THIS SEARCH THIS DOCUMENT THIS CR ISSUE GO TO
Next Hit Forward Next Document New CR Search
Prev Hit Back Prev Document HomePage
Hit List Best Sections Daily Digest Help
Doc Contents
The Chairman of the House Ways and Means Committee, Representative BILL ARCHER, was largely responsible for the inclusion of trust fund provisions in the
Balanced Budget Act of 1995 and the budget resolution for fiscal year 1997. He and I share a strong commitment to ensuring the continued success of our system of medical education. Indeed, Chairman ARCHER and I were both honored in 1996 to receive the
[Page: S652] GPO's PDF
That is the history of this effort, briefly stated.
Medical education is one o f America' s most precious public resources. Within our increasingly competitive health care system, it is rapidly becoming a public good--that is, a good from which everyone benefits, but for which no one is willing to pay. Therefore, it should be explicitly financed with contributions from all sectors of the health care system, not just the Medicare program as is the case today. The fiscal pressures of a competitive health market are increasingly closing off traditional implicit revenue sources (such as additional payments from private payers) that have supported medical schools, graduate medical education, and res earch unti l now. In its June, 1995 Report to Congress, the Prospective Payment Assessment Commission (ProPAC), created to advise Congress on Medicare Hospital Insurance (Part A) payment, summarized the situation of teaching hospitals as follows:
As competition in the health care system intensifies, the
additional costs borne by teaching hospitals will place them at a disadvantage
relative to other facilities. The role, scale, function, and number of these
institutions increasingly will be challenged........Accelerating price
competition in the private sector.......is reducing the ability of teaching
hospitals to obtain the higher patient care rates from other payers that
traditionally have contributed to financing the costs associated with graduate
medical education.
The State of New York provides a good example of what is happening as health care markets become more competitive. Effective at the end of the 1996 calendar year, New York repealed a state law that set hospital rates. Hospitals must now negotiate their fees with each and every health plan in the state. Where teaching hospitals were once guaranteed a payment that recognized, to some degree, its higher costs of providing services, the private sector is free to squeeze down payments to hospitals with no such recognition. While the State of New York operates funding pools that provide partial support for graduate medical education and unco mpensated care, it is largely up to the teaching hospitals to try to win higher rates than other hospitals when negotiating contracts with health plans. Some may succeed in doing so, but most will probably not. New York's state law was unique, but the same process of negotiation between hospitals and private health plant takes place across the country. Who, in this context, will pay for the higher costs of operating teaching hospitals?
It is worth mentioning that the NY state funding pools for GME were established as a temporary, yet important source of support for GME until Federal law--like the bill I am introducing today--can be passed by Congress. While New York has historically recognized the value of supporting GME through the state funding pools, this source of funding is currently in jeopardy of not being reauthorized by the state legislature.
It is obvious that teaching hospitals can no longer rely on higher payments from private payers to do so. Nor should they. The establishment of this trust fund, which explicitly reimburses teaching hospitals for the costs of graduate medical education, will en sure that teaching hospitals can pursue their vitally important patient care, training, and research missions in the face of an increasingly competitive health system.
Medical schools also face an uncertain future. There are many policy issues that need to be examined regarding the role of medical schools in our hea lth system, but two threats faced by medical schools require im mediate attention. This legislation addresses both. First, many medical schools are immedi ately threatened by the dire financial condition of their affiliated teaching hospitals. Medical schools rely on te aching hospitals to provide a place for their faculty to practice and perform research, a place to send third and fourth-year medical school students fo r training,
and for some direct revenues. By improving the financial condition of teaching hospitals, this legislation significantly improves the outlook for medical schools.
The second immediate threat faced by medical schools stems from their reliance on a portion of the clinical practice revenue generated by their faculties to support their operations. As competition within the health system intensifies and managed care proliferates, these revenues are shrinking. This legislation provides payments to medical schools from the Trust Fund that are designed to partially offset this loss of revenue.
As we begin the 106th Congress, the Bipartisan Commission on the Future of Medicare as established in the Balanced Budget Act of 1997 is debating its recommendations to assure the long-term solvency and viability of the Medicare program. One of the most important policy discussions the Commission has undertaken centers on Medicare's role in the funding of Graduate Medical Education. In orde r to remai n the world leader in graduate medical education, we must continue to maintain Medicare's commitment to GME and to the nation's teaching hospitals. I urge the Commission to maintain GME support through the Medicare program in order to assure a stable, federal source of funding. Several Commission members have raised the alarming idea of subjecting GME to an annual appropriations process. I urge my colleagues to reject this dangerous notion. It would be a tragedy for our medical schools and teachi ng institutions. Pitting GME against other important federal priorities would likely result in a substantial reduction in the federal commitment to GME.
None of the foregoing is meant to suggest that the new competitive forces reshaping health care have brought only negative results. To the contrary, the onset of competition has had many beneficial effects, the restraint of growth on average in health insurance premiums being the most obvious. But as Monsignor Charles J. Fahey of Fordham warned in testimony before the Finance Committee in 1994, we must be wary of the ``commodification of health care,'' by which he meant that health care is not just another commodity. We can rely on competition to hold down costs in much of the health system, but we must not allow it to bring a premature end to this great age of medical discovery, an age made possible by this country's exceptionally well-trained health professionals and superior medical schools and teachi ng hospitals. This legislation complements a competitive health market by providing tax-supported funding for the public services provided by teaching hospitals and medical schools.
Accordingly, the Medical Education Trust Fund established in the legislation I have just reintroduced would receive funding from three sources broadly representing the entire health care system: a 1.5 percent tax on health insurance premiums (the private sector's contribution), Medicare and Medicaid (the latter two sources comprising the public sector's contribution). The relative contribution from each of these sources will be in rough proportion to the medical education costs attributable to their respective covered populations.
Over the five years following enactment, the Medical Education Trust Fu nd provide s average annual payments of about $17 billion. The tax on health insurance premiums (including self-insured health plans) raises approximately $5 billion per year for the Trust Fund. Federal health programs contribute about $12 billion per year to the Trust Fund: $8 billion of current Medicare graduate medical education payments and $4 bi llion in federal Medicaid spending.
This legislation is only a first step. It establishes the principle that, as a public good, medical education should b e supporte d by dedicated, long-term Federal funding. To ensure that the United States continues to lead the world in the quality of its medical education and its health sys tem as a whole, the legislation would also create a Medical Education Advisory Commissio n to conduct a thorough study and make recommendations, including the potential use of demonstration projects, regarding the following:
Alternative and additional sources of medical education
financin g;
&nbs Policies designed to maintain superior research and
educational capacities in an increasingly competitive health system;
The appropriate role of medical schools in graduat e medical education; and
&nbs
p; Policies designed to expand eligibility for graduate medical education payments to instit utions other than teaching
hospitals, including children's hospitals.
Mr. President, the services provided by this Nation's
teaching hospitals and medical schools--groundbre aking research, highly skilled
medical care, and the trai ning of
tomorrow's physicians--are vitally important and must be protected in this time
of intense economic competition in the health system.
I ask unanimous consent that a summary of the bill and the
text of the bill, respectively, be included in the RECORD.
There being no objection, the materials were ordered to be
printed in the RECORD, as follows:
Be it enacted by the Senate and House of
Representa tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.--This Act may be cited as the
``Medical Education Trust Fu
nd Act of 1999''.
(b) TABLE OF CONTENTS.--The table of contents of
this Act is as follows:
Sec..1..Short title; table of contents.
Sec..2..Medical Education Trust Fu nd.
&nbs Sec..4..Amendments to medicaid program.
Sec..5..Assessments on insured and self-insured health
plans.
Sec..6..Medical Education Advisory Commissio n.
Sec..7..Demonstration projects.
SEC. 2. MEDICAL EDUCATION TRUST FU ND.
[Pag
e: S653]
``TITLE XXII--MEDICAL EDUCATION TRUST FU ND
&nbs
``SEC. 2201. ESTABLISHMENT OF TRUST FUND.
``(a) IN GENERAL.--There is established in the Treasury of the United States a fund to be known as the Medical Education Trust Fu nd (in thi s title referred to as the `Trust Fund'), consisting of the following accounts:
``(1) The Medical School Account. ``(2) The Medicare Teaching Hospital Indirect Account.
``(3) The Medicare Teaching Hospital Direct Account.
``(4) The Non-Medicare Teaching Hospital Indirect Account.
``(5) The Non-Medicare Teaching Hospital Direct Account.
Each such account shall consist of such amounts as are allocated and transferred to such account under this section, sections 1886(l) and 1936, and section 4503 of the Internal Revenue Code of 1986. Amounts in the accounts of the Trust Fund shall remain available until expended.
``(b) EXPENDITURES FROM TRUST FUND.--Amounts in the accounts of the Trust Fund are available to the Secretary for making payments under sections 2202 and 2203.
``(c) INVESTMENT.--
``(1) IN GENERAL.--The Secretary of the Treasury shall invest amounts in the accounts of the Trust Fund which the Secretary determines are not required to meet current withdrawals from the Trust Fund. Such investments may be made only in interest-bearing obligations of the United States. For such purpose, such obligations may be acquired on original issue at the issue price, or by purchase of outstanding obligations at the market price.
``(2) SALE OF OBLIGATIONS.--The Secretary of the Treasury may sell at market price any obligation acquired under paragraph (1).
``(3) AVAILABILITY OF INCOME.--Any interest derived from obligations held in each such account, and proceeds from any sale or redemption of such obligations, are hereby appropriated to such account.
``(d) MONETARY GIFTS TO TRUST FUND.--There are appropriated to the Trust Fund such amounts as may be unconditionally donated to the Federal Government as gifts to the Trust Fund. Such amounts shall be allocated and transferred to the accounts described in subsection (a) in the same proportion as the amounts in each of the accounts bears to the total amount in all the accounts of the Trust Fund.
``SEC. 2202. PAYMENTS TO MEDICAL SCHOOLS.
``(a) FEDERAL PAYMENTS TO MEDICAL SCHOOLS FOR CERTAI N COSTS.--
``(1) IN GENERAL.--In the case of a medical school that in acc ordance with paragraph (2) submits to the Secretary an application for fiscal year 2000 or any subsequent fiscal year, the Secretary shall make payments for such year to the medical school for the pur pose specified in paragraph (3). The Secretary shall make such payments from the Medical School Account in an amount determined in accordance with subsection (b), and may administer the payments as a contract, grant, or cooperative agreement.
``(2) APPLICATION FOR PAYMENTS.--For purposes of paragraph (1), an application for payments under such paragraph for a fiscal year is in accordance with this paragraph if--
``(A) the medical school involved su bmits the application not later than the date specified by the Secretary; and
``(B) the application is in such form, is made in such manner, and contains such agreements, assurances, and information as the Secretary determines to be necessary to carry out this section.
``(3) PURPOSE OF PAYMENTS.--The purpose of payments under paragraph (1) is to assist medical schools in maintai ning and developing quality educational programs in an increasingly competitive health care system.
``(b) AVAILABILITY OF TRUST FUND FOR PAYMENTS; ANNUAL AMOUNT OF PAYMENTS.--
``(1) AVAILABILITY OF TRUST FUND FOR PAYMENTS.--The following amounts shall be available for a fiscal year for making payments under subsection (a) from the amount allocated and transferred to the Medical School Account und er sections 1886(l), 1936, 2201(c)(3), and 2201(d), and section 4503 of the Internal Revenue Code of 1986:
``(A) In the case of fiscal year 2000, $200,000,000.
``(B) In the case of fiscal year 2001, $300,000,000.
``(C) In the case of fiscal year 2002, $400,000,000.
``(D) In the case of fiscal year 2003, $500,000,000.
``(E) In the case of fiscal year 2004, $600,000,000.
``(F) In the case of each subsequent fiscal year, the amount determined under this paragraph for the previous fiscal year updated through the midpoint of such previous fiscal year by the estimated percentage change in the general health care inflation factor (as defined in subsection (d)) during the 12-month period ending at that midpoint, with appropriate adjustments to reflect previous underestimations or overestimations under this subparagraph in the projected health care inflation factor.
``(2) AMOUNT OF PAYMENTS FOR MEDICAL SCHOOLS.--
&
``(B) DEVELOPMENT OF FORMULA.--The Secretary shall develop a formula for allocation of funds to medical schools under this section consistent with the purpose described in subsection (a)(3).
``(c) MEDICAL SCHOOL DEFINED .--For purposes of this section, the term `medical school' means a sc hool of medicine (as defined in section 799 of the Public Health Service Act) or a school of osteopathic medicine (as defined in such section).
``(d) GENERAL HEALTH CARE INFLATION FACTOR.--The term `general health care inflation factor' means the Consumer Price Index for Medical Services as determ ined by the Bureau of Labor Statistics.
``SEC. 2203. PAYMENTS TO TEACHING HOSPITALS.
``(a) FORMULA PAYMENTS TO ELIGIBLE ENTITIES.--
``(1) IN GENERAL.--In the case of any fiscal year beginning after September 30, 1999, the Secretary shall make payments to each eligible entity that, in accordance with paragraph (2), submits to the Secretary an application for such fiscal year. Such payments shall be made from the Trust Fund, and the total of the payments to the eligible entity for the fiscal year shall equal the sum of the amounts determined under subsections (b), (c), (d), and (e) with respect to such entity.
``(2) APPLICATION.--For purposes of paragraph (1), an application shall contain such information as may be necessary for the Secretary to make payments under such paragraph to an eligible entity during a fiscal year. An application shall be treated as submitted in accordance with this paragraph if it is submitted not later than the date specified by the Secretary, and is made in such form and manner as the Secretary may require.
``(3) PERIODIC PAYMENTS.--Payments under paragraph (1) to an eligible entity for a fiscal year shall be made periodically, at such intervals and in such amounts as the Secretary determines to be appropriate (subject to applicable Federal law regarding Federal payments).
``(4) ADMINISTRATOR OF PROGRAMS.--The Secretary shall carry out responsibility under this title by acting through the Administrator of the Health Care Financing Administration.
``(5) ELIGIBLE ENTITY.--For purposes of this title, the term `eligible entity', with respect to any fiscal year, means--
THIS SEARCH THIS DOCUMENT THIS CR ISSUE GO TO
Next Hit Forward Next Document New CR Search
Prev Hit Back Prev Document HomePage
Hit List Best Sections Daily Digest Help
Doc Contents