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Medicare Monthly Premium Rising To $89.20 in 2006

By Ceci Connolly
Washington Post Staff Writer
Friday, April 1, 2005; Page A25

Medicare payments to physicians jumped 15 percent last year, an unexpectedly large increase that prompted Bush administration officials yesterday to announce that monthly premiums for America's seniors will rise to $89.20 in 2006, $1.50 more than initially projected.

The unusually sharp spike was caused primarily by lengthier office visits, more complex imaging such as MRI scans and doctors administering more lab tests and treatments in their offices instead of at a hospital.

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"There's no question many of these things can help prevent complications of serious chronic diseases and keep patients out of the hospital," said Mark B. McClellan, administrator of the Centers for Medicare & Medicaid Services. But he expressed concern that that is not the case in every instance.

The CMS laid out the costs in a letter yesterday to the Medicare Payment Advisory Commission.

Monthly premiums for Medicare Part B, which covers outpatient services, were $66.60 last year and rose to $78.20 for 2005. In its March 23 report, the Medicare Board of Trustees projected an increase of $9.50 a month, but it now will be $11.

With increased demand and scheduled reductions in the fees Medicare pays physicians, the American Medical Association warned yesterday that doctors may think twice before taking Medicare patients.

"These cuts pose a serious threat to access to care for seniors," said AMA board Chairman J. James Rohack. "No senior citizen should have to worry whether their physician can afford to accept Medicare patients."

Last year, Congress rescinded a proposed cut in physician payments. But the rates are slated to be trimmed by 4.3 percent next year and by as much as 26 percent through 2011.

As is the case in the private sector, Medicare spending has been rising steadily for the past several years, and its long-term financial solvency is in doubt, according to its board of trustees. Yesterday's analysis related only to outpatient expenditures.

In a conference call with reporters, McClellan stressed his alarm over the spending figures and said he intends to find ways to steer doctors toward proven, cost-effective treatments. "This is a big increase that has an impact on both beneficiaries and taxpayers," he said.

CMS analysts found that many retirees are seeing doctors more often and for longer periods of time. Payments have been rising for minor treatments such as physical therapy, as well as for injectable medications such as chemotherapy. Government spending for physician services rose from $76.7 billion in 2003 to $88.3 billion last year.

Some increase in volume can be good, said Glenn M. Hackbarth, chair of the Medicare Payment Advisory Commission, "but some are not so good." The independent commission, which advises Congress on Medicare, has been pressing for a "pay-for-performance" system that would reward doctors who follow evidence-based treatment guidelines.

The AMA defended the increases, and warned that technological breakthroughs and an aging population will continue to create greater demand.

"Conditions that once required hospitalization now are routinely treated in physicians' offices at a lower cost to the government and patients," Rohack said. "Medicare should recognize and reward these advances rather than penalize physicians for these important improvements in patient care."

Some lawmakers have accused President Bush of focusing on Social Security at the expense of Medicare.

"Medicare's financial outlook has deteriorated dramatically over the past five years and is now much worse than Social Security's," the trustees concluded in their March 23 report. They project that the Medicare Trust Fund will be exhausted by 2020.

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