[Federal Register Volume 61, Number 214 (Monday, November 4, 1996)]
[Notices]
[Pages 56690-56691]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28142]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
[OACT-054-N]
RIN 0938-AHO8
Medicare Program; Inpatient Hospital Deductible and Hospital and
Extended Care Services Coinsurance Amounts for 1997
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 1997 under Medicare's hospital
insurance program (Medicare Part A). The Medicare statute specifies the
formulae to be used to determine these amounts.
The inpatient hospital deductible will be $760. The daily
coinsurance amounts will be: (a) $190 for the 61st through 90th days of
hospitalization in a benefit period; (b) $380 for lifetime reserve
days; and (c) $95 for the 21st through 100th days of extended care
services in a skilled nursing facility in a benefit period.
EFFECTIVE DATE: This notice is effective on January 1, 1997.
FOR FURTHER INFORMATION CONTACT:
John Wandishin, (410) 786-6389. For case-mix analysis only: Gregory J.
Savord, (410) 786-6384.
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 1997
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). This estimate is 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).
For fiscal year 1997, section 1886(b)(3)(B)(i)(XI) of the Act
provides that the applicable percentage increase for hospitals in all
areas is the market basket percentage increase minus 0.5 percent.
Section 1886(b)(3)(B)(ii)(V) of the Act provides that, for fiscal year
1997, the otherwise applicable rate-of-increase percentages (the market
basket percentage increase) for hospitals that are excluded from the
prospective payment system are reduced by the lesser of 1 percentage
point or the percentage point difference between 10 percent and the
percentage by which the hospital's allowable operating costs of
inpatient hospital services for cost reporting periods beginning in
fiscal year 1990 exceeds the hospital's target amount. Hospitals or
distinct part hospital units with fiscal year 1990 operating costs
exceeding target amounts by 10 percent or more receive the market
basket index percentage. The market basket percentage increases for
fiscal year 1997 are 2.5 percent for prospective payment system
hospitals and 2.5 percent for hospitals excluded from the prospective
payment system, as announced in the Federal Register on August 30, 1996
(VOL. 61, No. 170 FR 46166). Therefore, the percentage increases for
Medicare prospective payment rates are 2.0 percent for all hospitals.
The average payment percentage increase for hospitals excluded from the
prospective payment system is 1.96 percent. Thus, 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 1997 is 2.0 percent.
To develop the adjustment for real case mix, an average case mix
was first calculated for each hospital that reflects the relative
costliness of that hospital's mix of cases compared to that of other
hospitals. We then computed the increase in average case mix for
hospitals paid under the Medicare prospective payment system in fiscal
year 1996 compared to fiscal year 1995. (Hospitals excluded from the
prospective payment system were excluded from this calculation since
their payments are based on reasonable costs and are affected only by
real increases in case mix.) We used bills from prospective payment
hospitals received in HCFA as of July 1996. These bills represent a
total of about 8.2 million discharges for fiscal year 1996 and provide
the most recent case mix data available at this time. Based on these
bills, the increase in average case mix in fiscal year 1996 is 1.1
percent. Based on past experience, we expect overall case mix to
increase to 1.4
[[Page 56691]]
percent as the year progresses and more fiscal year 1996 data become
available.
Section 1813 of the Act requires that the inpatient hospital
deductible be increased only by that portion of the case mix increase
that is determined to be real. We estimate that the increase in real
case mix is about 1 percent. Since real case mix had been assumed to be
increasing at about 1 percent per year in prior years, we expect this
pattern to continue.
Thus, the estimate of the payment-weighted average of the
applicable percentage increases used for updating the payment rates is
2.0 percent, and the real case mix adjustment factor for the deductible
is 1 percent. Therefore, under the statutory formula, the inpatient
hospital deductible for services furnished in calendar year 1997 is
$760. This deductible amount is determined by multiplying $736 (the
inpatient hospital deductible for 1996) by the payment rate increase of
1.02 multiplied by the increase in real case mix of 1.01 which equals
$758.23 and is rounded to $760.
III. Computing the Inpatient Hospital and Extended Care Services
Coinsurance Amounts for 1997
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 1997, in
accordance with the fixed percentages defined in the law, the daily
coinsurance for the 61st through 90th days of hospitalization in a
benefit period will be $190 (\1/4\ of the inpatient hospital
deductible); the daily coinsurance for lifetime reserve days will be
$380 (\1/2\ of the inpatient hospital deductible); and the daily
coinsurance for the 21st through 100th days of extended care services
in a skilled nursing facility in a benefit period will be $95 (\1/8\ of
the inpatient hospital deductible).
IV. Cost to Beneficiaries
We estimate that in 1997 there will be about 9.2 million
deductibles paid at $760 each, about 3.1 million days subject to
coinsurance at $190 per day (for hospital days 61 through 90), about
1.4 million lifetime reserve days subject to coinsurance at $380 per
day, and about 21.3 million extended care days subject to coinsurance
at $95 per day. Similarly, we estimate that in 1996 there will be about
8.9 million deductibles paid at $736 each, about 3.0 million days
subject to coinsurance at $184 per day (for hospital days 61 through
90), about 1.4 million lifetime reserve days subject to coinsurance at
$368 per day, and about 20.8 million extended care days subject to
coinsurance at $92 per day. Therefore, the estimated total increase in
cost to beneficiaries is about $610 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 Notice of Proposed Rulemaking
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 formal notice
and comment rulemaking procedures, to make such 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 the 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 of these amounts would be
contrary to the public interest. Therefore, we find good cause to waive
publication of a proposed notice and solicitation of public comments.
VI. Impact Statement
This notice merely announces amounts required by legislation. This
notice is not a proposed rule or a final rule issued after a proposal
and does not alter any regulation or policy. Therefore, we have
determined, and certify, that no analyses are required under Executive
Order 12866, the Regulatory Flexibility Act (5 U.S.C. 601 through 612),
or section 1102(b) of the Act.
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 10, 1996.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
Dated: September 27, 1996.
Donna E. Shalala,
Secretary.
[FR Doc. 96-28142 Filed 11-1-96; 8:45 am]
BILLING CODE 4120-01-M
