STATEMENT ON THE REDIRECTION OF NURSING EDUCATION MEDICARE FUNDS TO GRADUATE NURSE EDUCATION
to

National Bipartisan Commission on the Future of Medicare
Graduate Medical Education Study Group

(January 29, 1998)

The American Association of Colleges of Nursing (AACN), representing 530 baccalaureate and graduate nursing education programs in senior colleges and universities, the American College of Nurse Practitioners representing 25,000 nurse practitioners through member, state, and national affiliate organizations, and the National Organization of Nurse Practitioner Faculties, representing over 892 faculty members in nurse practitioner programs, urge that Medicare funds now focused on entry level nursing education be redirected for clinical training of graduate nurses. This innovation would provide an on-going revenue source, not subject to the uncertainties of the annual appropriations process, to expand the production of advanced practice nurses, a vital resource for meeting future Medicare population needs.

As the Commission examines Medicare funding and services for the nation's elderly, Medicare's lesser-known side--the system's financial support of training for nurses, physicians, and other professionals--is in dire need of reform. Medicare supports the costs of training resident physicians with direct and indirect Graduate Medical Education funds amounting to over $7 billion per year. With an estimated $290 million in 1997 and a projected $420 million by the year 2000, Medicare is the largest single source of federal support to train America's largest health care profession--registered nurses. Yet, according to HCFA, 70 percent of every Medicare dollar for nursing education goes to hospitals that operate diploma programs that produce entry level nurses. These payments are concentrated in Pennsylvania, New Jersey, and Ohio, and hospitals there receive nearly half of the Medicare nursing education funds. Hospital downsizing and other changes in the health care system, resulting in sicker patients discharged to home, means that the care once provided in a hospital setting with a myriad of sophisticated support systems must now be provided by professional nurses prepared to work in home and community settings.

The increasing number of Medicare patients who require primary care, and the accelerating drive toward managed care, prevention, and cost-efficiency are spurring the nation's continued need for advanced practice nurses (APNs). APNs are expert clinicians, who, based on their areas of expertise, are trained to deliver primary care, manage chronic multiple medical conditions, and/or address other needs of the Medicare population. They include nurse practitioners, certified nurse midwives, certified nurse anesthetists, and clinical nurse specialists. There has been much discussion on how Medicare redesign may ultimately affect funding for physician residencies in the nation's teaching hospitals. Nursing and other health care leaders are focusing on the complementary concern of equal importance--the need to produce sufficient supplies of advanced practice nurses for an increasingly complex outpatient world where the needs of current and future Medicare patients will lie.

Reforming Medicare will require more effective targeting of Medicare dollars that support the training of health professionals who provide that care. Since its creation in 1965, Medicare has reimbursed hospitals for a portion of their clinical, classroom and other costs to train nurses, physicians and other health personnel with the aim of providing high-quality inpatient care for Medicare recipients. With recent and dramatic shifts in where and how health care is delivered, the time is long overdue to overhaul the other side of Medicare--its health professions education expenditures that increasingly have become misdirected. In fact, Medicare funds for nursing are almost impossible to track in terms of what they pay for once the funds enter the recipient institution.

At no additional cost to Medicare, money presently spent to prepare diploma nurses with skills limited to basic hospital service could be used to educate APNs. APNs are produced by graduate nurse education (GNE) programs accredited by nationally and regionally recognized accrediting bodies. Redirecting Medicare funds to the education of advanced practice nurses not only makes clear sense for a health system dominated increasingly by the competing concerns of quality and cost, but would support preparation of the nurses in greatest demand by today's Medicare patients. Currently, APNs represent only 6.3% of the total RN population. Supporting APN education would enhance the clinical decision-making capacity of nurses in all settings. In 1965 at Medicare's inception, most categories of advanced practice nursing had not yet emerged. In the years since, Medicare policy has not kept pace with the growing prevalence and documented quality and cost-effectiveness of APNs. Annually, the millions of Medicare dollars that could support the preparation of the APN instead have funded the continued production of diploma graduates.

Reports from other national organizations have called for the redesign of nursing education to meet the greater demand for APNs. The Pew Health Professions Commission (1995) called for reducing enrollments in diploma and associate degree programs and expanding advanced nurse practice programs. The commission urged doubling the number of nurse practitioner (NP) graduates by the year 2005 to offset the shortages of primary care physicians in major metropolitan centers, rural sites, and inner cities.

Among their roles, NPs conduct physical exams; diagnose and treat common acute illnesses and injuries; provide immunizations; manage high blood pressure, diabetes and other chronic problems; order and interpret lab tests; and counsel patients on adopting healthy lifestyles. NPs work in a variety of settings including: gerontological, pediatric, family health, women's health areas, and some have independent practices. In 48 states, nurse practitioners can prescribe medications, while several states have given NPs authority to practice independently without physician supervision or collaboration. NPs care for the nation's elderly in urban and rural practices and in clinics, correctional facilities, the military and private practice settings. As of January 1, 1998 NPs and CNSs became eligible for Medicare direct reimbursement for their services, regardless of setting.

In a report recently released by the Institute of Medicine (IOM) on nurse staffing in hospitals and nursing homes, an IOM panel urged that increasing numbers of registered nurses with advanced practice skills be utilized in outpatient and inpatient settings to meet the growing demand for RNs with management, leadership, and supervisory abilities.

Data from the 1996 National Nurse Practitioner Educational Survey show that in a sample of nurse practitioner graduates the greatest number practice in federally designated Health Professions Shortage Areas. The next greatest numbers of NPs choose to practice in rural health clinics. Over half of the graduates are working in rural or small urban areas. Some of the practice sites where these graduates can be found are homeless clinics/shelters, migrant health centers, local health departments, prisons, etc.

Data from the past decade indicate that the decrease in hospital utilization has yet to result in a decline in aggregate RN employment in hospitals. On the contrary, the number of full-time equivalent RNs employed by community hospitals increased by approximately 30 % between 1985 and 1994, despite a 10 percent decrease in the number of hospital beds. The trend reflects both increased patient acuity and a shift in RN positions from inpatient to outpatient units within hospitals. As patient intensity continues to escalate coupled with a decrease in length of stay within acute care hospitals, RNs with strong assessment skills, a copious amount of technical skill, as well as comprehensive pre- and post hospital planning, and intervention and coordination are required.

The IOM panel noted that advanced practice nurses such as clinical nurse specialists not only provide high-quality and cost-effective care, especially for patients with complicated or serious clinical conditions such as Medicare patients, but also are well skilled for the sophisticated levels of practice required in today's hospitals. They work on multi-disciplinary teams and deliver a continuum of care across settings rather than focus on a "single event" of hospitalization. IOM also recommended that nursing home care be enhanced through increased presence of gerontological nurse specialists and nurse practitioners. While Medicare's role in nursing homes is limited, the patient population in these facilities is primarily Medicare eligible. Recent research studies have demonstrated the cost effectiveness and improved health outcomes for geriatric patients receiving care from geriatric nurse practitioners and clinical nurse specialists.

Recent research supported by the National Institute of Nursing Research (NINR) has demonstrated the effectiveness of advanced practice nurses in the care of the elderly patient population on health outcomes and cost savings.

• Dorothy Brooten, PhD, Dean, Case Western Reserve University, developed the Quality-Cost Model of Nurse Specialist Transitional Care that has been tested in many patient populations with various health-related conditions. This model has demonstrated improvements in patient outcomes and decreases in costs of care. In the Quality-Cost Model design, care is provided by advanced practice (master's prepared) nurse specialists with clinical knowledge and skills matched to their patient populations. Comprehensive discharge planning is developed for each patient group, and follow-up in the home includes visits and telephone contacts.

• Mary Naylor, PhD, at the University of Pennsylvania, tested Brooten's model of transitional care, leading a multidisciplinary team specifically for Medicare beneficiaries. The first study (1989-1992) examined elders (N=120) admitted to hospitals with selected cardiac conditions to examine the effects of a discharge planning protocol. The outcomes demonstrated a short-term reduction in hospital readmissions for elders with medical cardiac conditions and suggested potential benefits of a more intensive intervention targeted at the most vulnerable patients.

  Service/Savings

  Number of hospital readmissions - 61% fewer - (6 weeks post discharge)

  Hospital charges for readmissions - 61% less

  Average cost of total health care services - 62% less

  Number of inpatient days for readmission - 70% fewer

• In the second study (1992-1997), an APN directed discharge planning and home care intervention was tested with elders at risk for poor outcomes and hospitalized with common medical or surgical conditions. The outcomes identified were fewer total re-hospitalizations, fewer patients with multiple admissions and lengthened time between discharge and readmission. The interventions also generated savings in Medicare reimbursement of almost $600,000 for the 177 beneficiaries in the intervention group during the six months after the index hospital discharge. When extrapolated to the number of adults hospitalized each year with similar conditions, the potential patient benefits and savings to the Medicare system resulting from this intervention are substantial, and APNs are the key.

  Thus, APNs often provide services of the type most needed by Medicare patients: primary care at easily accessible, community based sites. These quality services are available at lower cost than would be possible in a hospital setting.

Historically, schools of nursing have responded relatively quickly to imbalances between supply and demand. As health policy recommendations and market trends recognized NPs as an integral part of the primary care team, nursing schools expanded their focus to master's NP programs. According to an AACN report, national enrollments in graduate nursing programs have increased significantly from 1991-92 to 1996-97, but have actually decreased in the last 2 years. Graduations from these programs also have leveled off.

The need for RNs without preparation for advanced practice is expected to decline by about 10 percent over the next ten to fifteen years as the reduction in numbers of hospital beds declines. Additionally, the demand for APNs is expected to continue. This refocusing of nursing education would not require expansion of APN programs except to meet specific local or regional needs but allow for consolidation of support for existing programs in order to develop a larger portion of the existing nursing workforce. O'Neil and Coffman (1998) in their review of current projected nursing workforce needs support these recommendations.

Clearly, nursing education must be redesigned in order to prepare students for ambulatory practice roles. Currently, over half of RNs working in ambulatory settings are prepared at only the diploma or associate level. APNs account for only 8 percent. It will not be sufficient to simply move student learning experiences from hospital to ambulatory settings. Students must learn to practice across systems of care and to shift their focus from providing direct, hands-on care to managing and coordinating care for individuals, families, and populations.

This current analysis supports redirecting Medicare funding for hospitals operating diploma programs into APN education. The following Medicare changes would provide a greater benefit to the Medicare population:

Redirecting eligibility to add "jointly operated" programs and to phase out Medicare funding of diploma programs.

Since the inception of Medicare, nursing education has shifted from hospital on-the-job training almost entirely to community colleges, senior colleges, and universities. At present, Medicare reimbursement for nursing education programs is limited by the "provider-operated rule," which directs most of the funding to hospitals that operate diploma programs that produce entry level nurses who are trained in hospital oriented care. Most APNs represent categories of providers not in existence when Medicare educational payment policies were designed, such as nurse practitioners, clinical specialists, and others. Educational costs of these new providers are, with one exception (nurse anesthetists), not eligible for Medicare reimbursement now. Consequently, reimbursement eligibility requirements should be changed to include "jointly-operated" (provider-academic) programs that incur costs for APN education. To be eligible for reimbursement, Medicare providers (hospitals) would have to: 1) demonstrate that they incur clinical costs for the support of graduate nurse education programs, and 2) have a written contractual agreement with the program's academic partner institution. These requirements would provide some accountability for where the money is going and that it addresses demonstrable clinical costs.

Cost items for determination of Medicare's share of reimbursement could include student stipends, costs of nursing clinical faculty, and supervision of APN students at the clinical site. (Now the students, school, and clinical sites bear these costs.) Determination of the specific cost of education would be based on a modest stipend, an appropriate ratio of training faculty to students, and faculty and supervisory salaries.

Major problems for APN education are the need for resources to cover costs of clinical faculty and the availability of clinical training sites. A 1995 Lewin-VHI study "Expanding the Capacity of Advanced Practice Nursing Education-Final Report" identified several factors affecting the ability of APN programs to expand.

The availability of sites for appropriate clinical education is the single most significant factor in determining a program's ability to expand its APN capacity. According to the study, sites are becoming limited due to competition with other APN programs and graduate medical education programs; effects of managed care; and practical limitations on the distance between schools and clinical sites.

A major concern is the effect of managed care on clinical training of health practitioners in community sites. As managed care systems proliferate, providers have increased their panel sizes in order to meet the demand to be more productive. This results in a loss of qualified preceptors, as providers are unwilling to take time away from seeing patients in order to coach students. NP faculties have reported that the requirement to see more patients per day has become a major barrier in recruitment of preceptors.

AACN member schools in Arizona, Maine, New York, and Ohio report that their APN programs are competing with medical schools, residency programs, and physician assistant programs for clinical sites and do not fare well, because these other health professional programs are reimbursing the sites or providing tuition vouchers. Nursing schools report that, in some cases, practitioners who have traditionally agreed to precept students are turning away nursing students and taking students from programs that can reimburse them for their preceptor role.

Another factor affecting the ability of APN programs to expand is the availability of clinical faculty, including clinical coordinators and preceptors. Redirection would facilitate APN programs and clinical facilities to hire additional clinical faculty to expand the number of APNs in training, and would help to eliminate today's waiting lists for many graduate nurse programs. Medicare reimbursement for APN clinical education would give practice sites an incentive to take on additional APN students for clinical training, particularly if the numbers of specialty physician residencies are reduced. If the clinical site were being reimbursed for these faculty costs, the burden would be lifted from both that site and the school of nursing. The lifting of restrictions on Medicare funding for nursing education would result in increasing (both in terms of number and their program completion time) the production of APNs in settings with Medicare patients, making cost-effective care more readily available to the Medicare population.

In addition, the ability of programs to pay stipends for APN students to defray some student living and education costs have demonstrated to be effective in moving part-time students into full time study and toward a more rapid completion of graduate nurse studies. (According to AACN's 1997-1998 Enrollment and Graduations in Baccalaureate and Graduate Programs in Nursing, 70% of all masters' students and nurse practitioner students are enrolled on a part-time basis.) In return for a stipend, the graduate nursing student would provide care for the provider's patients, much as physician residents do. Providing education programs with flexibility to support APN students with stipends during their graduate preceptorships recognizes the similarity of their training to physician resident training. Unlike medical residency programs, most nursing programs pay their own clinical training faculty or make arrangements with preceptors at clinical sites to provide clinical training at patient care sites outside the schools' academic facilities. In almost all cases, APN students are RNs licensed to practice in a variety of patient settings, and most have practice experience as well.

Medicare defines "provider" as "hospitals, skilled nursing facilities, home health agencies, and other facilities." With health care delivery for Medicare populations evolving beyond the hospital to more accessible and lower cost, community based sites, it is clear that ambulatory care facilities, as well as tertiary care sites, should be reimbursed for costs incurred for clinical training of APNs. As training evolves to other settings, hospital payments alone will be inadequate to reimburse provider training costs. Support for training in these settings where primary care is delivered is critical. The Medicare definition of "other facilities" should be clarified to include those facilities that provide health care to Medicare recipients, with or without links to acute care settings, including, but not limited to, nurse managed centers, ambulatory care facilities, community health clinics, health maintenance organizations, and public health departments. Reimbursing clinical sites for training APN students recognizes the value of their services to Medicare patient care. As the number of specialty resident physicians is reduced, APNs are well positioned to deliver many services formerly performed by resident physicians, as well as nursing care and case management.

Under this proposal, facilities that incur clinical costs for support of APN education would have access to Medicare funds, but only for the portion of the cost attributable to the Medicare patient population. (This is the formula currently used.) Medicare funding would provide resources for added clinical faculty to expand the numbers of APNs in training, and promote quality service to the Medicare beneficiary.

Other national organizations support the redirection of Medicare dollars to APN education. The Institute of Medicine supported the redirection concept in April 1997 in its report On Implementing a National Graduate Medical Education Trust Fund. On page 16 the recommendation states, "Nursing DME (direct medical education) should be structured like physician DME and be paid to sponsoring institutions for the support of advanced practice, graduate clinical trainees. This provision should be neutral with respect to the proportion of DME that has supported nursing; diploma, undergraduate nurse education support should be phased out in 4 years or less to allow present students to complete their training;"

In April 1995 and again in February 1997 the Physician Payment Review Commission (PPRC) recommended that advanced degree nursing programs operated by four-year colleges and universities be eligible to receive Medicare funds that otherwise would be available only to hospital-operated programs. In July 1995 the Association of Academic Health Centers (AAHC) supported the allocation of funds for graduate nurse education by directing Medicare funds towards APN programs. Supporting APN clinical education with Medicare dollars also has been urged by the Graduate Nurse Education Coalition, representing 11 national nursing organizations.

Redirection of the current Medicare monies for nursing education to APN education will increase the number of nurses educated at the advance practice level and will ensure that Medicare patients will benefit from their skills in the future. For diploma nursing programs that receive Medicare passthrough support, AACN agrees with IOM that a phase out over five years would be equitable and would avoid harming current students in those programs. The redirection of these funds to APN education requires no new Medicare expenditures and could actually reduce expenditures. By recognizing only clinical costs of APN education and limiting eligibility to full-time APN students, costs would decrease substantially. Funding levels should not be reduced for those APN programs that currently benefit from Medicare support, such as nurse anesthetist programs. Redirection of funds would focus Medicare support on the preparation of the nurse in great demand by the Medicare beneficiary population, and help meet the needs of a health care delivery system that is changing for Medicare and other patients.

With an increasing proportion of older Americans and increasing incidence of chronic illnesses, APNs are precisely the type of health professional the Medicare population will need for its primary care, management of chronic medical conditions affecting older people, and patient education to help this population avoid injury and expensive hospitalization or nursing home care. The APN is a vital component in increasing access to quality health care services for Medicare patients in a rapidly changing health care environment. Now is the time to shift Medicare funding toward the recognized need for advanced practice nurses

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