US Seniors Face Higher Medicare Rates for 2003

 By Karen Pallarito, Reuters Health

  October 18, 2002

Medicare's 40 million beneficiaries will pay higher premiums and deductibles next year, on top of a slim cost-of-living adjustment for 2003.

Seniors' monthly premium for physician services will jump 8.7% to $58.70 in 2003, the federal government said on Friday. The deductible for hospital inpatient services will rise 3.5% to $840, it said.

AARP Executive Director and CEO William Novelli said the news of higher Medicare premiums is troubling. "Beneficiaries will be paying more than ever but still will not get any help with skyrocketing prescription drug costs," he said.

Meanwhile, retirees can expect to see a little more in their Social Security checks next year, but the 1.4% cost-of-living adjustment announced on Friday will be far outstripped by growing prescription drug costs.

"I think people probably see their costs going up more than 1.4% a year," noted David Certner, AARP's director of federal affairs. The Centers for Medicare and Medicaid Services projects a 12.8% increase in prescription drug spending from 2002 to 2003, he said.

Still, the Medicare rate hikes are modest compared with the double-digit rates of increase that employees in private health plans face. Surveys suggest private health plans will boost rates for employee healthcare coverage by an average of 15% to 17% next year.

Medicare is required to update premiums and deductibles annually based on formulas established by law, the US Department of Health and Human Services said. Medicare Part A covers inpatient hospital, skilled nursing and some home healthcare. Part B of the program covers physician services, hospital outpatient care, durable medical equipment and other services.

The Part A deductible that seniors pay covers up to 60 days of inpatient care. For longer stays, beneficiaries must pay an additional $210 per day through day 90 and $420 a day after that. Those amounts are 3.4% higher than this year's rates.

Seniors also can expect to pay more out-of-pocket for care they receive in nursing homes. The daily co-insurance rate will rise more than 3.4% to $105 for services received from days 21 through 100. Only beneficiaries enrolled in traditional Medicare pay the Part A deductible. The nearly 5 million Medicare beneficiaries who receive their care through private health plans won't know how their rates and benefits will be affected until the end of the month.

With costs rising at a 10% rate and federal reimbursement going up just 2% a year, health plans are being forced to make difficult choices about benefits and coverage, said Susan Pisano, a spokeswoman for the American Association of Health Plans.

Nearly 200,000 seniors were notified this month that their health plans will no longer serve Medicare beneficiaries in 2003. The recent upheaval follows several years of health plan non-renewals in the Medicare+Choice program. HMOs blame the turmoil on insufficient government reimbursement.