U.S. Calls for Rate Freeze on Hospitals

From Times Wire Services

The Department of Health and Human Services on Monday issued new regulations to hold Medicare hospital payments for up to 31 million recipients at current levels.

The regulations, published in the Federal Register and subject to a 30-day comment period before they become final, would maintain the current rates through the 1986 fiscal year, which begins Oct. 1.

It is the second year in a row that HHS Secretary Margaret M. Heckler has changed the hospital Medicare rates by regulation.

The government would be justified in reducing Medicare payments by an average of 2.85%, the department said, but it opted for a freeze on payments instead.


The department, which said that the move would save $1.8 billion a year, explained that while medical costs rose this year, they were more than offset by Medicare overpayments to hospitals in the past. These overpayments stemmed from use of unaudited cost figures in calculating payments and from overestimates of medical inflation, it said.

Hospitals ‘Not Responsible’

But it added that an actual reduction in Medicare payments “would be inappropriate” because it “would appear to be punitive of the hospital industry,” which was not responsible for the erroneous calculations.

Hospital industry spokesmen have argued for months that a payments freeze--part of President Reagan’s proposed cuts in federal spending--would jeopardize care for the elderly and increase the cost of health care for other persons.


But Heckler said in a statement that the freeze would not compromise hospital care.