Medicare: balancing health care quality and hospital profits

Can the federal medicare program be run without unnecessary cost to United States taxpayers while still ensuring adequate medical and nursing-home care for elderly Americans? That is the central issue in a revived debate in Washington over the federal program that provides medical cost assistance to some 31.8 million Americans over the age of 65.

Medicare officials say that the cost-cutting begun three years ago has been accomplished without major harm to the quality of care afforded medicare recipients in hospitals. But some observers are concerned that the quality of care has declined.

The issue of quality vs. efficiency in the medicare program has been spotlighted in recent days by a Senate Finance subcommittee hearing on the quality of care medicare recipients receive and by a report issued by the inspector general of the US Department of Health and Human Services (HHS).

The HHS report says that US hospitals, on average, made a 15 percent profit on the medicare patients treated in 1984. Some observers wonder if hospitals are making substantial profits on medicare patients because the institutions are more concerned with finances than with meeting individuals' needs.

Representatives of the nation's 6,000 hospitals insist this is not so. They say that in the three years that medicare reimbursements have been held down under revised federal guidelines, hospitals have been able to show profits by adopting more-efficient procedures while still providing good care.

Some members of Congress seem less sure. Sen. John Heinz (R) of Pennsylvania, chairman of the Senate Aging Committee, says he keeps hearing ``horror stories'' from medicare recipients about the treatment they have received.

William Roper, the new administrator of HHS's Health Care Financing Administration, which administers the medicare program, testified before the Senate subcommittee that in his judgment, the quality of medical care ``has improved dramatically across the health-care system.''

Dr. Roper acknowledged, however, that some of the organizations supposed to monitor hospital quality -- called Peer Review Organizations -- have not performed their task well.

Roper also said that his agency concluded that, from a financial standpoint, medicare could justify reducing reimbursement rates to hospitals by an average of nine-tenths of 1 percent. But to be certain of being fair, he adds, HHS proposes to raise the reimbursement rates by one-half of 1 percent.

An issue that is expected to become increasingly important is the amount of long-term medical care for elderly Americans provided for through medicare. Medicare recipients are being discharged from hospitals more quickly, with the result that more of their convalescence time is spent in nursing institutions.

Medicare now covers about 45 percent of the total medical costs of long-term care for older Americans, says Robert M. Ball, former commissioner of social security. Most of that money is paid during hospital stays. Medicare meets only about 1 percent of the cost of nursing-home care for the elderly, Mr. Ball says.

Sen. Dave Durenberger (R) of Minnesota, who chaired the Senate hearing, says he thinks medicare should pay more more long-term medical costs.