|
Medicare Part B Monthly Fee to Jump 17.4 Percent in
2005
Across the board increases in Medicare announced
by HHS
Sept. 4, 2004 - The largest cost increase in the
history of the Medicare program – 17.4 percent for those with Part B –
was announced for 2005 yesterday by the Department of Health and Human
Services. They also said the annual deductible will increase from $100
to $110. Increases were also announced for Part A deductibles and rates
for the few who must pay for Part A.
The monthly premium to be paid in 2005 by
beneficiaries enrolled in Medicare Part B, which covers physician
services, outpatient hospital services, certain home health services,
durable medical equipment and other items, will be $78.20, an increase
of $11.60, or 17.4 percent, over the $66.60 premium in 2004.
Section 629 of the Medicare Modernization Act of
2003 requires raising the Part B deductible in 2005 and indexing it
thereafter. In 2005, the Part B deductible will be $110. Beginning
January 1, 2006, the deductible will be indexed to the increase in the
average cost of Part B services for aged beneficiaries.
HHS said the new premiums, approximately the same
as the actuarial forecast published in March for the Medicare Trustees
Report, reflect general growth in health care costs, higher payments to
physicians and Medicare Advantage coordinated care health plans under
the Medicare Modernization Act (MMA), and building trust fund reserves.
Under the MMA, Medicare enrollees are benefiting
from improved access to physician services, new preventive and health
screening benefits, more Medicare Advantage plan choices, and better
benefits and/or lower out-of-pocket costs in many Medicare Advantage
plans.
"The new premiums reflect an enhanced Medicare that
is providing seniors and people with disabilities with strengthened
access to physician services and new preventive benefits, such as the
new 'Welcome to Medicare' physical and screening exams, as well as
improved Medicare Advantage plan choices that reduce beneficiaries'
health care costs," said CMS Administrator Mark B. McClellan, M.D.,
Ph.D.
Medicare deductibles and premiums are updated
annually in accordance with formulas set by law. By law, the federal
government picks up about 75 percent of the cost of Part B benefits and
the Part B premium covers the remaining 25 percent. About three-fourths
of the 2005 increase is due to additional costs for Part B, and almost
one-fourth for building reserves.
The principal contributing factor to the increased
cost of Medicare Part B benefits, accounting for about four-fifths of
the higher benefit costs, is higher payments in Medicare's traditional
plan. Most importantly, the recent Medicare law prevented physician
payments from falling significantly. In 2005, payment rates for
physicians will increase by 1.5 percent, preventing a 4.5 percent
reduction that could have threatened access to high-quality physician
services.
Another contributing factor to higher benefit costs
is improvement in the Medicare Advantage program under the MMA. As a
result, many beneficiaries enrolled in Medicare Advantage health plans
are expected to receive additional benefits including prescription
drugs, more preventive care, and even dental and vision care, as well as
lower co-payments that enable them to reduce their out of pocket costs.
On average, the premium changes related to Medicare
Advantage are more than offset by reductions in out-of-pocket payments
for Medicare Advantage enrollees. Prior to these benefit improvements,
beneficiary out-of-pocket costs were already lower than in traditional
Medicare. In 2003, beneficiaries without supplemental coverage from
employers or Medicaid who enrolled in Medicare Advantage plans had
average out-of-pocket payments that were approximately $700 lower.
A third contributing factor is increasing the
reserves held in the Part B account of the Medicare Supplementary
Medical Insurance Trust Fund toward a more adequate level. The Medicare
law requires adjustments in contributions from general revenues and
premium payments in order to maintain financial balance in the Part B
account.
Two other MMA changes will help lower
beneficiaries' out-of-pocket costs in 2005. First, the new Medicare law
provides additional savings for Medicare beneficiaries by paying more
appropriately for Medicare covered drugs and the administration of those
covered drugs. Second, the new preventive benefits in Medicare will help
beneficiaries cover the cost of screening tests for heart disease and
diabetes, and will provide a "Welcome to Medicare" exam (including
coverage for associated services) for beneficiaries entering the
program.
The Part B premium increase may not exceed any
beneficiary's cost of living adjustment in their Social Security check.
For the great majority of beneficiaries, the Social Security cost of
living increase is likely to be significantly greater than the premium
change.
About 93 percent of Medicare's 41.8 million
beneficiaries are enrolled in Part B, which helps pay for physician
services, hospital outpatient care, durable medical equipment and other
services, including some home health care. These beneficiaries generally
pay the monthly premium, or have it paid on their behalf by Medicaid
(including Medicare Savings Program) if they have limited incomes.
Medicaid currently pays some or all of the Part B premium for about 6.3
million Medicare beneficiaries. Many beneficiaries with retiree coverage
and some beneficiaries in Medicare Advantage plans also have some or all
of these premiums paid on their behalf.
For Medicare Part A, which pays for inpatient
hospital, skilled nursing facility, and some home health care, the
deductible paid by the beneficiary when admitted as a hospital inpatient
will be $912 in 2005, an increase of $36 from this year's $876
deductible. The Part A deductible is the beneficiary's only cost for up
to 60 days of Medicare-covered inpatient hospital care in a benefit
period. Beneficiaries must pay an additional $228 per day for days 61
through 90 in 2005, and $456 per day for hospital stays beyond the 90th
day in a benefit period. For 2004, per day payment for days 61 through
90 was $219, and $438 for beyond 90 days.
For beneficiaries in skilled nursing facilities,
the daily co-insurance for days 21 through 100 in a benefit period will
be $114 in 2005, compared to $109.50 in 2004. Those who enroll in
Medicare Advantage plans may not be affected by the Part A increase, and
may receive additional benefits with different cost-sharing
arrangements. All of these Part A payment changes are determined by a
statutory formula.
About 99 percent of Medicare beneficiaries do not
pay a premium for Part A services since they have at least 40 quarters
of Medicare-covered employment. However, other seniors and certain
persons under age 65 with disabilities who have fewer than 30 quarters
of coverage may obtain Part A coverage by paying a monthly premium set
according to a statutory formula. This premium will be $375 for 2005, an
increase of $32 from 2004. In addition, seniors with 30 to 39 quarters
of coverage, and certain disabled persons with 30 or more quarters of
coverage, pay a reduced premium of $206.
As noted above, states have programs that pay some
or all of beneficiaries' premiums and coinsurance for certain people who
have Medicare and a limited income. Information is available at
1-800-MEDICARE (1-800-633-4227) and, for hearing and speech impaired, at
TTY/TDD: 1-877-486-2048.
|
