Clinton Offers Medicare Savings Plan

In an effort to save billions of dollars on such items as drugs, wheelchairs and surgical services purchased by Medicare, the Clinton administration is seeking a major change in federal law to require competitive bidding in the massive health program.

The proposal, to be included in the budget the White House submits to Congress in February, “will bring down costs by allowing Medicare to purchase goods and services at a competitive price,” President Clinton said Saturday in his weekly radio address.

A shift to a bidding system is viewed as an essential tool in the government’s continuing drive to cut waste and fraud in Medicare. The program, which spends about $200 billion a year, is the fastest-growing category in the federal budget, and at least 10% of the money is consumed by fraud and waste, experts believe.

The administration’s plan could save more than $2 billion over five years, Health and Human Services Secretary Donna Shalala told reporters.

“I can go down to a store and purchase something cheaper than what Medicare is paying,” she said. “We ought to be behaving like the big purchaser that we are and getting the government the best prices.”

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When Medicare was created in 1965, there was fear that many suppliers would be reluctant to participate, and the government purposefully avoided basing its purchases on low bids. Instead, Medicare created an elaborate purchasing system for equipment and supplies, with variables linked to wholesale prices and differing geographic costs.

“The Congress gave us some limited authority last year [to change the system],” Shalala said. “We will go after complete authority so we can pay market prices.”

Medicare, which covers 38 million people--those older than 65 and the disabled of all ages--is the biggest single buyer of health care services. Yet it is paying higher prices than corporations, which have been successful in getting discounts through their insurance companies and health maintenance organizations, Shalala noted.

In addition to requiring competitive bidding for drugs and a variety of equipment ranging from wheelchairs to syringes, the administration wants the authority to get volume discounts from hospitals for routine surgeries.

Currently, a Centers of Excellence demonstration program saves the government money on coronary-bypass surgery in some markets. This would be expanded significantly if Congress approves the changes.

The administration also wants to double the number of audits for hospitals and get expanded powers to prosecute kickback schemes involving doctors and other health care providers.

Fraud against Medicare “is a real crime, committed by real criminals, intent on stealing from the system and cheating our most vulnerable citizens,” the president said in his radio address.

A toll-free hotline will be listed next month on all statements sent to Medicare beneficiaries to enable them to report fraud, the president said. “We will only win the fight against fraud and abuse in the Medicare system with the help of the American people.”

Clinton said the administration had saved more than $20 billion since 1993 through an expanded program to detect and deter fraud.