Dewonkify – Medicare Part B

Medicare is a federal program that provides health insurance coverage for people who are age 65 or older.  Individuals younger than 65 may qualify if they have certain disabilities or have End-Stage Renal Disease (ESRD).  Medicare is comprised of four parts — Parts A, B, C, and D.  Over the next few weeks, Capitol Health Record will dewonkify each of the four parts.

Definition:  Medicare Part B primarily pays for care provided by doctors and other health care professionals (like nurse practitioners), outpatient services, durable medical equipment (DME), home health, and some preventive services.

Used in a Sentence:  “The premiums for Medicare Part B will remain flat in 2014 and seniors have saved $8.3 billion on Part D prescriptions since the Affordable Care Act was enacted in 2010, the Department of Health and Human Services announced Monday. Medicare Part B covers medically necessary services, as well as preventive services.” From “Medicare Part B Premiums Won’t Go Up in 2014,” by Kelly Kennedy, USA Today, October 28, 2013

History:  Medicare Part B began in 1965 under the same legislation that enacted Medicare Part A and the Medicaid program.

Enrollment:  In 2012, 46.4 million Americans were enrolled in Medicare Part B.

Financing:  Medicare Part B is financed through general revenues and premiums collected from beneficiaries.  Because of the way it is financed, technically Medicare Part B can never be insolvent.  However, because the federal government pays 75 percent of the cost of Part B, many policymakers have begun to grow concerned about the increased cost of the program and have proposed ways to reduce these federal expenditures.

Sustainable Growth Rate (SGR):  Medicare Part B pays for services provided by physicians and other health care professionals using the SGR formula.  Unless Congress acts by the end of this year, physicians who treat Medicare beneficiaries will see their reimbursement cut by approximately 24 percent (the exact amount will be determined when the Centers for Medicare and Medicaid Services (CMS) releases its final rule implementing the Physician Fee Schedule).

Over the past decade, Congress has enacted more than 15 short-term fixes to address the SGR (see infographic).  In July the House Energy and Commerce Committee passed legislation to permanently address the SGR.  Last week, the House Ways and Means Committee and Senate Finance Committee jointly released a draft discussion guide which closely follows the Energy and Commerce proposal.

Premiums:  Medicare beneficiaries pay monthly premiums, which are adjusted each year and account for roughly 25 percent of Part B costs.  Currently most beneficiaries pay a monthly premium of $104.90 per month.  Individuals with higher incomes pay a higher monthly premium.  (More information on Medicare Part B premiums is available here.)  Individuals who lack other coverage (generally through a current or former employer) who delay signing up for Part B may be assessed a permanent late enrollment penalty.  (More information on the late enrollment penalty is available here.)

Out-of-Pocket Costs:  In addition to the monthly premium, beneficiaries have an annual deductible of $147 for 2013.  Beneficiaries also are assessed a copayment of 20 percent of the Medicare-approved cost of the service.  (More information is available here.) 

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