[Federal Register Volume 63, Number 203 (Wednesday, October 21, 1998)]
[Notices]
[Pages 56199-56201]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28162]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
[HCFA-8001-N]
RIN 0938-AJ02
Medicare Program; Inpatient Hospital Deductible and Hospital and
Extended Care Services Coinsurance Amounts for 1999
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Notice.
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SUMMARY: This notice announces the inpatient hospital deductible and
the hospital and extended care services coinsurance amounts for
services furnished in calendar year 1999 under Medicare's hospital
insurance program (Medicare Part A). The Medicare statute specifies the
formulae used to determine these amounts.
The inpatient hospital deductible will be $768. The daily
coinsurance amounts will be: (a) $192 for the 61st through 90th day of
hospitalization in a benefit period; (b) $384 for lifetime reserve
days; and (c) $96 for the 21st through 100th day of extended care
services in a skilled nursing facility in a benefit period.
EFFECTIVE DATE: This notice is effective on January 1, 1999.
FOR FURTHER INFORMATION CONTACT: Clare McFarland, (410) 786-6390.
For case-mix analysis only: Gregory J. Savord, (410) 786-1521.
SUPPLEMENTARY INFORMATION:
I. Background
Section 1813 of the Social Security Act (the Act) provides for an
inpatient hospital deductible to be subtracted from the amount payable
by Medicare for inpatient hospital services furnished to a beneficiary.
It also provides for certain coinsurance amounts to be subtracted from
the amounts payable by Medicare for inpatient hospital and extended
care services. Section 1813(b)(2) of the Act requires us to determine
and publish, between September 1 and September 15 of each year, the
amount of the inpatient hospital deductible and the hospital and
extended care services coinsurance amounts applicable for services
furnished in the following calendar year.
II. Computing the Inpatient Hospital Deductible for 1999
Section 1813(b) of the Act prescribes the method for computing the
amount of the inpatient hospital deductible. The inpatient hospital
deductible is an amount equal to the inpatient hospital deductible for
the preceding calendar year, changed by our best estimate of the
payment-weighted average of the applicable percentage increases (as
defined in section 1886(b)(3)(B) of the Act) used for updating the
payment rates to hospitals for discharges in the fiscal year that
begins on October 1 of the same preceding calendar year, and adjusted
to reflect real case mix. The adjustment to reflect real case mix is
determined on the basis of the most recent case mix data available. The
amount determined under this formula is rounded to the nearest multiple
of $4 (or, if midway between two multiples of $4, to the next higher
multiple of $4).
Under section 1886(b)(3)(B)(i) of the Act, as amended by section
4401(a) of the Balanced Budget Act of 1997 (Pub. L. 105-33), the
percentage increase used to update the payment rates for fiscal year
1999 for most hospitals paid under the prospective payment system is
the market basket percentage increase minus 1.9 percentage points.
Certain nonteaching, nondisproportionate share, non-Medicare-dependent
hospitals, however, are allowed higher updates than those provided for
other hospitals paid under the prospective payment system. These
hospitals must be located in States where, for nonteaching,
nondisproportionate share, non-Medicare-dependent hospitals--
Aggregate Medicare operating payments for their cost
reporting periods beginning during fiscal year 1995 are less than the
aggregate allowable operating costs of inpatient hospital services for
all these hospitals in the State for those cost reporting periods; and
The Medicare operating payments for discharges in the cost
reporting period involved are less than their allowable operating costs
for inpatient hospital services in that period.
For hospitals meeting these criteria, the percentage increase used
to update the payment rates for fiscal year 1999 is the market basket
percentage increase minus 1.6 percentage points.
Under section 1886(b)(3)(B)(ii) of the Act, as amended by section
4411(a) of the Balanced Budget Act of 1997, the percentage increase
used to update the payment rates for fiscal year 1999 for hospitals
excluded from the prospective payment system depends on the hospital's
allowable operating costs of inpatient hospital services. If the
hospital's allowable operating costs of inpatient hospital services for
the most recent cost reporting period for which information is
available--
[[Page 56200]]
(1) Are equal to or exceed 110 percent of the hospital's target
amount for that cost reporting period, the applicable percentage
increase is the market basket percentage;
(2) Exceed 100 percent but are less than 110 percent of the
hospital's target amount for that cost reporting period, the applicable
percentage increase is the market basket percentage minus 0.25
percentage points for each percentage point by which the hospital's
allowable operating costs are less than 110 percent of the target
amount for that cost reporting period (but not less than 0 percent);
(3) Are equal to or less than 100 percent of the hospital's target
amount for that cost reporting period, but exceed two-thirds of the
target amount, the applicable percentage increase is 0 percent or, if
greater, the market basket percentage minus 2.5 percentage points; or
(4) Do not exceed two-thirds of the hospital's target amount for
that cost reporting period, the applicable percentage increase is 0
percent.
The market basket percentage increase for fiscal year 1999 is 2.4
percent, as announced in the Federal Register on July 31, 1998 (63 FR
40954). Therefore, the percentage increase for most hospitals paid
under the prospective payment system is 0.5 percent, and the percentage
increase for the certain nonteaching, nondisproportionate share, non-
Medicare-dependent hospitals paid under the prospective payment system
and meeting the criteria described above is 0.8 percent. The average
payment percentage increase for hospitals excluded from the prospective
payment system is 0.4 percent. Weighting these percentages in
accordance with payment volume, our best estimate of the payment-
weighted average of the increases in the payment rates for fiscal year
1999 is 0.5 percent.
To develop the adjustment for real case mix, we first calculated
for each hospital an average case mix that reflects the relative
costliness of that hospital's mix of cases compared to those of other
hospitals. We then computed the change in average case mix for
hospitals paid under the Medicare prospective payment system in fiscal
year 1998 compared to fiscal year 1997. (We excluded from this
calculation hospitals excluded from the prospective payment system
because their payments are based on reasonable costs and are affected
only by real changes in case mix.) We used bills from prospective
payment hospitals received in HCFA as of July 1998. These bills
represent a total of about 8.5 million discharges for fiscal year 1998
and provide the most recent case mix data available at this time. Based
on these bills, the change in average case mix in fiscal year 1998 is
-0.81 percent. Based on past experience, we expect the overall case mix
change to be -0.6 percent as the year progresses and more fiscal year
1998 data become available.
Section 1813 of the Act requires that the inpatient hospital
deductible be adjusted only by that portion of the case mix change that
is determined to be real. There is a negligible change in overall case
mix for fiscal year 1998. We estimate that there is no change in real
case mix; that is, we estimate that the change in real case mix for
fiscal year 1998 is 0.0 percent.
Thus, the estimate of the payment-weighted average of the
applicable percentage increases used for updating the payment rates is
0.5 percent, and the real case mix adjustment factor for the deductible
is 0.0 percent. Therefore, under the statutory formula, the inpatient
hospital deductible for services furnished in calendar year 1999 is
$768. This deductible amount is determined by multiplying $764 (the
inpatient hospital deductible for 1998) by the payment-weighted average
increase in the payment rates of 1.005 multiplied by the increase in
real case mix of 1.000, which equals $767.82 and is rounded to $768.
III. Computing the Inpatient Hospital and Extended Care Services
Coinsurance Amounts for 1999
The coinsurance amounts provided for in section 1813 of the Act are
defined as fixed percentages of the inpatient hospital deductible for
services furnished in the same calendar year. Thus, the increase in the
deductible generates increases in the coinsurance amounts. For
inpatient hospital and extended care services furnished in 1999, in
accordance with the fixed percentages defined in the law, the daily
coinsurance for the 61st through 90th day of hospitalization in a
benefit period will be $192 (one-fourth of the inpatient hospital
deductible); the daily coinsurance for lifetime reserve days will be
$384 (one-half of the inpatient hospital deductible); and the daily
coinsurance for the 21st through 100th day of extended care services in
a skilled nursing facility in a benefit period will be $96 (one-eighth
of the inpatient hospital deductible).
IV. Cost to Beneficiaries
We estimate that in 1999 there will be about 8.4 million
deductibles paid at $768 each, about 2.3 million days subject to
coinsurance at $192 per day (for hospital days 61 through 90), about
1.1 million lifetime reserve days subject to coinsurance at $384 per
day, and about 34.4 million extended care days subject to coinsurance
at $96 per day. Similarly, we estimate that in 1998 there will be about
8.6 million deductibles paid at $764 each, about 2.3 million days
subject to coinsurance at $191 per day (for hospital days 61 through
90), about 1.1 million lifetime reserve days subject to coinsurance at
$382 per day, and about 32.3 million extended care days subject to
coinsurance at $95.50 per day. Therefore, the estimated total increase
in cost to beneficiaries is about $100 million (rounded to the nearest
$10 million), due to (1) the increase in the deductible and coinsurance
amounts and (2) the change in the number of deductibles and daily
coinsurance amounts paid.
V. Waiver of Proposed Notice and Comment Period
The Medicare statute, as discussed previously, requires publication
of the Medicare Part A inpatient hospital deductible and the hospital
and extended care services coinsurance amounts for services for each
calendar year. The amounts are determined according to the statute. As
has been our custom, we use general notices, rather than notice and
comment rulemaking procedures, to make the announcements. In doing so,
we acknowledge that, under the Administrative Procedure Act,
interpretive rules, general statements of policy, and rules of agency
organization, procedure, or practice are excepted from the requirements
of notice and comment rulemaking.
We considered publishing a proposed notice to provide a period for
public comment. However, we may waive that procedure if we find good
cause that prior notice and comment are impracticable, unnecessary, or
contrary to the public interest. We find that the procedure for notice
and comment is unnecessary because the formula used to calculate the
inpatient hospital deductible and hospital and extended care services
coinsurance amounts is statutorily directed, and we can exercise no
discretion in following that formula. Moreover, the statute establishes
the time period for which the deductible and coinsurance amounts will
apply and delaying publication would be contrary to the public
interest. Therefore, we find good cause to waive publication of a
proposed notice and solicitation of public comments.
[[Page 56201]]
VI. Regulatory Impact Statement
We have examined the impacts of this notice as required by
Executive Order 12866 and the Regulatory Flexibility Act (RFA) (Pub. L.
96-354). Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, when 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 for small businesses. For
purposes of the RFA, States and individuals are not considered small
entities.
Also, section 1102(b) of the Act requires the Secretary to prepare
a regulatory impact analysis for any notice that may have a significant
impact on the operations of a substantial number of small rural
hospitals. Such an analysis must conform to the provisions of section
604 of the RFA. For purposes of section 1102(b) of the Act, we consider
a small rural hospital as a hospital that is located outside of a
Metropolitan Statistical Area and has fewer than 50 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.
This notice announces that the inpatient hospital deductible for
calendar year 1999 is $768. It also announces the daily coinsurance
amounts of $192 for the 61st through 90th day of hospitalization in a
benefit period; $384 for lifetime reserve days; and $96 for the 21st
through 100th day of extended care services in a skilled nursing
facility in a benefit period. We believe that the total increase in
costs to beneficiaries associated with this notice is about $100
million due to (1) the increase in the deductible and coinsurance
amounts and (2) the change in the number of deductibles and daily
coinsurance amounts paid. 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.
Authority: Section 1813(b)(2) of the Social Security Act (42
U.S.C. 1395e(b)(2)).
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance)
Dated: September 18, 1998.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.
Dated: October 8, 1998.
Donna E. Shalala,
Secretary.
[FR Doc. 98-28162 Filed 10-16-98; 9:34 am]
BILLING CODE 4120-01-P
