In an effort to contain spiraling Medicaid costs that threaten to throw the District government's budget further out of balance, the city has announced changes in the Medicaid system designed to cut costs by discouraging expensive hospital care.

D.C. Department of Human Services Director James E. Buford announced that the Medicaid system, which provides health care funds to 60,000 low-income and elderly District residents, will increase the fee schedule for private physicians while decreasing the amount the city will pay for hospital outpatient and emergency room care.

Buford said the average cost of out-patient hospital visits during the 1980 fiscal year was $80, while the average comparable visit to a private physician -- including tests and laboratory work -- was $55.

Buford said the city will also discontinue payments for hospital care for patients who do not need acute care and could receive the services they require at nursing homes.

He said the city will also require, beginning Aug. 15, that health care providers bill the District government within 90 days of providing Medicaid services.

Buford estimated the changes could ultimately save the District $13 million a year in a Medicaid program whose escalating cost is expected to reach $200 million next fiscal year.

Under the new fee schedule, which Buford estimated would save the city $3 million, physicians will be paid $20 for a routine office visit, $30 for an initial visit and $45 for a complete medical history and physical. The current fees are $13, $19 and $32.

Buford said the change is designed to encourage private physicians to treat Medicaid patients. Many are now reluctant to do so, largely because of the low fees.

The spiraling cost of Medicaid has been one of the primary engines powering the massive overspending that has thrown the city's finances into deficit. Although Mayor Marion Barry has said that the current year's budget is "essentially balanced," he has acknowledged that Medicaid over-spending still constitutes a real problem.