Medicare payment issues raise questions, concerns

Medicare payment issues including rising costs, caps on physical therapy and other outpatient services for some patients are in the news.

The Dallas Morning News reports that Medicare Advantage plans with drug benefits are getting more expensive: "Seniors in those plans will pay an average of $39.61 a month this year in premiums, up 14.2 percent from 2009, according to Avalere Health, a Washington health advisory firm. In contrast, the average monthly premium for those plans rose by only 5.2 percent from 2008 to 2009. Medicare Advantage plans, offered by private insurance companies, often cover services such as dental or vision care that go beyond those included in Medicare's traditional fee-for-service program, and the extra benefits have lured many people away from original Medicare."

"Medicare pays a fixed amount every month to the companies offering Medicare Advantage plans. The government reduced its payment rates this year by about 4 percent per enrollee because of changes in federal laws passed in 2006 and 2008, according to the Centers for Medicare and Medicaid Services" (Yip, 3/6).

The Kansas City Star: "Glenn McDonald undergoes physical therapy twice a week for a bad back. ... McDonald's treatments are paid for, in part, by Medicare, the nation's health insurance for seniors. But because of a little-known quirk in current law and Washington's stalemate over health care reform, McDonald — and more than a half a million patients like him across the country — may soon see an end to Medicare payments for their treatments." ... Congress installed the hard cap [in 1997] after learning that outpatient therapy costs were soaring at twice the growth of other Medicare services. ... The cap, though, did not apply to diagnoses such as multiple sclerosis, joint replacement and 'spinal stenosis of the lumbar region' — a seriously bad back. Those conditions and dozens of other common maladies were automatically exempted from the cap to avoid angering patients."

"Until this year. On Jan. 1, the automatic exemption process ended and the hard cap — $1,860 in payments per year, no exceptions — was put into place" (Helling, 3/4).

Meanwhile, MedPage Today reports that "The Medicare Payment Advisory Commission (MedPAC) is recommending that physicians receive a 1% payment update in 2011. The small payment update, included in MedPAC's annual report to Congress, is in response to MedPAC's analyses finding that most Medicare patients have no trouble finding a doctor -- contrary to what many doctors' groups have said in the past. ... However, the recommendation by MedPAC ... doesn't mean a whole lot when the sustainable growth rate (SGR) formula, which governs Medicare payments, calls for massive cuts in Medicare reimbursement year after year. ... MedPAC also recommended that the Health and Human Services Secretary reduce payment rates to hospitals by 2% each year for the next three years to make up for overpayments made in 2008 and 2009" (Walker, 3/4).

Bangor Daily News: "Maine has the second-lowest Medicare hospital reimbursement rates in the nation, according to a recent analysis by the American Hospital Association. Maine hospitals are paid, on average, 79 cents for every dollar of cost they incur in delivering Medicare services, compared to a national rate of 90.6 cents on the dollar, according to Maine Hospital Association President Steven Michaud. ... Ellen Griffith, a CMS spokeswoman in Washington, D.C., said Thursday that there is no valid state-by-state comparison of Medicare rates. 'Everybody says their payments are inadequate,' she said, but the payment formula includes a range of adjustments to ensure equity between major teaching hospitals and the smallest rural facilities" (Haskell, 3/6).

---

This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.