Medicare Part B Premiums to increase 11.2% in 2007 to nearly $100 per month, Bush Administration says

[Jul 12, 2006]

The monthly premium for Medicare Part B will increase a projected 11.2% next year to at least $98.40, although the increase might be slightly higher, the Bush administration announced on Tuesday, the AP/Seattle Post-Intelligencer reports. The current monthly premium is $88.50 (Freking, AP/Seattle Post-Intelligencer, 7/11).

According to a CMS fact sheet released on Tuesday, overall Part B expenditures increased by 11% in 2005, including a 10% increase in expenditures for physicians' services and an 11% increase for outpatient hospital services. "The main reason for these increases in total expenditures is increases in the volume and intensity of physician and outpatient hospital services over the last several years," the fact sheet states, adding,

"[R]apid growth in services administered in physicians' offices is driven by more use of more intensive physicians' services, including imaging, physician-administered drugs, minor procedures, physical therapy, dermatology, lab tests, and evaluation and management services." According to the fact sheet, "Use of many of these services varies substantially across practices and geographic areas, with no clear impacts on patient health" (CMS release, 7/11).

Increase Could Be Higher
According to the AP/Post-Intelligencer, the estimated increase "assume[s] that Congress will reduce Medicare payment rates for physicians by about 4.7% next year" (AP/Post-Intelligencer, 7/11). Medicare physician reimbursements are scheduled to be cut on Jan. 1, 2007, unless Congress intervenes. Sens. Jon Kyl (R-Ariz.) and Debbie Stabenow (D-Mich.) in a recent letter to Senate Majority Leader Bill Frist (R-Tenn.) and Senate Minority Leader Harry Reid (D-Nev.) called on the Senate to increase Medicare physician reimbursements before it adjourns in October (Kaiser Daily Health Policy Report, 7/11). If Congress does reverse the cut, Medicare costs will increase, possibly resulting in higher monthly premiums, the AP/Post-Intelligencer reports.

Comments
CMS Administrator Mark McClellan said the premium increase is the result of an increase in the volume of care provided to beneficiaries, adding, "We can't keep pumping more money into a payment system that is not sustainable." Kirsten Sloan, chief health lobbyist for AARP, said, "We're going on several years of repeated double-digit increases, and it's also roughly three times the rate of the Social Security increase." Sloan said Congress should pass legislation that would increase the use of health care information technology, such as electronic health records, which she said would slow cost increases and reduce medical errors (AP/Seattle Post-Intelligencer, 7/11).