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Moving Beyond the Down Payment: BBA
Relief 2000
Graduate Medical Education
Issue
Washington continues to wrestle with the financing of graduate medical
education (GME) - a critical issue because Medicare payment policies have
traditionally set the benchmark for other payers. Recent actions by
Congress and others are having a significant impact on the training of
physicians and the financing of that training.
- The Balanced Budget Act of 1997
(BBA) imposed a limit, or cap, on the number of residency positions that
the Medicare program would support - a limit that remains in effect
today. It also established a carve-out of GME costs from the Medicare
managed care payment, phasing in the payment of those costs directly to
the hospitals that incur them. That phase-in is now entering its third
year, with hospitals receiving 60 percent of the carved-out dollars. The
BBA also reduced the indirect medical education (IME) adjustment
(payments for the indirect costs associated with approved GME programs)
to 6.5 percent in FY 1999, 6 percent in FY 2000, and 5.5 percent in FY
2001 and beyond.
- The Medicare, Medicaid, and SCHIP Balanced
Budget Refinement Act of 1999 (BBRA) modified the BBA's IME
cuts by raising the IME adjustment to 6.5 percent in FY 2000 and to 6.25
percent in FY 2001, and delaying the reduction to 5.5 percent until FY
2002. The BBRA also moves toward a direct GME payment based on a
national average per-resident amount by increasing payments for some
hospitals and freezing updates for others.
- GME funding for children's
hospitals was recognized for the first time by Congress when
lawmakers authorized a two-year grant program to begin funding
residencies in children's hospitals, which train 5 percent of all
residents nationwide.
- The Medicare Payment Advisory
Commission (MedPAC) last August released a preliminary report
on GME financing, suggesting that future Medicare support be
characterized as covering "enhanced" patient care rather than education.
While this approach raises concerns about the underpinnings of federal
support for GME, MedPAC's proposal remains sketchy, with few details
available.
- Hospital-physician relationships,
especially in the area of education, may be further complicated by
increased activities surrounding physician unionization and the National
Labor Relations Board decision that interns, residents and fellows are
employees, not students, and thus can unionize and strike.
AHA View
Congress, the National Bipartisan Commission on the Future of Medicare,
and MedPAC have all suggested different ways of providing support for the
training of physicians and other health care professionals. As Medicare's
long-term solvency, managed care, and other market forces continue to
affect medical education and teaching hospitals, the AHA supports the
following policies for GME:
- Establish a clinical education trust fund into which both public and
private payers contribute. In the absence of such a system, the AHA will
strongly oppose efforts to either further reduce GME payments under
Medicare or move GME funds out of the trust fund into an appropriated
account, where GME's future could be seriously jeopardized.
- Include medical, nursing, and allied health education as part of any
new trust fund.
- Make payments directly to the entities that incur the costs of the
clinical component of the educational programs (including university and
affiliated teaching community hospitals) rather than to the payers.
- Guarantee levels of support for medical education and prohibit
"earmarking" of funds for the special interests of individual
professions, disciplines, specialties and subspecialties.
- Restore IME funding to 6.5 percent for FY 2001 and beyond.
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