Hospital Medicare Pay-Out Hike Proposed

WASHINGTON —  The government proposed Thursday to increase Medicare payments to hospitals by 0.5% next year, one-fourth the amount President Reagan proposed in February.

The Health Care Financing Administration, which runs Medicare, said that the increase is offered only because a reduction or freeze in payments might be seen as punitive and unjust.

‘Could Lead to Concern’

Cost and profit figures would justify a reduction in Medicare payments of 0.9%, the agency said, but “could lead to concern that we would be economically disadvantaging hospitals. Therefore, we believe it is in the best interest of all parties . . . to propose an increase.”

The characterization did not sway opinion in the hospital industry, however. One trade association leader termed the proposal “an insult,” while another called it “totally unrealistic and unfair.”

The industry leaders predicted a battle in Congress over the payment level.

A 2% increase was envisioned in Reagan’s 1987 budget and that level was accepted in budget resolutions adopted by the House and Senate.

The proposed payment adjustment is included in a proposed regulation filed Thursday with the Federal Register.

It is scheduled for publication Tuesday, leading to a public comment period. Final rules, which must be issued by Sept. 1, will take effect Oct. 1.