On Implementing a National Graduate Medical Education Trust Fund (1997) / Chapter Skim
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Appendix B: History and Current Status of Medicare Graduate Medical Education Funding
Appendix B: History and Current Status of Medicare Graduate Medical Education Funding
Pages 54-64
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From page 54... ...
Surpluses from private payers, after growing steadily as a percentage of costs through the late 1980s, began to decline as managed care plans and other insurers became less able, and therefore less willing, to pass along steep cost increases through their premiums. Moreover, although some major teaching institutions offer higher quality services that are unavailable elsewhere, and thus may remain attractive to managed care plans, the greater cost of services at many of these facilities may make it increasingly difficult for them to compete for patients (Renter, 1996a)
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From page 55... ...
Medicare Teaching Payments The Medicare program provides two types of extra payments to hospitals with graduate medical education programs. First, teaching hospitals receive an adjustment to their Medicare Prospective Payment System (PPS)
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From page 56... ...
In 1979, it was decided that in calculating its routine per diem costs, a hospital could exclude all direct costs of GME programs. In 1980, the limits applied to teaching hospitals were adjusted to reflect the higher operating costs associated with treating patients in those hospitals (Lave, 1985~: We believe these increases in per diem costs occur because the provision of graduate medical education causes increases in certain types of costs that are only indirectly related to education programs.
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From page 57... ...
The Secretary's proposal for IME payments also continued the previous policy of recognizing the higher patient care costs at teaching hospitals: The indirect costs of graduate medical education are higher patient care costs incurred by hospitals with medical education programs. Although it is not known precisely what part of these higher costs are due to teaching .
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From page 58... ...
. the adjustment for indirect medical education costs is only a proxy to account for a number of factors which may legitimately increase costs in teaching hospitals.
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From page 59... ...
Changes in Direct GME Payments Even after the implementation of PPS, Medicare continued to pay its share of each hospital's actual direct GME costs. However, the enactment of COBRA changed the way that Medicare pays hospitals for the direct costs of teaching programs.
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From page 60... ...
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From page 61... ...
One of the primary factors driving both IME and direct GME spending growth is a continuing increase in the number of interns and residents. Moreover, virtually all of the growth in the number of residents in recent years is due to a rise in the number of graduates of foreign medical schools receiving graduate medical training in U.S.
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From page 62... ...
In particular, the public major teaching hospitals have only about half the nationwide share of private payer patient load, and so cannot leverage their surplus payments to offset their large uncompensated care losses. CONCLUSIONS In FY 1996, Medicare provided $6.8 billion in added direct and indirect GME payments to teaching hospitals.
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From page 63... ...
Under current Medicare rules, each residency slot unused by the hospital results in a reduction of almost $70,000 in Medicare (IME and direct GME) payments.
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