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Medicare premiums might grow more than initially expected next year, driven by a significant spike in payments to physicians.
Spending grew as doctors saw patients more frequently, did more tests and provided more in-office drugs than expected.
In addition to increasing premiums, the higher-than-expected spending on doctor services last year might hamper physician efforts to win a pay increase instead of a cut from Medicare next year.
Medicare patients pay 25% of the cost of Part B of the program, which covers non-hospital care. When spending goes up, patients pay more.
Part B premiums rose 17% this year to $78.20 and were expected to rise by about 12.1% next year, to $87.70 a month.
But the new data on spending from 2004 led Medicare officials to estimate that an additional $1.50 a month might be needed on premiums, bringing them to $89.20, or 14% more than this year.
If Congress grants doctors a raise next year, that number might need adjusting again.
''We're looking into it closely to find out exactly why Part B costs have gone up so much,'' Medicare chief Mark McClellan said in a briefing Thursday.
The spending on doctor services, which rose 15% in 2004, was more than a forecast 12% increase, itself a jump from prior years.
Accounting for the vast majority of the increase were longer office visits, more services, such as physical therapy, big increases in the use of diagnostic scans such as MRIs, more laboratory tests and more use of drugs that must be administered in a doctor's office.
A fee increase for doctors of 1.5% and enrollment growth were not considered significant factors.
''There's no question that many aspects of more intensive treatment, such as closer follow-up of patients . . . can help prevent complications of serious chronic illnesses,'' McClellan said.
But he also questioned why care varied by region and even among doctor offices.
More study is underway, he said, ''to get a better understanding of which are related to improvements in care and which are more questionable.''
The American Medical Association, in a written statement, called on Congress to do away with planned physician pay cuts they say would average 26% from January 2006 to 2011.
Instead, it said, doctors should be rewarded for providing more care to patients:
''Conditions that once required hospitalization now are routinely treated in physicians' offices at a lower cost to the government and patients,'' the AMA said.
''Medicare should recognize and reward these advances rather than penalize physicians for these important improvements in patient care.''
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