The Reagan administration, in an effort to rein in rising costs, is considering new limits on what it will pay hospitals under Medicare for such so-called ancillary services as X-rays and blood tests, which make up about half the average hospital bill.
There already are such limits on how much the government will pay for the basic room and board or daily room rate for Medicare patients. The new limits would involve the government, indirectly but intricately, much more deeply in the price-setting process for medical services.
The cost limits are among a number of proposals now in the final stages of consideration to restrain the rising cost of basic benefit or entitlement programs. There is irony in them; the administration has said many times it prefers a free market in the provision of medical care, yet the cost limits are first cousins to the hospital cost containment proposals that the Carter administration repeatedly introduced, and that Republicans from Ronald Reagan down denounced as intrusive.
In addition to the new limits on payments to hospitals, the administration is considering deferring what in effect is an annual cost-of-living increase in doctors' Medicare fees. The maximum fees that Medicare will pay for various services are adjusted each July for inflation. The administration is considering deferring next year's adjustment to October.
The administration hopes to propose new entitlement cuts shortly. Cost-control is not the only proposal under study. Also under consideration are proposals to shift costs to the patient or his employer.
Although no final decisions have been made, these include: charging Medicare and Medicaid patients an added special daily fee for hospital services (perhaps $1); making employers continue their private health insurance coverage for people who keep working after 65 so Medicare would not have to pay most of their doctor bills; raising by possibly a third the current $11 monthly premium now charged Medicare eligibles if they wish to purchase out-of-hospital doctor insurance under the optional "Part B" of Medicare, and bringing federal employes under Medicare and making them pay the Medicare portion of the Social Security tax.
Many former federal employes already get Medicare for only a few years of paying the Social Security tax in the private sector after they leave the government; this proposal would make them pay the tax for all the years they are in federal service as well.
These extra charges on Medicare patients and tax shifts would require congressional approval. The new cost limits could be imposed administratively.
Depending on how they are finally written, the contemplated limits on ancillary charges could save $1 billion or more a year eventually.
For the room and board portion of the Medicare patient's bill, the most the government now will pay any hospital is 108 percent of the average charge of all hospitals in the area; the figure was just lowered from 112 percent. The proposal under study would apply the 108 percent ceiling to ancillary services as well. "This is nothing more than hospital cost containment," said a Republican health expert.
Also under consideration is a cut in what the government would pay radiologists and pathologists who perform in-hospital services for Medicare patients and are not paid directly by the hospital. At present, Medicare pays them 100 percent. Under the proposal, Medicare would pay 80 percent and the doctor would have to bill the patient for the rest and hope to collect.
Still another proposal under study, which also might be done administratively, would reduce the rate of return on equity that the government now allows for-profit hospitals in computing Medicare payments. The current allowable rate is one and a half times the interest rate being earned by the Social Security system for its reserve funds invested in government securities.
Included in the package of options being studied is a plan to limit increases in federal Medicaid reimbursements to the states for long-term care of the elderly in nursing homes to between 5 and 7 percent a year. Since actual costs have been going up more rapidly, this "cap" would mean a federal saving as compared with current law. Long-term care now accounts for over two-fifths of the costs of the entire Medicaid program.
The current $11 monthy premium paid by Medicare beneficiaries for Part B out-of-hospital doctor coverage pays only 24 percent of the costs of the Part B program; the rest comes from Treasury general revenues. The Office of Management and Budget is studying whether to raise the fee enough each year to pay 34 percent. It's also considering automatic increases each year in the Part B deductible, the amount a Medicare patient must pay for out-of-hospital doctor costs before Part B coverage kicks in. Currently $75, the deductible would be raised each year roughly in pace with the cost of living.
Another possible proposal: eliminating the extra 5 percent paid hospitals for Medicare nursing costs.