Medicare Program; Self-Implementing Coverage and Payment Provisions: 1993 Legislation

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 405, 406, 408, 410, 413, and 418

[BPD-791-FC]

RIN 0938-AG64

Medicare Program; Self-Implementing Coverage and Payment

Provisions: 1993 Legislation

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Final rule with comment period.

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SUMMARY: This rule updates Medicare regulations to conform them to

certain self-implementing provisions on coverage of services and

payment requirements under the Omnibus Budget Reconciliation Act of

1993 (OBRA 93). OBRA 93 was enacted on August 10, 1993 and several of

the cited changes to the statute are already in effect and the others

will be shortly. We are also implementing a related provision of the

Omnibus Budget Reconciliation Act of 1990 (OBRA 90) as necessary for

consistency and clarity of the OBRA 93 provisions.

DATES: Effective date: These regulations are effective June 24, 1994.

Comment period: Comments will be considered if we receive them at

the appropriate address, as provided below, no later than 5 p.m., July

25, 1994.

ADDRESSES: Mail written comments (1 original and 3 copies) to the

following address:

Health Care Financing Administration, Department of Health and Human

Services, Attention: BPD-791-FC, P.O. Box 26676, Baltimore, MD 21207.

If you prefer, you may deliver your written comments (1 original

and 3 copies) to one of the following addresses:

Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,

Washington, DC 20201, or

Room 132, East High Rise Building, 6325 Security Boulevard, Baltimore,

MD 21207.

Because of staffing and resource limitations, we cannot accept

comments by facsimile (FAX) transmission. In commenting, please refer

to file code BPD-791-FC. Comments received timely will be available for

public inspection as they are received, generally beginning

approximately 3 weeks after publication of a document, in Room 309-G of

the Department's offices at 200 Independence Avenue, SW., Washington,

DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m.

(phone: (202) 690-7890).

FOR FURTHER INFORMATION CONTACT: Matt Plonski, (410) 966-4662.

SUPPLEMENTARY INFORMATION:

I. Background

On August 10, 1993, the Omnibus Budget Reconciliation Act of 1993

(OBRA 93) (Pub. L. 103-66) was enacted. This law contains numerous

provisions relating to coverage of services and payments for services

furnished to Medicare beneficiaries. Some of these provisions are self-

implementing; that is, the provisions are stated in terms that neither

require nor permit exercise of discretion in implementing them.

The plain wording of the law causes a conflict with several of our

existing regulations; in other cases, the regulations simply do not

take the amendments into account. We are, therefore, making the

necessary changes to incorporate the new provisions into regulations.

A discussion of the individual legislative provisions and the

accompanying regulations follows.

II. Reductions in Payments for Skilled Nursing Facility Services--

Elimination of Return on Equity for Proprietary Skilled Nursing

Facilities

A. Legislative Provision

Section 1861(v)(1)(B) of the Social Security Act (the Act) provides

that proprietary skilled nursing facilities (SNFs) receive, in addition

to payments for the costs of providing services, return on equity

payments, which provide the investors in the facilities a return on

their investment equivalent to what they would have earned had they

invested the same amount in specified government securities. Section

13503(c) of OBRA 93 amended sections 1861(v)(1)(B) and 1878(f)(2) of

the Act to eliminate payments to SNFs for return on equity capital,

applicable to portions of cost reporting periods beginning on or after

October 1, 1993.

B. Regulations Revision

We are revising Sec. 413.157(b)(3), Rate of return related to

proprietary SNFs, to limit its application to services furnished before

October 1, 1993.

III. Reductions in Payments for Hospice Services

A. Legislative Provision

Under section 1814(i) of the Act, we pay for hospice services on a

daily rate basis. Payments are adjusted by a market basket percentage

increase. Section 13504 of OBRA 93 amended section 1814(i) of the Act

to decrease the amount of the market basket (as defined by section

1886(b)(3)(B)(iii) of the Act) percentage increase that will be applied

in fiscal years (FY) 1994 through 1997. These decreases are:

FY 1994--the market basket percentage increase minus 2 percentage

points;

FYs 1995 and 1996--the market basket percentage increase minus 1.5

percentage points; and

FY 1997--the market basket percentage increase minus .5 percentage

points.

After FY 1997, the full market basket percentage increase will

again apply.

B. Regulations Revisions

We are revising Sec. 418.306, Determination of payment rates, by

updating paragraph (b)(2) to exclude FYs 1994 through 1997 from the

application of the market basket percentage increase without

modification and to add a new paragraph (b)(3) to add the statutory

decreases.

IV. Reduction in Part A Premium for Certain Individuals With 30 or

More Quarters of Social Security Coverage

A. Legislative Provision

Under section 226(a) of the Act, individuals generally become

entitled to benefits under Medicare Part A when they reach age 65 based

on hospital insurance (Part A) taxes they paid under the Federal

Insurance Contributions Act (FICA) while they were working. By paying

the Part A portion of the FICA tax, individuals acquire quarters of

coverage (QCs), which are used to insure them for Part A coverage.

Insured individuals are not required to pay monthly premiums for Part A

coverage. Under section 1818 of the Act, individuals age 65 or over who

do not have enough QCs to be insured for premium-free Part A may enroll

in the Part A program if they pay a monthly premium. The Part A premium

is determined under section 1818(d) of the Act and is based on the

actuarial value of benefits under Part A. In addition, under section

1818A of the Act, disabled individuals who lose eligibility for

premium-free Part A solely because they have returned to work may

enroll in Part A if they pay a monthly premium, the amount of which is

determined under section 1818(d).

Section 13508 of OBRA 93 amended section 1818(d) to reduce, on a

phased-in basis, the amount of the Part A premium for workers with 30

or more QCs and for spouses (including surviving spouses) of these

workers with 30 or more QCs after having been married at least one

year. The reduction also applies to divorced spouses (including

surviving divorced spouses) of workers with 30 or more QCs provided

that, at the time the divorce became final, the worker had 30 or more

QCs and the marriage had lasted for at least 10 years. The reductions

are as follows:

1994--25 percent

1995--30 percent

1996--35 percent

1997--40 percent

1998 and later years--45 percent

The reduction will begin with premium payments beginning January 1994.

B. Regulations Revisions

We are adding to Sec. 406.32, Monthly premiums, a new paragraph

(b)(3) to show the year by year reductions required by the statute and

a new paragraph (c) to show the requirements for qualifying for the

reduction. We are redesignating paragraph (b)(3) as (b)(4) and revising

its contents, which concern rounding off fractions of dollars, to

specify that the paragraph applies to the unreduced and the reduced

Part A premium. We are redesignating current paragraphs (c) through (f)

as (d) through (g), respectively.

V. Extension of 10 Percent Reduction in Payments for Capital-

Related Costs of Outpatient Hospital Services

A. Legislative Provision

Under 1861(v)(1)(S)(ii)(I) of the Act, Medicare pays the capital

costs of hospitals allocated to outpatient departments on the basis of

reasonable cost principles, subject to a 10 percent reduction through

FY 1995. (Sole community hospitals and rural primary care hospitals are

exempt from these reductions.) Section 13521 of OBRA 93 amended section

1861(v)(1)(S)(ii)(I) of the Act to extend the 10 percent reduction

through FY 1998.

B. Regulations Revisions

We are revising Sec. 413.130(j)(1)(ii), Reduction to capital-

related costs, to extend to 1998 the year through which the 10 percent

reduction applies.

VI. Extension of Reduction in Payments for Other Costs for

Outpatient Hospital Services

A. Legislative Provision

Under section 1861(v)(1)(S)(ii)(II) of the Act, Medicare payments

for hospital outpatient services made on a reasonable cost basis and

the cost portion of outpatient services paid on the basis of a blended

amount are both reduced by 5.8 percent through FY 1995. Section 13522

of OBRA 93 amended section 1861(v)(1)(S)(ii)(II) of the Act to extend

the application of the reduction through FY 1998.

B. Regulations Revisions

We are revising Sec. 413.124, Reduction to hospital outpatient

operating costs, to extend to 1998 the year through which the 5.8

percent reductions apply.

VII. Reduction in Payments for Intraocular Lenses

A. Legislative Provision

Section 1833(i)(2)(A)(iii) of the Act includes in the cost of

surgery to insert an intraocular lens during or after cataract surgery

a payment that is reasonable and related to the cost of acquiring the

class of lens involved. Section 4151 of Public Law 101-508 (the Omnibus

Budget Reconciliation Act of 1990 (OBRA 90)) froze the amount of

payment for the lens at $200. Section 13533 of OBRA 93 reduced the

payment amount for intraocular lenses inserted during or after cataract

surgery in an ambulatory surgical center on or after January 1, 1994

and before January 1, 1999. For that period, the payment is $150.

B. Regulations Revisions

Our regulations do not contain the specific amounts allowable for

intraocular lenses, which are, instead, contained in our administrative

guidelines. Therefore, we are making no changes to regulations to

implement the legislation.

VIII. Payment for Parenteral and Enteral Nutrients, Supplies and

Equipment During 1994 and 1995

A. Legislative Provision

In the Omnibus Budget Reconciliation Act of 1986 (Public Law 99-

509), section 9340 provided that reasonable charges for parenteral and

enteral nutrition supplies and equipment may not exceed the lowest

charge levels at which the supplies and equipment are widely and

consistently available. Under our regulations at 42 CFR 405.511(c)

those levels are set at the 25th percentile of the charges for the

items or services, in the locality designated by the carrier for this

purpose, during the three month period of July 1 through September 30

preceding the fee screen year for which the item or service was

furnished. Section 13541 of OBRA 93 requires that in determining the

amount of Part B payment for parenteral and enteral nutrients, supplies

and equipment during 1994 and 1995, the charges determined to be

reasonable with respect to these items may not exceed the charges

determined to be reasonable for them during 1993.

B. Regulation Revision

As our payment regulations do not specifically address payments for

parenteral and enteral nutrients, supplies and equipment, we do not

need to revise our regulations to implement this provision of OBRA 93

but will make any necessary changes in our program manuals.

IX. Increase in Annual Cap on Amount of Medicare Payment for

Outpatient Physical Therapy and Occupational Therapy Services

A. Legislative Provision

Section 1833(g) of the Act limits the amount payable annually for

covered outpatient physical and occupational therapy services provided

by independently practicing physical and occupational therapists.

Section 6133(a) of the Omnibus Budget Reconciliation of 1989 (OBRA 89)

(Pub. L. 101-239) amended section 1833(g) of the Act to increase the

maximum amount of incurred expenses that can be recognized for payment

purposes from $500 to $750, for services furnished on or after January

1, 1990, and section 13555 of OBRA 93 amended section 1833(g) of the

Act to increase the maximum amount of incurred expenses that can be

recognized for payment purposes from $750 to $900, effective for

services furnished on or after January 1, 1994.

B. Regulations Revisions

We are revising paragraph (c)(2) of 42 CFR 410.60, Outpatient

physical therapy services: Conditions, to show the various caps since

before 1982 through 1994 for physical therapy services furnished by

independent physical therapists. There is currently no corresponding

regulation section for occupational therapy but we will include the

$900 cap when we publish final regulations on those services.

X. Rural Health Clinics and Federally Qualified Health Centers

A. Legislative Provision

Under section 1861(aa) of the Act, Medicare pays for services

furnished in certain qualified health centers that are known as

Federally qualified health centers (FQHCs). Each center is: An entity

that is receiving a grant under section 329, 330, or 340 of the Public

Health Service Act or is under contract with the recipient of a grant

under section 329, 330, or 340 of the Public Health Service Act and

meets the requirements for receiving such a grant; or is determined,

based on the recommendations of the Health Resources and Services

Administration within the Public Health Service, to meet the

requirements for meeting such a grant; or was treated by the Secretary

as a comprehensive Federally funded health center as of January 1,

1990. Section 13556 of OBRA 93 amended section 1861(aa)(4) of the Act

to include as FQHCs outpatient programs and facilities operated by

Indian tribes or tribal organizations under the Indian Self-

Determination Act (25 U.S.C. 450). The amendment took effect as if

included in the enactment of section 4161(a)(2)(C) of OBRA 90, which

was effective October 1, 1991. Section 13556 of OBRA 93 also provides

that an outpatient health program or facility operated by an urban

Indian organization receiving funds under Title V of the Indian Health

Care Improvement Act (25 U.S.C. 1601ff) is included in the Medicare

program, effective October 1, 1991.

B. Regulations Revision

We are adding a new paragraph to the definition of Federally

qualified health centers in Sec. 405.2401(b) to include outpatient

health programs and facilities operated by Indian tribes under the

Indian Self-Determination Act or by urban Indian organizations under

title V of the Indian Health Care Improvement Act.

XI. Reduction in Payments for Epoetin

A. Legislation

Medicare is the principle purchaser of epoetin (EPO), an anti-

anemia drug used by dialysis patients with a specified level of anemia.

Section 1881(b)(11)(B) of the Act provides that payments to ESRD

facilities are made based on increments of 1,000 unit doses, rounded to

the nearest 100 units, with a maximum payment of $11 per 1,000 units.

Under section 1861(s)(2)(P) of the Act, Medicare considers as a medical

or other health service EPO for home dialysis patients competent to use

the drug in the home without medical or other supervision, subject to

methods and standards established by the Secretary by regulation for

the safe and effective use of the drug, and items related to the use of

the drug.

Section 13566 of OBRA 93 decreased the maximum payment for EPO to

$10 per 1,000 units. OBRA 93 also amended section 1861(s)(2)(P) to

remove the word ``home'' from ``home dialysis patients'', the effect of

which is to allow coverage of EPO when used at home by dialysis

patients who do not dialyze at home. The effective date of section

13566 of OBRA is January 1, 1994.

B. Regulations Revision

The change in payment rate requires no revision to regulations

because we announce the rate in a notice published in the Federal

Register rather than in regulations. To implement the provision

allowing dialysis patients who do not dialyze at home to use EPO in the

home, we are revising Secs. 405.2137, 405.2163, 410.10(k), and 410.52

to show the effective dates of the various sections for use of EPO at

home by patients who do not dialyze at home.

XII. Part B Premium

A. Legislative Provision

Section 1839(e) of the Act establishes the amount of the Medicare

Part B premium at 50 percent of the monthly actuarial rate for

enrollees age 65 and over for months in calendar years 1984 through

1990; section 4301 of the Omnibus Budget Reconciliation Act of 1990

added specific premiums for 1991 through 1995 based on Congressional

Budget Office estimates, at the time, of premium amounts that would

equal 50 percent of that actuarial rate. Section 13571 of OBRA 93

amended section 1839(e) of the Act to again have the premium determined

annually so that it equals 50 percent of the monthly actuarial rate for

enrollees age 65 and over for calendar years 1996, 1997 and 1998.

B. Regulations Revisions

To reflect OBRA 90 and 93 we are revising 42 CFR 408.20, Monthly

premiums, by adding calendar years 1991 through 1995, and calendar

years after 1998, to the heading and content of paragraph (b), which

currently contains the methodology for the period July 1976 through

December 1983 and the periods after 1990. We are specifying that the

rates cited in section 1839(e)(1)(B) of the Act apply to 1991 through

1995. To reflect OBRA 93, we are adding calendar years 1996 through

1998 to the heading and content of paragraph (c), which currently

discusses the methodology for determining premiums for calendar years

1984 through 1990.

XIII. Waiver of Proposed Rulemaking

We ordinarily publish a notice of proposed rulemaking for a

regulation in the Federal Register and 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.

As noted earlier, this rule updates our rules to properly reflect

explicit statutory requirements that are clear on their face and that

we are not interpreting in any way beyond their commonly understood

meanings. Without these changes, certain regulation requirements are in

conflict with the statute, possibly misleading those who rely on our

regulations. In addition, some of the statutory changes included in

these regulations have been enacted with retroactive effective dates or

effective dates close to the date of enactment of OBRA 93. Under these

circumstances, prompt publication of the correct up-to-date rules best

serves those governed by these regulations. Because this rule does not

create any legal requirements and because publishing a notice of

proposed rulemaking here would perpetuate conflicts between clear

statutory directives and our regulations, we find that publishing a

notice of proposed rulemaking before issuing this final rule would be

unnecessary and contrary to the public interest. However, we are

providing a 60-day comment period for public comments on the final rule

as indicated at the beginning of this rule.

XIV. Response to Comments

Because of the large number of items of correspondence we normally

receive on FR documents published for comment, we are not able to

acknowledge or respond to them individually. We will consider all

comments we receive by the date and time specified in the DATES section

of this preamble, and, if we proceed with a subsequent document, we

will respond to the comments in the preamble to that document.

XV. Regulatory Impact Statement

We generally prepare a regulatory flexibility analysis that is

consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601

through 612) unless the Secretary certifies that a final rule will not

have a significant economic impact on a substantial number of small

entities. For purposes of the RFA, all Medicare-participating

facilities are considered to be small entities. Individuals and States

are not included in the definition of small entity.

Also, section 1102(b) of the Act requires the Secretary to prepare

a regulatory impact analysis if a final rule will 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 and has fewer than 50 beds.

This final rule with comment period updates our regulations to

incorporate numerous self-implementing statutory provisions that are

not interrelated. None of the regulations interprets or extends

requirements beyond those included in the self-implementing

legislation.

The amendments to which this rule pertains are already in effect or

will go into effect independent of the publication of this rule.

Consequently, there are no actions to be taken that would flow from

further analyses of the impact of these provisions on entities.

Therefore, we are not preparing analyses for either the RFA or section

1102(b) of the Act since we have determined, and the Secretary

certifies, that this proposed rule would not result in a significant

economic impact on a substantial number of small entities and would not

have a significant economic impact on the operations of a substantial

number of small rural hospitals.

In accordance with the provisions of E.O. 12866, this final rule

with comment period was not reviewed by the Office of Management and

Budget.

XVI. Collection of Information Requirements

This document does not impose information collection and

recordkeeping requirements. Consequently, it need not be reviewed by

the Office of Management and Budget under the authority of the

Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.).

List of Subjects

42 CFR Part 405

Administrative practice and procedure, Health facilities, Health

professions, Kidney diseases, Medicare, Reporting and recordkeeping

requirements, Rural areas, X-rays.

42 CFR Part 406

Health facilities, Kidney diseases, Medicare.

42 CFR Part 408

Medicare.

42 CFR Part 410

Health facilities, Health professions, Kidney diseases,

Laboratories, Medicare, Rural areas, X-rays.

42 CFR Part 413

Health facilities, Kidney diseases, Medicare, Puerto Rico,

Reporting and recordkeeping requirements.

42 CFR Part 418

Health facilities, Hospice care, Medicare, Reporting and

recordkeeping requirements.

42 CFR chapter IV is amended as follows:

A. Part 405 is amended as follows:

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

1. Part 405, subpart U is amended to read as follows:

Subpart U--Conditions for Coverage of Suppliers of End-Stage Renal

Disease (ESRD) Services

a. The authority citation for part 405, subpart U continues to read

as follow:

Authority: Secs. 1102, 1861, 1862(a), 1871, 1874, and 1881 of

the Social Security Act (42 U.S.C. 1302, 1395x, 1395y(a), 1395hh,

1395kk, and 1395rr), unless otherwise noted.

b. In Sec. 405.2137, the introductory statement of paragraph (b)(7)

is revised to read as follows:

Sec. 405.2137 Condition: Patient long-term program and patient care

plan.

* * * * *

(b) Standard: Patient care plan. * * *

(7) Beginning July 1, 1991, for a home dialysis patient, and

beginning January 1, 1994, for any dialysis patient, who uses EPO in

the home, the plan must provide for monitoring home use of EPO that

includes the following:

* * * * *

c. In Sec. 405.2163, introductory paragraphs (g) and (g)(2) are

republished and paragraph (g)(2)(i) is revised to read as follows:

Sec. 405.2163 Condition: Minimal service requirements for a renal

dialysis facility or renal dialysis center.

* * * * *

(g) Use of EPO at home: Patient selection. The dialysis facility,

or the physician responsible for all dialysis-related services

furnished to the patient, must make a comprehensive assessment that

includes the following:

* * * * *

(2) Conditions the patient must meet. The assessment must find that

the patient meets the following conditions:

(i) On or after July 1, 1991, is a home dialysis patient or, on or

after January 1, 1994, is a dialysis patient;

* * * * *

2. Part 405, subpart X is amended as follows:

Subpart X--Rural Health Clinic and Federally Qualified Health

Center Services

a. The authority citation for subpart X is revised to read as

follows:

Authority: Sec. 1102, 1833, 1861(aa), 1871 of the Social

Security Act; 42 U.S.C. 1302, 13951, 1395x(aa), and 1395hh.

b. In the definition of ``Federally qualified health center'' in

Sec. 405.2401(b), the introductory paragraph, and paragraphs (2) and

(3) are revised and a new paragraph (4) is added to read as follows:

Sec. 405.2401 Scope and definitions.

* * * * *

Federally qualified health center (FQHC) means an entity that has

entered into an agreement with HCFA to meet Medicare program

requirements under Secs. 405.2434 and--

* * * * *

(2) Based on the recommendation of the PHS, is determined by HCFA

to meet the requirements for receiving such a grant;

(3) Was treated by HCFA, for purposes of part B, as a comprehensive

federally funded health center (FFHC) as of January 1, 1990; or

(4) Is an outpatient health program or facility operated by a tribe

or tribal organizations under the Indian Self-Determination Act or by

an Urban Indian organization receiving funds under title V of the

Indian Health Care Improvement Act.

B. Part 406 is amended as follows:

PART 406--HOSPITAL INSURANCE ELIGIBILITY AND ENTITLEMENT

1. The authority citation for part 406 is revised to read as

follows:

Authority: Secs. 202(t), 202(u) 226, 226A, 1102, 1818 and 1871

of the Social Security Act (42 U.S.C. 402(t), 402(u), 426, 426-1,

1302, 1395i-2, and 1395hh) and sec. 3103 of Pub. L. 89-97 (42 U.S.C.

426a), unless otherwise noted.

2. In Sec. 406.32, paragraph (b)(3) is redesignated as (b)(4) and

paragraphs (c) through (f) are redesignated as paragraphs (d) through

(g), respectively. New paragraphs (b)(3) and (c) are added and

redesignated paragraph (b)(4) is revised to read as follows:

Sec. 406.32 Monthly premiums.

* * * * *

(b) Monthly premiums: Determination of dollar amount.

* * * * *

(3) Effective for months beginning January 1994, if an individual

meets the requirements in paragraph (c) of this section, the monthly

premium determined under paragraph (b)(1) of this section is reduced in

each month in which the individual meets the requirements by 25 percent

in 1994, 30 percent in 1995, 35 percent in 1996, 40 percent in 1997 and

45 percent in 1998 and thereafter.

(4) The amount determined under paragraphs (b) (1), (2), or (3) of

this section is rounded to the next nearest multiple of $1. (Fifty

cents is rounded to the next higher dollar.)

(c) Qualifying for a reduction in monthly premium. An individual

who qualifies for the reduction described in paragraph (b)(3) of this

section must be an individual who--

(1) Has 30 or more quarters of coverage (QCs) as defined in 20 CFR

404.140 through 404.146;

(2) Has been married for at least the previous one year period to a

worker who has 30 or more QCs;

(3) Had been married to a worker who had 30 or more QCs for a

period of at least one year before the death of the worker;

(4) Is divorced from, after at least 10 years of marriage to, a

worker who had 30 or more QCs at the time the divorce became final; or

(5) Is divorced from, after at least 10 years of marriage to, a

worker who subsequently died and who had 30 or more QCs at the time the

divorce became final.

* * * * *

C. Part 408 is amended as follows:

PART 408--PREMIUMS FOR SUPPLEMENTARY MEDICAL INSURANCE

1. The authority citation for part 408 continues to read as

follows:

Authority: Secs. 1102, 1818, 1837-1840, 1843, 1871, and 1881(d)

of the Social Security Act (42 U.S.C. 1302, 1395i-2, 1395p-1395s,

1395v, 1395hh and 1395rr(d)) and the Federal Claims Collection Act

(31 U.S.C. 3711).

2. In Sec. 408.20, the headings of paragraphs (b) and (c),

introductory paragraphs (b)(1) and (c), and paragraph (b)(2) are

revised and new paragraph (b)(3) is added to read as follows:

Sec. 408.20 Monthly premiums.

* * * * *

(b) Criteria and procedures for the period from July 1976 through

December 1983, the period from January 1991 through December 1995, and

for periods after December 1998. (1) For periods from July 1976 through

December 1983 and after December 1998, the Secretary determines and

promulgates as the standard monthly premium (for disabled as well as

aged enrollees) the lower of the following:

* * * * *

(2) For periods after December 1998, the Secretary determines the

standard monthly premium in the manner specified in paragraph (b)(1) of

this section, but promulgates it in September for the following

calendar year.

(3) The premiums for calendar years 1991 through 1995 are those

amounts as specified by section 1839(e)(1)(B) of the Act as follows:

(i) In 1991, $29.90;

(ii) In 1992, $31.80;

(iii) In 1993, $36.60;

(iv) In 1994, $41.10; and

(v) In 1995, $46.10.

(c) Premiums for calendar years 1984 through 1990 and 1996 through

1998. For calendar years 1984 through 1990 and 1996 through 1998, the

standard monthly premium for all enrollees--

* * * * *

D. Part 410 is amended as follows:

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

1. The authority citation for part 410 is revised to read as

follows:

Authority: Secs. 1102, 1832, 1833, 1834, 1835, 1861 (r), (s),

(aa), (cc), and (mm), 1871 and 1881 of the Social Security Act (42

U.S.C. 1302, 1395k, 1395l, 1395m, 1395n, 1395x (r), (s), (aa), (cc),

and (mm), 1395hh, and 1395rr).

2. In Sec. 410.10, the introductory paragraph is republished and

paragraph (k) is revised to read as follows:

Sec. 410.10 Medical and other health services: Included services.

Subject to the conditions and limitations specified in this

subpart, ``medical and other health services'' includes the following

services:

* * * * *

(k) Home dialysis supplies and equipment; on or after July 1, 1991,

epoetin (EPO) for home dialysis patients, and, on or after January 1,

1994, for dialysis patients, competent to use the drug; self-care home

dialysis support services; and institutional dialysis services and

supplies.

* * * * *

3. In Sec. 410.52(a), the introductory paragraph is republished and

paragraph (a)(4) is revised to read as follows:

Sec. 410.52 Home dialysis services, supplies and equipment: Scope and

conditions.

(a) Medicare Part B pays for the following services, supplies, and

equipment furnished to an ESRD patient in his or her home:

* * * * *

(4) On or after July 1, 1991, epoetin (EPO) for use at home by a

home dialysis patient and, on or after January 1, 1994, by a dialysis

patient, if it has been determined, in accordance with Sec. 405.2163 of

this chapter, that the patient is competent to use the drug safely and

effectively.

* * * * *

4. In Sec. 410.60, the heading of paragraph (c) is republished,

paragraph (c)(2) is revised to read as follows and footnote 2 is

deleted:

Sec. 410.60 Outpatient physical therapy services: Conditions.

* * * * *

(c) Special provisions for services furnished by physical

therapists in independent practice.

* * * * *

(2) Limitation on incurred expenses. (i) Before 1982, not more than

$100 of reasonable charges incurred in a calendar year are recognized

as incurred expenses.

(ii) From 1982 through 1989, not more than $500 of reasonable

charges incurred in a calendar year are recognized as incurred

expenses.

(iii) From 1990 through 1993, not more than $750 of reasonable

charges incurred in a calendar year are recognized as incurred

expenses.

(iv) After 1993, not more than $900 of reasonable charges incurred

in a calendar year are recognized as incurred expenses.

E. Part 413 is amended as follows:

PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR

END-STAGE RENAL DISEASE SERVICES

1. The authority citation for part 413 continues to read as

follows:

Authority: Secs. 1102, 1122, 1814(b), 1815, 1833(a), 1861(v),

1871, 1881, 1883, and 1886 of the Social Security Act (42 U.S.C.

1302, 1320a-1, 1395f(b), 1395g, 13951(a), 1395x(v), 1395hh, 1395rr,

and 1395ww).

2. Section 413.124(a) is revised to read as follows:

Sec. 413.124 Reduction to hospital outpatient operating costs.

(a) Except for sole community hospitals, as defined in Sec. 412.92,

and rural primary care hospitals, the reasonable costs of outpatient

hospital services (other than capital-related costs of such services)

are reduced by 5.8 percent for services rendered during portions of

cost reporting periods occurring on or after October 1, 1990 and before

October 1, 1998.

* * * * *

3. In Sec. 413.130 the introductory paragraph of paragraph (j) is

republished and paragraph (j)(l)(ii) is revised to read as follows:

Sec. 413.130 Introduction to capital-related costs.

* * * * *

(j) Reduction to capital-related costs. (1) Except for sole

community hospitals and rural primary care hospitals, the amount of

capital-related costs of all hospital outpatient services is reduced

by--

(i) * * *

(ii) 10 percent for portions of cost reporting periods occurring on

or after October 1, 1991 through September 30, 1998.

* * * * *

4. Section 413.157(b)(3) is revised to read as follows:

Sec. 413.157 Return on equity capital of proprietary providers.

* * * * *

(b) General rule.

* * * * *

(3) Rate of return related to proprietary SNFs. (i) For cost

reporting periods beginning on or after October 1, 1985, the rate used

in determining the return for SNF services furnished before October 1,

1993 is a percentage equal to the average of the rates of interest

described in paragraph (b)(1) of this section.

(ii) There is no allowance for return for SNF services furnished on

or after October 1, 1993.

F. Part 418 is amended as follows:

PART 418--HOSPICE CARE

1. The authority citation for part 418 is revised to read as

follows:

Authority: Secs. 1102, 1812(a)(4) and (d), 1813(a)(4),

1814(a)(7) and (i), 1816(e)(5), 1861(dd) and 1871 of the Social

Security Act (42 U.S.C. 1302, 1395d(a)(4) and (d), 1395e(a)(4),

1395f(a)(7) and (i), 1395h(e)(5), 1395x(dd), and 1395hh); and sec.

353 of the Public Health Service Act (42 U.S.C. 263a).

2. In Sec. 418.306(b), the introductory language is republished,

paragraph (b)(2) is revised and a new paragraph (b)(3) is added to read

as follows:

Sec. 418.306 Determination of payment rates.

* * * * *

(b) Payment rates. The payment rates for routine home care and

other services included in hospice care are as follows:

* * * * *

(2) Except for the period beginning October 21, 1990 through

December 31, 1990, the payment rates for routine home care and other

services included in hospice care for Federal fiscal years 1991, 1992,

and 1993 and those that begin on or after October 1, 1997, are the

payment rates in effect under this paragraph during the previous fiscal

year increased by the market basket percentage increase as defined in

section 1886(b)(3)(B)(iii) of the Act, otherwise applicable to

discharges occurring in the fiscal year. The payment rates for the

period beginning October 21, 1990 through December 31, 1990 are the

same as those shown in paragraph (b)(1) of this section.

(3) For Federal fiscal years 1994 through 1997, the payment rate is

the payment rate in effect during the previous fiscal year increased by

a factor equal to the market basket percentage increase minus--

(i) 2 percentage points in FY 1994;

(ii) 1.5 percentage points in FYs 1995 and 1996; and

(iii) 0.5 percentage points in FY 1997.

(Catalog of Federal Domestic Assistance Program No. 93.773,

Medicare--Hospital Insurance; and Program No. 93.774, Medicare--

Supplementary Medical Insurance Program)

Dated: February 15, 1994.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

Dated: April 7, 1994.

Donna E. Shalala,

Secretary.

[FR Doc. 94-12461 Filed 5-24-94; 8:45 am]

BILLING CODE 4120-01-P