Medicare premiums next year likely will
increase 12.4% -- the largest increase in 11 years -- because Medicare
spending "surged unexpectedly" last year, Richard Foster, chief actuary
for Medicare, said March 25, the New
York Times reports. In addition to the $7.30 monthly increase
faced by Medicare beneficiaries, the program might decrease payments to
physicians by 4.2% next year. The reduction in physician reimbursement for
Medicare beneficiaries is likely to occur despite money set aside in the
recently enacted fiscal fiscal year 2003 omnibus spending bill to avoid
such cuts (Pear, New York Times, 3/26). That legislation,
signed into law on February 20, includes a provision that provides $54
billion to increase Medicare reimbursement to physicians and hospitals
over the next 10 years and a provision to eliminate a 4.4% reduction in
Medicare physician reimbursement rates that was to go into effect March 1.
In addition, the provision increases Medicare physician reimbursements by
1.6% and will cost the federal government between $1.5 billion and $2
billion through the end of FY 2003 (Kaiser
Daily Health Policy Report, 2/21). However, CMS Administrator
Tom Scully said the fee cut is offset by a "stunning 8% increase in the
volume" of physician services performed last year for Medicare
beneficiaries. Medicare, which provides coverage to 40 million U.S.
residents, last year paid $45 billion in reimbursements, an increase of $3
billion, or 7%, even though the average fee for each service was reduced,
the Times reports. Dr. Yank Coble, president of the American Medical Association, said,
"Under the formula, physicians are penalized if services to Medicare
patients grow more rapidly than the gross domestic product" because
Medicare spending on physician care is likely to exceed established
targets and trigger payment cuts in periods of slow economic growth. He
adding that the "health care needs of America's seniors don't change with
the ups and downs of the economy." Foster highlighted the following areas
of increased spending last year: