Washington For the first time in a decade, private-sector spending on health care grew more rapidly than public spending in 1998.

According to a report by the Health Care Financing Administration, total health care spending increased by 5.6 percent in 1998, compared with 4.7 percent in 1997. While 1998 marked the fifth year in a row that growth has been less than 6 percent, it was the largest increase since an 8.7 percent jump in 1993. The $1.1 trillion spent on health care in 1998 amounted to an average of $4,094 per person, compared with $3,912 per person in 1997.

"This is signaling some changes that appear to be imminent," said Katharine Levit, one of the report's authors. "We do think health care spending will begin to increase, but not back to the rates that we saw in the early 1990s."

But growth in government spending on health care continued at a slow pace, as it has in recent years, increasing only 4.1 percent in 1998. Medicare was the main factor, according to the report. The program is still reeling from the effects of the Balanced Budget Act of 1997, as well as from government crackdowns aimed at reducing waste, fraud and abuse. As a result, between 1996 and 1998, Medicare cut its payment error rate by almost half, the report states.

In 1998, Medicare spent $216.6 billion to deliver health care to nearly 39 million beneficiaries, a growth rate of only 2.5 percent-the slowest on record for the program-compared with 6 percent in 1997. Preliminary Treasury Department reports indicate that in fiscal 1999, ended Sept. 30, Medicare spending actually fell for the first time in history by 1 percent.

HCFA officials tried to put a positive light on the slow growth in public health care spending.

"These encouraging figures reflect the progress we've made to make our programs more efficient and to reduce waste, fraud and abuse while continuing to give beneficiaries the high-quality health care they deserve," said HCFA administrator Nancy-Ann DeParle.

In contrast to the public spending decline, private health care spending increased 6.9 percent in 1998, compared with 4.8 percent in 1997. According to the HCFA report, the private sector spending growth in 1998 was primarily the result of an 8.2 percent increase in private health insurance premiums, which is more than twice the rate of the past couple of years.

In 1997, premiums increased by only 3.5 percent, following a slump when HMOs and other managed care firms offered discounts to take customers away from traditional insurers. In addition, private insurance benefit payments also grew at about the same rate as premiums, ending a trend in which premiums grew more slowly than benefits from 1994 to 1997.-J.P.P.

Columbia, S.C. The Region C Durable Medical Equipment Regional Carrier's initiatives to fight Medicare fraud and abuse and save government and taxpayer money have paid off-in billions.

Palmetto Government Benefits Administrators, a subsidiary of Blue Cross and Blue Shield of South Carolina, says it saved or recovered $1.07 billion in federal tax monies, almost twice as much as the $516 million it saved the government and taxpayers in 1998.

"We are committed to aggressively and proactively preventing, identifying and recovering improper Medicare payments," said Sue Pearcy, Blue Cross' vice president of the Medicare Integrity Program Division. "Part of our job is to save taxpayer dollars, and we did that again this year, almost doubling the amount."

Palmetto GBA and Pearcy credit part of the billion dollar savings not only to an increased number of audits, but to the company's payment safeguard program.

"There are four components in the payment safeguard program," Pearcy said. "Medicare secondary payer, which ensures that the proper insurer pays before Medicare does, medical review of claims, anti-fraud activities, and financial audits of providers and institutions."

In 1999, the Medicare secondary payer component saved $91.3 million; the medical review of claims component saved $270.2 million; the anti-fraud activities component saved $72.5 million; and the financial audits of providers and institutions component netted $566.5 million.

Figures for Medicare savings by the other DMERCs were not available.-J.P.P.