Auditing the Doctors

PUBLIC HEALTH

As Medicare marked its third birth day last week, its growing pains were all too evident. Both Medicare, the fed erally financed program that pays hos pital bills for all Americans over 65, and the related Medicaid, which is financed jointly by Washington and the states and assists the poor of all ages, have been plagued by huge cost underestimates, administrative tangles and messy scandals. Now doctors who treat patients under both programs will have to contend with the Internal Revenue Service and Senate investigators.

In Washington last week, as the Senate Finance Committee began hearings into alleged abuses, Chairman Russell B. Long told IRS representatives that he had evidence of kickback arrangements involving nursing homes, doctors and drug suppliers. At the same time, the IRS announced that it planned to conduct a special audit of the income tax returns of an estimated 10,000 doctors who had received more than $25,000 apiece in Medicare and Medicaid payments from the Government last year.

Last-Minute Reprieve. The prospect that even a few doctors were overtoiling the state and federal governments was especially disturbing in view of the states' growing reluctance or inability to shoulder their share of Medicaid's relentlessly spiraling costs. So far only 40 states have set up Medicaid programs (the 40th, Virginia, began operation last week), and some have already been forced to cut back services. Last week close to 200,000 of New York City's low-income Medicaid recipients were dropped from the rolls when the state lowered the eligibility level to an annual income of $5,000 for a family of four. New Mexico last May withdrew from the Medicaid program altogether in hopes of re-entering at a lower level of services.

Concerned about Medicaid's rising costs, the Department of Health, Education and Welfare issued a new regulation last week designed to limit the fees charged by doctors and dentists. Such fees accounted for about 29% of the $2.4 billion spent by Washington and the states on Medicaid last year (the Federal Government spent an additional $6 billion on Medicare). Under present regulations, Medicaid fees are determined by the states. The new rule establishes federal standards that will limit fees in most states to the level that prevailed last January. Increases will be permitted, but only under a formula based on the consumer price index. The new regulation is expected to save about $65 million in its first year of operation and substantially more later.

National Goals. The Senate meanwhile passed and sent to the House a measure that would permit states to reduce certain Medicaid services without risking the loss of federal aid. Under the bill, states would still be required to provide basic services: hospital and nursing-home care, outpatient treatment, preventive care for children, physicians' fees, laboratory costs and X rays. But the states would be permitted to drop coverage of dental care, prescription drugs and eyeglasses. The Senate measure will enable financially pressed states to cut burgeoning costs without abandoning their Medicaid programs altogether.

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