AACN
Government Affairs Issue Summary
106th Congress, First Session

Medicare Funding for Graduate Nurse Education
(Revised 01/10/01)

AACN Position:

1. Redirect current Medicare graduate medical education (GME) funding for nursing education to the clinical training of advanced practice nurses (nurse practitioners, nurse anesthetists, clinical nurse specialists, and nurse midwives); and
2. Establish Medicare payment for advanced practice nursing (APN) in hospitals and non-hospital settings.

What you can do:
Visit, call, fax, or e-mail members of the House Committee on Ways and Means or the Senate Committee on Finance to those members to make sure that MedPAC (described below) follows its statutory mandate to study Medicare payments for training in nursing. Also please suggest that Medicare funding be shifted from diploma nursing programs to advanced practice nurse clinical education. Contact AACN Government Affairs with suggestions, data, or help in measuring how nursing students enhance Medicare patient care.

Rationale:
If adopted, these recommendations would increase the number of clinical sites available for APN training, support clinical nursing faculty in the education of APNs, and facilitate the training of APNs to serve Medicare beneficiaries in hospital and non-hospital settings.

Background:
In 1965, with the inception of Medicare Congress created GME payments to teaching hospitals to help pay for the costs that hospitals incur in training physicians, nurses and other health professionals to ensure the availability of quality care for Medicare beneficiaries. Congress directed nursing GME funding to the hundreds of provider-operated diploma schools that were educating most of the nation's registered nurses at the time that Medicare was enacted. Today, diploma schools train less than 10 percent of entry-level nurses; 82 percent of undergraduate nurses are enrolled in community and senior colleges and universities; and graduate programs are preparing advanced practice nurses to provide a broad range of primary and acute care to Medicare patients. GME, the largest source of federal support for nursing education, continues to support the clinical training of diploma school nurses who are trained primarily in hospital-oriented care.

Medicare provides two types of GME payments to teaching hospitals.

1. Direct medical education (DME) reimburses hospitals for the direct costs of residency programs such as residents' and faculty salaries. In 1999, DME expenditures are estimated at $2.2 billion.
2. Indirect medical education (IME) payments reimburse teaching hospitals for additional indirect costs associated with operating teaching institutions that cannot be allocated to residency programs. In 1999, IME expenditures are estimated to total $3.7 billion.

Approximately 85 percent of DME expenditures are for GME and 15 percent for clinical education in dentistry, nursing and other allied health professions. Currently Medicare reimbursement for nursing education primarily subsidizes diploma and other entry-level programs. For 1998, the Health Care Financing Administration (HCFA), the agency that administers Medicare, estimated the Medicare pass-through for allied health and nursing education was $410 million.

Although GME is the largest source of federal funding available to support nursing education, nursing GME expenditures are very modest ($330 million, FY99) compared to those for physician education ($5.8 billion, FY99).

During the FY 2000 appropriations process Congress created a new model for GME when it appropriated GME funding. Previously, all GME funding came through the Medicare entitlement program. This new model was created during reauthorization of the Agency for Healthcare Quality and Research, which included language authorizing Congress to fund $285 million in FY00 and FY01 to pay for physician GME in 59 pediatric hospitals that do not receive Medicare GME funding. The Labor, Health and Human Services, and Education Appropriations bill directed $40 million to those hospitals in FY00. Congress will appropriate at least $125 million to those 59 hospitals for FY 2001. Upon reform of Medicare GME, the appropriation would end.

Context/Issues:
Caring for Medicare beneficiaries requires APNs to manage complex and/or chronic conditions. However, clinical training sites are scarce, as the medical profession is able to pay with DME incentives while APNs and other health professionals do not have the same type of available funding across settings. GME support for graduate nursing education would provide Medicare patients with a stable population of nurses who are appropriately educated to care for their more sophisticated needs in the outpatient settings where they increasingly seek care.

Action:
Although Rep. Cardin and Rep. Stickland introduced separate bills proposing to provide GME support for the clinical education of graduate-level nurses, neither bill was enacted. At this time, it is unclear whether either Representative plans to reintroduce those bills. Rep. Benjamin Cardin's (D-MD-3) bill (H.R. 1224) proposed providing $300 million in Medicare and other funds for graduate nursing education and for allied health professionals. This legislative proposal, which puts AACN's graduate nurse education concept into legislative language, would have established an all payer system through a 1% fee on all health plan premiums. AACN held a press conference in support of Rep. Cardin's bill; click here to see a copy of the release. In August 1999, Rep. Ted Strickland (D-OH-6) introduced H.R. 2794, to provide Medicare support for the education of nurse practitioners, physician assistants, and psychologists.

The Balanced Budget Act of 1997 created two 17-member advisory groups to provide Congress with guidance on Medicare policies. In September 1998, working with two national nursing organizations, AACN provided the GME Working Group of the now defunct National Bipartisan Commission on the Future of Medicare with nursing data and policy recommendations on GME. (Click here to see AACN's Statement on the Redirection of Nursing Education Medicare Funds before National Bipartisan Commission on the Future of Medicare, 9/29/98.) The Bipartisan Commission did not meet the required 11-6 vote on a reform proposal before its authority expired in the spring of 1999. Many members of the Bipartisan Commission supported redirecting GME to graduate nursing education. The Medicare Payment Advisory Committee (MedPAC), expiring in April 2002, is mandated to specifically study the training of nurses. (Mary Wakefield, PhD, RN, of George Mason University is the only nurse on the commission.) MedPAC has not addressed nursing GME. In November 1999, the Balanced Budget Refinement Act included language that requires MedPAC to study and report to Congress within 18 months (of 11/99) on Medicare payment policy on clinical training of different non-physician health care professions, including nurses and nurse practitioners. Also, in November 1999, the Senate Subcommittee on Labor, Health and Human Services, and Education, requested a report from HCFA on recommended changes to nursing GME. AACN has shared its recommendations for redirecting GME to graduate nursing education with HCFA.

MedPAC discussions are framed by the Commission's idea that it is inappropriate for Medicare to pay for education, but Medicare should pay for the enhanced patient care that Medicare beneficiaries receive in teaching hospitals. (Click here to see MedPAC's August 1999 report, Rethinking Medicare's Payment Policies for Graduate Medical Education and Teaching Hospitals.) MedPAC has reconfigured Diagnostic Related Groups (DRG) payments to include a "teaching hospital adjustment" (THA); IME and DME are combined into the THA calculation, which continues to be based on a resident-to-bed ratio.

What's Ahead:
By statute, MedPAC is required to submit reports to Congress in March and June of each year. Although MedPAC's 2000 reports did not address nursing GME, the Commission is expected to outsource a study on nursing GME in February 2001, and publish study results in the June 2001 MedPAC report.

HCFA did not meet its congressional mandate to report on recommended changes for nursing GME by March 2000. Although HCFA staff indicated that the report is in the final approval process at HCFA, they also indicated that the report may never be released due to the change in Administration. AACN will notify members of the reports releases, should it occur.

Through the Labor, Health and Human Services, and Education FY 2001 appropriations bill, Congress appropriated $235 million to 59 pediatric hospitals to pay for physician GME. Pediatric GME is part of Public Health Service Act Title VII funding, which is a problem to other disciplines funded through Title VII funds because it gives Title VII programs the appearance of having received a tremendous boost in funding. Valuable time with members of Congress and their staff to discuss Title VII programs is eaten up with clarifying that $235 million of Title VII funding supports only physicians and only 59 hospitals. Congress also extended authorizing language for pediatric GME to FY 2005, giving appropriators the authority to fund those hospitals for an additional five years. With children's hospitals very near to their authorization limit, chances are good that they will advocate for language to increase their appropriation limit during the 107th Congress.

For additional information, please contact AACN Government Affairs.

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