ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, July 1, 1996 TAG: 9607010114
SECTION: NATIONAL/INTERNATIONAL PAGE: A-6 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: The New York Times
Because of a quirk in the federal Medicare law, elderly people are being required to pay more than their normal share of the bills for hospital outpatient services. It is far more than Congress originally intended, and the burden is rising rapidly as such services account for a larger portion of all health care in the United States.
Beneficiaries ordinarily are responsible for 20 percent of the cost of services under Part B of the Medicare program. But because of the law, they are now responsible, on average, for 37 percent of the total payments to hospitals for outpatient services, one of the most important benefits under Part B, according to a recent report to Congress by a federal advisory panel.
For many such services, the patients' share is even larger. Donna Shalala, the secretary of the Department of Health and Human Services, said beneficiaries were paying more than 49 percent of the total Medicare payment to hospitals for outpatient surgery, radiology and other diagnostic services.
And, Shalala said, ``We expect that the beneficiary share of total hospital payments for these services will continue to increase rapidly,'' to 68 percent in 2000.
Since 1983, the government has paid a flat amount for each Medicare patient admitted to a hospital, depending on the diagnosis. But there are no such limits on outpatient services. A hospital can often increase its Medicare revenue ``by simply increasing its charges'' for outpatient services, the HHS secretary told Congress. When the hospital increases its charges, the beneficiary pays more.
The Clinton administration acknowledges that the costs are already causing hardship for many Medicare beneficiaries. But administration officials say they lack the authority to limit what hospitals charge for outpatient services under Medicare, and they are fighting a lawsuit by Medicare patients who insist that the government is supposed to set such limits.
The new Medicare handbook, sent to all beneficiaries in May, explains the situation this way: ``When you use your Part B benefits, you are responsible for paying the first $100 each year of the charges approved by Medicare. This is called the Part B annual deductible. After the deductible is met, Medicare pays 80 percent of the Medicare-approved amount for most services. You are responsible for the remaining 20 percent.''
But, it states, there is one big exception: ``If you receive outpatient services at a hospital, you are responsible for paying 20 percent of whatever the hospital charges, not 20 percent of a Medicare-approved amount.''
In March, the federal advisory panel, the Prospective Payment Assessment Commission, urged Congress to correct this problem. ``The growing financial burden for Medicare enrollees who receive services in hospital outpatient departments should be alleviated immediately,'' the panel said. ``Beneficiary coinsurance for these services should be limited to 20 percent of the Medicare-allowed payment.''
But neither Congress nor the Clinton administration is pushing for a quick solution, partly because of the complexity of the problem and partly because of disagreement over who would foot the bill. If beneficiaries paid less, then the federal government would have to pay more or hospitals would have to accept less over all. Any solution would increase federal Medicare costs, reduce hospital revenue, or both.
A 74-year-old woman named Marie Lohse had outpatient cataract surgery on one eye at a Los Angeles hospital. The hospital charged $6,277. She was responsible for 20 percent of that amount, or $1,255. But, she later learned, Medicare paid the hospital only $1,280. So the hospital received a total of $2,535, and Lohse paid 49.5 percent of the total reimbursement.
If she had paid 20 percent of the Medicare-approved amount, as required for many other Part B services, she would have paid only $507.
Robert Myers, who was chief actuary of the Social Security Administration for 23 years, said of the current formula, ``It's a raw deal, a gross injustice to beneficiaries that ought to be remedied.''
Myers said it had always been ``the general philosophy, the general principle of the Medicare program, that the beneficiary should be responsible for 20 percent of what Medicare recognizes as the reasonable and appropriate amount for a service.''
And in most cases that is true. But hospital outpatient services are different: the patient is responsible for 20 percent of whatever the hospital charges. Originally, what hospitals charged and what Medicare recognized as reasonable were about the same. But in recent years, hospitals have charged far more than Medicare pays for outpatient services. So in paying 20 percent of the hospital charges, beneficiaries end up paying much more than 20 percent of what the hospitals ultimately receive for such services.
LENGTH: Medium: 85 linesby CNB