<P> The Specialty Society Relative Value Scale Update Committee (or Relative Value Update Committee; RUC), composed of physicians associated with the American Medical Association, advises the government about pay standards for Medicare patient procedures performed by doctors and other professionals under Medicare Part B. A similar but different CMS system determines the rates paid acute care and other hospitals--including skilled nursing facilities--under Medicare Part A . </P> <P> Medicare has several sources of financing . </P> <P> Part A's inpatient admitted hospital and skilled nursing coverage is largely funded by revenue from a 2.9% payroll tax levied on employers and workers (each pay 1.45%). Until December 31, 1993, the law provided a maximum amount of compensation on which the Medicare tax could be imposed each year, in the same way that the Social Security tax works in the United States . Beginning January 1, 1994, the compensation limit was removed . Self - employed individuals must pay the entire 2.9% tax on self - employed net earnings (because they are both employee and employer), but may deduct half of the tax from the income in calculating income tax . Beginning in 2013, the rate of Part A tax on earned income exceeding US $200,000 for individuals (US $250,000 for married couples filing jointly) rose to 3.8%, in order to pay part of the cost of the subsidies mandated by the PPACA . </P> <P> Parts B and D are partially funded by premiums paid by Medicare enrollees and general fund revenue . In 2006 a surtax was added to Part B premium for higher - income seniors to partially fund Part D. In the PPACA legislation of 2010, a surtax was added to the Part D premium for higher income seniors to partially fund PPACA and the number of Part B beneficiaries subject to the 2006 surtax was doubled, also partially to fund PPACA . </P>

Where does the primary funding for medicare part a come from
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