Medicare Part B premiums will increase 13.2% next year due to rapid growth in physician office visits, lab tests, and outpatient hospital expenses. The average monthly premium will jump $10.30 to $88.50 for Part B, which covers physician charges and some outpatient hospital expenses.
Deductibles will also increase, although CMS is claiming that many beneficiaries will actually see lower total costs due to the implementation of the Part D program that covers prescription drug.
What’s driving these increases?
On the surface, program costs and Medicare regulations. By law, beneficiaries have to pay 25%, with the rest of the costs borne by the taxpayers.
Looking just a bit deeper, utilization is the culprit. Medicare fixes physician prices at the RBRVS-based fee schedule, therefore by definition increases of this magnitude have to be driven by higher usage of services. Physician services were up 6.3% last year, are trending at 5.3% this year, and outpatient hospital increases are similar.
Some physicians have been claiming that the increases are due to higher quality care, better diagnostics, and treatments in an outpatient setting that are cheaper and more efficacious than the “old” inpatient protocols.
Regardless, the net is that taxpayers and beneficiaries are paying more for coverage.
Complicating the matter is the pending 4.3% decrease in the fee schedule slated to go into effect on 1/1/06. If Congress reverses the cut, then 2007 premium and deductible increases will be even higher than projected.
If they don’t, a lot of docs are going to be mighty upset.
What does this mean for you?
If there was ever an example of how price fixing does not manage expense, here it is. No payer does a better job of controlling the price per unit than CMS. And their expenses are still increasing at unsustainable levels.
It’s about utilization.
Sep
20
