- A portion of Medicare recipients could see a significant increase in premiums in 2016.
- Premium increases will affect Medicare Part B.
- Coincidentally, there will be no Social Security cost of living increase in 2016.
- Patients will likely make fewer office visits and will spend less on healthcare.
Millions of Americans will likely see an increase in Medicare Part B premiums in 2016. Making matters worse there will be no cost of living increase in Social Security payments in the same calendar year.
According to a recent article in Kiplinger, the increase will not be a large as was anticipated. "Medicare beneficiaries who have Part B premiums withheld from their Social Security checks—about 70% of beneficiaries—will continue to pay $104.90 per month for Part B. If you aren’t collecting Social Security yet or will enroll in Medicare in 2016, you will have to pay $121.80 per month in 2016. The $121.80 monthly premium also applies to people who are eligible for both Medicare and Medicaid and have their premiums paid for by their state. And if your income exceeds certain limits, you’ll pay more—from $170.50 to $389.80 per month," the article reported.
The effects for physicians and practices may include fewer appointments per patient, poorer compliance with treatment and appointment recommendations, fewer patients overall, and reduced Medicare reimbursement, among others.
Essentially, a quirk and a coincidence in the laws governing Medicare and Social Security will cause between 7 and 10 million Americans to see a 50% increase in Part B premiums. Part B is, of course, the part of Medicare that covers doctors’ bills.
However, lawmakers may be able to avert this difficult increase, according to a report in The Washington Post.
The tentative budget agreement forged by congressional leaders and the Obama administration could ward off the 50% increase, but it will nevertheless require nearly 30% of older Americans to pay 17% more in monthly premiums for doctors’ visits and other outpatient care. This will very likely mean that fewer patients visit their doctors.
Under the agreement, Medicare’s Part B premiums for this group of roughly 15 million people will increase from the current rate of $104.90 per month to $120 per month next year, plus a $3 surcharge. After holding level since 2013, the monthly premiums for these people would have soared to nearly $160 without the legislative adjustment.
Given that you will likely see less of your patients, you must make the most of each visit. Try to take extra time and gather as much information as possible about the patients and prescribe the appropriate tests and medications.
A Major Impact on Care
However, as of this writing, the rate increase is on track to take effect. A number of important articles have been published discussing the potential effects of the 50% Medicare premium increase for the 7 million unlucky older people:
Under a 1997 law, premium payments must cover 25% of the projected per capita costs for Part B. The premiums, which can rise and fall from year to year, are usually deducted from beneficiaries’ Social Security payments each month. A hold harmless provision guarantees that for most people the dollar amount of a premium increase will not be so large as to leave them with a with a Social Security check that is less than that of the year before. The goal is to ensure that beneficiaries, most of whom have modest incomes, don’t have less money to live on, The Washington Post reported.
“The problem is that Social Security recipients will not get a cost-of-living increase in 2016, but Part B premiums are projected to rise. The roughly 70% of beneficiaries who are held harmless will pay the same premium as last year. That means the increased cost will have to be made up by the other 30%, because of the rule that premiums must cover one-quarter of Part B costs. This group includes 2.8 million new enrollees, 1.6 million people who don’t collect Social Security benefits and 3.1 million higher-income beneficiaries.
“All together, more than seven million people will have to pay the premium themselves; millions of others are covered by state Medicaid programs, whose budgets will strain to meet the added costs. The Part B premium has been just under $105 a month for three years, but it is projected to reach $159 in 2016 and then drop to $120 in 2017,” according to The Post article.
The Part B deductible, which must be paid by everyone on Medicare (no one is “held harmless”), will rise from $147 in 2015 to $223 in 2016, before falling back to $169 in 2017. This will pose a particular burden to beneficiaries just above the poverty line who aren’t eligible for assistance from Medicaid in paying deductibles.
The Rubber and The Road
The 30% of recipients who see a 50% rise in premiums is the equivalent of 15 million people picking up the tab for 50 million. Because many of the people facing increases are low-income, state Medicaid offices cover the premium hikes, which this year total $2.1 billion, according to an article in The New York Times.
“All of a sudden you have this shot out of the blue,” said Matt Salo, head of the National Association of Medicaid Directors told The Times. “If you are California, it’s ‘Well, here’s an additional $300 million you have to come up with."
"States just can’t print money,” he added.
Mr. Salo called this “code red” time, with states looking to Washington for help. The Department of Health and Human Services, which oversees Medicare, has some discretion in how much states may have to pay. It’s unclear how much HHS Secretary Sylvia Burwell could limit the financial hit.