Health, Education and Welfare Secretary Joseph A. Califano Jr. yesterday announced a series of administrative steps he is taking to reduce health care costs as part of the Carter administration's efforts to curb inflation.
One of the main steps announced by Califano - imposing of a ceiling on what Medicare will pay for laboratory tests and medical equipment - was immediately attacked by the American Association of Retired Persons as a plan to "shift rising costs from government to individuals least able to afford it, and to put older Americans right in the forefront of the fight against inflation."
Califano also revealed yesterday that he had asked HEW's general counsel to investigate the relationship between physicians and Blue Shield insurance plans across the country. The investigation is to determine the extent to which physicians dominate Blue Shield plans paying federal funds to doctors, how great a conflict-of-interest problem is posed by this, and what should be done about it. Califano asked for a report by the end of this month.
In a news conference called to announced moves to curb rising health costs - following President Carter's announcement of a largely voluntary anti-inflation program on Tuesday - Califano outlined a series of steps in an attempt to tighten medical and hospital practices under both Medicare and Medicaid. He said he could not estimated precisely the savings except that it would be "hundreds of million of dollars."
Califano said that $1 billion could be saved yearly if the average length of hospital says in the East - 8.51 days per patient - could be reduced to the national average of 6.93 days. Califano again urged Congress to approve the hospital cost control bill, which he said could save $56 billion between 1979 and 1983.
Califano said new HEW regulations will become efffective within 30 days limiting Medicaid payments for the 12 most commonly done lab test and for medical equipment bought on rented by patients "to the lowest price that is widely available for the same quality in a particular community, instead of paying on the basis of average charges or even higher ones" as is presently done.
Medicare generally pays 80 percent of a reasonable charge, calculated by formula, with the patient paying the balance. Physicians and suppliers can charge more than Medicare allows and try to collect directly from patients. Califano said HEW would be "sensitive" to physicians and laboratories charging more to patients if Medicare paid less than what they charged. Of the $26 billion in Medicare funds, about $400 million was paid in lab fees.