$225-Million Cut in Medicare Limits Payments for Education, Home Health Care

WASHINGTON — The Reagan Administration, tightening the vise on health care costs, announced more than $225 million in additional cuts in Medicare spending Friday, to be achieved through new limits on payments for medical education and home health care.

In regulations published in the Federal Register, the Department of Health and Human Services imposed a freeze on payments under Medicare for subsidizing the education of interns and residents at teaching hospitals. The change will save $125 million next year, the department said.

It also established new rate structures for home health specialists in fields such as physical therapy and speech pathology, saving at least $100 million during the next three years.

The new regulations take effect immediately. A preliminary notice that they would be issued was published earlier by the Administration.

70% Affected

The department said that about 70% of home health specialists will be affected, either by being pressured to lower their rates or by being refused full reimbursement.

The second change brought a sharp response from the chairman of the House Aging Committee, Rep. Edward R. Roybal (D-Los Angeles), who said it will “translate into millions of denied home health visits to elderly Americans.”

Roybal said the changes are particularly critical because other Medicare cost-saving measures are forcing patients out of hospitals sooner, making them more dependent on home health care.

Both regulations were listed last winter as part of President Reagan’s 1986 budget plan to trim the growth in Medicare spending by $3.9 billion, holding the health insurance program for the nation’s elderly and disabled to a total of $77.2 billion.

Saving of $1.8 Billion

The largest proposal, freezing Medicare payments to hospitals at their 1985 levels, was formally offered as a regulation last month and carried an estimated saving of $1.8 billion.

The home health regulation affects payments to specialists in six fields: skilled nursing care, physical therapy, speech pathology, occupational therapy, medical social services and home health aides.

“I want to emphasize that these rules do not impose any new costs for beneficiaries, nor do they affect the number of visits an agency may furnish to Medicare patients,” HHS Secretary Margaret M. Heckler said in a statement. “But they will indeed apply needed pressure on the higher-cost home health agencies to bring their costs into line.”

However, the department noted that, if current billing practices continue unchanged, about 70% of the 5,640 home health care agencies participating in Medicare would violate the new cap and would be denied full reimbursement.

The department said it expects most of those specialists to trim back their rates to match the new caps. Roybal said most instead will pull out of the program, leaving Medicare patients without care.