Medicare doctor payments contribute to Part B premium rise

Physician reimbursement accounts for a third of the increase, and it could become a target for political battle.

By Joel B. Finkelstein, AMNews staff. Sept. 27, 2004.

Washington -- The steep rise in next year's Medicare Part B premiums can be tied in part to increased spending on physician services, but it is unclear whether that will factor into future efforts to shore up doctors' reimbursement rates.

Under the Medicare payment formula, physicians' reimbursement was set to sustain large cuts this year and next. But last year Congress passed a measure mandating that rates increase no less than 1.5% through 2005.

"Without Congress' intervention to stop the scheduled cuts in physician payments, Medicare patients' access to physician services would have been in jeopardy," said John C. Nelson, MD, MPH, president of the American Medical Association.

In part due to the increase in doctors' payments and a rise in the volume of physician services, beneficiaries will pay 17.5% more a month for their Part B premiums, the Centers for Medicare & Medicaid Services announced recently. Monthly premiums will be $78.20 next year. The agency uses a formula to calculate premiums as a portion of total Medicare costs.

Physician payments are only one factor of many that are behind the rise in beneficiaries' premiums, said Robert Doherty, senior vice president of governmental affairs and public policy at the American College of Physicians.

An AMA analysis found that together, higher payments to Medicare managed care plans, new preventive benefits and increased spending in Part B services account for about a third of the increased premiums. The need to boost cash reserves in the Part B account of the Medicare Supplementary Medical Insurance Trust Fund is responsible for another third, and physician payments account for about a third.