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Medicare premiums to jump 13% in '06

WASHINGTON — Medicare monthly premiums for doctor visits and outpatient care will jump next year from $78.20 to $88.50, federal officials announced Friday.

The 13.2 percent increase is lower than last year's record-high 17.4 percent spike, but nevertheless drains more cash from the Social Security checks of Americans 65 and older, from which Medicare premiums typically are drawn.

The premium hike will offset higher program spending that's due to more intensive patient care, said Herb Kuhn, the director of the Center for Medicare Management at the Centers for Medicare & Medicaid Services. Included in that spending is more frequent use of hospital outpatient services, doctor visits, lab tests, imaging and other minor medical procedures.

"They're all up. They're all up substantially, and we're trying to understand how much value we're getting for that, and we just don't have a good handle on that," Kuhn said.

The higher premiums also will help shore up Medicare's Supplementary Medical Insurance trust fund, which pays a portion of physician and outpatient care. Legislation that Congress passed in recent years to increase what Medicare pays for physician services has left trust-fund assets "below where we would normally like it to be," said Richard Foster, Medicare's chief actuary.

If Congress increases the physician payment level this year, Medicare's 2007 premiums for doctors' services probably will increase as well, Foster said.

Kuhn said doctors should be adequately compensated for treating Medicare's 43 million elderly and disabled patients. But he added that "the current system right now is just not sustainable. Simply adding larger payment updates to the current system would not only be expensive but from a standpoint of promoting more efficient and better-quality care, this is not going to get us there."

Those concerns underscore a growing quagmire for Medi- care, which is facing rising health-care costs, an increased use of services, a growing number of beneficiaries and a dwindling tax base to support it. When that's coupled with a costly new prescription-drug benefit that begins next year, Kuhn said, Medicare's price tag is "a cause of some major concern."

The so-called "Part B" premium, which helps pay for physician services, hospital outpatient care, durable medical equipment and other services, will be only slightly higher than the $87.70 that Medicare officials had predicted in the Medicare Trustees' Report earlier this year. More than 90 percent of Medicare beneficiaries are enrolled in Part B.

The Part B deductible will rise to $124 in 2006 from $110 this year.

Medicare premiums are up dated annually under a formula set by statute. The law requires that Part B premiums cover 25 percent of the program's costs. The federal government pays the other 75 percent.

Officials aren't sure what's behind the increased spending for services.

Some experts say it's an overall improvement in the quality of care. But Medicare officials say the increases can't be explained by new treatments based on new technology and new medical evidence. Others suggest that doctors are simply practicing defensive medicine or over-treating patients to guard against malpractice lawsuits.

To help address the problem, Medicare is studying ways to better compensate physicians who keep patients healthy while holding down costs.

Medicare's "Part A" deductible, which mainly covers inpatient and skilled nursing-facility care and is paid by patients when they're admitted to hospitals, goes from $912 this year to $952 next year. About 99 percent of Medicare enrollees don't pay Part A premiums.