires the Secretary to project real gross domestic product per
capita growth for the coming fiscal year. In calculating the SGR, we
estimate that this growth will be 1.8 percent in fiscal year 2000.
Factor 4--Percentage Change in Expenditures for Physicians' Services
Resulting From Changes in Law or Regulations in Fiscal Year 2000
Compared With Fiscal Year 1999
Legislative changes contained in the BBA will have some residual
effects on expenditures for physicians' services in fiscal year 2000.
In addition, there are some miscellaneous provisions that will have a
small impact.
Taking into account all of the changes in law or regulation that
may affect expenditures for physicians' services, the decrease in
expenditures for physicians' services is estimated to be -0.2 percent.
IV. The Use of Estimates in Computing the Sustainable Growth Rate
Section 1848(f) of the Act clearly requires that each year, the
Secretary establish the SGR for the upcoming fiscal year beginning
October 1 based on the Secretary's estimate[s] of four factors: The
percentage increase in physicians' fees, the percentage increase in
fee-for-service enrollment, the projected percentage growth in per
capita gross domestic product, and the percentage change in
expenditures for physicians' services resulting from changes in law or
regulations. Because the calculation of the SGR for a given year is
based on projected values, updates may be either lower or higher than
they would have been if we had used later data. Thus, we initially
considered revising estimates of the factors used in setting the SGR
when later data had become available. However, as we indicated in the
notice with comment period published in the Federal Register (63 FR
59188) on November 2, 1998, we had concerns about whether we had the
statutory authority to make these revisions under current law and
invited comments regarding how an adjustment could be made consistent
with the law. The comments we received and our response are discussed
below.
Comment: The American Medical Association and numerous physician
organizations suggested that congressional intent should be interpreted
to authorize adjustments for projection error. These commenters also
suggested a number of different approaches for making such adjustments.
The various approaches suggested rely on later data.
Response: We do not believe that we have the authority to make
adjustments based on Congressional intent because the statutory
language clearly requires that estimated values be used for computing
the SGR and there is no provision for revising the estimates to reflect
later data. Our actions are controlled by the clear statutory language.
Thus, we will not be able to make adjustments to the SGR based on later
data.
However, the Administration's legislative package for fiscal year
2000, released in February 1999, contains a legislative proposal to
adjust the SGR if later data are different from earlier estimates, as
well as to address issues relating to the instability of the SGR
discussed below. The changes proposed are all budget neutral. If
Congress enacts this proposal for fiscal year 2000, we would revise the
SGR for fiscal year 2000 as appropriate.
V. Technical Problems With the Sustainable Growth Rate System
We have begun to forecast the SGR for future years, and it appears
that there is some instability in the SGR system. In the long-term,
updates could oscillate between the maximum increase and decrease
adjustments due to the use of mismatched time periods and the lag
between measurement periods. The solution would be technical and would
involve the matching of time periods for the SGR calculation, the
actual versus target measurement, and the update adjustment. As
discussed above the Administration has submitted a legislative proposal
to the Congress that will address these factors and result in less
oscillation in the physician fee schedule update.
VI. Regulatory Impact Statement
Consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
through 612), we prepare a regulatory flexibility analysis unless we
certify that a notice will not have a significant economic impact on a
substantial number of small entities. For purposes of the RFA, we treat
all physicians and suppliers as small entities. Individuals and States
are not included in the definition of a small entity.
Also, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a notice may have a significant impact on
the operations of a substantial number of small rural hospitals. That
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 50 beds.
Legislative changes contained in the BBA will affect expenditures
for physicians' services in fiscal year 2000, although the impact will
be slight, and residual effects will result in fiscal year 2000 from
the calendar year implementation of these changes.
We are not preparing an analysis for either the RFA or section
1102(b) of the Act because we have determined, and the Secretary
certifies, that this notice will not have a significant economic impact
on a substantial number of small entities or on the operations of a
substantial number of small rural hospitals.
In accordance with the provisions of Executive Order 12866, this
notice was reviewed by the Office of Management and Budget.
We have reviewed this final notice under the threshold criteria of
Executive Order 13132 of August 4, 1999, and have determined that it
does not significantly affect the rights, roles, and responsibilities
of States.
(Sections 1848(d) and (f) of the Social Security Act) (42 U.S.C.
1395w-4(d) and (f))
(Catalog of Federal Domestic Assistance Program No. 93.774,
Medicare--Supplementary Medical Insurance Program)
Dated: September 1, 1999.
Michael M. Hash,
Deputy Administrator, Health Care Financing Administration.
Approved: September 20, 1999.
Donna E. Shalala,
Secretary.
[FR Doc. 99-25527 Filed 9-28-99; 9:58 am]
BILLING CODE 4120-01-P
