Medicare Premiums to Jump $6.90 a Month in January

Large increases in doctor bills will boost the Medicare premium by $6.90 a month next January, the biggest jump in Medicare’s 22-year history, federal officials announced Tuesday. The monthly premium, paid by 30 million Medicare beneficiaries, will climb to $24.80, up from $17.90 this year.

Surprised members of Congress, who had been expecting a smaller increase, immediately pledged new efforts to control the cost of physicians’ services. “The public will turn angry when they figure doctors are ripping them off,” said Rep. Pete Stark (D-Oakland), chairman of the House Ways and Means Committee’s health subcommittee.

“I want to know what’s out of control: whether it’s doctor bills or the management of the Medicare program,” said Sen. John Melcher (D-Mont.), chairman of the Senate Aging Committee.

The American Medical Assn., however, insisted that doctors are not at fault.

Blames Hospital Cost Cuts

“If we find physicians whose fees are out of line, we will be the first to speak out,” said Dr. James H. Sammons, AMA executive vice president. He blamed Medicare limits on hospital costs that he said are pushing Medicare patients out of hospitals earlier to receive more care in doctors’ offices.

The monthly premium pays for Part B of Medicare, which covers doctors’ fees and home health care. The premiums cover a quarter of the total costs of that care, with the rest coming from general tax revenues. The beneficiaries’ rates are adjusted annually, but the monthly increases are usually much smaller--last year’s was $2.40.

In announcing the new premium, Reagan Administration officials said that spending for Part B rose 22% to $24.9 billion during the first 10 months of the fiscal year, far outpacing the rate of inflation.

Costs also rose last year, but officials helped defray them with a surplus that had built up from overestimates of costs in some previous years.

Glenn Hackbarth, deputy administrator of the Health Care Financing Administration, which runs Medicare, said the spending growth shows, among other things, that doctors are performing more tests and medical procedures on their Medicare patients. Federal compensation for office visits and procedures are set out in a fee system that has some flexibility.

The Reagan Administration will offer several proposals in its budget next year to restrain the trend, Hackbarth said. He did not elaborate, but it is believed that the government will provide additional incentives for beneficiaries to join health maintenance organizations, which offer all health services for an advance fixed fee.

Key lawmakers said they are concerned that the premium increase will wipe out a hefty share of the cost-of-living increase of about $20 a month that Social Security recipients are expected to receive next year. Out of the $492 a month a typical retiree receives, a beneficiary must also pay--under Part A of Medicare--the deductible portion of hospital bills for any in-patient care he receives.

Beneficiaries pay for the first day in the hospital, receive 59 days free, and then pay $130 a day thereafter.

Sen. Lloyd Bentsen (D-Tex.), chairman of the Senate Finance Committee, which oversees Medicare legislation, said he has directed the committee staff to investigate the Part B increase. In the House, Rep. Dan Rostenkowski (D-Ill.), chairman of the Ways and Means Committee, said that the new rate “is much greater than anyone anticipated, and the reasons . . . will be the subject of a committee hearing.”

Stark and other critics of the medical profession charged that doctors, compensating for the increasingly strict Medicare controls on doctors’ fees in recent years, are now having their patients make more office visits and are performing more procedures to generate income.

“The AMA wants billions of dollars from the government through Medicare but doesn’t want any controls on the money,” Stark said. “That’s like having a key to the Treasury.”

Sammons said the AMA shares the concern about rising costs, but declared: “Laying the blame on physicians is unfair.” He said that doctors are only providing the office care needed to make up for care that is now curtailed in hospitals.

Stark said he may push for a freeze on physicians’ fees and development of other strict cost controls.

“We’re going to have to look very carefully at reforms to hold down costs,” said Rep. Henry Waxman (D-Los Angeles), chairman of the House Commerce Committee’s health subcommittee.

Some lawmakers said that the jump in Medicare costs illustrates why Congress should be cautious in considering new “catastrophic care” coverage for beneficiaries. Congress is reviewing a plan that would limit patients’ out-of-pocket spending for hospital and doctor bills, and offer unlimited days of government-paid hospital care.

Opponents of the legislation have argued that trying to control medical costs is difficult and that any expansion of Medicare benefits would be financially risky for the federal government.