The government proposed a new means yesterday of cutting costs in the Medicare and Medicaid programs: a uniform cost-reporting system for the nation's hospitals.
Hospital industry groups, which killed a similar plan last year, showed no enthusiasm for the new one.
The revised reporting system was prosposed by Leonard D. Schaeffer, administrator of the Department of Health, Education and Welfare's Health Care Financing Agency (HCFA).
He said reporting methods by hospitals for Mdeicare/Medicaid reimbursement differ so sharply that HEW has difficulty comparing costs and evaluating charges.
As a result, he said, there is no way for HEW to determine why one hospital has far higher costs for the same item than another -- for example, 38 cents for a bottle of 500 aspirin at one hospital and $2.66 at another.
Schaeffer said a hospital with a delivery room might not be completely segregating its obstetrical costs when applying for Medicare reimbursement, and therefore might be collecting Medicare reimbursement for its delivery room even though no elderly Medi care patients had babies.
The new system would exclude delivery room costs from Medicare reimbursement, he said.
Under current reporting methods, an aide said, a hospital also may report some services in a categroy that receives high reimbursement under the Medicare program (50 percent or 60 percent) when those services should be reported in a lower-reimbursement category. As a result, the hospital gets more government money than it should.
The new uniform reporting rules proposed yesterday -- a year after the earlier, longer set of rules was shot down by the hospital industry and Congress as excessively cumbersome -- would enable HEW to make clear cost comparisons and locate inefficient practices, Schaeffer said. With time allowed for public comment, congressional reaction and final revisions, the rules probably couldn't be published in binding form until the end of the year, he said.
The regulations, billed by Schaeffer as simpler and less costly than last year's proposals, drew little enthusiasm from the American Hospital Association, the nation's main hospital organization, or from the Federation of American Hospitals, representing 1,000 for-profit hospitals.
An AHA spokesman said the proposed requirements may be somewhat less burdensome than last year's -- the instruction book for answering the questionnaire is 305 pages instead of 600 -- but still appear cumbersome. "We are not ready to embrace and endorse this in any way," said the AHA spokesman.
Mike Bromberg, executive director of the FAH, said he felt many of the changes from the earlier proposal are "relatively cosmetic." He said the aim is still the same -- to impose on hospitals, by a new system of reporting, a basic reduction in Medicare and Medicaid reimbursement, the result of which he said would be to force hospitals to charge private patients and insurance companies more to maintain qualtiy services.
"The hospital profit margin is only 3 percent. Costs are high," Bromberg said, "but that doesn't mean someone's riping us off. Quality care is costly."
Schaeffer said Congress, recognizing that the federal government is paying about 40 percent of the nation's basic hospital costs by pumping out $25 billion a year to hospitals under Medicare and Medicaid, mandated a uniform reporting system in 1977 legislation.
Schaeffer said HEW simplified last year's proposal by reducing the size of the manual forms to be filled out. As a result, he said instead of costing $10,000 a year per hospital, the reporting would add $5,330 to operating costs, and HEW would pay for one-third of this.
Schaeffer said hospitals today generally report their expenses by organizational units, but because each hospital is organized a bit differently from others, the accounts aren't comparable. Under the new proposal, accounts would be reported according to activities, using uniform definitions.