The government yesterday gave doctors a 5 percent pay increase for Medicare treatment of the elderly, and said it will cost taxpayers $1.4 billion over the next 12 months.
The increase, retroactive to July 1, follows an annual cost-of-living review by the Department of Health, Education and Welfare as required by law. It is aimed at helping retired and fixed-income people meet rising medical costs.
The new fee structure does not limit the amount a doctor may charge a patient. But Medicare will pay only 5.08 percent more than currently is allowed for certain medical procedures in different areas.
"Benefit payments under medical insurance, part B of Medicare, are estimated to increase from $6.7 billion to $8.1 billion in the next 12 months," said Robert A. Derzon, chief of the Health Care Financing Administration.
Medicare pays 80 percent of "reasonable" charges for medical services to the elderly after the patient meets an initial deductible of $60 in a year. Medicare carriers - companies which process and pay claims for physicians' services - determine "reasonable" charges in different regions of the country.
The reasonable charge allowed by Medicare for a doctor's service may not exceed the doctor's customary charge for that service or the prevailing charges in the locality for similar services - whichever is lower.
Yesterday's move followed by two days an announcement by HEW Secretary Joseph A. Califano Jr., that the government will limit Medicare and Medicaid payments for laboratory services and medical equipment to their lowest locally available prices.