MICHELLE LEFKOWITZTECHNICAL ADVISOR

DIVISION OF ACUTE CARECENTERS FOR MEDICARE & MEDICAID

SERVICESMIECHAL.LEFKOWITZ@CMS.HHS.GOV

212-616-2517

http://thismakesmesick.typepad.com/this_makes_me_sick/2005/12/index.html

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Medicare’s Role in Financing GME

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“Many hospitals engage in substantial educational activities, including the training of medical students, internship and residency programs, the training of nurses, and the training of various paramedical personnel. Educational activities enhance the quality of care in an institution and it is intended, until the community undertakes to bear such education costs in some other way, that a part of the net cost of such activities (including stipends of trainees as well as compensation of teachers and other costs) should be considered as an element in the cost of patient care, to be borne to an appropriate extent by the hospital insurance program” (emphasis added, S. Rep. No. 404, 89th Cong., 1st Sess. 36 (1965); H.R. No. 213, 89th Cong., 1st Sess. 32 (1965)).

What does Medicare pay for?

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Under Current Law-- “Approved” medical residency training

programs are Accredited, and/or Lead to board certification

ACGME, AOA, ADA, CPME, ABMS

2 Types of Medicare GME Payments6

Direct GME Payments (DGME) Partially compensates for residency

education costs Salaries of staff, residents, and other direct

costs Indirect Medical Education (IME)

Payments Partially compensates for higher patient

care costs due to presence of teaching programs

It’s a percentage add-on payment to basic Medicare per case (DRG) payment

Direct GME Payment Formula

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For each hospital: DGME payment = $PRA x FTE residents x

Medicare utilization

Per Resident Amount (PRA) is cost per resident in a 1984 base year updated for inflation.

IME Payment Formula8

The IME adjustment is based on statistical analysis using intern and resident-to-bed ratios (IRB)

% per case add-on = DRG Payment X Multiplier X ((1 + IRB)0.405 -

1) For FFY 2011, multiplier is 1.35 Short hand for IME: Hospitals getting

about a 5.5% increase in DRG payments for every approx. 10% increase in the IRB ratio

Medicare GME Spending9

Estimated Federal Fiscal Year 2010: DGME Payments = $2.66 billion IME Payments = $6.53 billion Total = $9.19 billion

Source: CMS Office of the Actuary

Note-totals include Capital IME payments and direct GME and IME payments for Medicare Advantage enrollees

Medicare Resident Caps10

1996 FTE RESIDENT CAP—There is a limit to the number of FTE residents for which Medicare will pay each hospital Excludes dental and podiatry residents

Consider: Congressional debates, more cuts to GME funding Incentives to train primary care residents

Nursing & Allied Health Programs

A program must be “provider-operated” in order for the hospital to qualify for pass-through reasonable cost payment

Historically paid for hospital-operated diploma nursing and other allied health programs

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Provider-operated means

Directly incur the costs Directly control curriculum Control administration and day to day

activities of the program Employ the teaching staff Provide and control both classroom and

clinical training (if there is both a classroom and clinical component).

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N&AH Funding13

This model is increasingly rare! Some examples are . . . Current statute is binding

What is Medicare’s or the government’s role? General revenues (e.g., HRSA) vs. Medicare

(CMS)