Medicare Watch

Debate Continues Over Preventing Cuts to Medicare Physician Payments

Congress continues to discuss a compromise to prevent a 27.4 percent cut to Medicare physician payments as a result of the Sustainable Growth Rate (SGR) formula, which will otherwise take place March 1, 2012. In addition, Congress must act to extend the Qualified Individual (QI) program and the Medicare therapy caps exception process. The QI benefit helps individuals with limited incomes pay their monthly Medicare premiums. The therapy caps exceptions process allows individuals to apply for an exception to Medicare coverage limits on speech, physical and occupational therapy. At the end of 2011, Congress temporarily stalled physician payment cuts and extended other Medicare programs for two months, in order to give the House of Representatives and the Senate the opportunity to reach a longer-term compromise through the congressional conference process. The conferees, composed of 20 representatives and senators, have held public meetings to discuss the terms of the compromise, including how best to pay for these policies.

This week, Medicare Rights Center President Joe Baker sent a letter to congressional leaders addressing the pending physician payment cuts and the other Medicare programs that must be extended by the end of this month. In the letter, Baker emphasizes that while implementing a long-term solution to the SGR formula is important, paying for the cost of that policy or any other included in the compromise cannot come at the price of increasing health care costs for Medicare beneficiaries. Specifically, the letter discusses problems with increasing Medicare premiums for those with comparatively higher incomes. The debate over the controversial means-testing policy has continued in congressional public hearings, as some representatives and senators have raised concerns that over time, Medicare beneficiaries with moderate incomes will also be required to pay higher monthly premiums. Policymakers have also questioned whether the approach is balanced, if conference committee members who support increasing premiums for Medicare beneficiaries will not support increased revenues from taxes on the highest-earning Americans.

In previous years, Congress has voted to override cuts in physician payments as a result of the SGR formula. However, each time Congress passes a temporary fix, the cost of permanently repealing what many view as a flawed payment policy becomes more expensive. Beneficiaries and providers continue to raise concerns about the SGR formula’s effect on Medicare beneficiaries’ access to their doctors, especially if a large cut in physician payments were allowed to occur and if uncertainty in payment rates continues as a result of short-term temporary fixes to the SGR formula.

Read Medicare Rights Center President Joe Baker’s letter to Congress on the SGR formula and the need to extend other Medicare programs.

Watch the conference hearing discussion on raising Medicare premiums (start at 54:00).

Further Means-Testing Medicare Premiums May Affect Those With Moderate Incomes

Proposals to further means-test Medicare Part B and Part D premiums would increase premium costs for one out of every four beneficiaries, according to a new report released by the Kaiser Family Foundation, titled “Income-Relating Medicare Part B and Part D Premiums Under Current Law and Recent Proposals: What Are the Implications for Beneficiaries?” The report finds that if proposals that further means-test premiums took effect today, beneficiaries earning $47,000 or more would be responsible for higher premium payments.

Currently, Medicare beneficiaries with comparatively higher incomes of $85,000 or more pay higher Part B and Part D premiums. The more individuals earn, the more they are required to pay out-of-pocket in monthly premiums. Proposals to further means-test premiums have been discussed in the context of deficit reduction and most recently, in conversations around how to pay for the payroll tax bill and to prevent cuts to Medicare physician reimbursements. These proposals would freeze income thresholds at $80,000 to $85,000, depending on the policy, until at least 25 percent of all Medicare beneficiaries pay an income-related premium. As the value of the dollar changes over time, beneficiaries with more moderate incomes would face higher premium costs. Currently, only 5.1 percent of beneficiaries pay an income-related Part B premium, while three percent of beneficiaries pay a higher Part D premium.

These proposals aim not only to increase the number of people paying higher premiums by freezing income thresholds, but also to increase the amount that people subject to the policy would have to pay. For most beneficiaries, the Part B premium equals 25 percent of projected annual Part B expenses. Individuals with higher incomes currently pay premiums ranging from 35 to 80 percent. These proposals would increase an affected beneficiary’s premium responsibility to 40.2 to 90 percent of Part B program costs. For instance, under current law, a Medicare beneficiary with an income of $86,000 in 2017 is projected to pay $186 each month. If these proposals were enacted, the beneficiary’s premiums would increase to a projected $214 each month.

The report also raises concerns about the effect of such policies on the Medicare risk pool and financing. It suggests that as Medicare becomes more expensive for higher-income individuals, they may choose to leave the program and enroll in private insurance instead, resulting in higher premiums for all those who remain in the program.

Read the Kaiser Family Foundation report, “Income-Relating Medicare Part B and Part D Premiums Under Current Law and Recent Proposals: What Are the Implications for Beneficiaries?

 

Medicare Reminder

If you are dissatisfied with your Medicare private health plan, also known as a Medicare Advantage plan, you have until Tuesday, February 14, to disenroll. February 14 marks the end of the Medicare Advantage Disenrollment Period (MADP), which began January 1. The MADP gives beneficiaries the opportunity to drop their private plans and enroll in Original Medicare. If you disenroll from your Medicare Advantage plan, you may need to join a stand-alone Medicare prescription drug plan in order to maintain drug coverage. After the MADP, some people with Medicare will have limited opportunities to change their health coverage. However, most will have to wait until the Fall Open Enrollment Period, which begins October 15, 2012.

If you disenroll from your Medicare Advantage plan, you should be aware of whether you have the ability to buy coverage that will supplement Original Medicare. State rules vary on when beneficiaries can purchase Medicare supplemental policies, also known as Medigaps. Call your State Health Insurance Assistance Program (SHIP) to find out if and when you can enroll in a Medigap plan in your state.

Read the press release.

Learn more about switching to Original Medicare during the MADP at www.medicareinteractive.org.

Spotlight

How much do you know about Medicare? Take the Kaiser Family Foundation’s quiz to test your knowledge on questions such as: How many Medicare beneficiaries lived on incomes of less than $22,000 last year? Is Medicare spending expected to grow faster or slower per person than private health insurance spending over the next decade?

Take the quiz.