August 13, 1999

Lowey Introduces All Payer Trust Fund for Medical Education

Rep. Nita Lowey (D-N.Y.) introduced legislation (H.R. 2771) Aug. 5 to establish a Medical Education Trust fund to support medical schools and teachings hospitals. This bill is similar to S. 210 introduced earlier this year by Sen. Daniel Patrick Moynihan (D-N.Y.)

Recognizing that all sectors of the health care system should share the responsibility to fund graduate medical education, the bill requires Medicare, Medicaid, and the private sector to contribute to a trust fund to support medical education.

The legislation provides explicit and direct funding to medical schools and teaching hospitals by requiring Medicare, Medicaid, and private payers to pay into the fund. Private payers would be assessed a 1.5 percent tax on private health insurance premiums, raising an estimated $5 billion a year. With Medicare and Medicaid's contribution, $8 billion and $4 billion respectively, the trust fund would provide average annual payments of $17 billion.

Within the trust fund, five accounts would be created:

• the Medical School Account;

• the Medicare Teaching Hospital Direct Account;

• the Medicare Teaching Hospital Indirect Account;

• the Non-Medicare Teaching Hospital Indirect Account; and

• and the Non-Medicare Teaching Hospital Direct Account.

The Medical School Account would be funded from the other four accounts at a specified level: $200 million in FY 2000, $300 billion in FY 2001, $400 billion in FY 2002, $500 million in FY 2003 and $600 million in FY 2004. Medical schools would apply to the account for money to help assist in "maintaining and developing quality educational programs." Funding would be allocated based on an interim payment designed by the Secretary of Health and Human Services.

Teaching hospitals also would apply to the Secretary of Health and Human Services for funds related to direct and indirect costs of graduate medical education. Payments to teaching hospitals from the Medicare accounts would be based on Medicare's current formula for direct and indirect graduate medical education payments. Payments to teaching hospitals from the non-Medicare accounts would use Medicare's same formula for determining direct and indirect graduate medical education payments, but would substitute the hospitals' non-Medicare volume for the hospital's Medicare volume.

The bill also establishes a Medical Education Advisory Commission to study and report to Congress on operations of the Medical Education Trust Fund, alternative and additional sources of medical education funding, alternative methodologies for financing graduate medical education, the role of medical schools in graduate medical education, and policies designed to expand eligibility for graduate medical education payments to children's hospitals that operate graduate medical education programs.

Reps. Louise Slaughter (D-N.Y.), Joseph Moakley (D-Mass.) and James McGovern (D-Mass.) are original cosponsors of the legislation. As the legislation has the formal support of the AAMC, AAMC President Jordan Cohen, M.D., encourages members to write to their representatives requesting their cosponsorship of H.R. 2771.

Information: Lynne L. Davis, AAMC Office of Governmental Relations, 202-828-0526.