On March 6, in a carefully stage managed ceremony at the White House, President Carter unwrapped this year's version of his somewhat battered hospital cost-containment bill. The television cameras were present. Reporters busily took notes. The ceremonial event was news.
Five days before in the March 1 Federal Register, the Department of Health, Education and Welfare had published a "Proposed Schedule of Limits on Hospital Inpatient General Routine Operating Costs for Cost Reporting Periods Beginning on or After July 1, 1979."
That technical event was not treated as news. HEW did not even put out a news release.
Yet HEW's regulation is likely to have a far more immediate restraining effect on hospital costs than Carter's proposed legislation.
In the last several years, under orders from Congress, HEW has constructed a system of partial price controls for the nation's hospitals. There are limits on what the department will pay under Medicare and Medicald for so-called routine inpatient costs-the hospital room and board that now makes up about one-sixth of the total national medical bill.
The purposed new regulation would tighten these little-publicized limits substantially. Nearly one of five hospitals would be over the limits and have some of their claimed costs disallowed in Medicare and Medicaid cases.
These limits on routine costs, moreover, turn out to be only one strand in an extensive web of federal medical cost-containment regulations, which now make the medical business one of the nation's most regulated.
There are now "length-of-stay" rules in effect in hospitals all across the country. Federally blessed booklets lay out each year, for every illness and every age patient and every part of the country, the average number of days of hospitalization the year before. For an appendectomy not complicated by peritonitis, the average last year for all patients uner 35 in southern states was four days. For removal of hemorrhoids for the same group, it was five days.
The government will pay for above-average stays only when physicians supply special justification.
There are similar standards in effect on admissions to hospitals, and there are restrictions on the new equipment a hospital can buy or new beds it can add if it wants the government to share in the cost.
There are limits on physicians' fees: for a given procedure, the government will only pay up to the 75th percentile of all fees charged in a given community, and there is an additional limit on how much that cutoff point can climb in any community in a given year.
And now HEW is considering a new kind of limitation on hospital bills. Its goal is to rank all hospitals according to "case mix"-the complexity and therefore the costlines of the cases they handle. Then it proposes to limit what it will pay per day in every hospital, not just for routine costs but for all services.
An average patient day in a given hospital would be adjudged worth a certain amount of monay, as departmental planners now envision the system, and that is all the government would pay.
HEW experts have said that these new limits will be ready to put into place within two years.
Carter's bill is broader, and would be more powerful than these existing cost-containment rules. They apply only to federal expenditures, which are now about 30 percent of the total, but still only part. They also tend to approach costs piecemeal.
The bill would come at them in the opposite way, as lump sums. It would simply limit the amount that hospitals could increase their collections from all sources-private insurers and patients as well as public agencies-in any one year. How the hospitals lived within these limits would be largely up to them.
While the bill would take pressure off the existing rules, however, HEW experts say it would not supplant them. Their reason: the government would still need some way to make sure it was paying its fair share.
There is sweet political irony in the existing rules. When Congress created Medicare and Medicaid in the 1960s, its great concern was to keep the government out of medicine. Now, with costs rising so rapidly, it is tending the other way. For a conservative Congress that wants to reduce both federal regulation and the federal budge, health care is a special problem: Congress cannot have it both ways.
This dilemna is not a new one, however. Even in the original legislation, Congress tried to protect the Treasury against Medicare and Medicaid costs. It said, for example, that money in the Medicare trust fund could be used only to pay the "reasonable" costs of treating Medicare patients, and no others.
Ever since, the government and the hospital and accounting professions have been arguing about how to define these costs. The Medicare cost reimbursement rules are nearly as complicated as the tax code.
In the latest round in this fight, HEW-under instructions from Congress, as always-has published a proposed new system of uniform cost reporting for hospitals. It is called SHUR, for System for Hospital Uniform Reporting. For the first time, it would enable HEW confidently to compare the costs of various services-X-rays, for example, or blood tests or 10 minutes in the operating room-in every hospital in the country.
Currently, all such comparisons are blurred because hospitals use different accounting systems.
A uniform reporting system would obviously strengthen HEW's hand in setting reimbursement rules. The hospital and accounting systems are strenuously resisting SHUR.
In addition to arguing about the definition of costs, HEW and the affected professions have been debating the definition of "reasonable" over the years.
The proposed new limits on routine costs are part of this debate.
Under existing rules, HEW divides hospitals into categories-urban and non-urban and by size, for example.
Then it arrays the routine or hotel-keeping costs per patient-day in all hospitals in each category, goes about five-sixths of the way to the top in each list-the 80th percentile plus 10 percent of the median, which works out to about the 85th percentile-and says that is the most it will pay.
Hospitals over these cutoffs have part of their costs disallowed. About 800 hospitals are affected by the present standard.
Under the new system, HEW would lower the cutoff all the way to the 80th percentile-fourth-fifths of the way to the top. It says another 400 hospitals would end up having their claimed costs cut back. The departure estimates total savings under the new rules about $250 million a year. CAPTION: Illustration, while above is the Federal Register publication of a week earlier, ordering strict controls to go into effect after July 1.; Picture, President Carter, with Sen. Edward M. Kennedy (D-Mass.) and Rep. Henry A. Waxman (D-Calif.), announces his plan for controlling hospital costs. By Frank Johnston-The Washington Post