Recommendations for Distribution of GME Funds

Based on the identified principles, the committee makes the following recommendations:

GENERAL

  • The committee recommends establishing a National Graduate Medical Education Trust Fund with an annually defined amount. This would be equivalent to a GME Prospective Payment System and would allow consideration of the economics of academic training programs and teaching hospitals separate from the overall hospital sector.

  • Although the charge to the committee excluded consideration of funding sources, the committee notes the desirability of replacing, at least in part, eroding support from private-sector health care payments and limiting inappropriate shifting of the financial burden of providing a general, public benefit to Medicare. In addition to a Medicare contribution, therefore, a National GME Fund could also include a general, non-Medicare contribution which could be from general revenue, an all-payer fund, a premium tax or dedicated tax or some other public non-Medicare source. This would allow for a better distribution plan, satisfying the principles of proportional support from payers in recognition of a general public benefit, and providing, in practice, more uniform support and support to low Medicare-caseload institutions. The committee's distribution plan can be carried out in most respects through an exclusively Medicare-based fund, however.

  • Given a general, non-Medicare contribution, the National GME Trust Fund could be viewed as four separate funds: within the limit of the



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On Implementing a National Graduate Medical Education Trust Fund Recommendations for Distribution of GME Funds Based on the identified principles, the committee makes the following recommendations: GENERAL The committee recommends establishing a National Graduate Medical Education Trust Fund with an annually defined amount. This would be equivalent to a GME Prospective Payment System and would allow consideration of the economics of academic training programs and teaching hospitals separate from the overall hospital sector. Although the charge to the committee excluded consideration of funding sources, the committee notes the desirability of replacing, at least in part, eroding support from private-sector health care payments and limiting inappropriate shifting of the financial burden of providing a general, public benefit to Medicare. In addition to a Medicare contribution, therefore, a National GME Fund could also include a general, non-Medicare contribution which could be from general revenue, an all-payer fund, a premium tax or dedicated tax or some other public non-Medicare source. This would allow for a better distribution plan, satisfying the principles of proportional support from payers in recognition of a general public benefit, and providing, in practice, more uniform support and support to low Medicare-caseload institutions. The committee's distribution plan can be carried out in most respects through an exclusively Medicare-based fund, however. Given a general, non-Medicare contribution, the National GME Trust Fund could be viewed as four separate funds: within the limit of the

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On Implementing a National Graduate Medical Education Trust Fund National GME Trust Fund annually defined amount there would be a Medicare and a general DME fund, and a Medicare and a general IME fund. Each would have an annually determined amount, or part of the total fund. To maintain a consistent Medicare commitment to GME, Medicare funding should reflect, ideally, a base period expenditure for DME and IME, trended forward. Adjustments to these amounts could be legislated by Congress, because, in the final analysis, the fund amounts will be whatever Congress determines are necessary to support GME and teaching hospitals. A general, non-Medicare amount could be set by Congress in the budgeting process. Each payer for health care services should contribute in proportion to its share of total health care expenditures recognizing, as previously mentioned, the ongoing, though diminishing non-Medicare support through private-sector health care service payments. DME The DME funds should pay a uniform per resident amount, without reference to individual institutional Medicare (or non-Medicare) caseload, but continuing current weighting for work force composition. The system should provide a transition that moves gradually toward a uniform payment with the initial change occurring over 5 years. The initial transition discussed could fall short of achieving uniformity in many institutions. During this initial 5-year transition, however, a better DME distribution plan should be designed that recognizes the need for greater uniformity and for a reasonably standard resident training price, but also accounts for differences in costs of inputs and, if possible, other factors such as locations of special need. This new system would be initiated (or phased in) following the initial 5-year phase-in. Beginning immediately, residents added to an institution's total resident number should be paid for at the lesser of the projected uniform rate or the actual rate. Eligibility for DME payments should be expanded to include any entity that is a formal educational or health care service institution, that meets accrediting body standards for GME, and that assumes overall training program responsibility. These entities should be paid directly. Nursing DME 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.

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On Implementing a National Graduate Medical Education Trust Fund IME Medicare IME funding should be divided into halves. One half should be allocated from a historical base (historical payment) trended forward each year without further reference to resident, bed, caseload, or formula factors. The other half should be allocated using the current IME formula (formula payment), as adjusted from time to time by Congress. Both components should be set aside for teaching hospitals with accredited training programs only. Historical Payment: Historical Medicare IME payments should be set as each institution's proportion of total Medicare IME payments for a base period applied to one half of Medicare IME funds and annually trended forward thereafter. Adjustments would be made for the adequacy of the fund each year. Formula Payment: Formula Medicare IME payment should be calculated by applying the current IME formula to each institution. Payments should be made in the usual way through the PPS by applying the resulting adjustment to each diagnosis-related group (DRG) rate. Payments would need to be divided in half because only half of Medicare IME payment is to be made using the formula. Additional adjustments or reconciliations should be made as necessary to ensure that the total national Medicare IME payout remains within the Medicare IME fund limit for the year. If general, non-Medicare funds are included in the trust fund, they should also, like Medicare IME, be divided into halves, namely historical and formula payments. Historical Payments: Historical IME general, non-Medicare payments should be based on each institution's proportion of total imputed non-Medicare IME payments for a base period (calculated by using the IME formula for that year applied to non-Medicare inpatient revenues) applied to one half of general, non-Medicare IME funds and annually trended forward thereafter. Adjustments should be made for the adequacy of the general, non-Medicare IME fund in each year. Formula Payments: Formula general, non-Medicare payments should be calculated by applying the IME formula to each institution. Payments should be made periodically using the resulting IME formula adjustment applied to non-Medicare inpatient day revenues. Payments would need to be divided in half because only half of general, non-Medicare IME payment is to be made using the formula. Additional adjustments or reconciliations should be made as necessary

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On Implementing a National Graduate Medical Education Trust Fund to ensure that total national general, non-Medicare payment remains within the general, non-Medicare IME fund limit for the year. An institution's Medicare capitated patients' percentage of that institution's total Medicare caseload should be calculated and used as a coefficient to appropriately modify the IME formula PPS adjustment in the formula half of Medicare IME payment to account for capitated patients in the distribution of formula IME support. Current IME payment should be restricted exclusively to teaching hospitals. Study of the design and the effects of a wider distribution to cover indirect teaching costs in other settings that are accredited and recognized for payment by the National GME Trust Fund should be undertaken. The amount of time residents spend in approved, affiliated ambulatory training sites as part of an institution's Accreditation Council for Graduate Medical Education/American Osteopathic Association (ACGME/AOA) approved residency program should be counted for hospital IME payment purposes just as it is for DME payment.* *    The committee's use of the term "non-Medicare" share or caseload always excludes the Medicaid share or caseload. Medicaid pays for GME separately in almost every state. A GME trust fund would double pay if applied to a Medicaid share or caseload.