Bill would bring changes to education funding
Bill would bring changes to education funding
Financing from health plan fee
Rep. Benjamin Cardin (D-MD) has introduced into Congress the All-Payer Graduate Medical Education (GME) Act, which would create an all-payer trust fund to finance future GME costs.
The fund would be financed by a 1% fee on all health plan premiums and self-insured plan funds and traditional revenues from Medicare. The 1% fee is expected to contribute $3 billion to the trust fund. Teaching hospitals would receive $2 billion, while the remaining $1 billion would reduce Medicare’s GME contribution.
According to an analysis prepared by the Washington, DC, office of the Medical Group Management Association, here are some of the effects the legislation would have:
• Payments to teaching hospitals. Direct GME costs would be funded through a new formula that uses a "national average FTE training amount." This amount is calculated by adjusting the costs of resident salaries by changes in the consumer price index and area wage indices. The new direct GME formula for payments to hospitals from the all-payer trust fund is calculated by the following formula: number of residents X adjusted national average FTE training amount X private insurance hospital revenues X total hospital revenues.
Twenty percent of direct GME funds would be used to compensate physicians for teaching. Remaining trust funds would be distributed to hospitals for indirect GME costs according to the existing formula for Medicare. The bill also would keep current alternative rules for safety-net hospitals while directing the Department of Health and Human Services to study how to best continue the rule into the future.
• Modifications in Medicare payment for GME direct costs. The new Medicare direct GME payment would be based on this formula: number of residents X adjusted national average FTE training amount X Medicare hospital revenues X total hospital revenues.
• Teaching salaries. Under the bill, 20% of direct GME funds must be used to compensate physicians for teaching.
• Resident caps. The bill provides reasonable exceptions from resident caps for hospitals assigning residents to serve in rural and underserved urban areas.
• Health work force priorities. HHS, in collaboration with medical community representatives, is directed to develop and implement a plan to reduce residency training positions to 110% of American medical school graduates by 2005. HHS also is to monitor the distribution of resident specialty training positions to ensure that an adequate number of primary care physicians are trained to fulfill the country’s needs and ensure access to health care for underserved populations.
HHS is to consider the financial effects of residency reductions to hospitals and allow a portion of the funds saved by residency reductions to be used in support of affected hospitals.
• Modification in Medicare payments for regular and Disproportionate Share Hospitals (DSH). The multiplier for the indirect GME formula (for Medicare and the trust fund expenditures) is reduced to 4.8 from the 5.5 level for FY 2001 established in the Balanced Budget Act of 1997. Meanwhile, the definition of "low-income share" in the disproportionate share formula is expanded to include indigent and Medicaid-eligible patients in addition to patients on Medicaid and Social Security Insurance. Under the bill, 50% of Prospective Payment System hospitals would be eligible for DSH payments while establishing a new DSH formula that eliminates differential thresholds for hospitals because of size or location.
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