81_FR_80280 81 FR 80060 - Medicare Program; CY 2017 Inpatient Hospital Deductible and Hospital and Extended Care Services Coinsurance Amounts

81 FR 80060 - Medicare Program; CY 2017 Inpatient Hospital Deductible and Hospital and Extended Care Services Coinsurance Amounts

DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services

Federal Register Volume 81, Issue 220 (November 15, 2016)

Page Range80060-80063
FR Document2016-27389

This notice announces the inpatient hospital deductible and the hospital and extended care services coinsurance amounts for services furnished in calendar year (CY) 2017 under Medicare's Hospital Insurance Program (Medicare Part A). The Medicare statute specifies the formulae used to determine these amounts. For CY 2017, the inpatient hospital deductible will be $1,316. The daily coinsurance amounts for CY 2017 will be: (1) $329 for the 61st through 90th day of hospitalization in a benefit period; (2) $658 for lifetime reserve days; and (3) $164.50 for the 21st through 100th day of extended care services in a skilled nursing facility in a benefit period.

Federal Register, Volume 81 Issue 220 (Tuesday, November 15, 2016)
[Federal Register Volume 81, Number 220 (Tuesday, November 15, 2016)]
[Notices]
[Pages 80060-80063]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-27389]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-8062-N]
RIN 0938-AS70


Medicare Program; CY 2017 Inpatient Hospital Deductible and 
Hospital and Extended Care Services Coinsurance Amounts

AGENCY: Centers for Medicare & Medicaid Services (CMS), 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 (CY) 2017 under Medicare's Hospital 
Insurance Program (Medicare Part A). The Medicare statute specifies the 
formulae used to determine these amounts. For CY 2017, the inpatient 
hospital deductible will be $1,316. The daily coinsurance amounts for 
CY 2017 will be: (1) $329 for the 61st through 90th day of 
hospitalization in a benefit period; (2) $658 for lifetime reserve 
days; and (3) $164.50 for the 21st through 100th day of extended care 
services in a skilled nursing facility in a benefit period.

DATES: Effective Date: This notice is effective on January 1, 2017.

FOR FURTHER INFORMATION CONTACT:
    Clare McFarland, (410) 786-6390 for general information.

[[Page 80061]]

    Gregory J. Savord, (410) 786-1521 for case-mix analysis.

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 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 (CY).

II. Computing the Inpatient Hospital Deductible for CY 2017

    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 CY, adjusted 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 (FY) that begins on October 
1 of the same preceding CY, and adjusted to reflect changes in 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)(XX) of the Act, the percentage 
increase used to update the payment rates for FY 2017 for hospitals 
paid under the inpatient prospective payment system is the market 
basket percentage increase, otherwise known as the market basket 
update, reduced by 0.75 percentage points (see section 
1886(b)(3)(B)(xii)(V) of the Act), and an adjustment based on changes 
in the economy-wide productivity (the multifactor productivity (MFP) 
adjustment) (see section 1886(b)(3)(B)(xi)(II) of the Act). Under 
section 1886(b)(3)(B)(viii) of the Act, for FY 2017, the applicable 
percentage increase for hospitals that do not submit quality data as 
specified by the Secretary of the Department of Health and Human 
Services (the Secretary) is reduced by one quarter of the market basket 
update. We are estimating that after accounting for those hospitals 
receiving the lower market basket update in the payment-weighted 
average update, the calculated deductible will not be affected, since 
the majority of hospitals submit quality data and receive the full 
market basket update. Section 1886(b)(3)(B)(ix) of the Act requires 
that any hospital that is not a meaningful electronic health record 
(EHR) user (as defined in section 1886(n)(3) of the Act) will have 
three-quarters of the market basket update reduced by 66\2/3\ percent 
for FY 2016, 100 percent for FY 2017, and 100 percent for FY 2018 and 
each subsequent fiscal year. We are estimating that after accounting 
for these hospitals receiving the lower market basket update, the 
calculated deductible will not be affected, since the majority of 
hospitals are meaningful EHR users and are expected to receive the full 
market basket update.
    Under section 1886 of the Act, the percentage increase used to 
update the payment rates for FY 2017 for hospitals excluded from the 
inpatient prospective payment system is as follows:
     The percentage increase for long term care hospitals is 
the market basket percentage increase reduced by 0.75 percentage points 
and the MFP adjustment (see sections 1886(m)(3)(A) and 1886(m)(4)(F) of 
the Act). In addition, these hospitals may also be impacted by the 
quality reporting adjustments and the site-neutral payment rates (see 
sections 1886(m)(5) and 1886(m)(6) of the Act).
     The percentage increase for inpatient rehabilitation 
facilities is the market basket percentage increase reduced by 0.75 
percentage points and the MFP adjustment (see sections 1886(j)(3)(C) 
and 1886(j)(3)(D)(v) of the Act). In addition, these hospitals may also 
be impacted by the quality reporting adjustments (see section 
1886(j)(7) of the Act).
     The percentage increase used to update the payment rate 
for inpatient psychiatric facilities is the market basket percentage 
increase reduced by 0.2 percentage points and the MFP adjustment (see 
sections 1886(s)(2)(A)(i), 1886(s)(2)(A)(ii), and 1886(s)(3)(E) of the 
Act). In addition, these hospitals may also be impacted by the quality 
reporting adjustments (see section 1886(s)(4) of the Act).
     The percentage increase for other types of hospitals 
excluded from the inpatient hospital prospective payment system (cancer 
hospitals, children's hospitals, and hospitals located outside the 50 
States, the District of Columbia, and Puerto Rico) is the market basket 
percentage increase (see section 1886(b)(3)(B)(ii)(VIII) of the Act).
    The Inpatient Prospective Payment System market basket percentage 
increase for FY 2017 is 2.7 percent and the MFP adjustment is -0.3 
percentage point, as announced in the final rule that appeared in the 
Federal Register on August 22, 2016 entitled, ``Hospital Inpatient 
Prospective Payment Systems for Acute Care Hospitals and the Long-Term 
Care Hospital Prospective Payment System and Fiscal Year 2017 Rates'' 
(81 FR 56762). Therefore, the percentage increase for hospitals paid 
under the inpatient prospective payment system that submit quality data 
and are meaningful EHR users is 1.65 percent (that is, the FY 2017 
market basket update of 2.7 percent less the MFP adjustment of 0.3 
percentage point and less 0.75 percentage point). The average payment 
percentage increase for hospitals excluded from the inpatient 
prospective payment system is 2.0 percent. This average includes long 
term care hospitals, inpatient rehabilitation facilities, and other 
hospitals excluded from the inpatient hospital prospective payment 
system. Weighting these percentages in accordance with payment volume, 
our best estimate of the payment-weighted average of the increases in 
the payment rates for FY 2017 is 1.70 percent.
    To develop the adjustment to reflect changes in real case-mix, we 
first calculated an average case-mix for each hospital 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 
FY 2016 compared to FY 2015. (We excluded from this calculation 
hospitals whose payments are not based on the inpatient prospective 
payment system because their payments are based on alternate 
prospective payment systems or reasonable costs.) We used Medicare 
bills from prospective payment hospitals that we received as of July 
2016. These bills represent a total of about 7.4 million Medicare 
discharges for FY 2016 and provide the most recent case-mix data 
available at this time. Based on these bills, the change in average 
case-mix in FY 2016 is 2.61 percent. Based on these bills and past 
experience, we expect the overall case mix change to be 2.7 percent as 
the year progresses and more FY 2016 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

[[Page 80062]]

be real. Real case-mix is that portion of case-mix that is due to 
changes in the mix of cases in the hospital and not due to coding 
optimization. Over the past several years, we have seen case mix 
increases of about 0.5 percent per year. (In some years there were 
larger increases in case mix due to much lower discharges for that 
year.) For 2016, we expect the increase in real case mix to continue to 
be 0.5 percent. Most of the observed FY 2016 case mix increase is 
likely due to artifacts of the implementation of ICD-10 which affects 
the calculated case mix level, but does not measure the actual increase 
in real case mix. Therefore, we expect that much of the change in 
average case-mix will not be real and estimate that this real change 
will be 0.5 percent.
    Thus as stated above, the estimate of the payment-weighted average 
of the applicable percentage increases used for updating the payment 
rates is 1.70 percent, and the real case-mix adjustment factor for the 
deductible is 0.5 percent. Therefore, using the statutory formula as 
stated in section 1813(b) of the Act, we calculate the inpatient 
hospital deductible for services furnished in CY 2017 to be $1,316. 
This deductible amount is determined by multiplying $1,288 (the 
inpatient hospital deductible for CY 2016 (81 FR 56762)) by the 
payment-weighted average increase in the payment rates of 1.017 
multiplied by the increase in real case-mix of 1.005, which equals 
$1,316.45 and is rounded to $1,316.

III. Computing the Inpatient Hospital and Extended Care Services 
Coinsurance Amounts for CY 2017

    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 CY. The increase in the deductible 
generates increases in the coinsurance amounts. For inpatient hospital 
and extended care services furnished in CY 2017, 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 
$329 (one-fourth of the inpatient hospital deductible as stated in 
section 1813(a)(1)(A) of the Act); the daily coinsurance for lifetime 
reserve days will be $658 (one-half of the inpatient hospital 
deductible as stated in section 1813(a)(1)(B) of the Act); 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 
$164.50 (one-eighth of the inpatient hospital deductible as stated in 
section 1813(a)(3) of the Act).

IV. Cost to Medicare Beneficiaries

    Table 1 below summarizes the deductible and coinsurance amounts for 
CYs 2016 and 2017, as well as the number of each that is estimated to 
be paid.

    Table 1--Part A Deductible and Coinsurance Amounts for Calendar Years 2016 and 2017 Type of Cost Sharing
----------------------------------------------------------------------------------------------------------------
                                                               Value                 Number paid (in millions)
                                                 ---------------------------------------------------------------
                                                       2016            2017            2016            2017
----------------------------------------------------------------------------------------------------------------
Inpatient hospital deductible...................           $1288           $1316            7.15            7.26
Daily coinsurance for 61st-90th Day.............             322             329            1.77            1.80
Daily coinsurance for lifetime reserve days.....             644             658            0.87            0.88
SNF coinsurance.................................             161          164.50           40.56           41.83
----------------------------------------------------------------------------------------------------------------

    The estimated total increase in costs to beneficiaries is about 
$740 million (rounded to the nearest $10 million) due to: (1) The 
increase in the deductible and coinsurance amounts; and (2) the 
increase in the number of deductibles and daily coinsurance amounts 
paid. We determine the increase in cost to beneficiaries by calculating 
the difference between the 2016 and 2017 deductible and coinsurance 
amounts multiplied by the estimated increase in the number of 
deductible and coinsurance amounts paid.

V. Waiver of Proposed Notice and Comment Period

    Section 1813(b)(2) of the Act requires publication of the inpatient 
hospital deductible and all coinsurance amounts--the hospital and 
extended care services coinsurance amounts--between September 1 and 
September 15 of the year preceding the year to which they will apply. 
These amounts are determined according to the statute as discussed 
above. 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 
(APA), 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 here, because the formulae used to calculate 
the inpatient hospital deductible and hospital and extended care 
services coinsurance amounts are statutorily directed, and we can 
exercise no discretion in following the formulae. 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.

VI. Collection of Information Requirements

    This document does not impose information collection requirements, 
that is, reporting, recordkeeping or third-party disclosure 
requirements. Consequently, there is no need for review by the Office 
of Management and Budget under the authority of the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.).

VII. Regulatory Impact Analysis

A. Statement of Need

    Section 1813(b)(2) of the Act requires the Secretary to publish, 
between September 1 and September 15 of each year, the amounts of the 
inpatient hospital deductible and hospital and extended care services 
coinsurance applicable for services furnished in the following CY.

[[Page 80063]]

B. Overall Impact

    We have examined the impact of this notice as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 
1999) and the Congressional Review Act (5 U.S.C., Part I, Ch. 8).
    Executive Orders 12866 and 13563 direct 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 notices 
with economically significant effects ($100 million or more in any 1 
year). As stated in section IV of this notice, we estimate that the 
total increase in costs to beneficiaries associated with this notice is 
about $740 million due to: (1) The increase in the deductible and 
coinsurance amounts; and (2) the increase in the number of deductibles 
and daily coinsurance amounts paid. As a result, this notice is 
economically significant under section 3(f)(1) of Executive Order 12866 
and is a major action under the Congressional Review Act. In accordance 
with the provisions of Executive Order 12866, this notice was reviewed 
by the Office of Management and Budget.
    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and small 
governmental jurisdictions. Most hospitals and most other providers and 
suppliers are small entities, either by nonprofit status or by having 
revenues of less than $7.5 million to $38.5 million in any 1 year (for 
details, see the Small Business Administration's Web site at http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf). 
Individuals and states are not included in the definition of a small 
entity. As discussed above, this annual notice announces the inpatient 
hospital deductible and the hospital and extended care services 
coinsurance amounts for services furnished in CY 2017 under Medicare's 
Hospital Insurance Program (Medicare Part A). As a result, we are not 
preparing an analysis for the RFA because the Secretary has determined 
that this notice will not have a significant economic impact on a 
substantial number of small entities.
    In addition, section 1102(b) of the Social Security 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 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 for Medicare payment regulations and 
has fewer than 100 beds. As discussed above, we are not preparing an 
analysis for section 1102(b) of the Act because the Secretary has 
determined that this notice will not have a significant impact on the 
operations of a substantial number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. For 2016, that 
threshold accounting for inflation is approximately $146 million. This 
notice does not impose mandates that will have a consequential effect 
of $146 million or more on state, local, or tribal governments or on 
the private sector.
    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. Since this notice does not impose any costs on state or 
local governments, preempt state law, or have Federalism implications, 
the requirements of Executive Order 13132 are not applicable.

    Dated: September 23, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Dated: November 8, 2016.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2016-27389 Filed 11-10-16; 4:15 pm]
 BILLING CODE 4120-01-P



                                                  80060                             Federal Register / Vol. 81, No. 220 / Tuesday, November 15, 2016 / Notices

                                                  Proposed Project                                                        alcohol-related attitudes and behaviors                                       to 300 individuals will be screened to
                                                    Reframing How We Talk About                                           because the range of knowledge and                                            obtain 54 individuals who will
                                                  Alcohol: Public Perceptions of                                          beliefs about excessive alcohol use and                                       participate in 90-minute in-depth
                                                  Excessive Alcohol Use and Related                                       its risks is not well understood. Despite                                     interviews or triads. All data will be
                                                  Harms—NEW—National Center on Birth                                      the fact that public health experts                                           collected only one time. Respondents
                                                  Defects and Developmental Disabilities                                  recommend that alcohol screening and                                          who will participate in these interviews
                                                  (NCBDD), Centers for Disease Control                                    brief counseling be provided to adults in                                     and triads will be selected purposively
                                                  and Prevention (CDC).                                                   primary care settings, data indicate that                                     to inform the development of a
                                                                                                                          only one of six U.S. adults reported ever                                     messaging strategy. Topics addressed
                                                  Background and Brief Description                                        discussing alcohol use with a health                                          may include alcohol and its related
                                                     Excessive alcohol consumption leads                                  professional. To develop an effective,                                        harms, language used when talking
                                                  to a variety of negative health and social                              consistent messaging strategy, a deeper                                       about alcohol, how people talk about
                                                  consequences. Those who drink heavily                                   understanding of how the public thinks                                        alcohol with their health care providers,
                                                  have an increased risk for certain                                      and talks about alcohol is required. The                                      and sources of information about
                                                  chronic diseases, such as hypertension,                                 research will be used to inform the                                           alcohol.
                                                  psychological disorders, and various                                    development of patient and provider
                                                                                                                                                                                                          The information gathered through this
                                                  forms of cancer. Excessive alcohol use                                  materials and messages about excessive
                                                                                                                                                                                                        data collection will allow CDC to
                                                  also can result in societal harms, such                                 alcohol use and related harms.
                                                                                                                             The one-year study proposes a series                                       develop an effective messaging strategy
                                                  as unintentional injuries, violence, and
                                                                                                                          of individual in-depth interviews and                                         that reframes the way the public thinks
                                                  high economic costs.
                                                     Fortunately effective prevention                                     triads (small group discussions with                                          and communicates about excessive
                                                  strategies are available to reduce                                      three participants) with 54 participants                                      alcohol use. Participation is voluntary,
                                                  excessive alcohol use and its related                                   identified by contractor staff and                                            and there is no cost to respondents other
                                                  harms. However, it is difficult to craft                                professional recruiting firms. Data will                                      than their time.
                                                  public health messages and                                              be collected through one-time, 90-                                              The total estimated annualized
                                                  communication strategies to change                                      minute in-depth interviews or triads. Up                                      burden hours are 132.

                                                                                                                         ESTIMATED ANNUALIZED BURDEN HOURS
                                                                                                                                                                                                                                    Average
                                                                                                                                                                                                      Number of
                                                                                                                                                                           Number of                                              burden per              Total burden
                                                                  Respondents                                                  Form name                                                            responses per
                                                                                                                                                                          respondents                                              response                  hours
                                                                                                                                                                                                      respondent                   (in hours)

                                                  Persons aged 21–55 .........................             Study screener .................................                                300                            1                  10/60                  50

                                                                                                                                                                                In-depth interviews

                                                                                                           Phase 1 (Descriptive) .......................                                       9                         1                        1.5               14
                                                                                                           Phase 2 (Prescriptive) ......................                                       9                         1                        1.5               14

                                                                                                                                                                                          Triads

                                                                                                           Phase 1 (Descriptive) .......................                                    18                            1                       1.5               27
                                                                                                           Phase 2 (Prescriptive) ......................                                    18                            1                       1.5               27

                                                       Total ...........................................   ...........................................................   ........................   ........................   ........................            132



                                                  Leroy A. Richardson,                                                    DEPARTMENT OF HEALTH AND                                                      furnished in calendar year (CY) 2017
                                                  Chief, Information Collection Review Office,                            HUMAN SERVICES                                                                under Medicare’s Hospital Insurance
                                                  Office of Scientific Integrity, Office of the                                                                                                         Program (Medicare Part A). The
                                                  Associate Director for Science, Office of the                           Centers for Medicare & Medicaid                                               Medicare statute specifies the formulae
                                                  Director, Centers for Disease Control and                               Services                                                                      used to determine these amounts. For
                                                  Prevention.                                                                                                                                           CY 2017, the inpatient hospital
                                                  [FR Doc. 2016–27395 Filed 11–14–16; 8:45 am]                            [CMS–8062–N]
                                                                                                                                                                                                        deductible will be $1,316. The daily
                                                  BILLING CODE 4163–18–P                                                  RIN 0938–AS70                                                                 coinsurance amounts for CY 2017 will
                                                                                                                                                                                                        be: (1) $329 for the 61st through 90th
                                                                                                                          Medicare Program; CY 2017 Inpatient                                           day of hospitalization in a benefit
                                                                                                                          Hospital Deductible and Hospital and                                          period; (2) $658 for lifetime reserve
                                                                                                                          Extended Care Services Coinsurance                                            days; and (3) $164.50 for the 21st
                                                                                                                          Amounts                                                                       through 100th day of extended care
                                                                                                                                                                                                        services in a skilled nursing facility in
                                                                                                                                  Centers for Medicare &
mstockstill on DSK3G9T082PROD with NOTICES




                                                                                                                          AGENCY:
                                                                                                                                                                                                        a benefit period.
                                                                                                                          Medicaid Services (CMS), HHS.
                                                                                                                          ACTION: Notice.                                                               DATES:  Effective Date: This notice is
                                                                                                                                                                                                        effective on January 1, 2017.
                                                                                                                          SUMMARY:  This notice announces the
                                                                                                                          inpatient hospital deductible and the                                         FOR FURTHER INFORMATION CONTACT:
                                                                                                                          hospital and extended care services                                             Clare McFarland, (410) 786–6390 for
                                                                                                                          coinsurance amounts for services                                              general information.


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                                                                             Federal Register / Vol. 81, No. 220 / Tuesday, November 15, 2016 / Notices                                           80061

                                                    Gregory J. Savord, (410) 786–1521 for                 the market basket update. We are                      percentage increase (see section
                                                  case-mix analysis.                                      estimating that after accounting for                  1886(b)(3)(B)(ii)(VIII) of the Act).
                                                  SUPPLEMENTARY INFORMATION:                              those hospitals receiving the lower                      The Inpatient Prospective Payment
                                                                                                          market basket update in the payment-                  System market basket percentage
                                                  I. Background                                           weighted average update, the calculated               increase for FY 2017 is 2.7 percent and
                                                     Section 1813 of the Social Security                  deductible will not be affected, since the            the MFP adjustment is ¥0.3 percentage
                                                  Act (the Act) provides for an inpatient                 majority of hospitals submit quality data             point, as announced in the final rule
                                                  hospital deductible to be subtracted                    and receive the full market basket                    that appeared in the Federal Register on
                                                  from the amount payable by Medicare                     update. Section 1886(b)(3)(B)(ix) of the              August 22, 2016 entitled, ‘‘Hospital
                                                  for inpatient hospital services furnished               Act requires that any hospital that is not            Inpatient Prospective Payment Systems
                                                  to a beneficiary. It also provides for                  a meaningful electronic health record                 for Acute Care Hospitals and the Long-
                                                  certain coinsurance amounts to be                       (EHR) user (as defined in section                     Term Care Hospital Prospective
                                                  subtracted from the amounts payable by                  1886(n)(3) of the Act) will have three-               Payment System and Fiscal Year 2017
                                                  Medicare for inpatient hospital and                     quarters of the market basket update                  Rates’’ (81 FR 56762). Therefore, the
                                                  extended care services. Section                         reduced by 662⁄3 percent for FY 2016,                 percentage increase for hospitals paid
                                                  1813(b)(2) of the Act requires us to                    100 percent for FY 2017, and 100                      under the inpatient prospective
                                                  determine and publish each year the                     percent for FY 2018 and each                          payment system that submit quality data
                                                  amount of the inpatient hospital                        subsequent fiscal year. We are                        and are meaningful EHR users is 1.65
                                                  deductible and the hospital and                         estimating that after accounting for                  percent (that is, the FY 2017 market
                                                  extended care services coinsurance                      these hospitals receiving the lower                   basket update of 2.7 percent less the
                                                  amounts applicable for services                         market basket update, the calculated                  MFP adjustment of 0.3 percentage point
                                                  furnished in the following calendar year                deductible will not be affected, since the            and less 0.75 percentage point). The
                                                  (CY).                                                   majority of hospitals are meaningful                  average payment percentage increase for
                                                                                                          EHR users and are expected to receive                 hospitals excluded from the inpatient
                                                  II. Computing the Inpatient Hospital
                                                                                                          the full market basket update.                        prospective payment system is 2.0
                                                  Deductible for CY 2017
                                                                                                            Under section 1886 of the Act, the                  percent. This average includes long term
                                                     Section 1813(b) of the Act prescribes                percentage increase used to update the                care hospitals, inpatient rehabilitation
                                                  the method for computing the amount of                  payment rates for FY 2017 for hospitals               facilities, and other hospitals excluded
                                                  the inpatient hospital deductible. The                  excluded from the inpatient prospective               from the inpatient hospital prospective
                                                  inpatient hospital deductible is an                     payment system is as follows:                         payment system. Weighting these
                                                  amount equal to the inpatient hospital                    • The percentage increase for long                  percentages in accordance with
                                                  deductible for the preceding CY,                        term care hospitals is the market basket              payment volume, our best estimate of
                                                  adjusted by our best estimate of the                    percentage increase reduced by 0.75                   the payment-weighted average of the
                                                  payment-weighted average of the                         percentage points and the MFP                         increases in the payment rates for FY
                                                  applicable percentage increases (as                     adjustment (see sections 1886(m)(3)(A)                2017 is 1.70 percent.
                                                  defined in section 1886(b)(3)(B) of the                 and 1886(m)(4)(F) of the Act). In                        To develop the adjustment to reflect
                                                  Act) used for updating the payment                      addition, these hospitals may also be                 changes in real case-mix, we first
                                                  rates to hospitals for discharges in the                impacted by the quality reporting                     calculated an average case-mix for each
                                                  fiscal year (FY) that begins on October                 adjustments and the site-neutral                      hospital that reflects the relative
                                                  1 of the same preceding CY, and                         payment rates (see sections 1886(m)(5)                costliness of that hospital’s mix of cases
                                                  adjusted to reflect changes in real case-               and 1886(m)(6) of the Act).                           compared to those of other hospitals.
                                                  mix. The adjustment to reflect real case-                 • The percentage increase for                       We then computed the change in
                                                  mix is determined on the basis of the                   inpatient rehabilitation facilities is the            average case-mix for hospitals paid
                                                  most recent case-mix data available. The                market basket percentage increase                     under the Medicare prospective
                                                  amount determined under this formula                    reduced by 0.75 percentage points and                 payment system in FY 2016 compared
                                                  is rounded to the nearest multiple of $4                the MFP adjustment (see sections                      to FY 2015. (We excluded from this
                                                  (or, if midway between two multiples of                 1886(j)(3)(C) and 1886(j)(3)(D)(v) of the             calculation hospitals whose payments
                                                  $4, to the next higher multiple of $4).                 Act). In addition, these hospitals may                are not based on the inpatient
                                                     Under section 1886(b)(3)(B)(i)(XX) of                also be impacted by the quality                       prospective payment system because
                                                  the Act, the percentage increase used to                reporting adjustments (see section                    their payments are based on alternate
                                                  update the payment rates for FY 2017                    1886(j)(7) of the Act).                               prospective payment systems or
                                                  for hospitals paid under the inpatient                    • The percentage increase used to                   reasonable costs.) We used Medicare
                                                  prospective payment system is the                       update the payment rate for inpatient                 bills from prospective payment
                                                  market basket percentage increase,                      psychiatric facilities is the market                  hospitals that we received as of July
                                                  otherwise known as the market basket                    basket percentage increase reduced by                 2016. These bills represent a total of
                                                  update, reduced by 0.75 percentage                      0.2 percentage points and the MFP                     about 7.4 million Medicare discharges
                                                  points (see section 1886(b)(3)(B)(xii)(V)               adjustment (see sections                              for FY 2016 and provide the most recent
                                                  of the Act), and an adjustment based on                 1886(s)(2)(A)(i), 1886(s)(2)(A)(ii), and              case-mix data available at this time.
                                                  changes in the economy-wide                             1886(s)(3)(E) of the Act). In addition,               Based on these bills, the change in
                                                  productivity (the multifactor                           these hospitals may also be impacted by               average case-mix in FY 2016 is 2.61
                                                  productivity (MFP) adjustment) (see                     the quality reporting adjustments (see                percent. Based on these bills and past
                                                  section 1886(b)(3)(B)(xi)(II) of the Act).              section 1886(s)(4) of the Act).                       experience, we expect the overall case
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                                                  Under section 1886(b)(3)(B)(viii) of the                  • The percentage increase for other                 mix change to be 2.7 percent as the year
                                                  Act, for FY 2017, the applicable                        types of hospitals excluded from the                  progresses and more FY 2016 data
                                                  percentage increase for hospitals that do               inpatient hospital prospective payment                become available.
                                                  not submit quality data as specified by                 system (cancer hospitals, children’s                     Section 1813 of the Act requires that
                                                  the Secretary of the Department of                      hospitals, and hospitals located outside              the inpatient hospital deductible be
                                                  Health and Human Services (the                          the 50 States, the District of Columbia,              adjusted only by that portion of the
                                                  Secretary) is reduced by one quarter of                 and Puerto Rico) is the market basket                 case-mix change that is determined to


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                                                  80062                             Federal Register / Vol. 81, No. 220 / Tuesday, November 15, 2016 / Notices

                                                  be real. Real case-mix is that portion of                             0.5 percent. Therefore, using the                              services furnished in CY 2017, in
                                                  case-mix that is due to changes in the                                statutory formula as stated in section                         accordance with the fixed percentages
                                                  mix of cases in the hospital and not due                              1813(b) of the Act, we calculate the                           defined in the law, the daily
                                                  to coding optimization. Over the past                                 inpatient hospital deductible for                              coinsurance for the 61st through 90th
                                                  several years, we have seen case mix                                  services furnished in CY 2017 to be                            day of hospitalization in a benefit
                                                  increases of about 0.5 percent per year.                              $1,316. This deductible amount is                              period will be $329 (one-fourth of the
                                                  (In some years there were larger                                      determined by multiplying $1,288 (the                          inpatient hospital deductible as stated
                                                  increases in case mix due to much lower                               inpatient hospital deductible for CY                           in section 1813(a)(1)(A) of the Act); the
                                                  discharges for that year.) For 2016, we                               2016 (81 FR 56762)) by the payment-                            daily coinsurance for lifetime reserve
                                                  expect the increase in real case mix to                               weighted average increase in the                               days will be $658 (one-half of the
                                                  continue to be 0.5 percent. Most of the                               payment rates of 1.017 multiplied by the                       inpatient hospital deductible as stated
                                                  observed FY 2016 case mix increase is                                 increase in real case-mix of 1.005,                            in section 1813(a)(1)(B) of the Act); and
                                                  likely due to artifacts of the                                        which equals $1,316.45 and is rounded                          the daily coinsurance for the 21st
                                                  implementation of ICD–10 which affects                                to $1,316.                                                     through 100th day of extended care
                                                  the calculated case mix level, but does                                                                                              services in a skilled nursing facility in
                                                                                                                        III. Computing the Inpatient Hospital
                                                  not measure the actual increase in real                                                                                              a benefit period will be $164.50 (one-
                                                                                                                        and Extended Care Services
                                                  case mix. Therefore, we expect that                                                                                                  eighth of the inpatient hospital
                                                                                                                        Coinsurance Amounts for CY 2017
                                                  much of the change in average case-mix                                                                                               deductible as stated in section
                                                  will not be real and estimate that this                                 The coinsurance amounts provided                             1813(a)(3) of the Act).
                                                  real change will be 0.5 percent.                                      for in section 1813 of the Act are
                                                                                                                                                                                       IV. Cost to Medicare Beneficiaries
                                                     Thus as stated above, the estimate of                              defined as fixed percentages of the
                                                  the payment-weighted average of the                                   inpatient hospital deductible for                                Table 1 below summarizes the
                                                  applicable percentage increases used for                              services furnished in the same CY. The                         deductible and coinsurance amounts for
                                                  updating the payment rates is 1.70                                    increase in the deductible generates                           CYs 2016 and 2017, as well as the
                                                  percent, and the real case-mix                                        increases in the coinsurance amounts.                          number of each that is estimated to be
                                                  adjustment factor for the deductible is                               For inpatient hospital and extended care                       paid.

                                                      TABLE 1—PART A DEDUCTIBLE AND COINSURANCE AMOUNTS FOR CALENDAR YEARS 2016 AND 2017 TYPE OF COST
                                                                                                  SHARING
                                                                                                                                                                               Value                        Number paid
                                                                                                                                                                                                            (in millions)
                                                                                                                                                                        2016            2017            2016                2017

                                                  Inpatient hospital deductible ............................................................................               $1288            $1316            7.15               7.26
                                                  Daily coinsurance for 61st–90th Day ...............................................................                        322              329            1.77               1.80
                                                  Daily coinsurance for lifetime reserve days .....................................................                          644              658            0.87               0.88
                                                  SNF coinsurance .............................................................................................              161           164.50           40.56              41.83



                                                     The estimated total increase in costs                              than notice and comment rulemaking                             contrary to the public interest.
                                                  to beneficiaries is about $740 million                                procedures, to make the                                        Therefore, we find good cause to waive
                                                  (rounded to the nearest $10 million) due                              announcements. In doing so, we                                 publication of a proposed notice and
                                                  to: (1) The increase in the deductible                                acknowledge that under the                                     solicitation of public comments.
                                                  and coinsurance amounts; and (2) the                                  Administrative Procedure Act (APA),
                                                  increase in the number of deductibles                                 interpretive rules, general statements of                      VI. Collection of Information
                                                  and daily coinsurance amounts paid.                                   policy, and rules of agency organization,                      Requirements
                                                  We determine the increase in cost to                                  procedure, or practice are excepted from                         This document does not impose
                                                  beneficiaries by calculating the                                      the requirements of notice and comment                         information collection requirements,
                                                  difference between the 2016 and 2017                                  rulemaking.                                                    that is, reporting, recordkeeping or
                                                  deductible and coinsurance amounts                                      We considered publishing a proposed                          third-party disclosure requirements.
                                                  multiplied by the estimated increase in                               notice to provide a period for public                          Consequently, there is no need for
                                                  the number of deductible and                                          comment. However, we may waive that                            review by the Office of Management and
                                                  coinsurance amounts paid.                                             procedure if we find good cause that                           Budget under the authority of the
                                                  V. Waiver of Proposed Notice and                                      prior notice and comment are                                   Paperwork Reduction Act of 1995 (44
                                                  Comment Period                                                        impracticable, unnecessary, or contrary                        U.S.C. 3501 et seq.).
                                                                                                                        to the public interest. We find that the
                                                    Section 1813(b)(2) of the Act requires                              procedure for notice and comment is                            VII. Regulatory Impact Analysis
                                                  publication of the inpatient hospital                                 unnecessary here, because the formulae                         A. Statement of Need
                                                  deductible and all coinsurance                                        used to calculate the inpatient hospital
                                                  amounts—the hospital and extended                                     deductible and hospital and extended                             Section 1813(b)(2) of the Act requires
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                                                  care services coinsurance amounts—                                    care services coinsurance amounts are                          the Secretary to publish, between
                                                  between September 1 and September 15                                  statutorily directed, and we can exercise                      September 1 and September 15 of each
                                                  of the year preceding the year to which                               no discretion in following the formulae.                       year, the amounts of the inpatient
                                                  they will apply. These amounts are                                    Moreover, the statute establishes the                          hospital deductible and hospital and
                                                  determined according to the statute as                                time period for which the deductible                           extended care services coinsurance
                                                  discussed above. As has been our                                      and coinsurance amounts will apply                             applicable for services furnished in the
                                                  custom, we use general notices, rather                                and delaying publication would be                              following CY.


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                                                                             Federal Register / Vol. 81, No. 220 / Tuesday, November 15, 2016 / Notices                                           80063

                                                  B. Overall Impact                                       2017 under Medicare’s Hospital                        DEPARTMENT OF HEALTH AND
                                                     We have examined the impact of this                  Insurance Program (Medicare Part A).                  HUMAN SERVICES
                                                  notice as required by Executive Order                   As a result, we are not preparing an
                                                  12866 on Regulatory Planning and                        analysis for the RFA because the                      Centers for Medicare & Medicaid
                                                  Review (September 30, 1993), Executive                  Secretary has determined that this                    Services
                                                  Order 13563 on Improving Regulation                     notice will not have a significant                    [CMS–8064–N]
                                                  and Regulatory Review (January 18,                      economic impact on a substantial
                                                                                                          number of small entities.                             RIN 0938–AS72
                                                  2011), the Regulatory Flexibility Act
                                                  (RFA) (September 19, 1980, Pub. L. 96–                     In addition, section 1102(b) of the                Medicare Program; Medicare Part B
                                                  354), section 1102(b) of the Social                     Social Security Act requires us to                    Monthly Actuarial Rates, Premium
                                                  Security Act, section 202 of the                        prepare a regulatory impact analysis if               Rate, and Annual Deductible
                                                  Unfunded Mandates Reform Act of 1995                    a rule may have a significant impact on               Beginning January 1, 2017
                                                  (March 22, 1995; Pub. L. 104–4),                        the operations of a substantial number
                                                  Executive Order 13132 on Federalism                     of small rural hospitals. This analysis               AGENCY: Centers for Medicare &
                                                  (August 4, 1999) and the Congressional                  must conform to the provisions of                     Medicaid Services (CMS), HHS.
                                                  Review Act (5 U.S.C., Part I, Ch. 8).                   section 604 of the RFA. For purposes of               ACTION: Notice.
                                                     Executive Orders 12866 and 13563                     section 1102(b) of the Act, we define a
                                                  direct agencies to assess all costs and                                                                       SUMMARY:   This notice announces the
                                                                                                          small rural hospital as a hospital that is
                                                  benefits of available regulatory                                                                              monthly actuarial rates for aged (age 65
                                                                                                          located outside of a Metropolitan
                                                  alternatives and, if regulation is                                                                            and over) and disabled (under age 65)
                                                                                                          Statistical Area for Medicare payment
                                                  necessary, to select regulatory                                                                               beneficiaries enrolled in Part B of the
                                                                                                          regulations and has fewer than 100
                                                  approaches that maximize net benefits                                                                         Medicare Supplementary Medical
                                                                                                          beds. As discussed above, we are not
                                                  (including potential economic,                                                                                Insurance (SMI) program beginning
                                                                                                          preparing an analysis for section 1102(b)
                                                  environmental, public health and safety                                                                       January 1, 2017. In addition, this notice
                                                                                                          of the Act because the Secretary has
                                                  effects, distributive impacts, and                                                                            announces the monthly premium for
                                                                                                          determined that this notice will not
                                                  equity). A regulatory impact analysis                                                                         aged and disabled beneficiaries, the
                                                                                                          have a significant impact on the
                                                  (RIA) must be prepared for major                                                                              deductible for 2017, and the income-
                                                                                                          operations of a substantial number of
                                                  notices with economically significant                                                                         related monthly adjustment amounts to
                                                                                                          small rural hospitals.
                                                  effects ($100 million or more in any 1                                                                        be paid by beneficiaries with modified
                                                                                                             Section 202 of the Unfunded                        adjusted gross income above certain
                                                  year). As stated in section IV of this                  Mandates Reform Act of 1995 also
                                                  notice, we estimate that the total                                                                            threshold amounts. The monthly
                                                                                                          requires that agencies assess anticipated             actuarial rates for 2017 are $261.90 for
                                                  increase in costs to beneficiaries                      costs and benefits before issuing any
                                                  associated with this notice is about $740                                                                     aged enrollees and $254.20 for disabled
                                                                                                          rule whose mandates require spending                  enrollees. The standard monthly Part B
                                                  million due to: (1) The increase in the                 in any 1 year of $100 million in 1995
                                                  deductible and coinsurance amounts;                                                                           premium rate for all enrollees for 2017
                                                                                                          dollars, updated annually for inflation.              is $134.00, which is equal to 50 percent
                                                  and (2) the increase in the number of                   For 2016, that threshold accounting for
                                                  deductibles and daily coinsurance                                                                             of the monthly actuarial rate for aged
                                                                                                          inflation is approximately $146 million.              enrollees (or approximately 25 percent
                                                  amounts paid. As a result, this notice is               This notice does not impose mandates
                                                  economically significant under section                                                                        of the expected average total cost of Part
                                                                                                          that will have a consequential effect of              B coverage for aged enrollees) plus
                                                  3(f)(1) of Executive Order 12866 and is                 $146 million or more on state, local, or
                                                  a major action under the Congressional                                                                        $3.00. (The 2016 standard premium rate
                                                                                                          tribal governments or on the private                  was $121.80, which includes the $3.00
                                                  Review Act. In accordance with the                      sector.
                                                  provisions of Executive Order 12866,                                                                          repayment amount.) The Part B
                                                  this notice was reviewed by the Office                     Executive Order 13132 establishes                  deductible for 2017 is $183.00 for all
                                                  of Management and Budget.                               certain requirements that an agency                   Part B beneficiaries. If a beneficiary has
                                                     The RFA requires agencies to analyze                 must meet when it promulgates a                       to pay an income-related monthly
                                                  options for regulatory relief of small                  proposed rule (and subsequent final                   adjustment, they will have to pay a total
                                                  entities, if a rule has a significant impact            rule) that imposes substantial direct                 monthly premium of about 35, 50, 65,
                                                  on a substantial number of small                        requirement costs on state and local                  or 80 percent of the total cost of Part B
                                                  entities. For purposes of the RFA, small                governments, preempts state law, or                   coverage plus $4.20, $6.00, $7.80, or
                                                  entities include small businesses,                      otherwise has Federalism implications.                $9.60.
                                                  nonprofit organizations, and small                      Since this notice does not impose any                 DATES: Effective Date: January 1, 2017.
                                                  governmental jurisdictions. Most                        costs on state or local governments,                  FOR FURTHER INFORMATION CONTACT: M.
                                                  hospitals and most other providers and                  preempt state law, or have Federalism                 Kent Clemens, (410) 786–6391.
                                                  suppliers are small entities, either by                 implications, the requirements of                     SUPPLEMENTARY INFORMATION:
                                                  nonprofit status or by having revenues                  Executive Order 13132 are not
                                                  of less than $7.5 million to $38.5                      applicable.                                           I. Background
                                                  million in any 1 year (for details, see the               Dated: September 23, 2016.                             Part B is the voluntary portion of the
                                                  Small Business Administration’s Web                     Andrew M. Slavitt,                                    Medicare program that pays all or part
                                                  site at http://www.sba.gov/sites/default/                                                                     of the costs for physicians’ services,
                                                                                                          Acting Administrator, Centers for Medicare
                                                  files/files/Size_Standards_Table.pdf).                                                                        outpatient hospital services, certain
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                                                                                                          & Medicaid Services.
                                                  Individuals and states are not included                                                                       home health services, services furnished
                                                                                                            Dated: November 8, 2016.
                                                  in the definition of a small entity. As                                                                       by rural health clinics, ambulatory
                                                  discussed above, this annual notice                     Sylvia M. Burwell,                                    surgical centers, comprehensive
                                                  announces the inpatient hospital                        Secretary, Department of Health and Human             outpatient rehabilitation facilities, and
                                                  deductible and the hospital and                         Services.                                             certain other medical and health
                                                  extended care services coinsurance                      [FR Doc. 2016–27389 Filed 11–10–16; 4:15 pm]          services not covered by Medicare Part
                                                  amounts for services furnished in CY                    BILLING CODE 4120–01–P                                A, Hospital Insurance. Medicare Part B


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Document Created: 2016-11-15 00:48:27
Document Modified: 2016-11-15 00:48:27
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
ActionNotice.
ContactClare McFarland, (410) 786-6390 for general information.
FR Citation81 FR 80060 
RIN Number0938-AS70

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