Hospitals made their government money go farther in 1994, shifting fewer Medicare and Medicaid costs to the private sector.
Those are some of the findings from preliminary data released last week by the Prospective Payment Assessment Commission. The group advises Congress on Medicare payment issues.
In 1992, private payers paid $1.31 for every $1 that a service cost a hospital. The extra cost was needed to cover uncompensated care and to make up for federal programs that pay less than cost.
But in 1993, for the first time since the government began keeping records in 1980, the payment rate of private payers in relation to cost declined to $1.29 for every $1 of cost, according to ProPAC.
Now, preliminary data for 1994 show that private payers paid $1.24 for every $1 of cost.
While the shifting of costs from federal programs to private payers decreased, government payments also covered more of the government's bills, the figures showed.
The Medicare reimbursement rate, which in 1993 was 89 cents for every $1 of cost, jumped to nearly 97 cents for every $1 of cost in 1994.
Medicaid rates also improved. In 1993, Medicaid paid 93 cents for every $1 of cost. That rate improved to nearly 94 cents in 1994.
According to ProPAC Executive Direc-tor Donald Young, M.D., the change
in the Medicare and Medicaid reimbursement ratios came as a result of lower hospital costs, not from increased Medicare and Medicaid payment rates.
"The payment-to-cost ratios improved*.*.*.*because hospital costs dropped dramatically," Young said.
Late last year, ProPAC released data that showed that for the first time hospital costs per discharge actually declined by 0.5%. That decrease was led by proprietary hospitals, which decreased costs an average of 2.3% in 1994, according to ProPAC.
Much of the decline has been spurred by private managed-care plans, which have negotiated lower reimbursements rates with hospitals, Young said. Data released last year showed costs grew more slowly in regions with higher-than-average HMO penetration compared with those with less managed care
Young added that he believes hospitals' ability to shift costs to private payers decreased further in 1995.
