CMS Announces 2015 Medicare Premiums and Deductibles to Remain Same as in 2014 – Is the Medicare Secondary Payer Program Partly Responsible?

On October 9, 2014, Secretary of Health and Human Services (HHS) Sylvia Burwell announced that next year’s standard Medicare Part A and Part B monthly premiums and deductibles will remain generally the same as the last two years. Although there are lots of speculative reasons for this, including the possibility that the Affordable Care Act (ACA) may be helping to keep medical costs in check, it is also undeniable that CMS’ continuing evolution of MSP rules and regulations may have helped to reduce costs and thereby keep monthly premiums and deductibles the same. Although it may be impossible to credit one single change with the recent slowdown in Medicare spending, it is clear that a working mandatory insurer reporting system, an aggressive conditional payment reimbursement process, and although still incomplete and inconsistent, a set aside allocation, approval, and administration scheme, may be some of the many reasons why over the past four years, per capita Medicare spending growth has averaged 0.8 percent annually, much lower than the 3.1 percent annual increase in per capita GDP over the same period.

Medicare Hospital Insurance (Part A), as well as Medicare Supplementary Medical Insurance (Part B) is available to three basic groups of “insured” individuals: the aged (those over age 65), the disabled (those determined disabled by the Social Security Administration (SSA), and those with End-Stage Renal Disease (ESRD). There are a total of 52 million Medicare Part A and B beneficiaries today. Part A is largely funded by revenue from a 2.9 percent payroll tax levied on employers and workers (each pay 1.45 percent). Part B is partially funded by premiums paid by Medicare enrollees (ranging from $104.90 to $335.70) and general fund revenue.

Medicare Part A generally covers inpatient hospital, skilled nursing facility, and some home health care services.  About 99 percent of Medicare beneficiaries do not pay a Part A premium because they have paid into the system while they worked, accumulating at least 40 quarters of Medicare-covered employment. However, enrollees who are age 65 or older, or who are disabled, and who have fewer than 40 quarters of coverage must pay a monthly premium in order to receive coverage under Part A.

In 2015, beneficiaries who have between 30 and 39 quarters of coverage may buy into Medicare Part A for a monthly premium of $224, a decrease of $10 from the 2014 monthly rate. For beneficiaries who have fewer than 30 quarters of coverage, the Medicare Part A monthly premium will drop $19 in 2015 to $407.

The Medicare Part A deductible that beneficiaries pay when admitted to a hospital will be $1,260 in 2015, an increase of $44 from the 2014 deductible of $1,216. The Part A deductible covers beneficiaries’ share of costs for the first 60 days of Medicare-covered inpatient hospital care in a benefit period. Beneficiaries must however pay an additional $315 per day for days 61 through 90 in 2015, and $630 per day for hospital stays beyond the 90th day. For beneficiaries in skilled nursing facilities, the daily co-insurance for days 21 through 100 in a benefit period will be $157.50 in 2015, compared to $152.00 in 2014.

Medicare Part B generally covers physicians’ services, outpatient hospital services, certain home health services, durable medical equipment, and other items. For the approximately 49 million Americans enrolled in Medicare Part B, monthly premiums will remain unchanged in 2015 at $104.90. Deductibles will also remain the same at $147 annually.

Since 2007, beneficiaries with higher incomes have paid higher Part B monthly premiums.  These income-related monthly premium rates, which affect less than 5 percent of people with Medicare, will also remain the same as they were in 2014. They are as follows:

Beneficiaries who
file an individual tax return with income:

Beneficiaries who
file a joint tax return with income:

Part B
income-related monthly adjustment amount

Total monthly Part
B premium amount

Less than or equal to $85,000 Less than or equal to $170,000

$0.00

$104.90

Greater than $85,000 and less than or
equal to $107,000
Greater than $170,000 and less than
or equal to $214,000

$42.00

$146.90

Greater than $107,000 and less than
or equal to $160,000
Greater than $214,000 and less than
or equal to $320,000

$104.90

$209.80

Greater than $160,000 and less than
or equal to $214,000
Greater than $320,000 and less than
or equal to $428,000

$167.80

$272.70

Greater than $214,000 Greater than $428,000

$230.80

$335.70

Monthly premium rates to be paid by beneficiaries who are married and lived with their spouse at any time during the taxable year, but file a separate tax return, are as follows:

Beneficiaries who
are married and lived with their spouse at any time during the year, but file
a separate tax return from their spouse:

Part B
income-related monthly adjustment amount

Total monthly Part
B premium amount

Less than or equal to $85,000

$0.00

$104.90

Greater than $85,000 and less than or
equal to $129,000

$167.80

$272.70

Greater than $129,000

$230.80

$335.70

CMS is responsible for protecting the Medicare program’s fiscal integrity and ensuring that it pays only for those services that are its responsibility. If an individual is a Medicare beneficiary and there is another party or insurer responsible for the beneficiary’s medical treatment,
CMS rules dictate that Medicare is a secondary payer in such claims. There are a variety of methods and programs used to assure Medicare remains a secondary payer, including mandatory insurer reporting, conditional payment reimbursement, and set aside allocations. Along with multiple other programs, the MSP program, which makes Medicare a secondary payer to non-group health plans (NGHPs) like auto or other liability insurance, including self-insurance, no-fault insurance, and workers’ compensation, has begun to positively affect Medicare spending and therefore Medicare premiums and deductibles. As a result, in 2015, Medicare premiums and deductibles will generally remain the same as they were in 2014.

Rafael Gonzalez is Vice President of Strategic Solutions at Helios. With over 25 years of experience in the workers compensation, liability, Medicare and Medicaid industry, Rafael serves as thought leader on all aspects of Medicare and Medicaid compliance, including mandatory reporting, conditional payments, and set asides. You may contact Rafael at rafael.gonzalez@helioscomp.com or 813.612.5592.

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