Medicare Premiums to Rise 14%

(Miami Herald, Friday, April 1, 2005) WASHINGTON, D.C. -- Agency officials said Thursday (March 31) that Medicare plans to charge seniors 14 percent more for premiums next year and pay doctors about 4 percent less, according to this report by Tony Pugh published by the Miami Herald.

The adjustments are meant to cope with unexpected increases in Medicare's spending on physician visits and outpatient care. Those outlays grew by 15 percent in 2004, not the 12 percent that had been projected, said Medicare chief actuary Richard Foster. "We expected significant growth and got more than that," Foster said.

Both adjustments are preliminary and could worsen as more detailed spending data becomes available, said Medicare administrator Mark McClellan. Congress can intervene to modify the payments to doctors and is likely to be asked to do so. The Medicare Modernization Act eliminated a 4.3 percent cut in 2004 and replaced it with modest increases of 1.5 percent in 2004 and 2005.

Medicare's monthly beneficiary premiums for doctor visits and outpatient care will rise to $89.20 per month under the revised plan. The current premium for Medicare's so-called Part B program is $78.20 monthly. The proposed increase comes on the heels of a 17 percent premium hike that was effective in the current year.

Double-digit increases in Medicare premiums, said John Rother, policy director for AARP, are eroding much of the annual two- to three-percent increase in Social Security payments for seniors,

At the same time, Medicare expects to pay doctors about 4.3 percent less in 2006 for care provided to Medicare patients, a reduction that the physicians' professional association immediately protested loudly.

A 2003 survey by the American Society of Family Physicians found that more than one in five family doctors no longer accepted new Medicare patients. Medicare's payments to doctors are figured annually and based on four factors: medical inflation, enrollee growth, payment changes created by new laws or regulations, and projected annual growth in the gross domestic product. The Medicare Trustees report last week projected physician payment cuts totaling 26 percent from 2006 through 2011.

According to McClellan, the 15 percent increase in cost of doctor visits and outpatient care in 2004 was driven mainly by: longer and more intensive doctor consultations; increases in minor medical procedures; more use of complex imaging tests like MRI scans and more laboratory tests and testing.

Posted: 04/01/05