2012 Part B Medicare

8/3/2019 2012 Part B Medicare

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67572 Federal Register / Vol. 76, No. 211/ Tuesday, November 1, 2011/ Notices

consequential effect on State, local, ortribal governments or on the privatesector. However, States are required topay the premiums for dually-eligible

beneficiaries.Executive Order 13132 establishes

certain requirements that an agencymust meet when it promulgates aproposed rule (and subsequent final

rule) that imposes substantial directrequirement costs on State and localgovernments, preempts State law, orotherwise has Federalism implications.This notice will not have a substantialeffect on State or local governments.

In accordance with the provisions ofExecutive Order 12866, this notice wasreviewed by the Office of Managementand Budget.

(Catalog of Federal Domestic AssistanceProgram No. 93.773, MedicareHospitalInsurance)

Dated: September 22, 2011.

Donald M. Berwick,

Administrator, Centers for Medicare &Medicaid Services.

Dated: October 25, 2011.

Kathleen Sebelius,

Secretary.

[FR Doc. 201128188 Filed 102711; 11:15 am]

BILLING CODE 412001P

DEPARTMENT OF HEALTH ANDHUMAN SERVICES

Centers for Medicare & MedicaidServices

[CMS8045N]

RIN 0938AQ16

Medicare Program; Medicare Part BMonthly Actuarial Rates, PremiumRate, and Annual DeductibleBeginning January 1, 2012

AGENCY: Centers for Medicare &Medicaid Services (CMS), HHS.ACTION: Notice.

SUMMARY: This notice announces themonthly actuarial rates for aged (age 65and over) and disabled (under age 65)

beneficiaries enrolled in Part B of the

Medicare Supplementary MedicalInsurance (SMI) program beginningJanuary 1, 2012. In addition, this noticeannounces the monthly premium foraged and disabled beneficiaries as wellas the income-related monthlyadjustment amounts to be paid by

beneficiaries with modified adjustedgross income above certain thresholdamounts. The monthly actuarial ratesfor 2012 are $199.80 for aged enrolleesand $192.50 for disabled enrollees. Thestandard monthly Part B premium ratefor 2012 is $99.90, which is equal to 50

percent of the monthly actuarial rate foraged enrollees or approximately 25percent of the expected average totalcost of Part B coverage for agedenrollees. (The 2011 standard premiumrate was $115.40) The Part B deductiblefor 2012 is $140.00 for all Part B

beneficiaries. If a beneficiary has to payan income-related monthly adjustment,

they may have to pay a total monthlypremium of about 35, 50, 65, or 80percent of the total cost of Part Bcoverage.

DATES: Effective Date:January 1, 2012.

FOR FURTHER INFORMATION CONTACT: M.Kent Clemens, (410) 7866391.

SUPPLEMENTARY INFORMATION:

I. Background

Part B is the voluntary portion of theMedicare program that pays all or partof the costs for physicians services,outpatient hospital services, certain

home health services, services furnishedby rural health clinics, ambulatorysurgical centers, comprehensiveoutpatient rehabilitation facilities, andcertain other medical and healthservices not covered by Medicare PartA, Hospital Insurance. Medicare Part Bis available to individuals who areentitled to Medicare Part A, as well asto U.S. residents who have attained age65 and are citizens, and aliens who werelawfully admitted for permanentresidence and have resided in theUnited States for 5 consecutive years.Part B requires enrollment and payment

of monthly premiums, as described in42 CFR part 407, subpart B, and part408, respectively. The difference

between the premiums paid by allenrollees and total incurred costs is met

by transfers from the general fund of theTreasury.

The Secretary of the Department ofHealth and Human Services (theSecretary) is required by section 1839 ofthe Social Security Act (the Act) toannounce the Part B monthly actuarialrates for aged and disabled beneficiariesas well as the monthly Part B premium.The Part B annual deductible isincluded because its determination isdirectly linked to the aged actuarial rate.

The monthly actuarial rates for agedand disabled enrollees are used todetermine the correct amount of generalrevenue financing per beneficiary eachmonth. These amounts, according toactuarial estimates, will equal,respectively, one-half of the expectedaverage monthly cost of Part B for eachaged enrollee (age 65 or over) and one-half of the expected average monthlycost of Part B for each disabled enrollee(under age 65).

The Part B deductible to be paid byenrollees is also announced. Prior to theMedicare Prescription Drug,Improvement, and Modernization Act of2003 (MMA) (Pub. L. 108173), the PartB deductible was set in statute. Aftersetting the 2005 deductible amount at$110.00, section 629 of the MMA(amending section 1833(b) of the Act)

requires that the Part B deductible beindexed beginning in 2006. Theinflation factor to be used each year isthe annual percentage increase in thePart B actuarial rate for enrollees age 65and over. Specifically, the 2012 Part Bdeductible is calculated by multiplyingthe 2011 deductible by the ratio of the2012 aged actuarial rate over the 2011aged actuarial rate. The amountdetermined under this formula is thenrounded to the nearest $1.

The monthly Part B premium rate tobe paid by aged and disabled enrolleesis also announced. (Although the costs

to the program per disabled enrollee aredifferent than for the aged, the statuteprovides that they pay the samepremium amount.) Beginning with thepassage of section 203 of the SocialSecurity Amendments of 1972 (Pub. L.92603), the premium rate, which wasdetermined on a fiscal year basis, waslimited to the lesser of the actuarial ratefor aged enrollees, or the currentmonthly premium rate increased by thesame percentage as the most recentgeneral increase in monthly Title IIsocial security benefits.

However, the passage of section 124of the Tax Equity and Fiscal

Responsibility Act of 1982 (TEFRA)(Pub. L. 97248) suspended thispremium determination process.Section 124 of TEFRA changed thepremium basis to 50 percent of themonthly actuarial rate for aged enrollees(that is, 25 percent of program costs foraged enrollees). Section 606 of theSocial Security Amendments of 1983(Pub. L. 9821), section 2302 of theDeficit Reduction Act of 1984 (DEFRA84) (Pub. L. 98369), section 9313 of theConsolidated Omnibus BudgetReconciliation Act of 1985 (COBRA 85)(Pub. L. 99272), section 4080 of the

Omnibus Budget Reconciliation Act of1987 (OBRA 87) (Pub. L. 100203), andsection 6301 of the Omnibus BudgetReconciliation Act of 1989 (OBRA 89)(Pub. L. 101239) extended theprovision that the premium be based on50 percent of the monthly actuarial ratefor aged enrollees (that is, 25 percent ofprogram costs for aged enrollees). Thisextension expired at the end of 1990.

The premium rate for 1991 through1995 was legislated by section1839(e)(1)(B) of the Act, as added bysection 4301 of the Omnibus Budget

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67573Federal Register / Vol. 76, No. 211/ Tuesday, November 1, 2011/ Notices

Reconciliation Act of 1990 (OBRA 90)(Pub. L. 101508). In January 1996, thepremium determination basis wouldhave reverted to the method established

by the 1972 Social Security ActAmendments. However, section 13571of the Omnibus Budget ReconciliationAct of 1993 (OBRA 93) (Pub. L. 10366)changed the premium basis to 50

percent of the monthly actuarial rate foraged enrollees (that is, 25 percent ofprogram costs for aged enrollees) for1996 through 1998.

Section 4571 of the Balanced BudgetAct of 1997 (BBA) (Pub. L. 10533)permanently extended the provisionthat the premium be based on 50percent of the monthly actuarial rate foraged enrollees (that is, 25 percent ofprogram costs for aged enrollees).

The BBA included a further provisionaffecting the calculation of the Part Bactuarial rates and premiums for 1998through 2003. Section 4611 of the BBAmodified the home health benefitpayable under Part A for individualsenrolled in Part B. Under this section,

beginning in 1998, expenditures forhome health services not consideredpost-institutional are payable underPart B rather than Part A. However,section 4611(e)(1) of the BBA requiredthat there be a transition from 1998through 2002 for the aggregate amountof the expenditures transferred fromPart A to Part B. Section 4611(e)(2) ofthe BBA also provided a specific yearlyproportion for the transferred funds.The proportions were 16 for 1998, 13 for1999, 12 for 2000, 23 for 2001, and 56

for 2002. For the purpose of determiningthe correct amount of financing fromgeneral revenues of the FederalGovernment, it was necessary to includeonly these transitional amounts in themonthly actuarial rates for both agedand disabled enrollees, rather than thetotal cost of the home health services

being transferred.Section 4611(e)(3) of the BBA also

specified, for the purpose ofdetermining the premium, that themonthly actuarial rate for enrollees age65 and over be computed as though thetransition would occur for 1998 through

2003 and that1

7

of the cost betransferred in 1998, 27 in 1999, 37 in2000, 47 in 2001, 57 in 2002, and 67 in2003. Therefore, the transition periodfor incorporating this home healthtransfer into the premium was 7 yearswhile the transition period for includingthese services in the actuarial rate was6 years.

Section 811 of the MedicarePrescription Drug, Improvement, andModernization Act of 2003 (Pub. L. 108173, also known as the MedicareModernization Act, or MMA), which

amended section 1839 of the Act,requires that, starting on January 1,2007,the Part B premium a beneficiary payseach month be based on their annualincome. Specifically, if a beneficiarysmodified adjusted gross income isgreater than the legislated thresholdamounts (for 2012, $85,000 for a

beneficiary filing an individual income

tax return, and $170,000 for abeneficiary filing a joint tax return) thebeneficiary is responsible for a largerportion of the estimated total cost ofPart B benefit coverage. In addition tothe standard 25 percent premium, these

beneficiaries will now have to pay anincome-related monthly adjustmentamount. The MMA made no change tothe actuarial rate calculation, and thestandard premium, which will continueto be paid by beneficiaries whosemodified adjusted gross income is

below the applicable thresholds, stillrepresents 25 percent of the estimated

total cost to the program of Part Bcoverage for an aged enrollee. However,depending on income and tax filingstatus, a beneficiary can now beresponsible for 35, 50, 65, or 80 percentof the estimated total cost of Part Bcoverage, rather than 25 percent. Theend result of the higher premium is thatthe Part B premium subsidy is reducedand less general revenue financing isrequired for beneficiaries with higherincome because they are paying a largershare of the total cost with theirpremium. That is, the premium subsidycontinues to be approximately 75

percent for beneficiaries with incomebelow the applicable income thresholds,but will be reduced for beneficiarieswith income above these thresholds.The MMA specified that there be a 5-year transition to full implementation ofthis provision. However, section 5111 ofthe Deficit Reduction Act of 2005 (Pub.L. 109171) (DRA) modified thetransition to a 3-year period.

Section 4732(c) of the BBA addedsection 1933(c) of the Act, whichrequired the Secretary to allocate moneyfrom the Part B trust fund to the StateMedicaid programs for the purpose of

providing Medicare Part B premiumassistance from 1998 through 2002 forthe low-income Medicaid beneficiarieswho qualify under section 1933 of theAct. This allocation, while not a benefitexpenditure, was an expenditure of thetrust fund and was included incalculating the Part B actuarial ratesthrough 2002. For 2003 through 2007,the expenditure was made from the trustfund because the allocation wastemporarily extended. However,

because the extension occurred after thefinancing was determined, the

allocation was not included in thecalculation of the financing rates.

A further provision affecting thecalculation of the Part B premium issection 1839(f) of the Act, as amended

by section 211 of the MedicareCatastrophic Coverage Act of 1988(MCCA 88) (Pub.L. 100360). (TheMedicare Catastrophic Coverage Repeal

Act of 1989 (Pub. L. 101234) did notrepeal the revisions to section 1839(f)made by MCCA 88.) Section 1839(f) ofthe Act, referred to as the hold-harmless provision, provides that if anindividual is entitled to benefits undersection 202 or 223 of the Act (the Old-Age and Survivors Insurance Benefitand the Disability Insurance Benefit,respectively) and has the Part Bpremiums deducted from these benefitpayments, the premium increase will bereduced, if necessary, to avoid causinga decrease in the individuals netmonthly payment. This decrease in

payment occurs if the increase in theindividuals social security benefit dueto the cost-of-living adjustment undersection 215(i) of the Act is less than theincrease in the premium. Specifically,the reduction in the premium amountapplies if the individual is entitled to

benefits under section 202 or 223 of theAct for November and December of aparticular year and the individuals PartB premiums for December and thefollowing January are deducted from therespective months section 202 or 223

benefits. The hold-harmless provisiondoes not apply to beneficiaries who are

required to pay an income-relatedmonthly adjustment amount.A check for benefits under section 202

or 223 of the Act is received in themonth following the month for whichthe benefits are due. The Part Bpremium that is deducted from aparticular check is the Part B paymentfor the month in which the check isreceived. Therefore, a benefit check forNovember is not received untilDecember, but has Decembers Part Bpremium deducted from it.

Generally, if a beneficiary qualifies forhold-harmless protection, the reducedpremium for the individual for that

January and for each of the succeeding11 months is the greater of thefollowing

The monthly premium for Januaryreduced as necessary to make theDecember monthly benefits, after thededuction of the Part B premium for

January, at least equal to the precedingNovembers monthly benefits, after thededuction of the Part B premium forDecember; or

The monthly premium for thatindividual for that December.



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In determining the premiumlimitations under section 1839(f) of theAct, the monthly benefits to which anindividual is entitled under section 202or 223 of the Act do not includeretroactive adjustments or payments anddeductions on account of work. Also,once the monthly premium amount isestablished under section 1839(f) of the

Act, it will not be changed during theyear even if there are retroactiveadjustments or payments anddeductions on account of work thatapply to the individuals monthly

benefits.Individuals who have enrolled in Part

B late or who have re-enrolled after the

termination of a coverage period aresubject to an increased premium undersection 1839(b) of the Act. The increaseis a percentage of the premium and is

based on the new premium rate beforeany reductions under section 1839(f) ofthe Act are made.

II. Provisions of the Notice

A. Notice of Medicare Part B MonthlyActuarial Rates, Monthly PremiumRates, and Annual Deductible

The Medicare Part B monthlyactuarial rates applicable for 2012 are$199.80 for enrollees age 65 and overand $192.50 for disabled enrollees

under age 65. In section II.B. of thisnotice, we present the actuarialassumptions and bases from whichthese rates are derived. The Part Bstandard monthly premium rate for2012 is $99.90. The Part B annualdeductible for 2012 is $140.00. Listed

below are the 2012 Part B monthly

premium rates to be paid bybeneficiaries who file an individual taxreturn (including those who are single,head of household, qualifyingwidow(er) with dependent child, ormarried filing separately who livedapart from their spouse for the entiretaxable year), or a joint tax return.

Beneficiaries who file an individual tax return withincome:

Beneficiaries who file a joint tax return withincome:

Income-relatedmonthly adjust-ment amount

Total monthlypremium amount

Less than or equal to $85,000 ............................... Less than or equal to $170,000 ............................. $0.00 $99.90Greater than $85,000 and less than or equal to

$107,000.Greater than $170,000 and less than or equal to

$214,000.40.00 139.90

Greater than $107,000 and less than or equal to$160,000.


99.90 199.80



159.80 259.70

Greater than $214,000 ........................................... Greater than $428,000 ........................................... 219.80 319.70

In addition, the monthly premiumrates to be paid by beneficiaries who are

married and lived with their spouse atany time during the taxable year, but file

a separate tax return from their spouse,are listed below.

Beneficiaries who are married and lived with their spouse at any time during the year, but file aseparate tax return from their spouse:

Income-relatedmonthly adjust-ment amount


Less than or equal to $85,000 .................................................................................................................... $0.00 $99.90Greater than $85,000 and less than or equal to $129,000 ......................................................................... 159.80 259.70

Greater than $129,000 ................................................................................................................................ 219.80 319.70

The Part B annual deductible for 2012is $140.00 for all beneficiaries.

B. Statement of Actuarial Assumptionsand Bases Employed in Determining theMonthly Actuarial Rates and theMonthly Premium Rate for Part BBeginning January 2012

1. Actuarial Status of the Part B Accountin the Supplementary MedicalInsurance Trust Fund

Under the statute, the starting pointfor determining the standard monthlypremium is the amount that would benecessary to finance Part B on anincurred basis. This is the amount ofincome that would be sufficient to payfor services furnished during that year(including associated administrativecosts) even though payment for some ofthese services will not be made until

after the close of the year. The portionof income required to cover benefits notpaid until after the close of the year isadded to the trust fund and used whenneeded.

The premium rates are establishedprospectively and are, therefore, subjectto projection error. Additionally,legislation enacted after the financingwas established, but effective for theperiod in which the financing is set,may affect program costs. As a result,

the income to the program may notequal incurred costs. Therefore, trustfund assets must be maintained at alevel that is adequate to cover anappropriate degree of variation betweenactual and projected costs, and theamount of incurred, but unpaid,expenses. Numerous factors determinewhat level of assets is appropriate to

cover variation between actual andprojected costs. The three mostimportant of these factors are: (1) Thedifference from prior years between theactual performance of the program andestimates made at the time financingwas established; (2) the likelihood andpotential magnitude of expenditurechanges resulting from enactment oflegislation affecting Part B costs in ayear subsequent to the establishment offinancing for that year, and (3) theexpected relationship between incurredand cash expenditures. These factors areanalyzed on an ongoing basis, as thetrends can vary over time.

Table 1 summarizes the estimatedactuarial status of the trust fund as ofthe end of the financing period for 2010and 2011.



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TABLE 1ESTIMATED ACTUARIAL STATUS OF THE PART B ACCOUNT IN THE SUPPLEMENTARY MEDICAL INSURANCE TRUSTFUND AS OF THE END OF THE FINANCING PERIOD

Financing period ending Assets(millions)

Liabilities(millions)

Assets lessliabilities(millions)

December 31, 2010 ..................................................................................................................... $71,435 $14,558 $56,877December 31, 2011 ..................................................................................................................... 76,174 16,647 59,527

2. Monthly Actuarial Rate for EnrolleesAge 65 and Older

The monthly actuarial rate forenrollees age 65 and older is one-half ofthe sum of monthly amounts for: (1) Theprojected cost of benefits; and (2)administrative expenses for eachenrollee age 65 and older, afteradjustments to this sum to allow forinterest earnings on assets in the trustfund and an adequate contingencymargin. The contingency margin is anamount appropriate to provide for

possible variation between actual andprojected costs and to amortize anysurplus assets or unfunded liabilities.

The monthly actuarial rate forenrollees age 65 and older for 2012 isdetermined by first establishing per-enrollee cost by type of service fromprogram data through 2010 and thenprojecting these costs for subsequentyears. The projection factors used forfinancing periods from January 1, 2009through December 31, 2012 are shownin Table 2.

As indicated in Table 3, the projectedmonthly rate required to pay for one-half of the total of benefits and

administrative costs for enrollees age 65and over for 2012 is $192.80. Based oncurrent estimates, the assets are notsufficient to cover the amount ofincurred, but unpaid, expenses and toprovide for a significant degree ofvariation between actual and projectedcosts. Thus, a positive contingencymargin is needed to increase assets to amore appropriate level. The monthlyactuarial rate of $199.80 provides anadjustment of $9.64 for a contingencymargin and$2.64 for interestearnings.

The size of the contingency margin for

2012 is affected by several factors. Thelargest factor involves the current lawformula for physician fees, which isprojected to result in a reduction inphysician fees of 28.9 percent in 2012.For each year from 2003 through 2011,Congress has acted to prevent physicianfee reductions from occurring. Inrecognition of the strong possibility ofsubstantial increases in Part Bexpenditures that would result fromsimilar legislation to override thedecreases in physician fees in 2012, itis appropriate to maintain a

significantly larger Part B contingencyreserve than would otherwise benecessary. The asset level projected forthe end of 2010 is not adequate toaccommodate this contingency.

As noted previously, for most Part Bbeneficiaries the hold-harmlessprovision prevents their benefits undersection 202 or 223 of the Act fromdecreasing as a result of an increase inthe Part B premium. The increase in the

benefits under section 202 and 223 ofthe Act was 0 percent in 2010 and 0percent again in 2011. As a result, theincreases in the Part B premium for2010 and 2011 were paid by only asmall percentage of Part B enrollees. Inorder for Part B to be adequately fundedin 2010 and 2011, the contingencymargin was increased to account for thissituation. For 2012, the increase in

benefits under section 202 or 223 of theAct is expected to be large enough tomeet the Part B premium increase fornearly all Part B enrollees, and thereforenot require an increase in the 2012contingency margin.

Two other, smaller factors affect thecontingency margin for 2012. Starting in

2011, manufacturers and importers ofbrand-name prescription drugs will paya fee that is allocated to the Part Baccount of the SMI trust. For 2012, thetotal of these brand-name drug fees will

be $2.8 billion. The contingency marginhas been reduced to account for thisadditional revenue.

Another small factor impacting thecontingency margin comes from therequirement that certain paymentincentives, to encourage thedevelopment and use of healthinformation technology (HIT) byMedicare physicians, are to be excluded

from the premium determination. HITbonuses or penalties will be directlyoffset through transfers with the generalfund of the Treasury. The monthlyactuarial rate includes an adjustment of$0.65 for HIT bonus payments in2012.

The traditional goal for the Part Breserve has been that assets minusliabilities at the end of a year shouldrepresent between 15 and 20 percent ofthe following years total incurredexpenditures. Within this range, 17percent has been the normal target. In

view of the strong likelihood of actualexpenditures exceeding estimatedlevels, due to the enactment oflegislation after the financing has beenset for a given year, a contingencyreserve ratio in excess of 20 percent ofthe following years expenditures would

better ensure that the assets of the PartB account can adequately cover the costof incurred-but-not-reported benefitstogether with variations between actualand estimated cost levels.

The actuarial rate of $199.80 permonth for aged beneficiaries, asannounced in this notice for 2012,reflects the combined net effect of thefactors previously described and theprojection assumptions listed in Table2.

3. Monthly Actuarial Rate for DisabledEnrollees

Disabled enrollees are those personsunder age 65 who are enrolled in PartB because of entitlement to SocialSecurity disability benefits for morethan 24 months or because ofentitlement to Medicare under the end-stage renal disease (ESRD) program.

Projected monthly costs for disabledenrollees (other than those with ESRD)are prepared in a fashion parallel to theprojection for the aged usingappropriate actuarial assumptions (seeTable 2). Costs for the ESRD program areprojected differently because of thedifferent nature of services offered bythe program.

As shown in Table 4, the projectedmonthly rate required to pay for one-half of the total of benefits andadministrative costs for disabledenrollees for 2012 is $224.74. Themonthly actuarial rate of $192.50 alsoprovides an adjustment of$5.34 forinterest earnings and$26.90 for acontingency margin, reflecting the samefactors described above for the agedactuarial rate. Based on currentestimates, the assets associated with thedisabled Medicare beneficiaries aremore than sufficient to cover theamount of incurred, but unpaid,expenses and to provide for a significantdegree of variation between actual andprojected costs. Thus, a large negativecontingency margin is needed todecrease assets to an appropriate level.



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The actuarial rate of $192.50 permonth for disabled beneficiaries, asannounced in this notice for 2012,reflects the combined net effect of thefactors described above for aged

beneficiaries and the projectionassumptions listed in Table 2.

4. Sensitivity Testing

Several factors contribute touncertainty about future trends inmedical care costs. It is appropriate totest the adequacy of the rates usingalternative assumptions. The results ofthose assumptions are shown in Table 5.One set represents increases that arelower and, therefore, more optimisticthan the current estimate. The other setrepresents increases that are higher and,therefore, more pessimistic than thecurrent estimate. The values for thealternative assumptions weredetermined from a statistical analysis of

the historical variation in the respectiveincrease factors.

As indicated in Table 5, the monthlyactuarial rates would result in an excessof assets over liabilities of $67,156million by the end of December 2012under the assumptions used inpreparing this report. This amounts to28.4 percent of the estimated total

incurred expenditures for the followingyear.

Assumptions that are somewhat morepessimistic (and that therefore test theadequacy of the assets to accommodateprojection errors) produce a surplus of$44,895 million by the end of December2012, which amounts to 17.0 percent ofthe estimated total incurredexpenditures for the following year.Under fairly optimistic assumptions, themonthly actuarial rates would result ina surplus of $97,393 million by the endof December 2012, or 45.9 percent of the

estimated total incurred expendituresfor the following year.

The previous analysis indicates thatthe premium and general revenuefinancing established for 2012, togetherwith existing Part B account assetswould be adequate to cover estimatedPart B costs for 2012 under current law,

even if actual costs prove to besomewhat greater than expected.

5. Premium Rates and Deductible

As determined in accordance withsection 1839 of the Act, listed are the2012 Part B monthly premium rates to

be paid by beneficiaries who file anindividual tax return (including thosewho are single, head of household,qualifying widow(er) with dependentchild, or married filing separately wholived apart from their spouse for theentire taxable year), or a joint tax return.

Beneficiaries who file an individual tax return withincome:

Beneficiaries who file a joint tax return withincome:

Income-relatedmonthly

adjustmentamount




$214,000.40.00 139.90



99.90 199.80



159.80 259.70


In addition, the monthly premiumrates to be paid by beneficiaries who are

married and lived with their spouse atany time during the taxable year, but file

a separate tax return from their spouse,are listed below.

Beneficiaries who are married and lived with their spouse at any time during the year, but file a sepa-rate tax return from their spouse:


adjustmentamount


Less than or equal to $85,000 .................................................................................................................... $0.00 $99.90Greater than $85,000 and less than or equal to $129,000 ......................................................................... 159.80 259.70Greater than $129,000 ................................................................................................................................ 219.80 319.70

TABLE 2PROJECTION FACTORS 1 12-MONTH PERIODS ENDING DECEMBER 31 OF 20092012[In percent]

Calendar yearPhysicians services Durable

medicalequipment

Carrierlab 4

Othercarrier

services5

Outpatienthospital

Homehealthagency

Hospitallab 6

Otherintermediary

services7

Managedcare

Fees2 Residual3

Aged:2009 .................................................... 1.6 1.5 7.4 8.6 8.1 8.5 13.5 9.0 10.3 0.32010 .................................................... 3.2 0.8 2.1 1.6 3.5 6.2 2.0 2.7 2.3 1.62011 .................................................... 0.3 4.7 3.9 4.4 4.8 6.5 1.9 0.7 2.5 1.72012 .................................................... 30.2 8.5 7.7 7.2 4.8 5.7 1.0 2.7 4.2 0.6

Disabled:2009 .................................................... 1.6 5.0 1.8 21.3 9.8 9.7 13.8 10.8 12.5 0.82010 .................................................... 3.2 2.6 3.4 2.4 3.9 6.1 1.2 4.3 3.9 1.32011 .................................................... 0.3 4.1 3.8 3.6 2.4 6.2 1.4 2.3 2.2 2.02012 .................................................... 30.2 8.4 7.6 7.2 4.7 5.7 0.1 2.7 0.7 0.4

1All values for services other than managed care are per fee-for-service enrollee. Managed care values are per managed care enrollee.2As recognized for payment under the program.3 Increase in the number of services received per enrollee and greater relative use of more expensive services.4 Includes services paid under the lab fee schedule furnished in the physicians office or an independent lab.5 Includes physician-administered drugs, ambulatory surgical center facility costs, ambulance services, parenteral and enteral drug costs, supplies, etc.6 Includes services paid under the lab fee schedule furnished in the outpatient department of a hospital.7 Includes services furnished in dialysis facilities, rural health clinics, Federally qualified health centers, rehabilitation and psychiatric hospitals, etc.



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4 Includes services furnished in dialysis facilities, rural health clinics, federally qualified health centers, rehabilitation and psychiatric hospitals,etc.

TABLE 5ACTUARIAL STATUS OF THE PART B ACCOUNT IN THE SMI TRUST FUND UNDER THREE SETS OFASSUMPTIONS FOR FINANCING PERIODS THROUGH DECEMBER 31, 2012

As of December 31, 2010 2011 2012

This projection:Actuarial status (in millions).

Assets ........................................................................................................................................ 71,435 76,174 83,245Liabilities .................................................................................................................................... 14,558 16,647 16,089

Assets less liabilities .......................................................................................................... 56,877 59,527 67,156Ratio (in percent) 1 ............................................................................................................................ 24.9 26.9 28.4

Low cost projection:Actuarial status (in millions).



High cost projection:Actuarial status (in millions).



1Ratio of assets less liabilities at the end of the year to the total incurred expenditures during the following year, expressed as a percent.

III. Regulatory Impact Analysis

A. Statement of Need

Section 1839 of the Act requires us toannually announce (that is bySeptember 30th of each year) the Part Bmonthly actuarial rates for aged anddisabled beneficiaries as well as themonthly Part B premium. We alsoannounce the Part B annual deductible

because its determination is directlylinked to the aged actuarial rate.

B. Overall Impact

We have examined the impacts of thisnotice as required by Executive Order12866 on Regulatory Planning andReview (September 30, 1993), theRegulatory Flexibility Act (RFA)(September 19, 1980, Pub. L. 96354),section 1102(b) of the Social SecurityAct, section 202 of the UnfundedMandates Reform Act of 1995 (Pub. L.1044), Executive Order 13132 onFederalism (August 4, 1999), and the

Congressional Review Act (5 U.S.C.804(2)).

Executive Order 12866 directsagencies to assess all costs and benefitsof available regulatory alternatives and,if regulation is necessary, to selectregulatory approaches that maximizenet benefits (including potentialeconomic, environmental, public healthand safety effects, distributive impacts,and equity). A regulatory impactanalysis (RIA) must be prepared formajor rules with economically

significant effects ($100 million or morein any one year).

We have examined the impact of thisnotice as required by Executive Order12866 (September 1993, RegulatoryPlanning and Review) and theRegulatory Flexibility Act (RFA)(September 19, 1980, Pub. L. 96354).Executive Order 12866 directs agenciesto assess all costs and benefits ofavailable regulatory alternatives and, ifregulation is necessary, to selectregulatory approaches that maximizenet benefits (including potentialeconomic, environmental, public healthand safety effects, distributive impacts,and equity).

The RFA requires agencies to analyzeoptions for regulatory relief of small

businesses, if a rule has a significantimpact on a substantial number of smallentities. For purposes of the RFA, smallentities include small businesses,nonprofit organizations, and small

governmental jurisdictions. Mosthospitals and most other providers andsuppliers are small entities, either bynonprofit status or by having revenuesof $7.0 million to $34.5 million in any1 year. Individuals and States are notincluded in the definition of a smallentity. This notice will not have asignificant impact on a substantialnumber of small businesses or othersmall entities. Therefore, the Secretaryhas determined that this notice will nothave a significant economic impact ona substantial number of small entities.

In addition, section 1102(b) of the Actrequires us to prepare a regulatoryimpact analysis if a rule may have asignificant impact on the operations ofa substantial number of small ruralhospitals. This analysis must conform tothe provisions of section 604 of theRFA. For purposes of section 1102(b) ofthe Act, we define a small rural hospitalas a hospital that is located outside of

a Metropolitan Statistical Area and hasfewer than 100 beds. We havedetermined that this notice will nothave a significant effect on a substantialnumber of small entities or on theoperations of a substantial number ofsmall rural hospitals. Therefore, we arenot preparing analyses for either theRFA or section 1102(b) of the Act.

Section 202 of the UnfundedMandates Reform Act of 1995 (UMRA)also requires that agencies assessanticipated costs and benefits beforeissuing any rule whose mandatesrequire spending in any 1 year of $100

million in 1995 dollars, updatedannually for inflation. In 2011, thatthreshold is approximately $136million. This notice has noconsequential effect on State, local, ortribal governments. We believe theprivate sector costs of this notice fall

below this threshold as well.Executive Order 13132 establishes

certain requirements that an agencymust meet when it publishes a proposedrule (and subsequent final rule) thatimposes substantial direct compliancecosts on State and local governments,



8/8


preempts State law, or otherwise hasFederalism implications. We havedetermined that this notice does notsignificantly affect the rights, roles, andresponsibilities of States.

This notice announces that themonthly actuarial rates applicable for

2012 are $199.80 for enrollees age 65and over and $192.50 for disabledenrollees under age 65. It alsoannounces the 2011 monthly Part Bpremium rates to be paid by

beneficiaries who file an individual tax

return (including those who are single,head of household, qualifyingwidow(er) with a dependent child, ormarried filing separately who livedapart from their spouse for the entiretaxable year), or a joint tax return.

Beneficiaries who file an individual tax return withincome: Beneficiaries who file a joint tax return withincome:

Income-related

monthlyadjustmentamount




$214,000.40.00 139.90



99.90 199.80



159.80 259.70


In addition, the monthly premiumrates to be paid by beneficiaries who aremarried and lived with their spouse at

any time during the taxable year, but filea separate tax return from their spouse,

are also announced and listed in thefollowing chart.

Beneficiaries who are married and lived with their spouse at any time during the year, but file aseparate tax return from their spouse:


adjustmentamount


Less than or equal to $85,000 .................................................................................................................... $0.00 $99.90Greater than $85,000 and less than or equal to $129,000 ......................................................................... 159.80 259.70Greater than $129,000 ................................................................................................................................ 219.80 319.70

Approximately 2 million Part Benrollees paid the 2011 standardpremium rate of $115.40 which is$15.50 higher than the 2012 standardpremium rate of $99.90. These enrolleeswill have about $0.4 billion in reducedcosts in 2012. For the approximately 30million Part B enrollees who paid a2011 premium of $96.40 under the hold-harmless provision, the standard Part Bpremium rate of $99.90 is $3.50 higherthan the 2011 premium that they paid,so there will be about $1.3 billion ofadditional costs in 2012 to the these PartB enrollees. Therefore, this notice is amajor action as defined in 5 U.S.C.804(2) and is an economicallysignificant action under Executive Order12866.

In accordance with the provisions ofExecutive Order 12866, this notice wasreviewed by the Office of Managementand Budget.

IV. Waiver of Proposed Notice

The Medicare statute requires thepublication of the monthly actuarialrates and the Part B premium amounts

in September. We ordinarily use generalnotices, rather than notice and commentrulemaking procedures, to make suchannouncements. In doing so, we notethat, under the AdministrativeProcedure Act, interpretive rules,general statements of policy, and rulesof agency organization, procedure, orpractice are excepted from therequirements of notice and commentrulemaking.

We considered publishing a proposednotice to provide a period for publiccomment. However, we may waive thatprocedure if we find, for good cause,that prior notice and comment areimpracticable, unnecessary, or contraryto the public interest. The statuteestablishes the time period for whichthe premium rates will apply, anddelaying publication of the Part B

premium rate such that it would not bepublished before that time would becontrary to the public interest.Moreover, we find that notice andcomment are unnecessary because the

formulas used to calculate the Part Bpremiums are statutorily directed.Therefore, we find good cause to waivepublication of a proposed notice andsolicitation of public comments.

(Catalog of Federal Domestic AssistanceProgram No. 93.774, MedicareSupplementary Medical Insurance Program)

Dated: September 20, 2011.

Donald M. Berwick,

Administrator, Centers for Medicare &Medicaid Services.

Approved: October 25, 2011.

Kathleen Sebelius,

Secretary, Department of Health and HumanServices.

[FR Doc. 201128186 Filed 102711; 11:15 am]

BILLING CODE 412001P


Documents

2012 Part B Medicare