The Coming Medicare Changes
Changes are coming to Medicare. They recently were put on the books to begin in a few years.
The changes are the result of Medicare’s “doc fix.” You might be aware that in 1997 the formula for reimbursing doctors for treatment provided under Medicare was changed. The formula slashed reimbursement rates and would save Medicare a lot of money, but it established rates below doctors’ costs and wasn’t sustainable. The result was that periodically Congress would pass a temporary “fix” that increased reimbursement rates after a great deal of delay and effort.
This year Congress enacted a permanent change that increases doctor’s reimbursements, but a few other terms of the program also had to be changed to pay for some of the higher reimbursements for doctors.
You might find that your care is provided a bit differently in coming years. That’s because part of the doc fix is to pay physicians more based on the quality of care instead of quantity of care, though the details aren’t yet determined. Also, bonuses will be paid to doctors who receive more of their revenue from “alternative payment systems” other than fee for service. Models for the alternative payment systems still are being developed.
Higher income Medicare beneficiaries will help pay for the higher reimbursements. Starting in 2019, single Medicare beneficiaries with incomes higher than $133,500 (or marrieds with incomes of more than $267,000) will pay higher Medicare premiums for Parts B and D than they do under the current Medicare surtax. Currently, beneficiaries with modified adjusted gross incomes of $133,500-$160,000 ($267,000-$320,000 for a couple) pay 50% of their estimated costs through premiums. They will pay 65% of their premium costs for Part B (outpatient services) and Part D (prescription drugs) beginning in 2019. Those earning $160,000-$214,000 per year ($320,000-$428,000 for couples) currently pay 65% of their costs through premiums but beginning in 2019 will pay 75%.
In fact, all Medicare beneficiaries are likely to pay higher premiums. That’s because the base Medicare premium is calculated each year to cover a set percentage of Medicare’s costs. If doctors are paid more, beneficiaries will pay part of that through higher premiums. The cost estimators say the base premiums will rise about $10 by 2025 due to this change.
Beginning in 2020, Medigap or Medicare supplement policies won’t be able to cover the Part B deductible for new beneficiaries (currently the deductible is $147 per year). Also, long term care providers will receive base reimbursements of about 1% less beginning in 2018 for services provided to Medicare beneficiaries.
Some analysts say in the future the combination of higher standard Medicare part B and D premiums and the reduced benefits under Medigap policies will make Medicare Advantage plans more attractive than traditional Medicare.
RW June 2015.
