[Federal Register Volume 59, Number 230 (Thursday, December 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29557]
[[Page Unknown]]
[Federal Register: December 1, 1994]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
[OACT-048-N]
RIN 0938-AG51Y
Medicare Program; Inpatient Hospital Deductible and Hospital and
Extended Care Services Coinsurance Amounts for 1995
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: This notice announces the inpatient hospital deductible and
the hospital and extended care services coinsurance amounts for
services furnished in calendar year 1995 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 $716. The daily
coinsurance amounts will be: (a) $179 for the 61st through 90th days of
hospitalization in a benefit period; (b) $358 for lifetime reserve
days; and (c) $89.50 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, 1995.
FOR FURTHER INFORMATION CONTACT: John Wandishin, (410) 966-6389 For
case-mix analysis only: Gregory J. Savord, (410) 966-6384.
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 the Secretary 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 1995
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 the Secretary's 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 (FY) 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 FY 1995, section 1886(b)(3)(B)(i)(X) of the Act, as amended by
section 13501(a) of the Omnibus Budget Reconciliation Act of 1993
(Public Law 103-66, enacted on August 10, 1993), provides that the
applicable percentage increase for urban prospective payment system
hospitals is the market basket percentage increase minus 2.5 percent,
and the applicable percentage increase for rural prospective payment
system hospitals is the amount necessary to equalize the rural and
other urban national average standardized amounts. Section
1886(b)(3)(B)(ii)(V) of the Act, as added by section 13502(a) Public
Law 103-66, provides that, for FY 1995, 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 FY 1990 exceeds the hospital's
target amount. Hospitals or distinct part hospital units with FY 1990
operating costs exceeding target amounts by 10 percent or more receive
the market basket index percentage. The market basket percentage
increases for FY 1995 are 3.6 percent for prospective payment system
hospitals and 3.7 percent for hospitals excluded from the prospective
payment system, as announced in the Federal Register on September 1,
1994 (59 FR 45330). Therefore, the percentage increases for Medicare
prospective payment rates are 1.1 percent for urban hospitals and 8.4
percent for rural hospitals. The average payment percentage increase
for hospitals excluded from the prospective payment system is 3.13
percent, computed as required by section 13502 of Public Law 103-66.
Thus, weighting these percentages in accordance with payment volume,
the Secretary's best estimate of the payment-weighted average of the
increases in the payment rates for FY 1995 is 1.92 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 FY 1994
compared to FY 1993. (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 the end of July 1994. These bills represent a total of about
8 million discharges for FY 1994 and provide the most recent case mix
data available at this time. Based on these bills, the increase in
average case mix in FY 1994 is 0.33 percent. Based on past experience,
we expect overall case mix to increase to 0.85 percent as the year
progresses and more FY 1994 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 0.85 percent. This assumes that all of the increase
in case mix is real.
Thus, the estimate of the payment-weighted average of the
applicable percentage increases used for updating the payment rates is
1.92 percent, and the real case mix adjustment factor for the
deductible is 0.85 percent. Therefore, under the statutory formula, the
inpatient hospital deductible for services furnished in calendar year
1995 is $716. This deductible amount is determined by multiplying $696
(the inpatient hospital deductible for 1994) by the payment rate
increase of 1.0192 multiplied by the increase in real case mix of
1.0085 which equals $715.39 and is rounded to $716.
III. Computing the Inpatient Hospital and Extended Care Services
Coinsurance Amounts for 1995
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 1995, 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 $179 (1/4 of the inpatient hospital deductible);
the daily coinsurance for lifetime reserve days will be $358 (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 $89.50 (1/8 of the inpatient
hospital deductible).
IV. Cost to Beneficiaries
We estimate that in 1995 there will be about 9.2 million
deductibles paid at $716 each, about 3.6 million days subject to
coinsurance at $179 per day (for hospital days 61 through 90), about
1.6 million lifetime reserve days subject to coinsurance at $358 per
day, and about 18.6 million extended care days subject to coinsurance
at $89.50 per day. Similarly, we estimate that in 1994 there will be
about 8.9 million deductibles paid at $696 each, about 3.5 million days
subject to coinsurance at $174 per day (for hospital days 61 through
90), about 1.6 million lifetime reserve days subject to coinsurance at
$348 per day, and about 18.2 million extended care days subject to
coinsurance at $87 per day. Therefore, the estimated total increase in
cost to beneficiaries is about $530 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. 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 the Secretary certifies, 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 9, 1994.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
Dated: September 9, 1994.
Donna E. Shalala,
Secretary.
[FR Doc. 94-29557 Filed 11-30-94; 8:45 am]
BILLING CODE 4120-01-P
